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
For the fiscal year ended December 31, 2002
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
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
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(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
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interests
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) [ ] Yes [X] No
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last day of the registrant's most recently completed second fiscal quarter:
Not applicable. There is no established market for units of limited partnership
interest in the registrant.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
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 7-12
7A. Qualitative and Quantitative Disclosures About Market Risk 12
8. Consolidated Financial Statements and Supplementary Data 13-33
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 34
PART III
10. Directors and Executive Officers of the Registrant's General Partner 34-35
11. Executive Compensation 35
12. Security Ownership of Certain Beneficial Owners
and Management 35
13. Certain Relationships and Related Transactions 35
14. Controls and Procedures 35-36
PART IV
15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 36-37
SIGNATURES 38
Certifications 39-43
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
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 2002, the Partnership redeemed 882 limited
partnership units leaving 399,118 units outstanding at December 31, 2002. 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 acquiring
and 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.
The Partnership has no direct employees. The General Partner has full and
exclusive discretion in management and control of the Partnership.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
Lease and Financing Transactions
During the years ended December 31, 2002 and 2001, 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 DeHaviland DHC-8-102 aircraft to U.S. Airways. Lease rentals were
$582,931 for 2002. The carrying value of the aircraft represented approximately
39.5% of the Partnership's assets at December 31, 2002.
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 Company, from time-to-time, in the ordinary course of business,
commences legal actions when necessary to protect or enforce the rights of the
Partnership. We are not a defendant party to any litigation and are not aware of
any pending or threatened litigation against the Partnership.
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 2002.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
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,
2002 2001
---- ----
Limited Partners 3,105 3,105
General Partner 1 1
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
Item 6. Selected Consolidated Financial and Operating Data
Years Ended December 31,
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Total revenues $ 1,594,108 $ 874,695 $ 2,200,367 $ 2,658,007 $ 2,796,813
============ ============ ========== =========== =============
Net income $ 662,388 $ 284,772 $ 820,615 $ 823,675 $ 688,361
============ ============ =========== =========== =============
Net income
allocable to limited
partners $ 655,764 $ 281,924 $ 812,409 $ 815,438 $ 681,477
========== ============ =========== =========== =============
Net income
allocable to the
General Partner $ 6,624 $ 2,848 $ 8,206 $ 8,237 $ 6,884
========== ============ =========== =========== =============
Weighted average
limited partnership
units outstanding 399,118 399,118 399,118 399,118 399,118
========== ============ =========== =========== =============
Net income per
weighted average
limited partnership
unit $ 1.64 $ 0.71 $ 2.04 $ 2.04 $ 1.71
========== =========== =========== ========== =============
Distributions to
limited partners $ - $ 588,646 $ 4,091,082 $ 2,461,219 $ 4,074,331
========== ============ =========== =========== =============
Distributions to the
General Partner $ - $ 5,946 $ 41,323 $ 24,840 $ 41,155
========== ============ =========== =========== =============
December 31,
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Total assets $ 3,421,904 $ 3,847,550 $ 5,251,699 $11,621,332 $ 16,619,860
============ ============ =========== =========== ============
Partners' equity $ 1,039,778 $ 377,390 $ 687,210 $ 3,999,000 $ 5,661,384
============ ============ =========== =========== ============
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
Item 7. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
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The Partnership's portfolio consisted of a net investment in finance
leases, investment in operating lease equipment, investment in financings and an
investment in an unconsolidated joint venture representing 0%, 44%, 54% and 2%
of total investments at December 31, 2002, respectively, and 4%, 47%, 48% and 1%
of total investments at December 31, 2001, respectively.
Forward-Looking Information - The following discussion and analysis should
be read in conjunction with the audited financial statements included herein.
Certain statements within this document may constitute forward-looking
statements made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. These statements are identified by words such as
"anticipate," "believe," "estimate," "expects," "intend," "predict" or "project"
and similar expressions. This information may involve risks and uncertainties
that could cause actual results to differ materially from the forward-looking
statements. Although the Partnership believes that the expectations reflected in
such forward-looking statements are based on reasonable assumptions, such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected.
Critical Accounting Policies and Management Estimates
The policies discussed below are considered by the General Partner to be
critical to an understanding of the Partnership's financial statements because
their application places the most significant demands on the General Partner's
judgments, with financial reporting results relying on estimation about the
effects of matters that are inherently uncertain. Specific risks for these
critical accounting policies are described in the following paragraphs. For all
of these policies, the General Partner cautions that future events rarely
develop exactly as forecast, and the best estimates routinely require
adjustment.
Basis of Accounting and Presentation - The Partnership's records are
maintained on the accrual basis. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the dates of the financial
statements, and revenues and expenses during the reporting periods. Significant
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. In addition, management is
required to disclose contingent assets and contingent liabilities. Actual
results could differ from those estimates.
Leases and Revenue Recognition - The Partnership accounts for owned
equipment leased to third parties as either 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 using the interest
method. For operating
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
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.
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 re-lease or sale 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 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. 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 its 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, 2002 and 2001
For the years ended December 31, 2002 and 2001, the Partnership did not
finance or purchase any new equipment.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
Revenues for the year ended December 31, 2002 ("2002 Period") were
$1,594,108, representing an increase of $719,413 from December 31, 2001 ("2001
Period"). The increase in revenues resulted primarily from income from
investment in unconsolidated joint venture of $27,647 in the 2002 Period as
compared to losses of $491,869 in the 2001 Period, and an increase in
miscellaneous income of $513,174. The miscellaneous income for the 2002 Period
is a one-time adjustment due to a revised estimate of residual sharing values.
Offsetting these increases were decreases in rental income of $223,377, finance
income of $62,422 and net losses from sales of equipment of $8,001.
Rental income decreased due to a one-time settlement payment of $200,000
and recognition of approximately $244,000 of other lease settlements in the 2001
Period, which is offset by rents generated by the renewal of certain leases that
were reclassified from finance leases to operating leases in the 2002 Period.
Finance income decreased due to a decrease in the size of investments in the
finance lease portfolio from the 2001 Period to the 2002 Period. The gains from
investment in joint venture were primarily due to a reversal of the provision
for bad debt of $268,834 in the 2002 Period by an underlying joint venture, ICON
Receivables 1997-A LLC, as compared to recorded provisions for bad debt of
$1,825,000 in the 2001 Period.
Expenses for the 2002 Period were $931,720, representing an increase of
$341,797 from the 2001 Period. The increase is primarily due to an increase of
the provision for bad debt of $390,831 and an increase of the depreciation of
$24,912. Offsetting these increases are decreases in interest of $58,313,
general and administration of $11,573, and amortization of initial direct costs
of $4,060. In the 2002 Period, the increase in the provision for bad debt is due
to the provision for US Airways rents of $201,000 offset by a reversal of the
provision for financing of $67,097 that was no longer deemed necessary. In the
2001 Period, there was a reversal of the provision for bad debt of $256,928. The
decrease in interest is due to a lower debt balance in the 2002 Period versus
the 2001 Period.
Net income for the 2002 Period and 2001 Period was $662,388 and $284,772,
respectively. The net income per weighted average limited partnership unit was
$1.64 and $0.71 for 2002 Period and 2001 Period, respectively.
Years Ended December 31, 2001 and 2000
For the years ended December 31, 2001 and 2000 ("2000 period"), the
Partnership did not finance or purchase any new equipment.
Revenues for the 2001 period were $874,695 representing a decrease of
$1,325,672 from the 2000 period. The decrease in revenues resulted primarily
from a decrease in finance income of $331,092, a decrease in rental income of
$36,011, 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 the 2001 period as compared to the 2000 period 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
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
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 the 2001 period as compared to the 2000 period. 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 the 2001 period by an
underlying joint venture, ICON Receivables 1997-A LLC, versus a provision for
bad debt of $850,000 being recorded in the 2000 period. 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 the 2000 period.
Expenses for the 2001 period were $589,923 representing a decrease of
$789,829 from the 2000 period. 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 the 2000 period to the 2001 period.
General and administrative expenses decreased mainly as a result of lower
professional fees in the 2001 period as compared to the 2000 period.
Net income for the 2001 period and 2000 period was $284,772 and $820,615,
respectively. The net income per weighted average limited partnership unit was
$0.71 and $2.04 for the 2001 period and 2000 period, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of liquidity for the 2002 Period were net
cash provided by operations of $219,628, (which included a prepayment of
$250,000 received from L.P. Seven in the third quarter of 2002 Period against a
$2,000,000 financing that matures in 2004), as well as available cash, were used
substantially for principal payments on a note payable of $179,154. The
Partnership's current sources of cash are proceeds being collected from one
financing at the rate of $7,000 per month plus certain month to month renewal
lease payments. The Partnership anticipates that it will begin receiving cash
rentals from a three year lease renewal that commenced in January 2002 upon the
repayment of a related residual sharing obligation, which is scheduled to be
paid off in the second quarter of 2003. The Partnership's cash flow may be less
than the Partnership's current level of expenses. To the extent that cash flow
is insufficient to pay such expenses, the Partnership may be required to sell
assets prior to maturity or borrow against future cash flows.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
One of the Partnership's significant remaining assets is a DeHavilland
DHC-8-102 aircraft, which is subject to a lease with US Airways. The aircraft
has a carrying value of $1,350,202 at December 31, 2002, and the related lease
is scheduled to expire in the fourth quarter of 2003. The aircraft is subject to
non-recourse financing, and the lease payments are remitted directly by US
Airways to the lender to reduce the loan balance. If all payments were made as
scheduled, the loan would have a final $1.7 million balloon payment due at
termination date of the lease.
On August 11, 2002, US Airways filed for bankruptcy protection under
Chapter 11 of the United States Bankruptcy Code and was delinquent in its rental
payments from June 2002 through December 2002. The Partnership paid the lender
the scheduled note payments due for the period of delinquency.
Management has negotiated new terms with US Airways regarding the revised
rental schedule for the remaining lease term. The revised schedule calls for
lower rentals beginning August 11, 2002. While the Partnership has accrued
rental income for the six months ended December 31, 2002 at the current rental
rate of $49,000 per month, the Partnership has fully reserved for all unpaid
rentals for the period prior to August 11, 2002 and has provided an additional
allowance for rentals since August 11, 2002, pending the outcome of the approval
by the bankruptcy court. In the aggregate, the Partnership has recorded a
provision of $201,000 during the 2002 Period for uncollected rentals due from US
Airways. The net rental receivable of $99,742 is included in the caption "Other
Assets" on the consolidated balance sheet at December 31, 2002. US Airways paid
to the Partnership the amount equal to $20,000 per month for the period from and
including August 11, 2002 totaling $96,812, in accordance with the amended lease
term agreement dated December 23, 2002. The Partnership paid this amount to the
lender in January 2003. The Partnership obtained an appraisal of the aircraft
during 2002, which indicated that no impairment provision was required.
It is anticipated that cash distributions, if any, will not be significant
until the realization of proceeds from the sale or release of the DeHavilland
aircraft and the maturity of the related financing. There were no cash
distributions to the limited partners for the 2002 Period.
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 continue 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.
We do not consider the impact of inflation to be material in the analysis
of our overall operations.
New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for
Asset Retirement Obligations" ("SFAS No. 143") which is effective for fiscal
years beginning after June 15, 2002. SFAS No. 143 addresses financial accounting
and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The Partnership
does not expect that the adoption of SFAS No. 143 will have a material impact on
its financial position, results of operations or cash flows.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
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. 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 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.
Effective January 1, 2002, the Partnership adopted SFAS No. 145, "Recession
of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("SFAS No. 145"). SFAS No. 145 amends SFAS No. 13
Accounting for Leases to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. The provisions of the Statement related to
Statement No. 13 were effective for transactions occurring after May 15, 2002,
the adoption of which did not have a material effect on the Partnership's
financial statements.
On July 30, 2002, the FASB issued SFAS No. 146 "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS No. 146"). The standard
replaced Emerging Issues Task Force (EITF) issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)" and requires
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan. Examples of costs covered by the standard include lease termination costs
and certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, or other exit or disposal activity. SFAS
No. 146 is effective prospectively to exit or disposal activities initiated
after December 31, 2002. The impact on the Partnership's financial statement
from the application of this standard is dependent on any exit or disposal
activities in 2003.
The Partnership does not believe that any other recently issued but not yet
effective accounting standards will have a material effect on the Partnership's
financial position or results of operations.
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 equipment leasing 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, 2002
Item 8. Consolidated Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Page Number
Independent Auditors' Reports 15-16
Consolidated Balance Sheets as of December 31, 2002 and 2001 17-18
Consolidated Statements of Operations for the Years Ended
December 31, 2002, 2001 and 2000 19
Consolidated Statements of Changes in Partners' Equity for the
Years Ended December 31, 2002, 2001 and 2000 20
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2002, 2001 and 2000 21-23
Notes to Consolidated Financial Statements 24-33
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Financial Statements
December 31, 2002
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITOR'S REPORT
The Partners
ICON Cash Flow Partners, L.P., Series D:
We have audited the accompanying consolidated balance sheet of ICON Cash Flow
Partners, L.P., Series D (a Delaware limited partnership) as of December 31,
2002, and the related consolidated statements of operations, changes in
partners' equity, and cash flows for the year then ended. 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 audit 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 audit provides 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, 2002, and the results of its
operations and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.
/s/ Hays & Company LLP
----------------------
Hays & Company LLP
March 13, 2003
New York, New York
INDEPENDENT AUDITOR'S REPORT
The Partners
ICON Cash Flow Partners, L.P., Series D:
We have audited the accompanying consolidated balance sheet of ICON Cash Flow
Partners, L.P., Series D (a Delaware limited partnership) as of December 31,
2001, and the related consolidated statements of operations, changes in
partners' equity, and cash flows for each of the years in the two 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 the results of its
operations and its cash flows for each of the years in the two 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,
2002 2001
---- ----
Assets
Cash and cash equivalents ................ $ 116,095 $ 74,127
----------- -----------
Investment in finance leases
Minimum rents receivable .............. 4,082 24,553
Estimated unguaranteed residual values -- 119,400
Initial direct costs .................. -- 350
Unearned income ....................... -- (697)
----------- -----------
4,082 143,606
----------- -----------
Investment in operating leases
Equipment, at cost .................... 3,459,597 3,384,869
Accumulated depreciation .............. (2,059,577) (1,650,881)
----------- -----------
1,400,020 1,733,988
Investment in financings
Receivables due in installments ....... 2,048,816 2,390,863
Initial direct costs .................. -- 105
Unearned income ....................... (304,051) (487,655)
Allowance for doubtful accounts ....... (25,000) (92,097)
----------- -----------
1,719,765 1,811,216
Investment in unconsolidated joint venture 54,208 26,561
----------- -----------
Other assets, net ........................ 127,734 58,052
----------- -----------
Total assets ............................. $ 3,421,904 $ 3,847,550
=========== ===========
(continued on next page)
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Balance Sheets (Continued)
December 31,
2002 2001
---- ----
Liabilities and Partners' Equity
Notes payable - non-recourse ......................... $ 2,086,075 $ 2,526,490
Security deposits, deferred credits and other payables 296,051 943,670
----------- -----------
Total liabilities .................................... 2,382,126 3,470,160
----------- -----------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ................................... (334,198) (340,822)
Limited partners (399,118 units outstanding,
$100 per unit original issue price) ............. 1,373,976 718,212
----------- -----------
Total partners' equity ............................... 1,039,778 377,390
----------- -----------
Total liabilities and partners' equity ............... $ 3,421,904 $ 3,847,550
=========== ===========
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,
2002 2001 2000
---- ---- ----
Revenues
Rental income ....................... $ 822,848 $ 1,046,225 $ 1,082,236
Finance income ...................... 184,301 246,723 577,815
Income (loss) from investment
in unconsolidated joint venture ... 27,647 (491,869) (117,866)
(Loss) gain on sales of equipment ... (8,001) 4,856 606,784
Miscellaneous income ................ 513,174 -- --
Interest income and other ........... 54,139 68,760 51,398
----------- ----------- -----------
Total revenues ...................... 1,594,108 874,695 2,200,367
----------- ----------- -----------
Expenses
Depreciation expense ................ 408,696 383,784 542,309
Interest ............................ 245,280 303,593 527,065
General and administrative expense .. 143,386 154,959 239,388
Amortization of initial direct costs 455 4,515 11,166
Management fees - General Partner ... -- -- 47,532
Administrative expense reimbursements
- General Partner ................. -- -- 12,292
Provision for (reversal of) bad debts 133,903 (256,928) --
----------- ----------- -----------
Total expenses ...................... 931,720 589,923 1,379,752
----------- ----------- -----------
Net income ............................. $ 662,388 $ 284,772 $ 820,615
=========== =========== ===========
Net income allocable to:
Limited partners .................... $ 655,764 $ 281,924 $ 812,409
General Partner ..................... 6,624 2,848 8,206
----------- ----------- -----------
$ 662,388 $ 284,772 $ 820,615
=========== =========== ===========
Weighted average number of limited
partnership units outstanding ....... 399,118 399,118 399,118
=========== =========== ===========
Net income per weighted average
limited partnership unit ............ $ 1.64 $ 0.71 $ 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, 2002, 2001 and 2000
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
------- ------ -------- ------- -----
(Per weighted average unit)
Balance at
January 1, 2000 $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
Net income 655,764 6,624 662,388
---------- ---------- -----------
Balance at
December 31, 2002 $1,373,976 $ (334,198) $ 1,039,778
========== ========== ===========
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,
2002 2001 2000
------ ------ ------
Cash flows provided by operating activities:
Net income .......................................... $ 662,388 $ 284,772 $ 820,615
----------- ----------- -----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Rental income paid directly to lenders by lessees (388,591) (582,931) (1,002,474)
Finance income portion of receivables paid
directly to lenders by lessees ................ (156,684) (246,723) (93,426)
Depreciation expense ............................ 408,696 383,784 542,309
Provision for (reversal of) bad debt ............ 133,903 (256,928) --
Interest expense on non-recourse financing
paid directly by lessees ...................... 127,330 301,551 515,098
Loss (gains) on sales of equipment .............. 8,001 (4,856) (606,784)
Amortization of initial direct costs ............ 455 4,515 11,166
(Income) loss from investment in
unconsolidated joint venture ................. (27,647) 491,869 117,866
Changes in operating assets and liabilities:
Collection of principal - non-financed
receivables ................................. 370,078 175,928 388,648
Other assets, net ............................. (270,682) 36,998 99,490
Security deposits, deferred credits
and other payables .......................... (647,619) (438,611) (957,900)
Distributions from joint venture .............. -- -- 80,295
Accounts payable to General Partner
and affiliates, net ......................... -- 2,004 9,183
Other ......................................... -- (90,359) 142,262
----------- ----------- -----------
Total adjustments ............................. (442,760) (223,759) (754,267)
----------- ----------- -----------
Net cash provided by operating activities ....... 219,628 61,013 66,348
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sales of leases and equipment ......... 1,494 527,845 4,699,107
----------- ----------- -----------
Net cash provided by investing activities ....... 1,494 527,845 4,699,107
----------- ----------- -----------
(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,
2002 2001 2000
---- ---- ----
Cash flows from financing activities:
Principal payments on non-recourse debt ......... (179,154) -- (3,472,320)
Cash distributions to partners .................. -- (594,592) (4,132,405)
Proceeds from notes payable - non-recourse ...... -- -- 2,967,966
Principal payments on note payable - recourse ... -- (72,717) (205,453)
Principal payments on non-recourse - secured
financing ..................................... -- -- (58,146)
----------- ----------- -----------
Net cash used in financing activities ....... (179,154) (667,309) (4,900,358)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 41,968 (78,451) (134,903)
Cash and cash equivalents at beginning of year ..... 74,127 152,578 287,481
----------- ----------- -----------
Cash and cash equivalents at end of year ........... $ 116,095 $ 74,127 $ 152,578
=========== =========== ===========
(continued on next page)
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, 2002, 2001 and 2000, non-cash
activities included the following:
2002 2001 2000
---- ---- ----
Principal and interest on finance receivables
paid directly to lenders by lessees $ - $ 303,625 $ 714,614
Rental income paid directly to lender by lessee 388,591 582,931 1,002,474
Principal and interest on non-recourse financing
paid directly to lenders by lessees (388,591) (886,556) (1,717,088)
---------- ---------- -----------
$ - $ - $ -
========== ========== ===========
Interest expense on non-recourse debt paid directly
to lenders by lessees $ 127,330 $ 301,551 $ 515,098
Interest expense on non-recourse debt paid by the
Partnership 117,950 - -
Other interest paid - 2,042 11,967
---------- ---------- -----------
Total interest expense $ 245,280 $ 303,593 $ 527,065
========== ========== ===========
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
For theYears Ended December 31, 2002, 2001 and 2000
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 2002, the Partnership redeemed 882 limited partnership units
leaving 399,118 limited partnership units outstanding at December 31, 2002.
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 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 accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the dates of the financial
statements and revenues and expenses during the reporting periods. Significant
estimates include the allowance for doubtful accounts
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
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 in consolidation. 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.
Cash and Cash Equivalents - Cash and cash equivalents are defined as cash
in banks and highly liquid investments with original maturity dates of three
months or less. The Partnership's cash and cash equivalents are held principally
at one financial institution and at times may exceed insured limits.
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
recognized.
Allowance for Doubtful Accounts - The Partnership records a provision for
bad debts to provide for estimated credit losses in its 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 or written off when the
analysis indicates that the probability of collection of the account is remote.
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, 2002 and 2001
with respect to the Partnership'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 recorded since the
liability for such taxes are that of each of the partners rather than the
Partnership. The Partnership's income tax returns are subject to examination by
the federal and state taxing authorities, and changes, if any, could adjust the
individual income taxes of the partners.
Reclassifications - Certain items from prior years have been reclassified
to conform to the presentation used in 2002.
New Accounting Pronouncements - In June 2001, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143")
which is effective for fiscal years beginning after June 15, 2002. SFAS No. 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. The Partnerhip does not expect that the adoption of SFAS No. 143 will
have a material impact on its financial position, results of operations or cash
flows.
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.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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 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.
Effective January 1, 2002, the Partnership adopted SFAS No. 145, "Recession
of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("SFAS No. 145"). SFAS No. 145 amends SFAS No. 13
Accounting for Leases to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. The provisions of the Statement related to
Statement No. 13 were effective for transactions occurring after May 15, 2002,
the adoption of which did not have a material effect on the Partnership's
financial statements.
On July 30, 2002, the FASB issued SFAS No. 146 "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS No. 146"). The standard
replaced Emerging Issues Task Force (EITF) issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)" and requires
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan. Examples of costs covered by the standard include lease termination costs
and certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, or other exit or disposal activity. SFAS
No. 146 is effective prospectively to exit or disposal activities initiated
after December 31, 2002. The impact on the Partnership's financial statement
from the application of this standard is dependent on any exit or disposal
activities in 2003.
The Partnerhip does not believe that any other recently issued but not yet
effective accounting standards will have a material effect on the Partnership's
financial position or results of operations.
3. Investment in Unconsolidated Joint Venture
The Partnership and its 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 LLC
In March 1997 the Partnership, and affiliates, 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 LLC ("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. As of December 31, 2002, 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 investment in 1997-A under the equity method of
accounting.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Information as to the financial position and results of operations of
1997-A as of and for the years ended December 31, 2002 and 2001 is summarized
below:
December 31, 2002 December 31, 2001
Assets $ 694,761 $ 1,856,582
================ ===============
Liabilities $ 390,389 $ 1,707,445
================ ===============
Equity $ 304,372 $ 149,137
================ ===============
Partnership's share of equity $ 54,208 $ 26,561
================ ===============
For the Year Ended For the Year Ended
December 31, 2002 December 31, 2001
Net income (loss) $ 155,235 $ (2,004,455)
================ ===============
Partnership's share of net income (loss) $ 27,647 $ (491,869)
================ ===============
1997-A reversed the provision for bad debts of $268,834 for the year ended
December 31, 2002 and recorded a provision for bad debts of $1,825,000 for the
year ended December 31, 2001.
4. Receivables Due in Installments
Non-cancelable minimum annual amounts due on finance leases and financings
as of December 31, 2002 are as follows:
Finance
Year Leases Financings Total
2003 $ 4,082 $ 84,000 $ 88,082
2004 - 1,877,728 1,877,728
2005 - 87,088 87,088
--------------- ---------------- --------------
$ 4,082 $ 2,048,816 $ 2,052,898
=============== ================ ==============
5. Investment in Operating Leases
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.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
The DeHavilland DHC-8-102 aircraft has a carrying value of $1,350,202 at
December 31, 2002, and the related lease is scheduled to expire in the fourth
quarter of 2003. The aircraft is subject to non-recourse financing, and the
lease payments are remitted directly by US Air to the lender to reduce the loan
balance. If all payments were made as scheduled, the loan would have a final
$2.0 million payment due at termination date as of the lease.
On August 11, 2002, US Air filed for bankruptcy protection under Chapter 11
of the United States Bankruptcy Code and was delinquent in its rental payments
from June 2002 through December 2002. During the third and fourth quarter of
2002, the Partnership paid the lender the scheduled note payments due.
Management has negotiated new terms with US Air regarding the revised
rental schedule for the remaining lease term. The revised schedule calls for
lower rentals beginning August 11, 2002. While the Partnership has accrued
rental income for the six months December 31, 2002 at the current rental rate of
$49,000 per month, the Partnership has fully reserved for all unpaid rentals for
the period prior to August 11, 2002 and has provided an additional allowance for
rentals since August 11, 2002, pending the outcome of the approval by the
bankruptcy court. In the aggregate, the Partnership has recorded a provision of
$201,000 during the year 2002 for uncollected rentals due from US Air. The net
rental receivable of $99,742 is included in the caption "Other Assets, net" on
the consolidated balance sheet at December 31, 2002. US Air paid to the
Partnership the amount equal to $20,000 per month for the period from and
including August 11, 2002 totaling $96,812, in accordance with the amended lease
term agreement dated December 23, 2003. The Partnership obtained an appraisal of
the aircraft during 2002, which indicated that no impairment provision was
required.
The investments in operating leases at December 31, 2002 and 2001 were as
follows:
2002 2001
---- ----
Equipment cost, beginning of year $ 3,384,869 $ 3,384,869
Reclassification of finance lease to an
operating lease 74,728 -
------------- -------------
Equipment cost, end of year 3,459,597 3,384,869
------------- -------------
Accumulated depreciation, beginning of year (1,650,881) (1,267,097)
Depreciation expense (408,696) (383,784)
------------- -------------
Accumulated depreciation, end of year (2,059,577) (1,650,881)
------------- -------------
Investment in operating leases, end of year $ 1,400,020 $ 1,733,988
============= =============
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Non-cancelable minimum annual rental amounts due on the operating lease as
of December 31, 2002 are as follows:
Year
2003 $ 284,999
2004 50,667
---------------
$ 335,666
During the year ended December 31, 2002, the Partnership had two leases
which represented more than 10% of the Partnership's total revenue, representing
approximately 37% and 10%, respectively.
6. Allowance for Doubtful Accounts
The Allowance for Doubtful Accounts related to the investments in finance
leases, financings and operating leases consisted of the following:
Finance Operating
Leases Financings Leases(1) Total
------ ---------- -------- -----
Balance at January 1, 2000 ......... $ 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
Provision for (reversal of)
doubtful accounts ........... -- (67,097) 201,000 133,903
--------- --------- --------- ---------
Balance at December 31, 2002 ....... $ -- $ 25,000 $ 201,000 $ 226,000
========= ========= ========= =========
(1) included in other assets, net
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.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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
Partnership repaid the note in full during the year ended December 31, 2000.
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 repaid with a portion of the proceeds from the sale of
one of the aircraft.
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 was restructured as of
January 3, 2003 due to U.S. Air filing for bankruptcy. This debt carries an
interest rate of 11% and has a maturity date of December 2003. This debt is
collateralized by the remaining aircraft on lease with U.S. Air and the
underlying equipment with a net book value of $1,400,020 at December 31, 2002.
The 2000 non-recourse note is scheduled to mature in 2003.
8. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the year ended December 31, 2000 were as follows:
Charged to Operations
Management fees $ 47,532
Administrative expense reimbursements 12,292
---------
Year ended December 31, 2000 $ 59,824
=============
No such fees were incurred during the year ended December 31, 2002 and 2001
pursuant to the General Partners voluntary decision to waive its right to
management fees and expense reimbursements effective July 1, 2000.
In accordance with the terms of the Management 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
operations (See Note 1 for information relating to organization and offering
expenses and indemnity commission).
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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.
In 1997, the Partnership financed a portion of the free cash flow relating
to a leveraged lease owned by an affiliate, L.P. Seven. The lease expires in
July of 2004, at which time the maturity value of the financing was to be
$2,000,000. L.P. Seven has exercised its discretionary right to prepay a portion
of the financing, and during the six months ended December 31, 2002, L.P. Seven
prepaid $250,000 to the Partnership. The balance at December 2002 of $1,750,000
is included in the caption "Investment in Financings."
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. 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:
2002 2001 2000
---- ---- ----
Net income for financial statement reporting purposes $ 662,388 $ 284,772 $ 820,615
Differences due to:
Direct finance leases ............................ -- 246,723 449,184
Depreciation and amortization .................... 87,156 (225,783) (1,062,527)
Provision for gains (losses) ..................... 133,903 (256,928) (29,384)
(Loss) gain on sale of equipment ................. (3,104) 312,147 (184,260)
Other ............................................ (467,762) (339,262) 85,051
----------- ----------- -----------
Partnership income for
federal income tax reporting purposes ............ $ 412,581 $ 21,669 $ 78,679
=========== =========== ===========
As of December 31, 2002, the partners' capital accounts for financial
statement reporting purposes totaled $1,039,778 compared to the partners'
capital accounts for federal income tax purposes of $7,501,076 (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 reporting purposes and temporary differences related to direct finance
leases, depreciation and provision for gains and losses.
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
10. Quarterly Financial Data (Unaudited)
The following table is a summary of financial data by quarter for the years
ended December 31, 2002 and 2001:
For the Quarter Ended
------------------------------------------------------------------
March 31, June 30, September 30, December 31,
-------- ------- ------------ -----------
2002
Revenues $ 297,506 $ 308,171 $ 246,086 $ 742,345
========== =========== ========== =============
Net income (loss) allocable to
limited partners $ 87,313 $ 80,523 $ (45,345) $ 533,273(1)
========== =========== ========== =============
Net income (loss) per weighted
average limited partnership unit $ 0.21 $ 0.20 $ (0.11) $ 1.34
========== ============= ========== =============
2001
Revenues $ 424,703 $ (215,214) $ 208,124 $ 457,082
========== =========== ========== =============
Net income (loss) allocable to
limited partners $ 192,964 $ (426,480)(2) $ 8,895 $ 506,545(3)
========== =========== ========== =============
Net income (loss) per weighted
average limited partnership unit $ 0.48 $ (1.07) $ 0.02 $ 1.28
========== =========== ========== =============
(1) The fourth quarter of 2002 includes a one-time adjustment of $513,174 shown
under the caption "Miscellaneous Income," due to a revised estimated amount
of residual sharing values.
(2) 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).
(3) 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, 2002
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
- -------------------------------------------------------------------------------
The information required by Item 304 of Regulation S-K was previously filed
as part of the Partnership's Current Reports on Form 8-K filed on February 5,
2003.
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 performs 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 56, 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 42, 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, 2002
Thomas W. Martin, age 49, 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
There were no payments or accrued compensation and reimbursement expenses
to the General Partner or its affiliates for the years ended December 31, 2002,
2001 and 2000.
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 28, 2003, 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
None other than those disclosed in Item 11 herein.
Item 14. Control and Procedures
Beaufort J.B. Clarke and Thomas W. Martin, the Principal Executive and
Principal Financial Officers, respectively, of ICON Capital Corp. ("ICC"), the
General Partner of the Partnership, have evaluated the disclosure controls and
procedures of the Partnership within 90 days prior to the filing of this annual
report. As used herein, the term "disclosure controls and procedures" has the
meaning given to the term by Rule 13a-14 under the Securities Exchange Act of
1934, as amended ("Exchange Act"), and includes
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
the controls and other procedures of the Partnership that are designed to ensure
that information required to be disclosed by the Partnership in the reports that
it files with the SEC under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms. As
part of their evaluation, Messrs. Clarke and Martin conferred with the finance
and accounting staff of ICC and the finance and accounting staff of ICON
Holdings Corp., the parent of ICC. Based upon their evaluation, Messrs. Clarke
and Martin have concluded that the Partnership's disclosure controls and
procedures provide reasonable assurance that the information required to be
disclosed by the Partnership in this report is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms
applicable to the preparation of this report.
There have been no significant changes in the Partnership's internal
controls or in other factors that could significantly affect the Partnership's
internal controls subsequent to the evaluation described above conducted by
ICC's principal executive and financial officers.
PART IV
Item 15. 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.
3. Exhibits - The following exhibits are incorporated herein by reference:
(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).
(b) Reports on Form 8-K
Form 8-K filed on February 5, 2003
Item 4. Changes in Registrant's Certifying Accountant
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
Exhibits
99.1 Certification of Chairman and Chief Executive Officer pursuant to 18
U.S.C.ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
99.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C.ss.1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(d) Unconsolidated Joint Venture Financial Statements
ICON Receivables 1997-A LLC - as of and for the years ended December 31,
2002 and 2001
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
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: March 28, 2003 /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: March 28, 2003 /s/ Beaufort J.B. Clarke
-------------------------------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Date: March 28, 2003 /s/ Paul B. Weiss
-------------------------------------------------
Paul B. Weiss
President and Director
Date: March 28, 2003 /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.
Certifications - 10-K
I, Beaufort J.B. Clarke, certify that:
1. I have reviewed this annual report on Form 10-K of ICON Cash Flow Partners,
L.P., Series D;
2. Based on my knowledge, this annual report does not contain any untrue
statements 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 annual report;
3. Based on my knowledge, the financial statements and other financial
information included in this annual 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 annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries,is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Dated: March 28, 2003
/s/ Beaufort J.B. Clarke
- -----------------------------
Beaufort J. B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners, L.P., Series D
Certifications - 10-K
I, Thomas W. Martin, certify that:
1. I have reviewed this annual report on Form 10-K of ICON Cash Flow Partners,
L.P., Series D;
2. Based on my knowledge, this annual report does not contain any untrue
statements 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 annual report;
3. Based on my knowledge, the financial statements and other financial
information included in this annual 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 annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: March 28, 2003
/s/ Thomas W. Martin
- ----------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer of the General Partner of the
Registrant) ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners, L.P., Series D
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
EXHIBIT 99.1
I, Beaufort J.B. Clarke, Chairman and Chief Executive Officer of ICON
Capital Corp., the sole General Partner of ICON Cash Flow Partners, L.P., Series
D, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Annual Report on Form 10-K for the period ended December 31, 2002 (the
"Annual Report") which this statement accompanies fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78m) and
(2) information contained in the Annual Report fairly presents, in all material
respects, the financial condition and results of operations of ICON Cash
Flow Partners, L.P., Series D.
Dated: March 28, 2003
/s/ Beaufort J.B. Clarke
---------------------------------------------------
Beaufort J.B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners, L.P., Series D
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
December 31, 2002
EXHIBIT 99.2
I, Thomas W. Martin, Executive Vice President (Principal Financial and
Accounting Officer) of ICON Capital Corp., the sole General Partner of ICON Cash
Flow Partners, L.P., Series D, certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) the Annual Report on Form 10-K for the period ended December 31, 2002 (the
"Annual Report") which this statement accompanies fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78m) and
(2) information contained in the Annual Report fairly presents, in all material
respects, the financial condition and results of operations of ICON Cash
Flow Partners, L.P., Series D.
Dated: March 28, 2003
/s/ Thomas W. Martin
-------------------------------------------------------
Thomas W. Martin
Executive Vice President (Principal
Financial and Accounting Officer)
ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners, L.P., Series D
ICON Receivables 1997-A LLC
Financial Statements
December 31, 2002 and 2001
(With Independent Auditor's Report Thereon)
INDEPENDENT AUDITOR'S REPORT
The Members
ICON Receivables 1997-A LLC
We have audited the accompanying balance sheet of ICON Receivables 1997-A LLC
(the "Company") as of December 31, 2002, and the related statements of
operations, changes in members' equity, and cash flows for the year 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 audit. The financial statements of ICON Receivables 1997-A LLC as of
December 31, 2001, were audited by other auditors whose report dated April 15,
2002, expressed an unqualified opinion on those statements.
We conducted our audit 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 audit provides 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 2002 financial statements referred to the above present
fairly, in all material respects, the financial position of ICON Receivables
1997-A LLC as of December 31 2002, and the results of its operations and its
cash flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
/s/Hays & Company LLP
---------------------
Hays & Company LLP
March 13, 2003
New York, New York
ICON Receivables 1997-A LLC
Balance Sheets
December 31,
Assets 2002 2001
---- ----
Cash $ 64,889 $ 673,740
Investment in finance leases
Minimum rents receivable 684,130 2,984,147
Estimated unguaranteed residual values 169,186 269,211
Unearned income (76,362) (134,914)
Allowance for doubtful accounts (492,234) (2,174,224)
284,720 944,220
Other assets 345,152 238,622
Total assets $ 694,761 $ 1,856,582
Liabilities and Members' Equity
Notes payable non-recourse $ -- $ 1,157,730
Security deposits, deferred credits and other payables 390,389 549,715
Total liabilities 390,389 1,707,445
Commitments and Contingencies
Members' equity 304,372 149,137
Total liabilities and members' equity $ 694,761 $ 1,856,582
See accompanying notes to financial statements.
ICON Receivables 1997-A LLC
Statements of Operations
For the Years Ended December 31,
2002 2001
---- ----
Revenue
Finance income $ 49,798 $ 465,049
Interest income and other 5,342 56,001
(Loss) gain on sale of investments (12,763) 26,997
Total revenues 42,377 548,047
Expenses
General and administrative and other expenses 119,347 531,747
Interest expense 36,629 195,755
(Reversal of) provision for doubtful accounts (268,834) 1,825,000
Total expenses (112,858) 2,552,502
Net income (loss) $ 155,235 $(2,004,455)
See accompanying notes to financial statements.
ICON Receivables 1997-A LLC
Statements of Changes in Members' Equity
For the Years Ended December 31, 2002 and 2001
Balance at January 1, 2001 $ 2,153,592
Net loss (2,004,455)
Balance at December 31, 2001 149,137
Net income 155,235
Balance at December 31, 2002 $ 304,372
See accompanying notes to financial statements.
ICON Receivables 1997-A LLC
Statements of Cash Flows
For the Years Ended December 31,
2002 2001
---- ----
Cash flows from operating activities:
Net income (loss) $ 155,235 $(2,004,455)
Adjustments to reconcile net income (loss) to
net cash (used in) provided by operating activities:
Loss (gain) on sale of investments 12,763 (26,997)
(Reversal of) provision for doubtful accounts (268,834) 1,825,000
Changes in operating assets and liabilities:
Other assets (106,530) 602,179
Security deposits, deferred credits and other payables (159,326) (1,283,114)
Change in operating assets and liabilities 238,748 4,476,202
Total adjustments (283,179) 5,593,270
Net cash (used in) provided by operating activities (127,944) 3,588,815
Cash flows from investing activities:
Proceeds from the sale of investments 676,823 323,574
Net cash provided by investing activities 676,823 323,574
Cash flows from financing activities:
Principal payments on notes payable non-recourse (1,157,730) (3,858,368)
Net cash used in financing activities (1,157,730) (3,858,368)
Net (decrease) increase in cash (608,851) 54,021
Cash at beginning of year 673,740 619,719
Cash at end of year $ 64,889 $ 673,740
Supplemental information-interest paid $ 36,629 $ 194,555
See accompanying notes to financial statements.
ICON Receivables 1997-A LLC
Notes to Financial Statements
December 31, 2002
1. Organization
ICON Receivables 1997-A LLC (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 each 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
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the dates of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Significant estimates include the allowance for doubtful accounts and
unguaranteed residual values. Management believes that the estimates and
assumptions utilized in preparing its financial statements are reasonable and
prudent. In addition, management is required to disclose contingent assets and
contingent liabilities. Actual results could differ from those estimates.
Leases and Revenue Recognition - 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 or written off when the
analysis indicates that the probability of collection of the account is remote.
ICON Receivables 1997-A LLC
Notes to Financial Statements - Continued
December 31, 2002
Income Taxes - No provision for income taxes has been recorded since the
liability for such taxes is that of each of the members rather than the Company.
The Company's income tax returns are subject to examination by the federal and
state taxing authorities, and changes, if any could adjust the individual income
taxes of the members.
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 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 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 re-lease or sale of the equipment.
3. Finance Lease Receivables
Non-cancelable minimum annual rental amounts due on finance leases at
December 31, 2002 are as follows:
Year Ending
December 31, Amount
------------ -------
2003 $ 666,116
2004 18,014
---------
$ 684,130
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
2003.
ICON Receivables 1997-A LLC
Notes to Financial Statements - Continued
December 31, 2002
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 January 1, 2001 $ 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
Accounts written-off (1,413,156) -- (1,413,156)
Reversal of provision for doubtful accounts (268,834) -- (268,834)
Balance at December 31, 2002 $ 492,234 $ -- $ 492,234
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 $345,152 and $206,421
at December 31, 2002 and 2001, respectively, which represent amounts collected
by an affiliate on the Company's behalf.