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 September 30, 2002
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____ to _____
Commission file number: 0-16845
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 regis-
trant was required to file such reports), and (2) has been subject to such fil-
ing 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)
September 30, December 31,
2002 2001
_____________ ____________
Cash and cash equivalents $ 702,290 $1,032,557
Accounts receivable 16,155 80,464
Due from related parties 2,481 6,685
Net investment in direct
financing leases 201,127 544,430
Equipment under operating leases
(net of accumulated depreciation
of $1,269,646 and $1,823,534,
respectively) 115,785 302,567
Equipment held for sale or lease 31,623 31,623
__________ __________
Total assets $1,069,461 $1,998,326
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 27,432 $ 27,510
Accounts payable and
accrued expenses 18,681 57,560
Due to related parties 6,837 12,024
__________ __________
Total liabilities 52,950 97,094
Partners' capital 1,016,511 1,901,232
__________ __________
Total liabilities and
partners' capital $1,069,461 $1,998,326
========== ==========
The accompanying notes are an integral part of these financial statements.
2
FIDELITY LEASING INCOME FUND IV, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2002 2001 2002 2001
____ ____ ____ ____
Income:
Rentals $ 94,429 $142,556 $339,172 $427,668
Earned income on direct
financing leases 5,054 14,319 21,461 48,138
Interest 4,395 8,529 12,450 21,446
Gain on sale of equipment, net - - 30,360 -
Other 1,672 3,689 2,937 5,009
________ ________ ________ ________
105,550 169,093 406,380 502,261
________ ________ ________ ________
Expenses:
Depreciation 51,114 82,447 186,782 247,342
General and administrative 10,982 11,255 34,554 30,809
General and administrative
to related party 11,345 10,540 31,799 28,290
Management fee to related
party 9,835 16,145 37,966 45,027
________ ________ ________ ________
83,276 120,387 291,101 351,468
________ ________ ________ ________
Net income $ 22,274 $ 48,706 $115,279 $150,793
======== ======== ======== ========
Net income per equivalent
limited partnership unit $ 2.45 $ 4.77 $ 13.22 $ 14.66
======== ======== ======== ========
Weighted average number of
equivalent limited partner-
ship units outstanding
during the period 7,666 9,477 7,925 9,572
======== ======== ======== ========
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 nine months ended September 30, 2002
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 2002 $28,999 41,334 $1,872,233 $1,901,232
Cash distributions (35,000) - (965,000) (1,000,000)
Net income 10,500 - 104,779 115,279
_______ ______ __________ __________
Balance, September 30, 2002 $ 4,499 41,334 $1,012,012 $1,016,511
======= ====== ========== ==========
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 nine months ended September 30, 2002 and 2001
(Unaudited)
2002 2001
____ ____
Cash flows from operating activities:
Net income $ 115,279 $ 150,793
__________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 186,782 247,342
Gain on sale of equipment, net (30,360) -
(Increase) decrease in accounts receivable 64,309 (25,056)
(Increase) decrease in due from related
parties 4,204 23,434
Increase (decrease) in lease rents paid
in advance (78) 495
Increase (decrease) in accounts payable and
accrued expenses (38,879) (4,660)
Increase (decrease) in due to related parties (5,187) 71,764
__________ __________
180,791 313,319
__________ __________
Net cash provided by operating activities 296,070 464,112
__________ __________
Cash flows from investing activities:
Acquisition of equipment - (15,175)
Investment in direct financing leases - (200,890)
Proceeds from direct financing leases,
net of earned income 343,303 350,002
Proceeds from sale of equipment 30,360 -
__________ __________
Net cash provided by investing activities 373,663 133,937
__________ __________
Cash flows from financing activities:
Distributions (1,000,000) (300,000)
__________ __________
Net cash used in financing activities (1,000,000) (300,000)
__________ __________
Increase (decrease) in cash and
cash equivalents (330,267) 298,049
Cash and cash equivalents, beginning
of period 1,032,557 662,734
__________ __________
Cash and cash equivalents, end of period $ 702,290 $ 960,783
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
September 30, 2002
(Unaudited)
The accompanying unaudited condensed financial statements have been prepared
by the Fund in accordance with accounting principles generally accepted in
the United States of America, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of Management, all ad-
justments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included.
1. EQUIPMENT LEASED
The Fund has equipment leased under the direct financing method in
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 unguaranteed residuals recoverable upon
expiration of the lease over the related equipment cost) over the life of
the lease using the interest method. The Fund's direct financing leases
are for initial lease terms ranging from 24 to 60 months.
The approximate net investment in direct financing leases as of
September 30, 2002 is as follows (unaudited):
Minimum lease payments to be received $206,000
Unearned rental income (5,000)
________
$201,000
========
The Fund also has equipment under operating leases. The Fund's operat-
ing leases are for initial lease terms of 17 to 60 months. Generally,
operating leases will not recover all of the undepreciated cost and
related expenses of its rental equipment during the initial lease terms
and the Fund is prepared to remarket the equipment. Fund policy is to
review quarterly the expected economic life of its rental equipment in
order to determine the recoverability of its undepreciated cost. Recent
and 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.
6
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. EQUIPMENT LEASED (Continued)
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of September 30, 2002 are as
follows (unaudited):
Direct
Years Ending December 31 Operating Financing
________________________ _________ _________
2002 $ 94,000 $ 86,000
2003 134,000 120,000
________ ________
$228,000 $206,000
======== ========
2. RELATED PARTY TRANSACTIONS
The General Partner receives 6% or 3% of rental payments from 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.
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 and nine months
ended September 30, 2002 and 2001 (unaudited):
Three Months Ended Nine Months Ended
September 30 September 30
2002 2001 2002 2001
____ ____ ____ ____
Management fee $ 9,835 $16,145 $37,966 $45,027
Reimbursable costs 11,345 10,540 31,799 28,290
During the first quarter of 2001, the Fund transferred its checking and
investment accounts from Hudson United Bank to The Bancorp.com, Inc.
(TBI). The son and the spouse of the Chairman of Resource America, Inc.
are the Chairman and Chief Executive Officer, respectively, of TBI. The
Fund maintains a normal banking relationship with TBI.
Amounts due from related parties at September 30, 2002 and December 31,
2001 represent monies due the Fund from the General Partner and/or other
affiliated funds for rentals and sales proceeds collected and not yet
remitted to the Fund.
7
FIDELITY LEASING INCOME FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
Amounts due to related parties at September 30, 2002 and December 31,
2001 represent monies due to the General Partner for the fees and costs
mentioned above, as well as, rentals and sales proceeds collected by the
Fund on behalf of other affiliated funds.
3. CASH DISTRIBUTION
The General Partner declared and paid a cash distribution of $100,000 in
November 2002 for the three months ended September 30, 2002, to all
admitted partners as of September 30, 2002.
8
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 $105,550 and
$169,093 for the three months ended September 30, 2002 and 2001, respec-
tively, and $406,380 and $502,261 for the nine months ended September 30,
2002 and 2001, respectively. Rental income from the leasing of equipment
and earned income on direct financing leases accounted for 94% and 93% of
total revenues for the third quarter of 2002 and 2001, respectively and 89%
and 95% of total revenues for the first nine months of 2002 and 2001, re-
spectively. The decrease in revenues during the first nine months of 2002
was primarily attributable to the decrease in rental income on equipment under
operating leases. In 2002, rental income decreased by approximately $88,000
because equipment that came off lease and renewed at lower rental rates or
terminated and was sold since September 2001. Additionally, the decrease in
earned income on direct financing leases also contributed to the overall de-
crease in revenues during the nine months ended September 30, 2002. The earned
income on direct financing leases decreased in 2002 because of the normal
monthly amortization of unearned income using the interest method. Addi-
tionally, the early termination of certain direct financing leases in the
last two quarters of 2001 and the first nine months of 2002 contributed to
the decrease in earned income on direct financing leases during 2002. Further-
more, the decrease in interest income also accounted for the overall decrease
in revenues during the nine months ended September 30, 2002. Interest income
decreased in 2002 because of lower cash balances available for investment by
the Fund. The increase in net gain on sale of equipment for the nine months
ended September 30, 2002 served to mitigate the overall decrease in revenues.
The Fund recognized $30,360 of net gain on sale of equipment during the first
nine months of 2002. There was no gain on sale of equipment recognized for
the nine months ended September 30, 2001.
Expenses were $83,276 and $120,387 during the three months ended
September 30, 2002 and 2001, respectively and $291,101 and $351,468 during
the nine months ended September 30, 2002 and 2001, respectively. Depreciation
expense comprised 61% and 68% of total expenses for the third quarter of
2002 and 2001, respectively and 64% and 70% of total expenses for the first
nine months of 2002 and 2001, respectively. The decrease in expenses in
2002 was primarily caused by the decrease in depreciation expense resulting
from equipment that came off lease or terminated and was sold since the third
quarter of 2001. Additionally, management fee to related party also decreased
during the first nine months of 2002 as a direct result of the decrease in
rental income on equipment under operating leases and rentals earned on direct
financing leases during this period. The decrease in this account also con-
tributed to the decrease in total expenses in 2002.
For the three months ended September 30, 2002 and 2001, the Fund had net
income of $22,274 and $48,706, respectively. For the nine months ended
September 30, 2002 and 2001, the Fund had net income of $115,279 and $150,793,
respectively. The earnings per equivalent limited partnership unit, after
9
FIDELITY LEASING INCOME FUND IV, L.P
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS (Continued)
earnings allocated to the General Partner were $2.45 and $4.77 based on a
weighted average number of equivalent limited partnership units outstanding
of 7,666 and 9,477 for the quarter ended September 30, 2002 and 2001, re-
spectively. The earnings per equivalent limited partnership unit, after
earnings allocated to the General Partner were $13.22 and $14.66 based
on a weighted average number of equivalent limited partnership units out-
standing of 7,925 and 9,572 for the nine months ended September 30, 2002
and 2001, respectively.
The Fund generated cash from operations of $73,388 and $131,153, for
the purpose of determining cash available for distribution, during the third
quarter of 2002 and 2001, respectively and distributed $100,000 to partners
in both November 2002 and 2001. For the nine months ended September 30, 2002
and 2001, the Fund generated cash from operations of $271,701 and $398,135 and
distributed $200,000 to partners during both the nine months ended September
30, 2002 and 2001 and $100,000 to partners in both November 2002 and 2001.
The Fund also paid a cash distribution of $800,000 during the first nine
months of 2002 for the quarter ended December 31, 2001. For financial
statement purposes, the Fund records cash distributions to partners on a
cash basis in the period in which they are paid.
ANALYSIS OF FINANCIAL CONDITION
The Fund is currently in the process of dissolution. As provided in
the Restated Limited Partnership Agreement, the assets of the Fund shall
be liquidated as promptly as is consistent with obtaining their fair value.
During this time, the Fund will continue to look for opportunities to pur-
chase equipment with cash available from operations that was not distributed
to partners in previous periods. There was no equipment purchased or invest-
ment in direct financing leases during the nine months ended September 30,
2002. During the first nine months of 2001, the Fund purchased $15,175, of
equipment subject to operating leases and invested $200,890 in direct fi-
nancing leases.
The cash position of the Fund is reviewed daily and cash is invested on
a short-term basis.
The Fund's cash from operations is expected to continue to be adequate
to cover all operating expenses and contingencies during the next twelve
month period.
10
FIDELITY LEASING INCOME FUND IV, L.P
Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to the Fund's exposure to market
risk since its Annual Report on Form 10-K for the year ended December 31,
2001.
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 defi-
ciencies and material weaknesses.
11
Part II: Other Information
FIDELITY LEASING INCOME FUND IV, L.P.
September 30, 2002
Item 1. Legal Proceedings: Inapplicable.
Item 2. Changes in Securities: Inapplicable.
Item 3. Defaults Upon Senior Securities: Inapplicable.
Item 4. Submission of Matters to a Vote of Securities Holders: Inapplicable.
Item 5. Other Information: Inapplicable.
Item 6. Exhibits and Reports on Form 8-K:
a) Exhibits: None
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.
11-14-02 By: /s/ Crit S. DeMent
____________________________
Crit S. DeMent
Chairman of the Board of Directors
of LEAF Financial Corporation
(Principal Executive Officer)
11-14-02 By: /s/ Miles Herman
____________________________
Miles Herman
President and Director of
LEAF Financial Corporation
11-14-02 By: /s/ Freddie M. Kotek
____________________________
Freddie M. Kotek
Director of LEAF Financial Corporation
11-14-02 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 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 audit committee of regis-
trant'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: November 14, 2002
/s/ Crit DeMent
____________________________
Crit S. DeMent
Chairman of the Board of Directors of LEAF Financial Corporation
(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 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 audit committee of regis-
trant'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: November 14, 2002
/s/ Marianne T. Schuster
____________________________
Marianne T. Schuster
Vice President of Accounting of LEAF Financial Corporation
(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 September 30, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Crit S. DeMent, Principal Executive Officer of LEAF Financial Corporation,
the General Partner of the Fund, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13 (a)
or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of opera-
tions of the Fund.
/s/ Crit S. DeMent
________________________
Crit S. DeMent
Principal Executive Officer of LEAF Financial Corporation
November 14, 2002
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 September 30, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Marianne T. Schuster, Principal Financial Officer of LEAF Financial Corpora-
tion, 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
November 14, 2002
19