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 June 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)
June 30, December 31,
1995 1994
_____________ ____________
Cash and cash equivalents $ 500,868 $ 771,837
Accounts receivable 100,392 168,167
Interest receivable 89 2,388
Due from related parties 45,993 32,941
Equipment under operating leases
(net of accumulated depreciation
of $6,260,430 and $11,077,285,
respectively) 583,060 1,495,382
Equipment held for sale or lease 63,400 146,510
__________ __________
Total assets $1,293,802 $2,617,225
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 99,766 $ 114,603
Accounts payable and
accrued expenses 54,825 57,988
__________ __________
Total liabilities 154,591 172,591
Partners' capital 1,139,211 2,444,634
__________ __________
Total liabilities and
partners' capital $1,293,802 $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 Six Months Ended
June 30 June 30
1995 1994 1995 1994
____ ____ ____ ____
Income:
Rentals $439,720 $928,235 $1,055,681 $1,894,721
Interest 9,962 13,013 22,415 26,776
Gain on sale of equipment,
net 1,283 13,059 135,949 166,604
Other 631 2,673 2,955 3,660
________ ________ __________ __________
451,596 956,980 1,217,000 2,091,761
________ ________ __________ __________
Expenses:
Depreciation 188,654 659,114 511,208 1,388,406
Write-down of equipment to
net realizable value 121,000 - 121,000 -
General and administrative 28,109 133,266 46,113 147,784
General and administrative to
related party 9,805 23,150 16,147 39,259
Management fee to related
party 26,383 52,745 63,301 110,180
________ ________ __________ __________
373,951 868,275 757,769 1,685,629
________ ________ __________ __________
Net income $ 77,645 $ 88,705 $ 459,231 $ 406,132
======== ======== ========== ==========
Net income per equivalent
limited partnership unit $ 7.02 $ 5.12 $ 40.36 $ 23.01
======== ======== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during
the period 10,380 15,812 11,018 16,824
======== ======== ========== ==========
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 six months ended June 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 (17,547) - (1,737,146) (1,754,693)
Net income 14,556 - 444,675 459,231
_______ ______ __________ __________
Balance, June 30, 1995 $ 4,163 61,743 $1,135,048 $1,139,211
======= ====== ========== ==========
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 six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
____ ____
Cash flows from operating activities:
Net income $ 459,231 $ 406,132
__________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 511,208 1,388,406
Write-down of equipment to
net realizable value 121,000 -
Gain on sale of equipment, net (135,949) (166,604)
(Increase) decrease in accounts receivable 67,775 58,432
(Increase) decrease in due from related parties (13,052) 113,284
Increase (decrease) in lease rents
paid in advance (14,837) (51,000)
Increase (decrease) in due to related parties - 21,542
Increase (decrease) in other, net (864) (9,969)
__________ __________
535,281 1,354,091
__________ __________
Net cash provided by operating activities 994,512 1,760,223
__________ __________
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 500,148 246,278
__________ __________
Net cash provided by investing activities 499,173 313,077
__________ __________
Cash flows from financing activities:
Distributions (1,754,693) (2,479,376)
Redemptions of capital (9,961) (73,658)
__________ __________
Net cash used in financing activities (1,764,654) (2,553,034)
__________ __________
Decrease in cash and cash
equivalents (270,969) (479,734)
Cash and cash equivalents, beginning
of period 771,837 1,464,694
__________ __________
Cash and cash equivalents, end of period $ 500,868 $ 984,960
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND III, L.P.
NOTES TO FINANCIAL STATEMENTS
June 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. 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 12 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 six
months ended June 30, 1995 and 1994, respectively. 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 equip-
ment in future years. Any future losses are dependent upon unanticipated
technological developments affecting the computer equipment industry in
subsequent years.
The future approximate minimum rentals to be received on noncancellable
operating leases as of June 30, 1995 are as follows:
Years Ending December 31 Minimum Rentals
________________________ _______________
1995 $495,000
1996 256,000
1997 97,000
________
$848,000
========
6
FIDELITY LEASING INCOME FUND III, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. 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 six months ended June 30,
1995 and 1994:
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
____ ____ ____ ____
Management fee $26,383 $32,154 $63,301 $65,055
Reimbursable costs 9,805 26,951 16,147 50,705
Amounts due from related parties at June 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.
3. SUBSEQUENT EVENT
Cash Distribution:
The General Partner declared and paid a cash distribution of $482,233 in
August 1995 for the three months ended June 30, 1995, to all admitted
partners as of June 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 $451,596 and
$956,980 for the three months ended June 30, 1995 and 1994, respectively, and
$1,217,000 and $2,091,761 for the six months ended June 30, 1995 and 1994,
respectively. Rental income from the leasing of computer peripheral equipment
accounted for 97% of total revenues for the second quarter of both 1995 and
1994, and 87% and 91% for the first six 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 second quarter of
1994 and was re-leased at lower rental rates or sold. Additionally, the Fund
recognized a net gain on sale of equipment of $135,949 and $166,604 for the
six months ended June 30, 1995 and 1994, respectively, which also accounted
for the decrease in revenues in 1995.
Expenses were $373,951 and $868,275 during the three months ended June 30,
1995 and 1994, respectively, and $757,769 and $1,685,629 for the first six
months of 1995 and 1994, respectively. Depreciation expense comprised 50% and
76% of total expenses during the second quarter of 1995 and 1994, respectively,
and 67% and 82% for the first six 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
second 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 six months ended June 30, 1995 as
compared to $-0- for the six months ended June 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 technological
developments affecting the computer equipment industry in subsequent years.
For the three months ended June 30, 1995 and 1994, the Fund had net income
of $77,645 and $88,705, respectively. For the six months ended June 30, 1995
and 1994, the Fund had net income of $459,231 and $406,132, respectively.
The earnings per equivalent limited partnership unit, after earnings allocated
to the General Partner were $7.02 and $5.12 based on a weighted average number
of equivalent limited partnership units outstanding of 10,380 and 15,812 for
the quarter ended June 30, 1995 and 1994, respectively. The earnings per
equivalent limited partnership unit, after earnings allocated to the General
Partner, were $40.36 and $23.01 based on a weighted average number of equiva-
lent limited partnership units outstanding of 11,018 and 16,824 for the six
months ended June 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 $386,016 and $734,760, for the
purpose of determining cash available for distribution during the second
quarter of 1995 and 1994, respectively, and distributed $482,233 and $781,812
to partners in August 1995 and 1994, respectively. For the six months ended
June 30, 1995 and 1994, the Fund generated $955,490 and $1,627,934, respec-
tively of funds from operations and distributed $973,400 and $1,117,319 to
partners during the six months ended June 30, 1995 and 1994, respectively and
$482,233 and $781,812 to partners in August 1995 and 1994, respectively. The
distributions for the three and six months ended June 30, 1995 include $96,217
and $500,143, respectively, 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. The Fund contin-
ues to consider the purchase of computer peripheral equipment, primarily up-
grades to existing lease schedules, with cash available from operations which
was not distributed to partners. The Fund purchased $975 and $181,144 of
equipment during the six months ended June 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.
June 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: None
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.
8-10-95 By: P. Donald Mooney
_______ ___________________________
Date P. Donald Mooney
President of
Fidelity Leasing Corporation
(Principal Operating Officer)
8-10-95 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 500,868
<SECURITIES> 0
<RECEIVABLES> 146,474
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 647,342
<PP&E> 6,906,890
<DEPRECIATION> 6,260,430
<TOTAL-ASSETS> 1,293,802
<CURRENT-LIABILITIES> 154,591
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,139,211
<TOTAL-LIABILITY-AND-EQUITY> 1,293,802
<SALES> 1,055,681
<TOTAL-REVENUES> 1,217,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 757,769
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 459,231
<INCOME-TAX> 0
<INCOME-CONTINUING> 459,231
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 459,231
<EPS-PRIMARY> 40.36
<EPS-DILUTED> 40.36
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