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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the year ended December 31, 1995
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the transition period from _______________ to ______________
Commission file number 0-16845
Fidelity Leasing Income Fund IV, L.P.
________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 23-2441780
________________________________________________________________________
(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)
Securities registered pursuant to Section 12 (b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
None Not applicable
Securities registered pursuant to Section 12 (g) of the Act:
Limited Partnership Interests
Title of Class
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 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____
The number of outstanding limited partnership units of the Registrant at
December 31, 1995 is 40,786.
There is no public market for these securities.
The index of Exhibits is located on page 10.
1
PART I
Item 1. BUSINESS
Fidelity Leasing Income Fund IV, L.P. (the "Fund"), a Delaware limited
partnership, was organized in 1986 and acquires equipment, primarily
computer peripheral equipment, including printers, tape and disk storage
devices, data communications equipment, computer terminals, data processing
and office equipment, which is leased to third parties on a short-term
basis. The Fund's principal objective is to generate leasing revenues for
distribution. The Fund manages equipment, releasing or disposing of
equipment as it comes off lease in order to achieve its principal
objective. The Fund will not borrow funds to purchase equipment.
The Fund generally acquires equipment subject to a lease. Purchases
of equipment for lease are typically made through equipment leasing
brokers, under a sale-leaseback arrangement directly from lessees owning
equipment, from the manufacturer either pursuant to a purchase agreement
relating to significant quantities of equipment or on an ad hoc basis to
meet the needs of a particular lessee.
The equipment leasing industry is highly competitive. The Fund
competes with leasing companies, equipment manufacturers and distributors,
and entities similar to the Fund (including similar programs sponsored by
the General Partner), some of which have greater financial resources than
the Fund and more experience in the equipment leasing business than the
General Partner. Other leasing companies and equipment manufacturers and
distributors may be in a position to offer equipment to prospective lessees
on financial terms which are more favorable than those which the Fund can
offer. They may also be in a position to offer trade-in-privileges,
maintenance contracts and other services which the Fund may not be able to
offer. Equipment manufacturers and distributors may offer to sell
equipment on terms and conditions (such as liberal financing terms and
exchange privileges) which will afford benefits to the purchaser similar to
those obtained through leases. As a result of the advantages which certain
of its competitors may have, the Fund may find it necessary to lease its
equipment on a less favorable basis than certain of its competitors.
The computer equipment industry is extremely competitive as well.
Competitive factors include pricing, technological innovation and methods
of financing. Certain manufacturer-lessors maintain advantages through
patent protection, where applicable, and through product protection by the
use of a policy which combines service and hardware benefits with payment
for such benefits accomplished through a single periodic charge.
The dominant factor in the marketplace is International Business
Machines Corporation ("IBM"). Because of IBM's substantial resources and
dominant position, revolutionary changes with respect to pricing, marketing
practices, technological innovation and the availability of new and
attractive financing plans could occur at almost any time. Significant
action in any of these areas by IBM might materially adversely affect the
General Partner's ability to identify and purchase appropriate equipment.
It is the belief of the General Partner that IBM will continue to make
advances in the computer equipment industry which may result in
revolutionary changes with respect to small, medium and large computer
systems.
2
Item 1. BUSINESS (Continued)
A brief description of the types of equipment in which the Fund has
invested as of December 31, 1995, together with information concerning the
users of such equipment is contained in Item 2, following.
The Fund does not have any employees. All persons who work on the
Fund are employees of the General Partner.
Item 2. PROPERTIES
The following schedules detail the type and aggregate purchase price
of the various types of equipment acquired and leased by the Fund as of
December 31, 1995, along with the percentage of total equipment represented
by each type of equipment, a breakdown of equipment usage by industrial
classification and the average initial term of leases:
Purchase Price Percentage of
Type of Equipment Acquired of Equipment Total Equipment
Communication Controllers $1,397,628 15.73%
Disk Storage Systems 3,116,095 35.08
Network Communications 266,742 3.00
Personal Computers, Terminals
and Display Stations 2,082,629 23.45
Printers 363,638 4.09
Tape Storage Systems 1,536,313 17.29
Other 120,480 1.36
__________ _____
Totals $8,883,525 100.00%
========== ======
Breakdown of Equipment Usage
By Industrial Classification
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Computer/Data Processing $1,055,649 11.88%
Diversified Financial/Banking/
Insurance 4,487,030 50.51
Manufacturing/Refining 1,750,089 19.70
Publishing/Printing 207,698 2.34
Retailing/Consumer Goods 1,104,834 12.44
Telephone/Telecommunications 23,122 0.26
Utilities 255,103 2.87
__________ ______
Totals $8,883,525 100.00%
========== ======
Average Initial Term of Leases (in months): 34
All of the above equipment is currently leased under operating leases.
3
Item 3. LEGAL PROCEEDINGS
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
4
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
(a) The Fund's limited partnership units are not publicly
traded. There is no market for the Fund's limited
partnership units and it is unlikely that any
will develop.
(b) Number of Equity Security Holders:
Number of Partners
Title of Class as of December 31, 1995
Limited Partnership Interests 1,565
General Partnership Interest 1
Item 6. SELECTED FINANCIAL DATA
For the Years Ended December 31,
1995 1994 1993 1992 1991
Total Income $2,374,015 $2,689,758 $3,657,867 $5,332,466 $5,232,201
Net Income 738,436 765,397 739,957 907,145 455,031
Distributions to
Partners 2,261,160 2,556,427 4,351,379 3,429,212 3,515,572
Net Income per
Equivalent Limited
Partnership Unit 56.98 47.84 32.84 32.24 10.74
Weighted Average Number
of Equivalent Limited
Partnership Units
Outstanding During
the Year 12,305 15,527 21,215 27,062 31,311
December 31
1995 1994 1993 1992 1991
Total Assets $2,786,915 $4,418,545 $6,449,162 $10,510,421 $12,221,740
Equipment under
Operating Leases
and Equipment Held
for Sale or Lease
(Net) 1,891,816 1,816,440 2,449,146 4,856,688 8,866,968
Limited Partnership
Units 40,786 42,565 43,389 45,549 46,358
Limited Partners 1,565 1,573 1,595 1,665 1,678
5
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The Fund had revenues of $2,374,015, $2,689,758 and $3,657,867 for the
years ended December 31, 1995, 1994 and 1993, respectively. The decrease
in revenues between 1995, 1994 and 1993 is primarily caused by the decrease
in rental income generated from equipment under operating leases. Rental
income from the leasing of computer peripheral equipment accounted for 88%,
89%, and 86% of total income in 1995, 1994 and 1993, respectively. In
1995, rental income decreased by approximately $846,000 because of
equipment which came off lease and was re-leased at lower rental rates or
sold. This decrease, however, was offset by approximately $546,000 of
rental income generated from equipment under operating leases purchased
during 1995, as well as rental income from 1994 equipment purchases for
which a full year of rental income was earned in 1995 and only a partial
year was earned in 1994. In 1994, rental income decreased by approximately
$1,069,000 because of equipment which came off lease and was re-leased at
lower rental rates or sold. This decrease, however, was offset by
approximately $300,000 of rental income generated from equipment
purchased in 1994 as well as rental income from 1993 equipment purchases
for which a full year of rental income was earned in 1994 and only a
partial year was earned in 1993. Additionally, the Fund recognized a
net gain on sale of equipment of $182,063, $138,714 and $353,326 for the
twelve months ended December 31, 1995, 1994 and 1993, respectively which
contributed to the fluctuation in total revenues for these years.
Expenses were $1,635,579, $1,924,361, and $2,917,910 for the years
ended December 31, 1995, 1994 and 1993, respectively. Depreciation expense
comprised 75% of total expenses in 1995, 75% in 1994 and 77% in 1993. The
decrease in expenses between these years is primarily attributable to a
decrease in depreciation expense because of equipment which came off lease
and was terminated or sold. Currently, the Fund's practice is to review
the recoverability of its undepreciated costs of rental equipment
quarterly. The Fund's policy, as part of this review, is to analyze such
factors as re-leasing of equipment, technological developments and
information provided in third party publications. In 1995, 1994 and 1993,
approximately $94,000, $156,000 and $295,000, respectively, was charged to
write-down of equipment to net realizable value. 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 sales of its
equipment. The General Partner believes, after analyzing the current
equipment portfolio, that there are impending gains to be recognized upon
the sale of certain equipment in future years.
The Fund's net income was $738,436, $765,397 and $739,957 for the
years ended December 31, 1995, 1994 and 1993, respectively. The earnings
per equivalent limited partnership unit, after earnings allocated to the
General Partner, were $56.98, $47.84 and $32.84 for the years ended
December 31, 1995, 1994 and 1993, respectively. The weighted average
number of equivalent limited partnership units outstanding were 12,305,
15,527 and 21,215 for 1995, 1994 and 1993, respectively.
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
The Fund generated funds from operations of $1,871,187, $2,234,590 and
$2,937,249 for the purpose of determining cash available for distribution
and declared distributions of $1,865,582, $2,258,634 and $4,327,754 to
partners for the years ended December 31, 1995, 1994 and 1993,
respectively. The distributions for the years ended December 31, 1994 and
1993 include $24,044 and $1,390,505, respectively of cash available from
previous years which was not distributed. For financial statement
purposes, the Fund records cash distributions to partners on a cash basis
in the period in which they are paid. During the fourth quarter of 1995,
the General Partner revised its policy regarding cash distributions so that
the distributions more accurately reflect the net income of the Fund over
the most recent twelve months.
Analysis of Financial Condition
The Fund will continue to purchase computer equipment for lease with
cash available from operations which is not distributed to partners.
During the years ended December 31, 1995, 1994 and 1993, the Fund purchased
$1,533,346, $1,239,461 and $949,385, 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 fiscal
year.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted as a separate section of this
report commencing on page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
7
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Effective September 1, 1995, The Fidelity Mutual Life Insurance
Company (in Rehabilitation) sold Fidelity Leasing Corporation (FLC), the
General Partner of the Fund, to Resource Leasing, Inc., a wholly owned
subsidiary of Resource America, Inc. The Directors and Executive Officers
of FLC are:
FREDDIE M. KOTEK, age 39, Chairman of the Board of Directors,
President and Chief Executive Officer of FLC since September 1995
and Senior Vice President of Resource America, Inc. since 1995.
President of Resource Leasing, Inc. since September 1995.
Executive Vice President of Resource Properties, Inc. (a wholly owned
subsidiary of Resource America, Inc.) since 1993. First Vice
President of Royal Alliance Associates from 1991 to 1993. Senior
Vice President and Chief Financial Officer of Paine Webber Properties
from 1990 to 1991.
MICHAEL L. STAINES, age 46, Director and Secretary of FLC since
September 1995 and Senior Vice President and Secretary of Resource
America, Inc. since 1989.
SCOTT F. SCHAEFFER, age 33, Director of FLC since September 1995 and
Senior Vice President of Resource America, Inc. since 1995. Vice
President-Real Estate of Resource America, Inc. and President of
Resource Properties, Inc. (a wholly owned subsidiary of Resource
America, Inc.) since 1992. Vice President of the Dover Group, Ltd.
(a real estate investment company) from 1985 to 1992.
MARK A. MAYPER, age 42, Senior Vice President of FLC overseeing
the lease syndication business since 1987.
Others:
STEPHEN P. CASO, age 40, Vice President and Counsel of FLC since
1992.
MARIANNE T. SCHUSTER, age 37, Vice President and Controller of FLC
since 1984.
KRISTIN L. CHRISTMAN, age 28, Portfolio Manager of FLC since December
1995 and Equipment Brokerage Manager since 1993.
8
Item 11. EXECUTIVE COMPENSATION
The following table sets forth information relating to the aggregate
compensation earned by the General Partner of the Fund during the year
ended December 31, 1995:
Name of Individual or Capacities in
Number in Group Which Served Compensation
Fidelity Leasing
Corporation General Partner $123,347 (1)
========
(1) This amount does not include the General Partner's share of
cash distributions made to all partners.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) As of December 31, 1995, there was no person or group known
to the Fund that owned more than 5% of the Fund's outstanding
securities either beneficially or of record.
(b) In 1986, the General Partner contributed $1,000 to the
capital of the Fund but it does not own any of the Fund's
outstanding securities. No individual director or officer of
Fidelity Leasing Corporation nor such directors or officers as a
group, owns more than one percent of the Fund's outstanding
securities. The General Partner owns a general partnership
interest which entitles it to receive 3.5% of cash distributions
until the Limited Partners have received an amount equal to the
purchase price of their Units plus a 10% compounded Priority
Return; thereafter 10%. The General Partner will also share in
net income equal to the greater of its cash distributions or 1%
of net income or to the extent there are losses, 1% of such
losses.
(c) There are no arrangements known to the Fund that would, at
any subsequent date, result in a change in control of the Fund.
Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 1995, the Fund was charged $123,347
of management fees by the General Partner. The General Partner will
continue to receive 6% or 3% of rental payments on equipment under
operating leases or full pay-out leases, respectively for administrative
and management services performed on behalf of the Fund. Full pay-out
leases are noncancellable leases with terms in excess of 42 months and for
which rental payments during the initial term are at least sufficient to
recover the purchase price of the equipment, including acquisition fees.
The General Partner also receives 3.5% of cash distributions until the
Limited Partners have received an amount equal to the purchase price of
their Units plus a 10% compounded Priority Return. Thereafter, the General
Partner will receive 10% of cash distributions. During the year ended
December 31, 1995, the General Partner received $36,997 of cash
distributions.
The Fund incurred $106,410 of reimbursable costs to the General
Partner for services and materials provided in connection with the
administration of the Fund during 1995.
9
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2). The response to this portion of Item 14 is
submitted as a separate section of this report commencing on page F-1.
(a) (3) and (c) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
Exhibit Numbers Description Page Number
3(a) & (4) Amended and Restated Agreement *
of Limited Partnership
(9) not applicable
(10) not applicable
(11) not applicable
(12) not applicable
(13) not applicable
(18) not applicable
(19) not applicable
(22) not applicable
(23) not applicable
(24) not applicable
(25) not applicable
(28) not applicable
* Incorporated by reference.
10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 IV, L.P.
A Delaware limited partnership
By: FIDELITY LEASING CORPORATION
Freddie M. Kotek
By: ___________________________
Freddie M. Kotek, Chairman
and President
Dated March 26, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this annual report has been signed below by the following persons, on
behalf of the Registrant and in the capacities and on the date indicated:
Signature Title Date
Freddie M. Kotek
____________________________ Chairman of the Board of Directors 3-26-96
Freddie M. Kotek and President of Fidelity Leasing
Corporation (Principal Executive
Officer)
Michael L. Staines
____________________________ Director of Fidelity Leasing 3-26-96
Michael L. Staines Corporation
Marianne T. Schuster
____________________________ Vice President and Controller 3-26-96
Marianne T. Schuster of Fidelity Leasing Corporation
(Principal Financial Officer)
11
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Certified Public Accountants F-2
Balance Sheets as of December 31, 1995 and 1994 F-3
Statements of Operations for the years ended F-4
December 31, 1995, 1994 and 1993
Statements of Partners' Capital for the years F-5
ended December 31, 1995, 1994 and 1993
Statements of Cash Flows for the years ended F-6
December 31, 1995, 1994 and 1993
Notes to Financial Statements F-7 - F-11
All schedules have been omitted because the required information is not
applicable or is included in the Financial Statements or Notes thereto.
F-1
Report of Independent Certified Public Accountants
The Partners
Fidelity Leasing Income Fund IV, L.P.
We have audited the accompanying balance sheets of Fidelity Leasing
Income Fund IV, L.P. as of December 31, 1995 and 1994, and the related
statements of operations, changes in partners' capital and cash flows for
each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Fidelity Leasing
Income Fund IV, L.P. as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Grant Thornton, LLP
Philadelphia, Pennsylvania
February 2, 1996
F-2
FIDELITY LEASING INCOME FUND IV, L.P.
BALANCE SHEETS
ASSETS
December 31,
1995 1994
Cash and cash equivalents $ 789,629 $2,456,685
Accounts receivable 77,274 124,635
Interest receivable 3,651 8,702
Due from related parties 24,545 12,083
Equipment under operating leases
(net of accumulated depreciation
of $6,994,681 and $8,719,350,
respectively) 1,888,844 1,781,057
Equipment held for sale or lease 2,972 35,383
__________ __________
Total assets $2,786,915 $4,418,545
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 56,461 $ 165,711
Accounts payable and
accrued expenses 73,251 54,043
Due to related parties 4,096 3,553
_________ __________
Total liabilities 133,808 223,307
Partners' capital 2,653,107 4,195,238
__________ __________
Total liabilities and
partners' capital $2,786,915 $4,418,545
========== ==========
The accompanying notes are an integral part of these financial statements.
F-3
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF OPERATIONS
For the years ended December 31,
1995 1994 1993
Income:
Rentals $2,089,364 $2,389,796 $3,159,048
Interest 76,520 124,270 137,987
Gain on sale of equipment, net 182,063 138,714 353,326
Other 26,068 36,978 7,506
__________ __________ __________
2,374,015 2,689,758 3,657,867
__________ __________ __________
Expenses:
Depreciation 1,220,643 1,451,711 2,256,037
Write-down of equipment
to net realizable value 94,171 156,196 294,581
General and administrative 91,008 96,724 80,358
General and administrative to
related party 106,410 79,047 100,785
Management fee to related party 123,347 140,683 186,149
__________ __________ __________
1,635,579 1,924,361 2,917,910
__________ __________ __________
Net income $ 738,436 $ 765,397 $ 739,957
========== ========== ==========
Net income per equivalent
limited partnership unit $ 56.98 $ 47.84 $ 32.84
========== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding
during the year 12,305 15,527 21,215
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-4
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1995, 1994 and 1993
General Limited Partners
Partner Units Amount Total
_______ ___________________ _____
Balance, January 1, 1993 $ 9,849 45,549 $ 9,881,391 $9,891,240
Reinvested cash distributions - - 203,176 203,176
Redemptions - (2,160) (404,682) (404,682)
Cash distributions (43,514) - (4,307,865) 4,351,379)
Net income 43,278 - 696,679 739,957
________ ______ __________ __________
Balance, December 31, 1993 9,613 43,389 6,068,699 6,078,312
Redemptions - (824) (92,044) (92,044)
Cash distributions (25,565) - (2,530,862) (2,556,427)
Net income 22,587 - 742,810 765,397
________ ______ __________ __________
Balance, December 31, 1994 6,635 42,565 4,188,603 4,195,238
Redemptions - (1,779) (19,407) (19,407)
Cash distributions (36,997) - (2,224,163) (2,261,160)
Net income 37,241 - 701,195 738,436
________ ______ __________ __________
Balance, December 31, 1995 $ 6,879 40,786 $2,646,228 $2,653,107
======== ====== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-5
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF CASH FLOWS
For the years ended December 31,
1995 1994 1993
Cash flows from operating activities:
Net income $ 738,436 $ 765,397 $ 739,957
__________ __________ __________
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 1,220,643 1,451,711 2,256,037
Write-down of equipment to net realizable value 94,171 156,196 294,581
Gain on sale of equipment, net (182,063) (138,714) (353,326)
(Increase) decrease in accounts receivable 47,361 (44,518) 460,969
(Increase) decrease in due from related parties (12,462) 369,689 (360,386)
Increase (decrease) in lease rents
paid in advance (109,250) 10,820 51,982
Increase (decrease) in due to related parties 543 (88,471) (272,107)
Increase (decrease) in other, net 24,259 (68,012) (25,852)
__________ __________ __________
1,083,202 1,648,701 2,051,898
__________ __________ __________
Net cash provided by operating activities 1,821,638 2,414,098 2,791,855
__________ __________ __________
Cash flows from investing activities:
Acquisition of equipment (1,533,346) (1,239,461) (949,385)
Purchase of investment securities
held to maturity - (734,563) -
Maturity of investment securities
held to maturity - 1,230,449 487,489
Proceeds from sale of equipment 325,219 402,974 1,159,635
__________ __________ __________
Net cash provided by (used in) investing
activities (1,208,127) (340,601) 697,739
__________ __________ __________
Cash flows from financing activities:
Capital contributions - - 203,176
Distributions (2,261,160) (2,556,427) (4,351,379)
Redemptions of capital (19,407) (92,044) (404,682)
__________ __________ __________
Net cash used in financing activities (2,280,567) (2,648,471) (4,552,885)
__________ __________ __________
Decrease in cash and cash equivalents (1,66 7,056) (574,974) (1,063,291)
Cash and cash equivalents, beginning of year 2,456,685 3,031,659 4,094,950
__________ __________ __________
Cash and cash equivalents, end of year $ 789,629 $2,456,685 $3,031,659
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-6
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Fidelity Leasing Income Fund IV, L.P. (the "Fund") was formed in December
1986 with Fidelity Leasing Corporation ("FLC") as the General Partner. FLC
is a wholly owned subsidiary of Resource Leasing, Inc., a wholly owned
subsidiary of Resource America, Inc. The Fund is managed by the General
Partner. The Fund's limited partnership interests are not publicly traded.
There is no market for the Fund's limited partnership interests and it is
unlikely that any will develop. The Fund acquires computer equipment
including printers, tape and disk storage devices, data communications
equipment, computer terminals, data processing and office equipment which
is leased to third parties throughout the United States on a short-term
basis.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment Securities Held to Maturity
The Fund adopted Statement of Financial Accounting Standard (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" on
January 1, 1994. This new standard requires investments in securities to
be classified in one of three categories: held to maturity, trading and
available for sale. Debt securities that the Fund has the positive intent
and ability to hold to maturity are classified as held to maturity and are
reported at amortized cost. As the Fund does not engage in security
trading, the balance, if any, of its debt securities and equity securities
are classified as available for sale. Net unrealized gains and losses for
securities available for sale are required to be recognized as a separate
component of partners' capital and excluded from the determination of net
income. The Fund adopted this new standard for the year ended December 31,
1994 with no resulting financial statement impact on the Fund. Prior to
the adoption of SFAS No. 115, investment securities were carried at cost
which approximates market.
Concentration of Credit Risk
Financial instruments which potentially subject the Fund to concentrations
of credit risk consist principally of temporary cash investments. The Fund
places its temporary investments in securities backed by the United States
Government, commercial paper with high credit quality institutions, bank
money market funds and time deposits and certificates of deposit.
Concentrations of credit risk with respect to accounts receivables are
limited due to the dispersion of the Fund's leesees over different
industries and geographies.
Equipment Held for Sale or Lease
Equipment held for sale or lease is carried at its estimated net realizable
value.
F-7
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Accounting for Leases
The Fund's leasing operations consist only of operating leases. The cost
of the leased equipment is recorded as an asset and depreciated on a
straight-line basis over its estimated useful life, up to six years.
Acquisition fees associated with lease placements are allocated to
equipment when purchased and depreciated as part of equipment cost. Rental
income consists primarily of monthly periodic rentals due under the terms
of the leases. Generally, during the remaining terms of existing operating
leases, the Fund will not recover all of the undepreciated cost and related
expenses of its rental equipment and is prepared to remarket the equipment
in future years. Upon sale or other disposition of assets, the cost and
related accumulated depreciation are removed from the accounts and the
resulting gain or loss, if any, is reflected in income.
Income Taxes
Federal and State income tax regulations provide that taxes on the income
or benefits from losses of the Fund are reportable by the partners in their
individual income tax returns. Accordingly, no provision for such taxes
has been made in the accompanying financial statements.
Statements of Cash Flows
For purposes of the statements of cash flows, the Fund considers all highly
liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
Net Income per Equivalent Limited Partnership Unit
Net income per equivalent limited partnership unit is computed by dividing
net income allocated to limited partners by the weighted average number of
equivalent limited partnership units outstanding during the year. The
weighted average number of equivalent units outstanding during the year is
computed based on the weighted average monthly limited partners' capital
account balances, converted into equivalent units at $500 per unit.
Significant Fourth Quarter Adjustments
Currently, the Fund's practice is to review the recoverability of its
undepreciated costs of rental equipment quarterly. The Fund's policy,
as part of this review, is to analyze such factors as releasing of
equipment, technological developments and information provided in third
F-8
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Significant Fourth Quarter Adjustments (Continued)
party publications. Based upon this review, the Fund recorded an
adjustment of approximately $156,000 and $295,000 or $10.05 and $13.91
per equivalent limited partnership unit to write down its rental equipment
in the fourth quarter of 1994 and 1993, respectively. There were no
significant fourth quarter adjustments in 1995.
Reclassification
Certain amounts on the 1994 and 1993 financial statements have been
reclassified to conform to the presentation adopted in 1995.
3. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS
Cash distributions (except for the period from January 1, 1992 through
June 30, 1995), if any, are made quarterly as follows: 96.5% to the
Limited Partners and 3.5% to the General Partner, until the Limited
Partners have received an amount equal to the purchase price of their
Units, plus a 10% compounded Priority Return (an amount equal to 10%
compounded annually on the portion of the purchase price not previously
distributed); thereafter, 90% to the Limited Partners and 10% to the
General Partner.
Net Losses are allocated 99% to the Limited Partners and 1% to the General
Partner. The General Partner is allocated Net Income equal to its cash
distributions, but not less than 1% of Net Income, with the balance
allocated to the Limited Partners.
Net Income (Losses) allocated to the Limited Partners are allocated to
individual limited partners based on the ratio of the daily weighted
average partner's net capital account balance (after deducting related
commission expense) to the total daily weighted average of the Limited
Partners' net capital account balances.
4. EQUIPMENT LEASED
Equipment on lease consists primarily of computer peripheral equipment
under operating leases. The 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 15 to 60 months.
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, in 1995, 1994 and 1993,
approximately $94,000, $156,000 and $295,000, respectively was charged to
write-down of equipment to net realizable value. However the General
Partner believes, after analyzing the current equipment portfolio, that
there are impending gains to be recognized upon the sale of certain of its
equipment in future years.
F-9
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
4. EQUIPMENT LEASED (Continued)
The future approximate minimum rentals to be received on noncancellable
operating leases as of December 31 are as follows:
1996 $1,345,000
1997 733,000
1998 89,000
__________
$2,167,000
==========
5. RELATED PARTY TRANSACTIONS
The General Partner receives 6% or 3% 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 with terms in excess of 42 months and for
which rental payments during the initial term are at least sufficient to
recover the purchase price of the equipment, including acquisition fees.
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 a 10% cumulative compounded
Priority Return. Based on current estimates, it is not expected that the
Fund will be required to pay the General Partner a sales fee.
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 charged by the General Partner or its affiliates
during the years ended December 31:
1995 1994 1993
Management fee $123,347 $140,683 $186,149
Reimbursable costs 106,410 79,047 100,785
Amounts due from related parties at December 31, 1995 and 1994 represent
monies due to the Fund from the General Partner and/or other affiliated
funds for rentals and sales proceeds collected and not yet remitted the
Fund.
Amounts due to related parties at December 31, 1995 and 1994 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.
F-10
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
6. MAJOR CUSTOMERS
For the year ended December 31, 1995, two customers accounted for 18% each,
one customer accounted for 17% and two customers accounted for 13% and 12%
of the Fund's rental income. For the year ended December 31, 1994, three
customers accounted for 21%, 15% and 13% of the Fund's rental income. For
the year ended December 31, 1993, two customers accounted for 17% and 14%
of the Fund's rental income.
7. CASH DISTRIBUTIONS
Below is a summary of the quarterly cash distributions paid to partners
during the years ended December 31:
Month of Distribution 1995 1994 1993
February $ 563,578 $ 861,371 $ 884,996
May 561,230 565,804 1,302,123
August 560,918 565,202 1,301,564
November 575,434 564,050 862,696
__________ __________ __________
$2,261,160 $2,556,427 $4,351,379
========== ========== ==========
In addition, the General Partner declared a cash distribution of $168,000
in February 1996 for the three months ended December 31, 1995, to all
admitted partners as of December 31, 1995.
F-11