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, 2000
/ / 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.)
3 North Columbus Boulevard, Philadelphia, Pennsylvania 19106
____________________________________________________________________________
(Address of principal executive offices) (Zip code)
(215) 574-1636
____________________________________________________________________________
(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 registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes __X__ No _____
Page 1 of 12
<PAGE>
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND VII, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
March 31, December 31,
2000 1999
___________ ____________
Cash and cash equivalents $ 2,646,806 $ 1,769,740
Accounts receivable 291,472 273,492
Due from related parties 6,235 84,919
Equipment under operating leases
(net of accumulated depreciation
of $4,505,487 and $4,899,775,
respectively) 878,809 1,202,004
Net investment in direct financing leases 6,043,813 6,543,062
Equipment held for sale or lease 149,138 155,653
___________ ___________
Total assets $10,016,273 $10,028,870
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 47,721 $ 122,331
Security deposits 67,825 67,825
Accounts payable and
accrued expenses 79,075 49,370
Due to related parties 15,267 15,411
___________ ___________
Total liabilities 209,888 254,937
Partners' capital 9,806,385 9,773,933
___________ ___________
Total liabilities and
partners' capital $10,016,273 $10,028,870
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
FIDELITY LEASING INCOME FUND VII, L.P.
STATEMENTS OF OPERATIONS
For the three months ended March 31, 2000 and 1999
(Unaudited)
2000 1999
________ ________
Income:
Rentals $400,534 $404,113
Earned income on direct financing leases 124,733 76,592
Interest 24,731 34,307
Gain on sale of equipment, net 54,948 -
Other 10,337 2,438
________ ________
615,283 517,450
________ ________
Expenses:
Depreciation 316,927 381,718
Write-down of equipment to net
realizable value 6,267 30,700
General and administrative 38,178 36,158
General and administrative to related
party 40,569 55,323
Management fee to related party 30,890 24,661
Loss on sale of equipment, net - 250
________ ________
432,831 528,810
________ ________
Net income (loss) $182,452 $(11,360)
======== ========
Net income (loss) per equivalent
limited partnership unit $ 6.27 $ (0.38)
======== ========
Weighted average number of
equivalent limited partnership
units outstanding during the period 28,797 29,293
======== ========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
FIDELITY LEASING INCOME FUND VII, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the three months ended March 31, 2000
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 2000 $(33,315) 65,389 $9,807,248 $9,773,933
Cash distributions (1,500) - (148,500) (150,000)
Net income 1,825 - 180,627 182,452
________ ______ __________ __________
Balance, March 31, 2000 $(32,990) 65,389 $9,839,375 $9,806,385
======== ====== ========== ==========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
FIDELITY LEASING INCOME FUND VII, L.P.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2000 and 1999
(Unaudited)
2000 1999
________ ________
Cash flows from operating activities:
Net income (loss) $ 182,452 $ (11,360)
__________ __________
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation 316,927 381,718
Write-down of equipment to net
realizable value 6,267 30,700
(Gain) loss on sale of equipment, net (54,948) 250
(Increase) decrease in accounts
receivable (17,980) 5,047
(Increase) decrease in due from related
parties 78,684 51,907
Increase (decrease) in lease rents paid
in advance (74,610) 155,570
Increase (decrease) in accounts payable
and accrued expenses 29,705 11,432
Increase (decrease) in due to related
parties (144) (82,163)
__________ __________
283,901 554,461
__________ __________
Net cash provided by operating activities 466,353 543,101
__________ __________
Cash flows from investing activities:
Proceeds from direct financing leases,
net of earned income 499,249 226,992
Proceeds from sale of equipment 61,464 1,250
__________ __________
Net cash provided by investing activities 560,713 228,242
__________ __________
Cash flows from financing activities:
Redemptions of capital - (4,372)
Distributions (150,000) (150,000)
__________ __________
Net cash used in financing activities (150,000) (154,372)
__________ __________
Increase in cash and cash equivalents 877,066 616,971
Cash and cash equivalents, beginning
of period 1,769,740 2,967,163
__________ __________
Cash and cash equivalents, end of period $2,646,806 $3,584,134
========== ==========
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
FIDELITY LEASING INCOME FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
The accompanying unaudited condensed financial statements have been pre-
pared by the Fund in accordance with Generally Accepted Accounting Prin-
ciples, pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of Management, all adjustments (con-
sisting of normal recurring accruals) considered necessary for a fair
presentation have been included.
1. 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 21 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 develop-
ments affecting the equipment and competitive factors in the market-
place 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, $6,267 and
$30,700 was charged to write-down of equipment to net realizable value
for the three months ended March 31, 2000 and 1999, respectively. Any
future losses are dependent upon unanticipated technological develop-
ments affecting the types of equipment in the portfolio 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 ag-
gregate future rentals and estimated unguaranteed residuals upon expi-
ration of the lease over the related equipment cost) over the life of
the lease using the interest method. The Fund's direct financing leases
are for initial lease terms ranging from 33 to 60 months.
Unguaranteed residuals for direct financing leases represent the esti-
mated 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 expi-
ration is below the estimated residual value, an adjustment is made.
6
<PAGE>
FIDELITY LEASING INCOME FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. EQUIPMENT LEASED (continued)
The net investment in direct financing leases as of March 31, 2000 is
as follows:
Minimum lease payments to be received $5,761,000
Unguaranteed residuals 980,000
Unearned rental income (525,000)
Unearned residual income (172,000)
__________
$6,044,000
==========
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of March 31, 2000 are as
follows:
Years Ending December 31 Operating Direct Financing
________________________ _________ ________________
2000 $357,000 $1,863,000
2001 90,000 2,332,000
2002 28,000 1,531,000
2003 13,000 35,000
________ __________
$488,000 $5,761,000
======== ==========
Subsequent to March 31, 2000, the Fund invested in a direct financing
lease of approximately $1,111,000 for an initial lease term of 29 months.
The minimum lease payments to be received on this lease are $357,000 in
2000, $476,000 in 2001 and $317,000 in 2002.
2. RELATED PARTY TRANSACTIONS
The General Partner receives 5% or 2% of rental payments on equipment
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 pay-
ments during the initial term 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 1, 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
7
<PAGE>
FIDELITY LEASING INCOME FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (continued)
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 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. Fol-
lowing is a summary of fees and costs of services and materials charged
by the General Partner or its parent company during the three months
ended March 31:
2000 1999
________ ________
Management fee $30,890 $24,661
Reimbursable costs 40,569 55,323
Amounts due from related parties at March 31, 2000 and December 31,
1999 represent monies due 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 March 31, 2000 and December 31, 1999
represent monies due to the General Partner and/or its parent company
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 three cash distributions of
$50,000 each subsequent to March 31, 2000 for the months ended
January 31, February 29 and March 31, 2000 to all admitted partners
as of January 31, February 29 and March 31, 2000.
8
<PAGE>
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 $615,283 and
$517,450 for the three months ended March 31, 2000 and 1999, respec-
tively. Rental income from the leasing of equipment accounted for 65%
and 78% of total revenues for the first quarter of 2000 and 1999, respec-
tively. The increase in total revenues was partially attributable to the
increase in earned income on direct financing leases. During the last
quarter of 1999, the Fund invested $3.5 million in a direct financing lease
that generated earned income during the first three months of 2000. As a
result, the Fund recognized $124,733 of earned income on direct financing
leases during the three months ended March 31, 2000 compared to $76,592
during the three months ended March 31, 1999. Additionally, the increase
in net gain on sale of equipment also accounted for the overall increase
in revenues. The Fund recorded a net gain on sale of equipment of $54,948
for the first quarter of 2000. There was no net gain on sale of equipment
recorded for the first quarter of 1999.
Expenses were $432,831 and $528,810 during the three months ended
March 31, 2000 and 1999, respectively. Depreciation expense comprised
73% and 72% of total expenses during the first quarter of 2000 and 1999,
respectively. The decrease in expenses was primarily related to the de-
crease in depreciation expense due to equipment that was sold since the
first quarter of 1999. Additionally, the decrease in write-down of equip-
ment to net realizable value also contributed to the overall decrease in
expenses in 2000. Based upon the quarterly review of the recoverability of
the undepreciated cost of rental equipment, $6,267 and $30,700 was charged
to operations to write down equipment to its estimated net realizable value
during the three months ended March 31, 2000 and 1999, respectively. Any
future losses are dependent upon unanticipated technological developments
affecting the types of equipment in the portfolio in subsequent years.
For the three months ended March 31, 2000 and 1999, the Fund incurred
net income (loss) of $182,452 and ($11,360), respectively. The net income
(loss) per equivalent limited partnership unit, after income (loss) allocated
to the General Partner was $6.27 and ($0.38) based on a weighted average
number of equivalent limited partnership units outstanding of 28,797 and
29,293 for the three months ended March 31, 2000 and 1999, respectively.
The Fund generated $450,698 and $401,308 of cash from operations, for the
purpose of determining cash available for distribution, during the quarter
ended March 31, 2000 and 1999, respectively. There were no cash distribu-
tions paid to partners during the first quarter of 2000 and 1999 for the
three months ended March 31, 2000 and 1999. However, the General Partner
declared and paid three cash distributions of $50,000 each during the first
9
<PAGE>
FIDELITY LEASING INCOME FUND VII, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
quarter of 2000 for the months ended October 31, November 30 and December
31, 1999. Subsequent to March 31, 2000, 33% of the cash available from
operations was paid to partners for the first quarter of 2000. For financial
statement purposes, the Fund records cash distributions to partners on a cash
basis in the period in which they are paid.
ANALYSIS OF FINANCIAL CONDITION
The Fund is currently in the process of dissolution. As provided in
the Restated Limited Partnership Agreement, the assets of the Fund shall be
liquidated as promptly as is consistent with obtaining their fair value.
During this time, the Fund will continue to look for opportunities to
purchase equipment under operating leases or invest in direct financing
leases with cash available from operations which was not distributed to
partners in previous periods.
Subsequent to March 31, 2000, the Fund invested in a direct financing
lease of approximately $1,111,000 for an initial lease term of 29 months
commencing in April 2000.
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
<PAGE>
Part II: Other Information
FIDELITY LEASING INCOME FUND VII, L.P.
March 31, 2000
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
<PAGE>
SIGNATURES
Pursuant to the requirements 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 VII, L.P.
5-11-00 By: Freddie M. Kotek
_______ ___________________________
Date Freddie M. Kotek
President of
F.L. Partnership Management, Inc.
(Principal Operating Officer)
5-11-00 By: Marianne T. Schuster
_______ ___________________________
Date Marianne T. Schuster
Vice President of
F.L. Partnership Management, Inc.
(Principal Financial Officer)
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,646,806
<SECURITIES> 0
<RECEIVABLES> 297,707
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,944,513
<PP&E> 5,533,434
<DEPRECIATION> 4,505,487
<TOTAL-ASSETS> 10,016,273
<CURRENT-LIABILITIES> 209,888
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,806,385
<TOTAL-LIABILITY-AND-EQUITY> 10,016,273
<SALES> 400,534
<TOTAL-REVENUES> 615,283
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 432,831
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 182,452
<INCOME-TAX> 0
<INCOME-CONTINUING> 182,452
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 182,452
<EPS-BASIC> 6.27
<EPS-DILUTED> 6.27
</TABLE>
