-----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, MGnQFAun9MOKcW34GQx2GEeAGwqdAxKJO7r3M1Vy5i8jC5drJi3TdV6MZNDWCFd4 85Suy80qc7RITz9MqIOpUA== 0000948524-04-000049.txt : 20041115 0000948524-04-000049.hdr.sgml : 20041115 20041115164154 ACCESSION NUMBER: 0000948524-04-000049 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041115 DATE AS OF CHANGE: 20041115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POLARIS AIRCRAFT INCOME FUND III CENTRAL INDEX KEY: 0000806031 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943023671 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-10122 FILM NUMBER: 041145992 BUSINESS ADDRESS: STREET 1: 201 HIGH RIDGE ROAD STREET 2: 27TH FL CITY: STAMFORD STATE: CT ZIP: 06927 BUSINESS PHONE: (203) 357- MAIL ADDRESS: STREET 1: 201 HIGH RIDGE ROAD STREET 2: 27TH FL CITY: STAMFORD STATE: CT ZIP: 06927 10-Q 1 if3_3q04.txt SEPTEMBER 30, 2004 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 10-Q ---------------- 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 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 No. 33-10122 ---------------- POLARIS AIRCRAFT INCOME FUND III, A California Limited Partnership State of Organization: California IRS Employer Identification No. 94-3023671 201 High Ridge Road, Stamford, Connecticut 06927 Telephone - (203) 357-3776 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 Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act). Yes No X --- --- This document consists of 15 pages. POLARIS AIRCRAFT INCOME FUND III, A California Limited Partnership FORM 10-Q - For the Quarterly Period Ended September 30, 2004 INDEX Part I. Financial Information Page Item 1. Financial Statements (Unaudited) a) Condensed Balance Sheets - September 30, 2004 and December 31, 2003............................................3 b) Condensed Statements of Operations - Three and Nine Months Ended September 30, 2004 and 2003............................4 c) Condensed Statements of Changes in Partners' Capital (Deficit) - Year Ended December 31, 2003 and Nine Months Ended September 30, 2004.....................5 d) Condensed Statements of Cash Flows - Nine Months Ended September 30, 2004 and 2003............................6 e) Notes to Condensed Financial Statements......................7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...........10 Item 4. Controls and Procedures.................................13 Part II. Other Information Item 1. Legal Proceedings.......................................14 Item 6. Exhibits................................................14 Signature ........................................................15 2 Part I. Financial Information ----------------------------- Item 1. Financial Statements POLARIS AIRCRAFT INCOME FUND III, A California Limited Partnership CONDENSED BALANCE SHEETS (Unaudited) September 30, December 31, 2004 2003 ---- ---- ASSETS: CASH AND CASH EQUIVALENTS $ 1,664,808 $ 2,524,997 RECEIVABLE FROM AFFILIATE 20,880 -- OTHER RECEIVABLES 1,147 1,836 AIRCRAFT HELD FOR SALE 570,000 400,000 PREPAID EXPENSE 1,138 -- ----------- ----------- Total Assets $ 2,257,973 $ 2,926,833 =========== =========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT): PAYABLE TO AFFILIATES $ -- $ 96,353 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 66,221 54,420 ----------- ----------- Total Liabilities 66,221 150,773 ----------- ----------- PARTNERS' CAPITAL (DEFICIT): General Partner (3,868,519) (3,862,671) Limited Partners, 499,553 units in 2004 and 499,683 units in 2003 issued and outstanding 6,060,271 6,638,731 ----------- ----------- Total Partners' Capital 2,191,752 2,776,060 ----------- ----------- Total Liabilities and Partners' Capital $ 2,257,973 $ 2,926,833 =========== =========== The accompanying notes are an integral part of these condensed statements. 3 POLARIS AIRCRAFT INCOME FUND III, A California Limited Partnership CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2004 2003 2004 2003 ---- ---- ---- ---- REVENUES: Rent from operating leases $ -- $ 441,109 $ -- $ 1,376,965 Interest 7,973 5,555 17,958 17,624 Lessee return condition settlements -- 44,270 -- 44,270 Lessee settlements 81,458 -- 163,982 76,279 ----------- ----------- ----------- ----------- Total Revenues 89,431 490,934 181,940 1,515,138 ----------- ----------- ----------- ----------- EXPENSES: Depreciation -- 803,786 -- 1,466,624 Write-up of aircraft held for sale (101,800) -- (170,000) -- Management fees to general partner -- 12,386 -- 38,510 Operating 37,791 13,472 121,519 42,604 Administration and other 69,287 85,688 259,526 258,777 ----------- ----------- ----------- ----------- Total Expenses 5,278 915,332 211,045 1,806,515 ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ 84,153 $ (424,398) $ (29,105) $ (291,377) =========== =========== =========== =========== NET INCOME (LOSS) ALLOCATED TO THE GENERAL PARTNER $ 841 $ (4,244) $ 49,672 $ 197,478 =========== =========== =========== =========== NET INCOME (LOSS) ALLOCATED TO LIMITED PARTNERS $ 83,312 $ (420,154) $ (78,777) $ (488,855) =========== =========== =========== =========== NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ 0.16 $ (0.84) $ (0.16) $ (0.98) =========== =========== =========== ===========
The accompanying notes are an integral part of these condensed statements. 4 POLARIS AIRCRAFT INCOME FUND III, A California Limited Partnership CONDENSED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) Year Ended December 31, 2003 and Nine Months Ended September 30, 2004 General Limited Partner Partners Total ------- -------- ----- Balance, December 31, 2002 $(3,784,552) $ 9,420,501 $ 5,635,949 Net income (loss) 199,561 (282,650) (83,089) Cash distribution to partners ($5.00 per Limited Partnership Unit) (277,680) (2,499,120) (2,776,800) ----------- ----------- ----------- Balance, December 31, 2003 (3,862,671) 6,638,731 2,776,060 Net income (loss) 49,672 (78,777) (29,105) Cash distribution to partners ($1.00 per Limited Partnership Unit) (55,520) (499,683) (555,203) ----------- ----------- ----------- Balance, September 30, 2004 $(3,868,519) $ 6,060,271 $ 2,191,752 =========== =========== =========== The accompanying notes are an integral part of these condensed statements. 5 POLARIS AIRCRAFT INCOME FUND III, A California Limited Partnership CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 2004 2003 ---- ---- OPERATING ACTIVITIES: Net loss $ (29,105) $ (291,377) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation -- 1,466,624 Write-up of aircraft held for sale (170,000) -- Changes in operating assets and liabilities: Increase in receivable from affiliate (20,880) -- Decrease in rent and other receivables 689 97,855 (Decrease) increase in payable to affiliates (96,353) 4,617 Increase (decrease) in accounts payable and accrued liabilities 11,801 (59,481) Decrease in deferred income -- (316,966) Increase in prepaid expense (1,138) (4,126) ----------- ----------- Net cash (used in) provided by operating activities (304,986) 897,146 ----------- ----------- FINANCING ACTIVITIES: Cash distributions to partners (555,203) (2,776,800) ----------- ----------- Net cash used in financing activities (555,203) (2,776,800) ----------- ----------- CHANGES IN CASH AND CASH EQUIVALENTS (860,189) (1,879,654) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,524,997 4,118,926 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,664,808 $ 2,239,272 =========== =========== NON-CASH INVESTING AND FINANCING ACTIVITIES: Transfer of operating lease assets to assets held for sale $ -- $ 100,000 =========== =========== The accompanying notes are an integral part of these condensed statements. 6 POLARIS AIRCRAFT INCOME FUND III, A California Limited Partnership NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 1. Organization and the Partnership Polaris Aircraft Income Fund III, A California Limited Partnership (PAIF-III or the Partnership), was formed on June 27, 1984 for the purpose of acquiring and leasing aircraft. The Partnership will terminate no later than December 2020. Upon organization, both the General Partner and the initial Limited Partner contributed $500 to capital. The Partnership recognized no profits or losses during the periods ended December 31, 1984, 1985 and 1986. The offering of depositary units (Units), representing assignments of Limited Partnership interest, terminated on September 30, 1987 at which time the Partnership had sold 500,000 units of $500, representing $250,000,000. All unit holders were admitted to the Partnership on or before September 30, 1987 and are referred to collectively as the Limited Partners. During January 1998, 40 units were redeemed by the Partnership in accordance with section 18 of the Limited Partnership Agreement. During the nine months ended September 30, 2004, 130 units were abandoned. At September 30, 2004, there were 499,553 units outstanding, net of redemptions. As of September 30, 2004, the Partnership owned four aircraft. On September 20, 2004, the Partnership entered into a Letter of Intent to sell its four remaining aircraft to an unaffiliated buyer for a total selling price of $800,000. Upon completion of such sale, the Partnership plans to liquidate all its assets in an orderly manner, make a final distribution and terminate the Partnership thereafter; however, it is uncertain when this liquidation will occur. While there can be no assurance as to either the timing of such sale or whether such sale may be completed, the General Partner intends to seek to complete such sale during the fourth quarter of 2004. Polaris Investment Management Corporation (PIMC), the sole General Partner of the Partnership, supervises the day-to-day operations of the Partnership. Polaris Depository Company III (PDC) serves as the depositary. PIMC and PDC are wholly-owned subsidiaries of Polaris Aircraft Leasing Corporation (PALC). Polaris Holding Company (PHC) is the parent company of PALC. General Electric Capital Corporation (GE Capital), an affiliate of General Electric Company, owns 100% of PHC's outstanding common stock. PIMC has entered into a services agreement dated as of July 1, 1994 with GE Capital Aviation Services, Inc. (GECAS). Amounts paid and allocations to affiliates are described in Notes 3 and 4. Note 2. Accounting Principles and Policies In the opinion of management, the condensed financial statements presented herein include all adjustments, consisting only of normal recurring items, necessary to summarize fairly the Partnership's financial position and results of operations. The financial statements have been prepared in accordance with the instructions of the Quarterly Report to the Securities and Exchange Commission (SEC) Form 10-Q. The condensed balance sheet at December 31, 2003, has been derived from the audited financial statements at that date but does not include all of the information and note disclosures required by accounting principles generally accepted in the United States (GAAP). These statements 7 should be read in conjunction with the financial statements and notes thereto for the years ended December 31, 2003, 2002, and 2001 included in the Partnership's 2003 Annual Report to the SEC on Form 10-K. Note 3. Related Parties Under the Limited Partnership Agreement (the Agreement), the Partnership paid the following amounts for the current quarter to the General Partner, PIMC, in connection with services rendered or payments made on behalf of the Partnership: Payments made during the Three Months Ended September 30, 2004 ------------------ Out-of-Pocket Operating Expense Reimbursement $ 68,264 Out-of-Pocket Administrative Expense Reimbursement 178,363 -------- $246,627 ======== As of September 30, 2004, the Partnership also has a net Receivable from Affiliate of $20,880 which is comprised of a receivable due from PIMC totaling $37,383 (see Note 6) and a payable due to PIMC totaling $16,503 representing reimbursement of out-of-pocket administrative expenses. Note 4. Partners' Capital The Agreement stipulates different methods by which revenue, income and loss from operations and gain or loss on the sale of aircraft are to be allocated to the General Partner and the Limited Partners. Such allocations are made using income or loss calculated under GAAP for book purposes, which varies from income or loss calculated for tax purposes. Cash available for distributions, including the proceeds from the sale of aircraft, is distributed 10% to the General Partner and 90% to the Limited Partners. The different methods of allocating items of income, loss and cash available for distribution combined with the calculation of items of income and loss for book and tax purposes result in book basis capital accounts that may vary significantly from tax basis capital accounts. The ultimate liquidation and distribution of remaining cash will be based on the tax basis capital accounts following liquidation, in accordance with the Agreement. Note 5. Aircraft and Depreciation The Partnership periodically reviews the estimated realizability of the residual values at the projected end of each aircraft's economic life. For any downward adjustment in estimated residual value or decrease in the projected remaining economic life, the depreciation expense over the projected remaining economic life of the aircraft has been increased. 8 Aircraft on lease were carried at cost unless deemed impaired, in which case the asset was recorded at fair value. Aircraft on lease were deemed impaired, if the projected net cash flow for each aircraft (projected rental revenue, net of management fees, less projected maintenance costs, if any, plus the estimated residual value) was less than the carrying value of the aircraft. An impairment loss was recognized equal to the excess of the net carrying value of the asset over its fair value. Aircraft held for sale are carried at the lower of cost or fair value less cost to sell. During the three and nine months ended September 30, 2004, the Partnership recognized a write-up of $101,800 and $170,000, respectively, in the carrying value of aircraft held for sale due to changes in estimated fair market values based on the selling price of the Partnership's four aircraft in a Letter of Intent to sell dated September 20, 2004. The adjustments to increase the net carrying value did not result in a net carrying value in excess of the original net carrying value of the assets when they were initially designated as held for sale. Management believes the assumptions related to the fair value of impaired assets represent the best estimates based on reasonable and supportable assumptions and projections. Note 6. Subsequent Events On November 5, 2004, the Partnership received a payment of $85,853 representing a distribution from an original administrative rent claim in the amount of $465,277 filed against a former lessee's bankrupt estate. Also, in November 2004, the Partnership received a payment of $35,683 (plus interest of $1,700) representing a distribution associated with the original rent claim that was remitted by the bankruptcy estate to GECAS in December 2002. This payment is included in Lessee Settlements on the Statement of Operations for the three and nine months ended September 30, 2004 and is included in Receivable from Affiliate as of September 30, 2004. Further, the Partnership expects to receive an additional payment totaling $92,535 from the bankruptcy estate associated with the administrative rent claim during the fourth quarter of 2004. As such it is expected that the Partnership will ultimately received 100% of the administrative claim amount. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements Certain portions of this Quarterly Report on Form 10-Q contain forward-looking statements that are based on management's expectations, estimates, projections and assumptions. Words such as "expects", "anticipates", "plans", "believes", "scheduled", "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements, which include but are not limited to projections of revenues, earnings, cash flows, aircraft disposition and the like. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors, including, without limitation: --General U.S. and international political and economic conditions; --Changing demand preferences for business aircraft, including the effects of economic conditions on the business-aircraft market; All forward-looking statements speak only as of the date of this report, or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to the Partnership or any person acting on its behalf are qualified by the cautionary statements in this report. The Partnership does not undertake any obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report. Business Overview At September 30, 2004, Polaris Aircraft Income Fund III (PAIF-III or the Partnership) owned a portfolio of four used McDonnell Douglas DC-9-30 commercial jet aircraft (DC-9-30) out of its original portfolio of 38 aircraft. These DC-9-30 aircraft were being stored in New Mexico and were being marketed for sale. On September 20, 2004, the Partnership entered into a Letter of Intent to sell its four remaining aircraft to an unaffiliated buyer for a total selling price of $800,000. Upon completion of such sale, the Partnership plans to liquidate all its assets in an orderly manner, make a final distribution and terminate the Partnership thereafter; however, it is uncertain when this liquidation will occur. While there can be no assurance as to either the timing of such sale or whether such sale may be completed, the General Partner intends to seek to complete such sale during fourth quarter of 2004. Partnership Operations The Partnership recorded net income of $84,153, or $0.16 per Limited Partnership Unit, for the three months ended September 30, 2004, as compared to a net loss of $424,398, or $0.84 per Limited Partnership Unit, for the three months ended September 30, 2003. The Partnership recorded a net loss of $29,105, or $0.16 per Limited Partnership Unit, for the nine months ended September 30, 2004, compared to a net loss of $291,377, or $0.98 per Limited Partnership Unit, for the nine months ended September 30, 2003. Variances in net income may not correspond to variances in net income per Limited Partnership Unit due to the allocation of components of income and loss in accordance with the Partnership Agreement. 10 The increase in net income during the three months ended September 30, 2004 and the decrease in net loss for the nine months ended September 30, 2004, as compared to the same periods in 2003, is primarily due to the write-up of the carrying value of aircraft held for sale, an absence of depreciation expense and management fees to the General Partner, partially offset by an absence of rental income, along with an increase in operating expenses, as discussed below. The absence of rental income from operating leases during the three and nine months ended September 30, 2004, as compared to $441,109 and $1,376,965, respectively, in the same periods in 2003, is due to all lease terms having expired during 2003. Interest income increased slightly during the three and nine months ended September 30, 2004, as compared to the same periods in 2003, primarily due to the recent increase in interest rates. During the three and nine months ended September 30, 2004, the Partnership recognized lessee settlement income in the amount of $81,458 and $163,982, respectively, as compared to $0 and $76,279, respectively, recognized during the same periods in 2003. The payments received during the 2004 and 2003 periods resulted from distributions by a former lessee's bankrupt estate representing a portion of the $465,277 administrative rent claims initially filed by the Partnership pursuant to the bankruptcy (also see Note 6). Lessee return condition settlements were $44,270 during the three and nine months ended September 30, 2003, as compared to $0 for the same periods in 2004. The return condition payment received during the 2003 periods was for an aircraft that went off lease on September 15, 2003. Aircraft held for sale are carried at the lower of cost or fair value less cost to sell. During the three and nine months ended September 30, 2004, the Partnership recognized income of $101,800 and $170,000, or $0.20 and $0.34, respectively, per Limited Partnership Unit, on the write-up of the carrying value of two of its aircraft, which previously had been reduced through additional depreciation expense as the result of past reviews of estimated market values. The estimated fair market value of the aircraft held for sale at September 30, 2004 was based on the selling price of the Partnership's four aircraft in the Letter of Intent dated September 20, 2004. The carrying value of the Partnership's two other aircraft was not adjusted at September 30, 2004 because their cost basis determined at lease expiration was less than the current estimated fair market value. No adjustments to the market value of aircraft held for sale were made during the same periods in 2003. The absence of depreciation expense and management fees to the General Partner during the three and nine months ended September 30, 2004, as compared to the same periods in 2003, was due to all lease terms having expired during 2003. Operating expenses increased during the three and nine months ended September 30, 2004, as compared to the same periods in 2003, primarily due to maintenance and storage-related costs associated with the aircraft while they are being held for sale. During the three and nine months ended September 30, 2004, four aircraft were held in storage, as compared to the same periods in 2003, when one aircraft was kept in storage. Administration and other expense decreased during the three months September 30, 2004, as compared to the same period in 2003, primarily due to decreased legal fees related to various SEC and investor reporting matters and printing and 11 postage expenses. Administration and other expense increased slightly during the nine months ended September 30, 2004, as compared to the same period in 2003. Liquidity and Cash Distributions Liquidity - No further rent payments were due during the nine months ended September 30, 2004 since all lease terms expired during 2003. The Partnership received all payments due from its sole lessee for the aircraft remaining on lease during the nine months ended September 30, 2003. PIMC, the General Partner, has determined that cash reserves be maintained as a prudent measure to ensure that the Partnership has available funds for winding up the affairs of the Partnership and for other contingencies. The Partnership plans to liquidate all its assets in an orderly manner, make a final distribution and terminate the Partnership thereafter, however, it is uncertain when this liquidation will occur. On September 20, 2004, the Partnership entered into a Letter of Intent to sell its four remaining aircraft to an unaffiliated buyer for a total selling price of $800,000. While there can be no assurance as to either the timing of such sale or whether such sale may be completed, the General Partner intends to seek to complete such sale during fourth quarter of 2004. The Partnership's cash reserves will be monitored and may be revised from time to time as further information becomes available in the future. Cash Distributions - Cash distributions to Limited Partners during the nine months ended September 30, 2004 and 2003 were $499,683, or $1.00 per Limited Partnership Unit, and $2,499,120, or $5.00 per Unit, respectively. The General Partner has determined that it is in the best interests of the Partnership to suspend any further cash distributions until the Partnership is in a position to dissolve, wind up and terminate, and make a final distribution of its remaining cash. In reaching this conclusion, the General Partner considered the anticipated costs of storing and insuring the aircraft pending sale, the anticipated costs of marketing and preparing the aircraft for sale, the anticipated costs of winding up the Partnership's business, the uncertainty as to the period of time required to sell the aircraft and wind up the Partnership, the uncertainty as to the terms on which the Partnership's aircraft may be sold and the desirability of maintaining a prudent level of cash reserves for Partnership needs and contingencies. The Partnership does not have any material off-balance sheet commitments or obligations. 12 Item 4. Controls and Procedures (a) Evaluation of disclosure controls and procedures PIMC management reviewed the Partnership's internal controls and procedures and the effectiveness of these controls. As of September 30, 2004, PIMC management, including its Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures pursuant to Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and Chief 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 its periodic SEC filings. (b) Change to internal controls There was no change in the Partnership's internal controls over financial reporting or in other factors during the Partnership's last quarter that materially affected, or are reasonably likely to materially affect, the Partnership's internal controls over financial reporting. There were no significant deficiencies or material weaknesses, and therefore no corrective actions taken. 13 Part II. Other Information -------------------------- Item 1. Legal Proceedings As discussed in Item 3 of Part I of Polaris Aircraft Income Fund III's (the Partnership) 2003 Annual Report to the Securities and Exchange Commission (SEC) on Form 10-K (Form 10-K) and in Item 1 of Part II of the Partnership's Quarterly Report to the SEC on Form 10-Q (Form 10-Q) for the period ended June 30, 2004, there are several pending legal proceedings involving the Partnership. There have been no material developments with respect to such proceedings during the period covered by this report. However, the Partnership has received the payments described in Note 6 to the Financial Statements. Other Proceedings - Item 10 in Part III of the Partnership's 2003 Form 10-K and Item 1 of Part II of the Partnership's Quarterly Report to the SEC on Form 10-Q for the period ended June 30, 2004 discuss certain actions which have been filed against Polaris Investment Management Corporation and others in connection with the sale of interests in the Partnership and the management of the Partnership. The Partnership is not a party to these actions. There have been no material developments with respect to any of the actions described therein during the period covered by this report. Item 6. Exhibits a) Exhibits (numbered in accordance with Item 601 of Regulation S-K) 31.1 CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 14 SIGNATURE Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. POLARIS AIRCRAFT INCOME FUND III, A California Limited Partnership (Registrant) By: Polaris Investment Management Corporation, General Partner November 15, 2004 By: /s/Stephen E. Yost - ----------------- ---------------------- Stephen E. Yost, Chief Financial Officer 15 EX-31 2 if3_3q04ex311.txt CERTIFICATION - WILLIAM R. CARPENTER Exhibit 31.1 POLARIS AIRCRAFT INCOME FUND III, A California Limited Partnership Quarterly Certification I, William R Carpenter, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Polaris Aircraft Income Fund III (A California Limited Partnership); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer(s) 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 registrant and we 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 registrant, is made known to us by others within the entity, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 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 registrant'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 registrant's internal control over financial reporting. Date: November 15, 2004 ----------------- By: Polaris Investment Management Corporation General Partner /s/ William R. Carpenter - ------------------------ William R. Carpenter President EX-31 3 if3_3q04ex312.txt CERTIFICATION - STEPHEN E. YOST Exhibit 31.2 POLARIS AIRCRAFT INCOME FUND III, A California Limited Partnership Quarterly Certification I, Stephen E. Yost, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Polaris Aircraft Income Fund III (A California Limited Partnership); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer(s) 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 registrant and we 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 registrant, is made known to us by others within the entity, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 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 registrant'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 registrant's internal control over financial reporting. Date: November 15, 2004 ----------------- By: Polaris Investment Management Corporation General Partner /s/ Stephen E. Yost - ------------------- Stephen E. Yost Chief Financial Officer EX-32 4 if3_3q04ex321.txt CERTIFICATION - CARPENTER AND YOST Exhibit 32.1 POLARIS AIRCRAFT INCOME FUND III, A California Limited Partnership Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Polaris Investment Management Corporation (the General Partner), does hereby certify, to such officer's knowledge, that: The Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 of Polaris Aircraft Income Fund III (A California Limited Partnership) (the Partnership) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Partnership. Dated: November 15, 2004 ----------------- /s/ William R Carpenter - ----------------------- Name: William R. Carpenter Title: President of Polaris Investment Management Corporation (the General Partner) Dated: November 15, 2004 ----------------- /s/ Stephen E. Yost - ------------------- Name: Stephen E Yost Title: Chief Financial Officer of Polaris Investment Management Corporation (the General Partner) A signed original of this written statement required by Section 906 or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----