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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
For the year ended December 31, 1997
/ / Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______________ to ______________
Commission file number 0-20131
Fidelity Leasing Income Fund VIII, L.P.
______________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 23-2627143
______________________________________________________________________
(State of Organization) (I.R.S. Employer Identification No.)
3 North Columbus Blvd., Philadelphia, Pennsylvania 19106
______________________________________________________________________
(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, 1997 is 21,695.
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 equipment, including printers, tape and disk
storage devices, data communications equipment, computer terminals,
technical workstations as well as networking 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 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, 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 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.
A brief description of the types of equipment in which the Fund
has invested as of December 31, 1997, 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 and aggregate purchase
price of the various types of equipment acquired and leased by the
Fund as of December 31, 1997, 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
Disk Storage Systems $1,723,042 22.62%
Network Communications 35,985 0.46
Printers 1,387,709 18.22
Tape Storage Systems 910,062 11.95
Technical Workstations 3,340,469 43.85
Other 220,700 2.90
__________ ______
Totals $7,617,967 100.00%
========== ======
Breakdown of Equipment Usage
By Industrial Classification
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Computers/Data Processing $ 742,572 9.75%
Consumer Products/Retailing 1,986,570 26.07
Defense Contractors 194,932 2.56
Diversified Financial/Banking/
Insurance 387,696 5.09
Manufacturing/Refining 2,583,155 33.91
Telephone/Telecommunications 1,054,269 13.84
Transportation 668,773 8.78
__________ ______
Totals $7,617,967 100.00%
========== ======
Average Initial Term of Leases (in months): 36
All of the above equipment is currently leased under operating leases.
Item 3. LEGAL PROCEEDINGS
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
3
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, 1997
Limited Partnership Interests 942
General Partnership Interest 1
Item 6. SELECTED FINANCIAL DATA
For the Years Ended December 31,
1997 1996 1995 1994 1993
Total Income $2,273,084 $2,258,564 $2,543,493 $3,452,905 $3,376,928
Net Income (Loss) 382,297 24,373 (137,721) 123,837 207,044
Distributions to Partners 240,000 225,000 1,105,691 1,307,741 1,377,737
Net Income (Loss) per Equivalent
Limited Partnership Unit 28.53 1.62 (9.05) 6.16 9.12
Weighted Average Number of
Equivalent Limited Partnership
Units Outstanding During the Year 13,264 13,396 15,067 17,997 21,200
December 31,
1997 1996 1995 1994 1993
C>
Total Assets $5,276,226 $5,071,493 $5,596,725 $6,966,272 $8,619,625
Equipment under Operating
Leases and Equipment Held for
Sale or Lease (Net) 3,014,540 3,572,350 2,395,085 4,323,766 6,282,710
Limited Partnership
Units 21,695 21,695 22,812 23,223 24,406
Limited Partners 942 943 962 975 992
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 $2,273,084,
$2,258,564 and $2,543,493 for the years ended December 31, 1997, 1996 and 1995,
respectively. Rental income from the leasing of computer equipment
accounted for 90%, 96% and 93% of total revenues in 1997, 1996 and 1995,
respectively. The increase in total revenues in 1997 was a direct result of the
increase in net gain on sale of equipment. For the twelve months ended
December 31, 1997, $142,890 of net gain on sale of equipment was recognized by
the Fund as compared to $-0- for both years ended December 31, 1996 and 1995.
However, the decrease in rental income in both 1997 and 1996 reduced the
overall increase in revenues in 1997 and contributed to the overall decrease in
revenues in 1996. Rental income decreased in 1997 by approximately $834,000
because of equipment which came off lease and was re-leased at lower rental
rates or sold. This decrease, however, was reduced by rental income of
approximately $708,000 generated from equipment on operating leases purchased
during 1997 as well as rental income earned from 1996 equipment purchases for
which a full year of rental income was earned in 1997 and only a partial year
was earned in 1996. In 1996, rental income decreased by approximately
$889,000 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 $696,000 generated from equipment on operating leases purchased
during 1996 as well as rental income earned from 1995 equipment purchases for
which a full year of rental income was earned in 1996 and only a partial year
was earned in 1995. In addition, in 1996, interest income decreased because
of lower cash balances invested throughout the year which also accounts for
the overall decrease in revenues from 1995.
Expenses were $1,890,787, $2,234,191 and $2,681,214 for the years ended
December 31, 1997, 1996 and 1995, respectively. Depreciation and amortization
comprised 84%, 62% and 75% of total expenses during the years ended
December 31, 1997, 1996 and 1995, respectively. The decrease in total expenses
in 1997 was primarily related to the decrease in write-down of equipment to net
realizable value. Based upon the quarterly review of the recoverability of
the undepreciated cost of rental equipment, $32,282, $536,697 and $207,780 was
charged to operations to write down equipment to its estimated net realizable
value during the years ended December 31, 1997, 1996 and 1995, respectively.
The fluctuation in this account during these years caused the decrease in total
expenses in 1997 and reduced the decrease in total expenses in 1996.
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. Any future losses are dependent upon
unanticipated technological developments affecting the computer equipment
industry in subsequent years. Additionally, depreciation expense increased in
1997 because of equipment purchases made during the current year and
depreciation recorded on equipment purchased in 1996 for which a full year of
depreciation expense was taken in 1997 and only a partial year was taken in
1996. This increase lowered the amount of the decrease in total expenses in
1997. Conversely, depreciation expense decreased in 1996 as compared to 1995
resulting from equipment which came off lease, terminated or was sold in 1996.
5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations(continued)
Results of Operations (Continued)
This decrease in depreciation expense accounted for the decrease in overall
expenses from 1995 to 1996. Furthermore, the Fund incurred a net loss on sale
of equipment of $12,612 and $132,290 for the years ended December 31, 1996 and
1995. There was no charge to net loss on sale of equipment for the year ended
December 31, 1997. The decrease in this account contributed to the decrease in
total expenses in 1997 and 1996, as well.
The Fund's net income (loss) was $382,297, $24,373 and ($137,721) for the
years ended December 31, 1997, 1996 and 1995, respectively. The earnings
(loss) per equivalent limited partnership unit, after earnings (loss) allocated
to the General Partner, were $28.53, $1.62 and ($9.05) based on a weighted
average number of equivalent limited partnership units outstanding of 13,264,
13,396 and 15,067 for the years ended December 31, 1997, 1996 and 1995,
respectively.
The Fund generated cash from operations of $1,863,778, $1,950,783 and
$2,210,976, for the purpose of determining cash available for distribution, and
distributed 11%, 12% and 45% to partners in 1997, 1996 and 1995, respectively
and 2%, 2% and 0% of these amounts to partners in January and February 1998,
1997 and 1996, 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 1996, 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, 1997, 1996 and 1995, the Fund purchased $1,066,561,
$3,389,929 and $897,705 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
Item 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
F.L. Partnership Management, Inc. (FLPMI) is a wholly owned
subsidiary of Resource Leasing, Inc., a wholly owned subsidiary of
Resource America, Inc. The Directors and Executive Officers of FLPMI
are:
FREDDIE M. KOTEK, age 41, Chairman of the Board of Directors,
President and Chief Executive Officer of FLPMI 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 48, Director and Secretary of FLPMI since
September 1995 and Senior Vice President and Secretary of Resource
America, Inc. since 1989.
SCOTT F. SCHAEFFER, age 35, Director of FLPMI 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.
Others:
STEPHEN P. CASO, age 42, Vice President and General Counsel of FLPMI
since 1992.
MARIANNE T. SCHUSTER, age 39, Vice President and Controller of FLPMI
since 1984.
KRISTIN L. CHRISTMAN, age 30, Portfolio Manager of FLPMI 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, 1997:
Name of Individual or Capacities in
Number in Group Which Served Compensation
F.L. Partnership
Management, Inc. General Partner $81,039(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, 1997, 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 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 F.L. Partnership
Management, Inc. 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, 1997, the Fund was charged by the
General Partner $81,039 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 noncancellable leases for which rental payments
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.
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. Based on current estimates, it is
not expected that the Fund will be required to pay this sales fee to the
General Partner. As a result, $55,244 of sales fee accrued by the Fund
in prior periods was recorded as part of the net gain (loss) on sale of
equipment during the year ended December 31, 1996.
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 1997, the General Partner received cash distributions of $2,400.
The Fund incurred $124,149 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 1997.
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: F.L. PARTNERSHIP MANAGEMENT, INC.
Freddie M. Kotek
By: ___________________________
Freddie M. Kotek, Chairman
and President
Dated March 26, 1998
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 3-26-98
Freddie M. Kotek and President of F.L. Partnership
Management, Inc. (Principal Executive
Officer)
Michael L. Staines
________________________ Director of F.L. Partnership 3-26-98
Michael L. Staines Management, Inc.
Marianne T. Schuster
________________________ Vice President and Controller 3-26-98
Marianne T. Schuster of F.L. Partnership Management, Inc.
(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, 1997 and 1996 F-3
Statements of Operations for the years ended
December 31, 1997, 1996 and 1995 F-4
Statements of Partners' Capital for the years ended
December 31, 1997, 1996 and 1995 F-5
Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 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, 1997 and 1996, 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, 1997. 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, 1997 and 1996, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1997 in conformity with generally accepted accounting
principles.
Grant Thornton LLP
Philadelphia, Pennsylvania
February 17, 1998
F-2
FIDELITY LEASING INCOME FUND VIII, L.P.
BALANCE SHEETS
ASSETS
December 31,
1997 1996
Cash and cash equivalents $2,022,967 $1,279,570
Accounts receivable 154,812 216,696
Due from related parties 83,907 2,877
Equipment under operating leases
(net of accumulated depreciation of
$4,603,427 and $4,049,192) 3,014,540 3,572,350
__________ __________
Total assets $5,276,226 $5,071,493
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 82,510 $ 43,812
Accounts payable and accrued expenses 52,701 28,167
Due to related parties 7,918 8,714
__________ _________
Total liabilities 143,129 80,693
Partners' capital 5,133,097 4,990,800
__________ __________
Total liabilities and
partners' capital $5,276,226 $5,071,493
========== ==========
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,
1997 1996 1995
Income:
Rentals $2,039,604 $2,165,342 $2,358,813
Interest 88,212 83,499 180,388
Gain on sale of equipment, net 142,890 - -
Other 2,378 9,723 4,292
__________ __________ __________
2,273,084 2,258,564 2,543,493
__________ __________ __________
Expenses:
Depreciation and amortization 1,592,089 1,377,101 2,008,627
Write-down of equipment to net
realizable value 32,282 536,697 207,780
General and administrative 61,228 71,903 52,658
General and administrative to
related party 124,149 149,847 186,512
Management fee to related party 81,039 86,031 93,347
Loss on sale of equipment, net - 12,612 132,290
__________ __________ __________
1,890,787 2,234,191 2,681,214
__________ __________ __________
Net income (loss) $ 382,297 $ 24,373 $ (137,721)
========== ========== ==========
Net income (loss) per equivalent
limited partnership unit $ 28.53 $ 1.62 $ (9.05)
========== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during the year 13,264 13,396 15,067
========== ========== ==========
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, 1997, 1996 and 1995
General Limited Partners
Partner Units Amount Total
_______ __________________ _____
Balance, January 1, 1995 $ 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 loss (1,377) - (136,344) (137,721)
_______ ______ __________ __________
Balance, December 31, 1995 (10,359) 22,812 5,439,134 5,428,775
Redemptions - (1,117) (237,348) (237,348)
Cash distributions (2,250) - (222,750) (225,000)
Net income 2,650 - 21,723 24,373
_______ ______ __________ __________
Balance, December 31, 1996 (9,959) 21,695 5,000,759 4,990,800
Cash distributions (2,400) - (237,600) (240,000)
Net income 3,823 - 378,474 382,297
_______ ______ __________ __________
Balance, December 31, 1997 $(8,536) 21,695 $5,141,633 $5,133,097
======= ====== ========== ==========
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,
1997 1996 1995
Cash flows from operating activities:
Net income (loss) $ 382,297 $ 24,373 $ (137,721)
__________ __________ __________
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 1,592,089 1,377,101 2,008,627
Write-down of equipment to
net realizable value 32,282 536,697 207,780
(Gain) loss on sale of equipment, net (142,890) 12,612 132,290
(Increase) decrease in accounts receivable 61,884 97,049 306,550
(Increase) decrease in due from
related parties (81,030) 17,829 (16,202)
Increase (decrease) in lease
rents paid in advance 38,698 14,246 (21,301)
Increase (decrease) in accounts
payable and accrued expenses 24,534 (12,316) (2,257)
Increase (decrease) in due to
related parties (796) (89,187) 46,878
Increase (decrease) in other, net - 4,259 4,309
__________ __________ __________
1,524,771 1,958,290 2,666,674
__________ __________ __________
Net cash provided by operating
activities 1,907,068 1,982,663 2,528,953
__________ __________ __________
Cash flows from investing activities:
Acquisition of equipment (1,066,561) (3,389,929) (897,705)
Proceeds from sale of equipment 142,890 287,587 480,189
__________ __________ __________
Net cash used in investing activities (923,671) (3,102,342) (417,516)
__________ __________ __________
Cash flows from financing activities:
Distributions (240,000) (225,000) (1,105,691)
Redemptions of capital - (237,348) (149,455)
__________ __________ __________
Net cash used in financing activities (240,000) (462,348) (1,255,146)
__________ __________ __________
Increase (decrease) in cash and
cash equivalents 743,397 (1,582,027) 856,291
Cash and cash equivalents,
beginning of year 1,279,570 2,861,597 2,005,306
__________ __________ __________
Cash and cash equivalents, end of year $2,022,967 $1,279,570 $2,861,597
========== ========== ==========
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. The General Partner of the Fund is F.L.
Partnership Management, Inc. ("FLPMI") which 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, technical workstations
and networking equipment, which 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 which potentially subject the Fund to
concentrations of credit risk consist principally of temporary cash
investments. The Fund places its temporary investments in bank
repurchase agreements.
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
Effective January 1, 1996, the Fund adopted Statement of Financial
Accounting Standard (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of." This
standard provides guidance on when to recognize and how to measure
impairment losses of long-lived assets and how to value long-lived
assets to be disposed of. The adoption of SFAS No. 121 had no impact
on the net income of the Fund.
Equipment Held for Sale or Lease
Equipment held for sale or lease is carried at its estimated net
realizable value.
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.
F-7
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Organization Costs
Organization costs were amortized over a five year period.
Accounting for Leases
The Fund's leasing operations consist 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 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)
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 $18,000, $132,000 and
$82,000 or $1.36, $9.85 and $5.44 per equivalent limited
partnership unit to write down its rental equipment in the fourth
quarter of 1997, 1996 and 1995, respectively.
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 equipment under
operating leases. A majority of the equipment was manufactured by
IBM and Silicon Graphics. The lessees have agreements with the
manufacturer to provide maintenance for the leased equipment. The
Fund's operating leases are for initial lease terms of 11 to 48
months.
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 1997, 1996
and 1995, approximately $32,000, $537,000 and $208,000, respectively,
was charged to write-down of equipment to net realizable value. Any
future losses are dependent upon unanticipated technological develop-
ments affecting the computer equipment industry in subsequent years.
F-9
FIDELITY LEASING INCOME FUND VIII, 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:
1998 $1,692,000
1999 778,000
2000 81,000
__________
$2,551,000
==========
5. RELATED PARTY TRANSACTIONS
The General Partner receives 4% or 2% of gross rental payments from
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. Based on current
estimates, it is not expected that the Fund will be required to pay
this sales fee to the General Partner. As a result, $55,244 of sales
fee accrued by the Fund in prior periods was recorded as part of the
net gain (loss) on sale of equipment during the year ended December
31, 1996.
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:
1997 1996 1995
Management fee $ 81,039 $ 86,031 $ 93,347
Reimbursable costs 124,149 149,847 186,512
F-10
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. RELATED PARTY TRANSACTIONS (Continued)
During 1997, the Fund maintained its checking and investment accounts
in Jefferson Bank, a subsidiary of JeffBanks, Inc. in which the
Chairman of Resource America, Inc. serves as a director.
Amounts due from related parties at December 31, 1997 and 1996
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, 1997 and 1996 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, 1997, three customers accounted for
approximately 29%, 15% and 13% of the Fund's rental income. For the
year ended December 31, 1996, three customers accounted for
approximately 17%, 14% and 12% of the Fund's rental income. For the
year ended December 31, 1995, one customer accounted for approximately
27% and two customers generated approximately 13% each 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 1997 1996 1995
March $ 60,000 $ 65,000 $ 322,139
June 80,000 60,000 316,542
September 40,000 60,000 315,321
December 60,000 40,000 151,689
________ __________ __________
$240,000 $225,000 $1,105,691
======== ========= ==========
In addition, the General Partner declared and paid a cash distribution
of $20,000 in both January and February 1998 for the months ended
November 30 and December 31, 1997 to all admitted partners as of
November 30 and December 31, 1997.
F-11