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, 1995
/ / 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: 0-19232
Fidelity Leasing Income Fund VII, L.P.
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 23-2581971
_______________________________________________________________________________
(State of organization) (I.R.S. Employer Identification No.)
250 King of Prussia Road, Radnor, PA 19087
_______________________________________________________________________________
(Address of principal executive offices) (Zip code)
(610) 964-7102
_______________________________________________________________________________
(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 VII, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
September 30, December 31,
1995 1994
_____________ ____________
Cash and cash equivalents $3,041,794 $ 4,782,344
Investment securities held to maturity - 495,991
Accounts receivable 83,633 93,178
Interest receivable 5,156 29,579
Due from related parties 11,959 109,450
Equipment under operating leases
(net of accumulated depreciation
of $13,368,678 and $15,372,609,
respectively) 9,526,218 9,753,048
Net investment in direct financing leases 41,234 47,752
Equipment held for sale or lease 47,376 411,449
Organization costs
(net of accumulated amortization of
$10,000 and $9,334, respectively) - 666
___________ ___________
Total assets $12,757,370 $15,723,457
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 79,459 $ 273,939
Accounts payable and
accrued expenses 430,741 248,337
Due to related parties 192,391 177,205
___________ ___________
Total liabilities 702,591 699,481
Partners' capital 12,054,779 15,023,976
___________ ___________
Total liabilities and
partners' capital $12,757,370 $15,723,457
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
FIDELITY LEASING INCOME FUND VII, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
____ ____ ____ ____
Income:
Rentals $1,238,981 $1,846,461 $4,011,518 $6,026,512
Earned income on direct
financing leases 951 1,145 3,002 3,571
Interest 40,666 75,872 190,483 210,839
Gain on sale of equipment,
net 136,731 62,057 56,568 212,544
Other 2,824 8,804 19,832 11,000
__________ __________ __________ __________
1,420,153 1,994,339 4,281,403 6,464,466
__________ __________ __________ __________
Expenses:
Depreciation and
amortization 1,000,835 1,592,198 3,270,660 5,218,340
Write-down of equipment
to net realizable value 24,810 50,000 276,113 150,000
General and administrative 27,068 22,743 70,213 78,857
General and administrative
to related party 44,376 93,004 170,520 250,415
Management fee to
related party 61,558 87,732 192,431 280,091
__________ __________ __________ __________
1,158,647 1,845,677 3,979,937 5,977,703
__________ __________ __________ __________
Net income $ 261,506 $ 148,662 $ 301,466 $ 486,763
========== ========== ========== ==========
Net income per equivalent
limited partnership unit $ 7.37 $ 3.27 $ 7.51 $ 10.25
========== ========== ========== ==========
Weighted average number of
equivalent limited
partnership units outstanding
during the period 34,059 42,267 36,000 44,413
========== ========== ========= ==========
The accompanying notes are an integral part of these financial statements.
3
FIDELITY LEASING INCOME FUND VII, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the nine months ended September 30, 1995
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1995 $ 4,484 69,572 $15,019,492 $15,023,976
Redemptions - (784) (157,000) (157,000)
Cash distributions (31,136) - (3,082,527) (3,113,663)
Net income 31,096 - 270,370 301,466
_______ ______ ___________ ___________
Balance, September 30, 1995 $ 4,444 68,788 $12,050,335 $12,054,779
======= ====== =========== ===========
The accompanying notes are an integral part of these financial statements.
4
FIDELITY LEASING INCOME FUND VII, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1995 and 1994
(Unaudited)
1995 1994
____ ____
Cash flows from operating activities:
Net income $ 301,466 $ 486,763
__________ __________
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 3,270,660 5,218,340
Write-down of equipment to
net realizable value 276,113 150,000
Proceeds from direct financing leases, net
of earned income 6,518 5,949
Gain on sale of equipment, net (56,568) (212,544)
(Increase) decrease in accounts receivable 9,545 16,838
(Increase) decrease in interest receivable 24,423 9,953
(Increase) decrease in due from related
parties 97,491 486,875
Increase (decrease) in lease rents paid
in advance (194,480) (145,501)
Increase (decrease) in accounts payable
and accrued expenses 182,404 288,097
Increase (decrease) in due to related
parties 15,186 (97,636)
__________ __________
3,631,292 5,720,371
__________ __________
Net cash provided by operating activities 3,932,758 6,207,134
__________ __________
Cash flows from investing activities:
Acquisition of equipment (3,972,406) (5,711,161)
Purchase of investment securities
held to maturity (250,253) -
Maturity of investment securities
held to maturity 746,244 1,247,851
Proceeds from sale of equipment 1,073,770 959,472
__________ __________
Net cash used in investing activities (2,402,645) (3,503,838)
__________ __________
Cash flows from financing activities:
Redemptions of capital (157,000) (516,678)
Distributions (3,113,663) (3,166,055)
__________ __________
Net cash used in financing activities (3,270,663) (3,682,733)
__________ __________
Decrease in cash and cash equivalents (1,740,550) (979,437)
Cash and cash equivalents, beginning
of period 4,782,344 5,284,487
__________ __________
Cash and cash equivalents, end of period $3,041,794 $4,305,050
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(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 1994 financial statements have been
reclassified to conform to the presentation adopted in 1995.
1. EQUIPMENT LEASED
Equipment on lease consists primarily of computer peripheral equipment
under operating leases. A majority of the equipment was manufactured by
IBM. The lessees have agreements with the manufacturer to provide main-
tenance for the leased equipment. The Fund's operating leases are for
initial lease terms of 16 to 60 months. Generally, operating leases will
not recover all of the undepreciated cost and related expenses of its
rental equipment during the initial lease terms and the Fund is prepared to
remarket the equipment in future years. Fund policy is to review quarterly
the expected economic life of its rental equipment in order to determine
the recoverability of its undepreciated cost. Recent and anticipated
technological developments affecting computer equipment and competitive
factors in the marketplace are considered among other things, as part of
this review. In accordance with Generally Accepted Accounting Principles,
the Fund writes down its rental equipment to its estimated net realizable
value when the amounts are reasonably estimated and only recognizes gains
upon actual sale of its rental equipment. As a result, $276,113 and
$150,000 were charged to write-down of equipment to net realizable value
for the nine months ended September 30, 1995 and 1994, respectively. Any
future losses are dependent upon unanticipated technological developments
affecting the computer equipment industry in subsequent years.
The Fund also has equipment leased under the direct financing method in
accordance with Statement of Financial Accounting Standards No. 13. This
method provides for recognition of income (the excess of the aggregate
future rentals and estimated additional amounts recoverable upon expiration
of the lease over the related equipment cost) over the life of the lease
using the interest method.
The net investment in direct financing leases as of September 30, 1995 are
as follows:
Net minimum lease payments to be received $49,000
Less unearned income 8,000
Add expected future residuals -
_______
$41,000
=======
6
FIDELITY LEASING INCOME FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. EQUIPMENT LEASED (Continued)
The future approximate minimum rentals to be received on noncancellable
operating leases and direct financing leases as of September 30, 1995 are
as follows:
Direct
Years Ending December 31 Operating Financing
________________________ _________ _________
1995 $1,190,000 $ 3,000
1996 3,834,000 13,000
1997 2,301,000 13,000
1998 676,000 13,000
1999 and thereafter 379,000 7,000
__________ _______
$8,380,000 $49,000
========== =======
2. RELATED PARTY TRANSACTIONS
The General Partner receives 5% or 2% of gross rental payments from equip-
ment under operating leases and full pay-out leases, respectively, for
administrative and management services performed on behalf of the Fund.
Full pay-out leases are noncancellable leases for which the rental payments
due during the initial term of the lease are at least sufficient to recover
the purchase price of the equipment, including acquisition fees. This
management fee is paid monthly after the Limited Partners have received
distributions at a rate of 12% per year on the aggregate amount paid for
their units.
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 con-
nection with the disposition of equipment.
Additionally, the General Partner and its affiliates 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 affiliates during the three and nine months ended September
30, 1995 and 1994:
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
____ ____ ____ ____
Management fee $61,558 $87,732 $192,431 $280,091
Reimbursable costs 44,376 93,004 170,520 250,415
Sales fee 11,867 15,455 33,361 29,694
Amounts due from related parties at September 30, 1995 and December 31,
1994 represent monies due the Fund from the General Partner and/or other
affiliated funds for rentals and sales proceeds collected and not yet re-
mitted the Fund.
Amounts due to related parties at September 30, 1995 and December 31, 1994
represent monies due to the General Partner for the fees and costs men-
tioned above, as well as, rentals and sales proceeds collected by the Fund
on behalf of other affiliated funds.
7
FIDELITY LEASING INCOME FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
3. SUBSEQUENT EVENT
Cash Distribution:
The General Partner declared and paid a cash distribution of $344,307 in
October 1995 for the month ended September 30, 1995, to all admitted
partners as of September 30, 1995.
8
FIDELITY LEASING INCOME FUND VII, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Fidelity Leasing Income Fund VII, L.P. had revenues of $1,420,153 and
$1,994,339 for the three months ended September 30, 1995 and 1994,
respectively, and $4,281,403 and $6,464,466 for the nine months ended September
30, 1995 and 1994, respectively. Rental income from the leasing of computer
peripheral equipment accounted for 87% and 93% of total revenues for the third
quarter of 1995 and 1994, respectively and 94% and 93% for the nine months
ended September 30, 1995 and 1994, respectively. The decrease in revenues is
primarily attributable to a decrease in rental income. Rental income decreased
during 1995 by approximately $2,941,000 because of equipment which came off
lease and was re-leased at lower rental rates or sold. This decrease, however,
was offset by an increase of approximately $926,000 resulting from rental
income realized on equipment purchases made since September 30, 1994.
Additionally, the Fund incurred a net gain on sale of equipment of $56,568
during the first nine months of 1995 as compared to a net gain of $212,544 for
the first nine months of 1994 which also contributed to the decrease in total
revenues in 1995.
Expenses were $1,158,647 and $1,845,677 for the three months ended Septem-
ber 30, 1995 and 1994, respectively, and $3,979,937 and $5,977,703 for the nine
months ended September 30, 1995 and 1994, respectively. Depreciation and
amortization comprised 86% of total expenses for the third quarter of
both 1995 and 1994 and 82% and 87% of total expenses for the nine months ended
September 30, 1995 and 1994, respectively. The decrease in expenses is
directly related to the decrease in depreciation expense caused by equipment
which came off lease or was terminated and sold since September 1994.
Additionally, the decrease in management fees to related party resulting from
the decrease in rentals also contributed to the decrease in total expenses.
Furthermore, general and administrative expenses to related party decreased
in 1995 because of the decrease in reimbursable costs incurred to the General
Partner for remarketing of equipment. However, these decreases were offset by
an increase in the write-down of equipment to net realizable value in 1995.
Based upon the quarterly review of the recoverability of the undepreciated cost
of rental equipment, $276,113 and $150,000 was charged to expenses to write
down equipment to its estimated net realizable value during the nine months
ended September 30, 1995 and 1994, respectively. Any future losses are
dependent upon unanticipated technological developments affecting the computer
equipment industry in subsequent years.
The Fund's net income was $261,506 and $148,662 for the three months ended
September 30, 1995 and 1994, respectively, and $301,466 and $486,763 for the
nine months ended September 30, 1995 and 1994, respectively. The earnings
per equivalent limited partnership unit, after earnings allocated to the
General Partner, were $7.37 and $3.27 based on a weighted average number of
equivalent limited partnership units outstanding of 34,059 and 42,267 for the
three months ended September 30, 1995 and 1994, respectively. The earnings per
equivalent limited partnership unit, after earnings allocated to the General
Partner, were $7.51 and $10.25 based on a weighted average number of equivalent
limited partnership units outstanding of 36,000 and 44,413 for the nine months
ended September 30, 1995 and 1994, respectively.
9
FIDELITY LEASING INCOME FUND VII, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS (Continued)
The Fund generated $1,150,420 and $1,728,803 of funds from operations,
for the purpose of determining cash available for distribution, for the quarter
ended September 30, 1995 and 1994, respectively, and distributed 60% and 40% to
partners during the third quarter of 1995 and 1994, respectively, and 30% and
20% to partners in October 1995 and 1994, respectively. For the nine months
ended September 30, 1995 and 1994, the Fund generated $3,791,671 and $5,642,559
of funds from operations and distributed 73% and 56% of these amounts to
partners during the nine months ended September 30, 1995 and 1994,
respectively, and 9% and 6% of these amounts to partners in October 1995 and
1994, respectively.
ANALYSIS OF FINANCIAL CONDITION
During the nine months ended September 30, 1995 and 1994, the Fund
purchased $3,972,406 and $5,711,161, respectively, of equipment. The Fund will
continue to purchase equipment with sales proceeds and cash available from
operations which is not distributed to partners.
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 VII, L.P.
September 30, 1995
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: A report on Form 8-K was filed with the
Securities and Exchange Commission on October 12, 1995 reporting
under Item 1.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the regis-
trant has duly caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
FIDELITY LEASING INCOME FUND VII, L.P.
11-14-95 By: P. Donald Mooney
________ _____________________________
Date P. Donald Mooney
President of
Fidelity Leasing Corporation
(Principal Operating Officer)
11-14-95 By: Marianne T. Schuster
________ _____________________________
Date Marianne T. Schuster
Vice President of
Fidelity Leasing Corporation
(Principal Financial Officer)
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the regis-
trant has duly caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
FIDELITY LEASING INCOME FUND VII, L.P.
_______ _____________________________
Date P. Donald Mooney
President of
Fidelity Leasing Corporation
(Principal Operating Officer)
_______ _____________________________
Date Marianne T. Schuster
Vice President of
Fidelity Leasing Corporation
(Principal Financial Officer)
12
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 3,041,794
<SECURITIES> 0
<RECEIVABLES> 100,748
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,142,542
<PP&E> 22,942,272
<DEPRECIATION> 13,368,678
<TOTAL-ASSETS> 12,757,370
<CURRENT-LIABILITIES> 702,591
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 12,054,779
<TOTAL-LIABILITY-AND-EQUITY> 12,757,370
<SALES> 4,011,518
<TOTAL-REVENUES> 4,281,403
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,979,937
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 301,466
<INCOME-TAX> 0
<INCOME-CONTINUING> 301,466
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 301,466
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