As Filed with the Securities and Exchange Commission on October 23 , 1996
Registration No. 33-80849
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------
CAPITAL PREFERRED YIELD FUND-IV, L.P.
(Exact Name of registrant as specified in its governing instruments)
Delaware 7394 84-1331690
(State of Organization) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification Number)
7175 West Jefferson Avenue, Suite 4000
Lakewood, Colorado 80235
(303) 980-1000
(Address and telephone number of registrant's principal executive offices)
------------------
John F. Olmstead, President
CAI Equipment Leasing V Corp.
7175 West Jefferson Avenue, Suite 4000
Lakewood, Colorado 80235
(303) 980-1000
(Name, address and telephone number of agent for service)
-------------------
Copies to:
Lyle B. Stewart, Esq.
Ballard Spahr Andrews & Ingersoll
1225 Seventeenth Street, Suite 2300
Denver, Colorado 80202
(303) 292-2400
----------------
Approximate date of commencement of proposed sale to the public:
as soon as practicable after this
Registration Statement becomes effective.
-------------------
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box: | X |
<PAGE>
PROSPECTUS STICKER
FOR
CAPITAL PREFERRED YIELD FUND-IV, L.P.
PROSPECTUS DATED APRIL 15, 1996
The Partnership has prepared Supplement No. 1 to its Prospectus dated
April 15, 1996. Supplement No. 1 has been prepared in order to update certain
information in the Prospectus in compliance with certain provisions of federal
securities law.
Supplement No. 1 contains information with respect to:
o The status of the offering
o Partnership distributions to date
o Recent Partnership financial results
o Equipment purchases
o Updated information about the prior performance of affiliated
Partnerships
See the second page of the Prospectus for the Table of Contents which
explains the organization of the Prospectus.
<PAGE>
SUPPLEMENT NO. 1
TO
PROSPECTUS DATED APRIL 15, 1996
CAPITAL PREFERRED YIELD FUND-IV, L.P.
$1,200,000
12,000 Units Minimum Offering
$100 per Unit
Minimum Investment: 25 Units ($2,500); 10 Units ($1,000)
for Individual Retirement Accounts and Qualified Plans
The following information supplements the information in the
prospectus of Capital Preferred Yield Fund-IV, L.P. (the "Partnership"), dated
April 15, 1996 (the "Prospectus"). This Supplement is a part of, and should be
read in conjunction with, the Prospectus. The Partnership was recently formed as
a Delaware limited partnership to engage in the business of owning and leasing
equipment. See "SUMMARY OF THE OFFERING" in the Prospectus which accompanies, or
preceded the delivery of, this Supplement. Unless otherwise indicated, all of
the capitalized terms used in this Supplement have the same meanings given to
them in the Prospectus.
This Supplement contains updated financial information as required by
the federal securities laws. This Supplement also provides information with
respect to (i) the status of the offering of the Units, (ii) the Equipment the
Partnership has purchased and equipment the Partnership anticipates purchasing,
(iii) Partnership distributions, (iv) the performance of prior affiliated
investment programs, and (v) Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Partnership's first quarter of
operations.
------------------------------------
AN INVESTMENT IN THE PARTNERSHIP INVOLVES CERTAIN
MATERIAL RISK FACTORS. SEE "RISK FACTORS" IN THE PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------------
The date of this Supplement is __________ __, 1996.
<PAGE>
THE PARTNERSHIP
The principal offices of the Partnership and the General Partner are
at 7175 West Jefferson Avenue, Suite 4000, Lakewood, Colorado 80235, telephone
number (303) 980-1000.
STATUS OF THE OFFERING
As of September 30, 1996, 534 investors had acquired 77,430 Units, for
a total Capital Contribution of $7,743,000, and were admitted to the Partnership
as Class A Limited Partners. Of the 500,000 Units ($50,000,000) registered with
the Securities and Exchange Commission, 422,570 of the Units remain to be sold
in this offering, which would represent Class A Limited Partners' Capital
Contributions of $42,257,000.
See "PLAN OF DISTRIBUTION" in the Prospectus.
STANGER RANKING
In May of 1996, the Partnership was ranked by Robert A. Stanger & Co.,
Inc. among public equipment leasing partnerships then being offered. The
Partnership was given the "Highest" ranking of six possible rankings along with
three other public equipment leasing partnerships. At that time, ten public
equipment leasing partnerships were ranked on the scale of six possible rankings
from "Highest" to "Lowest." Among the four public equipment leasing partnerships
that were awarded the "Highest" ranking, the Partnership obtained the highest
numerical quotient (78.1) from the Stanger organization.
Stanger's Investor Share Ranking - The ISR reflects front-end expenses
and cost and revenue sharing arrangements between investors and the general
partner. The ISR does not measure overall program quality or predict annual
economic results of the investment; neither does it measure the creditworthiness
of the issuer or sponsor. Rather, the ISR is one of several factors which should
be considered when evaluating a partnership investment. To calculate the ISR,
computer models compare the investor's potential after-tax time-valued return in
the program to returns if the partnership's assets were bought outright with no
syndication costs or less. The ISR is expressed in terms of Highest (most
favorable to the investor), High, Above Average, Average, Below Average or
Lowest (least favorable to the investor). The ISR is prepared by Robert A.
Stanger & Co., a registered investment advisor, and is based on prospectus data
and supplementary information provided by the issuer. The ISR is subject to
revision or withdrawal as a result of changes in, or unavailability of, such
information, Robert A. Stanger & Co., does not conduct an independent
investigation of the accuracy or completeness of the information provided by the
issuer. The ISR does not constitute a recommendation to purchase or sell a
security. If the actual portfolio, when purchased, differs from the investment
models employed, the ISR for the partnership could change. Similarly, if the
front-end cost of sharing ratios between the general partner and the limited
partners were altered, the ISR also might change.
2
<PAGE>
PURCHASE OF EQUIPMENT
As of September 30, 1996, the Partnership had purchased from Capital
Associates International, Inc. ("CAII") the Equipment described in Exhibit A to
this Supplement. The aggregate purchase price paid by the Partnership to acquire
the Equipment described in Exhibit A was $4,755,734, including Acquisition Fees
and Acquisition Expenses paid by the Partnership. The Partnership paid
Acquisition Fees and Acquisition Expenses of $159,225, as of September 30, 1996,
all of which was paid to the General Partner and its Affiliates. The Partnership
only finances its ownership of Equipment on a non-recourse basis. Under any
Equipment lease which is financed, net rentals are sufficient, at a minimum, to
repay the related non-recourse debt. No Equipment or lease cross- collateralizes
the financing of any other Equipment or lease. See "INVESTMENT OBJECTIVES AND
POLICIES--The Equipment" in the Prospectus.
Except as set forth in Exhibit B hereto, the Equipment to be purchased
by the Partnership and the Lessees to which such Equipment will be leased have
not been determined as of the date hereof. The General Partner will have
complete discretion in investing the Net Offering Proceeds from the sale of
Units and Partnership indebtedness within the limits set forth in "INVESTMENT
OBJECTIVES AND POLICIES" in the Prospectus.
CLASS B LIMITED PARTNER CONTRIBUTION
As of September 30, 1996, CAII, an affiliate of the General Partner
and the Class B Limited Partner, had contributed $70,000 to the Partnership. The
Class B Limited Partner is obligated to contribute cash to the Partnership (on
or immediately after each date on which the Partnership acquires Equipment) in
an amount equal to $10,000 for each $1,000,000 of Class A Limited Partner
Capital Contributions received by the Partnership as of that date. See "SUMMARY
OF THE OFFERING - Class B Limited Partner" in the Prospectus.
PARTNERSHIP DISTRIBUTIONS
Class A Limited Partners are receiving monthly cash distributions in
an amount equal to 10.5% per annum, on a cumulative, non-compounded basis. A
significant portion of these distributions constitutes a return of capital. As
of September 30, 1996, the Partnership had paid or accrued total distributions
to Class A Limited Partners of $142,025. See "INVESTMENT OBJECTIVES AND
POLICIES" in the Prospectus.
Distributions to the General Partner and the Class B Limited Partner
are made on a monthly basis. As of September 30, 1996, the Partnership had paid
or accrued total distributions of $1,438 to the General Partner and $1,400 to
the Class B Limited Partner. See "COMPENSATION AND FEES" in the Prospectus.
3
<PAGE>
Distributions may be characterized for tax, accounting and economic
purposes as a return of capital, a return on capital or both. The portion of
each cash distribution by a partnership which exceeds its net income for the
fiscal period may be deemed a return of capital. However, the total return on
capital over a leasing partnership's life can only be determined at the
termination of the Partnership after all residual cash flows (which include
proceeds from the re-leasing and sale of equipment after initial lease terms
expire) have been realized. For the period from April 16, 1996 (commencement of
operations) through June 30, 1996, approximately 2% of declared distributions to
the Partners of the Partnership constituted a return of capital for accounting
purposes. This percentage related solely to the period from April 16, 1996
(commencement of operations) through June 30, 1996, the initial months of the
Partnership's operations, and will not be reflective of the percentage of
distribution that constitutes a return of capital as determined at any
subsequent point in time.
PERFORMANCE OF PRIOR INVESTMENT PROGRAMS
See Exhibit D hereto for information updating the Prior Performance
Tables appearing at Exhibit B to the Prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the financial statements of the Partnership for
the period from April 16, 1996 (commencement of operations), to June 30, 1996,
attached hereto in Exhibit C.
Results of Operations
- ---------------------
The Partnership commenced operations on April 16, 1996 and reported a
net income of $25,178 or $1.07 per weighted average Class A limited partner
unit, for the period from April 16, 1996 to June 30, 1996.
The ultimate profitability of the Partnership's leasing transactions
is dependent in part on the general level of interest rates because leasing is
an alternative to financing equipment purchases with debt. Lease rates therefore
tend to rise and fall with interest rates although lease rate movements
generally lag behind interest rate movements. The amount of future distributions
to the partners will depend, in part, on future interest rates.
A comparison of current operating results to the corresponding period
of the prior year cannot be made since the partnership did not commence
operations until April 16, 1996.
4
<PAGE>
Liquidity & Capital Resources
- -----------------------------
The Partnership was formed on December 18, 1995. On April 16, 1996,
the Partnership commenced operations and began offering 500,000 Class A limited
partner units at $100 per unit. On June 3, 1996, the Partnership held its
initial closing, receiving gross offering proceeds of $1,200,000 from the sale
of 12,000 Class A limited partner units. The Partnership incurred $168,000 in
commissions and other expenses in connection with the sale of these units. As of
June 30, 1996, Class A limited partners had purchased a total of 25,324 Class A
limited partner units representing $2,532,424 of gross offering proceeds. The
Partnership incurred $354,557 in commissions and other expenses in connection
with the sale of these units, $4,116 of which was payable to the general partner
and its affiliates at June 30, 1996. The Partnership intends to continue
offering Class A limited partner units for sale and admitting additional Class A
limited partners through April 15, 1998.
Available cash and cash reserves of the Partnership are invested in
short-term government securities, pending the acquisition of equipment and
distribution to the partners.
During the period from April 16, 1996 through June 30, 1996, the
Partnership purchased equipment under lease having a total equipment purchase
price of $1,057,576. CAII, the Class B limited partner and an affiliate of the
general partner, made a Class B limited partner contribution of $20,000 to the
Partnership in connection with this purchase as required by the Partnership
Agreement. As of June 30, 1996, the general partner had identified approximately
$2.4 million of equipment expected to be placed under lease that satisfied the
Partnership's investment criteria, $1.3 million of which was purchased by the
Partnership from CAII during July 1996. The Partnership expects to acquire the
remainder of the identified equipment from CAII with available cash from
operations and the net proceeds from the sale of additional Class A limited
partner units.
During the period ended June 30, 1996, the Partnership declared
distributions to the partners of $16,721 (a substantial portion of which
constituted a return of capital), $11,582 of which will be paid during the third
quarter 1996.
The general partner believes that the Partnership will generate
sufficient cash flows from operations during 1996, to (1) meet current operating
requirements, (2) enable it to fund cash distributions to both the Class A and
Class B limited partners at annualized rates of 10.5% (substantial portions of
which are expected to constitute returns of capital) of their capital
contributions, and (3) reinvest in additional equipment under leases, provided
that suitable equipment can be identified and acquired.
CAPITAL ASSOCIATES, INC. FINANCIAL RESULTS
The audited consolidated balance sheet of Capital Associates, Inc.
("CAI"), as of May 31, 1996, and the footnotes thereto, and the unaudited
consolidated balance sheet of CAI, as of August 31, 1996, and the footnotes
thereto, are attached in Exhibit C hereto. Although consolidated balance sheets
of CAI are set forth in the Prospectus under "FINANCIAL STATEMENTS," and herein
at Exhibit C, prospective investors should be aware that CAI is not a general
partner of the Partnership, and has no obligation to fund any obligations of the
Partnership or of the General Partner, other than as set forth in Note 3 to the
balance sheet of the General Partner.
5
<PAGE>
FINANCIAL RESULTS OF PARTNERSHIP AND GENERAL PARTNER
The unaudited financial statements and the footnotes to the financial
statements of the Partnership for the period from April 16, 1996 (commencement
of operations), to June 30, 1996 are attached hereto in Exhibit C. The audited
balance sheet and the footnotes thereto for the General Partner as of May 31,
1996, and the unaudited balance sheet and the footnotes thereto for the General
Partner as of August 31, 1996, are attached hereto in Exhibit C.
CORRECTIONS TO PROSPECTUS
On the inside cover page (six lines from the bottom of the first
paragraph), page 1 (two lines from the bottom of the second paragraph), page 41
(six lines from the bottom of the first paragraph under the bold legend) and
page 45 (three lines from the bottom of the second paragraph) the word "eight"
should be corrected to the word "nine." The liquidation of the Partnership is
expected to occur between seven and nine years after the Closing Date.
EXPERTS
The balance sheets of CAI Equipment Leasing V Corp. and Capital
Associates, Inc., as of May 31, 1996, have been included herein and in the
Registration Statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing. The balance
sheet of Capital Preferred Yield Fund-IV, L.P., as of December 31, 1995, has
been included in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, appearing in the
Registration Statement, and upon the authority of said firm as experts in
accounting and auditing.
6
<PAGE>
EXHIBIT A
EQUIPMENT PURCHASED
The following table shows the Equipment purchased by the Partnership
as of September 30, 1996. The information presented for each item is stated as
of the date the Equipment was purchased by the Partnership. Equipment Cost,
means the price paid upon the purchase or sale of a particular item of
Equipment, including the amount of Acquisition Fees, carrying costs on the
Equipment until transferred to the Partnership, less any rents received prior to
transferring the lease to the Partnership, and all liens and mortgages on the
equipment, but excluding points and prepaid interest. Remaining lease terms and
remaining rents are as of the purchase date. Depreciation is calculated using
the straight-line method over the lease term to an amount equal to the estimated
residual value at the lease termination date.
<TABLE>
<CAPTION>
Remaining Equipment Remaining
Lease Cost Rents Due Non-
Purchase Equip- Term to the to the Part- Annual recourse
Lessee Date ment (Months) Partnership nership(1) Rents Debt
- ------ ---- ---- --------- ----------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
General Motors 04/16/96 Forklift 54 $ 4,706 $ 3,950 $ 878 $0
Corporation
General Motors 04/16/96 Forklift 54 83,432 71,125 15,806 0
Corporation
General Motors 04/16/96 Forklift 54 176,906 150,051 33,345 0
Corporation
General Motors 04/16/96 Forklift 54 29,761 25,364 5,637 0
Corporation
General Motors 04/16/96 Forklift 54 28,758 24,392 5,421 0
Corporation
General Motors 04/16/96 Forklift 54 212,115 178,032 39,563 0
Corporation
General Motors 04/16/96 Forklift 54 51,633 43,795 9,732 0
Corporation
General Motors 04/16/96 Forklift 54 149,577 126,871 28,194 0
Corporation
General Motors 04/25/96 Loader 55 83,700 72,785 15,880 0
Corporation
Staples, Inc. 07/08/96 Copiers 26 237,739 202,097 93,276 0
Staples, Inc. 07/08/96 Copiers 25 254,608 213,526 102,492 0
USS Kobe Steel 05/07/96 Forklift 33 36,558 25,318 9,207 0
International 05/10/96 Net-working 33 126,272 112,696 40,980 0
Paper Co. Equip.
Universal Forest 06/04/96 Forklift 32 35,512 25,167 9,438 0
Products
General Motors 06/07/96 Forklift 57 38,644 34,826 7,332 0
Corporation
Universal Forest 07/01/96 Forklift 33 35,512 26,012 9,459 0
Products
Universal Forest 07/01/96 Forklift 33 21,982 15,768 5,734 0
Products
Addison Wesley 07/03/96 IBM 33 513,592 446,145 162,235 0
Longman Notebooks
Louisiana 07/01/96 Computer 33 120,076 120,796 43,926 0
Workers Comp Equipment
General Motors 07/05/96 Material 33 112,710 100,280 36,465 0
Corporation Handling
General Motors 07/08/96 Material 33 117,246 104,316 37,933 0
Corporation Handling
Xerox 3/83 07/24/96 Forklift 41 14,501 11,562 3,384 0
</TABLE>
A-1
<PAGE>
Financing Financing Equip- Type
Interest Term ment of
Lessee Rate (Months) Location Lease(2)
------ --------- --------- -------- --------
General Motors N/A N/A MI OL
Corporation
General Motors N/A N/A MI OL
Corporation
General Motors N/A N/A MI OL
Corporation
General Motors N/A N/A MI OL
Corporation
General Motors N/A N/A MI OL
Corporation
General Motors N/A N/A MI OL
Corporation
General Motors N/A N/A MI OL
Corporation
General Motors N/A N/A MI OL
Corporation
General Motors N/A N/A NY OL
Corporation
Staples, Inc. N/A N/A NJ OL
Staples, Inc. N/A N/A NY OL
USS Kobe Steel N/A N/A OH OL
International N/A N/A MS OL
Paper Co.
Universal Forest N/A N/A CO OL
Products
General Motors N/A N/A KY OL
Corporation
Universal Forest N/A N/A CO OL
Products
Universal Forest N/A N/A CO OL
Products
Addison Wesley N/A N/A TX OL
Longman
Louisiana N/A N/A LA DF
Workers Comp
General Motors N/A N/A OK OL
Corporation
General Motors N/A N/A GA OL
Corporation
Xerox 3/83 N/A N/A NY OL
<PAGE>
<TABLE>
<CAPTION>
Remaining Equipment Remaining
Lease Cost Rents Due Non-
Purchase Equip- Term to the to the Part- Annual recourse
Lessee Date ment (Months) Partnership nership(1) Rents Debt
- ------ ---- ---- --------- ----------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
GM Powertrain 08/09/96 Scrubber 34 6,423 5,888 2,078 0
General Motors 08/15/96 Material 35 111,912 91,574 31,397 0
Corporation Handling
General Motors 08/20/96 Material 35 22,066 18,056 6,191 0
Corporation Handling
Medtronic 2 08/22/96 Copier 34 14,630 14,369 5,072 0
General Motors 08/22/96 Material 35 13,437 10,995 3,770 0
Corporation Handling
International 08/29/96 Forklift 58 892,796 816,290 168,888 0
Paper
USS/Kobe Steel 08/30/96 Forklifts 82 85,876 282,435 41,332 0
Home Depot 09/05/96 Forklifts 46 669,457 647,919 169,022 0
Ball Foster Glass 09/09/96 Wrapper 59 238,961 234,534 47,702 0
Ball Foster Glass 09/18/96 Lift Trucks 35 61,354 44,418 15,229 0
General Motors 09/20/96 Trailer 60 38,470 36,495 7,299 0
Corporation
Ball Foster Glass 09/26/96 Wrapping 60 102,454 102,387 20,477 0
Equipment
Alliant 09/30/96 Phone System 24 12,357 9,869 4,934 0
Techsystems ---------- ---------- -----------
Total purchased $4,755,733 $4,450,103 $1,239,708 $0
at 9/30/96 ========== ========== ========== ==
</TABLE>
(1) The weighted average term (weighted by purchase price) for the above
leases is 46 months. The total rental income to the Partnership
pursuant to these leases over the initial, non- cancelable lease term
equals 94% of the purchase price of the Equipment paid by the
Partnership. Such percentage does not include any residual value of
the Equipment upon the expiration of the lease.
(2) "DFL" indicates that the lease is a direct financing lease and "OL"
indicates that the lease is an operating lease for accounting
purposes. A DFL provides for non-cancelable rentals in an amount
sufficient to return to the Partnership all of its acquisition costs
(including Acquisition Fees). An OL does not by its terms return all
acquisition costs to the Partnership.
A-2
<PAGE>
Financing Financing Equip- Type
Interest Term ment of
Lessee Rate (Months) Location Lease(2)
------ --------- --------- -------- --------
GM Powertrain N/A N/A MI OL
General Motors N/A N/A WI OL
Corporation
General Motors N/A N/A MI OL
Corporation
Medtronic 2 N/A N/A MN DF
General Motors N/A N/A OH OL
Corporation
International N/A N/A NC OL
Paper
USS/Kobe Steel N/A N/A OH OL
Home Depot N/A N/A NJ OL
Ball Foster Glass N/A N/A NC OL
Ball Foster Glass N/A N/A IL OL
General Motors N/A N/A LA OL
Corporation
Ball Foster Glass N/A N/A PA OL
Alliant N/A N/A TX OL
<PAGE>
EXHIBIT B
ANTICIPATED EQUIPMENT PURCHASES
The equipment listed below has been identified by the General Partner
for possible purchase by the Partnership. Affiliates of the General Partner are
negotiating the terms of the leases and the terms of the related financings, if
any, but no agreement has yet been reached on any such matters. It is possible
that the current negotiations will not be successful and that the Partnership
will not purchase any of this equipment. Except for such equipment, the
Equipment to be purchased by the Partnership and the Lessees to which such
Equipment will be leased have not been identified as of the date of this
Supplement. Furthermore, the Partnership does not intend to supplement the
Prospectus or this Supplement with descriptions of Equipment or Lessees prior
to, or at the time of, the purchase of any Equipment. The Partnership is an
unspecified equipment leasing partnership and purchasers of Units must rely
solely on the judgment and ability of the executive officers of the General
Partner with respect to the selection of Lessees, the purchase of Equipment, the
financing, if any, of Equipment, the negotiations of the terms of the purchase
of its Equipment and Leases and other aspects of the Partnership's business and
affairs. See "INVESTMENT OBJECTIVES AND POLICIES - The Equipment."
<TABLE>
<CAPTION>
Anticipated
Anticipated Anticipated Equipment Anticipated Anticipated
Anticipated First Basic Anticipated Lease Term Purchase Gross Monthly Anticipated
Lessee(1) Rent Date Equipment (Months)(1) Price Rents(1)(2) Rent Financing
- ------------------------- ----------- ------------------ ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ITT #8 10/01/96 Material Handling 60 $120,720 $119,880 $1,998 All Cash
Consolidated Diesel #15 10/01/96 Material Handling 60 36,506 43,440 724 All Cash
Consolidated Diesel #14 10/01/96 Material Handling 60 6,368 7,080 118 All Cash
Georgetown Steel #2 10/01/96 Material Handling 36 72,722 63,648 1,768 All Cash
General Motors #281 11/01/96 Material Handling 36 76,860 67,176 1,866 All Cash
Thomson Industries #5 11/01/96 Machine Tools 60 139,726 132,900 2,215 All Cash
Alliant Techsystems #10 1/01/96 Production Center 48 185,820 157,968 3,291 All Cash
Xerox #25 10/15/96 Straddle Stacker 44 34,248 30,536 694 All Cash
Xerox #26 10/15/96 Computer Equipment 36 73,002 69,012 1,917 All Cash
Xerox #27 10/15/96 Computer Equipment 36 21,695 20,520 570 All Cash
Precision Castparts 11/01/96 Lift Trucks 60 354,734 377,640 6,294 All Cash
USS/KOBE #23 11/01/96 Backhoe 84 71,400 247,296 2,944 All Cash
Thomson Industries #4 11/01/96 Machine Tools 60 1,395,112 1,367,760 22,796 All Cash
Matsushita #1 11/01/96 Phone System 36 88,766 85,464 2,374 All Cash
Consolidated Diesel #16 10/01/96 Copier 42 28,890 33,516 798 All Cash
Ball Foster #22 10/01/96 Auto Pallet Strapper 60 27,483 29,520 492 All Cash
Consolidated Diesel #17 10/01/96 Copier 36 7,948 8,496 236 All Cash
Ball Foster #37 11/01/96 Forklifts 36 177,156 137,772 3,827 All Cash
Ball Foster #21 11/01/96 Stretch Wrapper 60 113,991 122,400 2,040 All Cash
Owens Corning 10/01/96 Computer Equipment 36 500,000 303,484 8,487 YES
Consolidated Diesel #18 11/01/96 Burden Carrier 60 5,679 6,300 105 All Cash
Lucent Technologies #A10 09/01/96 Wafer Fabrication 36 27,390 26,856 746 All Cash
Lucent Technologies #A5 10/01/96 Wafer Fabrication 36 46,280 40,752 1,132 All Cash
Alcoa 12/01/96 Forklifts 44 664,390 634,348 14,417 All Cash
---------- ------- ------
TOTAL: $4,276,886 $4,135,812 $81,849
========== ========== =======
</TABLE>
- ----------------------
(1) The weighted average term (weighted by anticipated purchase price) for
the above transactions is 51 months. The total rental income to the
Partnership pursuant to these leases over the initial, non-cancelable
lease term equals 97% of the anticipated purchase price of the
Equipment to be paid by the Partnership. Such percentage does not
include any residual value of the Equipment upon expiration of the
lease.
(2) Gross Rents over the initial, non-cancelable lease term.
B-1
<PAGE>
EXHIBIT C
FINANCIAL STATEMENTS
Page
----
Capital Preferred Yield Fund-IV, L.P.
Unaudited Balance Sheet as of June 30, 1996 C-2
Unaudited Statement of Operations for the Period from the
Commencement of Operations (April 16, 1996) to June 30, 1996 C-3
Unaudited Statement of Partners' Capital for the Period from the
Commencement of Operations (April 16, 1996) to June 30, 1996 C-4
Unaudited Statement of Cash Flows for the Period from the
Commencement of Operations (April 16, 1996) to June 30, 1996 C-5
Notes to Unaudited Financial Statements C-6
CAI Equipment Leasing V Corp.
Independent Auditors' Report C-11
Balance Sheet as of May 31, 1996 and notes to Balance Sheet C-12
Unaudited Balance Sheet as of August 31, 1996 and notes to
Unaudited Balance Sheet C-16
Capital Associates, Inc.
Independent Auditors' Report C-20
Consolidated Balance Sheet as of May 31, 1996 and notes to
Consolidated Balance Sheet C-21
Unaudited Consolidated Balance Sheet as of August 31, 1996 and
notes to Unaudited Consolidated Balance Sheet C-36
C-1
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
BALANCE SHEET
(Unaudited)
ASSETS
June 30, 1996
Cash and cash equivalents $1,197,754
Accounts receivable, net 38,673
Leased equipment, net 1,029,293
----------
Total assets $2,265,720
==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued liabilities $ 3,484
Payable to affiliates 44,230
Distributions payable to partners 16,847
----------
Total liabilities 64,561
----------
Partners' Capital:
General partner -
Limited Partners:
Class A 2,181,115
Class B 20,044
----------
Total partners' capital 2,201,159
----------
Total liabilities and partners' capital $2,265,720
==========
The accompanying notes are an integral part of these financial statements.
C-2
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
STATEMENT OF OPERATIONS
(Unaudited)
For the period from the
Commencement of Operations
(April 16, 1996) to
June 30, 1996
--------------------------
Revenue:
Operating lease rentals $56,739
Interest income 5,079
-------
Total revenue 61,818
-------
Expenses:
Depreciation and amortization 28,283
Direct services from general partner 6,855
Management fees paid to general partner 761
General and administrative 741
-------
Total expenses 36,640
-------
Net income $25,178
=======
Net income allocated:
To the general partner $ 3,762
To the Class A limited partners 21,197
To the Class B limited partner 219
-------
$25,178
=======
Net income per weighted average Class A
limited partner unit outstanding $ 1.07
=======
Weighted average Class A limited partner
units outstanding 19,754
=======
The accompanying notes are an integral part of these financial statements.
C-3
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the period from commencement of operations (April 16, 1996)
to June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Class A Class B
General Limited Limited
Partner Partners Partner Total
--------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Capital contributions $ - $ 2,532,424 $ 20,000 $ 2,552,424
Commissions and offering costs on
sale of Class A limited partner units (3,545) (350,912) - (354,457)
Net income 3,762 21,197 219 25,178
Distributions to partners (217) (21,594) (175) (21,986)
--------- ----------- -------- -----------
Partners' capital, June 30, 1996 $ - $ 2,181,115 $ 20,044 $ 2,201,159
========= =========== ======== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
C-4
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the period from the
Commencement of Operations
(April 16, 1996) to
June 30, 1996
--------------------------
Net cash provided by operating activities $ 58,386
-----------
Cash flows from investing activities:
Purchases of equipment on operating leases from affiliate (1,057,576)
-----------
Net cash used in investing activities (1,057,576)
-----------
Cash flows from financing activities:
Proceeds from Class A capital contributions 2,532,424
Proceeds from Class B capital contributions 20,000
Commissions paid to affiliate in connection
with the sale of Class A limited partner units (250,315)
Non-accountable organization and offering expenses
reimbursement paid to the general partner in connection
with the sale of Class A limited partner units (100,026)
Distributions to partners (5,139)
-----------
Net cash provided by financing activities 2,196,944
-----------
Net increase in cash and cash equivalents 1,197,754
Cash and cash equivalents at beginning of period -
-----------
Cash and cash equivalents at end of period $ 1,197,754
===========
The accompanying notes are an integral part of these financial statements.
C-5
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO BALANCE SHEET
(Unaudited)
1. Basis of Presentation:
---------------------
The accompanying unaudited balance sheet has been prepared in accordance
with generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and
disclosures required by generally accepted accounting principles for annual
financial statements. In the opinion of the general partner, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. For further
information, refer to the balance sheet of Capital Preferred Yield Fund-IV,
L.P. (the "Partnership"), and the related notes, included in the
Partnership's registration statement on Form S-1, as of December 31, 1995,
previously filed with the Securities and Exchange Commission.
2. Summary of Significant Accounting Policies:
------------------------------------------
PARTNERSHIP ALLOCATIONS:
Cash Distributions:
------------------
During the Reinvestment Period (as defined in the Partnership Agreement),
available cash is distributed to the partners as follows:
First, 1.0% to the general partner and 99.0% to the Class A limited
partners until the Class A limited partners receive annual,
non-compounded cumulative distributions equal to 10.5% of their
contributed capital.
Second, 1.0% to the general partner and 99.0% to the Class B limited
partner until the Class B limited partner receives annual
non-compounded cumulative distributions equal to 10.5% of its
contributed capital.
Third, any remaining available cash will be reinvested or distributed
to the partners as specified in the Partnership Agreement.
After the Reinvestment Period (as defined in the Partnership Agreement),
available cash will be distributed to the partners as follows:
First, in accordance with the first and second allocations during the
Reinvestment Period as described above.
C-6
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO BALANCE SHEET
(Unaudited)
2. Summary of Significant Accounting Policies, continued:
------------------------------------------
Second, 99.0% to the Class A limited partners and 1.0% to the general
partner, until the Class A limited partners achieve Payout (as defined
in the Partnership Agreement).
Third, 99.0% to the Class B limited partner and 1.0% to the general
partner, until the Class B limited partner achieves Payout (as defined
in the Partnership Agreement).
Fourth, 99.0% to the Class A and Class B limited partners (as a class)
and 1.0% to the general partner, until the Class A and Class B limited
partners achieve 170% recovery (i.e., receive cash distributions equal
to 170% of their capital contributions).
Thereafter, 90% to the Class A and Class B limited partners (as a class)
and 10% to the general partner.
Profits and Losses:
------------------
There are several special allocations that precede the general allocations
of profits and losses to the partners. The most significant special
allocations are as follows:
First, commissions and expenses paid in connection with the sale of
Class A limited partner units are allocated 1.0% to the general partner
and 99.0% to the Class A limited partner.
Second, depreciation relating to Partnership equipment and any losses
resulting from the sale of equipment are generally allocated 1.0% to
the general partner and 99.0% to the limited partners (shared
99.0%/1.0% by the Class A and Class B limited partners, respectively)
until the cumulative amount of such depreciation and such losses
allocated to each limited partner equals such limited partner's
contributed capital reduced by commissions and expenses allocated to
such partner. Thereafter, gain on sale of equipment, if any, will be
allocated to the general partner in an amount equal to the sum of
depreciation and loss on sale of equipment previously allocated to the
general partner.
Third, notwithstanding anything in the Partnership Agreement to the
contrary, and before any other allocation is made, items of income and
gain for the current period shall be allocated, as quickly as possible,
to the general partner to the extent of any deficit balance existing in
the general partner's capital account as of the close of the
immediately preceding period, in order to restore the balance in the
general partner's capital account to zero.
C-7
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO BALANCE SHEET
(Unaudited)
2. Summary of Significant Accounting Policies, continued:
------------------------------------------
After giving effect to special allocations, profits (as defined in the
Partnership Agreement), are first allocated in proportion to, and to the
extent of, any previous losses, in reverse chronological order and
priority. Any remaining profits are allocated in the same order and
priority as cash distributions.
After giving effect to special allocations, losses (as defined in the
Partnership Agreement), are allocated in proportion to, and to the extent
of, any previous profits in reverse chronological order and priority. Any
remaining losses are allocated 1.0% to the general partner and 99.0% to the
limited partners (shared 99.0%/1.0% by the Class A and Class B limited
partners, respectively).
INCOME TAXES
No provision for income taxes has been made in the financial statements
since taxable income or loss is recorded in the tax returns of the
individual partners.
CASH EQUIVALENTS
The Partnership considers short-term, highly liquid investments that are
readily convertible to known amounts of cash to be cash equivalents.
Cash equivalents consist of $900,000 of overnight government securities
held by a bank at June 30, 1996. Cash equivalents have original maturities
of 90 days or less.
NET INCOME PER CLASS A LIMITED PARTNER UNIT
Net income per Class A limited partner unit is computed by dividing the net
income allocated to the Class A limited partners by the weighted average
number of Class A limited partner units outstanding during the period.
C-8
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO BALANCE SHEET
(Unaudited)
3. Transactions With the General Partner and Affiliates, continued:
----------------------------------------------------
SALES COMMISSIONS AND OFFERING COSTS
Under the terms of the Partnership Agreement, CAI Securities Corporation,
an affiliate of the general partner, is entitled to receive sales
commissions and wholesaling fees equal to 10% of the Class A limited
partners' capital contributions, up to 9% of which is paid to participating
broker-dealers. During the period from the commencement of operations
(April 16, 1996) to June 30, 1996, CAI Securities Corporation earned
commissions and fees in the amount of $253,255 ($2,940 of which will be
paid in the third quarter), $216,739 of which was paid to participating
broker-dealers.
As provided in the Partnership Agreement, the general partner earned
$101,302 ($1,176 of which will be paid in the third quarter) as
reimbursement for expenses incurred during the period from April 16, 1996
to June 30, 1996 in connection with the organization of the Partnership and
the offering of Class A limited partner units for sale to the public.
DIRECT SERVICES:
The general partner and its affiliates provide accounting, investor
relations, billing, collecting, asset management, and other administrative
services to the Partnership. The Partnership reimburses the general partner
for these services performed on its behalf as permitted under the terms of
the Partnership Agreement. A total of $6,855 of expenses were incurred by
the general partner through June 30, 1996, all of which will be paid in the
third quarter.
PAYABLE TO AFFILIATES:
Payable to affiliates consists of sales commissions, wholesaling fees,
organization and offering expense reimbursements with respect to Class A
limited partner units sold and amounts relating to general and
administrative expenses during the period ended June 30, 1996 due to the
general partner and its affiliates.
4. During the period ending June 30, 1996, the Partnership purchased from
Capital Associates International, Inc. ("CAII"), the Class B limited
partner and an affiliate of the general partner, the equipment under lease
listed below. The Partnership purchased the equipment at cost to CAII,
including reimbursement of other acquisition costs and acquisition fees as
provided for in the Partnership Agreement.
C-9
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO BALANCE SHEET
(Unaudited)
4. (continued)
<TABLE>
<CAPTION>
Acquisition Total
Equipment Cost of Fees and Equipment
Lessee Description Equipment Reimbursements Purchase Price
-------------------------- ----------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
General Motors Corporation Forklifts $ 4,549 $ 158 $ 4,707
General Motors Corporation Forklifts 80,638 2,794 83,432
General Motors Corporation Forklifts 170,982 5,925 176,907
General Motors Corporation Forklifts 28,764 997 29,761
General Motors Corporation Forklifts 27,795 963 28,758
General Motors Corporation Forklifts 205,011 7,104 212,115
General Motors Corporation Forklifts 49,904 1,729 51,633
General Motors Corporation Forklifts 144,568 5,009 149,577
General Motors Corporation Loader 80,897 2,803 83,700
USS Kobe Steel Forklifts 35,334 1,224 36,558
International Paper Company Networking equipment 122,043 4,229 126,272
Universal Forest Products Forklifts 34,323 1,189 35,512
General Motors Corporation Forklifts 37,350 1,294 38,644
------------ ---------- -----------
$ 1,022,158 $ 35,418 $ 1,057,576
============ ========== ===========
</TABLE>
C-10
<PAGE>
Independent Auditors' Report
BOARD OF DIRECTORS
CAI EQUIPMENT LEASING V CORPORATION:
We have audited the accompanying balance sheet of CAI Equipment Leasing V
Corporation (a wholly owned subsidiary of Capital Associates, Inc.) as of May
31, 1996. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free from material misstatement. An
audit of a balance sheet includes examining, on a test basis, evidence
supporting the amounts and disclosures in that balance sheet. An audit of a
balance sheet also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
balance sheet presentation. We believe that our audit of the balance sheet
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of CAI Equipment Leasing V Corporation
as of May 31, 1996, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
-------------------------
Denver, Colorado
July 16, 1996
C-11
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
BALANCE SHEET
MAY 31, 1996
- --------------------------------------------------------------------------------
Assets
- ------
Cash $ 900
Investment in Capital Preferred Yield Fund-IV, L.P. 100
Organization and offering expenses of
Capital Preferred Yield Fund-IV, L.P. (Note 2) 284,862
Other assets 1,850
-----------
Total assets $ 287,712
===========
Liabilities and Stockholder's Equity
Payable to affiliate (Note 4) $ 286,712
-----------
Commitments and contingencies (Note 1)
Stockholder's equity:
Common stock $.01 par value, authorized
issued and outstanding, 1,000 shares 10
Additional paid-in capital 1,000,990
Less demand note receivable from
Capital Associates, Inc. (Note 3) (1,000,000)
-----------
Total stockholder's equity 1,000
Total liabilities and stockholder's equity $ 287,712
===========
See accompanying notes to balance sheet.
C-12
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
NOTES TO BALANCE SHEET
MAY 31, 1996
- --------------------------------------------------------------------------------
(1) ORGANIZATION AND PURPOSE:
CAI Equipment Leasing V Corp. (the "Company"), a wholly-owned subsidiary of
Capital Associates, Inc. ("CAI"), was incorporated in the State of Colorado on
December 15, 1995 for the purpose of acting as general partner of Capital
Preferred Yield Fund-IV, L.P., a Delaware Limited Partnership (the
"Partnership"). The primary activity of the Partnership is to acquire equipment
on lease to creditworthy lessees. The fiscal year end of the Company is May 31.
As general partner, the Company is primarily responsible for the acquisition,
leasing and remarketing of the Partnership's equipment. The Company also
provides day-to-day management, accounting, investor relations and other
administrative services to the Partnership. The Company has agreed to pay all of
the Partnership's organization and offering expenses. The Company is reimbursed
by the Partnership for Partnership organization and offering expenses in an
amount equal to 4% of gross offering proceeds, which may be more or less than
the expenses incurred by the Company.
Capital Associates International, Inc. ("CAII"), a wholly-owned subsidiary of
CAI, is committed to contribute cash to the Partnership equal to 1% of gross
offering proceeds from the sale of Class A limited partnership interest in
exchange for a Class B limited partnership interest.
The Company will receive computer system support and usage, financial management
services, and other corporate administrative services from CAII and its
affiliates at no cost.
The Company has guaranteed the repayment of certain indebtedness of CAII under
the terms of a Continuing Guaranty, Security and Subordination Agreement (the
"Agreement"). The amount of the guarantee will not exceed the net worth of the
Company, after deducting the note receivable from CAI (the "Note") (as discussed
in Note 3). The Agreement grants the counterparty a security interest in all of
the existing and future assets of the Company other than the Note to secure
repayment of the indebtedness.
C-13
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
NOTES TO BALANCE SHEET (CONTINUED)
MAY 31, 1996
- --------------------------------------------------------------------------------
(2) SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of Presentation
The accompanying balance sheet has been prepared on the accrual basis of
accounting. The carrying amounts of financial instruments at May 31, 1996
approximate fair value.
(b) Investment in Capital Preferred Yield Fund-IV, L.P.
The Company's investment in the Partnership is accounted for using the equity
method. Income related to the Company's Partnership investment is recorded when
earned. Cash distributions received from the Partnership reduce the Company's
investment in the Partnership. Income related to management and equipment
acquisition services is recorded when earned.
(c) Organization and Offering Expenses of Capital Preferred Yield Fund-IV, L.P.
The Company has incurred certain expenses in connection with the organization of
the Partnership and the registration of Class A limited partnership interests
for sale to the public. The Company also has incurred and will continue to incur
certain expenses in connection with the offering of Class A limited partnership
interests for sale to the public. The Company anticipates recovering these
expenses through nonaccountable organization and offering expense reimbursements
paid to the Company by the Partnership in connection with the sale of limited
partnership interests. In the event the total organization and offering expenses
incurred by the Company exceed reimbursements, the excess expenses will be
capitalized as an additional investment in the Partnership and amortized over
the estimated remaining life of the Partnership.
(d) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.
C-14
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
NOTES TO BALANCE SHEET (CONTINUED)
MAY 31, 1996
- --------------------------------------------------------------------------------
(e) Income Taxes
The operations of the Company are included in the consolidated income tax return
of CAI. No income tax expense or benefit has been allocated to the Company by
CAI. Both the Company and CAI account for income taxes under the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", which requires the use of the asset and liability method of accounting
for income taxes.
(3) DEMAND NOTE RECEIVABLE:
The demand note receivable ("Note") is due, on demand, from CAI and is
noninterest bearing. The Note represents a portion of the initial capital
contribution to the Company by CAI and will be classified as a reduction of
stockholder's equity until paid. In addition, CAI has agreed to contribute such
additional amount or amounts necessary, if any, to maintain the net worth of the
Company and its partnership status for Federal income tax purposes.
CAI presently funds its operations using its recourse credit facility. CAI will
be required to maintain compliance with the terms of such facility in order to
pay the balance of the Note.
(4) RELATED PARTY TRANSACTIONS:
Payable to affiliate represents amounts paid on behalf of the Company by CAII
for organization and offering expenses of the Partnership.
C-15
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
BALANCE SHEET (UNAUDITED)
AUGUST 31, 1996
- --------------------------------------------------------------------------------
Assets
- ------
Cash $ 900
Organization and offering expenses of
Capital Preferred Yield Fund-IV, L.P. (Note 2) 632,270
-----------
Total assets $ 633,170
===========
Liabilities and Stockholder's Equity
Payable to affiliate (Note 4) $ 632,170
-----------
Commitments and contingencies (Note 1)
Stockholder's equity:
Common stock $.01 par value, authorized
issued and outstanding, 1,000 shares 10
Additional paid-in capital 1,000,990
Less demand note receivable from
Capital Associates, Inc. (Note 3) (1,000,000)
-----------
Total stockholder's equity 1,000
Total liabilities and stockholder's equity $ 633,170
===========
See accompanying notes to balance sheet.
C-16
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
NOTES TO BALANCE SHEET (UNAUDITED)
AUGUST 31, 1996
- --------------------------------------------------------------------------------
(1) ORGANIZATION AND PURPOSE:
CAI Equipment Leasing V Corp. (the "Company"), a wholly-owned subsidiary of
Capital Associates, Inc. ("CAI"), was incorporated in the State of Colorado on
December 15, 1995 for the purpose of acting as general partner of Capital
Preferred Yield Fund-IV, L.P., a Delaware Limited Partnership (the
"Partnership"). The primary activity of the Partnership is to acquire equipment
on lease to creditworthy lessees. The fiscal year end of the Company is May 31.
As general partner, the Company is primarily responsible for the acquisition,
leasing and remarketing of the Partnership's equipment. The Company also
provides day-to-day management, accounting, investor relations and other
administrative services to the Partnership. The Company has agreed to pay all of
the Partnership's organization and offering expenses. The Company is reimbursed
by the Partnership for Partnership organization and offering expenses in an
amount equal to 4% of gross offering proceeds, which may be more or less than
the expenses incurred by the Company.
Capital Associates International, Inc. ("CAII"), a wholly-owned subsidiary of
CAI, is committed to contribute cash to the Partnership equal to 1% of gross
offering proceeds from the sale of Class A limited partnership interest in
exchange for a Class B limited partnership interest.
The Company will receive computer system support and usage, financial management
services, and other corporate administrative services from CAII and its
affiliates at no cost.
The Company has guaranteed the repayment of certain indebtedness of CAII under
the terms of a Continuing Guaranty, Security and Subordination Agreement (the
"Agreement"). The amount of the guarantee will not exceed the net worth of the
Company, after deducting the note receivable from CAI (the "Note") (as discussed
in Note 3). The Agreement grants the counterparty a security interest in all of
the existing and future assets of the Company other than the Note to secure
repayment of the indebtedness.
(2) SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of Presentation
The accompanying balance sheet has been prepared on the accrual basis of
accounting. The carrying amounts of financial instruments at August 31, 1996
approximate fair value.
C-17
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
NOTES TO BALANCE SHEET (UNAUDITED) (CONTINUED)
AUGUST 31, 1996
- --------------------------------------------------------------------------------
(b) Investment in Capital Preferred Yield Fund-IV, L.P.
The Company's investment in the Partnership is accounted for using the equity
method. Income related to the Company's Partnership investment is recorded when
earned. Cash distributions received from the Partnership reduce the Company's
investment in the Partnership. Income related to management and equipment
acquisition services is recorded when earned.
(c) Organization and Offering Expenses of Capital Preferred Yield Fund-IV, L.P.
The Company has incurred certain expenses in connection with the organization of
the Partnership and the registration of Class A limited partnership interests
for sale to the public. The Company also has incurred and will continue to incur
certain expenses in connection with the offering of Class A limited partnership
interests for sale to the public. The Company anticipates recovering these
expenses through nonaccountable organization and offering expense reimbursements
paid to the Company by the Partnership in connection with the sale of limited
partnership interests. In the event the total organization and offering expenses
incurred by the Company exceed reimbursements, the excess expenses will be
capitalized as an additional investment in the Partnership and amortized over
the estimated remaining life of the Partnership.
(d) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.
(e) Income Taxes
The operations of the Company are included in the consolidated income tax return
of CAI. No income tax expense or benefit has been allocated to the Company by
CAI. Both the Company and CAI account for income taxes under the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", which requires the use of the asset and liability method of accounting
for income taxes.
C-18
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
NOTES TO BALANCE SHEET (UNAUDITED) (CONTINUED)
AUGUST 31, 1996
- --------------------------------------------------------------------------------
(3) DEMAND NOTE RECEIVABLE:
The demand note receivable ("Note") is due, on demand, from CAI and is
noninterest bearing. The Note represents a portion of the initial capital
contribution to the Company by CAI and will be classified as a reduction of
stockholder's equity until paid. In addition, CAI has agreed to contribute such
additional amount or amounts necessary, if any, to maintain the net worth of the
Company and its partnership status for Federal income tax purposes.
CAI presently funds its operations using its recourse credit facility. CAI will
be required to maintain compliance with the terms of such facility in order to
pay the balance of the Note.
(4) RELATED PARTY TRANSACTIONS:
Payable to affiliate represents amounts paid on behalf of the Company by CAII
for organization and offering expenses of the Partnership.
C-19
<PAGE>
Independent Auditors' Report
TO THE STOCKHOLDERS AND DIRECTORS OF
CAPITAL ASSOCIATES, INC.:
We have audited the accompanying consolidated balance sheet of Capital
Associates, Inc. and subsidiaries as of May 31, 1996. This consolidated
financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this consolidated financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free from material misstatement. An
audit of a balance sheet includes examining, on a test basis, evidence
supporting the amounts and disclosures in that balance sheet. An audit of a
balance sheet also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
balance sheet presentation. We believe that our audit of the consolidated
balance sheet provides a reasonable basis for our opinion.
In our opinion, the consolidated balance sheet referred to above presents
fairly, in all material respects, the financial position of Capital Associates,
Inc. and subsidiaries as of May 31, 1996, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
-------------------------
Denver, Colorado
July 16, 1996
C-20
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except shares and par value)
ASSETS
May 31,
1996
-------
Cash and cash equivalents $ 2,851
Receivable from affiliated limited partnerships 1,849
Accounts receivable, net 945
Equipment held for sale or re-lease 177
Residual values, net, and other receivables arising
from equipment under lease sold to private investors 3,374
Net investment in direct finance leases 14,967
Leased equipment, net 45,285
Investment in affiliated limited partnerships 8,759
Other 3,497
Deferred income taxes 1,900
Notes receivable arising from sale-leaseback transactions 8,409
Discounted lease rentals assigned to lenders arising
from equipment sale transactions 35,498
---------
$ 127,511
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Recourse bank debt $ 17,538
Accounts payable - equipment purchases 14,071
Accounts payable and other liabilities 9,272
Obligations under capital leases arising from
sale-leaseback transactions 8,421
Discounted lease rentals 55,328
---------
104,630
---------
Commitments and contingencies (Notes 10, 14 and 15)
Stockholders' equity:
Common stock, $.008 par value, 15,000,000 shares authorized,
5,139,000 shares issued 32
Additional paid-in capital 17,026
Retained earnings 6,121
Treasury stock, at cost (298)
---------
Total stockholders' equity 22,881
---------
$ 127,511
=========
The accompanying notes are an integral part of this consolidated balance sheet.
C-21
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
1. Summary of Significant Accounting Policies
------------------------------------------
General Accounting Principles
-----------------------------
NATURE OF OPERATIONS
Capital Associates, Inc. ("CAI" or the "Company") was incorporated as a
holding company in October 1986. Its principal operating subsidiary,
Capital Associates International, Inc. ("CAII"), is primarily engaged in
(1) buying, selling, leasing, and remarketing new and used equipment, (2)
managing equipment on and off lease, (3) sponsoring, co-sponsoring,
managing and co-managing publicly-registered income funds and (4)
arranging equipment-related financing. The principal market for the
Company's activities is the United States.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management 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 revenue and expenses
during the reporting period. For leasing entities, this includes the
estimate of residual values, as discussed below.
Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated balance sheet includes the accounts of CAI and its
subsidiaries. Intercompany accounts and transactions are eliminated in
consolidation.
The Company has investments in affiliated public income funds (the "PIFs",
consisting of both general partnership and subordinated limited
partnership interests) and other 50%-or-less owned entities. Such
investments are primarily accounted for using the equity method.
The parent company's assets consist solely of its investments in
subsidiaries and it has no liabilities separate from its subsidiaries.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments with a
maturity of three months or less.
C-22
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
1. Summary of Significant Accounting Policies, continued
------------------------------------------
General Accounting Principles, continued
-----------------------------
INCOME TAXES
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS
No. 109"). Under the asset and liability method of SFAS No. 109, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS No. 109,
the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
EQUIPMENT HELD FOR SALE OR RE-LEASE
Equipment held for sale or re-lease, recorded at the lower of cost or
market value expected to be realized, consists of equipment previously
leased to end users which has been returned to the Company following lease
expiration.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 123, Accounting for
Stock-based Compensation, was issued in October 1995. The Company will be
required to adopt the new standard no later than fiscal year 1997,
although early adoption is permitted. This standard establishes the fair
value based method (the "SFAS 123 Method") rather than the intrinsic value
based method as the preferred accounting methodology for stock based
compensation arrangements. Entities are allowed to (i) continue to use the
intrinsic value based methodology in their basic financial statement and
provide in the footnotes pro forma net income and earnings per share
information as if the SFAS 123 Method had been adopted, or (ii) adopt the
SFAS 123 Method. The SFAS 123 Method will result in higher recorded
compensation cost for the Company. The Company is continuing to evaluate
whether or not it will change to the recognition provisions of SFAS 123.
C-23
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
1. Summary of Significant Accounting Policies, continued
------------------------------------------
General Accounting Principles, continued
-----------------------------
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS, continued
The Company adopted Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed Of ("SFAS No. 121"), effective June 1, 1995. SFAS
No. 121 requires that long-lived assets, including operating leases, and
certain identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. In
performing the review for recoverability, the entity should estimate the
future cash flows expected to result from the use of the asset and its
eventual disposition. If the sum of the expected future cash flows
(undiscounted and without interest charges) is less than the carrying
amount of the asset, an impairment loss is recognized. Otherwise, an
impairment loss is not recognized. Measurement of an impairment loss for
long-lived assets, including operating leases, and identifiable
intangibles held by the Company is based on the fair value of the asset
calculated by discounting the expected future cash flows at an appropriate
interest rate. The adoption of this statement did not have a material
effect on the Company's financial condition or results of operations.
EQUIPMENT LEASING AND SALES
LEASE ACCOUNTING - Statement of Financial Accounting Standards No. 13,
Accounting for Leases, requires that a lessor account for each lease by
either the direct financing, sales-type or operating lease method. Direct
financing and sales-type leases are defined as those leases which transfer
substantially all of the benefits and risks of ownership of the equipment
to the lessee. The Company currently utilizes (i) the direct financing or
the operating lease method for substantially all of the Company's lease
originations and (ii) the sales-type or the operating lease method for
substantially all lease activity for an item of equipment subsequent to
the expiration of the initial lease term. After the origination of a
lease, the Company may engage in financing of lease receivables on a
non-recourse basis (i.e., "non-recourse debt" or "discounted lease
rentals") and/or equipment sale transactions to reduce or recover its
investment in the equipment.
C-24
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
1. Summary of Significant Accounting Policies, continued
------------------------------------------
General Accounting Principles, continued
-----------------------------
EQUIPMENT LEASING AND SALES, continued
The Company's accounting methods and their financial reporting effects are
described below:
Lease Inception
DIRECT FINANCING LEASES ("DFLs") - The cost of equipment, including
initial direct costs ("IDC"), is recorded as net investment in DFLs.
Residual values are established at lease inception equal to the
estimated value to be received from the equipment following
termination of the initial lease (which in certain circumstances
includes anticipated re-lease proceeds) as determined by the Company.
In estimating such values, the Company considers all relevant
information and circumstances regarding the equipment and the lessee.
OPERATING LEASES ("OLs") - The cost of equipment, including IDC, is
recorded as leased equipment and is depreciated on a straight-line
basis over the lease term to an amount equal to the estimated
residual value at the lease termination date. Residual values are
established at lease inception equal to the estimated value to be
received from the equipment following termination of the initial
lease (which in certain circumstances includes anticipated re-lease
proceeds) as determined by the Company. In estimating such values,
the Company considers all relevant information and circumstances
regarding the equipment and the lessee.
Transactions Subsequent to Lease Inception
NON-RECOURSE DISCOUNTING OF RENTALS - The Company may assign the
future rentals from leases to financial institutions at fixed
interest rates on a non-recourse basis. In return for such assigned
future rentals, the Company receives the discounted value of the
rentals in cash. In the event of default by a lessee, the financial
institution has a first lien on the underlying leased equipment, with
no further recourse against the Company. Cash proceeds from such
financings are recorded on the balance sheet as discounted lease
rentals.
SALES TO PRIVATE INVESTORS OF EQUIPMENT UNDER LEASE - The Company may
sell title to leased equipment that in some cases is subject to
existing discounted lease rentals in equipment sale transactions with
third-party investors. In such transactions, the investors obtain
ownership of the equipment as well as rights to equipment rentals.
Upon sale, the Company records equipment sales revenue equal to the
sales price of the equipment which may include a residual interest
retained by the Company (recorded as an asset at present value using
an appropriate interest rate) and records equipment sales cost equal
to the carrying value of the related assets (including remaining
unamortized IDC).
C-25
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
1. Summary of Significant Accounting Policies, continued
------------------------------------------
General Accounting Principles, continued
-----------------------------
EQUIPMENT LEASING AND SALES, continued
Other accounts arising from private equity sales include:
DISCOUNTED LEASE RENTALS, ETC. - Pursuant to FASB Technical
Bulletin No. 86-2, although private investors and PIFs may
acquire the equipment sold to them by the Company subject to the
associated non-recourse debt (i.e., discounted lease rentals),
the debt is not removed from the balance sheet unless such debt
has been legally assumed by the third-party investors. If not
legally assumed, a corresponding asset ("discounted lease
rentals assigned to lenders arising from equipment sale
transactions") is recorded representing the present value of the
end user rentals receivable relating to such transactions.
SALE-LEASEBACK TRANSACTIONS - In sale-leaseback transactions,
the Company leases equipment, obtains non-recourse financing on
the equipment, sells the equipment to a third party and leases
the equipment back from the third party. Income in a
sale-leaseback transaction is deferred and principally amortized
over the leaseback term in proportion to the reduction in the
leased asset. For financial reporting purposes, a note
receivable from the third-party, a capital lease obligation
equal to the present value of the leaseback payments and a
deferred gain are recorded at the time of the transaction. The
Company has not entered into a sale/leaseback transaction since
fiscal year 1991.
Transactions Subsequent to Initial Lease Termination
After the initial term of equipment under lease expires, the
equipment is either sold or released. When the equipment is sold, the
remaining net book value of equipment sold is removed and gain or
loss recorded. When the equipment is released, the Company utilizes
the sales-type method (described below) or the OL method (described
above).
Sales-type Leases
-----------------
The excess of the present value of (i) future rentals and (ii) the
estimated residual value (collectively, "the net investment") over
the carrying value of the equipment subject to the sales-type lease
is reflected in operations at the inception of the lease. Thereafter,
the net investment is accounted for as a DFL, as described above.
C-26
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
1. Summary of Significant Accounting Policies, continued
------------------------------------------
General Accounting Principles, continued
-----------------------------
ALLOWANCE FOR LOSSES
An allowance for losses is maintained at levels determined by management
to adequately provide for any other than temporary declines in asset
values. In determining losses, economic conditions, the activity in used
equipment markets, the effect of actions by equipment manufacturers, the
financial condition of lessees, the expected courses of action by lessees
with regard to leased equipment at termination of the initial lease term,
and other factors which management believes are relevant, are considered.
Asset chargeoffs are recorded upon the termination or remarketing of the
underlying assets. Assets are reviewed quarterly to determine the adequacy
of the allowance for losses.
The Company evaluates the realizability of the carrying value of its
investment in its PIFs based upon all estimated future cash flows from the
PIFs. As a result of such analyses, certain distributions have been
accounted for as a recovery of cost instead of income.
2. Residual Values and Other Receivables Arising from Equipment Under Lease
--------------------------------------------------------------------------
Sold to Private Investors
-------------------------
As of May 31, 1996 the equipment types for which the Company recorded the
present value of the estimated residual values and other receivables
arising from private sales of equipment under lease were (in thousands):
Description 1996
----------- ------
Mining, manufacturing and material handling $1,798
Furniture and fixtures 1,220
Aircraft 136
Other miscellaneous equipment 190
------
Total equipment residuals 3,344
Notes receivable due directly from investors 30
End user rentals under existing leases assigned
to the Company by investors -
------
$3,374
======
C-27
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
2. Residual Values and Other Receivables Arising from Equipment Under Lease
--------------------------------------------------------------------------
Sold to Private Investors, continued
-------------------------
Residual values and other receivables arising from equipment under lease
sold to private investors were net of an allowance for doubtful accounts
of $258,000 as of May 31, 1996.
In certain sale transactions, the Company agreed to certain hold backs
related to the lessee's performance. Pursuant to such agreements, a
portion of the sales proceeds was placed in an interest-bearing escrow
account until such time as the performance objectives are met. Escrowed
amounts related to these transactions were $645,000 at May 31, 1996 and
are included in Other Assets in the accompanying Consolidated Balance
Sheet.
3. Net Investment in DFLs
----------------------
The components of the Company's net investment in DFLs as of May 31, 1996
were (in thousands):
1996
--------
Minimum lease payments receivable $ 15,234
Estimated residual values 2,139
IDC 124
Less unearned income (2,530)
--------
$ 14,967
========
4. Leased Equipment, net
---------------------
The Company's investment in equipment under OLs, by major classes, as of
May 31, 1996 were (in thousands):
1996
--------
Material handling $ 29,793
Other technology and communication equipment 8,807
Aircraft 4,901
Other 4,451
Furniture and fixtures 3,825
IBM processors and peripheral computer equipment 3,220
Mining equipment 15
IDC 487
--------
55,499
Less accumulated depreciation (9,094)
Less allowance for losses (1,120)
--------
$ 45,285
========
C-28
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
5. Future Minimum Lease Payments
-----------------------------
Future minimum lease payments receivable from noncancelable leases on
equipment owned by the Company as of May 31, 1996, are as follows (in
thousands):
Years Ending May 31 DFLs OLs
------------------- --------- --------
1997 $ 7,781 $ 13,317
1998 3,305 10,331
1999 2,215 7,356
2000 1,570 5,195
Thereafter 363 7,465
-------- --------
$ 15,234 $ 43,664
======== ========
6. Notes Receivable and Obligations Under Capital Leases Arising from
--------------------------------------------------------------------------
Sale-leaseback Transactions
---------------------------
In sale-leaseback transactions, the leaseback payments are generally equal
in amount to the principal and interest payments due under the note
receivable and, accordingly, the notes receivable and obligations under
capital leases arising from sale-leaseback transactions do not represent
future net cash inflows or outflows of the Company.
Aggregate maturities of notes receivable and obligations under capital
leases arising from sale-leaseback transactions outstanding as of May 31,
1996 are as follows (in thousands):
Notes
Years Ending May 31 Receivable Obligations
------------------- ---------- -----------
1997 $ 7,666 $ 7,673
1998 743 748
------- -------
$ 8,409 $ 8,421
======= =======
Notes receivable and obligations arising from sale-leaseback transactions
bear interest at rates ranging from 10% to 12%.
7. Significant Customer and Concentration of Credit Risk
-----------------------------------------------------
One customer accounted for 42% of the Company's revenues in fiscal year
1996. No customer accounted for at least 10% of the Company's revenues in
fiscal years 1995 and 1994.
C-29
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
7. Significant Customer and Concentration of Credit Risk, continued
-----------------------------------------------------
The Company leases various types of equipment to companies in diverse
industries throughout the United States. To minimize credit risk, the
Company generally leases equipment to (i) companies that have a credit
rating of not less than Baa as determined by Moody's Investor Services,
Inc., or comparable credit ratings as determined by other recognized
credit rating services, or (ii) companies, which although not rated by a
recognized credit rating service or rated below Baa, are believed by the
Company to be sufficiently creditworthy to satisfy the financial
obligations under the lease.
At May 31, 1996, equipment under OLs and DFLs owned by the Company was
leased to companies with the following credit ratings:
Percentage of the
net book value of
Credit Rating equipment under lease
Baa (or equivalent) or above 91%
Below Baa (or equivalent) 1
In bankruptcy (see Footnote 15 to Notes
to Consolidated Financial Statements) 8
---
100%
===
8. Discounted Lease Rentals
------------------------
Discounted lease rentals outstanding at May 31, 1996 bear interest at
rates between 5% to 17%. Aggregate maturities of such non-recourse
obligations are (in thousands):
Years Ending May 31:
1997 $ 28,870
1998 15,664
1999 7,648
2000 3,146
--------
$ 55,328
========
C-30
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
9. Recourse Bank Debt
------------------
The Company extended its recourse bank debt and revolving credit
facilities (the "Bank Facility") on January 31, 1996. The lender group
currently consists of Norwest Bank Colorado, National Association, Agent,
Norwest Equipment Finance, Inc., Collateral Agent, Wells Fargo Bank, N.A.,
The Sumitomo Bank, Limited and The First National Bank of Boston. The
Borrower under the Bank Facility is Capital Associates International, Inc.
("CAII"), a wholly-owned subsidiary of the Company.
The Bank Facility consists of three components, a term loan facility (the
"Term Loan"), a revolving working capital credit facility (the "Working
Capital Facility") and a revolving warehousing credit facility (the
"Warehouse Facility"). The principal terms of the three facilities are as
follows (in thousands):
<TABLE>
<CAPTION>
Working Capital
Term Loan Facility Warehouse Facility Total Borrowings
----------------- ----------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Maturity Date November 30, 1997 November 30, 1996 November 30, 1996 N/A
Maximum amount $ 13,000 $ 5,000 lesser of $ 32,000 N/A
or borrowing base
Borrowings at May 31, 1996 6,500 0 11,038 $ 17,538
-------- -------- -------- =========
Potential availability at May 31, 1996 N/A $ 5,000 $ 20,962 N/A
======== ======== ========
Borrowings at May 31, 1995 $ 10,833 $ 1,531 $ 12,156 $ 24,520
======== ======== ======== =========
Interest rate at May 31, 1996 Prime* plus .75%** Prime* plus .75% Prime* plus .50%
</TABLE>
* Agent's Prime at May 31, 1996 was 8.25%.
** As required by the Bank Facility, CAII has acquired, at its own cost
(of $59,500), a 36-month interest rate cap contract at 10.5% with
respect to 50% of the principal balance of the Term Loan.
Principal reductions under the Term Loan are scheduled to occur as follows
(in thousands):
Fiscal year ending May 31, 1997 $ 4,333
Fiscal year 1998 through November 30, 1997 2,167
--------
$ 6,500
========
The Bank Facility (1) is collateralized by all of CAII's assets and (2) is
senior, in order of priority, to all of CAII's indebtedness, subject to
certain limited exceptions. The Company and certain of the Company's and
CAII's subsidiaries have guaranteed CAII's obligations under the Bank
Facility and have pledged all of their assets, with limited exceptions, to
collateralize their guarantees. The Bank Facility restricts CAII's ability
to pay dividends or loan or advance funds to the Company.
As of May 31, 1996, the Company was in compliance with the terms of the
Bank Facility.
C-31
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
10. Related Parties
---------------
PIFs:
The Company sponsors or co-sponsors seven PIFs that purchase equipment
under lease from the Company. The Company, through its PIF general partner
subsidiaries, acts as either a general partner or co-general partner of
each PIF for which it receives general partner distributions and
management fees. The Company, through CAII, also acts as the Class B
limited partner of each PIF for which it receives Class B limited partner
distributions. The Class B limited partner is required to make
subordinated limited partnership investments in the PIFs. The Class B
limited partner made approximately $0.3 million of cash contributions
during the fiscal year ended May 31, 1996 and has a maximum remaining
obligation to make further cash contributions of approximately $0.5
million for all of the existing PIFs (which relates solely to CPYF IV).
Also, as of May 31, 1996, the Company sold approximately $1 million of
equipment under lease to CPYF IV for a note receivable that was paid on
June 13, and July 11, 1996.
11. Income Taxes
------------
Significant components of the Company's deferred tax liabilities and
assets as of May 31, 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
1996
<S> <C>
------
Deferred income tax liabilities:
Direct finance leases accounted for as operating leases for
income tax purposes, and equipment depreciation for tax
purposes in excess of financial reporting depreciation $ 2,000
Residual values and other receivables arising from equipment
under lease sold to private investors recognized for
financial reporting purposes, but not for tax reporting purposes 1,300
-------
Total deferred income tax liabilities 3,300
-------
Deferred income tax assets:
Other assets and liabilities, net 1,800
Investment tax credit carryforwards 1,900
AMT credit carryforwards 3,300
-------
Total deferred income tax assets 7,000
Valuation allowance for deferred income tax assets (1,800)
-------
Net deferred income tax assets 5,200
-------
Net deferred income tax asset (liability) $ 1,900
=======
</TABLE>
C-32
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
11. Income Taxes, continued
------------
The Company has established a valuation allowance for deferred taxes due
to the uncertainty that the full amount of the ITC carryforward will be
utilized prior to expiration. The Company believes that it is more likely
than not that the results of future operations will generate sufficient
taxable income to realize the remaining deferred tax assets.
At May 31, 1996, the Company had an ITC carryforward of $1.9 million, net,
which expires from 1997 through 2001, and AMT credits of $3.3 million.
Under present federal tax law, AMT credits may be carried forward
indefinitely and may be utilized to reduce regular tax liability to an
amount equal to AMT liability.
12. Common and Preferred Stock
--------------------------
The Company has authority to issue 2,500,000 shares of preferred stock at
$0.008 par value. At May 31, 1996, no shares of preferred stock had been
issued.
Reverse Split
On November 2, 1995, after obtaining the necessary Board of Director and
stockholder approvals, the Company amended its Certificate of
Incorporation to effect a reverse split of its common stock pursuant to
which each share of common stock issued and outstanding immediately prior
to the effective date of the reverse split was automatically reclassified
as, and changed into, one-half (1/2) share of common stock. The reverse
split did not change (1) the par value of the common stock (which remains
$.008 per share after the reverse split), (2) the authorized number of
shares of common stock (which remains at 15,000,000 shares after the
reverse split) or (3) the voting rights of the common stock (which remain
at one vote per share of common stock after the reverse split). Fractional
shares of common stock created in the reverse split were redeemed for cash
pursuant to the formula set forth in the Certificate of Amendment to the
Certificate of Incorporation of the Company. Accordingly, all share and
per share data, as appropriate, reflect the effects of this reverse split
for all periods presented.
Change in Control of Registrant
On November 10, 1995, MCC Financial ("MCC") acquired voting control of the
Company through a private stock transaction and the delivery of proxies
for shares of common stock subject to purchase in the future pursuant to
agreements (the "Stock Purchase Agreements") executed by and between MCC
and the Company's Principal Stockholders.
C-33
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
12. Common and Preferred Stock, continued
--------------------------
Change in Control of Registrant
Pursuant to these Stock Purchase Agreements, MCC acquired 65,120 shares of
common stock for a purchase price of $3.30 per share or an aggregate
amount of $214,896. In addition, MCC acquired the right to purchase an
additional 1,245,000 shares of common stock in the future for an aggregate
purchase price of approximately $4.5 million.
On January 9 and 10, 1996, MCC completed the purchase of 550,000 shares of
common stock for a purchase price of $3.30 per share or an aggregate
amount of $1,815,000.
13. Stock Options
-------------
The Company has a qualified incentive stock option plan whereby stock
options may be granted to employees to purchase shares of the Company's
common stock at prices equal to 100% of the estimated fair value at the
date of grant. The Company has a non-qualified plan covering all directors
except the CEO.
At May 31, 1996, the Company had 693,000 options outstanding, of which
641,000 were exercisable at prices ranging from $0.68 and $2.4376.
14. Legal Proceedings
-----------------
MBANK LITIGATION. The MBank Litigation was settled on August 16, 1995 with
the exception of the claims asserted by Bank One, N.A., ("Bank One") in
its first amended complaint ("Bank One's Amended Complaint"). Bank One's
Amended Complaint does not assert any money damage claims against the
Company. The Company has filed a motion requesting dismissal of the claims
asserted against the Company in Bank One's Amended Complaint. As of July
16, 1996, the court has not ruled on (i) the Company's motion or (2) the
pending summary judgment motions of Bank One and FDIC concerning ownership
of the equipment.
On August 23, 1995, the Company received $10.8 million in settlement of
its claims in connection with the MBank Litigation. In accordance with the
terms of the settlement, on August 28, 1995, the Company delivered $2.2
million to Bank One in repayment of the monies received from Bank One in
1992 (along with interest thereon). On September 8, 1995, Bank One, which
is pursuing its lawsuit to obtain title to the MBank Equipment, rejected
the tender and returned the $2.2 million to the Company (while purporting
to reserve all rights to make a claim to such funds in the future). On
September 12, 1995, the Company deposited the $2.2 million returned by
Bank One in an escrow account with Norwest Bank, N.A., pending resolution
of Bank One's ongoing claims.
C-34
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
14. Legal Proceedings, continued
-----------------
HEMMETER LITIGATION. In June 1995, Grand Palais Riverboat, Inc. (the
"Lessee"), failed to make lease payments due under its lease with the
Company. In July 1995, the Lessee filed for bankruptcy protection. In
October 1995, the Company obtained a judgment against the Guarantors
(Hemmeter Enterprises, Inc., two subsidiaries and two individual
guarantors) for the amounts due under the lease plus fees and late
charges, in the total amount of approximately $4 million. In November
1995, the corporate Guarantors filed for bankruptcy protection.
In the fourth quarter of fiscal year 1996, the Company finalized a
settlement agreement with the corporate Guarantors in connection with the
payment of the Company's judgment and settlement of other pending claims
by the Company. Pursuant to the settlement agreement, the Company received
two promissory notes, one payable over two and one-half years and one
payable over five years, for the judgment amount plus interest at 9% per
annum. Payments received by the Company from the sale of the equipment on
lease to the Lessee (discussed in the following paragraph) are to be
credited against payments due under the five-year note.
During the fourth quarter of fiscal year 1996, the Company finalized an
agreement to sell the equipment which had been leased to the Lessee to the
purchaser of the Lessee's riverboat gaming operations for approximately
$2.5 million. The purchase price will be paid pursuant to the terms of an
eighteen month promissory note in monthly installments (or in a lump-sum
payment of approximately $2.3 million to be paid not later than August 1,
1996 in full satisfaction of the note) and is secured by a first priority
security interest in the equipment.
OTHER LITIGATION. The Company is also involved in routine legal
proceedings incidental to the conduct of its business. Management believes
that none of these legal proceedings will have a material adverse effect
on the financial condition or operations of the Company.
15. Commitments
-----------
The Company leases office space under long-term non-cancelable operating
leases. The leases contain renewal options and provide for annual
escalation for utilities, taxes and service costs.
Minimum future rental payments required by such leases are as follows (in
thousands):
Year Ending May 31,
1997 $ 429
1998 377
1999 350
2000 321
-------
$ 1,477
=======
C-35
<PAGE>
16. Disclosures about Fair Value of Financial Instruments
-----------------------------------------------------
The following disclosure of the estimated fair value of financial
instruments was made in accordance with Statements of Financial Standards
No. 107 ("SFAS No. 107"), Disclosures about Fair Value of Financial
Instruments. SFAS No. 107 specifically excludes certain items from its
disclosure requirements such as the Company's investment in leased assets.
Accordingly, the aggregate fair value amounts presented are not intended
to represent the underlying value of the net assets of the Company.
The carrying amounts at May 31, 1996 for cash and cash equivalents,
accounts receivable, residual values and other receivables arising from
equipment under lease sold to private investors, recourse bank debt and
accounts payable and other liabilities approximate their fair values due
to the short maturity of these instruments, or because the related
interest rates approximate current market rates.
As of May 31, 1996, discounted lease rentals and discounted lease rentals
assigned to lenders arising from equipment sale transactions of
$55,328,000 and $35,498,000, respectively, have fair values of $54,460,000
and $34,941,000, respectively. The fair values were estimated utilizing
market rates of comparable debt having similar maturities and credit
quality as of May 31, 1996.
C-36
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in thousands)
ASSETS
August 31,
1996
-----------
Cash and cash equivalents $ 2,531
Receivables from affiliated limited partnerships 798
Accounts receivable, net 705
Equipment held for sale or re-lease 188
Residual values and other receivables arising from equipment
under lease sold to private investors 3,725
Net investment in direct finance leases 13,355
Leased equipment, net 55,539
Investments in affiliated limited partnerships 8,463
Other 3,225
Deferred income taxes 1,723
Notes receivable arising from sale-leaseback transactions 5,639
Discounted lease rentals assigned to lenders arising from
equipment sale transactions 35,865
---------
$ 131,756
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Recourse bank debt $ 17,567
Accounts payable - equipment purchases 22,825
Accounts payable and other liabilities 9,224
Obligations under capital leases arising
from sale-leaseback transactions 5,649
Discounted lease rentals 53,603
---------
108,868
---------
Stockholders' equity:
Common stock 32
Additional paid-in capital 16,895
Retained earnings 6,259
Treasury stock (298)
---------
Total stockholders' equity 22,888
---------
$ 131,756
=========
The accompanying notes are an integral part
of this consolidated balance sheet.
C-37
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
(Unaudited)
1. Basis of Presentation
---------------------
The accompanying unaudited consolidated balance sheet has been prepared in
accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, it does not include all of the information and
disclosures required by generally accepted accounting principles for annual
balance sheets. In the opinion of management, all adjustments (consisting
only of normal recurring adjustments) considered necessary for a fair
presentation have been included. For further information, please refer to
the financial statements of Capital Associates, Inc. (the "Company"), and
the related notes, included within the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 1996 (the "1996 Form 10-K"), previously
filed with the Securities and Exchange Commission.
2. Hemmeter Litigation
-------------------
In connection with the Hemmeter Litigation (which is discussed in Footnote
15 to Notes to Consolidated Financial Statements to the 1996 Form 10-K), on
July 29, 1996, the Company received approximately $2 million from the sale
of the equipment which had been leased to Grand Palais Riverboat, Inc. (the
"Lessee") to the purchaser of the Lessee's riverboat gaming operations.
C-38
<PAGE>
EXHIBIT D
PRIOR PERFORMANCE TABLES
The following unaudited Tables update certain information relating to
the six prior public programs sponsored by CAI. See "PERFORMANCE OF PRIOR
INVESTMENT PROGRAMS" in the text of the Prospectus and Exhibit B to the
Prospectus for earlier information about such programs. All of the six prior
public programs were structured as limited partnerships, purchased a diversified
portfolio of equipment subject to Triple Net Leases to the end users of such
equipment, reinvested substantial portions of cash from operations by purchasing
additional equipment subject to Triple Net Leases and expect to liquidate their
portfolios and make liquidating distributions to investors within eight years of
the date their respective offering period is terminated. Thus, they have
investment objectives similar to those of the Partnership.
The Tables consist of:
Table I Experience in Raising and Investing
Funds: Presents general information
relating to prior partnerships.
Table II Compensation to General Partner and
Affiliates: Summarizes compensation paid
in connection with prior partnerships.
Table III Annual Operating Results: Summarizes
certain operating results for the last
five years for each prior partnership.
Table IV Sales or Dispositions of Equipment by
Prior Public Programs: Summarizes sales
proceeds, profit or loss and holding
periods for equipment sold.
Table V Historic Cash Distributions: Presents
annual gross cash distributions for each
prior partnership.
Table VI Historic Taxable Gain (Loss): Presents
gross annual taxable gain (loss) for
each prior partnership.
Table VII Information Regarding Prior Program
Lessees: Lists names of Lessees and
distribution of equipment by industry.
PURCHASERS OF UNITS WILL HAVE NO OWNERSHIP INTEREST IN THE INVESTMENTS
DESCRIBED IN THE FOLLOWING TABLES. PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE
INCLUSION OF THIS INFORMATION AS INDICATIVE OF THE POSSIBLE OPERATIONS OF THE
PARTNERSHIP.
D-1
<PAGE>
TABLE I
Experience in Raising and Investing Funds
(on a Percentage Basis)(1)
(Unaudited)
As of June 30, 1996
<TABLE>
<CAPTION>
Leastec PaineWebber Capital Capital
Income Fund Northstar Preferred Preferred Preferred
V Income Fund I Yield Fund Yield Fund Yield Fund II
--------------- ------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C> <C> <C>
Dollar Amount Offered $55,000,000 $150,000,000 $75,000,000 $100,000,000 $65,000,000
Dollar Amount Raised (100%) $50,368,000 $ 52,401,000 $71,064,000 $ 63,660,750 $33,943,500
Less Offering Expenses:
Selling Commissions 10.00% 10.00% 9.70% 10.00% 10.00%
Retained by Affiliates 0.00% 0.00% 0.00% 0.00% 0.00%
Organizational Expenses 0.26% 0.00% 0.00% 0.00% 0.00%
Offering Expenses 4.74% 3.00%(2) 3.00%(2) 3.14%(2) 4.37%(2)
Reserves 0.00% 1.00% 0.25% 0.00% 1.00%
----- ----- ----- ----- -----
Percent Available for Investment 85.00% 86.00% 87.05% 86.86% 84.63%
Acquisition Costs:
Cash Down Payment 81.69% 83.85% 84.88% 83.45% 81.45%
Acquisition Fees 3.31% 2.15% 2.17% 3.41% 3.18%
----- ----- ----- ----- -----
Total Acquisition Cost(3) 85.00% 86.00% 87.05% 86.86% 84.63%
Percent Leverage (4) 39.00% 0.00% 0.00% 46.00% 46.15%
Date Offering Began 10/01/87 11/23/88 05/21/90 01/05/90 04/15/92
Length of Offering 24 mos. 6 mos. 11 mos. 24 mos. 24 mos.
Months to Invest 90% of
Amount Available for
Investment (measured from
beginning of offering) 26 mos. 6 mos. 22 mos. 28 mos. 26 mos.
</TABLE>
- ------------------------------
D-2
<PAGE>
Capital
Preferred
Yield Fund III
---------------------
Dollar Amount Offered
Dollar Amount Raised (100%) $ 50,000,000
$ 50,000,000
Less Offering Expenses:
Selling Commissions
Retained by Affiliates 10.00%
Organizational Expenses 0.00%
Offering Expenses 0.00%
Reserves 4.32%(2)
1.00%
Percent Available for Investment --------------
84.68%
Acquisition Costs:
Cash Down Payment
Acquisition Fees 81.86%
2.82%
Total Acquisition Cost(3) --------------
84.68%
Percent Leverage (4)
Date Offering Began 46.17%
Length of Offering 04/16/94
Months to Invest 90% of 24 mos.
Amount Available for
Investment (measured from
beginning of offering)
26 mos.
- -----------------------------
(1) The percentages are based on the assumption that all fees and expenses
of the offering were paid from the proceeds of the offering and not
from the proceeds of borrowings.
(2) Combined Organizational and Offering Expenses.
(3) Includes amounts allocated to working capital reserves.
(4) Percentage leverage is calculated by dividing the principal amount of
indebtedness by the total cost of the equipment.
D-3
<PAGE>
TABLE II
Compensation to General Partner and Affiliates
(Unaudited)
As of June 30, 1996
<TABLE>
<CAPTION>
Leastec Northstar PaineWebber Capital
Income Income Preferred Preferred
Fund V Fund I Yield Fund Yield Fund
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Date offering commenced 10/01/87 11/23/88 5/21/90 1/05/90
Dollar amount raised $50,368,000 $52,401,000 $71,064,000 $63,660,750
Amount paid to General Partner and Affiliates:
Commissions(1) 5,036,800 5,240,100 6,893,208 6,366,075
Acquisition fees 3,631,407 1,593,944 2,825,799 5,146,564
Organization and offering expense allowance 2,518,400 1,572,030 2,131,920 2,000,061
Dollar amount of cash generated from operations before deducting
payments to General Partner and Affiliates 75,545,616 65,258,357 93,929,532 109,531,734
Amount paid to General Partner and Affiliates from operations:
Management fees 4,508,257 1,940,369 3,445,804 6,400,890
Reimbursements 1,047,941 675,970 104,423 659,336
Dollar amount of property sales before deducting payments to
General Partner and Affiliates 11,722,581 10,437,351 10,061,530 12,139,624
Amount paid to General Partner and Affiliates from property sales:
Resale fees -0- -0- -0- -0-
Management fees -0- -0- -0- -0-
Promotional interest (cash distribution) to General Partner 2,247,111 1,995,226 3,218,846 2,303,553
</TABLE>
<TABLE>
<CAPTION>
Capital Capital
Preferred Preferred Other
Yield Fund-II Yield Fund-III Programs
------------- -------------- ----------
<S> <C> <C> <C>
Date offering commenced 4/15/92 4/16/94 -0-
Dollar amount raised $33,943,500 $50,000,000 -0-
Amount paid to General Partner and Affiliates:
Commissions(1) 3,394,350 5,000,000 -0-
Acquisition fees 2,566,761 2,357,226 -0-
Organization and offering expense allowance 1,483,994 2,184,603 -0-
Dollar amount of cash generated from operations before deducting
payments to General Partner and Affiliates 36,073,602 14,971,163 -0-
Amount paid to General Partner and Affiliates from operations:
Management fees 861,364 316,155 -0-
Reimbursements 331,902 179,037 -0-
Dollar amount of property sales before deducting payments to
General Partner and Affiliates 2,235,185 435,815 -0-
Amount paid to General Partner and Affiliates from property sales:
Resale fees -0- -0- -0-
Management fees -0- -0- -0-
Promotional interest (cash distribution) to General Partner 120,593 56,516 754,288(2)
</TABLE>
- --------------------
(1) Affiliates of the sponsor re-allocated $4,153,665; $5,240,100;
$6,893,208; $5,577,777; $2,980,399 and $4,316,003 of commissions to
unaffiliated broker-dealers with respect to Leastec Income Fund V,
Northstar Income Fund I, PaineWebber Preferred Yield Fund, Capital
Preferred Yield Fund, Capital Preferred Yield Fund-II and Capital
Preferred Yield Fund-III.
(2) Reflects aggregate payments to the sponsor in 1995 through 1993 with
respect to nine other programs.
D-4
<PAGE>
TABLE III
Annual Operating Results
For the Six Months Ended June 30, 1996
(Unaudited)
Page 1 of 2
<TABLE>
<CAPTION>
Leastec NorthStar PaineWebber Capital Capital Capital
Income Income Preferred Yield Preferred Preferred Preferred
Fund V Fund I Fund Yield Fund Yield Fund-II Yield Fund-III
---------- ---------- --------------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Gross Revenues $1,389,524 $1,041,333 $7,854,169 $5,544,085 $4,995,467 $6,973,433
Profit (loss) on sale
of properties 90,854 267,101 407,129 392,099 85,916 110,831
Less: Operating expenses 302,905 222,013 962,977 1,454,926 743,497 296,194
Interest expense 76,299 -0- 685,503 357,304 533,532 719,272
Depreciation 749,140 656,661 4,750,265 3,480,236 3,666,019 4,927,197
Direct Services from
General Partner(s) 35,502 36,152 12,500 56,324 73,439 48,564
--------- --------- --------- --------- --------- ---------
Net income (loss) 316,532 393,608 1,960,043 587,394 64,896 1,093,037
Taxable income (loss) (5) (5) (5) (5) (5) (5)
- from operations (5) (5) (5) (5) (5) (5)
- from gain (loss) on sale (5) (5) (5) (5) (5) (5)
Cash generated (deficiency)
from operations 1,293,967 1,076,156 5,808,801 6,259,640 4,515,811 7,402,467
Cash generated from sales 460,181 713,692 1,271,113 2,030,076 988,179 435,815
Cash generated from refinancing -0- -0- -0- -0- -0- -0-
--------- --------- ---------- --------- --------- -----------
Cash generated from operations,
sales and refinancing 1,754,148 1,799,848 7,079,914 8,289,716 5,503,990 7,838,282
Less cash distributions to investors:
- from operating cash flows 1,017,558 1,945,138 5,680,503 4,622,570 2,053,813 2,365,475
- from sales and refinancing -0- -0- -0- -0- -0- -0-
- from other -0- -0- -0- -0- -0- -0-
--------- --------- ----------- --------- --------- ----------
Cash generated (deficiency)
after cash distributions 736,590 (155,290) 1,399,411 3,667,146 3,450,177 5,472,807
</TABLE>
D-5
<PAGE>
TABLE III (Continued)
Annual Operating Results
For the Six Months Ended June 30, 1996
(Unaudited)
Page 2 of 2
<TABLE>
<CAPTION>
Leastec NorthStar PaineWebber Capital Capital Capital
Income Income Preferred Yield Preferred Preferred Preferred
Fund V Fund I Fund Yield Fund Yield Fund-II Yield Fund-III
---------- ---------- --------------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Less Special items (not including
sales and refinancing):
Purchase of equipment -0- -0- 5,834,856 496,235 2,921,746 14,497,042
Net change in partnership debt 835,015 -0- 1,124,688 3,001,186 (1,838,514) (977,171)
Other (1) 10,248 -0- (534,547) 101,483 216,791 (9,209,518)
-------- --- ---------- ---------- ---------- -----------
Cash generated (deficiency) after cash
distributions and special items (108,673) (155,290) (5,025,586) 68,242 2,150,154 1,162,464
Tax & Distribution Data per $1,000
Invested(2):
Federal Income Tax Results:
Ordinary income (loss) (5) (5) (5) (5) (5) (5)
-from operations (5) (5) (5) (5) (5) (5)
-from recapture (5) (5) (5) (5) (5) (5)
Capital gain (loss) (5) (5) (5) (5) (5) (5)
Cash distribution to Investors
Source (on GAAP basis):
- investment income 6.38 7.51 27.58 9.29 1.93 21.94
- return of capital 14.14 29.61 52.35 63.82 59.15 25.54
Source (on cash basis):
- sales -0- 0.00 -0- -0- -0- -0-
- refinancing -0- -0- -0- -0- -0- -0-
- operations 20.52 37.12 79.94 73.11 61.08 47.48
- other -0- -0- -0- -0- -0- -0-
Original portfolio remaining (3) 28% -0% 34% 50% 85% 99%
Current portfolio amount as a
percentage of original portfolio
(4) 49% 22% 103% 80% 102% 129%
</TABLE>
- ------------------------------
(1) Includes increases/decreases to direct finance leases and/or
redemption of capital units.
(2) Excludes the units redeemed by the partnership pursuant to the Limited
Partnership Agreement, if any.
(3) Original total acquisition cost of original equipment retained,
divided by original total acquisition cost of all original equipment
acquired.
(4) Current portfolio amount is calculated by dividing original cost of
equipment portfolio at year end by total cost of the original
equipment acquired.
(5) To be calculated at December 31, 1996 for the annual period.
D-6
<PAGE>
TABLE IV
Sales or Dispositions of Equipment by Prior Public Programs
(Unaudited)
For the Six Months Ended June 30, 1996
Page 1 of 2
The following table sets forth the sales and dispositions of equipment by the
Prior Public Programs on various types of equipment.
<TABLE>
<CAPTION>
Holding Period(4)
Excess GAAP Profit --------------------
Year of Net Unrecovered (Deficiency) (Loss) on Average Range
Equipment Sales Proceeds (1) Cost (2) of Proceeds Sales (3) Term (mos.) (Months)
--------- ------- ------------ ----------- ------------ ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Leastec Income Fund V
- ---------------------
Data Processing Equipment 1996 $ 165,508 $ (144,388) $ 309,896 $ 93,037 57 34-84
Mining Equipment 1996 284,000 (62,573) 346,573 284,000 65 64-67
Manufacturing Equipment 1996 1,500 (86,554) 88,054 1,500 57 27-86
---------- ----------- ---------- --------
TOTALS $ 451,008 $ (293,514) $ 744,522 $378,537
========== =========== ========== ========
NorthStar Income Fund I
- -----------------------
Manufacturing Equipment 1996 $ 447,272 $ (799,141) $1,276,413 $108,218 44 35-80
Transportation Equipment 1996 235,000 (543,893) 778,893 164,985 53 50-54
Data Processing Equipment 1996 1,420 (182,438) 183,858 1,415 67 57-80
---------- ----------- ---------- --------
TOTALS $ 713,692 $(1,525,472) $2,239,164 $274,617
========== =========== ========== ========
PaineWebber Preferred Yield Fund
- --------------------------------
Data Processing Equipment 1996 $ 5,841 $ 20,452 $ (14,610) $ 5,841 35 36-66
Manufacturing Equipment 1996 1,139,072 (92,093) 1,231,165 328,439 54 24-65
Transportation Equipment 1996 74,900 (546) 75,446 33,297 53 53
Office Technology Equipment 1996 49,800 6,637 43,163 42,783 63 63
Medical Equipment 1996 1,500 (57,629) 59,129 1,500 25 24-28
---------- ----------- ----------- --------
TOTALS $1,271,113 $ (123,179) $1,394,292 $409,860
========== =========== ========== ========
</TABLE>
D-7
<PAGE>
TABLE IV
Sales or Dispositions of Equipment by Prior Public Programs
(Unaudited)
For the Six Months Ended June 30, 1996
Page 2 of 2
<TABLE>
<CAPTION>
Holding Period(4)
Excess GAAP Profit --------------------
Year of Net Unrecovered (Deficiency) (Loss) on Average Range
Equipment Sales Proceeds (1) Cost (2) of Proceeds Sales (3) Term (mos.) (Months)
--------- ------- ------------ ----------- ------------ ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Capital Preferred Yield Fund
- ----------------------------
Data Processing Equipment 1996 $ 228,628 $ (524,586) $ 753,214 $163,111 50 27-62
Manufacturing Equipment 1996 1,491,441 1,773,911 (282,470) 215,509 49 28-71
Transportation Equipment 1996 47,299 (1,891,474) 1,938,774 15,550 43 38-48
Mining Equipment 1996 125,000 21,944 103,056 0 59 59
Office Technology Equipment 1996 5,400 1,497 3,903 3,601 24 24
---------- ----------- ---------- --------
TOTALS $1,897,768 $ (618,708) $2,576,477 $397,771
========== =========== ========== ========
Capital Preferred Yield Fund II
- -------------------------------
Data Processing Equipment 1996 $ 515,379 $ 169,413 $ 345,967 $ 70,502 31 24-36
Manufacturing Equipment 1996 409,800 224,508 185,292 4,760 38 37-39
Medical Equipment 1996 63,000 12,231 50,769 15,009 37 37
--------- ----------- ---------- --------
TOTALS $ 988,179 $ 406,152 $ 582,028 $ 90,271
========== =========== ========== ========
Capital Preferred Yield Fund-III
- --------------------------------
Manufacturing Equipment 1996 $ 35,500 $ 82,471 $ (46,971) $ 0 21 21
Furniture and Fixtures 1996 77,795 62,714 15,081 9,833 11 11
Data Processing Equipment 1996 322,520 221,403 101,118 100,998 13 12-15
---------- ----------- ---------- --------
TOTALS $ 435,815 $ 366,588 $ 69,228 $110,831
========== =========== ========== ========
</TABLE>
- ---------------
(1) Proceeds received at disposition, net of direct selling cost.
(2) Original equipment investment less rents received from operations.
(3) Net proceeds received at disposition less the net book value of the
equipment at time of disposition.
(4) Holding Period is the number of months the assets are owned by the
Partnership. This is expressed as the average period for assets sold
and the range from shortest to longest period for assets sold.
D-8
<PAGE>
TABLE V
Historic Cash Distributions
(Unaudited)
For the Six Months Ended June 30, 1996
Page 1 of 3
<TABLE>
<CAPTION>
LEASTEC INCOME FUND V
- ---------------------
Class A Class B
General Partner(s) Limited Partners Limited Partners Total
------------------ ---------------- ---------------- -----
<S> <C> <C> <C> <C>
$ 51,053 $ 969,970 $ -0- $1,021,023
NORTHSTAR INCOME FUND I
- -----------------------
Class A Class B
General Partner(s) Limited Partners Limited Partners Total
------------------ ---------------- ---------------- -----
$ 64,011 $1,695,998 $ 68,871 $1,828,880
PAINEWEBBER PREFERRED YIELD FUND
- --------------------------------
Class A Class B
General Partner(s) Limited Partners Limited Partners Total
------------------ ---------------- ---------------- -----
$286,834 $4,974,480 $475,356 $5,736,670
CAPITAL PREFERRED YIELD FUND
- ----------------------------
Class A Class B
General Partner(s) Limited Partners Limited Partners Total
------------------ ---------------- ---------------- -----
$206,740 $4,087,026 $300,461 $4,622,570
Capital Preferred Yield Fund-II
- -------------------------------
Class A Class B
General Partner(s) Limited Partners Limited Partners Total
------------------ ---------------- ---------------- -----
$ 20,520 $2,013,320 $ 18,150 $2,051,990
Capital Preferred Yield Fund-III
- --------------------------------
Class A Class B
General Partner(s) Limited Partners Limited Partners Total
------------------ ---------------- ---------------- -----
$ 24,854 $2,402,695 $ 24,138 $2,451,687
</TABLE>
D-9
<PAGE>
TABLE V
Historic Cash Distributions
(Unaudited)
For the Six Months Ended June 30, 1996
Page 2 of 3
The following tables compare the distributions paid, income or loss
allocated for tax purposes and cumulative income/loss for tax purposes for a
$10,000 investment in each of the funds listed below, assuming that such
investment was made on the investment date indicated in parenthesis in the
heading for each table. Tax losses allocated for a particular year are carried
forward and may shelter tax income generated in subsequent years.
Leastec Income Fund V (11/16/87)
----------------------------------------------------------------
Distributions Income/ Cumulative
Paid Loss Income/Loss
-------------- ----------- -----------
1987 $ 138.63 ($ 291.94) ($ 291.94)
1988 1,150.52 ( 1,831.75) ( 2,123.69)
1989 1,200.02 -- ( 2,123.69)
1990 1,200.01 ( 350.29) ( 2,473.98)
1991 1,300.00 175.55 ( 2,298.43)
1992 1,400.04 504.37 ( 1,794.06)
1993 1,500.00 211.64 ( 1,582.42)
1994 1,046.31 1,026.97 ( 555.45)
1995 344.70 1,202.92 647.47
Northstar Income Fund (12/08/88)
----------------------------------------------------------------
Distributions Income/ Cumulative
Paid Loss Income/Loss
-------------- ----------- -----------
1987 $ 0 $ 0 $ 0
1988 0 0 0
1989 1,380.56 83.74 83.74
1990 1,493.41 ( 282.96) ( 199.22)
1991 1,769.38 258.68 59.46
1992 1,400.00 488.24 547.70
1993 1,400.00 295.33 843.03
1994 1,407.66 410.75 1,253.78
1995 859.53 377.59 1,631.37
D-10
<PAGE>
TABLE V
Historic Cash Distributions
(Unaudited)
For the Six Months Ended June 30, 1996
Page 3 of 3
Capital Preferred Yield Fund (01/24/90)
----------------------------------------------------------------
Distributions Income/ Cumulative
Paid Loss Income/Loss
-------------- ----------- -----------
1990 $1,029.03 ($1,825.54) ($1,825.54)
1991 1,200.01 ( 192.71) ( 2,018.25)
1992 1,200.01 1,373.04 ( 645.21)
1993 1,291.50 1,110.59 465.38
1994 1,299.99 92.81 558.19
1995 1,299.99 844.30 1,442.49
Capital Preferred Yield Fund-II (05/04/92)
----------------------------------------------------------------
Distributions Income/ Cumulative
Paid Loss Income/Loss
-------------- ----------- -----------
1990 $ 0 $ 0 $ 0
1991 0 0 0
1992 662.29 158.21 158.21
1993 1,200.00 (1,661.33) (1,503.12)
1994 1,200.00 ( 572.78) (2,075.90)
1995 1,200.00 320.09 (1,755.81)
Capital Preferred Yield Fund-III (04/29/94)
----------------------------------------------------------------
Distributions Income/ Cumulative
Paid Loss Income/Loss
-------------- ----------- -----------
1994 $ 612.50 ($ 753.87) ($ 753.87)
1995 1,050.00 ( 961.60) ( 1,715.47)
D-11
<PAGE>
TABLE VI
Historic Taxable Gain (Loss)
(Unaudited)
For the Six Months Ended June 30, 1996
Typically, the Partnerships have generated taxable losses to be
allocated to their partners during the first two years of operations. After that
taxable income is allocated to the partners annually.
<TABLE>
<CAPTION>
PaineWebber Capital Capital
Leastec NorthStar Preferred Preferred Yield Preferred Yield Preferred Yield
Date Income Fund V Income Fund I Yield Fund Fund Fund-II Fund-III
- ---- ------------- ------------- ---------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1996 (1) (1) (1) (1) (1) (1)
</TABLE>
(1) To be calculated at December 31, 1996 for the annual period.
D-12
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 1 of 9
The following is a list of all Lessees of Equipment owned by Capital Preferred
Yield Fund as of September 30, 1996:
AO Smith Corp. E I Dupont
Addington Embrex
Aetna Life Empire Blue Cross
Air National Guard Exel Logistics
Alliant Techsystems Federal Paper Board
Allied Signal Financial News Network
American Freightways First Bank of IL
AMPCO Pittsburgh FMC Corp
Anchor Glass Ford Motor Company
Apache Corporation Fourth Financial Corp
Apple River Hospital Fred Meyer
Aristech Chemical GE (Aero)
Avon GE (Transport)
Ball Corp. General Electric
Bartow Memorial Hospital General Felt
BioSafe, Inc. General Motors Corporation
Boeing Computer Georgia Power
Boston University Glamis Gold
BSE Management GM Powertrain
Branham & Baker Coal Goodyear
Cablec Corporation Gottschalks, Inc.
Carrier Corp. Gould, Inc.
Chambers Development HM Investment
Chrysler Corp. Hamline University
Citibank N.A. Hartford Fire
Commercial Union Insurance Hartz Foods
Community General Hospital Helvetia Coal
Compression Labs Henry General Hospital
Computer Science Hoyle, Morris & Kerr
Con Agra HP Casino Management
Conner Peripherals HP, Inc.
Consolidated Diesel Hughes Aircraft
Costain Coal Hughes Network
Cyprus Tonopah Mining Hyplains Beef
Danskin, Inc. IBM
Door County Hospital ICF
Dow Chemical ICI Americas
Dun & Bradstreet International Rectifier
D-13
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 2 of 9
Isomedix Quaker Fabric
ITO Corp of Baltimore Quality Products
Jamesway Corp Ralph's Grocery
Kaiser Cement Reliance Insurance
Key Services Rorer Group
Kimberly-Clark Rose Acres Farm
Kraft Savannah Electric
Lakeview Hospital Sarif, Inc.
LAM Research Schneider National
Lever Brothers Science Applications
Lockheed Sears Technology
Louisiana Workers Comp. Shareholder Services
LSI Logic Shell Mining
Marriott Sigma Designs
Marshalls Skywest Airlines
Maryland Casualty Smitty's Super Valu
Maxtor Corp. Southern Pacific Trans
Miami Dade Southwest Health Center
Miltope Southwest Health Center
Motorola Spring Arbor
McCray Memorial Springfield Sugar & Products
National Recovery Standish Community
Neenah Foundry Stater Brothers
Niagara Mohawk Stress Management
Norcross Footwear The Company Store
North American Chemical Thompson Pipe & Steel
Norton Company Thomson Saginaw
Occidental Chemical Timken Company
Otis Elevator Tokos
Pentagon Systems Triad International
Phillips Petroleum TRW
Phoenix Mutual Tyler Corp.
Plasma Quest US Navy
Prudential United Tech
D-14
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 3 of 9
United Track (Wembley) Western Digital
United Waste Wharf Resources
USS/Kobe Steel Williamsport Hospital
Valley Camp Coal Wisconsin Packaging
Wagner College Woodward & Lothrup
Wayne Farms Xerox
The percentage breakdown by the industry of Equipment owned and leased by
Capital Preferred Yield Fund as of September 30, 1996:
Above Ground Mining 2.36 PBX Systems 3.36
Agricul/Food Process 2.99 Periph-Controllers 0.96
Banking 0.23 Periph-Disk 3.68
Below Ground Mining 5.30 Periph-Printers 0.04
Boot Manufacturing 0.49 POS 0.95
Communication 5.19 Printed Circuit Board 0.17
Construction 2.64 Research 3.04
CPU'S DEC 4.45 Semiconductor Test 4.13
CPU'S IBM 3.73 Textile Equip. 1.25
CPU'S Other 1.87 Truck Leasing 2.89
Desktop PC 3.90 Transport Aircraft/Truck 5.40
Dry Vans 0.56 Wafer Fabrication 5.18
Forklifts 5.70 Warehousing 0.97
Furniture 5.44 Workstations 3.32
Glass Packaging 1.16 ------
Grocery 3.31 100.00
Loan 2.02
Locomotives 0.64
Machine Tools 0.71
Maintenance 3.63
Manuf.-Other 2.70
Medical 2.00
Misc. Packaging 0.73
Modular 1.14
Networking Equipment 0.54
Office Automation 1.23
D-15
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 4 of 9
The following is a list of all Lessees of Equipment owned by Capital Preferred
Yield Fund-II as of September 30, 1996:
Alliant Techsystems, Inc. ITO Corp
Allied Waste Industries James D. Hughes Insurance
Anchor Glass JP Food Service
Atlantic Steel Industries Kaman Corp.
Auto Alliance Lever Brothers
Barney's Lexmark International
Blue Cross & Blue Shield Londonderry
Chrysler Corporation LSI Logic
Chyron Corporation Maryland Casualty
CIBA Geigy Mascotech Braun
Communicorp, Inc. Matsushita
Community General Hospital Miami Dade
Consolidated Diesel Norcross Footwear
Danskin Northern Telecom
Diamond Shamrock Pepperidge Farm
Dow Jones Plexus Corporation
Ernst Home Center Ralph's Grocery
First Miss Steel Robertshaw Controls Company
G.E. Industrial Power Rose Acres Farm
G.E. (Aero-Eng) Savannah Electric & Power
G.E. Regional Sears Technology
General Motors Solectron Corp.
Georgia Power Southern Pacific
GM Powertrain Southwestern States Bank
Goodings Supermarket Staples
Hartford Fire State Street
H.E. Butt Grocery Stone Container
HBO & Company Sybron Chemicals
Hexcel System One Information Management
Honeywell Space Systems The Budd Company
HP Casino Management The Cerplex Group
IBM Corp The Falkirk Mining Co.
ICI America's The Forum Corporation
Ina Bearing Company The Good Guys
International Rectifier The Stop and Shop Supermarkets
D-16
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 5 of 9
Timken Company Westchester County
Tip Top Nurseries, Inc. Westinghouse
Town of Wellsley Wharf Resources
United Technologies Whirlpool
United Track Racing Wolfe Nursery
Walker Manufacturing Xerox
The percentage breakdown by the industry of Equipment owned and leased by
Capital Preferred Yield Fund-II as of September 30, 1996:
Above Ground Mining 2.46 Networking Equipment 3.96
Agricul/Food Process 1.21 Office Automation 2.34
Banking 3.75 PBX Systems 0.19
Boot Manufacturing 0.80 PC's Networking 0.24
Communication 0.31 PERIPH-Disk 0.69
Construction 1.70 PERIPH-Printers 0.96
CPU's - DEC 0.16 PERIPH-Tape 0.20
CPU's-IBM 0.32 Portable PC 1.62
CPU's Other 6.69 POS 4.44
Desktop PC's 10.34 Printed Circuit Board 5.65
Forklifts 7.47 Printing Equip. 0.01
Furniture 1.09 Research 0.81
Glass Packaging 1.62 Retail 3.05
Grocery FF&E 2.30 Semiconductor Test 4.73
Injection Molding 10.36 Textile Equip. 0.35
Loan 1.08 Track Leasing 1.63
Locomotives 1.33 Transport Trucks 3.78
Medical 1.00 Wafer Fabrication 1.00
Machine Tools 3.26 Workstations 2.36
Manuf.-Semiconductor 0.11 ------
Manuf.-Other 2.78 100.00
Modular 1.85
D-17
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 6 of 9
The following is a list of all Lessees of Equipment owned by Capital Preferred
Yield Fund-III as of September 30, 1996:
Acme Battery Manufacturing Compsource, Inc.
Alliant Techsystems, Inc. Consolidated Systems
Allied Waste Industries Consolidated Diesel
Allied Signal Container Care
Alloy Polymers, Inc. Country Cupboard
Alterations Plus Crystal Ford & Mercury
American Laminates, Inc. D.L. Phillips Investment
American Assoc. of Retired People DSL Transportation Service
Anchor Glass Dairymans Cooperative
Appalachian Power David Tire Co.
Applied Radidogical Control Decamps, William
Applied Graphics Diamond Shamrock
Atlantic Steel E&R, Inc.
Autry Grier & Sons, Inc. Eastern Associated Coal
Ball-Foster Glass Container Ebenoburg Power
Barber-Coleman Company Elmore-Pisgah, Inc.
Basic Vegetable Envirosafe Services
Bell South Telecommunications Equimed Leasing
Bickerstaff Imports Esselte Pendaflex Corp.
Bob King Pontiac GMC F&M Distributors
Bojangles Restaurants Feurer, Dennis
Bonar Fabrics Fingerhut
Brickhouse Enterprises Floyd Marine Storage
Bristol-Myers Squibb Foote & Davis, Inc.
Brown Strauss Steel Freestate Petroleum
C&H Knit Products GM Powertrain
CT Harris, Inc. General Motors
Calgon Carbon Georgetown Steel
Cansack USA Georgia Power
Cardiac Pacemakers Good Times Drive Thru
Central Air Freight HBO & Company
Ceradyne, Inc. HK Systems, Inc.
Champion Business Forms HP Casino Management
Chesebrough Ponds Haldix Corp.
Ciba Geigy Harry's Farmer's Market
Columbus Southern Power Heilig Meyers
D-18
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 7 of 9
Hokkins Systemation McGavren Guild, Inc.
Home Depot McKay, Dave
Honeywell Merrit, Ford
Hough Petroleum Midstate Construction
Hyplains Beef Mount Pleasant Publishing
IBM Corp. National Beef Packing Co.
ICI Americas National Broadcasting Co.
In Home Health North American Packaging
Indiana Michigan Power Ohio Power Company
Indy Electronics Oklahoma Dept. of Tourism
Interactive Marketing Pacific Coast Producers
Intergraph Peabody Coal Company
International Paper Co. Perimeter Oil Company
ITT Corporation Plexus Corp.
ITT Automotive Electrical Pretech Corporation
JJ Collins Sons, Inc. Prudential
Jack Eckerd Company PTC Aerospace
Kansas Oxide Corp. Quaker Coal Company
Kelley, Donald Quality Oil Company
Kentucky Power Co. Rainbow Marketers
Kessel Food Markets Ralph's Grocery
Keystone Consolidated Rawling Sporting Goods
Keystone Investment Management Recycled Materials Company
Kop. Flex, Inc. Riverside Chrysler Plymouth
KOVCD Roadmaster Corporation
Lakeland Chrysler Rogers Petroleum
Land O'Lakes Saturn Corp.
Lane Steel, Inc. Scott Company
Lever Brothers Company Sea-Lect Wholesale Seafood
Louisiana Workers Compensation Shapiro Packing
Lucas Western Shoex, Inc.
Lucas Industries Shroeder's Wholesale
Lucert Technologies Silverado Foods
Lykins Oil Co. Smoky Jennings Chevrolet
Madden Services SOS Transport
Major Brands Southway Tire & Automotive
Marriott Stampede Meat, Inc.
Maryland Casualty Staples
D-19
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 8 of 9
Straight-Line Water Sports Trammel Crow Distribution
System One Information Management Tom's Tire & Service Center
Television City Tracy-Locke
Tennessee River Tricord Systems
The Cerplex Group TRW
The Hanson Whitmey Company United Artists Theatre
The Foxboro Company United States Mineral
The Iams Company USS/Kobe Steel
The Warehouse, Inc. Valley Innovative Mgmt.
The Falkirk Mining Company VFL Technology
The Stop & Shop Supermarket Visionart Design
The Robert Plan Corp. Wayne Farns
Thomson Industries Whaley, Jane Co.
Thomson Saginaw Ball Screw Co. White Consolidated
Three Rivers Motor Co. Xerox
The percentage breakdown by the industry of Equipment owned and leased by
Capital Preferred Yield Fund-III as of September 30, 1996:
Above Ground Mining 3.30 PBX Systems 0.88
Agricul./Food Processing 4.51 PERIPH-Controllers 0.03
Automotive FF&E 0.50 PERIPH-Printers 0.40
Below Ground Mining 3.00 PERIPH-Tape 0.03
Communication 2.10 PERIPH-Terminals 0.25
Construction 2.70 Portable PC's 1.44
CPU's - DEC 0.34 POS 1.59
CPU's - Other 0.25 Printed Circuit Board 2.96
Desktop PC's 6.54 Printing Equipment 7.08
Dry Vans 1.17 Research 0.23
Forklifts 15.58 Restaurant FF&E 1.06
Furniture 6.66 Retail FF&E 1.86
Golf Course Equipment 0.62 Semiconductor Test Equip. 3.05
Grocery FF&E 5.54 Software 0.95
Injection Molding 0.15 Textile Equipment 1.17
Machine Tools 8.02 Track Leasing 0.04
Manuf.-Other 5.02 Transportation-Containers 0.16
Manuf.-Semiconductor 0.33 Transportation-Trucks 0.37
Misc. Packaging 0.51 Wafer Fabrication 1.77
Networking Equipment 2.64 Warehouse-Misc. 1.02
Office Automation 2.24 Workstations 1.94
------
100.00
D-20
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 9 of 9
The percentage breakdown by the industry of Equipment owned and leased by all of
Capital Preferred Yield Fund, Capital Preferred Yield Fund-II and Capital
Preferred Yield Fund-III as of September 30, 1996:
Above Ground Mining 2.64 Manufacturing-Other 3.37
Agricul/Food Process 2.97 Misc. Packaging 0.49
Automotive FF&E 0.14 Modular 0.98
Banking 1.01 Networking Equipment 2.01
Below Ground Mining 3.37 Office Automation 1.77
Boot Manufacturing 0.43 PBX Systems 1.90
Communication 3.14 Peripherals - Controllers 0.46
Construction 2.43 Peripherals - Disk 1.92
CPU's DEC 2.26 Peripherals - Printers 0.36
CPU's IBM 1.85 Peripherals - Tape 0.06
CPU's Teredata 2.24 Peripherals - Terminals 0.07
CPU's Other 0.33 Portable PC 0.79
Desktop PC 6.20 Point of Sale 1.97
Dry Vans 0.59 Printed Circuit Board Mfg. 2.26
Forklifts-1 1.64 Printing Equipment 1.99
Forklifts-2 6.65 Research 1.71
Forklifts-3 0.62 Restaurant FE&E 0.30
Furniture 4.72 Retail FF&E 1.25
Glass Packaging 0.94 Semiconductor Test 4.01
Golf Course Equipment 0.17 Software 0.27
Grocery FF&E 3.68 Textile Equipment 1.00
Injection Molding 2.52 Track Leasing 1.78
Loan 1.22 Transport Trucks 2.88
Locomotives 0.62 Transport Other 0.75
Machine Tools 3.39 Wafer Fabrication Mfg. 3.35
Maintenance 1.73 Warehousing 0.75
Manufacturing-Semiconductor 0.12 Workstations 2.69
Medical 1.24 ------
100.00
The following is a list of all Lessees of Equipment owned by Capital Preferred
Yield Fund-IV as of September 30, 1996:
Addison Wesley Longman International Paper Company
Alliant Techsystems, Inc. Louisiana Workers Comp.
Ball-Foster Glass Container Medtronic, Inc.
General Motors Corporation Staples, Inc.
GM Powertrain Division Universal Forest Products
Home Depot, Inc. USS/Kobe Steel
Xerox
D-21
<PAGE>
CAPITAL PREFERRED YIELD FUNDS
SAMPLE LESSEES BY REGION
-----------------------------
(Unaudited)
Northeastern Region Southeastern Region
- ------------------- -------------------
Avon Products Anchor Glass
Biosafe, Inc. Appalachian Power Co.
Bristol-Myers Squibb Co. Bartow Memorial Hospital
Columbus Southern Power Branham & Baker Coal Co.
Dow Jones & Company Ciba Geigy
G.E. Regional Electronics Center Compression Labs
Lever Brothers General Electric Supply
Marriott Corp. Georgia Power Company
Maryland Casualty HBO & Company
Ohio Power Co. Honeywell Space Systems, In.
Otis Elevator ICF, Inc.
Pepperidge Farm Intergraph Corporation
Shareholder Services Kentucky Power Co.
Staples, Inc. Kraft, Inc.
State Street Peabody Coal Co.
Thomson Saginaw Ball Screw Co. Plexus Corp.
TRW Savannah Electric & Power Co.
Shell Mining Co.
Timken Co.
Western Region Whirlpool
- --------------
Boeing Computer Systems Midwestern Region
Brown-Strauss Steel Division -----------------
Chesebrough-Ponds, Inc.
Chyron Corporation Alliant Techsystems, Inc.
Fred Meyers, Inc. Allied Signal, Inc.
General Felt Industries Apache Corp.
Hughes Aircraft Company Applied Graphics Technologies
General Motors Corporation Blue Cross & Blue Shield of Texas
Hughes Network Systems, Inc. Cardiac Pacemakers, Inc.
International Rectifier Corp. Carrier Corp.
Kaiser Cement Diamond Shamrock Refining
Lam Research Corp. Fingerhut
LSI Logic Corp. First Bank of Illinois
Lucas Western, Inc. Ford Motor Company
Marshalls Fourth Financial Corp.
Northern Telecom, Inc. General Motors Corporation
Ralph's Grocery' Hyplains Beef, L.C.
Southern Pacific Indiana Michigan Power Co.
Stater Brothers Land O'Lakes
Teledyne Industries, Inc. Motorola
Valley Camp Coal Occidental Chemical Corp.
Wharf Resources USA, Inc. Reliance Insurance
Sears Technology
D-22
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. Other Expenses of Issuance and Distribution*
Filing Fees - Securities and Exchange Commission...................$ 17,242.00
Filing Fee - NASD.................................................. 5,500.00
Accounting Fees and Expenses....................................... 30,000.00
Legal Fees and Expenses............................................ 175,000.00
Blue Sky Fees and Expenses......................................... 90,000.00
Printing Expenses (including Sales Materials)...................... 180,000.00
Marketing.......................................................... 1,000,000.00
Miscellaneous...................................................... 84,000.00
------------
Total Expenses............................................$1,581,742.00
- ---------------------
* All amounts are estimated maximums except Securities and Exchange
Commission and NASD filing fees. The Partnership will pay to the
General Partner a non-accountable reimbursement equal to 4% of the
Gross Offering Proceeds. Accordingly, the General Partner is assuming,
without recourse to the Partnership, responsibility for the payment of
all Reimbursable Organizational and Offering Expenses of the
Partnership, including any amounts which exceed such reimbursement.
ITEM 14. Indemnifications of Directors and Officers
The Partnership's Partnership Agreement contains certain
indemnification provisions indemnifying the General Partner and its Affiliates
including any directors and officers of the General Partner against certain
liabilities. Reference is made to Section 5.8 of the Partnership Agreement
(Exhibit A to the Prospectus). The Bylaws of the General Partner provide for
indemnification of its directors and officers and the Articles of Incorporation
provide for limitation of liability of the directors to the fullest extent
permitted under Colorado law. The officers and directors of the General Partner,
the General Partner itself and the Partnership will benefit from a standard
general partner liability and limited partnership reimbursement insurance policy
(paid for by an Affiliate of the General Partner), which will reimburse the
Partnership or make direct payments for certain claims which the Partnership may
be obligated to pay under Section 5.8 of the Partnership Agreement.
ITEM 15. Recent Sales of Unregistered Securities
In connection with the formation of the Partnership, the General
Partner made a nominal contribution to the capital of the Partnership, and
Capital Associates International, Inc., a Colorado corporation, as Class B
Limited Partner, has agreed to contribute cash to the Partnership equal to 1% of
the Partnership's Gross Offering Proceeds. These sales are exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended, as
they did not involve any public offering.
II-1
<PAGE>
ITEM 16. Exhibits and Financial Statement Schedules
(a) Exhibits. See Exhibit Index.
(b) Financial Statement Schedules. All schedules have been omitted
as the required information is inapplicable or is presented in the Prospectus,
in the balance sheets or related notes.
ITEM 17. Undertakings
1. The undersigned Registrant hereby undertakes:
A. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(1) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
B. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
C. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
2. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to the General Partner or other
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by the General Partner or controlling
persons of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by the General Partner or controlling persons in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Denver, State of
Colorado, on the 23rd day of October, 1996.
CAPITAL PREFERRED YIELD FUND-IV, L.P.
By: CAI EQUIPMENT LEASING V CORP.
a Colorado corporation and
the General Partner of the Registrant
By: /s/John F. Olmstead
--------------------------------
John F. Olmstead, President
II-3
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Amendment has been signed below on October 23, 1996 by the following persons in
the capacities indicated.
Signature Title
* President (Principal Executive Officer) and
- ----------------- Director of CAI Equipment Leasing V Corp.,
John F. Olmstead the General Partner of the Registrant
* Senior Vice President and Director of CAI
- ----------------- Equipment Leasing V Corp., the General
Dennis J. Lacey Partner of the Registrant
* Senior Vice President, Finance (Principal
- ------------------- Financial Officer) and Director of CAI
John E. Christensen Equipment Leasing V Corp., the General
Partner of the Registrant
* Senior Vice President, Assistant Secretary
- ------------------ and Director of CAI Equipment Leasing V
Anthony M. DiPaolo Corp., the General Partner of the
Registrant
* Director of CAI Equipment Leasing V Corp.,
- ---------------- the General Partner of the Registrant
Daniel J. Waller
* Director of CAI Equipment Leasing V Corp.,
- -------------------- the General Partner of the Registrant
Richard H. Abernethy
* Director of CAI Equipment Leasing V Corp.,
- ------------ the General Partner of the Registrant
John A. Reed
* Chief Accounting Officer and Secretary of
- ----------------- CAI Equipment Leasing V Corp., the General
David J. Anderson Partner of the Registrant
* John F. Olmstead, by signing his name hereto, does sign this document on
behalf of himself and each of Messrs. Lacey, Christensen, DiPaolo, Waller,
Abernethy, Reed and Anderson in the capacities indicated immediately above
pursuant to powers of attorney duly executed by each such person and filed with
the Securities and Exchange Commission.
/s/John F. Olmstead
------------------------
John F. Olmstead
Attorney-in-Fact
II-4
<PAGE>
EXHIBIT INDEX
Exhibits Exhibit Description
- -------- -------------------
1(a) -Form of Dealer-Manager Agreement**
1(b) -Form of Selling Dealer Agreement**
3(a) -Articles of Incorporation of CAI Equipment
Leasing V Corp.**
3(b) -Bylaws of CAI Equipment Leasing V Corp.**
4(a) -Organizational Partnership Agreement of
Capital Preferred Yield Fund - IV, L.P.**
4(b) -Form of Amended and Restated Agreement of
Limited Partnership (included in the
Prospectus)**
5 -Opinion of Ballard Spahr Andrews &
Ingersoll as to the legality of the
securities being registered**
8 -Opinion of Ballard Spahr Andrews &
Ingersoll as to tax matters**
10(a) -Escrow Agreement**
10(b) -Form of Subscription Agreement (included
in the Prospectus)**
23(a) -Consent of Ballard Spahr Andrews &
Ingersoll is contained in its opinion
(filed as Exhibit 5)**
23(b) -Consent of Ballard Spahr Andrews &
Ingersoll is contained in its opinion
(filed as Exhibit 8)**
23(c) -Consent of KPMG Peat Marwick relating to
its audit of the balance sheet of CAI
Equipment Leasing V Corp.
23(d) -Consent of KPMG Peat Marwick relating to
its audit of the balance sheets of
Capital Associates, Inc.
24 -Power of Attorney**
- ---------------------
** Previously filed.
II-5
Exhibit 23(c)
Consent of Independent Auditors
-------------------------------
BOARD OF DIRECTORS
CAI EQUIPMENT LEASING V CORPORATION:
We consent to the use of our report included herein relating to the balance
sheet of CAI Equipment Leasing V Corporation (a wholly owned subsidiary of
Capital Associates, Inc.) as of May 31, 1996, and to the reference to our firm
under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
/s/KPMG Peat Marwick LLP
------------------------
Denver, Colorado
October 17, 1996
<PAGE>
Exhibit 23(d)
Consent of Independent Auditors
BOARD OF DIRECTORS
CAPITAL ASSOCIATES, INC.:
We consent to the use of our report included herein relating to the consolidated
balance sheet of Capital Associates, Inc. and subsidiaries as of May 31, 1996,
and to the reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
/s/KPMG Peat Marwick LLP
------------------------
Denver, Colorado
October 17, 1996
