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, 2004
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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
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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.)
7901 Southpark Plaza, Ste. 107
Littleton, Colorado 80120
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 268-6550
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
Exhibit Index appears on Page 14
Page 1 of 19 Pages
CAPITAL PREFERRED YIELD FUND-III, L.P.
Quarterly Report on Form 10-Q
For the Quarter Ended
September 30, 2004
Table of Contents
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PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Balance Sheets - September 30, 2004 (Unaudited)
and December 31, 2003 3
Statements of Income (Unaudited) - Three and Nine Months
Ended September 30, 2004 and 2003 4
Statements of Cash Flows (Unaudited) -Nine Months Ended
September 30, 2004 and 2003 5
Notes to Financial Statements (Unaudited) 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,
2004 2003
---- ----
(Unaudited)
Cash and cash equivalents $2,836,715 $ 704,176
Accounts receivable, net 55,888 45,210
Prepaid Insurance 20,162 --
Equipment held for sale or re-lease 68,595 54,503
Net investment in direct finance leases 135,467 687,733
Leased equipment, net 1,411,879 4,142,658
---------- ----------
Total assets $4,528,706 $5,634,280
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued liabilities $ 485,626 $ 866,382
Payables to affiliates 48,567 67,264
Rents received in advance 6,035 23,341
Distributions payable to partners 50,013 205,030
Discounted lease rentals 65,430 842,983
---------- ----------
Total liabilities 655,671 2,005,000
---------- ----------
Partners' capital:
General partner -- --
Limited partners:
Class A 3,593,770 3,358,345
Class B 279,265 270,935
---------- ----------
Total partners' capital 3,873,035 3,629,280
---------- ----------
Total liabilities and partners' capital $4,528,706 $5,634,280
========== ==========
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,
------------- -------------
2004 2003 2004 2003
---- ---- ---- ----
Revenue:
Operating lease rentals $ 903,253 $1,007,454 $2,609,088 $3,337,007
Direct finance lease income 5,982 33,820 35,725 124,672
Equipment sales margin 369,888 49,376 423,030 386,879
Interest income 3,908 1,134 5,582 5,562
---------- ---------- ---------- ----------
Total revenue 1,283,031 1,091,784 3,073,425 3,854,120
---------- ---------- ---------- ----------
Expenses:
Depreciation 463,699 622,287 1,507,963 2,318,600
Management fees to general partner 15,031 23,544 55,965 79,789
Direct services from general partner 54,706 60,543 164,381 185,605
General and administrative 87,962 129,240 344,533 503,987
Interest on discounted lease rentals 5,584 30,214 55,828 117,041
Provision for losses 50,200 46,000 105,700 125,250
---------- ---------- ---------- ----------
Total expenses 677,182 911,828 2,234,370 3,330,272
---------- ---------- ---------- ----------
Net income $ 605,849 $ 179,956 $ 839,055 $ 523,848
========== ========== ========== ==========
Net income allocated:
To the general partner $ 1,500 $ 7,580 $ 5,953 $ 33,959
To the Class A limited partners 598,307 170,652 824,772 484,990
To the Class B limited partner 6,042 1,724 8,330 4,899
---------- ---------- ---------- ----------
$ 605,849 $ 179,956 $ 839,055 $ 523,848
========== ========== ========== ==========
Net income per weighted average Class A
limited partner unit outstanding $ 1.22 $ 0.35 $ 1.68 $ 0.99
========== ========== ========== ==========
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,
-------------
2004 2003
---- ----
Net cash provided by operating activities $ 3,660,409 $ 4,328,005
----------- -----------
Cash flows from financing activities:
Principal payments on discounted lease rentals (777,553) (1,254,304)
Distributions to partners (750,317) (3,715.420)
----------- -----------
Net cash used in financing activities (1,527,870) (4,969,724)
----------- -----------
Net increase (decrease) in cash and cash equivalents 2,132,539 (641,719)
Cash and cash equivalents at beginning of period 704,176 1,229,412
----------- -----------
Cash and cash equivalents at end of period $ 2,836,715 $ 587,693
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid on discounted lease rentals $ 55,828 $ 117,041
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, 2003 was derived from the audited financial statements
included in the Partnership's 2003 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, 2003, previously
filed with the Securities and Exchange Commission.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. For leasing
entities, this includes the estimate of residual values and impairment as
discussed below. Actual results could differ from those estimates. Included
in the results of operations for the nine months ended September 30, 2004
and 2003 were $105,700 and $125,250 for provision for losses.
The Partnership is in its liquidation period, as defined in the Partnership
Agreement. Even so, because the liquidation period extends over an
undefined number of accounting periods, the accompanying financial
statements have been prepared on a going concern basis that contemplates
the realization of assets and payments of liabilities in the ordinary
course of business, which is in accordance with accounting principles
generally accepted in the United States of America. The General Partner
believes that the Partnership will generate
sufficient cash flows from operations during the remainder of 2004, to (1)
meet current operating requirements, and (2) fund cash distributions to
Class A limited partners in accordance with the Partnership Agreement. All
distributions are expected to be a return of capital for economic and
accounting purposes. Additionally, the General Partner anticipates that all
equipment owned by the Partnership will be sold and the Partnership
liquidated during 2004. However, the Partnership has not entered into a
formal liquidation plan as of September 30, 2004 and accordingly has not
adopted the liquidation basis of accounting. There is no assurance that the
limited partners will receive future distributions equal to their capital
account balance at September 30, 2004.
Certain amounts recorded for the quarter ended June 30, 2003 were
reclassified in the December 31, 2003 financial statements. As such, the
amounts presented for the nine months ended September 30, 2003 do not agree
to previously filed form 10 Q's. However, as no partners entered or left
the fund since September 30, 2003, there is no net impact to the partners.
6
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Basis of Presentation, continued
---------------------
In the Partnership's Annual Report on Form 10-K for the year ended December
31, 2003, previously filed with the Securities and Exchange Commission, one
lessee, E-Trade Group, was identified as accounting for approximately 17%
of total revenue during 2003. As of the time of this filing, those leases
have been bought out by the lessee.
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 to the general partner for the nine
months ended September 30, 2004 and 2003 were $55,965 and $79,789,
respectively. At September 30, 2004 and December 31, 2003 management fees
of $6,218 and $7,121, respectively, are included in payables to affiliates.
Direct Services from General Partner
The General Partner and an affiliate provide accounting, investor
relations, billing, collecting, asset management, and other administrative
services to the Partnership. The Partnership reimburses the General Partner
for these services performed on its behalf as permitted under the terms of
the Partnership Agreement. Direct services from the general partner for the
nine months ended September 30, 2004 and 2003 were $164,381 and $185,605,
respectively. At September 30, 2004 and December 31, 2003 direct services
from the General Partner of $18,963 and $24,821, respectively, are included
in payables to affiliates.
General and Administrative Expenses
The General Partner and an affiliate are reimbursed for the actual cost of
administrative expenses incurred on behalf of the Partnership per the terms
of the Partnership Agreement. General and administrative expenses for the
nine months ended September 30, 2004 and 2003 were $344,533 and $503,987,
respectively. At September 30, 2004 and December 31, 2003 general and
administrative costs of $23,386 and $35,322, respectively, are included in
payables to affiliates.
7
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
- ---------------------
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,
----------------------------------------- -----------------------------------------
2004 2003 Change 2004 2003 Change
Leasing margin $ 439,952 $ 388,773 $ 51,179 $ 1,081,022 $ 1,026,038 $ 54,984
Equipment sales margin 369,888 49,376 320,512 423,030 386,879 36,151
Interest income 3,908 1,134 2,774 5,582 5,562 20
Management fees to general partner (15,031) (23,544) 8,513 (55,965) (79,789) 23,824
Direct services from general partner (54,706) (60,543) 5,837 (164,381) (185,605) 21,224
General and administrative (87,962) (129,240) 41,278 (344,533) (503,987) 159,454
Provision for losses (50,200) (46,000) (4,200) (105,700) (125,250) 19,550
----------- ----------- ----------- ----------- ----------- -----------
Net income $ 605,849 $ 179,956 $ 425,893 $ 839,055 $ 523,848 $ 315,207
=========== =========== =========== =========== =========== ===========
The Partnership is in its liquidation stage, as defined in the Partnership
Agreement, and is not purchasing additional equipment. Initial leases are
expiring, and the amount of equipment being remarketed (i.e. re-leased, renewed
or sold) is generally decreasing. As a result, both the size of the
Partnership's 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 Nine Months Ended
September 30, September 30,
------------ ------------- ----------------------------
2004 2003 2004 2003
---- ---- ---- ----
Operating lease rentals $ 903,253 $ 1,007,454 $ 2,609,088 $ 3,337,007
Direct finance lease income 5,982 33,820 35,725 124,672
Depreciation (463,699) (622,287) (1,507,963) (2,318,600)
Interest expense on discounted lease rentals (5,584) (30,214) (55,828) (117,041)
----------- ----------- ----------- -----------
Leasing margin $ 439,952 $ 388,773 $ 1,081,022 $ 1,026,038
=========== =========== =========== ===========
Leasing margin ratio 48% 37% 41% 30%
== == == ==
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
The components of leasing margin decreased for the three and nine months ended
September 30, 2004 compared to the three and nine months ended September 30,
2003 primarily as a result of portfolio runoff.
Leasing margin ratio increased for the three and nine months ended September 30,
2004 compared to the three and nine months ended September 30, 2003 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 Nine Months Ended
September 30, September 30,
-------------------------- ---------------------------
2004 2003 2004 2003
---- ---- ---- ----
Equipment sales revenue $ 1,547,276 $ 132,319 $ 1,652,551 $ 1,312,782
Cost of equipment sales (1,177,388) (82,943) (1,229,521) (925,903)
----------- ----------- ----------- -----------
Equipment sales margin $ 369,888 $ 49,376 $ 423,030 $ 386,879
=========== =========== =========== ===========
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 to partners and (2) the interest rate on such invested
cash.
Expenses
Management fees paid to the general partner are earned on gross rents received
and will fluctuate due to variances in cash flow and the size of the
Partnership's portfolio. Management fees paid to the general partner for the
three and nine months ended September 30, 2004 compared to the three and nine
months ended September 30, 2003 decreased due to portfolio run-off.
Direct services from the General Partner decreased for the three and nine months
ended September 30, 2004 compared to the three and nine months ended September
30, 2003 primarily due to the decreasing size of the portfolio.
General and administrative expenses decreased for the three and nine months
ended September 30, 2004 compared to September 30, 2003 primarily due to a)
upgrades to computer equipment and the associated consulting expenses that were
incurred in 2003 and b) change in recognition of prepaid insurance.
Provision for Losses
The realization of greater than the carrying value of equipment (which occurs
when the equipment is remarketed subsequent to initial lease termination) is
reported as equipment sales margin (if the equipment is sold) or leasing margin
(if the equipment is re-leased). The realization of less than the carrying value
of equipment is recorded as provision for losses.
Residual values are established equal to the estimated value to be received from
the equipment following termination of the lease. In estimating such values, the
Partnership considers all relevant facts regarding the equipment and the lessee,
including, for example, the likelihood that the lessee will re-lease or purchase
the equipment. The nature of the Partnership's leasing activities is such that
it has credit exposure and residual value exposure and will incur losses from
those exposures in the ordinary course of business. The Partnership performs
quarterly assessments of the estimated residual value of its assets to identify
any impairments in value that, if any, are also recorded as provision for
losses.
The provision for losses of $50,200 and $105,700 recorded during the three and
nine months ended September 30, 2004 related primarily to losses on equipment
returned to the Partnership at lease maturity occurring because the residual
realized is expected to be less than the residual value originally estimated.
10
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Liquidity & Capital Resources
- -----------------------------
The Partnership is in its liquidation period, as defined in the Partnership
Agreement. The Partnership is not purchasing additional equipment, initial
leases are expiring, and the amount of equipment being remarketed (i.e.,
re-leased, renewed, or sold) is generally decreasing. As a result, both the size
of the Partnership's lease portfolio and the amount of leasing revenue are
declining. Even so, because the liquidation period extends over an undefined
number of accounting periods, the accompanying financial statements have been
prepared on a going concern basis that contemplates the realization of assets
and payments of liabilities in the ordinary course of business, which is in
accordance with accounting principles generally accepted in the United States of
America.
The Partnership funds its operating activities principally with cash from rents
and sales of off-lease equipment. The decline of net cash provided by operating
activities of approximately $670,000 from the nine months ended September 30,
2003 to September 30, 2004 is primarily due to a reduction in equipment under
lease. Available cash and cash reserves of the Partnership are invested in
short-term government securities pending distribution to the partners.
During the nine months ended September 30, 2004, the Partnership declared
distributions to the Class A limited partners of $589,347 ($49,655 of which was
paid during October 2004). 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 2004, to (1) meet current
operating requirements, and (2) fund cash distributions to Class A limited
partners in accordance with the Partnership Agreement. All distributions are
expected to be a return of capital for economic and accounting purposes.
Additionally, the General Partner anticipates that all equipment owned by the
Partnership will be sold and the Partnership liquidated during 2004. However,
the Partnership has not entered into a formal liquidation plan as of September
30, 2004 and accordingly has not adopted the liquidation basis of accounting.
There is no assurance that the limited partners will receive future
distributions equal to their capital account balance at September 30, 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 2003 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 minimal interest rate risk or other market risk exposure.
Item 4. Controls and Procedures
An evaluation was performed under the supervision and with the participation of
the General Partner's management, including the President and Director, and the
Principal Financial Officer, of the effectiveness of the design and operation of
the Partnership's disclosure controls and procedures as of the end of the period
covered by this report. Based on that evaluation, the General Partner's
management, including the President and Director, and the Principal Financial
Officer, concluded that the Partnership's disclosure controls and procedures are
effective in timely alerting them to material information relating to the
Partnership required to be included in the Partnership's periodic SEC reports.
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, 2004.
13
Index to Exhibits
Exhibit
Number Description
- ------ -----------
* 99.1 Certification by John F. Olmstead pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
* 99.2 Certification by Mary M.Ebele pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
* Filed herewith
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 12, 2004 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 12, 2004 By: /s/Mary M. Ebele
----------------
Mary M. Ebele
Principal Financial Officer
15
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 quarterly report on Form 10-Q of the Partnership;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Partnership as of, and for the periods presented in this quarterly report;
4. The Partnership's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Partnership and have:
a. designed such disclosure controls and procedures or caused
such disclosure controls and procedures to be designed under our
supervision to ensure that material information relating to the
Partnership, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report in being prepared;
b. evaluated the effectiveness of the Partnership's disclosure
controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this report and based on such
evaluation; and
c. disclosed in this report any change in the Partnership's
internal control over financial reporting that occurred during the
Partnership's most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the Partnership's
internal control over financial reporting; and
5. The Partnership's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the General Partner and the Partnership's auditors:
a. all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the Partnership's ability to
record, process, summarize and report financial information; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the Partnership's
internal control over financial reporting.
/s/ John F. Olmstead
--------------------
John F. Olmstead
President and Director
(Principal Executive Officer)
November 12, 2004
16
CERTIFICATION
I, Mary M. Ebele, Principal Financial 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 quarterly report on Form 10-Q of the Partnership;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Partnership as of, and for the periods presented in this quarterly report;
4. The Partnership's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Partnership and have:
a. designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our supervision to
ensure that material information relating to the Partnership, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report in being
prepared;
b. evaluated the effectiveness of the Partnership's disclosure
controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures as of the end
of the period covered by this report and based on such evaluation; and
c. disclosed in this report any change in the Partnership's internal
control over financial reporting that occurred during the Partnership's
most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Partnership's internal control over
financial reporting; and
5. The Partnership's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the General Partner and the Partnership's auditors:
a. all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Partnership's ability to record,
process, summarize and report financial information; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the Partnership's internal
control over financial reporting.
/s/ Mary M. Ebele
-----------------
Mary M. Ebele
Principal Financial Officer
November 12, 2004
17