SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 1997
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission file number 33-80849
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 Number)
7175 W. JEFFERSON AVENUE, LAKEWOOD, COLORADO 80235
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 980-1000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 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
----- -----.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. Not applicable.
Exhibit Index Appears on Page 38
Page 1 of 39 Pages
<PAGE>
Item 1. Business
--------
Capital Preferred Yield Fund-IV, L.P., a Delaware limited partnership (the
"Partnership"), was organized on December 18, 1995 and is engaged in the
business of owning and leasing equipment. CAI Equipment Leasing V Corp., a
Colorado corporation and a wholly owned subsidiary of Capital Associates, Inc.
("CAI"), is the general partner of the Partnership.
The Partnership commenced business operations on April 16, 1996. Through
December 31, 1997, the Partnership had sold approximately 460,000 Class A
limited partner units and on February 9, 1998 achieved the planned maximum
placement of 500,000 Class A limited partner units. During 1998, the Partnership
will enter its reinvestment period as defined in the Partnership Agreement. A
summary of the Partnership's offering activities is presented below:
<TABLE>
<CAPTION>
Class A Sales
Limited Number Gross Commissions Net
Partner of Offering and Offering Offering
Units Sold Investors Proceeds Expenses Proceeds
-------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1996 154,553 867 $ 15,455,281 $ 2,230,270 $ 13,225,011
Year ended December 31, 1997 302,080 1,371 30,207,960 4,316,105 25,891,855
-------- ------ ------------ ----------- ------------
456,633 2,238 $ 45,663,241 $ 6,546,375 $ 39,116,866
======== ====== ============ =========== ============
</TABLE>
Capital Associates International, Inc. ("CAII"), an affiliate of the general
partner, is the sole Class B limited partner of the Partnership. In exchange for
its Class B limited partner interest, CAII is required to contribute cash of
$10,000 for each $1,000,000 of investors' capital contribution (i.e., cash
investments in the Partnership) to the Partnership. In addition, CAII's interest
in Distributable Cash is subordinated to the Class A limited partners' interest.
The contributions of CAII are made simultaneously with the purchase of equipment
by the Partnership. Through December 31, 1997, CAII had contributed $460,000 to
the Partnership.
The Partnership's overall investment objectives are to (i) raise the maximum
allowable capital from investors for investment in accordance with the
Partnership's investment objectives described in the Prospectus (which was
reached on February 9, 1998); (ii) invest such capital and related indebtedness
in a diversified portfolio of equipment subject to leases with terms ranging
from two to seven years; (iii) if funds are available for distribution, make
monthly cash distributions to the Class A and Class B limited partners during
the reinvestment period (a period that ends approximately June 30, 2003); (iv)
re-invest all available undistributed cash from operations and cash from sales
in additional equipment during the reinvestment period to increase the
Partnership's portfolio of revenue-generating equipment provided suitable
equipment can be identified and acquired; and (v) sell or otherwise dispose of
the Partnership's equipment and other assets in an orderly manner and promptly
distribute cash from sales thereof to the Partners within three years of the end
of the reinvestment period.
During 1997, the Partnership acquired capital of various types under lease to
third parties. All of the capital was purchased by CAII directly from
manufacturers or from other independent third parties and sold to the
Partnership. The capital is generally comprised of, transportation and
industrial equipment, office furniture and equipment and computer and peripheral
equipment, among others (the "equipment"). See Item 13 of this report,
-2-
<PAGE>
Item 1. Business, continued
--------
"Certain Relationships and Related Transactions" for the detail listing of
equipment purchased during 1997. The Partnership expects that a majority of the
equipment purchased during 1998 will be similar in nature to the equipment
acquired in 1997. As of December 31, 1997, the general partner has identified
approximately $3.6 million of additional equipment that satisfied the
Partnership's acquisition criteria that is expected to be acquired during the
first quarter 1998.
The Partnership may assign the rentals from leases to financial institutions, or
acquire leases subject to such assignments, at fixed interest rates on a
nonrecourse basis. This non-recourse debt financing, also referred to as
discounted lease rentals, will be utilized to finance the purchase of equipment
under lease, or to invest the proceeds therefrom in additional equipment under
lease. 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
assignments incurred in the acquisition of leases are recorded on the balance
sheet as discounted lease rentals. As lessees make payments to financial
institutions, leasing revenue and interest expense are recorded.
During 1997, the Partnership leased equipment to investment grade lessees in
diverse industries including the material handling, telecommunications and
manufacturing industries. Approximately 79% of the Partnership's equipment under
lease was leased to investment grade lessees as of December 31, 1997. 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 (iii) 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. The Partnership limits its credit
risk through selective use of non-recourse debt financing of future lease
rentals, as described above.
The Partnership only acquires equipment that is on lease at the time of
acquisition. After the initial term of its lease, each item of equipment will be
expected to provide additional investment income from its re-lease or sale. Upon
expiration of the initial lease, the Partnership attempts to re-lease or sell
the equipment to the existing lessee. If a re-lease or sale to the lessee cannot
be negotiated, the Partnership will attempt to lease or sell the equipment to a
third party.
The Partnership's business is not subject to seasonal variations.
The ultimate rate of return 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). The amount of future distributions to the partners will
depend, in part, on future interest rates.
The Partnership has no employees. The officers, directors and employees of the
general partner and its affiliates perform services on behalf of the
Partnership. The general partner is entitled to receive certain fees and expense
reimbursements in connection with the performance of these services. See Item 10
of this Report, "Directors and Executive Officers of the Partnership" and Item
13 of this Report, "Certain Relationships and Related Transactions," which are
incorporated herein by reference.
-3-
<PAGE>
Item 1. Business, continued
--------
The Partnership competes in the leasing marketplace as a lessor with a
significant number of other companies, including equipment manufacturers,
leasing companies and financial institutions. The Partnership competes mainly on
the basis of the expertise of its general partner in remarketing equipment,
terms offered in its transactions, pricing and service. Although the Partnership
does not account for a significant percentage of the leasing market, the general
partner believes that the Partnership's marketing strategies and financing
capabilities enable it to compete effectively in the equipment leasing and
remarketing markets.
The Partnership leases equipment to a significant number of lessees. However,
rental revenue from one lessee accounted for approximately 12% ($1,386,538) of
total revenue of the Partnership during 1997. Rental revenue from this lessee
constituted a larger percentage of the Partnership's total revenue than it is
expected to be in the future, as additional leases are acquired by the
Partnership.
The Partnership is required to dissolve and distribute all of its assets no
later than December 31, 2007. However, the general partner anticipates that all
equipment will be sold and the Partnership will be liquidated prior to that
date.
Item 2. Properties
----------
Per the Partnership Agreement, the Partnership does not own or lease any
physical properties other than the equipment discussed in Item 1 "Business," of
this Report, which is incorporated herein by reference.
Item 3. Legal Proceedings
-----------------
Neither the Partnership nor any of the Partnership's equipment is the subject of
any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matters were submitted to a vote of the limited partners of the Partnership,
through the solicitation of proxies or otherwise, during the fourth quarter
ended December 31, 1997.
Item 5. Market for the Partnership's Common Equity and Related Stockholder
-----------------------------------------------------------------------
Matters
-------
(a) The Partnership's Class A limited partner units, Class B interest and
general partner interest are not publicly traded. There is no
established public trading market for such units and interests and none
is expected to develop.
(b) At December 31, 1997, there were 2,226 Class A limited partners.
-4-
<PAGE>
Item 5. Market for the Partnership's Common Equity and Related Stockholder
-----------------------------------------------------------------------
Matters
-------
(c) Distributions
-------------
During 1997, the Partnership made twelve (12) distributions (a portion
of which constituted a return of capital) to Class A limited partners
as follows:
Distributions Per
$100 Investment
For the Payment (computed on Total
Period Ended Made During weighted average) Distributions
------------ ----------- ----------------- -------------
December 31, 1996 January 1997 $ 0.875 $ 126,682
January 31, 1997 February 1997 0.875 148,000
February 28, 1997 March 1997 0.875 165,833
March 31, 1997 April 1997 0.875 209,988
April 30, 1997 May 1997 0.875 206,805
May 31, 1997 June 1997 0.875 225,213
June 30, 1997 July 1997 0.875 282,582
July 31, 1997 August 1997 0.875 267,496
August 31, 1997 September 1997 0.875 290,656
September 30, 1997 October 1997 0.875 355,921
October 31, 1997 November 1997 0.875 326,231
November 30, 1997 December 1997 0.875 342,134
------- -----------
$ 10.50 $ 2,947,541
======= ===========
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 can 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.
The distribution for the month ended December 31, 1997, totaling
$425,479, was paid to the Class A limited partners on January 3, 1998.
Distributions to the general partner and Class B limited partner during
1997 are discussed in Item 13 of this Report, "Certain Relationships
and Related Transactions."
The general partner believes that the Partnership will generate
sufficient cash flows from operations during 1998, 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% of their capital contributions, (portions of which are expected
to constitute returns of capital) and (3) reinvest in additional
equipment under leases, provided that suitable equipment can be
identified and acquired.
-5-
<PAGE>
Item 5. Market for the Partnership's Common Equity and Related Stockholder
-----------------------------------------------------------------------
Matters, continued
-------
(c) Distributions, continued
-------------
During 1996, the Partnership made seven (7) distributions (a portion of
which constituted a return of capital) to Class A limited partners as
follows:
Distributions Per
$100 Investment
For the Payment (computed on Total
Period Ended Made During weighted average) Distributions
------------ ----------- ----------------- -------------
May 31, 1996 June 1996 $ 1.595* $ 5,265
June 30, 1996 July 1996 0.875 17,017
July 31, 1996 August 1996 0.875 26,767
August 31, 1996 September 1996 0.875 38,295
September 30, 1996 October 1996 0.875 60,032
October 31, 1996 November 1996 0.875 71,221
November 30, 1996 December 1996 0.875 94,441
------- ---------
$ 6.845 $ 313,038
======= =========
*For the period April 16, 1996 (commencement of operations) through May
31, 1996.
The following represents annual cumulative distributions paid per Class
A limited partner unit, as described in Footnote 1 to Notes to
Consolidated Financial Statements.
Distributions per
$ Per Class A Limited
Class A Partner Unit
Payment Limited Partner (computed on
Made During Unit Invested weighted average) % (1)
----------- --------------- ----------------- -----
1996 $ 100 $ 6.85 11.0%
1997 10.50 10.5%
-------
$ 17.35
=======
(1) Cumulative distributions, as described in Footnote 1 to Notes to
Consolidated Financial Statements, began May 1996.
-6-
<PAGE>
Item 6. Selected Financial Data
-----------------------
The following selected financial data relates to the years ended December 31,
1997 and 1996. The data should be read in conjunction with Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements and notes thereto with Item 8.
1997 1996*
---------- -----------
Total revenue $11,907,740 $ 940,346
Net income 955,418 102,627
Net income per weighted average Class A
limited partner unit outstanding 2.82 1.33
Total assets 56,161,440 16,652,457
Discounted lease rentals 17,633,047 2,765,239
Distributions declared to Class A limited partners 3,246,338 439,720
Distributions declared per weighted average
Class A limited partner unit outstanding 10.50 7.72
*For the period from April 16, 1996 (commencement of operations) to December 31,
1996
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
-------------
Presented below are schedules (prepared solely to facilitate the discussion of
results of operations that follows) showing condensed statements of income
categories and analyses of changes in those condensed categories derived from
the Statements of Income:
Condensed The effect
Statements of Income on net
for the years ended income of
December 31, changes
----------------------- between
1997 1996* years
---------- ---------- ----------
Leasing margin $ 1,185,661 $ 203,467 $ 982,194
Interest income 253,514 50,763 202,751
Management fees paid to general partner (250,233) (17,688) (232,545)
Direct services from general partner (78,767) (41,376) (37,391)
General and administrative (154,757) (92,539) (62,218)
----------- --------- ----------
Net income $ 955,418 $ 102,627 $ 852,791
=========== ========= ==========
*For the period from April 16, 1996 (commencement of operations) to December 31,
1996.
-7-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations, continued
-------------
Results of Operations, continued
- ---------------------
LEASING MARGIN
Leasing margin consists of the following:
Years ended December 31,
-----------------------------
1997 1996*
------------- -----------
Operating lease rentals $ 11,394,668 $ 881,778
Direct finance lease income 259,558 7,805
Depreciation (9,213,581) (659,574)
Interest on discounted lease rentals (1,254,984) (26,542)
------------ ----------
Leasing margin $ 1,185,661 $ 203,467
============ ==========
Leasing margin ratio 10% 23%
== ==
*For the period from April 16, 1996 (commencement of operations) to December 31,
1996.
All components of leasing margin increased due to growth in the Partnership's
lease portfolio. Leasing margin ratio fluctuates primarily due to non-recourse
interest expense. As of December 31, 1997, approximately 40% of the
Partnership's portfolio consisted of operating leases financed with non-recourse
debt while for the comparable period in 1996, the portfolio was minimally
financed with non-recourse debt and therefore, leasing margin was not materially
impacted by interest expense. Leasing margin and the related leasing margin
ratio for an operating lease financed with non-recourse debt increases during
the term of the lease since rents and depreciation are typically fixed while
interest expense declines as the related non-recourse debt is repaid.
The ultimate rate of return on leases depends, in part, on 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).
INTEREST INCOME
Interest income increased due to an increase in invested cash from sales of
Class A limited partner units pending the Partnership's initial acquisition of
equipment.
EXPENSES
Management fees, direct services from general partner and general and
administrative expenses increased due to growth in the Partnership's lease
portfolio.
PROVISION FOR LOSSES
The remarketing of equipment for an amount greater than its book value is
reported as equipment sales margin (if the equipment is sold) or leasing margin
(if the equipment is re-leased). The realization of less than the carrying value
of equipment (which is typically not known until remarketing subsequent to the
initial lease termination has occurred) is recorded as provision for losses.
-8-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations, continued
-------------
PROVISION FOR LOSSES, continued
Residual values are established equal to the estimated value to be received from
the equipment following termination of the lease. In estimating such values, the
Partnership considers all relevant facts regarding the equipment and the lessee,
including, for example, the likelihood that the lessee will re-lease the
equipment. The nature of the Partnership's leasing activities is that it has
credit and residual value exposure and, accordingly, in the ordinary course of
business, it will incur losses from those exposures. The Partnership performs
on-going quarterly assessments of its assets to identify any
other-than-temporary losses in value.
There were no provision for losses recorded during 1997 or 1996.
Liquidity and 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.
A summary of the Partnership's offering activities for 1997 is presented below:
Class A limited partner units sold 302,080
============
Gross offering proceeds $ 30,207,960
Sales commissions (3,020,796)
Organization and offering expenses (1,208,318)
Due diligence expenses (86,991)
------------
Net offering proceeds $ 25,891,855
============
Class B limited partner (CAII) cash contribution $ 310,000
============
A summary of the Partnership's offering activities from the commencement of
operations to December 31, 1997 is presented below:
Class A limited partner units sold 456,632
============
Gross offering proceeds $ 45,663,241
Sales commissions (4,566,324)
Organization and offering expenses (1,826,530)
Due diligence expenses (153,521)
------------
Net offering proceeds $ 39,116,866
============
Class B limited partner (CAII) cash contribution $ 460,000
============
As of February 9, 1998, all 500,000 Class A limited partner units have been
sold.
-9-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations, continued
-------------
Liquidity and Capital Resources, continued
- -------------------------------
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 1997, the Partnership acquired equipment subject to leases with a total
purchase price of $47,828,703 (including $16,946,684 of equipment acquired
subject to existing non-recourse debt). Also during 1997, the Partnership
discounted future rental payments from certain leases to non-recourse lenders
and received proceeds of $3,687,846. 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, 1997,
the general partner had identified $3.6 million of additional equipment that
satisfied the Partnership's acquisition criteria and is expected to be acquired
during 1998.
During 1997 and 1996, the Partnership declared distributions to the Class A
limited partners of $2,947,541 and $439,720, respectively, of which $425,479 was
paid during January 1998. A 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 can only be determined after all residual cash flows
(which include proceeds from the re-leasing and sales of equipment) have been
realized at the termination of the Partnership. For 1997, approximately 73% 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.
The general partner believes that the Partnership will generate sufficient cash
flows from operations during 1998, 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% of their capital contributions (portions
of which are expected to constitute returns of capital), and (3) reinvest in
additional equipment under leases, provided that suitable equipment can be
identified and acquired.
-10-
<PAGE>
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
Index to Financial Statements
Page
Number
Financial Statements ------
--------------------
Independent Auditors' Report 12
Balance Sheets as of December 31, 1997 and 1996 13
Statements of Income for the year ended December 31,
1997 and the period from April 16, 1996 (commencement
of operations) through December 31, 1996 14
Statements of Partners' Capital for the year ended
December 31, 1997 and the period from April 16, 1996
(commencement of operations) through December 31, 1996 15
Statements of Cash Flows for the year ended December
31, 1997 and the period from April 16, 1996
(commencement of operations) through December 31, 1996 16
Notes to Financial Statements 17-27
-11-
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
THE PARTNERS
CAPITAL PREFERRED YIELD FUND-IV, L.P.
We have audited the accompanying balance sheets of Capital Preferred Yield
Fund-IV, L.P. as of December 31, 1997 and 1996, and the related statements of
income, partners' capital, and cash flows for the year ended December 31, 1997
and 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 provides 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, 1997 and 1996, and the results of its
operations and its cash flows for the year ended December 31, 1997 and 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
February 6, 1998
-12-
<PAGE>
Capital Preferred Yield Fund-IV, L.P.
BALANCE SHEETS
December 31, 1997 and 1996
ASSETS
1997 1996
----------- -----------
Cash and cash equivalents $ 4,676,747 $ 3,286,072
Accounts receivable 383,407 76,524
Receivable from related party 10,000 -
Net investment in direct finance leases 4,602,977 182,328
Leased equipment, net 46,488,309 13,107,533
------------ ------------
Total assets $ 56,161,440 $ 16,652,457
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued liabilities $ 411,814 $ 288,834
Payables to affiliates 58,722 43,483
Rents received in advance 817,900 401,386
Distributions payable to partners 433,396 128,898
Discounted lease rentals 17,633,047 2,765,239
------------ ------------
Total liabilities 19,354,879 3,627,840
------------ ------------
Partners' capital:
General partner - -
Limited partners:
Class A 500,000 units authorized; 455,953 and
154,503 units issued and outstanding in 1997
and 1996, respectively 36,374,010 12,878,374
Class B 432,551 146,243
------------ ------------
Total partners' capital 36,806,561 13,024,617
------------ ------------
Total liabilities and partners' capital $ 56,161,440 $ 16,652,457
============ ============
See accompanying notes to financial statements.
-13-
<PAGE>
Capital Preferred Yield Fund-IV, L.P.
STATEMENTS OF INCOME
For the period
from April 16, 1996
Year Ended (commencement of
December 31, operations) to
1997 December 31, 1996
------------ -------------------
Revenue:
Operating lease rentals $ 11,394,668 $ 881,778
Direct finance lease income 259,558 7,805
Interest income 253,514 50,763
------------ ---------
Total revenue 11,907,740 940,346
------------ ---------
Expenses:
Depreciation 9,213,581 659,574
Management fees paid to general partner 250,233 17,688
Direct services from general partner 78,767 41,376
General and administrative 154,757 92,539
Interest on discounted lease rentals 1,254,984 26,542
------------ ---------
Total expenses 10,952,322 837,719
------------ ---------
Net income $ 955,418 $ 102,627
============ =========
Net income allocated:
To the general partner $ 74,673 $ 26,271
To the Class A limited partners 871,799 75,564
To the Class B limited partner 8,946 792
------------ ---------
$ 955,418 $ 102,627
============ =========
Net income per weighted average Class A
limited partner unit outstanding $ 2.82 $ 1.33
============ =========
Weighted average Class A limited partner
units outstanding 309,586 56,931
============ =========
See accompanying notes to financial statements.
-14-
<PAGE>
Capital Preferred Yield Fund-IV, L.P.
STATEMENTS OF PARTNERS' CAPITAL
For the year ended December 31, 1997 and the
period from April 16, 1996 (commencement of operations)
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 $ - 154,553 $ 15,455,281 $ 150,000 $ 15,605,281
Commissions and offering costs on
sales 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
Capital contributions - 302,080 30,207,960 310,000 30,517,960
Commissions and offering costs on
sales of Class A limited partner units (43,222) - (4,278,883) - (4,322,105)
Redemptions - (630) (58,902) - (58,902)
Net income 74,673 - 871,799 8,946 955,418
Distributions declared to partners (31,451) - (3,246,338) (32,638) (3,310,427)
--------- -------- ------------ --------- ------------
Partners' capital, December 31, 1997 $ - 455,953 $ 36,374,010 $ 432,551 $ 36,806,561
========= ======== ============ ========== ============
</TABLE>
See accompanying notes to financial statements.
-15-
<PAGE>
Capital Preferred Yield Fund-IV, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the period from
Year Ended April 16, 1996
December 31, (commencement of operations)
1997 to December 31, 1996
----------------- ----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 955,418 $ 102,627
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 9,213,581 659,574
Recovery of investment in direct finance leases 1,057,640 20,040
Changes in assets and liabilities:
Increase in accounts receivable (319,755) (76,524)
Increase in accounts payable and accrued liabilities 122,980 651,476
Increase in payables to affiliates 15,239 43,483
Increase in rents received in advance 416,514 31,991
-------------- -------------
Net cash provided by operating activities 11,461,617 1,432,667
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment on operating leases from affiliates (28,986,004) (12,939,697)
Investment in direct financing leases, acquired from affiliates (2,123,638) (202,368)
-------------- -------------
Net cash used in investing activities (31,109,642) (13,142,065)
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Class A capital contributions 30,207,960 15,455,281
Proceeds from Class B capital contributions 300,000 150,000
Proceeds from discounted lease rentals 3,687,846 1,923,239
Principal payments on discounted lease rentals (5,766,722) (7,244)
Redemptions of Class A limited partner units (58,902) (4,784)
Commissions paid to affiliate in connection with the sale of
Class A limited partner units (3,020,146) (1,545,528)
Non-accountable organization and offering expense reimbursement
paid to the general partner in connection with the sale of Class A
limited partner units (1,301,960) (656,155)
Distributions to partners (3,009,376) (319,339)
-------------- -------------
Net cash provided by financing activities 21,038,700 14,995,470
-------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,390,675 3,286,072
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,286,072 -
-------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,676,747 $ 3,286,072
============== =============
Supplemental disclosure of cash flow information:
Interest paid on discounted lease rentals $ 1,238,980 $ 26,542
Supplemental disclosure of noncash investing and financing activities:
Reduction in Partners' capital accounts for commissions and offering
costs payable to affiliates 18,879 28,587
Discounted lease rentals assumed in equipment acquisitions 16,946,684 849,244
</TABLE>
See accompanying notes to financial statements.
-16-
<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, 1997, 456,633
Class A limited partner units were sold to approximately 2,238 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.
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:
-17-
<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
------------------
First, 1.0% to the general partner and 99.0% to the Class A limited
partners until the class A limited partners receive annual,
non-compounded cumulative distributions equal to 10.5% of their
contributed capital.
Second, 1.0% to the general partner and 99.0% to the Class B limited
partner until the Class B limited partner receives annual non-compounded
cumulative distributions equal to 10.5% of its contributed capital.
Third, any remaining available cash will be reinvested or distributed to
the partners as specified in the Partnership Agreement.
After the Reinvestment Period (as defined in the Partnership Agreement),
available cash will be distributed to the partners as follows:
First, in accordance with the first and second allocations during the
Reinvestment Period as described above.
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:
-18-
<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
------------------
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.
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.
-19-
<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
During 1997, the Partnership adopted SFAS No. 125, Accounting for Transfer
and Servicing of Financial Assets and Extinguishments of Liabilities
("SFAS No. 125"). SFAS No. 125 provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. The adoption of SFAS No. 125 did not have a
material impact on the Partnership's financial position or results of
operations.
Long-lived Assets
The Partnership accounts for long-lived assets under the provisions of
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"). 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.
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.
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.
-20-
<PAGE>
Capital Preferred Yield Fund-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies, continued
-----------------------------------------------------------
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.
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.
Non-recourse 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 non-recourse 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 institutions, leasing revenue and interest expense are
recorded.
-21-
<PAGE>
Capital Preferred Yield Fund-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies, continued
-----------------------------------------------------------
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.
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 approximately $4,676,000 and $2,491,000 at December 31,
1997 and 1996, respectively, are comprised of investments 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.
-22-
<PAGE>
Capital Preferred Yield Fund-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
2. Net Investment in Direct Finance Leases
---------------------------------------
The components of the net investment in direct finance leases as of December
31, 1997 and 1996 were:
1997 1996
-------- ---------
Minimum lease payments receivable $ 4,420,096 $ 196,123
Estimated residual values 781,773 19,627
Less unearned income (598,892) (33,422)
----------- -----------
Total $ 4,602,977 $ 182,328
=========== ===========
3. Leased Equipment
----------------
The Partnership's investment in equipment on operating leases by major
classes as of December 31, 1997 and 1996 were:
1997 1996
-------- ---------
Transportation and industrial equipment $ 26,164,592 $ 10,188,595
Computers and peripherals 14,774,631 3,569,359
Office furniture and equipment 13,168,649 -
Other 2,228,605 30,988
------------ ------------
56,336,477 13,788,942
Less accumulated depreciation (9,848,168) (681,409)
------------ ------------
$ 46,488,309 $ 13,107,533
============ ============
Depreciation expense for 1997 and 1996 was $9,213,581 and $659,574,
respectively.
4. Future Minimum Lease Payments
-----------------------------
Future minimum lease payments receivable from noncancelable leases as of
December 31, 1997 are as follows:
Years Ending December 31, DFLs OLs
------------------------- ------ -----
1998 $ 1,827,864 $ 15,272,639
1999 1,488,582 11,793,021
2000 650,845 6,692,279
2001 438,583 3,209,992
2002 14,222 1,263,293
Thereafter - 451,269
----------- ------------
Total $ 4,420,096 $ 38,682,493
=========== ============
-23-
<PAGE>
Capital Preferred Yield Fund-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
5. Discounted Lease Rentals
------------------------
Discounted lease rentals outstanding at December 31, 1997 bear interest at
rates primarily ranging between 6% and 10%. Aggregate maturities of such
non-recourse obligations are:
Years Ending December 31,
-------------------------
1998 $ 7,843,011
1999 5,282,298
2000 2,557,064
2001 1,590,983
2002 318,381
Thereafter 41,310
------------
$ 17,633,047
============
6. Transactions With the General Partner and Affiliates
----------------------------------------------------
Sales Commissions and Offering Costs
------------------------------------
Under the terms of the Partnership Agreement, 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 1997 and 1996,
respectively, the Partnership incurred commissions and fees of
approximately $3,021,000 and $1,546,000, including $2,562,000 and
$1,324,000 that were paid to participating broker-dealers.
As provided in the Partnership Agreement, the general partner earned
approximately $1,208,000 and $618,000 as reimbursement for expenses
incurred during 1997 and 1996, respectively, in connection with the
organization of the Partnership and the offering of Class A limited
partner units. The general partner also received approximately $87,000 and
$67,000 as reimbursement for due diligence expenses incurred during 1997
and 1996, respectively.
Capital Contributions
---------------------
Under terms of the Partnership Agreement, the Class B limited partner made
capital contributions to the Partnership of $310,000 and $150,000 during
1997 and 1996, respectively, of which $10,000 was included in receivable
from related party at December 31, 1997.
-24-
<PAGE>
Capital Preferred Yield Fund-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
6. Transactions With the General Partner and Affiliates, continued
----------------------------------------------------
Origination Fee and Evaluation Fee
----------------------------------
The general partner earns 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 creditworthiness of the lessees. Origination and evaluation fees
totaled approximately $1,586,000 and $464,000 in 1997 and 1996,
respectively, 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 earns management fees 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.
The general partner earned approximately $250,000 and $18,000 of
management fees during 1997 and 1996, respectively.
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. The partnership recorded approximately
$79,000 and $41,000 of direct services from general partner during 1997
and 1996, respectively.
Equipment Purchases
-------------------
The Partnership purchased equipment from CAII, with a total purchase price
of approximately $47,800,000 (including approximately $16,900,000 of
discounted lease rentals) during 1997. The Partnership purchased the
equipment at CAII's historical cost plus reimbursement of other net
acquisition costs, as provided for in the Partnership Agreement.
Payables to Affiliates
----------------------
Payables 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.
-25-
<PAGE>
Capital Preferred Yield Fund-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
7. Tax Information (Unaudited)
---------------------------
The following reconciles net income for financial reporting purposes to the
income for federal income tax purposes for the periods ended December 31,
1997 and 1996:
1997 1996
---- ----
Net income per financial statements $ 955,418 $ 102,627
Direct financing leases 1,057,640 20,040
Depreciation (4,245,112) (567,815)
Other 400,382 87,042
------------ ----------
Partnership income for federal income
tax purposes $ (1,831,672) $ (358,106)
============ ==========
The following reconciles partners' capital for financial reporting purposes
to partners' capital for federal income tax purposes as of December 31, 1997
and 1996:
1997 1996
---- ----
Partners' capital per financial statements $ 36,806,561 $ 13,024,617
Commissions and offering costs 6,552,375 2,230,270
Direct financing leases 1,077,680 20,040
Depreciation (4,812,927) (567,815)
Other 476,622 81,277
------------ ------------
Partners' capital for federal income
tax purposes $ 40,100,311 $ 14,788,389
============ ============
8. Concentration of Credit Risk
----------------------------
Approximately 79% 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 (iii) 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.
One lessee accounted for approximately 12% ($1,387,000) of total revenue of
the Partnership during 1997. Three lessees accounted for approximately 48%
($453,000) of total revenue of the Partnership during 1996. Rental revenue
from these lessees constituted a larger percentage of the Partnership's
total revenue than expected in future 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.
-26-
<PAGE>
Capital Preferred Yield Fund-IV, L.P.
NOTES TO FINANCIAL STATEMENTS
9. Disclosures about Fair Value of Financial Instruments
-----------------------------------------------------
Statement of Financial Standards 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, 1997 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, 1997, the carrying value of discounted lease rentals
approximates its fair value because the debt was recently acquired.
-27-
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
-----------------------------------------------------------------------
Financial Disclosure
--------------------
None.
Item 10. Directors and Executive Officers of the Partnership
---------------------------------------------------
The Partnership has no officers and directors. The general partner manages and
controls the affairs of the Partnership and has general responsibility and
authority in all matters affecting its business. Information concerning the
directors and executive officers of the general partner is as follows:
CAI Equipment Leasing V Corp.
Name Positions Held
---- --------------
John F. Olmstead President and Director
Dennis J. Lacey Senior Vice President and Director
Anthony M. DiPaolo Senior Vice President, Principle Financial and
Chief Administrative Officer and Director
Richard H. Abernethy Vice President and Director
John A. Reed Vice President, Assistant Secretary and Director
Joseph F. Bukofski Vice President, Assistant Secretary and Director
Robert A. Golden Director
Mick Myers Director
Ann Danielson Assistant Vice President
David J. Anderson Chief Accounting Officer and Secretary
JOHN F. OLMSTEAD, age 53 joined CAII as Vice President in December, 1988, is a
Senior Vice President of CAI and CAII and is head of CAII's Public Equity
division. He has served as Chairman of the Board for Neo-kam Industries, Inc.,
Matchless Metal Polish Company, Inc. and ACL, Inc. for more than 5 years. He has
over 20 years of experience holding various positions of responsibility in the
leasing industry. Mr. Olmstead holds a Bachelor of Science degree from Indiana
University and a Juris Doctorate degree from Indiana Law School.
DENNIS J. LACEY, age 44, joined CAI as Vice President, Operations, in October
1989. Mr. Lacey was appointed Treasurer on January 1, 1991, Chief Financial
Officer on April 11, 1991, a director on July 19, 1991, and President and Chief
Executive Officer on September 6, 1991. Prior to joining CAI, Mr. Lacey was an
audit partner for the public accounting firm of Coopers & Lybrand. Mr. Lacey is
also a director and senior officer of CAII, CAI Equipment Leasing I Corp., CAI
Equipment Leasing II Corp., CAI Equipment Leasing III Corp., CAI Equipment
Leasing IV Corp., CAI Equipment Leasing V Corp., CAI Leasing Canada, Ltd., CAI
Partners Management Company, CAI Securities Corporation, CAI Lease
Securitization I Corp. and Capital Equipment Corporation (collectively referred
to herein as the "CAI Affiliates"), all of which are first- or second-tier
wholly-owned subsidiaries of CAI.
-28-
<PAGE>
Item 10. Directors and Executive Officers of the Partnership, continued
---------------------------------------------------
ANTHONY M. DIPAOLO, age 39, joined CAII in July 1990 as Assistant Treasurer and
is currently Senior Vice President-Chief Financial Officer. He also held the
positions of Senior Vice President-Controller and Assistant Vice
President-Credit Administration for the Company. Mr. DiPaolo has held similar
senior financial management positions with two public companies between 1986 and
June 1990, and prior to then was an audit manager for the public accounting firm
of Coopers & Lybrand. Mr. DiPaolo holds a Bachelor of Science degree in
Accounting from the University of Denver.
RICHARD H. ABERNETHY, age 43, joined CAII in April 1992 as Equipment Valuation
Manager and currently serves as Vice President of Asset Management. Mr.
Abernethy has thirteen years experience in the leasing industry, including prior
positions with Barclays Leasing Inc., from November 1986 to February 1992, and
Budd Leasing Corporation, from January 1981 to November 1986. Mr. Abernethy
holds a Bachelor of Arts in Business Administration from the University of North
Carolina at Charlotte.
JOHN A. REED, age 42, joined CAII in January 1990 as the Tax Director and
Assistant Secretary. Mr. Reed is currently the Vice President-Manager, Capital
Markets Group and is responsible for obtaining off balance sheet financing,
syndications and private programs. Prior to joining the Capital Markets Group,
Mr. Reed was Vice President of both Marketing Administration and Credit and Debt
Administration. He spent seven and one half years with Coopers & Lybrand in the
Tax Department and served on CAII's tax consulting engagement during that time.
Mr. Reed holds a Bachelor of Arts degree in Social Sciences and Masters of
Science in Accounting, from Colorado State University.
JOSEPH F. BUKOFSKI, age 42, joined CAII in June 1990 as a Financial Analyst. Mr.
Bukofski is currently the Vice President of Marketing and is responsible for all
lease documentation and management of transaction structuring and processing.
Prior to joining the Marketing Department, Mr. Bukofski was Assistant Vice
President and Controller. Prior to joining the Company, he was a geologist with
Barringer Geoservices, Inc. for eleven years. Mr. Bukofski holds a Bachelor of
Science degree in Secondary Education - Earth Science from Bloomsburg University
and a Masters of Science in Accounting from the University of Colorado.
ROBERT A. GOLDEN, age 52, is Vice President and the National Sales Manager of
the Company. Mr. Golden joined the Company in 1993 as a Branch Manager. He was
promoted to his current position in September 1994. Prior to joining the
Company, he was an Executive Vice President with the U.S. Funds Group, President
of BoCon Capital Group and Vice President with Ellco/GE Capital for fifteen
years. Mr. Golden is an officer, but not a director, of CAII.
MICK MYERS, age 40, joined CAI in February 1992 as a Senior Portfolio Manager.
Currently he is Assistant Vice President of Asset Management. Mr. Myers has nine
years experience in the leasing industry. Previously, he has held the position
of Senior End of Lease Negotiator with ELLCO/GE Capital. Mr. Myers holds a
Bachelor of Science degree from the University of Wyoming.
-29-
<PAGE>
Item 10. Directors and Executive Officers of the Partnership, continued
---------------------------------------------------
ANN DANIELSON, age 34, joined CAII in February 1990 and is currently Assistant
Vice President, Assistant Treasurer and is responsible for the Company's cash
management and collections functions. Prior to joining the Company, she was with
U.S. West financial Services and Coopers & Lybrand. Ms. Danielson holds a
Bachelor of Arts Degree from the University of Northern Iowa.
DAVID J. ANDERSON, age 45, joined CAII in August 1990 as Manager of Billing &
Collections and currently serves as Assistant Vice-President/Chief Accounting
Officer. Prior to joining CAII, Mr. Anderson was Vice- President/Controller for
Systems Marketing, Inc., from 1985 to 1990, and previous to that worked in
several senior staff positions at the Los Alamos National Laboratory and with
Ernst & Whinney. Mr. Anderson holds a Bachelor of Business Administration degree
in Accounting from the University of Wisconsin.
Item 11. Executive Compensation
----------------------
No compensation was paid by the Partnership to the officers and directors of the
general partner. See Item 13 of this Report, "Certain Relationships and Related
Transactions," which is incorporated herein by reference, for a description of
the compensation and fees paid to the general partner and its affiliates by the
Partnership during 1997.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
(a) As of the date hereof, no person is known by the Partnership to be the
beneficial owner of more than 5% of the Class A limited partner units
of the Partnership. The Partnership has no directors or officers, and
neither the general partner nor the Class B limited partner of the
Partnership own any Class A limited partner units.
CAII, an affiliate of the general partner is the sole Class B limited
partner.
CAI Equipment Leasing V Corp. is the general partner.
The names and addresses of the general partner and the Class B limited
partner are as follows:
General Partner
---------------
CAI Equipment Leasing V Corp.
7175 W. Jefferson Avenue
Suite 4000
Lakewood, Colorado 80235
-30-
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management,
-----------------------------------------------------------------------
continued
Class B Limited Partner
-----------------------
Capital Associates International, Inc.
7175 W. Jefferson Avenue
Suite 4000
Lakewood, Colorado 80235
(b) No directors or officers of the general partner or the Class B limited
partner owned any Class A limited partner units as of March 23, 1998.
(c) The Partnership knows of no arrangements, the operation of which may at
a subsequent date result in a change in control of the Partnership.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
The general partner and its affiliates receive certain types of compensation,
fees or other distributions in connection with the operations of the
Partnership.
Following is a summary of the amounts paid or payable to the general partner and
its affiliates during 1997:
ORGANIZATION AND OFFERING STAGE
Sales Commissions
- -----------------
CAI Securities Corporation (the "Dealer-Manager"), an affiliate of the general
partner, earned commissions of 10% of the sales price of Class A limited partner
units sold, up to 9% of which was paid to participating broker-dealers. During
1997, the Dealer-Manager earned commissions totaling $3,020,796, $2,561,871 of
which was paid to broker-dealers.
Due Diligence Expense Reimbursement
- -----------------------------------
The Dealer-Manager is reimbursed for bona fide due diligence expenses which it
incurs up to a maximum of 1/2% of gross offering proceeds. The Dealer-Manager
incurred $86,991 for due diligence expenses during 1997.
Organization and Offering Expense Reimbursement
- -----------------------------------------------
The general partner is reimbursed for the organization and offering expenses it
incurs in organizing the Partnership and offering Class A limited partner units
for sale to the public. The general partner earned $1,208,318 for organization
and offering expenses during 1997.
-31-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
ACQUISITION AND OPERATING STAGES
Acquisition Fee and Acquisition Cost Reimbursement
- --------------------------------------------------
The general partner receives a fee equal to 3.5% of the sales price of equipment
sold to the Partnership, 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 Lessee.
Origination and evaluation fees totaled $1,585,554 in 1997, 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
rendered in connection with managing the Partnership's equipment equal to 2% of
gross rentals received. Such fees totaled $250,233 for 1997.
Accountable General and Administrative Expenses
- -----------------------------------------------
The general partner is entitled to reimbursement of certain expenses paid on
behalf of the Partnership which are incurred in connection with the
Partnership's operations. Such reimbursable expenses amounted to $78,767 during
1997.
Additionally, the general partner is allocated 1% of Partnership cash
distributions and net income relating to its general partner interest in the
Partnership. Distributions and net income allocated to the general partner
totaled $31,451 and $74,673, respectively, for 1997. Distributions and net
income allocated to the Class B limited partner totaled $32,638 and $8,946,
respectively, during 1997.
During 1997, the Partnership acquired the equipment described below from CAII:
<TABLE>
<CAPTION>
Cost to
Partnership
Including
Acquisition Debt Annual
Lessee Equipment Description Cost to CAII Fees* Assumed Rents
- ------ --------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Alliance Data Systems, Inc. Computer equipment $ 1,466,561 $ 1,512,962 $ 3,870 $ 357,660
Arqule, Inc. Furniture & fixtures 39,996 41,382 37,939 15,188
Arqule, Inc. Research equipment 1,816,955 1,879,912 1,722,989 686,134
Christy's Market Computer equipment 124,625 128,944 116,357 32,053
Christy's Market Food service equipment 121,684 125,901 113,596 31,315
Christy's Market Furnace 7,628 7,892 7,121 1,963
Dewolfe Company Computer equipment 133,891 138,531 125,186 56,562
Dewolfe Company Copiers 69,006 71,397 64,773 27,894
-32-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
Cost to
Partnership
Including
Acquisition Debt Annual
Lessee Equipment Description Cost to CAII Fees* Assumed Rents
- ------ --------------------- ------------ ------------ ------------ ------------
General Motors Corporation Burden carrier $ 6,355 $ 6,575 $ 0 $ 1,595
International Paper Sweeper 17,022 17,612 0 3,891
International Paper Forklifts 69,179 71,576 0 15,825
ITT Automotive Mailing machine 12,411 12,841 0 4,721
Louisiana Workers Computer equipment 60,890 63,000 0 21,822
Northwestern University Test equipment 137,343 142,102 0 24,000
Oklahoma Gas & Electric Computer equipment 64,373 66,603 60,657 16,072
Oklahoma Gas & Electric Generator 167,224 173,019 160,723 78,073
Oklahoma Gas & Electric Manufacturing equipment 119,887 124,041 114,589 52,050
The Foxboro Company Air handling 31,683 32,781 30,292 12,422
The Foxboro Company Carpeting 59,497 61,558 57,174 22,627
The Foxboro Company Computer equipment 28,683 29,677 27,417 11,276
The Foxboro Company Facility equipment 84,986 87,931 81,197 31,982
The Foxboro Company Furniture & fixtures 6,600 6,829 6,343 2,452
The Foxboro Company Manufacturing equipment 438,810 454,014 421,765 183,504
The Foxboro Company Telecommunications equipment 26,407 27,322 25,351 10,736
Triconex Corporation Computer equipment 96,465 99,807 91,045 23,394
Triconex Corporation Manufacturing equipment 53,608 55,465 50,882 13,228
Triconex Corporation Trade show equipment 37,323 38,616 35,385 8,960
----------- ------------ ------------- ------------
Total direct finance leases sold to Partnership 5,299,092 5,478,290 3,354,651 1,747,399
----------- ------------ ------------- ------------
Alcoa Forklifts 1,462,149 1,511,704 0 383,868
Alliance Data Systems Inc. V-sat 2,629,893 2,718,221 0 651,082
Alliant Techsystems Inc. Lathes 383,078 396,351 0 70,221
Aluminum Co. of America Forklifts 102,550 106,028 0 26,197
Analysis & Technology Computer equipment 391,607 404,271 0 130,308
Applied Magnetics Teching system 1,182,922 1,223,910 0 263,191
Arqule, Inc. Furniture & fixtures 141,073 145,961 132,360 54,761
Arqule, Inc. HVAC 20,571 21,284 19,417 8,169
Arqule, Inc. Research equipment 310,100 320,845 284,817 224,990
Breckenridge-Remy Company Forklifts 26,832 27,762 0 5,490
Brown Strauss Forklifts 738,843 764,444 0 188,787
Burlingame Industries Forklifts 63,433 65,631 0 17,760
Christy's Market Computer equipment 6,488 6,713 5,977 1,483
Christy's Market Food service equipment 493,620 510,724 458,971 122,778
Christy's Market Furnace 7,801 8,071 7,283 2,008
Chrysler Corp. Forklifts 1,020,599 1,055,963 0 198,008
Consolidated Diesel Company Burden carrier 18,376 19,013 0 6,456
Consolidated Diesel Company Copiers 8,899 9,207 0 3,198
Consolidated Diesel Company Floor scrubber 30,000 31,040 0 9,662
Consolidated Diesel Company Forklifts 24,760 25,618 0 5,217
-33-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
Cost to
Partnership
Including
Acquisition Debt Annual
Lessee Equipment Description Cost to CAII Fees* Assumed Rents
- ------ --------------------- ------------ ------------ ------------- ------------
Consolidated Diesel Company Stock chaser $ 4,774 $ 4,939 $ 0 $ 2,099
Consolidated Diesel Company Electric pickup 5,660 5,856 0 1,832
Consolidated Diesel Company Fitness equipment 26,215 27,123 0 8,284
Darigold, Inc. Forklifts 81,230 84,044 0 18,711
Dewolfe Company Computer equipment 243,311 251,742 225,872 116,601
Dewolfe Company Copiers 92,841 96,057 85,166 54,426
Dewolfe Company Fax machine 2,119 2,193 1,944 1,221
Dewolfe Company Software 12,809 13,253 11,786 7,526
Diamond Shamrock POS system 1,982,783 2,051,487 0 653,240
Enogex Inc. Computer equipment 915,365 947,083 873,864 455,343
General Electric Company HP Omnibooks 2,287,891 2,367,167 0 729,792
General Motors Corporation Digital camera 44,155 45,685 0 14,604
General Motors Corporation Forklifts 956,616 989,762 0 186,507
General Motors Corporation Machine tools 259,891 268,896 0 40,217
General Motors Corporation Material handling 126,023 130,390 0 39,782
General Motors Corporation Pallet truck 27,593 28,549 0 9,237
General Motors Corporation Sweeper/scrubber 431,915 446,881 0 107,219
Genetics Institute Computer equipment 125,475 129,823 117,183 53,572
Genetics Institute Lab equipment 125,434 129,780 117,147 53,497
Genetics Institute Research equipment 757,498 783,745 707,434 323,416
Georgetown Steel Forklifts 91,558 94,730 0 18,136
GM Powertrain Division Sweeper/scrubber 33,806 34,978 0 7,082
GS Technologies Truck scale 57,821 59,824 0 12,734
Heluva Good Cheese Material handling 47,066 48,665 0 10,894
Home Depot, Inc. Forklifts 491,977 508,683 0 118,076
Home Depot, Inc. Sweeper/scrubbers 63,975 66,133 0 20,496
Honeywell Incorporated Computer equipment 29,824 30,858 0 356,112
Hughes Aircraft Device test system 218,717 226,296 0 56,218
Hughes Network Image printer 41,808 43,257 0 12,995
Hughes Space Forklifts 119,742 123,891 0 32,782
ICI American Holdings, Inc. Computer equipment 164,787 170,497 0 69,934
In Home Health, Inc. Furniture & fixtures 152,603 157,890 0 32,944
International Paper Company Boom lift 42,993 44,483 0 8,538
International Paper Company Club car 11,860 12,271 0 3,870
International Paper Company Forklifts 84,291 87,212 0 17,403
International Paper Company Sweeper/scrubber 37,944 39,259 0 10,537
International Paper Company Utility carts 65,747 68,025 0 21,321
International Paper Company Bobcat loaders 37,478 38,777 0 8,718
International Paper Company Tire loader 178,984 185,185 0 45,064
International Paper Company Forklift 17,025 17,614 0 3,725
Lear Corp. Computer equipment 70,730 73,078 0 33,444
Lexmark International Inc. Dispenser 45,845 47,434 0 16,086
-34-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
Cost to
Partnership
Including
Acquisition Debt Annual
Lessee Equipment Description Cost to CAII Fees* Assumed Rents
- ------ --------------------- ------------ ------------ ------------- ------------
Lexmark International Inc. Reflow oven $ 145,860 $ 150,914 $ 0 $ 50,444
Lexmark International Inc. Stencil printers 939,428 971,979 0 315,113
Lexmark International Inc. Wave soldering system 144,350 149,352 0 47,331
Louisiana Workers Computer equipment 19,179 19,843 0 6,889
Lucas Industries Computer equipment 40,300 41,697 37,473 17,907
Lucas Industries Manufacturing equipment 644,396 666,724 596,556 182,908
Lucas Industries Software 139,191 144,014 122,854 49,263
Lucent Technology Fuji placement 494,768 510,988 0 124,607
Lucent Technology Wafer fabrication 46,279 47,883 0 13,584
Matsushita Phone system 110,432 114,258 0 36,624
Mitchell International Computer equipment 239,661 247,965 0 108,948
Morgan Construction Computer equipment 658,699 681,523 628,766 276,567
Morgan Construction Manufacturing equipment 619,503 640,969 577,008 155,321
Nabisco Sweeper 17,248 17,846 0 4,234
National Broadcasting Co. Broadcast video equipment 319,785 329,665 0 138,666
New York Hospital Imaging system 393,051 406,670 0 96,067
Oklahoma Gas & Electric Computer equipment 1,186,170 1,227,271 1,128,383 482,047
Oklahoma Gas & Electric Manufacturing equipment 1,324,789 1,370,693 1,254,199 787,205
Owens Corning Computer equipment 938,320 970,827 0 349,124
PMX Industries Forklifts 627,323 648,323 0 170,130
Precision Cast Parts Forklifts 157,036 162,477 0 34,156
Robertshaw Controls Computer equipment 107,323 111,042 98,404 35,756
Robertshaw Controls Manufacturing equipment 1,242,878 1,285,943 1,163,169 249,154
Sealed Air Corp Forklifts 144,250 149,160 0 30,698
Smc Mcever Inc. Computer equipment 171,243 177,177 0 57,301
Source, Inc. Computer equipment 150,966 156,197 0 37,700
Texas Eastern Transmission Computer equipment 1,024,897 1,057,551 273,622 548,451
Texas Instruments Placement machine 494,411 511,543 0 119,246
Texas Instruments Soldering system 125,926 130,290 0 34,584
The Foxboro Company Air conditioner 113,942 117,890 107,503 27,730
The Foxboro Company Air handler 22,133 22,900 20,876 5,307
The Foxboro Company Computer equipment 1,504,158 1,556,277 1,448,575 533,617
The Foxboro Company Facility equipment 195,445 202,217 187,803 87,041
The Foxboro Company Furniture & fixtures 654,508 677,187 636,611 244,502
The Foxboro Company Manufacturing equipment 1,209,702 1,251,618 1,176,720 430,364
The Foxboro Company Telecommunications equipment 178,468 184,652 172,728 73,792
The Foxboro Company Wastewater treatment 29,205 30,217 27,589 7,428
Thomson Industries Inc. Lathe 134,640 139,305 0 25,240
Thomson Industries Inc. Machine tool 306,339 316,954 0 57,427
Thomson Industries Inc. Stretch machine 263,763 272,902 0 51,402
Thomson Industries Inc. Thread grinder 222,405 230,112 0 43,340
Thomson Industries Inc. Torque tester 169,321 175,188 0 34,328
-35-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
Cost to
Partnership
Including
Acquisition Debt Annual
Lessee Equipment Description Cost to CAII Fees* Assumed Rents
- ------ --------------------- ------------ ------------ ------------ ------------
Tifton Aluminum Inc. Forklifts $ 491,983 $ 508,674 $ 0 $ 123,247
Total System Services Mail sorter 1,043,330 1,078,718 0 264,530
Triconex Corporation Computer equipment 61,440 63,569 58,203 15,299
Triconex Corporation Furniture & fixtures 19,125 19,787 18,371 5,015
Triconex Corporation Manufacturing equipment 98,007 101,403 93,590 24,901
Triconex Corporation Oven 96,239 99,573 93,830 24,329
Unicco Service Co. Sweeper/scrubber 30,648 31,710 0 9,805
United Artists Projection equipment 663,318 686,302 619,979 165,529
Universal Forest Products Forklifts 216,608 224,113 0 60,638
US Sugar Excavator 327,528 338,877 0 90,390
USS/Kobe Steel Forklifts 276,157 285,726 0 74,816
Versar Inc. HP chromatograph 170,710 176,625 0 57,122
Xerox Analyzer 16,985 17,574 0 6,528
Xerox Nohau emulator 4,995 5,168 0 4,224
Xerox Signal processor 7,700 7,967 0 2,364
Xerox Test equipment 44,200 45,732 0 13,608
Xerox Video projector 23,620 24,436 0 7,594
------------ ------------ ------------ ------------
Total operating leases sold to Partnership 40,944,057 42,350,413 13,592,033 13,299,351
------------ ------------ ------------ ------------
Total sold to Partnership $ 46,243,149 $ 47,828,704 $ 16,946,684 $ 15,046,750
============ ============ ============ ============
</TABLE>
* The lower of (a) the price for the equipment plus all costs incurred in
maintaining the equipment (including, without limitation, the reasonable,
necessary and actual expenses, as determined in accordance with generally
accepted accounting principles, of storage, carrying, warehousing,
repair, marketing, financing and taxes) from the date of acquisition
thereof, provided that any proceeds accrued from the first basic rent
date thereof and retained by the general partner or an affiliate thereof
from leasing the equipment or any other arrangement with respect to the
equipment shall be deemed a credit towards the purchase price paid by the
Partnership, or (b) the fair market value of such equipment, as
determined by an independent nationally recognized appraiser selected by
the general partner.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
---------------------------------------------------------------
(a)
and
(d) The following documents are filed as part of this Report:
1. Financial Statements: (Incorporated by reference to Item 8
of this Report, "Financial Statements and Supplementary Data").
(b) The Partnership did not file any reports on Form 8-K during
the quarter ended December 31, 1997.
-36-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K,
-----------------------------------------------------------------------
continued
(c) Exhibits required to be filed.
Exhibit
Number Exhibit Name
------- ------------
4.1* Capital Preferred Yield Fund-IV Limited Partnership
Agreement
4.2* First Amendment to Limited Partnership Agreement dated
November 23, 1996
4.3* Amended and Restated Agreement of Limited Partnership of
Capital Preferred Yield Fund-IV, L.P.
* Not filed herewith. In accordance with Rule 12b-32 of the
General Rules and Regulations under the Securities
Exchange Act of 1934, reference is made to the document
previously filed with the Commission.
-37-
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 27, 1998 Capital Preferred Yield Fund-IV, L.P.
By: CAI Equipment Leasing V Corporation
By: /s/John F. Olmstead
-----------------------------------
John F. Olmstead
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the general partner
of the Partnership and in the capacities indicated on March 27, 1998.
Signature Title
/s/John F. Olmstead
- -------------------------
John F. Olmstead President and Director
/s/Dennis J. Lacey
- -------------------------
Dennis J. Lacey Senior Vice President and Director
/s/Anthony M. DiPaolo
- ------------------------- Senior Vice President, Principle Financial and Chief
Anthony M. DiPaolo Administrative Officer and Director
/s/Richard H. Abernethy
- -------------------------
Richard H. Abernethy Vice President and Director
/s/John A. Reed
- -------------------------
John A. Reed Vice President, Assistant Secretary and Director
/s/Joseph F. Bukofski
- -------------------------
Joseph F. Bukofski Vice President, Assistant Secretary and Director
/s/Robert A. Golden
- -------------------------
Robert A. Golden Director
/s/Mick Myers
- -------------------------
Mick Myers Director
/s/Ann Danielson
- -------------------------
Ann Danielson Assistant Vice President
/s/David J. Anderson
- -------------------------
David J. Anderson Chief Accounting Officer and Secretary
-38-
<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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,676,747
<SECURITIES> 0
<RECEIVABLES> 393,407
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 46,488,309
<DEPRECIATION> 0
<TOTAL-ASSETS> 56,161,440
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 36,806,561
<TOTAL-LIABILITY-AND-EQUITY> 56,161,440
<SALES> 0
<TOTAL-REVENUES> 11,907,740
<CGS> 0
<TOTAL-COSTS> 10,952,322
<OTHER-EXPENSES> 329,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,254,984
<INCOME-PRETAX> 955,418
<INCOME-TAX> 0
<INCOME-CONTINUING> 955,418
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 955,418
<EPS-PRIMARY> 2.82
<EPS-DILUTED> 2.82
</TABLE>
