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, 2003
------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission file number 33-44158
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Capital Preferred Yield Fund-III, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 84-1248907
-------- ----------
(State of organization) (I.R.S. Employer Identification No.)
2750 South Wadsworth, C-200
Denver, Colorado 80227
---------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (720) 963-9600
--------------
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-III, L.P.
Quarterly Report on Form 10-Q
For the Quarter Ended
June 30, 2003
Table of Contents
-----------------
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Balance Sheets - June 30, 2003 and December 31, 2002 3
Statements of Income - Three and Six Months Ended
June 30, 2003 and 2002 4
Statements of Cash Flows - Six Months Ended
June 30, 2003 and 2002 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
Item 4. Controls and Procedures 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Exhibit Index 14
Signatures 15
Certifications 16-19
2
CAPITAL PREFERRED YIELD FUND-III, L.P.
BALANCE SHEETS
ASSETS
June 30, December 31,
2003 2002
---- ----
(Unaudited)
Cash and cash equivalents $ 1,524,120 $ 1,229,412
Accounts receivable, net 53,563 158,424
Equipment held for sale or re-lease 85,611 51,730
Net investment in direct finance leases 1,018,571 1,368,607
Leased equipment, net 5,702,297 8,391,053
----------- -----------
Total assets $ 8,384,162 $11,199,226
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued liabilities $ 669,526 $ 1,076,491
Payables to affiliates 48,043 48,510
Rents received in advance 64,496 108,771
Distributions payable to partners 775,700 363,351
Discounted lease rentals 1,699,241 2,526,644
----------- -----------
Total liabilities 3,257,006 4,123,767
----------- -----------
Partners' capital:
General partner -- --
Limited partners:
Class A 4,856,573 6,811,509
Class B 270,583 263,950
----------- -----------
Total partners' capital 5,127,156 7,075,459
----------- -----------
Total liabilities and partners' capital $ 8,384,162 $11,199,226
=========== ===========
See accompanying notes to financial statements.
3
CAPITAL PREFERRED YIELD FUND-III, L.P.
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
2003 2002 2003 2002
---- ---- ---- ----
Revenue:
Operating lease rentals $1,480,843 $2,129,512 $2,675,358 $4,340,487
Direct finance lease income 43,967 59,942 90,852 129,268
Equipment sales margin 125,909 216,604 337,503 280,581
Interest income 2,191 6,189 4,428 12,720
---------- ---------- ---------- ---------
Total revenue 1,652,910 2,412,247 3,108,141 4,763,056
---------- ---------- ---------- ---------
Expenses:
Depreciation 790,717 1,474,127 1,696,313 3,159,398
Management fees to general partner 26,482 47,642 56,245 98,585
Direct services from general partner 59,217 67,361 125,062 132,992
General and administrative 115,399 184,907 374,747 302,927
Interest on discounted lease rentals 39,075 81,976 86,827 181,949
Provision for losses 13,250 145,000 79,250 220,000
---------- ---------- ---------- ---------
Total expenses 1,044,140 2,001,013 2,418,444 4,095,851
---------- ---------- ---------- ---------
Net income $ 608,770 $ 411,234 $ 89,697 $ 667,205
========== ========== ========== ==========
Net income allocated:
To the general partner $ 13,415 $ 21,575 $ 26,380 $ 40,630
To the Class A limited partners 589,401 385,763 656,684 620,310
To the Class B limited partner 5,954 3,896 6,633 6,265
---------- ---------- ---------- ---------
$ 608,770 $ 411,234 $ 689,697 $ 667,205
========== ========== ========== ==========
Net income per weighted average Class A
limited partner unit outstanding $ 1.20 $ 0.79 $ 1.34 $ 1.26
========== ========== ========== ==========
Weighted average Class A limited
partner units outstanding 491,011 491,011 491,011 491,011
========== ========== ========== ==========
See accompanying notes to financial statements.
4
CAPITAL PREFERRED YIELD FUND-III, L.P.,
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
--------------------
2003 2002
---- ----
Net cash provided by operating activities $ 3,347,762 $ 5,590,053
----------- -----------
Cash flows from financing activities:
Principal payments on discounted lease rentals (827,403) (1,369,329)
Distributions to partners (2,225,651) (4,271,062)
----------- -----------
Net cash used in financing activities (3,053,054) (5,640,391)
----------- -----------
Net increase (decrease) in cash and cash equivalents 294,708 (50,338)
Cash and cash equivalents at beginning of period 1,229,412 1,603,588
----------- -----------
Cash and cash equivalents at end of period $ 1,524,120 $ 1,553,250
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid on discounted lease rentals $ 86,827 $ 181,949
=========== ===========
See accompanying notes to financial statements.
5
CAPITAL PREFERRED YIELD FUND-III, 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. 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, 2002 was derived from the audited financial statements
included in the Partnership's 2002 Form 10-K. For further information,
refer to the financial statements of Capital Preferred Yield Fund-III, 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, 2002, previously
filed with the Securities and Exchange Commission.
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.
6
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
2. Transactions With the General Partner and Affiliates
----------------------------------------------------
Management Fees 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 of approximately $8,000 and $12,000 are
included in payables to affiliates at June 30, 2003 and December 31, 2002,
respectively.
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 the terms of
the Partnership Agreement. Direct services from the General Partner of
approximately $20,000 and $15,000 are included in payables to affiliates at
June 30, 2003 and December 31, 2002, respectively.
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 costs of
approximately $20,000 and $22,000 are included in payables to affiliates at
June 30, 2003 and December 31, 2002, respectively.
7
CAPITAL PREFERRED YIELD FUND-III, L.P.
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,
----------------------------------------- -----------------------------------------
2003 2002 Change 2003 2002 Change
---- ---- ------ ---- ---- ------
Leasing margin $ 695,018 $ 633,351 $ 61,667 $ 983,070 $ 1,128,408 $ (145,338)
Equipment sales margin 125,909 216,604 (90,695) 337,503 280,581 56,922
Interest income 2,191 6,189 (3,998) 4,428 12,720 (8,292)
Management fees to general partner (26,482) (47,642) 21,160 (56,245) (98,585) 42,340
Direct services from general partner (59,217) (67,361) 8,144 (125,062) (132,992) 7,930
General and administrative (115,399) (184,907) 69,508 (374,747) (302,927) (71,820)
Provision for losses (13,250) (145,000) 131,750 (79,250) (220,000) 140,750
----------- ----------- ----------- ----------- ----------- -----------
Net income $ 608,770 $ 411,234 $ 197,536 $ 689,697 $ 667,205 $ 22,492
=========== =========== =========== =========== =========== ===========
The Partnership is in its liquidation period, as defined in the Partnership
Agreement, and is not purchasing additional equipment. Initial leases are
expiring, and equipment is being remarketed (i.e. re-leased, renewed or sold).
As a result, both the size of the Partnership's portfolio and the amount of
total revenue are decreasing ("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.
Leasing Margin
Leasing margin consists of the following:
Three Months Ended Six Months Ended
June 30, June 30, _
--------------------------- ---------------------------
2003 2002 2003 2002
---- ---- ---- ----
Operating lease rentals $ 1,480,843 $ 2,129,512 $ 2,675,358 $ 4,340,487
Direct finance lease income 43,967 59,942 90,852 129,268
Depreciation (790,717) (1,474,127) (1,696,313) (3,159,398)
Interest expense on discounted lease rentals (39,075) (81,976) (86,827) (181,949)
----------- ----------- ----------- -----------
Leasing margin $ 695,018 $ 633,351 $ 983,070 $ 1,128,408
=========== =========== =========== ===========
Leasing margin ratio 46% 29% 36% 25%
== == == ==
8
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Results of Operations, continued
- ---------------------
Leasing Margin, continued
All of the components of leasing margin including operating lease rentals,
direct finance lease income, depreciation on leased equipment and interest
expense on discounted lease rentals decreased due to portfolio runoff. Because
the Partnership is in its liquidation period, no additional equipment is being
purchased. As a result, leasing margin and its components will decline over the
remaining life of the related leases in the Partnership's portfolio.
Leasing margin ratio increased for the three and six months ended June 30, 2003
compared to the three and six months ended June 30, 2002 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 and leasing margin ratio are generally higher as
leases enter their remarketing stage because typically depreciation expense is
reduced since the related equipment is at or near the end of its useful life.
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.
The ultimate rate of return on leases depends, in part, on interest rates at the
time the leases are originated, as well as 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).
Equipment Sales Margin
Equipment sales margin consists of the following:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2003 2002 2003 2002
---- ---- ---- ----
Equipment sales revenue $ 635,094 $ 310,482 $ 1,180,463 $ 1,164,903
Cost of equipment sales (509,185) (93,878) (842,960) (884,322)
Equipment sales margin $ 125,909 $ 216,604 $ 337,503 $ 280,581
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.
9
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Results of Operations, continued
- ---------------------
Interest Income
Interest income varies due to (1) the amount of cash available for investment
(pending distribution or equipment purchases) 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, 2003 compared to the three and six
months ended June 30, 2002 due to portfolio run-off.
Direct services from the General Partner decreased for the three and six months
ended June 30, 2003 compared to the three and six months ended June 30, 2002
primarily because the three and six months ended June 30, 2002 included
increased costs related to management's efforts to collect receivables owed to
the Partnership.
General and administrative expenses increased for the six months ended June 30,
2003 compared to the six months ended June 30, 2002 primarily due to a)
increased insurance costs of $48,504, and b) upgrades to computer equipment of
$52,100 needed to effectively and efficiently manage the Partnership's assets.
General and administrative expenses decreased for the three months ended June
30, 2003 compared to the three months ended June 30, 2002 primarily due to a)
decreased Partnership level state taxes of $10,146, and b) decreased equipment
storage costs of $31,107.
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 other-than-temporary losses in value that, if any, are also recorded as
provision for losses.
10
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
The provision for losses of 13,250 and $79,250 recorded during the three and six
months ended June 30, 2003 related primarily to $179,250 for losses on equipment
returned to the Partnership at lease maturity occurring because the residual
realized was, or is expected to be, less than the residual value originally
estimated; offset by a reversal of $100,000 of provision for losses recorded
during the third quarter of 2000 for an accounts receivable allowance for
losses. The General Partner reviewed the accounts receivable balances at June
30, 2003 and determined that the accounts receivable allowance was greater than
the amount required because of management's efforts to collect receivables owed
to the Partnership.
Liquidity & Capital Resources
- -----------------------------
The Partnership is in its liquidation period, as defined in the Partnership
Agreement. The Partnership is not purchasing additional equipment and initial
leases are expiring with the equipment being remarketed (i.e., re-leased,
renewed, or sold). As a result, the size of the Partnership's lease portfolio is
decreasing, which results in a corresponding decrease in leasing revenue. 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. 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, 2003, the Partnership declared
distributions to the Class A limited partners of $2,611,620 ($767,950 of which
was paid during July 2003). 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 2003, to meet current operating
requirements and fund cash distributions to 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 during 2004.
11
CAPITAL PREFERRED YIELD FUND-III, 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 2002 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 which are fixed at lease inception. The partnership finances its leases,
in part, with discounted lease rentals at a fixed debt rate. The Partnership's
other assets and liabilities are also at fixed rates. Consequently, the
Partnership has no interest rate risk or other market risk exposure.
Item 4. Controls and Procedures
The Partnership carried out and evaluation as of June 30, 2003, under the
supervision and with the participation of the General Partner's management,
including the President and Director, and the Chief Accounting Officer, of the
effectiveness of the design and operation of the Partnership's disclosure
controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange
Act of 1934. Based upon that evaluation, the President and Director, and the
Chief Accounting 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 this Quarterly Report on
Form 10-Q. There have been no changes in the Partnership's internal controls
over financial reporting that occurred during the quarter ended June 30, 2003
that have materially affected, or are reasonably likely to materially affect,
the Partnership's internal control over financial reporting.
12
CAPITAL PREFERRED YIELD FUND-III, 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.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) The Partnership did not file any reports on Form 8-K during the
quarter ended June 30, 2003.
13
Exhibit Index
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 Joseph F. Bukofski pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
* Filed herewith
14
CAPITAL PREFERRED YIELD FUND-III, 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-III, L.P.
By: CAI Equipment Leasing IV Corp.
Dated: August 14, 2003 By: /s/John F. Olmstead
-------------------
John F. Olmstead
President and Director
(Principal Executive Officer)
CAPITAL PREFERRED YIELD FUND-III, L.P.
By: CAI Equipment Leasing IV Corp.
Dated: August 14, 2003 By: /s/Joseph F. Bukofski
---------------------
Joseph F. Bukofski
Chief Accounting Officer
Principal Accounting and Financial Officer)
15
SECTION 302 CERTIFICATION
I, John F. Olmstead, President and Director of CAI Equipment Leasing IV Corp.,
the General Partner of Capital Preferred Yield Fund-III, L.P. (the
"Partnership"), certify that:
1. I have reviewed this report of the Partnership on Form 10-Q for the
quarterly period ended June 30, 2003;
2. Based on my knowledge, this 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 as with respect to the period covered by this 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 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 is made known to us by others within this entity,
particularly during the period in which this report is 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 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 (the Partnership's fourth
fiscal quarter in the case of an annual report) 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 controls 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 controls over financial reporting.
/s/ John F. Olmstead
---------------------------
John F. Olmstead
President and Director
(Principal Executive Officer)
August 14, 2003
16
SECTION 302 CERTIFICATION
I, Joseph F. Bukofski, Chief Accounting Officer of CAI Equipment Leasing IV
Corp., the General Partner of Capital Preferred Yield Fund-III, L.P. (the
"Partnership"), certify that:
1. I have reviewed this report of the Partnership on Form 10-Q for the
quarterly period ended June 30, 2003;
2. Based on my knowledge, this 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 as with respect to the period covered by this 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 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 is made known to us by others within this entity,
particularly during the period in which this report is 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 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 (the Partnership's fourth
fiscal quarter in the case of an annual report) 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 controls 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 controls over financial reporting.
/s/ Joseph F. Bukofski
--------------------------------------------
Joseph F. Bukofski
Chief Accounting Officer
(Principal Accounting and Financial Officer)
August 14, 2003
17