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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 338115
Leastec Income Fund IV, A California Limited Partnership
(Exact name of registrant as specified in its charter)
California 68-0100223
(State of other jurisdiction of (I.R.S. Employer Identifi
incorporation or organization) cation 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.
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Part 1. Financial Information
LEASTEC INCOME FUND IV
A California Limited Partnership
CONDENSED BALANCE SHEETS
(Unaudited)
March 31 December 31
1996 1995
ASSETS:
Cash $ 773,981 $1,129,581
Accounts receivable 31,550 61,845
Net investment in direct financing
leases 482,575 733,873
Equipment on operating leases, net of
accumulated depreciation of $2,201,123
in 1996 and $2,201,123 in 19950 0 0
Equipment held for sale or lease, net of
accumulated depreciation of $-0-in 1996
and $-0- in 1995 0 0
__________ __________
Total assets $1,288,106 $1,925,299
========== ==========
LIABILITIES AND PARTNERS' CAPITAL:
Liabilities:
Payables to affiliates $ 2,872 $ 2,872
Accounts payable 36,282 69,823
Deposits 137,379 150,246
Prepaid rental income 30,335 33,801
Distributions payable 473,684 631,580
_________ __________
Total liabilities 680,552 888,322
_________ __________
Partners' capital:
Partners' capital 607,554 1,036,977
_________ _________
Total partners' capital 607,554 1,036,977
_________ _________
Total liabilities & partners' capital $1,288,106 $1,925,299
========= =========
The accompanying notes are an integral
part of these condensed financial statements.
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LEASTEC INCOME FUND IV
A California Limited Partnership
CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months
Ended
March 31
1996 1995
Revenue:
Rental income $ 58,266 $ 72,549
Direct financing lease income 17,697 116,443
Gain on sale of equipment 0 39,430
Interest income 4,260 5,978
Other income (loss) 42,472 3,972
_______ _______
Total revenues 122,695 238,372
_______ _______
Expenses:
Management fees $ 21,917 $ 56,017
General & administrative 40,559 39,845
Data processing 7,757 9,335
Bad debt 6,690 0
Interest expense 1,512 21,898
_______ _______
Total expenses 78,435 127,095
_______ _______
Net Income $ 44,260 $111,277
======= =======
Net income per limited partnership unit $ 0.41 $ 1.04
======= =======
The accompanying notes are an integral
part of these condensed financial statements.
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LEASTEC INCOME FUND IV
A California Limited Partnership
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months
Ended
March 31
1996 1995
____ ____
Cash flows from operating activities:
Net income $ 44,260 $111,277
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on disposition of equipment 0 (39,430)
Change in assets and liabilities:
Decrease(increase) in accounts 30,295 (98,747)
receivable
Decrease in payable to affiliates 0 (16,731)
Decrease in accounts payable (33,541) (75,433)
Decrease in deposits (12,866) (19,160)
Decrease (increase) in prepaid rental income (3,466) 5,651
Decrease in distributions payable (157,896) (126,316)
________ _______
Net cash used by operating activities (133,214) (258,889)
________ _______
Cash flows from investing activities:
Proceeds from disposition of equipment 0 39,430
Decrease in net investment in direct
financing leases 251,298 585,744
_______ _______
Net cash provided by investing activities 251,298 625,174
_______ _______
Cash flows from financing activities:
Repayment of notes payable 0 (104,696)
Net distributions to partners (473,684) (526,317)
_______ _______
Net cash used in financing activities (473,684) (631,013)
_______ _______
Net Decrease in cash (355,600) (264,728)
Cash at beginning of period 1,129,581 928,298
_________ ________
Cash at end of period $ 773,981 $663,570
========= =======
The accompanying notes are an integral
part of these condensed financial statements.
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LEASTEC INCOME FUND IV
A California Limited Partnership
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1996, MARCH 31, 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 March 31, 1996,
March 31, 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 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 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 eleventh
full year of operation, December 1996.
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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. 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 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 Partners will not receive a 100% return of their original
investment because of shortfalls in the portfolio performance during the
life of the Partnership.
The Registrant reported a net income of $44,260 or $0.41 per Limited
Partnership Unit for the three months ended March 31, 1996, as compared to
net income of $111,277 or $1.04 per Limited Partnership Unit for the Three
months ended March 31, 1995.
Total revenues for the three months ended March 31, 1996, were $122,695
compared to $238,372 for the same period in the prior year. This decrease,
due to the shrinking lease portfolio, was not as large as anticipated due
to other income of $42,472 for the first quarter. The other income was
generated by a certain lessee's penalty for failure to give proper notice
of termination. 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 March 31, 1995, to March 31, 1996, ($116,443 to $17,697 respectively).
The net investment in direct financing leases decreased from $733,873 at
March 31, 1995, to $482,575 at March 31, 1996.
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Interest income decreased because the Registrant held slightly lower
cash balances due to lease termination's, sales and partner distributions
during the first three 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.
Total expenses for the three months ended March 31, 1996, were $78,435
compared to $127,095 for the same period in the prior year. Management
fees, interest, and general and administrative costs comprised 88% of the
total expenses. Interest expense decreased from March 31, 1995 to March
31, 1996, ($21,898 to $1,512 respectively).
The gain on sale of equipment for the three months ended March 31,
1996, was $-0- as compared to $39,430 for the same period in 1995. Since of
operating leases having been terminated and sold there are limited sources
remaining for gains on sale. The contractually obligated purchase of direct
financing leases usually does not generate a gain or loss on sale of equipment.
General and administrative costs remained fairly constant from $39,845
for the first three months of 1995 to $40,559 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, Regulatory and Partner reporting which
will continue at this level until the Registrants final close of operations.
Liquidity and Capital Resources
Cash used by operating activities for the three months ended March 31,
1996, was $133,214 compared to $258,889 for the same period in the prior
year.
Cash provided by investing activities decreased from $625,174 for the
three months ended March 31, 1995, to, $251,298 for the same period in 1996,
reflecting primarily the shrinking lease portfolio and the aging of rental
receipts from the direct finance leases.
As rental payments on finance leases are received, the cash is broken
up into income and return of principal. As a finance lease the income
portion of the rental receipts decrease and the return of principal portion
increases.
Cash provided by investing activities was used to repay $-0- of debt
during the three months ended March 31,1996 as compared to $104,696 for the
same period in the prior year.
As of March 31, 1996, the Fund's partners were allocated cash
distributions of $473,684 payable on April 15, 1996. The size of investor
distributions depend on the lease termination's and collections of rents.
As a result of the decreasing portfolio of leases, this amount can be
expected to gradually decrease during 1996.
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The cash balance decreased from $928,298 at December 31, 1994, to
$663,570 at March 31, 1995, to $1,129,581 at December 31, 1995 and
decreased to $773,981 at March 31, 1996.
The cash position as of March 31, 1996, was $773,981. The General
Partner anticipates that funds from operations will be adequate to cover
all operating expenses of the Partnership during 1996.
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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.
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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: April 28, 1996 By: _________________________
Ernest V. Lavagetto,
President