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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, 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 0-20131
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, 2000 is 21,695.
There is no public market for these securities.
The index of Exhibits is located on page 11.
1
PART I
Item 1. BUSINESS
Fidelity Leasing Income Fund VIII, L.P. (the "Fund"), a Delaware limited
partnership, was organized in 1990 and acquires computer equipment, including
printers, tape and disk storage devices, data communications equipment, com-
puter terminals, technical workstations, networking equipment, as well as other
electronic equipment that is leased to third parties on a short-term basis.
The Fund's principal objective is to generate leasing revenues for distri-
bution. The Fund manages the equipment, releasing or disposing of equipment
as it comes off lease in order to achieve its principal objective. The Fund
does not borrow funds to purchase equipment.
The Fund generally acquires equipment subject to a lease. Purchases of
equipment for lease are typically made through equipment leasing brokers,
under a sale-leaseback arrangement directly from lessees owning equipment,
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 methods as of December 31, 2000:
Operating Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Tape Storage Systems $ 426,713 40.05%
Technical Workstations and Terminals 418,116 39.24
Other 220,639 20.71
__________ ______
Totals $1,065,468 100.00%
========== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Network Communications $2,815,440 46.35%
Technical Workstations and Terminals 1,912,761 31.49
Tape Storage Systems 676,188 11.13
Other 308,114 5.07
PCB Assembly Equipment 293,687 4.83
Printers 68,531 1.13
__________ ______
Totals $6,074,721 100.00%
========== ======
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
Computers/Data Processing $ 646,919 60.72%
Manufacturing/Refining 418,549 39.28
__________ ______
Totals $1,065,468 100.00%
========== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Consumer Products/Retailing $4,755,827 78.29%
Computer/Data Processing 530,928 8.74
Manufacturing/Refining 346,785 5.71
Telecommunications 293,687 4.83
Diversified Financial/Banking/Insurance 84,152 1.39
Education 63,342 1.04
__________ ______
Totals $6,074,721 100.00%
========== ======
3
Item 2. PROPERTIES (Continued)
Average Initial Term of Leases (in months): 31
Item 3. LEGAL PROCEEDINGS
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
4
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) The Fund's limited partnership units are not publicly traded.
There is no market for the Fund's limited partnership units and it is
unlikely that any will develop.
(b) Number of Equity Security Holders:
Number of Partners
Title of Class as of December 31, 2000
Limited Partnership Interests 959
General Partnership Interest 1
Item 6. SELECTED FINANCIAL DATA
For the Years Ended December 31,
2000 1999 1998 1997 1996
Total Income $678,950 $1,051,009 $2,790,169 $2,273,084 $2,258,564
Net Income (Loss) 362,336 364,639 93,898 382,297 24,373
Distributions to Partners 300,000 240,000 220,000 240,000 225,000
Net Income (Loss)
per Equivalent Limited
Partnership Unit 26.69 27.55 6.87 28.53 1.62
Weighted Average Number
of Equivalent Limited
Partnership Units
Outstanding During
the Year 13,438 13,105 13,312 13,264 13,396
December 31,
2000 1999 1998 1997 1996
Total Assets $5,258,118 $5,203,246 $5,130,180 $5,276,226 $5,071,493
Equipment under
Operating Leases and
Equipment Held for
Sale or Lease (Net) 101,508 296,219 758,243 3,014,540 2,572,350
Net Investment in
Direct Financing Leases 3,266,920 3,103,244 2,817,738 - -
Limited Partnership
Units 21,695 21,695 21,695 21,695 21,695
Limited Partners 959 952 945 942 943
5
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Fidelity Leasing Income Fund VIII, L.P. had revenues of $678,950,
$1,051,009 and $2,790,169 for the years ended December 31, 2000, 1999 and
1998, respectively. Rental income from the leasing of equipment accounted
for 42%, 56% and 90% of total revenues in 2000, 1999 and 1998, respectively.
The decrease in total revenues in 2000 and 1999 was primarily attributable to
the decrease in rental income. Rental income decreased by approximately
$307,000 in 2000 because of equipment under operating leases that terminated
and either was renewed at lower rental rates or was sold during both 2000 and
1999. In 1999, rental income decreased by approximately $1,207,000 because of
equipment that terminated and was sold during both 1999 and 1998. Addition-
ally, the Fund collected the remaining rents owed on certain leases during the
last quarter of 1998. As a result, the Fund recognized $712,000 of rental
income during this period which also accounted for a portion of the decrease
in rental income in 1999. The fluctuation in earned income on direct financing
leases also contributed to the decrease in total revenues in 2000 but mitigated
the amount of the decrease in total revenues in 1999. The Fund invested in
$1,851,000, $1,858,000 and $3,312,000 of direct financing leases during the
years ended December 31, 2000, 1999 and 1998, respectively, that accounted for
the increase in earned income recognized. However, in October 1999, one of the
direct financing leases was sold which caused the overall decrease in earned
income on direct financing leases in 2000. Furthermore, the decrease in net
gain on sale of equipment also contributed to the total decrease in income in
2000 and 1999. The Fund recognized a net gain on sale of equipment of $44,873,
$49,407 and $85,228 for the years ended December 31, 2000, 1999 and 1998,
respectively.
Expenses were $316,614, $686,370 and $2,696,271 for the years ended
December 31, 2000, 1999 and 1998, respectively. Depreciation expense comprised
40%, 53% and 78% of total expenses during the years ended December 31, 2000,
1999 and 1998, respectively. The decrease in total expenses in 2000 and 1999
was primarily related to the decrease in depreciation expense. In 2000, depre-
ciation expense decreased because of equipment that terminated and was sold.
The decrease in total expenses between 2000, 1999 and 1998 was also 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, there was no write-down of equipment to net realizable value charged
to operations during the year ended December 31, 2000. For the years ended
December 31, 1999 and 1998, $80,267 and $246,318, respectively, was charged to
operations to write down equipment to its estimated net realizable value.
Currently, the Fund's practice is to review the recoverability of its undepre-
ciated 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 accor-
dance with accounting principles generally accepted in the United States of
America, the Fund writes down its rental equipment to its estimated net
realizable value when the amounts are reasonably estimated and only recognizes
gains, if any, upon actual sale of its rental equipment. Any future losses are
dependent upon unanticipated technological developments affecting the types of
equipment in the portfolio in subsequent years. In addition, the decrease in
general and administrative expense to related party decreased in 2000 and 1999
because of a decrease in the amount of expenses charged by the General Partner
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
or its parent company for services and materials provided to the Fund during
these years. Furthermore, the decrease in management fee to related party
resulting from the decrease in rental income in 2000 and 1999 also contributed
to the overall decrease in expenses during both 2000 and 1999.
The Fund's net income was $362,336, $364,639 and $93,898 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 $26.69, $27.55 and $6.87 based on a weighted average number of
equivalent limited partnership units outstanding of 13,438, 13,105 and 13,312
for the years ended December 31, 2000, 1999 and 1998, respectively.
The Fund generated cash from operations of $442,771, $760,331 and
$2,358,458, for the purpose of determining cash available for distribution
during the years ended December 31, 2000, 1999 and 1998, respectively. The
Fund distributed $240,000, $180,000 and $180,000 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 $90,000,
$60,000 and $60,000 of those amounts, respectively. The Fund also paid $40,000
of cash distributions 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 began the process of dissolution during 1999. As provided in
the Restated Limited Partnership Agreement, the assets of the Fund shall be
liquidated as promptly as is consistent with obtaining their fair value.
During this time, the Fund will continue to look for opportunities to purchase
equipment under operating leases or invest in direct financing leases for lease
terms consistent with the plan of dissolution. The Fund purchased $231,262
of equipment subject to operating leases during the twelve months ended
December 31, 1998. The Fund also invested in $1,851,498, $1,857,519 and
$3,312,383 of direct financing leases during the years ended December 31,
2000, 1999 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 twelve month
period.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted as a separate section of this
report commencing on page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
7
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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.
8
Item 11. EXECUTIVE COMPENSATION
The following table sets forth information relating to the aggregate
compensation earned by the General Partner of the Fund during the year
ended December 31, 2000:
Name of Individual or Capacities in
Number in Group Which Served Compensation
F.L. Partnership
Management, Inc. General Partner $49,583(1)
=======
(1) This amount does not include the General Partner's share of
cash distributions made to all partners.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Based upon a review of Schedule 13D as filed with the Securities and
Exchange Commission, the table set forth below outlines the persons or
groups known to the Fund that own more than 5% of the Fund's outstanding
securities either beneficially or of record.
Name of Individual Number of
or Group Units Owned
James S. and Danea T. Riley 1,128.574 (1)
Odd Lot Liquidity Fund, LLC 1,128.574 (2)
Sierra Fund 4, LLC 1,128.574 (3)
(1) Amount represents beneficial ownership interest through
ownership of Odd Lot Liquidity Fund, LLC and Sierra Fund 4, LLC
which own 809.974 units and 318.6 units, respectively, of the
outstanding limited partnership units of the Fund.
(2) Amount represents direct ownership by Odd Lot Liquidity
Fund, LLC of 809.974 units and beneficial ownership of 318.6
units by virtue of group membership and affiliate status with
Sierra Fund 4, LLC.
(3) Amount represents direct ownership by Sierra Fund 4, LLC
of 318.6 units and beneficial ownership of 809.974 units by
virtue of group membership and affiliate status with Odd Lot
Liquidity Fund, LLC.
(b) In 1990, the General Partner contributed $1,000 to the capital of
the Fund but it does not own any of the Fund's outstanding securities.
No individual director or officer of 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 part-
nership interest which entitles it to receive 1% of cash distributions
until the Limited Partners have received an amount equal to the purchase
9
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(Continued)
price of their units plus an 11% cumulative compounded priority return;
thereafter 10%. The General Partner will also share in net income equal
to the greater of its cash distributions or 1% of net income or to the
extent there are losses, 1% of such losses.
(c) There are no arrangements known to the Fund that would, at any
subsequent date, result in a change in control of the Fund.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 2000, the Fund was charged by the
General Partner $49,583 of management fees. The General Partner will
continue to receive 4% or 2% of rental payments on equipment under operating
leases and full pay-out leases, respectively, for administrative and manage-
ment services performed on behalf of the Fund. Full pay-out leases are
noncancellable leases for which rental payments during the initial term of
the lease are at least sufficient to recover the purchase price of the equip-
ment, including acquisition fees. All of the direct financing leases in
which the Fund has invested meet the criteria for a full pay-out lease and
pay a 2% management fee to the General Partner. This management fee is paid
monthly only if and when the Limited Partners have received distributions for
the period from the initial closing through the end of the most recent
calendar quarter equal to a return for such period at a rate of 11% per year
on the aggregate amount paid for their units.
The General Partner may also receive up to 3% of the proceeds from the
sale of the Fund's equipment for services and activities to be performed in
connection with the disposition of equipment. The payment of this sales fee
is deferred until the Limited Partners have received cash distributions equal
to the purchase price of their units plus an 11% cumulative compounded
priority return. Based on current estimates, it is not expected that the Fund
will be required to pay this sales fee to the General Partner.
The General Partner receives 1% of cash distributions until the Limited
Partners have received an amount equal to the purchase price of their units
plus an 11% cumulative compounded priority return. Thereafter, the General
Partner will receive 10% of cash distributions. During 2000, the General
Partner received cash distributions of $3,000.
The Fund incurred $84,975 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 VIII, 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-12
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, 2000 and 1999, and the related
statements of operations, partners' capital and cash flows for each of the
three years in the period ended 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 VIII, 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 VIII, L.P.
BALANCE SHEETS
ASSETS
December 31,
2000 1999
Cash and cash equivalents $1,682,259 $1,628,789
Accounts receivable 179,909 97,705
Due from related parties 27,522 77,289
Equipment under operating leases
(net of accumulated depreciation
of $963,960 and $1,438,669,
respectively) 101,508 283,469
Net investment in direct financing
leases 3,266,920 3,103,244
Equipment held for sale or lease - 12,750
__________ __________
Total assets $5,258,118 $5,203,246
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 10,430 $ 12,701
Accounts payable and
accrued expenses 43,046 52,747
Due to related parties 10,672 6,164
__________ __________
Total liabilities 64,148 71,612
Partners' capital 5,193,970 5,131,634
__________ __________
Total liabilities and
partners' capital $5,258,118 $5,203,246
========== ==========
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,
2000 1999 1998
Income:
Rentals $282,005 $ 589,216 $2,507,807
Earned income on direct
financing leases 278,353 304,021 128,079
Interest 62,631 81,090 58,324
Gain on sale of equipment, net 44,873 49,407 85,228
Other 11,088 27,275 10,731
________ __________ __________
678,950 1,051,009 2,790,169
________ __________ __________
Expenses:
Depreciation 125,308 364,832 2,103,470
Write-down of equipment to
net realizable value - 80,267 246,318
General and administrative 56,748 69,852 88,133
General and administrative to
related party 84,975 113,635 145,328
Management fee to related party 49,583 57,784 113,022
________ __________ __________
316,614 686,370 2,696,271
________ __________ __________
Net income $362,336 $ 364,639 $ 93,898
======== ========== ==========
Net income per equivalent
limited partnership unit $ 26.69 $ 27.55 $ 6.87
======== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during the year 13,438 13,105 13,312
======== ========== ==========
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, 2000, 1999 and 1998
General Limited Partners
Partner Units Amount Total
________ ___________________ _____
Balance, January 1, 1998 $(8,536) 21,695 $5,141,633 $5,133,097
Cash distributions (2,200) - (217,800) (220,000)
Net income 2,400 - 91,498 93,898
_______ ______ __________ __________
Balance, December 31, 1998 (8,336) 21,695 5,015,331 5,006,995
Cash distributions (2,400) - (237,600) (240,000)
Net income 3,646 - 360,993 364,639
_______ ______ __________ __________
Balance, December 31, 1999 (7,090) 21,695 5,138,724 5,131,634
Cash distributions (3,000) - (297,000) (300,000)
Net income 3,623 - 358,713 362,336
_______ ______ __________ __________
Balance, December 31, 2000 $(6,467) 21,695 $5,200,437 $5,193,970
======= ====== ========== ==========
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,
2000 1999 1998
Cash flows from operating activities:
Net income $ 362,336 $ 364,639 $ 93,898
__________ __________ __________
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 125,308 364,832 2,103,470
Write-down of equipment to net
realizable value - 80,267 246,318
(Gain) loss on sale of equipment, net (44,873) (49,407) (85,228)
(Increase) decrease in accounts receivable (82,204) 57,282 (175)
(Increase) decrease in due from
related parties 49,767 (14,296) 20,914
Increase (decrease) in lease rents paid in
advance (2,271) 3,198 (73,007)
Increase (decrease) in accounts payable
and accrued expenses (9,701) (53,867) 53,913
Increase (decrease) in due to related parties 4,508 (904) (850)
__________ __________ __________
40,534 387,105 2,265,355
__________ __________ __________
Net cash provided by operating activities 402,870 751,744 2,359,253
__________ __________ __________
Cash flows from investing activities:
Acquisition of equipment - - (231,262)
Investment in direct financing leases (1,851,498) (1,857,519) (3,312,383)
Proceeds from direct financing leases,
net of earned income 1,687,822 1,572,013 494,645
Proceeds from sale of equipment 114,276 66,332 222,999
__________ __________ __________
Net cash used in investing activities (49,400) (219,174) (2,826,001)
__________ __________ __________
Cash flows from financing activities:
Distributions (300,000) (240,000) (220,000)
__________ __________ __________
Net cash used in financing activities (300,000) (240,000) (220,000)
__________ __________ __________
Increase (decrease) in cash and cash
equivalents 53,470 292,570 (686,748)
Cash and cash equivalents, beginning of year 1,628,789 1,336,219 2,022,967
__________ __________ __________
Cash and cash equivalents, end of year $1,682,259 $1,628,789 $1,336,219
========== ========== ==========
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. (Resource
America). The Fund is managed by the General Partner. The Fund's limited
partnership interests are not publicly traded. There is no market for the
Fund's limited partnership interests and it is unlikely that any will develop.
The Fund acquires computer equipment, including printers, tape and disk storage
devices, data communications equipment, computer terminals, technical work-
stations and networking equipment, as well as other electronic equipment. This
equipment is leased to third parties throughout the United States on a short-
term basis.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration of Credit Risk
Financial instruments that potentially subject the Fund to concentra-
tions of credit risk consist principally of temporary cash investments. The
Fund places its temporary investments in money market savings accounts.
Concentrations of credit risk with respect to accounts receivables are
limited due to the dispersion of the Fund's lessees over different industries
and geographies.
Impairment of Long-Lived Assets
The Fund reviews its assets to determine if it has any long-lived assets
that are carried on the books for an amount that may not be recoverable. If
it is determined that an asset's estimated future cash flows will not be suf-
ficient to recover its carrying amount, an impairment charge will be recorded.
Equipment Held for Sale or Lease
Equipment held for sale or lease is carried at its estimated net realiz-
able value.
Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
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
F-7
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
cost of the leased equipment is recorded as an asset and depreciated on a
straight-line basis over its estimated useful life, up to seven years.
Acquisition fees associated with lease placements are allocated to equipment
when purchased and depreciated as part of equipment cost. Rental income con-
sists 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.
Under the direct financing method of accounting for leases, income (the
excess of the aggregate future rentals and estimated unguaranteed residuals
upon expiration of the lease over the related equipment cost) is recognized
over the life of the lease using the interest method.
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, tech-
nological developments and information provided in third party publications.
Based upon this review, there were no significant fourth quarter adjustments
for the years ended December 31, 2000 and 1999. However, the Fund recorded
an adjustment of approximately $73,000 or $5.48 per equivalent limited
partnership unit to write down its rental equipment in the fourth quarter
of 1998.
F-8
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
3. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS
Cash distributions, if any, are made monthly as follows: 99% to the
Limited Partners and 1% to the General Partner, until the Limited Partners
have received an amount equal to the purchase price of their units, plus an
11% compounded priority return (an amount equal to 11% compounded annually on
the portion of the purchase price not previously distributed); thereafter,
90% to the Limited Partners and 10% to the General Partner.
Net Losses are allocated 99% to the Limited Partners and 1% to the
General Partner. The General Partner is allocated Net Income equal to its
cash distributions, but not less than 1% of Net Income, with the balance
allocated to the Limited Partners.
Net Income (Losses) allocated to the Limited Partners are allocated to
individual limited partners based on the ratio of the daily weighted average
partner's net capital account balance (after deducting related commission
expense) to the total daily weighted average of the Limited Partners' net
capital account balances.
4. EQUIPMENT LEASED
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
11 to 36 months.
In accordance with accounting principles generally accepted in the United
States of America, the Fund writes down its rental equipment to its estimated
net realizable value when the amounts are reasonably estimated and only recog-
nizes gains upon actual sale of its rental equipment. As a result, in 2000,
there was no write-down of equipment to net realizable value. In 1999 and
1998, approximately $80,000 and $246,000, respectively, was charged to write-
down of equipment to net realizable value. Any future losses are dependent
upon unanticipated technological developments affecting the equipment in
subsequent years.
Unguaranteed residuals for direct financing leases represent the
estimated amounts recoverable at lease termination from lease extensions or
disposition of the equipment. The Fund reviews these residual values
quarterly. If the equipment's fair market value is below the estimated
residual value, an adjustment is made.
F-9
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
4. EQUIPMENT LEASED (Continued)
The net investment in direct financing leases as of December 31, 2000
is as follows:
Minimum lease payments to be received $3,211,000
Unguaranteed residuals 337,000
Unearned rental income (244,000)
Unearned residual income (37,000)
__________
$3,267,000
==========
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 $ 98,000 $2,037,000
2002 30,000 997,000
2003 - 177,000
________ __________
$128,000 $3,211,000
======== ==========
5. RELATED PARTY TRANSACTIONS
The General Partner receives 4% or 2% of rental payments from equipment
under operating leases and full pay-out leases, respectively, for adminis-
trative and management services performed on behalf of the Fund. Full pay-out
leases are noncancellable leases for which the rental payments due during the
initial term of the lease are at least sufficient to recover the purchase price
of the equipment, including acquisition fees. This management fee is paid
monthly only if and when the Limited Partners have received distributions for
the period from the initial closing through the end of the most recent calendar
quarter equal to a return for such period at a rate of 11% per year on the
aggregate amount paid for their units.
The General Partner may also receive up to 3% of the proceeds from the
sale of the Fund's equipment for services and activities to be performed in
connection with the disposition of equipment. The payment of this sales fee
is deferred until the Limited Partners have received cash distributions equal
to the purchase price of their units plus an 11% cumulative compounded
priority return. Based on current estimates, it is not expected that the
Fund will be required to pay this sales fee to the General Partner.
Additionally, the General Partner and its parent company are reimbursed
by the Fund for certain costs of services and materials used by or for the
Fund except those items covered by the above-mentioned fees. Following is
F-10
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. RELATED PARTY TRANSACTIONS (Continued)
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:
2000 1999 1998
Management fee $49,583 $ 57,784 $113,022
Reimbursable costs 84,975 113,635 145,328
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.
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, five customers accounted for
approximately 36%, 20%, 19%, 15% and 10% of the Fund's rental income. For
the year ended December 31, 1999, four customers accounted for approximately
34%, 16%, 14% and 12% of the Fund's rental income. For the year ended
December 31, 1998, two customers accounted for approximately 32% and 14% 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 2000 1999 1998
March $ 60,000 $ 60,000 $ 40,000
June 60,000 80,000 80,000
September 90,000 60,000 40,000
December 90,000 40,000 60,000
________ ________ ________
$300,000 $240,000 $220,000
======== ======== ========
F-11
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
7. CASH DISTRIBUTIONS (Continued)
In addition, the General Partner declared and paid three cash distri-
butions of $30,000 each in January and February 2001 for each of the months
ended October 31, November 30 and December 31, 2000, for an aggregate of
$90,000 to all admitted partners as of October 31, November 30 and Decem-
ber 31, 2000.
F-12