10-Q 1 cappref410q_09-02.txt SEPTEMBER 30, 2002 FORM 10-Q 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, 2002 ------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------ Commission file number 33-80849 --------------------------------- Capital Preferred Yield Fund-IV, L.P. ------------------------------------- (Exact name of registrant as specified in its charter) Delaware 84-1331690 -------- ---------- (State of organization) (I.R.S. Employer Identification No.) 2750 South Wadsworth Blvd., 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 17 Page 1 of 20 Pages CAPITAL PREFERRED YIELD FUND-IV, L.P. Quarterly Report on Form 10-Q For the Quarter Ended September 30, 2002 Table of Contents ----------------- PART I. FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements (Unaudited) Balance Sheets - September 30, 2002 and December 31, 2001 3 Statements of Operations - Three and Nine Months Ended September 30, 2002 and 2001 4 Statements of Cash Flows - Nine Months Ended September 30, 2002 and 2001 5 Notes to Financial Statements 6 - 9 Item 2. Management's Discussion and Analysis of Financial Conditionand Results of Operations 10 - 14 Item 3. Quantitative and Qualitative Disclosures About Market Risk 15 Item 4. Controls and Procedures 15 PART II. OTHER INFORMATION Item 1. Legal Proceedings 16 Item 6. Exhibits and Reports on Form 8-K 16 Signatures 18 Certifications 19-20 2 CAPITAL PREFERRED YIELD FUND-IV, L.P. BALANCE SHEETS ASSETS September 30, December 31, 2002 2001 ------------- ------------ (Unaudited) Cash and cash equivalents $ 3,271,955 $ 3,917,475 Accounts receivable, net 99,922 1,944,681 Equipment held for sale or re-lease 438,990 918,597 Net investment in direct finance leases 9,014,205 6,859,456 Leased equipment, net 36,499,060 33,272,181 ----------- ----------- Total assets $49,324,132 $46,912,390 =========== =========== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accounts payable and accrued liabilities $ 1,074,041 $ 2,511,585 Payables to affiliates 130,360 73,203 Rents received in advance 185,672 40,473 Distributions payable to partners 623,391 488,648 Discounted lease rentals 27,750,413 20,141,516 ----------- ----------- Total liabilities 29,763,877 23,255,425 ----------- ----------- Partners' capital: General partner -- -- Limited partners: Class A 19,285,568 23,343,893 Class B 274,687 313,072 ----------- ----------- Total partners' capital 19,560,255 23,656,965 ----------- ----------- Total liabilities and partners' capital $49,324,132 $46,912,390 =========== =========== See accompanying notes to financial statements. 3 CAPITAL PREFERRED YIELD FUND-IV, L.P. STATEMENTS OF OPERATIONS (Unaudited)

See accompanying notes to financial statements. 4 CAPITAL PREFERRED YIELD FUND-IV, L.P. STATEMENTS OF CASH FLOWS (Unaudited)

See accompanying notes to financial statements. 5 CAPITAL PREFERRED YIELD FUND-IV, 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, 2001 was derived from the audited financial statements included in the Partnership's 2001 Form 10-K. For further information, refer to the financial statements of Capital Preferred Yield Fund-IV, 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, 2001 (the "2001 Form 10-K"), previously filed with the Securities and Exchange Commission. Recently Issued Financial Accounting Standards In April 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 145 ("SFAS 145"), "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS 145 updates, clarifies and simplifies existing accounting pronouncements. SFAS 145 rescinds Statement 4, which required all gains and losses from extinguishments of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in APB Opinion 30 will now be used to classify those gains and losses. Statement 64 amended Statement 4, and is no longer necessary because Statement 4 has been rescinded. Statement 44 was issued to establish accounting requirements for the effects of transition to the provisions of the Motor Carrier Act of 1980. Because the transition has been completed, Statement 44 is no longer necessary. SFAS 145 amends Statement 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. This amendment is consistent with the FASB's goal of requiring similar accounting treatment for transactions that have similar economic effects. SFAS 145 also makes technical corrections to existing pronouncements. The Partnership does not believe the adoption of SFAS 145 will have a material impact on the Partnership's financial position, results of operations or cash flows. In July 2002, the FASB issued Statement of Financial Accounting Standards No. 146 ("SFAS 146"), "Accounting for Costs Associated With Exit or Disposal Activities." SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities, and nullifies Emerging Issues Task Force Issue No. 94-3 ("EITF 94-3"), "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". SFAS 146 requires recognition of a liability for a cost associated with an exit or disposal activity when the liability is incurred, as opposed to being recognized at the date an entity commits to an exit plan under EITF 94-3. SFAS 146 also establishes that fair value is the objective for initial measurement of the liability. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002, with earlier application encouraged. 6 CAPITAL PREFERRED YIELD FUND-IV, L.P. NOTES TO FINANCIAL STATEMENTS (Unaudited) 2. Transactions With the General Partner and Affiliates ---------------------------------------------------- Management Fees Paid 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. As of September 30, 2002, management fees of $26,399 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 terms of the Partnership Agreement. As of September 30, 2002, direct services from the General Partner in the amount of $25,498 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. As of September 30, 2002, administrative expenses of $78,463 are included in payables to affiliates. Equipment Purchases During the nine months ended September 30, 2002, the Partnership acquired the equipment described below from independent third parties as arranged by Mishawaka Leasing Company, Inc. (the General Partner):

7 CAPITAL PREFERRED YIELD FUND-IV, L.P. NOTES TO FINANCIAL STATEMENTS (Unaudited) 2. Transactions With the General Partner and Affiliates, continued ---------------------------------------------------- Equipment Purchases, continued Johnson Controls Forklifts 38,572 1,200 39,772 Johnson Controls Forklifts 193,296 6,012 199,308 Johnson Controls Pallet Trucks 151,991 4,728 156,719 Johnson Controls Forklifts 64,368 2,002 66,370 Johnson Controls Forklifts 26,454 946 27,400 Johnson Controls Forklifts 28,036 1,002 29,038 Johnson Controls Sweeper/Scrubber 30,024 1,073 31,097 Johnson Controls Forklifts 38,990 1,394 40,384 NBC Broadcasting 217,979 8,068 226,047 Michelin Forklifts 72,398 2,660 75,058 Michelin Forklifts 31,497 1,157 32,654 Johnson Controls Forklifts 163,724 5,857 169,581 Johnson Controls Forklifts 57,041 2,041 59,082 General Motors Forklifts 1,389,210 49,846 1,439,056 General Motors Construction 643,360 22,730 666,090 General Motors Forklifts 329,914 11,634 341,548 General Motors Crane 369,441 13,025 382,466 TRW Workstations 296,671 0 296,671 TRW Telecommunications 45,355 0 45,355 Communications Test Design Material Handling 116,793 0 116,793 Communications Test Design Forklifts 22,111 0 22,111 Communications Test Design Forklifts 85,717 0 85,717 Johnson Controls Forklifts 48,417 0 48,417 Johnson Controls Forklifts 28,987 0 28,987 Johnson Controls Forklifts 22,695 0 22,695 Johnson Controls Forklifts 25,521 0 25,521 Johnson Controls Forklifts 57,975 0 57,975 Michelin Forklifts 75,152 0 75,152 Michelin Forklifts 4,722 0 4,722 Michelin Forklifts 4,722 0 4,722 Michelin Forklifts 50,860 0 50,860 Michelin Forklifts 25,430 0 25,430 Michelin Forklifts 79,375 0 79,375 Michelin Forklifts 60,504 0 60,504 Mississippi Power Co. Tractors 1,370,398 0 1,370,398 NBC Broadcasting 1,035,312 0 1,035,312 Texas Utilities Networking 218,069 0 218,069 Texas Utilities Networking 42,551 0 42,551 Texas Utilities Networking 43,355 0 43,355 Texas Utilities Telecom - PBX 78,328 0 78,328 Texas Utilities Telecom - PBX 48,395 0 48,395 Texas Utilities Printers 89,395 0 89,395 Texas Utilities Printers 36,754 0 36,754 Texas Utilities Printers 37,920 0 37,920 Texas Utilities Printers 38,625 0 38,625 Texas Utilities Telecommunications 111,287 0 111,287

8 CAPITAL PREFERRED YIELD FUND-IV, L.P. NOTES TO FINANCIAL STATEMENTS (Unaudited) 2. Transactions With the General Partner and Affiliates, continued ---------------------------------------------------- Equipment Purchases, continued TRW Semiconductor 540,698 0 540,698 TRW Office Furniture 265,336 0 265,336 TRW Office Furniture 15,064 0 15,064 TRW Telecommunications 529,153 0 529,153 General Motors Trucks 132,518 0 132,518 General Motors Trucks 344,014 0 344,014 General Motors Construction 56,979 0 56,979 General Motors Machine Tool 51,072 0 51,072 General Motors Machine Tool 31,025 0 31,025 General Motors Forklift 118,990 0 118,990 General Motors Forklift 762,618 0 762,618 General Motors Crane 211,046 0 211,046 General Motors Yellow Gear 104,478 0 104,478 General Motors Construction 853,203 0 853,203 General Motors Manufacturing 196,849 0 196,849 TRW Office Furniture 294,931 0 294,931 Raytheon Company Computer Equipment 192,402 0 192,402 Texas Utilities Computer Equipment 632,444 0 632,444 Texas Utilities Computer Equipment 133,221 0 133,221 Texas Utilities Computer Equipment 542,610 0 542,610 Texas Utilities Computer Equipment 49,359 0 49,359 Texas Utilities Computer Equipment 12,062 0 12,062 Texas Utilities Computer Equipment 66,510 0 66,510 GE Plastics Research 97,343 0 97,343 NBC Broadcasting 379,858 0 379,858 Lockheed Martin Broadcasting 11,172 0 11,172 Lockheed Martin Broadcasting 12,185 0 12,185 Lockheed Martin Broadcasting 10,465 0 10,465 Lockheed Martin Broadcasting 21,857 0 21,857 TRW Office Furniture 114,611 0 114,611 General Motors Forklift 86,899 0 86,899 Lockheed Martin Broadcasting 321,825 0 321,825 Lockheed Martin Broadcasting 286,211 0 286,211 Lockheed Martin Broadcasting 82,615 0 82,615 Northrop Grumman Printers 157,524 0 157,524 Texas Utilities Computer Equipment 871,312 0 871,312 $ 18,848,988 $ 211,980 $ 19,060,968

In addition, during the nine months ended September 30, 2002, the Partnership reached its Front End Fee Cap, as defined in the Partnership Agreement. As such, the Partnership ceased paying acquisition fees during the three months ended March 31, 2002 and anticipates that no such fees will be paid in future periods. 9 CAPITAL PREFERRED YIELD FUND-IV, 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:

Leasing margin consists of the following:

Operating lease rentals decreased for the nine months ended September 30, 2002 and depreciation decreased for the three and nine months ended September 30, 2002 compared to the same periods of 2001 due to a decrease in the average net book value of the operating lease portfolio. Operating lease rentals increased for the three months ended September 30, 2002 compared to the three months ended September 30, 2001 primarily because of an increase in revenue from leases entering their remarketing period. Direct finance lease income decreased for the three and nine months ended September 30, 2002 compared to the same periods of 2001 (which is counter-intuitive because the average net book value of the direct finance lease portfolio increased during the period) primarily because during the periods in 2001, the direct finance lease portfolio included a large, high-yielding remarketed lease. 10 CAPITAL PREFERRED YIELD FUND-IV, L.P. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Results of Operations, continued --------------------- Leasing Margin, continued Interest expense on discounted lease rentals increased for the three and nine months ended September 30, 2002 compared to the three and nine months ended September 30, 2001 due to an increase in non-recourse debt outstanding. Leasing margin ratio varies due to changes in the portfolio including, among other things, the mix of operating leases versus direct finance leases, the average maturity of operating leases in the portfolio, the percentage of leases in the portfolio that have entered their remarketing stage, and the amount of discounted lease rentals financing the portfolio. Leasing margin ratio increased for the three months ended September 30, 2002 compared to the three months ended September 30, 2001 primarily as a result of the increase in remarketed operating leases discussed above. Leasing margin ration decreased for the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001 primarily because of the increase in non-recourse debt outstanding discussed above. Leasing margin ratio for a direct finance lease is fixed over the term of the lease. However, leasing margin ratio for an operating lease financed with non-recourse debt increases as the lease matures since rents and depreciation are typically fixed while interest expense declines as the related non-recourse debt principal is repaid. The ultimate profitability of the Partnership's leasing transactions is dependent in part on interest rates at the time the leases are originated, 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:

Equipment sales margin is affected by the volume and composition of equipment that becomes available for sale. Some of the Partnership's initial leases have expired, and the equipment is either being re-leased or sold to the lessee or to third parties. Interest Income Interest income varies due to (1) the amount of cash available for investment (pending distribution to partners or investment in equipment purchases) and (2) the interest rate on such invested cash. 11 CAPITAL PREFERRED YIELD FUND-IV, L.P. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Results of Operations, continued --------------------- Expenses Management fees paid to the general partner are calculated as a percentage of rents collected during the respective period. Direct services from general partner increased for the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001 primarily due to increased costs related to management's efforts to collect receivables owed to the Partnership. General and administrative expenses decreased for the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001 primarily because the period during 2001 included a) a one-time charge for software and computer equipment, and b) charges for data processing and a computer conversion, all of which were related to a change in the ownership of the general partner. 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 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. The provision for losses of $488,000 and $893,000 recorded during the three and nine months ended September 30, 2002 related primarily to lower of cost or market write downs of equipment in inventory in addition to residual value write downs of leased equipment. 12 CAPITAL PREFERRED YIELD FUND-IV, L.P. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Liquidity & Capital Resources ----------------------------- The Partnership funds its operating activities principally with cash from rents, discounted lease rentals (non-recourse debt), interest income and sales of off-lease equipment. Available cash and cash reserves of the Partnership are invested in short-term government securities pending the acquisition of equipment or distribution to partners. During the nine months ended September 30, 2002, the Partnership acquired equipment subject to leases with a total purchase price of $19,060,968 During the nine months ended September 30, 2002, the Partnership declared distributions to the Class A limited partners of $4,081,245 ($639,756 of which was paid in October 2002). A substantial portion of such distributions is expected to constitute a return of capital. 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 2002, to (1) meet current operating requirements, (2) fund cash distributions to both the Class A and Class B limited partners at annualized rates of 10.5% (portions of which are expected to constitute returns of capital), and (3) reinvest in additional equipment under leases, provided that suitable equipment can be identified and acquired. 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued New Accounting Pronouncements ----------------------------- In April 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 145 ("SFAS 145"), "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS 145 updates, clarifies and simplifies existing accounting pronouncements. SFAS 145 rescinds Statement 4, which required all gains and losses from extinguishments of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in APB Opinion 30 will now be used to classify those gains and losses. Statement 64 amended Statement 4, and is no longer necessary because Statement 4 has been rescinded. Statement 44 was issued to establish accounting requirements for the effects of transition to the provisions of the Motor Carrier Act of 1980. Because the transition has been completed, Statement 44 is no longer necessary. SFAS 145 amends Statement 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. This amendment is consistent with the FASB's goal of requiring similar accounting treatment for transactions that have similar economic effects. SFAS 145 also makes technical corrections to existing pronouncements. The Partnership does not believe the adoption of SFAS 145 will have a material impact on the Partnership's financial position, results of operations or cash flows. In July 2002, the FASB issued Statement of Financial Accounting Standards No. 146 ("SFAS 146"), "Accounting for Costs Associated With Exit or Disposal Activities." SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities, and nullifies Emerging Issues Task Force Issue No. 94-3 (EITF 94-3"), "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". SFAS 146 requires recognition of a liability for a cost associated with an exit or disposal activity when the liability is incurred, as opposed to being recognized at the date an entity commits to an exit plan under EITF 94-3. SFAS 146 also establishes that fair value is the objective for initial measurement of the liability. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002, with earlier application encouraged. "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 2001 Form 10-K when and where applicable. 14 CAPITAL PREFERRED YIELD FUND-IV, L.P. Item 3. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- The Partnership's leases with equipment users are non-cancelable and have lease rates that are fixed at lease inception. The Partnership finances its leases, in part, with discounted lease rentals. Discounted lease rentals are a fixed rate debt. 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 ----------------------- Within 90 days prior to the date of this quarterly report, an evaluation was performed 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. Based on that evaluation, the General Partner's management, including 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 the Partnership's periodic SEC reports. There have been no significant changes in the Partnership's internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation. 15 CAPITAL PREFERRED YIELD FUND-IV, 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, 2002. 16 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 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 17 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-IV, L.P. By: CAI Equipment Leasing V Corp. Dated: November 14, 2002 By: /s/John F. Olmstead ------------------- John F. Olmstead President and Director (Principal Executive Officer) CAPITAL PREFERRED YIELD FUND-IV, L.P. By: CAI Equipment Leasing V Corp. Dated: November 14, 2002 By: /s/Joseph F. Bukofski --------------------- Joseph F. Bukofski Chief Accounting Officer (Principal Accounting and Financial Officer) 18 CAPITAL PREFERRED YIELD FUND-IV, L.P. CERTIFICATION I, John F. Olmstead, President and Director of CAI Equipment Leasing V Corp., the General Partner of Capital Preferred Yield Fund-IV, L.P. (the "Partnership"), certify that: 1. I have reviewed this 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 as 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-14 and 15d-14) for the Partnership and have: a. designed such disclosure controls and procedures 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 as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Partnership's other certifying officer and I have disclosed, based on our most recent evaluation, to the Partnership's auditors: a. all significant deficiencies in the design or operation of internal controls which could adversely affect the Partnership's ability to record, process, summarize and report financial data and have identified for the Partnership's auditors any material weaknesses in internal controls; and b. any fraud, whether of not material, that involves management or other employees who have a significant role in the Partnership's internal controls; and 6. The Partnership's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/John F. Olmstead ------------------- John F. Olmstead President and Director (Principal Executive Officer) November 14, 2002 19 CAPITAL PREFERRED YIELD FUND-IV, L.P. CERTIFICATION I, Joseph F. Bukofski, Chief Accounting Officer of CAI Equipment Leasing V Corp., the General Partner of Capital Preferred Yield Fund-IV, L.P. (the "Partnership"), certify that: 1. I have reviewed this 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 as 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-14 and 15d-14) for the Partnership and have: a. designed such disclosure controls and procedures 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 as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Partnership's other certifying officer and I have disclosed, based on our most recent evaluation, to the Partnership's auditors: a. all significant deficiencies in the design or operation of internal controls which could adversely affect the Partnership's ability to record, process, summarize and report financial data and have identified for the Partnership's auditors any material weaknesses in internal controls; and b. any fraud, whether of not material, that involves management or other employees who have a significant role in the Partnership's internal controls; and 6. The Partnership's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/Joseph F. Bukofski --------------------- Joseph F. Bukofski Chief Accounting Officer (Principal Accounting and Financial Officer) November 14, 2002 20

CAPITAL PREFERRED YIELD FUND IV LP 10-Q