Item 1. Business -------- General Development of Business
ICON Cash Flow Partners, L.P., Series D (the "Partnership") was formed in February 1991 as a Delaware limited partnership. The Partnership commenced business operations on its initial closing date, September 13, 1991, with the admission of 26,905.59 limited partnership units. Between September 14, 1991 and December 31, 1991, 121,932.48 additional units were admitted. Between January 1, 1992 and June 5, 1992 (the final closing date), 251,161.93 additional units were admitted bringing the final admission to 400,000 units totaling $40,000,000 in capital contributions. From 1994 through 1997, the Partnership redeemed 882 limited partnership units leaving 399,118 units outstanding up to December 31, 2000. The sole general partner is ICON Capital Corp. (the "General Partner").
The Partnership's reinvestment period ended June 5, 1997. The disposition period began on June 6, 1997. During the disposition period the Partnership has, and will continue to distribute substantially all distributable cash from operations and equipment sales to the partners and begin the orderly termination of its operations and affairs. The Partnership has not, and will not invest in any additional new finance or lease transactions during the disposition period. During the disposition period, the Partnership expects to recover at a minimum, the carrying value of its assets.
Segment Information
The Partnership has only one operating segment: the business of acquiring equipment subject to leases with companies that the Partnership believes to be creditworthy..
Narrative Description of Business
The Partnership is an equipment leasing income fund. The principal investment objective of the Partnership is to obtain the maximum economic return from its investments for the benefit of its limited partners. To achieve this objective the Partnership has: (1) acquired a diversified portfolio of leases and financing transactions; (2) made monthly cash distributions to its limited partners from cash from operations, commencing with each limited partner's admission to the Partnership, (3) re-invested substantially all undistributed cash from operations and cash from sales in additional equipment and financing transactions during the reinvestment period; and (4) begun to sell the Partnership's investments and distribute the cash from sales of such investments to its limited partners.
The equipment leasing industry is highly competitive. In initiating its leasing transactions the Partnership competed with leasing companies, manufacturers that lease their products directly, equipment brokers and dealers and financial institutions, including commercial banks and insurance companies. Many competitors are larger than the Partnership and have greater financial resources.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
December 31, 2000
The Partnership has no direct employees. The General Partner has full and exclusive discretion in management and control of the Partnership.
Lease and Financing Transactions
For the years ended December 31, 2000 and 1999, the Partnership did not finance or purchase any new equipment. A summary of the portfolio equipment cost by category held at December 31, 2000 and 1999 is as follows:
The Partnership has one lease which represents greater than 10% of the total portfolio equipment cost at December 31, 2000. The underlying equipment is a DeHavilland DHC-8-102 aircraft and the total equipment cost represented 26.1% of the total portfolio equipment cost at December 31, 2000.
Item 2.
Item 2. Properties ---------- The Partnership neither owns nor leases office space or equipment for the purpose of managing its day-to-day affairs.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
December 31, 2000
Item 3.
Item 3. Legal Proceedings -----------------
The Partnership is not a party to any pending legal proceedings.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders ---------------------------------------------------
No matters were submitted to a vote of security holders during the fourth quarter of 2000.
PART II
Item 5.
Item 5. Market for the Registrant's Securities and Related Security Holder Matters -----------------------------------------------------------------------
The Partnership's limited partnership interests are not publicly traded nor is there currently a market for the Partnership's limited partnership interests. It is unlikely that any such market will develop.
Number of Equity Security Holders Title of Class as of December 31, -------------- ---------------------------------
2000 1999 ---- ---- Limited partners 3,105 3,060 General Partner 1 1
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
December 31, 2000
Item 6.
Item 6. Selected Consolidated Financial and Operating Data
The above selected consolidated financial and operating data should be read in conjunction with the consolidated financial statements and related notes appearing elsewhere in this report.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
December 31, 2000
Item 7.
Item 7. General Partner's Discussion and Analysis of Financial Condition and Results of Operations
The Partnership's portfolio consisted of a net investment in finance leases, investment in operating lease equipment, investment in financings and an investment in a joint venture representing 15%, 41%, 34% and 10% of total investments at December 31, 2000, respectively, and 20%, 58%, 15% and 7% of total investments at December 31, 1999, respectively.
Results of Operations
Years Ended December 31, 2000 and 1999
For the years ended December 31, 2000 and 1999, the Partnership did not finance or purchase any new equipment.
Revenues for the year ended December 31, 2000 were $2,200,367 representing a decrease of $457,640 from 1999. The decrease in revenues resulted primarily from a decrease in finance income of $363,724, a decrease in rental income of $218,377, a loss from equity investment in joint venture of $117,866 in 2000 versus income in 1999 of $19,410 and an increase in gain on sales of equipment of $252,360. Finance income decreased due to a decrease in the average size of the portfolio from 2000 to 1999. Rental income decreased due to the sale of a DHC-8 aircraft in the third quarter of 2000. The loss from investment in joint venture resulted primarily from a provision for bad debt of $850,000 being recorded in 2000 by an underlying joint venture, ICON Receivables 1997-A LLC, with no provision for bad debt being recorded in 1999. The increase in gain on sales of equipment resulted from the sale of the DHC-8 aircraft in the third quarter of 2000, which resulted in a gain of $708,500.
Expenses for the year ended December 31, 2000 were $1,379,752 representing a decrease of $454,580 from 1999. The decrease in expenses resulted primarily from decreases in management fees of $145,485, administrative expense reimbursements of $101,256, depreciation of $139,876, and interest expense of $75,855. These decreases were partially offset by an increase in general and administrative of $25,132. The decrease in management fees and administrative expense reimbursements resulted from the General Partner waiving its right to receive management fees and administrative expense reimbursements commencing July 1, 2000. The decrease in depreciation resulted from the sale of a DHC-8 aircraft in the third quarter of 2000. Interest expense decreased as a result of a decrease in average debt outstanding from 1999 to 2000. General and administrative expenses increased as a result of higher professional fees in 2000 compared to 1999.
Net income for the year ended December 31, 2000 and 1999 was $820,615 and $823,675, respectively. The net income per weighted average limited partnership unit was $2.04 for both 2000 and 1999, respectively.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
December 31, 2000
Years Ended December 31, 1999 and 1998
For the years ended December 31, 1999 and 1998, the Partnership did not finance or purchase any new equipment. During 1999, the Partnership expended $1,369,714 on equipment refurbishment.
Revenues for the year ended December 31, 1999 were $2,658,007, representing a decrease of $138,806 from 1998. The decrease in revenues was attributable to a decrease in finance income of $127,707 and a decrease in income from an investment in a joint venture of $167,755. These decreases were partially offset by an increase in gain on sales of equipment of $170,604 and an increase in interest income and other of $14,826. Finance income decreased due to a decrease in the average size of the portfolio from 1998 to 1999. The increase in net gain on sales of equipment was due to an increase in the number of leases maturing in which the underlying equipment was sold. The decrease in income from investment in joint venture was due to a decrease in the average size of the joint venture's portfolio from 1998 to 1999 and a provision for bad debts recorded by the venture in 1999.
Expenses for the year ended December 31, 1999 were $1,834,332, representing a decrease of $274,120 from 1998. The decrease in expenses was attributable primarily to a decrease in interest expense of $179,619, a decrease in amortization of initial direct costs of $149,711, a decrease in management fees of $204,154, and a decrease in administrative expense reimbursements of $104,610. This was partially offset by a $400,000 reversal of allowance for doubtful accounts in 1998. The decrease in interest expense resulted from a decrease in the average debt outstanding from 1998 to 1999. Amortization of initial direct costs, management fees, general and administrative and administrative expense reimbursements decreased due to a decrease in the average size of the portfolio from 1998 to 1999.
Net income for the years ended December 31, 1999 and 1998 was $823,675 and $688,361, respectively. The net income per weighted average limited partnership unit was $2.04 and $1.71 for 1999 and 1998, respectively.
Liquidity and Capital Resources
The Partnership's reinvestment period ended June 5, 1997. The disposition period began on June 6, 1997. During the disposition period the Partnership has, and will continue to distribute substantially all distributable cash from operations and equipment sales to the partners and begin the orderly termination of its operations and affairs. The Partnership has not, and will not invest in any additional new finance or lease transactions during the disposition period. However, it may expend monies to refurbish assets to maintain the value of the portfolio. During the disposition period, the Partnership expects to recover at a minimum, the carrying value of its assets. As a result of the Partnership's entering into the disposition period, future monthly distributions are expected to fluctuate depending on the amount of asset sale and re-lease proceeds received during that period.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
December 31, 2000
The Partnership's primary sources of funds in 2000, 1999 and 1998 were net cash provided by operations of $66,348, $584,985 and $3,315,260, respectively, and proceeds from sales of equipment of $4,699,107, $3,946,052 and $1,394,199, respectively, and proceeds from non-recourse notes payable of $2,967,966, $0 and $750,000, respectively. These funds were used to fund cash distributions and make payments on borrowings.
The Partnership's notes payable at December 31, 2000 totaled $3,484,212 and consisted of $3,411,495 in non-recourse notes and a full recourse note payable of $72,717.
Cash distributions to the limited partners in 2000, 1999 and 1998 totaled $4,091,082, $2,461,219 and $4,074,331, respectively, of which $812,409, $815,438, and $681,477 was investment income and $3,278,673, $1,645,781 and $3,392,854 was a return of capital, respectively. The monthly annualized cash distribution rate to limited partners in 2000, 1999 and 1998 was 10.25%, 6.17% and 10.21%, respectively.
As of December 31, 2000, except as noted above, there were no known trends or demands, commitments, events or uncertainties which are likely to have a material effect on liquidity. As cash is realized from operations and sales of equipment, the Partnership will distribute substantially all available cash, after retaining sufficient cash to meet its reserve requirements and recurring obligations.
Item 7a.
Item 7a. Qualitative and Quantitative Disclosures About Market Risk
The Partnership is exposed to certain market risks, including changes in interest rates. The Partnership believes its exposure to other market risks are insignificant to both its financial position and results of operations.
The Partnership manages its interest rate risk by obtaining fixed rate debt. The fixed rate debt service obligation streams are generally matched by fixed rate lease receivable streams generated by the Partnership's lease investments.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
December 31, 2000
Item 8.
Item 8. Consolidated Financial Statements and Supplementary Data --------------------------------------------------------
Index to Consolidated Financial Statements
Page Number
Independent Auditors' Report 12
Consolidated Balance Sheets as of December 31, 2000 and 1999 13-14
Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998 15
Consolidated Statements of Changes in Partners' Equity for the Years Ended December 31, 2000, 1999 and 1998 16
Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 17-19
Notes to Consolidated Financial Statements 20-28
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Consolidated Financial Statements
December 31, 2000
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Partners ICON Cash Flow Partners, L.P., Series D:
We have audited the accompanying consolidated balance sheets of ICON Cash Flow Partners, L.P., Series D (a Delaware limited partnership) as of December 31, 2000 and 1999, and the related consolidated statements of operations, changes in partners' equity, and cash flows for each of the years in the three-year period ended December 31, 2000. These consolidated financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1, the Partnership's reinvestment period ended June 5, 1997. The disposition period began on June 6, 1997. During the disposition period the Partnership has, and will continue to distribute substantially all distributable cash from operations and equipment sales to the partners and begin the orderly termination of its operations and affairs.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ICON Cash Flow Partners, L.P., Series D as of December 31, 2000 and 1999, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP --------------------------------------- KPMG LLP
March 28, 2001 New York, New York
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Consolidated Balance Sheets
December 31,
(continued on next page)
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Consolidated Balance Sheets (Continued)
December 31,
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Consolidated Statements of Operations
For the Years Ended December 31,
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Consolidated Statements of Changes in Partners' Equity For the Years Ended December 31, 2000, 1999 and 1998
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
For the Years Ended December 31,
(continued on next page)
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (Continued)
For the Years Ended December 31,
Note: Equipment purchased in 1999 represented an upgrade to an existing lease investment.
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (Continued)
Supplemental Disclosures of Cash Flow Information
Interest expense of $527,065, $602,920 and $782,539 for the years ended December 31, 2000, 1999 and 1998 consisted of: interest expense on non-recourse financing accrued or paid directly to lenders by lessees of $515,098, $472,953 and $581,922, respectively, and other interest of $11,967, $129,967 and $200,617, respectively.
During the years ended December 31, 2000, 1999 and 1998, non-cash activities included the following:
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 2000
1. Organization
ICON Cash Flow Partners, L.P., Series D (the "Partnership") was formed on February 21, 1991 as a Delaware limited partnership with an initial capitalization of $2,000. It was formed to acquire various types of equipment, to lease such equipment to third parties and, to a lesser degree, to enter into secured financing transactions. The Partnership's offering period commenced on August 23, 1991 and by its final closing on June 5, 1992, 400,000 units had been admitted into the Partnership with aggregate gross proceeds of $40,000,000. From 1994 through 2000, the Partnership redeemed 882 limited partnership units leaving 399,118 limited partnership units outstanding at December 31, 2000.
The Partnership's reinvestment period ended June 5, 1997. The disposition period began on June 6, 1997. During the disposition period the Partnership has, and will continue to distribute substantially all distributable cash from operations and equipment sales to the partners and begin the orderly termination of its operations and affairs. The Partnership has not, and will not invest in any additional finance or lease transactions during the disposition period. During the disposition period, the Partnership expects to recover, at a minimum, the carrying value of its assets.
The General Partner of the Partnership is ICON Capital Corp. (the "General Partner"), a Connecticut corporation. The General Partner manages and controls the business affairs of the Partnership's equipment leases and financing transactions under a management agreement with the Partnership.
ICON Securities Corp., an affiliate of the General Partner, received an underwriting commission on the gross proceeds from sales of all units. The total underwriting compensation paid by the Partnership, including underwriting commissions, sales commissions, incentive fees, public offering expense reimbursements and due diligence activities was limited to 13 1/2% of the gross proceeds received from the sale of the units. Such offering costs aggregated $5,400,000, (including $2,207,188 paid to the General Partner or its affiliates), and were charged directly to limited partners' equity.
Profits, losses, cash distributions and disposition proceeds are allocated 99% to the limited partners and 1% to the General Partner until each limited partner has received cash distributions and disposition proceeds sufficient to reduce its adjusted capital contribution account to zero and receive, in addition, other distributions and allocations which would provide a 10% per annum cumulative return on its outstanding adjusted capital contribution account. After such time, the distributions would be allocated 90% to the limited partners and 10% to the General Partner.
2. Significant Accounting Policies
Basis of Accounting and Presentation - The Partnership's records are maintained on the accrual basis. The preparation of financial statements in conformity with generally accepted accounting principles requires the General Partner's management to make estimates and assumptions that affect the reported
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
amounts of assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates. In addition, management is required to disclose contingent assets and liabilities.
Consolidation - The consolidated financial statements include the accounts of the Partnership and its wholly owned subsidiary, ICON D Corp. All inter-company accounts and transactions have been eliminated. The Partnership accounts for its interest in a less than 50% owned joint venture under the equity method of accounting. In such cases, the Partnership's original investments are recorded at cost and adjusted for its share of earnings, losses and distributions thereafter.
Leases - The Partnership accounts for owned equipment leased to third parties as finance leases or operating leases, as appropriate. For finance leases, the Partnership records, at the inception of the lease, the total minimum lease payments receivable, the estimated unguaranteed residual values, the initial direct costs related to the leases and the related unearned income. Unearned income represents the difference between the sum of the minimum lease payments receivable plus the estimated unguaranteed residual minus the cost of the leased equipment. Unearned income is recognized as finance income over the terms of the related leases using the interest method. For operating leases, equipment is recorded at cost and is depreciated on the straight-line method over the lease terms to their estimated fair market values at lease terminations. Related lease rentals are recognized on the straight-line method over the lease terms. Billed and uncollected operating lease receivables, net of allowance for doubtful accounts, are included in other assets. Initial direct costs of finance leases are capitalized and are amortized over the terms of the related leases using the interest method. Initial direct costs of operating leases are capitalized and amortized on the straight-line method over the lease terms. The Partnership's leases have terms ranging from two to five years. Each lease is expected to provide aggregate contractual rents that, along with residual proceeds, return the Partnership's cost of its investments along with investment income.
Investment in Financings - Investment in financings represent the gross receivables due from the financing of equipment plus the initial direct costs related thereto less the related unearned income. The unearned income is recognized as finance income, and the initial direct costs are amortized, over the terms of the receivables using the interest method. Financing transactions are supported by a written promissory note evidencing the obligation of the user to repay the principal, together with interest, which will be sufficient to return the Partnership's full cost associated with such financing transaction, together with some investment income. Furthermore, the repayment obligation is collateralized by a security interest in the tangible or intangible personal property.
Disclosures About Fair Value of Financial Instruments - Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments" requires disclosures about the fair value of financial instruments. Separate disclosure of fair value information as of December 31, 2000 and 1999 with respect to the Company's assets and liabilities is not provided because (i) SFAS No. 107 does not require disclosures about the fair value of lease arrangements, (ii) the carrying value of financial assets, other than lease related investments, and payables approximates market value and (iii) fair value information concerning certain recourse and non-recourse debt obligations is not practicable to estimate without incurring excessive costs to obtain all the information that would be necessary to derive a market interest rate.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Allowance for Doubtful Accounts - The Partnership records a provision for bad debts to provide for estimated credit losses in the portfolio. The allowance for doubtful accounts is based on an analysis of delinquency, an assessment of overall risk and a review of historical loss experience. The Partnership's write-off policy is based on an analysis of the aging of the Partnership's portfolio, a review of the non-performing receivables and leases, and prior collection experience. An account is fully reserved for or written off when the analysis indicates that the probability of collection of the account is remote. In 1998, the Partnership reversed $400,000 of amounts previously included in the allowance for doubtful accounts.
Impairment of Estimated Residual Values - The Partnership's policy with respect to impairment of estimated residual values is to review, on a periodic basis, the carrying value of its residuals on an individual asset basis to determine whether events or changes in circumstances indicate that the carrying value of an asset may not be recoverable and, therefore, an impairment loss should be recognized. The events or changes in circumstances which generally indicate that the residual value of an asset has been impaired are (i) the estimated fair value of the underlying equipment is less than the Partnership's carrying value or (ii) the lessee is experiencing financial difficulties and it does not appear likely that the estimated proceeds from disposition of the asset will be sufficient to satisfy the remaining obligation to the non-recourse lender and the Partnership's residual position. Generally in the latter situation, the residual position relates to equipment subject to third party non-recourse notes payable where the lessee remits their rental payments directly to the lender and the Partnership does not recover its residual until the non-recourse note obligation is repaid in full.
The Partnership measures its impairment loss as the amount by which the carrying amount of the residual value exceeds the estimated proceeds to be received by the Partnership from release or resale of the equipment. Generally, quoted market prices are used as the basis for measuring whether an impairment loss should be recognized.
Income Taxes - No provision for income taxes has been made as the liability for such taxes is that of each of the partners rather than the Partnership.
New Accounting Pronouncement - Effective January 1, 2001, the Partnership adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended. The adoption of SFAS No. 133 did not have any effect on the Partnership's financial position or results of operations.
3. Investment in Joint Venture
The Partnership and affiliates formed a joint venture for the purpose of acquiring and managing various assets.
ICON Receivables 1997-A L.L.C.
In March 1997 the Partnership, ICON Cash Flow Partners L.P. Six ("L.P. Six"), and ICON Cash Flow Partners L.P. Seven ("L.P. Seven") contributed and assigned equipment lease and finance receivables and residuals to ICON Receivables 1997-A L.L.C. ("1997-A"), a special purpose entity created for the purpose of originating leases, managing existing contributed assets and securitizing its portfolio. In September 1997 ICON Cash Flow Partners, L.P., Series E ("Series E"), L.P. Six and
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
L.P. Seven contributed and assigned additional equipment lease and finance receivables and residuals to 1997-A. The Partnership, Series E, L.P. Six and L.P. Seven received a 17.81%, 31.19%, 31.03% and 19.97% interest, respectively, in 1997-A based on the present value of their related contributions. The Partnership's contributions amounted to $4,805,767 in assigned leases and $125,000 of cash in 1997, $49,780 of cash in 1998 and $52,616 of cash and $51,876 in assigned leases in 1999. In September 1997, 1997-A securitized substantially all of its equipment leases and finance receivables and residuals. 1997-A became the beneficial owner of a trust. The Partnership's original investment was recorded at cost and is adjusted by its share of earnings, losses and distributions thereafter.
Information as to the financial position and results of operations of 1997-A as of and for the years ended December 31, 2000 and 1999 is summarized below:
December 31, 2000 December 31, 1999
Assets $ 9,002,519 $ 17,967,471 ============= =============
Liabilities $ 6,848,927 $ 14,701,353 ============= =============
Equity $ 2,153,592 $ 3,266,388 ============= =============
Partnership's share of equity $ 518,430 $ 716,591 ============= =============
Year Ended Year Ended December 31, 2000 December 31, 1999
Net (loss) income $ (661,929) $ 108,923 ============= =============
Partnership's share of net (loss) income $ (117,866) $ 19,410 ============= =============
Distributions to partners $ 450,867 $ 2,171,133 ============= =============
Partnership's share of distributions $ 80,295 $ 386,657 ============= =============
4. Receivables Due in Installments
Non-cancelable minimum annual amounts due on finance leases and financings as of December 31, 2000 are as follows:
Finance Year Leases Financings Total
2001 $ 202,290 $ 129,737 $ 332,027 2002 42,288 90,483 132,771 2003 100,953 87,720 188,673 2004 -- 2,176,279 2,176,279 ---------- ---------- ---------- $ 345,531 $2,484,219 $2,829,750 ========== ========== ==========
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
5. Investment in Operating Lease
In June 1997 the Partnership acquired two DeHaviland DHC-8-102 aircraft and leased them to U.S. Airways, Inc ("U.S. Air"). The purchase price totaled $6,819,250 and was funded with $3,619,250 of cash and $3,200,000 in non-recourse debt. In August 1999 one plane was re-leased to Wideroe's Flyveselskap ASA, a Norwegian air carrier for a term of four years under a lease which required the aircraft to be refurbished at a cost of $1,369,714. In November 1999 the Partnership extended the U.S. Air lease for a term of four years. In September 2000 the Partnership sold the Wideroe aircraft resulting in proceeds of $4,534,390 and a gain of $708,500.
The investment in operating leases at December 31, 2000, 1999 and 1998 consisted of the following:
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
6. Allowance for Doubtful Accounts
The allowance for doubtful accounts related to the investments in finance leases and financings consisted of the following:
Finance Leases Financings Total
Balance at December 31, 1997 $ 568,285 $ 456,206 $ 1,024,491
Accounts written-off (209,007) (47,034) (256,041) Recovery on accounts previously written-off 18,766 -- 18,766 Reversal of provision for doubtful accounts (131,594) (268,406) (400,000) ----------- ----------- -----------
Balance at December 31, 1998 246,450 140,766 387,216
Accounts written-off (79,889) (48,669) (128,558) Recovery on accounts previously written-off 57,983 -- 57,983 ----------- ----------- -----------
Balance at December 31, 1999 224,544 92,097 316,641
Recovery on accounts previously written-off 32,384 -- 32,384 ----------- ----------- -----------
Balance at December 31, 2000 $ 256,928 $ 92,097 $ 349,025 =========== =========== ===========
7. Notes Payable
In May 1997 the Partnership borrowed $2,700,000 from a bank pursuant to a four year term loan agreement. The loan agreement grants a security interest in certain Partnership payments and collateral for a specified group of leases and financing transactions. The note bears interest at 9.25% and is payable in monthly installments. In addition, the loan agreement contains restrictive covenants which include the maintenance of minimum tangible net worth and of certain financial ratios. The Partnership was in compliance with the related covenants at December 31, 2000. The Partnership had $72,717 outstanding relating to this note payable at December 31, 2000.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
In December 1995 the Partnership borrowed $4,148,838 by pledging lease receivables and granting a security interest in the underlying equipment and receivables relating to a specified group of leases and financing transactions. The loan (described herein as notes payable - non-recourse - secured financing) bore interest at a fixed rate of 8.02%, and was payable from receivable proceeds from the portfolio that had secured it. The Partnership retired the remaining note balance in 2000.
In June 1997 the Partnership acquired two DeHaviland DHC-8-102 aircraft and leased them to U.S. Air. The purchase price totaled $6,819,250 of which the Partnership borrowed $3,200,000 in non-recourse debt from Transamerica Business Credit Corp. ("Transamerica") (described herein as notes payable - non-recourse). In October 1998 the Partnership borrowed an additional $750,000 from Transamerica, to refurbish one of the two aircraft, bringing the total non-recourse debt relating to this transaction to $3,950,000.
In August 1999 the Partnership refinanced $2,000,000 of the Transamerica debt with a new lender, Christiania Bank of Norway ("Christiania"), and borrowed an additional $1,000,000 from Christiania. The maturity date of this $3,000,000 borrowing from Christiania was November 2003. The Partnership negotiated a fixed rate of 9.6% on this debt in October 1999. This debt was collateralized by the lease with Wideroe Flyveselskap ASA and the underlying equipment. In September 2000 the Partnership retired the remaining Christiana debt outstanding of $2,504,354 with the proceeds of sale of the equipment to Wideroe Flyveselskap ASA (see Note 5).
The remaining debt with Transamerica is collateralized by the other aircraft lease with U.S. Air and the underlying equipment. In the first quarter of 2000, the Partnership refinanced the remaining debt outstanding and borrowed an additional $2,000,000. This debt carries an interest rate of 11% and has a maturity date of November 2003.
Notes bear interest at rates ranging from 5.2% to 12% and mature as follows:
Transamerica Other Notes Payable Notes Payable Note Payable Non-Recourse Non-Recourse Total ------------ ------------ ------------ -----
2001 $ 72,717 $ 306,123 $ 581,446 $ 960,286 2002 -- 341,547 129,999 471,546 2003 -- 2,052,380 -- 2,052,380 ---------- ---------- ----------
$ 72,717 $2,700,050 $ 711,445 $3,484,212 ========== ========== ========== ==========
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
8. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General Partner or its affiliates for the years ended December 31, 2000, 1999 and 1998 are as follows:
Charged to Operations
Management fees $ 397,171 Administrative expense reimbursements 218,158 ----------- Year ended December 31, 1998 $ 615,329 ===========
Management fees $ 193,017 Administrative expense reimbursements 113,548 ----------- Year ended December 31, 1999 $ 306,565 ===========
Management fees $ 47,532 Administrative expense reimbursements 12,292 ----------- Year ended December 31, 2000 $ 59,824 ===========
The Partnership has an investment in one non-consolidated joint venture with other Partnerships sponsored by the General Partner (See Note 3 for additional information relating to the joint venture).
9. Security Deposits, Deferred Credits and Other Payables
Security deposits, deferred credits and other payables at December 31, 2000 and December 31, 1999 include $846,057 and $408,912, respectively, of proceeds received on residuals which will be applied upon final remarketing of the related equipment.
10. Subsidiary
In December 1994 the Partnership formed a wholly owned subsidiary, ICON D Corp., a Massachusetts corporation, formed for the purpose of managing equipment under lease located in the state of Massachusetts. Massachusetts partnerships are taxed for personal property at a higher rate than corporations, and therefore, to mitigate such excess property tax, certain leases are being managed by ICON D Corp, a corporation. The Partnership's consolidated financial statements include 100% of the accounts of ICON D Corp. As of December 31, 2000, there was no federal tax liability for ICON D Corp.
11. Commitments and Contingencies
The Partnership has entered into remarketing and residual sharing agreements with third parties. In connection therewith, remarketing or residual proceeds received in excess of specified amounts will be shared with third parties based on specified formulas. For the years ended December 31, 2000, 1999 and 1998, the Partnership paid $0, $152,739 and $116,400, respectively, to third parties as their share of the proceeds.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
12. Tax Information (Unaudited)
The following reconciles net income for financial reporting purposes to income (loss) for federal income tax purposes for the years ended December 31:
As of December 31, 2000, the partners' capital accounts included in the financial statements totaled $687,210 compared to the partners' capital accounts for federal income tax purposes of $12,373,040 (unaudited). The difference arises primarily from commissions reported as a reduction in the partners' capital for financial reporting purposes but not for federal income tax purposes, and temporary differences related to direct finance leases, depreciation and provision for losses.
13. Quarterly Financial Data (Unaudited)
The following table is a summary of financial data by quarter for the years ended December 31, 2000 and 1999:
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
December 31, 2000
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ----------------------------------------------------------------------
None
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant's General Partner
The General Partner, a Connecticut corporation, was formed in 1985. The General Partner's principal offices are located at 111 Church Street, White Plains, New York 10601-1505, and its telephone number is (914) 993-1700. The officers of the General Partner have extensive experience with transactions involving the acquisition, leasing, financing and disposition of equipment, including acquiring and disposing of equipment subject to leases and full financing transactions.
The manager of the Registrant's business is the General Partner. The General Partner is engaged in a broad range of equipment leasing and financing activities. Through its sales representatives and through various broker relationships throughout the United States, the General Partner offers a broad range of equipment leasing services.
The General Partner is performing or causing to be performed certain functions relating to the management of the equipment of the Partnership. Such services include the collection of lease payments from the lessees of the equipment, re-leasing services in connection with equipment which is off-lease, inspections of the equipment, liaison with and general supervision of lessees to assure that the equipment is being properly operated and maintained, monitoring performance by the lessees of their obligations under the leases and the payment of operating expenses.
The officers and directors of the General Partner are as follows:
Beaufort J.B. Clarke Chairman, Chief Executive Officer and Director
Paul B. Weiss President and Director
Thomas W. Martin Executive Vice President and Director
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
December 31, 2000
Beaufort J. B. Clarke, age 55, has been Chairman, Chief Executive Officer and Director of the General Partner since 1996. Prior to his present position, Mr. Clarke was founder and the President and Chief Executive Officer of Griffin Equity Partners, Inc. Mr. Clarke formerly was an attorney with Shearman and Sterling and has over 20 years of senior management experience in the United States leasing industry.
Paul B. Weiss, age 40, is President and Director of the General Partner. Mr. Weiss has been exclusively engaged in lease acquisitions since 1988 from his affiliations with the General Partner since 1996, Griffin Equity Partners (as Executive Vice President from 1993-1996); Gemini Financial Holdings (as Senior Vice President-Portfolio Acquisitions from 1991-1993) and Pegasus Capital Corporation (as Vice President-Portfolio Acquisitions from 1988-1991). He was previously an investment banker and a commercial banker.
Thomas W. Martin, age 47, has been Executive Vice President of the General Partner since 1996. Prior to his present position, Mr. Martin was the Executive Vice President and Chief Financial Officer of Griffin Equity Partners, Inc. (1993-1996), Gemini Financial Holdings (as Senior Vice President from 1992-1993) and Chancellor Corporation (as Vice President-Syndications from 1985-1992). Mr. Martin has 17 years of senior management experience in the leasing business.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
December 31, 2000
Item 11.
Item 11. Executive Compensation
The Partnership has no directors or officers. The General Partner and its affiliates were paid or accrued the following compensation and reimbursement for costs and expenses for the years ended December 31, 2000, 1999 and 1998.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) The registrant is a limited partnership and therefore does not have voting shares of stock. No person of record owns, or is known by the Partnership to own beneficially, more than 5% of any class of securities of the Partnership.
(b) Asof March 19, 2001, Directors and Officers of the General Partner do not own any equity securities of the Partnership.
(c) The General Partner owns the equity securities of the Partnership set forth in the following table:
Title Percent of Class Amount Beneficially Owned of Class -------- ------------------------- --------
General Partner Represents initially a 1% and potentially a 100% Interest 10% interest in the Partnership's income, gain and loss deductions.
Profits, losses, cash distributions and disposition proceeds are allocated 99% to the limited partners and 1% to the General Partner until each investor has received cash distributions and disposition proceeds sufficient to reduce its adjusted capital contribution account to zero and receive, in addition, other distributions and allocations which would provide a 10% per annum cumulative return, compounded daily, on the outstanding adjusted capital contribution account. After such time, the distributions will be allocated 90% to the limited partners and 10% to the General Partner.
Item 13.
Item 13. Certain Relationships and Related Transactions
See Item 11 for a discussion of the Partnership's related party transactions. See Note 3 for a discussion of the Partnership's related party investment in joint venture.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
December 31, 2000
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements - See Part II, Item 8 hereof.
2. Financial Statement Schedule - None.
Schedules not listed above have been omitted because they are not applicable or are not required or the information required to be set forth therein is included in the Financial Statements or Notes thereto.
3. Exhibits - The following exhibits are incorporated herein by references:
(i) Form of Dealer-Manager Agreement (Incorporated by reference to Exhibit 1.1 to Form S-1 Registration Statement No. 33-40044 filed with the Securities and Exchange Commission on April 18, 1991)
(ii) Form of Selling Dealer Agreement (Incorporated by reference to Exhibit 1.2 to Form S-1 Registration Statement No. 33-40044 filed with the Securities and Exchange Commission on April 18, 1991)
(iii)Amended and Restated Agreement of Limited Partnership (Incorporated herein by reference to Exhibit A to Amendment No. 4 to Form S-1 Registration Statement No. 33-40044 filed with the Securities and Exchange Commission on August 14, 1991)
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Partnership during the quarter ended December 31, 2000.
ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership)
December 31, 2000
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ICON CASH FLOW PARTNERS, L.P., Series D File No. 33-40044 (Registrant) By its General Partner, ICON Capital Corp.
Date: March 28, 2001 /s/ Beaufort J.B. Clarke --------------------------------------- Beaufort J.B. Clarke Chairman, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.
ICON Capital Corp. sole General Partner of the Registrant
Date: March 28, 2001 /s/ Beaufort J.B. Clarke --------------------------------------- Beaufort J.B. Clarke Chairman, Chief Executive Officer and Director
Date: March 28, 2001 /s/ Paul B. Weiss --------------------------------------- Paul B. Weiss President and Director
Date: March 28, 2001 /s/ Thomas W. Martin --------------------------------------- Thomas W. Martin Executive Vice President (Principal Financial and Accounting Officer)
Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrant Which have not Registered Securities Pursuant to Section 12 of the Act
No annual report or proxy material has been sent to security holders. An annual report will be sent to the limited partners and a copy will be forwarded to the Commission.