<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR QUARTER ENDED SEPTEMBER 30, 1995
COMMISSION FILE NUMBER 2-74063
REAL ESTATE ASSOCIATES LIMITED IV
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. EMPLOYER IDENTIFICATION NO. 95-3718731
9090 Wilshire Blvd., Suite 201
Beverly Hills, Calif. 90211
Registrant's Telephone Number,
Including Area Code (310) 278-2191
Securities Registered Pursuant to
Section 12(b) or 12(g) of the Act
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed with the Commission by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve 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
--- ---
<PAGE> 2
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets, September 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . 1
Statements of Operations,
Nine and Three Months Ended September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . 2
Statement of Partners' Equity,
Nine Months Ended September 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Cash Flows,
Nine Months Ended September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 3
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
ASSETS
1995 1994
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
INVESTMENTS IN AND ADVANCES TO
LIMITED PARTNERSHIPS $3,297,686 $3,234,884
CASH AND CASH EQUIVALENTS 5,626,359 4,594,174
SHORT-TERM INVESTMENTS 125,000 125,000
OTHER RECEIVABLES FROM LIMITED PARTNERSHIPS 85,000 -
---------- ----------
TOTAL ASSETS $9,134,045 $7,954,058
========== ==========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Notes payable $1,230,743 $1,230,743
Interest payable 376,761 432,406
Accounts payable 3,091 16,042
---------- ----------
1,610,595 1,679,191
PARTNERS' EQUITY 7,523,450 6,274,867
---------- ----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $9,134,045 $7,954,058
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
Nine months Three months Nine months Three months
ended ended ended ended
Sept. 30, 1995 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INTEREST INCOME $ 113,642 $ 41,100 $ 75,491 $ 33,959
OPERATING EXPENSES:
Interest expense 92,250 30,750 92,250 30,750
Management fees-general partner 379,044 126,348 379,044 126,348
General and administrative 121,578 23,328 115,402 22,578
---------- --------- --------- --------
Total operating expenses 592,872 180,426 586,696 179,676
---------- --------- --------- --------
LOSS FROM OPERATIONS (479,230) (139,326) (511,205) (145,717)
DISTRIBUTIONS RECOGNIZED
AS INCOME 1,331,813 198,115 891,805 102,068
EQUITY IN INCOME OF LIMITED
PARTNERSHIPS AND AMORTI-
ZATION OF ACQUISITION COSTS 396,000 132,000 489,000 163,000
---------- --------- --------- --------
NET INCOME $1,248,583 $ 190,789 $ 869,600 $119,351
========== ========= ========= ========
NET INCOME PER LIMITED
PARTNERSHIP INTEREST $ 95 $ 14 $ 66 $ 9
========== ========= ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENT OF PARTNERS' EQUITY (DEFICIENCY)
NINE MONTHS ENDED SEPTEMBER 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- -------- ---------
<S> <C> <C> <C>
PARTNERSHIP INTERESTS,
at September 30, 1995 13,202
==========
EQUITY (DEFICIENCY),
at January 1, 1995 $(209,281) $6,484,148 $6,274,867
Net income for nine months
ended September 30, 1995 12,486 1,236,097 1,248,583
--------- ---------- ----------
EQUITY (DEFICIENCY),
at September 30, 1995 $(196,795) $7,720,245 $7,523,450
========= ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,248,583 $ 869,600
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in income of limited partnerships (414,000) (507,000)
Amortization of acquisition costs 18,000 18,000
Increase in advances to limited partnerships (85,000) -
Decrease in -
Interest payable (55,645) (4,033)
Accounts payable (12,951) (662)
---------- ----------
Net cash provided by operating activities 698,987 375,905
CASH FLOW FROM INVESTING ACTIVITIES:
Distributions from limited partnerships
recognized as a return of capital 333,198 678,967
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,032,185 1,054,872
CASH AND CASH EQUIVALENTS,
beginning of period 4,594,174 3,937,531
---------- ----------
CASH AND CASH EQUIVALENTS,
end of period $5,626,359 $4,992,403
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 7
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The information contained in the following notes to the financial
statements is condensed from that which would appear in the annual
audited financial statements; accordingly, the financial statements
included herein should be reviewed in conjunction with the financial
statements and related notes thereto contained in the annual report
for the year ended December 31, 1994 filed by Real Estate Associates
Limited IV (the "Partnership"). Accounting measurements at interim
dates inherently involve greater reliance on estimates than at year
end. The results of operations for the interim period presented are
not necessarily indicative of the results for the entire year.
In the opinion of the Partnership, the accompanying unaudited
financial statements contain all adjustments (consisting primarily of
normal recurring accruals) necessary to present fairly the financial
position as of September 30, 1995 and the results of operations for
the three and nine months then ended and changes in cash flow for the
nine months then ended.
The general partners have a 1 percent interest in profits and losses
of the Partnership. The limited partners have the remaining 99
percent interest which is allocated in proportion to their respective
individual investments. National Partnership Investments Corp.
(NAPICO) is the corporate general partner of the Partnership.
METHOD ACCOUNTING FOR INVESTMENT IN LIMITED PARTNERSHIPS
The investment in limited partnerships is accounted for on the equity
method. Acquisition and selection fees and other costs related to the
acquisition of the projects have been capitalized as part of the
investment account.
NET INCOME PER LIMITED PARTNERSHIP INTEREST
Net income per limited partnership interest was computed by dividing
the limited partners' share of net income by the number of limited
partnership interests outstanding during the year. The number of
limited partnership interests was 13,202 for the periods presented.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and bank certificates of
deposit with an original maturity of three months or less.
SHORT TERM INVESTMENTS
Short term investments consist of bank certificates of deposit with
original maturities ranging from more than three months to twelve
months. The fair value of these securities, which have been
classified as held for sale, approximates their carrying value.
5
<PAGE> 8
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements since such taxes, if any, are the liability of
the individual partners.
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
The Partnership holds limited partnership interests in twenty-two
limited partnerships. In addition, the Partnership holds a general
partner interest in REA II. NAPICO is also a general partner in REA
II. REA II, in turn, holds limited partner interests in seven
additional limited partnerships. In total, therefore, the Partnership
holds interests, either directly or indirectly through REA II, in
twenty-nine partnerships which own residential rental projects
consisting of 2,783 apartment units. The mortgage loans of these
projects are insured by various governmental agencies.
The Partnership, as a limited partner, is entitled to between 80
percent and 99 percent of the profits and losses of the limited
partnerships it has invested in directly. The Partnership is also
entitled to 99.9 percent of the profits and losses of REA II. REA II
is entitled to a 99 percent interest in each of the limited
partnerships in which it has invested.
Equity in loss of the limited partnerships is recognized until the
investment balance is reduced to zero. Losses incurred after the
limited partnership investment account is reduced to zero are not
recognized.
Distributions from the limited partnerships are accounted for as a
return of capital until the investment balance is reduced to zero or
to a negative amount equal to further capital contributions required.
Subsequent distributions received are recognized as income.
Certain of the Partnership's investments involved purchases of
partnership interest from partners who subsequently withdrew from the
operating partnership. The Partnership is obligated on non-recourse
notes payable of $1,230,743 bearing interest at 10 percent, to the
sellers of the partnership interests. The notes and the related
interest are payable by the Partnership through REA II, and have
principal maturity dates ranging from 2015 to 2022 or upon sale or
refinancing of the underlying partnership properties. The notes are
collateralized by REA II's investment in the respective limited
partnerships and are payable only out of cash distributions from the
investee partnerships as defined in the notes. Unpaid interest is due
at maturity of the notes.
The following is a summary of the investment in limited partnerships
as of September 30, 1995:
<TABLE>
<S> <C>
Balance, beginning of period $3,234,884
Equity in income of limited partnerships 414,000
Distributions recognized as a return of capital (333,198)
Amortization of acquisition costs (18,000)
----------
Balance, end of period $3,297,686
==========
</TABLE>
6
<PAGE> 9
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS (CONTINUED)
The following are unaudited combined estimated statements of
operations for the limited partnerships in which the Partnership has
investments:
<TABLE>
<CAPTION>
Nine months Three months Nine months Three months
ended ended ended ended
Sept. 30, 1995 Sept. 30, 1995 Sept.. 30, 1994 Sept. 30, 1994
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
INCOME
Rental and other $17,613,000 $ 5,871,000 $17,406,000 $5,802,000
----------- ----------- ----------- ----------
EXPENSES
Depreciation 2,760,000 920,000 2,760,000 920,000
Interest 6,231,000 2,077,000 6,471,000 2,157,000
Operating 8,571,000 2,857,000 8,037,000 2,679,000
----------- ----------- ----------- ----------
17,562,000 5,854,000 17,268,000 5,756,000
----------- ----------- ----------- ----------
Net income $ 51,000 $ 17,000 $ 138,000 $ 46,000
=========== =========== =========== ==========
</TABLE>
NAPICO, or one of its affiliates, is the general partner and property
management agent for certain of the limited partnerships included
above.
NOTE 3 - MANAGEMENT FEE AND EXPENSES DUE TO GENERAL PARTNER
Under the terms of the Restated Certificate and Agreement of Limited
Partners, the Partnership is obligated to NAPICO for an annual
management fee equal to .4% of the invested assets of the limited
partnerships. Invested assets are defined as the costs of acquiring
project interests, including the proportionate amount of the mortgage
loans related to the Partnership's interests in the capital accounts
of the respective partnerships. The fee was $379,044 for the nine
months ended September 30, 1995 and 1994.
The partnership reimburses NAPICO for certain expenses. In 1995, the
reimbursement to NAPICO of $24,003 has been paid and included in the
Partnership's operating expenses.
NOTE 4 - CONTINGENCIES
The corporate general partner of the partnership is a plaintiff in
various lawsuits and has also been named a defendant in other lawsuits
arising from transactions in the ordinary course of business. In the
opinion of management and the corporate general partner, the claims
will not result in any material liability to the Partnership.
7
<PAGE> 10
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
SEPTEMBER 30, 1995
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary sources of funds include interest income
earned from investing available cash and distributions from limited
partnerships in which the Partnership has invested. It is not
expected that any of the local limited partnerships in which the
Partnership has invested will generate cash flow sufficient to provide
for distributions to limited partners in any material amount.
The Partnership is obligated on notes payable of $1,230,743 bearing
interest at 10 percent, payable at maturity dates ranging from 2015 to
2022 or upon the sale or refinancing of the underlying partnership
properties.
RESULTS OF OPERATIONS
Partnership revenues consist primarily of interest income earned on
certificates of deposit and other temporary investment of funds not
required for investment in local partnerships.
Operating expenses consist primarily of recurring general and
administrative expenses and professional fees for services rendered to
the Partnership. In addition, an annual Partnership management fee in
an amount equal to .5 percent of investment assets is payable to the
corporate general partner.
The Partnership accounts for its investments in the local limited
partnerships on the equity method, thereby adjusting its investment
balance by its proportionate share of the income or loss of the local
limited partnerships. Losses incurred after the limited partnership
investment balance is reduced to zero are not recognized.
Distributions received from limited partnerships are recognized as
return of capital until the investment balance has been reduced to
zero or to a negative amount equal to future capital contributions
required. Subsequent distributions received are recognized as income.
Except for certificates of deposit and money market funds, the
Partnership's investments are entirely interests in other limited
partnerships owning government assisted projects. Available cash not
invested in Limited Partnerships is invested in these funds earning
interest income as reflected in the statements of operations. These
money market funds and certificates of deposit can be converted to
cash to meet obligations as they arise. The Partnership intends to
continue investing available funds in this manner.
8
<PAGE> 11
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
SEPTEMBER 30, 1995
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of September 30, 1995, the Partnership's Corporate General Partner was a
plaintiff or defendant in several suits. None of the litigation involving the
General Partner are related to REAL IV.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits are required per the provision of item 7 of
regulation S-K.
9
<PAGE> 12
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
SEPTEMBER 30, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REAL ESTATE ASSOCIATES LIMITED IV
(a California limited partnership)
By: National Partnership Investments Corp.,
General Partner
Date: ____________________________________
By: ______________________________________
Bruce Nelson
President
Date: _____________________________________
By: _______________________________________
Shawn Horwitz
Executive Vice President and
Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 5,626,359
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,751,359
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,134,045
<CURRENT-LIABILITIES> 3,091
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 7,523,450
<TOTAL-LIABILITY-AND-EQUITY> 9,134,045
<SALES> 0
<TOTAL-REVENUES> 1,841,455
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 500,622
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 92,250
<INCOME-PRETAX> 1,248,583
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,248,583
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,248,583
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
