SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1996
/ / 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.)
7 E. Skippack Pike, Suite 275, Ambler, Pennsylvania 19002
_______________________________________________________________________________
(Address of principal executive offices) (Zip code)
(215) 619-2800
_______________________________________________________________________________
(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 11
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND VII, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
March 31, December 31,
1996 1995
____________ ____________
Cash and cash equivalents $ 3,203,332 $ 2,199,456
Investment securities held to maturity 499,740 499,740
Accounts receivable 178,934 78,373
Interest receivable 4,359 15,225
Due from related parties 9,400 66,249
Equipment under operating leases
(net of accumulated depreciation
of $15,070,604 and $14,445,214,
respectively) 7,723,658 8,670,653
Net investment in direct financing leases 36,635 38,961
Equipment held for sale or lease 315 26,116
___________ ___________
Total assets $11,656,373 $11,594,773
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 79,205 $ 47,361
Accounts payable and
accrued expenses 595,398 81,601
Due to related parties 291,397 204,707
___________ ___________
Total liabilities 966,000 333,669
Partners' capital 10,690,373 11,261,104
___________ ___________
Total liabilities and
partners' capital $11,656,373 $11,594,773
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
FIDELITY LEASING INCOME FUND VII, L.P.
STATEMENTS OF OPERATIONS
For the three months ended March 31, 1996 and 1995
(Unaudited)
1996 1995
________ ________
Income:
Rentals $1,247,330 $1,374,280
Earned income on direct financing leases 848 1,050
Interest 28,943 76,916
Gain on sale of equipment, net 54,797 -
Other 1,138 15,863
__________ __________
1,333,056 1,468,109
__________ __________
Expenses:
Depreciation and amortization 961,385 1,131,303
Write-down of equipment to net
realizable value 145,938 50,000
General and administrative 38,942 30,920
General and administrative to related
party 64,546 49,954
Management fee to related party 62,269 64,792
Loss on sale of equipment, net - 8,496
__________ __________
1,273,080 1,335,465
__________ __________
Net income $ 59,976 $ 132,644
========== ==========
Net income per equivalent
limited partnership unit $ 1.84 $ 3.22
========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during the period 31,573 37,953
========== ==========
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 three months ended March 31, 1996
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1996 $(31,464) 68,718 $11,292,568 $11,261,104
Redemptions - (3,129) (510,707) (510,707)
Cash distributions (1,200) - (118,800) (120,000)
Net income 1,800 - 58,176 59,976
________ ______ ___________ ___________
Balance, March 31, 1996 $(30,864) 65,589 $10,721,237 $10,690,373
======== ====== =========== ===========
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 three months ended March 31, 1996 and 1995
(Unaudited)
1996 1995
________ ________
Cash flows from operating activities:
Net income $ 59,976 $ 132,644
__________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 961,385 1,131,303
Write-down of equipment to net
realizable value 145,938 50,000
Proceeds from direct financing leases, net
of earned income 2,325 2,123
(Gain) loss on sale of equipment, net (54,797) 8,496
(Increase) decrease in accounts receivable (100,561) (59,108)
(Increase) decrease in interest receivable 10,866 14,575
(Increase) decrease in due from related parties 56,849 109,250
Increase (decrease) in lease rents paid
in advance 31,844 (113,635)
Increase (decrease) in accounts payable and
accrued expenses 513,797 348,157
Increase (decrease) in due to related parties 86,690 (12,956)
__________ __________
1,654,336 1,478,205
__________ __________
Net cash provided by operating activities 1,714,312 1,610,849
__________ __________
Cash flows from investing activities:
Acquisition of equipment (173,002) (730,120)
Maturity of investment securities held
to maturity - 245,738
Proceeds from sale of equipment 93,273 612,768
__________ __________
Net cash provided by (used in)
investing activities (79,729) 128,386
__________ __________
Cash flows from financing activities:
Redemptions of capital (510,707) (124,762)
Distributions (120,000) (1,043,575)
__________ __________
Net cash used in financing activities (630,707) (1,168,337)
__________ __________
Increase in cash and cash equivalents 1,003,876 570,898
Cash and cash equivalents, beginning
of period 2,199,456 4,782,344
__________ __________
Cash and cash equivalents, end of period $3,203,332 $5,353,242
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(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.
1. ORGANIZATION
In February 1996, the name of the General Partner was changed from Fidelity
Leasing Corporation to F.L. Partnership Management, Inc.
2. 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 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, $145,938 and $50,000 were charged to write-
down of equipment to net realizable value for the three months ended March
31, 1996 and 1995, 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 March 31, 1996 is as
follows:
Net minimum lease payments to be received $42,000
Less unearned income 6,000
Add expected future residuals -
_______
$36,000
=======
6
FIDELITY LEASING INCOME FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. EQUIPMENT LEASED (CONTINUED)
The future approximate minimum rentals to be received on noncancellable
operating leases and direct financing leases as of March 31, 1996 are as
follows:
Direct
Years Ending December 31 Operating Financing
________________________ _________ _________
1996 $3,129,000 $ 9,000
1997 2,548,000 13,000
1998 807,000 13,000
1999 269,000 7,000
2000 112,000 -
__________ _______
$6,865,000 $42,000
========== =======
3. 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 only if and when the Limited Partners have
received distributions for the period from January 1991 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 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 months ended March 31:
1996 1995
________ ________
Management fee $62,269 $64,792
Reimbursable costs 64,546 49,954
Accrued sales fee 2,885 18,952
Amounts due from related parties at March 31, 1996 and December 31, 1995
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 to the Fund.
Amounts due to related parties at March 31, 1996 and December 31, 1995
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)
4. SUBSEQUENT EVENT
Cash Distribution:
The General Partner declared a cash distribution of $60,000 in April 1996
for the month ended March 31, 1996, to all admitted partners as of
March 31, 1996.
8
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 $1,333,056 and
$1,468,109 for the three months ended March 31, 1996 and 1995, respectively.
Rental income from the leasing of computer peripheral equipment accounted for
94% of total revenues for the first quarter of both 1996 and 1995. The de-
crease in revenues is primarily attributable to a decrease in rental income.
Rental income decreased during 1996 by approximately $556,000 because of
equipment which came off lease and was re-leased at lower rental rates or sold.
This decrease, however, was reduced by an increase of approximately $429,000 in
rental income realized from equipment purchases made since March 31, 1995.
Additionally, the decrease in interest income in 1996 resulting from lower cash
balances available for investment also contributed to the decrease in total
revenues. Additionally, the Fund recognized a net gain on sale of equipment of
$54,797 during the first quarter of 1996 as compared to a net loss on sale of
equipment of $8,496 for the first quarter of 1995 which lessened the overall
decrease in total revenues in 1996.
Expenses were $1,273,080 and $1,335,465 during the three months ended March
31, 1996 and 1995, respectively. Depreciation and amortization comprised 76%
and 85% of total expenses during the first quarter of 1996 and 1995,
respectively. The decrease in expenses is primarily related to the decrease in
depreciation expense due to equipment which came off lease since the first
quarter of 1995. However, the increase in write-down of equipment to net
realizable value in 1996 reduced the overall decrease in total expenses. Based
upon the quarterly review of the recoverability of the undepreciated cost of
rental equipment, $145,938 and $50,000 was charged to operations to write down
equipment to its estimated net realizable value during the three months ended
March 31, 1996 and 1995, respectively. Any future losses are dependent upon
unanticipated technological developments affecting the computer equipment
industry in subsequent years.
For the three months ended March 31, 1996 and 1995, the Fund had net income
of $59,976 and $132,644, respectively. The earnings per equivalent limited
partnership unit, after earnings allocated to the General Partner were $1.84
and $3.22 based on a weighted average number of equivalent limited partnership
units outstanding of 31,573 and 37,953 for the three months ended March 31,
1996 and 1995, respectively.
The Fund generated $1,112,502 and $1,322,443 of funds from operations, for
the purpose of determining cash available for distribution, during the quarter
ended March 31, 1996 and 1995, respectively and distributed 11% and 53% of
these amounts to partners during the first quarter of 1996 and 1995, respec-
tively and 5% and 26% of these amounts to partners in April 1996 and 1995,
respectively.
ANALYSIS OF FINANCIAL CONDITION
During the quarter ended March 31, 1996 and 1995, the Fund purchased
$173,002 and $730,120 respectively, of equipment. The Fund will continue to
purchase equipment with 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.
9
Part II: Other Information
FIDELITY LEASING INCOME FUND VII, L.P.
March 31, 1996
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: None
b) Reports on Form 8-K: None
10
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.
5-14-96 By: Freddie M. Kotek
_______ ___________________________
Date Freddie M. Kotek
President of
F.L. Partnership Management, Inc.
(Principal Operating Officer)
5-14-96 By: Marianne T. Schuster
_______ ___________________________
Date Marianne T. Schuster
Vice President of
F.L. Partnership Management, Inc.
(Principal Financial Officer)
11
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,203,332
<SECURITIES> 499,740
<RECEIVABLES> 192,693
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,895,765
<PP&E> 22,794,577
<DEPRECIATION> 15,070,604
<TOTAL-ASSETS> 11,656,373
<CURRENT-LIABILITIES> 966,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,690,373
<TOTAL-LIABILITY-AND-EQUITY> 11,656,373
<SALES> 1,247,330
<TOTAL-REVENUES> 1,333,056
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,273,080
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 59,976
<INCOME-TAX> 0
<INCOME-CONTINUING> 59,976
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 59,976
<EPS-PRIMARY> 1.84
<EPS-DILUTED> 1.84
</TABLE>
