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: 0-16845
Fidelity Leasing Income Fund IV, L.P.
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 23-2441780
_______________________________________________________________________________
(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 IV, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
June 30, December 31,
1996 1995
___________ ____________
Cash and cash equivalents $ 986,124 $ 789,629
Accounts receivable 90,622 77,274
Interest receivable 10,005 3,651
Due from related parties 56,901 24,545
Equipment under operating leases
(net of accumulated depreciation
of $5,031,237 and $6,994,681,
respectively) 1,433,462 1,888,844
Equipment held for sale or lease - 2,972
__________ __________
Total assets $2,577,114 $2,786,915
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 99,328 $ 56,461
Accounts payable and
accrued expenses 22,353 73,251
Due to related parties 248 4,096
_________ __________
Total liabilities 121,929 133,808
Partners' capital 2,455,185 2,653,107
__________ __________
Total liabilities and
partners' capital $2,577,114 $2,786,915
========== ==========
The accompanying notes are an integral part of these financial statements.
2
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
____ ____ ____ ____
Income:
Rentals $374,285 $546,754 $775,550 $1,131,773
Interest 16,094 15,662 24,391 47,279
Gain on sale of equipment,
net 86,860 32,679 115,296 100,543
Other 7,114 813 7,483 12,673
________ ________ ________ __________
484,353 595,908 922,720 1,292,268
________ ________ ________ __________
Expenses:
Depreciation 175,466 320,825 369,856 690,882
Write-down of equipment
to net realizable value 39,109 87,796 78,217 87,796
General and administrative 21,471 48,865 54,386 64,498
General and administrative
to related party 17,260 29,969 34,455 43,505
Management fee to related
party 21,953 32,302 45,525 66,899
________ ________ ________ __________
275,259 519,757 582,439 953,580
________ ________ ________ __________
Net income $209,094 $ 76,151 $340,281 $ 338,688
======== ======== ======== ==========
Net income per equivalent
limited partnership unit $ 11.84 $ 5.54 $ 4.65 $ 24.99
======== ======== ======== ==========
Weighted average number of
equivalent limited
partnership units outstanding
during the period 10,532 12,732 10,672 13,106
======== ======== ======== ==========
The accompanying notes are an integral part of these financial statements.
3
FIDELITY LEASING INCOME FUND IV, 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 $ 6,879 40,786 $2,646,228 $2,653,107
Redemptions - (604) (33,954) (33,954)
Cash distributions (212,129) - (292,120) (504,249)
Net income 290,672 - 49,609 340,281
________ ______ __________ __________
Balance, June 30, 1996 $ 85,422 40,182 $2,369,763 $2,455,185
======== ====== ========== ==========
The accompanying notes are an integral part of these financial statements.
4
FIDELITY LEASING INCOME FUND IV, 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 $340,281 $ 338,688
________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 369,856 690,882
Write-down of equipment to net realizable
value 78,217 87,796
Gain on sale of equipment, net (115,296) (100,543)
(Increase) decrease in accounts receivable (13,348) 59,794
(Increase) decrease in due from
related parties (32,356) (15,417)
Increase (decrease) in lease rents paid
in advance 42,867 (21,477)
Increase (decrease) in accounts payable and
accrued expenses (50,898) (47,115)
Increase (decrease) in other, net (10,202) 11,476
________ __________
268,840 665,396
________ __________
Net cash provided by operating activities 609,121 1,004,084
________ __________
Cash flows from investing activities:
Acquisition of equipment - (1,533,346)
Proceeds from sale of equipment 125,577 148,610
________ __________
Net cash provided by
(used in) investing activities 125,577 (1,384,736)
________ __________
Cash flows from financing activities:
Distributions (504,249) (1,124,808)
Redemptions of capital (33,954) (17,453)
________ __________
Net cash used in financing activities (538,203) (1,142,261)
________ __________
Increase (decrease) in cash and cash
equivalents 196,495 (1,522,913)
Cash and cash equivalents, beginning
of period 789,629 2,456,685
________ __________
Cash and cash equivalents, end of period $986,124 $ 933,772
======== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND IV, 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
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 15 to 60 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, $78,217 and $87,796
was charged to write-down of equipment to net realizable value for
the six months ended June 30, 1996 and 1995, respectively. 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, 1996 are as follows:
Years Ending December 31 Minimum Rentals
________________________ _______________
1996 $ 632,000
1997 709,000
1998 89,000
__________
$1,430,000
==========
6
FIDELITY LEASING INCOME FUND IV, 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, 1996 and 1995:
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
____ ____ ____ ____
Management fee $21,953 $32,302 $45,525 $66,899
Reimbursable costs 17,260 29,969 34,455 43,505
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 men-
tioned 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 $276,458 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 IV, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Fidelity Leasing Income Fund IV, L.P. had revenues of $484,353 and
$595,908 for the three months ended June 30, 1996 and 1995, respectively
and $922,720 and $1,292,268 for the six months ended June 30, 1996 and 1995,
respectively. Rental income from the leasing of computer peripheral equipment
accounted for 77% and 92% of total revenues for the second quarter of 1996 and
1995, respectively and 84% and 88% of total revenues for the first six months
of 1996 and 1995, respectively. The decrease in revenues is primarily attri-
butable to a decrease in rental income. In 1996, rental income decreased by
approximately $408,000 because of equipment which came off lease and was re-
leased at lower rental rates or sold. This decrease, however, was reduced by
approximately $652,000 of rents generated from equipment purchases made since
the second quarter of 1995 as well as rental income earned on 1995 equipment
purchases for which a full six months of rental income was earned in 1996 and
only a portion of the six months was earned in 1995. Additionally, the
decrease in interest income in 1996 caused by lower cash balance available for
investment contributed to the overall decrease in revenues in 1996. However,
the Fund recognized a net gain on sale of equipment of $115,296 and $100,543
for the six months ended June 30, 1996 and 1995, respectively, which lowered
the overalldecrease in revenues in 1996.
Expenses were $275,259 and $519,757 during the three months ended June 30,
1996 and 1995, respectively and $582,439 and $953,580 for the six months ended
June 30, 1996 and 1995, respectively. Depreciation expense comprised 64% and
62% of total expenses during the second quarter of 1996 and 1995, respectively
and 64% and 72% of total expenses during the six months ended June 30, 1996 and
1995, respectively. The decrease in expenses is primarily caused by the
decrease in depreciation expense resulting from equipment which came off lease
or was sold since the second quarter of 1995. Additionally, management fee to
related party decreased proportionate to the decrease in rental income which
also accounts for the decrease in total expenses in 1996. Furthermore, based
upon the quarterly review of the recoverability of the undepreciated cost of
rental equipment, $78,217 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 $87,796 for the six months ended June 30, 1995 which also
contributed to the decrease in expenses in 1996. Any future losses are
dependent upon unanticipated technological developments affecting the computer
equipment industry in subsequent years.
For the three months ended June 30, 1996 and 1995, the Fund had net income
of $209,094 and $76,151, respectively. For the six months ended June 30, 1996
and 1995, the Fund had net income of $340,281 and $338,688, respectively. The
earnings per equivalent limited partnership unit, after earnings allocated to
the General Partner were $11.84 and $5.54 based on a weighted average number of
equivalent limited partnership units outstanding of 10,532 and 12,732 for the
quarter ended June 30, 1996 and 1995, respectively. The earnings per equiva-
lent limited partnership unit, after earnings allocated to the General Partner,
were $4.65 and $24.99 based on a weighted average number of equivalent
limited partnership units outstanding of 10,672 and 13,106 for the six months
ended June 30, 1996 and 1995, respectively.
8
FIDELITY LEASING INCOME FUND IV, 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 $336,809 and $452,093, for the
purpose of determining cash available for distribution, during the second
quarter of 1996 and 1995, respectively and distributed $276,458 and $560,918
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 $673,058
and $1,016,823 and distributed $336,249 and $561,230 to partners during the six
months ended June 30, 1996 and 1995, respectively and $276,458 and $560,918 to
partners in August 1996 and 1995, respectively.
ANALYSIS OF FINANCIAL CONDITION
The Fund continues to purchase computer equipment with cash available from
operations and sales proceeds which was not distributed to partners in previous
periods.
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 IV, 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 IV, 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 IV, 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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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 986,124
<SECURITIES> 0
<RECEIVABLES> 157,528
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,143,652
<PP&E> 6,464,699
<DEPRECIATION> 5,031,237
<TOTAL-ASSETS> 2,577,114
<CURRENT-LIABILITIES> 121,929
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,455,185
<TOTAL-LIABILITY-AND-EQUITY> 2,577,114
<SALES> 775,550
<TOTAL-REVENUES> 922,720
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 582,439
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 340,281
<INCOME-TAX> 0
<INCOME-CONTINUING> 340,281
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 340,281
<EPS-PRIMARY> 4.65
<EPS-DILUTED> 4.65
</TABLE>
