SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the year ended December 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 Blvd., Philadelphia, Pennsylvania 19106
________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(215) 574-1636
________________________________________________________________________
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
None Not applicable
Securities registered pursuant to Section 12 (g) of the Act:
Limited Partnership Interests
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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____
The number of outstanding limited partnership units of the Registrant at
December 31, 1999 is 41,334.
There is no public market for these securities.
The index of Exhibits is located on page 10.
1
<PAGE>
PART I
Item 1. BUSINESS
Fidelity Leasing Income Fund IV, L.P. (the "Fund"), a Delaware limited
partnership, was organized in 1986 and acquires computer equipment, including
printers, tape and disk storage devices, data communications equipment, com-
puter terminals, technical workstations, networking equipment, as well as other
electronic equipment that is leased to third parties on a short-term basis.
The Fund's principal objective is to generate leasing revenues for distri-
bution. The Fund manages the equipment, releasing or disposing of equipment
as it comes off lease in order to achieve its principal objective. The Fund
does not borrow funds to purchase equipment.
The Fund generally acquires equipment subject to a lease. Purchases of
equipment for lease are typically made through equipment leasing brokers,
under a sale-leaseback arrangement directly from lessees owning equipment,
from the manufacturer either pursuant to a purchase agreement relating to
significant quantities of equipment or on an ad hoc basis to meet the needs
of a particular lessee.
The equipment leasing industry is highly competitive. The Fund competes
with leasing companies, equipment manufacturers and distributors, and entities
similar to the Fund (including similar programs sponsored by the General
Partner), some of which have greater financial resources than the Fund. Other
leasing companies and equipment manufacturers and distributors may be in a
position to offer equipment to prospective lessees on financial terms which
are more favorable than those which the Fund can offer. They may also be in
a position to offer trade-in-privileges, maintenance contracts and other
services which the Fund may not be able to offer. Equipment manufacturers and
distributors may offer to sell equipment on terms and conditions (such as
liberal financing terms and exchange privileges) which will afford benefits to
the purchaser similar to those obtained through leases. As a result of the
advantages which certain of its competitors may have, the Fund may find it
necessary to lease its equipment on a less favorable basis than certain of its
competitors.
A brief description of the types of equipment in which the Fund has
invested as of December 31, 1999, together with information concerning the
users of such equipment is contained in Item 2, following.
The Fund does not have any employees. All persons who work on the Fund
are employees of the General Partner.
2
<PAGE>
Item 2. PROPERTIES
The following schedules detail the type, aggregate purchase price and
percentage of the various types of equipment leased by the Fund under the
operating and direct financing lease methods as of December 31, 1999:
Operating Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Tape Storage Systems $ 833,809 40.32%
Technical Workstations and Terminals 518,969 25.10
Communication Controllers 276,654 13.38
PCB Assembly Equipment 271,215 13.12
Electron Microscopes 139,211 6.73
Other 28,005 1.35
__________ ______
Totals $2,067,863 100.00%
========== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
PCB Assembly Equipment $561,147 66.10%
Technical Workstations and Terminals 228,462 26.91
Tape Storage Systems 52,815 6.22
Other 6,536 0.77
________ ______
Totals $848,960 100.00%
======== ======
The following schedules detail the type of business, aggregate purchase
price and percentage of equipment usage by industrial classification for
equipment leased by the Fund under the operating and direct financing methods
as of December 31, 1999:
Operating Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Computer/Data Processing $ 740,671 35.82%
Manufacturing/Refining 687,079 33.23
Diversified Financial/Banking/Insurance 635,498 30.73
Utilities 4,615 0.22
__________ ______
Totals $2,067,863 100.00%
========== ======
3
<PAGE>
Item 2. PROPERTIES (Continued)
Direct Financing Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Manufacturing/Refining $561,147 66.10%
Diversified Financial/Banking/Insurance 287,813 33.90
________ ______
Totals $848,960 100.00%
======== ======
Average Initial Term of Leases (in months): 46
Item 3. LEGAL PROCEEDINGS
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
4
<PAGE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
(a) The Fund's limited partnership units are not publicly traded. There
is no market for the Fund's limited partnership units and it is unlikely
that any will develop.
(b) Number of Equity Security Holders:
Number of Partners
Title of Class as of December 31, 1999
Limited Partnership Interests 1,562
General Partnership Interest 1
<TABLE>
Item 6. SELECTED FINANCIAL DATA
<CAPTION>
For the Years Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Total Income $882,124 $1,312,608 $1,465,537 $1,723,227 $2,374,015
Net Income 391,550 266,144 445,584 539,379 738,436
Distributions to
Partners 375,000 325,000 400,000 878,707 2,261,160
Net Income per
Equivalent Limited
Partnership Unit 37.08 25.51 42.54 23.17 56.98
Weighted Average Number
of Equivalent Limited
Partnership Units
Outstanding During
the Year 10,183 10,023 10,145 10,433 12,305
</TABLE>
<TABLE>
December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Total Assets $2,352,582 $2,324,899 $2,460,916 $2,389,398 $2,786,915
Equipment under
Operating Leases
and Equipment Held
for Sale or Lease
(Net) 609,476 591,749 993,149 1,397,793 1,891,816
Net Investment in
Direct Financing
Leases 618,763 1,046,488 - - -
Limited Partnership
Units 41,334 41,379 41,379 41,379 41,983
Limited Partners 1,562 1,557 1,551 1,551 1,565
</TABLE>
5
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The Fund had revenues of $882,124, $1,312,608, and $1,465,537 for the
years ended December 31, 1999, 1998 and 1997, respectively. The decrease
in revenues between 1999, 1998 and 1997 was primarily caused by the decrease
in rental income generated from equipment under operating leases. Rental
income from the leasing of equipment accounted for 72%, 91% and 96% of total
income in 1999, 1998 and 1997, respectively. In 1999, rental income decreased
by approximately $444,000 because of equipment that came off lease and was
released at lower rental rates or was sold. This decrease, however, was miti-
gated by approximately $96,000 of rental income generated from equipment under
an operating lease purchased during 1999, as well as rental income from a 1998
equipment purchase for which a full year of rental income was earned in 1999
and only a partial year was earned in 1998. Additionally, the Fund entered
into a transaction in which it collected the remaining rents owed of approxi-
mately $202,000 for one of its leases in the fourth quarter of 1998, which
also accounted for the total decrease in rental income in 1999 and mitigated
the total decrease in revenues in 1998. In 1998, rental income decreased by
approximately $572,000 because of equipment that came off lease and was sold.
This decrease, however, was reduced by approximately $154,000 of rental income
generated from equipment under operating leases purchased in 1998 as well as
rental income from 1997 equipment purchases for which a full year of rental
income was earned in 1998 and only a partial year was earned in 1997. The
Fund recorded a net gain on sale of equipment of $119,616 for the twelve
months ended December 31, 1999 compared to $24,727 for the twelve months ended
December 31, 1998. There was no gain on sale of equipment recognized during
the twelve months ended December 31, 1997. The increase in this account
reduced the overall decrease in revenues in both 1999 and 1998. Additionally,
the Fund invested in $1,127,000 of direct financing leases during the year
ended December 31, 1998 that generated approximately $61,000 and $37,000 of
earned income on direct financing leases during the years ended December 31,
1999 and 1998, respectively. The increase in this account also served to
mitigate the overall decrease in revenues in both 1999 and 1998.
Expenses were $490,574, $1,046,464 and $1,019,953 for the years ended
December 31, 1999, 1998 and 1997, respectively. Depreciation expense comprised
67%, 59% and 78% of total expenses in 1999, 1998 and 1997, respectively. The
variation in write-down of equipment to net realizable value contributed
significantly to the change in total expenses in 1999 and in 1998. Currently,
the Fund's practice is to review the recoverability of its undepreciated costs
of rental equipment quarterly. The Fund's policy, as part of this review, is
to analyze such factors as releasing of equipment, technological developments
and information provided in third party publications. In 1999, 1998 and 1997,
approximately $17,000, $251,000 and $38,000, respectively, was charged to
write-down of equipment to net realizable value. The decrease in this account
for the twelve months ended December 31, 1999 and the increase in this account
for the twelve months ended December 31, 1998 contributed to the overall
decrease in expenses in 1999 and the overall increase in expenses in 1998.
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 sales
of its equipment. Any future losses are dependent upon unanticipated techno-
logical developments affecting the type of equipment in the portfolio in sub-
6
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
sequent years. The change in depreciation expense also accounted for the
change in total expenses between 1999, 1998 and 1997. In 1999 and 1998,
depreciation expense decreased because of equipment that terminated or sold.
The decrease in this account contributed to the overall decrease in expenses
in 1999 and mitigated the overall increase in expenses in 1998.
The Fund's net income was $391,550, $266,144 and $445,584 for the years
ended December 31, 1999, 1998 and 1997, respectively. The earnings per equi-
valent limited partnership unit, after earnings allocated to the General
Partner, were $37.08, $25.51 and $42.54 for the years ended December 31, 1999,
1998 and 1997, respectively. The weighted average number of equivalent limited
partnership units outstanding were 10,183, 10,023 and 10,145 for 1999, 1998 and
1997, respectively.
The Fund generated cash from operations of $616,169, $1,106,229 and
$1,293,395 for the purpose of determining cash available for distribution and
declared distributions of $400,000, $300,000 and $400,000 to partners for the
years ended December 31, 1999, 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 liqui-
dated as promptly as is consistent with obtaining their fair value. During
this time, the Fund will continue to purchase equipment for lease with cash
available from operations which was not distributed to partners. During the
years ended December 31, 1999, 1998 and 1997, the Fund purchased equipment of
$380,365, $559,110 and $457,785, respectively. The Fund also invested
$1,127,157 in direct financing leases during the twelve months ended December
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 fiscal year.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted as a separate section of this
report commencing on page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
7
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
F.L. Partnership Management, Inc. (FLPMI) is a wholly owned subsidiary of
Resource Leasing, Inc., a wholly owned subsidiary of Resource America, Inc.
(Resource America). The Directors and Executive Officers of FLPMI are:
FREDDIE M. KOTEK, age 44, Chairman of the Board of Directors, President,
and Chief Executive Officer of FLPMI since September 1995 and Senior Vice
President of Resource America since 1995. President of Resource Leasing,
Inc. since September 1995. Executive Vice President of Resource
Properties, Inc. (a wholly owned subsidiary of Resource America) since
1993.
MICHAEL L. STAINES, age 50, Director and Secretary of FLPMI since
September 1995. Director of Resource America since 1989 and Senior Vice
President of Resource America since 1989.
SCOTT F. SCHAEFFER, age 37, Director of FLPMI since September 1995. Vice
Chairman of the Board of Resource America since 1998 and Executive Vice
President of Resource America since 1997. Prior thereto, Senior Vice
President of Resource America since 1995. Vice President-Real Estate of
Resource America and President of Resource Properties, Inc. (a wholly
owned subsidiary of Resource America) since 1992.
Others:
MARIANNE T. SCHUSTER, age 41, Vice President and Controller of FLPMI
since 1984.
KRISTIN L. CHRISTMAN, age 32, Portfolio Manager of FLPMI since December
1995 and Equipment Brokerage Manager since 1993.
8
<PAGE>
Item 11. EXECUTIVE COMPENSATION
The following table sets forth information relating to the aggregate
compensation earned by the General Partner of the Fund during the year ended
December 31, 1999:
Name of Individual or Capacities in
Number in Group Which Served Compensation
F.L. Partnership
Management, Inc. General Partner $51,862(1)
=======
(1) This amount does not include the General Partner's share of
cash distributions made to all partners.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) As of December 31, 1999, there was no person or group known to the
Fund that owned more than 5% of the Fund's outstanding securities either
beneficially or of record.
(b) In 1986, the General Partner contributed $1,000 to the capital of the
Fund but it does not own any of the Fund's outstanding securities. No
individual director or officer of F.L. Partnership Management, Inc. nor
such directors or officers as a group, owns more than one percent of the
Fund's outstanding securities. The General Partner owns a general
partnership interest which entitles it to receive 3.5% of cash distri-
butions until the Limited Partners have received an amount equal to the
purchase price of their Units plus a 10% compounded Priority Return;
thereafter 10%. The General Partner will also share in net income equal
to the greater of its cash distributions or 1% of net income or to the
extent there are losses, 1% of such losses.
(c) There are no arrangements known to the Fund that would, at any sub-
sequent date, result in a change in control of the Fund.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 1999, the Fund was charged $51,862 of
management fees by the General Partner. The General Partner will continue to
receive 6% or 3% of rental payments on equipment under operating leases or
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 acquisition fees.
The General Partner also receives 3.5% of cash distributions until the
Limited Partners have received an amount equal to the purchase price of their
Units plus a 10% compounded Priority Return. Thereafter, the General Partner
will receive 10% of cash distributions. During the year ended December 31,
1999, the General Partner received $13,125 of cash distributions.
The Fund incurred $58,688 of reimbursable costs to the General Partner
and its parent company for services and materials provided in connection with
the administration of the Fund during 1999.
9
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2). The response to this portion of Item 14 is submitted
as a separate section of this report commencing on page F-1.
(a) (3) and (c) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
Exhibit Numbers Description Page Number
3(a) & (4) Amended and Restated Agreement *
of Limited Partnership
(9) not applicable
(10) not applicable
(11) not applicable
(12) not applicable
(13) not applicable
(18) not applicable
(19) not applicable
(22) not applicable
(23) not applicable
(24) not applicable
(25) not applicable
(27) Financial Data Schedule
(28) not applicable
* Incorporated by reference.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
A Delaware limited partnership
By: F.L. PARTNERSHIP MANAGEMENT, INC.
Freddie M. Kotek
By: ___________________________
Freddie M. Kotek, Chairman and President
Dated March 23, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
annual report has been signed below by the following persons, on behalf of the
Registrant and in the capacities and on the date indicated:
Signature Title Date
Freddie M. Kotek
____________________________ Chairman of the Board of Directors 3-23-00
Freddie M. Kotek and President of F.L. Partnership
Management, Inc.
(Principal Executive Officer)
Michael L. Staines
____________________________ Director of F.L. Partnership 3-23-00
Michael L. Staines Management, Inc.
Marianne T. Schuster
____________________________ Vice President and Controller 3-23-00
Marianne T. Schuster of F.L. Partnership Management, Inc.
(Principal Financial Officer)
11
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Certified Public Accountants F-2
Balance Sheets as of December 31, 1999 and 1998 F-3
Statements of Operations for the years ended
December 31, 1999, 1998 and 1997 F-4
Statements of Partners' Capital for the years ended
December 31, 1999, 1998 and 1997 F-5
Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997 F-6
Notes to Financial Statements F-7 - F-12
All schedules have been omitted because the required information is not
applicable or is included in the Financial Statements or Notes thereto.
F-1
<PAGE>
Report of Independent Certified Public Accountants
The Partners
Fidelity Leasing Income Fund IV, L.P.
We have audited the accompanying balance sheets of Fidelity Leasing
Income Fund IV, L.P. as of December 31, 1999 and 1998, and the related state-
ments of operations, partners' capital and cash flows for each of the three
years in the period ending December 31, 1999. These financial statements are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Fidelity Leasing
Income Fund IV, L.P. as of December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999 in conformity with generally accepted accounting principles.
Grant Thornton LLP
Philadelphia, Pennsylvania
February 11, 2000
F-2
<PAGE>
FIDELITY LEASING INCOME FUND IV, L.P.
<TABLE>
BALANCE SHEETS
ASSETS
<CAPTION>
December 31,
1999 1998
<S> <C> <C>
Cash and cash equivalents $1,070,066 $ 556,543
Accounts receivable 40,594 63,126
Due from related parties 13,683 66,993
Net investment in direct financing leases 618,763 1,046,488
Equipment under operating leases
(net of accumulated depreciation
of $1,490,011 and $3,265,367,
respectively) 577,852 560,126
Equipment held for sale or lease 31,624 31,623
__________ __________
Total assets $2,352,582 $2,324,899
========== ==========
</TABLE>
<TABLE>
LIABILITIES AND PARTNERS' CAPITAL
<CAPTION>
Liabilities:
<S> <C> <C>
Lease rents paid in advance $ 51,356 $ 27,867
Accounts payable and
accrued expenses 9,464 12,608
Due to related parties 10,163 17,871
_________ _________
Total liabilities 70,983 58,346
Partners' capital 2,281,599 2,266,553
__________ __________
Total liabilities and
partners' capital $2,352,582 $2,324,899
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
FIDELITY LEASING INCOME FUND IV, L.P.
<TABLE>
STATEMENTS OF OPERATIONS
<CAPTION>
For the years ended December 31,
1999 1998 1997
Income:
<S> <C> <C> <C>
Rentals $638,366 $1,188,283 $1,403,860
Earned income on direct
financing leases 60,750 37,206 -
Interest 36,256 47,571 58,962
Gain on sale of equipment, net 119,616 24,727 -
Other 27,136 14,821 2,715
________ __________ __________
882,124 1,312,608 1,465,537
________ __________ __________
Expenses:
Depreciation 327,235 613,376 792,301
Write-down of equipment
to net realizable value 17,000 251,436 38,218
General and administrative 35,789 47,116 28,737
General and administrative to
related party 58,688 67,846 61,188
Management fee to related party 51,862 66,690 82,217
Loss on sale of equipment, net - - 17,292
________ __________ __________
490,574 1,046,464 1,019,953
________ __________ __________
Net income $391,550 $ 266,144 $ 445,584
======== ========== ==========
Net income per equivalent
limited partnership unit $ 37.08 $ 25.51 $ 42.54
======== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during the year 10,183 10,023 10,145
======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
FIDELITY LEASING INCOME FUND IV, L.P.
<TABLE>
STATEMENTS OF PARTNERS' CAPITAL
<CAPTION>
For the years ended December 31, 1999, 1998 and 1997
General Limited Partners
Partner Units Amount Total
_______ __________________ _____
<S> <C> <C> <C> <C>
Balance, January 1, 1997 $ 4,499 41,379 $2,275,326 $2,279,825
Cash distributions (14,000) - (386,000) (400,000)
Net income 14,000 - 431,584 445,584
_______ ______ __________ _________
Balance, December 31, 1997 4,499 41,379 2,320,910 2,325,409
Cash distributions (11,375) - (313,625) (325,000)
Net income 10,500 - 255,644 266,144
_______ ______ __________ _________
Balance, December 31, 1998 3,624 41,379 2,262,929 2,266,553
Cash distributions (13,125) - (361,875) (375,000)
Redemptions - (45) (1,504) (1,504)
Net income 14,000 - 377,550 391,550
_______ ______ __________ __________
Balance, December 31, 1999 $ 4,499 41,334 $2,277,100 $2,281,599
======= ====== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
FIDELITY LEASING INCOME FUND IV, L.P.
<TABLE>
STATEMENTS OF CASH FLOWS
<CAPTION>
For the years ended December 31,
1999 1998 1997
Cash flows from operating activities:
<S> <C> <C> <C>
Net income $ 391,550 $ 266,144 $ 445,584
__________ __________ __________
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 327,235 613,376 792,301
Write-down of equipment to
net realizable value 17,000 251,436 38,218
(Gain) loss on sale of
equipment, net (119,616) (24,727) 17,292
(Increase) decrease in
accounts receivable 22,532 15,075 (32,436)
(Increase) decrease in due
from related parties 53,310 (60,656) 23,731
Increase (decrease) in lease
rents paid in advance 23,489 (79,127) 16,262
Increase (decrease) in
other, net (10,852) 1,966 9,672
__________ __________ __________
313,098 717,343 865,040
__________ __________ __________
Net cash provided by
operating activities 704,648 983,487 1,310,624
__________ __________ __________
Cash flows from investing activities:
Acquisition of equipment (380,365) (559,110) (457,785)
Investment in direct financing leases - (1,127,157) -
Proceeds from direct financing
leases, net of earned income 427,725 80,669 -
Proceeds from sale of equipment 138,019 120,425 14,618
__________ __________ __________
Net cash provided by (used in)
investing activities 185,379 (1,485,173) (443,167)
__________ __________ __________
Cash flows from financing activities:
Distributions (375,000) (325,000) (400,000)
Redemptions of capital (1,504) - -
__________ __________ __________
Net cash used in financing
activities (376,504) (325,000) (400,000)
__________ __________ __________
Increase (decrease) in cash
and cash equivalents 513,523 (826,686) 467,457
Cash and cash equivalents,
beginning of year 556,543 1,383,229 915,772
__________ __________ __________
Cash and cash equivalents,
end of year $1,070,066 $ 556,543 $1,383,229
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF BUSINESS
Fidelity Leasing Income Fund IV, L.P. (the "Fund") was formed in December
1986. The General Partner of the Fund is F.L. Partnership Management, Inc.
("FLPMI") which is a wholly owned subsidiary of Resource Leasing, Inc., a
wholly owned subsidiary of Resource America, Inc. The Fund is managed by the
General Partner. The Fund's limited partnership interests are not publicly
traded. There is no market for the Fund's limited partnership interests and
it is unlikely that any will develop. The Fund acquires computer equipment
including printers, tape storage devices, data communications equipment,
computer terminals, technical workstations and networking equipment, as well
as other electronic equipment, which is leased to third parties throughout
the United States on a short-term basis.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration of Credit Risk
Financial instruments which potentially subject the Fund to concentra-
tions of credit risk consist principally of temporary cash investments. The
Fund places its temporary investments in bank repurchase agreements and jumbo
savings accounts.
Concentrations of credit risk with respect to accounts receivables are
limited due to the dispersion of the Fund's lessees over different industries
and geographies.
Impairment of Long-Lived Assets
The Fund reviews its assets to determine if it has any long-lived assets
that are carried on the books for an amount that may not be recoverable. If
it is determined that an asset's estimated future cash flows will not be suf-
ficient to recover its carrying amount, an impairment charge will be recorded.
Equipment Held for Sale or Lease
Equipment held for sale or lease is carried at its estimated net realiz-
able value.
Use of Estimates
In preparing financial statements in conformity with Generally Accepted
Accounting Principles, management is required to make estimates and assump-
tions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Accounting for Leases
The Fund's leasing operations consist of both operating and direct
financing leases. Under the operating method of accounting for leases, the
F-7
<PAGE>
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting for Leases (Continued)
cost of the leased equipment is recorded as an asset and depreciated on a
straight-line basis over its estimated useful life, up to six years. Acqui-
sition fees associated with lease placements are allocated to equipment when
purchased and depreciated as part of equipment cost. Rental income consists
of monthly periodic rentals due under the terms of the leases. Generally,
during the remaining terms of existing operating leases, the Fund will not
recover all of the undepreciated cost and related expenses of its rental
equipment and is prepared to remarket the equipment in future years. Upon
sale or other disposition of assets, the cost and related accumulated
depreciation are removed from the accounts and the resulting gain or loss,
if any, is reflected in income.
Under the direct financing method of accounting for leases, income (the
excess of the aggregate future rentals and estimated additional amounts
recoverable upon expiration of the lease over the related equipment cost) is
recognized over the life of the lease using the interest method.
Income Taxes
Federal and State income tax regulations provide that taxes on the
income or benefits from losses of the Fund are reportable by the partners in
their individual income tax returns. Accordingly, no provision for such taxes
has been made in the accompanying financial statements.
Statements of Cash Flows
For purposes of the statements of cash flows, the Fund considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
Net Income per Equivalent Limited Partnership Unit
Net income per equivalent limited partnership unit is computed by
dividing net income allocated to limited partners by the weighted average
number of equivalent limited partnership units outstanding during the year.
The weighted average number of equivalent units outstanding during the year
is computed based on the weighted average monthly limited partners' capital
account balances, converted into equivalent units at $500 per unit.
Significant Fourth Quarter Adjustments
Currently, the Fund's practice is to review the recoverability of its
undepreciated costs of rental equipment quarterly. The Fund's policy, as part
of this review, is to analyze such factors as releasing of equipment, techno-
logical developments and information provided in third party publications.
Based upon this review, the Fund recorded an adjustment of approximately
$29,000 and $12,000 or $2.89 and $1.18 per equivalent limited partnership unit
to write down its rental equipment in the fourth quarter of 1998 and 1997, re-
spectively. There were no significant fourth quarter adjustments made in 1999.
F-8
<PAGE>
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
3. YEAR 2000 COMPLIANCE
The "Year 2000 Issue" addresses the ability of computer programs to
distinguish between the year 2000 and the year 1900. Computer programs were
written using two digits rather than four digits for the year in a date field.
This could ultimately result in miscalculations or inaccuracies in processing
data.
The Fund's operating system is Year 2000 capable. Additionally, all of
the main software systems used to generate information for the Fund are Year
2000 compliant.
The costs incurred to make the software systems Year 2000 compliant were
not material as of December 31, 1999.
Furthermore, all significant outside suppliers have been contacted to
ensure that their systems are Year 2000 compliant. The Fund has not experi-
enced any problems with outside suppliers regarding Year 2000 compliance
issues.
4. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS
Cash distributions (except for the period from January 1, 1992 through
June 30, 1995), if any, are made quarterly as follows: 96.5% to the Limited
Partners and 3.5% to the General Partner, until the Limited Partners have
received an amount equal to the purchase price of their Units, plus a 10%
compounded priority return (an amount equal to 10% compounded annually on the
portion of the purchase price not previously distributed); thereafter, 90% to
the Limited Partners and 10% to the General Partner.
Net Losses are allocated 99% to the Limited Partners and 1% to the
General Partner. The General Partner is allocated Net Income equal to its
cash distributions, but not less than 1% of Net Income, with the balance
allocated to the Limited Partners.
Net Income (Losses) allocated to the Limited Partners are allocated to
individual limited partners based on the ratio of the daily weighted average
partner's net capital account balance (after deducting related commission
expense) to the total daily weighted average of the Limited Partners' net
capital account balances.
F-9
<PAGE>
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. EQUIPMENT LEASED
Equipment on lease consists primarily of computer equipment under
operating leases. A majority of the equipment was manufactured by IBM. 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
23 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, in 1999, 1998 and 1997, approxi-
mately $17,000, $251,000 and $38,000, respectively was charged to write-down
of equipment to net realizable value. Any future losses are dependent upon
unanticipated technological developments affecting the equipment in subsequent
years.
The net investment in direct financing leases as of December 31, 1999 is
as follows:
Net minimum lease payments to be received $694,000
Unearned rental income (75,000)
Unguaranteed residuals -
________
$619,000
========
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of December 31 are as follows:
Direct
Operating Financing
2000 $296,000 $204,000
2001 248,000 204,000
2002 164,000 204,000
2003 36,000 82,000
________ ________
$744,000 $694,000
======== ========
F-10
<PAGE>
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
6. RELATED PARTY TRANSACTIONS
The General Partner receives 6% or 3% of rental payments on 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.
The General Partner may also receive up to 3% of the proceeds from the
sale of the Fund's equipment for services and activities to be performed in
connection with the disposition of equipment. The payment of this sales fee
is deferred until the Limited Partners have received cash distributions equal
to the purchase price of their units plus a 10% cumulative compounded priority
return. Based on current estimates, it is not expected that the Fund will be
required to pay the General Partner a sales fee.
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 charged by the General Partner and its parent
company during the years ended December 31:
1999 1998 1997
Management fee $51,862 $66,690 $82,217
Reimbursable costs 58,688 67,846 61,188
During 1999, the Fund maintained its checking and investment accounts in
Jefferson Bank, a subsidiary of JeffBanks, Inc. in which the Chairman of
Resource America, Inc. served as a director. In November 1999, Hudson United
Bancorp acquired JeffBanks, Inc. The Fund maintains its banking relationship
with Hudson United Bancorp. The Chairman of Resource America, Inc. does not
hold any position with Hudson United Bancorp.
Amounts due from related parties at December 31, 1999 and 1998 represent
monies due to 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 December 31, 1999 and 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.
7. MAJOR CUSTOMERS
For the year ended December 31, 1999, three customers accounted for 42%,
27% and 14% of the Fund's rental income. For the year ended December 31,
1998, four customers accounted for 34%, 21%, 15% and 12% of the Fund's rental
income. For the year ended December 31, 1997, three customers generated
31%, 27% and 15% of the Fund's rental income.
F-11
<PAGE>
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
8. CASH DISTRIBUTIONS
Below is a summary of the quarterly cash distributions paid to partners
during the years ended December 31:
<TABLE>
Month of Distribution 1999 1998 1997
<CAPTION>
<S> <C> <C> <C>
February $ 75,000 $100,000 $100,000
May 100,000 75,000 100,000
August 100,000 75,000 100,000
November 100,000 75,000 100,000
________ ________ ________
$375,000 $325,000 $400,000
======== ======== ========
</TABLE>
In addition, the General Partner declared and paid a cash distribution
of $100,000 in February 2000 for the three months ended December 31, 1999, to
all admitted partners as of December 31, 1999.
F-12
<PAGE>
1
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,070,066
<SECURITIES> 0
<RECEIVABLES> 54,277
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,124,343
<PP&E> 2,099,487
<DEPRECIATION> 1,490,011
<TOTAL-ASSETS> 2,352,582
<CURRENT-LIABILITIES> 70,983
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,281,599
<TOTAL-LIABILITY-AND-EQUITY> 2,352,582
<SALES> 638,366
<TOTAL-REVENUES> 882,124
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 490,574
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 391,550
<INCOME-TAX> 0
<INCOME-CONTINUING> 391,550
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 391,550
<EPS-BASIC> 37.08
<EPS-DILUTED> 37.08
</TABLE>
