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 June 30, 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
June 30, 1997
Table of Contents
-----------------
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements (Unaudited)
Balance Sheets - June 30, 1997 and December 31, 1996 3
Statements of Income - Three and Six months ended
June 30, 1997 and for the period from the
Commencement
of Operations (April 16, 1996) to June 30, 1996 4
Statement of Partner's Capital - January 1, 1997 -
June 30, 1997 5
Statements of Cash Flows - Six months ended June 30,
1997 and for the period from the Commencement
of Operations (April 16, 1996) to June 30, 1996 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
June 30, December 31,
1997 1996
----------- -----------
Cash and cash equivalents $ 6,602,408 $ 3,286,072
Accounts receivable 306,233 76,524
Receivable from affiliates 13,057 -
Net investment in direct finance leases 3,696,432 182,328
Leased equipment, net 36,898,920 13,107,533
----------- -----------
Total assets $47,517,050 $16,652,457
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued liabilities $ 493,601 $ 658,229
Payable to affiliates 77,026 43,483
Rents received in advance 14,603 31,991
Distributions payable to partners 292,583 128,898
Discounted lease rentals 20,974,612 2,765,239
----------- -----------
Total liabilities 21,852,425 3,627,840
----------- -----------
PARTNERS' CAPITAL:
General partner - -
Limited Partners:
Class A 25,367,938 12,878,374
Class B 296,687 146,243
----------- -----------
Total partners' capital 25,664,625 13,024,617
----------- -----------
Total liabilities and partners' capital $47,517,050 $16,652,457
=========== ===========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the period For the period
from the from the
Commencement Commencement
Three Months of Operations Six Months of Operations
ended (April 16, 1996) ended (April 16, 1996)
June 30, 1997 to June 30, 1996 June 30, 1997 to June 30, 1996
------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
REVENUE:
Operating lease rentals $2,842,519 $ 56,739 $4,348,365 $ 56,739
Direct finance lease income 72,160 - 100,282 -
Interest income 45,829 5,079 95,807 5,079
---------- ---------- ---------- ----------
Total revenue 2,960,508 61,818 4,544,454 61,818
---------- ---------- ---------- ----------
EXPENSES:
Depreciation and amortization 2,305,959 28,283 3,497,553 28,283
Direct services from general partner 19,238 6,855 41,410 6,855
Management fees paid to general partner 60,585 761 90,698 761
General and administrative 36,748 741 72,625 741
Interest on discounted lease rentals 359,961 - 508,849 -
---------- ---------- ---------- ----------
Total expenses 2,782,491 36,640 4,211,135 36,640
---------- ---------- ---------- ----------
NET INCOME $ 178,017 $ 25,178 $ 333,319 $ 25,178
========== ========== ========== ==========
NET INCOME ALLOCATED:
To the general partner $ 17,933 $ 3,762 $ 34,473 $ 3,762
To the Class A limited partners 158,454 21,197 295,802 21,197
To the Class B limited partner 1,630 219 3,044 219
---------- ---------- ---------- ----------
$ 178,017 $ 25,178 $ 333,319 $ 25,178
========== ========== ========== ==========
Net income per weighted average Class A
limited partner unit outstanding$ .58 $ 1.07 $ 1.26 $ 1.07
========== ========== ========== ==========
Weighted average Class A limited partner
units outstanding 271,648 19,754 234,694 19,754
========== ========== ========== ==========
</TABLE>
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 six months ended June 30, 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 - 156,750 15,670,067 160,000 15,830,067
Volume discount - - (6,000) - (6,000)
Commissions and offering
costs on sale of Class A
limited partner units (22,532) - (2,224,611) - (2,247,143)
Redemptions - - (7,274) - (7,274)
Net income 34,473 - 295,802 3,044 333,319
Distributions declared
to partners (11,941) - (1,238,420) (12,600) (1,262,961)
------------ ------------ ------------ ------------ ------------
Partners' capital,
June 30, 1997 $ - 311,253 $ 25,367,938 $ 296,687 $ 25,664,625
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the period
from the
Commencement
Six months of Operations
ended (April 16, 1996)
June 30, 1997 to June 30, 1996
------------- ----------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 3,812,110 $ 58,386
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment on operating leases from affiliate (13,968,184) (1,057,576)
Investment in direct finance leases, acquired from affiliate (536,466) -
------------ ------------
Net cash used in investing activities (14,504,650) (1,057,576)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Class A capital contributions 15,670,067 2,532,424
Proceeds from Class B capital contributions 160,000 20,000
Proceeds from discounted lease rentals 3,695,735 -
Principal payments on discounted lease rentals (2,159,424) -
Redemptions of Class A limited partner units (7,274) -
Commissions paid to affiliate in connection
with the sale of Class A limited partner units (1,573,007) (250,315)
Non-accountable organization and offering expenses
reimbursement paid to the general partner in connection
with the sale of Class A limited partner units (677,944) (100,026)
Distributions to partners (1,099,277) (5,139)
------------ ------------
Net cash provided by financing activities 14,008,876 2,196,944
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,316,336 1,197,754
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,286,072 -
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,602,408 $ 1,197,754
============ ============
Supplemental disclosure of cash flow information:
Interest paid on discounted lease rentals $ 508,849 $ -
Supplemental disclosure of noncash investing and
financing activities:
Discounted lease rentals assumed in equipment acquisitions 16,673,062 -
</TABLE>
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)
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. The balance sheet at
December 31, 1996 has been derived from the audited financial statements
included in the Partnership's 1996 Form 10-K. 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.
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 six months ended June 30, 1997, CAI Securities
Corporation earned commissions and fees in the amount of $1,567,007
($1,336,866 of which was paid to participating broker-dealers).
As provided in the Partnership Agreement, the general partner earned
$626,803 as reimbursement for expenses incurred during the six months ended
June 30, 1997 in connection with the organization of the Partnership and
the offering of Class A limited partner units. The general partner also
received $53,333 ($30,779 of which was paid in July 1997) as reimbursement
for due diligence expenses incurred during the six months ended June 30,
1997.
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 six months ended June 30, 1997 in the amount of $6,000.
7
<PAGE>
CAPITAL PREFERRED YIELD FUND-IV, L.P.
NOTES TO BALANCE SHEET
(Unaudited)
2. Transactions With the General Partner and Affiliates, continued
----------------------------------------------------
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 $41,410 ($6,232 of
which were paid in July 1997) during the six months ended June 30, 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.
RECEIVABLE FROM AFFILIATES
Receivable from affiliates represents a $10,000 Class B contribution for
June that was paid in July and an overpayment of $3,057 to the general
partner for equipment purchased during June of 1997.
3. During the period ending June 30, 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 2,332,820 80,832 2,413,652
Brown Strauss Forklifts 271,923 9,422 281,345
Burlingame Industries Forklifts 63,433 2,198 65,631
Christy's Market Foodservice equipment 761,846 26,398 788,244
Chrysler Corp Forklifts 1,020,599 35,364 1,055,963
Consolidated Diesel Burden carriers 18,376 637 19,013
Darigold, Inc. Forklifts 81,230 2,815 84,045
Dewolfe Company Computer equipment 553,977 19,195 573,172
Enogex Inc. Computer equipment 915,365 31,717 947,082
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
--------------------- --------------------- ---------- -------------- ----------
General Motors Forklifts $ 648,200 $ 22,460 $ 670,660
General Motors Corp. Machine tools 269,075 9,323 278,398
Genetics Institute Research & development 1,008,407 34,941 1,043,348
Georgetown Steel Lift trucks 91,558 3,172 94,730
GS Technologies Truck scale 57,821 2,004 59,825
Heluva Good Cheese Material handling 47,066 1,599 48,665
Home Depot, Inc. Lift trucks 555,952 18,864 574,816
Hughes Aircraft Lift trucks 338,459 11,728 350,187
In Home Health, Inc. Furniture, fixture & equipment 13,063 453 13,516
International Paper Material handling equipment 447,538 15,507 463,045
Lear Corp. Computer equipment 70,730 2,348 73,078
Lexmark Stencil printers 675,514 23,407 698,921
Louisiana Workers Comp Computer equipment 53,671 1,860 55,531
Lucas Industries Manufacturing equipment 823,887 28,548 852,435
Matsushita Phone system 110,432 3,826 114,258
Morgan Construction Production equipment 1,278,202 44,290 1,322,492
Nabisco Sweeper 17,248 598 17,846
National Broadcasting Co. Broadcast video equipment 319,785 9,879 329,664
New York Hospital Imaging system 228,796 7,928 236,724
Northwestern University Test equipment 137,343 4,759 142,102
Oklahoma Gas & Electric Computer equipment 2,862,444 99,184 2,961,628
Owens Corning Computer equipment 938,157 32,507 970,664
Precision Castparts Forklifts 157,036 5,441 162,477
Robertshaw Controls Manufacturing equipment 1,350,201 46,784 1,396,985
Texas Instruments Manufacturing equipment 620,338 21,495 641,833
The Foxboro Company Manufacturing equipment 4,584,226 158,843 4,743,069
Thomson Industries Manufacturing equipment 493,409 17,097 510,506
Total System Services Mail sorter 1,043,330 35,388 1,078,718
Triconex Corporation Manufacturing 462,208 16,016 478,224
Unicco Service Co. Sweeper/scrubber 30,648 1,062 31,710
United Artists Projection equipment 663,318 22,984 686,302
Universal Forest Products Forklifts 147,962 5,127 153,089
US Sugar Excavator 327,528 11,349 338,877
USS/Kobe Steel Lift trucks 276,157 9,569 285,726
Xerox Test equipment 80,515 2,790 83,305
----------- ----------- -----------
$30,137,069 $ 1,040,643 $31,177,712
=========== =========== ===========
</TABLE>
As of June 30, 1997, the general partner had identified $4.5 million of
equipment that satisfied the Partnership's investment criteria that is
expected to be acquired during the remainder of 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 $333,319, or $1.26 per weighted average
Class A limited partner unit, for the six months ended June 30, 1997. Net income
was principally derived from rentals generated from $45,169,021 of equipment
owned by the Partnership as of June 30, 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 at the time the leases
are originated, as well as future equipment values and on-going lessee
creditworthiness. Because leasing is an alternative to financing equipment
purchases with debt, lease rates tend to rise and fall with interest rates
(although lease rate movements generally lag interest rate changes in the
capital markets).
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 June 30, 1997 is presented below:
Class A limited partner units sold 311,253
============
Gross offering proceeds including volume discounts of $6,000 $ 31,125,349
Sales commissions (3,112,535)
Organization and offering expenses (1,245,014)
Due diligence expenses (119,963)
------------
Net offering proceeds $ 26,647,837
============
Class B limited partner (CAII) cash contribution $ 310,000
============
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 six months of
1997 is presented below:
Class A limited partner units sold 156,700
============
Gross offering proceeds including volume discounts of $6,000 $ 15,670,067
Sales commissions (1,567,007)
Organization and offering expenses (626,803)
Due diligence expenses (53,333)
------------
Net offering proceeds $ 13,422,924
============
Class B limited partner (CAII) cash contribution $ 160,000
============
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 six months ended June 30, 1997, the Partnership acquired equipment
subject to leases with a total purchase price of $31,177,712 (including
$16,673,062 of discounted lease rentals). As of June 30, 1997, the general
partner had identified $4.5 million of additional equipment that satisfied the
Partnership's acquisition criteria that is expected to be acquired during 1997.
During the six months ended June 30, 1997, the Partnership declared
distributions to the Class A limited partners of $1,238,420 ($282,582 of which
was paid during July 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 six
months ended June 30, 1997, approximately 76% 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 June 30, 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: August 8, 1997 By: /s/Anthony M. DiPaolo
---------------------
Anthony M. DiPaolo
Senior Vice President
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,602,408
<SECURITIES> 0
<RECEIVABLES> 306,233
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 36,898,920
<DEPRECIATION> 0
<TOTAL-ASSETS> 47,517,050
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 25,664,625
<TOTAL-LIABILITY-AND-EQUITY> 47,517,050
<SALES> 0
<TOTAL-REVENUES> 4,544,454
<CGS> 0
<TOTAL-COSTS> 4,211,135
<OTHER-EXPENSES> 132,108
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 508,849
<INCOME-PRETAX> 333,319
<INCOME-TAX> 0
<INCOME-CONTINUING> 333,319
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 333,319
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.26
</TABLE>
