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, 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.)
7 E. Skippack Pike, Suite 275, Ambler, Pennsylvania 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)
June 30, December 31,
1996 1995
_____________ ____________
Cash and cash equivalents $ 805,462 $ 716,019
Accounts receivable 20,342 301,754
Interest receivable 8,277 4,190
Due from related parties 14,455 6,349
Equipment under operating leases
(net of accumulated depreciation
of $4,523,679 and $5,841,499,
respectively) 184,834 310,347
Equipment held for sale or lease 61 13,218
__________ __________
Total assets $1,033,431 $1,351,877
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 68,287 $ 375,648
Accounts payable and
accrued expenses 29,571 24,597
Due to related parties 810 15,100
__________ __________
Total liabilities 98,668 415,345
Partners' capital 934,763 936,532
__________ __________
Total liabilities and
partners' capital $1,033,431 $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 Six Months Ended
June 30 June 30
1996 1995 1996 1995
____ ____ ____ ____
Income:
Rentals $183,957 $439,720 $469,412 $1,055,681
Interest 13,610 9,962 21,612 22,415
Gain on sale of equipment,
net 5,751 1,283 196,606 135,949
Other 1,108 631 1,828 2,955
________ ________ ________ _________
204,426 451,596 689,458 1,217,000
________ ________ ________ __________
Expenses:
Depreciation 50,308 188,654 100,718 511,208
Write-down of equipment to
net realizable value - 121,000 - 121,000
General and administrative 21,492 28,109 31,747 46,113
General and administrative
to related party 8,030 9,805 20,238 16,147
Management fee to related
party 11,038 26,383 28,165 63,301
________ ________ ________ __________
90,868 373,951 180,868 757,769
________ ________ ________ __________
Net income $113,558 $ 77,645 $508,590 $ 459,231
======== ======== ======== ==========
Net income per equivalent
limited partnership unit $ (16.35) $ 7.02 $ 3.90 $ 40.36
======== ======== ======== ==========
Weighted average number of
equivalent limited partnership
units outstanding
during the period 9,377 10,380 9,528 11,018
======== ======== ======== ==========
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, 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 (217,087) - (287,500) (504,587)
Net income 471,433 - 37,157 508,590
________ ______ ________ ________
Balance, June 30, 1996 $266,187 61,235 $668,576 $934,763
======== ====== ======== ========
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, 1996 and 1995
(Unaudited)
1996 1995
________ ________
Cash flows from operating activities:
Net income $508,590 $ 459,231
________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 100,718 511,208
Write-down of equipment to
net realizable value - 121,000
Gain on sale of equipment, net (196,606) (135,949)
(Increase) decrease in accounts receivable 281,412 67,775
(Increase) decrease in due from related parties (8,106) (13,052)
Increase (decrease) in lease rents paid
in advance (307,361) (14,837)
Increase (decrease) in due to related parties (14,290) -
Increase (decrease) in other, net 887 (864)
________ __________
(143,346) 535,281
________ __________
Net cash provided by operating activities 365,244 994,512
________ __________
Cash flows from investing activities:
Acquisition of equipment - (975)
Proceeds from sale of equipment 234,558 500,148
________ __________
Net cash provided by investing activities 234,558 499,173
________ __________
Cash flows from financing activities:
Distributions (504,587) (1,754,693)
Redemptions of capital (5,772) (9,961)
________ __________
Net cash used in financing activities (510,359) (1,764,654)
________ __________
Increase (decrease) in cash and
cash equivalents 89,443 (270,969)
Cash and cash equivalents, beginning
of period 716,019 771,837
________ __________
Cash and cash equivalents, end of period $805,462 $ 500,868
======== ==========
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, 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
manufactured by IBM. The lessees have agreements with the manufacturer to
provide maintenance for the leased equipment. The Fund's operating leases
are for initial lease terms of 14 to 48 months. Generally, during the
remaining 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 June 30, 1996 are $102,000 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 six months ended June 30,
1996 and 1995:
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
____ ____ ____ ____
Management fee $11,038 $26,383 $28,165 $63,301
Reimbursable costs 8,030 9,805 20,238 16,147
6
FIDELITY LEASING INCOME FUND III, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
Amounts due from related parties at June 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 to the Fund.
Amounts due to related parties at June 30, 1996 and December 31, 1995
represent 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:
The General Partner declared and paid a cash distribution of $314,346 in
August 1996 for the three months ended June 30, 1996, to all admitted
partners as of June 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 $204,426 and
$451,596 for the three months ended June 30, 1996 and 1995, respectively.
and $689,458 and $1,217,000 for the six months ended June 30, 1996 and 1995
respectively. Rental income from the leasing of computer peripheral equipment
accounted for 90% and 97% of total revenues for the second quarter of 1996 and
1995, respectively and 68% and 87% of total revenues for the first six 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 second quarter of 1995 and was re-leased at lower rental rates
or sold. Additionally, the Fund recognized a net gain on sale of equipment of
$196,606 and $135,949 for the six months ended June 30, 1996 and 1995,
respectively, which reduced the overall decrease in revenues in 1996.
Expenses were $90,868 and $373,951 during the three months ended June 30,
1996 and 1995, respectively and $180,868 and $757,769 for the first six
months of 1996 and 1995, respectively. Depreciation expense comprised 55% and
50% of total expenses during the second quarter of 1996 and 1995, respectively
and 56% and 67% of total expenses for the first six 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 second quarter of 1995. Additionally, management fee to
related party decreased proportionate to the decrease in rental income.
Furthermore, 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 six months ended June 30, 1996 as
compared to $121,000 for the six months ended June 30, 1995.
For the three months ended June 30, 1996 and 1995, the Fund had net income
of $113,558 and $77,645, respectively. For the six months ended June 30,
1996 and 1995, the Fund had net income of $508,590 and $459,231, respectively.
The earnings (loss) per equivalent limited partnership unit, after earnings
(loss) allocated to the General Partner were ($16.35) and $7.02 based on a
weighted average number of equivalent limited partnership units outstanding of
9,377 and 10,380 for the quarter ended June 30, 1996 and 1995, respectively.
The earnings per equivalent limited partnership unit, after earnings allocated
to the General Partner, were $3.90 and $40.36 based on a weighted average
number of equivalent limited partnership units outstanding of 9,528 and 11,018
for the six months ended June 30, 1996 and 1995, respectively.
The Fund generated funds from operations of $158,115 and $386,016, for the
purpose of determining cash available for distribution during the second
quarter of 1996 and 1995, respectively, and distributed $314,346 and $482,233
to partners in August 1996 and 1995, respectively. For the six months ended
June 30, 1996 and 1995, the Fund generated funds from operations of $412,702
and $955,490, respectively and distributed $254,587 and $973,400 to partners
during the six months ended June 30, 1996 and 1995, respectively and $314,346
and $482,233 to partners in August 1996 and 1995, respectively. The distribu-
tions for both the three and six months ended June 30, 1996 include $219,231
of sales proceeds and cash available from previous quarters which was not dis-
tributed.
8
FIDELITY LEASING INCOME FUND III, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ANALYSIS OF FINANCIAL CONDITION
The General Partner continues the dissolution process for the Fund with the
intent of fully liquidating the Fund in 1996. Therefore, as leases expire, the
General Partner will seek to sell the equipment at its 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 the remainder of the
liquidation period.
9
Part II: Other Information
FIDELITY LEASING INCOME FUND III, L.P.
June 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.
8-13-96 By: Freddie M. Kotek
_______ ___________________________
Date Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
8-13-96 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.
By:
_______ ___________________________
Date Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
By:
_______ ___________________________
Date Marianne T. Schuster
Vice President of
F.L. Partnership Management, Inc.
(Principal Financial Officer)
11
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 805,462
<SECURITIES> 0
<RECEIVABLES> 43,074
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 848,536
<PP&E> 4,708,574
<DEPRECIATION> 4,523,679
<TOTAL-ASSETS> 1,033,431
<CURRENT-LIABILITIES> 98,668
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 934,763
<TOTAL-LIABILITY-AND-EQUITY> 1,033,431
<SALES> 469,412
<TOTAL-REVENUES> 689,458
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 180,868
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 508,590
<INCOME-TAX> 0
<INCOME-CONTINUING> 508,590
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 508,590
<EPS-PRIMARY> 3.90
<EPS-DILUTED> 3.90
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