FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities exchange Act of 1934
For the Quarterly Period Ended March 31, 2003
Commission File Number 0-16815
NHP RETIREMENT HOUSING PARTNERS I
LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
(Exact name of registrant as specified in its charter)
DELAWARE 52-1453513
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
14160 DALLAS PARKWAY, SUITE 300
DALLAS, TX 75254
(Address of principal executive offices)
(Zip Code)
(972) 770-5600
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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
---- ----
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X
---- ----
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statements of Net Assets in Liquidation
(LIQUIDATION BASIS)
March 31, 2003 December 31, 2002
(Unaudited) (Note A)
ASSETS:
Cash and cash equivalents $ 245,120 $ 60,944
Receivables 6,001 75,978
Prepaid expense 2,875 7,187
Other assets - 252,698
----------------- ------------------
Total assets 253,996 396,807
----------------- ------------------
LIABILITIES:
Interest payable (Note D) - -
Pension notes (Note D) - -
Other liabilities 234,300 264,477
----------------- ------------------
Total liabilities 234,300 264,477
----------------- ------------------
Net assets in liquidation $ 19,696 $ 132,330
================= ==================
See notes to financial statements.
1
17
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statements of Changes in Net Assets in Liquidation
(LIQUIDATION BASIS)
For the Three Months Ended March 31, 2003
(Unaudited)
Net assets in liquidation at January 1, 2003 $ 132,330
Net loss (112,634)
-------------
Net assets in liquidation at March 31, 2003 $ 19,696
=============
See notes to financial statements
2
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statements of Operations
(LIQUIDATION BASIS)
(Unaudited)
Three months ended March 31,
2003 2002
REVENUE:
Rental income $ - $ 1,198
Interest income 569 1,132
Other income 3,254 (759)
------------------ ------------------
3,823 1,571
------------------ ------------------
COSTS AND EXPENSES:
Administrative and marketing 23 1,084
Taxes and insurance 4,312 -
------------------ ------------------
4,335 1,084
------------------ ------------------
(LOSS) INCOME FROM RENTAL OPERATIONS (512) 487
------------------ ------------------
OTHER INCOME (EXPENSES):
Debt forgiveness income - 18,991,176
Interest expense - pension notes - (423,590)
Other expense (112,122) (91,375)
------------------ ------------------
(112,122) 18,476,211
------------------ ------------------
NET (LOSS) INCOME $ (112,634) $ 18,476,698
================== ==================
NET (LOSS) INCOME PER ASSIGNEE INTEREST:
Net (loss) income $ (3) $ 432
================== ==================
WEIGHTED AVERAGE NUMBER OF ASSIGNEE
UNITS $ 41,888 $ 41,888
================== ==================
See notes to financial statements
3
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statements of Partners' Equity (Deficit)
(Unaudited)
ASSIGNEE
GENERAL LIMITED
PARTNER PARTNERS TOTAL
Partners' (deficit) equity
at January 1, 2003 and net
assets in liquidation $ (802,356) $ 934,686 $ 132,330
Net loss - Three months
ended March 31, 2003 (2,253) (110,381) (112,634)
------------- ---------- ----------
Partners' (deficit) equity
at March 31, 2003 and net
assets in liquidation $ (804,609) $ 824,305 $ 19,696
============= ========= ==========
Percentage interest
at March 31, 2003 2% 98% 100%
== === ====
See notes to financial statements
4
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statements of Cash Flows
(LIQUIDATION BASIS)
(Unaudited)
Three months ended March 31,
2003 2002
Cash flows from operating activities:
Rent and other asset collections $ 322,675 $ 25,276
Interest received 569 1,132
Other income 3,254 (759)
Salary and related benefits - (46,900)
Management fees, dietary fees and other services (116) (68,350)
Other operating expenses paid (142,206) (592,003)
Interest paid - (7,461,934)
----------------- -----------------
Net cash provided by (used in) operating activities 184,176 (8,143,538)
----------------- -----------------
Cash flows from financing activities:
Pension note payments - (9,538,066)
----------------- -----------------
Net cash used in financing activities - (9,538,066)
----------------- -----------------
Net increase (decrease) in cash and cash equivalents 184,176 (17,681,604)
Cash and cash equivalents at beginning of period 60,944 18,117,660
----------------- -----------------
Cash and cash equivalents at end of period $ 245,120 $ 436,056
================= =================
See notes to financial statements
5
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statements of Cash Flows
(LIQUIDATION BASIS)
(Unaudited)
(Continued)
Three months ended March 31,
2003 2002
RECONCILIATION OF NET (LOSS) INCOME
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Net (loss) income $ (112,634) $ 18,476,698
Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities:
Debt forgiveness - (18,991,176)
Changes in operating assets and liabilities:
Other assets and receivables 322,675 24,078
Prepaid expenses 4,312 -
Accounts payable - (122,135)
Interest payable - (7,038,344)
Other liabilities (30,177) (492,659)
----------------- -----------------
Total adjustments 296,810 (26,620,236)
----------------- -----------------
Net cash provided by (used in) operating activities $ 184,176 $ (8,143,538)
================= =================
See notes to financial statements
6
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Notes to Financial Statements
March 31, 2003
A. ACCOUNTING POLICIES
Nature of Business
NHP Retirement Housing Partners I Limited Partnership (the "Partnership") is a
limited partnership organized under the laws of the State of Delaware on March
10, 1986. The Partnership was formed for the purpose of raising capital by
issuing both Pension Notes ("Notes") to tax-exempt investors and selling
additional partnership interests in the form of Assignee Interests ("Interests")
to taxable individuals. Interests represent assignments of the limited
partnership interests of the Partnership issued to the Assignor Limited Partner,
NHP RHP-I Assignor Corporation. The proceeds from the sale of the Notes and
Interests were invested in residential rental properties for retirement age
occupants.
Dissolution of Partnership
On February 12, 2001, due to the pending maturity of the Pension Notes at
December 31, 2001 and to obtain maximum value through an organized disposition
of Partnership assets, the General Partner notified the Pension Note holders and
Assignee Interest holders of its intent to dissolve the Partnership effective
May 21, 2001 and liquidate its remaining property, the Amberleigh.
On December 31, 2001, the Partnership sold the Amberleigh to an unaffiliated
entity for $20,000,000. The Partnership received two $1,000,000 promissory
notes, each payable within 12 months from the date of sale, one Note subject to
the purchaser obtaining certain levels of financing proceeds and the other note
subject to the property achieving certain levels of operating income. The
Partnership did not satisfy the requirements for payment under either promissory
note, and therefore the Partnership will not receive any proceeds from these
notes. The balance of the sale proceeds net of settlement costs and other direct
costs associated with the sale was paid in cash, resulting in net sale proceeds
of $16,014,830. The Partnership recognized a $1,491,679 loss on the sale in
2001. On December 31, 2001, the principal on the Pension Notes and deferred
interest of approximately $35,504,000 matured.
Relating to the sale of the Amberleigh on December 31, 2001, the Partnership
paid $9,538,066 for a partial redemption of Notes, and paid $7,461,934 for a
partial payment of deferred interest, effective February 28, 2002. Cash funds
were not sufficient at February 28, 2002 to fully repay the outstanding
principal balance of $18,991,176 in Notes and deferred interest. Since available
cash after payment of Partnership expenses and potential collection of the
Amberleigh promissory notes was insufficient to repay the outstanding Pension
Notes and deferred interest, the unpaid debt related to the Pension Notes has
been treated as forgiven for book purposes and resulted in $18,991,176 of income
for the year ended 2002. For tax purposes, any income relating to the
forgiveness of unpaid debt and deferred interest will be recognized in the year
the Pension Notes are deemed cancelled, which has not yet occurred. Upon final
liquidation of the Partnership's cash reserves, to the extent any funds are in
excess of liabilities, those funds will be distributed to the Pension Note
holders.
7
The Partnership adopted Financial Accounting Standards Board (FASB) Statement
No. 145, Recession of FASB No. 4,44 and 64, Amendment of FASB No. 13 and
Technical Corrections, during the first quarter of 2003. Upon adoption of FASB
Statement No. 145, the Partnership reclassified its extraordinary income
recorded in 2002 on debt forgiveness to ordinary income.
Basis of Presentation
The accompanying balance sheet as of December 31, 2002 has been derived from
audited financial statements of the Partnership for the year ended December 31,
2002 and the accompanying unaudited financial statements, as of March 31, 2003
and 2002, have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. As of December 31, 2001, the Partnership
changed its basis of accounting from going-concern basis to liquidation basis.
Under this basis of accounting, assets and liabilities are stated at their net
realizable value and estimated costs through the liquidation date are provided
to the extent reasonably determinable. Certain information and note disclosures
normally included in the annual financial statements prepared in accordance with
accounting principles generally accepted in the United States have been
condensed or omitted pursuant to those rules and regulations. For further
information, refer to the financial statements and notes thereto for the year
ended December 31, 2002 included in the Partnership's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 28, 2003.
In the opinion of management, the accompanying financial statements contain all
adjustments, all of which were normal recurring accruals, necessary to present
fairly the Partnership's net assets in liquidation as of March 31, 2003 and
December 31, 2002, statements of changes in net assets in liquidation for the
three month period ended March 31, 2003, results of operations, changes in
Partner's equity (deficit) and cash flows for three month periods ended March
31, 2003 and 2002. The results of operations for the three-month period ended
March 31, 2003 are not necessarily indicative of the results for the year ending
December 31, 2003.
B. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE GENERAL PARTNER
Effective January 23, 1995, Capital Realty Group Senior Housing, Inc. (CRGSH)
became the sole general partner of the Partnership. On June 10, 1998, the sole
owner of CRGSH, Capital Realty Group Corporation, sold all of its shares of
CRGSH common stock to Retirement Associates, Inc. ("Associates") for $855,000.
The source of the funds is a Promissory Note for $855,000 with a five-year term
and bears a current interest rate of 8 percent per annum. As of March 31, 2003,
the unpaid interest on this note is $9,284 and the unpaid balance on this note
is $717,938. Associates is the maker of the Note and Capital Realty Group
Corporation is the payee. Mr. Robert Lankford is the President of Associates and
has brokered and continues to broker real estate as an independent contractor
with Capital Realty Group Corporation and its affiliates.
Certain home office personnel who perform services for the Partnership are
employees of Capital Senior Living, Inc. (CSL), an affiliate of CRGSH until June
30, 1998. The Partnership reimburses CSL for the salaries, related benefits, and
overhead reimbursements of such personnel as reflected in the accompanying
financial statements. Salary and related benefits reimbursed and expensed by the
Partnership to CSL for the first fiscal quarter ended March 31, 2003 and 2002,
were $0. Management fees, dietary fees and other services reimbursed and
expensed by the Partnership to CSL for the first fiscal quarter ended March 31,
2003 and 2002, were $116 and $68,350, respectively. Unpaid management fees,
dietary fees and other services to CSL at March 31, 2003 were $106,800.
8
In connection with the sale of the Amberleigh, the General Partner became
entitled to a brokerage fee of $255,000. In January 2002, the Partnership paid
the General Partner one-half of this amount, or $127,500. The General Partner
remains entitled to receive the balance of this brokerage fee in the amount of
$127,500 and has been accrued for payment at March 31, 2003.
There were no distributions to the General Partner during the three months ended
March 31, 2003 and 2002, respectively.
C. LEGAL PROCEEDINGS
On September 17, 2002, William Bren filed a putative class action complaint on
behalf of certain holders of Pension Notes of the Partnership in the Delaware
Court of Chancery, C.A. No. 19902 (the "Bren Action"), against the Partnership
and the General Partner. The complaint in the Bren Action, which was amended on
December 3, 2002, alleges that the General Partner breached its fiduciary duty
by failing to initiate a lawsuit against, among others, the former General
Partner and its principals in connection with the sale of four properties by the
Partnership in September 1998; failed to disclose material information and
promised to make certain distributions when it solicited consents from the
Pension Note holders in 2001 to facilitate the sale of the Partnership's fifth
property, the Amberleigh, which sale occurred in December 2001; and failed to
disclose material information in connection with obtaining releases from the
Pension Note holders in 2002. The Bren Action also seeks a judgment against the
Partnership for failing to pay the full amount of the principal and interest
owed on the Pension Notes on December 21, 2001, the maturity date of the Pension
Notes.
On February 10, 2003, the defendants moved to dismiss the amended complaint in
the Bren Action or, alternatively, for summary judgment. Briefing has been
completed on this motion and the matter is expected to be submitted to the Court
shortly for decision. Previously, on October 15, 2002, plaintiff filed a motion
for class certification, which plaintiff is pursuing at the present time. The
Partnership believes the allegations asserted in the Bren Action are without
merit and intends to defend against these claims. The Partnership is unable at
the time to estimate liability, if any, related to this claim.
D. PENSION NOTES
Relating to the sale of the Amberleigh on December 31, 2001, the Partnership
paid $9,538,066 for a partial redemption of Notes, and paid $7,461,934 for a
partial redemption of deferred interest, effective February 28, 2002. Cash funds
were not sufficient at February 28, 2002 to fully repay the outstanding
principal and deferred interest balance of $18,991,176. Since available cash
after payment of Partnership expenses and potential collection of the Amberleigh
promissory notes was insufficient to repay the outstanding Notes and deferred
interest, the unpaid debt related to the Notes has been treated for book
purposes as forgiven and resulted in $18,991,176 of income for the year ended
2002. For tax purposes any income relating to the forgiveness of unpaid debt and
deferred interest will be recognized in the year the Notes are deemed cancelled,
which has not yet occurred. Upon final liquidation of the Partnership's cash
reserves, to the extent any funds are in excess of liabilities, those funds will
be distributed to Note Holders.
9
The Partnership's obligation to repay the principal amount of the Notes, which
matured on December 31, 2001, and stated interest thereon, is limited to the
assets of the Partnership. The Notes are subject to redemption in whole or in
part upon not less than 30 or more than 60 days prior notice, at the election of
the Partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Resources
Rent and other asset collections for the three-month period ended March 31, 2003
increased to $322,675 in 2003 from $25,276 in 2002. Increased rent and other
asset collections were due to collections of accounts receivable and escrows
related to the sale of the Amberleigh. Salaries, management fees and other
operating expenses paid likewise decreased, from $707,253 in 2002 to $142,322 in
2003. Decreased operating expenses paid was due to the sale of the Amberleigh
and its related December 31, 2001 accruals paid in the first quarter ended March
31, 2002.
Relating to the sale of the Amberleigh on December 31, 2001, the Partnership
paid $9,538,066 for a partial redemption of Notes, and paid $7,461,934 for a
partial payment of deferred interest, effective February 28, 2002. Cash funds
were not sufficient at February 28, 2002 to fully repay the outstanding
principal balance of $18,991,176 in Notes and deferred interest. Since available
cash after payment of Partnership expenses and potential collection of the
Amberleigh promissory notes was insufficient to repay the outstanding Notes and
deferred interest, the unpaid debt has been treated for book purposes as
forgiven and resulted in $18,991,176 of income for the year ended 2002. Net cash
provided by (used in) operations after the payment of interest expense during
the three months ended March 31, 2003 and 2002 was $184,176 and $(8,143,538),
respectively. Interest on the Notes bears stated simple interest at 13 percent
rate per annum, and is paid on a 7 percent rate per annum, however it was
accrued under the effective interest method at a rate of approximately 9 percent
per annum compounded quarterly through May 2001. As of June 2001, the
Partnership began recording accrued interest on the principal at the stated
interest rate which represents the amount that was scheduled to be due upon
dissolution of the Partnership. Interest expense totaled $0 and $423,590 for the
three months ended March 31, 2003 and 2002, respectively.
Cash and cash equivalents at March 31, 2003 and December 31, 2002 amounted to
$245,120 and $60,944, respectively.
Dissolution of Partnership
On February 12, 2001, due to the pending maturity of the Pension Notes at
December 31, 2001 and to obtain maximum value through an organized disposition
of Partnership assets, the General Partner notified the Pension Note holders and
Assignee Interest holders of its intent to dissolve the Partnership effective
May 21, 2001 and liquidate its remaining property, the Amberleigh.
On December 31, 2001, the Partnership sold the Amberleigh to an unaffiliated
entity for $20,000,000. The Partnership received two $1,000,000 promissory
notes, each payable within 12 months from the date of sale, one Note subject to
the purchaser obtaining certain levels of financing proceeds and the other note
subject to the property achieving certain levels of operating income. The
Partnership did not satisfy the requirements for payment under either promissory
note, and therefore the Partnership will not receive any proceeds from these
notes. The balance of the sale proceeds net of settlement costs and other direct
10
costs associated with the sale was paid in cash, resulting in net sale proceeds
of $16,014,830. The Partnership recognized a $1,491,679 loss on the sale in
2001. On December 31, 2001, the principal on the Pension Notes and deferred
interest of approximately $35,504,000 matured.
Relating to the sale of the Amberleigh on December 31, 2001, the Partnership
paid $9,538,066 for a partial redemption of Notes, and paid $7,461,934 for a
partial payment of deferred interest, effective February 28, 2002. Cash funds
were not sufficient at February 28, 2002 to fully repay the outstanding
principal balance of $18,991,176 in Notes and deferred interest. Since available
cash after payment of Partnership expenses and potential collection of the
Amberleigh promissory notes was insufficient to repay the outstanding Pension
Notes and deferred interest, the unpaid debt related to the Pension Notes has
been treated as forgiven for book purposes and resulted in $18,991,176 of income
for the year ended 2002. For tax purposes, any income relating to the
forgiveness of unpaid debt and deferred interest will be recognized in the year
the Pension Notes are deemed cancelled, which has not yet occurred. Upon final
liquidation of the Partnership's cash reserves, to the extent any funds are in
excess of liabilities, those funds will be distributed to the Pension Note
holders.
11
Results of Operations
The Partnership net income (loss) decreased from $18,476,698 to $(112,634) for
the three-month periods ending March 31, 2002 and 2003, respectively. Net income
(loss) per assignee interest decreased from $432 to $(3) for the three-month
periods ending March 31, 2002 and 2003, respectively. The increase in the
Partnership's net loss was principally due to $18,991,176 of income recognized
from the dissolution of the Partnership and debt forgiveness of outstanding
notes and deferred interest in 2002. Total revenues for the three-month periods
increased from $1,571 in 2002 to $3,823 in 2003. Total operating costs and
expenses increased from $1,084 in 2002 to $4,335 in 2003. The increase in
operating expenses primarily was due to insurance costs. Note interest expense
decreased from $423,590 to $0 for the three-month periods ending March 31, 2002
and 2003, respectively. The decrease in Note interest expense is due to the
cessation of interest expense on the Note release date of February 28, 2002.
Other expenses relating to Partnership administration increased from $91,375 to
$112,122 for the three-month periods ending March 31, 2002 and 2003,
respectively, due to increased professional costs.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK.
The Partnership invests its cash in money market accounts. As a result, the
Partnership believes any impact of market risk to the Partnership's investments
is immaterial.
ITEM 4. CONTROLS AND PROCEDURES
The Partnership's General Partner including its Chief Executive Officer and
Chief Financial Officer, after evaluating the effectiveness of the Partnership's
disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c)
under the Securities Exchange Act of 1934) as of a date (the "Evaluation Date"),
which was within 90 days of this quarterly report on Form 10-Q, have concluded
in their judgment that, as of the Evaluation Date, the Partnership's disclosure
controls and procedures were adequate and designed to ensure that material
information relating to the Partnership and its subsidiaries would be made known
to them.
There were no significant changes in the Partnership's internal controls or, to
the General Partner's knowledge, in other factors that could significantly
affect its disclosure controls and procedures subsequent to the Evaluation Date.
12
PART II
Item 1. Legal Proceedings
On September 17, 2002, William Bren filed a putative class action complaint on
behalf of certain holders of Pension Notes of the Partnership in the Delaware
Court of Chancery, C.A. No. 19902 (the "Bren Action"), against the Partnership
and the General Partner. The complaint in the Bren Action, which was amended on
December 3, 2002, alleges that the General Partner breached its fiduciary duty
by failing to initiate a lawsuit against, among others, the former General
Partner and its principals in connection with the sale of four properties by the
Partnership in September 1998; failed to disclose material information and
promised to make certain distributions when it solicited consents from the
Pension Note holders in 2001 to facilitate the sale of the Partnership's fifth
property, the Amberleigh, which sale occurred in December 2001; and failed to
disclose material information in connection with obtaining releases from the
Pension Note holders in 2002. The Bren Action also seeks a judgment against the
Partnership for failing to pay the full amount of the principal and interest
owed on the Pension Notes on December 21, 2001, the maturity date of the Pension
Notes.
On February 10, 2003, the defendants moved to dismiss the amended complaint in
the Bren Action or, alternatively, for summary judgment. Briefing has been
completed on this motion and the matter is expected to be submitted to the Court
shortly for decision. Previously, on October 15, 2002, plaintiff filed a motion
for class certification, which plaintiff is pursuing at the present time. The
Partnership believes the allegations asserted in the Bren Action are without
merit and intends to defend against these claims. The Partnership is unable at
the time to estimate liability, if any, related to this claim.
13
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibit:
99.1 Certification Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
(B) Reports on Form 8-K
None
14
SIGNATURES
Pursuant to the requirements 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.
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
By: Capital Realty Group Senior Housing, Inc.
General Partner
By: /s/ Robert Lankford
------------------------------
Robert Lankford
President (duly authorized officer and principal financial officer)
Date: May 14, 2003
15
CERTIFICATION
I, Robert Lankford, Chief Executive Officer and Chief Financial Officer of the
General Partner of NHP Retirement Housing Partners I Limited Partnership,
certify that:
1. I have reviewed this quarterly report on Form 10-Q of NHP Retirement Housing
Partners I Limited Partnership ("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. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
Partnership and I have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the Partnership, is made known to me by others
within the Partnership, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the Partnership's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date.
5. I have disclosed, based on my most recent evaluation, to the Partnership's
auditors and the General Partner's board of directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Partnership 's ability to record,
process, summarize and report financial data and have identified for the
Partnership's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Partnership's internal
controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
/s/ Robert Lankford
----------------------------------
Robert Lankford
Chief executive officer and
Chief financial officer of the
General Partner
May 14, 2003
16