UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[Fee Required]
For the fiscal year ended December 31, 2001
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
[Fee Required]
For the transition period from ______________________ to _______________________
Commission File Number 33-40044
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ICON Cash Flow Partners, L.P., Series D
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3602979
- ------------------------------------ ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
100 Fifth Avenue, 10th Floor, New York, New York 10011
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 418-4700
------------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class Name of each exchange on which registered
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
- --------------------------------------------------------------------------------
(Title of class)
- --------------------------------------------------------------------------------
(Title of class)
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 (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.
[X] Yes [ ] No
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
TABLE OF CONTENTS
Item Page
PART I
1. Business 3-4
2. Properties 4
3. Legal Proceedings 4
4. Submission of Matters to a Vote of Security Holders 4
PART II
5. Market for the Registrant's Securities and Related
Security Holder Matters 5
6. Selected Consolidated Financial and Operating Data 6
7. General Partner's Discussion and Analysis of Financial
Condition and Results of Operations 7-11
8. Consolidated Financial Statements and Supplementary Data 12-30
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 31
PART III
10. Directors and Executive Officers of the Registrant's
General Partner 31-32
11. Executive Compensation 32
12. Security Ownership of Certain Beneficial Owners
and Management 33
13. Certain Relationships and Related Transactions 33
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 33-34
SIGNATURES 44
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
PART I
Item 1. Business
General Development of Business
ICON Cash Flow Partners, L.P., Series D (the "Partnership") was formed in
February 1991 as a Delaware limited partnership. The Partnership commenced
business operations on its initial closing date, September 13, 1991, with the
admission of 26,905.59 limited partnership units. Between September 14, 1991 and
June 5, 1992 (the final closing date), 373,094.41 additional units were admitted
bringing the total admissions to 400,000 units totaling $40,000,000 in capital
contributions. From 1994 through 2001, the Partnership redeemed 882 limited
partnership units leaving 399,118 units outstanding at December 31, 2001. The
general partner is ICON Capital Corp. (the "General Partner").
The Partnership's reinvestment period ended June 5, 1997 and the
disposition period began on June 6, 1997. During the disposition period the
Partnership has, and will continue to distribute substantially all distributable
cash from operations and equipment sales to the partners and begin the orderly
termination of its operations and affairs. The Partnership has not, and will not
invest in any additional new finance or lease transactions during the
disposition period. During the disposition period, the Partnership expects to
recover at a minimum, the carrying value of its assets.
Segment Information
The Partnership has only one operating segment: the business of managing
equipment subject to leases with companies that the Partnership believes to be
creditworthy.
Narrative Description of Business
The Partnership is an equipment leasing income fund. The principal
investment objective of the Partnership is to obtain the maximum economic return
from its investments for the benefit of its limited partners. To achieve this
objective the Partnership has: (1) acquired a diversified portfolio of leases
and financing transactions; (2) made monthly cash distributions to its limited
partners commencing with each limited partner's admission to the Partnership,
(3) re-invested substantially all undistributed cash from operations and cash
from sales of equipment and financing transactions during the reinvestment
period; and (4) commenced the disposition period and begun to sell the
Partnership's investments and distribute the cash from sales of such investments
to its limited partners.
The equipment leasing industry is highly competitive. In initiating its
leasing transactions, the Partnership competed with leasing companies,
manufacturers that lease their products directly, equipment brokers and dealers
and financial institutions, including commercial banks and insurance companies.
Many competitors are larger than the Partnership and have greater financial
resources.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
The Partnership has no direct employees. The General Partner has full and
exclusive discretion in management and control of the Partnership.
Lease and Financing Transactions
During the years ended December 31, 2001 and 2000, the Partnership did not
finance or purchase any new equipment.
The Partnership has one lessee which represents more than 10% of revenue,
the lease of a DeHavilland DHC-8-102 aircraft to U.S. Airways. Lease rentals
were $588,000 for 2001. The carrying value of the aircraft represented
approximately 45.1% of the Partnership's assets at December 31, 2001.
Item 2. Properties
The Partnership neither owns nor leases office space or equipment for the
purpose of managing its day-to-day affairs.
Item 3. Legal Proceedings
The Partnership is not a party to any pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of 2001.
The Partnership has one lease which represents more than 10% of revenue.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
PART II
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters
The Partnership's limited partnership interests are not publicly traded nor
is there currently a market for the Partnership's limited partnership interests.
It is unlikely that any such market will develop.
Number of Equity Security Holders
Title of Class as of December 31,
- -------------- -----------------------------------
2001 2000
---- ----
Limited partners 3,105 3,105
General Partner 1 1
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
Item 6. Selected Consolidated Financial and Operating Date
Years Ended December 31,
---------------------------------------------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Total revenues $ 874,695 $ 2,200,367 $ 2,658,007 $ 2,796,813 $ 3,537,411
========== ============ ============ ============ ============
Net income $ 284,772 $ 820,615 $ 823,675 $ 688,361 $ 676,730
========== ============ ============ ============ ============
Net income
Allocable to limited
Partners $ 281,924 $ 812,409 $ 815,438 $ 681,477 $ 669,963
========== ============ ============ ============ ============
Net income
Allocable to the
General Partner $ 2,848 $ 8,206 $ 8,237 $ 6,884 $ 6,767
========== ============ ============ ============ ============
Weighted average
limited partnership
units outstanding 399,118 399,118 399,118 399,118 399,138
========== ============ ============ ============ ============
Net income per
weighted average
limited partnership
unit $ 0.71 $ 2.04 $ 2.04 $ 1.71 $ 1.68
========== ============ ============ ============ ============
Distributions to
limited partners $ 588,646 $ 4,091,082 $ 2,461,219 $ 4,074,331 $ 7,882,867
========== ============ ============ ============ ============
Distributions to the
General Partner $ 5,946 $ 41,323 $ 24,840 $ 41,155 $ 79,648
========== ============ ============ ============ ============
December 31,
-------------------------------------------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Total assets $3,847,550 $5,251,699 $11,621,332 $16,619,860 $22,999,478
========== ========== =========== =========== ===========
Partners' equity $ 377,390 $ 687,210 $ 3,999,000 $ 5,661,384 $ 9,088,509
========== ========== =========== =========== ===========
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
Item 7. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
The Partnership's portfolio consisted of a net investment in finance
leases, investment in operating lease equipment, investment in financings and an
investment in a joint venture representing 4%, 47%, 48% and 1% of total
investments at December 31, 2001, respectively, and 13%, 42%, 34% and 11% of
total investments at December 31, 2000, respectively.
Significant Accounting Policies and Management Estimates
Basis of Accounting and Presentation - The Partnership's records are
maintained on the accrual basis. The preparation of financial statements in
conformity with generally accepted accounting principles requires the General
Partner's management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the dates of the financial statements, and
revenues and expenses during the reporting periods. Major estimates include the
allowance for bad debts and unguaranteed residual values. Management believes
that the estimates and assumptions utilized in preparing its financial
statements are reasonable and prudent. Actual results could differ from those
estimates. In addition, management is required to disclose contingent assets and
contingent liabilities.
Leases - The Partnership accounts for owned equipment leased to third
parties as finance leases or operating leases, as appropriate. For finance
leases, the Partnership records, at the inception of the lease, the total
minimum lease payments receivable, the estimated unguaranteed residual values,
the initial direct costs related to the leases and the related unearned income.
Unearned income represents the difference between the sum of the minimum lease
payments receivable plus the estimated unguaranteed residual minus the cost of
the leased equipment. Unearned income is recognized as finance income over the
terms of the related leases following the interest method. For operating leases,
equipment is recorded at cost and is depreciated on the straight-line method
over the lease terms to their estimated fair market values at lease
terminations. Related lease rentals are recognized on the straight-line method
over the lease terms. Billed and uncollected operating lease receivables are
included in other assets. Initial direct costs of finance leases are capitalized
and are amortized over the terms of the related leases using the interest
method. Initial direct costs of operating leases are capitalized and amortized
on the straight-line method over the lease terms.
Impairment of Estimated Residual Values - The Partnership's policy with
respect to impairment of estimated residual values is to review, on a periodic
basis, the carrying value of its residuals on an individual asset basis to
determine whether events or changes in circumstances indicate that the carrying
value of an asset may not be recoverable and, therefore, an impairment loss
should be recognized. The events or changes in circumstances which generally
indicate that the residual value of an asset has been impaired are (i) the
estimated fair value of the underlying equipment is less than the Partnership's
carrying value or (ii) the lessee is experiencing financial difficulties and it
does not appear likely that the estimated proceeds from disposition of the asset
will be sufficient to satisfy the remaining obligation to the non-recourse
lender and the Partnership's residual position. Generally in the latter
situation, the residual position relates to equipment subject to third party
non-recourse notes payable where the lessee remits their rental payments
directly to the lender and the Partnership does not recover its residual until
the non-recourse note obligation is repaid in full.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
The Partnership measures its impairment loss as the amount by which the
carrying amount of the residual value exceeds the estimated proceeds to be
received by the Partnership from release or resale of the equipment. Generally,
third party appraisals, reviews of future cash flow and detailed market analyses
are used as the basis for measuring whether an impairment loss should be
recorded.
Investment in Financings - Investment in financing represent the gross
receivables due from the financing of equipment plus the initial direct costs
related thereto less the related unearned income. The unearned income is
recognized as finance income, and the initial direct costs are amortized, over
the terms of the receivables using the interest method. Financing transactions
are supported by a written promissory note evidencing the obligation of the user
to repay the principal, together with interest, which will be sufficient to
return the Partnership's full cost associated with such financing transaction,
together with some investment income. Furthermore, the repayment obligation is
collateralized by a security interest in the tangible or intangible personal
property.
Allowance for Doubtful Accounts - The Partnership records a provision for
bad debts to provide for estimated credit losses in the portfolio. The allowance
for doubtful accounts is based on an analysis of delinquency, an assessment of
overall risk and a review of historical loss experience. The Partnership's
write-off policy is based on an analysis of the aging of the Partnership's
portfolio, a review of the non-performing receivables and leases, and prior
collection experience. An account is fully reserved for or written off when the
analysis indicates that the probability of collection of the account is remote.
Results of Operations
Years Ended December 31, 2001 and 2000
For the years ended December 31, 2001 and 2000, the Partnership did not
finance or purchase any new equipment.
Revenues for the year ended December 31, 2001 were $874,695 representing a
decrease of $1,325,672 from 2000. The decrease in revenues resulted primarily
from a decrease in finance income of $331,092, a decrease in rental income of
$36,010, an increase in the loss from equity investment in joint venture of
$374,003 and a decrease in gain on sales of equipment of $601,928. Finance
income decreased in 2001 as compared to 2000 due to a decrease in the
outstanding investment balance on which such earnings are determined. Rental
income decreased primarily as a result of the sale in the third quarter of 2000
of one of the DHC-8 aircraft. The decrease in rental income was partially offset
by a one time settlement payment of $200,000 received in the first quarter of
2001 for a rental claim related to the DHC-8 aircraft sold in the third quarter
of 2000 and the recognition of approximately $244,000 of other lease settlements
in the fourth quarter of 2001. Excluding the impact of these lease settlement
payments, rental income would have decreased by approximately $480,000 in 2001
as compared to 2000. As of December 31, 2001, the Partnership had only one
aircraft operating lease generating rental income.
The loss from investment in joint venture resulted primarily from a
provision for bad debts of $1,825,000 being recorded in 2001 by an underlying
joint venture, ICON Receivables 1997-A LLC, versus a provision for bad debt of
$850,000 being recorded in 2000. The decrease in gain on sales of equipment
resulted from the sale of the DHC-8 aircraft in the third quarter of 2000, which
resulted in a gain of $708,500 in 2000.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
Expenses for the year ended December 31, 2001 were $589,923 representing a
decrease of $789,829 from 2000. The decrease in expenses resulted primarily from
a reversal of a prior year provision for bad debts of $256,928 that was no
longer deemed necessary, decreases in management fees of $47,532, administrative
expense reimbursements of $12,292, depreciation of $158,525, interest expense of
$223,472 and general and administrative of $84,429. The decrease in management
fees and administrative expense reimbursements resulted from the General Partner
voluntarily waiving its right to receive management fees and administrative
expense reimbursements commencing July 1, 2000. The voluntary waiver by the
General Partner was based on the fact that the Partnership's level of operations
through its continued sale of equipment in the disposition period had been
reduced to a level where such fees were not significant. The decrease in
depreciation resulted from the sale of a DHC-8 aircraft subject to operating
lease in the third quarter of 2000. Interest expense decreased as a result of a
decrease in average debt outstanding from 2000 to 2001. General and
administrative expenses decreased mainly as a result of lower professional fees
in 2001 as compared to 2000.
Net income for the year ended December 31, 2001 and 2000 was $284,772 and
$820,615, respectively. The net income per weighted average limited partnership
unit was $0.71 and $2.04 for 2001 and 2000, respectively.
Years Ended December 31, 2000 and 1999
For the years ended December 31, 2000 and 1999, the Partnership did not
finance or purchase any new equipment.
Revenues for the year ended December 31, 2000 were $2,200,367 representing
a decrease of $457,640 from 1999. The decrease in revenues resulted primarily
from a decrease in finance income of $363,724, a decrease in rental income of
$218,377, a loss from equity investment in joint venture of $117,866 in 2000
versus income in 1999 of $19,410 and an increase in gain on sales of equipment
of $252,360. Finance income decreased due to a decrease in the average size of
the portfolio from 1999 to 2000. Rental income decreased due to the sale of a
DHC-8 aircraft in the third quarter of 2000. The loss from investment in joint
venture resulted primarily from a provision for bad debts of $850,000 being
recorded in 2000 by an underlying joint venture, ICON Receivables 1997-A LLC,
with no provision for bad debts being recorded in 1999. The increase in gain on
sales of equipment resulted from the sale of the DHC-8 aircraft in the third
quarter of 2000, which resulted in a gain of $708,500.
Expenses for the year ended December 31, 2000 were $1,379,752 representing
a decrease of $454,580 from 1999. The decrease in expenses resulted primarily
from decreases in management fees of $145,485, administrative expense
reimbursements of $101,256, depreciation of $139,876, and interest expense of
$75,855. These decreases were partially offset by an increase in general and
administrative expenses of $25,132. The decrease in management fees and
administrative expense reimbursements resulted from the General Partner's
voluntary waiver of its right to receive management fees and administrative
expense reimbursements commencing July 1, 2000. The waiver by the General
Partner was based on the fact that the Partnership's level of operations through
its continued sale of equipment in the disposition period had been reduced to a
level where such fees were not significant. The decrease in depreciation
resulted from
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
the sale of a DHC-8 aircraft in the third quarter of 2000. Interest expense
decreased as a result of a decrease in average debt outstanding from 1999 to
2000. General and administrative expenses increased as a result of higher
professional fees in 2000 compared to 1999.
Net income for the year ended December 31, 2000 and 1999 was $820,615 and
$823,675, respectively. The net income per weighted average limited partnership
unit was $2.04 for both 2000 and 1999, respectively.
Liquidity and Capital Resources
The Partnership's reinvestment period ended June 5, 1997 and the
disposition period began on June 6, 1997. During the disposition period the
Partnership has, and will continue to distribute substantially all distributable
cash from operations and equipment sales to the partners and begin the orderly
termination of its operations and affairs. The Partnership has not, and will not
invest in any additional new finance or lease transactions during the
disposition period. However, it may expend monies to refurbish assets to
maintain the value of the portfolio. Because the Partnership is in the
disposition period, future monthly distributions are expected to fluctuate
depending on the amount of asset sales and re-lease proceeds received during
that period.
The Partnership's primary sources of funds in 2001, 2000 and 1999 were net
cash provided by operations of $61,013, $66,348 and $584,985, respectively,
proceeds from sales of equipment in 2001, 2000 and 1999 of $527,845, $4,699,107
and $3,946,052, respectively, and proceeds from non-recourse notes payable in
2000 of $2,967,966. These funds were used to fund cash distributions and make
payments on borrowings.
The Partnership's notes payable at December 31, 2001 totaled $2,526,490 and
consisted entirely of non-recourse notes secured by leased equipment.
Cash distributions to the limited partners in 2001, 2000, and 1999 totaled
$588,646, $4,091,082 and $2,461,219, respectively, of which $281,924, $812,409,
and $815,438 was investment income and $306,722, $3,278,673 and $1,645,781 was a
return of capital, respectively. The monthly annualized cash distribution rate
to limited partners in 2001, 2000 and 1999 was 1.47%, 10.25% and 6.17%,
respectively.
As of December 31, 2001, except as noted above, there were no known trends
or demands, commitments, events or uncertainties which are likely to have a
material effect on liquidity. As cash is realized from operations and sales of
equipment, the Partnership will distribute substantially all available cash,
after retaining sufficient cash to meet its reserve requirements and recurring
obligations.
New Accounting Pronouncement
Effective January 1, 2002, the Partnership adopted SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144).
This statement requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to the future net
cash flows expected to be generated by the asset. If the carrying amount of the
asset exceeds its estimated future cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. The adoption of SFAS No. 144 did not have any effect on
the Partnership's financial position or results of
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
operations as the provisions of SFAS No. 144 are similar to the Partnership's
current policy for impairment review. SFAS No. 144 requires companies to
separately report discontinued operations and extends that reporting to a
component of an entity that either has been disposed of (by sale, abandonment or
in a distribution to the owners) or classified as held for sale. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
the costs to sell.
Item 7a. Qualitative and Quantitative Disclosures About Market Risk
The Partnership is exposed to certain market risks, including changes in
interest rates and the demand for equipment (and the related residuals) owned by
the Partnership and its investee. The Partnership believes its exposure to other
market risks are insignificant to both its financial position and results of
operations.
The Partnership manages its interest rate risk by obtaining fixed rate
debt. The fixed rate debt service obligation streams are generally matched by
fixed rate lease receivable streams generated by the Partnership's lease
investments.
The Partnership manages its exposure to equipment and residual risk by
monitoring the market and maximizing the re-marketing proceeds received through
re-leasing or sale of equipment.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
Item 8. Consolidated Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Page Number
Independent Auditors' Report 14
Consolidated Balance Sheets as of December 31, 2001 and 2000 15-16
Consolidated Statements of Operations for the Years Ended
December 31, 2001, 2000 and 1999 17
Consolidated Statements of Changes in Partners' Equity for the
Years Ended December 31, 2001, 2000 and 1999 18
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2001, 2000 and 1999 19-21
Notes to Consolidated Financial Statements 22-30
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Financial Statements
December 31, 2001
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Partners
ICON Cash Flow Partners, L.P., Series D:
We have audited the accompanying consolidated balance sheets of ICON Cash Flow
Partners, L.P., Series D (a Delaware limited partnership) as of December 31,
2001 and 2000, and the related consolidated statements of operations, changes in
partners' equity, and cash flows for each of the years in the three year period
ended December 31, 2001. These consolidated financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As discussed in Note 1, the Partnership's reinvestment period ended June 5,
1997. The disposition period began on June 6, 1997. During the disposition
period the Partnership has, and will continue to distribute substantially all
distributable cash from operations and equipment sales to the partners and begin
the orderly termination of its operations and affairs.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ICON Cash Flow
Partners, L.P., Series D as of December 31, 2001 and 2000, and the results of
its operations and its cash flows for each of the years in the three year period
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.
/s/ KPMG LLP
----------------------------------------
KPMG LLP
April 15, 2002
New York, New York
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Balance Sheets
December 31,
2001 2000
---- ----
Assets
Cash $ 74,127 $ 152,578
----------- -----------
Investment in finance leases
Minimum rents receivable 24,553 345,531
Estimated unguaranteed residual values 119,400 642,389
Initial direct costs 350 4,157
Unearned income (697) (92,763)
Allowance for doubtful accounts -- (256,928)
----------- -----------
143,606 642,386
----------- -----------
Investment in operating lease equipment, at cost 3,384,869 3,384,869
Accumulated depreciation (1,650,881) (1,267,097)
----------- -----------
1,733,988 2,117,772
Investment in financings
Receivables due in installments 2,390,863 2,484,219
Initial direct costs 105 308
Unearned income (487,655) (666,947)
Allowance for doubtful accounts (92,097) (92,097)
----------- -----------
1,811,216 1,725,483
----------- -----------
Investment in joint venture 26,561 518,430
----------- -----------
Other assets 58,052 95,050
----------- -----------
Total assets $ 3,847,550 $ 5,251,699
=========== ===========
(continued on next page)
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Balance Sheets (Continued)
December 31,
2001 2000
---- ----
Liabilities and Partners' Equity
Note payable - recourse $ -- $ 72,717
Notes payable - non-recourse 2,526,490 3,111,495
Security deposits, deferred credits and other payables 943,670 1,380,277
----------- -----------
3,470,160 4,564,489
----------- -----------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (340,822) (337,724)
Limited partners (399,118 units outstanding,
$100 per unit original issue price) 718,212 1,024,934
----------- -----------
Total partners' equity 377,390 687,210
----------- -----------
Total liabilities and partners' equity $ 3,847,550 $ 5,251,699
=========== ===========
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Operations
For the Years Ended December 31,
2001 2000 1999
---- ---- ----
Revenues
Rental income $ 1,046,225 $ 1,082,236 $ 1,300,613
Finance income 246,723 577,815 941,539
(Loss) income from investment
in unconsolidated joint venture (491,869) (117,866) 19,410
Gains on sales of equipment 4,856 606,784 354,424
Interest income and other 68,760 51,398 42,021
----------- ----------- -----------
Total revenues 874,695 2,200,367 2,658,007
----------- ----------- -----------
Expenses
Interest 303,593 527,065 602,920
Depreciation 383,784 542,309 682,185
General and administrative 154,959 239,388 214,256
Management fees - General Partner -- 47,532 193,017
Administrative expense reimbursements
- General Partner -- 12,292 113,548
Amortization of initial direct costs 4,515 11,166 28,406
Reversal of provision for bad debts (256,928) -- --
----------- ----------- -----------
Total expenses 589,923 1,379,752 1,834,332
----------- ----------- -----------
Net income $ 284,772 $ 820,615 $ 823,675
=========== =========== ===========
Net income allocable to:
Limited partners $ 281,924 $ 812,409 $ 815,438
General Partner 2,848 8,206 8,237
----------- ----------- -----------
$ 284,772 $ 820,615 $ 823,675
=========== =========== ===========
Weighted average number of limited
partnership units outstanding 399,118 399,118 399,118
=========== =========== ===========
Net income per weighted average
limited partnership unit $ 0.71 $ 2.04 $ 2.04
=========== =========== ===========
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Changes in Partners' Equity
For the Years Ended December 31, 2001, 2000 and 1999
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
------- ------ -------- ------- -----
(Per weighted average unit)
Balance at
December 31, 1998 $ 5,949,388 $(288,004) $ 5,661,384
Cash distributions
to partners $ 4.13 $ 2.04 (2,461,219) (24,840) (2,486,059)
Net income 815,438 8,237 823,675
----------- --------- -----------
Balance at
December 31, 1999 4,303,607 (304,607) 3,999,000
Cash distributions
to partners $ 8.21 $ 2.04 (4,091,082) (41,323) (4,132,405)
Net income 812,409 8,206 820,615
----------- --------- -----------
Balance at
December 31, 2000 1,024,934 (337,724) 687,210
Cash distributions
to partners $ 0.76 $ 0.71 (588,646) (5,946) (594,592)
Net income 281,924 2,848 284,772
----------- --------- -----------
Balance at
December 31, 2001 $ 718,212 $(340,822) $ 377,390
=========== ========= ===========
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
For the Years Ended December 31,
2001 2000 1999
---- ---- ----
Cash flows provided by operating activities:
Net income $ 284,772 $ 820,615 $ 823,675
----------- ----------- -----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Finance income portion of receivables paid
directly to lenders by lessees (246,723) (93,426) (168,261)
Rental income paid directly to lenders by lessees (582,931) (1,002,474) (620,426)
Amortization of initial direct costs 4,515 11,166 28,406
Gains on sales of equipment (4,856) (606,784) (354,424)
Reversal of provision for bad debt (256,928) -- --
Interest expense on non-recourse financing
paid directly by lessees 301,551 515,098 472,953
Depreciation 383,784 542,309 682,185
Loss (income) from investment in joint venture 491,869 117,866 (19,410)
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables (net) 175,928 388,648 613,099
Distributions from joint venture -- 80,295 386,657
Investment in joint venture -- -- (52,616)
Accounts payable to General Partner
and affiliates, net 2,004 9,183 10,939
Security deposits, deferred credits
and other payables (438,611) (957,900) (1,188,748)
Other assets 36,998 99,490 --
Other (90,359) 142,262 (29,044)
----------- ----------- -----------
Total adjustments (223,759) (754,267) (238,690)
----------- ----------- -----------
Net cash provided by
operating activities 61,013 66,348 584,985
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sales of leases and equipment 527,845 4,699,107 3,946,052
Refurbishment of operating equipment -- -- (1,369,714)
----------- ----------- -----------
Net cash provided by investing activities 527,845 4,699,107 2,576,338
----------- ----------- -----------
(continued on next page)
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (Continued)
For the Years Ended December 31,
2001 2000 1999
---- ---- ----
Cash flows from financing activities:
Cash distributions to partners (594,592) (4,132,405) (2,486,059)
Proceeds from notes payable - non-recourse -- 2,967,966 --
Principal payments on note payable - recourse (72,717) (205,453) (592,631)
Principal payments on non-recourse - secured
financing -- (58,146) (440,891)
Principal payments on non-recourse debt -- (3,472,320) --
----------- ----------- -----------
Net cash used in financing activities (667,309) (4,900,358) (3,519,581)
----------- ----------- -----------
Net decrease in cash (78,451) (134,903) (358,258)
Cash at beginning of year 152,578 287,481 645,739
----------- ----------- -----------
Cash at end of year $ 74,127 $ 152,578 $ 287,481
=========== =========== ===========
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (Continued)
Supplemental Disclosures of Cash Flow Information
During the years ended December 31, 2001, 2000 and 1999, non-cash
activities included the following:
2001 2000 1999
---- ---- ----
Principal and interest on finance receivables
paid directly to lenders by lessees $ 303,625 $ 714,614 $ 971,296
Rental income paid directly to lender by lessee 582,931 1,002,474 620,426
Principal and interest on non-recourse financing
paid directly to lenders by lessees (886,556) (1,717,088) (1,591,722)
Decrease in investments in finance leases and
financing due to contribution in joint venture -- -- (51,876)
Increase in equity investment in joint venture -- -- 51,876
----------- ----------- -----------
$ -- $ -- $ --
=========== =========== ===========
Interest expense
Interest expense on non-recourse debt paid directly
to lenders by lessees $ 301,551 $ 515,098 $ 472,953
Other interest 2,042 11,967 129,967
----------- ----------- -----------
Total interest expense $ 303,593 $ 527,065 $ 602,920
=========== =========== ===========
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 2001
1. Organization
ICON Cash Flow Partners, L.P., Series D (the "Partnership") was formed on
February 21, 1991 as a Delaware limited partnership with an initial
capitalization of $2,000. It was formed to acquire various types of equipment,
to lease such equipment to third parties and, to a lesser degree, to enter into
secured financing transactions. The Partnership's offering period commenced on
August 23, 1991 and by its final closing on June 5, 1992, 400,000 units had been
admitted into the Partnership with aggregate gross proceeds of $40,000,000. From
1994 through 2001, the Partnership redeemed 882 limited partnership units
leaving 399,118 limited partnership units outstanding at December 31, 2001.
The Partnership's reinvestment period ended June 5, 1997. The disposition
period began on June 6, 1997. During the disposition period the Partnership has,
and will continue to distribute substantially all distributable cash from
operations and equipment sales to the partners and begin the orderly termination
of its operations and affairs. The Partnership has not, and will not invest in
any additional finance or lease transactions during the disposition period.
During the disposition period, the Partnership expects to recover, at a minimum,
the carrying value of its assets.
The General Partner of the Partnership is ICON Capital Corp. (the "General
Partner"), a Connecticut corporation. The General Partner manages and controls
the business affairs of the Partnership's equipment leases and financing
transactions under a management agreement with the Partnership.
ICON Securities Corp., an affiliate of the General Partner, received an
underwriting commission on the gross proceeds from sales of all units. The
General Partner received organization and offering expenses from the gross
proceeds of such sales. The total underwriting compensation paid by the
Partnership, including underwriting commissions, sales commissions, incentive
fees, public offering expense reimbursements and due diligence activities was
limited to 13 1/2% of the gross proceeds received from the sale of the units.
Such offering costs aggregated $5,400,000, (including $2,207,188 paid to the
General Partner or its affiliates), and were charged directly to limited
partners' equity.
Profits, losses, cash distributions and disposition proceeds are allocated
99% to the limited partners and 1% to the General Partner until each limited
partner has received cash distributions and disposition proceeds sufficient to
reduce its adjusted capital contribution account to zero and receive, in
addition, other distributions and allocations which would provide a 10% per
annum cumulative return on its outstanding adjusted capital contribution
account. After such time, the distributions would be allocated 90% to the
limited partners and 10% to the General Partner.
2. Significant Accounting Policies
Basis of Accounting and Presentation - The Partnership's records are
maintained on the accrual basis. The preparation of financial statements in
conformity with generally accepted accounting principles requires the General
Partner's management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the dates of the financial statements, and
revenues and expenses during
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
the reporting periods. Major estimates include the allowance for bad debts and
unguaranteed residual values. Management believes that the estimates and
assumptions utilized in preparing its financial statements are reasonable and
prudent. Actual results could differ from those estimates. In addition,
management is required to disclose contingent assets and contingent liabilities.
Consolidation - The consolidated financial statements include the accounts
of the Partnership and its wholly owned subsidiary. All inter-company accounts
and transactions have been eliminated. The Partnership accounts for its interest
in a less than 50% owned joint venture under the equity method of accounting. In
such case, the Partnership's original investment is recorded at cost and
adjusted for its share of earnings, losses and distributions thereafter.
Leases - The Partnership accounts for owned equipment leased to third
parties as finance leases or operating leases, as appropriate. For finance
leases, the Partnership records, at the inception of the lease, the total
minimum lease payments receivable, the estimated unguaranteed residual values,
the initial direct costs related to the leases and the related unearned income.
Unearned income represents the difference between the sum of the minimum lease
payments receivable plus the estimated unguaranteed residual minus the cost of
the leased equipment. Unearned income is recognized as finance income over the
terms of the related leases following the interest method. For operating leases,
equipment is recorded at cost and is depreciated on the straight-line method
over the lease terms to their estimated fair market values at lease
terminations. Related lease rentals are recognized on the straight-line method
over the lease terms. Billed and uncollected operating lease receivables are
included in other assets. Initial direct costs of finance leases are capitalized
and are amortized over the terms of the related leases using the interest
method. Initial direct costs of operating leases are capitalized and amortized
on the straight-line method over the lease terms. Each lease is expected to
provide aggregate contractual rents that, along with residual proceeds, return
the Partnership's cost of its investments along with investment income.
Investment in Financings - Investment in financings represent the gross
receivables due from the financing of equipment plus the initial direct costs
related thereto less the related unearned income. The unearned income is
recognized as finance income, and the initial direct costs are amortized, over
the terms of the receivables using the interest method.
Impairment of Estimated Residual Values - The Partnership's policy with
respect to impairment of estimated residual values is to review, on a periodic
basis, the carrying value of its residuals on an individual asset basis to
determine whether events or changes in circumstances indicate that the carrying
value of an asset may not be recoverable and, therefore, an impairment loss
should be recognized. The events or changes in circumstances which generally
indicate that the residual value of an asset has been impaired are (i) the
estimated fair value of the underlying equipment is less than the Partnership's
carrying value or (ii) the lessee is experiencing financial difficulties and it
does not appear likely that the estimated proceeds from disposition of the asset
will be sufficient to satisfy the remaining obligation to the non-recourse
lender and the Partnership's residual position. Generally in the latter
situation, the residual position relates to equipment subject to third party
non-recourse notes payable where the lessee remits their rental payments
directly to the lender and the Partnership does not recover its residual until
the non-recourse note obligation is repaid in full.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
The Partnership measures its impairment loss as the amount by which the
carrying amount of the residual value exceeds the estimated proceeds to be
received by the Partnership from release or resale of the equipment. Generally,
third party appraisals, reviews of future cash flow and detailed market analyses
are used as the basis for measuring whether an impairment loss should be
recorded.
Allowance for Doubtful Accounts - The Partnership records a provision for
bad debts to provide for estimated credit losses in the portfolio. The allowance
for doubtful accounts is based on an analysis of delinquency, an assessment of
overall risk and a review of historical loss experience. The Partnership's
write-off policy is based on an analysis of the aging of the Partnership's
portfolio, a review of the non-performing receivables and leases, and prior
collection experience. An account is fully reserved for or written off when the
analysis indicates that the probability of collection of the account is remote.
Disclosures About Fair Value of Financial Instruments - Statement of
Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value
of Financial Instruments" requires disclosures about the fair value of financial
instruments. Separate disclosure of fair value information as of December 31,
2001 and 2000 with respect to the Company's assets and liabilities is not
provided because (i) SFAS No. 107 does not require disclosures about the fair
value of lease arrangements, (ii) the carrying value of financial assets, other
than lease related investments, and payables approximates market value and (iii)
fair value information concerning certain recourse and non-recourse debt
obligations is not practicable to estimate without incurring excessive costs to
obtain all the information that would be necessary to derive a market interest
rate.
Income Taxes - No provision for income taxes has been made as the liability
for such taxes are that of each of the partners rather than the Partnership.
Reclassifications - Certain items have been reclassified to conform to the
classification used in 2001.
New Accounting Pronouncement - Effective January 1, 2002, the Partnership
adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" (SFAS No. 144). This statement requires that long-lived assets be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to the future net cash flows expected to be generated by the asset. If
the carrying amount of the asset exceeds its estimated future cash flows, an
impairment charge is recognized by the amount by which the carrying amount of
the asset exceeds the fair value of the asset. The adoption of SFAS No. 144 did
not have any effect on the Partnership's financial position or results of
operations as the provisions of SFAS No. 144 are similar to the partnership's
current policy for impairment review. SFAS No. 144 requires companies to
separately report discontinued operations and extends that reporting to a
component of an entity that either has been disposed of (by sale, abandonment or
in a distribution to the owners) or classified as held for sale. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
the costs to sell.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
3. Investment in Joint Venture
The Partnership and affiliates formed a joint venture for the purpose of
acquiring and managing various assets. The Partnership and its affiliates have
identical investment objectives and participate on the same terms and
conditions. The Partnership has a right of first refusal to purchase the
equipment, on a pro-rata basis, if any of the affiliates desire to sell their
interest in the equipment
ICON Receivables 1997-A L.L.C.
In March 1997 the Partnership, ICON Cash Flow Partners L.P. Six ("L.P.
Six"), and ICON Cash Flow Partners L.P. Seven ("L.P. Seven") contributed and
assigned equipment lease and finance receivables and residuals to ICON
Receivables 1997-A L.L.C. ("1997-A"). In September 1997 ICON Cash Flow Partners,
L.P., Series E ("Series E"), L.P. Six and L.P. Seven contributed and assigned
additional equipment lease and finance receivables and residuals to 1997-A. The
Partnership, Series E, L.P. Six and L.P. Seven own 17.81%, 31.19%, 31.03% and
19.97% interests, respectively, in 1997-A the Partnership accounts for its
interest in 1997-A under the equity method of accounting.
Information as to the financial position and results of operations of
1997-A as of and for the years ended December 31, 2001 and 2000 is summarized
below:
December 31, 2001 December 31, 2000
Assets $ 1,856,582 $ 9,002,519
================ ===============
Liabilities $ 1,707,445 $ 6,848,927
================ ===============
Equity $ 149,137 $ 2,153,592
================ ===============
Partnership's share of equity $ 26,561 $ 518,430
================ ===============
Year Ended Year Ended
December 31, 2001 December 31, 2000
Net loss $ (2,004,455) $ (661,929)
================ ===============
Partnership's share of net loss $ (491,869) $ (117,866)
================ ===============
Distributions to partners $ - $ 450,867
================ ===============
Partnership's share of distributions $ - $ 80,295
================ ===============
1997-A recorded a provision for bad debts of $1,825,000 in 2001 and
$850,000 in 2000.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
4. Receivables Due in Installments
Non-cancelable minimum annual amounts due on finance leases and financings
as of December 31, 2001 are as follows:
Finance
Year Lease Financing Total
2002 $ 24,553 $ 135,775 $ 160,328
2003 - 84,000 84,000
2004 - 2,084,000 2,084,000
2005 - 87,088 87,088
----------- ----------- -----------
$ 24,553 $ 2,390,863 $ 2,415,416
=========== =========== ===========
The finance lease was renewed in the first quarter of 2002 for an
additional 36 months.
5. Investment in Operating Lease
In June 1997 the Partnership acquired two DeHaviland DHC-8-102 aircraft and
leased them to U.S. Airways, Inc ("U.S. Air"). The purchase price totaled
$6,819,250 and was funded with $3,619,250 of cash and $3,200,000 in non-recourse
debt. In August 1999 the lease of one of the aircraft expired and the aircraft
was remarketed to Wideroe's Flyveselskap ASA, a Norwegian air carrier for a term
of four years under a lease which required the Partnership to fund approximately
$1,370,000 of refurbishments. In November 1999, the Partnership extended the
remaining U.S. Air lease for a term of four years. In September 2000, the
Partnership sold the Wideroe aircraft for proceeds totaling $4,534,390 which
resulted in a gain on sale of $708,500.
The investments in operating leases at December 31, 2001 and 2000 were as
follows:
2001 2000
---- ----
Equipment cost, beginning of year $ 3,384,869 $ 8,188,694
Equipment disposition - (4,803,825)
------------- --------------
Equipment cost, end of year 3,384,869 3,384,869
------------- ---------
Accumulated depreciation, beginning of year (1,267,097) (1,702,723)
Depreciation expense (383,784) (542,309)
Accumulated depreciation on disposition - 977,935
------------- -------------
Accumulated depreciation, end of year (1,650,881) (1,267,097)
------------- -------------
Investment in operating leases, end of year $ 1,733,988 $ 2,117,772
============= =============
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Non-cancelable minimum annual amounts due on the operating lease as of
December 31, 2001 are as follows:
Year
2002 $ 588,080
2003 539,000
---------------
$ 1,127,080
6. Allowance for Doubtful Accounts
The allowance for doubtful accounts related to the investments in finance
leases and financings consisted of the following:
Finance
Leases Financings Total
Balance at December 31, 1998 $ 246,450 $140,766 $ 387,216
Accounts written-off (79,889) (48,669) (128,558)
Recovery of accounts previously
written-off 57,983 - 57,983
--------- -------- ---------
Balance at December 31, 1999 224,544 92,097 316,641
Recovery on accounts previously
written-off 32,384 - 32,384
--------- -------- ---------
Balance at December 31, 2000 256,928 92,097 349,025
Reversal of prior provisions (256,928) - (256,928)
--------- -------- ---------
Balance at December 31, 2001 $ - $ 92,097 $ 92,097
========= ======== =========
7. Notes Payable
In May 1997 the Partnership borrowed $2,700,000 from a third party lender
pursuant to a four year term loan agreement. The loan agreement granted the
lender a security interest in certain lease payments and financings. The note
bore interest at 9.25% and was payable in monthly installments of interest and
principal. The Partnership repaid the note in full during the year ended
December 31, 2001.
In December 1995 the Partnership borrowed $4,148,838 by pledging lease
receivables and granting a security interest in the underlying equipment and
receivables relating to a specified group of leases and financing transactions.
The loan accrued interest at a fixed rate of 8.02%, and was payable from
receivable proceeds generated by the portfolio that had secured it. The note was
fully repaid 2000.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
In June 1997 the Partnership acquired two DeHaviland DHC-8-102 aircraft and
leased them to U.S. Air. The purchase price totaled $6,819,250 of which the
Partnership borrowed $3,200,000 in non-recourse debt from an unaffiliated third
party lender (the Aircraft Lender). In October 1998, the Partnership borrowed an
additional $750,000 from the Aircraft Lender to refurbish one of the two
aircraft (in the aggregate the "Aircraft Debt").
In August 1999 the Partnership borrowed $3,000,000 of new debt from a new
lender at a rate of 9.6% with a scheduled maturity date of November 2003 and
repaid a portion of the Aircraft Debt. In September 2000 the balance of the new
debt of $2,504,354 was paid off with a portion of the proceeds of sale of one of
the aircraft (see Note 5).
In the first quarter of 2000, the Partnership refinanced the remaining
Aircraft Debt outstanding and borrowed an additional $2,000,000 under a
non-recourse note ("2000 Non-recourse Note"). This debt carries an interest rate
of 11% and has a maturity date of November 2003. This debt is collateralized by
the other aircraft on lease with U.S. Air and the underlying equipment with a
net book value of $1,733,988 at December 31, 2001.
The notes payable mature as follows:
2000 Other
Non-Recourse Notes Payable
Note Non-Recourse Total
-------------- ------------ --------------
2002 $ 341,547 $ 133,102 $ 474,649
2003 2,051,841 - 2,051,841
-------------- ------------ --------------
$ 2,393,388 $ 133,102 $ 2,526,490
============== ============ ==============
8. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the years ended December 31, 2000 and 1999 are as
follows: Charged to Operations
Management fees $ 193,017
Administrative expense reimbursements 113,548
-------------
Year ended December 31, 1999 $ 306,565
=============
Management fees $ 47,532
Administrative expense reimbursements 12,292
-------------
Year ended December 31, 2000 $ 59,824
=============
No such fees were incurred in the year ended December 31, 2001 pursuant to
the General Partners voluntary decision to waiver its right to management fees
and expense reimbursements effective July 1, 2000.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
In accordance with the Manager Agreement, the Partnership paid the General
Partner management fees based on a percentage of rental payments received
(ranging from 1% to 7%). In addition, the General Partner is reimbursed for
expenses incurred by it in connection with the Partnership's operators (See Note
1 for information relating to organization and offering expenses and indemnity
commission).
Due to the reduced level of operations during the disposition period of the
Partnership, the General Partner voluntarily waived all management fees and
administrative expense reimbursements payable by the Partnership effective July
1, 2000.
The Partnership has an investment in one non-consolidated joint venture
with other Partnerships sponsored by the General Partner (See Note 3 for
additional information relating to the joint venture).
9. Commitments and Contingencies
The Partnership has entered into remarketing and residual sharing
agreements with third parties. In connection therewith, remarketing or residual
proceeds received in excess of specified amounts will be shared with third
parties based on specified formulas. During the year ended December 31, 1999,
the Partnership paid $152,739, to third parties as their share of the proceeds.
No such obligations were incurred in 2000 and 2001.
10. Tax Information (Unaudited)
The following reconciles net income for financial statement reporting
purposes to income (loss) for federal income tax purposes for the years ended
December 31:
2001 2000 1999
Net income for financial statement reporting purposes $ 284,772 $ 820,615 $ 823,675
Differences due to:
Direct finance leases 246,723 449,184 1,315,734
Depreciation and amortization (225,783) (1,062,527) (2,020,504)
Provision for losses (256,928) (29,384) (70,575)
Gain (loss) on sale of equipment 312,147 (184,260) (686,442)
Other (339,262) 85,051 (78,444)
--------- ----------- -----------
Partnership income (loss) for
federal income tax reporting purposes $ 21,669 $ 78,679 $ (716,556)
========= =========== ===========
As of December 31, 2001, the partners' capital accounts for financial
statement reporting purposes totaled $377,390 compared to the partners' capital
accounts for federal income tax purposes of $6,934,133 (unaudited). The
difference arises primarily from commissions reported as a reduction in the
partners' capital for financial reporting purposes but not for federal income
tax regarding purposes, and temporary differences related to direct finance
leases, depreciation and provision for losses.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
11. Quarterly Financial Data (Unaudited)
The following table is a summary of financial data by quarter for the years
ended December 31, 2001 and 2000:
For the Quarters Ended
----------------------------------------------------------------------
March 31, June 30, September 30, December 31,
-------- ------- ------------ -----------
2001
Revenues $ 424,703 $ (215,214) $ 208,124 $ 457,082
============= ============= ============= =============
Net income (loss) allocable to
limited partners $ 192,964 $ (426,480)(1) $ 8,895 $ 506,545(2)
============= ============= ============= =============
Net income (loss) per weighted
average limited partnership unit $ 0.48 $ (1.07) $ 0.02 $ 1.28
============= ============= ============ =============
2000
Revenues $ 451,153 $ 465,995 $ 946,824 $ 336,395
============= ============= ============= =============
Net income allocable to
limited partners $ 55,958 $ 23,272 $ 619,452 $ 113,727
============= ============= ============= =============
Net income per weighted
average limited partnership unit $ 0.14 $ 0.06 $ 1.55 $ 0.29
============= ============= ============ =============
(1) The second quarter of 2001 includes the effect of the Partnership's share
of the $1,825,000 provision for bad debts recorded by a joint venture in
which the Partnership has an interest (See note 3).
(2) The fourth quarter of 2001 includes the effect of a reversal of
approximately $257,000 of allowances for bad debts no longer deemed
necessary.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant's General Partner
The General Partner, a Connecticut corporation, was formed in 1985. The
General Partner's principal offices are located at 100 Fifth Avenue, New York,
New York 10011, and its telephone number is (212) 418-4700. The officers of the
General Partner have extensive experience with transactions involving the
acquisition, leasing, financing and disposition of equipment, including
acquiring and disposing of equipment subject to leases and full financing
transactions.
The manager of the Registrant's business is the General Partner. The
General Partner is engaged in a broad range of equipment leasing and financing
activities. Through its sales representatives and through various broker
relationships throughout the United States, the General Partner offers a broad
range of equipment leasing services.
The General Partner is performing or causing to be performed certain
functions relating to the management of the equipment of the Partnership. Such
services include the collection of lease payments from the lessees of the
equipment, re-leasing services in connection with equipment which is off-lease,
inspections of the equipment, liaison with and general supervision of lessees to
assure that the equipment is being properly operated and maintained, monitoring
performance by the lessees of their obligations under the leases and the payment
of operating expenses.
The officers and directors of the General Partner are as follows:
Beaufort J.B. Clarke Chairman, Chief Executive Officer and Director
Paul B. Weiss President and Director
Thomas W. Martin Executive Vice President and Director
Beaufort J. B. Clarke, age 55, has been Chairman, Chief Executive Officer
and Director of the General Partner since 1996. Prior to his present position,
Mr. Clarke was founder and the President and Chief Executive Officer of Griffin
Equity Partners, Inc. Mr. Clarke formerly was an attorney with Shearman and
Sterling and has over 20 years of senior management experience in the United
States leasing industry.
Paul B. Weiss, age 41, is President and Director of the General Partner.
Mr. Weiss has been exclusively engaged in lease acquisitions since 1988 from his
affiliations with the General Partner since 1996, Griffin Equity Partners (as
Executive Vice President from 1993-1996); Gemini Financial Holdings (as Senior
Vice President-Portfolio Acquisitions from 1991-1993) and Pegasus Capital
Corporation (as Vice President-Portfolio Acquisitions from 1988-1991). He was
previously an investment banker and a commercial banker.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
Thomas W. Martin, age 48, has been Executive Vice President of the General
Partner since 1996. Prior to his present position, Mr. Martin was the Executive
Vice President and Chief Financial Officer of Griffin Equity Partners, Inc.
(1993-1996), Gemini Financial Holdings (as Senior Vice President from 1992-1993)
and Chancellor Corporation (as Vice President-Syndications from 1985-1992). Mr.
Martin has 17 years of senior management experience in the leasing business.
Item 11. Executive Compensation
The Partnership has no directors or officers. The General Partner and its
affiliates were paid or accrued the following compensation and reimbursement for
costs and expenses for the years ended December 31, 2001, 2000 and 1999.
Type of
Entity Capacity Compensation 2001 2000 1999
------ -------- ------------ ---- ---- ----
ICON Capital Corp. General Partner Management fees $ - $47,532 $193,017
ICON Capital Corp. General Partner Administrative expense
reimbursements - 12,292 113,548
--------- ------- --------
$ - $59,824 $306,565
========= ======= ========
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) The registrant is a limited partnership and therefore does not have voting
shares of stock. No person of record owns, or is known by the Partnership
to own beneficially, more than 5% of any class of securities of the
Partnership.
(b) As of March 29, 2002, Directors and Officers of the General Partner do not
own any equity securities of the Partnership.
(c) The General Partner owns the equity securities of the Partnership set forth
in the following table:
Title Amount Beneficially Percent
of Class Owned of Class
General Partner Represents initially a 1% and potentially a 100%
Interest 10% interest in the Partnership's income, gain
and loss deductions.
Profits, losses, cash distributions and disposition proceeds are allocated
99% to the limited partners and 1% to the General Partner until each investor
has received cash distributions and disposition proceeds sufficient to reduce
its adjusted capital contribution account to zero and receive, in addition,
other distributions and allocations which would provide a 10% per annum
cumulative return, compounded daily, on the outstanding adjusted capital
contribution account. After such time, the distributions will be allocated 90%
to the limited partners and 10% to the General Partner.
Item 13. Certain Relationships and Related Transactions
See Item 11 for a discussion of the Partnership's related party
transactions. See Notes 3 and 8 for a discussion of the Partnership's related
party transactions.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements - See Part II, Item 8 hereof.
2. Financial Statement Schedule - None.
Schedules not listed above have been omitted because they are not
applicable or are not required or the information required to be set forth
therein is included in the Financial Statements or Notes thereto.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
3. Exhibits - The following exhibits are incorporated herein by
references:
(i) Form of Dealer-Manager Agreement (Incorporated by reference to
Exhibit 1.1 to Form S-1 Registration Statement No. 33-40044 filed
with the Securities and Exchange Commission on April 18, 1991)
(ii) Form of Selling Dealer Agreement (Incorporated by reference to
Exhibit 1.2 to Form S-1 Registration Statement No. 33-40044 filed
with the Securities and Exchange Commission on April 18, 1991)
(iii)Amended and Restated Agreement of Limited Partnership
(Incorporated herein by reference to Exhibit A to Amendment No. 4
to Form S-1 Registration Statement No. 33-40044 filed with the
Securities and Exchange Commission on August 14, 1991) (iv) (b)
Reports on Form 8-K
No reports on Form 8-K were filed by the Partnership during the quarter
ended December 31, 2001.
(c) Exhibits
(d) Unconsolidated Joint Venture Financial Statements ICON Receivables 1997-A -
as of and for the years ended December 31, 2001 and 2000
ICON Receivables 1997-A L.L.C.
Financial Statements
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Members ICON Receivables 1997-A L.L.C.
We have audited the accompanying balance sheets of ICON Receivables 1997-A
L.L.C. (the "Company") as of December 31, 2001 and 2000, and the related
statements of operations, changes in members' equity, and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As discussed in Note 1, the Company is winding down its portfolio and will
distribute available cash to its members when all assets are liquidated and all
obligations are paid.
In our opinion, the consolidated financial statements referred to the above
present fairly, in all material respects, the financial position of ICON
Receivables 1997-A L.L.C. as of December 31 2001 and 2000, and the results of
its operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
/s/KPMG LLP
-------------------------------------
KPMG LLP
April 15, 2002
New York, New York
ICON Receivables 1997-A L.L.C.
Balance Sheets
December 31,
Assets 2001 2000
------ ---- ----
Cash $ 673,740 $ 619,719
------------ ------------
Investment in finance leases
Minimum rents receivable 2,984,147 4,594,866
Estimated unguaranteed residual values 269,211 565,788
Unearned income (134,914) (354,592)
Allowance for doubtful accounts (2,174,224) (786,560)
------------ ------------
944,220 4,019,502
------------ ------------
Investment in financings
Minimum rents receivable - 4,570,567
Unearned income - (245,371)
Allowance for doubtful accounts - (802,699)
------------ ------------
- 3,522,497
------------ ------------
Other assets 238,622 840,801
------------ ------------
Total assets $ 1,856,582 $ 9,002,519
============ ============
Liabilities and Members' Equity
Notes payable non-recourse $ 1,157,730 $ 5,016,098
Security deposits, deferred credits
and other payables 549,715 1,832,829
------------ -------------
Total liabilities 1,707,445 6,848,927
------------ -------------
Members' equity 149,137 2,153,592
------------ -------------
Total liabilities and members' equity $ 1,856,582 $ 9,002,519
============ =============
See accompanying notes to financial statement.
ICON Receivables 1997-A L.L.C.
Statements of Operations
For the Years Ended December 31,
2001 2000
---- ----
Revenue
Finance income $ 465,049 $ 960,903
Interest income and other 56,001 135,580
Gain on remarketing of equipment 26,997 161,410
------------ ------------
Total revenues 548,047 1,257,893
------------ ------------
Expenses
General and administrative and
other expenses 531,747 450,902
Interest expense 195,755 618,920
Provision for doubtful accounts 1,825,000 850,000
------------ ------------
Total expenses 2,552,502 1,919,822
------------ ------------
Net loss $ (2,004,455) $ (661,929)
============ ============
See accompanying notes to financial statement.
ICON Receivables 1997-A L.L.C.
Statements of Changes in Members' Equity
For the Years Ended December 31, 2001 and 2000
Total
Balance at December 31, 1999 $ 3,266,388
--------------
Net loss (661,929)
Distributions to members (450,867)
--------------
Balance at December 31, 2000 2,153,592
Net loss (2,004,455)
--------------
Balance at December 31, 2001 $ 149,137
==============
See accompanying notes to financial statement.
ICON Receivables 1997-A L.L.C.
Statements of Cash Flows
For the Years Ended December 31,
2001 2000
---- ----
Cash flows from operating activities:
Net loss $(2,004,455) $ (661,929)
----------- -----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain from the sale of finance leases (26,997) (161,410)
Provision for doubtful accounts 1,825,000 850,000
Changes in operating assets and liabilities:
Collection of principal 4,476,202 5,518,901
Other assets 602,179 349,534
Security deposits, deferred credits and
other payables (1,283,114) 340,695
----------- -----------
Total adjustments 5,593,270 6,897,720
----------- -----------
Net cash provided by operating activities 3,588,815 6,235,791
----------- -----------
Cash flows from investing activities:
Proceeds from the sales of equipment 323,574 1,379,988
----------- -----------
Net cash provided by investing activities 323,574 1,379,988
----------- -----------
Cash flows from financing activities:
Principal payments on notes payable non-recourse (3,858,368) (8,193,119)
Distributions to members -- (450,867)
----------- -----------
Net cash used in investing activities (3,858,368) (8,643,986)
----------- -----------
Net increase (decrease) in cash 54,021 (1,028,207)
Cash at the beginning of the year 619,719 1,647,926
----------- -----------
Cash at the end of the year $ 673,740 $ 619,719
=========== ===========
Supplemental information-interest paid $ 194,555 $ 640,625
=========== ===========
See accompanying notes to financial statement.
ICON RECEIVABLES 1997-A L.L.C.
Notes to Financial Statement
December 31, 2001
1. Organization
ICON Receivables 1997-A L.L.C. (the "Company"), was formed in March 1997
and commenced business operations in 1997. In 1997, ICON Cash Flow Partners
L.P., Series D ("Series D"), ICON Cash Flow Partners, L.P., Series E ("Series
E"), ICON Cash Flow Partners L.P. Six ("L.P. Six") and ICON Cash Flow Partners
L.P. Seven ("L.P. Seven") contributed and assigned equipment leases and finance
receivables and residuals to the Company. The financial statements reflect the
Company's management of such contributed assets. Since its formation, the
Company has not entered into any new transactions other than owning and managing
the assets contributed for the benefit of the members. The Company is managed by
the General Partner of the Company's members. The Company is winding down its
portfolio and will distribute available cash to its members when all assets are
liquidated and all obligations are paid.
2. Significant Accounting Policies
Basis of Accounting and Presentation - The Company's records are maintained
on the accrual basis. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the dates of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.
Leases - The Company's leases are accounted for as finance leases. As such,
the Company recorded, at the inception of the lease, the total minimum lease
payments receivable, the estimated unguaranteed residual values and the related
unearned income. Unearned income represents the difference between the sum of
the minimum lease payments receivable plus the estimated unguaranteed residual
minus the cost of the leased equipment. Unearned income is recognized as finance
income over the terms of the related leases using the interest method.
Investment in Financings - Investment in financings represented the gross
receivables due from the financing of equipment less the related unearned
income. The unearned income was recognized as finance income over the terms of
the receivables using the interest method.
Allowance for Doubtful Accounts - The Company records a provision for
doubtful accounts to provide for estimated credit losses in the portfolio. The
allowance for doubtful accounts is based on an analysis of delinquency, an
assessment of overall risk and a review of historical loss experience. The
Company's write-off policy is based on an analysis of the aging of the Company's
portfolio, a review of the non-performing receivables and leases, and prior
collection experience. An account is fully reserved for or written off when the
analysis indicates that the probability of collection of the account is remote.
Income Taxes - No provision for income taxes has been made as the liability
for such taxes is that of each of the members rather than the Company.
ICON RECEIVABLES 1997-A L.L.C.
Notes to Financial Statement
December 31, 2001
Impairment of Estimated Residual Values - The Company's policy with respect
to impairment of estimated residual values is to review, on a periodic basis,
the carrying value of its residuals on an individual assets basis to determine
whether events or changes in circumstances indicate that the carrying value of
an asset may not be recoverable and, therefore, an impairment loss should be
recognized. The events or changes in circumstances which generally indicate that
the residual value of an asset has been impaired are that the estimated fair
value of the underlying equipment is less than the Company's carrying value.
The Company measures its impairment loss as the amount by which the
carrying amount of the residual value exceeds the estimated proceeds to be
received by the Company from release or resale of the equipment.
Effective January 1, 2002, the Company adopted SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144). This
statement requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to the future net cash flows
expected to be generated by the asset. If the carrying amount of the asset
exceeds its estimated future cash flows, an impairment charge is recognized by
the amount by which the carrying amount of the asset exceeds the fair value of
the asset. SFAS No. 144 requires companies to separately report discontinued
operations and extends that reporting to a component of an entity that either
has been disposed of (by sale, abandonment or in a distribution to the owners)
or classified as held for sale. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less the costs to sell. The adoption
of SFAS No. 144 did not have any effect on the Company's financial position or
results of operations as the provisions of SFAS No. 144 are similar to the
Company's current policy for impairment review.
3. Finance Lease Receivables
Non-cancelable minimum annual amounts due on finance leases at December 31,
2001 are as follows:
Year Amount
2002 $ 2,926,097
2003 40,036
2004 18,014
-------------
$ 2,984,147
=============
The Company's allowance for doubtful accounts relates to a significant
amount of past due receivables which are reflected in the above table as due in
2002.
ICON RECEIVABLES 1997-A L.L.C.
Notes to Financial Statement
December 31, 2001
4. Allowance for Doubtful Accounts
The allowance for doubtful accounts related to the investments in finance
leases and financings consisted of the following: Finance Leases Financings
Total
Balance at December 31, 1999 $ 101,122 $ 66,788 $ 167,910
Recoveries on accounts
previously written-off 274,938 296,411 571,349
Provision for doubtful accounts 410,500 439,500 850,000
----------- ----------- -----------
Balance at December 31, 2000 786,560 802,699 1,589,259
Accounts written-off (437,336) (802,699) (1,240,035)
Provision for doubtful accounts 1,825,000 -- 1,825,000
----------- ----------- -----------
Balance at December 31, 2001 $ 2,174,224 $ -- $ 2,174,224
=========== =========== ===========
5. Notes Payable
The notes payable are non-recourse, bear interest at rates ranging from
6.435% to 6.95% and are secured by and payable from the collections of finance
lease receivables and proceeds from the sales of residuals.
6. Other Assets
Other assets include amounts due from affiliates of $206,421 and $263,700
at December 31, 2001 and 2000, respectively which represent amounts collected by
an affiliate on the Company's behalf.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2001
SIGNATURES
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.
ICON CASH FLOW PARTNERS, L.P., Series D
File No. 33-40044 (Registrant)
By its General Partner, ICON Capital Corp.
Date: April 15, 2002 /s/ Beaufort J.B. Clarke
-----------------------------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacity and on the dates indicated.
ICON Capital Corp.
sole General Partner of the Registrant
Date: April 15, 2002 /s/ Beaufort J.B. Clarke
--------------------------------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Date: April 15, 2002 /s/ Paul B. Weiss
--------------------------------------------------
Paul B. Weiss
President and Director
Date: April 15, 2002 /s/ Thomas W. Martin
--------------------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer)
Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrant Which have not Registered Securities Pursuant to
Section 12 of the Act
- --------------------------------------------------------------------------------
No annual report or proxy material has been sent to security holders. An annual
report will be sent to the limited partners and a copy will be forwarded to the
Commission.