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 June 30, 1999
/ / 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: 0-20131
Fidelity Leasing Income Fund VIII, L.P.
____________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 23-2627143
____________________________________________________________________________
(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 13
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND VIII, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
June 30, December 31,
1999 1998
________ ________
Cash and cash equivalents $1,858,004 $1,336,219
Accounts receivable 68,142 154,987
Due from related parties 28,846 62,993
Equipment under operating leases
(net of accumulated depreciation
of $1,505,994 and $5,339,099,
respectively) 447,556 656,241
Net investment in direct financing
leases 2,699,850 2,817,738
Equipment held for sale or lease 25,697 102,002
__________ __________
Total assets $5,128,095 $5,130,180
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 54,540 $ 9,503
Accounts payable and
accrued expenses 72,677 106,614
Due to related parties 56,156 7,068
__________ __________
Total liabilities 183,373 123,185
Partners' capital 4,944,722 5,006,995
__________ __________
Total liabilities and
partners' capital $5,128,095 $5,130,180
========== ==========
The accompanying notes are an integral part of these financial statements.
2
FIDELITY LEASING INCOME FUND VIII, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1999 1998 1999 1998
____ ____ ____ ____
Income:
Rentals $171,922 $593,614 $313,777 $1,136,720
Earned income on direct
financing leases 54,743 8,290 104,290 8,290
Interest 14,660 15,769 30,910 42,249
Gain on sale of equipment,
net - 225 19,021 225
Other 14,982 1,415 21,912 1,949
________ ________ ________ __________
256,307 619,313 489,910 1,189,433
________ ________ ________ __________
Expenses:
Depreciation 97,373 471,646 194,746 897,058
Write-down of equipment
to net realizable value 51,865 81,117 86,265 81,117
General and administrative 25,300 16,940 44,731 37,259
General and administrative
to related party 35,532 36,480 62,989 66,722
Management fee to related
party 12,677 24,165 23,452 46,046
________ ________ ________ __________
222,747 630,348 412,183 1,128,202
________ ________ ________ __________
Net income (loss) $ 33,560 $(11,035) $ 77,727 $ 61,231
======== ======== ======== ==========
Net income (loss) per equivalent
limited partnership unit $ 2.53 $ (.87) $ 5.86 $ 4.49
======== ======== ======== ==========
Weighted average number of equivalent
limited partnership units
outstanding during the period 13,013 13,350 13,060 13,362
======== ======== ======== ==========
The accompanying notes are an integral part of these financial statements.
3
FIDELITY LEASING INCOME FUND VIII, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the six months ended June 30, 1999
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1999 $(8,336) 21,695 $5,015,331 $5,006,995
Cash distributions (1,400) - (138,600) (140,000)
Net income 1,200 - 76,527 77,727
_______ ______ __________ __________
Balance, June 30, 1999 $(8,536) 21,695 $4,953,258 $4,944,722
======= ====== ========== ==========
The accompanying notes are an integral part of these financial statements.
4
FIDELITY LEASING INCOME FUND VIII, L.P.
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1999 and 1998
(Unaudited)
1999 1998
__________ __________
Cash flows from operating activities:
Net income $ 77,727 $ 61,231
__________ __________
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 194,746 897,058
Write-down of equipment to net realizable value 86,265 81,117
Gain on sale of equipment, net (19,021) (225)
(Increase) decrease in accounts receivable 86,845 2,818
(Increase) decrease in due from related parties 34,147 76,355
Increase (decrease) in lease rents paid
in advance 45,037 (28,565)
Increase (decrease) in accounts payable
and accrued expenses (33,937) 70,908
Increase (decrease) in other, net 49,088 (5,979)
__________ __________
443,170 1,093,487
__________ __________
Net cash provided by operating activities 520,897 1,154,718
__________ __________
Cash flows from investing activities:
Acquisition of equipment - (2,165,254)
Investment in direct financing leases (348,160) (826,885)
Proceeds from sale of equipment 23,000 225
Proceeds from direct financing leases,
net of earned income 466,048 38,554
__________ __________
Net cash provided by (used in)
investing activities 140,888 (2,953,360)
__________ __________
Cash flows from financing activities:
Distributions (140,000) (120,000)
__________ __________
Net cash used in financing activities (140,000) (120,000)
__________ __________
Increase (decrease) in cash and
cash equivalents 521,785 (1,918,642)
Cash and cash equivalents, beginning
of period 1,336,219 2,022,967
__________ __________
Cash and cash equivalents, end of period $1,858,004 $ 104,325
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 1998 financial statements have been
reclassified to conform to the presentation in 1999.
1. EQUIPMENT LEASED
Equipment on lease consists primarily of equipment under operating
leases. 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 48 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. 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 tech-
nological developments affecting 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, $86,265 and $81,117
was charged to write-down of equipment to net realizable value for the six
months ended June 30, 1999 and 1998, respectively. Any future losses are
dependent upon unanticipated technological developments 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 aggregate
future rentals and estimated unguaranteed residuals upon expiration of the
lease over the related equipment cost) over the life of the lease using
the interest method.
Unguaranteed residuals for direct financing leases represent the
estimated amounts recoverable at lease termination from lease exten-
sions or disposition of the equipment. The Fund reviews these resi-
dual values quarterly. If the equipment's fair market value is below
the estimated residual value, an adjustment is made.
6
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. EQUIPMENT LEASED (Continued)
The net investment in direct financing leases as of June 30, 1999 is as
follows:
Minimum lease payments to be received $2,808,000
Unguaranteed residuals 143,000
Unearned rental income (233,000)
Unearned residual income (18,000)
__________
$2,700,000
==========
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of June 30, 1999 are as follows:
Direct
Years Ending December 31 Operating Financing
________________________ _________ __________
1999 $199,000 $ 645,000
2000 132,000 1,305,000
2001 51,000 709,000
2002 30,000 94,000
2003 - 55,000
________ __________
$412,000 $2,808,000
======== ==========
2. RELATED PARTY TRANSACTIONS
The General Partner receives 4% or 2% of rental payments on 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 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 distri-
butions for the period from the initial closing through the end of the
most recent calendar quarter equal to a return for such period at a rate
of 11% 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 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 an 11% 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.
7
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
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 six months
ended June 30, 1999 and 1998:
Three Months Ended Six Months Ended
June 30 June 30
1999 1998 1999 1998
____ ____ ____ ____
Management fee $12,677 $24,165 $23,452 $46,046
Reimbursable costs 35,532 36,480 62,989 66,722
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 June 30, 1999 and December 31, 1998
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 June 30, 1999 and December 31, 1998
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. YEAR 2000 COMPLIANCE
All of the main software systems utilized to generate information for
the Fund are now Year 2000 compliant and in the testing phase. The
costs incurred to complete the Year 2000 Compliance project are not
expected to be material to the net income of the Fund.
All suppliers for the Fund continue to complete their Year 2000
Compliance programs. It is not anticipated that the Fund will incur
any significant losses should any of its outside suppliers fail to
meet their Year 2000 Compliance deadlines.
8
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
4. CASH DISTRIBUTIONS
The General Partner declared and paid a cash distribution of $20,000 in
June 1999 for the month ended April 30, 1999, to all admitted partners as
of April 30, 1999. The General Partner declared and paid two cash dis-
tributions of $20,000 each subsequent to June 30, 1999 for the months
ended May 31 and June 30, 1999, to all admitted partners as of May 31
and June 30, 1999.
9
FIDELITY LEASING INCOME FUND VIII, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Fidelity Leasing Income Fund VIII, L.P. had revenues of $256,307 and
$619,313 for the three months ended June 30, 1999 and 1998, respectively,
and $489,910 and $1,189,433 for the six months ended June 30, 1999 and
1998, respectively. Rental income from the leasing of equipment accounted for
67% and 96% of total revenues for the second quarter of 1999 and 1998,
respectively, and 64% and 96% of total revenues for the six months ended
June 30, 1999 and 1998, respectively. The decrease in revenues was primarily
attributable to the decrease in rental income. In 1999, rental income de-
creased by approximately $823,000 because of equipment that came off lease
and terminated or sold. The Fund, however, invested in direct financing
leases during the last nine months of 1998 which generated approximately
$93,000 in income earned on direct financing leases for the six months ended
June 30, 1999. The increase in this account served to lower the amount of
the overall decrease in revenues during the first six months of 1999.
Additionally, the Fund recognized $19,021 in net gain on sale of equipment
during the six months ended June 30, 1999 compared to $225 for the same
period in 1998 which also reduced the decrease in total revenues in 1999.
Furthermore, the Fund recorded late charges of approximately $13,000 in 1999
which are included in other income. There were no late charges recorded in
1998. This also lowered the overall decrease in revenues in 1999.
Expenses were $222,747 and $630,348 for the three months ended June 30,
1999 and 1998, respectively, and $412,183 and $1,128,202 for the six
months ended June 30, 1999 and 1998, respectively. Depreciation expense
comprised 44% and 75% of total expenses during the second quarter of 1999 and
1998, respectively and 47% and 80% of total expenses for the six months ended
June 30, 1999 and 1998, respectively. The decrease in expenses was primarily
attributable to the decrease in depreciation expense resulting from sales or
terminations of equipment under operating leases since the second quarter of
1998. Management fee to related party also decreased in 1999 which contri-
buted to the overall decrease in expenses during the six months ended June 30,
1999. This decrease partially related to the decrease in rental income on
operating leases earned by the Fund. Additionally, the Fund invested in
direct financing leases during the last nine months of 1998 which meet the
requirements of full pay-out leases for management fee calculation purposes.
The Fund paid a lower management fee of 2% on full-pay out leases which also
accounted for the decrease in total expenses in 1999.
The Fund's net income (loss) was $33,560 and ($11,035) for the three
months ended June 30, 1999 and 1998, respectively, and $77,727 and $61,231
for the six months ended June 30, 1999 and 1998, respectively. The earnings
(loss) per equivalent limited partnership unit, after earnings (loss) allocated
to the General Partner, were $2.53 and $(0.87) based on a weighted average
number of equivalent limited partnership units outstanding of 13,013 and
10
FIDELITY LEASING INCOME FUND VIII, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS (Continued)
13,350 for the three months ended June 30, 1999 and 1998, respectively. The
earnings per equivalent limited partnership unit, after earnings allocated to
the General Partner, were $5.86 and $4.49 based on a weighted average number
of equivalent limited partnership units outstanding of 13,060 and 13,362 for
the six months ended June 30, 1999 and 1998, respectively.
The Fund generated $182,798 and $541,503 of cash from operations, for the
purpose of determining cash available for distribution, during the quarter
ended June 30, 1999 and 1998, respectively. The Fund distributed 11% and 4%
of these amounts to partners during the second quarter of 1999 and 1998,
respectively and 22% and 7% of these amounts to partners subsequent to June
30, 1999 and 1998, respectively. For the six months ended June 30, 1999 and
1998, the Fund generated $339,717 and $1,039,181 of cash from operations and
distributed 24% and 8% of these amounts to partners during the six months
ended June 30, 1999 and 1998, respectively and 12% and 4% of these amounts
to partners subsequent to June 30, 1999 and 1998, respectively. For finan-
cial 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 liqui-
dated as promptly as is consistent with obtaining their fair value. During
this time, the Fund will continue to purchase equipment with cash available
from operations that was not distributed to partners in previous periods.
During the six months ended June 30, 1999, the Fund made no purchases of
equipment subject to operating leases. During the six months ended June 30,
1998, the Fund purchased $2,165,254, of equipment subject to operating leases.
The Fund also invested $348,160 and $826,885 in direct financing leases during
the six months ended June 30, 1999 and 1998, respectively.
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.
11
Part II: Other Information
FIDELITY LEASING INCOME FUND VIII, L.P.
June 30, 1999
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
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 VIII, L.P.
8-12-99 By: Freddie M. Kotek
_______ ___________________________
Date Freddie M. Kotek
President of F.L Partnership
Management, Inc.
(Principal Operating Officer)
8-12-99 By: Marianne T. Schuster
_______ ___________________________
Date Marianne T. Schuster
Vice President of
F.L. Partnership Management, Inc.
(Principal Financial Officer)
13
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,858,004
<SECURITIES> 0
<RECEIVABLES> 96,988
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,954,992
<PP&E> 1,979,247
<DEPRECIATION> 1,505,994
<TOTAL-ASSETS> 5,128,095
<CURRENT-LIABILITIES> 183,373
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,944,722
<TOTAL-LIABILITY-AND-EQUITY> 5,128,095
<SALES> 313,777
<TOTAL-REVENUES> 489,910
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 412,183
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 77,727
<INCOME-TAX> 0
<INCOME-CONTINUING> 77,727
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,727
<EPS-BASIC> 5.86
<EPS-DILUTED> 5.86
</TABLE>
