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 March 31, 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)
March 31, December 31,
1998 1997
___________ ____________
Cash and cash equivalents $1,119,562 $1,383,229
Accounts receivable 69,726 78,201
Due from related parties 26,941 6,337
Equipment under operating leases
(net of accumulated depreciation
of $3,692,477 and $5,000,834,
respectively) 834,492 848,028
Net investment in direct financing lease 279,638 -
Equipment held for sale or lease 90,407 145,121
__________ __________
Total assets $2,420,766 $2,460,916
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 102,264 $ 106,994
Accounts payable and
accrued expenses 139,143 17,905
Due to related parties 10,996 10,608
__________ __________
Total liabilities 252,403 135,507
Partners' capital 2,168,363 2,325,409
__________ __________
Total liabilities and
partners' capital $2,420,766 $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
For the three months ended March 31, 1998 and 1997
(Unaudited)
1998 1997
________ ________
Income:
Rentals $268,892 $358,175
Earned income on direct financing lease 3,076 730
Interest 15,665 12,157
Gain on sale of equipment, net 3,706 610
Other 5,472 -
________ ________
296,811 371,672
________ ________
Expenses:
Depreciation 141,920 213,885
Write-down of equipment to net realizable
value 168,285 -
General and administrative 12,416 9,801
General and administrative to related
party 15,253 13,966
Management fee to related party 15,983 20,987
________ ________
353,857 258,639
________ ________
Net income (loss) $(57,046) $113,033
======== ========
Net income (loss) per equivalent
limited partnership unit $ (5.60) $ 10.83
======== ========
Weighted average number of
equivalent limited partnership
units outstanding during the period 10,093 10,117
======== ========
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 three months ended March 31, 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 (3,500) - (96,500) (100,000)
Net loss (570) - (56,476) (57,046)
______ _______ __________ _________
Balance, March 31, 1998 $ 429 41,379 $2,167,934 $2,168,363
====== ======= ========== ==========
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 three months ended March 31, 1998 and 1997
(Unaudited)
1998 1997
__________ ________
Cash flows from operating activities:
Net income (loss) $ (57,046) $113,033
__________ ________
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation 141,920 213,885
Write-down of equipment to net realizable
value 168,285 -
Proceeds from direct financing lease,
net of earned income 8,175 -
(Gain) loss on sale of equipment, net (3,706) (610)
(Increase) decrease in due from related
parties (20,604) 5,616
Increase (decrease) in accounts payable and
accrued expenses 121,238 3,405
Increase (decrease) in other, net 4,133 (7,483)
__________ ________
419,441 214,813
__________ ________
Net cash provided by operating activities 362,395 327,846
__________ ________
Cash flows from investing activities:
Acquisition of equipment (250,294) (225,436)
Investment in direct financing lease (287,813) -
Proceeds from sale of equipment 12,045 610
__________ ________
Net cash used in investing activities (526,062) (224,826)
__________ ________
Cash flows from financing activities:
Distributions (100,000) (100,000)
__________ ________
Net cash used in financing activities (100,000) (100,000)
__________ ________
Increase (decrease) in cash and
cash equivalents (263,667) 3,020
Cash and cash equivalents, beginning
of period 1,383,229 915,772
__________ ________
Cash and cash equivalents, end of period $1,119,562 $918,792
========== ========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 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. Certain amounts on the 1997 financial statements have been
reclassified to conform to the presentation in 1998.
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, $168,000 was charged to write-down of equipment to
net realizable for the three months ended March 31, 1998. For the three
months ended March 31, 1997, there was no charge to write-down of equipment
to net realizable value.
The net investment in direct financing lease as of March 31, 1998 is as
follows:
Net minimum lease payments to be received $326,000
Less unearned income 46,000
Add expected future residuals -
________
$280,000
========
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of March 31, 1998 are as follows:
Direct
Years Ending December 31 Operating Financing
1998 $ 483,000 $ 49,000
1999 312,000 68,000
2000 87,000 68,000
2001 87,000 68,000
2002 83,000 68,000
Thereafter - 5,000
__________ ________
$1,052,000 $326,000
========== ========
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
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 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 months ended
March 31:
1998 1997
________ ________
Management fee $15,983 $20,987
Reimbursable costs 15,253 13,966
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 March 31, 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 re-
mitted to the Fund.
Amounts due to related parties at March 31, 1998 and December 31, 1997
represent monies due to the General Partner and/or its parent company 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
May 1998 for the three months ended March 31, 1998, to all admitted
partners as of March 31, 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 $296,811 and
$371,672 for the three months ended March 31, 1998 and 1997, respectively.
Rental income from the leasing of computer equipment accounted for
91% and 96% of total revenues for the first quarter of 1998 and 1997, respec-
tively. The decrease in revenues is primarily attributable to a decrease in
rental income. In 1998, rental income decreased by approximately $144,000
because of equipment which came off lease and was re-leased at lower rental
rates or sold. This decrease, however, was mitigated by approximately $55,000
of rents generated from equipment purchases made since the first quarter of
1997 as well as rents earned on first quarter 1997 equipment purchases for
which a full three months of rent was earned in 1998 and only a portion of the
three months was earned in 1997.
Expenses were $353,857 and $258,639 during the three months ended March 31,
1998 and 1997, respectively. Depreciation expense comprised 40% and 83% of
total expenses during the first quarter of 1998 and 1997, respectively. The
increase in expenses between the first quarter of 1998 and 1997 is primarily
attributable to an increase in write-down of equipment to net realizable value.
Based upon the review of the recoverability of the undepreciated cost of rental
equipment, $168,285 was charged to operations to write down equipment to its
estimated net realizable value during the three months ended March 31, 1998 as
compared to no charge incurred for the three months ended March 31, 1997. Any
future losses are dependent upon unanticipated technological developments
affecting the computer equipment industry in subsequent years. The overall
increase in expenses was mitigated by a decrease in depreciation expense in the
first quarter of 1998. Depreciation expense decreased in 1998 because of
equipment that either terminated or sold since the first quarter of 1997.
For the three months ended March 31, 1998 and 1997, the Fund had net income
(loss) of ($57,046) and $113,033, respectively. The earnings (loss) per
equivalent limited partnership unit, after earnings (loss) allocated to the
General Partner were ($5.60) and $10.83 based on a weighted average number of
equivalent limited partnership units outstanding of 10,093 and 10,117 for the
quarter ended March 31, 1998 and 1997, respectively.
The Fund generated cash from operations of $249,453 and $326,308, for the
purpose of determining cash available for distribution for the quarter ended
March 31, 1998 and 1997, respectively. The Fund distributed $75,000 and
$100,000 to partners in May 1998 and 1997, respectively, for the first quarter
of 1998 and 1997, respectively. A cash distribution of $100,000 was paid to
partners during the first quarter of 1998 for the three months ended
December 31, 1997. 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 IV, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
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 first quarter of 1998 and 1997, 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 three months
ended March 31, 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.
March 31, 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: None
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.
5-14-98 By: Freddie M. Kotek
_______ ___________________________
Date Freddie M. Kotek
President of
F.L. Partnership Management, Inc.
(Principal Operating Officer)
5-14-98 By: Marianne T. Schuster
_______ ___________________________
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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,119,562
<SECURITIES> 0
<RECEIVABLES> 96,667
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,216,229
<PP&E> 4,617,376
<DEPRECIATION> 3,692,477
<TOTAL-ASSETS> 2,420,766
<CURRENT-LIABILITIES> 252,403
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,168,363
<TOTAL-LIABILITY-AND-EQUITY> 2,420,766
<SALES> 271,968
<TOTAL-REVENUES> 296,811
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 353,857
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (57,046)
<INCOME-TAX> 0
<INCOME-CONTINUING> (57,046)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (57,046)
<EPS-PRIMARY> (5.60)
<EPS-DILUTED> (5.60)
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