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, 1997
/ / 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.)
7004 W. Butler Pike, 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 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,
1997 1996
_____________ ____________
Cash and cash equivalents $ 3,436,239 $2,983,264
Accounts receivable 204,882 146,010
Due from related parties 40,965 48,254
Equipment under operating leases
(net of accumulated depreciation
of $9,385,856 and $11,958,429,
respectively) 6,574,166 7,704,003
Net investment in direct financing leases 21,515 29,334
Equipment held for sale or lease 565,308 30,168
___________ ___________
Total assets $10,843,075 $10,941,033
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 100,589 $ 98,834
Accounts payable and
accrued expenses 77,194 67,530
Due to related parties 5,937 19,620
___________ ___________
Total liabilities 183,720 185,984
Partners' capital 10,659,355 10,755,049
___________ ___________
Total liabilities and
partners' capital $10,843,075 $10,941,033
=========== ===========
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
1997 1996 1997 1996
____ ____ ____ ____
Income:
Rentals $1,243,191 $1,287,599 $3,663,516 $3,738,585
Earned income on direct
financing leases 508 740 1,702 2,383
Interest 36,574 21,993 128,609 110,151
Gain on sale of equipment,
net - 317,035 54,255 606,027
Other 3,634 2,823 7,867 6,345
__________ __________ __________ __________
1,283,907 1,630,190 3,855,949 4,463,491
__________ __________ __________ __________
Expenses:
Depreciation 1,007,871 1,017,226 3,001,194 2,909,709
Write-down of equipment
to net realizable value 14,039 133,455 45,401 412,848
General and administrative 28,515 30,982 77,546 100,452
General and administrative
to related party 42,340 74,961 174,136 216,604
Management fee to
related party 62,223 64,444 183,366 186,959
Loss on sale of equipment,
net 25,210 - - -
__________ __________ __________ __________
1,180,198 1,321,068 3,481,643 3,826,572
__________ __________ __________ __________
Net income $ 103,709 $ 309,122 $ 374,306 $ 636,919
========== ========== ========== ==========
Net income per equivalent
limited partnership unit $ 3.34 $ 9.89 $ 12.18 $ 20.29
========== ========== ========== ==========
Weighted average number of
equivalent limited
partnership units outstanding
during the period 30,667 31,067 30,381 31,127
========== ========== ========= ==========
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, 1997
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1997 $(30,264) 65,589 $10,785,313 $10,755,049
Cash distributions (4,700) - (465,300) (470,000)
Net income 4,400 - 369,906 374,306
________ ______ ___________ ___________
Balance, September 30, 1997 $(30,564) 65,589 $10,689,919 $10,659,355
======== ====== =========== ===========
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, 1997 and 1996
(Unaudited)
1997 1996
____ ____
Cash flows from operating activities:
Net income $ 374,306 $ 636,919
__________ __________
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 3,001,194 2,909,709
Write-down of equipment to
net realizable value 45,401 412,848
Proceeds from direct financing leases, net
of earned income 7,819 7,137
Gain on sale of equipment, net (54,255) (606,027)
(Increase) decrease in accounts receivable (58,872) (155,355)
(Increase) decrease in interest receivable - (21,938)
(Increase) decrease in due from related
parties 7,289 (139,704)
Increase (decrease) in lease rents paid
in advance 1,755 46,671
Increase (decrease) in accounts payable
and accrued expenses 9,664 98,441
Increase (decrease) in due to related
parties (13,683) (204,707)
__________ __________
2,946,312 2,347,075
__________ __________
Net cash provided by operating activities 3,320,618 2,983,994
__________ __________
Cash flows from investing activities:
Acquisition of equipment (2,643,930) (3,635,051)
Maturity of investment securities
held to maturity - 499,740
Proceeds from sale of equipment 246,287 675,214
__________ __________
Net cash used in investing activities (2,397,643) (2,460,097)
__________ __________
Cash flows from financing activities:
Redemptions of capital - (510,707)
Distributions (470,000) (480,000)
__________ __________
Net cash used in financing activities (470,000) (990,707)
__________ __________
Increase (decrease) in cash and
cash equivalents 452,975 (466,810)
Cash and cash equivalents, beginning
of period 2,983,264 2,199,456
__________ __________
Cash and cash equivalents, end of period $3,436,239 $1,732,646
========== ==========
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, 1997
(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 1996 financial statements have been
reclassified to conform to the presentation in 1997.
1. 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 11
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, $45,401 and $412,848 was charged to write-
down of equipment to net realizable value for the nine months ended
September 30, 1997 and 1996, 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, 1997 are
as follows:
Net minimum lease payments to be received $23,000
Less unearned income 2,000
Add expected future residuals -
_______
$21,000
=======
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, 1997 are
as follows:
Direct
Years Ending December 31 Operating Financing
________________________ _________ _________
1997 $ 907,000 $ 3,000
1998 2,614,000 13,000
1999 1,652,000 7,000
2000 440,000 -
__________ _______
$5,613,000 $23,000
========== =======
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 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. 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 12% cumulative compounded
priority return. Based on current estimates, it is not expected that the
Fund will be required to pay this sales fee to the General Partner.
Additionally, the General Partner and its parent company are reimbursed by
the Fund for certain costs of services and materials used by or for the
Fund except those items covered by the above-mentioned fees. Following is
a summary of fees and costs of services and materials charged by the
General Partner or its parent company during the three and nine months
ended September 30, 1997 and 1996:
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
____ ____ ____ ____
Management fee $62,223 $64,444 $183,366 $186,959
Reimbursable costs 42,340 74,961 174,136 216,604
7
FIDELITY LEASING INCOME FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
The Fund maintains its checking and investment accounts in Jefferson Bank,
a subsidiary of JeffBanks, Inc., in which the Chairman of Resource America,
Inc. serves as a director.
Amounts due from related parties at September 30, 1997 and December 31,
1996 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, 1997 and December 31, 1996
represent monies due to the General Partner for the fees and costs
mentioned above, as well as, rentals and sales proceeds collected by the
Fund on behalf of other affiliated funds.
3. CASH DISTRIBUTION
The General Partner declared and paid a cash distribution of $50,000 and
$40,000 in October and November 1997 for the months ended August 31, 1997
and September 30, 1997, to all admitted partners as of August 31, 1997 and
September 30, 1997.
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 $1,283,907 and
$1,630,190 for the three months ended September 30, 1997 and 1996, respec-
tively, and $3,855,949 and $4,463,491 for the nine months ended September 30,
1997 and 1996, respectively. Rental income from the leasing of computer
equipment accounted for 97% and 79% of total revenues for the third quarter of
1997 and 1996, respectively and 95% and 84% for the nine months ended
September 30, 1997 and 1996, respectively. The decrease in revenues is
primarily attributable to the decrease in net gain on sale of equipment. The
Fund recognized a net gain on sale of equipment of $54,255 during the first
nine months of 1997 as compared to $606,027 for the first nine months of 1996.
Additionally, the decrease in rental income contributed to the decrease in
total revenues. Rental income decreased during 1997 by approximately
$1,018,000 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 $943,000 of rental income realized from equipment purchases made
since September 30, 1996 as well as rental income earned on 1996 equipment
purchases for which a full nine months was earned in 1997 and only a portion of
the nine months was earned in 1996.
Expenses were $1,180,198 and $1,321,068 for the three months ended Septem-
ber 30, 1997 and 1996, respectively, and $3,481,643 and $3,826,572 for the nine
months ended September 30, 1997 and 1996, respectively. Depreciation comprised
85% and 77% of total expenses for the third quarter of 1997 and 1996,
respectively and 86% and 76% of total expenses for the nine months ended
September 30, 1997 and 1996, respectively. The decrease in expenses in 1997 is
primarily related to the decrease in write-down of equipment to net realizable
value. Based upon the quarterly review of the recoverability of the
undepreciated cost of rental equipment, $45,401 and $412,848 was charged to
operations to write down equipment to its estimated net realizable value during
the nine months ended September 30, 1997 and 1996, respectively. Any future
losses are dependent upon unanticipated technological developments affecting
the computer equipment industry in subsequent years. However, the overall
decrease in expenses in 1997 was reduced by the increase in depreciation
expense during the nine months ended September 30, 1997. Depreciation
expense increased because of depreciation expense taken on equipment purchases
made in 1997 as well as depreciation expense on 1996 equipment purchases for
which a full nine months of depreciation expense was recorded in 1997 and only
a portion of the nine months was recorded in 1996.
The Fund's net income was $103,709 and $309,122 for the three months ended
September 30, 1997 and 1996, respectively, and $374,306 and $636,919 for the
nine months ended September 30, 1997 and 1996, respectively. The earnings
per equivalent limited partnership unit, after earnings allocated to the
General Partner, were $3.34 and $9.89 based on a weighted average number of
equivalent limited partnership units outstanding of 30,667 and 31,067 for the
three months ended September 30, 1997 and 1996, respectively. The earnings per
equivalent limited partnership unit, after earnings allocated to the General
Partner, were $12.18 and $20.29 based on a weighted average number of equiva-
lent limited partnership units outstanding of 30,381 and 31,127 for the nine
months ended September 30, 1997 and 1996, 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 $1,150,829 and $1,142,768 of cash from operations,
for the purpose of determining cash available for distribution for the quarter
ended September 30, 1997 and 1996, respectively, and distributed 4% and 11% to
partners during the third quarter of 1997 and 1996, respectively, and 8% and
5% to partners subsequent to September 30 1997 and 1996, respectively. For the
nine months ended September 30, 1997 and 1996, the Fund generated $3,366,646
and $3,353,449 of cash from operations and distributed 10% and 14% of these
amounts to partners during the nine months ended September 30, 1997 and 1996,
respectively and 3% and 2% of these amounts to partners subsequent to
September 30, 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.
ANALYSIS OF FINANCIAL CONDITION
During the nine months ended September 30, 1997 and 1996, the Fund
purchased $2,643,930 and $3,635,051, 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.
10
Part II: Other Information
FIDELITY LEASING INCOME FUND VII, L.P.
September 30, 1997
Item 1. Legal Proceedings: Inapplicable.
Item 2. Changes in Securities: Inapplicable.
Item 3. Defaults Upon Senior Securities: Inapplicable.
Item 4. Submission of Matters to a Vote of Securities Holders: Inapplicable.
Item 5. Other Information: Inapplicable.
Item 6. Exhibits and Reports on Form 8-K:
a) Exhibits: EX-27
b) Reports on Form 8-K: None
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the 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.
11/14/97 By: Freddie M. Kotek
________ _____________________________
Date Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
11/14/97 By: Marianne T. Schuster
________ _____________________________
Date Marianne T. Schuster
Vice President of F.L. Partnership Management, Inc.
(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 Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
_______ _____________________________
Date Marianne T. Schuster
Vice President of F.L. Partnership Management, Inc.
(Principal Financial Officer)
12
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,436,239
<SECURITIES> 0
<RECEIVABLES> 245,847
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,682,086
<PP&E> 16,525,330
<DEPRECIATION> 9,385,856
<TOTAL-ASSETS> 10,846,075
<CURRENT-LIABILITIES> 183,720
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,659,355
<TOTAL-LIABILITY-AND-EQUITY> 10,843,075
<SALES> 3,663,516
<TOTAL-REVENUES> 3,855,949
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,481,643
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 374,306
<INCOME-TAX> 0
<INCOME-CONTINUING> 374,306
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 374,306
<EPS-PRIMARY> 12.18
<EPS-DILUTED> 12.18
</TABLE>
