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 September 30, 2003
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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
---------------------------------
Capital Preferred Yield Fund-III, L.P.
--------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-1248907
-------- ----------
(State of organization) (I.R.S. Employer Identification No.)
7901 Southpark Plaza, Suite 107
Littleton, Colorado 80120
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 268-6550
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
---
Exhibit Index appears on Page 14
Page 1 of 19 Pages
CAPITAL PREFERRED YIELD FUND-III, L.P.
Quarterly Report on Form 10-Q
For the Quarter Ended
September 30, 2003
Table of Contents
-----------------
PART I. FINANCIAL INFORMATION PAGE
- - ----
Item 1. Financial Statements (Unaudited)
Balance Sheets - September 30, 2003 and December 31, 2002 3
Statements of Income - Three and Nine Months Ended
September 30, 2003 and 2002 4
Statements of Cash Flows - Nine Months Ended
September 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
September 30, December 31,
2003 2002
---- ----
(Unaudited)
Cash and cash equivalents $ 587,693 $ 1,229,412
Accounts receivable, net 189,572 158,424
Equipment held for sale or re-lease 61,784 51,730
Net investment in direct finance leases 848,273 1,368,607
Leased equipment, net 5,002,680 8,391,053
----------- -----------
Total assets $ 6,690,002 $11,199,226
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued liabilities $ 692,736 $ 1,076,491
Payables to affiliates 67,704 48,510
Rents received in advance 64,179 108,771
Distributions payable to partners 43,929 363,351
Discounted lease rentals 1,272,340 2,526,644
----------- -----------
Total liabilities 2,140,888 4,123,767
----------- -----------
Partners' capital:
General partner -- --
Limited partners:
Class A 4,276,808 6,811,509
Class B 272,306 263,950
----------- -----------
Total partners' capital 4,549,114 7,075,459
----------- -----------
Total liabilities and partners' capital $ 6,690,002 $11,199,226
=========== ===========
See accompanying notes to financial statements.
3
CAPITAL PREFERRED YIELD FUND-III, L.P.
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2003 2002 2003 2002
---- ---- ---- ----
Revenue:
Operating lease rentals $1,007,454 $1,806,509 $3,682,812 $6,146,996
Direct finance lease income 33,820 58,417 124,672 187,685
Equipment sales margin 49,376 69,316 386,879 349,897
Interest income 1,134 4,719 5,562 17,439
---------- ---------- ---------- ----------
Total revenue 1,091,784 1,938,961 4,199,925 6,702,017
---------- ---------- ---------- ----------
Expenses:
Depreciation 622,287 1,284,242 2,318,600 4,443,640
Management fees to general partner 23,544 42,188 79,789 140,772
Direct services from general partner 60,543 67,955 185,605 200,946
General and administrative 129,240 94,067 503,987 396,994
Interest on discounted lease rentals 30,214 66,623 117,041 248,572
Provision for losses 46,000 300,500 125,250 520,500
---------- ---------- ---------- ----------
Total expenses 911,828 1,855,575 3,330,272 5,951,424
---------- ---------- ---------- ----------
Net income $ 179,956 $ 83,386 $ 869,653 $ 750,593
========== ========== ========== ==========
Net income allocated:
To the general partner $ 7,580 $ 15,865 $ 33,960 $ 56,495
To the Class A limited partners 170,652 66,846 827,336 687,156
To the Class B limited partner 1,724 675 8,357 6,942
---------- ---------- ---------- ----------
$ 179,956 $ 83,386 $ 869,653 $ 750,593
========== ========== ========== ==========
Net income per weighted average Class A
limited partner unit outstanding $ 0.35 $ 0.14 $ 1.68 $ 1.40
========== ========== ========== ==========
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)
Nine Months Ended
September 30,
--------------------------
2003 2002
----------- -----------
Net cash provided by operating activities $ 4,328,005 $ 7,770,248
----------- -----------
Cash flows from financing activities:
Principal payments on discounted lease rentals (1,254,304) (2,017,831)
Distributions to partners (3,715,420) (6,030,162)
----------- -----------
Net cash used in financing activities (4,969,724) (8,047,993)
----------- -----------
Net decrease in cash and cash equivalents (641,719) (277,745)
Cash and cash equivalents at beginning of period 1,229,412 1,603,588
----------- -----------
Cash and cash equivalents at end of period $ 587,693 $ 1,325,843
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid on discounted lease rentals $ 117,041 $ 248,572
=========== ===========
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 September 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 $22,000 and $15,000 are included in payables to affiliates at
September 30, 2003 and December 31, 2002, respectively.
General and Administrative Expenses
The General Partner and an affiliate pay the allocated actual cost of
administrative expenses incurred on behalf of the Partnership. The
Partnership reimburses the General Partner for these expenses as permitted
under terms of the Partnership Agreement. General and administrative costs
of approximately $38,000 and $22,000 are included in payables to affiliates
at September 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 Nine Months
Ended September 30, Ended September 30,
------------------------------------------ -----------------------------------------
2003 2002 Change 2003 2002 Change
---- ---- ------ ---- ---- ------
Leasing margin $ 388,773 $ 514,061 $ (125,288) $ 1,371,843 $ 1,642,469 $ (270,626)
Equipment sales margin 49,376 69,316 (19,940) 386,879 349,897 36,982
Interest income 1,134 4,719 (3,585) 5,562 17,439 (11,877)
Management fees to general partner (23,544) (42,188) 18,644 (79,789) (140,772) 60,983
Direct services from general partner (60,543) (67,955) 7,412 (185,605) (200,946) 15,341
General and administrative (129,240) (94,067) (35,173) (503,987) (396,994) (106,993)
Provision for losses (46,000) (300,500) 254,500 (125,250) (520,500) 395,250
----------- ----------- ----------- ----------- ----------- -------
Net income $ 179,956 $ 83,386 $ 96,570 $ 869,653 $ 750,593 $ 119,060
=========== =========== =========== =========== =========== ===========
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 Nine Months
Ended September 30, Ended September 30,
--------------------------- ---------------------------
2003 2002 2003 2002
---- ---- ---- ----
Operating lease rentals $ 1,007,454 $ 1,806,509 $ 3,682,812 $ 6,146,996
Direct finance lease income 33,820 58,417 124,672 187,685
Depreciation (622,287) (1,284,242) (2,318,600) (4,443,640)
Interest expense on discounted lease rentals (30,214) (66,623) (117,041) (248,572)
----------- ----------- ----------- -----------
Leasing margin $ 388,773 $ 514,061 $ 1,371,843 $ 1,642,469
Leasing margin ratio 37% 28% 36% 26%
== == == ==
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 nine months ended September 30,
2003 compared to the three and nine months ended September 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. Leasing margin ratio for a direct
finance lease is fixed over the term of the lease.
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 Nine Months Ended
September 30, September 30,
------------- -------------
2003 2002 2003 2002
---- ---- ---- ----
Equipment sales revenue $ 132,319 $ 174,696 $ 1,312,782 $ 1,339,599
Cost of equipment sales (82,943) (105,380) (925,903) (989,702)
----------- ----------- ----------- -----------
Equipment sales margin $ 49,376 $ 69,316 $ 386,879 $ 349,897
=========== =========== =========== ===========
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 nine months ended September 30, 2003 compared to the three and
nine months ended September 30, 2002 due to portfolio run-off.
Direct services from the General Partner decreased for the three and nine months
ended September 30, 2003 compared to the three and nine months ended September
30, 2002 primarily because the three and nine months ended September 30, 2002
included increased costs related to the General Partner's efforts to collect
receivables owed to the Partnership.
General and administrative expenses increased for the nine months ended
September 30, 2003 compared to the nine months ended September 30, 2002
primarily due to a) increased insurance costs of approximately $65,000, and b)
upgrades to computer equipment of approximately $52,000 needed to effectively
and efficiently manage the Partnership's assets. General and administrative
expenses increased for the three months ended September 30, 2003 compared to the
three months ended September 30, 2002 primarily due to increased equipment
storage costs of approximately $34,000.
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 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). Losses related to credit exposure, if any, and
residual value exposure, if any, are recorded as provision for losses. Residual
value exposure includes equipment returned to the Partnership subsequent to
initial lease termination and equipment sold to the lessee subsequent to initial
lease termination.
10
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Additionally, residual value exposure includes assets currently under lease. The
Partnership performs quarterly assessments of the estimated net realizable value
(NRV assessments) of its assets under lease to identify any other-than-temporary
losses in value that, if any, are also recorded as provision for losses.
The provision for losses of $125,250 recorded during the nine months ended
September 30, 2003 related primarily to losses of approximately $154,000 related
to equipment returned to the Partnership subsequent to initial lease
termination, approximately $38,000 related to equipment sold to the lessee
subsequent to initial lease termination and approximately $33,000 related to NRV
assessments; offset by reversal of $100,000 of provision for losses. The General
Partner reviewed the accounts receivable balances during the nine months ended
September 30, 2003 and determined that the accounts receivable allowance was
greater than the amount required because of the General Partner'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 (considered cash
equivalents) pending distribution to the partners.
During the nine months ended September 30, 2003, the Partnership declared
distributions to the Class A limited partners of $3,362,040 ($42,570 of which
was paid during October 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 an evaluation as of September 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 September 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 September 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: November 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: November 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 September 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)
November 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 September 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)
November 14, 2003
17