UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
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Commission File No. 33-15551
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POLARIS AIRCRAFT INCOME FUND IV,
a California Limited Partnership
State of Organization: California
IRS Employer Identification No. 94-3039169
201 High Ridge Road, Stamford, Connecticut 06927
Telephone - (203) 357-3776
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes _X_ No ___
This document consists of 11 pages.
POLARIS AIRCRAFT INCOME FUND IV,
A California Limited Partnership
FORM 10-Q - For the Quarterly Period Ended March 31, 1998
INDEX
Part I. Financial Information Page
Item 1. Financial Statements
a) Balance Sheets - March 31, 1998 and
December 31, 1997.............................................. 3
b) Statements of Operations - Three Months Ended
March 31, 1998 and 1997........................................ 4
c) Statements of Changes in Partners' Capital
(Deficit) - Year Ended December 31, 1997
and Three Months Ended March 31, 1998.......................... 5
d) Statements of Cash Flows - Three Months
Ended March 31, 1998 and 1997.................................. 6
e) Notes to Financial Statements.................................. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................ 9
Part II. Other Information
Item 1. Legal Proceedings............................................ 10
Item 6. Exhibits and Reports on Form 8-K............................. 10
Signature ......................................................... 11
2
Part I. Financial Information
-----------------------------
Item 1. Financial Statements
POLARIS AIRCRAFT INCOME FUND IV,
A California Limited Partnership
BALANCE SHEETS
(Unaudited)
March 31, December 31,
1998 1997
---- ----
ASSETS:
CASH AND CASH EQUIVALENTS $ 2,068,211 $ 34,023,841
OTHER RECEIVABLES 374 -
------------ ------------
$ 2,068,585 $ 34,023,841
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT):
PAYABLE TO AFFILIATES $ 98,949 $ 190,967
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES 420,901 325,984
------------ ------------
Total Liabilities 519,850 516,951
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner (7,794,458) (4,825,310)
Limited Partners, 499,954 and 499,964 units
outstanding in 1998 and 1997, respectively 9,343,193 38,332,200
------------ ------------
Total Partners' Capital 1,548,735 33,506,890
------------ ------------
$ 2,068,585 $ 34,023,841
============ ============
The accompanying notes are an integral part of these statements.
3
POLARIS AIRCRAFT INCOME FUND IV,
A California Limited Partnership
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
----------------------------
1998 1997
---- ----
REVENUES:
Rent from operating leases $ - $2,132,642
Interest 233,496 291,123
Other - 16,333
---------- ----------
Total Revenues 233,496 2,440,098
---------- ----------
EXPENSES:
Depreciation and amortization - 1,350,966
Management fees to general partner - 106,632
Operating 86,562 5,318
Administration and other 96,123 79,386
---------- ----------
Total Expenses 182,685 1,542,302
---------- ----------
NET INCOME $ 50,811 $ 897,796
========== ==========
NET INCOME ALLOCATED
TO THE GENERAL PARTNER $ 231,669 $ 258,935
========== ==========
NET INCOME (LOSS) ALLOCATED
TO LIMITED PARTNERS $ (180,858) $ 638,861
========== ==========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (0.36) $ 1.28
========== ==========
The accompanying notes are an integral part of these statements.
4
POLARIS AIRCRAFT INCOME FUND IV,
A California Limited Partnership
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
Year Ended December 31, 1997 and
Three Months Ended March 31, 1998
---------------------------------
General Limited
Partner Partners Total
------- -------- -----
Balance, December 31, 1996 $ (3,975,366) $ 52,044,872 $ 48,069,506
Net income 979,368 2,751,143 3,730,511
Cash distributions to partners (1,829,312) (16,463,815) (18,293,127)
------------ ------------ ------------
Balance, December 31, 1997 (4,825,310) 38,332,200 33,506,890
Net income (loss) 231,669 (180,858) 50,811
Capital redemptions (10 units) - (800) (800)
Cash distributions to partners (3,200,817) (28,807,349) (32,008,166)
------------ ------------ ------------
Balance, March 31, 1998 $ (7,794,458) $ 9,343,193 $ 1,548,735
============ ============ ============
The accompanying notes are an integral part of these statements.
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POLARIS AIRCRAFT INCOME FUND IV,
A California Limited Partnership
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
----------------------------
1998 1997
---- ----
OPERATING ACTIVITIES:
Net income $ 50,811 $ 897,796
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization - 1,350,966
Changes in operating assets and
liabilities:
Increase in rent and other receivables (374) (45,702)
Increase in other assets - (33,269)
Increase (decrease) in payable to
affiliates (92,018) 42
Increase (decrease) in accounts payable
and accrued liabilities 94,917 (45,482)
Increase in lessee security deposits - 12,827
Decrease in maintenance reserves - (151,117)
------------ ------------
Net cash provided by operating
activities 53,336 1,986,061
------------ ------------
FINANCING ACTIVITIES:
Capital redemptions (800) -
Cash distributions to partners (32,008,166) (2,777,578)
------------ ------------
Net cash used in financing
activities (32,008,966) (2,777,578)
------------ ------------
CHANGES IN CASH AND CASH
EQUIVALENTS (31,955,630) (791,517)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 34,023,841 23,989,285
------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 2,068,211 $ 23,197,768
============ ============
The accompanying notes are an integral part of these statements.
6
POLARIS AIRCRAFT INCOME FUND IV,
A California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Principles and Policies
In the opinion of management, the financial statements presented herein include
all adjustments, consisting only of normal recurring items, necessary to
summarize fairly Polaris Aircraft Income Fund IV's (the Partnership's) financial
position and results of operations. The financial statements have been prepared
in accordance with the instructions of the Quarterly Report to the Securities
and Exchange Commission (SEC) Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles (GAAP). These statements should be read in conjunction with the
financial statements and notes thereto for the years ended December 31, 1997,
1996, and 1995 included in the Partnership's 1997 Annual Report to the SEC on
Form 10-K.
2. Related Parties
Under the Limited Partnership Agreement, the Partnership paid or agreed to pay
the following amounts for the current quarter to the general partner, Polaris
Investment Management Corporation, in connection with services rendered or
payments made on behalf of the Partnership:
Payments for
Three Months Ended Payable at
March 31, 1998 March 31, 1998
-------------- --------------
Out-of-Pocket Administrative Expense
Reimbursement $ 67,346 $ 75,851
Out-of-Pocket Operating and
Remarketing Expense Reimbursement 129,498 23,098
-------- --------
$196,844 $ 98,949
======== ========
3. Partners' Capital
The Partnership Agreement (the Agreement) stipulates different methods by which
revenue, income and loss from operations and gain or loss on the sale of
aircraft are to be allocated to the general partner and the limited partners.
Such allocations are made using income or loss calculated under GAAP for book
purposes, which varies from income or loss calculated for tax purposes.
Cash available for distributions, including the proceeds from the sale of
aircraft, is distributed 10% to the general partner and 90% to the limited
partners.
The different methods of allocating items of income, loss and cash available for
distribution combined with the calculation of items of income and loss for book
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and tax purposes result in book basis capital accounts that may vary
significantly from tax basis capital accounts. The ultimate liquidation and
distribution of remaining cash will be based on the tax basis capital accounts
following liquidation, in accordance with the Agreement.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
As discussed below under "Liquidity and Cash Distributions," Polaris Investment
Management Corporation (PIMC, or the General Partner), is in the process of
winding up the business of Polaris Aircraft Income Fund IV (the Partnership).
During 1997, the Partnership sold its remaining portfolio of 13 used commercial
jet aircraft out of its original portfolio of 33 aircraft.
Partnership Operations
The Partnership reported net income of $50,811, which, after allocation in
accordance with the partnership agreement, resulted in a net loss of $0.36 per
limited partnership unit, for the three months ended March 31, 1998, compared to
net income of $897,796, or $1.28 per unit, for the same period in 1997.
The decline in operating results during the three months ended March 31, 1998,
as compared to the same period in 1997, was primarily due to the sale of the
Partnership's remaining aircraft in 1997.
Interest income decreased during the three months ended March 31, 1998, as
compared to the same period in 1997, primarily due to a decrease in the cash
reserves in 1998. The decrease in the cash reserves resulted from cash
distributions, as discussed in the liquidity section. Another factor
contributing to the decrease in interest income was the absence of interest
income on the deferred rent payments due from Continental that ended when the
final payment was made in 1997.
Operating expenses increased during the three months ended March 31, 1998 as
compared to the same period in 1997, due to an increase in legal expenses
related to the sale of the remaining aircraft.
Administration and other expenses increased during the three months ended March
31, 1998 as compared to the same period in 1997, due to increases in printing
and postage costs related to an additional distribution.
Liquidity and Cash Distributions
Liquidity - As previously discussed, the Partnership sold its remaining aircraft
during 1997. Polaris Investment Management Corporation, the general partner, has
determined that the Partnership maintain cash reserves as a prudent measure to
ensure that the Partnership has available sufficient funds to satisfy
anticipated contingencies and expenses in connection with winding up its
business. The Partnership's cash reserves will be monitored and may be revised
from time to time as further information becomes available in the future.
Cash Distributions - Cash distributions to limited partners were $28,807,349 or
$57.62 per limited partnership unit, and $2,499,820 or $5.00 per limited
partnership unit during the three months ended March 31, 1998 and 1997,
respectively. The increase, as compared to 1997, is due to the distribution of
the proceeds received from the prepayment of a note due from Triton Aviation
Services IV LLC on December 30, 1997. The Partnership is now in the process of
winding up its business. With the exception of reserves maintained for
anticipated expenses and costs of winding up, the Partnership distributed all of
its available cash during 1997 and the first quarter of 1998. Consequently, the
timing and amount of future cash distributions, if any, are not yet known and
will depend upon whether the Partnership's reserves exceed its actual expenses
and contingencies in winding up and on the time required to complete the winding
up process.
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Part II. Other Information
--------------------------
Item 1. Legal Proceedings
As discussed in Item 3 of Part I of Polaris Aircraft Income Fund IV's (the
Partnership) 1997 Annual Report to the Securities and Exchange Commission on
Form 10-K (Form 10-K), there are a number of pending legal actions or
proceedings involving the Partnership. There have been no material developments
with respect to any such actions or proceedings during the period covered by
this report.
Other Proceedings - Item 10 in Part III of the Partnership's 1997 Form 10-K
discusses certain actions which have been filed against Polaris Investment
Management Corporation and others in connection with the sale of interests in
the Partnership and the management of the Partnership. The Partnership is not a
party to these actions. There have been no material developments with respect to
any of the actions described therein during the period covered by this report.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
27. Financial Data Schedule (in electronic format only).
b) Reports on Form 8-K
A Current Report on Form 8-K, dated December 30, 1997, reporting a
prepayment in full of the Promissory Note from Triton Aviation Services
IV LLC, was filed on January 5, 1998.
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SIGNATURE
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.
POLARIS AIRCRAFT INCOME FUND IV,
A California Limited Partnership
(Registrant)
By: Polaris Investment
Management Corporation,
General Partner
May 13, 1998 By: /S/Marc A. Meiches
- ----------------------------- --------------------------------
Marc A. Meiches
Chief Financial Officer
(principal financial officer and
principal accounting officer of
Polaris Investment Management
Corporation, General Partner of
the Registrant)
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