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
For the year ended December 31, 2001
/ / 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.)
1845 Walnut Street, Suite 1000, Philadelphia, Pennsylvania 19103
______________________________________________________________________
(Address of principal executive offices) (Zip Code)
(215) 574-1636
______________________________________________________________________
(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, 2001 is 21,695.
There is no public market for these securities.
The index of Exhibits is located on page 11.
1
PART I
Item 1. BUSINESS
Fidelity Leasing Income Fund VIII, L.P. (the "Fund"), a Delaware limited
partnership, was organized in 1990 and acquires computer equipment, including
printers, tape and disk storage devices, data communications equipment, com-
puter terminals, technical workstations, networking equipment, as well as other
electronic equipment that is leased to third parties on a short-term basis.
The Fund's principal objective is to generate leasing revenues for distri-
bution. The Fund manages the equipment, releasing or disposing of equipment
as it comes off lease in order to achieve its principal objective. The Fund
does 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 or
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.
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 that 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) that will afford benefits to
the purchaser similar to those obtained through leases. As a result of the
advantages that 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.
A brief description of the types of equipment in which the Fund has
invested as of December 31, 2001, 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.
2
Item 2. PROPERTIES
The following schedules detail the type, aggregate purchase price and
percentage of the various types of equipment leased by the Fund under the
operating and direct financing methods as of December 31, 2001:
Operating Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Tape Storage Systems $ 426,713 40.02%
Technical Workstations and Terminals 418,990 39.29
Other 220,639 20.69
__________ ______
Totals $1,066,342 100.00%
========== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Network Communications $3,137,137 71.11%
Tape Storage Systems 931,739 21.12
PCB Assembly Equipment 293,687 6.65
Technical Workstations and Terminals 49,248 1.12
__________ ______
Totals $4,411,811 100.00%
========== ======
The following schedules detail the type of business, aggregate purchase
price and percentage of equipment usage by industrial classification for
equipment leased by the Fund under the operating and direct financing methods
as of December 31, 2001:
Operating Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Computers/Data Processing $ 646,919 60.67%
Manufacturing/Refining 419,423 39.33
__________ ______
Totals $1,066,342 100.00%
========== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Consumer Products/Retailing $3,167,704 71.80%
Computers/Data Processing 795,328 18.03
Telecommunications 293,687 6.65
Diversified Financial/Banking/Insurance 82,966 1.88
Education 63,342 1.44
Manufacturing/Refining 8,784 0.20
__________ ______
Totals $4,411,811 100.00%
========== ======
3
Item 2. PROPERTIES (Continued)
Average Initial Term of Leases (in months): 31
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 EQUITY AND RELATED STOCKHOLDER
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, 2001
Limited Partnership Interests 960
General Partnership Interest 1
Item 6. SELECTED FINANCIAL DATA
For the Years Ended December 31,
2001 2000 1999 1998 1997
Total Income $536,922 $678,950 $1,051,009 $2,790,169 $2,273,084
Net Income 164,287 362,336 364,639 93,898 382,297
Distributions to Partners 360,000 300,000 240,000 220,000 240,000
Net Income per Equivalent
Limited Partnership Unit 11.53 26.69 27.55 6.87 28.53
Weighted Average Number
of Equivalent Limited
Partnership Units
Outstanding During
the Year 13,307 13,438 13,105 13,312 13,264
December 31,
2001 2000 1999 1998 1997
Total Assets $5,029,949 $5,258,118 $5,203,246 $5,130,180 $5,276,226
Equipment under
Operating Leases and
Equipment Held for
Sale or Lease (Net) 144,788 101,508 296,219 758,243 3,014,540
Net Investment in
Direct Financing Leases 1,648,681 3,266,920 3,103,244 2,817,738 -
Limited Partnership
Units 21,695 21,695 21,695 21,695 21,695
Limited Partners 960 959 952 945 942
5
Item 7. 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 $536,922,
$678,950 and $1,051,009 for the years ended December 31, 2001, 2000 and
1999, respectively. Earned income from direct financing leases and rental
income from the leasing of equipment accounted for 84%, 83% and 85% of total
revenues in 2001, 2000 and 1999, respectively. The decrease in total revenues
in 2001 and 2000 was primarily attributable to the decrease in rental income.
Rental income decreased by approximately $111,000 in 2001 and $307,000 in 2000
because of equipment under operating leases that terminated and either was
renewed at lower rental rates or was sold during 2001, 2000 and 1999. Addi-
tionally, the decrease in net gain on sale of equipment also contributed
to the total decrease in income in 2001 and 2000. There was no net gain on
sale of equipment recognized for the year ended December 31, 2001. The Fund
recognized a net gain on sale of equipment of $44,873 and $49,407 for the
years ended December 31, 2000 and 1999, respectively. The fluctuation in
interest income mitigated the decrease in total revenues in 2001 and contrib-
uted to the decrease in total revenues in 2000. In 2001, the Fund earned
approximately $83,000 in interest income compared to $63,000 in 2000 and
$81,000 in 1999. This account increased in 2001 and decreased in 2000 because
of the change in cash balances available for investment by the Fund as a result
of the amount of investments made in direct financing leases in 2001, 2000 and
1999.
Expenses were $372,635, $316,614 and $686,370 for the years ended
December 31, 2001, 2000 and 1999, respectively. Depreciation expense comprised
16%, 40% and 53% of total expenses during the years ended December 31, 2001,
2000 and 1999, respectively. The increase in total expenses in 2001 was
primarily due to the increase in the reserve for uncollectible accounts.
During the year ended December 31, 2001, approximately $109,000 was charged
to this account to reserve for potential uncollectible rents for one lease.
Depreciation expense decreased in 2001 and 2000 because of equipment that
terminated and was sold during these years. The decrease in this account
mitigated the overall increase in expenses in 2001 and contributed to the
overall decrease in expenses in 2000. Furthermore, the decrease in write-down
of equipment to net realizable value in 2000 also contributed to the overall
decrease in expenses for this year. Based upon the quarterly review of the
recoverability of the undepreciated cost of rental equipment, there was no
write-down of equipment to net realizable value charged to operations during
the years ended December 31, 2001 and 2000, respectively. For the year ended
December 31, 1999, $80,267 was charged to operations to write down equipment
to its estimated net realizable value. 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 party publications. In accordance with accounting principles
generally accepted in the United States of America, the Fund writes down its
rental equipment to its estimated net realizable value when the amounts are
reasonably estimated and only recognizes gains, if any, upon actual sale of
its rental equipment. Any future losses are dependent upon unanticipated
technological developments affecting the types of equipment in the portfolio
in subsequent years.
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
The Fund's net income was $164,287, $362,336 and $364,639 for the years
ended December 31, 2001, 2000 and 1999, respectively. The earnings per equiv-
alent limited partnership unit, after earnings allocated to the General
Partner, were $11.53, $26.69 and $27.55 based on a weighted average number of
equivalent limited partnership units outstanding of 13,307, 13,438 and 13,105
for the years ended December 31, 2001, 2000 and 1999, respectively.
The Fund generated cash from operations of $334,757, $442,771 and $760,331
for the purpose of determining cash available for distribution during the years
ended December 31, 2001, 2000 and 1999, respectively. The Fund distributed
$270,000, $240,000 and $180,000 of those amounts to partners during the period
from April 1 through December 31, 2001, 2000 and 1999, respectively. During
the first quarter of 2002, 2001 and 2000, the Fund distributed $810,000,
$90,000 and $60,000 to partners, respectively. For financial statement pur-
poses, 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 for
lease terms consistent with the plan of dissolution. The Fund invested in
$760,417, $1,851,498 and $1,857,519 of direct financing leases during
the years ended December 31, 2001, 2000 and 1999, 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.
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
In December 2001, the General Partner's Certificate of Incorporation was
amended to change the name of the General Partner of the Fund from F.L.
Partnership Management, Inc. to LEAF Financial Corporation (LEAF). LEAF
Financial Corporation is a wholly owned subsidiary of Resource Leasing, Inc.
which is a wholly owned subsidiary of Resource America, Inc. (Resource
America). The Directors and Executive Officers of LEAF are:
CRIT S. DEMENT, age 49, Chairman, President and Chief Executive Officer
of LEAF since November 2001. President of Fidelity Leasing, Inc. and its
successor, the Technology Finance Group of CitiCapital Vendor Finance from
1996 to 2001. Vice President of Marketing for Tokai Financial Services,
from 1987 through 1996.
EDWARD E. COHEN, age 62, Director of LEAF since November 2001. Chairman
of the Board of Resource America since 1990, President of Resource America
since 2000 and Chief Executive Officer and a Director of Resource America
since 1988. Chairman of the Managing Board of Directors of Atlas Pipeline
Partners GP, LLC (a wholly owned subsidiary of Resource America that is
the general partner of a publicly traded limited partnership that owns and
operates natural gas pipelines) since its formation in 1999. Chairman of
the Board of Directors of Brandywine Construction & Management, Inc. (a
property management company) since 1994. Mr. Cohen is the father of
Jonathan Z. Cohen.
JONATHAN Z. COHEN, age 31, Director of LEAF since November 2001. Execu-
tive Vice President of Resource America since 2001, Senior Vice President
of Resource America from 1999 to 2001. Vice Chairman of the Managing
Board of Atlas Pipeline Partners GP, LLC since its formation in 1999.
Trustee and Secretary of RAIT Investment Trust (a publicly traded real
estate investment trust) since 1997. Mr. Cohen is the son of Edward E.
Cohen.
MILES HERMAN, age 42, Vice President and a Director of LEAF since November
2001. Held various senior operational offices with Fidelity Leasing, Inc.
and its successor from 1998 to 2001. Held several management positions in
sales, marketing and operations at Tokai Financial Services from 1983 to
1998.
FREDDIE M. KOTEK, age 46, Director of LEAF since 1996. Senior Vice
President of Resource America since 1995. President of Resource Leasing,
Inc. since 1995.
MARIANNE T. SCHUSTER, age 43, Vice President and Treasurer of LEAF
since 1984.
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, 2001:
Name of Individual or Capacities in
Number in Group Which Served Compensation
LEAF Financial
Corporation General Partner $51,511(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) Based upon a review of Schedule 13D as filed with the Securities and
Exchange Commission, the table set forth below outlines the persons or
groups known to the Fund that own more than 5% of the Fund's outstanding
securities either beneficially or of record.
Name of Individual Number of
or Group Units Owned
James S. and Danea T. Riley 1,346.06 (1)
Odd Lot Liquidity Fund, LLC 1,346.06 (2)
Sierra Fund 4, LLC 1,346.06 (3)
(1) Amount represents beneficial ownership interest through
ownership of Odd Lot Liquidity Fund, LLC and Sierra Fund 4, LLC
which own 1,027.46 units and 318.60 units, respectively, of the
outstanding limited partnership units of the Fund.
(2) Amount represents direct ownership by Odd Lot Liquidity
Fund, LLC of 1,027.46 units and beneficial ownership of 318.60
units by virtue of group membership and affiliate status with
Sierra Fund 4, LLC.
(3) Amount represents direct ownership by Sierra Fund 4, LLC
of 318.60 units and beneficial ownership of 1,027.46 units by
virtue of group membership and affiliate status with Odd Lot
Liquidity Fund, LLC.
(b) In 1990, 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 LEAF Financial 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 part-
nership interest which entitles it to receive 1% of cash distributions
until the Limited Partners have received an amount equal to the purchase
9
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(Continued)
price of their units plus an 11% cumulative 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, 2001, the Fund was charged by the
General Partner $51,511 of management fees. The General Partner will
continue to receive 4% or 2% of rental payments on equipment under operating
leases and full pay-out leases, respectively, for administrative and manage-
ment services performed on behalf of the Fund. Full pay-out leases are
noncancellable leases for which rental payments during the initial term of
the lease are at least sufficient to recover the purchase price of the equip-
ment, including acquisition fees. All of the direct financing leases in
which the Fund has invested meet the criteria for a full pay-out lease and
pay a 2% management fee to the General Partner. 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.
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.
The General Partner receives 1% of cash distributions until the Limited
Partners have received an amount equal to the purchase price of their units
plus an 11% cumulative compounded priority return. Thereafter, the General
Partner will receive 10% of cash distributions. During 2001, the General
Partner received cash distributions of $3,600.
The Fund incurred $88,286 of reimbursable costs to the General Partner
and its parent company for services and materials provided in connection with
the administration of the Fund during 2001.
10
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.
11
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 VIII, L.P.
A Delaware limited partnership
By: LEAF FINANCIAL CORPORATION
/s/ Crit S. DeMent
By: ___________________________
Crit S. DeMent, Chairman and President
Dated March 28, 2002
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
/s/ Crit S. DeMent
____________________________ Chairman of the Board of Directors 3-28-02
Crit S. DeMent and President of LEAF Financial
Corporation
(Principal Executive Officer)
/s/ Miles Herman
____________________________ Vice President and Director of 3-28-02
Miles Herman LEAF Financial Corporation
/s/ Freddie M. Kotek
____________________________ Director of LEAF Financial Corporation 3-28-02
Freddie M. Kotek
/s/ Marianne T. Schuster
____________________________ Vice President and Treasurer of 3-28-02
Marianne T. Schuster LEAF Financial Corporation
(Principal Financial Officer)
12
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Certified Public Accountants F-2
Balance Sheets as of December 31, 2001 and 2000 F-3
Statements of Operations for the years ended
December 31, 2001, 2000 and 1999 F-4
Statements of Partners' Capital for the years ended
December 31, 2001, 2000 and 1999 F-5
Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999 F-6
Notes to Financial Statements F-7 - F-13
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 VIII, L.P.
We have audited the accompanying balance sheets of Fidelity Leasing
Income Fund VIII, L.P. as of December 31, 2001 and 2000, and the related
statements of operations, partners' capital and cash flows for each of the
three years in the period ended December 31, 2001. 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the finan-
cial statements are free of material misstatement. An audit includes examin-
ing, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting princi-
ples 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 VIII, L.P. as of December 31, 2001 and 2000, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted
in the United States of America.
Grant Thornton LLP
Philadelphia, Pennsylvania
February 14, 2002
F-2
FIDELITY LEASING INCOME FUND VIII, L.P.
BALANCE SHEETS
ASSETS
December 31,
2001 2000
Cash and cash equivalents $2,908,429 $1,682,259
Accounts receivable 319,052 179,909
Due from related parties 8,999 27,522
Net investment in direct financing
leases 1,648,681 3,266,920
Equipment under operating leases
(net of accumulated depreciation
of $1,025,054 and $963,960,
respectively) 41,288 101,508
Equipment held for sale or lease 103,500 -
__________ __________
Total assets $5,029,949 $5,258,118
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 12,272 $ 10,430
Accounts payable and
accrued expenses 7,231 43,046
Due to related parties 12,189 10,672
__________ __________
Total liabilities 31,692 64,148
Partners' capital 4,998,257 5,193,970
__________ __________
Total liabilities and
partners' capital $5,029,949 $5,258,118
========== ==========
The accompanying notes are an integral part of these financial statements.
F-3
FIDELITY LEASING INCOME FUND VIII, L.P.
STATEMENTS OF OPERATIONS
For the years ended December 31,
2001 2000 1999
Income:
Earned income on direct
financing leases $278,823 $278,353 $ 304,021
Rentals 171,169 282,005 589,216
Interest 82,804 62,631 81,090
Gain on sale of equipment, net - 44,873 49,407
Other 4,126 11,088 27,275
________ ________ __________
536,922 678,950 1,051,009
________ ________ __________
Expenses:
Depreciation 61,094 125,308 364,832
Write-down of equipment to
net realizable value - - 80,267
General and administrative 62,368 56,748 69,852
General and administrative to
related party 88,286 84,975 113,635
Management fee to related party 51,511 49,583 57,784
Reserve for uncollectible accounts 109,376 - -
________ ________ __________
372,635 316,614 686,370
________ ________ __________
Net income $164,287 $362,336 $ 364,639
======== ======== ==========
Net income per equivalent
limited partnership unit $ 11.53 $ 26.69 $ 27.55
======== ======== ==========
Weighted average number of
equivalent limited partnership
units outstanding during the year 13,307 13,438 13,105
======== ======== ==========
The accompanying notes are an integral part of these financial statements.
F-4
FIDELITY LEASING INCOME FUND VIII, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the years ended December 31, 2001, 2000 and 1999
General Limited Partners
Partner Units Amount Total
________ ___________________ _____
Balance, January 1, 1999 ($8,336) 21,695 $5,015,331 $5,006,995
Cash distributions (2,400) - (237,600) (240,000)
Net income 3,646 - 360,993 364,639
_______ ______ __________ __________
Balance, December 31, 1999 (7,090) 21,695 5,138,724 5,131,634
Cash distributions (3,000) - (297,000) (300,000)
Net income 3,623 - 358,713 362,336
_______ ______ __________ __________
Balance, December 31, 2000 (6,467) 21,695 5,200,437 5,193,970
Cash distributions (3,600) - (356,400) (360,000)
Net income 10,800 - 153,487 164,287
_______ ______ __________ __________
Balance, December 31, 2001 $ 733 21,695 $4,997,524 $4,998,257
======= ====== ========== ==========
The accompanying notes are an integral part of this financial statement.
F-5
FIDELITY LEASING INCOME FUND VIII, L.P.
STATEMENTS OF CASH FLOWS
For the years ended December 31,
2001 2000 1999
Cash flows from operating activities:
Net income $ 164,287 $ 362,336 $ 364,639
__________ __________ __________
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 61,094 125,308 364,832
Write-down of equipment to net
realizable value - - 80,267
Reserve for uncollectible accounts 109,376 - -
(Gain) loss on sale of equipment, net - (44,873) (49,407)
(Increase) decrease in accounts receivable (139,143) (82,204) 57,282
(Increase) decrease in due from
related parties 18,523 49,767 (14,296)
Increase (decrease) in lease rents paid in
advance 1,842 (2,271) 3,198
Increase (decrease) in accounts payable
and accrued expenses (35,815) (9,701) (53,867)
Increase (decrease) in due to related parties 1,517 4,508 (904)
__________ __________ __________
17,394 40,534 387,105
__________ __________ __________
Net cash provided by operating activities 181,681 402,870 751,744
__________ __________ __________
Cash flows from investing activities:
Acquisition of equipment (104,374) - -
Investment in direct financing leases (760,417) (1,851,498) (1,857,519)
Proceeds from direct financing leases,
net of earned income 2,269,280 1,687,822 1,572,013
Proceeds from sale of equipment - 114,276 66,332
__________ __________ __________
Net cash provided by (used in)
investing activities 1,404,489 (49,400) (219,174)
__________ __________ __________
Cash flows from financing activities:
Distributions (360,000) (300,000) (240,000)
__________ __________ __________
Net cash used in financing activities (360,000) (300,000) (240,000)
__________ __________ __________
Increase in cash and cash equivalents 1,226,170 53,470 292,570
Cash and cash equivalents, beginning of year 1,682,259 1,628,789 1,336,219
__________ __________ __________
Cash and cash equivalents, end of year $2,908,429 $1,682,259 $1,628,789
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-6
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF BUSINESS
Fidelity Leasing Income Fund VIII, L.P. (the Fund) was formed on
November 21, 1990. In December 2001, the General Partner's Certificate of
Incorporation was amended to change the name of the General Partner of the
Fund from F.L. Partnership Management, Inc. to LEAF Financial Corporation
(LEAF). LEAF Financial Corporation is a wholly owned subsidiary of Resource
Leasing, Inc. which is a wholly owned subsidiary of Resource America, Inc.
(Resource America). 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 storage
devices, data communications equipment, computer terminals, technical work-
stations and networking equipment, as well as other electronic equipment, that
is leased to third parties throughout the United States on a short-term basis.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration of Credit Risk
Financial instruments that potentially subject the Fund to concentra-
tions of credit risk consist principally of temporary cash investments. The
Fund places its temporary investments in money market savings accounts.
Concentrations of credit risk with respect to accounts receivables are
limited due to the dispersion of the Fund's lessees over different industries
and geographies.
Impairment of Long-Lived Assets
The Fund reviews its assets to determine if it has any long-lived assets
that are carried on the books for an amount that may not be recoverable. If
it is determined that an asset's estimated future cash flows will not be suf-
ficient to recover its carrying amount, an impairment charge will be recorded.
Equipment Held for Sale or Lease
Equipment held for sale or lease is carried at its estimated net realiz-
able value.
Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, 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.
F-7
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting for Leases
The Fund's leasing operations consist of both direct financing and
operating leases. Under the direct financing method of accounting for leases,
income (the excess of the aggregate future rentals and estimated unguaranteed
residuals upon expiration of the lease over the related equipment cost) is
recognized over the life of the lease using the interest method.
Under the operating method of accounting for 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 seven 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 dep-
reciation 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.
F-8
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
3. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS
Cash distributions, if any, are made monthly as follows: 99% to the
Limited Partners and 1% to the General Partner, until the Limited Partners
have received an amount equal to the purchase price of their units, plus an
11% compounded priority return (an amount equal to 11% 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
The Fund's direct financing leases are for initial lease terms ranging
from 7 to 60 months. Unguaranteed residuals for direct financing leases
represent the estimated 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 is below the estimated
residual value, an adjustment is made.
The approximate net investment in direct financing leases as of Decem-
ber 31, 2001 is as follows:
Minimum lease payments to be received $1,523,000
Unguaranteed residuals 337,000
Unearned rental income (71,000)
Reserve for uncollectible accounts (124,000)
Unearned residual income (16,000)
__________
$1,649,000
==========
Equipment on lease consists 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
ranging from 11 to 36 months.
In accordance with accounting principles generally accepted in the United
States of America, the Fund writes down its rental equipment to its estimated
net realizable value when the amounts are reasonably estimated and only recog-
nizes gains upon actual sale of its rental equipment. As a result, in 2001 and
2000 there was no write-down of equipment to net realizable value. In 1999,
F-9
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
4. EQUIPMENT LEASED (Continued)
approximately $80,000 was charged to write-down of equipment to net realizable
value. Any future losses are dependent upon unanticipated technological
developments affecting the equipment in subsequent years.
The future approximate minimum rentals to be received on noncancellable
direct financing and operating leases as of December 31 are as follows:
Direct
Financing Operating
2002 $1,310,000 $59,000
2003 212,000 -
2004 1,000 -
__________ _______
$1,523,000 $59,000
========== =======
5. RELATED PARTY TRANSACTIONS
The General Partner receives 4% or 2% of rental payments from equipment
under operating leases and full pay-out leases, respectively, for adminis-
trative and management services performed on behalf of the Fund. Full pay-out
leases are noncancellable leases for which the rental payments due during the
initial term of the lease are at least sufficient to recover the purchase price
of the equipment, including acquisition fees. This management fee is paid
monthly only if and when the Limited Partners have received distributions for
the period from 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.
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 and its parent company during the years ended December 31:
2001 2000 1999
Management fee $51,511 $49,583 $ 57,784
Reimbursable costs 88,286 84,975 113,635
F-10
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. RELATED PARTY TRANSACTIONS (Continued)
During 2001, the Fund transferred its checking and investment accounts
from Hudson United Bank to The Bancorp.com, Inc. (TBI). The son and the spouse
of the Chairman of Resource America, Inc. are the Chairman and Chief Executive
Officer, respectively, of TBI. The Fund maintains a normal banking relation-
ship with TBI.
Amounts due from related parties at December 31, 2001 and 2000 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 to the Fund.
Amounts due to related parties at December 31, 2001 and 2000 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.
6. MAJOR CUSTOMERS
For the year ended December 31, 2001, two customers accounted for
approximately 55% and 30% of the Fund's rental income. For the year ended
December 31, 2000, five customers accounted for approximately 36%, 20%, 19%,
15% and 10% of the Fund's rental income. For the year ended December 31, 1999,
four customers accounted for approximately 34%, 16%, 14% and 12% of the Fund's
rental income.
7. CASH DISTRIBUTIONS
Below is a summary of the cash distributions paid to partners during the
years ended December 31:
For the Quarter Ended 2001 2000 1999
March $ 90,000 $ 60,000 $ 60,000
June 90,000 60,000 80,000
September 120,000 90,000 60,000
December 60,000 90,000 40,000
________ ________ ________
$360,000 $300,000 $240,000
======== ======== ========
In addition, the General Partner declared and paid two cash distri-
butions of $30,000 each in January and February 2002 and one cash distri-
bution of $750,000 in February 2002 for the months ended October 31,
November 30 and December 31, 2001, for an aggregate of $810,000 to all
admitted partners as of October 31, November 30 and December 31, 2001.
F-11
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
8. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
The following table summarizes the results of operations on a quarterly
basis during 2001 and 2000:
2001
----------------------------------------
Fourth Third Second First
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Income:
Earned income on direct financing
leases $ 44,020 $ 49,150 $117,887 $ 67,766
Rentals 40,443 42,604 44,219 43,903
Interest 21,813 24,245 20,415 16,331
Other 1,194 2,172 384 376
________ ________ ________ ________
Total income 107,470 118,171 182,905 128,376
________ ________ ________ ________
Expenses:
Depreciation 12,799 16,098 16,099 16,098
General and administrative 13,331 20,063 18,918 10,056
General and administrative to
related party 25,328 23,409 19,213 20,336
Management fee to related party 11,811 11,324 14,067 14,309
Reserve for uncollectible accounts 22,590 33,884 52,902 -
________ ________ ________ ________
Total expenses 85,859 104,778 121,199 60,799
________ ________ ________ ________
Net income $ 21,611 $ 13,393 $ 61,706 $ 67,577
======== ======== ======== ========
Net income per equivalent limited
partnership unit $ 1.09 $ .95 $ 4.51 $ 4.98
======== ======== ======== ========
F-12
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
8. SUMMARY OF QUARTERLY RESULTS (UNAUDITED) (Continued)
2000
----------------------------------------
Fourth Third Second First
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Income:
Earned income on direct financing
leases $ 73,187 $ 69,647 $ 78,038 $ 57,481
Rentals $ 48,163 68,639 54,577 110,626
Interest 13,146 12,769 13,745 22,971
Gain on sale of equipment, net - - 41,023 4,600
Other 647 1,618 8,160 663
________ ________ ________ ________
Total income 135,143 152,673 195,543 196,341
________ ________ ________ ________
Expenses:
Depreciation 16,098 20,134 22,152 66,924
General and administrative 16,279 12,844 7,899 19,726
General and administrative to
related party 25,804 20,808 18,333 20,030
Management fee to related party 13,348 12,500 11,936 11,799
Loss on sale of equipment, net - 750 - -
________ ________ ________ ________
Total expenses 71,529 67,036 60,320 118,479
________ ________ ________ ________
Net income $ 63,614 $ 85,637 $135,223 $ 77,862
======== ======== ======== ========
Net income per equivalent limited
partnership unit $ 4.66 $ 6.29 $ 9.97 $ 5.77
======== ======== ======== ========
F-13