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, 1999
/ / 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 registrant was required to file such reports), and (2)
has been subject to such filing 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)
March 31, December 31,
1999 1998
___________ ____________
Cash and cash equivalents $ 626,051 $ 556,543
Accounts receivable 91,430 63,126
Due from related parties 104,294 66,993
Equipment under operating leases
(net of accumulated depreciation
of $2,378,805 and $3,265,367,
respectively) 563,912 560,126
Net investment in direct
financing leases 996,296 1,046,488
Equipment held for sale or lease 35,938 31,623
__________ __________
Total assets $2,417,921 $2,324,899
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 32,418 $ 27,867
Accounts payable and
accrued expenses 19,645 12,608
Due to related parties 9,950 17,871
__________ __________
Total liabilities 62,013 58,346
Partners' capital 2,355,908 2,266,553
__________ __________
Total liabilities and
partners' capital $2,417,921 $2,324,899
========== ==========
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, 1999 and 1998
(Unaudited)
1999 1998
________ ________
Income:
Rentals $204,112 $268,892
Earned income on direct financing leases 19,111 3,076
Interest 5,952 15,665
Gain on sale of equipment, net 88,030 3,706
Other 1,542 5,472
________ ________
318,747 296,811
________ ________
Expenses:
Depreciation 105,690 141,920
Write-down of equipment to net realizable
value 10,000 168,285
General and administrative 9,371 12,416
General and administrative to related
party 13,624 15,253
Management fee to related party 15,707 15,983
________ ________
154,392 353,857
________ ________
Net income (loss) $164,355 $(57,046)
======== ========
Net income (loss) per equivalent
limited partnership unit $ 15.74 $ (5.60)
======== ========
Weighted average number of
equivalent limited partnership
units outstanding during the period 10,219 10,093
======== ========
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, 1999
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1999 $ 3,624 41,379 $2,262,929 $2,266,553
Cash distributions (2,625) - (72,375) (75,000)
Net income 3,500 - 160,855 164,355
_______ ______ __________ __________
Balance, March 31, 1999 $ 4,499 41,379 $2,351,409 $2,355,908
======= ====== ========== ==========
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, 1999 and 1998
(Unaudited)
1999 1998
__________ __________
Cash flows from operating activities:
Net income (loss) $ 164,355 $ (57,046)
_________ __________
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 105,690 141,920
Write-down of equipment to net realizable
value 10,000 168,285
Gain (loss) on sale of equipment, net (88,030) (3,706)
(Increase) decrease in accounts receivable (28,304) 8,475
(Increase) decrease in due from related
parties (37,301) (20,604)
Increase (decrease) in accounts payable
and accrued expenses 7,037 121,238
Increase (decrease) in other, net (3,371) (4,342)
_________ __________
(34,279) 411,266
_________ __________
Net cash provided by operating activities 130,076 354,220
_________ __________
Cash flows from investing activities:
Acquisition of equipment (123,790) (250,294)
Investment in direct financing leases - (287,813)
Proceeds from direct financing leases,
net of earned income 50,192 8,175
Proceeds from sale of equipment 88,030 12,045
_________ __________
Net cash provided by (used in)
investing activities 14,432 (517,887)
_________ __________
Cash flows from financing activities:
Distributions (75,000) (100,000)
_________ __________
Net cash used in financing activities (75,000) (100,000)
_________ __________
Increase (decrease) cash and
cash equivalents 69,508 (263,667)
Cash and cash equivalents, beginning
of period 556,543 1,383,229
_________ __________
Cash and cash equivalents, end of period $ 626,051 $1,119,562
========= ==========
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, 1999
(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 Commission. 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 1998
financial statements have been reclassified to conform to the presen-
tation in 1999.
1. EQUIPMENT LEASED
Equipment on lease consists of equipment under operating leases.
The lessees have agreements with the manufacturer to provide mainte-
nance for the leased equipment. The Fund's operating leases are for
initial lease terms of 12 to 60 months. In accordance with Generally
Accepted Accounting Principles, the Fund writes down its rental equip-
ment to its estimated net realizable value when the amounts are reason-
ably estimated and only recognizes gains upon actual sale of its
rental equipment. As a result, $10,000 and $168,000 was charged to
write-down of equipment to net realizable for the three months ended
March 31, 1999 and 1998, respectively. Any future losses are de-
pendent upon unanticipated technological developments affecting the
types of equipment in the portfolio 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 ag-
gregate future rentals and estimated unguaranteed residuals upon ex-
piration of the lease over the related equipment cost) over the life
of the lease using the interest method.
Unguaranteed residuals for direct financing leases represent the esti-
mated amounts recoverable at lease termination from lease extensions
or disposition of equipment. The Fund reviews these residual values
quarterly. If the equipment's fair market value is below the estima-
ted residual value, an adjustment is made.
6
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. EQUIPMENT LEASED (continued)
The net investment in direct financing leases as of March 31, 1999 is
as follows:
Minimum lease payments to be received $1,164,000
Unearned rental income (168,000)
Expected future residuals -
__________
$ 996,000
==========
The future approximate minimum rentals to be received on noncancel-
lable operating and direct financing leases as of March 31, 1999 are
as follows:
Years Ending December 31 Operating Direct Financing
________________________ _________ ________________
1999 $277,000 $ 208,000
2000 159,000 277,000
2001 88,000 277,000
2002 84,000 277,000
2003 39,000 125,000
________ __________
$647,000 $1,164,000
======== ==========
2. RELATED PARTY TRANSACTIONS
The General Partner receives 6% or 3% of rental payments from equip-
ent 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, inclu-
ding 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.
7
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (continued)
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:
1999 1998
________ ________
Management fee $15,707 $15,983
Reimbursable costs 13,624 15,253
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, 1999 and December 31,
1998 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 March 31, 1999 and December 31, 1998
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. YEAR 2000 COMPLIANCE
Two of the three main software systems utilized to generate informa-
tion for the Fund are still in the testing phase. The third software
system should be Year 2000 capable by July 1999. The costs incurred
to complete the Year 2000 Compliance project are not expected to be
material to the net income of the Fund.
All suppliers for the Fund continue to complete their Year 2000
Compliance programs. It is not anticipated that the Fund will incur
any significant losses should any of its outside suppliers fail to
meet their Year 2000 Compliance deadlines.
4. CASH DISTRIBUTION
The General Partner declared and paid a cash distribution of $100,000
in May 1999 for the three months ended March 31, 1999, to all admitted
partners as of March 31, 1999.
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 $318,747 and
$296,811 for the three months ended March 31, 1999 and 1998, respectively.
Rental income from the leasing of equipment accounted for 64% and 91% of
total revenues for the first quarter of 1999 and 1998, respectively. The
increase in revenues was primarily attributable to an increase in net gain
on sale of equipment. During the three months ended March 31, 1999 and
1998, the Fund recorded a net gain on sale of equipment of $88,030 and
$3,706, respectively. Additionally, during the last six months of 1998,
the Fund invested in direct financing leases that generated $19,111 of
earned income on direct financing leases during the first quarter of 1999.
The increase in this account also contributed to the overall increase
in revenues in 1999. However, the rental income earned by the Fund on
operating leases decreased in 1999 which reduced the increase in total
revenues in this quarter. In 1999, rental income decreased by approxi-
mately $105,000 because of equipment which came off lease and was re-
leased at lower rental rates or sold. This decrease, however, was miti-
gated by approximately $40,000 of rents generated from equipment purchases
made since the first quarter of 1998.
Expenses were $154,392 and $353,857 during the three months ended
March 31, 1999 and 1998, respectively. Depreciation expense comprised 68%
and 40% of total expenses during the first quarter of 1999 and 1998,
respectively. The decrease in expenses between the first quarter of 1999
and 1998 was primarily attributable to a decrease in write-down of equipment
to net realizable value. Based upon the review of the recoverability of
the undepreciated cost of rental equipment, $10,000 was charged to opera-
tions to write down equipment to its estimated net realizable value during
the three months ended March 31, 1999 compared to $168,285 incurred for
the three months ended March 31, 1998. Any future losses are dependent
upon unanticipated technological developments affecting the types of equip-
ment in the portfolio in subsequent years. The overall decrease in expenses
was also caused by a decrease in depreciation expense in the first quarter
of 1999. Depreciation expense decreased in 1999 because of equipment that
either terminated or sold since the first quarter of 1998.
For the three months ended March 31, 1999 and 1998, the Fund had net
income (loss) of $164,355 and ($57,046), respectively. The earnings (loss)
per equivalent limited partnership unit, after earnings (loss) allocated to
the General Partner were $15.74 and ($5.60) based on a weighted average num-
ber of equivalent limited partnership units outstanding of 10,219 and 10,093
for the quarter ended March 31, 1999 and 1998, respectively.
9
FIDELITY LEASING INCOME FUND IV, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (continued)
The Fund generated cash from operations of $192,015 and $249,453, for
the purpose of determining cash available for distribution for the quarter
ended March 31, 1999 and 1998, respectively. The Fund distributed $100,000
and $75,000 to partners in May 1999 and 1998, respectively for the first
quarter of 1999 and 1998, respectively. A cash distribution of $75,000
and $100,000 was paid to partners during the first quarter of 1999 and
1998, respectively for the three months ended December 31, 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 is currently in the process of dissolution. As provided in
the Restated Limited Partnership Agreement, the assets of the Fund shall be
liquidated as promptly as is consistent with obtaining their fair value.
During this time, the Fund will continue to purchase equipment with cash
available from operations which was not distributed to partners in previous
periods. During the first quarter of 1999 and 1998, the Fund purchased
$123,790 and $250,294, respectively of equipment subject to operating leases.
The Fund also invested $287,813 in equipment under 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.
10
Part II: Other Information
FIDELITY LEASING INCOME FUND IV, L.P.
March 31, 1999
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.
5-14-99 By: Freddie M. Kotek
_______ ___________________________
Date Freddie M. Kotek
President of
F.L. Partnership Management, Inc.
(Principal Operating Officer)
5-14-99 By: Marianne T. Schuster
_______ ___________________________
Date Marianne T. Schuster
Vice President of
F.L. Partnership Management, Inc.
(Principal Financial Officer)
12
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 626,051
<SECURITIES> 0
<RECEIVABLES> 195,724
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 821,775
<PP&E> 2,978,655
<DEPRECIATION> 2,378,805
<TOTAL-ASSETS> 2,417,921
<CURRENT-LIABILITIES> 62,013
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,355,908
<TOTAL-LIABILITY-AND-EQUITY> 2,417,921
<SALES> 204,112
<TOTAL-REVENUES> 318,747
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 154,392
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 164,355
<INCOME-TAX> 0
<INCOME-CONTINUING> 164,355
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 164,355
<EPS-PRIMARY> 15.74
<EPS-DILUTED> 15.74
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