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, 1998
/ / 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.)
3 North Columbus Boulevard, Philadelphia, Pennsylvania 19106
_______________________________________________________________________________
(Address of principal executive offices) (Zip code)
(215) 574-1636
_______________________________________________________________________________
(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,
1998 1997
___________ ____________
Cash and cash equivalents $1,243,436 $1,383,229
Accounts receivable 15,141 78,201
Due from related parties 6,535 6,337
Equipment under operating leases
(net of accumulated depreciation
of $3,809,816 and $5,000,834,
respectively) 717,152 848,028
Net investment in direct financing lease 267,209 -
Equipment held for sale or lease 26,803 145,121
__________
Total assets $2,276,276 $2,460,916
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 85,679 $ 106,994
Accounts payable and
accrued expenses 10,344 17,905
Due to related parties 2,752 10,608
__________ __________
Total liabilities 98,775 135,507
Partners' capital 2,177,501 2,325,409
__________ __________
Total liabilities and
partners' capital $2,276,276 $2,460,916
========== ==========
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
1998 1997 1998 1997
____ ____ ____ ____
Income:
Rentals $236,489 $339,491 $505,381 $697,666
Earned income on direct
financing lease 4,449 - 7,525 -
Interest 13,911 13,386 29,576 25,543
Gain on sale of equipment,
net - 2,785 - 3,395
Other 6,604 942 12,076 1,672
________ ________ ________ ________
261,453 356,604 554,558 728,276
________ ________ ________ ________
Expenses:
Depreciation 100,674 187,452 242,594 401,337
Write-down of equipment
to net realizable value 29,310 - 197,595 -
General and administrative 8,986 7,780 21,402 17,581
General and administrative
to related party 18,853 15,165 34,106 29,131
Loss on sale of equipment,
net 5,960 - 2,254 -
Management fee to related
party 13,532 19,865 29,515 40,852
________ ________ ________ ________
177,315 230,262 527,466 488,901
________ ________ ________ ________
Net income $ 84,138 $126,342 $ 27,092 $239,375
======== ======== ======== ========
Net income per equivalent
limited partnership unit $ 8.22 $ 12.09 $ 2.18 $ 22.92
======== ======== ======== ========
Weighted average number of
equivalent limited
partnership units outstanding
during the period 9,921 10,161 10,007 10,139
======== ======== ======== ========
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, 1998
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1998 $4,499 41,379 $2,320,910 $2,325,409
Cash distributions (6,125) - (168,875) (175,000)
Net income 5,250 - 21,842 27,092
______ ______ __________ __________
Balance, June 30, 1998 $3,624 41,379 $2,173,877 $2,177,501
====== ====== ========== ==========
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, 1998 and 1997
(Unaudited)
1998 1997
__________ __________
Cash flows from operating activities:
Net income $ 27,092 $ 239,375
__________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 242,594 401,337
Write-down of equipment to net realizable
value 197,595 -
Proceeds from direct financing lease, net
of earned income 20,604 -
(Gain) loss on sale of equipment, net 2,254 (3,395)
(Increase) decrease in accounts receivable 63,060 19,184
(Increase) decrease in due from
related parties (198) 30,068
Increase (decrease) in lease rents paid
in advance (21,315) 22,521
Increase (decrease) in accounts payable and
accrued expenses (7,561) (592)
Increase (decrease) in other, net (7,856) (5,745)
__________ __________
489,177 463,378
__________ __________
Net cash provided by operating activities 516,269 702,753
__________ __________
Cash flows from investing activities:
Acquisition of equipment (250,294) (225,436)
Investment in direct financing lease (287,813) -
Proceeds from sale of equipment 57,045 3,396
__________ __________
Net cash used in investing activities (481,062) (222,040)
__________ __________
Cash flows from financing activities:
Distributions (175,000) (200,000)
__________ __________
Net cash used in financing activities (175,000) (200,000)
__________ __________
Increase (decrease) in cash and
cash equivalents (139,793) 280,713
Cash and cash equivalents, beginning
of period 1,383,229 915,772
__________ __________
Cash and cash equivalents, end of period $1,243,436 $1,196,485
========== ==========
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, 1998
(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 equipment under operating
leases. 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 15 to 60 months. 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, $197,595 was charged to write-down of
equipment to net realizable value for the first six months of 1998. For
the six months ended June 30, 1997, there was no charge to write-down of
equipment to net realizable value. Any future losses are dependent upon
unanticipated technological developments affecting the computer equipment
industry in subsequent years.
The net investment in direct financing lease as of Juno 30, 1998 is as
follows:
Net minimum lease payments to be received $309,000
Less unearned income 42,000
Add expected future residuals -
________
$267,000
========
The future approximate minimum rentals to be received on noncancellable
operating leases and direct financing lease as of June 30, 1998 are as
follows:
Direct
Years Ending December 31 Operating Financing
________________________ _________ _________
1998 $313,000 $ 32,000
1999 112,000 68,000
2000 87,000 68,000
2001 87,000 68,000
2002 87,000 68,000
Thereafter 2,000 5,000
________ ________
$688,000 $309,000
======== ========
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 rental payments from equipment
under operating leases and full pay-out leases, respectively, for adminis-
trative 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 acquisition fees.
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, 1998 and 1997:
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
____ ____ ____ ____
Management fee $13,532 $19,865 $29,515 $40,852
Reimbursable costs 18,853 15,165 34,106 29,131
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, 1998 and December 31, 1997
represent monies due the Fund from the General Partner and/or other
affiliated funds for rentals and sales proceeds collected and not yet
remitted to the Fund.
Amounts due to related parties at June 30,1998 and December 31, 1997
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. CASH DISTRIBUTION
The General Partner declared and paid a cash distribution of $75,000 in
August 1998 for the three months ended June 30, 1998, to all admitted
partners as of June 30, 1998.
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 $261,453 and
$356,604 for the three months ended June 30, 1998 and 1997, respectively
and $554,558 and $728,276 for the six months ended June 30, 1998 and 1997,
respectively. Rental income from the leasing of equipment accounted for 90%
and 95% of total revenues for the second quarter of 1998 and 1997, respectively
and 91% and 96% of total revenues for the first six months of 1998 and 1997,
respectively. The decrease in revenues is primarily attributable to a decrease
in rental income. Rental income decreased by approximately $252,000 because of
equipment that came off lease and was released at lower rental rates or sold.
This decrease, however, was reduced by rental income of approximately $60,000
generated from equipment on operating leases purchased since June 1997.
Expenses were $177,315 and $230,262 for the second quarter of 1998 and
1997, respectively and $527,466 and $488,901 for the six months ended June 30,
1998 and 1997, respectively. Depreciation expense comprised 57% and 81% of
total expenses for the second quarter of 1998 and 1997, respectively and 46%
and 82% of total expenses for the six months ended June 30, 1998 and 1997,
respectively. The increase in expenses was primarily due to the increase in
write-down of equipment to net realizable value. Based upon the review of the
recoverability of the undepreciated cost of rental equipment, approximately
$198,000 was charged to write-down of equipment to net realizable value during
the six months ended June 30, 1998. There was no charge to operations to write
down equipment to its net realizable value during the six months ended June 30,
1997. Any future losses are dependent upon unanticipated technological
developments affecting the computer equipment industry in subsequent years.
The decrease in depreciation expense resulting from equipment which came off
lease, terminated or was sold since June 1997 reduced the overall increase in
expenses for the six months ended June 30, 1998.
The Fund's net income was $84,138 and $126,342 for the second quarter of
1998 and 1997, respectively and $27,092 and $239,375 for the six months ended
June 30, 1998 and 1997, respectively. The earnings per equivalent limited
partnership unit, after earnings allocated to the General Partner, were $8.22
and $12.09 based on a weighted average number of equivalent limited partnership
units outstanding of 9,921 and 10,161 for the quarter ended June 30, 1998 and
1997, respectively. The earnings per equivalent limited partnership unit,
after earnings allocated to the General Partner, were $2.18 and $22.92 based on
a weighted average number of equivalent limited partnership units outstanding
of 10,007 and 10,139 for the first six months of 1998 and 1997, 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 cash from operations of $220,082 and $311,009 for the
purpose of determining cash available for distribution, during the second
quarter of 1998 and 1997, respectively and distributed $75,000 and $100,000 to
partners in August 1998 and 1997, respectively. For the six months ended
June 30, 1998 and 1997, the Fund generated cash from operations of $469,535 and
$637,317 and distributed $75,000 and $100,000 to partners during the first six
months of 1998 and 1997, repectively and $75,000 and $100,000 to partners in
August 1998 and 1997, 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 Fund continues to purchase equipment with cash available from
operations which was not distributed to partners in previous periods. During
the six months ended June 30, 1998, the Fund purchased $250,294 and $225,436,
respectively of equipment subject to operating leases. The Fund also made an
investment of $287,813 in a direct financing lease during the six months ended
June 30, 1998.
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, 1998
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.
8-13-98 By: Freddie M. Kotek
_______ ___________________________
Date Freddie M. Kotek
President of
F.L. Partnership Management, Inc.
(Principal Operating Officer)
8-13-98 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:
8-13-98 ___________________________
Date Freddie M. Kotek
President of
F.L. Partnership Management, Inc.
(Principal Operating Officer)
By:
8-13-98 ___________________________
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-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,243,436
<SECURITIES> 0
<RECEIVABLES> 21,676
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,265,112
<PP&E> 4,553,771
<DEPRECIATION> 3,809,816
<TOTAL-ASSETS> 2,276,276
<CURRENT-LIABILITIES> 98,775
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,177,501
<TOTAL-LIABILITY-AND-EQUITY> 2,276,276
<SALES> 505,381
<TOTAL-REVENUES> 554,558
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 527,466
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 27,092
<INCOME-TAX> 0
<INCOME-CONTINUING> 27,092
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,092
<EPS-PRIMARY> 2.18
<EPS-DILUTED> 2.18
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