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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
( ) 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 - 0-21458.
TELECOMMUNICATIONS INCOME FUND IX, L.P.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Iowa 42-1367356
------------------------------ -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
701 Tama Street, Marion, Iowa 52302
-------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 319-447-5700
------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities pursuant to section 12 (g) of the Act:
Limited Partnership Interests (the "Units")
--------------
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) 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).
As of March 4, 2003, 65,515 units were issued and outstanding. Based on the book
value of $.70 per unit at December 31, 2002, the aggregate market value at March
4, 2003 was $45,861.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the prospectus included in the Partnership's Post Effective
Amendment No. 4 to the Registration Statement on Form S-1 filed December 22,
1992 are incorporated by reference into Part IV.
TELECOMMUNICATIONS INCOME FUND IX, L.P.
2002 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Page
PART I
Item 1 Business---------------------------------------------------------- 3
Item 2 Properties-------------------------------------------------------- 3
Item 3 Legal Proceedings------------------------------------------------- 3
Item 4 Submission of Matters to a Vote of Unit Holders------------------- 4
PART II
Item 5 Market for the Registrant's
Common Equity and Related Stockholders Matters-------------------- 4
Item 6 Selected Financial Data------------------------------------------- 4
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations------------------------------- 5
Item 7A Quantitative and Qualitative Disclosures About Market Risk-------- 6
Item 8 Financial Statements and Supplementary Data----------------------- 6
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure---------------------------- 19
PART III
Item 10 Directors and Executive Officers of the Registrant---------------- 19
Item 11 Executive Compensation-------------------------------------------- 20
Item 12 Security Ownership of Certain Beneficial Owners and Management---- 21
Item 13 Certain Relationships and Related Transactions-------------------- 21
Item 14 Controls and Procedures------------------------------------------- 21
PART IV
Item 15 Exhibits, Financial Statement Schedules and Reports on Form 8-K--- 22
Signatures-------------------------------------------------------- 23
Certifications---------------------------------------------------- 24
2
PART I
Item 1. Business
--------
Telecommunications Income Fund IX, L.P., an Iowa limited partnership (the
"Partnership"), was organized on April 2, 1991. The general partner is Berthel
Fisher & Company Leasing, Inc. (the "General Partner"), an Iowa corporation that
has been in operation since 1988. The Partnership's business and the executive
offices of the General Partner are located at 701 Tama Street, Marion, Iowa
52302. Substantially all of the voting stock of the General Partner is owned by
Berthel Fisher & Company ("Berthel Fisher").
The Partnership began offering Units to the public on October 31, 1991 and
continued to offer Units to the public through April 30, 1993. The Partnership
was originally scheduled to dissolve by December 31, 1999. However, in November,
1999, the partners voted to extend the Partnership until December 31, 2005,
unless dissolved sooner due to the occurrence of any of the following events:
(i) the vote by limited partners owning a majority of the Partnership in
accordance with the Partnership Agreement; (ii) the withdrawal, bankruptcy, or
dissolution and liquidation or other cessation to exist as a legal entity of the
General Partner (unless any successor general partner elected in accordance with
the provisions of the Partnership Agreement elects to continue the business of
the Partnership); (iii) the final distribution of all liquidating distributions
among the limited partners pursuant to the Partnership Agreement; or (iv) the
sale or disposition of all or substantially all of the assets of the Partnership
without the subsequent reinvestment in equipment.
The Partnership entered the liquidation phase on May 1, 1998 and must be
dissolved by December 31, 2005. During the liquidation process, the orderly
collection of lease payments will continue. Also, early payoff of leases and
sales of equipment will be a priority. If leases can be sold for an adequate
return to the investor, the sale of lease receivables will be pursued. Proceeds
from the sale of net assets, including the sale of any portion of the lease
portfolio, will be distributed to Partners.
The Partnership acquired telecommunications equipment (primarily pay telephones
and call processing equipment) and leased the equipment to third parties
generally under full payout leases. The Partnership also acquired other types of
equipment that is subject to full payout leases. Full payout leases are leases
that are expected to generate gross rental payments sufficient to recover the
purchase price of the subject equipment and any overhead and acquisition costs.
The General Partner acquired and approved leases on behalf of the Partnership.
The General Partner established guidelines to use in approving lessees.
Generally, before any lease was approved, there was a review of the potential
lessees' financial statements, credit references were checked, and outside
business and/or individual credit reports were obtained.
The Partnership's equipment leases are concentrated in the pay telephones
representing approximately 81%, 79%, and 34% of the Partnership's direct finance
lease portfolio at December 31, 2002, 2001, and 2000, respectively. Computer
equipment represented approximately 19%, 19%, and 12% of the Partnership's
portfolio at December 31, 2002, 2001, and 2000, respectively. At December 31,
2002, only two customers remained. The Partnership operates in one segment.
The Partnership has no employees and utilizes the administrative services of the
General Partner for which it pays an administrative service fee.
Item 2. Properties
----------
The Partnership does not own or lease any real estate. The Partnership's
materially important properties consist entirely of equipment under lease, as
described in Item 1.
Item 3. Legal Proceedings
-----------------
Telcom Management Systems filed a suit against the Partnership, the General
Partner, and others in Federal Court in Dallas, Texas during February 1998. The
plaintiffs purchased equipment from the Partnership out of a bankruptcy for
approximately $450,000. They alleged that when they attempted to sell the
3
equipment at a later date, the Partnership had not provided good title. The
General Partner filed a Motion for Summary Judgment, which was denied. After
filing the suit, the plaintiff transferred assets in lieu of bankruptcy. No
further action has been taken at this time by the plaintiff. No loss, if any,
has been recorded in the financial statements with respect to this matter.
Item 4. Submission of Matters to a Vote of Unit Holders
-----------------------------------------------
No matters were submitted to a vote of limited partners, through the
solicitation of proxies or otherwise during the year covered by this report.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
-----------------------------------------------------------------
Matters
- -------
The Registrants' Units are not publicly traded. There is no market for the Units
and it is unlikely that any will develop. The General Partner will resist the
development of a public market for the Units.
Number of Partners
Title of Class at March 4, 2003
---------------------------------------------------------
Limited Partners 1,144
General Partner 1
Distributions of $0, $424,940, $300,000, $1,565,000, and $8,477,803 were made to
investors in 2002, 2001, 2000, 1999, and 1998, respectively. This represented
distributions per unit of $0 for 2002, $6.39 for 2001, $4.49 for 2000, $23.21
for 1999, and $125.23 for 1998.
Item 6. Selected Financial Data
-----------------------
(Historical
Cost Basis)
-------------
Three
Months Ended
Mar. 31, 1998
-------------
Total Revenue $ 402,020
Net Income 94,123
Provision for Possible Losses 64,711
Net Income per Unit 1.39
Distributions per Unit 7.50
Distributions to Partners 508,064
(Liquidation Basis)
---------------------------------------------------------------------------
Dec. 31, 2002 Dec. 31, 2001 Dec. 31, 2000 Dec. 31, 1999 Dec. 31, 1998
------------- ------------- ------------- ------------- -------------
Total Assets $ 100,712 $ 129,819 $ 969,554 $ 1,593,434 $ 3,215,954
(Liquidation Basis)
--------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Mar. 31, 1998-
Dec. 31, 2002 Dec. 31, 2001 Dec. 31, 2000 Dec. 31, 1999 Dec. 31, 1998
------------- ------------- ------------- ------------- -------------
Change in net assets, excluding
distributions and withdrawals $ 12,463 $(333,467) $ (85,161) $ 50,608 $ 235,258
Distributions to Partners -0- 424,940 300,000 1,565,000 7,969,739
Distributions per Unit -0- 6.39 4.49 23.21 117.73
The selected financial data above was derived from the liquidation basis
financial statements of the Partnership from March 31, 1998 through December 31,
2002 and the historical cost basis financial statements prior to March 31, 1998.
As of March 31, 1998, the Partnership adopted the liquidation basis of
accounting. Under liquidation basis accounting, assets are presented at
estimated net realizable value and liabilities are presented at estimated
settlement amounts. The change to liquidation basis accounting may materially
affect the comparability of the selected financial data. The above selected
financial data should be read in connection with the financial statements and
related notes appearing elsewhere in this report.
4
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
- -------------
Results of Operations
On May 1, 1998, the Partnership ceased reinvestment in equipment and leases and
began the orderly liquidation of the Partnership in accordance with the
partnership agreement. As a result, the financial statements beginning with the
second quarter of 1998 have been presented under the liquidation basis of
accounting. Under the liquidation basis of accounting, assets are stated at
their estimated net realizable values and liabilities are stated at their
anticipated settlement amounts. Although management will make every effort to
collect leases, sell equipment, and maximize equity positions as quickly as
possible, no assurance can be given that the Partnership will be dissolved prior
to December 31, 2005.
As discussed above, the Partnership is in liquidation and does not believe a
comparison of results would be meaningful. The Partnership realized $9,087 in
income from direct financing leases, notes receivable, interest, and other
income during 2002. The Partnership will make distributions to the partners, to
the extent cash is available for distribution, as leases are collected or sold
and equity securities (common shares of Murdock Communications Corporation
("Murdock")) are sold. The valuation of assets and liabilities necessarily
requires many estimates and assumptions and there are uncertainties in carrying
out the liquidation of the Partnership's net assets. The actual value of the
liquidating distributions will depend on a variety of factors, including the
actual timing of distributions to the partners. The actual amounts are likely to
differ from the amounts presented in the financial statements. Through December
31, 2002, there have been distributions totalling $21,473,163. As of December
31, 2002 the Partnership had $56,921 of cash on hand.
Management increased its estimate of the liquidation value of net assets during
2002 by $3,376 due to the change in the carrying value of equity securities of
$8,654, a gain on lease terminations of $15,722, and offset by an increase in
the reserve for estimated costs during the period of liquidation of $21,000. The
Partnership has accrued the estimated expenses of liquidation, which is $49,971
at December 31, 2002. The General Partner reviews this estimate and will adjust
quarterly, as needed.
As of December 31, 2002 there was one customer with payments over 90 days past
due. When payments are past due more than 90 days, the Partnership discontinues
recognizing income on those contracts. The Partnership's net investment in this
contract at December 31, 2002 was $8,005. This contract was paid in full in
February, 2003, resulting in proceeds of $9,332 and a gain of $3,025. Management
believes its reserves are adequate as of December 31, 2002. Management will
continue to monitor any past due contracts and take the necessary steps to
protect the Partnership's investment.
The General Partner is engaged directly for its own account in the business of
acquiring and leasing equipment. The General Partner serves as the general
partner of Telecommunications Income Fund X, L.P. ("TIF X") and
Telecommunications Income Fund XI, L.P. ("TIF XI"), publicly owned limited
partnerships that are engaged in the equipment leasing business. Also, an
affiliate of the General Partner serves as a general partner of a privately
offered active limited partnership. As of December 31, 2002, the net proceeds of
the private program, TIF X, and TIF XI have been invested in specific equipment.
TIF X entered the liquidation phase on December 31, 1999. The activities of the
General Partner, in regards to its other leasing activities, has had no impact
on the Partnership to date in management's opinion.
The General Partner is not aware of any regulatory issues that may have a
substantial negative impact within the telecommunications industry in which the
Partnership conducts a significant amount of its business. There are, and will
continue to be, regulatory issues within the telecommunications industry that
the General Partner will monitor.
The equipment leases acquired by the Partnership were financed to yield rates of
return between 15% and 20%, and terms varying from 36 to 60 months. Rates
charged on a particular lease depended on a variety of factors, including the
size of the transaction and the financial strength of the lessee. Inflation
affects the cost of equipment purchased and the residual values realized when
leases terminate and equipment is sold.
5
Berthel Fisher & Company, Inc., the parent of the General Partner, has $2.2
million of unsecured debt that was due December 31, 2002. Berthel Fisher &
Company, Inc. has not paid this debt as of the filing of this report and is in
default. Since Berthel Fisher & Company, Inc. is in default, its creditors could
take legal action to enforce their right to repayment. Ultimately, this could
result in the bankruptcy of Berthel Fisher & Company, Inc. Since the General
Partner is a subsidiary and asset of Berthel Fisher & Company, Inc., the
bankruptcy of Berthel Fisher & Company, Inc. could cause the General Partner to
be unable to continue as a going concern. If this were to happen, the
Partnership would need to elect or appoint a new general partner. The new
general partner could require additional fees and charges that would have a
significant negative impact on the liquidation proceeds received by the limited
partners.
Liquidity and Capital Resources
Under terms of the Partnership agreement, the Partnership is required to
establish working capital reserves of no less than 1% of the total capital
raised, or $169,755. At December 31, 2002, actual cash on hand was $56,921.
However, upon entering the liquidation phase, the General Partner has
prioritized the liquidation of assets and distributing remaining proceeds to the
partners. Management believes that the cash on hand at December 31, 2002 is
sufficient to satisfy current operating expenses and costs of the Partnership.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
Equity Price Sensitivity
The following table provides information about the Partnership's not readily
marketable equity security that is sensitive to price changes as of December 31,
2002.
Carrying Amount Fair Value
--------------- -----------
Common Stock-Murdock $ 24,812 $ 24,812
----------- -----------
Not readily marketable equity security $ 24,812 $ 24,812
=========== ===========
The Partnership's primary market risk exposure is equity price. The
Partnership's general strategy in owning equity securities is long-term growth
in the equity value of emerging companies in order to increase the rate of
return to the limited partners over the life of the Partnership. The primary
risk of the security held is derived from the underlying ability of the company
invested in to satisfy debt obligations and their ability to maintain or improve
common equity values. Since the investment is in a shell company with no
operations, the equity price can be volatile. The Partnership holds 248,118
shares of Murdock and at December 31, 2002, the total amount at risk was
$24,812. Murdock has filed an S-4 registration with the intent to merge with
another company. The Partnership intends to hold the Murdock shares to determine
if any significant value can be achieved from this potential merger. No
assurance can be given that the merger will be consummated or that any value can
be realized if the merger is consummated.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
The following financial statements and related information as of and for the
years ended December 31, 2002, 2001, and 2000 are included in Item 8:
Independent Auditors' Report
Statements of Net Assets as of December 31, 2002 and 2001
(Liquidation Basis)
Statements of Changes in Net Assets (Liquidation Basis) for the Years Ended
December 31, 2002, 2001 and 2000
Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and
2000 Notes to Financial Statements
6
INDEPENDENT AUDITORS' REPORT
To the Partners
Telecommunications Income Fund IX, L.P.
We have audited the accompanying statements of net assets (liquidation basis) of
Telecommunications Income Fund IX, L.P. (the "Partnership") as of December 31,
2002 and 2001, and the related statements of changes in net assets (liquidation
basis) and of cash flows for each of the three years in the period ended
December 31, 2002. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As discussed in Note 1 to the financial statements, the Partnership agreement
required that the orderly liquidation of the Partnership's net assets begin in
the second quarter of 1998, and the Partnership commenced liquidation shortly
thereafter. As a result, the Partnership changed its basis of accounting from
the going concern basis to the liquidation basis effective March 31, 1998.
In our opinion, such financial statements present fairly, in all material
respects, the net assets of Telecommunications Income Fund IX, L.P. at December
31, 2002 and 2001, and the changes in its net assets and its cash flows for each
of the three years in the period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America on the
basis described in Note 1.
As discussed in Note 1 to the financial statements, because of the inherent
uncertainty of valuation when an entity is in liquidation, the amounts
realizable from the disposition of the remaining assets may differ materially
from the amounts shown in the accompanying financial statements.
/s/ DELOITTE & TOUCHE LLP
- -----------------------------
DELOITTE & TOUCHE LLP
Cedar Rapids, Iowa
March 10, 2003
7
TELECOMMUNICATIONS INCOME FUND IX, L.P.
STATEMENTS OF NET ASSETS (LIQUIDATION BASIS)
AS OF DECEMBER 31, 2002 AND 2001
- ------------------------------------------------------------------------------------
ASSETS 2002 2001
Cash and cash equivalents $ 56,921 $ 51,213
Not readily marketable equity security (Note 2) 24,812 16,158
Net investment in direct financing leases (Notes 3 and 4) 18,979 59,446
Other assets 3,002
-------- --------
Total assets 100,712 129,819
-------- --------
LIABILITIES
Accounts payable 4,149 3,469
Lease security deposits 831 4,763
Reserve for estimated costs during the period of liquidation 49,971 87,922
-------- --------
Total liabilities 54,951 96,154
-------- --------
CONTINGENCIES (Note 9)
NET ASSETS $ 45,761 $ 33,665
======== ========
See notes to financial statements
-8-
TELECOMMUNICATIONS INCOME FUND IX, L.P.
STATEMENTS OF CHANGES IN NET ASSETS (LIQUIDATION BASIS)
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
- --------------------------------------------------------------------------------
NET ASSETS AS OF JANUARY 1, 2000 $ 1,189,969
Income from direct financing leases 13,876
Interest and other income 7,830
Change in estimate of liquidation value of net assets (Note 1) (106,867)
Distributions to partners ($4.49 per unit) (Note 6) (300,000)
Withdrawals of limited partners (11,164)
===========
NET ASSETS AS OF DECEMBER 31, 2000 793,644
Income from direct financing leases 6,753
Interest and other income 7,100
Change in estimate of liquidation value of net assets (Note 1) (347,320)
Distributions to partners ($6.39 per unit) (Note 6) (424,940)
Withdrawals of limited partners (1,572)
===========
NET ASSETS AS OF DECEMBER 31, 2001 33,665
Income from direct financing leases 7,293
Interest and other income 1,794
Change in estimate of liquidation value of net assets (Note 1) 3,376
Withdrawals of limited partners (367)
===========
NET ASSETS AS OF DECEMBER 31, 2002 $ 45,761
===========
See notes to financial statements.
-9-
TELECOMMUNICATIONS INCOME FUND IX, L.P.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
- ------------------------------------------------------------------------------------------------------------
2002 2001 2000
OPERATING ACTIVITIES:
Change in net assets excluding distributions and withdrawals $ 12,463 $(333,467) $ (85,161)
Adjustments to reconcile to net cash from operating activities:
Liquidation basis adjustments (3,376) 347,320 106,867
Noncash dividend income (9,850)
Changes in operating assets and liabilities:
Other assets 3,002 1,824 (4,826)
Outstanding checks in excess of bank balance (94,490)
Accounts payable 680 (6,214) 148
Due to affiliates (477)
Accrued expenses and other liabilities (58,951) (69,216) (122,937)
--------- --------- ---------
Net cash from operating activities (46,182) (59,753) (210,726)
--------- --------- ---------
INVESTING ACTIVITIES:
Repayments of direct financing leases 52,035 391,926 111,496
Proceeds from sale or termination of direct financing leases 4,154 12,166 63,251
Proceeds from sale of equipment under operating lease 336,815
Repayments of notes receivable 22,043
Net lease security deposits paid (3,932) (4,326) (9,799)
--------- --------- ---------
Net cash from investing activities 52,257 399,766 523,806
--------- --------- ---------
FINANCING ACTIVITIES - Distributions and withdrawals paid to partners (367) (426,512) (311,164)
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,708 (86,499) 1,916
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 51,213 137,712 135,796
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 56,921 $ 51,213 $ 137,712
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 45
Noncash investing and financing activities:
Direct financing lease converted to notes receivable and
not readily marketable equity security 174,811
Operating lease converted to note receivable 870,000
See notes to financial statements.
-10-
TELECOMMUNICATIONS INCOME FUND IX, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
- ---------------------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations- Telecommunications Income Fund IX,
L.P. (the "Partnership") was formed on April 2, 1991 under the Iowa Limited
Partnership Act. The general partner of the Partnership is Berthel Fisher &
Company Leasing, Inc. (the "General Partner"), an Iowa corporation. During
its offering period, the Partnership sold 68,007 units of partnership
interests at a price per unit of $250.
The Partnership operates in one segment. The Partnership's operations are
conducted throughout the United States. The Partnership primarily acquired
equipment for lease to third parties. Certain agreements exceed 10% of the
Partnership's direct finance lease and notes receivable portfolio (see Note
3). The Partnership ceased reinvestment in equipment and leases and began
the orderly liquidation of Partnership assets on May 1, 1998 as required by
the Partnership agreement. Originally, the Partnership was required to
dissolve on December 31, 1999. During November 1999, the limited partners
approved an amendment to extend the term of the Partnership to December 31,
2005 to allow for the orderly liquidation of the remaining assets.
Basis of Presentation - The Partnership began the orderly liquidation of
Partnership assets in the second quarter of 1998 as discussed above. As a
result, on March 31, 1998 the Partnership adopted the liquidation basis of
accounting. The statements of net assets and the statements of changes in
net assets have been prepared on the liquidation basis. Accordingly, assets
have been valued at estimated net realizable value and liabilities include
estimated costs associated with carrying out the plan of liquidation.
Changes in the estimated liquidation value of net assets during the years
ended December 31, 2002, 2001 and 2000 are summarized as follows:
2002 2001 2000
Change in estimate of liquidation value of:
Securities $ 8,654 $ (81,408) $(180,736)
Direct financing leases and notes receivable 15,722 (265,912) 73,869
Reserve for estimated costs during the period
of liquidation (21,000)
--------- --------- ---------
Total $ 3,376 $(347,320) $(106,867)
========= ========= =========
The valuation of assets and liabilities necessarily requires many estimates
and assumptions and there are uncertainties in carrying out the liquidation
of the Partnership's net assets. The actual value of the liquidating
distributions will depend on a variety of factors, including the actual
timing of distributions to partners. The actual amounts are likely to
differ from the amounts presented in the financial statements.
-11-
Use of Estimates - 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 and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ significantly from those estimated. Material
estimates that are particularly susceptible to significant change in the
near-term relate to the determination of the net realizable values of the
Partnership's assets and the reserve for estimated costs during the period
of liquidation.
The Partnership's equity security at December 31, 2002 consists of a common
stock investment in one company. A prospective buyer may require a
substantially lower price than currently estimated and the prospects of
this company may deteriorate. These factors, among others, could have a
material near-term impact on the net realizable value of its equity
security.
Most of the Partnership's leases are with customers that are highly
leveraged and require financing in place of or to supplement financing from
banks. Although the Partnership attempts to mitigate its credit risk
through timely collection efforts, failure of the Partnership's customers
to make scheduled payments under their equipment leases could have a
material near-term impact on the net realizable value of leases.
Realization of residual values on the Partnerships' underlying leased
equipment depends on many factors, several of which are not within the
Partnership's control, including general market conditions at the time of
the lease contract's expiration, whether there has been unusual wear and
tear on, or use of, the equipment, the cost of comparable new equipment,
the extent, if any, to which the equipment has become technologically or
economically obsolete during the contract term and the effects of any
additional or amended government regulations. Also, the market for pay
telephone equipment is volatile. These factors, among others, could have a
material near-term impact on the net realizable value of leases.
Certain Risk Concentrations - The Partnership's portfolio of lease
receivables are concentrated in pay telephones and computer equipment,
representing approximately 81% and 19% at December 31, 2002 and 79% and 19%
at December 31, 2001, respectively, of the Partnership's direct finance
lease portfolio.
Two customers represented 100% of the Partnership's net investment in
direct financing leases at December 31, 2002 (three customers represented
94% at December 31, 2001).
Related Party Transactions - In fulfilling its role as general partner,
Berthel Fisher & Company Leasing, Inc. enters into transactions with the
Partnership in the normal course of business. Further, the Partnership also
enters into transactions with affiliates of Berthel Fisher & Company
Leasing, Inc. These transactions are set forth in the notes that follow.
Management is of the opinion that these transactions are in accordance with
the terms of the Agreement of Limited Partnership.
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to be
cash equivalents.
-12-
Equity Securities - The Partnership's common equity security is restricted
as to sale in the public market under rules of the Securities and Exchange
Commission. The common equity security is valued at an estimated discount
from the published market price reflective of its more illiquid nature.
The Partnership's preferred equity security was valued at its estimated net
realizable value, based on benchmark comparisons to similar public
companies.
Net Investment in Direct Financing Leases - The Partnership's primary
activity consisted of leasing telecommunications equipment under direct
financing leases generally over a period of three to five years. At the
time of closing a direct financing lease, the Partnership recorded the
gross lease contract receivable, the estimated unguaranteed residual value,
and unearned lease income. The unearned lease income represents the excess
of the gross lease receivable plus the estimated unguaranteed residual
value over the cost of the equipment leased. In addition, the Partnership
capitalized all initial direct costs associated with originating the direct
financing lease. The unearned income and initial direct costs are amortized
to income over the lease term so as to produce a constant periodic
rate-of-return on the net investment in the lease. Lessees are responsible
for all taxes, insurance, and maintenance costs.
The realization of the estimated unguaranteed residual value of leased
equipment depends on the value of the leased equipment at the end of the
lease term and is not a part of the contractual agreement with the lessee.
Estimated residual values are based on estimates of amounts historically
realized by the Partnership for similar equipment and are periodically
reviewed by management for possible impairment.
Notes Receivable - Notes receivable were carried at the principal balance
outstanding. Interest income on notes receivable was accrued based on the
principal amount outstanding.
Allowance for Possible Loan and Lease Losses - The Partnership performed
credit evaluations prior to approval of a loan and lease. Subsequently, the
creditworthiness of the customer and the value of the underlying assets are
monitored on an ongoing basis. Under its lease agreements, the Partnership
retains legal ownership of the leased asset. The Partnership maintains an
allowance for possible loan and lease losses which could arise should
customers become unable to discharge their obligations under the loan and
lease agreements. The allowance for possible loan and lease losses is
maintained at a level deemed appropriate by management to provide for known
and inherent risks in the loan and lease portfolio. The allowance is based
upon a continuing review of past loss experience, current economic
conditions, delinquent loans and leases, an estimate of potential loss
exposure on significant customers in adverse situations, and the underlying
asset value. The consideration of such future potential losses also
includes an evaluation for other than temporary declines in value of the
underlying assets. Loans and leases, which are deemed uncollectible, are
charged off and deducted from the allowance. The provision for possible
loan and lease losses and recoveries are added to the allowance.
-13-
Net Realizable Value of Net Investment in Direct Financing Leases and Notes
Receivable - Management, in arriving at the net realizable value of the
Partnership's net investment in direct financing leases and notes
receivable, considers the contractual repayment schedule, the estimated
duration of the liquidation period, the customer and industry concentration
risk, and interest rate levels, among other factors, in arriving at a
discount to apply to the portfolio to estimate its net realizable value.
Tax Status - Under present income tax laws, the Partnership is not liable
for income taxes, as each partner recognizes a proportionate share of the
Partnership income or loss in their income tax return. Accordingly, no
provision for income taxes is made in the financial statements of the
Partnership.
Net Distributions Per Partnership Unit - Net distributions per partnership
unit is based on the weighted average number of units outstanding
(including both general and limited partners' units).
Reclassifications - Certain prior year amounts have been reclassified to
conform to the current year presentation.
2. EQUITY SECURITY
The Partnership's not readily marketable equity security consists of the
following at December 31, 2002 and 2001:
2002 2001
248,118 common shares at December 31, 2002 and 2001 of
Murdock Communications Corporation, a public shell
company with no operations $24,812 $16,158
======= =======
3. NET INVESTMENT IN DIRECT FINANCING LEASES
The Partnership's net investment in direct financing leases consists of the
following at December 31, 2002 and 2001:
2002 2001
Minimum lease payments receivable $ 45,330 $ 82,272
Estimated unguaranteed residual values 2 13,047
Unearned income (3,429) (9,472)
Unamortized initial direct costs 2
Adjustment to estimated net realizable value (22,924) (26,403)
-------- --------
Net investment in direct financing leases $ 18,979 $ 59,446
======== ========
At December 31, 2002, the future minimum payments to be received under the
direct financing leases and the estimated unguaranteed residuals to be
realized at the expiration of the direct financing leases are as follows:
Minimum Estimated
Lease Unguaranteed
Payments Residual
Receivable Values
Years ending December 31:
2003 $ 45,330 $ 2
======== ========
-14-
The Partnership leases equipment or provides financing to certain companies
for which the General Partner or its affiliates have an ownership interest
in, provide financing to, or provide investment advisory services for such
companies. The Partnership's net investment in direct financing leases with
these companies were $8,005 and $12,762 at December 31, 2002 and 2001,
respectively.
Four customers accounted for 10% or more of the amount of income from
direct financing leases during one or more of the years presented, as
follows:
2002 2001 2000
Customer A 94 %
Customer B 49 % 35 %
Customer C 22 22
Customer D 18 21
4. ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES
The changes in the allowance for possible loan and lease losses for the
years ended December 31, 2002, 2001 and 2000 are as follows:
2002 2001 2000
Balance at beginning of year $ 26,403 $ 75,897 $ 100,343
Provision 70,000
Charge-offs, net of recoveries (3,479) (119,494) (24,446)
--------- --------- ---------
Balance at end of year $ 22,924 $ 26,403 $ 75,897
========= ========= =========
The allowance for possible loan and lease losses consisted of specific
allowances of $22,924, $0 and $47,846 for certain leases and general
unallocated allowances of $0, $26,403 and $28,051 at December 31, 2002,
2001 and 2000, respectively. The allowance at December 31, 2002, 2001 and
2000 is included in the estimated net realizable value adjustment discussed
in Note 3.
In June, 2000, the Partnership's two leases with Murdock Communications
Corporation ("Murdock") were converted to notes and stock as part of a
restructuring. At the time of the restructuring, the Partnership's net
investment in the contracts totaled $174,811. The Partnership received two
notes and recorded these at their estimated net realizable value of
$127,879 and 34,947 (adjusted for a stock split) shares of preferred stock
in AcTel, a not readily marketable security. The estimated net realizable
value of the AcTel preferred stock was $78,630 at December 31, 2000. The
Partnership did not accrue interest on the notes receivable due to the
uncertainty of Murdock's ability to pay. The Partnership established a
specific allowance of $47,846 at December 31, 2000 for the notes receivable
related to this uncertainty. The Partnership increased the allowance for
loan and lease losses by $70,000 in 2001 and wrote-off the carrying value
of the notes receivable as Murdock's primary asset was AcTel preferred
stock and AcTel filed for bankruptcy in April 2001.
At December 31, 2002, one customer was past due over 90 days. The
Partnership's net investment in contracts with this customer totaled
$8,005. Subsequent to year end, the Partnership received a full pay-off of
the balance due. At December 31, 2001, two customers were past due over 90
days. The Partnership's net investment in contracts with these customers
totaled $55,913. Management believes that the underlying collateral is
adequate to recover the Partnership's net investment. If a lease or note
receivable is past due more than 90 days, the Partnership discontinues
recognizing income on the contract.
-15-
5. EQUIPMENT
In August 2000, the Partnership recorded a note receivable for $870,000 for
equipment previously held under operating lease. The buyer was scheduled to
make three payments totaling $870,000. Payments totaling $329,278 were made
in 2000 and 2001, resulting in a $540,722 note receivable balance at the
end of the first quarter of 2001. Due to nonpayment on the note receivable,
a new agreement was signed selling the equipment for $348,000, which was
collected in full during 2001. The new agreement resulted in a loss of
$192,722 for the Partnership.
6. LIMITED PARTNERSHIP AGREEMENT
The Partnership was formed pursuant to an Agreement of Limited Partnership
dated as of April 2, 1991 and amended August 12, 1991 (the "Agreement").
The Agreement outlines capital contributions to be made by the partners and
the allocation of cash distributions, net income, and net loss to the
partners. Capital contributions by the partners to the Partnership consist
of the $10,000 contributed by the General Partner and the amounts
contributed by limited partners for the purchase of their units.
Net income or net loss allocated to the limited partners will be
apportioned among them based on the number of limited partnership units
held and on the number of months within the respective year that such units
were held. Any share of Partnership net loss will first be allocated to the
limited partners to the extent of their positive capital account balances.
Any share of additional net loss will be allocated to the General Partner.
Any Partnership net income will first be allocated to partners with
negative capital accounts in proportion to, and to the extent of, such
negative capital accounts. Except as provided below, any additional net
income will then be allocated to the General Partner and limited partners
based on number of units held. During liquidation of the Partnership, when
cash distributions are to be made 80% to the limited partners and 20% to
the General Partner (see below), net income will be allocated 80% to the
limited partners and 20% to the General Partner.
During the Partnership's operating phase, to the extent there is cash
available for distribution, cash distributions will be made on a monthly or
quarterly basis in the following order of priority: first, to reimburse the
General Partner for administrative services it provides to the Partnership,
as further described in the Agreement (see Note 7); second, to the limited
partners up to amounts representing a 12% annual return on their adjusted
capital contribution (as defined), of which 8% annually will be cumulative;
and third, to the General Partner, representing a monthly equipment
management fee of 5% of the gross rental payments received by the
Partnership. To the extent that cash is not available to pay all or a
portion of the equipment management fee pursuant to the above priority
distributions, such fee will accrue and accumulate. Any remaining cash
distributions after payment of the above (including arrearages) will be
paid, at the discretion of the General Partner, to the limited partners.
During the Partnership's liquidation phase, cash available for distribution
will be distributed in the following order of priority: first, for payment
of the General Partner's administrative services expense described above;
second, to the limited partners for any arrearage in their 8% cumulative
priority return; third, to the limited partners for 100% of their adjusted
capital contributions; fourth, to the limited partners, distributions
totaling 12% annually, noncompounded, on their adjusted capital
contributions; fifth, to the General Partner for any arrearage in its
equipment management fee; and, sixth, 80% to the limited partners and 20%
to the General Partner (provided, however, that the General Partner will
not receive such amounts unless the limited partners have received total
distributions equal to their capital contribution plus a 12% annualized
return).
-16-
7. ADMINISTRATIVE SERVICES AGREEMENT
The General Partner is reimbursed for certain administrative costs under an
administrative services agreement. Amounts incurred by the Partnership
pursuant to this agreement amounted to $9,500, $12,000 and $30,000 for the
years ended December 31, 2002, 2001 and 2000, respectively.
8. RECONCILIATION OF FINANCIAL AND INCOME TAX REPORTING BASIS
A reconciliation of the change in net assets (excluding distributions and
withdrawals) for financial reporting purposes with net income (loss)
reported for income tax purposes for the years ended December 31, 2002,
2001 and 2000 is as follows:
2002 2001 2000
---------------------- ---------------------- ---------------------
Per Per Per
Amount Unit Amount Unit Amount Unit
Change in net assets
(excluding
distributions and
withdrawals) for
financial reporting
purposes $ 12,463 $ .19 $(333,467) $ (5.01) $ (85,161) $ (1.26)
Adjustment to
convert direct
financing leases to
operating leases
for income tax
purposes (13,053) (.20) (385,031) (5.79) (275,501) (4.07)
Net change in
allowance for
possible loan and
lease losses (3,479) (.05) (119,494) (1.80) 24,445 .36
Gain (loss) on lease
terminations (23,040) (.35) 6,260 .09 374,384 5.53
Net realizable
value adjustments (3,376) (.05) 347,320 5.23 106,867 1.58
--------- --------- --------- --------- --------- ---------
Net income (loss)
for income tax
reporting purposes $ (30,485) $ (.46) $(484,412) $ (7.28) $ 145,034 $ 2.14
========= ========= ========= ========= ========= =========
9. CONTINGENCIES
Telcom Management Systems filed a suit against the Partnership, the General
Partner, and others in Federal Court in Dallas, Texas during February 1998.
The plaintiffs purchased equipment from the Partnership out of a bankruptcy
for approximately $450,000. They alleged that when they attempted to sell
the equipment at a later date, the Partnership had not provided good title.
The General Partner filed a Motion for Summary Judgment, which was denied.
After filing the suit, the plaintiff transferred assets in lieu of
bankruptcy. No further action has been taken at this time by the plaintiff.
No loss, if any, has been recorded in the financial statements with respect
to this matter.
The General Partner's parent has approximately $2.2 million of unsecured
subordinated debt which was due on December 31, 2002 and does not have
sufficient liquid assets to repay such amounts. The General Partner's
parent is pursuing additional financing, refinancing, and asset sales to
meet its obligations. No assurance can be provided that the General
Partner's parent will be successful in its efforts. The inability of the
General Partner to continue as a going concern as a result of the parent's
inability to restructure its debts would require the Partnership to elect a
successor general partner. The new general partner could require additional
fees and charges that would have a significant negative impact on the
liquidation proceeds received by the limited partners.
17
10. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
2002 Quarters
--------------------------------------------------------
First Second Third Fourth 2002
Income from direct
financing leases $ 2,561 $ 1,844 $ 1,580 $ 1,308 $ 7,293
Interst and other income 181 253 1,195 165 1,794
Withdrawals of
limited partners (92) (49) (102) (124) (367)
Change in estimate
of liquidation value
of net assets 35,921 (12,118) 18,180 (38,607) 3,376
-------- -------- -------- -------- --------
Change in net assets $ 38,571 $(10,070) $ 20,853 $(37,258) $ 12,096
======== ======== ======== ======== ========
2001 Quarters
----------------------------------------------------------
First Second Third Fourth 2001
Income from direct
financing leases $ 2,364 $ 1,999 $ 1,408 $ 982 $ 6,753
Interst and other income 2,375 544 3,761 420 7,100
Distributions to partners (99,940) (325,000) (424,940)
Withdrawals of
limited partners (521) (521) (254) (276) (1,572)
Change in estimate
of liquidation value
of net assets (160,128) (192,218) 21,190 (16,164) (347,320)
--------- --------- --------- --------- ---------
Change in net assets $(255,850) $(190,196) $(298,895) $ (15,038) $(759,979)
========= ========= ========= ========= =========
The change in estimate of liquidation value of net assets in the first
quarter of 2001 is primarily due to the bankruptcy of AcTel and its related
impact on Murdock which totaled $148,630 as discussed in Note 4 and in the
second quarter of 2001 is due to the resale of the equipment at a loss of
$192,722 as discussed in Note 5.
* * * * *
18
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
None
PART III
Item 10. Directors & Executive Officers of the Registrant
------------------------------------------------
A. The General Partner of the registrant: Berthel Fisher & Company
Leasing, Inc., an Iowa corporation.
B. Executive officers of the General Partner of the Registrant:
Thomas J. Berthel (age 51) - Mr. Berthel is the Chief Executive Officer,
President, and Director of the General Partner, a position he has held since the
General Partner's inception in 1988. Mr. Berthel is also President and a
Director of the General Partner's parent, Berthel Fisher & Company, Inc.
("Berthel Fisher"), which he founded in 1985, and Berthel Fisher's other
subsidiaries, Berthel Fisher & Company Financial Services, Inc.; Berthel Fisher
& Company Management Corp.; Berthel Fisher & Company Planning, Inc.; and one
other corporation which acts as general partner of a separate private program.
He also serves as the Chairman of the Board and Director of Amana Colonies Golf
Course, Inc. Mr. Berthel holds a bachelor's degree from St. Ambrose College in
Davenport, Iowa (1974). From 1974 to 1982, Mr. Berthel was President and
majority shareholder of Insurance Planning Services Corporation in Maquoketa,
Iowa, which was engaged in the operation of a securities and insurance business.
Mr. Berthel holds a Financial and Operation Principal license issued by the
National Association of Securities Dealers, Inc. Mr. Berthel is also a Certified
Life Underwriter. Mr. Berthel also serves as an individual general partner of
the limited partnership referred to above. Mr. Berthel received a MBA degree
from the University of Iowa in 1993.
Ronald O. Brendengen (age 48) - Mr. Brendengen is the Treasurer, Chief
Operating Officer, Chief Financial Officer, and a Director (1988 to present) of
the General Partner. He was elected to his current offices in January 1998. He
had previously served as Secretary (1994 - March, 1995), Treasurer (August 1995
- - 1988) and Chief Financial Officer (1994 - August 1995) of the General Partner.
He served as Controller (1985-1993), Treasurer (1987-present), Chief Financial
Officer, Secretary and a Director (1987-present), and was also elected Chief
Operating Officer in January 1998, of Berthel Fisher & Company, the parent
company of the General Partner. Mr. Brendengen serves as the Treasurer, Chief
Financial Officer and a Director of Berthel Fisher & Company Planning, Inc., the
trust advisor of Berthel Growth & Income Trust I, a company required to file
reports pursuant to the Securities Exchange Act of 1934. He also serves in
various offices and as a Director of each subsidiary of Berthel Fisher &
Company. Mr. Brendengen holds a certified public accounting certificate and
worked in public accounting during 1984 and 1985. From 1979 to 1984, Mr.
Brendengen worked in various capacities for Morris Plan and MorAmerica Financial
Corp., Cedar Rapids, Iowa. Mr. Brendengen attended the University of Iowa before
receiving a bachelor's degree in Accounting and Business Administration with a
minor in Economics from Mt. Mercy College, Cedar Rapids, Iowa, in 1978.
19
Item 11. Executive Compensation
----------------------
Set forth is the information relating to all direct remuneration paid or accrued
by the Registrant during the last three years to the General Partner:
(A) (B) (C) (C1) (C2) (D)
Securities of
property
insurance Aggregate
benefits or of
Cash and Cash reimbursement contingent
Name of individual and Year equivalent forms personal or forms of
capacities which served ended of remuneration Fees benefits remuneration
- ---------------------------------------------------------------------------------------------------------------------
Berthel Fisher & Co. 2002 $0 $ 9,500 $0 $0
Leasing, Inc. 2001 $0 $12,000 $0 $0
General Partner 2000 $0 $30,000 $0 $0
20
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
(a) No person owns of record, or is known by the Registrant to own
beneficially, more than five percent of the Partnership Units.
(b) The General Partner of the Registrant owns Units of the Registrant
set forth in the following table.
(1) (2) (3) (4)
Name and Address of Amount and Nature of
Title of Class Beneficial Ownership Beneficial Ownership Percent of Class
- -------------- -------------------------- -------------------- ----------------
Units Berthel Fisher & Co. Leasing Inc. Forty (40) Units; 0.06%
701 Tama Street
Marion, IA 52302
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
Related party transactions are described in Notes 3 and 7 of the notes to the
financial statements.
Item 14. Controls and Procedures
-----------------------
An evaluation was performed under the supervision and with the participation of
the Partnership's management, including the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Partnership's disclosure controls and procedures within 90 days before the
filing date of this annual report. Based on that evaluation, the Partnership's
management, including the Chief Executive Officer and Chief Financial Officer,
concluded that the Partnership's disclosure controls and procedures were
effective in timely alerting them to material information relating to the
Partnership required to be included in the Partnership's periodic SEC filings.
There have been no significant changes in the Company's internal controls or
other factors that could significantly affect these controls subsequent to the
date of their evaluation, and no corrective actions with regards to significant
deficiencies and material weaknesses, of which none were noted, were required.
21
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
----------------------------------------------------------------
(a) 1. Financial Statements.
Page No.
Statements of Net Assets as of December 31, 2002
and 2001 (Liquidation Basis) 8
Statements of Changes in Net Assets
(Liquidation Basis) for the Years Ended
December 31, 2002, 2001 and 2000 9
Statements of Cash Flows for the Years Ended
December 31, 2002, 2001 and 2000 10
Notes to Financial Statements 11
2. Financial Statements Schedules
Information pursuant to Rule 12-09 (Schedule II)
is included in the financial statements and
notes thereto.
3. Exhibits
3,4 Amended and Restated Agreement of
Telecommunications Income Fund IX, L.P. currently in
effect dated as of August 12, 1991 (1)
99.1 Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350
99.2 Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350
(b) Reports on Form 8-K
No reports on Form 8-K were filed in the fourth quarter of 2002.
- -------------------------
(1) Incorporated herein by reference to Partnership Exhibit A to the
prospectus included in the Partnership's post effective amendment No. 4 to Form
S-1 registration statement filed on December 22, 1992.
22
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.
TELECOMMUNICATIONS INCOME FUND IX, L.P.
(Registrant)
By Berthel Fisher & Company Leasing, Inc.
By: /s/ Thomas J. Berthel Date: March 25, 2003
--------------------------------
Thomas J. Berthel
President, Chief Executive Officer
By Berthel Fisher & Company Leasing, Inc.
By: /s/ Ronald O. Brendengen Date: March 25, 2003
--------------------------------
Ronald O. Brendengen
Chief Operating Officer,
Chief Financial Officer, Treasurer
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 capacities and on the dates indicated.
/s/ Thomas J. Berthel Date: March 25, 2003
- ------------------------------------
Thomas J. Berthel
Chief Executive Officer
President, Director
Berthel Fisher & Company Leasing, Inc.
Corporate General Partner
/s/ Ronald O. Brendengen Date: March 25, 2003
- ------------------------------------
Ronald O. Brendengen
Chief Operating Officer,
Chief Financial Officer, Treasurer, Director
Berthel Fisher & Company Leasing, Inc.
Corporate General Partner
/s/ Daniel P. Wegmann Date: March 25, 2003
- ------------------------------------
Daniel P. Wegmann
Controller
Berthel Fisher & Company Leasing, Inc.
Corporate General Partner
/s/ Leslie D. Smith Date: March 25, 2003
- ------------------------------------
Leslie D. Smith
Director
Berthel Fisher & Company Leasing, Inc.
Corporate General Partner
23
FORM OF SECTION 302 CERTIFICATION
I, Thomas J. Berthel, President and Chief Executive Officer of Berthel Fisher &
Company Leasing, Inc., the General Partner of Telecommunications Income Fund IX,
L.P., certify that:
1. I have reviewed this annual report on Form 10-K of Telecommunications Income
Fund IX, L.P.;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this 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 have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant is made known to us by others,
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.
March 25, 2003 /s/ Thomas J. Berthel
-----------------------------------
Thomas J. Berthel
President and
Chief Executive Officer
Berthel Fisher & Company
Leasing, Inc.
General Partner
Telecommunications Income Fund
IX, L.P.
24
FORM OF SECTION 302 CERTIFICATION
I, Ronald O. Brendengen, Chief Financial Officer of Berthel Fisher & Company
Leasing, Inc., the General Partner of Telecommunications Income Fund IX, L.P.,
certify that:
1. I have reviewed this annual report on Form 10-K of Telecommunications Income
Fund IX, L.P.;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this 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 have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant is made known to us by others,
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.
March 25, 2003 /s/ Ronald O. Brendengen
-----------------------------------
Ronald O. Brendengen
Chief Financial Officer
Berthel Fisher & Company
Leasing, Inc.
General Partner
Telecommunications Income Fund
IX, L.P.
25