UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required] For the fiscal year ended Commission file number 33-32744 December 31,1996 CSA Income Fund IV Limited PartnershiP (Exact name of registrant as specified in its charter) Massachusetts No. 04-3072449 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 22 Batterymarch St., Boston, MA 02109 (Address of principal executive Zip Code offices) Registrant's telephone number, including area code: (617) 357-1700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: 506,776 Units of Limited Partnership Interest Indicate by check whether 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 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] Number of shares outstanding of each registrant's classes of securities: Number of Units Title of Each Class at December 31, 1996 Units of Limited Partnership 506,776 Interest: $100 per unit DOCUMENTS INCORPORATED BY REFERENCE Portions of Part IV are incorporated by reference to Amendment No. 1 to Form S-1 and Form S-1, Registration No. 33-32744 The exhibit index is located on pages 18 and 19. Part I Item 1. Business CSA Income Fund IV Limited Partnership (the "Partnership") is a limited partnership organized under the provisions of The Massachusetts Uniform Limited Partnership Act. The Partnership is composed of CSA Lease Funds, Inc. (an affiliate of CSA Financial Corp.), the sole General Partner, and as of December 31, 1996, 2,771 Limited Partners owning 506,776 Units of Limited Partnership Interest of $100 each. The capital contributions of the Partners totaled $50,677,600. The Partnership was formed on December 21, 1989 and commenced operations on April 18, 1990. The Partnership was organized to engage in the business of acquiring income-producing equipment for investment. The Partnership's principal objectives are: 1. To acquire and lease Equipment, primarily through Operating Leases, to generate income during its entire useful life; 2. To provide monthly distributions of cash to the Limited Partners from leasing revenues and from the proceeds of sale or other disposition of Partnership Equipment; 3. To reinvest in additional Equipment a portion of lease revenues and a substantial portion of Cash From Sales and Refinancing during the first years of the Partnership's operations. The Partnership was formed primarily for investment purposes and not as a "tax shelter". The Partnership shall terminate on December 31, 2014 unless sooner terminated. The Partnership has no direct employees. The General Partner has full and exclusive discretion in management and control of the Partnership. Selection of the Equipment for purchase and lease is based principally on the General Partner's evaluation of the usefulness of the Equipment in commercial or industrial applications and its estimate of the potential demand for the equipment at the end of the initial lease term. The Partnership's equipment may include: 1. New and reconditioned computer peripheral equipment, computer terminal systems and data processing systems primarily manufactured by International Business Machines, Inc. (IBM) and qualified for IBM maintenance. 2. New telecommunications and telecomputer equipment consisting primarily of private automated branch exchanges (PBX's), advanced high-speed digital telephone switching devices, voice/data transmission devices and telephone/computer networks as well as telephone handsets and facsimile transmission products. 3. New office equipment consisting primarily of photocopying and graphic processing equipment. 4. New highway transportation equipment and new and reconditioned air transportation equipment consisting primarily of tractors, trailers, trucks, intermodal equipment, railroad rolling stock, passenger vehicles and corporate or commercial aircraft. 5. Miscellaneous other types of equipment which meet the investment objectives of the Partnership. The equipment leasing industry is highly competitive. In initiating its leasing transactions, the Partnership competes with leasing companies, manufacturers that lease their products directly, equipment brokers, dealers and financial institutions, including commercial banks and insurance companies. Many competitors are larger than the Partnership and have access to more favorable financing. Competitive factors in the equipment leasing business primarily involve pricing and other financial arrangements. Marketing capability is also a factor. As of December 31, 1996, substantially all of the remaining equipment in the Partnership's portfolio was leased under 149 separate leases to 97 lessees. The lessees providing at least 10% of total revenues during 1996 are as follows: U S Sprint 20% Perot Systems Europe Limited 15% As of December 31, 1996, approximately 26% of the Partnership's equipment portfolio (based on cost) has been leased outside the United States. The Partnership's leases and equipment are described more fully in Notes 3 and 4 to the Financial Statements included in Item 8. Item 2. Properties The Partnership neither owns nor leases office space or equipment for the purpose of managing its day-to-day affairs. The General Partner, CSA Lease Funds, Inc. ("CLF"), has exclusive control over all aspects of the business of the Partnership, including provision of any necessary office space. As such, CLF will be compensated through Management fees and reimbursement of General and Administrative costs related to managing the Partnership's business. Excluded from the allowable reimbursement to the General Partner, however, will be any of the following: (1) Expenditures for rent or utilities; (2) Capital equipment and the related depreciation; and (3) Certain other administrative items. Item 3. Legal Proceedings The Partnership is not a party to any pending legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of 1996. PART II Item 5. Market for the Registrant's Equity Securities and Related Security Holder Matters a. The Partnership's limited partnership interests are not publicly traded. There is no active market for the Partnership's limited partnership interests and it is unlikely that one will develop. b. Approximate Number of Equity Security Holders: Title of Class Number of Limited Partners Units of Limited Partnership Interests as of 12/31/96 506,776 2,771 Item 6. Selected Financial Data - unaudited The following table sets forth selected financial information regarding the Partnership's financial position and operating results. The information should be used in conjunction with the Financial Statements and Notes thereto, and the General Partner's Discussion and Analysis of Financial Condition and Results of Operations, which are included in Item 7 and 8 of this Report. (IN THOUSANDS EXCEPT PER UNIT AMOUNTS) Year Ended Year Ended Year Ended Year Ended Year Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, 1996 1995 1994 1993 1992 Total Revenues $ 17,641 $ 21,917 $ 21,735 $ 23,745 $ 29,263 Net Income/ (Loss) 1,772 858 2,356 1,148 (1,217) Net Income/ (Loss) per Limited Partnership Unit 3.46 1.68 4.60 2.24 (2.40) Total Assets 25,498 33,734 48,111 44,448 44,877 Notes Payable 7,573 13,804 23,329 17,846 16,435 Limited Recourse Notes Payable 229 581 757 Cash Distribution per Limited Partnership Unit Outstanding $ 8.00 $ 8.00 $ 8.00 $ 9.68 $ 11.88 Item 7. General Partner's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Gross rental income for the years ended December 31, 1996, 1995 and 1994 was $17,428,344, $20,213,456 and $21,256,476, respectively. The decrease in rental income is due to expiring leases and the sale of equipment from the Partnership's portfolio as well as investments in sales agency agreements which provide for equity in residual values of equipment but provide no current rental revenue or debt service requirements to the Partnership. Net income for the years ended December 31, 1996, 1995 and 1994 was $1,772,216, $857,812 and $2,356,457, respectively. The increase in net income in 1996 is primarily attributable to lower levels of depreciation which were the result of the use of accelerated methods of depreciation for a portion of the Partnership's portfolio in prior years and the remarketing of fully depreciated equipment. The decrease in income in 1995 was the combined result of the lower rental revenues discussed above and a $1,648,268 increase in depreciation expense related to a large portfolio purchase on September 1, 1994. Depreciation and amortization expense for 1996, 1995 and 1994 was $13,095,023, $17,736,910 and $16,088,642, respectively. Interest income for 1996, 1995 and 1994 was $90,473, $480,899, and $322,613, respectively. The decrease in 1996 was primarily due to a lower cash balance available for investment. Interest expense was $1,065,689, $1,662,201, and $1,541,450 for the years ended December 31, 1996, 1995, and 1994, respectively. Net income was also affected by the gain on the sale of equipment of $108,293, $1,113,423 and $86,120 for the years ended 1996, 1995 and 1994, respectively. The large increase in 1995 was primarily related to the early termination of a lease by a lessee. Liquidity and Capital Resources During 1996, the Partnership generated $14,060,304 in cash flow from operations and $2,994,079 from the sale of equipment. The Partnership utilized these funds, proceeds from notes payable and cash on hand to acquire additional equipment of $13,050,318, reduce outstanding notes payable by $10,598,644 and make cash distributions of $4,095,160. As of December 31, 1996, the Partnership did not have any material amount of equipment off lease and in storage. The Partnership's liquidity is determined by cash from operations provided by the leases currently in place. It is expected that this cash flow will be sufficient to service outstanding debt and to pay monthly distributions to the partners and to meet any other commitments and obligations which may arise in the ordinary course of business. The Partnership's future liquidity will be dependent upon the addition of leased equipment, the sale and/or re-lease of equipment as it comes off lease and the level of debt service. To date, the Partnership has made cash distributions to the Limited Partners ranging from 43% to 65% of their initial investment, depending on when the Limited Partner entered the Partnership. The objective of the Partnership is to return the Limited Partners' investment through current distributions and provide a return on this investment by continued distributions as long as the equipment continues to be leased. On an annual basis, management reviews the Partnership's projected performance. Though revenues generated by the Partnership from certain lease renewals and remarketings after the initial lease terms have been lower than anticipated as a result of more rapid obsolescence in high technology equipment, the General Partner presently estimates that the continued cash distributions will return the entire initial investment of the Limited partners and a return thereon. However, the magnitude of the return may be lower than originally anticipated at the inception of the Partnership. The General Partner will continue to report on the Limited Partners' return of investment with each cash distribution and the General Partner intends to pursue additional lease investment opportunities to increase the Partnership's distributions. Quarterly Financial Data - unaudited Summarized unaudited quarterly financial data for the years ended December 31, 1996 and 1995 are as follows: 1996 Quarter Ended: 12/31 9/30 6/30 3/31 Total Revenues $3,303,325 $3,883,946 $5,693,274 $4,760,449 Net Income * 529,689 142,315 514,978 585,234 Net Income Per Limited Partnership Unit Outstanding 1.03 .28 1.01 1.14 Cash Distributions Per Limited Partnership Unit Outstanding 2.00 2.00 2.00 2.00 1995 Quarter Ended: 12/31 9/30 6/30 3/31 Total Revenues $5,646,249 $5,220,747 $5,183,879 $5,866,344 Net Income (loss) * 497,419 400,247 (182,043) 142,189 Net Income (loss) * Per Limited Partnership Unit Outstanding .98 .78 (.36) .28 Cash Distributions Per Limited Partnership Unit Outstanding 2.00 2.00 2.00 2.00 * The fourth quarter of 1996 includes a charge to expense of $300,000 for adjustments to anticipated residual values. The corresponding amount for the fourth quarter of 1995 was $445,686. Item 8. Financial Statements CSA Income Fund IV Limited Partnership Index to Financial Statements Independent Auditors' Report Statements of Financial Position as of December 31, 1996 and 1995 Statements for the Years Ended December 31, 1996, 1995 and 1994 Operations Cash Flows Changes in Partners' Capital (Deficit) Notes to Financial Statements INDEPENDENT AUDITORS' REPORT To the Partners of CSA Income Fund IV Limited Partnership We have audited the accompanying statements of financial position of CSA Income Fund IV Limited Partnership as of December 31, 1996 and 1995, and the related statements of operations, cash flow, and changes in partners' capital (deficit) for the three years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CSA Income Fund IV Limited Partnership as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the three years then ended in conformity with generally accepted accounting principles. \s\ Sullivan Bille, P.C. Boston, Massachusetts March 26, 1997 CSA INCOME FUND IV LIMITED PARTNERSHIP Statements of Financial Position as of December 31, 1996 and 1995 Assets 1996 1995 Cash and cash equivalents $ 1,187,208 $ 6,795,047 Rentals receivable 872,371 369,887 Value added tax receivable 80,511 89,913 Accounts receivable-affiliates 416,589 611,953 Other receivable 153,817 31,160 Rental equipment, at cost 59,434,351 77,469,983 Less accumulated depreciation (36,646,360) (51,633,820) Net rental equipment 22,787,991 25,836,163 Total assets $25,498,487 $33,734,123 Liabilities and Partners' Capital Accrued management fees $ 54,316 $ 40,781 Accrued interest expense 69,655 113,562 Accounts payable 28,701 37,968 Accounts payable equipment purchases 84,691 Accounts payable - affiliates 1,032,127 85,240 Deferred income 74,545 226,089 Notes payable 7,573,033 13,804,399 Limited recourse notes payable 228,562 580,901 Total liabilities 9,060,939 14,973,631 Partners' capital: General Partner: Capital contribution 1,000 1,000 Cumulative net loss (15,208) (32,930) Cumulative cash distributions (287,587) (246,635) (301,795) (278,565) Limited Partners (506,776 units): Capital contributions net of offering costs 46,201,039 46,201,039 Cumulative net loss (1,505,671) (3,260,165) Cumulative cash distributions (27,956,025) (23,901,817) 16,739,343 19,039,057 Total partners' capital 16,437,548 18,760,492 Total liabilities and partners' capital $25,498,487 $33,734,123 See accompanying notes to financial statements CSA INCOME FUND IV LIMITED PARTNERSHIP Statements of Operations for the years ended December 31, 1996, 1995 and 1994 1996 1995 1994 Revenue: Rental income $17,428,344 $20,213,456 $21,256,476 Interest income 90,473 480,899 322,613 Gain on sale of equipment 108,293 1,113,423 86,120 Net gain on foreign currency transactions 13,884 109,441 69,685 Total revenue 17,640,994 21,917,219 21,734,894 Expenses: Depreciation and amortization 13,095,023 17,736,910 16,088,642 Interest 1,065,689 1,662,201 1,541,450 Management fee 1,399,993 1,340,804 1,360,153 General and administrative 308,073 319,492 388,192 Total expenses 15,868,778 21,059,407 19,378,437 Net income $ 1,772,216 $ 857,812 $ 2,356,457 Net income allocation: General Partner $ 17,722 $ 8,578 $ 23,565 Limited Partners 1,754,494 849,234 2,332,892 $ 1,772,216 $ 857,812 $ 2,356,457 Net income per Limited Partnership Unit 3.46 1.68 4.60 Number of Limited Partnership units outstanding 506,776 506,776 506,776 See accompanying notes to financial statements CSA INCOME FUND IV LIMITED PARTNERSHIP Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 1996 1995 1994 Cash flows from operations: Cash received from rental of equipment $16,783,224 $21,895,109 $21,918,305 Cash paid for operating and management expenses (1,703,797) (1,831,571) (3,739,726) Interest paid (1,109,596) (1,742,436) (1,640,860) Interest received 90,473 480,899 322,613 Net cash from operations 14,060,304 18,802,001 16,860,332 Cash flows from investments: Value added tax deposits 9,402 (20,001) 10,291 Purchase of equipment (13,050,318) (6,158,563) (30,234,604) Sale of equipment 2,994,079 6,434,150 966,870 Net cash (used for) provided by investments (10,046,837) 255,586 (29,257,443) Cash flows from financing: A/P equipment purchases (84,691) (967,631) 967,631 Advances to/ from affiliates 1,142,250 533,817 (360,149) Proceeds from notes payable 4,014,939 5,985,266 17,652,202 Repayment of notes payable (10,598,644) (15,686,102) (11,412,212) Payment of cash distributions ( 4,095,160) (4,095,160) (4,095,161) Net cash (used for) provided by financing (9,621,306) (14,229,810) 2,752,311 Net change in cash and cash equivalents (5,607,839) 4,827,777 (9,644,800) Cash and cash equivalents at beginning of year 6,795,047 1,967,270 11,612,070 Cash and cash equivalents at end of year $ 1,187,208 $ 6,795,047 $ 1,967,270 See accompanying notes to financial statements CSA INCOME FUND IV LIMITED PARTNERSHIP Statement of Changes in Partners' Capital (Deficit) for years ended December 31, 1996, 1995, and 1994 Limited General Partners Partner Total Balance at December 31, 1993 $23,965,348 $ (228,804) $23,736,544 Net income 2,332,892 23,565 2,356,457 Cash distributions (4,054,209) ( 40,952) (4,095,161) Balance at December 31, 1994 22,244,031 (246,191) 21,997,840 Net income 849,234 8,578 857,812 Cash distributions (4,054,208) ( 40,952) (4,095,160) Balance at December 31, 1995 19,039,057 (278,565) 18,760,492 Net income 1,754,494 17,722 1,772,216 Cash distributions (4,054,208) ( 40,952) (4,095,160) Balance at December 31, 1996 $16,739,343 $ (301,795) $16,437,548 See accompanying notes to financial statements. CSA INCOME FUND IV LIMITED PARTNERSHIP Notes to Financial Statements December 31, 1996 (1) Organization CSA Income Fund IV Limited Partnership ("the Partnership") was formed under the Massachusetts Uniform Limited Partnership Act on December 21, 1989 with an initial investment of $1,000, from its sole General Partner, CSA Lease Funds, Inc. and the purchase of 10 Limited Partnership Units at $100 each by an initial Limited Partner. The Partnership's primary activity is to invest in equipment to be leased to third parties. On February 22, 1990, the Partnership began its offering of Limited Partnership Units. The Partnership commenced operations on April 18, 1990. As of December 31, 1996, the Partnership has 506,776 units of Limited Partnership interest outstanding representing aggregate capital contributions of $50,677,600. Distributable cash from operations, sales or refinancing and profits or losses for federal income tax purposes are allocated 99% to the Limited Partners and 1% to the General Partner until Payout has occurred, and thereafter, 85% and 15% respectively. Payout is achieved when the aggregate amount of all distributions to the Limited Partners equals the amount of the Limited Partners' original invested capital plus a cumulative 9% annual return (compounded daily) on unreturned invested capital. In accordance with the Partnership Agreement, the Partnership is liable to the General Partner (or its affiliates) for management fees calculated at 5% of gross rental revenues and to certain reimbursable operating expenses subject to limitations stated in the Partnership Agreement. (2) Significant Accounting Policies The Partnership records are maintained on the accrual basis of accounting. The Partnership accounts for equipment leases as operating leases; therefore, rental income is reported when earned. Equipment purchases are depreciated on a straight-line basis over the initial term of the lease to estimated realizable value. On a periodic basis, the Partnership conducts a review of the residual value of its equipment as compared to the estimated net realizable values for such equipment upon expiration of the related lease. The Partnership records additional charges to depreciation expense when net book values exceed estimated realizable values. In connection with this review for the years ended December 31, 1996, 1995 and 1994 the Partnership recorded additional charges of $300,000, $445,686 and $826,341, respectively, to depreciation expense. Deferred income represents prepaid rentals received for active leases that are recognized when earned. No provision for income taxes has been made as the liability for such taxes is that of the partners rather than the Partnership. The Partnership's federal tax return is prepared solely to arrive at the Partners' individual taxable income or loss as reported on form K-1. Partnership taxable income in 1996, 1995 and 1994 was $1,628,070, $816,250 and $3,303,177, respectively. The differences between Partnership taxable income and book income are primarily due to the difference between tax and book depreciation methods and the related differences in the gain or loss on sales of equipment. CSA INCOME FUND IV LIMITED PARTNERSHIP Notes to Financial Statements The Partnership considers short-term investments with original maturities of three months or less to be cash equivalents. The preparation of financial statements in conformity with generally accepted accounting principles requires the General Partner to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting year. Actual results could differ from those estimates. (3) Rental Equipment The Partnership purchases equipment subject to existing leases either directly from CSA Financial Corp. or the manufacturer. The purchase price to the Partnership is equal to the lesser of fair market value or cost as adjusted, if necessary, for rents received and carrying costs, plus an acquisition fee of 4% of cost. In accordance with Section 6.4 (b) of the Partnership Agreement, the total of all acquisition fees paid to the General Partner shall not exceed 15% of the total Capital Contributions received by the Partnership. This lifetime acquisition fee limit was met during 1996 and the General Partner is no longer paid acquisition fees on any new Partnership equipment acquisitions, However, the General Partner continues to actively seek out additional lease investment opportunities. During 1994, CSA Financial Corp. acquired TIC Leasing Corp. (TIC) from Turner Broadcasting System Inc. TIC's only asset was an interest in partnerships which owned a portfolio of equipment subject to leases consisting primarily of computer equipment. CSA Financial Corp. has assigned the beneficial interest in certain of the underlying equipment and the related leases to the Partnership. Accordingly, the Partnership is accounting for its interest as a purchase from CSA Financial Corp. of equipment and related debt, subject to the leases. The total cost to the Partnership for this equipment was $12,379,122 consisting of $2,259,118 in cash and $10,120,004 of debt assumed. A summary of changes in rental equipment owned and its related accumulated depreciation is as follows: Beginning Ending Balance Additions Sales Balance Costs for years ended: December 31, 1994 $70,016,783 $30,915,342 $ 8,247,174 $92,684,951 December 31, 1995 $92,684,951 $ 6,158,563 $21,373,531 $77,469,983 December 31, 1996 $77,469,983 $13,050,318 $31,085,950 $59,434,351 Accumulated depreciation for the years ended: December 31, 1994 $41,521,624 $15,779,411 $ 7,366,424 $49,934,611 December 31, 1995 $49,934,611 $17,501,209 $15,802,000 $51,633,820 December 31, 1996 $51,633,820 $13,095,023 $28,082,483 $36,646,360 CSA INCOME FUND IV LIMITED PARTNERSHIP Notes to Financial Statements (4) Leases As of December 31, 1996, substantially all of the Partnership's equipment was leased under 149 separate leases to 97 lessees. Approximately 26% of the Partnership's equipment portfolio (based on cost) has been leased outside the United States. Two lessees provided approximately 35% (20% and 15%, respectively ) of the Partnership's revenues in 1996 as compared to three leases providing 48% (25%, 13%, and 10%, respectively) in 1995 and two lessees providing 27% (16% and 11%, respectively) in 1994. Minimum annual lease rentals scheduled to be received under existing noncancellable operating leases are as follows: Year Amount 1997 $ 7,627,335 1998 5,035,255 1999 3,446,682 2000 2,218,430 2001 169,878 Thereafter 22,829 $18,520,409 (5) Notes Payable Notes payable consist of nonrecourse notes due in monthly, quarterly and annual installments, with interest rates that range from 6.25% to 10.50% per annum. Such notes are collateralized by equipment with a cost of $23,902,016. Annual maturities of notes payable at December 31, 1996, are as follows: Year Amount 1997 $ 3,545,350 1998 1,874,542 1999 1,444,476 2000 685,806 Thereafter 22,859 $ 7,573,033 (6) Limited Recourse Notes Payable Limited recourse notes payable of $228,562, maturing during 1997, consist of notes due with interest (8.60% to 8.95%) at maturity which coincided with the expiration of the initial lease term of the related equipment which had a cost of $1,128,501 and the lenders' recourse is limited to proceeds obtained through disposition of the equipment. All of the Partnership's limited recourse notes payable were incurred as part of the acquisition of equipment subject to lease interests, obtained in connection with CSA Financial Corp.'s acquisition of TIC Leasing Corp. (See note 3). CSA INCOME FUND IV LIMITED PARTNERSHIP Notes to Financial Statements (7) Fair Values of Financial Instruments The following methods and assumptions were used to estimate the fair value of financial instruments: Cash and Cash Equivalents The carrying amount of cash and cash equivalents approximates its fair value due to their short maturity. Notes Payable The fair value of the Partnership's notes payable is based on the market price for the same or similar debt issues or on the current rates offered to the Partnership for debt with the same remaining maturity. The carrying amount of notes payable approximates fair value. Limited Recourse Notes Payable The carrying amount of the limited recourse notes payable approximates its fair value due to their short maturities. (8) Related Party Transactions Fees and other expenses paid or accrued by the Partnership to the General Partner or affiliates of the General Partner for 1996, 1995 and 1994 are as follows: 1996 1995 1994 Equipment acquisition fees $1,028,920 $ 578,149 $ 1,565,810 Management fee 1,399,993 1,340,804 1,360,153 Reimbursable operating expenses 169,016 180,530 247,048 $2,597,929 $2,099,483 $ 3,173,011 (9) Net Cash Provided from Operations The reconciliation of net income to net cash from operations for 1996, 1995 and 1994 are as follows: 1996 1995 1994 Net Income $ 1,772,216 $ 857,812 $ 2,356,457 Gain on sale of equipment (108,293) (1,113,423) (86,120) Gain on foreign currency transactions (52,140) Depreciation and amortization 13,095,023 17,736,910 16,088,642 (Increase) decrease in receivables (507,459) 1,746,093 (44,273) Decrease in payables and deferred income (191,183) (425,391) (1,402,234) Net cash from operations $14,060,304 $18,802,001 $16,860,332 (10) Net Gain from Foreign Currency Transactions Net gain from foreign currency transactions resulted from exchange gains and losses on certain leases which call for the payment of rentals in British Pound Sterling. (11) Reclassification of Amounts Certain amounts in the financial statements for the year ended December 31, 1995 and December 31, 1994 have been reclassified to conform to current year's presentation. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None PART III Item 10. Directors and Executive Officers of the Registrant The Partnership has no directors or officers. All management functions are performed by CSA Lease Funds, Inc., the corporate General Partner. The current directors and officers of the corporate General Partner are: Name Age Title(s) Elected J. Frank Keohane 60 Director & President 04/01/88 Richard P. Timmons 42 Controller 03/01/95 Trevor A. Keohane 30 Director 05/28/93 Claudine A. Aquillon 31 Clerk 08/30/95 Term of Office: Until a successor is elected. Item 11. Executive Compensation (a), (b), (c), (d) and (e): The Officers and Directors of the General Partner receive no current or proposed direct remuneration in such capacities, pursuant to any standard arrangements or otherwise, from the Partnership. In addition, the Partnership has not paid and does not propose to pay any options, warrants or rights to the Officers and Directors of the General Partner. There exists no remuneration plan or arrangement with any Officer or Director of the General Partner resulting from resignation, retirement or any other termination. See Note 8 of the Notes to Financial Statements included in Item 8 of this report for a description of the remuneration paid by the Partnership to the General Partner and its affiliates. Item 12. Security Ownership of Certain Beneficial Owners and Management By virtue of its organization as a limited partnership, the Partnership has outstanding no securities possessing traditional voting rights. However, as provided for in Section 13.2 of the Agreement of Limited Partnership (subject to Section 13.3), a majority in interest of the Limited Partners have voting rights with respect to: 1. Amendment of the Limited Partnership Agreement. 2. Termination of the Partnership. 3. Removal of the General Partner. 4. Approval or disapproval of the sale of substantially all the assets of the Partnership. No person or group is known by the General Partner to own beneficially more than 5% of he Partnership's outstanding Limited Partnership Units as of December 31, 1996. Item 13. Certain Relationships and Related Transactions An affiliate of the General Partner also acts as General Partner for CSA Income Fund Limited Partnerships II and III. The General Partner or affiliates may act in that capacity for other income fund limited partnerships in the future. PART IV Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K (a) (1) Financial Statements - See accompanying Index to Financial Statements - Item 8. (2) Financial Statement Schedules - All schedules have been omitted as not required, not applicable or the information required to be shown therein is included in the Financial Statements and related notes. (3) Exhibits Index Except as set forth below, all exhibits to Form 10-K, as set forth in item 601 of Regulation S-K are not applicable. Page Number or Exhibit Incorporated by Number Description Reference 4.1 Agreement of Limited Partnership * 4.2 Subscription Agreement ** 4.3 Certificate of Limited Partnership and *** Agreement of Limited Partnership dated April 8, 1988 4.4 First Amended and Restated Certificate **** of Limited Partnership and Agreement of Limited Partnership dated June 22, 1988 10.1 Escrow Agreement *** 11.0 Information regarding a change in the Registrant's Certifying Accountant ***** 12.0 First Amendment to Agreement of Limited Partnership ****** * Included as Exhibit A to Amendment No. 1 to Form S-1, Registration Statement No. 0-19939 filed with the Securities and Exchange Commission on June 23, 1988. ** Included as Exhibit C to Amendment No. 1 to Form S-1 to Registration Statement No. 0-19939 filed with the Securities and Exchange Commission on June 23, 1988. *** Included with the Exhibit Volume to Form S-1, Registration Statement No. 0-19939 filed with the Securities and Exchange Commission on April 15, 1988. **** Included with the Exhibit Volume to Amendment No. 1 to Form S-1, Registration Statement No. 0-19939 filed with the Securities and Exchange Commission on June 23, 1988. ***** Included in reports on Form 8-K filed on October 26, 1994 and January 6, 1995. ****** Included in Consent Statement filed on August 3, 1994. (b) Reports on Form 8-K: There were no reports filed during the fourth quarter of 1996. Signatures Pursuant to the requirements of Section 13 or 15(d) 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. CSA Income Fund IV Limited Partnership (Registrant) By its General Partner, CSA Lease Funds, Inc. Date: /S/ J. Frank Keohane, President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By its General Partner, CSA Lease Funds, Inc. Date: /S/ J. Frank Keohane President & Director Principal Executive Officer Date: /S/ Richard P. Timmons Controller Principal Accounting and Finance Officer