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, 1996
/ / 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.)
Seven East Skippack Pike, Ambler, PA 19002
_______________________________________________________________________________
(Address of principal executive offices) (Zip code)
(215) 619-2800
_______________________________________________________________________________
(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,
1996 1995
_____________ ____________
Cash and cash equivalents $653,532 $ 716,019
Accounts receivable 6,713 301,754
Interest receivable 8,277 4,190
Due from related parties 42,700 6,349
Equipment under operating leases
(net of accumulated depreciation
of $4,130,219 and $5,841,499,
respectively) 129,859 310,347
Equipment held for sale or lease - 13,218
________ __________
Total assets $841,081 $1,351,877
======== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 83,304 $ 375,648
Accounts payable and
accrued expenses 16,764 24,597
Due to related parties - 15,100
________ __________
Total liabilities 100,068 415,345
Partners' capital 741,013 936,532
________ __________
Total liabilities and
partners' capital $841,081 $1,351,877
======== ==========
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
1996 1995 1996 1995
____ ____ ____ ____
Income:
Rentals $158,851 $403,181 $628,263 $1,458,862
Interest 7,205 6,259 28,817 28,674
Gain on sale of equipment,
net 21,459 - 218,065 129,139
Other 475 5,729 2,303 8,684
________ ________ ________ __________
187,990 415,169 877,448 1,625,359
________ ________ ________ __________
Expenses:
Depreciation 29,620 112,867 130,338 624,075
Write-down of equipment to
net realizable value - - - 121,000
General and administrative 19,822 70,311 51,569 116,424
General and administrative
to related party 8,421 3,643 28,659 19,790
Management fee to related
party 9,531 23,923 37,696 87,224
Loss on sale of equipment,
net - 6,810 - -
________ ________ ________ __________
67,394 217,554 248,262 968,513
________ ________ ________ __________
Net income $120,596 $197,615 $629,186 $ 656,846
======== ======== ======== ==========
Net income (loss) per equivalent
limited partnership unit $ (16.15) $ 20.11 $( 11.64) $ 60.40
======== ======== ======== ==========
Weighted average number of
equivalent limited partnership
units outstanding during
the period 9,053 9,362 9,369 10,480
======== ======== ======= ==========
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, 1996
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1996 $ 11,841 61,743 $924,691 $936,532
Redemptions - (508) (5,772) (5,772)
Cash distributions (483,935) - (334,998) (818,933)
Net income (loss) 738,279 - (109,093) 629,186
________ ______ ________ ________
Balance, September 30, 1996 $266,185 61,235 $474,828 $741,013
======== ====== ======== ========
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, 1996 and 1995
(Unaudited)
1996 1995
____ ____
Cash flows from operating activities:
Net income $ 629,186 $ 656,846
__________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 130,338 624,075
Write-down of equipment to
net realizable value - 121,000
Gain on sale of equipment, net (218,065) (129,139)
(Increase) decrease in accounts receivable 295,041 26,273
(Increase) decrease in due from related parties (36,351) 27,573
Increase (decrease) in lease rents
paid in advance (292,344) (54,879)
Increase (decrease) in accounts payable
and accrued expenses (7,833) (38,659)
Increase (decrease) in due to related parties (15,100) 11,175
(Increase) decrease in other, net (4,087) 2,282
__________ __________
(148,401) 589,701
__________ __________
Net cash provided by operating activities 480,785 1,246,547
__________ __________
Cash flows from investing activities:
Acquisition of equipment - (975)
Proceeds from sale of equipment 281,433 547,583
__________ __________
Net cash provided by investing activities 281,433 546,608
__________ __________
Cash flows from financing activities:
Distributions (818,933) (2,236,926)
Redemptions of capital (5,772) (9,961)
__________ __________
Net cash used in financing activities (824,705) (2,246,887)
__________ __________
Decrease in cash and cash equivalents (62,487) (453,732)
Cash and cash equivalents, beginning
of period 716,019 771,837
__________ __________
Cash and cash equivalents, end of period $ 653,532 $ 318,105
========== ==========
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, 1996
(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.
1. EQUIPMENT LEASED
The remaining equipment on lease consists primarily of computer peripheral
equipment under operating leases. A majority of the equipment was manu-
factured by IBM. The lessees have agreements with the manufacturer to pro-
vide maintenance for the leased equipment. The Fund's operating leases are
for initial lease terms of 14 to 48 months. Generally, during the remain-
ing terms of existing operating leases, the Fund will not recover all of
the undepreciated cost and related expenses of its rental equipment and is
prepared to remarket the equipment in future years. Currently, the Fund's
policy is to review quarterly the expected economic life of its rental
equipment in order to determine 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.
The future approximate minimum rentals to be received on noncancellable
operating leases as of September 30, 1996 are $131,000 for the remainder of
the year ending December 31, 1996.
2. RELATED PARTY TRANSACTIONS
The General Partner receives 6% of gross rental payments from equip-
ment under operating leases for administrative and management services
performed on behalf of the Fund.
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, 1996 and 1995:
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
____ ____ ____ ____
Management fee $9,531 $23,923 $37,696 $87,224
Reimbursable costs 8,421 3,643 28,659 19,790
Amounts due from related parties at September 30, 1996 and December 31,
1995 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.
6
FIDELITY LEASING INCOME FUND III, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
The amount due to related parties at December 31, 1995 represents monies
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.
3. SUBSEQUENT EVENT
Cash Distribution:
Subsequent to September 30, 1996, the General Partner declared and paid a
cash distribution of $314,345 for the three months ended September 30,
1996, to all admitted partners as of September 30, 1996.
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 $187,990 and
$415,169 for the three months ended September 30, 1996 and 1995, respectively,
and $877,448 and $1,625,359 for the nine months ended September 30, 1996 and
1995, respectively. Rental income from the leasing of computer peripheral
equipment accounted for 84% and 97% of total revenues for the third quarter of
1996 and 1995, respectively and 72% and 90% for the first nine months of 1996
and 1995, 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 1995 and was re-leased at lower rental rates or sold. Addi-
tionally, the Fund recognized a net gain on sale of equipment of $218,065 and
$129,139 for the nine months ended September 30, 1996 and 1995, respectively,
which reduced the overall decrease in revenues in 1996.
Expenses were $67,394 and $217,554 during the three months ended September
30, 1996 and 1995, respectively, and $248,262 and $968,513 for the first nine
months of 1996 and 1995, respectively. Depreciation expense comprised 44% and
52% of total expenses during the third quarter of 1996 and 1995, respectively,
and 53% and 64% of total expenses for the first nine months of 1996 and 1995,
respectively. The decrease in expenses between 1996 and 1995 is primarily
attributable to a decrease in depreciation expense. The decrease in depreci-
ation expense was caused by equipment which came off lease or became fully
depreciated since the third quarter of 1995. Additionally, the decrease in the
write-down of equipment to net realizable value also contributed to the
decrease in overall expenses in 1996. Based upon the quarterly review of the
recoverability of the undepreciated cost of rental equipment, $-0- was charged
to operations to write down equipment to its estimated net realizable value
during the nine months ended September 30, 1996 as compared to $121,000 for the
nine months ended September 30, 1995. The decrease in equipment expenses
incurred to remarket equipment, which are included in general and
administrative expenses also contributed to the decline in expenses in 1996.
Furthermore, management fee to related party decreased proportionately to the
decrease in rental income in 1996.
For the three months ended September 30, 1996 and 1995, the Fund had net
income of $120,596 and $197,615, respectively. For the nine months ended
September 30, 1996 and 1995, the Fund had net income of $629,186 and $656,846,
respectively. The earnings (loss) per equivalent limited partnership unit,
after earnings (loss) allocated to the General Partner were ($16.15) and $20.11
based on a weighted average number of equivalent limited partnership units
outstanding of 9,053 and 9,362 for the quarter ended September 30, 1996 and
1995, respectively. The earnings (loss) per equivalent limited partnership
unit, after earnings (loss) allocated to the General Partner, were ($11.64) and
$60.40 based on a weighted average number of equivalent limited partnership
units outstanding of 9,369 and 10,480 for the nine months ended September 30,
1996 and 1995, 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 $128,757 and $317,292, for the
purpose of determining cash available for distribution during the third
quarter of 1996 and 1995, respectively, and distributed $314,345 and $186,744
to partners subsequent to September 30, 1996 and 1995, respectively. For the
nine months ended September 30, 1996 and 1995, the Fund generated $541,459 and
$1,272,782, respectively of funds from operations and distributed $568,932 and
$1,455,633 to partners during the nine months ended September 30, 1996 and
1995, respectively and $314,345 and $186,744 to partners subsequent to
September 30, 1996 and 1995, respectively. For financial statement purposes,
the Fund records cash distributions to partners on a cash basis in the period
in which they are paid.
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
market value.
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 remainder of the
liquidation process.
9
Part II: Other Information
FIDELITY LEASING INCOME FUND III, L.P.
September 30, 1996
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.
11-12-96 By: Freddie M. Kotek
________ _____________________________
Date Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
11-12-96 By: Marianne T. Schuster
________ _____________________________
Date Marianne T. Schuster
Vice President of F.L. Partnership Management, Inc.
(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 Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
_______ _____________________________
Date Marianne T. Schuster
Vice President of F.L. Partnership Management, Inc.
(Principal Financial Officer)
11
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 653,532
<SECURITIES> 0
<RECEIVABLES> 57,690
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 4,260,078
<DEPRECIATION> 4,130,219
<TOTAL-ASSETS> 841,081
<CURRENT-LIABILITIES> 100,068
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 741,013
<TOTAL-LIABILITY-AND-EQUITY> 841,081
<SALES> 628,263
<TOTAL-REVENUES> 877,448
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 248,262
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 629,186
<INCOME-TAX> 0
<INCOME-CONTINUING> 629,186
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 629,186
<EPS-PRIMARY> (11.64)
<EPS-DILUTED> (11.64)
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