<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 June 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
Part 1. Financial Information
LEASTEC INCOME FUND IV
A California Limited Partnership
CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
------ -----------
<S> <C> <C>
ASSETS:
Cash $ 421,792 $ 1,129,581
Accounts receivable 0 61,845
Net investment in direct financing leases 340,787 733,873
Equipment on operating leases, net of
accumulated depreciation of $2,201,123
in 1996 and $2,201,123 in 1995 0 0
Equipment held for sale or lease, net of
accumulated depreciation of $-0- in
1996 and $-0- in 1995. 0 0
-------- ---------
Total assets $ 762,579 $ 1,925,299
======== =========
LIABILITIES AND PARTNERS' CAPITAL:
Liabilities:
Payables to affiliates $ 8,665 $ 2,872
Accounts payable 49,060 69,823
Deposits 72,543 150,246
Prepaid rental income 19,422 33,801
Distributions payable 94,737 631,580
------- --------
Total liabilities 244,427 888,322
------- --------
Partners' capital:
Partners' capital 518,152 1,036,977
------- ---------
Total partners' capital 518,152 1,036,977
------- ---------
Total liabilities & partners' capital $762,579 $1,925,299
======== ==========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
<PAGE> 3
LEASTEC INCOME FUND IV
A California Limited Partnership
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Six Months Quarter
Ended Ended
June 30 June 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Rental income $116,084 $ 156,497 57,818 83,948
Direct financing lease income 37,062 302,424 19,365 185,981
Gain (loss) on sale of equipment 0 54,313 0 14,883
Interest income 6,348 13,525 2,088 7,547
Other income 42,472 596,029 0 592,057
------- --------- ------- -------
Total revenues 201,966 1,122,788 79,271 884,416
------- --------- ------- -------
Expenses:
Management fees 39,979 192,792 18,062 136,775
General & administrative 96,171 101,428 48,921 61,583
Data processing 14,109 18,759 6,352 9,424
lnterest expense 2,113 29,112 601 7,214
------- --------- ------- -------
Total expenses 152,372 342,091 73,936 214,996
------- --------- ------- -------
Net Income $ 49,594 $ 780,697 $ 5,335 $669,420
======= ========= ====== =======
Net income per limited
partnership unit $ 0.46 $ 7.27 $ 0.05 $ 6.24
======= ======== ====== =======
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
<PAGE> 4
LEASTEC INCOME FUND IV
A California Limited Partnership
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
June 30
1996 1995
____ ____
<S> <C> <C>
Cash flows from operating activities:
Net income $ 49,594 780,697
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on disposition of equipment 0 (54,313)
Change in assets and liabilities:
Decrease in accounts receivable 61,845 1,484
Increase (decrease) in payable to affiliates 5,793 (1,792)
Decrease in accounts payable (20,763) (44,667)
Decrease in deposits (77,702) (151,260)
(Decrease) increase in prepaid rental income (14,379) 5,531
(Decrease) increase in distributions payable (536,842) 663,152
--------- ---------
Net cash (used) provided by operating activities (532,454) 1,198,832
--------- ---------
Cash flows from investing activities:
Proceeds from disposition of equipment 0 207,065
Decrease in net investment in direct
financing leases 393,086 1,733,377
--------- ---------
Net cash provided by investing activities 393,086 1,940,442
--------- ---------
Cash flows from financing activities:
Repayment of notes payable 0 (305,610)
Net distributions to partners (568,421) (1,841,992)
--------- ---------
Net cash used in financing activities (568,421) (2,147,602)
--------- ---------
Net (decrease) increase in cash (707,789) 991,672
Cash at beginning of period 1,129,581 928,298
--------- ---------
Cash at end of period $ 421,792 $ 1,919,970
========= =========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
<PAGE> 5
LEASTEC INCOME FUND IV
A California Limited Partnership
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1996, June 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
June 30, 1996, June 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 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. 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. It is anticipated that the Partners
will receive a return of approximately 70% of their original investment
because of shortfalls in portfolio performance and a difficult economic
environment during the life of the Partnerhsip.
The Registrant reported a net income of $49,594 or $0.46 per Limited
Partnership Unit for the six months ended June 30, 1996 as compared to net
income of $780,697 or $7.27 per Limited Partnership Unit for the six months
ended June 30, 1995.
Total revenues for the six months ended June 30, 1996, were $201,966
compared to $1,122,788 for the same period in the prior year. This decrease
reflects a reduced rental income from both operating and finance leases due to
the gradual 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 June 30, 1995, to June 30,
1996, ($302,424 to $37,062 respectively). The net investment in direct
financing leases decreased from $1,185,261 at June 30, 1995, to $340,787 at
June 30, 1996.
Interest income decreased because the Registrant held lower cash balances
due to distributions to Partners and lease termination's during the first
six 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 six months ended June 30, 1996, were $152,372
compared to $342,091 for the same period in the prior year. Management fees,
interest, and general and administrative costs comprised 91% of the total
expenses. Interest expense decreased from June 30, 1995, to June 30, 1996,
($29,112 to $2,113 respectively).
General and administrative costs decreased from $101,428 for the first
six months of 1995 to $96,171 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 six months ended June 30,
1996, was $532,454 compared to cash provided of $1,198,832 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 large decrease
in distributions payable to Partners.
Cash provided by investing activities decreased from $1,940,442 in the
first half of 1995 to $393,086 for the first half of 1996, reflecting
the lack of sales from the remaining operating lease equipment in the first
half 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 six months of 1995 compared to $-0- for the same period
in 1996.
As of June 30, 1996, the Fund's partners were allocated cash distributions
of $94,737 payable on July 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 1996.
The cash balance increased from $928,298 at December 31, 1994, to
$1,919,970 at June 30, 1995, and decreased from $1,129,581 at December 31,
1995, to $421,792 at June 30, 1996.
The cash position as of June 30, 1996, was $421,792. 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: July 29, 1996 By: _____________________________
Ernest V. Lavagetto, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 421,793
<SECURITIES> 0
<RECEIVABLES> 340,787
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 762,579
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 762,579
<CURRENT-LIABILITIES> 244,427
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 518,152
<TOTAL-LIABILITY-AND-EQUITY> 762,579
<SALES> 201,966
<TOTAL-REVENUES> 201,966
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 152,372
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 49,594
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,594
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
</TABLE>
