SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the year ended December 31, 2001
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to ______________
Commission file number 0-16845
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.)
1845 Walnut Street, Suite 1000, Philadelphia, Pennsylvania 19103
________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(215) 574-1636
________________________________________________________________________
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
None Not applicable
Securities registered pursuant to Section 12 (g) of the Act:
Limited Partnership Interests
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes __X__ No____
The number of outstanding limited partnership units of the Registrant at
December 31, 2001 is 41,334.
There is no public market for these securities.
The index of Exhibits is located on page 12.
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 or
from the manufacturer either pursuant to a purchase agreement relating to
significant quantities of equipment or on an ad hoc basis to meet the needs
of a particular lessee.
The equipment leasing industry is highly competitive. The Fund competes
with leasing companies, equipment manufacturers and distributors, and entities
similar to the Fund (including similar programs sponsored by the General
Partner), some of which have greater financial resources than the Fund. Other
leasing companies and equipment manufacturers and distributors may be in a
position to offer equipment to prospective lessees on financial terms which
are more favorable than those which the Fund can offer. They may also be in
a position to offer trade-in-privileges, maintenance contracts and other
services that the Fund may not be able to offer. Equipment manufacturers and
distributors may offer to sell equipment on terms and conditions (such as
liberal financing terms and exchange privileges) that will afford benefits to
the purchaser similar to those obtained through leases. As a result of the
advantages 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, 2001, together with information concerning the
users of such equipment is contained in Item 2, following.
The Fund does not have any employees. All persons who work on the Fund
are employees of the General Partner.
2
Item 2. PROPERTIES
The following schedules detail the type, aggregate purchase price and
percentage of the various types of equipment leased by the Fund under the
operating and direct financing lease methods as of December 31, 2001:
Operating Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Tape Storage Systems $1,013,844 47.69%
Technical Workstations and Terminals 673,826 31.69
PCB Assembly Equipment 271,215 12.76
Electron Microscopes 139,211 6.54
Other 28,005 1.32
__________ ______
Totals $2,126,101 100.00%
========== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
PCB Assembly Equipment $ 561,649 43.02%
Tape Storage Systems 501,335 38.40
Technical Workstations and Terminals 236,449 18.11
Other 6,034 0.47
__________ ______
Totals $1,305,467 100.00%
========== ======
The following schedules detail the type of business, aggregate purchase
price and percentage of equipment usage by industrial classification for
equipment leased by the Fund under the operating and direct financing methods
as of December 31, 2001:
Operating Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Diversified Financial/Banking/Insurance $ 975,005 45.86%
Computer/Data Processing 740,671 34.84
Manufacturing/Refining 410,425 19.30
__________ ______
Totals $2,126,101 100.00%
========== ======
3
Item 2. PROPERTIES (Continued)
Direct Financing Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Manufacturing/Refining $ 565,964 43.35%
Computer/Data Processing 361,624 27.70
Diversified Financial/Banking/Insurance 326,381 25.01
Education 34,736 2.66
Retailing/Consumer Goods 16,762 1.28
__________ ______
Totals $1,305,467 100.00%
========== ======
Average Initial Term of Leases (in months): 35
Item 3. LEGAL PROCEEDINGS
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
4
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) The Fund's limited partnership units are not publicly traded. There
is no market for the Fund's limited partnership units and it is unlikely
that any will develop.
(b) Number of Equity Security Holders:
Number of Partners
Title of Class as of December 31, 2001
Limited Partnership Interests 1,562
General Partnership Interest 1
Item 6. SELECTED FINANCIAL DATA
For the Years Ended December 31,
2001 2000 1999 1998 1997
Total Income $666,887 $626,847 $882,124 $1,312,608 $1,465,537
Net Income 203,404 216,229 391,550 266,144 445,584
Distributions to
Partners 400,000 400,000 375,000 325,000 400,000
Net Income per
Equivalent Limited
Partnership Unit 17.27 20.41 37.08 25.51 42.54
Weighted Average Number
of Equivalent Limited
Partnership Units
Outstanding During
the Year 9,547 9,911 10,183 10,023 10,145
December 31
2001 2000 1999 1998 1997
Total Assets $1,998,326 $2,153,297 $2,352,582 $2,324,899 $2,460,916
Equipment under
Operating Leases
and Equipment Held
for Sale or Lease
(Net) 334,190 595,877 609,476 591,749 993,149
Net Investment in
Direct Financing
Leases 544,430 833,062 618,763 1,046,488 -
Limited Partnership
Units 41,334 41,334 41,334 41,379 41,379
Limited Partners 1,562 1,562 1,562 1,557 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 $666,887, $626,847 and $882,124 for the
years ended December 31, 2001, 2000 and 1999, respectively. The increase
in total revenues between 2001 and 2000 and the decrease in total revenues
between 2000 and 1999 was partially caused by the fluctuation in rental
income generated from equipment under operating leases. Rental income from
the leasing of equipment accounted for 85%, 84% and 72% of total income in
2001, 2000 and 1999, respectively. In 2001, rental income increased by
approximately $38,000 because of upgrades made to equipment under operating
leases during 2001. In 2000, rental income decreased by approximately $109,000
because of equipment that came off lease and was released at lower rental rates
or sold. Additionally, the change in earned income on direct financing leases
contributed to the increase in total revenues in 2001 and the decrease in total
revenues in 2000. This account increased in 2001 because of investments in
direct financing leases made in 2001 and late 2000. The decrease in this
account in 2000 resulted from a lease that was sold in 1999. Furthermore, the
Fund recorded a net gain on sale of equipment of $1,000 for the twelve months
ended December 31, 2001 compared to $300 for the twelve months ended Decem-
ber 31, 2000 and $119,616 for the twelve months ended December 31, 1999. The
fluctuation in this account also contributed to the overall increase in reve-
nues in 2001 and contributed to the decrease in total revenues in 2000.
Expenses were $463,483, $410,618 and $490,574 for the years ended
December 31, 2001, 2000 and 1999, respectively. Depreciation expense comprised
70%, 71% and 67% of total expenses in 2001, 2000 and 1999, respectively. The
fluctuation in depreciation expense partially accounted for the overall in-
crease in expenses in 2001 and the decrease in expenses in 2000. The increase
in depreciation expense in 2001 was caused by the increase in depreciation
resulting from equipment that was purchased during 2001 as well as equipment
that was purchased during 2000 for which a full year of depreciation was re-
corded in 2001 and only a portion of the twelve months was recorded in 2000.
The decrease in depreciation expense in 2000 was caused by equipment that
terminated and was sold in 2000. The change in management fee to related party
also contributed to the increase in expenses in 2001 and the decrease in ex-
penses in 2000. Management fee to related party fluctuated directly with the
fluctuation in rentals earned on both operating and direct financing leases
during 2001 and 2000. The decrease in general and administrative expense to
related party served to mitigate the increase in overall expenses in 2001 and
contributed to the decrease in total expenses in 2000. 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
2001 and 2000. Additionally, the decrease in write-down of equipment to net
realizable value contributed to the decrease in total expenses in 2000.
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 publica-
tions. In 2001 and 2000, there was no write-down of equipment to net realiz-
able value. In 1999, approximately $17,000 was charged to write-down of
equipment to net realizable value. The decrease in this account for the
twelve months ended December 31, 2000 contributed to the overall decrease in
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
expenses in 2000. 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 the types of equipment in the portfolio in subsequent years.
The Fund's net income was $203,404, $216,229 and $391,550 for the years
ended December 31, 2001, 2000 and 1999, respectively. The earnings per equiv-
alent limited partnership unit, after earnings allocated to the General
Partner, were $17.27, $20.41 and $37.08 for the years ended December 31, 2001,
2000 and 1999, respectively. The weighted average number of equivalent limited
partnership units outstanding were 9,547, 9,911 and 10,183 for 2001, 2000 and
1999, respectively.
The Fund generated cash from operations of $526,626, $506,499 and $616,169
for the purpose of determining cash available for distribution for the years
ended December 31, 2001, 2000 and 1999, respectively. The Fund distributed
$300,000 of those amounts during each of the periods from April 1 through
December 31, 2001, 2000 and 1999, respectively. During the first quarter
of 2002, 2001 and 2000, the Fund distributed $800,000, $100,000 and $100,000
of those amounts, respectively. 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, 2001, 2000 and
1999, the Fund purchased equipment of $62,536, $276,971 and $380,365, respec-
tively. The Fund also invested $200,890 and $425,941 in direct financing
leases during the twelve months ended December 31, 2001 and 2000, 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
In December 2001, the General Partner's Certificate of Incorporation was
amended to change the name of the General Partner of the Fund from F.L.
Partnership Management, Inc. to LEAF Financial Corporation (LEAF). LEAF
Financial Corporation is a wholly owned subsidiary of Resource Leasing, Inc.
which is a wholly owned subsidiary of Resource America, Inc. (Resource
America). The Directors and Executive Officers of LEAF are:
CRIT S. DEMENT, age 49, Chairman, President and Chief Executive Officer
of LEAF since November 2001. President of Fidelity Leasing, Inc. and its
successor, the Technology Finance Group of CitiCapital Vendor Finance from
1996 to 2001. Vice President of Marketing for Tokai Financial Services
from 1987 through 1996.
EDWARD E. COHEN, age 62, Director of LEAF since November 2001. Chairman
of the Board of Resource America since 1990, President of Resource America
since 2000 and Chief Executive Officer and a Director of Resource America
since 1988. Chairman of the Managing Board of Directors of Atlas Pipeline
Partners GP, LLC (a wholly owned subsidiary of Resource America that is
the general partner of a publicly traded limited partnership that owns and
operates natural gas pipelines) since its formation in 1999. Chairman of
the Board of Directors of Brandywine Construction & Management, Inc. (a
property management company) since 1994. Mr. Cohen is the father of
Jonathan Z. Cohen.
JONATHAN Z. COHEN, age 31, Director of LEAF since November 2001. Execu-
tive Vice President of Resource America since 2001, Senior Vice President
of Resource America from 1999 to 2001. Vice Chairman of the Managing
Board of Atlas Pipeline Partners GP, LLC since its formation in 1999.
Trustee and Secretary of RAIT Investment Trust (a publicly traded real
estate investment trust) since 1997. Mr. Cohen is the son of Edward E.
Cohen.
MILES HERMAN, age 42, Vice President and a Director of LEAF since November
2001. Held various senior operational offices with Fidelity Leasing, Inc.
and its successor from 1998 to 2001. Held several management positions in
sales, marketing and operations at Tokai Financial Services from 1983 to
1998.
FREDDIE M. KOTEK, age 46, Director of LEAF since 1996. Senior Vice
President of Resource America since 1995. President of Resource Leasing,
Inc. since 1995.
MARIANNE T. SCHUSTER, age 43, Vice President and Treasurer of LEAF
since 1984.
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, 2001:
Name of Individual or Capacities in
Number in Group Which Served Compensation
LEAF Financial
Corporation General Partner $61,160(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 2,154.07 (1)
Odd Lot Liquidity Fund, LLC 2,154.07 (2)
Sierra Fund 4, LLC 2,154.07 (3)
(1) Amount represents beneficial ownership interest through
ownership of Odd Lot Liquidity Fund, LLC and Sierra Fund 4, LLC
which own 1,886.37 units and 267.70 units, respectively, of
the outstanding limited partnership units of the Fund.
(2) Amount represents direct ownership by Odd Lot Liquidity
Fund, LLC of 1,886.37 units and beneficial ownership of
267.70 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 267.70 units and beneficial ownership of 1,886.37 units
by virtue of group membership and affiliate status with Odd Lot
Liquidity Fund, LLC.
(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 LEAF Financial Corporation nor
such directors or officers as a group, owns more than one percent of the
Fund's outstanding securities. The General Partner owns a general
partnership interest which entitles it to receive 3.5% of cash distri-
butions until the Limited Partners have received an amount equal to the
10
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(Continued)
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, 2001, the Fund was charged $61,160 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,
2001, the General Partner received $14,000 of cash distributions.
The Fund incurred $39,586 of reimbursable costs to the General Partner
and its parent company for services and materials provided in connection with
the administration of the Fund during 2001.
11
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.
12
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: LEAF FINANCIAL CORPORATION
/s/ Crit S. DeMent
By: ___________________________
Crit S. DeMent, Chairman and President
Dated March 28, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this
annual report has been signed below by the following persons, on behalf of the
Registrant and in the capacities and on the date indicated:
Signature Title Date
/s/ Crit S. DeMent
____________________________ Chairman of the Board of Directors 3-28-02
Crit S. DeMent and President of LEAF Financial
Corporation
(Principal Executive Officer)
/s/ Miles Herman
____________________________ Vice President and Director of 3-28-02
Miles Herman LEAF Financial Corporation
/s/ Freddie M. Kotek
____________________________ Director of LEAF Financial Corporation 3-28-02
Freddie M. Kotek
/s/ Marianne T. Schuster
____________________________ Vice President and Treasurer of 3-28-02
Marianne T. Schuster LEAF Financial Corporation
(Principal Financial Officer)
13
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Certified Public Accountants F-2
Balance Sheets as of December 31, 2001 and 2000 F-3
Statements of Operations for the years ended
December 31, 2001, 2000 and 1999 F-4
Statements of Partners' Capital for the years ended
December 31, 2001, 2000 and 1999 F-5
Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999 F-6
Notes to Financial Statements F-7 - F-13
All schedules have been omitted because the required information is not
applicable or is included in the Financial Statements or Notes thereto.
F-1
Report of Independent Certified Public Accountants
The Partners
Fidelity Leasing Income Fund IV, L.P.
We have audited the accompanying balance sheets of Fidelity Leasing
Income Fund IV, L.P. as of December 31, 2001 and 2000, and the related state-
ments of operations, partners' capital and cash flows for each of the three
years in the period ending December 31, 2001. These financial statements are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the finan-
cial statements are free of material misstatement. An audit includes examin-
ing, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting princi-
ples used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Fidelity Leasing
Income Fund IV, L.P. as of December 31, 2001 and 2000, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted
in the United States of America.
Grant Thornton LLP
Philadelphia, Pennsylvania
February 14, 2002
F-2
FIDELITY LEASING INCOME FUND IV, L.P.
BALANCE SHEETS
ASSETS
December 31,
2001 2000
Cash and cash equivalents $1,032,557 $ 662,734
Accounts receivable 80,464 30,918
Due from related parties 6,685 30,706
Net investment in direct financing leases 544,430 833,062
Equipment under operating leases
(net of accumulated depreciation
of $1,823,534 and $1,775,965,
respectively) 302,567 564,253
Equipment held for sale or lease 31,623 31,624
__________ __________
Total assets $1,998,326 $2,153,297
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 27,510 $ 26,192
Accounts payable and
accrued expenses 57,560 16,302
Due to related parties 12,024 12,975
__________ __________
Total liabilities 97,094 55,469
Partners' capital 1,901,232 2,097,828
__________ __________
Total liabilities and
partners' capital $1,998,326 $2,153,297
========== ==========
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,
2001 2000 1999
Income:
Rentals $567,321 $529,386 $638,366
Earned income on direct
financing leases 61,537 44,277 60,750
Interest 30,459 40,817 36,256
Gain on sale of equipment, net 1,000 300 119,616
Other 6,570 12,067 27,136
________ ________ ________
666,887 626,847 882,124
________ ________ ________
Expenses:
Depreciation 324,222 290,570 327,235
Write-down of equipment
to net realizable value - - 17,000
General and administrative 38,515 34,404 35,789
General and administrative to
related party 39,586 43,459 58,688
Management fee to related party 61,160 42,185 51,862
________ ________ ________
463,483 410,618 490,574
________ ________ ________
Net income $203,404 $216,229 $391,550
======== ======== ========
Net income per equivalent
limited partnership unit $ 17.27 $ 20.41 $ 37.08
======== ======== ========
Weighted average number of
equivalent limited partnership
units outstanding during the year 9,547 9,911 10,183
======== ======== ========
The accompanying notes are an integral part of these financial statements.
F-4
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the years ended December 31, 2001, 2000 and 1999
General Limited Partners
Partner Units Amount Total
_______ __________________ _____
Balance, January 1, 1999 $ 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
Cash distributions (14,000) - (386,000) (400,000)
Net income 38,500 - 164,904 203,404
_______ ______ __________ __________
Balance, December 31, 2001 $28,999 41,334 $1,872,233 $1,901,232
======= ====== ========== ==========
The accompanying notes are an integral part of this financial statement.
F-5
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF CASH FLOWS
For the years ended December 31,
2001 2000 1999
Cash flows from operating activities:
Net income $ 203,404 $ 216,229 $ 391,550
__________ __________ __________
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 324,222 290,570 327,235
Write-down of equipment to
net realizable value - - 17,000
Gain on sale of equipment, net (1,000) (300) (119,616)
(Increase) decrease in
accounts receivable (49,546) 9,676 22,532
(Increase) decrease in due
from related parties 24,021 (17,023) 53,310
Increase (decrease) in lease
rents paid in advance 1,318 (25,164) 23,489
Increase (decrease) in accounts
payable and accrued expenses 41,258 6,838 (3,144)
Increase (decrease) in due to
related parties (951) 2,812 (7,708)
__________ __________ __________
339,322 267,409 313,098
__________ __________ __________
Net cash provided by
operating activities 542,726 483,638 704,648
__________ __________ __________
Cash flows from investing activities:
Acquisition of equipment (62,536) (276,971) (380,365)
Investment in direct financing leases (200,890) (425,941) -
Proceeds from direct financing
leases, net of earned income 489,523 211,642 427,725
Proceeds from sale of equipment 1,000 300 138,019
__________ __________ __________
Net cash provided by (used in)
investing activities 227,097 (490,970) 185,379
__________ __________ __________
Cash flows from financing activities:
Distributions (400,000) (400,000) (375,000)
Redemptions of capital - - (1,504)
__________ __________ __________
Net cash used in financing
activities (400,000) (400,000) (376,504)
__________ __________ __________
Increase (decrease) in cash
and cash equivalents 369,823 (407,332) 513,523
Cash and cash equivalents,
beginning of year 662,734 1,070,066 556,543
__________ __________ __________
Cash and cash equivalents,
end of year $1,032,557 $ 662,734 $1,070,066
========== ========== ==========
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. In December 2001, the General Partner's Certificate of Incorporation
was amended to change the name of the General Partner of the Fund from F.L.
Partnership Management, Inc. to LEAF Financial Corporation (LEAF). LEAF
Financial Corporation is a wholly owned subsidiary of Resource Leasing, Inc.,
which is a wholly owned subsidiary of Resource America, Inc. (Resource Amer-
ica). The Fund is managed by the General Partner. The Fund's limited partner-
ship interests are not publicly traded. There is no market for the Fund's
limited partnership interests and it is unlikely that any will develop. The
Fund acquires computer equipment including printers, tape storage devices, data
communications equipment, computer terminals, technical workstations and net-
working equipment, as well as other electronic equipment, that is leased to
third parties throughout the United States on a short-term basis.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration of Credit Risk
Financial instruments that potentially subject the Fund to concentra-
tions of credit risk consist principally of temporary cash investments. The
Fund places its temporary investments in money market savings accounts.
Concentrations of credit risk with respect to accounts receivables are
limited due to the dispersion of the Fund's lessees over different industries
and geographies.
Impairment of Long-Lived Assets
The Fund reviews its assets to determine if it has any long-lived assets
that are carried on the books for an amount that may not be recoverable. If
it is determined that an asset's estimated future cash flows will not be suf-
ficient to recover its carrying amount, an impairment charge will be recorded.
Equipment Held for Sale or Lease
Equipment held for sale or lease is carried at its estimated net realiz-
able value.
Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
F-7
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting for Leases
The Fund's leasing operations consist of both 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
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.
Reclassifications
Certain amounts on the 2000 and 1999 financial statements have been re-
classified to conform to the presentation in 2001.
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, 1996), 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
17 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 2001 and 2000. In 1999,
approximately $17,000 was charged to write-down of equipment to net realizable
value. Any future losses are dependent upon unanticipated technological
developments affecting the equipment in subsequent years.
The Fund's direct financing leases are for initial lease terms ranging
from 19 to 60 months. The approximate net investment in direct financing
leases as of December 31, 2001 is as follows:
Net minimum lease payments to be received $575,000
Unearned rental income (31,000)
Unguaranteed residuals -
________
$544,000
========
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
2002 $420,000 $427,000
2003 134,000 148,000
________ ________
$554,000 $575,000
======== ========
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:
2001 2000 1999
Management fee $61,160 $42,185 $51,862
Reimbursable costs 39,586 43,459 58,688
During 2001, the Fund transferred its checking and investment accounts
from Hudson United Bank to The Bancorp.com, Inc. (TBI). The son and the spouse
of the Chairman of Resource America, Inc. are the Chairman and Chief Executive
Officer, respectively, of TBI. The Fund maintains a normal banking relation-
ship with TBI.
Amounts due from related parties at December 31, 2001 and 2000 represent
monies due to the Fund from the General Partner and/or other affiliated funds
for rentals and sales proceeds collected and not yet remitted to the Fund.
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, 2001 and 2000 represent
monies due to the General Partner for the fees and costs mentioned above, as
well as, rentals and sales proceeds collected by the Fund on behalf of other
affiliated funds.
6. MAJOR CUSTOMERS
For the year ended December 31, 2001, three customers accounted for 54%,
30% and 10% of the Fund's rental income. 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.
7. CASH DISTRIBUTIONS
Below is a summary of the quarterly cash distributions paid to partners
during the years ended December 31:
Month of Distribution 2001 2000 1999
February $100,000 $100,000 $ 75,000
May 100,000 100,000 100,000
August 100,000 100,000 100,000
November 100,000 100,000 100,000
________ ________ ________
$400,000 $400,000 $375,000
======== ======== ========
In addition, the General Partner declared and paid a cash distribution
of $800,000 in February 2002 for the three months ended December 31, 2001, to
all admitted partners as of December 31, 2001.
F-11
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
8. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
The following table summarizes the results of operations on a quarterly
basis during 2001 and 2000:
2001
----------------------------------------
Fourth Third Second First
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Income:
Rentals $139,653 $142,556 $142,556 $142,556
Earned income on direct financing
leases 13,399 14,319 17,706 16,113
Interest 9,013 8,529 6,222 6,695
Gain on sale of equipment, net 1,000 - - -
Other 1,561 3,689 971 349
________ ________ ________ ________
Total income 164,626 169,093 167,455 165,713
________ ________ ________ ________
Expenses:
Depreciation 76,880 82,447 82,448 82,447
General and administrative 7,706 11,255 11,465 8,089
General and administrative to
related party 11,296 10,540 3,050 14,700
Management fee to related party 16,133 16,145 14,132 14,750
________ ________ ________ ________
Total expenses 112,015 120,387 111,095 119,986
________ ________ ________ ________
Net income $ 52,611 $ 48,706 $ 56,360 $ 45,727
======== ======== ======== ========
Net income per equivalent limited
partnership unit $ 2.61 $ 4.77 $ 5.52 $ 4.37
======== ======== ======== ========
F-12
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
8. SUMMARY OF QUARTERLY RESULTS (UNAUDITED) (Continued)
2000
----------------------------------------
Fourth Third Second First
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Income:
Rentals $143,939 $143,744 $131,092 $110,611
Earned income on direct financing
leases 15,052 9,162 9,897 10,166
Interest 5,951 11,875 5,922 17,069
Gain on sale of equipment, net 300 - - -
Other 2,275 2,300 5,940 1,552
________ ________ ________ ________
Total income 167,517 167,081 152,851 139,398
________ ________ ________ ________
Expenses:
Depreciation 80,051 80,052 71,872 58,595
General and administrative 9,899 10,881 1,701 11,923
General and administrative to
related party 13,379 11,028 9,864 9,188
Management fee to related party 14,344 10,216 9,457 8,168
________ ________ ________ ________
Total expenses 117,673 112,177 92,894 87,874
________ ________ ________ ________
Net income $ 49,844 $ 54,904 $ 59,957 $ 51,524
======== ======== ======== ========
Net income per equivalent limited
partnership unit $ 4.75 $ 5.21 $ 5.67 $ 4.78
======== ======== ======== ========
F-13
21