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, 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)
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____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information state-
ments incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K. [ ]
1
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes____ No__X__
The number of outstanding limited partnership units of the Registrant at
December 31, 2003 is 41,334.
There is no public market for these securities.
The index of Exhibits is located on page 13.
2
PART I
Item 1. BUSINESS
Fidelity Leasing Income Fund IV, L.P. (the "Fund"), a Delaware limited
partnership, was organized in 1986 and acquired 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 was leased to third parties on a short-term basis.
As of December 31, 2003, the Fund's equipment portfolio was liquidated. The
Fund's principal objective was to generate leasing revenues for distribution.
The Fund managed the equipment, releasing or disposing of equipment as it
came off lease in order to achieve its principal objective. The Fund
did not borrow funds to purchase equipment.
The Fund generally acquired equipment subject to a lease. Purchases of
equipment for lease were typically made through equipment leasing brokers,
under a sale-leaseback arrangement directly from lessees owning equipment or
from the manufacturer either pursuant to a purchase agreement relating to
significant quantities of equipment or on an ad hoc basis to meet the needs
of a particular lessee.
The Fund competed with leasing companies, equipment manufacturers and
distributors, and entities similar to the Fund (including similar programs
sponsored by the General Partner), some of which had greater financial re-
sources than the Fund. Other leasing companies and equipment manufacturers
and distributors may have been in a position to offer equipment to prospective
lessees on financial terms which were more favorable than those which the Fund
could offer. Equipment manufacturers and distributors may have offered to sell
equipment on terms and conditions (such as liberal financing terms and exchange
privileges) that would afford benefits to the purchaser similar to those ob-
tained through leases. They may also have been in a position to offer trade-
in-privileges, maintenance contracts and other services which the Fund could
not offer. As a result of the advantages that certain of its competitors had,
the Fund may have leased its equipment on a less favorable basis than certain
of its competitors.
The Fund did not have any employees. All persons who worked on the Fund
were employees of the General Partner.
Item 2. PROPERTIES
During 2003, the General Partner liquidated the remaining equipment under
operating leases and investments in direct financing leases owned by the Fund.
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 were not publicly traded. There
was no market for the Fund's limited partnership units.
(b) Number of Equity Security Holders:
Number of Partners
Title of Class as of December 31, 2003
Limited Partnership Interests 1,570
General Partnership Interest 1
Item 6. SELECTED FINANCIAL DATA
The following selected financial and operating information should be read
in conjunction with Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operation," and our financial statements, including
the notes thereto, included elsewhere herein.
For the Years Ended December 31,
2003 2002 2001 2000 1999
Total Income $ 317,646 $ 509,241 $666,887 $626,847 $882,124
Net (Loss) Income (3,577) (41,340) 203,404 216,229 391,550
Distributions to
Partners 756,313 1,100,000 400,000 400,000 375,000
Net (Loss) Income
per Equivalent
Limited
Partnership Unit (0.54) (5.26) 17.27 20.41 37.08
Weighted Average Number
of Equivalent Limited
Partnership Units
Outstanding During
the Year 6,582 7,782 9,547 9,911 10,183
December 31
2003 2002 2001 2000 1999
Total Assets - $1,006,690 $1,998,326 $2,153,297 $2,352,582
Equipment under
Operating Leases
and Equipment Held
for Sale or Lease
(Net) - 107,602 334,190 595,877 609,476
Net Investment in
Direct Financing
Leases - 116,643 544,430 833,062 618,763
Limited Partnership
Units - 41,334 41,334 41,334 41,334
Limited Partners 1,570 1,563 1,562 1,562 1,562
4
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The significant decrease in revenues and expenses in 2003 is primarily
due to the dissolution process of the Fund that was completed during the fourth
quarter of 2003. Equipment was sold to the end user at lease expiration or
packaged and sold prior to lease expiration for the present value of the
remaining lease payments plus the forecasted future residual value.
The Fund had revenues of $317,646, $509,241 and $666,887 for the
years ended December 31, 2003, 2002 and 2001, respectively. The decrease
in total revenues between 2003 and 2002 was primarily caused by the decrease
in rental income generated from equipment under operating leases. Rental
income from the leasing of equipment accounted for 81%, 85% and 85% of total
income in 2003, 2002 and 2001, respectively. In 2003 and 2002, rental income
decreased by approximately $176,000 and $134,000 because of equipment that
terminated and was sold or equipment under operating leases that renewed at
lower rental rates. Additionally, the change in earned income on direct
financing leases contributed to the decrease in total revenues in 2003 and
the decrease in total revenues in 2002. This account decreased in 2003 and
2002 because of the normal amortization of unearned income using the interest
method as well as the early termination of certain direct financing leases
during 2003 and the last six months of 2002. The decrease in interest income
during the twelve months ended December 31, 2003 and 2002 also contributed to
the decrease in revenues in 2003. The decrease in interest income during 2003
resulted from lower cash balances available for investment by the Fund and
lower interest rates earned by the Fund. However, the Fund recorded a net
gain on sale of equipment of $39,334 for the twelve months ended December 31,
2003 compared to $30,360 for the twelve months ended December 31, 2002 and
$1,000 for the twelve months ended December 31, 2001. The increase in this
account served to mitigate the overall decrease in revenues in 2003 and 2002.
Expenses were $321,223, $550,581 and $463,483 for the years ended
December 31, 2003, 2002 and 2001, respectively. The decrease in expenses
in 2003 was primarily due to a decrease in depreciation expense. The de-
crease in depreciation expense in 2003 was a result of equipment that
terminated and was sold during 2003. The decrease in depreciation expense
in 2002 was the primary cause of the decrease in expenses in 2002. The
decrease in this account was due to equipment purchased during 2002 as well
as equipment that was purchased in 2001 for which a full year of depreciation
was recorded in 2002 and only a portion of the twelve months was recorded in
2001. Depreciation expense comprised 13%, 41% and 70% of total expenses in
2003, 2002 and 2001, respectively. Additionally, general and administrative
expenses decreased during this period. General and administrative expenses
decreased by $9,000 during the twelve months ended December 31, 2003. For the
twelve months ended December 31, 2002, general and administrative expenses
increased by $195,000. This increase in 2002 was because of new state laws
enacted in the state of New Jersey. These laws require a partnership to pay
a per partner filing fee to the state. The estimated filing fees for the
Fund were $176,000 and $187,000 for the years ended December 31, 2003 and
2002, respectively. The decrease in management fee to related party also
5
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
contributed to the decrease in expenses in 2003 and the decrease in this
account in 2002 mitigated the increase in expenses in 2002. Management fee
to related party fluctuated directly with the fluctuation in rentals earned
on both operating and direct financing leases in 2003, 2002 and 2001.
The Fund's net (loss) income was $(3,577), $(41,340) and $203,404 for the
years ended December 31, 2003, 2002 and 2001, respectively. The (loss)
earnings per equivalent limited partnership unit, after (loss) earnings
allocated to the General Partner, were $(0.54), $(5.26) and $17.27 for the
years ended December 31, 2003, 2002 and 2001, respectively. The weighted
average number of equivalent limited partnership units outstanding were 6,582,
7,782 and 9,547 for 2003, 2002 and 2001, respectively.
The Fund (used) generated cash from operations of ($2,108), $154,888 and
$526,626 for the purpose of determining cash available for distribution, for
the years ended December 31, 2003, 2002 and 2001, respectively. The Fund
distributed $656,313 for the period from April 1 through December 31, 2003
and $300,000 during each of the periods from April 1 through December 31, 2002
and 2001. During the first quarter of 2003 and 2002, the Fund distributed
$100,000 and $800,000, respectively to partners for the years ended Decem-
ber 31, 2003 and 2002. For financial statement purposes, the Fund recorded
cash distributions to partners on a cash basis in the period in which they
were paid.
Analysis of Financial Condition
During 2003, the General Partner liquidated the remaining equipment under
operating leases and investments in direct financing leases owned by the Fund
and distributed all remaining cash to the Limited Partners and the General
Partner.
The cash position of the Fund was reviewed daily and cash was invested on
a short-term basis.
Recent Accounting Pronouncements
The Fund adopted Financial Accounting Standards Board ("FASB") Interpreta-
tion 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
including Indirect Guarantees of Indebtedness of Others" ("FIN 45") on Jan-
uary 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 FASB Interpretation 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 clarifies the application
of Accounting Research Bulletin 51, "Consolidated Financial Statements," to
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Recent Accounting Pronouncements (Continued)
certain entities in which voting rights are not effective in identifying the
investor with the controlling financial interest. An entity is subject to
consolidation under FIN 46 if the investors either do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support, are unable to direct the entity's activities,
or are not exposed to the entity's losses or entitled to its residual returns
("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.
Subsequent to the issuance of FIN 46, the FASB issued a revised interpre-
tation, FIN 46(R), the provisions of which must be applied to certain variable
interest entities by March 31, 2004. The Fund does not anticipate that FIN 46
will have a material impact on its financial position or results of operations.
The FASB issued SFAS No. 150, "Accounting for Certain Financial Instru-
ments with Characteristics of Both Liabilities and Equity," on May 15, 2003.
SFAS 150 changes the classification in the statement of financial position of
certain common financial instruments from either equity or mezzanine presenta-
tion to liabilities and requires an issuer of those financial statements to
recognize changes in fair value or redemption amount, as applicable, in
earnings. SFAS 150 is effective for public companies for financial instru-
ments entered into or modified after May 31, 2003 and is effective at the
beginning of the first interim period beginning after June 15, 2003. The
adoption of SFAS 150 did not have a material impact on the Fund's financial
position or results of operations.
Critical Accounting Policies, Judgments and Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires us
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of actual revenues
and expenses during the reporting period. Although we believe our estimates
are reasonable, actual results could differ from those estimates. Changes in
these estimates could materially affect our financial position, results of
operations or cash flows. Key estimates used by our management include
estimates used to record revenue and expense accruals, depreciation and
amortization, asset impairment and fair values of assets acquired. We
summarize our significant accounting policies in Note 2 to our Financial
Statements included in this report. We discuss below the critical accounting
policies that we have identified.
Accounts Receivable and Allowances for Uncollectible Accounts
In evaluating our allowance for possible uncollectible accounts, we
consider our contractual delinquencies, economic conditions and trends,
industry statistics, lease portfolio characteristics and our General
Partner's management's prior experience with similar lease assets.
7
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Recent Accounting Pronouncements (Continued)
Net Assets in Liquidation
The 2003 financial statements have been prepared on a liquidation basis of
accounting, whereby the remaining assets and liabilities have been revalued to
the amount expected to be paid or collected during liquidation.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
All of our assets and liabilities are denominated in U.S. dollars, and
as a result, we do not have exposure to currency exchange risks.
We do not engage in any interest rate, foreign currency exchange rate or
commodity price-hedging transactions, and as a result, we do not have exposure
to derivatives risk.
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.
Item 9A. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our reports under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed,
summarized, and reported within the time periods specified in the SEC's rules
and forms, and that such information is accumulated and communicated to our
chief executive officer and our chief financial officer, as appropriate, to
allow timely decisions regarding required disclosure. We necessarily applied
our judgment in assessing the costs and benefits of such controls and proce-
dures, which by their nature can provide only reasonable assurance regarding
our control objectives.
We carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 13a-15 as of the end of the period covered by this report. Our chief
executive officer and chief financial officer participated and provided input
into this process. Based upon the foregoing, these senior officers concluded
that our disclosure controls and procedures are effective in timely alerting
them to material information relating to us required to be included in our
Exchange Act reports.
There has been no change in our internal control over financial report-
ing that occurred during the fourth fiscal quarter of our fiscal year ended
December 31, 2003 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
8
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 DEMENT, age 51, 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.
ALAN D. SCHREIBER, M.D., age 61, Professor of Medicine since 1973 and
Assistant Dean for Research and Research Training sine 1990 at the
University of Pennsylvania School of Medicine. Chairman, Scientific
Advisory Board, Inkine Pharmaceutical Co., Inc. (a publicly traded
biopharmaceutical company) since 1997. Founder and Chief Scientific
Officer of CorBec Pharmaceuticals, Inc. from 1993 to 1997.
EDWARD E. COHEN, age 65, 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 33, 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 44, 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 1997 to 2000. Held
several management positions in sales, marketing and operations at Tokai
Financial Services from 1983 to 1998.
FREDDIE M. KOTEK, age 48, Director of LEAF since 1996. Senior Vice
President of Resource America since 1995. President of Resource Leasing,
Inc. since 1996.
9
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
LINDA RICHARDSON, age 56, 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.
ROBERT K. MOSKOVITZ, age 47, Chief Financial Officer and Treasurer of
LEAF since 2004. Independent consultant working with companies on
performance management initiatives from 2002 to 2004. Executive Vice
President and Chief Financial Officer of ImpactRx, Inc., (a start-up,
market research firm servicing pharmaceutical manufacturers). Chief
Financial Officer of Breakthrough Commerce LLC (a holding company that
created and funded Internet related businesses) from 1999 to 2001. Held
senior financial positions with several high growth public and privately
owned companies from 1983 to 1997. Mr. Moskovitz is also a Certified
Public Accountant.
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, 2003:
Name of Individual or Capacities in
Number in Group Which Served Compensation
--------------------- -------------- ------------
LEAF Financial
Corporation General Partner $18,543(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)
10
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(Continued)
(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 267.07 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
267.07 units by virtue of group membership and affiliate
status with Sierra Fund 4, LLC.
(3) Amount represents direct ownership by Sierra Fund 4, LLC
of 267.07 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, owned more than one percent of the
Fund's outstanding securities. The General Partner owned 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 also shared in net income equal
to the greater of its cash distributions or 1% of net income or to the
extent there were losses, 1% of such losses.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 2003, the Fund was charged $18,543 of
management fees by the General Partner. The General Partner received 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 received 3.5% of cash distributions. During
the year ended December 31, 2003, the General Partner received $26,472 of
cash distributions.
The Fund incurred $37,328 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 2003.
11
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Aggregate fees recognized by the Partnership during the years ending
December 31, 2003 and 2002 by its principal accounting firm, Grant Thornton,
LLP, are set forth below. The audit committee of the managing board of our
General Partner has considered whether the provision of the non-audit services
described below is compatible with maintaining the principal accountant's
independence.
For the Year Ended For the Year Ended
December 31, 2003 December 31, 2002
------------------ ------------------
Audit fees (1) $31,350 $29,000
Audit related fees (2) ( -
Tax fees (3) - -
All other fees (4) - -
_______ _______
Total aggregate fees billed $31,350 $29,000
======= =======
(1) Includes the aggregate fees recognized in each of the last
two years for professional services rendered by Grant Thornton,
LLP for the audit of the Partnership's annual financial statements
and the review of financial statements included in Form 10-Q.
The fees are for services that are normally provided by Grant
Thornton, LLP in connection with statutory or regulatory filings
or engagements.
(2) Includes the aggregate fees recognized in each of the last
two years for professional services rendered by Grant Thornton,
LLP for tax compliance, tax advice, and tax planning.
(3) Includes the aggregate fees recognized in each of the last two
years for products and services provided by Grant Thornton, LLP,
other than those services described above. Services in this category
include due diligence related to an acquisition.
12
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements (1) and (2) The response to this portion of
Item 15 is submitted as a separate section of this report commencing on
page F-1.
(a) Exhibits (3) 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
31.1 Rule 13a-14(a)/15d-14(a)
Certification 15
31.2 Rule 13a-14(a)/15d-14(a)
Certification 17
32.1 Section 1350 Certification 19
32.2 Section 1350 Certification 20
b) Reports on Form 8-K: Not applicable
* Incorporated by reference.
13
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 DeMent
By: ___________________________
Crit DeMent, Chairman of the Board and
Principal Executive Officer
Dated March 30, 2004
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 DeMent
____________________________ Chairman of the Board of Directors 3-30-04
Crit DeMent of LEAF Financial Corporation
(Principal Executive Officer)
/s/ Miles Herman
____________________________ President, and Director of 3-30-04
Miles Herman LEAF Financial Corporation
(Principal Operating Officer)
/s/ Jonathan Z. Cohen
____________________________ Director of LEAF Financial Corporation 3-30-04
Jonathan Z. Cohen
/s/ Freddie M. Kotek
____________________________ Director of LEAF Financial Corporation 3-30-04
Freddie M. Kotek
/s/ Robert K. Moskovitz
____________________________ Chief Financial Officer and Treasurer of 3-30-04
Robert K. Moskovitz LEAF Financial Corporation
(Principal Financial Officer)
14
Exhibit 31.1
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 report does not contain any untrue
statement of a 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our super-
vision, to ensure that material information relating to the Regis-
trant, is made known to us by others within those entities, partic-
ularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
controls over financial reporting that occurred during the Regis-
trant's most recent fiscal quarter (the registrant's fourth quarter
in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
controls over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal controls over financial re-
porting, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; 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 over financial reporting.
15
CERTIFICATIONS (continued)
Date: March 30, 2004
/s/ Crit DeMent
____________________________
Crit S. DeMent
Chairman of the Board of Directors of LEAF Financial Corporation,
The General Partner
(Principal Executive Officer)
16
Exhibit 31.2
CERTIFICATIONS
I, Robert K. Moskovitz, 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 report does not contain any untrue
statement of a 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our super-
vision, to ensure that material information relating to the Regis-
trant, is made known to us by others within those entities, partic-
ularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
controls over financial reporting that occurred during the Regis-
trant's most recent fiscal quarter (the registrant's fourth quarter
in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
controls over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal controls over financial re-
porting, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; 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 over financial reporting.
17
CERTIFICATIONS (continued)
Date: March 30, 2004
/s/ Robert K. Moskovitz
____________________________
Robert K. Moskovitz
Chief Financial Officer and Treasurer of LEAF Financial Corporation,
The General Partner
(Principal Financial Officer)
18
Exhibit 32.1
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, 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
March 30, 2004
19
Exhibit 32.2
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, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Robert K. Moskovitz, 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/ Robert K. Moskovitz
________________________
Robert K. Moskovitz
Principal Financial Officer of LEAF Financial Corporation
March 30, 2004
20
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Certified Public Accountants F-2
Statement of Net Assets in Liquidation as of
December 31, 2003 F-3
Balance Sheet as of December 31, 2002 F-4
Statement of Changes of Net Assets in Liquidation for
the year ended December 31, 2003 F-5
Statements of Operations for the years ended
December 31, 2002 and 2001 F-6
Statements of Partners' Capital for the years ended
December 31, 2002 and 2001 F-7
Statements of Cash Flows for the years ended
December 31, 2003, 2002 and 2001 F-8
Notes to Financial Statements F-9 - F-16
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 balance sheet of the Fidelity Leasing Income
Fund IV, L.P. (the Fund) as of December 31, 2002, and the related statements
of operations, partners' capital, and cash flows for each of the two years
ended December 31, 2002. In addition, we have audited the statement of net
assets in liquidation as of December 31, 2003, and the related statement of
changes in net assets in liquidation for the period from January 1, 2003 to
December 31, 2003. 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 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 financial
statements are free of material misstatements. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe our
audits provide a reasonable basis for our opinion.
As described in Note No. 3 to the financial statements, the General
Partner approved a plan of liquidation. As a result, the Fund has changed
its basis of accounting for periods subsequent to December 31, 2002 to a
liquidation basis.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Fidelity
Leasing Income Fund IV, L.P. as of December 31, 2002, and the results of
its operations and its cash flows for the two years then ended, its net assets
in liquidation as of December 31, 2003, and the changes in its net assets in
liquidation for the period from January 1, 2003 to December 31, 2003, in
conformity with accounting principles generally accepted in the United States
of America applied on the bases described in the preceding paragraph.
Grant Thornton LLP
Philadelphia, Pennsylvania
February 10, 2004
F-2
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENT OF NET ASSETS IN LIQUIDATION
ASSETS
December 31, 2003
Cash and cash equivalents $ -
Accounts receivable -
Due from related parties -
Net investment in direct financing leases -
Equipment under operating leases
(net of accumulated depreciation of $1,311,044) -
Equipment held for sale or lease -
__________
Total assets $ -
==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ -
Accounts payable and accrued expenses -
Due to related parties -
__________
Total liabilities -
Partners' capital -
__________
Total liabilities and partners' capital $ -
==========
The accompanying notes are an integral part of these financial statements.
F-3
FIDELITY LEASING INCOME FUND IV, L.P.
BALANCE SHEET
ASSETS
December 31, 2002
Cash and cash equivalents $ 737,755
Accounts receivable 31,965
Due from related parties 12,725
Net investment in direct financing leases 116,643
Equipment under operating leases
(net of accumulated depreciation $1,309,452) 75,979
Equipment held for sale or lease 31,623
__________
Total assets $1,006,690
==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 27,432
Accounts payable and accrued expenses 207,598
Due to related parties 11,768
__________
Total liabilities 246,798
Partners' capital 759,892
__________
Total liabilities and partners' capital $1,006,690
==========
The accompanying notes are an integral part of these financial statements.
F-4
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENT OF CHANGES OF NET ASSETS IN LIQUIDATION
For the year ended December 31, 2003
Income:
Rentals $257,711
Earned income on direct financing leases 2,249
Interest 14,812
Gain on sale of equipment, net 39,334
Other 3,540
________
317,646
________
Expenses:
Depreciation 40,803
General and administrative 224,549
General and administrative to related party 37,328
Management fee to related party 18,543
________
321,223
________
Net loss ($ 3,577)
========
Net loss per equivalent limited partnership unit ($ 0.54)
========
Weighted average number of equivalent
limited partnership units outstanding during the year 6,582
========
Net assets in liquidation at January 1, 2003 $759,892
Cash distributions - Limited Partners (729,843)
Cash distributions - General Partner (26,472)
Net loss (3,577)
________
Net assets in liquidation at December 31, 2003 $ -
========
The accompanying notes are an integral part of these financial statements.
F-5
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF OPERATIONS
For the years ended December 31,
2002 2001
Income:
Rentals $433,601 $567,321
Earned income on direct
financing leases 24,553 61,537
Interest 16,997 30,459
Gain on sale of equipment, net 30,360 1,000
Other 3,730 6,570
________ ________
509,241 666,887
________ ________
Expenses:
Depreciation 226,588 324,222
General and administrative 233,249 38,515
General and administrative to
related party 43,449 39,586
Management fee to related party 47,295 61,160
________ ________
550,581 463,483
________ ________
Net (loss) income ($ 41,340) $203,404
======== ========
Net (loss) income per equivalent
limited partnership unit ($ 5.26) $ 17.27
======== ========
Weighted average number of
equivalent limited partnership
units outstanding during the year 7,782 9,547
======== ========
The accompanying notes are an integral part of these financial statements.
F-6
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the years ended December 31, 2002 and 2001
General Limited Partners
Partner Units Amount Total
_______ __________________ _____
Balance, January 1, 2001 $ 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-7
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF CASH FLOWS
For the years ended December 31,
2003 2002 2001
Cash flows from operating activities:
Net (loss) income ($ 3,577) ($ 41,340) $ 203,404
________ __________ __________
Adjustments to reconcile net
(loss) income to net cash provided
by operating activities:
Depreciation 40,803 226,588 324,222
Gain on sale of equipment, net (39,334) (30,360) (1,000)
(Increase) decrease in
accounts receivable 31,965 48,499 (49,546)
(Increase) decrease in due
from related parties 12,725 (6,040) 24,021
Increase (decrease) in lease
rents paid in advance (27,432) (78) 1,318
Increase (decrease) in accounts
payable and accrued expenses (207,598) 150,038 41,258
Increase (decrease) in due to
related parties (11,768) (256) (951)
________ __________ __________
(200,639) 388,391 339,322
________ __________ __________
Net cash (used in) provided by
operating activities (204,216) 347,051 542,726
________ __________ __________
Cash flows from investing activities:
Acquisition of equipment - - (62,536)
Investment in direct financing leases - - (200,890)
Proceeds from direct financing
leases, net of earned income 116,643 427,787 489,523
Proceeds from sale of equipment 106,133 30,360 1,000
________ __________ __________
Net cash provided by
investing activities 222,776 458,147 227,097
________ __________ __________
Cash flows from financing activities:
Distributions (756,315) (1,100,000) (400,000)
________ __________ __________
Net cash used in financing
activities (756,315) (1,100,000) (400,000)
________ __________ __________
Increase (decrease) in cash
and cash equivalents (737,755) (297,802) 369,823
Cash and cash equivalents,
beginning of year 737,755 1,032,557 662,734
________ __________ __________
Cash and cash equivalents,
end of year $ - $ 737,755 $1,032,557
======== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-8
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 was
managed by the General Partner. The Fund's limited partnership interests were
not publicly traded. There was no market for the Fund's limited partnership
interests. During 2003, the General Partner completed the dissolution
process of the Fund. The remaining lease portfolio was sold during the year
and all cash was distributed to the partners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Financial Statement Presentation
The accounting and reporting policies of the Fund conform to accounting
principles generally accepted in the United States of America (US GAAP). 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. Significant estimates include the allowance for doubtful
accounts, un-guaranteed residual values and impairment of residual values.
Actual results could differ from those estimates.
The Fund carries its investments in the future estimated unguaranteed
residual values of assets at cost, which is equal to or less than market
value, subject to the Fund's policy relating to impairments of residuals.
Gains or losses are recognized upon the sale or disposition of the investments.
The Fund reviews, on a periodic basis, the carrying value of its residuals
on an individual asset basis to determine whether events or changes in circum-
stances indicate that the carrying value of an asset may not be recoverable
and, therefore, an impairment loss should be recognized. The events or changes
in circumstances which generally indicate that the residual value of an asset
has been impaired are (i) the estimated fair value of the underlying equipment
is less than the Fund's carrying value or (ii) the lessee is experiencing
financial difficulties and it does not appear likely that the estimated
proceeds from disposition of the asset will be sufficient to satisfy the
remaining obligation to the non-recourse lender and the Fund's residual
position. Generally in the latter situation, the residual position relates
to equipment subject to third party non-recourse notes payable where the
lessee remits their rental payments directly to the lender and the Fund does
not recover its residual until the non-recourse note obligation is repaid in
full. The Fund measures its impairment loss as the amount by which the
carrying amount of the residual value exceeds the estimated proceeds to be
received by the Fund from re-lease or sale of the equipment. Generally, third
party appraisals, reviews of future cash flows and anticipated future cash
flows and detailed market analyses are used as the basis for measuring whether
an impairment loss should be recognized.
F-9
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of Financial Statement Presentation (Continued)
The 2003 financial statements have been prepared on a liquidation basis of
accounting, whereby the remaining assets and liabilities have been revalued to
the amount expected to be paid or collected during liquidation.
The Fund records an allowance for doubtful accounts to provide for
estimated credit losses in its portfolio. The allowance for doubtful accounts
is based on the ongoing analysis of delinquency trends, loss experience and
an assessment of overall credit risk. The Fund's write-off policy is based
on an analysis of the aging of the Fund's portfolio, a review of the non-
performing receivables and leases, and prior collection experience. An
account is fully reserved or written off when the analysis indicates that
the probability of collection of the account is remote.
Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures
About Segments of an Enterprise and Related Information," establishes standards
for the way public business enterprises report information about operating
segments in annual financial statements. The Fund has one operating and,
accordingly, one reportable segment, "Leasing Activities."
Accounting for Leases
The Fund's leasing operations consisted of both operating and direct
financing leases. Under the operating method of accounting for leases, the
cost of the leased equipment was 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 were allocated to equipment when
purchased and depreciated as part of equipment cost. Rental income consisted
of monthly periodic rentals due under the terms of the leases. Upon sale or
other disposition of assets, the cost and related accumulated depreciation were
removed from the accounts and the resulting gain or loss, if any, was 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) was
recognized over the life of the lease using the interest method.
Equipment Held for Sale or Lease
Equipment held for sale or lease was carried at its estimated net realiz-
able value.
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
F-10
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets
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 reviewed its assets to determine if it has any long-lived assets
that were carried on the books for an amount that may not be recoverable. If it
was determined that an asset's estimated future cash flows was not be suf-
ficient to recover its carrying amount, an impairment charge was recorded.
There was no impairment of any long-lived assets at December 31, 2003 and 2002.
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.
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.
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.
Concentration of Credit Risk
Financial instruments that potentially subject the Fund to concentra-
tions of credit risk consisted principally of temporary cash investments. The
Fund placed its temporary investments in money market savings accounts.
Concentrations of credit risk with respect to accounts receivables were
due to the limited dispersion of the Fund's lessees over different industries
and geographies.
Comprehensive Income
Comprehensive income includes net income and all other changes in the
equity of a business during a period from non-owner sources. These changes,
other than net income, are referred to as "other comprehensive income." The
Fund had no other elements of comprehensive income, other than net income to
report.
F-11
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements
The Fund adopted Financial Accounting Standards Board ("FASB") Interpreta-
tion 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
including Indirect Guarantees of Indebtedness of Others" ("FIN 45") 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 FASB Interpretation 46 (FIN 46), "Con-
solidation of Variable Interest Entities." FIN 46 clarifies the application
of Accounting Research Bulletin 51, "Consolidated Financial Statements," to
certain entities in which voting rights are not effective in identifying the
investor with the controlling financial interest. An entity is subject to
consolidation under FIN 46 if the investors either do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support, are unable to direct the entity's activities,
or are not exposed to the entity's losses or entitled to its residual returns
("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.
Subsequent to the issuance of FIN 46, the FASB issued a revised inter-
pretation, FIN 46(R), the provisions of which must be applied to certain
variable interest entities by March 31, 2004. The Fund does not anticipate
that FIN 46 will have a material impact on its financial position or results
of operations.
The FASB issued SFAS No. 150, "Accounting for Certain Financial Instru-
ments with Characteristics of Both Liabilities and Equity," on May 15, 2003.
SFAS 150 changes the classification in the statement of financial position of
certain common financial instruments from either equity or mezzanine presenta-
tion to liabilities and requires an issuer of those financial statements to
recognize changes in fair value or redemption amount, as applicable, in
earnings. SFAS 150 is effective for public companies for financial instru-
ments entered into or modified after May 31, 2003 and is effective at the
beginning of the first interim period beginning after June 15, 2003. The
adoption of SFAS 150 did not have a material impact on the Fund's financial
position or results of operations.
F-12
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
3. LIQUIDATION
During 2003, the General Partner liquidated the remaining equipment under
operating leases and investments in direct financing leases owned by the Fund
and distributed all remaining cash to the Limited Partners and the General
Partner.
4. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS
Cash distributions (except for the period from January 1, 1992 through
June 30, 1996), if any, were made annually 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 were allocated 99% to the Limited Partners and 1% to the
General Partner. The General Partner was 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 were 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.
5. RELATED PARTY TRANSACTIONS
The General Partner received 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 was also to 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
was deferred until the Limited Partners received cash distributions equal
to the purchase price of their units plus a 10% cumulative compounded priority
return. Based on actual operations, the Fund was not required to pay the
General Partner a sales fee.
F-13
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 were 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:
2003 2002 2001
Management fee $18,543 $47,295 $61,160
Reimbursable costs 37,328 43,449 39,586
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 maintained a normal banking relation-
ship with TBI.
Amounts due from related parties at December 31, 2003 and 2002 represented
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, 2003 and 2002 represented
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, 2003, three customers accounted for 85%,
14% and 1% of the Fund's rental income. 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.
7. CASH DISTRIBUTIONS
Below is a summary of the quarterly cash distributions paid to partners
during the years ended December 31:
Month of Distribution 2003 2002 2001
February $100,000 $ 800,000 $100,000
May - 100,000 100,000
June 100,000 - -
August 100,000 100,000 100,000
November 100,000 100,000 100,000
December 356,313 - -
________ __________ ________
$756,313 $1,100,000 $400,000
======== ========== ========
F-14
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
8. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
The following table summarizes the results of operations on a quarterly
basis during 2003 and 2002:
2003
----------------------------------------
Fourth Third Second First
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Income:
Rentals $36,820 $44,439 $86,985 $ 89,467
Earned income on direct financing
leases - 53 572 1,624
Interest 2,659 3,307 4,154 4,692
Gain on sale of equipment, net 12,325 - 9 27,000
Other 980 1,440 310 810
_______ _______ _______ ________
Total income 52,784 49,239 92,030 123,593
_______ _______ _______ ________
Expenses:
Depreciation - 8,096 12,143 20,564
General and administrative 69,872 43,882 52,170 58,625
General and administrative to
related party 11,878 4,617 11,941 8,892
Management fee to related party 709 2,901 6,489 8,444
_______ _______ _______ ________
Total expenses 82,459 59,496 82,743 96,525
_______ _______ _______ ________
Net (loss) income ($29,675) ($10,257) $ 9,287 $ 27,068
======= ======= ======= ========
Net (loss) income per equivalent
limited partnership unit $ (4.81) $ (2.08) $ 0.89 $ 3.34
======= ======= ======= ========
F-15
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
8. SUMMARY OF QUARTERLY RESULTS (UNAUDITED) (Continued)
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 (loss) income ($156,619) $ 22,274 $ 49,764 $ 43,241
======== ======== ======== ========
Net (loss) income per equivalent
limited partnership unit ($ 18.43) $ 2.45 $ 5.95 $ 4.77
======== ======== ======== ========
F-16
21