SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2002
/ / 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.)
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)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 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 _____
Page 1 of 15
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND VIII, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
June 30, December 31,
2002 2001
________ ________
Cash and cash equivalents $2,638,437 $2,908,429
Accounts receivable 130,620 319,052
Due from related parties 9,776 8,999
Net investment in direct
financing leases 861,888 1,648,681
Equipment under operating leases
(net of accumulated depreciation
of $353,813 and $1,025,054,
respectively) 17,925 41,288
Equipment held for sale or lease - 103,500
__________ __________
Total assets $3,658,646 $5,029,949
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 1,992 $ 12,272
Accounts payable and
accrued expenses 6,533 7,231
Due to related parties 2,565 12,189
__________ __________
Total liabilities 11,090 31,692
Partners' capital 3,647,556 4,998,257
__________ __________
Total liabilities and
partners' capital $3,658,646 $5,029,949
========== ==========
The accompanying notes are an integral part of these financial statements.
2
FIDELITY LEASING INCOME FUND VIII, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2002 2001 2002 2001
____ ____ ____ ____
Income:
Earned income on direct
financing leases $22,931 $117,887 $61,549 $185,653
Rentals 23,242 44,219 63,733 88,122
Interest 18,428 20,415 37,495 36,746
Gain on sale of equipment,
net 15,950 - 16,800 -
Other 1,201 384 2,547 760
_______ ________ ________ ________
81,752 182,905 182,124 311,281
_______ ________ ________ ________
Expenses:
Depreciation 11,390 16,099 23,363 32,197
General and administrative 21,154 18,918 41,990 28,974
General and administrative
to related party 19,983 19,213 43,588 39,549
Management fee to related
party 10,827 14,067 23,884 28,376
Reserve for uncollectible
accounts - 52,902 - 52,902
_______ ________ ________ ________
63,354 121,199 132,825 181,998
_______ ________ ________ ________
Net income $18,398 $ 61,706 $ 49,299 $129,283
======= ======== ======== ========
Net income per equivalent
limited partnership unit $ 1.19 $ 4.51 $ 3.34 $ 9.48
======= ======== ======== ========
Weighted average number of
equivalent limited partnership
units outstanding during
the period 10,782 13,484 11,402 13,454
======= ======== ======== ========
The accompanying notes are an integral part of these financial statements.
3
FIDELITY LEASING INCOME FUND VIII, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the six months ended June 30, 2002
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 2002 $ 733 21,695 $4,997,524 $4,998,257
Cash distributions (14,000) - (1,386,000) (1,400,000)
Net income 11,200 - 38,099 49,299
_______ ______ __________ __________
Balance, June 30, 2002 ($ 2,067) 21,695 $3,649,623 $3,647,556
======= ====== ========== ==========
The accompanying notes are an integral part of these financial statements.
4
FIDELITY LEASING INCOME FUND VIII, L.P.
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2002 and 2001
(Unaudited)
2002 2001
__________ __________
Cash flows from operating activities:
Net income $ 49,299 $ 129,283
__________ __________
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 23,363 32,197
Reserve for uncollectible accounts - 52,902
Gain on sale of equipment, net (16,800) -
(Increase) decrease in accounts receivable 188,432 (30,236)
(Increase) decrease in due from related parties (777) (33,903)
Increase (decrease) in lease rents paid
in advance (10,280) 1,936
Increase (decrease) in accounts payable
and accrued expenses (698) (36,246)
Increase (decrease) in due to related parties (9,624) (3,583)
__________ __________
173,616 (16,933)
__________ __________
Net cash provided by operating activities 222,915 112,350
__________ __________
Cash flows from investing activities:
Investment in direct financing leases (3,105) (502,226)
Proceeds from sale of equipment 16,800 -
Proceeds from direct financing leases,
net of earned income 893,398 1,300,163
__________ __________
Net cash provided by investing activities 907,093 797,937
__________ __________
Cash flows from financing activities:
Distributions (1,400,000) (180,000)
__________ __________
Net cash used in financing activities (1,400,000) (180,000)
__________ __________
Increase (decrease) in cash and
cash equivalents (269,992) 730,287
Cash and cash equivalents, beginning
of period 2,908,429 1,682,259
__________ __________
Cash and cash equivalents, end of period $2,638,437 $2,412,546
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 2002
(Unaudited)
The accompanying unaudited condensed financial statements have been prepared
by the Fund in accordance with accounting principles generally accepted in
the United States of America, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of Management, all ad-
justments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included.
1. EQUIPMENT LEASED
The Fund has equipment leased under the direct financing method in accor-
dance with Statement of Financial Accounting Standards No. 13. This
method provides for recognition of income (the excess of the aggregate
future rentals and estimated unguaranteed residuals upon expiration of the
lease over the related equipment cost) over the life of the lease using
the interest method. The Fund's direct financing leases are for initial
lease terms ranging from 7 to 60 months.
Unguaranteed residuals for direct financing leases represent the esti-
mated 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.
The net investment in direct financing leases as of June 30, 2002 is as
follows (unaudited):
Minimum lease payments to be received $563,000
Unguaranteed residuals 336,000
Unearned rental income (35,000)
Unearned residual income (2,000)
________
$862,000
========
The Fund also has equipment under operating leases. The Fund's operating
leases are for initial lease terms of 3 to 36 months. Generally, operat-
ing leases will not recover all of the undepreciated cost and related
expenses of its rental equipment during the initial lease terms and the
Fund is prepared to remarket the equipment. Fund policy is to review
quarterly the expected economic life of its rental equipment in order to
determine the recoverability of its undepreciated cost. Recent and antic-
ipated technological developments affecting equipment and competitive
factors in the marketplace are considered among other things, as part of
this review. In accordance with accounting principles generally accepted
6
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. EQUIPMENT LEASED (Continued)
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 upon actual sale of its rental equip-
ment.
The future approximate minimum rentals to be received on noncancellable
direct financing and operating leases as of June 30, 2002 are as follows:
Direct
Years Ending December 31 Financing Operating
________________________ _________ __________
2002 $303,000 $8,000
2003 181,000 -
2004 27,000 -
2005 26,000 -
2006 26,000 -
________ ______
$563,000 $8,000
======== ======
2. RELATED PARTY TRANSACTIONS
The General Partner receives 4% of rental payments on equipment under
operating leases and 2% of rental payments (as opposed to earned income)
on full pay-out leases for administrative 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 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 per-
formed 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 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. Follow-
7
FIDELITY LEASING INCOME FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
ing is a summary of fees and costs of services and materials charged by
the General Partner or its parent company during the three and six months
ended June 30, 2002 and 2001:
Three Months Ended Six Months Ended
June 30 June 30
2002 2001 2002 2001
____ ____ ____ ____
Management fee $10,827 $14,067 $23,884 $28,376
Reimbursable costs 19,983 19,213 43,588 39,549
During the first quarter of 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 relationship with TBI.
Amounts due from related parties at June 30, 2002 and December 31, 2001
represent monies due 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 June 30, 2002 and December 31, 2001
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.
3. CASH DISTRIBUTIONS
The General Partner declared and paid a cash distribution of $30,000 in
June 2002 for the month ended April 30, 2002 to all admitted partners as
of April 30, 2002. Additionally, the General Partner declared and paid
cash distributions of $30,000 and $500,000 subsequent to June 30,2002
for the months ended May 31 and June 30, 2002, respectively, to all
admitted partners as of May 31 and June 30, 2002.
8
FIDELITY LEASING INCOME FUND VIII, L.P.
Item 2: 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 $81,752 and
$182,905 for the three months ended June 30, 2002 and 2001, respectively,
and $182,124 and $311,281 for the six months ended June 30, 2002 and 2001,
respectively. Earned income on direct financing leases and rental income
from the leasing of equipment accounted for 56% and 89% of total revenues
for the second quarter of 2002 and 2001, respectively and 69% and 88% of
total revenues for the six months ended June 30, 2002 and 2001, respectively.
The decrease in revenues was primarily attributable to the decrease in earned
income on direct financing leases. In 2002, earned income on direct financing
leases decreased by approximately $124,000 because of the monthly amortization
of unearned income using the interest method. Additionally, the early termi-
nation of certain direct financing leases in the last six months of 2001 and
the first six months of 2002 also accounted for the decrease in earned income
on direct financing leased during the six months ended June 30, 2002. The
decrease in rental income also contributed to the overall decrease in revenues
in 2002. Rental income decreased in 2002 by approximately $24,000 due to
equipment that came off lease or was sold. The net gain on sale of equipment
served to mitigate the decrease in revenues in 2002. The Fund recognized a net
gain on sale of equipment of $16,800 for the six months ended June 30, 2002
compared to $-0- for the same period in 2001.
Expenses were $63,354 and $121,199 for the three months ended June 30,
2002 and 2001, respectively, and $132,825 and $181,998 for the six months
ended June 30, 2002 and 2001, respectively. Depreciation expense comprised
18% and 13% of total expenses for the second quarter of 2002 and 2001, re-
spectively and 18% of total expenses for both the six months ended June 30,
2002 and 2001. The decrease in expenses during the six months ended June 30,
2002 was primarily attributable to the decrease in the reserve for un-
collectible accounts. During the second quarter of 2001, approximately
$53,000 was charged to this account to reserve for potential uncollectible
rents. There was no charge to this account during the first six months of
2002. The decrease in depreciation expense of approximately $9,000 also
contributed to the decrease in overall expenses during the six months ended
June 30, 2002. The decrease in this account resulted from equipment under
operating leases that became fully depreciated since June 2001. The decrease
in total expenses during the six months ended June 30, 2002 was mitigated by
the increase in general and administrative expense. General and administra-
tive expense increased because of the increase in the various costs incurred
to operate the Fund on a daily basis.
The Fund's net income was $18,398 and $61,706 for the three months ended
June 30, 2002 and 2001, respectively, and $49,299 and $129,283 for the six
months ended June 30, 2002 and 2001, respectively. The earnings per equiva-
lent limited partnership unit, after earnings allocated to the General Partner,
were $1.19 and $4.51 based on a weighted average number of equivalent limited
partnership units outstanding of 10,782 and 13,484 for the three months ended
June 30, 2002 and 2001, respectively. The earnings per equivalent limited
9
FIDELITY LEASING INCOME FUND VIII, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS (Continued)
partnership unit, after earnings allocated to the General Partner, were $3.34
and $9.48 based on a weighted average number of equivalent limited partnership
units outstanding of 11,402 and 13,454 for the six months ended June 30, 2002
and 2001, respectively.
The Fund generated $13,838 and $130,707 of cash from operations, for the
purpose of determining cash available for distribution, during the quarter
ended June 30, 2002 and 2001, respectively. The General Partner declared
and paid one cash distribution of $30,000 during the second quarter of 2002
for the month of April 2002. Subsequent to June 30, 2002, the General Partner
declared and paid cash distributions of $30,000 and $500,000 for the months
ended May 31 and June 30, 2002, respectively. Subsequent to June 30, 2001,
the General Partner declared and paid three cash distributions of $30,000
each for a total of $90,000 for the three months ended June 30, 2001. For
the six months ended June 30, 2002 and 2001, the Fund generated $55,862 and
$214,382 of cash from operations, for the purpose of determining cash
available for distribution. The General Partner declared cash distributions
totaling $1,120,000 and $180,000 for the six months ended June 30, 2002 and
2001, respectively. The General Partner declared and paid three cash
distributions of $30,000 each and one cash distribution of $500,000 during
the first six months of 2002. Subsequent to June 30, 2002, the General
Partner declared and paid one cash distribution of $30,000 and one cash
distribution of $500,000 for the first six months of 2002. The General
Partner also declared and paid three cash distributions totaling $810,000
during the first six months of 2002 for the months ended October 31, November
30 and December 31, 2001. For the six months ended June 30, 2001, the
General Partner declared and paid three cash distributions of $30,000 each
during the first six months of 2001 and three cash distributions of $30,000
each subsequent to June 30, 2001. 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 under operating leases or invest in direct financing leases with cash
available from operations that was not distributed to partners in previous
periods and for lease terms consistent with the plan of dissolution. The Fund
invested $3,105 and $502,226 in direct financing leases during the six months
ended June 30, 2002 and 2001, respectively.
The cash position of the Fund is reviewed daily and cash is invested on a
short-term basis.
10
FIDELITY LEASING INCOME FUND VIII, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS (Continued)
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.
11
Part II: Other Information
FIDELITY LEASING INCOME FUND VIII, L.P.
June 30, 2002
Item 1. Legal Proceedings: Inapplicable.
Item 2. Changes in Securities: Inapplicable.
Item 3. Defaults Upon Senior Securities: Inapplicable.
Item 4. Submission of Matters to a Vote of Securities Holders: Inapplicable.
Item 5. Other Information: Inapplicable.
Item 6. Exhibits and Reports on Form 8-K:
a) Exhibits:
Exhibit No. Description
----------- -----------
99.1 Certification pursuant to 18 U.S.C.,
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002
99.2 Certification pursuant to 18 U.S.C.,
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002
b) Reports on Form 8-K: None
12
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Fidelity Leasing Income Fund VIII,
L.P. (the "Fund") on Form 10-Q for the period ended June 30, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Crit S. DeMent, Principal Executive Officer of LEAF Financial Corporation,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13 (a)
or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of opera-
tions of the Fund.
________________________
Crit S. DeMent
Principal Executive Officer
August 13, 2002
13
Exhibit 99.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Fidelity Leasing Income Fund VIII,
L.P. (the "Fund") on Form 10-Q for the period ended June 30, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Marianne T. Schuster, Principal Financial Officer of LEAF Financial Corpora-
tion, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13 (a)
or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of opera-
tions of the Fund.
________________________
Marianne T. Schuster
Principal Financial Officer
August 13, 2002
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the regis-
trant has duly caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
FIDELITY LEASING INCOME FUND VIII, L.P.
8-13-02 By:
____________________________
Crit S. DeMent
Chairman of the Board of Directors
of LEAF Financial Corporation
(Principal Executive Officer)
8-13-02 By:
____________________________
Miles Herman
President and a Director of
LEAF Financial Corporation
8-13-02 By:
____________________________
Freddie M. Kotek
Director of LEAF Financial Corporation
8-13-02 By:
____________________________
Marianne T. Schuster
Vice President of Accounting of
LEAF Financial Corporation
(Principal Financial Officer)
15