<PAGE>
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 June 30,1995 Commission file number 33-8115
Leastec Income Fund IV, A California Limited Partnership
----------------------------------- --------------------
(Exact name of registrant as specified in its charter)
California 68-0100223
---------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2855 Mitchell Drive, Suite 215, Walnut Creek, California 94598
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 938-3443
________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS: N/A
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS: N/A
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
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Part 1. Financial Information
-----------------------------
LEASTEC INCOME FUND IV
A CALIFORNIA LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June December
1995 1994
---------- ----------
<S> <C> <C>
ASSETS:
Cash $1,919,970 $ 928,298
Accounts receivable 43,961 45,445
Net investment in direct financing leases 1,825,261 3,711,391
Equipment on operating leases, net of
accumulated depreciation of $2,622,806 -0- -0-
in 1995 and $2,992,283 in 1994
Equipment held for sale or lease, net of
accumulated depreciation of $61,341 in
1995 and $215,677 in 1994 -0- -0-
---------- ----------
Total assets $3,789,192 $4,685,134
========== ==========
LIABILITIES AND PARTNERS' CAPITAL:
Liabilities:
Payables to affiliates $ 142,332 $ 144,124
Accounts payable 69,864 114,531
Deposits 208,937 360,197
Prepaid rental income 16,617 11,086
Distributions payable 1,315,784 652,632
Notes payable -0- 305,610
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Total liabilities 1,753,534 1,588,180
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Partners' Capital:
Partners' capital 2,035,658 3,096,954
---------- ----------
Total partners' capital 2,035,658 3,096,954
---------- ----------
Total liabilities & partners' capital $3,789,192 $4,685,134
========== ==========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
2
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LEASTEC INCOME FUND IV
A CALIFORNIA LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Quarter
Ended Ended
June 30 June 30
---------- -------
1995 1994 1995 1994
----------------------- --------------------
<S> <C> <C> <C> <C>
REVENUE:
Rental income $ 156,497 $ 570,368 $ 83,948 $317,890
Direct financing lease income 302,424 384,115 185,981 185,790
Gain on sale of equipment 54,313 36,002 14,883 11,798
Interest income 13,525 5,889 7,547 2,432
Other income 596,029 29,607 592,057 29,332
---------- ---------- -------- --------
Total revenues 1,122,788 1,025,981 884,416 547,242
---------- ---------- -------- --------
EXPENSES:
Depreciation -0- 373,085 -0- 184,491
Management fees 192,792 122,392 136,775 63,208
General & administrative 101,428 102,677 61,583 65,103
Data processing 18,759 38,786 9,424 25,083
lnterest expense 29,112 73,610 7,214 29,537
---------- ---------- -------- --------
Total expenses 342,091 710,550 214,996 367,422
---------- ---------- -------- --------
Net Income $ 780,697 $ 315,431 $669,420 $179,820
========== ========== ======== ========
Net income per limited
partnership unit $ 7.27 $ 2.94 $ 6.24 $ 1.68
========== ========== ======== ========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
3
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LEASTEC INCOME FUND IV
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months
Ended
June 30
----------
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 780,697 $ 315,431
Adjustments to reconcile net income to net cash
provided by operating activities:
Accumulated depreciation -0- 373,085
Gain on disposition of equipment (54,313) (36,002)
Other income -0- (27,884)
Change in assets and liabilities:
(Increase) decrease in accounts receivable 1,484 (99,229)
Increase (decrease) in payable to affiliates (1,792) 27,897
Decrease in accounts payable (44,667) (86,820)
Decrease in deposits (151,260) (13,274)
Increase (decrease) in prepaid rental income 5,531 (33)
Increase in distributions payable 663,152 183,502
----------- -----------
Net cash provided by operating activities 1,198,832 636,673
----------- -----------
Cash flows from investing activities:
Proceeds from disposition of equipment 207,065 174,429
Decrease in net investment in direct
financing leases 1,733,377 1,040,572
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Net cash provided by investing activities 1,940,442 1,215,001
----------- -----------
Cash flows from financing activities:
Repayment of notes payable (305,610) (773,651)
Net distributions to partners (1,841,992) (1,068,421)
----------- ----------
Net cash used in financing activities (2,147,602) (1,842,072)
----------- -----------
Net increase in cash 991,672 9,602
Cash at beginning of period 928,298 576,596
----------- -----------
Cash at end of period $ 1,919,970 $ 586,198
=========== ===========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
4
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LEASTEC INCOME FUND IV
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1995, JUNE 30, 1994 AND DECEMBER 31, 1994
(UNAUDITED)
1. Basis of Condensed Financial Statement Preparation
--------------------------------------------------
In the opinion of the General Partner, the accompanying unaudited condensed
financial statements contain all adjustments (consisting principally of
normal, recurring accruals) necessary to present fairly the financial
position of Leastec Income Fund IV (the Partnership) as of June 30, 1995,
June 30, 1994 and December 31, 1994.
As provided for in the Partnership agreement and offering document, the
Partnership engaged in leasing activities which intended to be completed in
approximately eleven years from its inception at which time all remaining
partnership assets will have been liquidated and cash proceeds distributed to
the registrant's partners. The Partnership has presented its 1995 financial
statements to reflect its leasing activities on a basis consistent with prior
periods.
2. Wind Down Phase
---------------
The Registrant has ceased acquisition of new capital equipment and is in the
process of liquidating its lease portfolio. It is intended that the
Registrant will be fully liquidated at the end of its eleventh full year of
operation, December 1996.
5
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LEASTEC INCOME FUND IV
A CALIFORNIA LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operation
- --------------------
The Registrant has been winding down operations since 1993 by discontinuing
new leasing activities and returning cash available from operations to the
Registrant's Partners. Although the Registrant has until December 1997 to
liquidate operations, the Registrant intends to be fully liquidated by December
1996. In order to complete the liquidation of all assets by the end of 1996, it
is the General Partner's policy to allow the early termination of leases when
requested as well as to seek the sale of leased assets in which the lease may
extend beyond December 1996. The General Partner does not anticipate that the
cash proceeds from liquidation will return 100% of the Investors original
capital contribution.
The majority of the Registrant's operating leases have terminated. The
remaining leases were fully depreciated in the first half of 1995. As operating
leases terminate, the equipment is sold. The remaining balance of the lease
portfolio is invested in Direct Finance leases which terminate with the lessee's
contractually required purchase of equipment. The income and expenses of the
Registrant are steadily declining as the lease portfolio size declines. The
cash balances and related interest income fluctuate according to the cash flow
from rents and equipment and finance lease sales during each quarter. Cash is
distributed to the Partners according to their respective tax basis capital
accounts.
The Registrant reported a net income of $780,697 or $7.27 per Limited
Partnership Unit for the six months ended June 30, 1995 as compared to net
income of $315,431 or $2.94 per Limited Partnership Unit for the six months
ended June 30, 1994.
Total revenues for the six months ended June 30, 1995 were $1,122,788 compared
$1,025,981 for the same period in the prior year. This increase is primarily
due to the significant increase in other income from $29,607 for the six months
ended June 30, 1994 to $596,029 for the same period in 1995. Virtually all of
the increase, or $591,829, for the six months ended June 30, 1995 was caused by
early termination fees on a direct finance lease with Paradigm Technology.
Revenue derived from the Fund's equipment management activities comprised 99% of
the total income for the period, with the remaining 1% being interest income.
Direct financing lease income decreased from June 30, 1994 to June 30, 1995
($384,115 to $302,424 respectively). The net investment in direct financing
leases decreased from $4,957,282 at June 30, 1994 to $1,825,261 at June 30,
1995.
Interest income increased because the Registrant held slightly higher cash
balances due to equipment and lease sales during the first six months of 1995 as
compared to the same period in the prior year. All available cash is being paid
out in distributions to the Fund's partners on a quarterly basis.
Total expenses for the six months ended June 30, 1995 were $342,091 compared
to $710,550 for the same period in the prior year. Depreciation, management
fees, interest, and general and administrative costs comprised 95% of the total
expenses. Interest expense decreased from June 30, 1994 to June 30, 1995
($73,610 to $29,112 respectively). The
6
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note payable balance was $802,422 as of June 30, 1994 compared to a note payable
balance of $0 as of June 30, 1995.
The equipment on operating leases was fully depreciated at the end of 1994
giving a balance net of accumulated depreciation of $-0- for both December 31,
1994 and June 30, 1995.
The gain on sale of equipment for the six months ended June 30, 1995 was
$54,313 as compared to $36,002 for the same period in 1994. As the Registrant
draws nearer to complete liquidation more leases and underlying equipment will
be sold causing fluctuations between periods in the gain on sale of equipment.
General and administrative costs remained relatively unchanged decreasing
slightly from $102,677 for the first six months of 1994 to $101,428 for the same
period in 1995.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operating activities for the six months ended June 30, 1995
was $1,198,832 compared to $636,673 for the same period in the prior year. This
increase was primarily driven by the increase in other income generated by the
Paradigm early termination.
Cash provided by investing activities increased from $ 1,215,001 for the six
months ended June 30, 1994 to $1,940,442 for the same period in 1995, reflecting
primarily the inter-period fluctuations in equipment sales and the aging of
rental receipts from the direct finance lease portfolio.
As rental payments on finance leases are received, the cash is broken up into
income and return of principal. As a finance lease ages the income portion of
the rental receipts decrease and the return of principal portion increases.
Sales proceeds of equipment for the six months ended June 30, 1994 totaled
approximately $174,429 resulting in a $36,002 gain after depreciation expense
was taken compared to $207,065 resulting in a gain of $54,313 for the same
period this year.
Cash provided by investing activities was used to repay $305,610 of debt
during the six months ended June 30, 1995 as compared to $773,651 for the same
period in the prior year.
As of June 30, 1995, the Fund's partners were allocated cash distributions of
$1,315,784 payable on July 14, 1995. The size of investor distributions depend
on the timing of equipment sales and collections of rents. As a result of the
decreasing portfolio of leases, this amount can be expected to gradually
decrease during 1995 and 1996 and to be variable in amount from quarter to
quarter depending on the timing of equipment sales.
The cash balance increased from $576,596 December 31, 1993 to $586,198 at June
30, 1994 to $928,298 at December 31, 1994 to $1,919,970 at June 30, 1995.
The cash position as of June 30, 1995 was $1,919,970. The General Partner
anticipates that funds from operations will be adequate to cover all operating
expenses and future needs of the Partnership during 1995.
7
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities
---------------------
None.
Item 3. Defaults Upon Senior Securities
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
8
<PAGE>
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.
LEASTEC INCOME FUND IV
(Registrant)
LEASTEC CORPORATION, General Partner
Date: August 11, 1995 By: _______________________________
Ernest V. Lavagetto, President
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,191,970
<SECURITIES> 0
<RECEIVABLES> 1,869,222
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,789,192
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,789,192
<CURRENT-LIABILITIES> 1,753,534
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2,035,658
<TOTAL-LIABILITY-AND-EQUITY> 3,789,192
<SALES> 1,122,788
<TOTAL-REVENUES> 1,122,788
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 312,979
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,112
<INCOME-PRETAX> 780,697
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 780,697
<EPS-PRIMARY> 7.27
<EPS-DILUTED> 7.27
</TABLE>
