Back to GetFilings.com
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, 2000
/ / 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 0-16845
Fidelity Leasing Income Fund IV, L.P.
________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 23-2441780
________________________________________________________________________
(State of Organization) (I.R.S. Employer Identification No.)
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, 2000 is 41,334.
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 IV, L.P. (the "Fund"), a Delaware limited
partnership, was organized in 1986 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,
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.
A brief description of the types of equipment in which the Fund has
invested as of December 31, 2000, 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 lease methods as of December 31, 2000:
Operating Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Tape Storage Systems $ 966,483 41.30%
Technical Workstations and Terminals 658,651 28.14
Communication Controllers 276,653 11.82
PCB Assembly Equipment 271,215 11.59
Electron Microscopes 139,211 5.95
Other 28,005 1.20
__________ ______
Totals $2,340,218 100.00%
========== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
PCB Assembly Equipment $ 561,649 44.05%
Tape Storage Systems 470,768 36.93
Technical Workstations and Terminals 236,449 18.55
Other 6,034 0.47
__________ ______
Totals $1,274,900 100.00%
========== ======
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, 2000:
Operating Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Diversified Financial/Banking/Insurance $ 912,469 38.99%
Computer/Data Processing 740,670 31.65
Manufacturing/Refining 687,079 29.36
__________ ______
Totals $2,340,218 100.00%
========== ======
3
Item 2. PROPERTIES (Continued)
Direct Financing Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Manufacturing/Refining $ 565,964 44.39%
Computer/Data Processing 330,407 25.92
Diversified Financial/Banking/Insurance 327,031 25.65
Education 34,736 2.72
Retailing/Consumer Goods 16,762 1.32
__________ ______
Totals $1,274,900 100.00%
========== ======
Average Initial Term of Leases (in months): 32
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, 2000
Limited Partnership Interests 1,562
General Partnership Interest 1
Item 6. SELECTED FINANCIAL DATA
For the Years Ended December 31,
2000 1999 1998 1997 1996
Total Income $626,847 $882,124 $1,312,608 $1,465,537 $1,723,227
Net Income 216,229 391,550 266,144 445,584 539,379
Distributions to
Partners 400,000 375,000 325,000 400,000 878,707
Net Income per
Equivalent Limited
Partnership Unit 20.41 37.08 25.51 42.54 23.17
Weighted Average Number
of Equivalent Limited
Partnership Units
Outstanding During
the Year 9,911 10,183 10,023 10,145 10,433
December 31
2000 1999 1998 1997 1996
Total Assets $2,153,297 $2,352,582 $2,324,899 $2,460,916 $2,389,398
Equipment under
Operating Leases
and Equipment Held
for Sale or Lease
(Net) 595,877 609,476 591,749 993,149 1,397,793
Net Investment in
Direct Financing
Leases 833,062 618,763 1,046,488 - -
Limited Partnership
Units 41,334 41,334 41,379 41,379 41,379
Limited Partners 1,562 1,562 1,557 1,551 1,551
5
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The Fund had revenues of $626,847, $882,124, and $1,312,608 for the
years ended December 31, 2000, 1999 and 1998, respectively. The decrease
in revenues between 2000, 1999 and 1998 was partially caused by the decrease
in rental income generated from equipment under operating leases. Rental
income from the leasing of equipment accounted for 84%, 72% and 91% of total
income in 2000, 1999 and 1998, respectively. In 2000, rental income decreased
by approximately $109,000 because of equipment that came off lease and was re-
leased at lower rental rates or was sold. In 1999, rental income decreased
by approximately $444,000 because of equipment that came off lease and was
released at lower rental rates or was sold. This decrease, however, was miti-
gated by approximately $96,000 of rental income generated from equipment under
an operating lease purchased in 1999 as well as rental income from a 1998
equipment purchase for which a full year of rental income was earned in 1999
and only a partial year was earned in 1998. Additionally, the Fund entered
into a transaction in which it collected the remaining rents owed of approxi-
mately $202,000 for one of its leases in the fourth quarter of 1998 which also
accounted for the total decrease in rental income in 1999. The Fund recorded
a net gain on sale of equipment of $300 for the twelve months ended Decem-
ber 31, 2000 compared to $119,616 for the twelve months ended December 31, 1999
and $24,727 for the twelve months ended December 31, 1998. The fluctuation in
this account also contributed to the overall decrease in revenues in 2000 and
mitigated the amount of decrease in total revenues in 1999. Furthermore, the
change in earned income on direct financing leases contributed to the decrease
in total revenues in 2000 and reduced the decrease in total revenues in 1999.
This account decreased in 2000 because of a lease that was sold in July 1999.
This account increased in 1999 because the Fund invested in $1,127,000 of di-
rect financing leases during the last six months of 1998 that generated a full
year of earned income in 1999 and only a partial year of earned income in 1998.
Expenses were $410,618, $490,574 and $1,046,464 for the years ended
December 31, 2000, 1999 and 1998, respectively. Depreciation expense comprised
71%, 67% and 59% of total expenses in 2000, 1999 and 1998, respectively. The
decrease in depreciation expense partially accounted for the overall decrease
in expenses in 2000 and 1999. Depreciation expense decreased during these
years because of equipment that terminated and was sold. Additionally, the
decrease in write-down of equipment to net realizable value contributed to the
decrease in total expenses in 2000 and in 1999. 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 2000, there was no write-down of
equipment to net realizable value. In 1999 and 1998, approximately $17,000
and $251,000, respectively, was charged to write-down of equipment to net
realizable value. The decrease in this account for the twelve months ended
December 31, 2000 and 1999 contributed to the overall decrease in expenses in
2000 and 1999. 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 sales of its equipment. Any future
losses are dependent upon unanticipated technological developments affecting
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
the types of equipment in the portfolio in subsequent years. Furthermore, the
decrease in general and administrative expense to related party contributed to
the decrease in overall expenses in 2000 and 1999. The decrease in this
account resulted from a decrease in expenses charged by the General Partner or
its parent company for services and materials provided to the Fund during 2000
and 1999.
The Fund's net income was $216,229, $391,550 and $266,144 for the years
ended December 31, 2000, 1999 and 1998, respectively. The earnings per equiv-
alent limited partnership unit, after earnings allocated to the General
Partner, were $20.41, $37.08 and $25.51 for the years ended December 31, 2000,
1999 and 1998, respectively. The weighted average number of equivalent limited
partnership units outstanding were 9,911, 10,183 and 10,023 for 2000, 1999 and
1998, respectively.
The Fund generated cash from operations of $506,499, $616,169 and
$1,106,229 for the purpose of determining cash available for distribution for
the years ended December 31, 2000, 1999 and 1998, respectively. The Fund
distributed $300,000, $300,000 and $225,000 of those amounts during the period
April 1 through December 31, 2000, 1999 and 1998, respectively, and during the
first quarter of 2001, 2000 and 1999, the Fund distributed $100,000, $100,000
and $75,000 of those amounts, respectively. The Fund also paid a cash distri-
bution of $100,000 to partners during the first quarter of 1998 for the last
quarter of the previous year. For financial statement purposes, the Fund
records cash distributions to partners on a cash basis in the period in which
they are paid.
Analysis of Financial Condition
The Fund is currently in the process of dissolution. As provided in the
Restated Limited Partnership Agreement, the assets of the Fund shall be liqui-
dated as promptly as is consistent with obtaining their fair value. During
this time, the Fund will continue to look for opportunities to purchase equip-
ment for lease or invest in direct financing leases for terms consistent with
the plan of dissolution. During the years ended December 31, 2000, 1999 and
1998, the Fund purchased equipment of $276,971, $380,365 and $559,110, respec-
tively. The Fund also invested $425,941 and $1,127,157 in direct financing
leases during the twelve months ended December 31, 2000 and 1998, respectively.
The cash position of the Fund is reviewed daily and cash is invested on
a short-term basis.
The Fund's cash from operations is expected to continue to be adequate to
cover all operating expenses and contingencies during the next fiscal year.
7
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.
8
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.
(Resource America). The Directors and Executive Officers of FLPMI are:
FREDDIE M. KOTEK, age 45, Chairman of the Board of Directors, President,
and Chief Executive Officer of FLPMI since September 1995 and Senior Vice
President of Resource America since 1995. President of Resource Leasing,
Inc. since September 1995. President of Resource Properties, Inc. (a
wholly owned subsidiary of Resource America) since 2000. Executive Vice
President of Resource Properties, Inc. from 1993 to 2000.
MICHAEL L. STAINES, age 51, Director and Secretary of FLPMI since
September 1995. Director of Resource America from 1989 to 2000 and
Senior Vice President of Resource America since 1989. Chief Operating
Officer, Secretary and Managing Board Member of Atlas Pipeline Partners
G.P., LLC since its formation in 1999. President, Secretary and a direc-
tor of Resource Energy, Inc. (a wholly owned subsidiary of Resource
America) since 1993.
SCOTT F. SCHAEFFER, age 38, Director of FLPMI since September 1995.
President of RAIT Investment Trust (a publicly traded real estate invest-
ment trust) since October 2000. Vice Chairman of the Board of Resource
America from 1998 to September 2000 and Executive Vice President of Re-
source America from 1997 to 1998. Prior thereto, Senior Vice President
of Resource America since 1995. President of Resource Properties, Inc.
(a wholly owned subsidiary of Resource America) from 1992 to September
2000.
Others:
MARIANNE T. SCHUSTER, age 42, Vice President and Controller of FLPMI
since 1984.
KRISTIN L. CHRISTMAN, age 33, Portfolio Manager of FLPMI since December
1995 and Equipment Brokerage Manager since 1993.
9
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, 2000:
Name of Individual or Capacities in
Number in Group Which Served Compensation
F.L. Partnership
Management, Inc. General Partner $42,185(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, 2000, there was no person or group known to the
Fund that owned more than 5% of the Fund's outstanding securities either
beneficially or of record.
(b) In 1986, the General Partner contributed $1,000 to the capital of the
Fund but it does not own any of the Fund's outstanding securities. No
individual director or officer of 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 3.5% of cash distri-
butions until the Limited Partners have received an amount equal to the
purchase price of their units plus a 10% compounded Priority Return;
thereafter 10%. The General Partner will also share in net income equal
to the greater of its cash distributions or 1% of net income or to the
extent there are losses, 1% of such losses.
(c) There are no arrangements known to the Fund that would, at any sub-
sequent date, result in a change in control of the Fund.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 2000, the Fund was charged $42,185 of
management fees by the General Partner. The General Partner will continue to
receive 6% or 3% of rental payments on equipment under operating leases or
full pay-out leases, respectively for administrative and management services
performed on behalf of the Fund. Full pay-out leases are noncancellable
leases with terms in excess of 42 months and for which rental payments during
the initial term are at least sufficient to recover the purchase price of the
equipment, including acquisition fees.
The General Partner also receives 3.5% of cash distributions until the
Limited Partners have received an amount equal to the purchase price of their
units plus a 10% compounded Priority Return. Thereafter, the General Partner
will receive 10% of cash distributions. During the year ended December 31,
2000, the General Partner received $14,000 of cash distributions.
The Fund incurred $43,459 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 2000.
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 IV, L.P.
A Delaware limited partnership
By: F.L. PARTNERSHIP MANAGEMENT, INC.
/s/ Freddie M. Kotek
By: ___________________________
Freddie M. Kotek, Chairman and President
Dated March 29, 2001
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/ Freddie M. Kotek
____________________________ Chairman of the Board of Directors 3-29-01
Freddie M. Kotek and President of F.L. Partnership
Management, Inc.
(Principal Executive Officer)
/s/ Michael L. Staines
____________________________ Director of F.L. Partnership 3-29-01
Michael L. Staines Management, Inc.
/s/ Marianne T. Schuster
____________________________ Vice President and Controller 3-29-01
Marianne T. Schuster of F.L. Partnership Management, Inc.
(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, 2000 and 1999 F-3
Statements of Operations for the years ended
December 31, 2000, 1999 and 1998 F-4
Statements of Partners' Capital for the years ended
December 31, 2000, 1999 and 1998 F-5
Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998 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 IV, L.P.
We have audited the accompanying balance sheets of Fidelity Leasing
Income Fund IV, L.P. as of December 31, 2000 and 1999, and the related state-
ments of operations, partners' capital and cash flows for each of the three
years in the period ending December 31, 2000. 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 IV, L.P. as of December 31, 2000 and 1999, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted
in the United States of America.
Grant Thornton LLP
Philadelphia, Pennsylvania
February 16, 2001
F-2
FIDELITY LEASING INCOME FUND IV, L.P.
BALANCE SHEETS
ASSETS
December 31,
2000 1999
Cash and cash equivalents $ 662,734 $1,070,066
Accounts receivable 30,918 40,594
Due from related parties 30,706 13,683
Net investment in direct financing leases 833,062 618,763
Equipment under operating leases
(net of accumulated depreciation
of $1,775,965 and $1,490,011,
respectively) 564,253 577,852
Equipment held for sale or lease 31,624 31,624
__________ __________
Total assets $2,153,297 $2,352,582
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 26,192 $ 51,356
Accounts payable and
accrued expenses 16,302 9,464
Due to related parties 12,975 10,163
__________ __________
Total liabilities 55,469 70,983
Partners' capital 2,097,828 2,281,599
__________ __________
Total liabilities and
partners' capital $2,153,297 $2,352,582
========== ==========
The accompanying notes are an integral part of these financial statements.
F-3
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF OPERATIONS
For the years ended December 31,
2000 1999 1998
Income:
Rentals $529,386 $638,366 $1,188,283
Earned income on direct
financing leases 44,277 60,750 37,206
Interest 40,817 36,256 47,571
Gain on sale of equipment, net 300 119,616 24,727
Other 12,067 27,136 14,821
________ ________ __________
626,847 882,124 1,312,608
________ ________ __________
Expenses:
Depreciation 290,570 327,235 613,376
Write-down of equipment
to net realizable value - 17,000 251,436
General and administrative 34,404 35,789 47,116
General and administrative to
related party 43,459 58,688 67,846
Management fee to related party 42,185 51,862 66,690
________ ________ __________
410,618 490,574 1,046,464
________ ________ __________
Net income $216,229 $391,550 $ 266,144
======== ======== ==========
Net income per equivalent
limited partnership unit $ 20.41 $ 37.08 $ 25.51
======== ======== ==========
Weighted average number of
equivalent limited partnership
units outstanding during the year 9,911 10,183 10,023
======== ======== ==========
The accompanying notes are an integral part of these financial statements.
F-4
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 2000, 1999 and 1998
General Limited Partners
Partner Units Amount Total
_______ __________________ _____
Balance, January 1, 1998 $ 4,499 41,379 $2,320,910 $2,325,409
Cash distributions (11,375) - (313,625) (325,000)
Net income 10,500 - 255,644 266,144
_______ ______ __________ __________
Balance, December 31, 1998 3,624 41,379 2,262,929 2,266,553
Cash distributions (13,125) - (361,875) (375,000)
Redemptions - (45) (1,504) (1,504)
Net income 14,000 - 377,550 391,550
_______ ______ __________ __________
Balance, December 31, 1999 4,499 41,334 2,277,100 2,281,599
Cash distributions (14,000) - (386,000) (400,000)
Net income 14,000 - 202,229 216,229
_______ ______ __________ __________
Balance, December 31, 2000 $ 4,499 41,334 $2,093,329 $2,097,828
======= ====== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-5
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF CASH FLOWS
For the years ended December 31,
2000 1999 1998
Cash flows from operating activities:
Net income $ 216,229 $ 391,550 $ 266,144
__________ __________ __________
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 290,570 327,235 613,376
Write-down of equipment to
net realizable value - 17,000 251,436
(Gain) loss on sale of
equipment, net (300) (119,616) (24,727)
(Increase) decrease in
accounts receivable 9,676 22,532 15,075
(Increase) decrease in due
from related parties (17,023) 53,310 (60,656)
Increase (decrease) in lease
rents paid in advance (25,164) 23,489 (79,127)
Increase (decrease) in
other, net 9,650 (10,852) 1,966
__________ __________ __________
267,409 313,098 717,343
__________ __________ __________
Net cash provided by
operating activities 483,638 704,648 983,487
__________ __________ __________
Cash flows from investing activities:
Acquisition of equipment (276,971) (380,365) (559,110)
Investment in direct financing leases (425,941) - (1,127,157)
Proceeds from direct financing
leases, net of earned income 211,642 427,725 80,669
Proceeds from sale of equipment 300 138,019 120,425
__________ __________ __________
Net cash provided by (used in)
investing activities (490,970) 185,379 (1,485,173)
__________ __________ __________
Cash flows from financing activities:
Distributions (400,000) (375,000) (325,000)
Redemptions of capital - (1,504) -
__________ __________ __________
Net cash used in financing
activities (400,000) (376,504) (325,000)
__________ __________ __________
Increase (decrease) in cash
and cash equivalents (407,332) 513,523 (826,686)
Cash and cash equivalents,
beginning of year 1,070,066 556,543 1,383,229
__________ __________ __________
Cash and cash equivalents,
end of year $ 662,734 $1,070,066 $ 556,543
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-6
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF BUSINESS
Fidelity Leasing Income Fund IV, L.P. (the "Fund") was formed in December
1986. 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. (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 equip-
ment including printers, tape storage devices, data communications equipment,
computer terminals, technical workstations and networking equipment, as well as
other electronic 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 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.
Accounting for Leases
The Fund's leasing operations consist of both operating and direct
financing leases. Under the operating method of accounting for leases, the
cost of the leased equipment is recorded as an asset and depreciated on a
F-7
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting for Leases (Continued)
straight-line basis over its estimated useful life, up to six years. Acqui-
sition fees associated with lease placements are allocated to equipment when
purchased and depreciated as part of equipment cost. Rental income consists
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.
Under the direct financing method of accounting for leases, income (the
excess of the aggregate future rentals and estimated additional amounts
recoverable upon expiration of the lease over the related equipment cost) is
recognized over the life of the lease using the interest method.
Income Taxes
Federal and State income tax regulations provide that taxes on the
income or benefits from losses of the Fund are reportable by the partners in
their individual income tax returns. Accordingly, no provision for such taxes
has been made in the accompanying financial statements.
Statements of Cash Flows
For purposes of the statements of cash flows, the Fund considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
Net Income per Equivalent Limited Partnership Unit
Net income per equivalent limited partnership unit is computed by
dividing net income allocated to limited partners by the weighted average
number of equivalent limited partnership units outstanding during the year.
The weighted average number of equivalent units outstanding during the year
is computed based on the weighted average monthly limited partners' capital
account balances, converted into equivalent units at $500 per unit.
Significant Fourth Quarter Adjustments
Currently, the Fund's practice is to review the recoverability of its
undepreciated costs of rental equipment quarterly. The Fund's policy, as part
of this review, is to analyze such factors as releasing of equipment, techno-
logical developments and information provided in third party publications.
Based upon this review, there were no significant fourth quarter adjustments
made in 2000 and 1999. The Fund recorded an adjustment of approximately
$29,000 or $2.89 per equivalent limited partnership unit to write down its
rental equipment in the fourth quarter of 1998.
F-8
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
3. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS
Cash distributions (except for the period from January 1, 1992 through
June 30, 1995), if any, are made quarterly as follows: 96.5% to the Limited
Partners and 3.5% to the General Partner, until the Limited Partners have
received an amount equal to the purchase price of their units, plus a 10%
compounded priority return (an amount equal to 10% compounded annually on the
portion of the purchase price not previously distributed); thereafter, 90% to
the Limited Partners and 10% to the General Partner.
Net Losses are allocated 99% to the Limited Partners and 1% to the
General Partner. The General Partner is allocated Net Income equal to its
cash distributions, but not less than 1% of Net Income, with the balance
allocated to the Limited Partners.
Net Income (Losses) allocated to the Limited Partners are allocated to
individual limited partners based on the ratio of the daily weighted average
partner's net capital account balance (after deducting related commission
expense) to the total daily weighted average of the Limited Partners' net
capital account balances.
4. EQUIPMENT LEASED
Equipment on lease consists 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 of
23 to 60 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, there was
no write-down of equipment to net realizable value in 2000. In 1999 and 1998,
approximately $17,000 and $251,000, respectively, was charged to write-down of
equipment to net realizable value. Any future losses are dependent upon unan-
ticipated technological developments affecting the equipment in subsequent
years.
The net investment in direct financing leases as of December 31, 2000 is
as follows:
Net minimum lease payments to be received $919,000
Unearned rental income (86,000)
Unguaranteed residuals -
________
$833,000
========
F-9
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
4. EQUIPMENT LEASED (Continued)
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of December 31 are as follows:
Direct
Operating Financing
2001 $428,000 $399,000
2002 233,000 376,000
2003 39,000 144,000
________ ________
$700,000 $919,000
======== ========
5. RELATED PARTY TRANSACTIONS
The General Partner receives 6% or 3% of rental payments on equipment
under operating leases and full pay-out leases, respectively, for adminis-
trative and management services performed on behalf of the Fund. Full pay-out
leases are noncancellable leases with terms in excess of 42 months and for
which rental payments during the initial term are at least sufficient to
recover the purchase price of the equipment, including acquisition fees.
The General Partner may also receive up to 3% of the proceeds from the
sale of the Fund's equipment for services and activities to be performed in
connection with the disposition of equipment. The payment of this sales fee
is deferred until the Limited Partners have received cash distributions equal
to the purchase price of their units plus a 10% cumulative compounded priority
return. Based on current estimates, it is not expected that the Fund will be
required to pay the General Partner a sales fee.
Additionally, the General Partner and its 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 charged by the General Partner and its parent
company during the years ended December 31:
2000 1999 1998
Management fee $42,185 $51,862 $66,690
Reimbursable costs 43,459 58,688 67,846
During 1999, the Fund maintained its checking and investment accounts in
Jefferson Bank, a subsidiary of JeffBanks, Inc. in which the Chairman of
Resource America served as a director. In November 1999, Hudson United Bancorp
acquired JeffBanks, Inc. The Fund maintains a normal banking relationship
with Hudson United Bancorp. As of December 31, 2000 and 1999, the Chairman of
Resource America did not hold any position with Hudson United Bancorp.
Amounts due from related parties at December 31, 2000 and 1999 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.
F-10
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. RELATED PARTY TRANSACTIONS (Continued)
Amounts due to related parties at December 31, 2000 and 1999 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, 2000, three customers accounted for 50%,
32% and 10% of the Fund's rental income. For the year ended December 31, 1999,
three customers accounted for 42%, 27% and 14% of the Fund's rental income.
For the year ended December 31, 1998, four customers accounted for 34%, 21%,
15% and 12% of the Fund's rental income.
7. CASH DISTRIBUTIONS
Below is a summary of the quarterly cash distributions paid to partners
during the years ended December 31:
Month of Distribution 2000 1999 1998
February $100,000 $ 75,000 $100,000
May 100,000 100,000 75,000
August 100,000 100,000 75,000
November 100,000 100,000 75,000
________ ________ ________
$400,000 $375,000 $325,000
======== ======== ========
In addition, the General Partner declared and paid a cash distribution
of $100,000 in February 2001 for the three months ended December 31, 2000, to
all admitted partners as of December 31, 2000.
F-11
21