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, 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 0-17658
Fidelity Leasing Income Fund V, L.P.
_________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 23-2496362
_________________________________________________________________
(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, 1998 is 76,137.
There is no public market for these securities.
The index of Exhibits is located on page 10.
1
PART I
Item 1. BUSINESS
Fidelity Leasing Income Fund V, L.P. (the "Fund"), a Delaware limited
partnership, was organized in 1988 and acquires equipment, including
printers, tape and disk storage devices, data communications equipment,
computer terminals, technical workstations, networking equipment as well as
other electronic equipment, which is leased to third parties on a short-term
basis. The Fund's principal objective is to generate leasing revenues for
distribution. 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, 1998, 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
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 methods as of December 31, 1998:
Operating Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Communications Controllers $ 676,934 9.88%
Disk Storage Systems 615,029 8.97
Network Communications 529,197 7.72
Printers 173,321 2.53
Tape Storage Systems 106,322 1.55
Technical Workstations and Terminals 4,752,440 69.35
__________ ______
Totals $6,853,243 100.00%
========== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Electron Microscopes $2,118,268 73.58%
PCB Assembly Equipment 445,785 15.48
Technical Workstations and Terminals 314,979 10.94
__________ ______
Totals $2,879,032 100.00%
========== ======
The following schedules detail the type of business, aggregate purchase
price and percentage of equipment usage by industrial classification for equip-
ment leased by the Fund under the operating and direct financing methods as of
December 31, 1998:
Operating Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Broadcasting/Entertainment $ 393,515 5.74%
Computers/Data Processing 1,254,438 18.30
Diversified Financial/Banking/Insurance 412,916 6.03
Manufacturing/Refining 362,653 5.29
Publishing/Printing 81,984 1.20
Retailing/Consumer Goods 730,937 10.67
Telephone/Telecommunications 3,616,800 52.77
__________ ______
Totals $6,853,243 100.00%
========== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Manufacturing/Refining $2,118,268 73.58%
Retailing/Consumer Goods 445,785 15.48
Telephone/Telecommunications 314,979 10.94
__________ ______
Totals $2,879,032 100.00%
========== ======
Average Initial Term of Leases (in months): 26
3
Item 3. LEGAL PROCEEDINGS
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
4
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, 1998
Limited Partnership Interests 2,573
General Partnership Interest 1
<TABLE>
Item 6. SELECTED FINANCIAL DATA
<CAPTION>
For the Years Ended December 31,
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Total Income $3,640,530 $3,442,545 $4,269,938 $6,821,697 $9,380,728
Net Income 232,105 634,505 878,737 1,884,603 1,532,102
Distributions to Partners 550,000 600,000 960,000 6,760,990 5,530,243
Net Income per Equivalent
Limited Partnership Unit 9.05 25.07 33.97 63.35 37.01
Weighted Average
Number of Equivalent
Limited Partnership
Units Outstanding
During the Year 25,065 25,054 25,610 29,077 39,545
</TABLE>
<TABLE>
December 31,
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Total Assets $ 7,047,755 $ 7,455,365 $ 7,569,806 $ 8,096,622 $12,968,181
Equipment under
Operating Leases
and Equipment Held for
Sale or Lease (Net) 2,354,710 3,423,510 3,909,025 4,249,271 6,568,961
Net Investment in
Direct Financing
Leases 2,489,583 - 209,459 280,779 782,651
Limited Partnership
Units 76,137 76,137 76,137 78,970 79,679
Limited Partners 2,573 2,570 2,558 2,604 2,628
</TABLE>
5
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The Fund had revenues of $3,640,530, $3,442,545 and $4,269,938 for the
years ended December 31, 1998, 1997 and 1996, respectively. Rental income
from the leasing of equipment accounted for 90%, 94% and 86% of total income
in 1998, 1997 and 1996, respectively. The increase in total revenues in
1998 is primarily attributable to an increase in earned income on direct
financing leases. During 1998, the Fund invested in $2,731,393 of direct
financing leases resulting in an increase in the earned income recognized on
direct financing leases. There were no investments made in direct financing
leases during 1997 and 1996. The increase in rental income in 1998 and the
decrease in rental income in 1997 also accounts for the change in total
revenues during these years. In 1998, rental income increased by approxi-
mately $1,156,000 due to equipment which was purchased and put on lease, as
well as, rental income realized on 1997 equipment purchases for which a full
year of rent was earned in 1998 and only a partial year was earned in 1997.
Additionally, the Fund entered into a transaction in which it collected the
remaining rents owed on certain leases and recognized $315,000 of rental
income. This increase in rents, however, was reduced by $1,410,000 because
of equipment that came off lease and was released at lower rental rates or
sold. In 1997, rental income decreased by approximately $1,647,000 due to
lease terminations or sales of equipment. This decrease, however, was
mitigated by an increase of approximately $1,209,000 of rental income gene-
rated from equipment purchased in 1997, as well as, rental income realized
on 1996 equipment purchases for which a full year of rent was earned in
1997 and only a partial year was earned in 1996. Furthermore, the Fund
recognized $53,323 of net gain on sale of equipment in 1998 compared to $-0-
in 1997 and $403,111 in 1996. The fluctuation in this account contributed to
the increase in total revenues in 1998 and the decrease in total revenues in
1997. In 1998, the decrease in interest income resulting from lower cash
balances available for investment by the Fund, reduced the overall increase
in revenues. In 1997, however, interest income increased due to higher
interest rates earned on invested cash by the Fund which mitigated the over-
all decrease in total revenues from 1996.
Expenses were $3,408,425, $2,808,040 and $3,391,201 for the years ended
December 31, 1998, 1997 and 1996, respectively. Depreciation expense
comprised 76%, 75% and 71% of total expenses in 1998, 1997 and 1996,
respectively. The increase in total expenses in 1998 was primarily related
to an increase in depreciation expense resulting from equipment purchases
made during the year, as well as, depreciation recorded on equipment purchased
in 1997 for which a full year of depreciation expense was taken in 1998 and
only a partial year was taken in 1997. The decrease in expenses during 1997
was partially caused by the decrease in depreciation expense because of equip-
ment which came off lease and was terminated or sold. The fluctuation in
write-down of equipment to net realizable value also affected the change in
total expenses in 1998 and 1997. The Fund recorded approximately $247,000,
$62,000 and $382,000 of write-down of equipment to net realizable value
during 1998, 1997 and 1996, respectively. 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 accordance with Generally Accepted
Accounting Principles, the Fund writes down its rental equipment to its
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
estimated net realizable value when the amounts are reasonably estimated and
only recognizes gains upon actual sale of its rental equipment. Any future
losses are dependent upon unanticipated technological developments affecting
the types of equipment in the portfolio in subsequent years. The Fund had
no net loss on sale of equipment during 1998 and 1996. However, the Fund
incurred $178,961 of net loss on sale of equipment during the year ended
December 31, 1997. The variation in this account lowered the overall
increase in expenses in 1998 and contributed to the decrease in expenses
in 1997.
The Fund's net income was $232,105, $634,505 and $878,737 for the years
ended December 31, 1998, 1997 and 1996, respectively. The earnings per equi-
valent limited partnership unit, after earnings allocated to the General
Partner, were $9.05, $25.07 and $33.97 for the years ended December 31, 1998,
1997 and 1996, respectively. The weighted average number of equivalent
limited partnership units outstanding were 25,065, 25,054 and 25,610 for 1998,
1997 and 1996, respectively.
The Fund generated cash from operations of $3,019,439, $2,981,370 and
$3,275,285 for the purpose of determining cash available for distribution and
declared distributions of $525,000, $600,000 and $870,000 to partners for the
years ended December 31, 1998, 1997 and 1996, respectively. For financial
statement purposes, the Fund records cash distributions to partners on a
cash basis in the period in which they are paid. During the fourth quarter
of 1996, the General Partner revised its policy regarding cash distributions
so that the distributions more accurately reflect the net income of the Fund
over the most recent twelve months.
Analysis of Financial Condition
The Fund continues to purchase equipment for lease with cash available
from operations and sales proceeds which are not distributed to partners.
During the years ended December 31, 1998, 1997 and 1996, the Fund purchased
$2,335,867, $2,143,926 and $3,075,481, respectively, of equipment subject to
operating leases. Additionally, the Fund invested in $2,731,393 of direct
financing leases during the year 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 the
report commencing on page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
7
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 43, 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 49, Director and Secretary of FLPMI since
September 1995. Director of Resource America since 1994 and Senior Vice
President of Resource America since 1989.
SCOTT F. SCHAEFFER, age 36, 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:
STEPHEN P. CASO, age 43, Vice President and General Counsel of FLPMI
since 1992.
MARIANNE T. SCHUSTER, age 40, Vice President and Controller of FLPMI
since 1984.
KRISTIN L. CHRISTMAN, age 31, Portfolio Manager of FLPMI since December
1995 and Equipment Brokerage Manager since 1993.
8
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, 1998:
Name of Individual or Capacities in
Number in Group Which Served Compensation
F.L. Partnership
Management, Inc. General Partner $219,659(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, 1998, 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 1988, 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 1% of cash distri-
butions until the Limited Partners have received an amount equal to the
purchase price of their Units plus a 10% cumulative compounded priority
return; hereafter 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, 1998, the Fund was charged $219,659 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 initial lease terms in excess of 42 months for which rental payments
during the initial term are at least sufficient to recover the purchase price
of the equipment, including acquisition fees. A majority of the direct finan-
cing leases in which the Fund has invested meet the criteria for a full pay-
out lease and pay a 3% management fee to the General Partner. This manage-
ment fee is paid quarterly only if and when the Limited Partners have received
distributions for the period from January 1, 1989 through the end of the most
recent quarter equal to a return for such period at a rate of 12% per year on
the aggregate amount paid for their units.
The General Partner also receives 1% of cash distributions until the
Limited Partners have received an amount equal to the purchase price of their
Units plus a 10% cumulative compounded priority return. Thereafter, the
General Partner will receive 10% of cash distributions. During the year
ended December 31, 1998, the General Partner received $5,500 of cash distri-
butions.
The Fund incurred $206,109 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 1998.
9
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
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 V, L.P.
A Delaware limited partnership
By: F.L. PARTNERSHIP MANAGEMENT, INC.
Freddie M. Kotek
By: ___________________________
Freddie M. Kotek, Chairman and President
Dated March 27, 1999
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
Freddie M. Kotek and President of F.L. Partnership 3-27-99
Management, Inc.
(Principal Executive Officer)
Michael L. Staines
____________________________ Director of F.L. Partnership
Michael L. Staines Management, Inc. 3-27-99
Marianne T. Schuster
____________________________ Vice President and Controller
Marianne T. Schuster of F.L. Partnership Management, Inc. 3-27-99
(Principal Financial Officer)
11
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Certified Public Accountants F-2
Balance Sheets as of December 31, 1998 and 1997 F-3
Statements of Operations for the years ended
December 31, 1998, 1997 and 1996 F-4
Statements of Partners' Capital for the years ended
December 31, 1998, 1997 and 1996 F-5
Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 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
Report of Independent Certified Public Accountants
The Partners
Fidelity Leasing Income Fund V, L.P.
We have audited the accompanying balance sheets of Fidelity Leasing
Income Fund V, L.P. as of December 31, 1998 and 1997, and the related state-
ments of operations, partners' capital and cash flows for each of the three
years in the period ending December 31, 1998. 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 signi-
ficant 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 V, L.P. as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
Grant Thornton LLP
Philadelphia, Pennsylvania
February 12, 1999
F-2
FIDELITY LEASING INCOME FUND V, L.P.
BALANCE SHEETS
<TABLE>
ASSETS
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
Cash and cash equivalents $1,822,926 $3,679,630
Accounts receivable 232,606 193,525
Due from related parties 147,930 158,700
Equipment under operating leases (net of
accumulated depreciation of $4,559,234
and $7,078,588, respectively) 2,294,009 3,423,328
Net investment in direct financing leases 2,489,583 -
Equipment held for sale or lease 60,701 182
__________ __________
Total assets $7,047,755 $7,455,365
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 155,878 $ 253,242
Accounts payable and accrued expenses 84,219 109,888
Due to related parties 61,485 28,167
__________ __________
Total liabilities 301,582 391,297
Partners' capital 6,746,173 7,064,068
__________ __________
Total liabilities and partners' capital $7,047,755 $7,455,365
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
FIDELITY LEASING INCOME FUND V, L.P.
<TABLE>
STATEMENTS OF OPERATIONS
<CAPTION>
For the years ended December 31,
1998 1997 1996
Income:
<S> <C> <C> <C>
Rentals $3,290,957 $3,230,211 $3,667,788
Earned income on direct financing
leases 184,283 15,927 21,999
Interest 97,204 182,934 112,518
Gain on sale of equipment, net 53,323 - 403,111
Other 14,763 13,473 64,522
__________ __________ __________
3,640,530 3,442,545 4,269,938
__________ __________ __________
Expenses:
Depreciation 2,593,989 2,106,041 2,417,385
Write-down of equipment to net
realizable value 246,668 61,863 382,274
General and administrative 142,000 88,166 156,468
General and administrative to
related party 206,109 172,435 211,769
Management fee to related party 219,659 200,574 223,305
Loss on sale of equipment, net - 178,961 -
__________ __________ __________
3,408,425 2,808,040 3,391,201
__________ __________ __________
Net income $ 232,105 $ 634,505 $ 878,737
========== ========== ==========
Net income per equivalent limited
partnership unit $ 9.05 $ 25.07 $ 33.97
========== ========== ==========
Weighted average number of equivalent
limited partnership units outstanding
during the year 25,065 25,054 25,610
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
FIDELITY LEASING INCOME FUND V, L.P.
<TABLE>
STATEMENTS OF PARTNERS' CAPITAL
<CAPTION>
For the years ended December 31, 1998, 1997 and 1996
General Limited Partners
Partner Units Amount Total
_______ ___________________ _____
<S> <C> <C> <C> <C>
Balance, January 1, 1996 $3,321 78,970 $7,374,764 $7,378,085
Redemptions - (2,833) (267,259) (267,259)
Cash distributions (9,600) - (950,400) (960,000)
Net income 8,700 - 870,037 878,737
______ ______ __________ __________
Balance, December 31, 1996 2,421 76,137 7,027,142 7,029,563
Cash distributions (6,000) - (594,000) (600,000)
Net income 6,345 - 628,160 634,505
______ ______ __________ __________
Balance, December 31, 1997 2,766 76,137 7,061,302 7,064,068
Cash distributions (5,500) - (544,500) (550,000)
Net income 5,250 - 226,855 232,105
______ ______ __________ __________
Balance, December 31, 1998 $2,516 76,137 $6,743,657 $6,746,173
====== ====== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
FIDELITY LEASING INCOME FUND V, L.P.
<TABLE>
STATEMENTS OF CASH FLOWS
<CAPTION>
For the years ended December 31,
1998 1997 1996
Cash flows from operating activities:
<S> <C> <C> <C>
Net income $ 232,105 $ 634,505 $ 878,737
__________ __________ __________
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,593,989 2,106,041 2,417,385
Write-down of equipment to net
realizable value 246,668 61,863 382,274
(Gain) loss on sale of equipment, net (53,323) 178,961 (403,111)
(Increase) decrease in accounts receivable (39,081) 9,762 60,568
(Increase) decrease in due from related
parties 10,770 (145,073) 210,416
Increase (decrease) in lease rents paid
in advance (97,364) (151,100) (60,388)
Increase (decrease) in accounts payable
and accrued expenses (25,669) 30,472 (145,345)
Increase (decrease) in other, net 33,318 (28,318) 37,805
__________ __________ __________
Total adjustments 2,669,308 2,062,608 2,499,604
__________ __________ __________
Net cash provided by operating activities 2,901,413 2,697,113 3,378,341
__________ __________ __________
Cash flows from investing activities:
Acquisition of equipment (2,335,867) (2,143,926) (3,075,481)
Investment in direct financing leases (2,731,393) - -
Proceeds from direct financing leases,
net of earned income 556,790 209,459 71,320
Proceeds from sale of equipment 302,353 282,576 1,019,179
__________ __________ __________
Net cash used in investing activities (4,208,117) (1,651,891) (1,984,982)
__________ __________ __________
Cash flows from financing activities:
Distributions (550,000) (600,000) (960,000)
Redemptions of capital - - (267,259)
__________ __________ __________
Net cash used in financing activities (550,000) (600,000) (1,227,259)
__________ __________ __________
Increase (decrease) in cash and cash
equivalents (1,856,704) 445,222 166,100
Cash and cash equivalents, beginning of year 3,679,630 3,234,408 3,068,308
__________ __________ __________
Cash and cash equivalents, end of year $1,822,926 $3,679,630 $3,234,408
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
FIDELITY LEASING INCOME FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF BUSINESS
Fidelity Leasing Income Fund V, L.P. (the "Fund") was formed in January
1988. 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 equipment including
printers, tape and disk storage devices, data communications equipment,
computer terminals, technical workstations, 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 concentrations
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 dis-
closure 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
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.
F-7
FIDELITY LEASING INCOME FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting for Leases (Continued)
Acquisition fees associated with lease placements are allocated to equipment
when purchased and depreciated as part of equipment cost. Rental income
consists primarily 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 accum-
ulated depreciation are removed from the accounts and the resulting gain or
loss, if any, is reflected in income.
The Fund has direct financing leases, as well. Under the direct finan-
cing method, income (the excess of the aggregate future rentals and estimated
unguaranteed residuals 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
$31,742 and $96,000 or $1.27 and $3.75 per equivalent limited partnership
unit to write down its rental equipment in the fourth quarter of 1998 and
1996, respectively. There was no significant fourth quarter adjustment made
in 1997.
F-8
FIDELITY LEASING INCOME FUND V, 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 is currently in the process of ensuring that all of its systems
are Year 2000 compliant. The Fund's operating system is year 2000 capable.
Additionally, two of the three main software systems are Year 2000 compliant
and in the testing phase. The third software system is expected to be year
2000 capable by July 1999.
The costs incurred to make the software system Year 2000 compliant has
not been material as of December 31, 1998. It is not anticipated that any
remaining costs incurred to complete this project will have a material affect
on the net income of the Fund.
Furthermore, all significant outside suppliers have been contacted to
ensure that their systems will be Year 2000 compliant. All have indicated
that their systems are in compliance or that Year 2000 Compliance programs
will be completed in early 1999. If the Fund determines that any of its
significant external suppliers are not in compliance, the Fund will not be
materially adversely affected and will seek the services of another supplier.
4. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS
Cash distributions, if any, are made quarterly as follows: 99% to the
Limited Partners and 1% 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 allo-
cated 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.
5. EQUIPMENT LEASED
Equipment on lease consists of equipment under operating leases. The
lessees have agreements with the manufacturer of the equipment to provide
maintenance for the leased equipment. The Fund's operating leases are for
initial lease terms of 9 to 36 months.
F-9
FIDELITY LEASING INCOME FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. EQUIPMENT LEASED (Continued)
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 1998, 1997 and 1996, approxi-
mately $247,000, $62,000 and $382,000, respectively was charged to write-down
of equipment to net realizable value. Any future losses are dependent upon
technological developments affecting the equipment in subsequent years.
Unguaranteed residuals for direct financing leases represent the
estimated amounts recoverable at lease termination from lease extensions or
disposition of the equipment. The Fund reviews these residual values
quarterly. If the equipment's fair market value at lease expiration is below
the estimated residual value, an adjustment is made.
The net investment in direct financing leases as of December 31, 1998 is
as follows:
Minimum lease payments to be received $2,812,000
Unguaranteed residuals 151,000
Unearned rental income (432,000)
Unearned residual income (41,000)
__________
$2,490,000
==========
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
1999 $1,411,000 $ 959,000
2000 457,000 627,000
2001 - 494,000
2002 - 488,000
2003 - 244,000
__________ __________
$1,868,000 $2,812,000
========== ==========
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 admini-
strative and management services performed on behalf of the Fund. Full
pay-out leases are non-cancellable 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.
This management fee is paid quarterly only if and when the Limited Partners
have received distributions for the period from January 1, 1989 through the
end of the most recent quarter equal to a return for such period at a rate
of 12% per year on the aggregate amount paid for their units.
F-10
FIDELITY LEASING INCOME FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
6. RELATED PARTY TRANSACTIONS (Continued)
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 or its parent
company during the years ended December 31:
1998 1997 1996
Management fee $219,659 $200,574 $223,305
Reimbursable costs 206,109 172,435 211,769
During 1998, the Fund maintained 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 December 31, 1998 and 1997 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, 1998 and 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.
7. MAJOR CUSTOMERS
For the year ended December 31, 1998, three customers accounted for
approximately 34%, 17% and 10% of the Fund's rental income. For the year
ended December 31, 1997, one customer accounted for approximately 26% and
two customers accounted for 14% each of the Fund's rental income. For the
year ended December 31, 1996, one customer generated approximately 11% of the
Fund's rental income.
F-11
FIDELITY LEASING INCOME FUND V, 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 1998 1997 1996
<CAPTION>
<S> <C> <C> <C>
February $150,000 $150,000 $240,000
May 150,000 150,000 240,000
August 125,000 150,000 240,000
November 125,000 150,000 240,000
________ ________ ________
$550,000 $600,000 $960,000
======== ======== ========
</TABLE>
In addition, the General Partner declared and paid a cash distribution of
$125,000 in February 1999 for the three months ended December 31, 1998, to all
admitted partners as of December 31, 1998.
F-12
0
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,822,926
<SECURITIES> 0
<RECEIVABLES> 380,536
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,203,462
<PP&E> 6,913,944
<DEPRECIATION> 4,559,234
<TOTAL-ASSETS> 7,047,755
<CURRENT-LIABILITIES> 301,582
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,746,173
<TOTAL-LIABILITY-AND-EQUITY> 7,047,755
<SALES> 3,290,957
<TOTAL-REVENUES> 3,640,530
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,408,425
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 232,105
<INCOME-TAX> 0
<INCOME-CONTINUING> 232,105
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 232,105
<EPS-PRIMARY> 9.05
<EPS-DILUTED> 9.05
</TABLE>
