As Filed with the Securities and Exchange Commission on March 6, 1997
Registration No. 33-80849
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
POST-EFFECTIVE AMENDMENT NO. 2
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.
3751 South Quebec Street
Denver, Colorado 80237
----------------
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. 2 to its Prospectus dated April
15, 1996. Supplement No. 2 has been prepared in order to update certain
information in the Prospectus in compliance with certain provisions of federal
securities law. Supplement No. 2 supersedes Supplement No. 1.
Supplement No. 2 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.
1
<PAGE>
SUPPLEMENT NO. 2
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. This Supplement is a consolidated Supplement
and supersedes Supplement No. 1. The Partnership was 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 year 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 , 1997.
--------------- --
2
<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 January 31, 1997, 1,230 investors had acquired 183,699 Units, for a
total Capital Contribution of $18,369,872, 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, 316,301 of the Units remain to be sold
in this offering, which would represent additional Class A Limited Partners'
Capital Contributions of $31,630,100.
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.
3
<PAGE>
PURCHASE OF EQUIPMENT
As of January 31, 1997, 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 $14,844,296, including Acquisition Fees
and Acquisition Expenses paid by the Partnership, of which $849,244 was
financed. The Partnership paid Acquisition Fees and Acquisition Expenses of
$492,095, as of January 31, 1997, 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 January 31, 1997, CAII, an affiliate of the General Partner and the
Class B Limited Partner, had contributed $180,000 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 January 31, 1997, the Partnership had paid or accrued total distributions to
Class A Limited Partners of $587,720. 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 January 31, 1997, the Partnership had paid or
accrued total distributions of $5,343 to the General Partner and $6,125 to the
Class B Limited Partner. See "COMPENSATION AND FEES" in the Prospectus.
4
<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 December 31, 1996, approximately 76% 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 December 31, 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 December 31, 1996,
attached hereto in Exhibit C.
Results of Operations
- ---------------------
The Partnership commenced operations on April 16, 1996 and reported net
income of $102,627 for the period from April 16, 1996 to December 31, 1996. Net
income was derived principally from rentals generated from $13,991,309 of
equipment owned by the Partnership at December 31, 1996.
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.
Revenue generated from equipment on lease comprised 95% of total revenue
for 1996. Interest income comprised 5% of total revenue. General Motors, Lucent
Technologies and Staples, Inc. accounted for approximately 19%, 19% and 10%,
respectively, of total revenue during 1996. This concentration is attributable
to placement of equipment with the lessees during the early stages of the
Partnership's operations. Rental revenue from these lessees was, therefore,
relatively more significant in 1996 than it would be expected in the future, as
additional leases are acquired by the Partnership.
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.
Depreciation expense comprised 79% of total expenses for 1996.
5
<PAGE>
Liquidity & Capital Resources
- -----------------------------
The Partnership was formed on December 18, 1995. On April 16, 1996, the
Partnership commenced offering 500,000 Class A limited partner units at $100 per
unit for sale to investors. 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 intends to continue offering up
to 500,000 Class A limited partner units for sale and admitting additional Class
A limited partners through April 15, 1998.
A summary of the Partnership's offering activities from the commencement of
operations to December 31, 1996 is presented below:
Class A limited partner units sold 154,553
============
Gross offering proceeds $ 15,455,281
Sales commissions (1,545,528)
Organization and offering expenses (618,112)
Due diligence expenses (66,630)
------------
Net offering proceeds $ 13,225,011
============
Class B limited partner (CAII) cash contribution $ 150,000
============
The Partnership funds its operating activities principally with cash from
rents, discounted lease rentals (non-recourse debt), interest income, and sales
of off-lease equipment. Available cash and cash reserves of the Partnership are
invested in short-term government securities pending the acquisition of
equipment or distribution to the partners.
During 1996, the Partnership acquired equipment subject to leases with a
total purchase price of $13,991,309 (including $849,244 of discounted lease
rentals). Also during 1996, the Partnership discounted future rental payments
from certain leases to non-recourse lenders and received proceeds of $1,923,239.
Non-recourse borrowing against unleveraged leases in the Partnership's lease
portfolio may occur in the future as well, when the general partner, in its
discretion, determines that such non-recourse financing is in the best interest
of the Partnership. As of December 31, 1996, the general partner had identified
$2.6 million of additional equipment that satisfied the Partnership's
acquisition criteria that is expected to be acquired during 1997.
During 1996, the Partnership declared distributions to the Class A limited
partners of $439,720 of which $126,682 was paid during January 1997. A
substantial portion of such distributions is expected to constitute a return of
capital. Distributions may be characterized for tax, accounting and economic
purposes as a return of capital, a return on capital or a portion of 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 for accounting purposes.
However, the total percentage of a partnership's return on capital over its life
will only be determined after all residual cash flows (which include proceeds
from the re-leasing and sale of equipment) have been realized at the termination
of the Partnership. For 1996, approximately 76% of the cash distributions paid
to the partners of the Partnership constituted a return of capital for
accounting purposes. This percentage may not be reflective of the percentage of
distributions that constitutes a return of capital at any subsequent point in
time.
6
<PAGE>
The general partner believes that the Partnership will generate sufficient
cash flows from operations during 1997, 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 November 30, 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.
FINANCIAL RESULTS OF PARTNERSHIP AND GENERAL PARTNER
The audited financial statements and the footnotes to the financial
statements of the Partnership for the period from April 16, 1996 (commencement
of operations), to December 31, 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 November 30, 1996, are attached hereto in Exhibit C.
PLAN OF DISTRIBUTION
In situations where the individual broker is compensated by the investor on
a fee basis and can not take a commission, the investor shall receive additional
Units for such portion of the sales commission that would have been paid to the
individual broker, and the selling dealer would still receive its portion of the
sales commission.
Selling dealers will be given the option to receive 6.0 percent of their
full sales commission at closing and an additional 0.5 percent per year for five
years rather than the full 8.0 percent sales commission at closing. In no case
shall the full sales commission exceed 10.0 percent.
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.
7
<PAGE>
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 financial statements of
Capital Preferred Yield Fund- IV, L.P., as of December 31, 1996, and for the
period from April 16, 1996 (commencement of operations) to December 31, 1996,
have been included herein and the Registration Statement in reliance upon the
report 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.
8
<PAGE>
EXHIBIT A
EQUIPMENT PURCHASED
The following table shows the Equipment purchased by the Partnership as of
January 31, 1997. 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 Corporation 04/16/96 Forklifts 51 $ 4,706 $ 3,950 $ 878 $ 0
General Motors Corporation 04/16/96 Forklifts 51 83,432 71,125 15,806 0
General Motors Corporation 04/16/96 Forklifts 51 176,906 150,051 33,345 0
General Motors Corporation 04/16/96 Forklifts 51 29,761 25,364 5,637 0
General Motors Corporation 04/16/96 Forklifts 51 28,758 24,392 5,421 0
General Motors Corporation 04/16/96 Forklifts 51 212,115 178,032 39,563 0
General Motors Corporation 04/16/96 Forklifts 51 51,633 43,795 9,732 0
General Motors Corporation 04/16/96 Forklifts 51 149,577 126,871 28,194 0
General Motors Corporation 04/25/96 Loader 52 83,700 72,785 15,880 0
Staples 07/08/96 Copiers 23 237,739 202,097 93,276 0
Staples 07/08/96 Copiers 22 254,608 213,526 102,492 0
USS/Kobe Steel 05/07/96 Forklifts 30 36,558 25,318 9,207 23,146
International Paper Co 05/10/96 Networking eqmt 30 126,272 112,696 40,980 93,905
Universal Forest Products 06/04/96 Forklifts 29 35,512 25,167 9,438 20,765
General Motors Corporation 06/07/96 Forklifts 54 38,644 34,826 7,332 0
Universal Forest Products 07/01/96 Forklifts 30 35,512 26,012 9,459 21,459
Universal Forest Products 07/01/96 Forklifts 30 21,982 15,768 5,734 13,009
Addison Wesley Longman 07/03/96 IBM notebooks 30 513,592 446,145 162,235 0
Louisiana Workers Comp 07/01/96 Computer eqmt 30 120,076 120,796 43,926 100,655
General Motors Corporation 07/05/96 Material handling 30 112,710 100,280 36,465 0
General Motors Corporation 07/08/96 Material handling 30 117,246 104,316 37,933 0
Xerox 07/24/96 Forklifts 38 14,501 11,562 3,384 0
GM Powertrain 08/09/96 Scrubber 31 6,423 5,888 2,078 0
General Motors Corporation 08/15/96 Material handling 32 111,912 91,574 31,397 0
General Motors Corporation 08/20/96 Material handling 32 22,066 18,056 6,191 0
Medtronic 08/22/96 Copiers 31 14,630 14,369 5,072 11,851
General Motors Corporation 08/22/96 Material handling 32 13,437 10,995 3,770 0
</TABLE>
A-1
<PAGE>
Financing Financing Equip- Type
Interest Term ment of
Lessee Rate (Months) Location Lease (2)
- -------------------------- --------- ---------- -------- ---------
General Motors Corporation N/A N/A MI OL
General Motors Corporation N/A N/A MI OL
General Motors Corporation N/A N/A MI OL
General Motors Corporation N/A N/A MI OL
General Motors Corporation N/A N/A MI OL
General Motors Corporation N/A N/A MI OL
General Motors Corporation N/A N/A MI OL
General Motors Corporation N/A N/A MI OL
General Motors Corporation N/A N/A NY OL
Staples N/A N/A NJ OL
Staples N/A N/A NY OL
USS/Kobe Steel 6.86 30 OH OL
International Paper Co 6.86 30 MS OL
Universal Forest Products 7.65 29 CO OL
General Motors Corporation N/A N/A KY OL
Universal Forest Products 7.66 30 CO OL
Universal Forest Products 7.66 30 CO OL
Addison Wesley Longman N/A N/A TX OL
Louisiana Workers Comp 6.86 30 LA DF
General Motors Corporation N/A N/A OK OL
General Motors Corporation N/A N/A GA OL
Xerox N/A N/A NY OL
GM Powertrain N/A N/A MI OL
General Motors Corporation N/A N/A WI OL
General Motors Corporation N/A N/A MI OL
Medtronic 7.67 31 MN DF
General Motors Corporation N/A N/A OH OL
A-1
<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>
International Paper 08/29/96 Forklifts 55 $ 892,796 $ 816,290 $ 168,888 $ 659,454
USS/Kobe Steel 08/30/96 Forklifts 79 85,876 282,435 41,332 73,960
Home Depot 09/05/96 Forklifts 43 669,457 647,919 169,022 460,286
Ball Foster Glass 09/09/96 Wrapper 56 238,961 234,534 47,702 189,099
Ball Foster Glass 09/18/96 Lift Trucks 32 61,354 44,418 15,229 37,008
General Motors Corporation 09/20/96 Trailer 57 38,470 36,495 7,299 0
Ball Foster Glass 09/26/96 Wrapping eqmt 57 102,454 102,387 20,477 82,388
Alliant Techsystems 09/30/96 Phone system 21 12,357 9,869 4,934 0
ITT Automotive Electric 10/01/96 Material handling 57 124,903 113,881 23,975 97,869
Consolidated Diesel 10/03/96 Material handling 57 37,771 41,275 8,690 0
Consolidated Diesel 10/10/96 Material handling 57 6,589 6,734 1,418 0
Thomson Industries 10/17/96 Machine tools 58 144,050 128,022 26,487 106,154
Consolidated Diesel 10/18/96 Copiers 40 29,891 31,932 9,579 0
Harsco Corp 11/27/96 Manufacturing eqmt 5 98,292 18,710 44,904 0
Harsco Corp 11/27/96 Manufacturing eqmt 24 923,942 529,377 264,688 0
Georgetown Steel Corporation 10/10/96 Material handling 33 75,242 58,357 21,221 52,449
Xerox 10/15/96 Video imaging 32 22,447 18,240 6,840 0
Xerox 10/16/96 Video imaging 32 75,531 61,344 23,004 0
General Motors Corporation 10/11/96 Material handling 34 79,821 63,449 22,394 0
Ball Foster Glass 10/24/96 Forklifts 33 184,995 126,277 45,919 114,737
Ball Foster Glass 10/23/96 Stretch wrapper 56 122,517 114,265 24,485 97,064
Ball Foster Glass 10/23/96 Material handling 28 50,537 29,375 12,589 27,082
USS/Kobe Steel 10/23/96 Material handling 81 73,874 238,496 35,333 65,015
Ball Foster Glass 10/25/96 Material handling 55 29,522 27,057 5,903 23,051
Ball Foster Glass 11/05/96 Loaders 58 86,318 75,430 15,606 0
Ball Foster Glass 11/05/96 Loaders 58 112,952 98,704 20,422 0
Xerox 11/05/96 Material handling 41 35,435 28,454 8,328 0
Basic Vegetable 11/04/96 Material handling 58 151,375 134,499 27,827 0
Consolidated Diesel 11/07/96 Copiers 34 8,223 8,010 2,827 0
Lucent Technologies 11/20/96 Modular building 33 2,323,805 1,979,835 719,940 0
Ball Foster Glass 11/25/96 Forklifts 27 62,397 35,024 15,566 0
Consolidated Diesel 11/26/96 Burden carriers 59 5,876 6,199 1,261 0
General Motors Corporation 11/27/96 Material handling 36 41,315 34,671 11,557 0
Xerox 12/09/96 Emulator 22 4,749 3,256 1,776 0
GM Powertrain 12/13/96 Material handling 36 44,143 37,153 12,384 0
Total System Service 12/13/96 Mailing system 45 1,950,481 1,747,908 466,109 0
Thomson Industries, Inc. 12/13/96 Grinders 95 45,659 68,020 8,592 0
</TABLE>
A-2
<PAGE>
Financing Financing Equip- Type
Interest Term ment of
Lessee Rate (Months) Location Lease (2)
- -------------------------- --------- ---------- -------- ---------
International Paper 7.08 55 NC OL
USS/Kobe Steel 7.18 79 OH OL
Home Depot 7.09 43 NJ OL
Ball Foster Glass 7.08 56 NC OL
Ball Foster Glass 6.88 32 IL OL
General Motors Corporation N/A N/A LA OL
Ball Foster Glass 7.09 57 PA OL
Alliant Techsystems N/A N/A TX OL
ITT Automotive Electric 7.09 57 NY OL
Consolidated Diesel N/A N/A NC DF
Consolidated Diesel N/A N/A NC OL
Thomson Industries 7.89 58 MI OL
Consolidated Diesel N/A N/A NC DF
Harsco Corp N/A N/A AL OL
Harsco Corp N/A N/A AL OL
Georgetown Steel Corporation 7.69 33 SC OL
Xerox N/A N/A NY OL
Xerox N/A N/A NY OL
General Motors Corporation N/A N/A MI OL
Ball Foster Glass 6.89 33 MA OL
Ball Foster Glass 7.08 56 IL OL
Ball Foster Glass 6.84 28 PA OL
USS/Kobe Steel 7.19 81 OH OL
Ball Foster Glass 7.08 55 MA OL
Ball Foster Glass N/A N/A IN OL
Ball Foster Glass N/A N/A CA OL
Xerox N/A N/A NY OL
Basic Vegetable N/A N/A CA OL
Consolidated Diesel N/A N/A NC OL
Lucent Technologies N/A N/A IL OL
Ball Foster Glass N/A N/A IL OL
Consolidated Diesel N/A N/A NC OL
General Motors Corporation N/A N/A MI OL
Xerox N/A N/A NY OL
GM Powertrain N/A N/A MI OL
Total System Service N/A N/A GA OL
Thomson Industries, Inc. N/A N/A MI OL
A-2
<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>
Precision Castparts 12/18/96 Forklifts 59 $ 372,509 $ 377,429 $ 76,765 $ 0
Thomson Industries, Inc. 12/20/96 Grinders 60 1,383,039 1,367,768 273,554 0
General Motors Corporation 12/20/96 Material handling 60 19,882 18,862 3,772 0
Owens-Corning Fiberglass 12/20/96 Personal computers 30 466,087 424,355 169,742 388,959
Xerox 12/27/96 Logic analyzer 35 10,418 8,400 2,880 0
Xerox 12/27/96 Analysis system 35 30,988 28,035 9,612 0
Alliant Techsystems 01/02/97 Lathe 60 250,597 219,835 43,967 0
Xerox 01/10/97 Signal processor 36 7,967 7,092 2,364 0
Matsushita 01/10/97 Phone system 36 114,258 109,872 36,624 0
Xerox 01/13/97 Test equipment 36 20,522 17,388 5,796 0
Xerox 01/13/97 Test equipment 36 25,209 23,436 7,812 0
Alcoa Aluminum 01/13/97 Lift trucks 44 152,022 133,276 36,348 0
In Home Health 01/16/97 FF&E 60 13,516 14,101 2,820 0
General Motors Corporation 01/24/97 Machine tools 83 268,896 278,168 40,217 0
------------ ------------ ----------- -----------
Total purchased at January 31, 1997 $ 14,844,296 $ 13,342,074 $ 3,841,605 $ 2,759,365
============ ============ =========== ===========
</TABLE>
(1) The weighted average term (weighted by purchase price) for the above
leases is 43 months. The total rental income to the Partnership pursuant
to these leases over the initial, non-cancelable lease term equals 90% 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-3
<PAGE>
Financing Financing Equip- Type
Interest Term ment of
Lessee Rate (Months) Location Lease (2)
-------------------------- --------- --------- -------- ---------
Precision Castparts N/A N/A OR OL
Thomson Industries, Inc. N/A N/A MI OL
General Motors Corporation N/A N/A MI OL
Owens-Corning Fiberglass 6.86 30 OH OL
Xerox N/A N/A NY OL
Xerox N/A N/A NY OL
Alliant Techsystems N/A N/A MN OL
Xerox N/A N/A NY OL
Matsushita N/A N/A NJ OL
Xerox N/A N/A NY OL
Xerox N/A N/A NY OL
Alcoa Aluminum N/A N/A WA OL
In Home Health N/A N/A IN OL
General Motors Corporation N/A N/A LA OL
A-3
<PAGE>
EXHIBIT B
ANTICIPATED EQUIPMENT PURCHASES
The equipment listed below, as of January 31, 1997, 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 Equipment Anticipated Anticipated
First Basic Anticipated Lease Term Purchase Gross Monthly Anticipated
Anticipated Lessee (1) Rent Date Equipment (Months) (1) Price Rents (1) (2) Rent Financing
- ---------------------- ------------ ---------- ------------ ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Xerox 02/15/97 Communication 36 $ 24,438 $ 22,752 $ 632 All Cash
Home Depot 01/25/97 Forklifts 60 103,354 88,740 1,479 All Cash
Home Depot 01/25/97 Forklifts 48 405,329 217,248 4,526 All Cash
Nabisco 01/01/97 Forklifts 48 17,205 16,944 353 All Cash
General Motors 03/01/97 Forklifts 36 9,184 9,216 256 All Cash
Louisiana Workers 12/01/96 Networking 36 34,492 37,080 1,030 All Cash
Northwestern University 03/01/97 Medical 60 134,650 180,000 3,000 All Cash
Consolidated Diesel 03/01/97 Copiers 36 17,990 19,404 539 All Cash
Alcoa Fujikura 01/01/97 Forklifts 44 800,811 634,348 14,417 All Cash
Brown Strauss 05/01/97 Forklifts 36 362,564 284,832 7,912 All Cash
Brown Strauss 10/01/97 Forklifts 36 725,128 569,664 15,824 All Cash
E-Trade 12/01/96 PC's 32 511,972 502,176 15,693 All Cash
General Motors 03/01/97 Van 36 20,946 19,800 550 All Cash
International Paper 03/01/97 Utility Carts 36 67,104 65,412 1,817 All Cash
International Paper 03/01/97 Carry All 36 11,816 11,556 321 All Cash
International Paper 06/01/97 Lift Trucks 60 83,976 87,000 1,450 All Cash
International Paper 05/01/97 Lift Trucks 60 68,920 78,480 1,308 All Cash
Lucent 03/01/97 Wafer Fabrication 36 46,280 40,752 1,132 All Cash
Lucent 03/01/97 Wafer Fabrication 36 27,390 26,856 746 All Cash
Precision Castparts 03/01/97 Forklifts 60 131,068 142,320 2,372 All Cash
B-1
<PAGE>
Anticipated Anticipated Equipment Anticipated Anticipated
First Basic Anticipated Lease Term Purchase Gross Monthly Anticipated
Anticipated Lessee (1) Rent Date Equipment (Months) (1) Price Rents (1) (2) Rent Financing
- ---------------------- ------------ ---------- ------------ ----------- ------------- ------------ -----------
Thomson Industries 05/01/97 Machine Tools 60 $ 217,170 $ 211,620 $ 3,527 All Cash
Thomson Industries 03/01/97 Machine Tools 60 81,203 77,700 1,295 All Cash
Thomson Saginaw 03/01/97 Torgue Tester 60 159,302 158,580 2,643 All Cash
Total System Services 03/01/97 Mail Sorter 47 1,035,330 1,027,843 21,869 All Cash
Universal Forest 03/01/97 Forklift 36 34,323 28,548 793 All Cash
Universal Forest 03/01/97 Forklift 36 44,993 37,908 1,053 All Cash
USS/Kobe 04/01/97 HVAC System 48 231,570 209,712 4,369 All Cash
----------- ----------- ---------
TOTAL: $ 5,408,508 $ 4,806,491 $ 110,906
=========== =========== =========
</TABLE>
- ----------------------
(1) The weighted average term (weighted by anticipated purchase price) for the
above transactions is 47 months. The total rental income to the
Partnership pursuant to these leases over the initial, non-cancelable
lease term equals 89% 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-2
<PAGE>
EXHIBIT C
FINANCIAL STATEMENTS
Page
----
Capital Preferred Yield Fund-IV, L.P.
Independent Auditors' Report C-2
Balance Sheet as of December 31, 1996 C-3
Statement of Income for the Period from the Commencement
of Operations (April 16, 1996) to December 31, 1996 C-4
Statement of Partners' Capital for the Period from the Commencement
of Operations (April 16, 1996) to December 31, 1996 C-5
Statement of Cash Flows for the Period from the Commencement
of Operations (April 16, 1996) to December 31, 1996 C-6
Notes to Financial Statements C-8
CAI Equipment Leasing V Corp.
Independent Auditors' Report C-18
Balance Sheet as of May 31, 1996 and Notes to Balance Sheet C-19
Unaudited Balance Sheet as of November 30, 1996 and Notes to
Unaudited Balance Sheet C-23
Capital Associates, Inc.
Independent Auditors' Report C-27
Consolidated Balance Sheet as of May 31, 1996 and Notes to
Consolidated Balance Sheet C-28
Unaudited Consolidated Balance Sheet as of November 30, 1996 and
Notes to Unaudited Consolidated Balance Sheet C-42
C-1
<PAGE>
Independent Auditors' Report
----------------------------
The Partners
Capital Preferred Yield Fund-IV, L.P.
We have audited the accompanying balance sheet of Capital Preferred Yield
Fund-IV, L.P. as of December 31, 1996, and the related statements of income,
partners' capital, and cash flows for the period from April 16, 1996
(commencement of operations) to December 31, 1996. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Capital Preferred Yield
Fund-IV, L.P. as of December 31, 1996, and the results of its operations and its
cash flows for the period from April 16, 1996 (commencement of operations) to
December 31, 1996, in conformity with generally accepted accounting principles.
/s/KPMG Peat Marwick LLP
------------------------
KPMG Peat Marwick LLP
Denver, Colorado
January 31, 1997
C-2
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
BALANCE SHEET
ASSETS
December 31,
1996
------------
Cash and cash equivalents $ 3,286,072
Accounts receivable 76,524
Net investment in direct finance leases 182,328
Leased equipment, net 13,107,533
-----------
Total assets $16,652,457
===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued liabilities $ 658,229
Payable to affiliates 43,483
Rents received in advance 31,991
Distributions payable to partners 128,898
Discounted lease rentals 2,765,239
-----------
Total liabilities 3,627,840
-----------
Partners' capital:
General partner -
Limited partners:
Class A 500,000 units authorized; 154,503 units
issued and outstanding 12,878,374
Class B 146,243
-----------
Total partners' capital 13,024,617
-----------
Total liabilities and partners' capital $16,652,457
===========
The accompanying notes are an integral part of these financial statements.
C-3
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
STATEMENT OF INCOME
For the period from the
Commencement of Operations
(April 16, 1996) to
December 31, 1996
--------------------------
Revenue:
Operating lease rentals $881,778
Direct finance lease income 7,805
Interest income 50,763
--------
Total revenue 940,346
--------
Expenses:
Depreciation and amortization 659,574
Management fees paid to general partner 17,688
Direct services from general partner 41,376
General and administrative 92,539
Interest on discounted lease rentals 26,542
--------
Total expenses 837,719
--------
Net income $102,627
========
Net income allocated:
To the general partner $ 26,271
To the Class A limited partners 75,564
To the Class B limited partner 792
--------
$102,627
========
Net income per weighted average Class A limited
partner unit outstanding $ 1.33
========
Weighted average Class A limited partner
units outstanding 56,931
========
The accompanying notes are an integral part of these financial statements.
C-4
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
STATEMENT OF
PARTNERS' CAPITAL For the period
from commencement of operations (April 16, 1996)
to December 31, 1996
<TABLE>
<CAPTION>
Class A
Limited Class A Class B
General Partners Limited Limited
Partner Units Partners Partner Total
------- ----- -------- ------- -----
<S> <C> <C> <C> <C> <C>
Capital contributions $ 0 154,553 $ 15,455,281 $ 150,000 $ 15,605,281
Commissions and offering
costs on sale of Class A
limited partner units (22,303) - (2,207,967) - (2,230,270)
Redemptions - (50) (4,784) - (4,784)
Net income 26,271 - 75,564 792 102,627
Distributions declared
to partners (3,968) - (439,720) (4,549) (448,237)
-------- ------- ------------ --------- ------------
Partners' capital,
December 31, 1996 $ - 154,503 $ 12,878,374 $ 146,243 $ 13,024,617
======== ======= ============ ========= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
C-5
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the period from the
Commencement of Operations
(April 16, 1996) to
December 31, 1996
--------------------------
<S> <C>
Cash flows from operating activities:
Net income $ 102,627
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 659,574
Recovery of investment in direct finance leases 20,040
Changes in assets and liabilities:
Increase in accounts receivable (76,524)
Increase in accounts payable and accrued liabilities 651,476
Increase in payable to affiliates 43,483
Increase in rents received in advance 31,991
-------------
Net cash provided by operating activities 1,432,667
-------------
Cash flows from investing activities:
Purchases of equipment on operating leases from affiliates (12,939,697)
Investment in direct financing leases, acquired from affiliates (202,368)
-------------
Net cash used in investing activities (13,142,065)
-------------
Cash flows from financing activities:
Proceeds from Class A capital contributions 15,455,281
Proceeds from Class B capital contributions 150,000
Proceeds from discounted lease rentals 1,923,239
Principal payments on discounted lease rentals (7,244)
Redemptions of Class A limited partner units (4,784)
Commissions paid to affiliate in connection with
the sale of Class A limited partner units (1,545,528)
Non-accountable organization and offering expenses
reimbursement paid to the general partner in connection
with the sale of Class A limited partner units (656,155)
Distributions to partners (319,339)
-------------
Net cash provided by financing activities 14,995,470
-------------
Net increase in cash and cash equivalents 3,286,072
-------------
Cash and cash equivalents at beginning of period -
Cash and cash equivalents at end of period $ 3,286,072
=============
</TABLE>
C-6
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the period from the
Commencement of Operations
(April 16, 1996) to
December 31, 1996
--------------------------
<S> <C>
Supplemental disclosure of cash flow information:
Interest paid on discounted lease rentals $ 26,542
Supplemental disclosure of noncash investing and financing
activities:
Reduction in Partner's capital accounts for commissions
and offering costs payable to affiliates 28,587
Discounted lease rentals assumed in equipment acquisitions 849,244
</TABLE>
The accompanying notes are an integral part of these financial statements.
C-7
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies
-----------------------------------------------------------
Organization
Capital Preferred Yield Fund-IV, L.P. (the "Partnership") was organized on
December 18, 1995 as a limited partnership under the laws of the State of
Delaware pursuant to an Agreement of Limited Partnership (the "Partnership
Agreement"). The Partnership was formed for the purpose of acquiring and
leasing a diversified portfolio of equipment to unaffiliated third
parties. The Partnership will continue until December 31, 2007 unless
terminated earlier in accordance with the terms of the Partnership
Agreement. All Partnership equipment is expected to be sold and the
Partnership liquidated between 2003 and 2007. The general partner of the
Partnership is CAI Equipment Leasing V Corp., a wholly owned subsidiary of
Capital Associates, Inc. ("CAI").
The general partner manages the Partnership, including investment of
funds, purchase and sale of equipment, lease negotiation and other
administrative duties. The Partnership commenced business operations on
April 16, 1996, and from that date through December 31, 1996, 154,553
Class A limited partner units were sold to approximately 867 investors at
a price of $100 per Class A limited partner unit.
Capital Associates International, Inc. ("CAII"), a wholly owned subsidiary
of CAI, is the Class B limited partner. The Class B limited partner is
required to contribute cash, upon acquisition of equipment, in an amount
equal to 1% of gross offering proceeds received from the sale of Class A
limited partner units. As of December 31, 1996, CAII has contributed
$150,000 to the Partnership.
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.
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.
C-8
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies, continued
-----------------------------------------------------------
Partnership Allocations, continued
Cash Distributions, continued
------------------
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.
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, 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 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 partners.
C-9
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies, continued
-----------------------------------------------------------
Profits and Losses, continued
------------------
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 other
expenses paid in connection with the sale of Class A limited partner
units 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 year (or 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 year, in order to restore
the balance in the general partner's capital account to zero.
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).
Financial Reporting
-------------------
For financial reporting purposes, net income is allocated to the partners
in a manner consistent with the allocation of cash distributions.
Recently Issued Financial Accounting Standards
The Partnership 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 January 1, 1996. 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.
C-10
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies, continued
-----------------------------------------------------------
Recently Issued Financial Accounting Standards, continued
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 Partnership 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 Partnership's financial condition or results of
operations.
Lease Accounting
Statement of Financial Accounting Standards No. 13, Accounting for Leases,
requires that a lessor account for each lease by the direct finance,
sales-type or operating lease method. The Partnership currently utilizes
the direct financing and operating methods for all of the Partnership's
equipment under lease. Direct finance leases are defined as those leases
which transfer substantially all of the benefits and risks of ownership of
the equipment to the lessee. For all types of leases, the determination of
profit considers the estimated value of the equipment at lease
termination, referred to as the residual value. After the inception of a
lease, the Partnership may engage in financing of lease receivables on a
nonrecourse basis (i.e., "non-recourse debt" or "discounted lease
rentals") and/or equipment sale transactions to reduce or recover its
investment in the equipment.
The Partnership's accounting methods and their financial reporting effects
are described below.
Net Investment in Direct Financing Leases ("DFLs")
The cost of the equipment, including acquisition fees paid to the general
partner, is recorded as net investment in DFLs on the accompanying balance
sheet. Leasing revenue, which is recognized over the term of the lease,
consists of the excess of lease payments plus the estimated residual value
over the equipment's cost. Earned income is recognized monthly to provide
a constant yield and is recorded as direct finance lease income on the
accompanying income statements. 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 general
partner. In estimating such values, the general partner considers all
relevant information regarding the equipment and the lessee.
C-11
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies, continued
-----------------------------------------------------------
Equipment on Operating Leases ("OLs")
The cost of equipment, including acquisition fees paid to the general
partner, is recorded as leased equipment in the accompanying balance
sheets 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. Leasing revenue consists principally of monthly rents and is
recognized as operating lease rentals in the accompanying income
statements. 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 general partner. In
estimating such values, the general partner considers all relevant
information and circumstances regarding the equipment and the lessee.
Because revenue, depreciation expense and the resultant profit margin
before interest expense are recorded on a straight-line basis, and
interest expense on discounted lease rentals (discussed below) is recorded
on the interest method, lower returns are realized in the early years of
the term of an OL and higher returns in later years.
Nonrecourse Discounting of Rentals
The Partnership may assign the future rentals from leases to financial
institutions, or acquire leases subject to such assignments, at fixed
interest rates on a nonrecourse basis. In return for such assigned future
rentals, the Partnership 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 Partnership. Cash proceeds from such financings, or the
assumption of such financings, are recorded on the balance sheet as
discounted lease rentals. As lessees make payments to financial institu
tions, leasing revenue and interest expense are recorded.
Allowance for Losses
An allowance for losses is maintained at levels determined by the general
partner to adequately provide for any other-than-temporary declines in
asset values. In determining losses, economic conditions, the activity in
the 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 the general partner believes
are relevant, are considered. Asset chargeoffs are recorded upon the
termination or remarketing of the underlying assets. The lease portfolio
is reviewed quarterly to determine the adequacy of the allowance for
losses.
Transactions Subsequent to Initial Lease Termination
After the initial term of equipment under lease expires, the equipment is
either sold or re-leased to the existing lessee or another third party.
The remaining net book value of equipment sold is removed and gain or loss
recorded when equipment is sold. The accounting for re-leased equipment is
consistent with the accounting described under "Net Investment in Direct
Financing Leases" and "Equipment on Operating Leases" above.
C-12
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies, continued
-----------------------------------------------------------
Income Taxes
No provision for income taxes has been made in the financial statements
since taxable income or loss is recorded in the tax return 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 of $2,491,000 at December 31, 1996, are comprised of an
investment in a mutual fund which invests solely in U.S. Government
treasury bills having 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.
2. Net Investment in Direct Finance Leases
---------------------------------------
The components of the net investment in direct finance leases as of
December 31, 1996 were:
Minimum lease payments receivable $ 196,123
Estimated residual values 19,627
Less unearned income (33,422)
---------
Total $ 182,328
=========
3. Leased Equipment
----------------
The Partnership's investment in equipment on operating leases by major
classes as of December 31, 1996 were:
Transportation and industrial equipment $ 10,188,595
Computers and peripherals 3,569,359
Other 30,988
------------
13,788,942
Less accumulated depreciation (681,409)
------------
$ 13,107,533
============
Depreciation expense for 1996 was $681,409.
C-13
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
4. Future Minimum Lease Payments
-----------------------------
Future minimum lease payments receivable from noncancelable leases as of
December 31, 1996 are as follows:
Years Ending December 31 DFLs OLs
--------- ------------
1997 $ 67,260 $ 3,522,304
1998 67,260 3,477,210
1999 43,185 2,516,090
2000 11,867 1,403,995
2001 6,651 711,339
Thereafter - 68,455
--------- ------------
Total $ 196,123 $ 11,699,393
========= ============
5. Discounted Lease Rentals
------------------------
Discounted lease rentals outstanding at December 31, 1996 bear interest at
rates primarily ranging between 4.90% and 11.65%. Aggregate maturities of
such non-recourse obligations are:
Years Ending December 31
1997 $ 790,395
1998 790,396
1999 600,933
2000 341,579
2001 202,700
Thereafter 39,236
-----------
$ 2,765,239
===========
6. Transactions With the General Partner and Affiliates
----------------------------------------------------
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 1996, CAI Securities Corporation
earned commissions and fees in the amount of $1,545,528, including
$1,324,225 that was paid to participating broker-dealers.
C-14
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
6. Transactions With the General Partner and Affiliates, continued
----------------------------------------------------
Sales Commissions and Offering Costs, continued
------------------------------------
As provided in the Partnership Agreement, the general partner earned
$618,112 as reimbursement for expenses incurred during 1996, in connection
with the organization of the Partnership and the offering of Class A
limited partner units. The general partner also received $66,630 (of which
$38,043 was paid in January 1997) as reimbursement for due diligence
expenses incurred during 1996.
Capital Contributions
---------------------
Under terms of the Partnership Agreement, the Class B limited partner made
capital contributions to the Partnership of $150,000 during 1996.
Origination Fee and Evaluation Fee
----------------------------------
The general partner receives a fee equal to 3.5% of the sales price of
equipment sold to the Partnership (up to a maximum cumulative amount as
specified in the Partnership Agreement), 1.5% of which represents
compensation for selecting, negotiating and consummating the acquisition
of the equipment and 2% of which represents reimbursement for services
rendered in connection with evaluating the suitability of the equipment
and the credit worthiness of the lessees. Origination and evaluation fees
totaled $463,529 in 1996, all of which were capitalized by the Partnership
as part of the cost of equipment on operating leases and net investment in
direct financing leases.
Management Fees
---------------
The general partner receives management fees as compensation for services
performed in connection with managing the Partnership's equipment equal to
2% of gross rentals received as permitted under terms of the Partnership
Agreement. Such fees totaled $17,688 (of which $8,510 was paid in January
1997) for 1996.
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. Such reimbursements totaled $41,376
($6,386 of which were paid in January 1997) during 1996.
C-15
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
6. Transactions With the General Partner and Affiliates, continued
----------------------------------------------------
Equipment Purchases
-------------------
The Partnership purchased equipment from CAII, with a total purchase price
of $13,991,309 (including $849,244 of discounted lease rentals) during
1996. The Partnership purchased the equipment at CAII's historical cost
plus reimbursement of other net acquisition costs, as provided for in the
Partnership Agreement.
Payable to Affiliates
---------------------
Payable to affiliates consists of direct services, management fees, sales
commissions, wholesaling fees and organization and offering expense
reimbursements with respect to Class A limited partner units payable to
the general partner and its affiliates.
7. Tax Information (Unaudited)
---------------------------
The following reconciles net income for financial reporting purposes to
the income for federal income tax purposes for the period ended December
31, 1996:
Net income per financial statements $ 102,627
Direct financing leases 20,040
Depreciation (567,815)
Other 87,042
----------
Partnership income for federal income tax purposes $ (358,106)
==========
The following reconciles partners' capital for financial reporting
purposes to partners' capital for federal income tax purposes as of
December 31, 1996:
Partners' capital per financial statements $ 13,024,617
Commissions and offering costs 2,230,270
Direct financing leases 20,040
Depreciation (567,815)
Other 81,277
------------
Partners' capital for federal income tax purposes $ 14,788,389
============
C-16
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
8. Concentration of Credit Risk
----------------------------
Approximately 88% of the Partnership's equipment under lease was leased to
investment grade companies. Pursuant to the Partnership Agreement, an
investment grade lessee is a company (i) with a net worth in excess of
$100,000,000 (and no debt issues that are rated), or (ii) with a credit
rating of not less than Baa as determined by Moody's Investor Services,
Inc. or comparable credit rating as determined by another recognized
credit rating service; or a lessee, all of whose lease payments have been
unconditionally guaranteed or supported by a letter of credit issued by a
company meeting one of the above requirements.
General Motors, Lucent Technologies and Staples, Inc. accounted for
approximately 48% ($453,460) of total revenue of the Partnership during
1996. This concentration is attributable to placement of equipment with
these lessees during the first nine months of the Partnership's
operations. Rental revenue from these lessees constituted a larger
percentage of the Partnership's total 1996 revenue than expected in future
fiscal periods, as additional leases are acquired by the Partnership.
The Partnership's cash balance is maintained with a high credit quality
financial institution. At times, such balances may be in excess of the
FDIC insurance limit due to the receipt of lockbox amounts that have not
cleared the presentment bank (generally for less than two days). As the
funds become available, they are invested in a money market mutual fund.
9. Disclosures about Fair Value of Financial Instruments
-----------------------------------------------------
Statement of Financial Standards No. 107 ("SFAS No. 107"), Disclosures
about Fair Value of Financial Instruments specifically excludes certain
items from its disclosure requirements such as the Partnership's
investment in leased assets. The carrying amounts at December 31, 1996 for
cash and cash equivalents, accounts receivable, accounts payable and
accrued liabilities, payable to affiliates, rents and sale proceeds
received in advance and distributions payable to partners approximate
their fair values due to the short maturity of these instruments.
As of December 31, 1996, the carrying value of discounted lease rentals
approximates its fair value because the debt was recently acquired.
C-17
<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.
/s/KPMG Peat Marwick LLP
------------------------
KPMG Peat Marwick LLP
Denver, Colorado
July 16, 1996
C-18
<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-19
<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.
(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.
C-20
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
NOTES TO BALANCE SHEET (continued)
May 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-21
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
NOTES TO BALANCE SHEET (continued)
May 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-22
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
BALANCE SHEET (UNAUDITED)
November 30, 1996
Assets
- ------
Cash $ 900
Receivable from Capital Preferred Yield Fund-IV, L.P. (Note 4) 2,859
Organization and offering expenses of
Capital Preferred Yield Fund-IV, L.P. (Note 2) 629,203
-----------
Total assets $ 632,962
===========
Liabilities and Stockholder's Equity
Payable to affiliate (Note 4) $ 631,105
-----------
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)
Retained earnings 857
-----------
Total stockholder's equity 1,857
-----------
Total liabilities and stockholder's equity $ 632,962
===========
See accompanying notes to balance sheet.
C-23
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
NOTES TO BALANCE SHEET (UNAUDITED)
November 30, 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 November 30, 1996
approximate fair value.
C-24
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
NOTES TO BALANCE SHEET (UNAUDITED) (continued)
November 30, 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.
(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.
C-25
<PAGE>
CAI EQUIPMENT LEASING V CORP.
(a wholly-owned subsidiary of Capital Associates, Inc.)
NOTES TO BALANCE SHEET (UNAUDITED) (continued)
November 30, 1996
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:
Receivable from Capital Preferred Yield Fund-IV, L.P. represents general
partners distributions due from the Partnership.
Payable to affiliate represents amounts paid on behalf of the Company by CAII
for organization and offering expenses of the Partnership.
C-26
<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.
/s/KPMG Peat Marwick LLP
------------------------
KPMG Peat Marwick LLP
Denver, Colorado
July 16, 1996
C-27
<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-28
<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.
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
C-29
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
1. Summary of Significant Accounting Policies, continued
------------------------------------------
General Accounting Principles, continued
-----------------------------
INCOME TAXES, continued
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.
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.
C-30
<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
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.
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.
C-31
<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
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).
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.
C-32
<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
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.
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.
C-33
<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
-------------------------
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
======
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
========
C-34
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
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
========
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):
C-35
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
6. Notes Receivable and Obligations Under Capital Leases Arising from
---------------------------------------------------------------------------
Sale-leaseback Transactions, continued
---------------------------
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.
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-36
<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-37
<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):
1996
--------
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
=======
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.
C-38
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
11. Income Taxes, continued
------------
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.
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.
C-39
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
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.
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.
C-40
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
14. Legal Proceedings, continued
-----------------
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
=======
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-41
<PAGE>
CAPITAL ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in thousands)
ASSETS
November 30,
1996
------------
Cash and cash equivalents $ 3,069
Receivables from affiliated limited partnerships 795
Accounts receivable, net 650
Equipment held for sale or re-lease 37
Residual values and other receivables arising from
equipment under lease sold to private investors 4,445
Net investment in direct finance leases 12,150
Leased equipment, net 62,236
Investments in affiliated limited partnerships 7,785
Other 2,887
Deferred income taxes 1,721
Notes receivable arising from sale-leaseback transactions 3,690
Discounted lease rentals assigned to lenders arising from
equipment sale transactions 32,669
---------
$ 132,134
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Recourse bank debt $ 18,862
Accounts payable - equipment purchases 26,502
Accounts payable and other liabilities 10,106
Obligations under capital leases arising from sale-leaseback
transactions 3,698
Discounted lease rentals 49,832
---------
109,000
---------
Stockholders' equity:
Common stock 32
Additional paid-in capital 16,894
Retained earnings 6,506
Treasury stock (298)
---------
Total stockholders' equity 23,134
---------
$ 132,134
=========
The accompanying notes are an integral part
of this consolidated balance sheet.
C-42
<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 sheet. 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.
C-43
<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 December 31, 1996
Page 1 of 2
<TABLE>
<CAPTION>
Leastec PaineWebber Capital
Income Fund Northstar Preferred Preferred
V Income Fund I Yield Fund Yield Fund
----------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Dollar Amount Offered $ 55,000,000 $ 150,000,000 $ 75,000,000 $ 100,000,000
Dollar Amount Raised (100%) $ 50,368,000 $ 52,401,000 $ 71,064,000 $ 63,660,750
Less Offering Expenses:
Selling Commissions 10.00% 10.00% 9.70% 10.00%
Retained by Affiliates 0.00% 0.00% 0.00% 0.00%
Organizational Expenses 0.26% 0.00% 0.00% 0.00%
Offering Expenses 4.74% 3.00%(2) 3.00%(2) 3.14%(2)
Reserves 0.00% 1.00% 0.25% 0.00%
----------------- ---------------- --------------- ----------------
Percent Available for Investment 85.00% 86.00% 87.05% 86.86%
Acquisition Costs:
Cash Down Payment 81.69% 83.85% 84.88% 83.47%
Acquisition Fees 3.31% 2.15% 2.17% 3.39%
----------------- ---------------- --------------- ----------------
Total Acquisition Cost(3) 85.00% 86.00% 87.05% 86.86%
Percent Leverage (4) 39.00% 0.00% 0.00% 45.00%
Date Offering Began 10/01/87 11/23/88 05/21/90 01/05/90
Length of Offering 24 mos. 6 mos. 11 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.
</TABLE>
(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-2
<PAGE>
TABLE I
Experience in Raising and Investing Funds
(on a Percentage Basis)(1)
(Unaudited)
As of December 31, 1996
Page 2 of 2
Capital Capital
Preferred Preferred
Yield Fund II Yield Fund III
------------- --------------
Dollar Amount Offered $ 65,000,000 $ 50,000,000
Dollar Amount Raised (100%) $ 33,943,500 $ 50,000,000
Less Offering Expenses:
Selling Commissions 10.00% 10.00%
Retained by Affiliates 0.00% 0.00%
Organizational Expenses 0.00% 0.00%
Offering Expenses 4.37%(2) 4.37%(2)
Reserves 1.00% 1.00%
Percent Available for Investment --------------- ---------------
84.63% 84.63%
Acquisition Costs:
Cash Down Payment 81.45% 81.82%
Acquisition Fees 3.18% 2.81%
--------------- ---------------
Total Acquisition Cost(3) 84.63% 84.63%
Percent Leverage (4) 43.34% 43.27%
Date Offering Began 04/15/92 04/16/94
Length of Offering 24 mos. 24 mos.
Months to Invest 90% of Amount
Available for Investment
(measured from beginning of offering) 26 mos. 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 December 31, 1996
<TABLE>
<CAPTION>
Leastec Northstar PaineWebber Capital Capital Capital
Income Income Preferred Preferred Preferred Preferred Other
Fund V Fund I Yield Fund Yield Fund Yield Fund-II Yield Fund-III Programs
------ ------ ---------- ---------- ------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Date offering commenced 10/01/87 11/23/88 5/21/90 1/05/90 4/15/92 4/16/94 -0-
Dollar amount raised $50,368,000 $52,401,000 $71,064,000 $63,660,750 $33,943,500 $50,000,000 -0-
Amount paid to General Partner and
Affiliates:
Commissions(1) 5,036,800 5,240,100 6,893,208 6,366,075 3,394,350 5,000,000 -0-
Acquisition fees 3,631,407 1,593,944 2,825,799 5,146,564 2,566,761 2,357,226 -0-
Organization and offering expense 2,518,400 1,572,030 2,131,920 2,000,061 1,483,994 2,184,603 -0-
allowance
Dollar amount of cash generated
from operations before deducting
payments to General Partner and
Affiliates 76,574,236 66,002,328 95,104,756 113,590,138 40,903,087 25,398,391 -0-
Amount paid to General Partner and
Affiliates from operations:
Management fees 4,591,210 1,992,260 3,597,678 6,751,339 966,888 553,966 -0-
Reimbursements 1,078,662 705,568 110,673 704,157 417,233 224,163 -0-
Dollar amount of property sales
before deducting payments to
General Partner and Affiliates 12,488,638 12,120,299 11,133,550 14,934,696 4,112,448 454,045 -0-
Amount paid to General Partner and
Affiliates from property sales:
Resale fees -0- -0- -0- -0- -0- -0- -0-
Management fees -0- -0- -0- -0- -0- -0- -0-
Promotional interest (cash 2,318,163 2,088,774 3,457,824 2,641,593 141,091 83,149 754,288(2)
distribution) to General Partner
</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 1985 through 1993 with respect
to nine other programs.
D-4
<PAGE>
TABLE III
Annual Operating Results
For the Year Ended December 31, 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 $2,425,882 $1,826,527 $11,757,293 $ 9,969,567 $10,680,648 $17,134,300
Profit (loss) on sale of properties 525,245 940,938 572,568 1,350,258 189,435 110,831
Less: Operating expenses 466,480 373,176 1,421,266 2,263,507 1,471,396 705,819
Interest expense 122,830 -0- 820,851 591,457 1,151,707 1,785,640
Depreciation 1,172,100 1,142,542 7,116,362 6,124,604 7,856,952 12,585,981
Direct Services from
General Partner(s) 66,223 65,750 18,750 101,145 158,770 93,690
---------- ---------- ----------- ----------- ----------- -----------
Net income (loss) 1,123,494 1,185,997 2,952,632 2,239,112 231,258 2,074,001
Taxable income (loss) 2,036,484 1,753,483 2,012,679 1,193,887 643,311 (1,675,210)
- from operations 1,214,458 806,795 951,937 2,424,935 830,977 (1,810,672)
- from gain (loss) on sale 822,026 946,688 1,060,742 (1,231,048) (187,666) 135,462
Cash generated (deficiency)
from operations 2,546,972 2,368,893 8,857,119 11,544,754 9,887,732 17,781,264
Cash generated from sales 1,226,238 2,396,640 2,343,133 4,825,150 2,865,442 454,045
Cash generated from refinancing -0- -0- -0- -0- -0- -0-
---------- ---------- ----------- ----------- ----------- -----------
Cash generated from operations,
sales and refinancing 3,773,210 4,765,533 11,200,252 16,369,904 12,753,174 18,235,309
Less cash distributions to investors:
- from operating cash flows 2,403,187 4, 038,489 8,547,640 11,744,201 4,104,137 5,030,230
- from sales and refinancing -0- -0- -0- -0- -0- -0-
- from other -0- -0- -0- -0- -0- -0-
---------- ---------- ----------- ----------- ----------- -----------
Cash generated (deficiency) after
cash distributions 1,370,023 727,044 2,652,612 4,625,703 8,649,037 13,205,079
</TABLE>
D-5
<PAGE>
TABLE III (Continued)
Annual Operating Results
For the Year Ended December 31, 1996
(Unaudited)
Page 2 of 2
<TABLE>
<CAPTION>
Leastec Northstar PaineWebber Capital Capital Capital
Income Income Preferred Preferred Preferred Preferred
Fund V Fund I Yield 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- 8,649,624 1,142,624 7,887,705 23,483,867
Net change in partnership debt 1,339,784 -0- 1,585,298 5,048,721 842,214 4,794,494
Other (1) 11,685 -0- (792,092) 254,733 242,985 (9,097,350)
---------- ------- ------------ ---------- --------- ----------
Cash generated (deficiency) after cash
distributions and special items 18,554 727,044 (6,790,218) (1,820,375) (323,867) (5,975,932)
Tax & Distribution Data per $1,000
- ----------------------------------
Invested (2):
- -------------
Federal Income Tax Results:
Ordinary income (loss) 41 33 33 48 35 (31)
-from operations 22 11 15 26 25 (35)
-from recapture 19 22 18 22 10 4
Capital gain (loss) (3) (6) (5) (40) (16) (2)
Cash distribution to Investors
Source (on GAAP basis):
- investment income 22.69 22.63 41.55 35.53 6.89 41.76
- return of capital 25.85 54.44 78.73 150.85 115.35 59.52
Source (on cash basis):
- sales -0- -0- -0- -0- -0- -0-
- refinancing -0- -0- -0- -0- -0- -0-
- operations 48.54 77.07 120.28 186.38 122.24 101.28
- other -0- -0- -0- -0- -0- -0-
Original portfolio remaining (3) 22% -20% 29% 40% 77% 99%
Current portfolio amount as a
percentage of original portfolio (4) 42% 10% 103% 71% 101% 142%
</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.
D-6
<PAGE>
TABLE IV
Sales or Dispositions of Equipment by Prior Public Programs
(Unaudited)
For the Year Ended December 31, 1996
Page 1 of 3
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)
Year Excess GAAP Profit ----------------------
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 $ 171,959 $ (8,598) $ 180,557 $ 96,608 60 27-92
Furniture & Fixtures 1996 69,464 (65,174) 134,638 0 60 60
Medical Equipment 1996 200,000 118,857 81,143 194,884 45 45
Transportation Equipment 1996 502,500 39,778 462,722 229,973 49 49
Mining Equipment 1996 284,000 (137,626) 421,625 1,500 66 64-67
Manufacturing Equipment 1996 316 174,081 (173,765) 281 57 35-84
----------- ------------ ----------- ---------
TOTALS $ 1,228,238 $ 121,318 $ 1,106,920 $ 525,245
=========== ============ =========== =========
NORTHSTAR INCOME FUND I
- -----------------------
Manufacturing Equipment 1996 $ 1,341,965 $ (737,554) $ 2,079,519 $ 452,931 50 35-80
Transportation Equipment 1996 235,000 (247,023) 482,023 171,991 49 41-54
Data Processing Equipment 1996 819,675 (558,036) 1,377,711 325,343 63 57-80
----------- ------------ ----------- ---------
TOTALS $ 2,396,640 $ (1,542,613) $ 3,939,253 $ 950,266
=========== ============ =========== =========
PAINEWEBBER PREFERRED YIELD FUND
- --------------------------------
Data Processing Equipment 1996 $ 132,940 $ (81,360) $ 214,300 $ 134,267 46 36-66
Manufacturing Equipment 1996 1,139,072 (85,765) 1,224,837 326,439 56 24-79
Transportation Equipment 1996 74,900 (546) 75,446 33,297 53 53
Office Technology Equipment 1996 50,000 (125,869) 175,869 42,983 66 63-69
Furniture & Fixtures 1996 873,142 941,864 (68,723) 0 26 26
Medical Equipment 1996 59,000 (202,391) 261,391 32,517 51 12-66
----------- ------------ ----------- ---------
TOTALS $ 2,329,054 $ 445,933 $ 1,883,121 $ 569,502
=========== ============ =========== =========
</TABLE>
D-7
<PAGE>
TABLE IV
Sales or Dispositions of Equipment by Prior Public Programs
(Unaudited)
For the Year Ended December 31, 1996
Page 2 of 3
<TABLE>
<CAPTION>
Holding Period(4)
Year Excess GAAP Profit ----------------------
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 $ 393,218 $ 21,555 $ 371,662 $ 182,502 40 27-68
Manufacturing Equipment 1996 3,771,978 282,409 3,489,570 912,656 49 19-71
Transportation Equipment 1996 63,299 9,592 53,707 31,550 48 38-57
Mining Equipment 1996 125,000 21,944 103,056 0 59 59
Furniture & Fixtures 1996 515,332 (110,930) 626,262 267,228 57 24-70
Medical 1996 0 (30,544) 30,544 0 66 66
----------- ----------- ------------ -----------
TOTALS $ 4,868,827 ($ 194,026) $ 4,674,801 $ 1,393,936
=========== =========== ============ ===========
CAPITAL PREFERRED YIELD FUND II
- -------------------------------
Data Processing Equipment 1996 $ 804,414 $ 2,558,463 $ (1,754,049) $ 58,458 33 22-44
Manufacturing Equipment 1996 551,300 141,853 409,447 4,760 36 35-38
Furniture & Fixtures 1996 889,990 8,752 881,239 7,132 36 26-43
Transportation Equipment 1996 336,738 158,314 178,423 104,523 26 26
Medical Equipment 1996 283,000 113,251 169,749 15,009 38 37-38
----------- ----------- ------------ -----------
TOTALS $ 2,865,442 $ 2,980,634 $ (115,192) $ 189,883
=========== =========== ============ ===========
CAPITAL PREFERRED YIELD FUND-III
- --------------------------------
Manufacturing Equipment 1996 $ 53,730 $ 187,328 $ (133,598) $ 0 21 21-22
Transportation Equipment 1996 311,123 215,873 95,251 93,520 15 15
Furniture and Fixtures 1996 77,795 62,714 15,081 9,833 11 11
Data Processing Equipment 1996 11,397 5,530 5,867 7,478 12 12
----------- ----------- ------------ -----------
TOTALS $ 454,045 $ 471,445 $ (17,399) $ 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 IV
Sales or Dispositions of Equipment by Prior Public Programs
(Unaudited)
As of December 31, 1996
3 of 3
The following table sets forth the total annual ordinary and capital gains
from the sales and disposition of equipment by the Prior Public Programs.
Ordinary Capital
Gain/(Loss) Gain/(Loss)
----------- -----------
Leastec Income Fund V
1996.......................................... $ 822,026 $ 0
Northstar Income Fund I
1996.......................................... $ 946,688 $ 0
PaineWebber Preferred Yield Fund
1996.......................................... $ 1,060,742 $ 0
Capital Preferred Yield Fund
1996.......................................... $ (1,231,048) $ 0
Capital Preferred Yield Fund-II
1996.......................................... $ (187,666) $ 0
Capital Preferred Yield Fund-III
1996.......................................... $ 135,462 $ 0
D-9
<PAGE>
TABLE V
Historic Cash Distributions
(Unaudited)
For the Year Ended December 31, 1996
Page 1 of 4
Leastec Income Fund V
- ---------------------
Class A Class B
General Partner(s) Limited Partners Limited Partners Total
------------------ ---------------- ---------------- -----
$ 122,105 $ 2,320,000 $ -0- $ 2,442,105
Northstar Income Fund I
- -----------------------
Class A Class B
General Partner(s) Limited Partners Limited Partners Total
------------------ ---------------- ---------------- -----
$ 157,559 $ 4,112,842 $ 231,276 $ 4,501,676
PaineWebber Preferred Yield Fund (as of September 30, 1996)
- --------------------------------
Class A Class B
General Partner(s) Limited Partners Limited Partners Total
------------------ ---------------- ---------------- -----
$ 525,812 $ 9,118,932 $ 871,487 $ 10,516,231
Capital Preferred Yield Fund
- ----------------------------
Class A Class B
General Partner(s) Limited Partners Limited Partners Total
------------------ ---------------- ---------------- -----
$ 544,780 $ 10,960,526 $ 600,923 $ 12,106,229
Capital Preferred Yield Fund-II
- -------------------------------
Class A Class B
General Partner(s) Limited Partners Limited Partners Total
------------------ ---------------- ---------------- -----
$ 41,018 $ 4,024,490 $ 36,300 $ 4,101,808
Capital Preferred Yield Fund-III
- --------------------------------
Class A Class B
General Partner(s) Limited Partners Limited Partners Total
------------------ ---------------- ---------------- -----
$ 51,487 $ 5,052,804 $ 50,389 $ 5,154,680
D-10
<PAGE>
TABLE V
Historic Cash Distributions
(Unaudited)
For the Year Ended December 31, 1996
Page 2 of 4
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 0 (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
1996 468.00 381.00 1,028.00
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
1996 785.00 274.00 1,905.00
D-11
<PAGE>
TABLE V
Historic Cash Distributions
(Unaudited)
For the Year Ended December 31, 1996
Page 3 of 4
PaineWebber Preferred Yield Fund
------------------------------------------------------------------
Distributions Income/ Cumulative
Paid Loss Income/Loss
------------- ------------ -----------
1990 $ 735.33 ($ 377.00) ($ 377.00)
1991 1,398.75 (296.00) (673.00)
1992 1,400.00 257.00 (416.00)
1993 1,400.00 317.00 99.00
1994 1,400.00 134.00 35.00
1995 1,400.00 1,838.00 1,873.00
1996 1,400.00 276.00 2,149.00
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 1,402.49
1996 1,736.00 82.00 1,484.00
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)
1996 1,200.00 197.00 (1,559.00)
D-12
<PAGE>
TABLE V
Historic Cash Distributions
(Unaudited)
For the Year Ended December 31, 1996
Page 3 of 4
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)
1996 1,050.00 (334.00) (2,049.00)
D-13
<PAGE>
TABLE VI
Historic Taxable Gain (Loss)
(Unaudited)
For the Year Ended December 31, 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 Capital
Leastec Northstar Preferred Preferred Preferred Preferred
Date Income Fund V Income Fund I Yield Fund Yield Fund Yield Fund-II Yield Fund-III
- ---- ------------- ------------- ----------- ----------- ------------- --------------
<C> <C> <C> <C> <C> <C> <C>
1996 $ 2,036,484 $ 1,753,483 $ 2,012,679 $ 1,193,887 $ 643,311 $ (1,675,210)
</TABLE>
D-14
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 1 of 10
The following is a list of all Lessees of Equipment owned by Capital Preferred
Yield Fund as of December 31, 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-15
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 2 of 10
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-16
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 3 of 10
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 December 31, 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 3.62 Textile Equip. 1.25
CPU'S Other 1.87 Truck Leasing 2.89
Desktop PC 4.04 Transport Aircraft/Truck 5.29
Dry Vans 0.56 Wafer Fabrication 5.37
Forklifts 5.59 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-17
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 4 of 10
The following is a list of all Lessees of Equipment owned by Capital Preferred
Yield Fund-II as of December 31, 1996:
Alliant Techsystems, Inc. Lexmark International
Allied Waste Industries Londonderry
Anchor Glass LSI Logic
Atlantic Steel Industries Maryland Casualty
Auto Alliance Mascotech Braun
Barney's Matsushita
Basic Vegetable Products Miami Dade
Blue Cross & Blue Shield Norcross Footwear
Chrysler Corporation Northern Telecom
Chyron Corporation Owens-Corning Fiberglass
CIBA Geigy Pacific Coast Producers
Communicorp, Inc. Parke-Davis Pharmaceutical
Community General Hospital Pepperidge Farm
Consolidated Diesel Plexus Corporation
Danskin Ralph's Grocery
Diamond Shamrock Robertshaw Controls Company
Dow Jones Rose Acres Farm
Ernst Home Center Savannah Electric & Power
First Miss Steel Sears Technology
G.E. Industrial Power Smithfield Foods
G.E. (Aero-Eng) Solectron Corporation
G.E. Regional Southern Pacific
General Motors Southwestern States Bank
Georgia Power Staples
GM Powertrain State Street
Goodings Supermarket Stone Container
Hartford Fire Sybron Chemicals
H.E. Butt Grocery System One Information Management
HBO & Company Teledyne Industries, Inc.
Hexcel Timken Company
Honeywell Space Systems Tip Top Nurseries, Inc.
HP Casino Management The Budd Company
IBM Corporation The Cerplex Group
ICI America's The Falkirk Mining Company
Ina Bearing Company The Forum Corporation
International Rectifier The Good Guys
ITO Corp. The Stop and Shop Supermarkets
James D. Hughes Insurance Town of Wellsley
JP Food Service United States Sugar Corporation
Kaman Corporation United Technologies
Lever Brothers United Track Racing
D-18
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 5 of 10
USS/Kobe Steel Whirlpool
Westinghouse Wolfe Nursery
Westchester County Walker Manufacturing
Wharf Resources Xerox
The percentage breakdown by the industry of Equipment owned and leased by
Capital Preferred Yield Fund- II as of December 31, 1996:
Above Ground Mining 2.35 Modular 1.78
Agricul/Food Process 1.16 Networking Equipment 4.06
Banking 3.59 Office Automation 2.23
Boot Manufacturing 0.77 PBX Systems 0.18
Communication 0.31 PC's Networking 0.23
Construction 2.18 PERIPH-Disk 0.67
CPU's - DEC 0.16 PERIPH-Printers 0.92
CPU's-IBM 0.32 PERIPH-Tape 0.19
CPU's Other 6.42 Portable PC 1.55
Desktop PC's 10.36 POS 4.25
Forklifts 9.31 Printed Circuit Board 5.44
Furniture 1.05 Printing Equip. 0.01
Glass Packaging 1.55 Research 1.03
Grocery FF&E 2.22 Retail 2.92
Injection Molding 9.92 Semiconductor Test 4.54
Loan 1.04 Textile Equip 0.33
Locomotives 1.27 Track Leasing 1.56
Medical 0.96 Transport Trucks 3.64
Machine Tools 3.48 Wafer Fabrication 0.97
Manuf.-Semiconductor 0.11 Workstations 2.26
Manuf.-Other 2.71 -------
100.00
D-19
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 6 of 10
The following is a list of all Lessees of Equipment owned by Capital Preferred
Yield Fund-III as of December 31, 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 Greer & 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
Canoak 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 Haldex Corp.
Ciba Geigy Harry's Farmer's Market
Columbus Southern Power Heilig Meyers
D-20
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 7 of 10
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
KOVCO 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
Lucent 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-21
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 8 of 10
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 Micron White Consolidated
Thomson Saginaw Ball Screw Co. Xerox
Three Rivers Motor Co.
The percentage breakdown by the industry of Equipment owned and leased by
Capital Preferred Yield Fund- III as of December 31, 1996:
Above Ground Mining 3.30 PBX Systems 0.93
Agricul./Food Processing 4.48 PERIPH-Controllers 0.03
Automotive FF&E 0.48 PERIPH-Printers 0.40
Below Ground Mining 2.98 PERIPH-Tape 0.03
Communication 2.09 PERIPH-Terminals 0.25
Construction 2.69 Portable PC's 1.43
CPU's - DEC 0.33 POS 1.58
CPU's - Other 0.25 Printed Circuit Board 2.93
Desktop PC's 6.59 Printing Equipment 7.03
Dry Vans 1.16 Research 0.23
Forklifts 15.54 Restaurant FF&E 1.04
Furniture 6.88 Retail FF&E 1.83
Golf Course Equipment 0.62 Semiconductor Test Equip. 3.02
Grocery FF&E 5.50 Software 0.94
Injection Molding 0.15 Textile Equipment 1.15
Machine Tools 8.28 Track Leasing 0.04
Manuf.-Other 4.95 Transportation-Containers 0.16
Manuf.-Semiconductor 0.33 Transportation-Trucks 0.37
Misc.. Packaging 0.50 Wafer Fabrication 1.75
Networking Equipment 2.62 Warehouse-Misc. 1.01
Office Automation 2.21 Workstations 1.92
------
100.00
D-22
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 9 of 10
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 December 31, 1996:
Above Ground Mining 2.60 Manufacturing-Other 3.33
Agricul/Food Process 2.93 Misc. Packaging 0.49
Automotive FF&E 0.13 Modular 0.97
Banking 1.01 Networking Equipment 2.06
Below Ground Mining 3.33 Office Automation 1.75
Boot Manufacturing 0.42 PBX Systems 1.89
Communication 3.10 Peripherals - Controllers 0.46
Construction 2.53 Peripherals - Disk 1.90
CPU's DEC 2.23 Peripherals - Printers 0.36
CPU's IBM 1.82 Peripherals - Tape 0.06
CPU's Teredata 2.21 Peripherals - Terminals 0.07
CPU's Other 0.32 Portable PC 0.78
Desktop PC 6.33 Point of Sale 1.94
Dry Vans 0.58 Printed Circuit Board Mfg 2.23
Forklifts-1 1.99 Printing Equipment 1.97
Forklifts-2 6.75 Research 1.75
Forklifts-3 0.59 Restaurant FE&E 0.29
Furniture 4.73 Retail FF&E 1.24
Glass Packaging 0.93 Semiconductor Test 3.95
Golf Course Equipment 0.17 Software 0.26
Grocery FF&E 3.64 Textile Equipment 0.99
Injection Molding 2.49 Track Leasing 1.75
Loan 1.21 Transport Trucks 2.84
Locomotives 0.62 Transport Other 0.74
Machine Tools 3.50 Wafer Fabrication Mfg. 3.31
Maintenance 1.71 Warehousing 0.74
Manufacturing-Semiconductor 0.12 Workstations 2.66
Medical 1.23 ------
100.00
D-23
<PAGE>
TABLE VII
PROGRAM LESSEES
(Unaudited)
Page 10 of 10
The following is a list of all Lessees of Equipment owned by Capital Preferred
Yield Fund-IV as of December 31, 1996:
Addison Wesley Longman International Paper Company
Alliant Techsystems, Inc. Louisiana Workers Comp.
Ball-Foster Glass Container Lucent Technologies, Inc.
Basic Vegetable Products Medtronic, Inc.
Consolidated Diesel Owens-Corning Fiberglass
General Motors Corporation Precision Castparts
Georgetown Steel Staples, Inc.
GM Powertrain Division Thomson Industries
Harsco Corporation Total System Services
Home Depot, Inc. Universal Forest Products
ITT Automotive Electrical USS/Kobe Steel
Xerox
D-24
<PAGE>
CAPITAL PREFERRED YIELD FUNDS
SAMPLE LESSEES BY REGION
(Unaudited)
1 of 2
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
Brown-Strauss Steel Division Midwestern Region
Chesebrough-Ponds, Inc. -----------------
Chyron Corporation
Fred Meyers, Inc. Alliant Techsystems, Inc.
General Felt Industries Allied Signal, Inc.
Hughes Aircraft Company Apache Corp.
General Motors Corporation Applied Graphics Technologies
Hughes Network Systems, Inc. Blue Cross & Blue Shield of Texas
International Rectifier Corp. Cardiac Pacemakers, Inc.
Kaiser Cement Carrier Corp.
Lam Research Corp. Diamond Shamrock Refining
LSI Logic Corp. Fingerhut
Lucas Western, Inc. First Bank of Illinois
Ford Motor Company
D-25
<PAGE>
CAPITAL PREFERRED YIELD FUNDS
SAMPLE LESSEES BY REGION
(Unaudited)
2 of 2
Western Region Midwestern Region
- -------------- -----------------
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-26
<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 6th
day of March, 1997.
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 March 6, 1997 by the following persons in the
capacities indicated.
Signature Title
--------- -----
* President (Principal Executive Officer) and Director
- -------------------- of CAI Equipment Leasing V Corp., the General Partner
John F. Olmstead of the Registrant
* Senior Vice President and Director of CAI Equipment
- -------------------- Leasing V Corp., the General Partner of the Registrant
Dennis J. Lacey
* Senior Vice President, Finance (Principal Financial
- -------------------- Officer) and Director of CAI Equipment Leasing V
John E. Christensen Corp., the General Partner of the Registrant
* Senior Vice President, Assistant Secretary and
- -------------------- Director of CAI Equipment Leasing V Corp., the
Anthony M. DiPaolo 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
* Director of CAI Equipment Leasing V. Corp., the
- -------------------- General Partner of the Registrant
Robert A. Golden
* Chief Accounting Officer and Secretary of CAI
- -------------------- Equipment Leasing V Corp., the General Partner of the
David J. Anderson 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 LLP relating to its audit of the
balance sheet of CAI Equipment Leasing V Corp.
23(d) Consent of KPMG Peat Marwick LLP relating to its audit of the
balance sheet of Capital Preferred Yield Fund-IV, L.P.
23(e) Consent of KPMG Peat Marwick LLP relating to its audit of the
balance sheet 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.
/s/KPMG Peat Marwick LLP
------------------------
KPMG Peat Marwick LLP
Denver, Colorado
March 6, 1997
<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 financial
statements of Capital Preferred Yield Fund-IV, L.P., as of December 31, 1996,
and to the reference to our firm under the heading "Experts" in the prospectus.
/s/KPMG Peat Marwick LLP
------------------------
KPMG Peat Marwick LLP
Denver, Colorado
March 6, 1997
<PAGE>
Exhibit 23(e)
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., as of May 31, 1996, and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/KPMG Peat Marwick LLP
------------------------
KPMG Peat Marwick LLP
Denver, Colorado
March 6, 1997
