<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 MARCH 31, 1996
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
----- -----
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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, March 31, 1996 and December 31, 1995....... 1
Statements of Operations,
Three Months Ended March 31, 1996 and 1995 ......... 2
Statement of Partners' Equity (Deficiency),
Three Months Ended March 31, 1996 .................. 3
Statements of Cash Flows,
Three Months Ended March 31, 1996 and 1995 ......... 4
Notes to Financial Statements ............................. 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................ 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................... 10
Item 6. Exhibits and Reports on Form 8- K ......................... 10
Signatures........................................................... 11
</TABLE>
<PAGE> 3
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS
1996 1995
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2) $ 3,330,761 $ 3,221,339
CASH AND CASH EQUIVALENTS (Note 1) 5,531,466 5,561,045
SHORT TERM INVESTMENTS (Note 1) 125,000 125,000
OTHER ASSETS 90,000 90,000
----------- -----------
TOTAL ASSETS $ 9,077,227 $ 8,997,384
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY)
LIABILITIES:
Notes payable (Notes 1 and 5) $ 1,230,742 $ 1,230,743
Interest payable (Notes 1 and 5) 438,261 407,511
Accounts payable 59,037 29,327
----------- -----------
1,728,040 1,667,581
----------- -----------
COMMITMENTS AND CONTINGENCIES (Notes 3 and 4)
PARTNERS' EQUITY (DEFICIENCY):
General partners (198,538) (198,732)
Limited partners 7,547,725 7,528,535
----------- -----------
7,349,187 7,329,803
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
EQUITY $ 9,077,227 $ 8,997,384
=========== ===========
</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
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
INTEREST INCOME $ 36,766 $ 28,171
--------- ---------
OPERATING EXPENSES:
Legal and accounting 9,446 39,038
Management fees - general partner (Note 3) 126,348 126,348
Interest (Note 1) 30,750 30,750
Administrative (Note 3) 63,828 19,922
--------- ---------
TOTAL OPERATING EXPENSES 230,372 216,058
--------- ---------
LOSS FROM OPERATIONS (193,606) (187,887)
DISTRIBUTIONS FROM LIMITED
PARTNERSHIPS RECOGNIZED AS
INCOME (Note 2) 92,990 271,226
EQUITY IN INCOME OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ACQUISITION COSTS 120,000 132,000
--------- ---------
NET INCOME $ 19,384 $ 215,339
========= =========
NET INCOME PER LIMITED PARTNERSHIP
INTEREST (Note 1) $ 1 $ 16
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
---------- ---------- ----------
<S> <C> <C> <C>
PARTNERSHIP INTERESTS,
March 31, 1996 13,202
==========
EQUITY (DEFICIENCY),
January 1, 1996 $ (198,732) $7,528,535 $7,329,803
Net income for the three months
ended March 31, 1996 194 19,190 19,384
---------- ---------- ----------
EQUITY (DEFICIENCY),
March 31, 1996 $ (198,538) $7,547,725 $7,349,187
========== ========== ==========
</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
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 19,384 $ 215,339
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Equity in income of limited partnerships and amorti-
zation of additional basis and acquisition costs (120,000) (132,000)
Increase in accounts payable and interest payable 60,459 41,105
----------- -----------
Net cash provided by (used in) operating activities (40,157) 124,444
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from limited partnerships
recognized as return of capital 10,578 50,925
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (29,579) 175,369
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,561,045 4,594,174
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,531,466 $ 4,769,543
=========== ===========
</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
MARCH 31, 1996
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, 1995 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 March 31, 1996 and the results of operations and changes in cash flows
for the three 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.
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 reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
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.
5
<PAGE> 8
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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.
6
<PAGE> 9
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1996
NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS (CONTINUED)
The following is a summary of the investment in limited partnerships as of
March 31, 1996:
<TABLE>
<S> <C>
Balance, beginning of period $ 3,221,339
Equity in income of limited partnerships 165,000
Distributions recognized as a return of capital (10,578)
Amortization of acquisition costs (45,000)
-----------
Balance, end of period $ 3,330,761
===========
</TABLE>
The following are unaudited combined estimated statements of operations for
the three months ended March 31, 1996 and 1995 for the limited partnerships
in which the Partnership has investments:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
INCOME
Rental and other $ 5,874,000 $ 5,871,000
----------- -----------
EXPENSES
Depreciation 941,000 920,000
Interest 2,022,000 2,077,000
Operating 2,927,000 2,857,000
----------- -----------
5,890,000 5,854,000
----------- -----------
Net income $ (16,000) $ 17,000
=========== ===========
</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 $126,000 for the three months ended March 31,
1996 and 1995.
The Partnership reimburses NAPICO for certain expenses. The reimbursement
paid to NAPICO was $8,001 for the three months ended March 31, 1996 and
1995, and is included in administrative expenses.
7
<PAGE> 10
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1996
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.
NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about Fair
Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, when it is practicable to estimate
that value. The notes payable are collateralized by the Partnership's
investments in the investee limited partnerships and are payable only out
of cash distributions from the investee partnerships. The operations
generated by the investee limited partnerships are subject to various
government rules, regulations and restrictions which make it impracticable
to estimate the fair value of the notes payable and related accrued
interest. The carrying amount of other assets and liabilities reported on
the balance sheets that require such disclosure approximates fair value due
to their short-term maturity.
8
<PAGE> 11
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1996
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.
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.
9
<PAGE> 12
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1996
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of March 31, 1996, 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.
10
<PAGE> 13
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1996
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
11
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 5,531,466
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,746,466
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,077,227
<CURRENT-LIABILITIES> 59,037
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,349,187
<TOTAL-LIABILITY-AND-EQUITY> 9,077,227
<SALES> 0
<TOTAL-REVENUES> 249,756
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 199,622
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,750
<INCOME-PRETAX> 19,384
<INCOME-TAX> 0
<INCOME-CONTINUING> 19,384
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,384
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
