UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 o
    
    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 000-53667
 LEAF EQUIPMENT FINANCE FUND 4, L.P.
  Delaware
    
    61-1552209(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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LEAF EQUIPMENT FINANCE FUND 4, L.P.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
 PAGEPART I
    
    FINANCIAL INFORMATIONITEM 1.
    
    Financial StatementsConsolidated Balance Sheets  March 31, 2009 (unaudited) and December 31, 2008
    
    
    3Consolidated Statement of Operations
Three Months Ended March 31, 2009 (unaudited)
    
    
    4Consolidated Statement of Partners Capital
Three Months Ended March 31, 2009 (unaudited)
    
    
    5Consolidated Statement of Cash Flows
Three Months Ended March 31, 2009 (unaudited)
    
    
    6Notes to Consolidated Financial Statements  March 31, 2009 (unaudited)
    
    
    7ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    20ITEM 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    28ITEM 4.
    
    Controls and Procedures
    
    
    29PART II
    
    OTHER INFORMATIONITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30ITEM 6.
    
    Exhibits
    
    
    31SIGNATURES
    
    
    32
  2




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##### 



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
 
 Consolidated Balance Sheets
(in thousands)
 March 31,
    
    
    December 31,2009
    
    
    2008(unaudited)ASSETSCash
    
    $
    2,726
    
    
    $
    6,736Restricted cash
    
    
    8,956
    
    
    
    16Investment in commercial finance assets, net
    
    
    269,063
    
    
    
    14,934Investment in affiliated leasing partnership
    
    
    10,571
    
    
    
    10,466Derivative assets at fair value
    
    
    434
    
    
    
    Deferred financing costs, net
    
    
    2,982
    
    
    
    125Other assets
    
    
    85
    
    
    
    10$
    294,817
    
    
    $
    32,287LIABILITIES AND PARTNERS CAPITALLiabilities:Bank debt
    
    $
    234,700
    
    
    $
    Accounts payable, accrued expenses and other liabilities
    
    
    1,218
    
    
    
    199Derivative liabilities at fair value
    
    
    6,154
    
    
    
    Due to affiliates
    
    
    1,272
    
    
    
    427Subordinated notes payable
    
    
    9,355
    
    
    
    Total liabilities
    
    
    252,699
    
    
    
    626Commitments and contingenciesPartners Capital:General partner
    
    
    (57
    )
    
    
    (12
    )Limited partners
    
    
    41,903
    
    
    
    32,240Accumulated other comprehensive income (loss)
    
    
    3
    
    
    
    (567
    )Total LEAF 4 partners capital
    
    
    41,849
    
    
    
    31,661Noncontrolling interest
    
    
    269
    
    
    
    Total partners capital
    
    
    42,118
    
    
    
    31,661Total liabilities and partners capital
    
    $
    294,817
    
    
    $
    32,287
  3




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##### 



LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
 
 Consolidated Statement of Operations
(in thousands, except unit data)
(unaudited)
 Three MonthsEndedMarch 31, 2009Revenues:Interest on equipment financings
    
    $
    1,725Rental income
    
    
    170Gains on sales of equipment and lease dispositions, net
    
    
    2Other
    
    
    511,948Expenses:Interest expense
    
    
    1,080Depreciation on operating leases
    
    
    144Provision for credit losses
    
    
    943Management fees to affiliate
    
    
    568Administrative expenses reimbursed to affiliate
    
    
    369General and administrative expenses
    
    
    282Unrealized losses on derivative hedging activities
    
    
    9264,312Loss before equity in losses of affiliate
    
    
    (2,364
    )Equity in losses of affiliate
    
    
    (1,200
    )Net loss
    
    
    (3,564
    )Less: Net loss attributable to the noncontrolling interest
    
    
    11Net loss attributable to LEAF 4
    
    $
    (3,553
    )Weighted average number of limited partner units
outstanding during the period
    
    
    468,710Net loss per weighted average limited partner unit
    
    $
    (7.50
    )
  4




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##### 



LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
 
 Consolidated Statement of Partners Capital
For the Three Months Ended March 31, 2009
(in thousands, except unit data)
(unaudited)
 AccumulatedGeneral
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    TotalPartner
    
    
    Limited Partners
    
    
    Comprehensive
    
    
    
    
    
    
    Noncontrolling
    
    
    Partners
    
    
    ComprehensiveAmount
    
    
    Units
    
    
    Amount
    
    
    Income (Loss)
    
    
    Total
    
    
    Interest
    
    
    Capital
    
    
    Income (Loss)Balance, January 1, 2009
    
    $
    (12
    )
    
    
    390,925
    
    
    $
    32,240
    
    
    $
    (567
    )
    
    $
    31,661
    
    
    $
    
    
    
    $
    31,661Sales of limited partner units
    
    
    
    
    
    
    161,604
    
    
    
    16,119
    
    
    
    
    
    
    
    16,119
    
    
    
    
    
    
    
    16,119Offering costs related to the
sale of limited partner units
    
    
    
    
    
    
    
    
    
    
    (2,068
    )
    
    
    
    
    
    
    (2,068
    )
    
    
    
    
    
    
    (2,068
    )Issuance of membership interest
to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    280
    
    
    
    280Cash distributions
    
    
    (9
    )
    
    
    
    
    
    
    (871
    )
    
    
    
    
    
    
    (880
    )
    
    
    
    
    
    
    (880
    )Comprehensive Loss:Net loss
    
    
    (36
    )
    
    
    
    
    
    
    (3,517
    )
    
    
    
    
    
    
    (3,553
    )
    
    
    (11
    )
    
    
    (3,564
    )
    
    $
    (3,564
    )Unrealized gains on financial
derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    570
    
    
    
    570
    
    
    
    
    
    
    
    570
    
    
    
    570Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,994
    )Comprehensive loss attributable
to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11Comprehensive loss attributable
to LEAF 4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,983
    )Balance, March 31, 2009
    
    $
    (57
    )
    
    
    552,529
    
    
    $
    41,903
    
    
    $
    3
    
    
    $
    41,849
    
    
    $
    269
    
    
    $
    42,118
  5




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
 
 Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
 Three Months EndedMarch 31, 2009Cash flows from operating activities:Net loss attributable to LEAF 4
    
    $
    (3,553
    )Adjustments to reconcile net loss to net cash provided by operating activities:Gains on sales of equipment and lease dispositions, net
    
    
    (2
    )Amortization of deferred financing costs
    
    
    250Depreciation on operating leases
    
    
    144Provision for credit losses
    
    
    943Equity in losses of affiliate
    
    
    1,200Net loss attributable to the noncontrolling interest
    
    
    (11
    )Unrealized losses on derivative hedging activities
    
    
    926Changes in operating assets and liabilities, net of effect of acquisition:Accounts payable and accrued expenses and other liabilities
    
    
    248Due to affiliates, net
    
    
    37Net cash provided by operating activities
    
    
    182Cash flows from investing activities:Purchases of commercial finance assets, net
    
    
    (66,060
    )Proceeds from commercial finance assets, net
    
    
    3,762Security deposits returned, net of collected
    
    
    (566
    )Investment in LEAF Funds JV1
    
    
    (735
    )Issuance of membership interest in LEAF Funds JV2 to noncontrolling interest
    
    
    280Investment in LEAF Commercial Finance Fund (see Note 3), net of cash acquired
    
    
    (7,649
    )Net cash used in investing activities
    
    
    (70,968
    )Cash flows from financing activities:Borrowings of bank debt
    
    
    61,684Repayment of bank debt
    
    
    (5,195
    )Increase in restricted cash
    
    
    (2,227
    )Increase in deferred financing costs
    
    
    (577
    )Acquisition of financial derivatives
    
    
    (80
    )Limited partners capital contributions
    
    
    16,119Offering costs incurred for the sale of partnership units
    
    
    (2,068
    )Cash distributions to partners
    
    
    (880
    )Net cash provided by financing activities
    
    
    66,776Decrease in cash
    
    
    (4,010
    )Cash, beginning of period
    
    
    6,736Cash, end of period
    
    $
    2,726
  6




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
 
 Notes To Consolidated Financial Statements
March 31, 2009
(unaudited)
 NOTE 1  ORGANIZATION AND NATURE OF BUSINESS
    NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation
    7




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements  (Continued)
March 31, 2009
(unaudited)
 NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (Continued)
 Principles of Consolidation  (Continued)
  Noncontrolling Interests
in Consolidated Financial Statements-an amendment of ARB No 51
 The Equity Method of Accounting for Investments in Common Stock,
 Reclassifications
  Use of Estimates
   8




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements  (Continued)
March 31, 2009
(unaudited)
 NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (Continued)
 Use of Estimates  (Continued)
    Restricted Cash
  Revenue Recognition
  Accounting for Leases
 Direct Financing Leases.
 9




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements  (Continued)
March 31, 2009
(unaudited)
 NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (Continued)
 Revenue Recognition  (Continued)
 Operating Leases.
 Loans.
 Future Payment Card Receivables.
  Derivative Instruments
 Accounting for
Derivative Instruments and Hedging Activities
 10




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements  (Continued)
March 31, 2009
(unaudited)
 NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (Continued)
 Transfers of Financial Assets
 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities
 Comprehensive Loss
  Newly Adopted Accounting Principles
 Disclosures about Derivative Instruments and
Hedging Activities, an amendment of SFAS 133
 NOTE 3  ACQUISITION OF INTEREST IN POOL OF LEASE ASSETS
   11




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements  (Continued)
March 31, 2009
(unaudited)
 NOTE 3  ACQUISITION OF INTEREST IN POOL OF LEASE ASSETS  (Continued)
  AmountCash
    
    $
    2,024Restricted cash
    
    
    6,713Investment in leases and loans
    
    
    192,528Debt
    
    
    (178,211
    )Derivative assets
    
    
    719Derivative liability
    
    
    (5,566
    )Subordinated notes
    
    
    (9,355
    )Due to affiliates
    
    
    (8,409
    )Other assets
    
    
    1,730Total purchase price for equity interest
    
    
    2,173Cash acquired
    
    
    (2,024
    )Total purchase price for equity interest, net of cash acquired
    
    
    149Paydown of due to affiliate balance
    
    
    7,500Total cash paid
    
    $
    7,649
  12




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements  (Continued)
March 31, 2009
(unaudited)
 NOTE 4  INVESTMENT IN COMMERCIAL FINANCE ASSETS
  March 31,
    
    
    December 31,2009
    
    
    2008Direct financing leases
    
    $
    95,412
    
    
    $
    3,025Loans
    
    
    169,214
    
    
    
    8,700Other financings (a)
    
    
    5,739
    
    
    
    3,779270,365
    
    
    
    15,504Allowance for credit losses
    
    
    (1,302
    )
    
    
    (570
    )$
    269,063
    (b)
    
    $
    14,934
    (b)
 
 (a)
    
    Other equipment financings includes operating leases and future payment card
receivables.(b)
    
    The above table does not include the Funds share of commercial finance assets held by
LEAF Funds JV1, of which the Fund owns a 49% interest. As of March 31, 2009, LEAF Funds
JV1 owns approximately $170 million of direct financing leases, operating leases and loans,
of which the Funds pro-rata (49%) share was approximately $83 million.  March 31, 2009
    
    
    December 31, 2008Direct
    
    
    
    
    
    
    DirectFinancing
    
    
    
    
    
    
    FinancingLeases
    
    
    Loans
    
    
    Leases
    
    
    LoansTotal future minimum lease payments
    
    $
    108,801
    
    
    $
    203,149
    
    
    $
    3,404
    
    
    $
    9,312Unearned income
    
    
    (13,088
    )
    
    
    (29,215
    )
    
    
    (458
    )
    
    
    (531
    )Residuals, net of unearned residual
income
    
    
    599
    
    
    
    
    
    
    
    105
    
    
    
    Security deposits
    
    
    (900
    )
    
    
    (4,720
    )
    
    
    (26
    )
    
    
    (81
    )$
    95,412
    
    
    $
    169,214
    
    
    $
    3,025
    
    
    $
    8,700
  Three MonthsEndedMarch 31, 2009Allowance for credit losses, beginning of period
    
    $
    570Provision for credit losses
    
    
    943Charge-offs
    
    
    (211
    )Allowance for credit losses, end of period
    
    $
    1,302
 13




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements  (Continued)
March 31, 2009
(unaudited)
 NOTE 5  BANK DEBT
  Amount
    
    
    Amount ofMaturity
    
    
    Outstanding
    
    

Collateral (1)Wells Fargo
    
    Feb 2012
    
    $
    41,577
    
    
    $
    49,805Morgan Stanley
    
    Nov 2009
    
    
    193,123
    
    
    
    202,589$
    234,700
    
    
    $
    252,394
 
 (1)
    
    Recourse under these facilities is limited to the amount of collateral pledged.   14




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements  (Continued)
March 31, 2009
(unaudited)
 NOTE 5  BANK DEBT  (Continued)
  Debt repayments
  2010
    
    $
    62,1902011
    
    
    55,4442012
    
    
    44,0632013
    
    
    33,6972014
    
    
    18,308Thereafter
    
    
    20,998$
    234,700
 NOTE 6 - SUBORDINATED NOTES PAYABLE
  15




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements  (Continued)
March 31, 2009
(unaudited)
 NOTE 7  DERIVATIVE INSTRUMENTS
     Fair Value of Derivative Instruments as of March 31, 2009Notional
    
    
    
    
    
    
    FairAmount
    
    
    Balance Sheet Location
    
    
    ValueDerivatives not designated as hedging instruments
under SFAS 133Interest rate cap contracts
    
    $
    88,380
    
    
    Derivative assets at fair value
    
    $
    434Interest rate swap contracts
    
    
    119,763
    
    
    Derivative liabilities at fair value
    
    
    6,154$
    208,143
 The Effect of Derivative Instruments on the Consolidated Statements of Operations for theThree Months Ended March 31, 2009Notional
    
    
    Statement of Operations
    
    
    FairAmount
    
    
    Location
    
    
    ValueDerivatives not designated as hedging instruments
under SFAS 133Interest rate cap contracts
    
    $
    88,380
    
    
    Unrealized losses on derivative hedging activities
    
    $
    338Interest rate swap contracts
    
    
    119,763
    
    
    Unrealized losses on derivative hedging activities
    
    
    588$
    208,143
    
    
    
    
    
    
    $
    926
 16




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements  (Continued)
March 31, 2009
(unaudited)
 NOTE 8  FAIR VALUE MEASUREMENT
   Fair Value Measurements
 
    
    Level 1 Quoted prices in active markets for identical assets and liabilities that the
reporting entity has the ability to access at the measurement date.
    
    Level 2 Observable inputs other than quoted prices included within Level 1, such as
quoted prices for similar assets or liabilities in active markets or quoted prices for
identical assets or liabilities in inactive markets.
    
    Level 3 Unobservable inputs that reflect the entitys own assumptions about the
assumptions that market participants would use in the pricing of the asset or liability and
are consequently not based on market activity, but rather through particular valuation
techniques.
  17




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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements  (Continued)
March 31, 2009
(unaudited)
 NOTE 8  FAIR VALUE MEASUREMENT  (Continued)
  Fair Value Measurements Using
    
    Assets (Liabilities)Level 1
    
    Level 2
    
    Level 3
    
    At Fair ValueInterest rate caps
    
    $
    
    
    
    $
    434
    
    
    $
    
    
    
    $
    434Interest rate swaps
    
    $
    
    
    
    $
    (6,154
    )
    
    $
    
    
    
    $
    (6,154
    )
 NOTE 9  CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH AFFILIATES
  Three Months EndedMarch 31, 2009Acquisition fees
    
    $
    905Management fees
    
    
    568Administrative expenses
    
    
    369Organization and offering expense allowance
    
    
    484Underwriting fees
    
    
    1,584
 Acquisition Fees.
 Management Fees.
 Administrative Fees
 Organization and Offering Expense Allowance
 18




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##### 



LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES
Notes To Consolidated Financial Statements  (Continued)
March 31, 2009
(unaudited)
 NOTE 9  CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH AFFILIATES  (Continued)
   19




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##### 



ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 When used in this Form 10-Q, the words believes anticipates, expects and similar expressions
are intended to identify forward-looking statements. Such statements are subject to certain risks
and uncertainties more particularly described in other documents filed with Securities and Exchange
Commission. These risks and uncertainties could cause actual results to differ materially.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. We undertake no obligation to publicly release the results of any
revisions to forward-looking statements which we may make to reflect events or circumstances after
the date of this Form 10-Q or to reflect the occurrence of unanticipated events.
 Overview
   
    
    500 or fewer employees;
    
    $1.0 billion or less in total assets; or
    
    $100.0 million or less in total annual sales.
   20




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##### 



Finance Receivables and Asset Quality
    March 31, 2009
    
    December 31, 2008Held Indirectly
    
    
    
    
    
    Held Indirectlyby us through
    
    
    
    
    
    by us throughHeld Directly
    
    LEAF Funds
    
    Held Directly
    
    LEAF Fundsby Us
    
    JV1
    
    by Us
    
    JV1Investment in commercial finance
assets, net
    
    $
    269,063
    
    
    $
    83,408
    
    
    $
    14,934
    
    
    $
    95,016Number of contracts
    
    
    6,881
    
    
    
    6,337
    
    
    
    953
    
    
    
    7,009Number of individual end users (a)
    
    
    6,064
    
    
    
    5,645
    
    
    
    815
    
    
    
    6,195Average origination amount
    
    $
    64.7
    
    
    $
    44.8
    
    
    $
    20.9
    
    
    $
    42.8Average initial term (in months)
    
    
    58
    
    
    
    48
    
    
    
    45
    
    
    
    51States accounting for more than 10% of
commercial finance assets portfolio:California
    
    
    14
    %
    
    
    20
    %
    
    
    21
    %
    
    
    20
    %Texas
    
    
    12
    %
    
    
    7
    %
    
    
    3
    %
    
    
    7
    %Florida
    
    
    8
    %
    
    
    10
    %
    
    
    6
    %
    
    
    10
    %Types of equipment accounting for more than
10% of commercial finance assets portfolio:Industrial equipment
    
    
    24
    %
    
    
    38
    %
    
    
    15
    %
    
    
    39
    %Medical equipment
    
    
    18
    %
    
    
    20
    %
    
    
    11
    %
    
    
    20
    %Communications
    
    
    13
    %
    
    
    1
    %
    
    
    1
    %
    
    
    1
    %Transportation equipment
    
    
    10
    %
    
    
    
    %
    
    
    45
    %
    
    
    
    %Restaurant equipment
    
    
    7
    %
    
    
    23
    %
    
    
    4
    %
    
    
    22
    %Types of business accounting for more than
10% of commercial finance assets portfolio:Services
    
    
    44
    %
    
    
    49
    %
    
    
    25
    %
    
    
    52
    %Retail Trade
    
    
    13
    %
    
    
    34
    %
    
    
    17
    %
    
    
    32
    %Finance/Insurance/Real Estate
    
    
    12
    %
    
    
    2
    %
    
    
    37
    %
    
    
    2
    %
 
 (a)
    
    Located in the 50 states as well as the District of Columbia and Puerto Rico.
No individual end user or single piece of equipment accounted for more than 1% of our
portfolio based on the origination amount.  21




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##### 



As of and For the Three Months
    
    As of and For the Period EndedEnded March 31, 2009
    
    December 31, 2008Held Indirectly
    
    
    
    
    
    Held Indirectlyby Us Through
    
    
    
    
    
    by Us ThroughHeld Directly
    
    LEAF Funds
    
    Held Directly
    
    LEAF Fundsby Us
    
    JV1
    
    by Us
    
    JV1Investment in commercial finance
assets before allowance for credit losses
    
    $
    270,365
    
    
    $
    85,186
    
    
    $
    15,504
    
    
    $
    96,650Weighted average investment before allowance
for credit losses
    
    
    102,006
    
    
    
    92,821
    
    
    
    6,383
    
    
    
    99,988Allowance for credit losses
    
    
    1,302
    
    
    
    1,779
    
    
    
    570
    
    
    
    1,634Non-performing assets
    
    
    7,582
    
    
    
    3,138
    
    
    
    1,187
    
    
    
    2,756Charge-offs
    
    $
    211
    
    
    $
    895
    
    
    $
    
    
    
    $
    567As a percentage of finance receivables:Allowance for credit losses
    
    
    0.48
    %
    
    
    2.09
    %
    
    
    3.68
    %
    
    
    1.69
    %Non-performing assets
    
    
    2.80
    %
    
    
    3.68
    %
    
    
    7.66
    %
    
    
    2.85
    %As a percentage of weighted average finance
receivables:Charge-offs
    
    
    0.21
    %
    
    
    0.96
    %
    
    
    
    %
    
    
    0.57
    %
    22




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##### 



Critical Accounting Policies
   Fair Value of Interest Rate Swaps and Caps
 Amendment of Statement 133 on Derivative
Instruments and Hedging Activities Accounting for
Derivative Financial Instruments and Hedging Activities
 Fair Value Measurements,
  Fair Value Measurements Using
    
    Assets (Liabilities)Level 1
    
    Level 2
    
    Level 3
    
    At Fair ValueAssets (Liabilities)Interest Rate Caps
    
    $
    
    
    
    $
    434
    
    
    $
    
    
    
    $
    434Interest Rate Swaps
    
    $
    
    
    
    $
    (6,154
    )
    
    $
    
    
    
    $
    (6,154
    )
 23




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##### 



Results of Operations
  Revenues:Interest on equipment financings
    
    $
    1,725Rental income
    
    
    170Gains on sales of equipment and lease dispositions, net
    
    
    2Other
    
    
    511,948Expenses:Interest expense
    
    
    1,080Depreciation on operating leases
    
    
    144Provision for credit losses
    
    
    943Management fees to affiliate
    
    
    568Administrative expenses reimbursed to affiliate
    
    
    369General and administrative expenses
    
    
    282Unrealized loss on derivative hedging activities
    
    
    9264,312Loss before equity in losses of affiliate and noncontrolling interest
    
    
    (2,364
    )Equity in losses of affiliate
    
    
    (1,200
    )Net loss
    
    
    (3,564
    )Less: Net loss attributable to the noncontrolling interest
    
    
    11Net loss attributable to LEAF 4
    
    $
    (3,553
    )
   
    
    increased depreciation expense as we continue to purchase operating leases.
    
    increased provision for credit losses as we increase our portfolio.
    
    increased interest expense as we entered into a loan and security agreement with
Wells Fargo Foothill, LLC in February 2009 and expect to fully utilize the facility to
acquire leases and loans, and we now consolidate the $250 million revolving debt
facility with Morgan Stanley as a result of LEAF Funds JV2 acquiring an interest in
LCFF.
    
    increased management fees to affiliate based on payments of commercial finance
assets processed by our General Partner.
    
    increased administrative expenses reimbursed to affiliate representing
reimbursements made to our General Partner for expenses incurred for managing us.
    
    increased general and administrative expenses representing costs we incur to operate
on a daily basis.
 24




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##### 




    
    unrealized gains (losses) on derivative hedging activities. The lease assets we
originate are almost entirely fixed-rate, while the funds borrowed through our debt
facilities are obtained on a floating-rate basis. Accordingly, we employ a hedging
strategy using derivative financial instruments such as interest rate swaps, to fix the
rate on our debt and attempt to lock in our interest rate spread between our interest
received on our financings and the interest we pay on our debt. Under U.S. GAAP, we
are required to recognize all derivatives on the balance sheet at fair value. We have
elected not to apply hedge accounting, and therefore any changes in the fair value of
these derivative instruments is recognized immediately in unrealized gain (loss) on
derivatives and hedging activities. These gains will be based on the value of the
derivative contracts at the respective balance sheet date and in a volatile market that
is changing daily, may not necessarily reflect the cash amount to be paid at
settlement. These gains (losses) will create volatility in our results of operations,
as the market value of our derivative financial instruments changes over time, and this
volatility may adversely impact our results of operations and financial condition.
   Liquidity and Capital Resources
   Three Months EndedMarch 31, 2009Net cash provided by operating activities
    
    $
    182Net cash used in investing activities
    
    
    (70,968
    )Net cash provided by financing activities
    
    
    66,776Decrease in cash
    
    $
    (4,010
    )
     Amount
    
    
    Amount ofMaturity
    
    
    Outstanding
    
    

Collateral (1)Wells Fargo
    
    Feb 2012
    
    $
    41,577
    
    
    $
    49,805Morgan Stanley
    
    Nov 2009
    
    
    193,123
    
    
    
    202,589$
    234,700
    
    
    $
    252,394
 
 (1)
    
    Recourse under these facilities is limited to the amount of collateral pledged. 25




---



##### 



26




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##### 



Contractual Obligations and Commercial Commitments
  Payments Due by PeriodLess than
    
    1 - 3
    
    4 - 5
    
    After 5Total
    
    1 Year
    
    Years
    
    Years
    
    YearsBank debt (1)
    
    $
    234,700
    
    
    $
    62,190
    
    
    $
    99,507
    
    
    $
    52,005
    
    
    $
    20,998Subordinated notes (2)
    
    
    9,355
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,355
 
 1)
    
    To mitigate interest rate risk on the variable rate debt, we employ a hedging strategy
using derivative financial instruments such as interest rate swaps and caps which fix the
weighted average interest rates. Not included in the table above are estimated interest
payments calculated at rates in effect at March 31, 2009: Less than 1 year: $9.7 million;
1-3 years: $11.2 million; 4-5 years: $4.0 million; and after 5 years: $493,000.2)
    
    Not included in the table above are estimated interest payments on the subordinated
notes at March 31, 2009; Less than 1 year: $772,000; 1-3 years: $1.5 million; 4-5 years:
$1.5 million; and after 5 years: $707,000. 27




---



##### 



Legal Proceedings
  
 ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Interest rates
    
    
    
    
    
    Interest ratesfall 100 basis
    
    
    
    
    
    rise 100 basispoints
    
    Unchanged
    
    pointsHedging instrumentsFair value
    
    $
    (8,807
    )
    
    $
    (5,720
    )
    
    $
    (2,807
    )Change in fair value
    
    $
    (3,087
    )
    
    
    
    
    
    $
    2,913Change as a percent of fair value
    
    
    (54
    %)
    
    
    
    
    
    
    51
    %
  28




---



##### 



ITEM 4  CONTROLS AND PROCEDURES
 Disclosure Controls
   Changes in Internal Control over Financial Reporting
  29




---



##### 



PART II  OTHER INFORMATION
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    As of March31, 2009Offering proceeds
    
    $
    55,182,712Offering expenses based on the amount of the offering
proceeds shown in the table:Sales commissions and related fees (1)
    
    
    3,816,583Dealer-Manager fees (1)
    
    
    1,641,222Reimbursement for accountable due diligence expenses (3)
    
    
    76,145Organization expenses (2)
    
    
    1,655,880Total public offering and organization expenses
    
    
    7,189,830Acquisition fees (3)
    
    
    1,085,167Reserves
    
    
    551,827Total proceeds available for investment
    
    $
    46,355,888
 
 (1)
    
    Paid to an affiliate of our General Partner which is then remitted to third parties.(2)
    
    Paid to our General Partner.(3)
    
    Paid to an affiliate of our General Partner 30




---



##### 



ITEM 6  EXHIBITS
 Exhibit No.
    
    Description3.1
    
    Certificate of Limited Partnership (1)3.2
    
    Amended and Restated Agreement of Limited Partnership (2)4.1
    
    Forms of letters sent to limited partners confirming their investment (1)10.1
    
    Form of Origination and Servicing Agreement Among LEAF Financial Corporation, LEAF Equipment
Finance Fund 4, LP and LEAF Funding, Inc. (1)10.2
    
    Receivables Loan and Security Agreement, dated as of October 31, 2006, among Resource Capital
Funding II, LLC, as the Borrower, and LEAF Financial Corporation, as the Servicer, and Morgan
Stanley Bank, as a Lender and Collateral Agent, and U.S. Bank National Association, as the
Custodian and the Lenders Bank and Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio
Services), as the Backup Servicer, as amended through November 13, 2008 (3)10.3
    
    Forbearance and Reservation of Rights, dated as of May 14, 2009, by and among Resource Capital
Funding II, LLC, LEAF Financial Corporation, Morgan Stanley Bank, NA, and Morgan Stanley Capital
Services Inc.10.4
    
    Indenture by and between LEAF Commercial Finance Fund, LLC and U.S. Bank National Association (3)10.5
    
    Amended and Restated Limited Liability Company Agreement of LEAF Commercial Finance Fund, LLC (3)10.6
    
    Limited Liability Company Agreement of LEAF Funds Joint Venture 2, LLC (3)10.7
    
    Membership Interest Purchase Agreement by and between LEAF Financial Corporation and LEAF Funds
Joint Venture 2, LLC (3)31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive
Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
 (1)
    
    Filed previously as an exhibit to our Registration Statement on Form S-1 filed on March
24, 2008 and by this reference incorporated herein.(2)
    
    Filed previously as an exhibit to Form 8-A on May 8, 2009 and by this reference
incorporated herein.(3)
    
    Filed previously on May 12, 2009 in Post-Effective Amendment No. 1 as an exhibit to our
Registration Statement and by this reference incorporated herein. 31




---



##### 



SIGNATURES
  LEAF EQUIPMENT FINANCE FUND 4, L.P.By: LEAF Asset Management, LLC, its General PartnerMay 15, 2009
    
    /s/ Crit DeMentCRIT DEMENTChairman and Chief Executive OfficerMay 15, 2009
    
    /s/ Robert K. MoskovitzROBERT K. MOSKOVITZChief Financial OfficerMay 15, 2009
    
    /s/ Tonya L. ZweierTONYA L. ZWEIERChief Accounting Officer
 32