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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2004
--------------------------------------------------
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the transition period from _____________________ to ________________________
Commission File Number 33-94458
----------------------------------------------------------
ICON Cash Flow Partners L.P. Seven
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3835387
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
100 Fifth Avenue, New York, New York 10011-1505
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(212) 418-4700
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Registrant's telephone number, including area code
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 whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). [ ] Yes [x] No
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Condensed Consolidated Balance Sheets
(unaudited)
June 30, December 31,
2004 2003
---- ----
Assets
------
Cash and cash equivalents $ 696,087 $ 301,256
----------------- ----------------
Investment in finance leases
Minimum rents receivable 481,906 904,811
Estimated unguaranteed residual values 815,902 1,188,402
Initial direct costs, net - 1,299
Unearned income (36,356) (55,036)
Allowance for doubtful accounts (86,631) (239,516)
----------------- ---------------
1,174,821 1,799,960
----------------- ---------------
Investment in operating leases
Equipment at cost 2,565,000 6,352,370
Accumulated depreciation (555,540) (1,614,224)
----------------- ---------------
2,009,460 4,738,146
----------------- ---------------
Equipment held for sale or lease, net 8,240,738 15,569,831
----------------- ---------------
Net investment in leveraged lease 10,336,317 19,631,879
----------------- ---------------
Investment in estimated unguaranteed residual values 4,686,758 4,686,758
----------------- ---------------
Investments in unconsolidated joint ventures 3,830,488 4,000,169
----------------- ---------------
Due from affiliates 405,477 369,071
----------------- ----------------
Other assets, net 663,132 966,486
----------------- ----------------
Total assets $ 32,043,278 $ 52,063,556
================= ================
(continued on next page)
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Condensed Consolidated Balance Sheets - Continued
(unaudited)
June 30, December 31,
2004 2003
---- ----
Liabilities and Partners' Equity
Notes payable - non-recourse $ 9,709,125 $ 22,129,648
Notes and accrued interest payable - recourse 13,514,713 14,027,055
Due to General Partner and affiliates, net 136,311 51,522
Security deposits, deferred credits and other payables 435,621 429,127
Minority interest in consolidated joint venture 20,093 22,871
---------------- ----------------
Total liabilities 23,815,863 36,660,223
---------------- ----------------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (766,632) (694,873)
Limited Partners (987,548 units outstanding,
$100 per unit original issue price) 8,994,047 16,098,206
---------------- ----------------
Total partners' equity 8,227,415 15,403,333
---------------- ----------------
Total liabilities and partners' equity $ 32,043,278 $ 52,063,556
================ ================
See accompanying notes to condensed consolidated financial statements.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Condensed Consolidated Statements of Operations
(unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
---- ---- ---- ----
Revenues
Finance income $ 3,837 $ 15,186 $ 7,685 $ 38,208
Rental income 104,201 519,574 209,825 887,260
Income from leveraged leases 377,862 425,800 1,078,481 1,025,718
Net gain on sales of equipment 10,489 92,231 10,489 130,779
Income from investments in
unconsolidated joint ventures 186,408 330,584 532,890 634,574
Interest income and other 32,365 260 32,770 2,590
------------ ------------- ------------- ------------
Total revenues 715,162 1,383,635 1,872,140 2,719,129
------------ ------------- ------------- -------------
Expenses
Provision for impairment loss - 350,000 4,700,000 700,000
Depreciation expense 508,960 1,379,374 2,027,219 2,758,748
Loss on lease termination 622,872 - 622,872 -
Interest 400,610 819,929 804,674 1,513,759
General and administrative 159,838 500,939 402,035 865,358
Management fees - General Partner 9,495 36,673 387,287 479,292
Administrative expense reimbursements -
General Partner 32,702 15,961 154,958 194,477
Reversal of provision for doubtful accounts (112,412) - (112,412) -
Amortization of initial direct costs 31,384 (30,352) 62,768 98,328
Minority interest in consolidated joint venture (664) - (1,343) 1,183
------------- ------------- ------------- -------------
Total expenses 1,652,785 3,072,524 9,048,058 6,611,145
============= ============= ============= =============
Net loss $ (937,623) $ (1,688,889) $ (7,175,918) $ (3,892,016)
Net loss allocable to:
Limited Partners $ (928,247) $ (1,672,000) $ (7,104,159) $ (3,853,096)
General Partner (9,376) (16,889) (71,759) (38,920)
-------------- ------------- ------------- -------------
$ (937,623) $ (1,688,889) $ (7,175,918) $ (3,892,016)
============= ============= ============== ==============
Weighted average number of limited
partnership units outstanding 987,548 987,548 987,548 987,548
============= ============= ============= ==============
Net loss per weighted average
limited partnership unit $ (0.94) $ (1.69) $ (7.19) $ (3.90)
============= ============ ============= =============
See accompanying notes to condensed consolidated financial statements.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Condensed Consolidated Statement of Changes in Partners' Equity
For the Six Months Ended June 30, 2004
(unaudited)
Limited General
Partners Partner Total
-------- ------- -----
Balance at
January 1, 2004 $ 16,098,206 $ (694,873) $ 15,403,333
Net loss (7,104,159) (71,759) (7,175,918)
------------------- --------------- --------------
Balance at
June 30, 2004 $ 8,994,047 $ (766,632) $ 8,227,415
------------------- --------------- --------------
See accompanying notes to condensed consolidated financial statements.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30,
(unaudited)
2004 2003
---- ----
Cash flows from operating activities:
Net loss $ (7,175,918) $ (3,892,016)
---------------- ---------------
Adjustments to reconcile net loss to
net cash used in operating activities:
Rental income paid directly to lenders by lessees - (674,894)
Provision for impairment loss 4,700,000 700,000
Reversal of provision for doubtful accounts (112,412) -
Interest expense on non-recourse financing paid
directly to lenders by lessees 391,890 979,521
Loss on lease termination 622,872 -
Amortization of initial direct costs 62,768 98,328
Depreciation expense 2,027,219 2,758,748
Income from leveraged leases (1,078,481) (1,025,718)
Income from investments in unconsolidated joint ventures (532,890) (634,574)
Net gain on sales of equipment (10,489) (130,779)
Minority interest in consolidated joint venture (1,343) 1,183
Changes in operating assets and liabilities:
Collection of principal from non-financed receivables 675,096 703,092
Other assets 303,354 302,758
Due to/from General Partner and affiliates 48,383 (87,776)
Security deposits, deferred credits and other payables 6,494 387,456
-------------- -------------
Total adjustments 7,102,461 3,377,345
-------------- -------------
Net cash used in operating activities (73,457) (514,671)
-------------- -------------
Cash flows from investing activities:
Proceeds from sales of equipment 258,833 827,549
Distributions received from unconsolidated joint ventures 721,797 298,564
-------------- -------------
Net cash provided by investing activities 980,630 1,126,113
-------------- -------------
Cash flows from financing activities:
Cash distributions to partners - (1,662,543)
Proceeds form notes payable - recourse - 690,000
Principal payments on notes payable - recourse debt (512,342) (453,901)
-------------- -------------
Net cash (used in) financing activities (512,342) (1,426,444)
-------------- -------------
Net increase (decrease) in cash and cash equivalents 394,831 (815,002)
Cash and cash equivalents at beginning of period 301,256 1,257,947
-------------- -------------
Cash and cash equivalents at end of period $ 696,087 $ 442,945
============== =============
(continued on next page)
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Condensed Consolidated Statements of Cash Flows - Continued
Supplemental Disclosure of Cash Flow Information
For the six months ended June 30, 2004 and 2003, non-cash activities
included the following:
2004 2003
---- ----
Principal and interest on direct finance
receivables paid directly to lenders by lessees $ 5,674,044 $ 4,241,348
Rental income assigned - operating lease receivables - 674,894
Principal and interest on non-recourse
financing paid directly to lenders by lessees (5,674,044) (4,916,242)
---------------- ---------------
$ - $ -
================ ==============
Notes payable - non-recourse relinquished upon termination $ 7,138,369 $ -
================ ==============
Transfer of investment in operating leases, net of accumulated
depreciation, to equipment held for sale or lease $ 2,327,588 $ 3,444,412
================ ===============
Interest accrued or paid directly to lenders by lessees
on non-recourse financings $ 391,890 $ 979,521
Other interest paid 412,784 534,238
---------------- ---------------
Total interest expense $ 804,674 $ 1,513,759
================ ===============
See accompanying notes to condensed consolidated financial statements.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements
June 30, 2004
(unaudited)
1. Basis of Presentation
The condensed consolidated financial statements of ICON Cash Flow Partners
L.P. Seven (the "Partnership") have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC") and, in the
opinion of management, include all adjustments (consisting only of normal
recurring accruals) necessary for a fair statement of results for each period
shown. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted pursuant
to such SEC rules and regulations. Management believes that the disclosures made
are adequate to make the information represented not misleading. The results for
the interim period are not necessarily indicative of the results for the full
year. These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes included in the
Partnership's 2003 Annual Report on Form 10-K. Certain 2003 amount have been
reclassified to conform to the 2004 presentation.
2. Disposition Period
The Partnership's reinvestment period ended in November, 2002 and the
disposition period began immediately thereafter. During the disposition period,
the Partnership has and will continue to utilize available cash to pay its
liabilities; distribute substantially all remaining cash, if any, from
operations and equipment sales to the partners; and continue the orderly
termination of its operations and affairs. The Partnership will not invest in
any additional finance or lease transactions during the disposition period.
3. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the six months ended June 30, 2004 and 2003,
respectively, were as follows:
2004 2003
---- ----
Management fees $ 387,287 $ 479,292 Charged to Operations
Administrative expense
reimbursements 154,958 194,477 Charged to Operations
------------ -------------
Total $ 542,245 $ 673,769
============ =============
As of June 30, 2004, the Partnership had a net receivable of $405,477 due
from affiliates, primarily resulting from its share of distributions and rental
payments received by affiliates on behalf of the Partnership. The Partnership
also had a net payable of $136,311 due to the General Partner and affiliates for
administrative expense reimbursements and rental payments received on behalf of
such affiliates.
The Partnership and its affiliates, entities in which ICON Capital Corp. is
also the General Partner, formed eight joint ventures for the purpose of
acquiring and managing various assets. (See Note 5 for additional information
relating to these joint ventures)
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
4. Net Investment in Leveraged Lease
As of June 30, 2004 the Partnership had an ownership interest in a DC-10-30
aircraft subject to a leveraged lease with Federal Express Corporation through
July 2, 2004.
The net investment in the leveraged lease as of June 30, 2004 and December
31, 2003 consisted of the following:
June 30, December 31,
2004 2003
---- ----
Non-cancelable minimum rents receivable (net of
principal and interest on non-recourse debt) $ 136,317 $ 5,810,360
Estimated unguaranteed residual value 10,200,000 14,900,000
Initial direct costs - 29,411
Unearned income - (1,107,892)
------------ ------------
$ 10,336,317 $ 19,631,879
============ ============
The DC-10-30 aircraft was subject to non-recourse debt, which had a balance
of $9,705,040 at June 30, 2004 and had a balloon payment due of approximately
$9,600,000 at lease end, July 2, 2004. As required by the loan agreement, the
Partnership entered into a residual value insurance agreement with an unrelated
third party. Under the residual value insurance agreement, the insurer had the
obligation to pay the insured amount to the lender at lease expiry. During the
second quarter 2004, the insurer, pursuant to the insurance agreement, notified
the Partnership of its intention to pay the insured amount of $10,200,000 at
lease end which would thereby result in title of the aircraft being transferred
to the insurer. As a result, the Partnership recorded an impairment charge of
$4,700,000 in the quarter ended March 31, 2004 in order to reduce the estimated
unguaranteed residual value of the aircraft to $10,200,000 in the event the
lender and the Partnership decide not to exercise their rights under the
insurance agreement.
Upon lease expiration in July 2004, the aircraft was sold to the insurer
for the $10,200,000, and the Partnership received $520,293, net of $9,679,707
paid to the non-recourse lender.
5. Joint Ventures
The Partnership and its affiliates formed eight ventures discussed below
for the purpose of acquiring and managing various assets. The Partnership and
its affiliates have substantially 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 interests in the equipment.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
Consolidated Joint Venture
The venture described below is majority owned and is consolidated with the
Partnership.
ICON Cash Flow Partners L.L.C. III
----------------------------------
In December 1996, the Partnership and an affiliate, ICON Cash Flow
Partners, L.P., Series E ("Series E") formed ICON Cash Flow Partners L.L.C. III,
for the purpose of acquiring and managing an aircraft which was on lease to
Continental Airlines, Inc. The aircraft is a 1976 McDonnell Douglas DC-10-30
with an original cost of $11,429,751. The original lease, which was accounted
for as a leveraged lease, expired on April 30, 2003. Effective May 1, 2003, the
aircraft was re-leased to World Airways, Inc. on a "power-by-the-hour" basis.
World Airways has tentatively agreed to a lease extension through March of 2005
at a fixed rental of $50,000 a month plus maintenance reserves. Aviation
Investors, Inc. has a 50% interest in the DC-10-30F aircraft currently on lease
to World Airways. The Partnership and Series E contributed 99% and 1% of the
cash required for such acquisition, respectively, to ICON Cash Flow L.L.C. III.
ICON Cash Flow L.L.C. III acquired the aircraft, assuming non-recourse debt and
utilizing contributions received from the Partnership and L.P. Seven. ICON Cash
Flow Partners L.L.C. III has since repaid the entire non-recourse debt secured
by this asset.
Investments in Unconsolidated Joint Ventures
The seven joint ventures described below are 50% or less owned and are
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 of the joint ventures.
ICON Receivables 1997-A L.L.C.
------------------------------
In March 1997, the Partnership and three affiliates, ICON Cash Flow
Partners L.P. Six ("L.P. Six"), Series E and ICON Cash Flow Partners, L.P.,
Series D ("Series D") contributed, and assigned equipment lease and finance
receivables and residuals to ICON Receivables 1997-A L.L.C. ("1997-A") for the
purpose of securitizing their cash flow collections. As of June 30, 2004, the
Partnership, Series E, L.P. Six and Series D own 19.97%, 31.03%, 31.19%, and
17.81% interests, respectively, in 1997-A.
Information as to the unaudited results of operations of 1997-A for the six
months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- -------------
Net income (loss) $ 37,436 $ (39,975)
================ =================
Partnership's share of net income (loss) $ 7,474 $ (7,981)
================ ================
ICON Receivables 1997-B L.L.C.
------------------------------
In August 1997, the Partnership and two affiliates, Series E and L.P. Six,
formed ICON Receivables 1997-B L.L.C. ("1997-B") for the purpose of securitizing
their cash flow collections. The Partnership, Series E and L.P. Six each
contributed cash, equipment leases and residuals and own a 16.67%, 75.00% and
8.33% interest, respectively, in 1997-B.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
Information as to the unaudited results of operations of 1997-B for the six
months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- --------------
Net loss $ (585,497) $ (203,652)
=============== ================
Partnership's share of net loss $ (97,603) $ (33,949)
=============== ================
Distributions $ 206,128 $ -
=============== ================
Partnership's share of distributions $ 34,362 $ -
=============== ================
ICON/Boardman Facility LLC
--------------------------
In December 1998, the Partnership and three affiliates, ICON Cash Flow
Partners, L.P., Series C ("Series C"), L.P. Six and ICON Income Fund Eight A
L.P. ("Fund Eight A"), formed ICON/Boardman Facility LLC ("ICON BF"), for the
purpose of acquiring a lease for a coal handling facility with Portland General
Electric, a utility company. The purchase price totaled $27,421,810 and was
funded with cash and non-recourse debt. The remaining venturers' shares in ICON
BF at June 30, 2004 were .5025%, .5025%, and 98.995% for the Partnership,
L.P.Six, and Fund Eight A, respectively. The non-recourse debt associated with
this equipment was refinanced on May 6, 2004 at an interest rate of 3.65%
maturing on January 23, 2010. The outstanding balance of the debt secured by
this equipment as of June 30, 2004 was $11,255,873. The lender of the
non-recourse debt is assigned the rental payments.
The Partnership is currently in negotiations with Portland General Electric
("PGE") about PGE possibly purchasing the coal handling facility from the
Partnership, either at the end of the current lease term, or at the end of the
extension term in January 2010.
Information as to the unaudited results of operations of ICON BF for the
six months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- -------------
Net income $ 740,912 $ 701,622
=============== ================
Partnership's share of net income $ 3,723 $ 3,525
=============== ================
Distributions $ 7,245,027 $ -
=============== =================
Partnership's share of distributions $ 36,406 $ -
=============== ================
ICON/AIC Trust
--------------
In 1999, ICON/AIC Trust ("AIC Trust") was formed to own and manage a
portfolio of leases in England. The Partnership, L.P. Six and Fund Eight A own
30.76%, 25.51% and 43.73% interests in AIC Trust, respectively.
On December 28, 2001, AIC Trust sold its remaining leases, subject to the
related debt, in exchange for a note receivable of (Pound)2,575,000 ($3,744,822
converted at the exchange rate at December 31, 2001) which was payable in six
installments through June 2004. At June 30, 2004, the remaining amount due was
(Pound)375,000 ($679,718 converted at the exchange rate at June 30, 2004), as
AIC Trust had collected (Pound)375,000 in the first quarter. In July 2004, the
final installment on the note was collected by the Partnership.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
Information as to the unaudited results of operations of ICON/AIC Trust for
the six months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- ------------
Net income $ 7,700 $ 21,313
=============== ================
Partnership's share of net income $ 2,369 $ 6,556
=============== ================
Distributions $ 683,603 $ 722,005
=============== ================
Partnership's share of distribution $ 210,276 $ 222,089
=============== ================
ICON Cheyenne LLC
-----------------
In December 2000, the Partnership and three affiliates, L.P. Six, Fund
Eight A and ICON Income Fund Eight B L.P. ("Fund Eight B") formed ICON Cheyenne
LLC ("ICON Cheyenne") for the purpose of acquiring a portfolio of leases for an
aggregate purchase price of $29,705,716. The purchase price consisted of cash of
$11,401,151 and the assumption of non-recourse debt of $18,304,565. The
non-recourse debt is structured so as to be amortized with rentals due under the
leases. The leases expire on various dates through September 2006. The
Partnership, L.P. Six, Fund Eight A and Fund Eight B have ownership interests of
10.31%, 1.0%, 1.0% and 87.69%, respectively, in ICON Cheyenne. The outstanding
balance of the non-recourse debt secured by these assets, at June 30, 2004, was
$727,584.
Information as to the unaudited results of operations of ICON Cheyenne for
the six months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- -------------
Net (loss) income $ (371,961) $ 132,537
=============== ================
Partnership's share of net (loss) income $ (38,349) $ 13,664
=============== ================
Distributions $ 4,275,001 $ 741,759
=============== ================
Partnership's share of distribution $ 440,753 $ 76,475
================ ================
ICON Aircraft 24846, LLC
------------------------
During 2000, the Partnership and two affiliates, Fund Eight A and Fund
Eight B, formed ICON Aircraft 24846 LLC ("ICON Aircraft 24846") for the purpose
of acquiring an investment in a Boeing 767-300ER aircraft on lease at the time
to Scandinavian Airline Systems ("SAS") for a purchase price of $44,515,416. The
purchase price was funded with cash of $2,241,371 and the assumption of
non-recourse debt in the amount of $42,274,045. The lenders have a security
interest in the aircraft. The lease with SAS expired in March 2003, at which
time the outstanding balance of the non-recourse debt secured by this asset was
approximately $34,500,000. The Partnership has been making contributions toward
interest only payments on the outstanding non-recourse debt during the
remarketing of the aircraft by the General Partner. The Partnership, Fund
Eight-A and Fund Eight-B have ownership interests of 2.0%, 2.0% and 96.0%,
respectively, in ICON Aircraft 24846.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
Subsequent Event
The General Partner had determined that it was in its best interest to sell
the Boeing 767-300ER aircraft, manufacturer's serial number 24846, to BTM
Capital Corp., the lender, for an amount equal to the outstanding debt balance.
The decision to sell the aircraft was based, in part, on the following factors:
1) The aircraft's current fair market value was between $24,000,000 and
$27,000,000 and the balance of the outstanding debt was $34,500,000.
2) Any new lease for the aircraft would have required the Partnership to
contribute an additional $850,000 in equity (at minimum) in order to
reconfigure the aircraft and/or upgrade the engines.
3) If the Partnership were to continue to remarket the aircraft, the lender
would have required interest only payments of $100,000/month until the
aircraft was placed with a new lessee.
The sale of the aircraft took place on July 29, 2004. ICON Aircraft 24846
realized a loss of approximately $601,788 and recorded an impairment in the
second quarter.
Information as to the unaudited results of operations of ICON Aircraft
24846 for the six months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- -------------
Net loss $ (2,515,567) $ (685,814)
================ ==============
Partnership's share of net loss $ (50,311) $ (13,716)
================ ==============
Contributions $ 577,021 $ -
=============== ==============
Partnership's share of contributions $ 11,540 $ -
=============== ==============
North Sea (Connecticut) Limited Partnership
-------------------------------------------
During 2000, a joint venture, North Sea (Connecticut) Limited Partnership
("North Sea"), in which the Partnership is a 50% Class C limited partner,
exercised its option to acquire a drilling rig and simultaneously leased the
drilling rig to the operator. The lease was then financed on a non-recourse
basis with a bank, and a portion of the loan proceeds were used to pay for the
exercise of the option with the excess loan proceeds of $20,002,567 distributed
to the joint venturers ($10,001,284 represented the Partnership's 50% share).
The other joint venturers are not affiliates of the Partnership or its General
Partner.
The Partnership has guaranteed an amount between the stipulated loss value
provided for in the financing and the loan balance. The maximum amount for which
the Partnership is contingently liable at June 30, 2004 under this guarantee was
approximately $72,000.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
Information as to the unaudited results of operations of North Sea for the
six months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- -------------
Net income $ 1,411,776 $ 1,332,950
================ ================
Partnership's share of net income $ 705,588 $ 666,475
================ ================
6. Investment in Operating Leases and Equipment Held for Sale or Lease
The Partnership is the sole owner of two special purpose entities ("SPE")
that owned five (5) marine vessels originally on charter to affiliates of Seacor
Marine, Inc. (the "Vessels"). These Vessels were subject to outstanding
non-recourse debt with Fleet Capital Corp. ("Fleet").
On September 11, 2003, Fleet took control of the Vessels and commenced
remarketing efforts. On May 12, 2004, Fleet sold the Vessels, which resulted in
aggregate sale proceeds of $3,580,000. At the time of sale the outstanding
non-recourse debt related to the Vessels was $7,138,369, therefore all proceeds
from the sale were used to pay down the outstanding non-recourse notes. As a
result of the sale of the Vessels, the Partnership recorded a loss on lease
termination of $622,872.
The Partnership is also the sole owner of an additional SPE that owns three
(3) marine vessels originally on charter to affiliates of Seacor Smit, Inc.
These vessels are not subject to outstanding debt with a lender. As of June 30,
2004, the vessels are held for sale or lease. The Gulf Wind (formerly known as
the Amanda Graham) and the Gulf Pearl (formerly known as the Pearl Graham) are
being operated under bareboat charters in the form of a management agreement
whereby Gulf Fleet Management will sub-lease the vessels. The vessels are being
managed and maintained by Gulf Fleet Management which crews and charters the
vessels on a short term basis in the spot market. It is the intension of the
Partnership and of Gulf Fleet Management to charter both the vessels on longer
term charters if the opportunities are available.
The General Partner is conducting negotiations with Gulf Fleet Management,
Inc. about the possibility of Gulf Fleet purchasing one or more of the Vessels.
7. Line of Credit Agreement
The Partnership, along with certain of its affiliates -- ICON Income Fund
Eight A, ICON Income Fund Eight B, and ICON Income Fund Nine, LLC -- are parties
to a Loan and Security Agreement dated May 30, 2002, as amended (the "Loan
Agreement") between themselves and Comerica Bank (the "Bank"). Certain financial
covenants under the Loan Agreement were violated during 2003 and were
subsequently cured. The Bank has waived any defaults that might have resulted
there from.
The line of credit was extended to expire December 31, 2004. As of June 30,
2004, the Partnership had $6,615,439 outstanding under the line. Aggregate
borrowings by all Funds under the line of credit agreement was $8,615,439 on
June 30, 2004.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
8. Notes Payable
Included in notes payable-recourse is $1,148,264 owed to Series D, an
affiliate of the Partnership. In 1997, Series D financed a portion of the free
cash flow, including the proceeds from the sale or disposal of the equipment,
relating to the leveraged lease with Federal Express Corporation owned by the
Partnership. The lease expired on July 2, 2004 at which time all obligated
unpaid amounts were due to Series D. During the six months ended June 30, 2004,
the Partnership repaid $604,716 (inclusive of interest) of the financing.
The Partnership made an additional payment $260,146 on this note during
August 2004 since the sale of the underlying equipment and is expected to pay
another $388,763, while the remainder is expected to be extinguished based upon
the lower return on the underlying equipment.
9. Significant Lessee
World Airways, Inc. has tentatively agreed to a lease extension through
March of 2005 at a fixed rental of $50,000 a month plus maintenance reserves.
Aviation Investors, Inc. has a 50% interest in the DC-10-30F aircraft currently
on lease to World Airways.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
June 30, 2004
Item 2. Manager's Discussion and Analysis of Financial Condition and Results of
Operations
Forward-Looking Information - The following discussion and analysis should
be read in conjunction with the audited financial statements and included in the
Partnership's annual report on Form 10-K notes dated December 31, 2003. Certain
statements within this document may constitute forward-looking statements within
the meaning 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. 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. Any such forward-looking statements are subject to risks and
uncertainties and the Partnership's future results of operations could differ
materially from historical results or current expectations. Some of these risks
are discussed in this report, and include, without limitation, fluctuations in
oil and gas prices; level of fleet additions by competitors and industry
overcapacity; changing customer demands for aircraft; acts of terrorism;
unsettled political conditions, war, civil unrest and governmental actions, and
environmental and labor laws. The Partnership's actual results could differ
materially from those anticipated by such forward-looking statements due to a
number of factors, some of which may be beyond the Partnership's control,
including, without limitation:
o changes in our industry, interest rates or the general economy;
o the degree and nature of our competition;
o availability of qualified personnel;
o cash flows from operating activities may be less than the Partnership's
current level of expenses;
o the financial condition of lessees; and
o lessee defaults.
a. Overview
The Partnership is an equipment leasing business formed on May 23, 1995 and
began active operations on November 9, 1995. The Partnership is primarily
engaged in the business of acquiring equipment subject to leases.
The Partnership is currently selling its assets in the ordinary course of
business, a time frame called the "disposition period". Our goal is to complete
the disposition period in the next few years.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
June 30, 2004
The Partnership's current portfolio, which is held directly by the
Partnership or through joint venture investments with affiliates, primarily
consists of:
o Warehouse distribution equipment subject to lease with AZ3, Inc. with an
expiration date of September 30, 2004. The equipment was purchased for
$523,640.
o Three (3) supply vessels originally subject to lease with Seacor Marine,
Inc. with an original expiration date of August 31, 2001. The purchase
price consisted of an equity contribution of $4,205,000 in cash and the
assumption of $12,900,000 in non-recourse debt. The Gulf Wind (formerly
known as the Amanda Graham) and the Gulf Pearl (formerly known as the Pearl
Graham) are being operated under bareboat charters in the form of a
management agreement. The vessels are being managed and maintained by Gulf
Fleet Management who crews and charters the vessels on short term basis in
the spot market. It is the intension of the Partnership and of Gulf Fleet
Management to charter both the vessels on longer term charters once the
opportunities are available. The Partnership is in negotiations with Gulf
Fleet Management, Inc. about the possibility of Gulf Fleet purchasing one
or more of the Vessels.
o A .5025% interest in a coal handling facility on lease to Portland General
Electric. The purchase price of the equipment was $27,421,810, of which the
equity contribution was $15,193,097, and assumed non-recourse debt of
$12,228,713. The lease has been extended and is currently set to expire on
January 23, 2005, at which time the lessee has the option to renew for
another 15 years. The Partnership is currently in negotiations with
Portland General Electric about PGE possibly purchasing the coal handling
facility from the Partnership, either at the end of the current lease term,
or at the end of the extension term in January 2010.
o A 10.31% interest in ICON Cheyenne LLC ("ICON Cheyenne"), a portfolio
consisting of various equipment including over the road rolling stock,
manufacturing equipment and materials handling equipment. The original
transaction involved acquiring from Cheyenne Leasing Company a portfolio of
119 leases for a purchase price of $29,705,716. The purchase price
consisted of an equity contribution of $11,401,151 and the assumption of
non-recourse debt of $18,304,565. Of the original 119 schedules, 30 are
still active with expiration dates ranging between January of 2005 and
October of 2006.
o Various rotable aircraft parts that were originally subject to leases with
Sabena SA with the base term expiring on July 31, 2001 and August 31, 2001.
The equipment was purchased for $3,029,583 in cash and is currently off
lease and in the process of being remarketed.
o A 99% interest in a McDonnell Douglas DC-10-30F aircraft subject to lease
with World Airways, Inc. with an original expiration date of December 31,
2003. The aircraft is currently leased based on a "power by the hour" rate
through December 2004, and an extension through March 2005 is being
negotiated. The purchase price consisted of an equity contribution of
$2,119,992 and $9,309,759 in non-recourse debt.
o A 50% interest in a sodium chlorate production facility subject to lease
with EKA Chemicals, Inc. with an expiration date of July 2006, at which
time title in the equipment will pass to the lessee. The purchase price
consisted of an equity contribution of $2,805,920 and $1,052,998 in
non-recourse debt.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
June 30, 2004
o A 50% interest in a mobile offshore drilling rig subject to lease with
Rowan Companies, Inc. The Partnership's contribution of the purchase price
was $12,325,000 of equity and $2,400,828 in assumed non-recourse debt. The
lease was renewed on September 15, 2000 and will expire on March 15, 2008.
Substantially all of our recurring operating revenues are generated from
the operations of the single-investor leases in the Partnership's portfolio. On
a monthly basis, we deduct the expenses related to the recurring operations of
the portfolio from such revenues and assess the amount of the remaining cash
flows that will be required to fund known re-leasing costs and equipment
management costs.
Industry Factors
Our results continue to be impacted by a number of factors influencing the
equipment leasing industry.
Further Deterioration of the Air Travel Industry.
The aircraft leasing industry is currently experiencing a recession, and
this has resulted in depressed sales prices for assets such as the Partnership's
aircraft and rotable parts. It does not appear that the industry will recover
significantly in the very near future. A further weakening of the industry could
cause the proceeds realized from the future sale of the aircraft and rotables to
be even less than suggested by recent appraisals.
Inability to Remarket Assets.
The market for some of the Partnership's assets, such as the interest in
the offshore oil rig, is not very liquid. If current equipment lessees choose
not to renew their leases or purchase the equipment at lease expiry, the
Partnership will need to remarket the equipment. There is no assurance that the
Partnership will be able to locate a willing buyer or lessee, or if one is
located, that the buyer or lessee will pay a price for the asset at least equal
to the appraised value.
b. Results of Operations for the Three Months Ended June 30, 2004 and 2003
Revenues
Gross Revenues for the three months ended June 30, 2004 (the "2004
Quarter") were $715,162, as compared to $1,383,635 in the quarter ended June 30,
2003 (the "2003 Quarter"), representing a decrease of $668,473. This decrease in
revenues resulted primarily from a decrease in rental income of $415,373,
decreases in gain on sales of equipment of $81,742, decrease in income from
investments in unconsolidated joint ventures of $144,176, and finance income of
$11,349. The decrease in rental income is as a result of leases expiring and the
underlying equipment reclassified as equipment held for sale or lease. The
decrease in gain on sales of equipment is due to the fact that the Partnership
only sold four leases in the 2004 Quarter as opposed to the 2003 Quarter when it
sold eight leases which more closely approximated the estimated unguaranteed
residual value at termination. The decrease in income from investments in
unconsolidated joint ventures was due primarily to net losses incurred by the
ICON Receivables 1997-B L.L.C. ("1997-B") and ICON Cheyenne joint ventures held
by the Partnership. The decrease in finance income resulted primarily from a
decrease in the average size of the Partnership's lease portfolio. Specifically,
the following leases have since expired from the 2003 Quarter: Continental
Airlines Inc., Sabreliner Corp., Boca Teeca Cleaners and Circle Construction.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
June 30, 2004
Expenses of the Partnership
Expenses for the 2004 Quarter were $1,652,785, as compared to $3,072,524 in
the 2003 Quarter, representing a decrease of $1,419,739. This decrease in
expenses was primarily due to decreases in depreciation expense of $870,414,
interest expense of $419,319, provision for residual impairment of $350,000,
general and administrative expenses of $341,101 and a reversal of provision for
doubtful accounts of $112,412 due to management's ongoing analysis of minimum
rents receivable resulting in a decision that a lower allowance reflects current
collectibility of receivables more closely. The decrease in expense was
partially offset by an increase in loss on lease termination of $622,872. The
decrease in depreciation expense was due primarily to the termination of the
leases owned by the special purpose entities ("SPE's") that own five marine
vessels originally on charter to affiliates of Seacor Smit and Seacor Marine.
The decrease in interest expense was due to a decrease in the average debt
outstanding from the 2004 Quarter to the 2003 Quarter primarily as a result of
the extinguishment of debt associated with the termination of the SPE's. The
decrease in provision for residual impairment was due to the fact that a
DC-10-30 aircraft subject to a leveraged lease with Federal Express Corporation,
for which such provision had been taken in the 2003 Quarter, has been fully
written down to its expected fair market value. A decrease in general and
administrative expenses was due to reductions in storage and maintenance and
insurance expense in the 2004 Quarter versus the 2003 Quarter as a result of
reduced payments under the Seacor Smit and Seacor Marine leases. The increase in
loss on lease termination was due to the termination of the two SPE's mentioned
above.
Net Income/Loss of the Partnership
As a result of the foregoing factors, net loss for the 2004 Quarter and the
2003 Quarter was $937,623 and $1,688,889, respectively. The net loss per
weighted average limited partnership unit outstanding was $0.94 and $1.69 for
the 2004 Quarter and the 2003 Quarter, respectively.
c. Results of Operations for the Six Months Ended June 30, 2004 and 2003
Revenues
Gross Revenues for the six months ended June 30, 2004 (the "2004 Period")
were $1,872,140, as compared to $2,719,129 for the six months ended June 30,
2003 (the "2003 Period"), representing a decrease of $846,989. This decrease in
revenues resulted primarily from a decrease in rental income of $677,435,
decreases in gain on sales of equipment of $120,290, decrease in income from
investments in unconsolidated joint ventures of $101,684, and a decrease in
finance income of $30,523. The decrease in rental income is as a result of
leases expiring and the underlying equipment reclassified as equipment held for
sale or lease. The decrease in gain on sales of equipment is due to the fact
that the Partnership only sold four leases in the 2004 Period as opposed to the
2003 Period when it sold eight leases which more closely approximated the
estimated unguaranteed residual value at termination. The decrease in income
from investments in unconsolidated joint ventures was due primarily to net
losses incurred by the 1997-B and ICON Cheyenne joint ventures held by the
Partnership. The decrease in finance income resulted primarily from a decrease
in the average size of the Partnership's lease portfolio. Specifically, the
following leases have expired since the 2003 Period: Continental Airlines Inc.,
Sabreliner Corp., Boca Teeca Cleaners and Circle Construction.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
June 30, 2004
Expenses of the Partnership
Expenses for the 2004 Period were $9,048,058, as compared to $6,611,145 in
the 2003 Period, representing an increase of $2,436,913. This increase in
expenses was primarily due to an increase in provision for residual impairment
of $4,000,000 and an increase in loss on lease termination of $622,872. The
increase in expense was partially offset by decreases in depreciation expense of
$731,529, interest expense of $709,085, general and administrative expenses of
$463,323 and a reversal of provision for doubtful accounts of $112,412 due to
management's ongoing analysis of minimum rents receivable resulting in a
decision that a lower allowance reflects current collectibility of receivables
more closely. The increase in provision for residual impairment was due to the
fact that a DC-10-30 aircraft subject to a leveraged lease with Federal Express
Corporation, was fully written down to its unguaranteed estimated residual
value. The increase in loss on lease termination was due primarily to the
termination of the leases owned by the special purpose entities ("SPE's") that
own five marine vessels originally on charter to affiliates of Seacor Smit and
Seacor Marine. The decrease in depreciation expense was due to the termination
of the two SPE's mentioned above. The decrease in interest expense was due to a
decrease in the average debt outstanding from the 2004 Period to the 2003 Period
primarily as a result of the extinguishment of debt associated with the
termination of the SPE's. A decrease in general and administrative expenses was
due to reductions in storage and maintenance and insurance expense in the 2004
Period versus the 2003 Period as a result of reduced payments under the Seacor
Smit and Seacor Marine leases.
Net Income/Loss of the Partnership
As a result of the foregoing factors, net loss for the 2004 Period and the
2003 Period was $7,175,918 and $3,892,016, respectively. The net loss per
weighted average limited partnership unit outstanding was $7.19 and $3.90 for
the 2004 Quarter and the 2003 Quarter, respectively.
d. Sources of Cash
Operations
During the six months ended June 30, 2004, the Partnership's overall cash
position increased by $394,831. The principal reasons for this increase were
proceeds from sales of equipment of $258,833 and distributions received from
unconsolidated joint ventures of $721,797. The Partnership also used $604,716 of
cash on principal and interest paid on notes payable - recourse as described in
detail below. These activities resulted in an increase in the liquidity of the
Partnership.
Reduction in Note Payable
Included in notes payable-recourse is $1,148,264 owed to ICON Cash Flow
Partners L.P., Series D, an affiliate of the Partnership. In 1997, Series D
financed a portion of the free cash flow relating to the leveraged lease with
Federal Express Corporation owned by the Partnership. The lease expired on July
2, 2004 at which time all obligated unpaid amounts were due to Series D. During
the six months ended June 30, 2004, the Partnership repaid $604,716 (inclusive
of interest) of the financing.
Subsequent Events
The Partnership made an additional $260,146 in payment of this note payable
since the sale of the underlying equipment and is expected to pay another
$388,763, while the remainder is expected to be extinguish based upon the lower
return on the underlying equipment.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
June 30, 2004
Status of Boeing 767-300ER Aircraft
The Partnership had determined that it was in its best interest to sell the
Boeing 767-300ER aircraft, manufacturer's serial number 24846, to BTM Capital
Corp., the lender, for an amount equal to the outstanding debt balance. The
decision to sell the aircraft was based, in part, on the following factors:
1) The aircraft's current fair market value was between $24,000,000 and
$27,000,000 and the balance of the outstanding debt was $34,500,000.
2) Any new lease for the aircraft would have required the Partnership to
contribute an additional $850,000 in equity (at minimum) in order to
reconfigure the aircraft and/or upgrade the engines.
3) If the Partnership were to continue to remarket the aircraft, the lender
would have required interest only payments of $100,000/month until the
aircraft was placed with a new lessee.
The sale of the aircraft took effect on July 29, 2004. ICON Aircraft 24846
realized a loss of approximately $601,788 as an impairment loss in the second
quarter.
Supply Vessels
The Partnership is the sole owner of two special purpose entities that
owned (5) five marine vessels originally on charter to affiliates of Seacor
Marine, Inc. (the "Vessels"). These Vessels were subject to outstanding
non-recourse debt with a lender, Fleet Capital Corp. ("Fleet").
On September 11, 2003, Fleet took control of the Vessels and commenced
remarketing efforts. On May 12, 2004, Fleet held a sale for the Vessels, which
resulted in an aggregate sale price of $3,580,000. All of the sale proceeds went
to Fleet to reduce the outstanding non-recourse debt. Since there were no
proceeds for the Partnership's benefit, the Partnership realized a loss of $
622,872 on the transaction.
The Gulf Wind (formerly known as the Amanda Graham) and the Gulf Pearl
(formerly known as the Pearl Graham) are being operated under bareboat charters
in the form of a management agreement whereby Gulf Fleet management will
sub-lease the vessels. The vessels are being managed and maintained by Gulf
Fleet Management who crews and charters the vessels on short term basis in the
spot market. It is the intension of the Partnership and of Gulf Fleet Management
to charter both the vessels on longer term charters if the opportunities are
available.
The Partnership is in negotiations with Gulf Fleet Management, Inc. about
the possibility of Gulf Fleet purchasing one or more of the Vessels.
World Airways, Inc.
World Airways, Inc. has tentatively agreed to a lease extension through
March of 2005 at a fixed rental of $50,000 a month plus maintenance reserves.
Aviation Investors, Inc. has a 50% interest in the DC-10-30F aircraft currently
on lease to World Airways.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
June 30, 2004
Financings and Recourse Borrowings
The Partnership, along with certain of its affiliates -- ICON Income Fund
Nine, LLC, ICON Income Fund Eight B, ICON Income Fund Eight A -- are parties to
a Loan and Security Agreement dated May 30, 2002, as amended (the "Loan
Agreement") between themselves and Comerica Bank (the "Bank"). Certain financial
covenants under the Loan Agreement were violated during 2003 and were
subsequently cured. The Bank has waived any defaults that might have resulted
there from.
The Partnership's obligations to each other under the Contribution
Agreement are collateralized by a subordinate lien on the assets of each
participating Partnership. The line of credit was extended for twelve additional
months expiring December 31, 2004. As of June 30, 2004, the Partnership had
$6,615,439 outstanding under the line. Aggregate borrowing by all Funds under
the line of credit agreement aggregated $8,615,439 on June 30, 2004.
Distributions
The Partnership has not made distributions to limited partners since April
2003 and, while it anticipates being able to make distributions in the future,
cannot predict when distributions may recommence.
Uncertainties
As of June 30, 2004, except as noted above in the Overview section and
listed below in the Risk Factors section, and to the best of our knowledge,
there were no known trends or demands, commitments, events or uncertainties
which are likely to have a material effect on liquidity.
Risk Factors
Set forth below and elsewhere in this report and in other documents we file
with the Securities and Exchange Commission are risks and uncertainties that
could cause our actual results to differ materially from the results
contemplated by the forward-looking statements contained in this report and
other periodic statements we make, including but not limited to, the following:
o There is a depressed market for supply vessels of this type, age and
condition which have affected the value of the Partnership's three
remaining supply vessels. The Partnership believes this will continue to
negatively impact its ability to remarket these vessels.
o The Partnership may face difficulty remarketing the aircraft rotables. Due
to the current condition of the airline industry, there is a depressed
demand market for these rotables.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
June 30, 2004
d. Inflation and Interest Rates
The potential effects of inflation on the Partnership are difficult to
predict. However, since the Partnership is in its disposition phase, the effects
are anticipated to be minimal. If the general economy experiences significant
rates of inflation, however, it could affect the Partnership in a number of
ways. The Partnership does not currently have or expect to have rent escalation
clauses tied to inflation in its leases. The anticipated residual values to be
realized upon the sale or re-lease of equipment upon lease terminations (and
thus the overall cash flow from the Partnership's leases may be expected to
increase with inflation as the cost of similar new and used equipment
increases).
If interest rates increase significantly, the lease rates that the
Partnership can obtain on future leases may be expected to increase as the cost
of capital is a significant factor in the pricing of lease financing. Leases
already in place, for the most part, would not be affected by changes in
interest rates.
Item 3. Qualitative and Quantitative Disclosures About Market Risk Not
Applicable
The Partnership is exposed to certain market risks, including changes in
interest rates and the demand for equipment (and the related residual) owned by
the Partnership and its investors.
The Partnership manages its interest rate risk by obtaining fixed rate debt
for most of its obligations. The Partnership borrows funds under floating rate
lines of credit and is therefore exposed to interest rate risk until the
floating rate lines of credit are repaid. The Partnership's borrowing under the
floating rate lines of credit as of June 30, 2004 aggregated $8,615,439.
The Partnership attempts to manage its exposure to equipment and residual
risk by monitoring the market and maximizing remarketing proceeds through either
releasing or sales of equipment.
Item 4. Controls and Procedures
The Partnership carried out an evaluation, under the supervision and with
the participation of management of ICON Capital Corp., the General Partner of
the Partnership, including the Chief Executive Officer and the Principal
Financial and Accounting Officer, of the effectiveness of the design and
operation of the Partnership's disclosure controls and procedures as of the end
of the period covered by this report pursuant to the Securities Exchange Act of
1934. Based upon the evaluation, the Chief Executive Officer and the Principal
Financial and Accounting Officer concluded that the Partnership's disclosure
controls and procedures were effective.
There were no significant changes in the Partnership's internal control
over financial reporting during the Partnership's second quarter that have
materially affected, or are likely to materially affect, the Partnership's
internal control over financial reporting.
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
PART II - OTHER INFORMATION
- ---------------------------
Item 1 - Legal Proceedings
- --------------------------
The Partnership, 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 pending litigation and are not
aware of any pending or threatened litigation against the Partnership.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
32.1 Certification of Chairman and Chief Executive Officer
32.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer.
33.1 Certification of Chairman and Chief Executive Officer pursuant to 18 U.S.C.
(Section)1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
33.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C. (Section)1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K - None
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ICON Cash Flow Partners L.P. Seven
By its General Partner,
ICON Capital Corp.
August 16, 2004 /s/ Thomas W. Martin
-------------------------- -------------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer
of the General Partner of the Partnership)
Exhibit 32.1
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
Certifications - 10-Q
---------------------
I, Beaufort J.B. Clarke, certify that:
1. I have reviewed this quarterly report of ICON Cash Flow Partners, L.P.,
Seven;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the condensed consolidated financial statements and
other financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; and
c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the General Partner
(or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the registrant's ability to record, process, summarize and
report financial information and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Dated: August 16, 2004
/s/ Beaufort J.B. Clarke
- -----------------------------
Beaufort J. B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
General Partner of ICON Cash Flow Partners L.P. Seven
Exhibit 32.2
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
Certifications - 10-Q
---------------------
I, Thomas W. Martin, certify that:
1. I have reviewed this quarterly report of ICON Cash Flow Partners, L.P.,
Seven;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the condensed consolidated financial statements and
other financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; and
c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the General Partner
(or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the registrant's ability to record, process, summarize and
report financial information and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Dated: August 16, 2004
/s/ Thomas W. Martin
- ----------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting officer
of the General Partner of the Partnership)
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
June 30, 2004
EXHIBIT 33.1
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. Seven,
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
1350), that, to the best of my knowledge and belief:
(1) the Quarterly Report on Form 10-Q for the period ended June 30, 2004 (the
"Periodic Report") which this statement accompanies fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78m); and
(2) the information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Cash Flow Partners L.P. Seven.
Dated: August 16, 2004
/s/ Beaufort J.B. Clarke
------------------------------------------------------
Beaufort J.B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
General Partner of ICON Cash Flow Partners L.P. Seven
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
June 30, 2004
EXHIBIT 33.2
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. Seven, certify, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350), that, to the best of my knowledge and belief:
(1) the Quarterly Report on Form 10-Q for the period ended June, 30 2004 (the
"Periodic Report") which this statement accompanies fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78m); and
(2) the information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Cash Flow Partners L.P. Seven.
Dated: August 16, 2004
/s/ Thomas W. Martin
-------------------------------------------------------
Thomas W. Martin
Executive Vice President (Principal
Financial and Accounting Officer)
ICON Capital Corp.
General Partner of ICON Cash Flow Partners L.P. Seven