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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 0-20131
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.)
7 E. Skippack Pike, Suite 275, Ambler, Pennsylvnaia 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 22,812.
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 VIII, L.P. (the "Fund"), a Delaware
limited partnership, was organized in 1990 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
the 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 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 significant advances in the
computer equipment industry which may result in revolutionary changes
with respect to small, medium and large computer systems.
2
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 $ 307,668 3.45%
Disk Storage Systems 4,874,504 54.60
Network Communications 724,196 8.11
Personal Computers, Terminals
and Display Stations 512,278 5.75
Printers 1,588,453 17.79
Tape Storage Systems 910,063 10.19
Other 9,934 0.11
__________ _______
Totals $8,927,096 100.00%
========== =======
Breakdown of Equipment Usage
By Industrial Classification
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Computers/Data Processing $1,432,494 16.05%
Consumer Products/Retailing 1,329,900 14.90
Diversified Financial/Banking/
Insurance 3,258,985 36.51
Manufacturing/Refining 1,695,989 19.00
Publishing/Printing 43,835 0.49
Telephone/Telecommunications 1,165,893 13.05
__________ _______
Totals $8,927,096 100.00%
========== =======
Average Initial Term of Leases (in months): 40
All of the above equipment is currently leased under operating leases.
Item 3. LEGAL PROCEEDINGS
Not applicable.
3
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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 962
General Partnership Interest 1
Item 6. SELECTED FINANCIAL DATA
For the Years Ended December 31,
1995 1994 1993 1992 1991(1)
Total Income $2,543,493 $3,452,905 $3,376,928 $2,574,789 $343,068
Net Income(Loss) (137,721) 123,837 207,044 138,640 11,001
Distributions to Partners 1,105,691 1,307,741 1,377,737 1,273,195 119,105
Net Income (Loss) per Equivalent
Limited Partnership Unit (9.05) 6.16 9.12 5.47 0.79
Weighted Average Number of
Equivalent Limited Partnership
Units Outstanding During the Year 15,067 17,997 21,200 22,921 11,623
December 31,
1995 1994 1993 1992 1991(1)
C>
Total Assets $5,596,725 $6,966,272 $8,619,625 $10,116,518 $6,830,859
Equipment under Operating
Leases and Equipment Held for
Sale or Lease (Net) 2,395,085 4,323,766 6,282,710 8,433,473 6,046,448
Limited Partnership
Units 22,812 23,223 24,406 25,556 15,620
Limited Partners 962 975 992 1,021 608
(1) The Fund was initially capitalized on November 21, 1990 and began
operations on September 3, 1991. Therefore, operations for the period from
September 3, 1991 through December 31, 1991 are reflected herein.
4
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 $2,543,493,
$3,452,905 and $3,376,928 for the years ended December 31, 1995, 1994 and 1993,
respectively. Rental income from the leasing of computer peripheral equipment
accounted for 93%, 90% and 93% of total revenues in 1995, 1994 and 1993,
respectively. The decrease in total revenue in 1995 is primarily attributable
a decrease in rental income. Rental income decreased by approximately
$1,022,000 because of equipment that came off lease and was re-leased at lower
rental rates or sold. This decrease, however, was offset by rental income of
approximately $272,000 generated from equipment on operating leases purchased
during 1995 as well as rental income earned 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. Additionally, the Fund recognized a net loss on the sale
of equipment of $132,290 for the year ended December 31, 1995 as compared to a
net gain on sale of equipment of $236,013 for the year ended December 31, 1994.
These decreases in revenue were offset by an increase in interest income in
1995 due to an increase in cash available for investment throughout the year.
In 1994, the increase in total revenues was primarily attributable to the net
gain on sale of equipment of $236,013 recognized by the Fund as compared to
$164,356 recognized in 1993. Additionally, interest income increased in 1994
due to an increase in the cash available for investment throughout that year.
These increases in total revenue in 1994 were offset by a decrease in rental
income. In 1994, rental income decreased by approximately $473,000 because of
equipment which came off lease and was released at lower rental rates or sold.
This decrease, however, was offset by rental income of approximately $434,000
generated from equipment on operating leases purchased during 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.
Expenses were $2,681,214, $3,329,068 and $3,169,884 for the years ended
December 31, 1995, 1994, and 1993, respectively. Depreciation and amortization
comprised 75%, 83% and 87% of total expenses during the years ended
December 31, 1995, 1994 and 1993, respectively. The decrease in expenses in
1995 was primarily due to a decrease in depreciation expense because of
equipment which came off lease, terminated or was sold. Management fees
decreased proportionately to the decrease in rental income in 1995. In
addition, write-down of equipment to net realizable value was $207,780 in 1995
as compared to $257,662 in 1994 which also contributed to the decrease in total
expenses. 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 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. 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 decrease in total
expenses was offset by an increase in administrative services incurred to the
General Partner in 1995 which are included in general and administrative
expenses to related party. In 1994, the increase in expenses was largely due
to an increase in write-down of equipment to net realizable value.
5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations(continued)
Results of Operations (Continued)
In 1994, the Fund incurred a write-down of equipment to net realizable value of
$257,662 as compared to $133,678 in 1993. Additionally, depreciation expense
increased during the twelve months ended December 31, 1994 because of the
additional equipment owned and leased by the Fund.
The Fund's net income (loss) was $(137,721), $123,837 and $207,044 for the
years ended December 31, 1995, 1994 and 1993, respectively. The earnings
(loss) per equivalent limited partnership unit, after earnings (loss) allocated
to the General Partner, were $(9.05), $6.16 and $9.12 based on a weighted
average number of equivalent limited partnership units outstanding of 15,067,
17,997 and 21,200 for the years ended December 31, 1995, 1994 and 1993,
respectively.
The Fund generated funds from operations of $2,210,976, $2,923,299 and
$2,926,988 for the purpose of determining cash available for distribution and
distributed 45%, 45% and 47% to partners in 1995, 1994 and 1993, respectively
and 0%, 4% and 4% of these amounts to partners in January 1996, 1995 and 1994,
respectively. 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 continues 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 $897,705,
$1,733,792 and $1,186,076 respectively, of equipment.
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. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
6
PART III
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.
7
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 $108,202(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 five percent of the Fund's outstanding
securities either beneficially or of record.
(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 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 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 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 by the
General Partner $93,347 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 management services performed on behalf of the Fund.
Full pay-out leases are noncancelable leases for which rental payments
during the initial term are at least sufficient to recover the purchase
price of the equipment, including acquisition fees. This management fee
is paid monthly only if and when the Limited Partners have received
distributions for the period from 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.
8
Item 13. CERTAIN RELATIONSHIPS AND RELATED 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
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. During 1995, the Fund incurred a
sales fee of $14,855 to the General Partner for services performed in
connection with the disposition of equipment.
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 1995, the General Partner received cash distributions of $11,057.
The Fund incurred $176,086 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 VIII, 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
December 31, 1995, 1994 and 1993 F-4
Statements of Partners' Capital for the years
ended December 31, 1995, 1994 and 1993 F-5
Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 F-6
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 VIII, L.P.
We have audited the accompanying balance sheets of Fidelity Leasing
Income Fund VIII, 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 VIII, 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 VIII, L.P.
BALANCE SHEETS
ASSETS
December 31,
1995 1994
Cash and cash equivalents $2,861,597 $2,005,306
Accounts receivable 313,745 620,295
Interest receivable 4,259 8,568
Due from related parties 20,706 4,504
Equipment under operating leases
(net of accumulated depreciation of
$6,629,864 and $6,493,302) 2,297,232 3,986,155
Equipment held for sale or lease 97,853 337,611
Organization costs
(net of accumulated amortization of
$8,667 and $6,167) 1,333 3,833
__________ __________
Total assets $5,596,725 $6,966,272
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 29,566 $ 50,867
Accounts payable and accrued expenses 50,909 42,740
Due to related parties 87,475 51,023
__________ _________
Total liabilities 167,950 144,630
Partners' capital 5,428,775 6,821,642
__________ __________
Total liabilities and
partners' capital $5,596,725 $6,966,272
========== ==========
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
1995 1994 1993
Income:
Rentals $2,358,813 $3,108,535 $3,147,853
Interest 180,388 106,701 60,558
Gain on sale of equipment, net - 236,013 164,356
Other 4,292 1,656 4,161
__________ __________ __________
2,543,493 3,452,905 3,376,928
__________ __________ __________
Expenses:
Depreciation and amortization 2,008,627 2,777,813 2,750,622
Write-down of equipment to net
realizable value 207,780 257,662 133,678
General and administrative 63,084 54,904 62,422
General and administrative to
related party 176,086 101,165 97,738
Management fee to related party 93,347 137,524 125,424
Loss on sale of equipment, net 132,290 - -
__________ __________ __________
2,681,214 3,329,068 3,169,884
__________ __________ __________
Net income (loss) $ (137,721) $ 123,837 $ 207,044
========== ========== ==========
Net income (loss) per equivalent
limited partnership unit $ (9.05) $ 6.16 $ 9.12
========== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during the year 15,067 17,997 21,200
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-4
FIDELITY LEASING INCOME FUND VIII, 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 $ 2,183 25,556 $9,979,382 $9,981,565
Redemptions - (1,150) (423,879) (423,879)
Cash distributions (13,777) - (1,363,960) (1,377,737)
Net income 13,724 - 193,320 207,044
_______ ______ __________ __________
Balance, December 31, 1993 2,130 24,406 8,384,863 8,386,993
Redemptions - (1,183) (381,447) (381,447)
Cash distributions (13,077) - (1,294,664) (1,307,741)
Net income 13,022 - 110,815 123,837
_______ ______ __________ __________
Balance, December 31, 1994 2,075 23,223 6,819,567 6,821,642
Redemptions - (411) (149,455) (149,455)
Cash distributions (11,057) - (1,094,634) (1,105,691)
Net income (loss) (1,377) - (136,344) (137,721)
_______ ______ __________ __________
Balance, December 31, 1995 $(10,359) 22,812 $5,439,134 $5,428,775
======= ====== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-5
FIDELITY LEASING INCOME FUND VIII, L.P.
STATEMENTS OF CASH FLOWS
For the years ended December 31,
1995 1994 1993
Cash flows from operating activities:
Net income (loss) $ (137,721) $ 123,837 $ 207,044
__________ __________ __________
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 2,008,627 2,777,813 2,750,622
Write-down of equipment to
net realizable value 207,780 257,662 133,678
(Gain) loss on sale of equipment, net 132,290 (236,013) (164,356)
(Increase) decrease in accounts receivable 306,550 (612,248) 42,835
(Increase) decrease in due from
related parties (16,202) 95,437 (99,941)
Increase (decrease) in lease
rents paid in advance (21,301) (20,788) (33,258)
Increase (decrease) in accounts
payable and accrued expenses 8,169 (99,096) 112,445
Increase (decrease) in other, net 40,761 28,266 30,727
__________ __________ __________
2,666,674 2,191,033 2,772,752
__________ __________ __________
Net cash provided by operating
activities 2,528,953 2,314,870 2,979,796
__________ __________ __________
Cash flows from investing activities:
Purchase of investment securities
held to maturity - (491,749) -
Maturity of investment securities
held to maturity - 739,698 235,426
Acquisition of equipment (897,705) (1,733,792) (1,186,076)
Proceeds from sale of equipment 480,189 894,774 618,895
__________ __________ __________
Net cash used in investing activities (417,516) (591,069) (331,755)
__________ __________ __________
Cash flows from financing activities:
Distributions (1,105,691) (1,307,741) (1,377,737)
Redemptions of capital (149,455) (381,447) (423,879)
__________ __________ __________
Net cash used in financing
activities (1,255,146) (1,689,188) (1,801,616)
__________ __________ __________
Increase in cash and cash equivalents 856,291 34,613 846,425
Cash and cash equivalents,
beginning of year 2,005,306 1,970,693 1,124,268
__________ __________ __________
Cash and cash equivalents, end of year $2,861,597 $2,005,306 $1,970,693
========== ========== ==========
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
Fidelity Leasing Income Fund VIII, L.P. (the "Fund") was formed on
November 21, 1990 with Fidelity Leasing Corporation ("FLC") as the
General Partner. FLC is a wholly owned subsidiary of Resources
Leasing, Inc. a wholly owned subsidary 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 Standards (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 adoption of this new standard had no 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 VIII, L.P.
NOTES TO FINANCIAL STATEMENTS
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.
Organization Costs
Organization costs are being amortized over a five year period.
Accounting for Leases
The Fund's leasing operations consist primarily of operating leases
whereby 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.
Statement of Cash Flows
For purposes of the statement 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)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 party publications. Based upon this review, the
Fund recorded an adjustment of approximately $82,000, $208,000 and
$134,000 or $5.44, $11.56 and $6.32 per equivalent limited partnership
unit to write down its rental equipment in the fourth quarter of 1995,
1994 and 1993, respectively.
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, 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
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 12 to 48
months.
F-9
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
4. EQUIPMENT LEASED (Continued)
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 $208,000, $258,000 and $134,000, 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.
The future approximate minimum rentals to be received on
noncancellable operating leases as of December 31 are as follows:
1996 $1,164,000
1997 576,000
1998 310,000
1999 31,000
__________
$2,081,000
==========
In addition, in January 1996, the Fund purchased $1,129,000 of
equipment subject to operating leases with initial lease terms of 36
months commencing in 1996. The future approximate minimum rentals to
be received on these noncancellable operating leases are $294,000 in
1996, 1997 and 1998, respectively.
5. RELATED PARTY TRANSACTIONS
The General Partner also receives 4% or 2% of rental payments on
equipment under operating leases and full pay-out leases,
respectively, for administrative and management services performed on
behalf of the Fund. Full pay-out leases are non-cancellable 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.
F-10
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. RELATED PARTY TRANSACTIONS (Continued)
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 of services and materials
charged by the General Partner or its affiliates during the years
ended December 31:
1995 1994 1993
Management fee $ 93,347 $137,524 $125,424
Reimbursable costs 176,086 101,165 97,738
Sales fee 14,855 17,096 19,141
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.
6. MAJOR CUSTOMERS
For the year ended December 31, 1995, three customers accounted for
27%, 13% and 13% of the Fund's rental income. For the year ended
December 31, 1994, three customers accounted for 26%, 20% and 12% of
the Fund's rental income. For the year ended December 31, 1993, three
customers accounted for 26%, 17% 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 1995 1994 1993
March $ 322,139 $ 338,292 $ 353,973
June 316,542 323,517 343,074
September 315,321 323,160 341,697
December 151,689 322,772 338,993
__________ __________ __________
$1,105,691 $1,307,741 $1,377,737
========== ========== ==========
F-11