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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