SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1995
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____ to _____
Commission file number: 0-15765
Fidelity Leasing Income Fund III, L.P.
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 51-0292194
_______________________________________________________________________________
(State of organization) (I.R.S. Employer Identification No.)
250 King of Prussia Road, Radnor, PA 19087
_______________________________________________________________________________
(Address of principal executive offices) (Zip code)
(610) 964-7102
_______________________________________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the regis-
trant was required to file such reports), and (2) has been subject to such fil-
ing requirements for the past 90 days.
Yes __X__ No _____
Page 1 of 11
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND III, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
September 30, December 31,
1995 1994
_____________ ____________
Cash and cash equivalents $318,105 $ 771,837
Accounts receivable 141,894 168,167
Interest receivable 106 2,388
Due from related parties 5,368 32,941
Equipment under operating leases
(net of accumulated depreciation
of $6,236,668 and $11,077,285,
respectively) 458,871 1,495,382
Equipment held for sale or lease 20,477 146,510
________ __________
Total assets $944,821 $2,617,225
======== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 59,724 $ 114,603
Accounts payable and
accrued expenses 19,329 57,988
Due to related parties 11,175 -
________ __________
Total liabilities 90,228 172,591
854,593 2,444,634
Partners' capital ________ __________
Total liabilities and
partners' capital $944,821 $2,617,225
======== ==========
The accompanying notes are an integral part of these financial statements.
2
FIDELITY LEASING INCOME FUND III, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
____ ____ ____ ____
Income:
Rentals $403,181 $891,020 $1,458,862 $2,785,741
Interest 6,259 12,282 28,674 39,058
Gain on sale of equipment,
net - 26,583 129,139 193,187
Other 5,729 1,365 8,684 5,025
________ ________ __________ __________
415,169 931,250 1,625,359 3,023,011
________ ________ __________ __________
Expenses:
Depreciation 112,867 592,968 624,075 1,981,374
Write-down of equipment to
net realizable value - - 121,000 -
General and administrative 70,311 16,389 116,424 164,173
General and administrative
to related party 3,643 17,028 19,790 56,287
Management fee to related
party 23,923 56,017 87,224 166,197
Loss on sale of equipment,
net 6,810 - - -
________ ________ __________ __________
217,554 682,402 968,513 2,368,031
________ ________ __________ __________
Net income $197,615 $248,848 $ 656,846 $ 654,980
======== ======== ========== ==========
Net income per equivalent
limited partnership unit $ 20.11 $ 16.72 $ 60.40 $ 39.19
======== ======== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during
the period 9,362 14,350 10,480 15,999
======== ======== ========== ==========
The accompanying notes are an integral part of these financial statements.
3
FIDELITY LEASING INCOME FUND III, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the nine months ended September 30, 1995
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1995 $ 7,154 62,215 $2,437,480 $2,444,634
Redemptions - (472) (9,961) (9,961)
Cash distributions (22,369) - (2,214,557) (2,236,926)
Net income 23,893 - 632,953 656,846
_______ ______ __________ __________
Balance, September 30, 1995 $ 8,678 61,743 $ 845,915 $ 854,593
======= ====== ========== ==========
The accompanying notes are an integral part of these financial statements.
4
FIDELITY LEASING INCOME FUND III, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1995 and 1994
(Unaudited)
1995 1994
____ ____
Cash flows from operating activities:
Net income $ 656,846 $ 654,980
__________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 624,075 1,981,374
Write-down of equipment to
net realizable value 121,000 -
Gain on sale of equipment, net (129,139) (193,187)
(Increase) decrease in accounts receivable 26,273 65,284
(Increase) decrease in due from related parties 27,573 84,166
Increase (decrease) in lease rents
paid in advance (54,879) (59,082)
Increase (decrease) in accounts payable
and accrued expenses (38,659) (43,100)
Increase (decrease) in due to related parties 11,175 24,340
Increase (decrease) in other, net 2,282 2,214
__________ __________
589,701 1,862,009
__________ __________
Net cash provided by operating activities 1,246,547 2,516,989
__________ __________
Cash flows from investing activities:
Acquisition of equipment (975) (181,144)
Maturity of investment securities held
to maturity - 247,943
Proceeds from sale of equipment 547,583 333,878
__________ __________
Net cash provided by investing activities 546,608 400,677
__________ __________
Cash flows from financing activities:
Distributions (2,236,926) (3,261,188)
Redemptions of capital (9,961) (74,202)
__________ __________
Net cash used in financing activities (2,246,887) (3,335,390)
__________ __________
Decrease in cash and cash equivalents (453,732) (417,724)
Cash and cash equivalents, beginning
of period 771,837 1,464,694
__________ __________
Cash and cash equivalents, end of period $ 318,105 $1,046,970
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND III, L.P.
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
The accompanying unaudited condensed financial statements have been prepared
by the Fund in accordance with generally accepted accounting principles,
pursuant to the rules and regulations of the Securities and Exchange Commis-
sion. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Certain amounts on the 1994 financial statements have been
reclassified to conform to the presentation adopted in 1995.
1. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS
Beginning July 1, 1995, cash distributions, if any, are made quarterly as
follows: 95% to the Limited Partners and 5% to the General Partner, until
the Limited Partners have received an amount equal to the purchase price of
their Units, plus a 10% compounded Priority Return (an amount equal to 10%
compounded annually on the portion of the purchase price not previously
distributed); thereafter, 90% to the Limited Partners and 10% to the
General Partner. For the period from January 1, 1992 through June 30,
1995, cash distributions were allocated 99% to Limited Partners and 1% to
the General Partner.
2. EQUIPMENT LEASED
Equipment on lease consists primarily of computer peripheral equipment
under operating leases. A majority of the equipment was manufactured by
IBM. The lessees have agreements with the manufacturer to provide main-
tenance for the leased equipment. The Fund's operating leases are for
initial lease terms of 13 to 48 months. Generally, operating leases will
not recover all of the undepreciated cost and related expenses of its
rental equipment during the initial lease terms and the Fund is prepared to
remarket the equipment in future years. Fund policy is to review quarterly
the expected economic life of its rental equipment in order to deter-
mine the recoverability of its undepreciated cost. Recent and anticipated
technological developments affecting computer equipment and competitive
factors in the marketplace are considered among other things, as part of
this review. In accordance with Generally Accepted Accounting Principles,
the Fund writes down its rental equipment to its estimated net realizable
value when the amounts are reasonably estimated and only recognizes gains
upon actual sale of its rental equipment. As a result, $121,000 and $0
was charged to write-down of equipment to net realizable value for the nine
months ended September 30, 1995 and 1994, respectively. The General Part-
ner believes, after analyzing the current equipment portfolio, that there
are impending gains to be recognized upon the sale of certain of its equip-
ment in future years. Any future losses are dependent upon unanticipated
technological developments affecting the computer equipment industry in
subsequent years.
6
FIDELITY LEASING INCOME FUND III, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. EQUIPMENT LEASED (Continued)
The future approximate minimum rentals to be received on noncancellable
operating leases as of September 30, 1995 are as follows:
Years Ending December 31 Minimum Rentals
________________________ _______________
1995 $322,000
1996 213,000
1997 98,000
________
$633,000
========
3. RELATED PARTY TRANSACTIONS
The General Partner receives 6% or 3% of gross rental payments from equip-
ment under operating leases and full pay-out leases, respectively, for
administrative and management services performed on behalf of the Fund.
Full pay-out leases are noncancellable leases with terms in excess of 42
months and for which rental payments during the initial term are at least
sufficient to recover the purchase price of the equipment, including acqui-
sition fees.
Additionally, the General Partner and its affiliates are reimbursed by the
Fund for certain costs of services and materials used by or for the Fund
except those items covered by the above-mentioned fees. Following is a
summary of fees and costs of services and materials charged by the General
Partner or its affiliates during the three and nine months ended September
30, 1995 and 1994:
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
____ ____ ____ ____
Management fee $23,923 $56,017 $87,224 $166,197
Reimbursable costs 3,643 17,028 19,790 56,287
Amounts due from related parties at September 30, 1995 and December 31,
1994 represent monies due the Fund from the General Partner and/or other
affiliated funds for rentals and sales proceeds collected and not yet re-
mitted the Fund.
Amounts due to related parties at September 30, 1995 represent monies due
due to the General Partner for the fees and costs mentioned above, as
well as rentals and sales proceeds collected by the Fund on behalf of other
affiliated funds.
4. SUBSEQUENT EVENT
Cash Distribution:
The General Partner declared and paid a cash distribution of $186,744 in
November 1995 for the three months ended September 30, 1995, to all
admitted partners as of September 30, 1995.
7
FIDELITY LEASING INCOME FUND III, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Fidelity Leasing Income Fund III, L.P. had revenues of $415,169 and
$931,250 for the three months ended September 30, 1995 and 1994, respectively,
and $1,625,359 and $3,023,011 for the nine months ended September 30, 1995 and
1994, respectively. Rental income from the leasing of computer peripheral
equipment accounted for 97% and 96% of total revenues for the third quarter of
1995 and 1994, respectively and 90% and 92% for the first nine months of 1995
and 1994, respectively. The decrease in revenues is primarily attributable to
a decrease in rental income caused by equipment which came off lease since the
third quarter of 1994 and was re-leased at lower rental rates or sold. Addi-
tionally, the Fund recognized a net gain on sale of equipment of $129,139 and
$193,187 for the nine months ended September 30, 1995 and 1994, respectively,
which also accounted for the decrease in revenues in 1995.
Expenses were $217,554 and $682,402 during the three months ended September
30, 1995 and 1994, respectively, and $968,513 and $2,368,031 for the first nine
months of 1995 and 1994, respectively. Depreciation expense comprised 52% and
87% of total expenses during the third quarter of 1995 and 1994, respectively,
and 64% and 84% for the first nine months of 1995 and 1994, respectively. The
decrease in expenses between 1995 and 1994 is primarily attributable to a de-
crease in depreciation expense. The decrease in depreciation expense was
caused by equipment which came off lease or became fully depreciated since the
third quarter of 1994. In addition, the decrease in equipment expenses
incurred to remarket equipment which are included in general and adminis-
trative expenses also contributed to the decline in expenses in 1995.
Furthermore, management fees decreased proportionate to the decrease in rental
income. However, the overall decrease in expenses in 1995 was offset by an
increase in the write-down of equipment to net realizable value. Based upon
the quarterly review of the recoverability of the undepreciated cost of rental
equipment, $121,000 was charged to operations to write down equipment to its
estimated net realizable value during the nine months ended September 30, 1995
as compared to $-0- for the nine months ended September 30, 1994. The General
Partner believes, after analyzing the current equipment portfolio, that there
are impending gains to be recognized upon the sale of certain of its equipment
in future years. Any future losses are dependent upon unanticipated techno-
logical developments affecting the computer equipment industry in subsequent
years.
For the three months ended September 30, 1995 and 1994, the Fund had net
income of $197,615 and $248,848, respectively. For the nine months ended
September 30, 1995 and 1994, the Fund had net income of $656,846 and $654,980,
respectively. The earnings per equivalent limited partnership unit, after
earnings allocated to the General Partner were $20.11 and $16.72 based on a
weighted average number of equivalent limited partnership units outstanding of
9,362 and 14,350 for the quarter ended September 30, 1995 and 1994,
respectively. The earnings per equivalent limited partnership unit, after
earnings allocated to the General Partner, were $60.40 and $39.19 based on a
weighted average number of equivalent limited partnership units outstanding of
10,480 and 15,999 for the nine months ended September 30, 1995 and 1994,
respectively.
8
FIDELITY LEASING INCOME FUND III, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS (Continued)
The Fund generated funds from operations of $317,292 and $815,233, for the
purpose of determining cash available for distribution during the third
quarter of 1995 and 1994, respectively, and distributed $186,744 and $893,498
to partners in November 1995 and 1994, respectively. For the nine months ended
September 30, 1995 and 1994, the Fund generated $1,272,782 and $2,443,167,
respectively of funds from operations and distributed $1,455,633 and $1,899,131
to partners during the nine months ended September 30, 1995 and 1994, respec-
tively and $186,744 and $893,498 to partners in November 1995 and 1994,
respectively. The distributions for the nine months ended September 30, 1995
include $369,595 of sales proceeds and cash available from previous quarters
which was not distributed.
ANALYSIS OF FINANCIAL CONDITION
The General Partner has commenced the dissolution process for the Fund with
the intent of fully liquidating the Fund by the end of 1996. Therefore, as
leases expire, the General Partner will seek to sell the equipment at its
market value or extend the equipment for lease terms consistent with the plan
of liquidation. The Fund purchased $975 and $181,144 of equipment during the
nine months ended September 30, 1995 and 1994, respectively.
The cash position of the Fund is reviewed daily and cash is invested on a
short-term basis.
The Fund's cash from operations is expected to continue to be adequate to
cover all operating expenses and contingencies during the next twelve month
period.
9
Part II: Other Information
FIDELITY LEASING INCOME FUND III, L.P.
September 30, 1995
Item 1. Legal Proceedings: Inapplicable.
Item 2. Changes in Securities: Inapplicable.
Item 3. Defaults Upon Senior Securities: Inapplicable.
Item 4. Submission of Matters to a Vote of Securities Holders: Inapplicable.
Item 5. Other Information: Inapplicable.
Item 6. Exhibits and Reports on Form 8-K:
a) Exhibits: EX-27
b) Reports on Form 8-K: A report on Form 8-K was filed on October
12, 1995 with the Securities and Exchange Commission reporting
under Item 1.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the regis-
trant has duly caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
FIDELITY LEASING INCOME FUND III, L.P.
11-14-95 By: P. Donald Mooney
________ _____________________________
Date P. Donald Mooney
President of
Fidelity Leasing Corporation
(Principal Operating Officer)
11-14-95 By: Marianne T. Schuster
________ _____________________________
Date Marianne T. Schuster
Vice President of
Fidelity Leasing Corporation
(Principal Financial Officer)
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the regis-
trant has duly caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
FIDELITY LEASING INCOME FUND III, L.P.
_______ _____________________________
Date P. Donald Mooney
President of
Fidelity Leasing Corporation
(Principal Operating Officer)
_______ _____________________________
Date Marianne T. Schuster
Vice President of
Fidelity Leasing Corporation
(Principal Financial Officer)
11
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 318,105
<SECURITIES> 0
<RECEIVABLES> 147,368
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 465,473
<PP&E> 6,716,016
<DEPRECIATION> 6,236,668
<TOTAL-ASSETS> 944,821
<CURRENT-LIABILITIES> 90,228
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 854,593
<TOTAL-LIABILITY-AND-EQUITY> 944,821
<SALES> 1,458,862
<TOTAL-REVENUES> 1,625,359
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 968,513
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 656,846
<INCOME-TAX> 0
<INCOME-CONTINUING> 656,846
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 656,846
<EPS-PRIMARY> 60.40
<EPS-DILUTED> 60.40
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