<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, 1996 Commission file number 338115
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
incorporation or organization) Number)
2855 Mitchell Drive, Suite 215, Walnut Creek, California 94598
(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 __
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.
<PAGE> 2
<TABLE>
Part 1. Financial Information
LEASTEC INCOME FUND IV
A California Limited Partnership
CONDENSED BALANCE SHEETS
(Unaudited)
<CAPTION>
September 30 December 31
1996 1995
------ --------
<S> <C> <C>
ASSETS:
Cash $ 584,270 $ 1,129,581
Accounts receivable 0 61,845
Net investment in direct financing leases 85,435 733,873
-------- ----------
Total assets $ 669,705 $ 1,925,299
======== ==========
LIABILITIES AND PARTNERS' CAPITAL:
Liabilities:
Payables to affiliates $ 0 $ 2,872
Accounts payable 63,702 69,823
Deposits 11,792 150,246
Prepaid rental income 0 33,801
Distributions payable 105,263 631,580
-------- ---------
Total liabilities 180,757 888,322
-------- ---------
Partners' capital:
Partners' capital 488,948 1,036,977
-------- ----------
Total partners' capital 488,948 1,036,977
-------- ----------
Total liabilities & partners' capital $ 669,705 $1,925,299
======== =========
<FN>
The accompanying notes are an integral
part of these condensed financial statements.
</TABLE>
<PAGE> 3
<TABLE>
LEASTEC INCOME FUND IV
A California Limited Partnership
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Nine Months Quarter
Ended Ended
September 30 September 30
1996 1995 1996 1995
------ ----- ------ ------
<S> <C> <C> <C> <C>
Revenue:
Rental income $ 173,875 267,341 116,057 110,844
Direct financing lease income 55,110 336,386 35,745 33,962
Gain (loss) on sale of equipment 63,408 54,313 63,408 0
Interest income 8,665 20,332 6,577 6,807
Other income 42,472 641,486 42,472 45,457
-------- --------- ------- -------
Total revenues 343,530 1,319,858 264,259 197,070
-------- --------- ------- -------
Expenses:
Management fees 53,994 230,408 35,932 37,616
General & administrative 136,019 151,168 149,399 49,740
Data processing 17,759 25,246 11,407 6,487
lnterest expense 2,153 30,192 1,552 1,080
------- -------- ------- -------
Total expenses 209,925 437,014 198,290 94,923
-------- -------- ------- -------
Net Income $ 133,605 882,844 65,969 102,147
======== ======== ======= =======
Net income per limited
partnership unit $ 1.24 $ 8.23 $ 0.61 $ .95
======== ======== ======= =======
<FN>
The accompanying notes are an integral
part of these condensed financial statements.
</TABLE>
<PAGE> 4
<TABLE>
LEASTEC INCOME FUND IV
A California Limited Partnership
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months
Ended
September 30
1996 1995
____ ____
<C> <C>
Cash flows from operating activities:
Net income $ 133,605 882,844
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on disposition of equipment (63,408) (54,313)
Change in assets and liabilities:
Decrease in accounts receivable 61,845 28,219
Decrease in payable to affiliates (2,872) (23,476)
Decrease in accounts payable (6,121) (83,446)
Decrease in deposits (138,454) (200,012)
(Decrease) increase in prepaid rental income (33,801) 8,336
(Decrease) increase in distributions payable (526,317) 5,268
--------- --------
Net cash (used) provided by operating activities (575,523) 563,420
--------- --------
Cash flows from investing activities:
Proceeds from disposition of equipment 63,408 51,445
Proceeds from sale of direct financing leases 0 155,620
Decrease in net investment in direct
financing leases 640,488 2,105,406
--------- ----------
Net cash provided by investing activities 703,896 2,312,471
--------- ----------
Cash flows from financing activities:
Repayment of notes payable 0 (305,610)
Net distributions to partners (673,684) (2,500,000)
--------- ----------
Net cash used in financing activities (673,684) (2,805,610)
--------- ----------
Net (decrease) increase in cash (545,311) 70,281
Cash at beginning of period 1,129,581 928,298
--------- ----------
Cash at end of period $ 584,270 $ 998,579
========= ==========
<FN>
The accompanying notes are an integral
part of these condensed financial statements.
</TABLE>
<PAGE> 5
LEASTEC INCOME FUND IV
A California Limited Partnership
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 1996, September 30, 1995 and December 31, 1995
(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
September 30, 1996, September 30, 1995 and December 31, 1995.
As provided for in the Partnership agreement and offering document, the
Partnership engaged in leasing activities which intended to be completed
in approximately ten 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 1996 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 tenth full year
of operation, December 1996.
<PAGE> 6
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 will be fully liquidated
by December 31, 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. This is the
Registrant's final year of operation.
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 lease portfolio is invested in Direct Finance leases which
terminate with the lessee's contractually required purchase of equipment. The
income of the Registrant is rapidly declining as the lease portfolio size
declines. The cash balances and related interest income fluctuates according
to the cash flow from rents and finance lease termination payments during
each quarter. Cash is distributed to the Partners according to their
respective tax basis capital accounts.
The Partners will have a loss of capital because of shortfalls in portfolio
performance and a difficult economic environment during the life of the
Partnership. The previous filing anticipated a return of original investment
of approximately 70%. The percentage of capital returned will vary according
to the following factors: a) the timing of the original investment and
b) the decision of the Partner to receive or reinvest distributions during
the Partnership's operating phase. Those Partner's that chose to reinvest
acquired a larger percentage basis ownership in the Partnership and thereby,
a larger share of the loss and lower return of original investment. With the
close of the Partnership all of the Partner's taxable losses may be applied
against their taxable income.
The Registrant reported a net income of $133,605 or $1.24 per Limited
Partnership Unit for the nine months ended September 30, 1996 as compared to
net income of $882,844 or $8.23 per Limited Partnership Unit for the nine
months ended September 30, 1995. This reflects a gain on the sale of the final
operating lease equipment of $63,408.
Total revenues for the nine months ended September 30, 1996, were $343,530
compared to $1,319,858 for the same period in the prior year. This decrease
reflects a reduced rental income from both operating and finance leases due to
the rapid liquidation of the Registrant's lease portfolio. Revenue derived
from the Fund's equipment management activities comprised 97% of the total
income for the period, with the remaining 3% being interest income.
Direct financing lease income decreased from September 30, 1995,
to September 30, 1996, ($336,386 to $55,110 respectively). The net investment
in direct financing leases decreased from $1,453,233 at September 30, 1995,
to $85,435 at September 30, 1996.
Interest income decreased because the Registrant held lower cash balances
due to distributions to Partners and lease termination's during the first
nine months of 1996 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.
<PAGE> 7
Total expenses for the nine months ended September 30, 1996, were $209,925
compared to $437,014 for the same period in the prior year. Management fees,
interest, and general and administrative costs comprised 92% of the total
expenses. Interest expense decreased from September 30, 1995, to September 30,
1996, ($30,192 to $2,153 respectively).
General and administrative costs decreased from $151,168 for the first
nine months of 1995 to $136,019 for the same period in 1996. The variable
expenses of the Registrant have been reduced steadily as the liquidation
progressed. There are certain fixed expenses caused by the Partnership
Agreement's requirements for Regulatory and Partner reporting which will
continue at their current level until the Registrant's final close of
operations.
Liquidity and Capital Resources
_______________________________
Cash used by operating activities for the nine months ended September 30,
1996, was $575,523 compared to cash provided of $563,420 for the same period
in the prior year. The decrease in cash from operating activities reflects
the continued winding down of the operating lease portfolio and decreases
in distributions payable to Partners.
Cash provided by investing activities decreased from $2,312,471 in the
first three quarters of 1995 to $703,896 for the first three quarters of 1996,
reflecting the lack of sales from the remaining operating lease equipment in
the first three quarters of 1996, lease terminations and fluctuation of rental
receipts from the direct finance lease portfolio. As rental payment 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 decreases and
the return of principal portion increases.
Cash provided by investing activities was used to repay notes payable of
$305,610 in the first nine months of 1995 compared to $-0- for the same period
in 1996.
As of September 30, 1996, the Fund's partners were allocated cash
distributions of $105,263 payable on October 15, 1996. The size of investor
distributions depend on the timing of lease termination's and collections of
rents. As a result of the decreasing portfolio of leases, this amount can be
expected to decrease during the remainder 1996.
The cash balance increased from $928,298 at December 31, 1994, to
$998,579 at September 30, 1995, and decreased from $1,129,581 at December 31,
1995, to $584,270 at September 30, 1996.
The cash position as of September 30, 1996, was $584,270. The General
Partner anticipates that funds from operations will be adequate to cover all
operating expenses of the Partnership during 1996.
<PAGE> 8
PART II. OTHER INFORMATION
Item 1. Legal Proceeding
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.
<PAGE> 8
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: November 4, 1996 By: _____________________________
Ernest V. Lavagetto, President
<TABLE> <S> <C>
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 584,270
<SECURITIES> 0
<RECEIVABLES> 85,435
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 669,705
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 669,705
<CURRENT-LIABILITIES> 180,757
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 488,948
<TOTAL-LIABILITY-AND-EQUITY> 669,705
<SALES> 343,530
<TOTAL-REVENUES> 343,530
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 207,772
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,153
<INCOME-PRETAX> 133,605
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 133,605
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24
