SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
--------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------------ ---------------------
Commission file number 33-80849
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Capital Preferred Yield Fund-IV, L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-1331690
----------------------- ------------------------------------
(State of organization) (I.R.S. Employer Identification No.)
7175 West Jefferson Avenue, Suite 4000
Lakewood, Colorado 80235
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 980-1000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
----- -----
Exhibit Index Appears on Page 13
Page 1 of 14 Pages
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
Quarterly Report on Form 10-Q
For the Quarter Ended
March 31, 1997
Table of Contents
-----------------
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements (Unaudited)
Balance Sheets - March 31, 1997 and December 31, 1996 3
Statement of Income - Three months ended
March 31, 1997 4
Statement of Partner's Capital - Three months
ended March 31, 1997 5
Statement of Cash Flows - For the three months
ended March 31, 1997 6
Notes to Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signature 14
2
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
BALANCE SHEET
(Unaudited)
ASSETS
March 31, December 31,
1997 1996
----------- ------------
Cash and cash equivalents $ 1,548,389 $ 3,286,072
Accounts receivable 23,310 76,524
Receivable from affiliates 5,955 --
Net investment in direct finance leases 3,714,084 182,328
Leased equipment, net 34,127,607 13,107,533
----------- -----------
Total assets $39,419,345 $16,652,457
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued liabilities $ 586,787 $ 658,229
Payable to affiliates 53,039 43,483
Rents received in advance 142,074 31,991
Distributions payable to partners 214,040 128,898
Discounted lease rentals 18,822,216 2,765,239
----------- -----------
Total liabilities 19,818,156 3,627,840
----------- -----------
Partners' Capital:
General partner - -
Limited Partners:
Class A 19,378,870 12,878,374
Class B 222,319 146,243
----------- -----------
Total partners' capital 19,601,189 13,024,617
----------- -----------
Total liabilities and partners' capital $39,419,345 $16,652,457
=========== ===========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
STATEMENT OF INCOME
(Unaudited)
For the three months
ended March 31, 1997
--------------------
Revenue:
Operating lease rentals $1,505,846
Direct finance lease income 28,122
Interest income 49,978
----------
Total revenue 1,583,946
----------
Expenses:
Depreciation and amortization 1,191,594
Direct services from general partner 22,172
Management fees paid to general partner 30,113
General and administrative 35,877
Interest on discounted lease rentals 148,888
----------
Total expenses 1,428,644
----------
Net income $ 155,302
==========
Net income allocated:
To the general partner $ 16,540
To the Class A limited partners 137,348
To the Class B limited partner 1,414
----------
$ 155,302
==========
Net income per weighted average Class A
limited partner unit outstanding $ 0.70
==========
Weighted average Class A limited partner
units outstanding 197,329
==========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the three months ended March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Class A
Limited Class A Class B
General Partners Limited Limited
Partner Units Partners Partner Total
---------- -------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
Partners' capital,
January 1, 1997 $ - 154,503 $ 12,878,374 $ 146,243 $ 13,024,617
Capital contributions - 80,279 8,027,905 80,000 8,107,905
Volume discount - - (6,000) - (6,000)
Commissions and offering
costs on sale of Class A
limited partner units (11,525) - (1,134,936) - (1,146,461)
Net income 16,540 - 137,348 1,414 155,302
Distributions declared
to partners (5,015) - (523,821) (5,338) (534,174)
---------- -------- ------------ --------- ------------
Partners' capital,
March 31, 1997 $ 0 234,782 $ 19,378,870 $ 222,319 $ 19,601,189
========== ======== ============ ========= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
STATEMENT OF CASH FLOWS
(Unaudited)
For the three months
ended March 31, 1997
--------------------
Net cash provided by operating activities $ 1,530,312
-----------
Cash flows from investing activities:
Purchases of equipment on operating leases from affiliate (8,687,400)
Investment in direct finance leases, acquired from affiliate (464,890)
-----------
Net cash used in investing activities (9,152,290)
-----------
Cash flows from financing activities:
Proceeds from Class A capital contributions 8,027,905
Proceeds from Class B capital contributions 80,000
Principal payments on discounted lease rentals (616,084)
Commissions paid to affiliate in connection
with the sale of Class A limited partner units (802,791)
Non-accountable organization and offering expenses
reimbursement paid to the general partner in connection
with the sale of Class A limited partner units (355,703)
Distributions to partners (449,032)
-----------
Net cash provided by financing activities 5,884,295
------------
Net decrease in cash and cash equivalents (1,737,683)
Cash and cash equivalents at beginning of period 3,286,072
-----------
Cash and cash equivalents at end of period $ 1,548,389
===========
Supplemental disclosure of cash flow information:
Interest paid on discounted lease rentals 148,888
Supplemental disclosure of noncash investing and
financing activities:
Discounted lease rentals assumed in equipment acquisitions 16,673,062
Reduction in Partner's capital accounts for commissions and
costs payable to affiliates 22,554
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO BALANCE SHEET
(Unaudited)
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO BALANCE SHEET
(Unaudited)
1. Basis of Presentation:
---------------------
The accompanying unaudited balance sheet has been prepared in accordance
with generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and
disclosures required by generally accepted accounting principles for annual
financial statements. In the opinion of the general partner, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. For further
information, refer to the financial statements of Capital Preferred Yield
Fund-IV, L.P. (the "Partnership"), and the related notes, included in the
Partnership's Annual Report on Form 10-K for the year ended December 31,
1996 (the "1996 Form 10-K"), previously filed with the Securities and
Exchange Commission.
The balance sheet at December 31, 1996 has been derived from the audited
financial statements included in the Partnership's 1996 Form 10-K.
2. 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 the three months ended March 31, 1997, CAI
Securities Corporation earned commissions and fees in the amount of
$802,791, $687,743 of which was paid to participating broker-dealers.
As provided in the Partnership Agreement, the general partner earned
$343,670 ($22,554 of which was paid in April 1997) as reimbursement for
expenses incurred during the three months ended March 31, 1997 in
connection with the organization of the Partnership and the offering of
Class A limited partner units. The general partner also received $22,554
(all of which was paid in April 1997) as reimbursement for due diligence
expenses incurred during the three months ended March 31, 1997.
7
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO BALANCE SHEET
(Unaudited)
2. Transactions With the General Partner and Affiliates, continued
----------------------------------------------------
SALES COMMISSIONS AND OFFERING COSTS, continued
As provided in the Prospectus, a volume discount, equal to 1.0% of the
purchase price per unit for all purchases of $500,000 or more, was granted
during the three months ended March 31, 1997 in the amount of $6,000.
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 $22,172 ($14,808 of
which were paid in April 1997) during the three months ended March 31,
1997.
PAYABLE TO AFFILIATES:
Payable to affiliates consists of direct services, management fees, sales
commissions, wholesaling fees, organization and offering expense
reimbursements with respect to Class A limited partner units payable to the
general partner and its affiliates.
3. During the period ending March 31, 1997, the Partnership acquired the
equipment described below from Capital Associates International, Inc.
("CAII"):
<TABLE>
<CAPTION>
Total
Acquisition Equipment
Cost of Fees and Purchase
Lessee Equipment Description Equipment Reimbursements Price
-------------------------- ------------------------------ ----------- -------------- -----------
<S> <C> <C> <C> <C>
Alcoa Fujikura Forklifts $ 1,462,149 $ 49,555 $ 1,511,704
Alliant Techsystems Lathe 242,205 8,392 250,597
Applied Magnetics Teching system 1,182,922 40,988 1,223,910
Arqule, Inc. Research & development 2,332,813 80,829 2,413,642
Christy's Market Food service equipment 761,849 26,396 788,245
Chrysler Corporation Forklifts 1,020,599 35,364 1,055,963
Dewolfe Company Computer equipment 553,983 19,198 573,181
Enogex Inc. Computer equipment 915,364 31,721 947,085
General Motors Corporation Machine tools 269,074 9,323 278,397
Genetics Institute Research & development 1,008,407 34,941 1,043,348
Heluva Good Cheese Material handling equipment 47,066 1,599 48,665
Home Depot, Inc Lift trucks 491,977 16,706 508,683
8
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO BALANCE SHEET
(Unaudited)
3. continued
Total
Acquisition Equipment
Cost of Fees and Purchase
Lessee Equipment Description Equipment Reimbursements Price
-------------------------- ------------------------------ ----------- -------------- -----------
In Home Health, Inc. Furniture, fixture & equipment $ 13,063 $ 453 $ 13,516
International Paper Utility carts 77,607 2,689 80,296
Louisiana Workers Comp Server 34,492 1,195 35,687
Lucas Industries Manufacturing equipment 823,887 28,549 852,436
Matsushita Phone system 110,431 3,826 114,257
Morgan Construction Production equipment 1,278,202 44,289 1,322,491
Nabisco Sweeper 17,248 597 17,845
National Broadcasting Co Broadcast video equipment 318,988 9,852 328,840
Northwestern University Test equipment 137,343 4,759 142,102
Oklahoma Gas & Electric Computer equipment 2,862,444 99,184 2,961,628
Precision Cast Parts Forklifts 131,068 4,542 135,610
Robertshaw Controls Manufacturing equipment 1,350,199 46,784 1,396,983
The Foxboro Company Manufacturing equipment 4,584,229 158,846 4,743,075
Thomson Industries Manufacturing equipment 412,550 14,295 426,845
Total System Services Mail sorter 1,043,330 35,388 1,078,718
Triconex Corporation Manufacturing 462,209 16,014 478,223
United Artists Projection equipment 663,318 22,984 686,302
Universal Forest Products Forklifts 79,316 2,748 82,064
USS/Kobe Steel Lift trucks 199,950 6,928 206,878
Xerox Video projector 75,520 2,616 78,136
----------- ---------- -----------
$24,963,802 $ 861,550 $25,825,352
=========== ========== ===========
</TABLE>
As of March 31, 1997, the general partner had identified approximately $3
million of equipment that satisfied the Partnership's investment criteria
that is expected to be acquired during 1997.
9
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
- ---------------------
The Partnership reported net income of $155,302, or $.70 per weighted average
Class A limited partner unit, for the three months ended March 31, 1997. Net
income was principally derived from rentals generated from $39,816,661 of
equipment owned by the Partnership as of March 31, 1997.
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.
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.
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 March 31, 1997 is presented below:
Class A limited partner units sold 234,832
============
Gross offering proceeds including volume discounts of $6,000 $ 23,477,187
Sales commissions (2,348,319)
Organization and offering expenses (939,327)
Due diligence expenses (89,184)
------------
Net offering proceeds $ 20,100,357
============
Class B limited partner (CAII) cash contribution $ 230,000
============
10
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Liquidity & Capital Resources, continued
- -----------------------------
A summary of the Partnership's offering activities for the first three months of
1997 is presented below:
Class A limited partner units sold 80,279
===========
Gross offering proceeds including volume discounts of $6,000 $ 8,021,905
Sales commissions (802,791)
Organization and offering expenses (321,116)
Due diligence expenses (22,554)
-----------
Net offering proceeds $ 6,875,444
===========
Class B limited partner (CAII) cash contribution $ 80,000
===========
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 the three months ended March 31, 1997, the Partnership acquired equipment
subject to leases with a total purchase price of $25,825,352 (including
$16,673,062 of discounted lease rentals). As of March 31, 1997, the general
partner had identified approximately $3 million of additional equipment that
satisfied the Partnership's acquisition criteria that is expected to be acquired
during 1997.
During the three months ended March 31, 1997, the Partnership declared
distributions to the Class A limited partners of $523,821 ($214,040 of which was
paid during April 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 the three months ended March
31, 1997, approximately 74% of the cash distributions 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.
11
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Liquidity & Capital Resources, continued
- -----------------------------
The general partner believes that the Partnership will generate sufficient cash
flows from operations during the remainder of 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.
12
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is not a party to any material legal proceedings
outside the ordinary course of its business.
Item 6. Exhibits and Reports on Form 8-K
(a) None.
(b) The Partnership did not file any reports on Form 8-K during the
quarter ended March 31, 1997.
13
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAPITAL PREFERRED YIELD FUND-IV, L.P.
By: CAI Equipment Leasing V Corp.
Dated: May 5, 1997 By: /s/Anthony M. DiPaolo
---------------------
Anthony M. DiPaolo
Senior Vice President
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of income and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,548,389
<SECURITIES> 0
<RECEIVABLES> 23,310
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 34,127,607
<DEPRECIATION> 0
<TOTAL-ASSETS> 39,419,345
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 19,601,189
<TOTAL-LIABILITY-AND-EQUITY> 39,419,345
<SALES> 0
<TOTAL-REVENUES> 1,583,946
<CGS> 0
<TOTAL-COSTS> 1,428,644
<OTHER-EXPENSES> 58,049
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 148,888
<INCOME-PRETAX> 155,302
<INCOME-TAX> 0
<INCOME-CONTINUING> 155,303
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 155,302
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0.70
</TABLE>
