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, 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, PA 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 12
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND IV, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
September 30, December 31,
1998 1997
___________ ____________
Cash and cash equivalents $ 586,483 $1,383,229
Accounts receivable 65,611 78,201
Due from related parties 50,809 6,337
Equipment under operating leases
(net of accumulated depreciation
of $3,349,083 and $5,000,834,
respectively) 621,973 848,028
Net investment in direct financing leases 798,013 -
Equipment held for sale or lease 207,220 145,121
__________ __________
Total assets $2,330,109 $2,460,916
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 49,393 $ 106,994
Accounts payable and
accrued expenses 10,992 17,905
Due to related parties 26,885 10,608
__________ __________
Total liabilities 87,270 135,507
Partners' capital 2,242,839 2,325,409
__________ __________
Total liabilities and
partners' capital $2,330,109 $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 Nine Months Ended
September 30 September 30
1998 1997 1998 1997
____ ____ ____ ____
Income:
Rentals $269,132 $332,640 $774,514 $1,030,306
Earned income on direct
financing leases 10,192 - 17,717 -
Interest 11,442 15,449 41,018 40,992
Gain on sale of equipment,
net 12,930 - 10,677 -
Other 840 298 12,915 1,970
________ ________ ________ __________
304,536 348,387 856,841 1,073,268
________ ________ ________ __________
Expenses:
Depreciation 97,965 193,877 340,558 595,214
Write-down of equipment
to net realizable value 25,220 26,000 222,815 26,000
General and administrative 12,277 6,801 33,677 24,382
General and administrative
to related party 12,746 10,793 46,856 39,924
Management fee to related
party 15,990 19,455 45,505 60,307
Loss on sale of equipment, net - 23,275 - 19,880
________ ________ ________ _________
164,198 280,201 689,411 765,707
________ ________ ________ _________
Net income $140,338 $ 68,186 $167,430 $ 307,561
======== ======== ======== =========
Net income per equivalent
limited partnership unit $ 13.80 $ 6.37 $ 15.96 $ 29.29
======== ======== ======== =========
Weighted average number of
equivalent limited partner-
ship units outstanding
during the period 9,980 10,147 9,998 10,142
======== ======== ======== =========
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 nine months ended September 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 (2,500) - (247,500) (250,000)
Net income 7,875 - 159,555 167,430
________ ______ __________ __________
Balance, September 30, 1998 $ 9,874 41,379 $2,232,965 $2,242,839
======== ====== ========== ==========
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 nine months ended September 30, 1998 and 1997
(Unaudited)
1998 1997
____ ____
Cash flows from operating activities:
Net income $ 167,430 $ 307,561
__________ _________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 340,558 595,214
Write-down of equipment to net
realizable value 222,815 26,000
Proceeds from direct financing leases,
net of earned income 32,686 -
(Gain) loss on sale of equipment, net (10,677) 19,880
(Increase) decrease in due from related parties (44,472) 26,339
Increase (decrease) in lease rents paid
in advance (57,601) 22,600
Increase (decrease) in due to related parties 16,277 (4,954)
Increase (decrease) in other, net 5,677 (4,918)
__________ __________
505,263 680,161
__________ __________
Net cash provided by operating activities 672,693 987,722
__________ __________
Cash flows from investing activities:
Acquisition of equipment (493,865) (318,575)
Investment in direct financing leases (830,699) -
Proceeds from sale of equipment 105,125 12,030
__________ __________
Net cash used in investing activities (1,219,439) (306,545)
__________ __________
Cash flows from financing activities:
Distributions (250,000) (300,000)
__________ __________
Net cash used in financing activities (250,000) (300,000)
__________ __________
Increase (decrease) in cash and
cash equivalents (796,746) 381,177
Cash and cash equivalents, beginning
of period 1,383,229 915,772
__________ __________
Cash and cash equivalents, end of period $ 586,483 $1,296,949
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
September 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. 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 12 to 60 months. Generally,
operating leases will not recover all of the undepreciated cost and
related expenses of its rental equipment during the initial 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 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. 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, $222,815 and $26,000 was
charged to write-down of equipment to net realizable value for the
nine months ended September 30, 1998 and 1997, respectively. Any
future losses are dependent upon unanticipated technological
developments affecting the computer equipment industry in subsequent
years.
The Fund also has equipment leased under the direct financing method in
accordance with Statement of Financial Accounting Standards No. 13.
This method provides for recognition of income (the excess of the
aggregate future rentals and estimated additional amounts recoverable
upon expiration of the lease over the related equipment cost) over the
life of the lease using the interest method.
The net investment in direct financing leases as of September 30, 1998
is as follows:
Net minimum lease payments to be received $953,000
Less unearned income 155,000
Add expected future residuals -
________
$798,000
========
6
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. EQUIPMENT LEASED (continued)
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of September 30, 1998 are as
follows:
Direct
Years Ending December 31 Operating Financing
------------------------ ---------------- ---------
1998 $214,000 $ 33,000
1999 310,000 205,000
2000 97,000 205,000
2001 91,000 205,000
Thereafter 86,000 305,000
________ ________
$798,000 $953,000
======== ========
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 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, 1998 and 1997:
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
____ ____ ____ ____
Management fee $15,990 $19,455 $45,505 $60,307
Reimbursable costs 12,746 10,793 46,856 39,924
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, 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.
7
FIDELITY LEASING INCOME FUND IV, L.P
.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (continued)
Amounts due to related parties at September 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
November 1998 for the three months ended September 30, 1998, to all
admitted partners as of September 30, 1998.
8
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 $304,536 and
$348,387 for the three months ended September 30, 1998 and 1997,
respectively, and $856,841 and $1,073,268 for the nine months ended
September 30, 1998 and 1997, respectively. Rental income from the leasing
of equipment accounted for 88% and 95% of total revenues for the third
quarter of 1998 and 1997, respectively, and 90% and 96% of total revenues for
the first nine months of 1998 and 1997, respectively. The decrease in
revenues is primarily attributable to a decrease in rental income. In 1998,
rental income decreased by approximately $379,000 because of equipment which
came off lease and was re-leased at lower rental rates or sold. This
decrease, however, was reduced by approximately $123,000 of rents
generated from equipment purchases made since the third quarter of 1997 as
well as rents generated on 1997 equipment purchases for which a full nine
months of rent was earned in 1998 and only a portion of the nine months of
rent was earned in 1997. However, the increase in earned income on direct
financing leases and the net gain on sale of equipment mitigated the overall
decrease in revenues in 1998. The Fund earned $17,717 of income on
direct financing leases during the nine months ended September 30, 1998.
There were no direct financing leases at September 30, 1997. Additionally,
the Fund recognized $10,677 of net gain on sale of equipment for the nine
months ended September 30, 1998. During the nine months ended
September 30, 1997, there was no gain on sale of equipment.
Expenses were $164,198 and $280,201 during the three months ended
September 30, 1998 and 1997, respectively and $689,411 and $765,707 for the
nine months ended September 30, 1998 and 1997, respectively. Depreciation
expense comprised 60% and 69% of total expenses during the third quarter of
1998 and 1997, respectively and 49% and 78% of total expenses for the first
nine months of 1998 and 1997, respectively. The decrease in expenses in
1998 is primarily caused by the decrease in depreciation expense because of
equipment which came off lease or terminated and sold since September 1997.
Additionally, the Fund incurred a net loss on sale of equipment of $19,880
during the nine months ended September 30, 1997. There was no loss on sale
of equipment incurred during the nine months ended September 30, 1998 which
also accounts for the decrease in total expenses in 1998. However, the
increase in write-down of equipment to net realizable value lowered the overall
decrease in expenses in 1998. Based upon the quarterly review of the
recoverability of the undepreciated cost of rental equipment, $222,815
was charged to operations to write down equipment to its estimated net
realizable value during the nine months ended September 30, 1998 compared
to $26,000 for the nine months ended September 30, 1997. Any future losses
are dependent upon unanticipated technological developments affecting the
computer equipment industry in subsequent years.
9
FIDELITY LEASING INCOME FUND IV, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
For the three months ended September 30, 1998 and 1997, the Fund had net
income of $140,338 and $68,186, respectively. For the nine months ended
September 30, 1998 and 1997, the Fund had net income of $167,430 and
$307,561, respectively. The earnings per equivalent limited partnership
unit, after earnings allocated to the General Partner were $13.80 and
$6.37 based on a weighted average number of equivalent limited partnership
units outstanding of 9,980 and 10,147 for the quarter ended September 30, 1998
and 1997, respectively. The earnings per equivalent limited partnership
unit, after earnings allocated to the General Partner were $15.96 and $29.29
based on a weighted average number of equivalent limited partnership units
outstanding of 9,998 and 10,142 for the nine months ended September 30,
1998 and 1997, respectively.
The Fund generated cash from operations of $250,593 and $311,338, for
the purpose of determining cash available for distribution, during the third
quarter of 1998 and 1997, respectively and distributed $75,000 and $100,000
to partners in November 1998 and 1997, respectively. For the nine months
ended September 30, 1998 and 1997, the Fund generated cash from operations of
$720,126 and $948,655 and distributed $150,000 and $200,000 to partners
during the nine months ended September 30, 1998 and 1997, respectively and
$75,000 and $100,000 to partners in November 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. The Fund
purchased $493,865 and $318,575 of equipment during the nine months ended
September 30, 1998 and 1997, respectively. The Fund also invested in $830,699
of direct financing leases during the nine months ended September 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.
10
Part II: Other Information
FIDELITY LEASING INCOME FUND IV, L.P.
September 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
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIDELITY LEASING INCOME FUND IV, L.P.
By: Freddie M. Kotek
11-10-98
________ _____________________________
Date Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
By: Marianne T. Schuster
11-10-98
________ ____________________________
Date Marianne T. Schuster
Vice President of F.L. Partnership Management, Inc.
(Principal Financial Officer)
12
11
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 586,483
<SECURITIES> 0
<RECEIVABLES> 116,420
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 702,903
<PP&E> 4,178,276
<DEPRECIATION> 3,349,083
<TOTAL-ASSETS> 2,330,109
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<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,242,839
<TOTAL-LIABILITY-AND-EQUITY> 2,330,109
<SALES> 774,514
<TOTAL-REVENUES> 856,841
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 689,411
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 167,430
<INCOME-TAX> 0
<INCOME-CONTINUING> 167,430
<DISCONTINUED> 0
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<NET-INCOME> 167,430
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