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, 1997
/ / 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.)
7004 West Butler 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,
1997 1996
_____________ ____________
Cash and cash equivalents $854,781 $462,633
Accounts receivable 40 27,153
Due from related parties 3,592 1,473
Equipment under operating leases
(net of accumulated depreciation
of $2,334,837 and $4,577,784,
respectively) 28,243 102,325
________ ________
Total assets $886,656 $593,584
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 4,516 $ 19,702
Accounts payable and
accrued expenses 5,624 30,249
Due to related parties 6,213 9,890
________ ________
Total liabilities 16,353 59,841
Partners' capital 870,303 533,743
________ ________
Total liabilities and
partners' capital $886,656 $593,584
======== ========
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
1997 1996 1997 1996
____ ____ ____ ____
Income:
Rentals $ 80,904 $158,851 $348,365 $628,263
Interest 10,260 7,205 24,514 28,817
Gain on sale of equipment,
net 33,500 21,459 121,757 218,065
Other 138 475 20,622 2,303
________ ________ ________ ________
124,802 187,990 515,258 877,448
________ ________ ________ ________
Expenses:
Depreciation 20,514 29,620 62,487 130,338
General and administrative 5,232 17,674 26,532 45,125
General and administrative
to related party 6,937 10,569 18,777 35,103
Management fee to related
party 4,854 9,531 20,902 37,696
________ ________ ________ ________
37,537 67,394 128,698 248,262
________ ________ ________ ________
Net income $ 87,265 $120,596 $386,560 $629,186
======== ======== ======== ========
Net income (loss) per equivalent
limited partnership unit $ 9.48 $ (16.15) $ 43.28 $( 11.64)
======== ======== ======== ========
Weighted average number of
equivalent limited partnership
units outstanding during
the period 9,117 9,053 8,842 9,369
======== ======== ======== ========
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, 1997
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1997 $1,841 61,231 $531,902 $533,743
Cash distributions (2,500) - (47,500) (50,000)
Net income 3,866 - 382,694 386,560
______ ______ ________ ________
Balance, September 30, 1997 $3,207 61,231 $867,096 $870,303
====== ====== ======== ========
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, 1997 and 1996
(Unaudited)
1997 1996
____ ____
Cash flows from operating activities:
Net income $386,560 $629,186
________ ________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 62,487 130,338
Gain on sale of equipment, net (121,757) (218,065)
(Increase) decrease in accounts receivable 27,113 295,041
(Increase) decrease in due from related parties (2,119) (36,351)
Increase (decrease) in lease rents
paid in advance (15,186) (292,344)
Increase (decrease) in accounts payable
and accrued expenses (24,625) (7,833)
Increase (decrease) in due to related parties (3,677) (15,100)
(Increase) decrease in other, net - (4,087)
________ ________
(77,764) (148,401)
________ ________
Net cash provided by operating activities 308,796 480,785
________ ________
Cash flows from investing activities:
Proceeds from sale of equipment 133,352 281,433
________ ________
Net cash provided by investing activities 133,352 281,433
________ ________
Cash flows from financing activities:
Distributions (50,000) (818,933)
Redemptions of capital - (5,772)
________ ________
Net cash used in financing activities (50,000) (824,705)
________ ________
Increase (decrease) in cash and
cash equivalents 392,148 (62,487)
Cash and cash equivalents, beginning
of period 462,633 716,019
________ ________
Cash and cash equivalents, end of period $854,781 $653,532
======== ========
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, 1997
(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 1996 financial statements have been
reclassified to conform to the presentation in 1997.
1. EQUIPMENT LEASED
The remaining equipment on lease consists primarily of computer 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 General Partner continues the
dissolution process for the Fund and intends to sell any remaining
equipment in the fourth quarter of 1997.
The future approximate minimum rentals to be received on noncancellable
operating leases as of September 30, 1997 are $59,000 for the remainder of
the year ending December 31, 1997.
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 parent company 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 parent company during the three and nine months
ended September 30, 1997 and 1996:
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
____ ____ ____ ____
Management fee $4,854 $ 9,531 $20,902 $37,696
Reimbursable costs 6,937 10,569 18,777 35,103
6
FIDELITY LEASING INCOME FUND III, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
The Fund maintains its checking and investment accounts in Jefferson Bank,
a subsidiary of JeffBanks, Inc., in which the Chairman of Resource America,
Inc. serves as a director.
Amounts due from related parties at September 30, 1997 and December 31,
1996 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, 1997 and December 31, 1996
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.
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 $124,802 and
$187,990 for the three months ended September 30, 1997 and 1996, respectively,
and $515,258 and $877,448 for the nine months ended September 30, 1997 and
1996, respectively. Rental income from the leasing of computer equipment
accounted for 65% and 84% of total revenues for the third quarter of 1997 and
1996, respectively and 68% and 72% for the first nine months of 1997 and 1996,
respectively. The decrease in revenues during the nine months ended
September 30, 1997 is primarily attributable to a decrease in rental income
caused by equipment which came off lease since the third quarter of 1996
because of the liquidation of the Fund's equipment portfolio. Additionally,
the Fund recognized a net gain on sale of equipment of $121,757 and $218,065
for the nine months ended September 30, 1997 and 1996, respectively, which
contributed to the overall decrease in revenues in 1997.
Expenses were $37,537 and $67,394 during the three months ended
September 30, 1997 and 1996, respectively, and $128,698 and $248,262 for the
first nine months of 1997 and 1996, respectively. Depreciation expense
comprised 55% and 44% of total expenses during the third quarter of 1997 and
1996, respectively, and 49% and 53% of total expenses for the first nine months
of 1997 and 1996, respectively. The decrease in expenses between 1997 and 1996
is primarily attributable to a decrease 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 1996. Additionally, management
fee to related party decreased in 1997 proportionate to the decrease in rental
income, which also accounts for the overall decrease in expenses in 1997.
Furthermore, the general and administrative expenses and general and
administrative expenses to related party decreased in the first nine months of
1997 as compared to the same period in 1996 because of the dissolution of the
Fund in the current year. This decrease contributed to the overall decrease in
expenses in 1997, as well.
For the three months ended September 30, 1997 and 1996, the Fund had net
income of $87,265 and $120,596, respectively. For the nine months ended
September 30, 1997 and 1996, the Fund had net income of $386,560 and $629,186,
respectively. The earnings (loss) per equivalent limited partnership unit,
after earnings (loss) allocated to the General Partner were $9.48 and ($16.15)
based on a weighted average number of equivalent limited partnership units
outstanding of 9,117 and 9,053 for the quarter ended September 30, 1997 and
1996, respectively. The earnings (loss) per equivalent limited partnership
unit, after earnings (loss) allocated to the General Partner, were $43.28 and
($11.64) based on a weighted average number of equivalent limited partnership
units outstanding of 8,842 and 9,369 for the nine months ended September 30,
1997 and 1996, 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 cash from operations of $74,279 and $128,757, for the
purpose of determining cash available for distribution during the third
quarter of 1997 and 1996, respectively. There was no distribution made to
partners for the three months ended September 30, 1997. A distribution of
$314,345 was made to partners subsequent to September 30, 1996 for the three
months ended September 30, 1996. For the nine months ended September 30, 1997
and 1996, the Fund generated cash from operations of $327,290 and $541,459,
respectively. No cash distribution was made to partners for the nine months
ended September 30, 1997. For the nine months ended September 30, 1996, a
distribution of $568,932 was paid to partners during the nine months ended
September 30, 1996 and $314,345 was paid to partners subsequent to
September 30, 1996. 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 Fund's dissolution process continued during the first nine months of
1997 and should be completed by December 31, 1997. 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 remainder of the
dissolution period.
9
Part II: Other Information
FIDELITY LEASING INCOME FUND III, L.P.
September 30, 1997
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.
11/13/97 By: Freddie M. Kotek
________ _____________________________
Date Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
11/13/97 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-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 854,781
<SECURITIES> 0
<RECEIVABLES> 3,632
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 858,413
<PP&E> 2,363,080
<DEPRECIATION> 2,334,837
<TOTAL-ASSETS> 886,656
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<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 870,303
<TOTAL-LIABILITY-AND-EQUITY> 886,656
<SALES> 348,365
<TOTAL-REVENUES> 515,258
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 128,698
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 386,560
<INCOME-TAX> 0
<INCOME-CONTINUING> 386,560
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 386,560
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