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, 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)
March 31, December 31,
1999 1998
________ ________
Cash and cash equivalents $1,719,764 $1,336,219
Accounts receivable 157,526 154,987
Due from related parties 3,872 62,993
Equipment under operating leases
(net of accumulated depreciation
of $1,408,621 and $2,426,589,
respectively) 544,929 656,241
Net investment in direct
financing leases 2,599,732 2,817,738
Equipment held for sale or lease 77,562 102,002
__________ __________
Total assets $5,103,385 $5,130,180
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 61,663 $ 9,503
Accounts payable and
accrued expenses 44,435 106,614
Due to related parties 6,125 7,068
__________ __________
Total liabilities 112,223 123,185
Partners' capital 4,991,162 5,006,995
__________ __________
Total liabilities and
partners' capital $5,103,385 $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
For the three months ended March 31, 1999 and 1998
(Unaudited)
1999 1998
________ ________
Income:
Rentals $141,855 $543,106
Earned income on direct financing leases 49,547 -
Interest 16,250 26,480
Gain on sale of equipment, net 19,021 -
Other 6,930 534
________ ________
233,603 570,120
________ ________
Expenses:
Depreciation 97,373 425,412
Write-down of equipment to net
realizable value 34,400 -
General and administrative 19,431 20,319
General and administrative to related
party 27,457 30,242
Management fee to related party 10,775 21,881
________ ________
189,436 497,854
________ ________
Net income $ 44,167 $ 72,266
======== ========
Net income per equivalent
limited partnership unit $ 3.32 $ 5.35
======== ========
Weighted average number of
equivalent limited partnership
units outstanding during the period 13,106 13,374
======== ========
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 three months ended March 31, 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 (600) - (59,400) (60,000)
Net income 600 - 43,567 44,167
________ ______ __________ __________
Balance, March 31, 1999 $(8,336) 21,695 $4,999,498 $4,991,162
======== ====== ========== ==========
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 three months ended March 31, 1999 and 1998
(Unaudited)
1999 1998
__________ __________
Cash flows from operating activities:
Net income $ 44,167 $ 72,266
__________ __________
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 97,373 425,412
Write-down of equipment to net realizable value 34,400 -
(Gain) loss on sale of equipment, net (19,021) -
(Increase) decrease in accounts receivable (2,539) 76,883
(Increase) decrease in due from related parties 59,121 24,301
Increase (decrease) in lease rents paid
in advance 52,160 (18,683)
Increase (decrease) in accounts payable and
accrued expenses (62,179) (9,049)
Increase (decrease) in other, net (943) (3,522)
__________ __________
158,372 495,342
__________ __________
Net cash provided by operating activities 202,539 567,608
__________ __________
Cash flows from investing activities:
Acquisition of equipment - (255,721)
Proceeds from direct financing leases,
net of earned income 218,006 -
Proceeds from sale of equipment 23,000 -
__________ __________
Net cash provided by (used in)
investing activities 241,006 (255,721)
__________ __________
Cash flows from financing activities:
Distributions (60,000) (40,000)
__________ __________
Net cash used in financing activities (60,000) (40,000)
__________ __________
Increase in cash and cash equivalents 383,545 271,887
Cash and cash equivalents, beginning
of period 1,336,219 2,022,967
__________ __________
Cash and cash equivalents, end of period $1,719,764 $2,294,854
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 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 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 11 to 48 months. Generally,
operating leases will not recover all of the undepreciated cost and re-
lated 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 unde-
preciated cost. Recent and anticipated technological developments af-
fecting the equipment and competitive factors in the marketplace are con-
sidered 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, $34,400 was charged to write-down
of equipment to net realizable value for the three months ended
March 31, 1999. There was no charge to write-down of equipment to net
realizable for the three months ended March 31, 1998. 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 ag-
gregate 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 March 31, 1999 is
as follows:
Minimum lease payments to be received $2,735,000
Unguaranteed residuals 144,000
Unearned rental income (258,000)
Unearned residual income (21,000)
__________
$2,600,000
==========
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of March 31, 1999 are as follows:
Years Ending December 31 Operating Direct Financing
________________________ _________ ________________
1999 $335,000 $ 873,000
2000 132,000 1,164,000
2001 51,000 580,000
2002 31,000 94,000
2003 - 24,000
________ __________
$549,000 $2,735,000
======== ==========
Subsequent to March 31, 1999, the Fund invested in $366,000 of equip-
ment subject to a direct financing lease with an initial lease term of
32 months. The future approximate minimum rentals to be received on
this noncancellable lease are $106,000 in 1999, $141,000 in 2000 and
$129,000 in 2001.
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 acquisi-
tion fees. This management fee is paid monthly only if and when the
Limited Partners have received distributions 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.
7
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (continued)
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 per-
formed 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 fee to
the General Partner.
Additionally, the General Partner and its parent company are reim-
bursed 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
months ended March 31:
1999 1998
________ ________
Management fee $10,775 $21,881
Reimbursable costs 27,457 30,242
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 March 31, 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 March 31, 1999 and December 31,
1998 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 affili-
ated funds.
3. YEAR 2000 COMPLIANCE
Two of the three main software systems utilized to generate informa-
tion for the Fund are still in the testing phase. The third software
system should be Year 2000 capable by July 1999. 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 three cash distributions
of $20,000 each subsequent to March 31, 1999 for the months ended
January 31, February 28 and March 31, 1999, to all admitted
partners as of January 31, February 28 and March 31, 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 $233,603 and
$570,120 for the three months ended March 31, 1999 and 1998, respectively.
Rental income from the leasing of equipment accounted for 61% and 95% of
total revenues for the first quarter of 1999 and 1998, respectively. The
decrease in revenues in 1999 is primarily attributable to the decrease in
rental income. In 1999, rental income decreased by approximately $401,000
because of equipment which terminated or sold since the first quarter of
1998. The Fund, however, invested in direct financing leases during the
last nine months of 1998 which generated approximately $50,000 in income
earned on direct financing leases in the first quarter of 1999. There were
no direct financing leases as of March 31, 1998. The increase in this
account served to lower the amount of the overall decrease in revenues in
the first quarter of 1999. Furthermore, the Fund recognized $19,000 of net
gain on sale of equipment during the first three months of 1999. There was
no net gain on sale of equipment earned during the first quarter of 1998.
The increase in this account also reduced the decrease in total revenues
in 1999.
Expenses were $189,436 and $497,854 for the three months ended
March 31, 1999 and 1998, respectively. Depreciation expense comprised
51% and 85% of total expenses for the first quarter of 1999 and 1998,
respectively. The decrease in expenses in 1999 is primarily related to
the decrease in depreciation expense resulting from sales or terminations
of equipment under operating leases since the first quarter of 1998.
Management fee to related party also decreased in 1999 which contributed
to the overall decrease in expenses in the first quarter of 1999. This
decrease partially relates 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 re-
quirements of full pay-out leases for management fee calculation purposes.
The Fund pays a lower management fee of 2% on full-pay out leases which
also accounts for the decrease in total expenses in 1999.
The Fund's net income was $44,167 and $72,266 for the three months
ended March 31, 1999 and 1998, respectively. The income per equivalent
limited partnership unit, after income allocated to the General Partner,
was $3.32 and $5.35 based on a weighted average number of equivalent
limited partnership units outstanding of 13,106 and 13,374 for the three
months ended March 31, 1999 and 1998, respectively.
The Fund generated $156,919 and $497,678 of cash from operations, for
the purpose of determining cash available for distribution, during the
quarter ended March 31, 1999 and 1998, respectively. There were no cash
distributions paid to partners during the first quarter of 1999 for the
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)
three months ended March 31, 1999. Subsequent to March 31, 1999 and 1998,
38% and 12% of the cash available from operations was paid to partners
for the first quarter of 1999 and 1998, 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 three months ended March 31, 1999, the Fund made no pur-
chases of equipment. During the three months ended March 31, 1998, the
Fund purchased $255,721 of equipment. The Fund will continue to look for
opportunities to purchase equipment with cash available from operations
which is not distributed to partners.
Subsequent to March 31, 1999, the Fund invested in $366,000 of equip-
ment subject to a direct financing lease.
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.
March 31, 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
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIDELITY LEASING INCOME FUND VIII, L.P.
5-13-99 By: Freddie M. Kotek
_______ ___________________________
Date Freddie M. Kotek
President of F.L Partnership
Management, Inc.
(Principal Operating Officer)
5-13-99 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,719,764
<SECURITIES> 0
<RECEIVABLES> 161,398
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,881,162
<PP&E> 2,031,112
<DEPRECIATION> 1,408,621
<TOTAL-ASSETS> 5,103,385
<CURRENT-LIABILITIES> 112,223
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,991,162
<TOTAL-LIABILITY-AND-EQUITY> 5,103,385
<SALES> 141,855
<TOTAL-REVENUES> 233,603
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 189,436
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 44,167
<INCOME-TAX> 0
<INCOME-CONTINUING> 44,167
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,167
<EPS-PRIMARY> 3.32
<EPS-DILUTED> 3.32
</TABLE>
