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, 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, 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,
1999 1998
_____________ ____________
Cash and cash equivalents $ 972,577 $ 556,543
Accounts receivable 77,235 63,126
Due from related parties 7,451 66,993
Equipment under operating leases
(net of accumulated depreciation
of $1,441,092 and $3,265,367,
respectively) 626,770 560,126
Net investment in direct financing leases 658,939 1,046,488
Equipment held for sale or lease 41,623 31,623
__________ __________
Total assets $2,384,595 $2,324,899
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 41,403 $ 27,867
Accounts payable and
accrued expenses 7,449 12,608
Due to related parties 28,839 17,871
__________ __________
Total liabilities 77,691 58,346
Partners' capital 2,306,904 2,266,553
__________ __________
Total liabilities and
partners' capital $2,384,595 $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
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1999 1998 1999 1998
____ ____ ____ ____
Income:
Rentals $136,148 $269,132 $532,765 $774,514
Earned income on direct
financing leases 11,511 10,192 49,883 17,717
Interest 11,448 11,442 24,525 41,018
Gain on sale of equipment,
net 4,586 12,930 92,616 10,677
Other 6,880 840 25,746 12,915
________ ________ ________ ________
170,573 304,536 725,535 856,841
________ ________ ________ ________
Expenses:
Depreciation 58,668 97,965 271,317 340,558
Write-down of equipment
to net realizable value - 25,220 17,000 222,815
General and administrative 7,165 12,277 32,487 33,677
General and administrative
to related party 13,000 12,746 43,582 46,856
Management fee to related
party 17,438 15,990 44,226 45,505
________ ________ ________ ________
96,271 164,198 408,612 689,411
________ ________ ________ ________
Net income $ 74,302 $140,338 $316,923 $167,430
======== ======== ======== ========
Net income per equivalent
limited partnership unit $ 6.97 $ 13.80 $ 30.03 $ 15.96
======== ======== ======== ========
Weighted average number of
equivalent limited partner-
ship units outstanding
during the period 10,156 9,980 10,204 9,998
======== ======== ======== ========
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, 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 (9,625) - (265,375) (275,000)
Redemption - (45) (1,572) (1,572)
Net income 10,500 - 306,423 316,923
_______ ______ __________ __________
Balance, September 30, 1999 $ 4,499 41,334 $2,302,405 $2,306,904
======= ====== ========== ==========
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, 1999 and 1998
(Unaudited)
1999 1998
____ ____
Cash flows from operating activities:
Net income $ 316,923 $ 167,430
__________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 271,317 340,558
Write-down of equipment to net
realizable value 17,000 222,815
(Gain) loss on sale of equipment, net (92,616) (10,677)
(Increase) decrease in accounts receivable (14,109) 12,590
(Increase) decrease in due from related parties 59,542 (44,472)
Increase (decrease) in lease rents paid
in advance 13,536 (57,601)
Increase (decrease) in accounts payable and
accrued expenses (5,159) (6,913)
Increase (decrease) in due to related parties 10,968 16,277
__________ __________
260,479 472,577
__________ __________
Net cash provided by operating activities 577,402 640,007
__________ __________
Cash flows from investing activities:
Acquisition of equipment (380,365) (493,865)
Investment in direct financing leases - (830,699)
Proceeds from sale of equipment 108,020 105,125
Proceeds from direct financing leases,
net of earned income 387,549 32,686
__________ __________
Net cash provided by (used in)
investing activities 115,204 (1,186,753)
__________ __________
Cash flows from financing activities:
Distributions (275,000) (250,000)
Redemption (1,572) -
__________ __________
Net cash used in financing activities (276,572) (250,000)
__________ __________
Increase (decrease) in cash and
cash equivalents 416,034 (796,746)
Cash and cash equivalents, beginning
of period 556,543 1,383,229
__________ __________
Cash and cash equivalents, end of period $ 972,577 $ 586,483
========== ==========
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, 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 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 1998 financial statements have been
reclassified to conform to the presentation in 1999.
1. EQUIPMENT LEASED
Equipment on lease consists of 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 equip-
ment. Fund policy is to review quarterly the expected economic life of its
rental equipment in order to determine the recoverability of its undepre-
ciated cost. Recent and anticipated technological developments affecting
the 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 equip-
ment. As a result, $17,000 and $222,815 was charged to write-down of
equipment to net realizable value for the nine months ended September 30,
1999 and 1998, respectively. Any future losses are dependent upon unanti-
cipated 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
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, 1999
is as follows:
Minimum lease payments to be received $745,000
Unearned rental income (86,000)
Expected future residuals -
________
$659,000
========
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, 1999 are as
follows:
Direct
Years Ending December 31 Operating Financing
________________________ _________ _________
1999 $106,000 $ 51,000
2000 254,000 204,000
2001 248,000 204,000
2002 164,000 204,000
2003 39,000 82,000
________ ________
$811,000 $745,000
======== ========
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 nine months
ended September 30, 1999 and 1998:
Three Months Ended Nine Months Ended
September 30 September 30
1999 1998 1999 1998
____ ____ ____ ____
Management fee $17,438 $15,990 $44,226 $45,505
Reimbursable costs 13,000 12,746 43,582 46,856
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, 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.
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, 1999 and December 31,
1998 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. YEAR 2000 COMPLIANCE
All of the main software systems utilized to generate information for the
Fund are now Year 2000 compliant and in the testing phase. 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
November 1999 for the three months ended September 30, 1999, to all
admitted partners as of September 30, 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 $170,573 and
$304,536 for the three months ended September 30, 1999 and 1998,
respectively, and $725,535 and $856,841 for the nine months ended
September 30, 1999 and 1998, respectively. Rental income from the leasing
of equipment accounted for 80% and 88% of total revenues for the third
quarter of 1999 and 1998, respectively, and 73% and 90% of total revenues for
the first nine months of 1999 and 1998, respectively. The decrease in
revenues was primarily attributable to a decrease in rental income. In 1999,
rental income decreased by approximately $365,000 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 1998 as
well as rents generated on 1998 equipment purchases for which a full nine
months of rent was earned in 1999 and only a portion of the nine months of
rent was earned in 1998. 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 1999. The Fund earned $49,883 of income on direct
financing leases during the nine months ended September 30, 1999 compared to
$17,717 for the nine months ended September 30, 1998. Additionally, the Fund
recognized $92,616 and $10,677 of net gain on sale of equipment for the nine
months ended September 30, 1999 and 1998, respectively.
Expenses were $96,271 and $164,198 during the three months ended
September 30, 1999 and 1998, respectively and $408,612 and $689,411 for the
nine months ended September 30, 1999 and 1998, respectively. Depreciation
expense comprised 61% and 60% of total expenses during the third quarter of
1999 and 1998, respectively and 66% and 49% of total expenses for the first
nine months of 1999 and 1998, respectively. The decrease in expenses in
1999 was primarily caused by the decrease in write-down of equipment to net
realizable value. Based upon the quarterly review of the recoverability of the
undepreciated cost of rental equipment, $17,000 was charged to operations to
write down equipment to its estimated net realizable value during the nine
months ended September 30, 1999 compared to $222,815 for the nine months ended
September 30, 1998. Any future losses are dependent upon unanticipated
technological developments affecting the types of equipment in the portfolio
in subsequent years. Additionally, the decrease in depreciation expense
resulting from equipment that came off lease, terminated or sold since
September 1998 also contributed to the overall decrease in expenses during
the nine months ended September 30, 1999.
For the three months ended September 30, 1999 and 1998, the Fund had net
income of $74,302 and $140,338, respectively. For the nine months ended
September 30, 1999 and 1998, the Fund had net income of $316,923 and
$167,430, respectively. The earnings per equivalent limited partnership
unit, after earnings allocated to the General Partner were $6.97 and
$13.80 based on a weighted average number of equivalent limited partnership
units outstanding of 10,156 and 9,980 for the quarter ended September 30, 1999
and 1998, respectively. The earnings per equivalent limited partnership
unit, after earnings allocated to the General Partner were $30.03 and $15.96
9
FIDELITY LEASING INCOME FUND IV, L.P
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
based on a weighted average number of equivalent limited partnership units
outstanding of 10,204 and 9,998 for the nine months ended September 30,
1999 and 1998, respectively.
The Fund generated cash from operations of $128,384 and $250,593, for
the purpose of determining cash available for distribution, during the third
quarter of 1999 and 1998, respectively and distributed $100,000 and $75,000
to partners in November 1999 and 1998, respectively. For the nine months
ended September 30, 1999 and 1998, the Fund generated cash from operations of
$512,624 and $720,126 and distributed $200,000 and $150,000 to partners
during the nine months ended September 30, 1999 and 1998, respectively and
$100,000 and $75,000 to partners in November 1999 and 1998, 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 that was not distributed to partners in previous
periods. During the first six months of 1999 and 1998, the Fund purchased
$380,486 and $493,865, respectively, of equipment subject to operating leases.
The Fund also invested $830,699 in 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, 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.
11-9-99 By: Freddie M. Kotek
_______ ____________________________
Date Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
11-9-99 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 972,577
<SECURITIES> 0
<RECEIVABLES> 84,686
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,057,263
<PP&E> 2,109,485
<DEPRECIATION> 1,441,092
<TOTAL-ASSETS> 2,384,595
<CURRENT-LIABILITIES> 77,691
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,306,904
<TOTAL-LIABILITY-AND-EQUITY> 2,384,595
<SALES> 532,765
<TOTAL-REVENUES> 725,535
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 408,612
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 316,923
<INCOME-TAX> 0
<INCOME-CONTINUING> 316,923
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 316,923
<EPS-BASIC> 30.03
<EPS-DILUTED> 30.03
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