10-K 1 flif4.txt FLIF 4 10-K 2001 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, 2001 / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _______________ to ______________ Commission file number 0-16845 Fidelity Leasing Income Fund IV, L.P. ________________________________________________________________________ (Exact name of registrant as specified in its charter) Delaware 23-2441780 ________________________________________________________________________ (State of Organization) (I.R.S. Employer Identification No.) 1845 Walnut Street, Suite 1000, Philadelphia, Pennsylvania 19103 ________________________________________________________________________ (Address of principal executive offices) (Zip Code) (215) 574-1636 ________________________________________________________________________ (Registrant's telephone number, including area code) Securities registered pursuant to Section 12 (b) of the Act: Name of Each Exchange Title of Each Class on Which Registered None Not applicable Securities registered pursuant to Section 12 (g) of the Act: Limited Partnership Interests Title of Class Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No____ The number of outstanding limited partnership units of the Registrant at December 31, 2001 is 41,334. There is no public market for these securities. The index of Exhibits is located on page 12. 1 PART I Item 1. BUSINESS Fidelity Leasing Income Fund IV, L.P. (the "Fund"), a Delaware limited partnership, was organized in 1986 and acquires computer equipment, including printers, tape and disk storage devices, data communications equipment, com- puter terminals, technical workstations, networking equipment, as well as other electronic equipment that is leased to third parties on a short-term basis. The Fund's principal objective is to generate leasing revenues for distri- bution. The Fund manages the equipment, releasing or disposing of equipment as it comes off lease in order to achieve its principal objective. The Fund does not borrow funds to purchase equipment. The Fund generally acquires equipment subject to a lease. Purchases of equipment for lease are typically made through equipment leasing brokers, under a sale-leaseback arrangement directly from lessees owning equipment or from the manufacturer either pursuant to a purchase agreement relating to significant quantities of equipment or on an ad hoc basis to meet the needs of a particular lessee. The equipment leasing industry is highly competitive. The Fund competes with leasing companies, equipment manufacturers and distributors, and entities similar to the Fund (including similar programs sponsored by the General Partner), some of which have greater financial resources than the Fund. Other leasing companies and equipment manufacturers and distributors may be in a position to offer equipment to prospective lessees on financial terms which are more favorable than those which the Fund can offer. They may also be in a position to offer trade-in-privileges, maintenance contracts and other services that the Fund may not be able to offer. Equipment manufacturers and distributors may offer to sell equipment on terms and conditions (such as liberal financing terms and exchange privileges) that will afford benefits to the purchaser similar to those obtained through leases. As a result of the advantages which certain of its competitors may have, the Fund may find it necessary to lease its equipment on a less favorable basis than certain of its competitors. A brief description of the types of equipment in which the Fund has invested as of December 31, 2001, together with information concerning the users of such equipment is contained in Item 2, following. The Fund does not have any employees. All persons who work on the Fund are employees of the General Partner. 2 Item 2. PROPERTIES The following schedules detail the type, aggregate purchase price and percentage of the various types of equipment leased by the Fund under the operating and direct financing lease methods as of December 31, 2001: Operating Leases: Purchase Price Percentage of Type of Equipment of Equipment Total Equipment Tape Storage Systems $1,013,844 47.69% Technical Workstations and Terminals 673,826 31.69 PCB Assembly Equipment 271,215 12.76 Electron Microscopes 139,211 6.54 Other 28,005 1.32 __________ ______ Totals $2,126,101 100.00% ========== ====== Direct Financing Leases: Purchase Price Percentage of Type of Equipment of Equipment Total Equipment PCB Assembly Equipment $ 561,649 43.02% Tape Storage Systems 501,335 38.40 Technical Workstations and Terminals 236,449 18.11 Other 6,034 0.47 __________ ______ Totals $1,305,467 100.00% ========== ====== The following schedules detail the type of business, aggregate purchase price and percentage of equipment usage by industrial classification for equipment leased by the Fund under the operating and direct financing methods as of December 31, 2001: Operating Leases: Purchase Price Percentage of Type of Business of Equipment Total Equipment Diversified Financial/Banking/Insurance $ 975,005 45.86% Computer/Data Processing 740,671 34.84 Manufacturing/Refining 410,425 19.30 __________ ______ Totals $2,126,101 100.00% ========== ====== 3 Item 2. PROPERTIES (Continued) Direct Financing Leases: Purchase Price Percentage of Type of Business of Equipment Total Equipment Manufacturing/Refining $ 565,964 43.35% Computer/Data Processing 361,624 27.70 Diversified Financial/Banking/Insurance 326,381 25.01 Education 34,736 2.66 Retailing/Consumer Goods 16,762 1.28 __________ ______ Totals $1,305,467 100.00% ========== ====== Average Initial Term of Leases (in months): 35 Item 3. LEGAL PROCEEDINGS Not applicable. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. 4 PART II Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) The Fund's limited partnership units are not publicly traded. There is no market for the Fund's limited partnership units and it is unlikely that any will develop. (b) Number of Equity Security Holders: Number of Partners Title of Class as of December 31, 2001 Limited Partnership Interests 1,562 General Partnership Interest 1 Item 6. SELECTED FINANCIAL DATA

December 31 2001 2000 1999 1998 1997 Total Assets $1,998,326 $2,153,297 $2,352,582 $2,324,899 $2,460,916 Equipment under Operating Leases and Equipment Held for Sale or Lease (Net) 334,190 595,877 609,476 591,749 993,149 Net Investment in Direct Financing Leases 544,430 833,062 618,763 1,046,488 - Limited Partnership Units 41,334 41,334 41,334 41,379 41,379 Limited Partners 1,562 1,562 1,562 1,557 1,551

5 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The Fund had revenues of $666,887, $626,847 and $882,124 for the years ended December 31, 2001, 2000 and 1999, respectively. The increase in total revenues between 2001 and 2000 and the decrease in total revenues between 2000 and 1999 was partially caused by the fluctuation in rental income generated from equipment under operating leases. Rental income from the leasing of equipment accounted for 85%, 84% and 72% of total income in 2001, 2000 and 1999, respectively. In 2001, rental income increased by approximately $38,000 because of upgrades made to equipment under operating leases during 2001. In 2000, rental income decreased by approximately $109,000 because of equipment that came off lease and was released at lower rental rates or sold. Additionally, the change in earned income on direct financing leases contributed to the increase in total revenues in 2001 and the decrease in total revenues in 2000. This account increased in 2001 because of investments in direct financing leases made in 2001 and late 2000. The decrease in this account in 2000 resulted from a lease that was sold in 1999. Furthermore, the Fund recorded a net gain on sale of equipment of $1,000 for the twelve months ended December 31, 2001 compared to $300 for the twelve months ended Decem- ber 31, 2000 and $119,616 for the twelve months ended December 31, 1999. The fluctuation in this account also contributed to the overall increase in reve- nues in 2001 and contributed to the decrease in total revenues in 2000. Expenses were $463,483, $410,618 and $490,574 for the years ended December 31, 2001, 2000 and 1999, respectively. Depreciation expense comprised 70%, 71% and 67% of total expenses in 2001, 2000 and 1999, respectively. The fluctuation in depreciation expense partially accounted for the overall in- crease in expenses in 2001 and the decrease in expenses in 2000. The increase in depreciation expense in 2001 was caused by the increase in depreciation resulting from equipment that was purchased during 2001 as well as equipment that was purchased during 2000 for which a full year of depreciation was re- corded in 2001 and only a portion of the twelve months was recorded in 2000. The decrease in depreciation expense in 2000 was caused by equipment that terminated and was sold in 2000. The change in management fee to related party also contributed to the increase in expenses in 2001 and the decrease in ex- penses in 2000. Management fee to related party fluctuated directly with the fluctuation in rentals earned on both operating and direct financing leases during 2001 and 2000. The decrease in general and administrative expense to related party served to mitigate the increase in overall expenses in 2001 and contributed to the decrease in total expenses in 2000. The decrease in this account resulted from a decrease in expenses charged by the General Partner or its parent company for services and materials provided to the Fund during 2001 and 2000. Additionally, the decrease in write-down of equipment to net realizable value contributed to the decrease in total expenses in 2000. Currently, the Fund's practice is to review the recoverability of its undepreciated costs of rental equipment quarterly. The Fund's policy, as part of this review, is to analyze such factors as releasing of equipment, technological developments and information provided in third party publica- tions. In 2001 and 2000, there was no write-down of equipment to net realiz- able value. In 1999, approximately $17,000 was charged to write-down of equipment to net realizable value. The decrease in this account for the twelve months ended December 31, 2000 contributed to the overall decrease in 6 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Results of Operations (Continued) expenses in 2000. 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, if any, upon actual sales of its equipment. Any future losses are dependent upon unanticipated technological developments affecting the types of equipment in the portfolio in subsequent years. The Fund's net income was $203,404, $216,229 and $391,550 for the years ended December 31, 2001, 2000 and 1999, respectively. The earnings per equiv- alent limited partnership unit, after earnings allocated to the General Partner, were $17.27, $20.41 and $37.08 for the years ended December 31, 2001, 2000 and 1999, respectively. The weighted average number of equivalent limited partnership units outstanding were 9,547, 9,911 and 10,183 for 2001, 2000 and 1999, respectively. The Fund generated cash from operations of $526,626, $506,499 and $616,169 for the purpose of determining cash available for distribution for the years ended December 31, 2001, 2000 and 1999, respectively. The Fund distributed $300,000 of those amounts during each of the periods from April 1 through December 31, 2001, 2000 and 1999, respectively. During the first quarter of 2002, 2001 and 2000, the Fund distributed $800,000, $100,000 and $100,000 of those amounts, respectively. For financial statement purposes, the Fund records cash distributions to partners on a cash basis in the period in which they are paid. Analysis of Financial Condition The Fund is currently in the process of dissolution. As provided in the Restated Limited Partnership Agreement, the assets of the Fund shall be liqui- dated as promptly as is consistent with obtaining their fair value. During this time, the Fund will continue to look for opportunities to purchase equip- ment for lease or invest in direct financing leases for terms consistent with the plan of dissolution. During the years ended December 31, 2001, 2000 and 1999, the Fund purchased equipment of $62,536, $276,971 and $380,365, respec- tively. The Fund also invested $200,890 and $425,941 in direct financing leases during the twelve months ended December 31, 2001 and 2000, respectively. The cash position of the Fund is reviewed daily and cash is invested on a short-term basis. The Fund's cash from operations is expected to continue to be adequate to cover all operating expenses and contingencies during the next fiscal year. 7 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. 8 PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT In December 2001, the General Partner's Certificate of Incorporation was amended to change the name of the General Partner of the Fund from F.L. Partnership Management, Inc. to LEAF Financial Corporation (LEAF). LEAF Financial Corporation is a wholly owned subsidiary of Resource Leasing, Inc. which is a wholly owned subsidiary of Resource America, Inc. (Resource America). The Directors and Executive Officers of LEAF are: CRIT S. DEMENT, age 49, Chairman, President and Chief Executive Officer of LEAF since November 2001. President of Fidelity Leasing, Inc. and its successor, the Technology Finance Group of CitiCapital Vendor Finance from 1996 to 2001. Vice President of Marketing for Tokai Financial Services from 1987 through 1996. EDWARD E. COHEN, age 62, 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 and a Director 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 31, Director of LEAF since November 2001. Execu- tive Vice President of Resource America since 2001, Senior Vice President of Resource America from 1999 to 2001. 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 investment trust) since 1997. Mr. Cohen is the son of Edward E. Cohen. MILES HERMAN, age 42, Vice President and a Director of LEAF since November 2001. Held various senior operational offices with Fidelity Leasing, Inc. and its successor from 1998 to 2001. Held several management positions in sales, marketing and operations at Tokai Financial Services from 1983 to 1998. FREDDIE M. KOTEK, age 46, Director of LEAF since 1996. Senior Vice President of Resource America since 1995. President of Resource Leasing, Inc. since 1995. MARIANNE T. SCHUSTER, age 43, Vice President and Treasurer of LEAF since 1984. 9 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, 2001: Name of Individual or Capacities in Number in Group Which Served Compensation LEAF Financial Corporation General Partner $61,160(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 2,154.07 (1) Odd Lot Liquidity Fund, LLC 2,154.07 (2) Sierra Fund 4, LLC 2,154.07 (3) (1) Amount represents beneficial ownership interest through ownership of Odd Lot Liquidity Fund, LLC and Sierra Fund 4, LLC which own 1,886.37 units and 267.70 units, respectively, of the outstanding limited partnership units of the Fund. (2) Amount represents direct ownership by Odd Lot Liquidity Fund, LLC of 1,886.37 units and beneficial ownership of 267.70 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 267.70 units and beneficial ownership of 1,886.37 units by virtue of group membership and affiliate status with Odd Lot Liquidity Fund, LLC. (b) In 1986, the General Partner contributed $1,000 to the capital of the Fund but it does not own any of the Fund's outstanding securities. No individual director or officer of LEAF Financial Corporation nor such directors or officers as a group, owns more than one percent of the Fund's outstanding securities. The General Partner owns a general partnership interest which entitles it to receive 3.5% of cash distri- butions until the Limited Partners have received an amount equal to the 10 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (Continued) purchase price of their units plus a 10% compounded Priority Return; thereafter 10%. The General Partner will also share in net income equal to the greater of its cash distributions or 1% of net income or to the extent there are losses, 1% of such losses. (c) There are no arrangements known to the Fund that would, at any sub- sequent date, result in a change in control of the Fund. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During the year ended December 31, 2001, the Fund was charged $61,160 of management fees by the General Partner. The General Partner will continue to receive 6% or 3% of rental payments on equipment under operating leases or full pay-out leases, respectively for administrative and management services performed on behalf of the Fund. Full pay-out leases are noncancellable leases with terms in excess of 42 months and for which rental payments during the initial term are at least sufficient to recover the purchase price of the equipment, including acquisition fees. The General Partner also receives 3.5% of cash distributions until the Limited Partners have received an amount equal to the purchase price of their units plus a 10% compounded Priority Return. Thereafter, the General Partner will receive 10% of cash distributions. During the year ended December 31, 2001, the General Partner received $14,000 of cash distributions. The Fund incurred $39,586 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 2001. 11 PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) and (2) The response to this portion of Item 14 is submitted as a separate section of this report commencing on page F-1. (a) (3) and (c) Exhibits (numbered in accordance with Item 601 of Regulation S-K) Exhibit Numbers Description Page Number 3(a) & (4) Amended and Restated Agreement * of Limited Partnership (9) not applicable (10) not applicable (11) not applicable (12) not applicable (13) not applicable (18) not applicable (19) not applicable (22) not applicable (23) not applicable (24) not applicable (25) not applicable (28) not applicable * Incorporated by reference. 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FIDELITY LEASING INCOME FUND IV, L.P. A Delaware limited partnership By: LEAF FINANCIAL CORPORATION /s/ Crit S. DeMent By: ___________________________ Crit S. DeMent, Chairman and President Dated March 28, 2002 Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons, on behalf of the Registrant and in the capacities and on the date indicated: Signature Title Date /s/ Crit S. DeMent ____________________________ Chairman of the Board of Directors 3-28-02 Crit S. DeMent and President of LEAF Financial Corporation (Principal Executive Officer) /s/ Miles Herman ____________________________ Vice President and Director of 3-28-02 Miles Herman LEAF Financial Corporation /s/ Freddie M. Kotek ____________________________ Director of LEAF Financial Corporation 3-28-02 Freddie M. Kotek /s/ Marianne T. Schuster ____________________________ Vice President and Treasurer of 3-28-02 Marianne T. Schuster LEAF Financial Corporation (Principal Financial Officer) 13 INDEX TO FINANCIAL STATEMENTS AND SCHEDULES Pages Report of Independent Certified Public Accountants F-2 Balance Sheets as of December 31, 2001 and 2000 F-3 Statements of Operations for the years ended December 31, 2001, 2000 and 1999 F-4 Statements of Partners' Capital for the years ended December 31, 2001, 2000 and 1999 F-5 Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999 F-6 Notes to Financial Statements F-7 - F-13 All schedules have been omitted because the required information is not applicable or is included in the Financial Statements or Notes thereto. F-1 Report of Independent Certified Public Accountants The Partners Fidelity Leasing Income Fund IV, L.P. We have audited the accompanying balance sheets of Fidelity Leasing Income Fund IV, L.P. as of December 31, 2001 and 2000, and the related state- ments of operations, partners' capital and cash flows for each of the three years in the period ending December 31, 2001. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the finan- cial statements are free of material misstatement. An audit includes examin- ing, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting princi- ples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Fidelity Leasing Income Fund IV, L.P. as of December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America. Grant Thornton LLP Philadelphia, Pennsylvania February 14, 2002 F-2 FIDELITY LEASING INCOME FUND IV, L.P. BALANCE SHEETS ASSETS

LIABILITIES AND PARTNERS' CAPITAL

The accompanying notes are an integral part of these financial statements. F-3 FIDELITY LEASING INCOME FUND IV, L.P. STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these financial statements. F-4 FIDELITY LEASING INCOME FUND IV, L.P. STATEMENT OF PARTNERS' CAPITAL

The accompanying notes are an integral part of this financial statement. F-5 FIDELITY LEASING INCOME FUND IV, L.P. STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these financial statements. F-6 FIDELITY LEASING INCOME FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND NATURE OF BUSINESS Fidelity Leasing Income Fund IV, L.P. (the "Fund") was formed in December 1986. In December 2001, the General Partner's Certificate of Incorporation was amended to change the name of the General Partner of the Fund from F.L. Partnership Management, Inc. to LEAF Financial Corporation (LEAF). LEAF Financial Corporation is a wholly owned subsidiary of Resource Leasing, Inc., which is a wholly owned subsidiary of Resource America, Inc. (Resource Amer- ica). The Fund is managed by the General Partner. The Fund's limited partner- ship interests are not publicly traded. There is no market for the Fund's limited partnership interests and it is unlikely that any will develop. The Fund acquires computer equipment including printers, tape storage devices, data communications equipment, computer terminals, technical workstations and net- working equipment, as well as other electronic equipment, that is leased to third parties throughout the United States on a short-term basis. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Concentration of Credit Risk Financial instruments that potentially subject the Fund to concentra- tions of credit risk consist principally of temporary cash investments. The Fund places its temporary investments in money market savings accounts. Concentrations of credit risk with respect to accounts receivables are limited due to the dispersion of the Fund's lessees over different industries and geographies. Impairment of Long-Lived Assets The Fund reviews its assets to determine if it has any long-lived assets that are carried on the books for an amount that may not be recoverable. If it is determined that an asset's estimated future cash flows will not be suf- ficient to recover its carrying amount, an impairment charge will be recorded. Equipment Held for Sale or Lease Equipment held for sale or lease is carried at its estimated net realiz- able value. Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. F-7 FIDELITY LEASING INCOME FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS (Continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Accounting for Leases The Fund's leasing operations consist of both operating and direct financing leases. Under the operating method of accounting for leases, the cost of the leased equipment is recorded as an asset and depreciated on a straight-line basis over its estimated useful life, up to six years. Acqui- sition fees associated with lease placements are allocated to equipment when purchased and depreciated as part of equipment cost. Rental income consists of monthly periodic rentals due under the terms of the leases. Generally, during the remaining terms of existing operating leases, the Fund will not recover all of the undepreciated cost and related expenses of its rental equipment and is prepared to remarket the equipment in future years. Upon sale or other disposition of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is reflected in income. Under the direct financing method of accounting for leases, income (the excess of the aggregate future rentals and estimated additional amounts recoverable upon expiration of the lease over the related equipment cost) is recognized over the life of the lease using the interest method. Income Taxes Federal and State income tax regulations provide that taxes on the income or benefits from losses of the Fund are reportable by the partners in their individual income tax returns. Accordingly, no provision for such taxes has been made in the accompanying financial statements. Statements of Cash Flows For purposes of the statements of cash flows, the Fund considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. 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. Reclassifications Certain amounts on the 2000 and 1999 financial statements have been re- classified to conform to the presentation in 2001. F-8 FIDELITY LEASING INCOME FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS (Continued) 3. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS Cash distributions (except for the period from January 1, 1992 through June 30, 1996), if any, are made quarterly as follows: 96.5% to the Limited Partners and 3.5% to the General Partner, until the Limited Partners have received an amount equal to the purchase price of their units, plus a 10% compounded priority return (an amount equal to 10% compounded annually on the portion of the purchase price not previously distributed); thereafter, 90% to the Limited Partners and 10% to the General Partner. Net Losses are allocated 99% to the Limited Partners and 1% to the General Partner. The General Partner is allocated Net Income equal to its cash distributions, but not less than 1% of Net Income, with the balance allocated to the Limited Partners. Net Income (Losses) allocated to the Limited Partners are allocated to individual limited partners based on the ratio of the daily weighted average partner's net capital account balance (after deducting related commission expense) to the total daily weighted average of the Limited Partners' net capital account balances. 4. EQUIPMENT LEASED Equipment on lease consists of equipment under operating leases. The lessees have agreements with the manufacturer to provide maintenance for the leased equipment. The Fund's operating leases are for initial lease terms of 17 to 60 months. 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 recog- nizes gains upon actual sale of its rental equipment. As a result, there was no write-down of equipment to net realizable value in 2001 and 2000. In 1999, approximately $17,000 was charged to write-down of equipment to net realizable value. Any future losses are dependent upon unanticipated technological developments affecting the equipment in subsequent years. The Fund's direct financing leases are for initial lease terms ranging from 19 to 60 months. The approximate net investment in direct financing leases as of December 31, 2001 is as follows: Net minimum lease payments to be received $575,000 Unearned rental income (31,000) Unguaranteed residuals - ________ $544,000 ======== F-9 FIDELITY LEASING INCOME FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS (Continued) 4. EQUIPMENT LEASED (Continued) The future approximate minimum rentals to be received on noncancellable operating and direct financing leases as of December 31 are as follows: Direct Operating Financing 2002 $420,000 $427,000 2003 134,000 148,000 ________ ________ $554,000 $575,000 ======== ======== 5. RELATED PARTY TRANSACTIONS The General Partner receives 6% or 3% of rental payments on equipment under operating leases and full pay-out leases, respectively, for adminis- trative and management services performed on behalf of the Fund. Full pay-out leases are noncancellable leases with terms in excess of 42 months and for which rental payments during the initial term are at least sufficient to recover the purchase price of the equipment, including acquisition fees. The General Partner may also receive up to 3% of the proceeds from the sale of the Fund's equipment for services and activities to be performed in connection with the disposition of equipment. The payment of this sales fee is deferred until the Limited Partners have received cash distributions equal to the purchase price of their units plus a 10% cumulative compounded priority return. Based on current estimates, it is not expected that the Fund will be required to pay the General Partner a sales fee. Additionally, the General Partner and its parent company are reimbursed by the Fund for certain costs of services and materials used by or for the Fund except those items covered by the above-mentioned fees. Following is a summary of fees and costs charged by the General Partner and its parent company during the years ended December 31: 2001 2000 1999 Management fee $61,160 $42,185 $51,862 Reimbursable costs 39,586 43,459 58,688 During 2001, the Fund transferred its checking and investment accounts from Hudson United Bank to The Bancorp.com, Inc. (TBI). The son and the spouse of the Chairman of Resource America, Inc. are the Chairman and Chief Executive Officer, respectively, of TBI. The Fund maintains a normal banking relation- ship with TBI. Amounts due from related parties at December 31, 2001 and 2000 represent monies due to the Fund from the General Partner and/or other affiliated funds for rentals and sales proceeds collected and not yet remitted to the Fund. F-10 FIDELITY LEASING INCOME FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS (Continued) 5. RELATED PARTY TRANSACTIONS (Continued) Amounts due to related parties at December 31, 2001 and 2000 represent monies due to the General Partner for the fees and costs mentioned above, as well as, rentals and sales proceeds collected by the Fund on behalf of other affiliated funds. 6. MAJOR CUSTOMERS For the year ended December 31, 2001, three customers accounted for 54%, 30% and 10% of the Fund's rental income. For the year ended December 31, 2000, three customers accounted for 50%, 32% and 10% of the Fund's rental income. For the year ended December 31, 1999, three customers accounted for 42%, 27% and 14% 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 2001 2000 1999

In addition, the General Partner declared and paid a cash distribution of $800,000 in February 2002 for the three months ended December 31, 2001, to all admitted partners as of December 31, 2001. F-11 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 2001 and 2000: 2001 ---------------------------------------- Fourth Third Second First Quarter Quarter Quarter Quarter ------- ------- ------- ------- Income: Rentals $139,653 $142,556 $142,556 $142,556 Earned income on direct financing leases 13,399 14,319 17,706 16,113 Interest 9,013 8,529 6,222 6,695 Gain on sale of equipment, net 1,000 - - - Other 1,561 3,689 971 349 ________ ________ ________ ________ Total income 164,626 169,093 167,455 165,713 ________ ________ ________ ________ Expenses: Depreciation 76,880 82,447 82,448 82,447 General and administrative 7,706 11,255 11,465 8,089 General and administrative to related party 11,296 10,540 3,050 14,700 Management fee to related party 16,133 16,145 14,132 14,750 ________ ________ ________ ________ Total expenses 112,015 120,387 111,095 119,986 ________ ________ ________ ________ Net income $ 52,611 $ 48,706 $ 56,360 $ 45,727 ======== ======== ======== ======== Net income per equivalent limited partnership unit $ 2.61 $ 4.77 $ 5.52 $ 4.37 ======== ======== ======== ========

F-12 FIDELITY LEASING INCOME FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS (Continued) 8. SUMMARY OF QUARTERLY RESULTS (UNAUDITED) (Continued) 2000 ---------------------------------------- Fourth Third Second First Quarter Quarter Quarter Quarter ------- ------- ------- ------- Income: Rentals $143,939 $143,744 $131,092 $110,611 Earned income on direct financing leases 15,052 9,162 9,897 10,166 Interest 5,951 11,875 5,922 17,069 Gain on sale of equipment, net 300 - - - Other 2,275 2,300 5,940 1,552 ________ ________ ________ ________ Total income 167,517 167,081 152,851 139,398 ________ ________ ________ ________ Expenses: Depreciation 80,051 80,052 71,872 58,595 General and administrative 9,899 10,881 1,701 11,923 General and administrative to related party 13,379 11,028 9,864 9,188 Management fee to related party 14,344 10,216 9,457 8,168 ________ ________ ________ ________ Total expenses 117,673 112,177 92,894 87,874 ________ ________ ________ ________ Net income $ 49,844 $ 54,904 $ 59,957 $ 51,524 ======== ======== ======== ======== Net income per equivalent limited partnership unit $ 4.75 $ 5.21 $ 5.67 $ 4.78 ======== ======== ======== ========

F-13 21

FIDELITY LEASING INCOME FUND IV L P 10-K