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 33-44413
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ICON Cash Flow Partners, L.P., Series E
(Exact name of registrant as specified in its charter)
Delaware 13-3635208
- ----------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 Fifth Avenue, 10th Floor, New York, New York 10011
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 418-4700
----------------------------
Securities registered pursuant to Section 12(b) of the Act: None
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 E
(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 4
6. Selected Consolidated Financial and Operating Data 5
7. General Partner's Discussion and Analysis of Financial
Condition and Results of Operations 6-10
7A. Qualitative and Quantitative Disclosures About Market Risk 11
8. Consolidated Financial Statements and Supplementary Data 12-34
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 35
PART III
10. Directors and Executive Officers of the Registrant's General Partner 35-36
11. Executive Compensation 36
12. Security Ownership of Certain Beneficial Owners and Management 36
13. Certain Relationships and Related Transactions 37
14. Control and Procedures 37
PART IV
15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 37-38
SIGNATURES 39
Certifications 40-44
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
December 31, 2002
PART I
Item 1. Business
General Development of Business
ICON Cash Flow Partners, L.P., Series E (the "Partnership") was formed in
November 1991 as a Delaware limited partnership. The Partnership commenced
business operations on its initial closing date, July 6, 1992, with the
admission of 13,574.17 limited partnership units. Between July 7, 1992 and to
July 31, 1993 (the final closing date), 596,837.34 additional units were
admitted bringing the total admissions to 610,411.51 units totaling $61,041,151
in capital contributions. From 1994 through 2002, the Partnership redeemed 2,556
limited partnership units leaving 607,855.51 limited partnership units
outstanding at December 31, 2002. The sole general partner is ICON Capital Corp.
(the "General Partner").
The Partnership's reinvestment period ended July 31, 1998. The disposition
period began on August 1, 1998. 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.
Segment Information
The Partnership has only one operating segment: the business of managing
equipment subject to leases with companies that the Partnership believes to be
creditworthy.
Narrative Description of Business
The Partnership is an equipment leasing income fund. The principal
investment objective of the Partnership is to obtain the maximum economic return
from its investments for the benefit of its limited partners. To achieve this
objective, the Partnership has: (1) acquired a diversified portfolio of leases
and financing transactions; (2) made monthly cash distributions to its limited
partners commencing with each limited partner's admission to the Partnership,
(3) re-invested substantially all undistributed cash from operations and cash
from sales of equipment and financing transactions during the reinvestment
period; and (4) 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. When seeking its leasing
transactions for acquisition, the Partnership competed with leasing companies,
manufacturers that lease their products directly, equipment brokers and dealers
and financial institutions, including commercial banks and insurance companies.
Many competitors are larger than the Partnership and have greater financial
resources.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
December 31, 2002
The Partnership has no direct employees. The General Partner has full and
exclusive discretion in management and control of the Partnership.
Lease and Financing Transactions
For the years ended December 31, 2002 and 2001, the Partnership did not
finance or purchase any new equipment.
The lease of an aircraft to Aerovias de Mexico, S.A. de C.V. ("Aeromexico")
represents more than 10% of the Partnership's revenue for the year ended
December 31, 2002. The carrying value of the Aeromexico aircraft represented
approximately 62% 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 year
ended 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 3,721 3,736
General Partner 1 1
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
December 31, 2002
Item 6. Selected Consolidated Financial and Operating Data
Year Ended December 31,
-----------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Total revenues $ 5,853,738 $ 5,387,932 $ 6,532,679 $ 10,203,685 $ 10,087,667
================ ============== =============== ============== ===============
Net income (loss) $ 2,301,648 $ (1,395,324) $ 396,430 $ 2,242,510 $ 1,047,706
================ ============== =============== ============== ===============
Net income (loss) allocable
to limited partners $ 2,278,632 $ (1,381,371) $ 392,466 $ 2,220,085 $ 1,037,229
================ ============== =============== ============== ===============
Net income (loss) allocable
to the General Partner $ 23,016 $ (13,953) $ 3,964 $ 22,425 $ 10,477
================ ============== =============== ============== ===============
Weighted average
limited partnership
units outstanding 607,856 607,856 607,856 607,856 608,273
================ ============== =============== ============== ===============
Net income (loss) per
weighted average limited
partnership unit $ 3.75 $ (2.27) $ .65 $ 3.65 $ 1.71
=============== =============== =============== ============== ===============
Distributions to
limited partners $ 2,594,024 $ 1,356,383 $ 3,672,173 $ 4,381,933 $ 7,755,553
================ ============== =============== ============== ===============
Distributions to the
General Partner $ 26,202 $ 13,564 $ 37,091 $ 44,258 $ 78,338
================ ============== =============== ============== ===============
December 31,
-----------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Total assets $ 22,507,394 $ 32,783,624 $ 46,154,746 $ 64,830,618 $ 86,918,230
================ =============== ================ =============== =================
Partners' equity $ 8,295,706 $ 8,614,284 $ 11,379,555 $ 14,692,389 $ 16,876,070
================ =============== ================ =============== =================
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
December 31, 2002
Item 7. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
- -------------------------------------------------------------------------------
The Partnership's portfolio consisted of a net investment in finance
leases, financings, operating leases and equity investments in joint ventures
representing 24%, 8%, 67% and 1% of total investments at December 31, 2002,
respectively, and 31%, 17%, 51% and 1% of total investments at December 31,
2001, respectively. The Partnership did not finance or purchase any new
equipment in 2002 or 2001.
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
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 date of the financial
statements and 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. Actual results
could differ from those estimates. In addition, management is required to
disclose contingent assets and contingent liabilities.
Leases and Revenue Recognition - 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, 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 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.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
December 31, 2002
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 term.
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 flows and anticipated future cash
flows 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 the ongoing analysis of delinquency trends,
loss experience and an assessment of overall credit risk. 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.
Revenues for the year ended December 31, 2002 were $5,853,738, representing
an increase of $465,806 or 8.6% from 2001. The increase in revenues resulted
primarily from an increase in miscellaneous income of $2,017,763, which
represents a one-time adjustment due to a revised estimate of residual sharing
values. Income from unconsolidated joint ventures also increased by $366,660.
This increase resulted primarily from the reversal of a provision for bad debts
of $268,834 in 2002 by an underlying joint venture, ICON Receivables 1997-A LLC,
as compared to a provision for bad debts of
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
December 31, 2002
$1,825,000 being recorded by this venture in 2001. Offsetting these increases
was a decrease in finance income of $2,007,890. Finance income decreased due to
the reduction in the average size of the finance lease portfolio.
Expenses for the year ended December 31, 2002 were $3,552,090, representing
a decline of $3,231,166 or 47.6% from 2001. The decline in expenses resulted
primarily from a reduction in the provision for bad debts or $2,862,304. As a
result of an analysis of delinquencies, an assessment of overall risk and a
review of historical loss experience, the allowance was adjusted downward by
$700,000 in 2002. Additionally, interest expense decreased by $904,293 in 2002.
The decrease in interest expense resulted from a decrease in the average debt
outstanding from 2001 to 2002. In addition, management fees decreased by
$182,449 and administrative expense reimbursements decreased by $145,465. Both
were a result of the reduction in the average size of the finance lease
portfolio. These decreases were partially offset by an increase in depreciation
expense of $428,839. The increase in depreciation was due to a change in
estimate (reduction) of a residual value of an aircraft in the fourth quarter of
2001 as well as the depreciation on equipment that was reclassified from a
finance lease to an operating lease. Additionally, minority interest expense
increased by $513,588. This increase resulted from an overall increase in income
in one of the Partnership's consolidated joint ventures.
Net income (loss) for the years ended December 31, 2002 and 2001 was
$2,301,648 and $(1,395,324) respectively. The net income (loss) per weighted
average limited partnership unit was $3.75 and $(2.27) for 2002 and 2001,
respectively.
Years Ended December 31, 2001 and 2000
Revenues for the year ended December 31, 2001 were $5,387,932, representing
a decrease of $1,144,747 or 17.5% from 2000. The decrease in revenues resulted
primarily from a decrease in finance income of $924,152. Finance income
decreased due to the reduction in the average size of the finance lease
portfolio. Additionally, the gain on sales of equipment decreased $185,469. The
decrease in gain on sales of equipment resulted from a decrease in the amount of
equipment sold where the proceeds received were in excess of the Partnership's
carrying value. In addition, the loss from investments in unconsolidated joint
ventures increased by $122,857. The increase in the loss resulted primarily from
a provision for bad debts of $1,825,000 being recorded in 2001 by an underlying
joint venture, ICON Receivables 1997-A LLC, as compared with a provision for bad
debts of $850,000 being recorded by this venture in 2000.
Expenses for the year ended December 31, 2001 were $6,783,256, representing
an increase of $647,007 or 10.5% from 2000. The increase in expenses resulted
primarily from an increase in depreciation of $537,172. The increase in
depreciation was due to a change in estimate (reduction) of a residual value of
an aircraft in the fourth quarter of 2001 as well as the depreciation on
equipment that was reclassified from a finance lease to an operating lease.
Additionally, the provision for bad debts increased by $1,662,304. The provision
for bad debts increased as a result of determinations made to adjust the levels
of reserves required. These determinations were the result of the Partnership's
ongoing analysis of delinquency trends, loss experience and an assessment of the
overall credit risk. Amortization of initial direct costs and other also
increased by $123,205. The increase in this expense was due to the amortization
of loan origination fees incurred by ICON Receivables 1997-B LLC, the
Partnership's
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
December 31, 2002
majority owned joint venture. These increases were partially offset by a
decrease in interest expense of $674,083. The decrease in interest expense
resulted from a decrease in the average debt outstanding from 2000 to 2001. In
addition, management fees decreased by $210,941 and administrative expense
reimbursements decreased by $119,193. Both were a result of the reduction in the
average size of the finance lease portfolio. Minority interest expense also
decreased by $573,165 to income of $460,987. This resulted from an overall loss
in one of the Partnership's consolidated joint ventures in 2001 versus income in
the consolidated joint venture in 2000.
Net (loss) income for the years ended December 31, 2001 and 2000 was
$(1,395,324) and $396,430, respectively. The net (loss) income per weighted
average limited partnership unit was $(2.27) and $.65 for 2001 and 2000,
respectively.
Liquidity and Capital Resources
The Partnership's primary sources of liquidity in 2002, 2001 and 2000 were
net cash provided by operating activities of $5,255,183, $8,300,201 and
$9,256,495, respectively, and proceeds from sales of equipment of $2,394,019,
$738,728 and $2,159,942, respectively. These proceeds were used to fund cash
distributions and debt repayments.
The Partnership's notes payable consisted of $11,352,510 of non-recourse
debt as of December 31, 2002. Such debt is secured by leased equipment and is
payable from the rentals and residuals realized from such investments.
The Partnership's reinvestment period ended July 31, 1998. The disposition
period began August 1, 1998, at which time the Partnership began the orderly
termination of its operations and affairs. During the disposition period, the
Partnership has and will continue to distribute substantially all distributable
cash from operations and equipment sales to the partners. The Partnership has
not and will not invest in any additional finance or lease transactions during
the disposition period. Because the Partnership is in the disposition period,
future monthly distributions are expected to fluctuate depending on the amount
of asset sale and re-lease proceeds received during that period.
As of December 31, 2002, except as noted above, there were no known trends
or demands, commitments, events or uncertainties which are likely to have a
material effect on liquidity. As cash is realized from operations and sales of
equipment, the Partnership will distribute substantially all available cash,
after retaining sufficient cash to meet its reserve and recurring obligations.
Distributions to partners amounted to $2,620,226, $1,369,947 and $3,709,264 for
the years ended December 31, 2002, 2001 and 2000, respectively.
We do not consider the impact of inflation to be material in the analysis
of our overall operations.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
December 31, 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 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.
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.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
December 31, 2002
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 investees. Except as discussed below, 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 E
(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 14-15
Consolidated Balance Sheets as of December 31, 2002 and 2001 16
Consolidated Statements of Operations for the Years Ended
December 31, 2002, 2001 and 2000 17
Consolidated Statements of Changes in Partners' Equity for the Years Ended
December 31, 2002, 2001 and 2000 18
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2002, 2001 and 2000 19-21
Notes to Consolidated Financial Statements 22-34
ICON Cash Flow Partners, L.P., Series E
(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 E:
We have audited the accompanying consolidated balance sheet of ICON Cash
Flow Partners, L.P., Series E (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 audit.
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 July
31, 1998. The disposition period began on August 1, 1998. 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 E 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 E:
We have audited the accompanying consolidated balance sheet of ICON Cash
Flow Partners, L.P., Series E (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 July
31, 1998. The disposition period began on August 1, 1998. 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 E 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 E
(A Delaware Limited Partnership)
Consolidated Balance Sheets
December 31,
2002 2001
---- ----
Assets
Cash and cash equivalents $ 746,808 $ 1,363,922
------------ ------------
Investment in finance leases
Minimum rents receivable 2,590,191 7,249,182
Estimated unguaranteed residual values 3,197,247 5,073,140
Unearned income (120,426) (746,315)
Allowance for doubtful accounts (488,165) (1,888,318)
------------ ------------
5,178,847 9,687,689
------------ ------------
Investment in operating leases
Equipment at cost 21,554,842 21,554,842
Accumulated depreciation (7,261,999) (5,708,777)
------------ ------------
14,292,843 15,846,065
Investment in financings
Receivables due in installments 3,157,773 6,843,252
Unearned income (81,826) (413,030)
Allowance for doubtful accounts (1,331,570) (1,214,557)
------------ ------------
1,744,377 5,215,665
Investments in unconsolidated joint ventures 216,489 166,692
------------ ------------
Other assets, net 328,030 503,591
------------ ------------
Total assets $ 22,507,394 $ 32,783,624
============ ============
Liabilities and Partners' Equity
Notes payable - non-recourse $ 11,352,510 $ 21,862,616
Security deposits, deferred credits and other payables 1,667,953 1,688,474
Deferred income 483,436 176,860
Accounts payable - General Partner and affiliate 529,572 266,718
Minority interests in consolidated joint ventures 178,217 174,672
------------ ------------
Total liabilities 14,211,688 24,169,340
------------ ------------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (436,768) (433,582)
Limited partners (607,855.51 units outstanding,
$100 per unit original issue price) 8,732,474 9,047,866
------------ ------------
Total partners' equity 8,295,706 8,614,284
------------ ------------
Total liabilities and partners' equity $ 22,507,394 $ 32,783,624
============ ============
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Statements of Operations
For the Years Ended December 31,
2002 2001 2000
---- ---- ----
Revenues
Rental income $ 2,547,841 $ 2,609,465 $ 2,460,000
Finance income 915,583 2,923,473 3,847,625
(Loss) gain on sales of equipment (14,300) 68,268 253,737
Interest income and other 337,054 103,589 165,323
Miscellaneous income 2,017,763 - -
Income (loss) from investments in
unconsolidated joint ventures 49,797 (316,863) (194,006)
------------- ------------- -------------
Total revenues 5,853,738 5,387,932 6,532,679
------------- ------------- -------------
Expenses
Depreciation 1,553,222 1,124,383 587,211
Interest 1,428,860 2,333,153 3,007,236
(Reversal of) provision for bad debts (700,000) 2,162,304 500,000
Management fees - General Partner 354,788 537,237 748,178
Administrative expense reimbursements
- General Partner 194,272 339,737 458,930
General and administrative 606,778 624,122 722,414
Amortization of initial direct costs and other 61,569 123,307 102
Minority interest expense (income) in
consolidated joint ventures 52,601 (460,987) 112,178
------------- ------------- -------------
Total expenses 3,552,090 6,783,256 6,136,249
------------- ------------- -------------
Net income (loss) $ 2,301,648 $ (1,395,324) $ 396,430
============= ============= =============
Net income (loss) allocable to:
Limited partners $ 2,278,632 $ (1,381,371) $ 392,466
General Partner 23,016 (13,953) 3,964
------------- ------------- -------------
$ 2,301,648 $ (1,395,324) $ 396,430
============= ============= =============
Weighted average number of limited
partnership units outstanding 607,856 607,856 607,856
============= ============= =============
Net income (loss) per weighted average
limited partnership unit $ 3.75 $ (2.27) $ .65
============ ============ ==============
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series E
(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 $ 15,065,327 $ (372,938) $ 14,692,389
Cash distribution
to partners $ 5.39 $ .65 (3,672,173) (37,091) (3,709,264)
Net income 392,466 3,964 396,430
--------------- ------------- ----------------
Balance at
December 31, 2000 11,785,620 (406,065) 11,379,555
Cash distribution
to partners $ 2.23 $ - (1,356,383) (13,564) (1,369,947)
Net loss (1,381,371) (13,953) (1,395,324)
--------------- ------------- ----------
Balance at
December 31, 2001 9,047,866 (433,582) 8,614,284
Cash distribution
to partners $ .52 $ 3.75 (2,594,024) (26,202) (2,620,226)
Net income 2,278,632 23,016 2,301,648
--------------- ------------- ----------------
Balance at
December 31, 2002 $ 8,732,474 $ (436,768) $ 8,295,706
=============== ============= ================
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
For the Years Ended December 31,
2002 2001 2000
---- ---- ----
Cash flows from operating activities:
Net income (loss) $ 2,301,648 $(1,395,324) $ - 396,430
----------- ------------ -------------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 1,553,222 1,124,383 587,211
Rental income - assigned operating lease receivables (2,200,000) (2,460,000) (2,460,000)
(Reversal of) provision for doubtful accounts (700,000) 2,162,304 500,000
Finance income portion of receivables paid directly
to lenders by lessees (193,939) (447,632) (1,111,381)
Amortization of initial direct costs 61,569 123,307 102
Loss (gain) on sales of equipment 14,300 (68,268) (253,737)
Interest expense on non-recourse financing
paid directly by lessees 1,206,993 1,687,354 1,750,991
(Income) loss from investments in
unconsolidated joint ventures (49,797) 316,863 194,006
Minority interest expense (income) in consolidated
joint ventures 52,601 (460,987) 112,178
Changes in operating assets and liabilities, net 3,208,586 7,718,201 9,540,695
----------- ----------- -----------
Total adjustments 2,953,535 9,695,525 8,860,065
----------- ----------- -----------
Net cash provided by operating activities 5,255,183 8,300,201 9,256,495
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sales of equipment 2,394,019 738,728 2,159,942
Distributions received from
unconsolidated joint ventures -- -- 140,630
Distribution to minority interests in consolidated
joint ventures (49,056) -- (37,145)
----------- ----------- -----------
Net cash provided by investing activities 2,344,963 738,728 2,263,427
----------- ----------- -----------
(continued on next page)
ICON Cash Flow Partners, L.P., Series E
(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 (5,597,034) (7,335,811) (20,797,194)
Proceeds from non-recourse debt -- -- 11,943,528
Cash distributions to partners (2,620,226) (1,369,947) (3,709,264)
------------ ------------ ------------
Net cash used in financing activities (8,217,260) (8,705,758) (12,562,930)
------------ ------------ ------------
Net (decrease) increase in cash and cash equivalents (617,114) 333,171 (1,043,008)
Cash and cash equivalents at beginning of year 1,363,922 1,030,751 2,073,759
------------ ------------ ------------
Cash and cash equivalents at end of year $ 746,808 $ 1,363,922 $ 1,030,751
============ ============ ============
(continued on next page)
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Statements of Cash Flows (Continued)
Supplemental Disclosures of Cash Flow Information
For the years ended December 31, 2002, 2001 and 2000, non-cash activities
included the following:
2002 2001 2000
---- ---- ----
Principal and interest on direct finance
receivables paid directly to lenders
by lessees $ 3,920,065 $ 2,145,767 $ 5,139,723
Rental income on operating
lease receivables paid directly to lender
by lessee 2,200,000 2,460,000 2,460,000
Principal and interest on non-recourse debt
paid directly by lessees (6,120,065) (4,605,767) (7,599,723)
------------- ------------ ------------
$ - $ - $ -
============= ============ ============
Transfer of finance lease
residual to operating lease $ - $ 846,858 $ -
============= ============ ============
Interest expense on non-recourse
financing accrued or paid directly
to lenders by lessees $ 1,206,993 $ 1,687,354 $ 1,750,991
Other interest 221,867 645,799 1,256,245
------------- ------------ ------------
Total interest expense $ 1,428,860 $ 2,333,153 $ 3,007,236
============= ============ ============
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2002, 2001 and 2000
1. Organization
ICON Cash Flow Partners, L.P., Series E (the "Partnership") was formed on
November 7, 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
June 5, 1992 and by its final closing on July 31, 1993, 610,411.51 units had
been admitted into the Partnership with aggregate gross proceeds of $61,041,151.
From 1994 through 2002, the Partnership redeemed 2,556 limited partnership units
leaving 607,855.51 limited partnership units outstanding at December 31, 2002.
The Partnership's reinvestment period ended July 31, 1998. The disposition
period began on August 1, 1998. 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 $8,240,555 (including $3,362,551 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, compounded daily, on its outstanding adjusted capital
contribution account. After such time, the distributions will 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 date of the financial
statements and revenues and expenses
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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. 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 majority owned subsidiaries, ICON Cash Flow Partners
L.L.C. I ("ICON Cash Flow LLC I") and ICON Receivables 1997-B LLC ("1997-B").
All inter-company accounts and transactions have been eliminated in
consolidation. The Partnership accounts for its interests in less than 50% owned
joint ventures under the equity method of accounting. In such cases, the
Partnership's original investments are 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,
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 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
term.
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.
Disclosures About Fair Value of Financial Instruments - Statement of
Financial Accounting Standards No. 107, "Disclosures about Fair Value of
Financial Instruments" ("SFAS 107") 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
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.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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 the ongoing analysis of delinquency trends,
loss experience and an assessment of overall credit risk. 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.
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 release or resale of the equipment. Generally,
third party appraisals, reviews of future cash flows and detailed market
analyses are used as the basis for measuring whether an impairment loss should
be recognized.
Income Taxes - No provision for income taxes has been recorded since the
liability for such taxes is 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 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 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.
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
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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.
3. Consolidated Ventures and Investments in Unconsolidated Joint Ventures
The Partnership and its affiliates formed five joint ventures 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.
Consolidated Ventures
The two joint ventures described below are majority owned and are
consolidated with the Partnership.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
ICON Cash Flow Partners L.L.C. I
In September 1994, the Partnership and an affiliate, ICON Cash Flow
Partners L.P. Six ("L.P. Six"), formed a joint venture, ICON Cash Flow LLC I,
for the purpose of acquiring and managing an aircraft subject to an operating
lease with a U.S. based commercial airline. In 1997, the aircraft was remarketed
to Aeromexico under a lease which expired in October 2002. In November 2002 an
extension agreement was consummated with Aeromexico. The lease extension terms
call for a 15 month rental at $75,000 per month. At the end of the 15 months,
Aeromexico has an option to renew for two twelve-month renewal periods at the
then current fair market value rental rate. The Partnership and L.P. Six
acquired interests of 99% and 1%, respectively, in ICON Cash Flow LLC I. ICON
Cash Flow LLC I acquired the aircraft, assuming non-recourse debt and utilizing
contributions received from the Partnership and L.P. Six. Profits, losses,
excess cash and disposition proceeds are allocated 99% to the Partnership and 1%
to L.P. Six. The Partnership's consolidated financial statements include 100% of
the assets, liabilities, revenues and expenses of ICON Cash Flow LLC I. L.P.
Six's investment in ICON Cash Flow LLC I is reflected as minority interest in
joint venture on the Partnership's consolidated balance sheets and as minority
interest expense (income) on the consolidated statements of operations.
ICON Receivables 1997-B LLC
In August 1997, the Partnership and its affiliates, L.P. Six and ICON Cash
Flow Partners L.P. Seven ("L.P. Seven"), formed 1997-B. The Partnership, L.P.
Six and L.P. Seven each contributed cash, equipment leases and residuals and
received a 75.00%, 8.33% and 16.67% interest, respectively, in 1997-B.
The Partnership's consolidated financial statements include 100% of the
assets and liabilities and revenues and expenses of 1997-B. L.P. Six and L.P.
Seven's investments in 1997-B has been reflected as minority interests in
consolidated joint ventures on the balance sheets and minority interest expense
(income) in consolidated joint ventures on the consolidated statements of
operations. 1997-B earned $223,402 in 2002 and the other joint venturers
recorded 25% of such income, or $55,850, which amount is included in minority
interest expense in 2002.
Investments in Unconsolidated Joint Ventures
The three joint ventures described below are less than 50% owned and are
accounted for following the equity method.
ICON Cash Flow Partners L.L.C. II
In March 1995, the Partnership and an affiliate, L.P. Six, formed ICON Cash
Flow Partners L.L.C. II ("ICON Cash Flow LLC II"), for the purpose of acquiring
and managing an aircraft subject to an operating lease with a U.S. based
commercial airline. In 1997, upon the scheduled termination of the lease, the
aircraft was remarketed to Aeromexico under a lease that expired in November
2002. At that time an extension agreement was consummated with Aeromexico. The
lease extension terms call for a 15 month rental with payment for months one
through seven at a power by the hour rate of $525 per flight hour, not to exceed
$75,000 per month. After seven months the rental would be $75,000 per month. At
the end of the 15 months, Aeromexico has an option to renew for two twelve-month
renewal periods at
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
the then current fair market value rental rate. The Partnership and L.P. Six
acquired interests of 1% and 99%, respectively, in ICON Cash Flow LLC II. ICON
Cash Flow LLC II acquired the aircraft, assuming non-recourse debt and utilizing
contributions received from the Partnership and L.P. Six. Profits, losses,
excess cash and disposition proceeds are allocated 1% to the Partnership and 99%
to L.P. Six. The Partnership's investment in the joint venture is accounted for
under the equity method whereby the Partnership's original investment was
recorded at cost and is adjusted by its share of earnings, losses and
distributions.
Information as to the financial position and results of operations of ICON
Cash Flow LLC II as of and for the years ended December 31, 2002 and 2001 is
summarized below:
December 31, 2002 December 31, 2001
----------------- -----------------
Assets $ 15,750,363 $ 17,090,554
============= =============
Liabilities $ 8,932,485 $ 9,926,812
============= =============
Equity $ 6,817,878 $ 7,163,742
============= =============
Partnership's share of equity $ 68,179 $ 71,638
============= =============
For the Year Ended For the Year Ended
December 31, 2002 December 31, 2001
----------------- -----------------
Net (loss) income $ (345,864) $ 523,938
============= =============
Partnership's share of net (loss) income $ (3,459) $ 5,240
============= =============
ICON Cash Flow Partners L.L.C. III
In December 1996, the Partnership and an affiliate, L.P. Seven, formed ICON
Cash Flow Partners L.L.C. III ("ICON Cash Flow LLC III"), for the purpose of
acquiring and managing an aircraft currently on lease to Continental Airlines,
Inc. subject to a leveraged lease that is scheduled to expire in March 2003. The
Partnership and L.P. Seven contributed 1% and 99% of the cash required for such
acquisition, respectively, to ICON Cash Flow LLC III. ICON Cash Flow LLC III
acquired the aircraft, assuming non-recourse debt and utilizing contributions
received from the Partnership and L.P. Seven. Profits, losses, excess cash and
disposition proceeds are allocated 1% to the Partnership and 99% to L.P. Seven.
The Partnership accounts for its investment in ICON Cash Flow LLC III under the
equity method of accounting.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Information as to the financial position and results of operations of ICON
Cash Flow LLC III as of the years ended December 31, 2002 and 2001 is summarized
below:
December 31, 2002 December 31, 2001
----------------- -----------------
Assets $ 5,337,603 $ 4,853,818
=============== ===============
Liabilities $ - $ -
=============== ===============
Equity $ 5,337,603 $ 4,853,818
=============== ===============
Partnership's share of equity $ 53,376 $ 48,538
=============== ===============
For the Year Ended For the Year Ended
December 31, 2002 December 31, 2001
----------------- -----------------
Net income $ 483,785 $ 496,171
=============== ===============
Partnership's share of net income $ 4,838 $ 4,962
=============== ===============
ICON Receivables 1997-A LLC
In March 1997, the Partnership and its affiliates, ICON Cash Flow Partners,
L.P., Series D ("Series D") and L.P. Six, contributed and assigned equipment
lease and finance receivables and residuals to ICON Receivables 1997-A LLC
("1997-A"). In September 1997, the Partnership, 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 D, L.P.
Six and L.P. Seven own 31.19%, 17.81%, 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 E
(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 $ 94,934 $ 46,516
=============== ===============
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) $ 48,418 $ (327,065)
=============== ===============
1997-A reversed a 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
are as follows:
Finance
Year Leases Financings Total
---- ------ ---------- -----
2003 $ 2,167,997 $ 3,157,773 $ 5,325,770
2004 397,347 - 397,347
2005 24,847 - 24,847
------------ ------------- -------------
$ 2,590,191 $ 3,157,773 $ 5,747,964
============ ============= =============
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
5. Investment in Operating Leases
The investment in operating leases at December 31, 2002 and 2001 consisted
of the following:
2002 2001
---- ----
Equipment cost, beginning of year $ 21,554,842 $ 20,707,984
Transfer from finance lease residual - 846,858
--------------- ---------------
Equipment cost, end of year 21,554,842 21,554,842
--------------- ---------------
Accumulated depreciation,
beginning of year (5,708,777) (4,584,394)
Depreciation expense (1,553,222) (1,124,383)
--------------- ---------------
Accumulated depreciation, end of year (7,261,999) (5,708,777)
--------------- ---------------
Investment in operating leases, end of year $ 14,292,843 $ 15,846,065
=============== ===============
In the second quarter of 2001, the original lease term of a power generator
equipment lease accounted for as a direct finance lease expired. The residual
value at the expiration of the original finance lease term was $846,858. This
lease was renewed for a twelve month period and the equipment lease has been
reclassified as an operating lease.
The lease with Aeromexico accounted for approximately 64% of the
Partnership's rental and finance income during the year ended December 31, 2002.
Non-cancelable minimum annual amounts due on operating leases are as
follows:
Year Amount
2003 $ 900,000
2004 75,000
------------------
$ 975,000
==================
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
6. Allowance for Doubtful Accounts
The Allowance for Doubtful Accounts related to the investments in finance
leases and financings consisted of the following:
Finance
Leases Financings Total
------ ---------- -----
Balance at January 1, 2000 $ 1,237,909 $ 735,231 $ 1,973,140
Provision for doubtful accounts -- 500,000 500,000
Recovery on accounts previously
written-off 49,303 -- 49,303
----------- ----------- -----------
Balance at December 31, 2000 1,287,212 1,235,231 2,522,443
Provision for doubtful accounts 775,248 1,387,056 2,162,304
Accounts written-off (174,142) (1,407,730) (1,581,872)
----------- ----------- -----------
Balance at December 31, 2001 1,888,318 1,214,557 3,102,875
(Reversal of) provision for doubtful accounts (1,400,153) 700,153 (700,000)
Accounts written-off -- (583,140) (583,140)
----------- ----------- -----------
Balance at December 31, 2002 $ 488,165 $ 1,331,570 $ 1,819,735
=========== =========== ===========
7. Notes Payable
The non-recourse notes payable consist of:
(i) Notes payable totaling $1,245,283 bearing interest at a fixed rate of 6.19%
and are payable from receivables related to the portfolio that secures the
debt, and
(ii) $10,107,227 of other non-recourse notes bearing interest at rates ranging
from 7.48% to 11.83%, $9,186,243 of which is secured by the aircraft on an
operating lease with a net book value of approximately $13,950,000 at
December 31, 2002.
The notes mature as follows:
Year ending December 31, Amount
2003 $ 1,969,069
2004 9,383,441
--------------
$ 11,352,510
=============
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
8. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the years ended December 31, 2002, 2001 and 2000
are as follows: Charged to Operations
Management fees $ 748,178
Administrative expense reimbursements 458,930
----------
Year ended December 31, 2000 $1,207,108
==========
Management fees $ 537,237
Administrative expense reimbursements 339,737
----------
Year ended December 31, 2001 $ 876,974
==========
Management fees $ 354,788
Administrative expense reimbursements 194,272
----------
Year ended December 31, 2002 $ 549,060
==========
In accordance with the terms of the Management Agreement, the Partnership
pays the General Partner management fees based on a percentage of rentals
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
underwriting commissions).
The Partnership has investments in five joint ventures with other
partnerships sponsored by the General Partner. See Note 3 for additional
information relating to the joint ventures.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
9. Tax Information (Unaudited)
The following table reconciles net income (loss) for financial statement
reporting purposes to (loss) for federal income tax reporting purposes for the
years ended December 31:
2002 2001 2000
----------- ----------- -----------
Net income (loss) for financial statement
reporting purposes $ 2,301,648 $(1,395,324) $ 396,430
Differences due to:
Direct finance leases (141,396) 1,818,815 2,938,653
Depreciation (841,698) (2,839,850) (4,142,464)
Provision for losses (700,000) 580,432 478,812
Gain (loss) on sales of equipment 3,872 (543,376) (1,171,655)
Other (1,767,921) (162,269) 1,375,963
----------- ----------- -----------
Partnership loss for federal income
tax reporting purposes $(1,145,495) $(2,541,572) $ (124,261)
=========== =========== ===========
As of December 31, 2002, the partners' capital accounts for financial
statement reporting purposes totaled $8,295,706 compared to the partners'
capital accounts for federal income tax reporting purposes of $7,145,976
(unaudited). The difference arises primarily from sales expenses and commissions
reported as a reduction in the partners' capital for financial statement
reporting purposes but not for federal income tax reporting purposes, offset by
temporary differences related to direct finance leases, depreciation, provision
for losses and gain (loss) on sales of equipment.
ICON Cash Flow Partners, L.P., Series E
(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 $ 962,813 $ 926,660 $ 740,463 $ 3,223,802
============== ============= ============= =============
Net (loss) income allocable to
Limited partners $ (351,321) $ (489,909) $ 354,629 $ 2,765,233
============== ============= ============= =============
Net (loss) income per weighted
average limited partnership unit $ (.58) $ (.81) $ .58 $ 4.56
============== ============= ============= =============
2001
Revenues $ 1,455,453 $ 1,168,206 $ 1,373,991 $ 1,390,282
============== ============= ============= =============
Net income (loss) allocable to
Limited partners $ 157,160 $ (161,898) $ (463,405) $ (913,228)
============== ============= ============= =============
Net income (loss) per weighted
average limited partnership unit $ 0.26 $ (0.27) $ (0.76) $ (1.50)
============== ============= ============= =============
(1) The Partnership recorded provisions for bad debts in 2001 of $125,000
in the first quarter, $150,000 in the second quarter, $780,114 in the third
quarter and $1,107,190 in the fourth quarter. (2) In the third quarter of 2002
the Partnership reversed the provision for bad debts by $700,000. (3) In the
fourth quarter of 2002 the Partnership recorded a one-time adjustment of
$2,017,763 of miscellaneous income due to a revised estimate of residual sharing
values.
ICON Cash Flow Partners, L.P., Series E
(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 is performing or causing to be performed certain
functions relating to the management of the equipment of the Partnership. Such
services include the collection of lease payments from the lessees of the
equipment, re-leasing services in connection with equipment which is off-lease,
inspections of the equipment, liaison with and general supervision of lessees to
assure that the equipment is being properly operated and maintained, monitoring
performance by the lessees of their obligations under the leases and the payment
of operating expenses.
The officers and directors of the General Partner are as follows:
Beaufort J.B. Clarke Chairman, Chief Executive Officer and Director
Paul B. Weiss President and Director
Thomas W. Martin Executive Vice President and Director
Beaufort J.B. Clarke, age 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 E
(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
The Partnership has no directors or officers. The General Partner and its
affiliates were paid or accrued the following compensation and reimbursement for
costs and expenses for the years ended December 31, 2002, 2001 and 2000.
Entity Capacity Type of Compensation 2002 2001 2000
------ -------- -------------------- ---- ---- ----
ICON Capital Corp. General Partner Management fees $ 354,788 $ 537,237 $ 748,178
ICON Capital Corp. General Partner Administrative expense
reimbursements 194,272 339,737 458,930
--------------- -------------- -------------
$ 549,060 $ 876,974 $ 1,207,108
=============== ============== =============
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.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
December 31, 2002
Item 13. Certain Relationships and Related Transactions
See Item 11 for a discussion of the Partnership's reimbursable management
fees and administrative expenses.
See Note 3 for a discussion of the Partnership's related party investments
in joint ventures.
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 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 Amendment No. 2 to Form S-1 Registration Statement No. 33-44413
filed with the Securities and Exchange Commission on June 4, 1992)
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
December 31, 2002
(ii) Form of Selling Dealer Agreement (Incorporated by reference to Exhibit
1.2 to Amendment No. 2 to Form S-1 Registration Statement No. 33-44413
filed with the Securities and Exchange Commission on June 4, 1992)
(iii)Amended and Restated Agreement of Limited Partnership (Incorporated
herein by reference to Exhibit A to Amendment No. 2 to Form S-1
Registration Statement No. 33-44413 filed with the Securities and
Exchange Commission on June 4, 1992)
(b) Reports on Form 8-K
Form 8-K filed on February 5, 2003
Item 4. Changes in Registrant's Certifying Accountant
(c) 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 E
(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 E
File No. 33-44413 (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 E;
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 E
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 E;
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 E
Last printed 3/28/2003 9:48 AM
Page 43
ICON Cash Flow Partners, L.P., Series E
(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
E, 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 E.
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 E
ICON Cash Flow Partners, L.P., Series E
(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 E, 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 E.
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 E
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.