-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NfpHIV6U9oxk/o5bWml2wG/40FJ8cRR2aUR1tqtxsZGt5YTtmRwknjjOdB3tisjK wncMwVOVyCSy8KbLA3FEvg== 0000927797-06-000200.txt : 20060814 0000927797-06-000200.hdr.sgml : 20060814 20060814124116 ACCESSION NUMBER: 0000927797-06-000200 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060630 FILED AS OF DATE: 20060814 DATE AS OF CHANGE: 20060814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPITAL PREFERRED YIELD FUND IV LP CENTRAL INDEX KEY: 0001005415 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22225 FILM NUMBER: 061028315 BUSINESS ADDRESS: STREET 1: 7175 W JEFFERSON AVE STREET 2: STE 4000 CITY: LAKEWOOD STATE: CO ZIP: 80235 BUSINESS PHONE: 3039801000 MAIL ADDRESS: STREET 1: 7175 WEST JEFFERSON AVENUE STREET 2: SUITE 4000 CITY: LAKEWOOD STATE: CO ZIP: 80235 10-Q 1 cap4-form10q_063006.txt CAP4 FORM 10-Q 06/30/06 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2006 ---------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------------- Commission file number 33-80849 -------------------------------- Capital Preferred Yield Fund-IV, L.P. ------------------------------------- (Exact name of registrant as specified in its charter) Delaware 84-1331690 - ------------------------ ------------------------------------ (State of organization) (I.R.S. Employer Identification No.) 7901 Southpark Plaza, Ste. 107 Littleton, Colorado 80120 - ---------------------------------------- ------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (303) 268-6550 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 . --- --- Exhibit Index Appears on Page 14 Page 1 of 19 Pages CAPITAL PREFERRED YIELD FUND-IV, L.P. Quarterly Report on Form 10-Q For the Quarter Ended June 30, 2006 Table of Contents ----------------- PART I. FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements Balance Sheets - June 30, 2006 and December 31, 2005 3 Statements of Income - Three and Six Months Ended June 30, 2006 and 2005 4 Statements of Cash Flows -Six Months Ended June 30, 2006 and 2005 5 Notes to Financial Statements 6 - 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk 13 Item 4. Controls and Procedures 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings 14 Item 6. Exhibits 14 Exhibits 15 Signatures 16 Certifications 17-20 2 CAPITAL PREFERRED YIELD FUND-IV, L.P. BALANCE SHEETS (Unaudited) ASSETS June 30, December 31, 2006 2005 ---- ---- Cash and cash equivalents $ 560,493 $1,000,558 Accounts receivable, net allowance for losses of $10,000 in 2006 and $19,238 in 2005 467 90,784 Prepaid Insurance 85,073 25,177 Equipment held for sale or re-lease 353,083 148,566 Net investment in direct finance leases 759,682 1,198,399 Leased equipment, net 4,753,404 7,419,059 ---------- ---------- Total assets $6,512,202 $9,882,543 ========== ========== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accounts payable and accrued liabilities $ 319,985 $ 449,101 Payables to affiliates 132,191 250,429 Distributions payable to partners 136,532 270,450 Discounted lease rentals 2,699,859 4,472,322 ---------- ---------- Total liabilities 3,288,567 5,442,302 ---------- ---------- Partners' capital: General partner - - Limited partners: Class A 2,970,802 4,192,369 Class B 252,833 247,872 ---------- ---------- Total partners' capital 3,223,635 4,440,241 ---------- ---------- Total liabilities and partners' capital $6,512,202 $9,882,543 ========== ========== See accompanying notes to financial statements. 3 CAPITAL PREFERRED YIELD FUND-IV, L.P. STATEMENTS OF INCOME (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ----------------------- ---------- ---------- 2006 2005 2006 2005 ----------------------- ---------- ---------- Revenue: Operating lease rentals $1,084,536 $2,080,035 $2,425,759 $4,354,671 Direct finance lease income 12,253 29,569 27,439 71,083 Equipment sales margin 124,697 125,526 311,590 158,773 Interest income 5,098 3,155 10,774 5,860 ---------- ---------- ---------- ---------- Total revenue 1,226,584 2,238,285 2,775,562 4,590,387 ---------- ---------- ---------- ---------- Expenses: Depreciation 727,597 1,433,885 1,629,384 3,039,859 Management fees to general partner 26,112 47,584 58,048 100,598 Direct services from general partner 29,215 38,923 62,545 77,150 General and administrative 161,979 134,780 277,294 232,974 Interest on discounted lease rentals 72,702 149,230 137,579 295,378 Remarketing sharing 2,915 130,074 53,555 213,946 Provision for losses, net 33,763 -- 43,763 61,000 ---------- ---------- ---------- ---------- Total expenses 1,054,283 1,934,476 2,262,168 4,020,905 ---------- ---------- ---------- ---------- Net income $ 172,301 $ 303,809 $ 513,394 $ 569,482 ========== ========== ========== ========== Net income allocated: To the general partner $ 6,600 $ 14,427 $ 17,300 $ 28,004 To the Class A limited partners 164,044 286,488 491,133 536,064 To the Class B limited partner 1,657 2,894 4,961 5,414 ---------- ---------- ---------- ---------- $ 172,301 $ 303,809 $ 513,394 $ 569,482 ========== ========== ========== ========== Net income per weighted average Class A limited partner unit outstanding $ 0.34 $ 0.59 $ 1.02 $ 1.11 ========== ========== ========== ========== Weighted average Class A limited partner units outstanding 481,590 481,695 481,590 481,742 ========== ========== ========== ==========
See accompanying notes to financial statements. 4 CAPITAL PREFERRED YIELD FUND-IV, L.P. STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended --------------------------- June 30, June 30, 2006 2005 ----------- ----------- Net cash provided by operating activities $ 3,196,316 $ 4,989,945 ----------- ----------- Cash flows from financing activities: Principal payments on discounted lease rentals (1,772,463) (2,801,130) Redemptions of Class A limited partner units - (738) Distributions to partners (1,863,918) (2,989,604) ----------- ----------- Net cash used in financing activities (3,636,381) (5,791,472) ----------- ----------- Net decrease in cash and cash equivalents (440,065) (801,527) Cash and cash equivalents at beginning of period 1,000,558 1,208,737 ----------- ----------- Cash and cash equivalents at end of period $ 560,493 $ 407,210 =========== =========== Supplemental disclosure of cash flow information - Distributions declared to partners $ 1,730,000 $ 2,800,400 Interest paid on discounted lease rentals $ 137,579 $ 295,378 =========== =========== See accompanying notes to financial statements. 5 CAPITAL PREFERRED YIELD FUND-IV, L.P. NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation --------------------- The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. CAI Equipment Leasing V Corp. ("CAIEL-V"), a Colorado corporation, is the general partner of the Partnership. CAIEL-V was a wholly owned subsidiary of Capital Associates, Inc. ("CAI") until September 12, 2000, the date it was purchased in its entirety by Mishawaka Leasing Company, Inc. ("MLC"). CAI discontinued its operations on December 15, 2000 and filed Chapter 11 Bankruptcy on October 15, 2001. In the opinion of the general partner, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The balance sheet at December 31, 2005 was derived from the audited financial statements included in the Partnership's 2005 Form 10-K. For further information, refer to the financial statements of Capital Preferred Yield Fund-IV, L.P. (the "Partnership"), and the related notes, included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2005, previously filed with the Securities and Exchange Commission. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. For leasing entities, this includes the estimate of residual values and impairment as discussed below. Actual results could differ from those estimates. Included in the results of operations for the six months ended June 30, 2006 and 2005 were $43,763 and $61,000 for provision for losses. The Partnership is in its liquidation period, as defined in the Partnership Agreement. Even so, because the liquidation period extends over an undefined number of accounting periods, the accompanying financial statements have been prepared on a going concern basis that contemplates the realization of assets and payments of liabilities in the ordinary course of business, which is in accordance with accounting principles generally accepted in the United States of America. The General Partner believes that the Partnership will generate sufficient cash flows from operations during the remainder of 2006, to (1) meet current operating requirements, and (2) fund cash distributions to Class A limited partners in accordance with the Partnership Agreement. All distributions are expected to be a return of capital for economic and accounting purposes. Additionally, the General Partner anticipates that all equipment owned by the Partnership will be sold, the Partnership liquidated and final distribution made by September 30, 2006. However, the Partnership has not entered into a formal liquidation plan as of June 30, 2006 and accordingly has not adopted the liquidation basis of accounting. There is no assurance that the limited partners will receive future distributions equal to their capital account balance at June 30, 2006. 6 CAPITAL PREFERRED YIELD FUND-IV, L.P. NOTES TO FINANCIAL STATEMENTS (Unaudited) 2. Transactions With the General Partner and Affiliates ---------------------------------------------------- Management Fees Paid to General Partner In accordance with the Partnership Agreement, the General Partner earns a management fee in connection with its management of the equipment, calculated as a percentage of the monthly gross rentals received, and paid monthly in arrears. Management fees to the general partner for the six months ended June 30, 2006 and 2005 were $58,048 and $100,598, respectively. As of June 30, 2006 and December 31, 2005 management fees of $7,549 and $12,966 respectively, are included in payables to affiliates. Direct Services from General Partner The General Partner and an affiliate provide accounting, investor relations, billing, collecting, asset management, and other administrative services to the Partnership. The Partnership reimburses the General Partner for these services performed on its behalf as permitted under terms of the Partnership Agreement. Direct services from the general partner for the six months ended June 30, 2006 and 2005 were $62,545 and $77,150, respectively. As of June 30, 2006 and December 31, 2005 direct services from the General Partner in the amount of $11,020 and $10,933, respectively, are included in payables to affiliates. General and Administrative Expenses The General Partner and an affiliate are reimbursed for the actual cost of administrative expenses incurred on behalf of the Partnership per the terms of the Partnership Agreement. General and administrative expenses for the six months ended June 30, 2006 and 2005 were $277,294 and $232,974, respectively. As of June 30, 2006 and December 31, 2005 administrative expenses of $113,622 and $226,530, respectively, are included in payables to affiliates. The June 30, 2006 amount includes an accrual for profit sharing proceeds which will be paid in the third quarter (see below). 3. Remarketing Agreement --------------------- The Partnership has entered into remarketing agreements with an unaffiliated third party, whereby that party provides remarketing services to the Partnership in exchange for profit sharing once the Partnership has reached certain thresholds, usually relating to rents received on re-marketed or sold equipment after the expiration of the initial lease term. The profit sharing proceeds incurred during the six months ended June 30, 2006 and 2005 were $53,555 and $213,946 and are recorded in the accompanying statements of income as remarketing sharing. 4. Subsequent event ---------------- Subsequent to June 30, 2006, the Partnership accepted and closed on an offer to purchase approximately 84% of the Partnership's lease portfolio. The purchase price for these leases was approximately $3.2 7 CAPITAL PREFERRED YIELD FUND-IV, L.P. NOTES TO FINANCIAL STATEMENTS (Unaudited) Transactions With the General Partner and Affiliates, continued ----------------------------------------------------- million, including the assumption of the related discounted lease rentals. The Partnership also entered into an agreement to sale the remaining 16% of the Partnership's lease portfolio, including the related discounted lease rentals, to the General Partner for approximately $525,000. This sale is expected to close during the third quarter of 2006. No impairment will be recorded as a result of these sales. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Presented below are schedules (prepared solely to facilitate the discussion of results of operations that follows) showing items of income and expense and changes in those items derived from the Statements of Income:
Three Months Six Months Ended June 30, Ended June 30, ------------------------------------ ----------------------------------- 2006 2005 Change 2006 2005 Change --------- --------- --------- --------- --------- --------- Leasing margin $ 293,575 $ 396,415 $(102,840) $ 632,680 $ 876,571 $(243,891) Equipment sales margin 124,697 125,526 (829) 311,590 158,773 152,817 Interest income 5,098 3,155 1,943 10,774 5,860 4,914 Management fees to general partner (26,112) (47,584) 21,472 (58,048) (100,598) 42,550 Direct services from general partner (29,215) (38,923) 9,708 (62,545) (77,150) 14,605 General and administrative (161,979) (134,780) (27,199) (277,294) (232,974) (44,320) Provision for losses, net (33,763) - (33,763) (43,763) (61,000) 17,237 --------- --------- --------- --------- --------- --------- Net income $ 172,301 $ 303,809 $(131,508) $ 513,394 $ 569,482 $ (56,088) ========= ========= ========= ========= ========= =========
The Partnership entered its liquidation period in 2002, as defined in the Partnership Agreement, and will not purchase any equipment in future periods. Furthermore, during future periods, initial leases will expire and the equipment will be remarketed (i.e., re-leased or sold). As a result, both the size of the Partnership's leasing portfolio and the amount of total revenue will decline ("portfolio runoff"). Even so, because the liquidation period extends over an undefined number of accounting periods, the accompanying financial statements have been prepared on a going concern basis that contemplates the realization of assets and payments of liabilities in the ordinary course of business, which is in accordance with accounting principles generally accepted in the United States of America. 8 CAPITAL PREFERRED YIELD FUND-IV, L.P. NOTES TO FINANCIAL STATEMENTS (Unaudited) Results of Operations, continued - ---------------------- Leasing Margin Leasing margin consists of the following:
Three Months Ended Six Months Ended June 30, June 30, -------------------------- --------------------------- 2006 2005 2006 2005 ---------- ----------- ----------- ----------- Operating lease rentals $ 1,084,536 $ 2,080,035 $ 2,425,759 $ 4,354,671 Direct finance lease income 12,253 29,569 27,439 71,083 Depreciation (727,597) (1,433,885) (1,629,384) (3,039,859) Remarketing sharing (2,915) (130,074) (53,555) (213,946) Interest expense on discounted lease rentals (72,702) (149,230) (137,579) (295,378) ----------- ----------- ----------- ----------- Leasing margin $ 293,575 $ 396,415 $ 632,680 $ 876,571 =========== =========== =========== =========== Leasing margin ratio 27% 19% 26% 20% == == == ==
The components of leasing margin decreased due to portfolio runoff. Remarketing sharing represents a remarketing agreement with an unaffiliated third party, whereby that party provides remarketing services to the Partnership in exchange for profit sharing once the Partnership has reached certain thresholds, usually relating to rents received on re-marketed or sold equipment after the expiration of the initial lease term. Leasing margin ratio increased for the three and six months ended June 30, 2006 compared to the three and six months ended June 30, 2005 primarily due to increases in a) the percentage of leases in the portfolio that have entered their remarketing stage, and b) the average maturity of operating leases in the portfolio. Leasing margin is generally lower and leasing margin ratio is generally higher as leases enter their remarketing stage because typically the rate of return on remarketed leases is higher. Leasing margin and leasing margin ratio for an operating lease financed with discounted lease rentals increase as the lease matures since rents and depreciation are typically fixed while interest expense declines as the related discounted lease rentals principal is repaid. Leasing margin decreased for the three and six months ended June 30, 2006 compared to the three and six months ended June 30, 2005 primarily due to the decreasing size of the portfolio. The ultimate profitability of the Partnership's leasing transactions is dependent in part on interest rates at the time the leases are originated, future equipment values, and on-going lessee creditworthiness. Because leasing is an alternative to financing equipment purchases with debt, lease rates tend to rise and fall with interest rates (although lease rate movements generally lag interest rate changes in the capital markets). 9 CAPITAL PREFERRED YIELD FUND-IV, L.P. NOTES TO FINANCIAL STATEMENTS (Unaudited) Results of Operations, continued - ---------------------- Equipment Sales Margin Equipment sales margin consists of the following:
Three Months Ended Six Months Ended June 30, June 30, -------------------------- -------------------------- 2006 2005 2006 2005 ----------- ----------- ----------- ----------- Equipment sales revenue $ 463,007 $ 703,132 $ 1,146,697 $ 909,997 Cost of equipment sales (338,310) (577,606) (835,107) (751,224) ----------- ----------- ----------- ----------- Equipment sales margin $ 124,697 $ 125,526 $ 311,590 $ 158,773 =========== =========== =========== ===========
Equipment sales margin fluctuates based on the composition of equipment available for sale. Currently, the Partnership is in its liquidation period (as defined in the Partnership Agreement). Initial leases are expiring and the equipment is either being re-leased or sold to the lessee or a third party. Equipment sales margin varies with the number and dollar amount of equipment leases that mature in a particular period and the current market for specific equipment and residual value estimates. Interest Income Interest income varies due to (1) the amount of cash available for investment pending distribution to partners and (2) the interest rate on such invested cash. Expenses Management fees paid to the general partner are earned on gross rents received and will fluctuate due to variances in cash flow and the size of the Partnership's portfolio. Management fees paid to the general partner decreased for the three and six months ended June 30, 2006 compared to the three and six months ended June 30, 2005 due to the decrease in average portfolio size discussed above, which resulted in a corresponding decrease in gross rents received. Direct services from the general partner decreased for the three and six months ended June 30, 2006 primarily due to the decreasing size of the portfolio. There are fewer leases and, therefore, less time is required to manage it. General and administrative expenses increased for the three and six months ended June 30, 2006 compared to the three and six months ended June 30, 2005 primarily due to a) an increase in audit fees, b) an increase in state taxes paid during the second quarter. 10 CAPITAL PREFERRED YIELD FUND-IV, L.P. NOTES TO FINANCIAL STATEMENTS (Unaudited) Results of Operations, continued - ---------------------- Provision for Losses The realization of greater than the carrying value of equipment (which occurs when the equipment is remarketed subsequent to initial lease termination) is reported as equipment sales margin (if the equipment is sold) or leasing margin (if the equipment is re-leased). The realization of less than the carrying value of equipment is recorded as provision for losses. Residual values are established equal to the estimated value to be received from the equipment following termination of the lease. In estimating such values, the Partnership considers all relevant facts regarding the equipment and the lessee, including, for example, the likelihood that the lessee will re-lease or purchase the equipment. The nature of the Partnership's leasing activities is such that it has credit exposure and residual value exposure and will incur losses from those exposures in the ordinary course of business. The Partnership performs quarterly assessments of the estimated residual value of its assets to identify any impairments in value that, if any, are also recorded as provision for losses. The provision for losses of $43,763 recorded during the six months ended June 30, 2006 related primarily to losses on equipment returned to the Partnership at lease maturity occurring because the residual realized is expected to be less than the residual value originally estimated. 11 CAPITAL PREFERRED YIELD FUND-IV, L.P. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Liquidity & Capital Resources - ----------------------------- The Partnership is in its liquidation period, as defined in the Partnership Agreement. The Partnership is not purchasing additional equipment, initial leases are expiring, and the amount of equipment being remarketed (i.e., re-leased, renewed, or sold) is generally decreasing. As a result, both the size of the Partnership's lease portfolio and the amount of leasing revenue are declining. Even so, because the liquidation period extends over an undefined number of accounting periods, the accompanying financial statements have been prepared on a going concern basis that contemplates the realization of assets and payments of liabilities in the ordinary course of business, which is in accordance with accounting principles generally accepted in the United States of America. The Partnership funds its operating activities principally with cash from rents and sales of off-lease equipment. The decline of net cash provided by operating activities of $1,793,629 from the six months ended June 30, 2005 to June 30, 2006 is primarily due to a reduction in equipment under lease. Available cash and cash reserves of the Partnership are invested in short-term government securities pending distribution to the partners. During the six months ended June 30, 2006, the Partnership declared distributions to the Class A limited partners of $1,712,700 ($134,194 of which was paid in July 2006). All such distributions are expected to constitute a return of capital for economic purposes. Distributions may be characterized for tax, accounting and economic purposes as a return of capital, a return on capital, or a portion of both. The portion of each cash distribution that exceeds its net income for the fiscal period may be deemed a return of capital for accounting purposes. However, the total percentage of the partnership's return on capital over its life will only be determined after all residual cash flows (which include proceeds from the re-leasing and sale of equipment) have been realized at the termination of the partnership. The General Partner believes that the Partnership will generate sufficient cash flows from operations during the remainder of 2006, to (1) meet current operating requirements, and (2) fund cash distributions to Class A limited partners in accordance with the Partnership Agreement. All distributions are expected to be a return of capital for economic and accounting purposes. Additionally, the General Partner anticipates that all equipment owned by the Partnership will be sold and the Partnership liquidated by September 30, 2006. However, the Partnership has not entered into a formal liquidation plan as of June 30, 2006 and accordingly has not adopted the liquidation basis of accounting. There is no assurance that the limited partners will receive future distributions equal to their capital account balance at June 30, 2006. Subsequent to June 30, 2006, the Partnership accepted and closed on an offer to purchase approximately 84% of the Partnership's lease portfolio. The purchase price for these leases was approximately $3.2 million, including the assumption of the related discounted lease rentals. The Partnership also entered into an agreement to sale the remaining 16% of the Partnership's lease portfolio, including the related discounted lease rentals, to the General Partner for approximately $525,000. This sale is expected to close during the third quarter of 2006. No impairment will be recorded as a result of these sales. 12 CAPITAL PREFERRED YIELD FUND-IV, L.P. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of - ----------------------------------------------------------------------------- 1995 - ---- The statements contained in this report which are not historical facts may be deemed to contain forward-looking statements with respect to events, the occurrence of which involve risks and uncertainties, and are subject to factors that could cause actual future results to differ both adversely and materially from currently anticipated results, including, without limitation, the level of lease originations, realization of residual values, the availability and cost of financing sources and the ultimate outcome of any contract disputes. Certain specific risks associated with particular aspects of the Partnership's business are discussed under Results of Operations in this report and under Results of Operations in the 2005 Form 10-K when and where applicable. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Partnership's leases with equipment users are non-cancelable and have lease rates that are fixed at lease inception. The Partnership finances its leases, in part, with discounted lease rentals. Discounted lease rentals are a fixed rate debt. The Partnership's other assets and liabilities are also at fixed rates. Consequently, the Partnership has minimal interest rate risk or other market risk exposure. Item 4. Controls and Procedures An evaluation was performed under the supervision and with the participation of the General Partner's management, including the President and Director, and the Principal Financial Officer, of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the General Partner's management, including the President and Director, and the Principal Financial Officer, concluded that the Partnership's disclosure controls and procedures are effective in timely alerting them to material information relating to the Partnership required to be included in the Partnership's periodic SEC reports. There have been no significant changes in the Partnership's internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Partnership completed its evaluation. 13 CAPITAL PREFERRED YIELD FUND-IV, L.P. PART II. OTHER INFORMATION Item 1. Legal Proceedings The Partnership is involved in routine legal proceedings incidental to the conduct of its business. The General Partner believes none of these legal proceedings will have a material adverse effect on the financial condition or operations of the Partnership. Items 2 - 5 None Item 6. Exhibits (a) Exhibits 14 Index to Exhibits Exhibit Number Description - ------ ----------- * 99.1 Certification by John F. Olmstead pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * 99.2 Certification by Mary M. Ebele pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * Filed herewith 15 CAPITAL PREFERRED YIELD FUND-IV, L.P. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAPITAL PREFERRED YIELD FUND-IV, L.P. By: CAI Equipment Leasing V Corp. Dated: August 14, 2006 By: /s/John F. Olmstead ------------------- John F. Olmstead President and Director (Principal Executive Officer) CAPITAL PREFERRED YIELD FUND-IV, L.P. By: CAI Equipment Leasing V Corp. Dated: August 14, 2006 By: /s/Mary M. Ebele ---------------- Mary M. Ebele Principal Financial Officer 16 CERTIFICATION I, John F. Olmstead, President and Director of CAI Equipment Leasing V Corp., the General Partner of Capital Preferred Yield Fund-IV, L.P. (the "Partnership"), certify that: 1. I have reviewed this quarterly report on Form 10-Q of the Partnership; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Partnership as of, and for the periods presented in this quarterly report; 4. The Partnership's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Partnership and have: a. designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the Partnership, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report in being prepared; b. evaluated the effectiveness of the Partnership's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report and based on such evaluation; and c. disclosed in this report any change in the Partnership's internal control over financial reporting that occurred during the Partnership's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting; and 5. The Partnership's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Partnership's auditors: a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Partnership's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Partnership's internal control over financial reporting. /s/John F. Olmstead ------------------- John F. Olmstead President and Director (Principal Executive Officer) August 14, 2006 17 CERTIFICATION I, Mary M. Ebele, Principal Financial Officer of CAI Equipment Leasing V Corp., the General Partner of Capital Preferred Yield Fund-IV, L.P. (the "Partnership"), certify that: 1. I have reviewed this quarterly report on Form 10-Q of the Partnership; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Partnership as of, and for the periods presented in this quarterly report; 4. The Partnership's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Partnership and have: a. designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the Partnership, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report in being prepared; b. evaluated the effectiveness of the Partnership's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report and based on such evaluation; and c. disclosed in this report any change in the Partnership's internal control over financial reporting that occurred during the Partnership's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting; and 5. The Partnership's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Partnership's auditors: a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Partnership's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Partnership's internal control over financial reporting. /s/Mary M. Ebele ---------------- Mary M. Ebele Principal Financial Officer August 14, 2006 18 EX-99 3 cap4-form10qexh991_063006.txt EXHIBIT 99.1 SECTION 1350 CERTIFICATION PRES/DIR Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report of Capital Preferred Yield Fund-IV, L.P. (the "Partnership") on Form 10-Q for the quarterly period ended June 30, 2006, as filed with the Security and Exchange Commission on the date hereof (the "Report"), I, John F. Olmstead, President and Director of CAI Equipment Leasing V Corp., the General Partner of the Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. By: /s/ John F. Olmstead Dated: August 14, 2006 -------------------- John F. Olmstead Title: President and Director 19 EX-99 4 cap4-form10qexh992_063006.txt EXHIBIT 99.2 SECTION 1350 CERTIFICAITON FIN. OFF. Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report of Capital Preferred Yield Fund-IV, L.P. (the "Partnership") on Form 10-Q for the quarterly period ended June 30, 2006, as filed with the Security and Exchange Commission on the date hereof (the "Report"), I, Mary M. Ebele, Principal Financial Officer of CAI Equipment Leasing V Corp., the General Partner of the Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. By: /s/ Mary M. Ebele Dated: August 14, 2006 ----------------- Mary M. Ebele Title: Principal Financial Officer 20 -----END PRIVACY-ENHANCED MESSAGE-----