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 March 31, 2003
/ / 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)
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 19
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND IV, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
March 31, December 31,
2003 2002
___________ ____________
Cash and cash equivalents $836,672 $ 737,755
Accounts receivable 246 31,965
Due from related parties 9,000 12,725
Net investment in direct
financing leases 45,446 116,643
Equipment under operating leases
(net of accumulated depreciation
of $1,190,804 and $1,309,452,
respectively) 55,415 75,979
Equipment held for sale or lease 31,623 31,623
________ __________
Total assets $978,402 $1,006,690
======== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 27,432 $ 27,432
Accounts payable and
accrued expenses 254,260 207,598
Due to related parties 9,750 11,768
________ __________
Total liabilities 291,442 246,798
Partners' capital 686,960 759,892
________ __________
Total liabilities and
partners' capital $978,402 $1,006,690
======== ==========
The accompanying notes are an integral part of these financial statements.
2
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF OPERATIONS
For the three months ended March 31, 2003 and 2002
(Unaudited)
2003 2002
________ ________
Income:
Rentals $ 89,467 $136,343
Earned income on direct financing leases 1,624 10,824
Interest 4,692 4,637
Gain on sale of equipment 27,000 -
Other 810 465
________ ________
123,593 152,269
________ ________
Expenses:
Depreciation 20,564 68,504
General and administrative 58,625 13,367
General and administrative to related
party 8,892 10,987
Management fee to related party 8,444 16,170
________ ________
96,525 109,028
________ ________
Net income $ 27,068 $ 43,241
======== ========
Net income per equivalent limited
partnership unit $ 3.34 $ 4.77
======== ========
Weighted average number of
equivalent limited partnership
units outstanding during the period 7,066 8,335
======== ========
The accompanying notes are an integral part of these financial statements.
3
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the three months ended March 31, 2003
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 2003 ($9,914) 41,334 $769,806 $759,892
Cash distributions (3,500) - (96,500) (100,000)
Net income 3,500 - 23,568 27,068
______ ______ ________ ________
Balance, March 31, 2003 ($9,914) 41,334 $696,874 $686,960
====== ====== ======== ========
The accompanying notes are an integral part of these financial statements.
4
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2003 and 2002
(Unaudited)
2003 2002
_________ _________
Cash flows from operating activities:
Net income $ 27,068 $ 43,241
________ __________
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 20,564 68,504
Gain on sale of equipment (27,000) -
(Increase) decrease in accounts receivable 31,719 2,183
(Increase) decrease in due from related
parties 3,725 (45,396)
Increase (decrease) in lease rents paid
in advance - 2,067
Increase (decrease) in accounts payable
and accrued expenses 46,662 (44,001)
Increase (decrease) in due to related
parties (2,018) 946
________ __________
73,652 (15,697)
________ __________
Net cash provided by operating activities 100,720 27,544
________ __________
Cash flows from investing activities:
Proceeds from sale of equipment 27,000 -
Proceeds from direct financing leases,
net of earned income 71,197 146,756
________ __________
Net cash provided by investing activities 98,197 146,756
________ __________
Cash flows from financing activities:
Distributions (100,000) (800,000)
________ __________
Net cash used in financing activities (100,000) (800,000)
________ __________
Increase (decrease) in cash and
cash equivalents 98,917 (625,700)
Cash and cash equivalents, beginning
of period 737,755 1,032,557
________ __________
Cash and cash equivalents, end of period $836,672 $ 406,857
======== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 2003
(Unaudited)
BASIS OF PRESENTATION
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 regu-
lations of the Securities and Exchange Commission. In the opinion of
Management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. These
condensed financial statements should be read with the audited financial
statements and notes thereto as of December 31, 2002 and for the year then
ended. The results for the three months ended March 31, 2003 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2003.
1. RECENT ACCOUNTING PRONOUNCEMENTS
The Fund adopted FASB Interpretation 45 (FIN 45), "Guarantor's Accounting
and Disclosure Requirements for Guarantees, including Indirect
Guarantees of Indebtedness of Others" on January 1, 2003. FIN 45 requires
a guarantor entity, at the inception of a guarantee covered by the
measurement provisions of the interpretation, to record a liability for
the fair value of the obligation undertaken in issuing the guarantee.
FIN 45 applies prospectively to guarantees the Fund issues or modifies
subsequent to December 31, 2002. The adoption of FIN 45 did not
have a material impact on the financial position or results of operations
of the Fund.
In January 2003, the FASB issued FIN 46 "Consolidation of Variable Interest
Entities". FIN 46 clarifies the application of Accounting Research
Bulletin 51, "Consolidated Financial Statements", for certain entities
that do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other
parties or in which equity investors do not have the characteristics of a
controlling financial interest ("variable interest entities"). Variable
interest entities within the scope of FIN 46 will be required to be
consolidated by their primary beneficiary. The primary beneficiary of a
variable interest entity is determined to be the party that absorbs a
majority of the entity's expected losses, receives a majority of its
expected returns, or both. FIN 46 applies immediately to variable interest
entities created after January 31, 2003, and to variable interest entities
in which an enterprise obtains an interest after that date. It applies in
the first fiscal year or interim period beginning after June 15, 2003, to
variable interest entities in which an enterprise holds a variable interest
6
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. RECENT ACCOUNTING PRONOUNCEMENTS (continued)
that it acquired before February 1, 2003. The Fund is in the process of
determining what impact, if any, the adoption of the provisions of FIN 46
will have upon its financial condition or results of operations. The Fund
does not anticipate FIN 46 to have a material impact on the financial
position or results of operations.
2. EQUIPMENT LEASED
The Fund has equipment leased under the direct financing method in
accordance with Statement of Financial Accounting Standards No. 13.
This method provides for recognition of income (the excess of the ag-
gregate future rentals and estimated unguaranteed residuals upon ex-
piration 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 24 to 58 months.
The approximate net investment in direct financing leases as of
March 31, 2003 is as follows (unaudited):
Minimum lease payments to be received $46,000
Unearned rental income (1,000)
_______
$45,000
=======
The Fund also has equipment under operating leases. The Fund's operat-
ing leases are for initial lease terms of 17 to 58 months. Generally,
operating leases will not recover all of the undepreciated cost and re-
lated expenses of its rental equipment during the initial lease terms
and so, 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 anticipated technological developments affecting the equipment
and competitive factors in the marketplace are considered among other
things, as part of this review. 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 upon actual sale of its
rental equipment. There were no write-downs of equipment to net realizable
records during the three months ended March 31, 2003 and 2002.
7
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. EQUIPMENT LEASED (continued)
The future approximate minimum rentals to be received on noncancel-
lable operating and direct financing leases as of March 31, 2003 are
as follows:
Years Ending December 31 Operating Direct Financing
________________________ _________ ________________
2003 $49,000 $46,000
_______ _______
$49,000 $46,000
======= =======
3. RELATED PARTY TRANSACTIONS
The General Partner receives 6% of rental payments from equipment under
operating leases and 3% of rental payments (as opposed to unearned income)
on full pay-out leases for administrative and management services per-
formed 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.
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 of services and materials
charged by the General Partner or its parent company during the three
months ended March 31, 2003 and 2002 (unaudited):
2003 2002
________ ________
Management fee $ 8,444 $16,170
Reimbursable costs 8,892 10,987
The Fund keeps its checking and investment accounts at The Bancorp Bank,
("TBB"). The son and the spouse of the Chairman of Resource America,
Inc. are the Chairman and Chief Executive Officer, respectively, of TBB.
The Fund maintains a normal banking relationship with TBB.
Amounts due from related parties at March 31, 2003 and December 31,
2002 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.
8
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
3. RELATED PARTY TRANSACTIONS (continued)
Amounts due to related parties at March 31, 2003 and December 31, 2002
represent monies due to the General Partner and/or its parent company
for the fees and costs mentioned above, as well as, rentals and sales
proceeds collected by the Fund on behalf of other affiliated funds.
4. CASH DISTRIBUTION
The General Partner declared and paid a cash distrion of $100,000 during
the first quarter of 2003 for the quarter ended December 31, 2002.
The General Partner declared a cash distribution of $100,000
in May 2003 for the three months ended March 31, 2003, to all admitted
partners as of March 31, 2003.
9
FIDELITY LEASING INCOME FUND IV, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Fidelity Leasing Income Fund IV, L.P. had revenues of $123,593 and
$152,269 for the three months ended March 31, 2003 and 2002, respectively.
Rental income from the leasing of equipment and earned income on direct
financing leases accounted for 74% and 97% of total revenues for the first
quarter of 2003 and 2002, respectively. The decrease in revenues was
primarily attributable to the decrease in rental income. Rental income
decreased by approximately $47,000 in 2003 because of equipment that
terminated and was sold since March 2002. Additionally, earned income on
direct financing leases decreased during the quarter ended March 31, 2003
because of the monthly amortization of unearned income using the interest
method as well as the termination of certain direct financing leases during
2002. The decrease in this account contributed to the decrease in total
revenues during the quarter ended March 31, 2003. The gain on sale of
equipment of $27,000 mitigated the overall decrease in revenues in 2003.
There was no gain on sale of equipment during the quarter ended
March 31, 2002.
Expenses were $96,525 and $109,028 during the three months ended
March 31, 2003 and 2002, respectively. Depreciation expense comprised
21% and 63% of total expenses during the first quarter of 2003 and 2002,
respectively. The decrease in expenses between the first quarter of 2003
and 2002 was primarily attributable to the decrease in depreciation expense.
Depreciation expense decreased in 2003 because of equipment that became
fully depreciated or terminated and was sold since March 31, 2002. The
decrease in management fee to related party also contributed to the overall
decrease in expenses. Management fee to related party decreased as a result
of lower rentals received on both operating and direct financing leases during
the first quarter of 2003 compared to the first quarter of 2002. However,
the increase in general and administrative expense during the first quarter
of 2003 lowered the overall decrease in expenses during this period. The
increase in this account was primarily related to the accrual of filing fees
to the state of New Jersey. The state of New Jersey enacted new legislation
in 2002 that requires a partnership to pay a per partner filing fee to the
state with its tax return.
For the three months ended March 31, 2003 and 2002, the Fund had net
income of $27,068 and $43,241, respectively. The net income per equiva-
lent limited partnership unit, after net income allocated to the General
Partner was $3.34 and $4.77 based on a weighted average number of equiva-
lent limited partnership units outstanding of 7,066 and 8,335 for the
quarter ended March 31, 2003 and 2002, respectively.
The Fund generated cash from operations of $20,632 and $111,745, for
the purpose of determining cash available for distribution for the quarter
ended March 31, 2003 and 2002, respectively. The Fund distributed $100,000
to partners in both May 2003 and 2002 for the first quarter of 2003 and
2002, respectively. A cash distribution of $100,000 was paid to partners
10
FIDELITY LEASING INCOME FUND IV, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (Continued)
during the first quarter of 2003 for the quarter ended December 31, 2002.
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
liquidated as promptly as is consistent with obtaining their fair value.
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 through termination of
the Fund.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
Item 4: CONTROLS AND PROCEDURES
The Chief Executive Officer and Chief Financial Officer of LEAF Financial
Corporation, the General Partner of the Fund, have concluded, based on an
evaluation conducted within 90 days prior to the filing date of this Quarterly
Report on Form 10-Q, that the Fund's disclosure controls and procedures as
defined in Rules Section 240.13a-14(c) and 240.15d-14(c) are effective.
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 these internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
11
Part II: Other Information
FIDELITY LEASING INCOME FUND IV, L.P.
March 31, 2003
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) 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
SIGNATURES
Pursuant to the requirements 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.
5-15-03 By: /s/ Crit DeMent
____________________________
Crit DeMent
Chairman of the Board of Directors
of LEAF Financial Corporation
(Principal Executive Officer)
5-15-03 By: /s/ Miles Herman
____________________________
Miles Herman
President and Director of
LEAF Financial Corporation
5-15-03 By: /s/ Freddie M. Kotek
____________________________
Freddie M. Kotek
Director of LEAF Financial Corporation
5-15-03 By: /s/ Marianne T. Schuster
____________________________
Marianne T. Schuster
Vice President of Accounting of
LEAF Financial Corporation
(Principal Financial Officer)
13
CERTIFICATIONS
I, Crit DeMent, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Fidelity Leasing
Income Fund IV, L.P.;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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 quarterly 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
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly 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 quarterly 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: May 15, 2003
/s/ Crit DeMent
____________________________
Crit 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 quarterly report on Form 10-Q of Fidelity Leasing
Income Fund IV, L.P.;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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 quarterly 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
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly 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 quarterly 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: May 15, 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 Quarterly Report of Fidelity Leasing Income Fund IV,
L.P. (the "Fund") on Form 10-Q for the period ended March 31, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Crit 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 DeMent
________________________
Crit DeMent
Principal Executive Officer of LEAF Financial Corporation
May 15, 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 Quarterly Report of Fidelity Leasing Income Fund IV,
L.P. (the "Fund") on Form 10-Q for the period ended March 31, 2003 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
May 15, 2003
19