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, 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 W. Butler Pike, 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,
1997 1996
_____________ ____________
Cash and cash equivalents $726,196 $462,633
Accounts receivable 17,719 27,153
Due from related parties 7,314 1,473
Equipment under operating leases
(net of accumulated depreciation
of $2,710,941 and $4,577,784,
respectively) 48,757 102,325
________ ________
Total assets $799,986 $593,584
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 7,132 $ 19,702
Accounts payable and
accrued expenses 4,642 30,249
Due to related parties 5,174 9,890
________ ________
Total liabilities 16,948 59,841
Partners' capital 783,038 533,743
________ ________
Total liabilities and
partners' capital $799,986 $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 Six Months Ended
June 30 June 30
1997 1996 1997 1996
____ ____ ____ ____
Income:
Rentals $119,878 $183,957 $267,461 $469,412
Interest 8,040 13,610 14,254 21,612
Gain on sale of equipment,
net 91,802 5,751 88,257 196,606
Other 19,835 1,108 20,484 1,828
________ ________ ________ ________
239,555 204,426 390,456 689,458
________ ________ ________ ________
Expenses:
Depreciation 20,892 50,308 41,973 100,718
General and administrative 14,017 19,344 21,300 27,452
General and administrative
to related party 6,569 10,178 11,840 24,533
Management fee to related
party 7,193 11,038 16,048 28,165
________ ________ ________ ________
48,671 90,868 91,161 180,868
________ ________ ________ ________
Net income $190,884 $113,558 $299,295 $508,590
======== ======== ======== ========
Net income (loss) per
equivalent limited
partnership unit $ 21.39 $ (16.35) $ 34.04 $ 3.90
======== ======== ======== ========
Weighted average number of
equivalent limited
partnership units
outstanding during the
period 8,835 9,377 8,705 9,528
======== ======== ======== ========
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, 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 2,993 - 296,302 299,295
______ ______ ________ ________
Balance, June 30, 1997 $2,334 61,231 $780,704 $783,038
====== ====== ======== ========
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, 1997 and 1996
(Unaudited)
1997 1996
________ ________
Cash flows from operating activities:
Net income $299,295 $508,590
________ ________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 41,973 100,718
Gain on sale of equipment, net (88,257) (196,606)
(Increase) decrease in accounts receivable 9,434 281,412
(Increase) decrease in due from related parties (5,841) (8,106)
Increase (decrease) in lease rents paid
in advance (12,570) (307,361)
Increase (decrease) in accounts payable and
accrued expenses (25,607) 680
Increase (decrease) in other, net (4,716) (14,083)
________ ________
(85,584) (143,346)
________ ________
Net cash provided by operating activities 213,711 365,244
________ ________
Cash flows from investing activities:
Proceeds from sale of equipment 99,852 234,558
________ ________
Net cash provided by investing activities 99,852 234,558
________ ________
Cash flows from financing activities:
Distributions (50,000) (504,587)
Redemptions of capital - (5,772)
________ ________
Net cash used in financing activities (50,000) (510,359)
________ ________
Increase in cash and cash equivalents 263,563 89,443
Cash and cash equivalents, beginning
of period 462,633 716,019
________ ________
Cash and cash equivalents, end of period $726,196 $805,462
======== ========
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, 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 by December 31, 1997.
The future approximate minimum rentals to be received on noncancellable
operating leases as of June 30, 1997 are $78,000 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 six months ended
June 30, 1997 and 1996:
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
____ ____ ____ ____
Management fee $7,193 $11,038 $16,048 $28,165
Reimbursable costs 6,569 10,178 11,840 24,533
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 June 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 to the Fund.
Amounts due to related parties at June 30, 1997 and December 31, 1996
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.
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 $239,555 and
$204,426 for the three months ended June 30, 1997 and 1996, respectively
and $390,456 and $689,458 for the six months ended June 30, 1997 and 1996,
respectively. Rental income from the leasing of computer equipment
accounted for 50% and 90% of total revenues for the second quarter of 1997 and
1996, respectively and 68% of total revenues for the first six months of both
1997 and 1996. The decrease in revenues during the six months ended June 30,
1997 is primarily attributable to a decrease in rental income caused by
equipment which came off lease since the second quarter of 1996. Additionally,
the Fund recognized a net gain on sale of equipment of $88,257 and $196,606 for
the six months ended June 30, 1997 and 1996, respectively, which contributed to
the overall decrease in revenues in 1997.
Expenses were $48,671 and $90,868 during the three months ended June 30,
1997 and 1996, respectively and $91,161 and $180,868 for the first six
months of 1997 and 1996, respectively. Depreciation expense comprised 43% and
55% of total expenses during the second quarter of 1997 and 1996, respectively
and 46% and 56% of total expenses for the first six 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 depreci-
ation expense was caused by equipment which came off lease or became fully
depreciated since the second 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 to related party incurred by the Fund
decreased in the first six months of 1997 as compared to the same period in
1996 which contributed to the overall decrease in expenses in 1997, as well.
For the three months ended June 30, 1997 and 1996, the Fund had net income
of $190,884 and $113,558, respectively. For the six months ended June 30,
1997 and 1996, the Fund had net income of $299,295 and $508,590, respectively.
The earnings (loss) per equivalent limited partnership unit, after earnings
(loss) allocated to the General Partner were $21.39 and ($16.35) based on a
weighted average number of equivalent limited partnership units outstanding of
8,835 and 9,377 for the quarter ended June 30, 1997 and 1996, respectively.
The earnings per equivalent limited partnership unit, after earnings allocated
to the General Partner, were $34.04 and $3.90 based on a weighted average
number of equivalent limited partnership units outstanding of 8,705 and 9,528
for the six months ended June 30, 1997 and 1996, respectively.
The Fund generated cash from operations of $119,974 and $158,115, for the
purpose of determining cash available for distribution during the second
quarter of 1997 and 1996, respectively. There was no distribution made to
partners for the three months ended June 30, 1997. A distribution of $314,346
was made to partners in August 1996 for the three months ended June 30, 1996.
For the six months ended June 30, 1997 and 1996, the Fund generated cash from
operations of $253,011 and $412,702, respectively. No cash distribution was
made to partners for the six months ended June 30, 1997. For the six months
ended June 30, 1996, a distribution of $254,587 was paid to partners during the
six months ended June 30, 1996 and $314,346 was paid to partners in August
1996. For financial statement purposes, the Fund records cash distributions to
partners on a cash basis in the period in which they are paid.
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 Fund's dissolution process continued during the first six 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.
June 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.
8/13/97 By: Freddie M. Kotek
_______ ___________________________
Date Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
8/13/97 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.
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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 726,196
<SECURITIES> 0
<RECEIVABLES> 25,033
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 751,229
<PP&E> 2,759,698
<DEPRECIATION> 2,710,941
<TOTAL-ASSETS> 799,986
<CURRENT-LIABILITIES> 16,948
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 783,038
<TOTAL-LIABILITY-AND-EQUITY> 799,986
<SALES> 267,461
<TOTAL-REVENUES> 390,456
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 91,161
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 299,295
<INCOME-TAX> 0
<INCOME-CONTINUING> 299,295
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 299,295
<EPS-PRIMARY> 34.04
<EPS-DILUTED> 34.04
</TABLE>
