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, 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 0-16845
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, 2002 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.
A brief description of the types of equipment in which the Fund has
invested as of December 31, 2002, 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.
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, 2002:
Operating Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Technical Workstations and Terminals $ 721,185 52.06%
PCB Assembly Equipment 271,215 19.58
Tape Storage Systems 225,814 16.29
Electron Microscopes 139,211 10.05
Other 28,005 2.02
__________ ______
Totals $1,385,430 100.00%
========== ======
2
Item 2. PROPERTIES (Continued)
Direct Financing Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
PCB Assembly Equipment $ 561,147 50.16%
Tape Storage Systems 314,682 28.13
Technical Workstations and Terminals 236,449 21.13
Other 6,536 0.58
__________ ______
Totals $1,118,814 100.00%
========== ======
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, 2002:
Operating Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Diversified Financial/Banking/Insurance $ 975,005 70.38%
Manufacturing/Refining 410,425 29.62
__________ ______
Totals $1,385,430 100.00%
========== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Manufacturing/Refining $ 561,147 50.16%
Diversified Financial/Banking/Insurance 322,041 28.78
Computer/Data Processing 200,890 17.96
Education 34,736 3.10
__________ ______
Totals $1,118,814 100.00%
========== ======
Average Initial Term of Leases (in months): 42
Item 3. LEGAL PROCEEDINGS
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
3
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON 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, 2002
Limited Partnership Interests 1,563
General Partnership Interest 1
Item 6. SELECTED FINANCIAL DATA
For the Years Ended December 31,
2002 2001 2000 1999 1998
Total Income $ 509,241 $666,887 $626,847 $882,124 $1,312,608
Net Income (Loss) (41,340) 203,404 216,229 391,550 266,144
Distributions to
Partners 1,100,000 400,000 400,000 375,000 325,000
Net Income (Loss)
per Equivalent
Limited
Partnership Unit (5.26) 17.27 20.41 37.08 25.51
Weighted Average Number
of Equivalent Limited
Partnership Units
Outstanding During
the Year 7,782 9,547 9,911 10,183 10,023
December 31
2002 2001 2000 1999 1998
Total Assets $1,006,690 $1,998,326 $2,153,297 $2,352,582 $2,324,899
Equipment under
Operating Leases
and Equipment Held
for Sale or Lease
(Net) 107,602 334,190 595,877 609,476 591,749
Net Investment in
Direct Financing
Leases 116,643 544,430 833,062 618,763 1,046,488
Limited Partnership
Units 41,334 41,334 41,334 41,334 41,379
Limited Partners 1,563 1,562 1,562 1,562 1,557
4
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The Fund had revenues of $509,241, $666,887 and $626,847 for the
years ended December 31, 2002, 2001 and 2000, respectively. The decrease
in total revenues between 2002 and 2001 was primarily caused by the decrease
in rental income generated from equipment under operating leases. Rental
income from the leasing of equipment accounted for 85%, 85% and 84% of total
income in 2002, 2001 and 2000, respectively. In 2002, rental income decreased
by approximately $134,000 because of equipment that terminated and was sold or
equipment under operating leases that renewed at lower rental rates. In 2001,
rental income increased by approximately $38,000 because of upgrades made to
equipment under operating leases during 2001. Additionally, the change in
earned income on direct financing leases contributed to the decrease in total
revenues in 2002 and the increase in total revenues in 2001. This account
decreased in 2002 because of the normal amortization of unearned income using
the interest method as well as the early termination of certain direct fi-
nancing leases during 2002 and the last six months of 2001. The increase in
this account in 2001 resulted from investments made in direct financing leases
in 2001 and late 2000. The decrease in interest income during the twelve
months ended December 31,2002 and 2001 also contributed to the decrease in
revenues in 2002 and lowered the increase in revenues in 2001. The decrease
in interest income during 2002 resulted from lower cash balances available for
investment by the Fund and lower interest rates earned by the Fund. The
decrease in interest income in 2001 was caused by lower interest rates earned.
However, the Fund recorded a net gain on sale of equipment of $30,360 for the
twelve months ended December 31, 2002 compared to $1,000 for the twelve months
ended December 31, 2001 and $300 for the twelve months ended December 31, 2000.
The increase in this account served to mitigate the overall decrease in
revenues in 2002 and contributed to the increase in total revenues in 2001.
Expenses were $550,581, $463,483 and $410,618 for the years ended
December 31, 2002, 2001 and 2000, respectively. The increase in expenses
in 2002 was primarily due to an increase in general and administrative ex-
penses. General and administrative expenses increased by $195,000 during
the twelve months ended December 31, 2002. This account increased in 2002
because of new state tax laws enacted in the state of New Jersey during 2002.
These laws require a partnership to pay a per partner filing fee to the state.
The estimated filing fee for the Fund was $187,000 for the year ended December
31, 2002. Depreciation expense comprised 41%, 70% and 71% of total expenses
in 2002, 2001 and 2000, respectively. The decrease in depreciation expense
served to mitigate the overall increase in expenses in 2002. The decrease in
depreciation expense in 2002 was a result of equipment that terminated and was
sold during 2002. The increase in depreciation expense in 2001 was the pri-
mary cause of the increase in expenses in 2001. The increase in this account
was due to equipment purchased during 2001 as well as equipment that was
purchased in 2000 for which a full year of depreciation was recorded in 2001
and only a portion of the twelve months was recorded in 2000. The decrease
in management fee to related party also mitigated the increase in expenses in
2002 and the increase in this account in 2001 contributed to the increase in
expenses in 2001. Management fee to related party fluctuated directly with
the fluctuation in rentals earned on both operating and direct financing
leases in 2002, 2001 and 2000.
5
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
The Fund's net income (loss) was $(41,340), $203,404 and $216,229 for the
years ended December 31, 2002, 2001 and 2000, respectively. The earnings
(loss) per equivalent limited partnership unit, after earnings (loss) allocated
to the General Partner, were $(5.26), $17.27 and $20.41 for the years ended
December 31, 2002, 2001 and 2000, respectively. The weighted average number
of equivalent limited partnership units outstanding were 7,782, 9,547 and
9,911 for 2002, 2001 and 2000, respectively.
The Fund generated cash from operations of $154,888, $526,626 and
$506,499, for the purpose of determining cash available for distribution,
for the years ended December 31, 2002, 2001 and 2000, respectively. The
Fund distributed $300,000 during each of the periods from April 1 through
December 31, 2002, 2001 and 2000. During the first quarter of 2003, 2002
and 2001, the Fund distributed $100,000, $800,000 and $100,000, respectively
to partners for the years ended December 31, 2002, 2001 and 2000. 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. There was no equipment purchased during the year
ended December 31, 2002. During the years ended December 31, 2001 and 2000,
the Fund purchased equipment of $62,536 and $276,971, respectively. The
Fund did not invest in any direct financing leases during the year ended
December 31, 2002. The Fund invested $200,890 and $425,941 in direct fi-
nancing 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.
Recent Accounting Pronouncements
In June 2001, SFAS No. 143, "Accounting for Asset Retirement Obligations"
was issued. SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. Management expects to adopt SFAS
No. 143 on January 1, 2003 and is currently determining the impact of this
standard on its financial statements.
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Recent Accounting Pronouncements (Continued)
In April 2002, SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and
64 and Amendment of FASB Statement No. 13, and Technical Corrections" was
issued. SFAS No. 145 eliminates extraordinary accounting treatment for re-
porting gain or loss on debt extinguishment, and amends other existing pro-
nouncements to make technical corrections, clarify meanings or describe their
applicability under changed conditions. The adoption of SFAS No. 145 did not
have a material effect on the Fund's financial position, results of operations
or cash flows.
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
The General Partner of the Fund is LEAF Financial Corporation (LEAF).
LEAF 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 50, Chairman of the Board of Directors and Chief
Executive Officer of LEAF since February 2002. Chairman of the
Board of Directors, President and Chief Executive Officer of LEAF from
November 2001 to February 2002. President of Fidelity Leasing, Inc.
and its successor, the Technology Finance Group of CitiCapital Vendor
Finance from 1998 to 2001. Vice President of Marketing for Tokai
Financial Services from 1987 through 1996.
CARLOS C. CAMPBELL, age 65, Director of LEAF since May 2002. President
of C.C. Campbell and Company (a management consulting firm) since 1985.
Director of PICO Holdings, Inc. (a publicly traded diversified holding
company) since 1998.
EDWARD E. COHEN, age 64, 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 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 32, Director of LEAF since November 2001. Chief
Operating Officer and a Director of Resource America since 2002. Execu-
tive Vice President of Resource America since 2001. Senior Vice Presi-
dent of Resource America from 1999 to 2001. Vice President of Resource
America from 1998 to 1999. 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 invest-
ment trust) since 1997. Mr. Cohen is the son of Edward E. Cohen.
MILES HERMAN, age 43, President, Chief Operating Officer and a Director
of LEAF since February 2002. Vice President and a Director of LEAF from
November 2001 to February 2002. 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 47, Director of LEAF since 1996. Senior Vice
President of Resource America since 1995. President of Resource Leasing,
Inc. since 1996.
8
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
LINDA RICHARDSON, age 55, Director of LEAF since August 2002. President
and Chief Executive Officer of Richardson (a sales training and consulting
firm) since 1988. A director of the Pennsylvania Academy of the Fine
Arts.
MARIANNE T. SCHUSTER, age 44, Vice President of Accounting of LEAF
since 1984.
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, 2002:
Name of Individual or Capacities in
Number in Group Which Served Compensation
LEAF Financial
Corporation General Partner $47,295(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 2,210.07 (1)
Odd Lot Liquidity Fund, LLC 2,210.07 (2)
Sierra Fund 4, LLC 2,210.07 (3)
(1) Amount represents beneficial ownership interest through
ownership of Odd Lot Liquidity Fund, LLC and Sierra Fund 4, LLC
which own 1,942.37 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 1,942.37 units and beneficial ownership of
267.70 units by virtue of group membership and affiliate
status with Sierra Fund 4, LLC.
9
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(Continued)
(3) Amount represents direct ownership by Sierra Fund 4, LLC
of 267.70 units and beneficial ownership of 1,942.37 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
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, 2002, the Fund was charged $47,295 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,
2002, the General Partner received $38,500 of cash distributions.
The Fund incurred $43,449 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 2002.
Item 14. CONTROLS AND PROCEDURES
The Fund's Chief Executive Officer (principal executive officer) and Chief
Financial Officer (principal financial officer) have concluded, based on an
evaluation conducted within 90 days prior to the filing date of this Annual
Report on Form 10-K, that the Fund's disclosure controls and procedures have
functioned effectively so as to provide those officers the information
necessary to evaluate whether:
10
Item 14. CONTROLS AND PROCEDURES (Continued)
(i) this Annual Report on Form 10-K contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this Annual Report on Form 10-K, and
(ii) the financial statements, and other financial information included
in this Annual Report on Form 10-K, fairly present in all material
respects the financial condition, results of operations and cash flows
of the Fund as of, and for, the periods presented in this Annual Report
on Form 10-K.
There have been no significant changes in the Fund's internal controls or
in other factors since the date of the Chief Executive Officer's and Chief
Financial Officer's evaluation that could significantly affect internal con-
trols, including any corrective actions with regard to significant deficien-
cies and material weaknesses.
11
PART IV
Item 15. 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
99.1 Certification pursuant to 18 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 19
U.S.C., Section 1350, as
adopted pursuant to Section
906 of the Sarbanes-Oxley
Act of 2002
* 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 DeMent, Chairman
Dated March 31, 2003
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 3-31-03
Crit S. DeMent of LEAF Financial Corporation
(Principal Executive Officer)
/s/ Miles Herman
____________________________ President and Director of 3-31-03
Miles Herman LEAF Financial Corporation
/s/ Jonathan Z. Cohen
____________________________ Director of LEAF Financial Corporation 3-31-03
Jonathan Z. Cohen
/s/ Freddie M. Kotek
____________________________ Director of LEAF Financial Corporation 3-31-03
Freddie M. Kotek
/s/ Marianne T. Schuster
____________________________ Vice President of Accounting of 3-31-03
Marianne T. Schuster LEAF Financial Corporation
(Principal Financial Officer)
13
CERTIFICATIONS
I, Crit DeMent, certify that:
1. I have reviewed this annual report on Form 10-K of Fidelity Leasing
Income Fund IV, L.P.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particu-
larly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effect-
tiveness of the disclosure controls and procedures based on our evaluation as
of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
14
CERTIFICATIONS (continued)
Date: March 31, 2003
/s/ Crit DeMent
____________________________
Crit S. DeMent
Chairman of the Board of Directors of LEAF Financial Corporation,
The General Partner
(Principal Executive Officer)
15
CERTIFICATIONS
I, Marianne T. Schuster, certify that:
1. I have reviewed this annual report on Form 10-K of Fidelity Leasing
Income Fund IV, L.P.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particu-
larly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effect-
tiveness of the disclosure controls and procedures based on our evaluation as
of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
16
CERTIFICATIONS (continued)
Date: March 31, 2003
/s/ Marianne T. Schuster
____________________________
Marianne T. Schuster
Vice President of Accounting of LEAF Financial Corporation,
The General Partner
(Principal Financial Officer)
17
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 Annual Report of Fidelity Leasing Income Fund IV,
L.P. (the "Fund") on Form 10-K for the period ended December 31, 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,
the General Partner of the Fund, 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.
/s/ Crit S. DeMent
________________________
Crit S. DeMent
Principal Executive Officer of LEAF Financial Corporation
March 31, 2003
18
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 Annual Report of Fidelity Leasing Income Fund IV,
L.P. (the "Fund") on Form 10-K for the period ended December 31, 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, the General Partner of the Fund, 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.
/s/ Marianne T. Schuster
________________________
Marianne T. Schuster
Principal Financial Officer of LEAF Financial Corporation
March 31, 2003
19
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Certified Public Accountants F-2
Balance Sheets as of December 31, 2002 and 2001 F-3
Statements of Operations for the years ended
December 31, 2002, 2001 and 2000 F-4
Statements of Partners' Capital for the years ended
December 31, 2002, 2001 and 2000 F-5
Statements of Cash Flows for the years ended
December 31, 2002, 2001 and 2000 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, 2002 and 2001, and the related state-
ments of operations, partners' capital and cash flows for each of the three
years in the period ending December 31, 2002. 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, 2002 and 2001, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2002 in conformity with accounting principles generally accepted
in the United States of America.
Grant Thornton LLP
Philadelphia, Pennsylvania
February 7, 2003
F-2
FIDELITY LEASING INCOME FUND IV, L.P.
BALANCE SHEETS
ASSETS
December 31,
2002 2001
Cash and cash equivalents $ 737,755 $1,032,557
Accounts receivable 31,965 80,464
Due from related parties 12,725 6,685
Net investment in direct financing leases 116,643 544,430
Equipment under operating leases
(net of accumulated depreciation
of $1,309,452 and $1,823,534,
respectively) 75,979 302,567
Equipment held for sale or lease 31,623 31,623
__________ __________
Total assets $1,006,690 $1,998,326
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 27,432 $ 27,510
Accounts payable and
accrued expenses 207,598 57,560
Due to related parties 11,768 12,024
__________ __________
Total liabilities 246,798 97,094
Partners' capital 759,892 1,901,232
__________ __________
Total liabilities and
partners' capital $1,006,690 $1,998,326
========== ==========
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,
2002 2001 2000
Income:
Rentals $433,601 $567,321 $529,386
Earned income on direct
financing leases 24,553 61,537 44,277
Interest 16,997 30,459 40,817
Gain on sale of equipment, net 30,360 1,000 300
Other 3,730 6,570 12,067
________ ________ ________
509,241 666,887 626,847
________ ________ ________
Expenses:
Depreciation 226,588 324,222 290,570
General and administrative 233,249 38,515 34,404
General and administrative to
related party 43,449 39,586 43,459
Management fee to related party 47,295 61,160 42,185
________ ________ ________
550,581 463,483 410,618
________ ________ ________
Net income (loss) ($ 41,340) $203,404 $216,229
======== ======== ========
Net income (loss) per equivalent
limited partnership unit ($ 5.26) $ 17.27 $ 20.41
======== ======== ========
Weighted average number of
equivalent limited partnership
units outstanding during the year 7,782 9,547 9,911
======== ======== ========
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, 2002, 2001 and 2000
General Limited Partners
Partner Units Amount Total
_______ __________________ _____
Balance, January 1, 2000 $ 4,499 41,334 $2,277,100 $2,281,599
Cash distributions (14,000) - (386,000) (400,000)
Net income 14,000 - 202,229 216,229
_______ ______ __________ __________
Balance, December 31, 2000 4,499 41,334 2,093,329 2,097,828
Cash distributions (14,000) - (386,000) (400,000)
Net income 38,500 - 164,904 203,404
_______ ______ __________ __________
Balance, December 31,2001 28,999 41,334 1,872,233 1,901,232
Cash distributions (38,500) - (1,061,500) (1,100,000)
Net loss (413) - (40,927) (41,340)
_______ ______ __________ __________
Balance, December 31, 2002 ($ 9,914) 41,334 $ 769,806 $ 759,892
======= ====== ========== ==========
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,
2002 2001 2000
Cash flows from operating activities:
Net income (loss) ($ 41,340) $ 203,404 $ 216,229
__________ __________ __________
Adjustments to reconcile net
income (loss) to net cash provided
by operating activities:
Depreciation 226,588 324,222 290,570
Gain on sale of equipment, net (30,360) (1,000) (300)
(Increase) decrease in
accounts receivable 48,499 (49,546) 9,676
(Increase) decrease in due
from related parties (6,040) 24,021 (17,023)
Increase (decrease) in lease
rents paid in advance (78) 1,318 (25,164)
Increase (decrease) in accounts
payable and accrued expenses 150,038 41,258 6,838
Increase (decrease) in due to
related parties (256) (951) 2,812
__________ __________ __________
388,391 339,322 267,409
__________ __________ __________
Net cash provided by
operating activities 347,051 542,726 483,638
__________ __________ __________
Cash flows from investing activities:
Acquisition of equipment - (62,536) (276,971)
Investment in direct financing leases - (200,890) (425,941)
Proceeds from direct financing
leases, net of earned income 427,787 489,523 211,642
Proceeds from sale of equipment 30,360 1,000 300
__________ __________ __________
Net cash provided by (used in)
investing activities 458,147 227,097 (490,970)
__________ __________ __________
Cash flows from financing activities:
Distributions (1,100,000) (400,000) (400,000)
__________ __________ __________
Net cash used in financing
activities (1,100,000) (400,000) (400,000)
__________ __________ __________
Increase (decrease) in cash
and cash equivalents (294,802) 369,823 (407,332)
Cash and cash equivalents,
beginning of year 1,032,557 662,734 1,070,066
__________ __________ __________
Cash and cash equivalents,
end of year $ 737,755 $1,032,557 $ 662,734
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-6
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF BUSINESS
Fidelity Leasing Income Fund IV, L.P. (the "Fund") was formed in December
1986. The General Partner of the Fund is LEAF Financial Corporation (LEAF).
LEAF is a wholly owned subsidiary of Resource Leasing, Inc., which is 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 storage devices, data communications equip-
ment, computer terminals, technical workstations and networking equipment, as
well as other electronic equipment, that is leased to third parties throughout
the United States on a short-term basis.
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.
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
due to the limited dispersion of the Fund's lessees over different industries
and geographies.
Impairment of Long-Lived Assets
The Fund adopted Statement of Financial Accounting Standard (SFAS) No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets", on
January 1, 2002. SFAS No. 144 retains the existing requirements to recognize
and measure the impairment of long-lived assets to be held and used or to be
disposed by sale. SFAS No. 144 changes the requirements relating to reporting
the effects of a disposal or discontinuation of a business segment.
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.
The adoption of SFAS No. 144 did not have any material effect on the Fund's
financial position, results of operations or cash flows.
Equipment Held for Sale or Lease
Equipment held for sale or lease is carried at its estimated net realiz-
able value.
F-7
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Accounting for Leases
The Fund's leasing operations consist of both operating and direct
financing leases. Under the operating method of accounting for leases, the
cost of the leased equipment is recorded as an asset and depreciated on a
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.
F-8
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
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.
Recent Accounting Pronouncements
In June 2001, SFAS No. 143, "Accounting for Asset Retirement Obligations"
was issued. SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. Management expects to adopt SFAS
No. 143 on January 1, 2003 and is currently determining the impact of this
standard on its financial statements.
In April 2002, SFAS No. 145, "Rescission of FASB Statements No. 4, 44
and 64 and Amendment of FASB Statement No. 13, and Technical Corrections" was
issued. SFAS No. 145 eliminates extraordinary accounting treatment for re-
porting gain or loss on debt extinguishment, and amends other existing pro-
nouncements to make technical corrections, clarify meanings or describe their
applicability under changed conditions. The adoption of SFAS No. 145 did not
have a material effect on the Fund's financial position, results of operations
or cash flows.
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 annual 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.
F-9
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
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.
The Fund's direct financing leases are for initial lease terms ranging
from 24 to 60 months. The approximate net investment in direct financing
leases as of December 31, 2002 is as follows:
Net minimum lease payments to be received $119,000
Unearned rental income (2,000)
Unguaranteed residuals -
________
$117,000
========
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
2003 $137,000 $119,000
________ ________
$137,000 $119,000
======== ========
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.
F-10
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. RELATED PARTY TRANSACTIONS (Continued)
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:
2002 2001 2000
Management fee $47,295 $61,160 $42,185
Reimbursable costs 43,449 39,586 43,459
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, 2002 and 2001 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, 2002 and 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.
6. MAJOR CUSTOMERS
For the year ended December 31, 2002, three customers accounted for 68%,
13% and 12% of the Fund's rental income. 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.
7. CASH DISTRIBUTIONS
Below is a summary of the quarterly cash distributions paid to partners
during the years ended December 31:
Month of Distribution 2002 2001 2000
February $ 800,000 $100,000 $100,000
May 100,000 100,000 100,000
August 100,000 100,000 100,000
November 100,000 100,000 100,000
__________ ________ ________
$1,100,000 $400,000 $400,000
========== ======== ========
F-11
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
7. CASH DISTRIBUTIONS (Continued)
In addition, the General Partner declared and paid a cash distribution
of $100,000 in February 2003 for the three months ended December 31, 2002, to
all admitted partners as of December 31, 2002.
8. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
The following table summarizes the results of operations on a quarterly
basis during 2002 and 2001:
2002
----------------------------------------
Fourth Third Second First
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Income:
Rentals $ 94,429 $ 94,429 $108,400 $136,343
Earned income on direct financing
leases 3,092 5,054 5,583 10,824
Interest 4,547 4,395 3,418 4,637
Gain on sale of equipment, net - - 30,360 -
Other 793 1,672 800 465
________ ________ ________ ________
Total income 102,861 105,550 148,561 152,269
________ ________ ________ ________
Expenses:
Depreciation 39,806 51,114 67,164 68,504
General and administrative 198,695 10,982 10,205 13,367
General and administrative to
related party 11,650 11,345 9,467 10,987
Management fee to related party 9,329 9,835 11,961 16,170
________ ________ ________ ________
Total expenses 259,480 83,276 98,797 109,028
________ ________ ________ ________
Net income (loss) ($156,619) $ 22,274 $ 49,764 $ 43,241
======== ======== ======== ========
Net income (loss) per equivalent
limited partnership unit ($ 18.43) $ 2.45 $ 5.95 $ 4.77
======== ======== ======== ========
F-12
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
8. SUMMARY OF QUARTERLY RESULTS (UNAUDITED) (Continued)
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-13
21