-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L/FsLQ9ivK1YzEada4bwirwG23IEQ51bjFwFKfQ5psoghAmsjHML13Xn66GIA7kR RPNYHyjPUVd81KS7DabEwA== 0000940394-02-000678.txt : 20021114 0000940394-02-000678.hdr.sgml : 20021114 20021114165334 ACCESSION NUMBER: 0000940394-02-000678 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELAIR CAPITAL FUND LLC CENTRAL INDEX KEY: 0001050816 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25767 FILM NUMBER: 02825840 BUSINESS ADDRESS: STREET 1: 24 FEDERAL ST CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6174828260 MAIL ADDRESS: STREET 1: 24 FEDERAL ST CITY: BOSTON STATE: MA ZIP: 02110 10-Q 1 belair10q902.txt BELAIR 10Q FOR QTR ENDED 9-30-02 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2002 Commission File No. 000-25767 Belair Capital Fund LLC ----------------------- (Exact name of registrant as specified in its charter) Massachusetts 04-3404037 ------------- ---------- (State of organization) (I.R.S. Employer Identification No.) The Eaton Vance Building 255 State Street, Boston, Massachusetts 02109 --------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number: 617-482-8260 ---------------------- None ---- Former Name, Former Address and Former Fiscal Year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and 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 [ ] Belair Capital Fund LLC Index to Form 10Q PART I - FINANCIAL INFORMATION Page Item 1. Condensed Consolidated Financial Statements 3 Condensed Consolidated Statements of Assets and Liabilities as of September 30, 2002 (Unaudited) and December 31, 2001 3 Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended September 30, 2002 and 2001 and for the Nine Months Ended September 30, 2002 and 2001 4 Condensed Consolidated Statements of Changes in Net Assets (Unaudited) for the Nine Months Ended September 30, 2002 and 2001 6 Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2002 and 2001 7 Financial Highlights (Unaudited) for the Nine Months Ended September 30, 2002 9 Notes to Condensed Consolidated Financial Statements as of September 30, 2002 (Unaudited) 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk 16 Item 4. Controls and Procedures 17 PART II - OTHER INFORMATION Item 1. Legal Proceedings 18 Item 2. Changes in Securities and Use of Proceeds 18 Item 3. Defaults Upon Senior Securities 18 Item 4. Submission of Matters to a Vote of Security Holders 18 Item 5. Other Information 18 Item 6. Exhibits and Reports 18 SIGNATURES 19 PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements - -------------------------------------------------------------------------------- BELAIR CAPITAL FUND LLC Condensed Consolidated Statements of Assets and Liabilities September 30, 2002 December 31, (Unaudited) 2001 ------------- ------------ Assets: Investment in Belvedere Capital Fund Company LLC $1,308,342,688 $1,820,021,041 Investment in Partnership Preference Units 411,022,791 376,475,922 Investment in other real estate 156,802,019 327,945,162 Short-term investments 904,115 4,559,775 -------------- -------------- Total Investments $1,877,071,613 $2,529,001,900 Cash 4,360,751 6,540,394 Escrow deposits - restricted 1,448,239 4,637,336 Interest and dividends receivable 6,227,929 2,547,069 Other assets 1,725,022 2,409,881 -------------- -------------- Total assets $1,890,833,554 $2,545,136,580 -------------- -------------- Liabilities: Loan payable on Credit Facility $ 537,769,000 $ 558,769,000 Mortgages payable 112,630,517 228,480,517 Payable for Fund Shares redeemed 50,120 - Open interest rate swap contracts, at value 27,784,412 29,867,703 Swap interest payable 4,752,242 4,394,148 Security deposits 406,093 878,199 Accrued expenses: Interest expense 2,657,402 3,717,765 Property taxes 1,441,616 2,053,094 Other expenses and liabilities 761,761 1,988,505 Minority interests in controlled subsidiaries 12,584,137 27,349,823 -------------- -------------- Total liabilities $ 700,837,300 $ 857,498,754 -------------- -------------- Net assets $1,189,996,254 $1,687,637,826 -------------- -------------- Shareholders' Capital -------------- -------------- Shareholders' capital $1,189,996,254 $1,687,637,826 -------------- -------------- Shares Outstanding 13,726,814 14,376,567 -------------- -------------- Net Asset Value and Redemption Price Per Share $ 86.69 $ 117.39 -------------- -------------- See notes to condensed consolidated financial statements 3 BELAIR CAPITAL FUND LLC Condensed Consolidated Statements of Operations (Unaudited)
Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2002 2001 2002 2001 ------------- ------------- ------------- ------------- Investment Income: Dividends allocated from Belvedere Capital (net of foreign taxes of $42,418, $44,221, $161,697 and $105,714, respectively) $ 4,726,239 $ 4,874,695 $14,646,879 $14,280,241 Interest allocated from Belvedere Capital 108,312 305,015 387,454 1,410,055 Expenses allocated from Belvedere Capital (2,186,364) (2,773,700) (7,449,533) (8,800,292) ------------ ------------ ------------ ------------ Net investment income allocated from Belvedere Capital $ 2,648,187 $ 2,406,010 $ 7,584,800 $ 6,890,004 Dividends from Partnership Preference Units 9,400,672 10,990,418 27,538,520 25,947,746 Rental income 5,644,042 11,799,211 24,778,816 26,217,134 Interest 16,150 133,957 82,982 435,192 ------------ ------------ ------------ ------------ Total investment income $17,709,051 $25,329,596 $59,985,118 $59,490,076 ------------ ------------ ------------ ------------ Expenses: Investment advisory and administrative fees $ 1,302,584 $ 1,769,268 $ 4,462,753 $ 5,283,226 Property management fees 226,923 477,876 998,029 1,055,018 Servicing fees 103,797 148,829 420,176 537,892 Interest expense on Credit Facility 3,261,594 7,331,251 9,976,826 26,315,577 Interest expense on mortgages 2,386,112 4,363,500 9,795,166 9,984,380 Interest expense on swap contracts 7,767,646 4,034,455 22,654,696 7,575,195 Property and maintenance expenses 1,579,825 2,915,737 6,119,951 6,452,652 Property taxes and insurance 821,827 1,363,655 3,174,822 2,857,539 Amortization of deferred expenses 27,665 27,063 82,094 81,492 Miscellaneous 165,289 344,405 569,799 1,170,652 ------------ ------------ ------------ ------------ Total expenses $17,643,262 $22,776,039 $58,254,312 $61,313,623 ----------- ------------ ------------ ------------ Net investment income (loss) before minority interests in net income of controlled subsidiaries $ 65,789 $ 2,553,557 $ 1,730,806 $(1,823,547) Minority interests in net income of controlled subsidiaries (171,959) (777,054) (1,186,621) (1,604,393) ------------ ------------ ------------ ------------ Net investment income (loss) $ (106,170) $ 1,776,503 $ 544,185 $(3,427,940) ------------ ------------ ------------ ------------
See notes to condensed consolidated financial statements 4 BELAIR CAPITAL FUND LLC Condensed Consolidated Statements of Operations (Unaudited) (Continued)
Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2002 2001 2002 2001 ------------- ------------- ------------- ------------- Realized and Unrealized Gain (Loss) Net realized loss - Investment transactions from Belvedere Capital (identified cost basis) $ (29,423,656) $ (22,669,199) $(170,307,349) $ (23,927,100) Investment transactions in Partnership Preference Units (identified cost basis) - (1,784,999) (614,855) (2,927,609) Investment transactions in other real estate investments - - (9,540,011) - -------------- -------------- -------------- -------------- Net realized loss $ (29,423,656) $ (24,454,198) $(180,462,215) $ (26,854,709) -------------- -------------- -------------- -------------- Change in unrealized appreciation (depreciation) - Investment in Belvedere Capital (identified cost basis) $(210,483,891) $(252,359,949) $(271,842,429) $(396,904,169) Investments in Partnership Preference Units (identified cost basis) 13,987,308 (8,565,113) 23,381,240 36,218,730 Investment in other real estate investments (net of minority interests in unrealized gain (loss) of controlled subsidiaries of $202,776 $1,032,376, $(11,527) and $1,523,624, respectively) (202,776) (1,032,376) (2,907,245) (3,219,608) Interest rate swap contracts (47,205) (20,961,445) 2,083,291 (30,667,713) -------------- ------------- -------------- ------------- Net change in unrealized appreciation (depreciation) $(196,746,564) $(282,918,883) $(249,285,143) $(394,572,760) -------------- -------------- -------------- -------------- Net realized and unrealized loss $(226,170,220) $(307,373,081) $(429,747,358) $(421,427,469) -------------- -------------- -------------- -------------- Net decrease in net assets from operations $(226,276,390) $(305,596,578) $(429,203,173) $(424,855,409) ============== ============== ============== ==============
See notes to condensed consolidated financial statements 5 BELAIR CAPITAL FUND LLC Condensed Consolidated Statements of Changes in Net Assets (Unaudited) Nine Months Nine Months Ended Ended September 30, September 30, 2002 2001 --------------- --------------- Increase (Decrease) in Net Assets: Net investment income (loss) $ 544,185 $ (3,427,940) Net realized loss on investment transactions (180,462,215) (26,854,709) Net change in unrealized appreciation (depreciation) of investments (249,285,143) (394,572,760) --------------- --------------- Net decrease in net assets from operations $ (429,203,173) $ (424,855,409) --------------- --------------- Transactions in Fund Shares - Net asset value of Fund Shares redeemed $ (68,437,211) $ (61,030,200) --------------- --------------- Net decrease in net assets from Fund Share transactions $ (68,437,211) $ (61,030,200) --------------- --------------- Distributions - Special distributions to Belair Capital Fund LLC Shareholders $ (1,188) $ - --------------- --------------- Total distributions $ (1,188) $ - --------------- --------------- Net decrease in net assets $ (497,641,572) $ (485,885,609) Net assets: At beginning of period $1,687,637,826 $2,010,997,840 --------------- -------------- At end of period $1,189,996,254 $1,525,112,231 =============== =============== See notes to condensed consolidated financial statements 6 BELAIR CAPITAL FUND LLC Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Nine Months Ended Ended September 30, September 30, 2002 2001 ----------------- ----------------- Cash Flows From (For) Operating Activities - Net decrease in net assets from operations $(429,203,173) $(424,855,409) Adjustments to reconcile net decrease in net assets from operations to net cash flows from (for) operating activities - Amortization of debt issuance costs 146,157 145,760 Amortization of deferred expenses 82,094 81,492 Net investment income allocated from Belvedere Capital (7,584,800) (6,890,004) (Increase) decrease in interest and dividends receivable (3,680,860) 8,021,686 Increase in escrow deposits (10,837) (1,733,312) (Increase) decrease in other assets (588,908) 11,470 Increase in interest payable for open swap contracts 358,094 3,342,344 Increase in accrued property taxes 29,283 1,626,572 Decrease in security deposits, accrued interest and other accrued expenses and liabilities (180,114) (5,380,826) Improvements to rental property (1,209,566) (1,685,371) (Purchases) sales of investments in other real estate 32,965,765 (41,261,497) Cash assumed (decrease in cash) in connection with purchase (sale) of majority interest in controlled subsidiary (2,429,734) 1,745,868 Purchases of Partnership Preference Units (30,488,829) (9,386,616) Sales of Partnership Preference Units 18,708,345 33,101,616 Net (increase) decrease in investment in Belvedere Capital 13,256,357 (36,690,122) Decrease in minority interest (52,500) (52,500) Decrease in short-term investments 3,655,660 2,927,581 Minority interests in net income of controlled subsidiaries 1,186,621 1,604,393 Net realized loss on investment transactions 180,462,215 26,854,709 Net change in unrealized (appreciation) depreciation of investments 249,285,143 394,572,760 ----------------- ----------------- Net cash flows from (for) operating activities $ 24,706,413 $ (53,899,406) Cash Flows From (For) Financing Activities - Proceeds from (repayment of) Credit Facility $(21,000,000) $ 20,000,000 Payments for Fund Shares redeemed (4,530,073) (5,672,651) Distributions paid to minority shareholders (1,355,983) (1,119,510) ----------------- ---------------- Net cash flows from (for) financing activities $(26,886,056) $ 13,207,839 Net decrease in cash $ (2,179,643) $ (40,691,567) Cash at beginning of period $ 6,540,394 $ 46,875,064 ----------------- ------------------ Cash at end of period $ 4,360,751 $ 6,183,497 ================= ==================
See notes to condensed consolidated financial statements 7 BELAIR CAPITAL FUND LLC Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued) Nine Months Nine Months Ended Ended September 30, September 30, 2002 2001 ------------ ------------ Supplemental Disclosure of Non-cash Investing and Financing Activities- Interest paid for loan-Credit Facility $ 10,249,157 $ 29,176,035 Interest paid for swap contracts $ 22,296,602 $ 4,232,851 Interest paid for mortgages $ 9,649,009 $ 9,185,516 Market value of securities distributed in payment of redemptions $ 63,437,211 $ 55,357,549 Market value of real property and other assets, net of current liabilities, contributed to Katahdin $ - $ 170,124,083 Mortgage assumed in conjunction with acquisition of real estate investment in Katahdin $ - $ 115,850,000 Market value of real property and other assets, net of current liabilities, disposed of in conjunction with sale of real estate investment in Katahdin $169,610,451 $ - Mortgage disposed of in conjunction with sale of real estate investment in Katahdin $115,850,000 $ - See notes to condensed consolidated financial statements 8 BELAIR CAPITAL FUND LLC as of September 30, 2002 Condensed Consolidated Financial Statements (Continued) Financial Highlights (Unaudited) For the Nine Months Ended September 30, 2002 - -------------------------------------------------------------------------------- Net asset value - Beginning of period $ 117.390 - -------------------------------------------------------------------------------- Income (Loss) from Operations - -------------------------------------------------------------------------------- Net investment income (5) $ 0.039 Net realized and unrealized loss (30.739) - -------------------------------------------------------------------------------- Total Loss from Operations $ (30.700) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Distributions - -------------------------------------------------------------------------------- Special distributions to Belair Capital Fund LLC Shareholders (9) $ (0.00) - -------------------------------------------------------------------------------- Total Distributions $ (0.00) - -------------------------------------------------------------------------------- Net Asset Value - End of Period $ 86.690 - -------------------------------------------------------------------------------- Total Return (1) (26.15)% - -------------------------------------------------------------------------------- As a Percentage As a Percentage of Average Net of Average Gross RATIOS Assets (4) Assets (2)(4) - -------------------------------------------------------------------------------- Expenses of Consolidated Real Property Subsidiaries Interest and other borrowing costs (3) 0.64% (8) 0.45% (8) Operating expenses (3) 0.68% (8) 0.47% (8) Belair Capital Fund LLC Expenses Interest and other borrowing costs (6) 2.90% (8) 2.00% (8) Investment advisory and administrative fees, servicing fees and other Fund operating expenses (6)(7) 1.14% (8) 0.79% (8) ------------------------------------ Total expenses 5.36% (8) 3.71% (8) Net investment income 0.05% (8) 0.03% (8) - -------------------------------------------------------------------------------- SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Net assets, end of period (000's omitted) $ 1,189,996 Portfolio Turnover of Tax-Managed Growth Portfolio 16% - -------------------------------------------------------------------------------- (1) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of the period. Distributions, if any, are assumed reinvested at the net asset value on the reinvestment date. (2) Average Gross Assets is defined as the average daily amount of all assets of Belair Capital Fund LLC (not including its investment in Belair Real Estate Corporation (BREC)) plus all assets of BREC minus the sum of their liabilities other than the principal amount of money borrowed. For this purpose, the assets and liabilities of BREC's controlled subsidiaries are reduced by the proportionate interests therein of investors other than BREC. (3) Ratio includes BREC's proportional share of expenses incurred by its majority-owned subsidiaries. (4) For the purpose of calculating ratios, the income and expenses of BREC's controlled subsidiaries are reduced by the proportionate interests therein of investors other than BREC. (5) Calculated using average shares outstanding. (6) Ratio includes the expenses of Belair Capital Fund LLC and BREC, for which Belair Capital Fund LLC owns 100% of the outstanding common stock. The ratio does not include expenses of other real estate subsidiaries. (7) Ratio includes Belair Capital Fund LLC's share of Belvedere Capital's allocated expenses, including those expenses allocated from the Portfolio. (8) Annualized. (9) Amounts to less than $0.001 per share. See notes to condensed consolidated financial statements 9 BELAIR CAPITAL FUND LLC as of September 30, 2002 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1 Basis of Presentation The condensed consolidated interim financial statements of Belair Capital Fund LLC (Belair Capital) and its subsidiaries (collectively, the Fund) have been prepared by the Fund, without audit, in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted as permitted by such rules and regulations. All adjustments, consisting of normal recurring adjustments, have been included. Management believes that the disclosures are adequate to present fairly the financial position, results of operations, cash flows and financial highlights at the dates and for the periods presented. It is suggested that these interim financial statements be read in conjunction with the financial statements and the notes thereto included in the Fund's latest annual report on Form 10-K. Results for interim periods are not necessarily indicative of those to be expected for the full fiscal year. The balance sheet at December 31, 2001, has been derived from the December 31, 2001 audited financial statements but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements as permitted by the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain amounts in the prior period's condensed consolidated financial statements have been reclassified to conform with the current period presentation. 2 Investment Transactions Increases and decreases of the Fund's investment in Belvedere Capital Fund Company LLC (Belvedere Capital) for the nine months ended September 30, 2002 aggregated $77,481,268 and $154,594,643, respectively, and for the nine months ended September 30, 2001 aggregated $101,770,233 and $120,327,739, respectively. Purchases and sales of Partnership Preference Units aggregated $30,488,829 and $18,708,345 respectively, for the nine months ended September 30, 2002 and $9,386,616 and $33,101,616, respectively, for the nine months ended September 30, 2001. For the nine months ended September 30, 2002, acquisitions and sales of other real estate investments aggregated $0 and $32,965,765, respectively. For the nine months ended September 30, 2001, acquisitions and sales of other real estate investments aggregated $41,261,497 and $0, respectively. During the nine months ended September 30, 2002, Belair Real Estate Corporation (BREC) sold its majority interest in Katahdin Property Trust LLC (Katahdin) to another fund sponsored by Eaton Vance Management (EVM), for which a loss of $9,540,011 was recognized. Purchases of Partnership Preference Units during the nine months ended September 30, 2002 and purchases and sales of Partnership Preference Units during the nine months ended September 30, 2001 represent amounts purchased from and sold to other funds sponsored by EVM. Sales of Partnership Preference Units during the nine months ended September 30, 2002 include amounts sold to other funds sponsored by EVM for which a loss of $775,295 was recognized. 10 3 Indirect Investment in Portfolio Belvedere Capital's interest in Tax-Managed Growth Portfolio (the Portfolio) at September 30, 2002 was $8,043,904,602 representing 58.6% of the Portfolio's net assets and at September 30, 2001 was $8,914,385,448, representing 55.5% of the Portfolio's net assets. The Fund's investment in Belvedere Capital at September 30, 2002 was $1,308,342,688 representing 16.3% of Belvedere Capital's net assets and at September 30, 2001 was $1,700,296,368, representing 19.1% of Belvedere Capital's net assets. Investment income allocated to Belvedere Capital from the Portfolio for the nine months ended September 30, 2002 totaled $88,799,143, of which $15,034,333, was allocated to the Fund. Investment income allocated to Belvedere Capital from the Portfolio for the nine months ended September 30, 2001 totaled $77,460,677, of which $15,690,296 was allocated to the Fund. Expenses allocated to Belvedere Capital from the Portfolio for the nine months ended September 30, 2002 totaled $32,657,939, of which $5,554,277 was allocated to the Fund. Expenses allocated to Belvedere Capital from the Portfolio for the nine months ended September 30, 2001 totaled $32,264,414, of which $6,538,815 was allocated to the Fund. Belvedere Capital allocated additional expenses to the Fund of $1,895,256 for the nine months ended September 30, 2002, representing $49,819 of operating expenses and $1,845,437 of service fees. Belvedere Capital allocated additional expenses to the Fund of $2,261,477 for the nine months ended September 30, 2001, representing $54,852 of operating expenses and $2,206,625 of service fees. A summary of the Portfolio's Statement of Assets and Liabilities, at September 30, 2002, December 31, 2001 and September 30, 2001 and its operations for the nine months ended September 30, 2002, the year ended December 31, 2001 and the nine months ended September 30, 2001 follows: September 30, December 31, September 30, 2002 2001 2001 -------------- ---------------- ---------------- Investments, at value $13,713,440,772 $18,312,992,768 $15,879,363,685 Other Assets 59,906,476 23,229,223 247,862,763 - -------------------------------------------------------------------------------- Total Assets $13,773,347,248 $18,336,221,991 $16,127,226,448 Total Liabilities 35,785,860 357,011 63,436,483 - -------------------------------------------------------------------------------- Net Assets $13,737,561,388 $18,335,864,980 $16,063,789,965 ================================================================================ Dividends and interest $ 155,639,717 $ 192,367,081 $ 141,895,798 - -------------------------------------------------------------------------------- Investment adviser fee $ 55,373,624 $ 76,812,367 $ 57,512,662 Other expenses 1,956,361 2,161,015 1,602,705 - -------------------------------------------------------------------------------- Total expenses $ 57,329,985 $ 78,973,382 $ 59,115,367 - -------------------------------------------------------------------------------- Net investment income $ 98,309,732 $ 113,393,699 $ 82,780,431 Net realized losses (503,906,340) (360,120,300) (226,406,730) Net change in unrealized appreciation (depreciation) (4,125,048,140) (1,605,211,090) (3,614,091,583) - ----------------------------------- -------------------------------------------- Net decrease in net assets from operations $(4,530,644,748) $(1,851,937,691) $(3,757,717,882) - -------------------------------------------------------------------------------- 4 Cancelable Interest Rate Swap Agreements Belair Capital has entered into cancelable interest rate swap agreements in connection with its real estate investments and the associated borrowings. Under such agreements, Belair Capital has agreed to make periodic payments at fixed rates in exchange for payments at floating rates. The notional or contractual amounts of these instruments may not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these 11 investments is meaningful only when considered in conjunction with all related assets, liabilities and agreements. As of September 30, 2002 and December 31, 2001, Belair Capital has entered into cancelable interest rate swap agreements with Merrill Lynch Capital Services, Inc., as listed below.
Notional Initial Unrealized Unrealized Amount Optional Depreciation Depreciation Effective (000's Fixed Floating Termination Maturity At September 30, At December 31, Date omitted) Rate Rate Rate Date 2002 2001 - ------------------------------------------------------------------------------------------------------------------------------------ 2/98 $120,000 6.715% Libor+0.45% 2/03 2/05 $ 1,926,874 $ 4,036,969 4/98 50,000 6.840% Libor+0.45% 2/03 2/05 825,070 1,789,764 4/98 150,000 6.835% Libor+0.45% 4/03 4/05 3,884,842 5,769,278 6/98 20,000 6.670% Libor+0.45% 6/03 2/05 665,580 780,852 6/98 75,000 6.680% Libor+0.45% 6/03 2/05 2,501,531 2,943,209 6/98 80,000 6.595% Libor+0.45% 6/03 2/05 2,617,429 3,002,682 11/98 14,709 6.130% Libor+0.45% 11/03 2/05 650,817 455,595 2/99 34,951 6.340% Libor+0.45% 2/04 2/05 1,929,279 1,322,041 4/99 5,191 6.490% Libor+0.45% 2/04 2/05 300,813 216,372 7/99 24,902 7.077% Libor+0.45% 7/04 2/05 2,041,564 1,507,472 9/99 10,471 7.370% Libor+0.45% 9/04 2/05 979,007 734,425 3/00 19,149 7.890% Libor+0.45% 2/04 2/05 1,476,322 1,428,015 3/00 70,000 7.710% Libor+0.45% - 2/05 7,985,284 5,881,029 - ------------------------------------------------------------------------------------------------------------------------------------ Total $27,784,412 $29,867,703 - ------------------------------------------------------------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2002, COMPARED TO THE QUARTER ENDED SEPTEMBER 30, 2001 The total return of Belair Capital Fund LLC and its subsidiaries (collectively, the Fund) was -15.84% for the quarter ended September 30, 2002. This return reflects a decrease in the Fund's net asset value per share from $103.00 to $86.69 during the period. For comparison, the Standard & Poor's 500 Index (the S&P 500), an unmanaged index of large capitalization stocks commonly used as a benchmark for the U.S. equity market, had a total return of -17.27% over the same period. Investors cannot invest directly in an Index. For the quarter ended September 30, 2001, the Fund's total return was -16.62%. This return reflected a decrease in the Fund's net asset value per share from $125.23 to $104.41. For comparison, the S&P 500 had a total return of -14.67% over the same period. A multitude of factors contributed to the disconnect between the economic recovery and the dismal performance of the equity markets. A combination of geopolitical uncertainties, negative investor sentiment, and fears of double dip recession pressured equity returns. The third quarter of 2002 marked the worst broad market decline, as measured by the S&P 500, since the fourth quarter of 1987. Looking back a year ago during the same period, the U.S. equity market fell sharply as well, but mostly in response to the tragic events of September 11th coupled with deteriorating domestic economic conditions. Every major domestic benchmark experienced negative returns during the September 2002 quarter, and none of the S&P 500 sectors or industry groups had gains. A subtle change in leadership to growth and large caps emerged, but volatility and the pace of sector rotation remained at high levels. 12 The best performing sector of the S&P 500 was health care, while information technology and telecommunications services continued to trail the benchmark. Market leading groups in the third quarter of 2002 included casinos and gaming stocks, agricultural equipment, as well as defensive plays such as household products, generic pharmaceuticals and utilities. Defensive leadership was evident during the third quarter of 2001 as well, resulting from cautious investor sentiment due to September 11th. Last year's leading industries included consumer products, pharmaceuticals, packaged foods and utilities groups. Higher beta and more aggressive groups were the worst performers for the quarter ending in September 2002, a continued theme from the same period in 2001. Weaker group performers included semiconductors, airlines, entertainment, catalog retail and steel stocks. In this challenging environment, the performance of Tax-Managed Growth Portfolio (the Portfolio) surpassed that of the overall market. The Portfolio maintained an overweight position in the industrials and consumer staples sectors, a slight directional increase from the levels held at the end of the third quarter of 2001. The Portfolio's emphasis in the areas of food and drug products, airfreight logistics, machinery and defense sub-groups contributed positively to its performance. The Portfolio's neutral weight in the energy group, a relative increase from last year, particularly in the oil and gas industry, proved to be constructive for the overall returns. The Portfolio's underweight in health care and an overweight of the consumer discretionary stocks detracted from returns. While the Portfolio had gradually reduced its position in the financial sector from last year's level, this sector was overweighted, weakening absolute returns, mainly due to insurance and bank industry holdings. Lack of earnings visibility and fundamental uncertainty resulted in the Portfolio's de-emphasis of information technology and telecommunications, which were the worst performing sectors in the quarter ended September 30, 2002. The combined impact on performance of the Fund's investment activities outside of the Portfolio was modestly negative for the quarters ended September 30, 2002 and 2001. The performance of the Fund trailed that of the Portfolio by approximately -0.7% and -3.0% for the quarters ended September 30, 2002 and 2001, respectively. The Fund's investments in real estate Partnership Preference Units generally benefited from declining interest rates and tightening spreads in income-oriented securities, particularly in real estate-related securities, for the quarter ended September 30, 2002, but suffered modestly from rising credit spreads impacting the value of the Fund's real estate investments during the quarter ended September 30, 2001. During both periods, the Fund's investments in real estate joint ventures suffered from weakness in multifamily fundamentals in many U.S. markets, which resulted in declines in value, and interest rate swap valuations declined as interest rates fell. During both periods, dividends received from the Fund's Partnership Preference Units and real estate joint venture investments modestly added to performance. RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002, COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2001 The Fund's total return for the nine months ended September 30, 2002 was - -26.15%. This return reflects a decrease in the Fund's net asset value per share from $117.39 to $86.69 during the period. For comparison, the S&P 500 had a total return of -28.15% over the same period. For the nine months ended September 30, 2001, the Fund's total return was -21.57%. This return reflected a decrease in the Fund's net asset value per share from $133.13 to $104.41. For comparison, the S&P 500 had a total return of -20.38% over the same period. Investors awaiting earnings and economic solidification were troubled by political uncertainties, possibility of a double dip recession, lackluster corporate growth prospects, and weakening consumer resilience. Heightened risk sensitivity translated into negative investor sentiment, which has prolonged the 13 bear market. The first nine months of 2002 repeated another volatile market pattern seen during the same period in 2001, rising gradually through mid-March and retreating to the lowest levels of the year at the end of September. Investors' behavior however proved different during 2002 in that U.S. equity fund net outflows were at peak levels, sharply contrasting net inflow activity seen during the first nine months of 2001. Most major indices posted multi-year lows, with none achieving positive returns year-to-date in 2002. All ten of the S&P 500 sectors declined during this period. The best performing sectors during these nine months included consumer staples, materials, and energy. The weakest performing groups included fiber optics, semiconductor equipment, unregulated power producers and information technology consulting and services groups. For the first nine months of 2002, the performance of the Portfolio was above that of the overall market. The outperformance relative to the benchmark can be attributed to the Portfolio's sector allocation and stock selection. The most important decision was to underweight information technology and telecom services groups, a continued theme from 2001. The Portfolio underweighted computers, semiconductor equipment, and diversified and wireless services. The Portfolio's positioning in the banks, insurance, food products, and defense sub-groups was also beneficial. The Portfolio gradually reduced holdings in the health care sector, a directional shift from the same period last year, but participation in the pharmaceutical and biotechnology names nevertheless hurt returns. The only other notable difference in the Portfolio's current composition relative to last year was evident in the reduced underweight in the energy and utilities sectors. The combined impact on performance of the Fund's investment activities outside of the Portfolio was modestly negative for the nine months ended September 30, 2002 and 2001. The performance of the Fund trailed that of the Portfolio by approximately -1.8% and -1.2% for the nine months ended September 30, 2002 and 2001, respectively. During both periods, the Fund's investments in real estate Partnership Preference Units generally benefited from declining interest rates and tightening spreads in income-oriented securities, particularly in real estate-related securities, while the Fund's investments in real estate joint ventures suffered from weakness in multifamily fundamentals in many U.S. markets, which resulted in declines in value. For the nine months ended September 30, 2002, interest rate swap valuations rose modestly as initial optional termination dates moved closer. In comparison, for the nine months ended September 30, 2001, interest rate swap valuations declined as interest rates fell. During both periods, dividends received from the Fund's Partnership Preference Units and real estate joint venture investments modestly added to performance. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Fund has entered into interest rate swap agreements with respect to its borrowings and real estate investments. Pursuant to these agreements, the Fund makes quarterly payments to the counterparty at predetermined fixed rates, in exchange for floating-rate payments from the counterparty at a predetermined spread to three-month LIBOR. During the terms of the outstanding swap agreements, changes in the underlying values of the swaps are recorded as unrealized gains or losses. As of September 30, 2002 and 2001, the unrealized depreciation related to the interest rate swap agreements was $27,784,412 and $35,502,366, respectively. 14 CRITICAL ACCOUNTING POLICIES - ---------------------------- The Fund's discussion and analysis of its financial condition and results of operations are based upon the Fund's condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Fund to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The Fund bases these estimates, judgments and assumptions on historical experience and on other various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Fund's critical accounting policies affect the Fund's more significant estimates and assumptions used in valuing the Fund's real estate investments and interest rate swap contracts. Prices are not readily available for these types of investments and therefore are valued on an ongoing basis by Boston Management and Research (BMR), in its capacity as Manager of Belair Real Estate Corporation (BREC), in the case of the real estate investments, and in its capacity as the Fund's investment adviser, in the case of the interest rate swap contracts. In estimating the value of the Fund's investments in real estate, BMR takes into account relevant factors, data and information, including with respect to investments in Partnership Preference Units, information from dealers and similar firms with knowledge of such issues and the prices of comparable preferred equity securities and other fixed or adjustable rate instruments having similar investment characteristics. Real estate investments other than Partnership Preference Units are generally stated at estimated market values based upon independent valuations assuming an orderly disposition of assets. Detailed investment valuations are performed at least annually and reviewed periodically. Interim valuations reflect results of operations and distributions, and may be adjusted if there has been a significant change in economic circumstances since the most recent independent valuation. Given that such valuations include many assumptions, including but not limited to an orderly disposition of assets, values may differ from amounts ultimately realized. BMR, as the Fund's investment adviser, determines the value of interest rate swaps, and, in doing so, may consider among other things, dealer and counter-party quotes and pricing models. The policies for valuing real estate investments involve significant judgments that are based upon, without limitation, general economic conditions, the supply and demand for different types of real properties, the financial health of tenants, the timing of lease expirations and terminations, fluctuations in rental rates and operating costs, exposure to adverse environmental conditions and losses from casualty or condemnation, interest rates, availability of financing, managerial performance and government rules and regulations. The valuations of Partnership Preference Units held by the Fund through its investment in BREC fluctuate over time to reflect, among other factors, changes in interest rates, changes in perceived riskiness of such units (including call risk), changes in the perceived riskiness of comparable or similar securities trading in the public market and the relationship between supply and demand for comparable or similar securities trading in the public market. The value of interest rate swaps may be subject to wide swings in valuation caused by changes in interest rates and in the prices of the underlying instrument and the interest rate swap may be difficult to value since such instrument may be considered illiquid. Fluctuations in the value of Partnership Preference Units derived from changes in general interest rates can be expected to be offset in part (but not entirely) by changes in the value of interest rate swap agreements or other interest rate hedges entered into by the Fund with respect to its borrowings. Fluctuations in the value of real estate investments derived from other factors besides general interest rate movements (including issuer-specific and 15 sector-specific credit concerns, property-specific concerns and changes in interest rate spread relationships) will not be offset by changes in the value of interest rate swap agreements or other interest rate hedges entered into by the Fund. Changes in the valuation of Partnership Preference Units not offset by changes in the valuation of interest rate swap agreements or other interest rate hedges entered into by the Fund and changes in the value of other real estate investments will cause the performance of the Fund to deviate from the performance of the Portfolio. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - ------------------------------------------------------------------- The Fund's primary exposure to interest rate risk arises from investments in real estate that are financed using floating rate bank borrowings under a revolving credit facility (the Credit Facility). The interest rate on borrowings under the Fund's Credit Facility is reset at regular intervals based on a fixed and predetermined premium to LIBOR for short-term extensions of credit. The Fund utilizes cancelable interest rate swap agreements to fix the cost of its borrowings under the Credit Facility and to mitigate the impact of interest rate changes on the Fund's net asset value. Under the terms of the interest rate swap agreements, the Fund makes cash payments at fixed rates in exchange for floating rate payments that fluctuate with three-month LIBOR. The interest rate swap agreements are valued on an ongoing basis by BMR, in its capacity as the Fund's investment adviser. In the future, the Fund may use other interest rate hedging arrangements (such as caps, floors and collars) to fix or limit borrowing costs. The use of interest rate hedging arrangements is a specialized activity that may be considered speculative and which can expose the Fund to significant loss. The following table summarizes the contractual maturities and weighted-average interest rates associated with the Fund's significant non-trading financial instruments. The Fund has no market risk sensitive instruments held for trading purposes. This information should be read in conjunction with Note 4 to the condensed consolidated financial statements.
Interest Rate Sensitivity Principal (Notional) Amount by Contractual Maturity For the Twelve Months Ended September 30, 2003 2004 2005 2006 2007 Thereafter Total Fair Value --------------------------------------------------------------------------------------------------------- Rate sensitive liabilities: - ----------------------- Long term debt- variable rate Credit Facility $537,769,000 $537,769,000 $537,769,000 Average interest rate 2.24% 2.24% Rate sensitive derivative financial instruments: - ----------------------- Pay fixed/ Receive variable interest rate swap contracts $674,373,000 $674,373,000 $(27,784,412) Average pay rate 6.86% 6.86% Average receive rate 2.24% 2.24%
16 ITEM 4. CONTROLS AND PROCEDURES - -------------------------------- Eaton Vance Management, as the Fund's Manager ("Eaton Vance"), and the Fund's Chief Executive Officer and Chief Financial Officer have conducted an evaluation of the effectiveness of disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this quarterly report has been made known to them in a timely fashion. There have been no significant changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date the Chief Executive Officer and Chief Financial Officer completed their evaluation. The complete and entire management, control and operation of the Fund are vested in the Fund's Manager, Eaton Vance. The Fund's organizational structure does not provide for a board of directors or a board audit committee. As such, the Fund's Chief Executive Officer and Chief Financial Officer intend to report any significant deficiency in the design or operation of internal controls which could adversely affect the Fund's ability to record, process, summarize and report financial data, and any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund's internal controls, to Eaton Vance. 17 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. - -------------------------- Although in the ordinary course of business, the Fund, BREC or the real estate investments in which BREC has equity interests may become involved in legal proceedings, the Fund is not aware of any material pending legal proceedings to which the Fund or BREC is a party or of which any of BREC's real estate investments is the subject. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. - -------------------------------------------------- None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. - ---------------------------------------- None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. - ------------------------------------------------------------ None. ITEM 5. OTHER INFORMATION. - -------------------------- On October 16, 2002, Eaton Vance, as the Fund's Manager, elected Thomas E. Faust Jr. and Michelle A. Alexander as the Fund's Chief Executive Officer and Chief Financial Officer, respectively. Mr. Faust is Executive Vice President of Eaton Vance and BMR and their corporate parent and trustee, Eaton Vance Corp. and Eaton Vance Inc. He is also the Chief Investment Officer of Eaton Vance and BMR, and a Director of Eaton Vance Corp. Ms. Alexander is a Vice President of Eaton Vance and BMR. Mr. Faust and Ms. Alexander also serve as officers of various investment companies managed or advised by Eaton Vance or BMR. ITEM 6. THE FOLLOWING IS A LIST OF ALL EXHIBITS FILED AS PART OF THIS FORM 10Q: - ------------------------------------------------------------------------------- (a) Exhibits 21 List of subsidiaries 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized officer on November 14, 2002. BELAIR CAPITAL FUND LLC (Registrant) By: /s/ Michelle A. Alexander ---------------------------------- Michelle A. Alexander Duly Authorized Officer and Principal Accounting Officer 19 CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION - ------------- I, Thomas E. Faust Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Belair Capital Fund LLC; 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 registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers 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 registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers 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. Date: November 14, 2002 /s/ Thomas E. Faust Jr. ----------------------- Thomas E. Faust Jr. Chief Executive Officer 20 CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION - ------------- I, Michelle A. Alexander, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Belair Capital Fund LLC; 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 registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers 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 registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers 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. Date: November 14, 2002 /s/ Michelle A. Alexander ------------------------- Michelle A. Alexander Chief Financial Officer 21 EXHIBIT INDEX 21 List of subsidiaries 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 22 EX-99.21 3 belairexh21.txt BELAIR EXHIBIT 21 SUBSIDIARIES Exhibit 21 BELAIR CAPITAL FUND LLC SUBSIDIARIES Name Jurisdiction of Incorporation ---- ----------------------------- Belair Real Estate Corporation Delaware Bel Residential Properties Trust Maryland Katahdin Property Trust, LLC Delaware EX-99.99.1 4 belairexh991.txt BELAIR EXHIBIT 99.1 CEO CERTIFICATE Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned hereby certifies in his capacity as Chief Executive Officer of Belair Capital Fund LLC (the "Fund"), that: (a) the Quarterly Report of the Fund on Form 10-Q for the quarter ended September 30, 2002 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and (b) the information contained in the Report fairly presents, in all material respects, the financial condition and the results of operations of the Fund for such period. Dated: November 14, 2002 /s/ Thomas E. Faust Jr. ----------------------- Thomas E. Faust Jr. Chief Executive Officer EX-99.99.2 5 belairexh992.txt BELAIR EXHIBIT 99.2 CFO CERTIFICATE Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned hereby certifies in her capacity as Chief Financial Officer of Belair Capital Fund LLC (the "Fund"), that: (a) the Quarterly Report of the Fund on Form 10-Q for the quarter ended September 30, 2002 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and (b) the information contained in the Report fairly presents, in all material respects, the financial condition and the results of operations of the Fund for such period. Dated: November 14, 2002 /s/ Michelle A. Alexander ------------------------- Michelle A. Alexander Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----