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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, 2004
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required]
Commission File Number 33-40044
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ICON Cash Flow Partners, L.P., Series D
(Exact name of registrant as specified in its charter)
Delaware 13-3602979
- -------------------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 Fifth Avenue, 10th floor, New York, New York 10011
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 418-4700
-----------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to
Section 12(g) of the Act: Units of Limited Partnership Interests
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) [ ] Yes [X] No
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity,
as of the last day of the registrant's most recently completed second fiscal
quarter: Not applicable. There is no established market for units of in the
registrant.
Table of Contents
Item
PART I
1. Business 3
2. Properties 4
3. Legal Proceedings 4
4. Submission of Matters to a Vote of Security Holders 4
PART II
5. Market for the Registrant's Securities and Related Security Holder Matters 4
6. Selected Financial Data 5
7. General Partner's Discussion and Analysis of Financial
Condition and Results of Operations 6-15
7A. Qualitative and Quantitative Disclosures About Market Risk 16
8. Financial Statements 17-32
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 33
9A. Controls and Procedures 33
9B. Other Information 33
PART III
10. Directors and Executive Officers of the Registrant's Manager 34-35
11. Executive Compensation 35
12. Security Ownership of Certain Beneficial Owners and Management 35
13. Certain Relationships and Related Transactions 36
14. Principal Accountant Fees and Services 36
PART IV
15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 37
SIGNATURES 38
Certifications 39-42
2
PART I
Item 1. Business
General Development of Business
ICON Cash Flow Partners, L.P., Series D (the "Partnership") was formed in
February 1991 as a Delaware limited partnership. When used in this report, the
terms "we" "us" and "our" refers to the Partnership.
Our maximum offering was $40,000,000 and we commenced business operations
on our initial closing date, August 23, 1991, with the admission of 26,905.59
limited partnership units at $100 per unit representing $2,690,559 in capital
contributions. Between August 24, 1991 and June 5, 1992 (the final closing
date), 373,094.41 additional units were admitted bringing the total admissions
to 400,000 units totaling $40,000,000 in capital contributions. From 1994
through 2004, we redeemed 882 limited partnership units leaving 399,118 units
outstanding at December 31, 2004.
Our General Partner is ICON Capital Corp., a Connecticut corporation. The
General Partner manages and controls our business affairs including equipment,
leases and financing transactions under a management agreement with us.
Segment Information
We have only one operating segment: the business of owning equipment
subject to leases with companies that we believe to be creditworthy.
Narrative Description of Business
We are an equipment leasing income fund. The principal investment objective
is to obtain the maximum economic return from our investments for the benefit of
our partners. To achieve this objective we have: (i) acquired a diversified
portfolio of leases and financing transactions; (ii) made monthly cash
distributions to our limited partners commencing with each limited partner's
admission, (iii) re-invested substantially all undistributed cash from
operations and cash from sales of equipment and financing transactions during
the reinvestment period; and (iv) commenced the disposition period and begun to
sell our investments and distribute the cash from sales of such investments to
our partners.
Our reinvestment period ended June 5, 1997. During the disposition period,
we have 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. We have not and will not invest in
any additional new finance or lease transactions during the disposition period.
At December 31, 2004 and 2003, we had total assets of $1,499,628 and
$3,013,421, respectively. During the year ended December 31, 2004, our total
revenue was $255,019. Amounts derived primarily from our leasing and rental
revenue totaled $265,911, which was derived from two leases which accounted for
approximately 98% of our total revenue. We incurred a net loss for the year
ended December 31, 2004 of $747,464. For the year ended December 31, 2003, our
total revenue was $600,314, which was derived primarily from three leases which
accounted for 79% of our revenue. We incurred a net loss for the year ended
December 31, 2003 of $18,781. For the year ended December 31, 2002, our total
revenue was $1,594,108, which was derived primarily from four leases which
accounted for 58% of our revenue. Our net income for the year ended December 31,
2002 of $662,388.
We have no direct employees. The General Partner has full and exclusive
control over our in management and operations.
Our Competition
The equipment leasing industry is highly competitive. When seeking leasing
transactions for acquisition or sale, we compete 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 us and have greater financial resources than we
do.
Lease and Financing Transactions
We did not purchase nor finance any additional equipment for the years
ended December 31, 2004, 2003 and 2002.
Available Information
Our Annual Reports on Form 10-K and our most recent Quarterly Reports on
Form 10-Q and amendments to those reports, if any, are available free of charge
on our internet website at http://www.iconcapital.com as soon as reasonably
practicable after such reports are electronically filed with or furnished to the
Securities and Exchange Commission. The information contained on our website is
not part of this Annual Report on Form 10K. This information is also available
on the Securities and Exchange Commission's website, at http://www.sec.gov.
3
Item 2. Properties
We neither own nor lease office space or any other real property in our
business at the present time.
Item 3. Legal Proceedings
In the ordinary course of conducting our business, there may be certain
claims, suits, and complaints filed against us. In the opinion of management,
the outcome of such matters, if any, will not have a material impact on our
consolidated financial position or results of operations. No material legal
proceedings are currently pending against us or against any of our assets.
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 2004.
PART II
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters
Our units are not publicly traded nor is there currently a market for our
units. It is unlikely that any such market will develop.
Number of Equity Security Holders
Title of Class as of March 18, 2005
--------------------------- ------------------------------------
General Partner (as a member) 1
Additional Partners 3,076
We do not, in the normal course of business, pay dividends. For the years
ended December 31, 2004 and 2003 and 2002, we did not pay any distributions to
our partners.
Our reinvestment period ended June 5, 1997. During the disposition period,
we have 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. We have not and will not invest in
any additional new finance or lease transactions during the disposition period.
In order for National Association of Securities Dealers ("NASD") members
and their associated persons to have participated in the offering and sale of
interests in limited partnership units (the "Units") pursuant to the fourth
offering or to participate in any future offering of our Units, we are required
pursuant to NASD Rule 2710(c)(6) to disclose in each annual report distributed
to our limited partners a per unit estimated value of our Units, the method by
which we developed the estimated value and the date used to develop the
estimated value. In addition, our General Partner must prepare annual statements
our estimated Unit values to assist fiduciaries of retirement plans subject to
the annual reporting requirements of Employee Retirement Income Security Act
("ERISA") in the preparation of their reports relating to an investment in our
Units. For these purposes, the estimated value of our Units will be deemed to be
$0.02 per Unit as of December 31, 2004.
This estimate was based on the amount of remaining undiscounted lease
payments on our existing leases, the booked estimated residual values of the
equipment held by us upon the termination of those leases and our cash on hand.
From this amount we then subtracted our total debt outstanding and then divided
that sum by the total number of Units outstanding. This valuation was based
solely on the General Partner's perception of market conditions and the types
and amounts of our assets. No independent valuation was sought. However, as set
forth below, there is no significant public trading market for our Units at this
time, and there can be no assurance that limited partners could receive $0.02
per Unit if such a market did exist and they sold their Units or that they will
be able to receive such amount for their Units in the future. The foregoing
valuation was performed solely for the ERISA and NASD purposes described above.
There is no market for our Units, and, accordingly, this value does not
represent an estimate of the amount a limited partner would receive if he were
to seek to sell his Units. Furthermore, there can be no assurance as to the
amount we may actually receive if and when we seek to liquidate our assets or
the amount of lease payments and equipment disposition proceeds we will actually
receive over our remaining term.
4
Item 6. Selected Consolidated Financial Data
The selected financial data should be read in conjunction with the
consolidated financial statements and related notes included in Item 8,
Financial Statements and Supplemental Data contained elsewhere in this report.
Years Ended December 31,
-----------------------------------
2004 2003 2002 2001 2000
---- ---- ---- ----- ----
Total revenue $ 255,019 $ 600,314 $1,594,108 $ 874,695 $ 2,200,367
========== =========== ========== ========= ===========
Net (loss) income $ (747,464) $ (18,781) $ 662,388 $ 284,772 $ 820,615
=========== =========== ========== ========= ===========
Net (loss) income allocable
to the limited partner $ (739,989) $ (18,593) $ 655,764 $ 281,924 $ 812,409
========== =========== ========== ========= ===========
Net (loss) income allocable
to the Genral Partner $ (7,475) $ (188) $ 6,624 $ 2,848 $ 8,206
=========== ========== ========== ========= ===========
Weighted average limited partnership
units outstanding 399,118 399,118 399,118 399,118 399,118
=========== ========== ========== ========= ===========
Net (loss) income per weighted average
limited partnership unit $ (1.85) $ (0.05) $ 1.64 $ 0.71 $ 2.04
=========== ========== ========== ========= ===========
Distributions to limited partners $ - $ - $ - $ 588,656 $ 4,091,082
=========== ========== ========== ========= ===========
Distributions per weighted average
limited partnership unit $ - $ - $ - $ 1.47 $ 10.25
============ ========== ========== ========= ===========
Distributions to the General Partner $ - $ - $ - $ 5,946 $ 41,323
============ ========== ========== ========= ===========
December 31,
2004 2003 2002 2001 2000
----- ----- ----- ----- -----
Total assets $1,499,628 $3,013,421 $3,421,904 $3,847,550 $5,251,699
=========== ========== ========== ========== ==========
Notes payable $1,209,575 $1,934,027 $2,086,075 $2,526,940 $3,111,495
========== ========== =========== ========== ==========
Partner's equity $ 273,533 $1,020,997 $1,039,778 $ 377,390 $ 687,210
========== ========== ========== ========== ==========
In 2004, we had an increase in provision for bad debt of approximately for
$496,000 or approximately $1.24 per limited partnership unit. In 2002, we made a
one-time adjustment to residual sharing value resulting in a gain of
approximately $500,000 or approximately $1.25 per limited partnership unit. In
2002, we had an increase in provision for bad debt of approximately $390,000 or
approximately $.10 per limited partnership unit. In 2001, we had a reversal of a
provision for bad debt in the amount of approximately $250,000 or approximately
$.62 per limited partnership unit. In 2000, we had a gain of a sale of an
aircraft of approximately $700,000 or approximately $1.75 per limited
partnership unit.
5
Item 7. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-Looking Information - Certain statements within this document may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are identified by
words such as "anticipate," "believe," "estimate," "expects," "intend,"
"predict" or "project" and similar expressions. This information may involve
risks and uncertainties that could cause actual results to differ materially
from the forward-looking statements. We believe that the expectations reflected
in such forward-looking statements are based on reasonable assumptions. Such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. Any such forward-looking
statements are subject to risks and uncertainties and our future results of
operations could differ materially from historical results or current
expectations. Some of these risks are discussed in this report, and include,
without limitation, fluctuations in oil and gas prices; level of fleet additions
by competitors and industry overcapacity; changing customer demands for
aircraft; acts of terrorism; unsettled political conditions, war, civil unrest
and governmental actions, and environmental and labor laws. Our actual results
could differ materially from those anticipated by such forward-looking
statements due to a number of factors, some of which may be beyond our control,
including, without limitation:
o changes in our industry, interest rates or the general economy;
o the degree and nature of our competition;
o availability of qualified personnel;
o cash flows from operating activities may be less than our current
level of expenses and debt obligations; o the financial condition of
lessees; and o lessee defaults.
a. Overview
We are an equipment leasing business formed on February 21, 1991 which
began active operations on August 23, 1991. We primarily engage in the business
of acquiring equipment subject to lease and, to a lesser degree, acquiring
ownership rights to items of leased equipment at lease expiration. Some of our
equipment leases were acquired for cash and provided current cash flow, which we
refer to as "income" leases. The majority of the purchase price of our other
equipment leases was borrowed, so these leases generated little or no current
cash flow because substantially all of the rental payments received from a
lessee were paid to a lender. For these "growth" leases, we anticipate that the
future value of the leased equipment will exceed the cash portion of the
purchase price paid for the equipment. We are currently in our disposition
period, wherein we are seeking to sell our assets in the ordinary course of
business.
Capital Resources and Liquidity
We invested most of the net proceeds from our offering in items of
equipment subject to a lease. After the net offering proceeds were invested,
additional investments were made with the cash generated from our initial
investments to the extent that the cash was not needed for expenses, reserves
and distributions to investors. The investment in additional equipment in this
manner is called "reinvestment." After the "reinvestment period," we began
selling our assets in the ordinary course of business during a time frame called
the "disposition period." If we believe it would benefit investors to reinvest
our cash flow in equipment during the disposition period, we may do so, but we
will not receive any additional fees in connection with such reinvestments. Our
goal is to complete the disposition period in three years after the end of the
reinvestment period, but it may take longer to do so.
6
Our reinvestment period ended June 5, 1997, and the disposition period
began on June 6, 1997. During the disposition period, we have and will continue
to distribute substantially all distributable cash from operations and equipment
sales to the partners and continue the orderly termination of its operations and
affairs. We have not and will not invest in any additional finance or lease
transactions during the disposition period.
Our current equipment portfolio, which we own directly, consists primarily
of the following:
Air Transportation Industry:
o We own a 100% interest in a de Havilland DHC-8-102 aircraft (the
"Aircraft") subject to a lease with US Airways, Inc., ("US Airways")
which expired in October 2004. On September 12, 2004, US Airways filed
for bankruptcy protection under Chapter 11 of the United States
Bankruptcy Code and indicated, during October 2004, they would seek to
reject the lease at September 30, 2004 and not pay the final rental
payment due under the lease in October 2004. US Airways has made all
required payments under the terms of the operating lease through
September 30, 2004. The operating lease with US Airways expired during
October 2004. The Aircraft is held as collateral against a recourse
note payable.
Management is currently reviewing our options with respect to the Aircraft.
These options include finding another party to lease the Aircraft or selling the
Aircraft to a third party. Management believes that the current net book value
of the Aircraft, at December 31, 2004, including the anticipated maintenance
upgrade required to continue its air worthiness, is less than the amount
anticipated in a sale or re-lease. The cash portion of the purchase price was
$3,169,250 and there is currently $1,209,575 of recourse debt remaining secured
by this asset.
Restaurant and Brewing Equipment
o Restaurant and brewing equipment that is subject to a lease with
Charlie and Jake's Bar-B-Q, Inc. that expires during January 2006. At
lease expiration, the lessee will own the equipment. The equipment was
purchased for $274,771, and there is no related debt at December 31,
2004.
Substantially all of our recurring operating revenues are generated from
the operations of the Charlie and Jake's Bar-B-Q lease. On a monthly basis, we
deduct the expenses related to the recurring operations of the portfolio from
such revenues and assess the amount of the remaining cash flows that will be
required to fund known re-leasing costs, equipment management costs, and general
and administrative costs. Below is a review of our portfolio activity during the
twelve months ended December 31, 2004.
Portfolio Activity
US Airways Bankruptcy
In September 2004, US Airways filed for bankruptcy under Chapter 11 of the
United States Bankruptcy Code. Additionally, in a Second Motion to Authorize the
Debtors to Reject Certain Leased Aircraft Equipment Pursuant to 11 U.S.C.
Section 365 (the "Motion"), US Airways sought to reject our Aircraft lease at
September 30, 2004 and not pay the October 2004 rent.
Following the filing of the Motion, US Airways realized that one of our
Aircraft's engines was mistakenly returned to Bombardier on a Bombardier DH-8
aircraft. Bombardier accepted our engine from US Airways and the engine is
currently located in Ontario, Canada. Due to the costs and logistics involved
with having the engine returned from Bombardier, US Airways agreed to exchange
one of its own engines for our engine that was mistakenly returned to
Bombardier. We have agreed to this exchange.
7
In early March 2005, it appeared that the exchange could be finalized.
However, on March 4, 2005, the replacement engine we received from Bombardier
failed a maintenance test performed in compliance with the Federal Aviation
Administration's Short Term Storage Program. US Airways has proposed another
replacement engine. If acceptable to us, the exchange will resume and this
engine will be provided to us. Once documented, an Order will be submitted to
the United States Bankruptcy judge requesting approval of the exchange of the
engines. Upon approval, we will recover our aircraft.
The operating lease with US Airways expired during October 2004. US Airways
has made all required payments under the terms of the operating lease through
September 30, 2004. We have been making all required debt service payments to
Transamerica Aviation, LLC during the time the aircraft has been off lease to
reduce the balloon payment when it comes due on December 31, 2006.
Status of Current Portfolio
de Havilland DHC-8-102 Aircraft
We have one aircraft a de Havilland DHC-8-102 aircraft. The operating lease
with US Airways expired during October 2004. US Airways has made all required
payments under the terms of the operating lease through September 30, 2004. We
have been making debt service payments to Transamerica Aviation, LLC during the
time the aircraft has been off lease to reduce the balloon payment when it comes
due.
The de Havilland DHC-8-102 aircraft is powered by twin-turbo propeller
engines and, as such, is being replaced in the market by faster, more efficient,
regional jets. Accordingly, we may have difficulty remarketing the Aircraft for
an amount sufficient to satisfy our outstanding loan obligations. We have been
in negotiations with several third-parties to lease or sell the aircraft. We
believe that the current net book value of the Aircraft, which is approximately
$1,010,000 at December 31, 2004, including the expected maintenance upgrade is
less than the amount we anticipate realizing in our remarketing effort.
The Aircraft is subject to recourse financing and the lease payments were
remitted directly to the lender to reduce the outstanding loan balance. The
outstanding loan balance at December 31, 2004 was $1,209,575. We anticipate that
selling the Aircraft would result in proceeds sufficient to cover the debt
balance at December 31, 2004.
The Aircraft is subject to a Federal Aviation Administration required
40,000 hour airframe maintenance overhaul. It was anticipated that the potential
overhaul would not be required for a significant period of time. However, as a
result of a routine records check it was determined that the overhaul could be
required sooner than expected. The Aircraft cannot operate if the maintenance is
not performed when required. As a result, the economic life of the Aircraft will
be shortened or its residual value diminished.
8
Restaurant and Brewing Equipment
We own restaurant and brewing equipment that is subject to a lease with
Charlie and Jake's Bar-B-Q, Inc. with an expiration date of January 14, 2006. At
lease expiration, the lessee will own the equipment. The equipment was purchased
for $274,771, and there is no related debt secured by this asset at December 31,
2004.
Economic and Industry Factors
Our results continue to be impacted by a number of factors influencing the
United States of America's economy, as well as, the equipment leasing industry
some of which are discussed below.
United States Economy
The economy of the United States of America appears to be recovering, and
the leasing industry's outlook for the foreseeable future is encouraging. We
foresee an increase in capital spending by corporations through 2007 which
should increase the pool of available leases, and to that end, we believe there
will be more opportunities in this market. Nonetheless, a key obstacle still
facing the leasing industry is the continued low interest rate environment,
which reduces leasing volume inasmuch as customers are more prone to purchase
than lease. Other factors which may negatively affect the leasing industry are
the proposed legal and regulatory changes that may affect tax benefits of
leasing and the continued misperception by potential lessees, stemming from
Enron, WorldCom and others, that leasing should not play a central role as a
financing alternative. However, as economic growth continues and interest rates
inevitably begin to rise over time, we are optimistic that more lessees will
return to the marketplace.
Air Transportation Industry
The aircraft leasing industry has been on the downside of a business cycle
and continues to remain there. This has resulted in depressed sales prices for
assets such as our aircraft interests. It does not appear that the industry will
recover significantly in the very near future with the recent increases in the
price of gasoline and the fare wars within the air transportation industry,
although we are optimistic that a recovery will occur within two to three years
time. However, a further weakening of the industry could cause the proceeds
realized from the future sale of our aircraft to be even less than suggested by
recent appraisals.
Inability to Remarket Assets
The de Havilland DHC-8-102 aircraft is powered by twin-turbo propeller
engines and, as such, is being replaced in the market by faster, more efficient,
regional jets. Accordingly, we may have difficulty remarketing the Aircraft for
an amount sufficient to satisfy our outstanding loan obligations.
9
Critical Accounting Policies
An appreciation of our critical accounting policies is necessary to
understand our financial results. These policies may require the General Partner
to make difficult and subjective judgments regarding uncertainties, and as a
result, such estimates may significantly impact our financial results. The
precision of these estimates and the likelihood of future changes depend on a
number of underlying variables and a range of possible outcomes. We applied our
critical accounting policies and estimation methods consistently in all periods
presented. We consider the following accounting policies to be critical to our
business:
o Lease classification and revenue recognition
o Asset impairments
o Depreciation
Lease Classification and Revenue Recognition
The equipment we lease to third parties is classified either as a finance
lease, a leveraged lease, or an operating lease, which is determined based upon
the terms of each lease. Initial direct costs are capitalized and amortized over
the term of the related lease for both a finance lease and a leveraged lease.
For an operating lease, the initial direct costs are included as a component of
the cost of the equipment and depreciated.
For finance leases, we record, at lease inception, the total minimum lease
payments receivable from the lessee, the estimated unguaranteed residual value
of the equipment at lease termination, the initial direct costs related to the
lease 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 ratably over the term of the lease.
For leveraged leases, we record, at lease inception, our net investment in
the equipment which consists of the minimum lease payments receivable, the
estimated unguaranteed residual value of the equipment at lease termination and
the initial direct costs related to the lease, net of the unearned income and
principal and interest on the related non-recourse debt. Unearned income is
recognized as income over the life of the lease at a constant rate of return on
the positive net investment.
For operating leases, income is recorded as rental income and is recognized
on the straight line method over the lease term.
Our General Partner has an Investment Committee that approves each new
equipment acquisition. As part of their process, the Investment Committee
determines the residual value to be used once the acquisition has been approved.
The factors considered in determining the residual value include, but are not
limited to, the creditworthiness of the potential lessee, the type of equipment
being considered, how the equipment is integrated into the potential lessees
business, the length of the lease and industry in which the potential lessee
operates. Residual values are reviewed in accordance with our policy to review
all significant assets in our portfolio.
10
Asset Impairments
The significant assets in our asset portfolio are periodically reviewed, at
least annually, by management, to determine whether events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. Management uses qualified third party appraisers to assist in the
review process. An impairment loss shall be recognized only if the carrying
amount of a long-lived asset is not recoverable and exceeds its fair value. In
such circumstances, we will estimate the future cash flows (undiscounted and
without interest charges) expected to result from the use of the asset and its
eventual disposition. Future cash flows are the future cash inflows expected to
be generated by an asset less the future outflows expected to be necessary to
obtain those inflows. An impairment loss shall be measured as the amount by
which the carrying amount of a long-lived asset exceeds its fair value.
The events or changes in circumstances which generally indicate that an
asset may be impaired are (i) the estimated fair value of the underlying
equipment is less than our carrying value or (ii) the lessee is experiencing
financial difficulties and it does not appear likely that the estimated proceeds
from the disposition of the asset will be sufficient to satisfy the remaining
obligation to the lender and our residual position in the asset. Generally in
the latter situation, the residual position relates to equipment subject to
third party notes payable where the lessee remits their rental payments directly
to the lender and we do not recover our residual position until the note payable
is repaid in full.
Depreciation
We record depreciation expense on equipment classified as an operating
lease. In order to calculate depreciation, we first determine the depreciable
equipment cost, which is the cost less estimated residual value. The estimated
residual value is our estimate of the value of the equipment at lease
termination. The estimated residual value is reviewed annually, by management,
to determine whether an impairment charge may be required. Management uses
qualified third party appraisers to assist in the review process. Depreciation
expense is recorded ratably over the term of the related lease.
New Accounting Pronouncements
During December 2004, the FASB issued SFAS No. 153 "Exchanges of
Nonmonetary Assets--an amendment of APB Opinion No. 29" ("SFAS 153"). SFAS 153
is based on the principle that exchanges of nonmonetary assets should be
measured based on the fair value of the assets exchanged. The guidance in
Opinion 29, however, included certain exceptions to that principle. This
Statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges
of similar productive assets and replaces it with a general exception for
exchanges of nonmonetary assets that do not have commercial substance. SFAS 153
is effective for nonmonetary exchanges occurring in fiscal periods beginning
after June 15, 2005. We do not expect the adoption of SFAS 153 to have an impact
on our financial position or results of operations.
Management does not believe that any recently issued, but not yet effective
accounting pronouncements, if currently adopted, would have a material effect on
the accompanying consolidated financial statements.
11
b. Results of Operations for the Years Ended December 31, 2004 ("2004) and 2003
("2003")
Revenue for the years ended 2004 and 2003 are summarized as follows:
Years Ended December 31,
------------------------
2004 2003 Change
---- ---- ------
Total revenue $ 255,019 $ 600,314 $ (345,295)
=============== ============ ===============
Rental income $ 160,000 $ 284,045 $ (124,045)
Finance income 105,911 192,560 (86,649)
Income (loss) from investments in joint ventures (30,359) (15,796) (14,563)
Net gain (loss) on sales of equipment (4,762) 116,939 (121,701)
Interest and other income 24,229 22,566 1,663
Revenues for 2004 decreased by $345,295, or 58%, as compared to 2003. The
decrease in rental revenue is due primarily to the restructuring of the US
Airways lease, reducing rental income by $20,000 per month and then the
subsequent loss in the US Airways lease due to US Airways filing bankruptcy in
September 2004. The decrease in finance income is due to the expiration of our
Federal Express Corporation lease in June 2004. The decrease in net gain (loss)
on sales of equipment is due to the difference in the assets sold in 2004 as
compared to 2003 resulting in a higher gain in 2003.
Expenses for 2004 and 2003 are summarized as follows:
Years Ended December 31,
------------------------
2004 2003 Change
---- ---- -----
Total expenses $ 1,002,483 $ 619,095 $ 383,388
============= ========== ===========
Depreciation 100,000 252,456 (152,456)
Interest 208,911 213,428 (4,517)
General and administrative 197,197 153,211 43,986
Provision for bad debt 496,375 - 496,375
Expenses for 2004 increased by $383,388 or 62%, as compared to 2003.
Depreciation decreased due to the termination of the Champlain lease in 2003 and
to US Airways rejecting the lease, resulting in no depreciation expense being
taken in the fourth quarter of 2004 as the aircraft was off-lease. This decrease
was off set by an increase in our provision for bad debt which was a result our
writing off amounts due from affiliated entities.
Net Income/Loss
As a result of the foregoing factors, the net loss in 2004 and 2003 was
$747,464 and $18,781 respectively. The net loss per weighted average number of
limited partner's units outstanding was $1.85, and $.05, respectively, for 2004
and 2003.
12
c. Results of Operations for the Years Ended December 31, 2003 ("2003") and 2002
("2002")
Revenue for the years ended 2003 and 2002 are summarized as follows:
Years Ended December 31,
------------------------
2003 2002 Change
---- ---- ------
Total revenue $ 600,314 $ 1,594,108 $ (993,794)
=============== ============ ============
Rental income $ 284,045 $ 822,848 $ (538,803)
Finance income 192,560 184,301 8,259
Income (loss) from investments in joint ventures (15,796) 27,647 (43,443)
Net gain (loss) on sales of equipment 116,939 (8,001) 124,940
Interest and other income 22,566 567,313 (544,747)
Revenues for 2003 decreased $993,794, or 62%, as compared to 2002. Revenue
decreased primarily due to rental income decreasing due to the restructuring of
the lease terms with US Airways. Net gain (loss) on the sales of equipment is
due to the sale of equipment leased to Champlain Cable Corp., from which we
received proceeds of $141,956 for a gain of $116,591. There was no similar
transaction in 2002.
Expenses for 2003 and 2002 are summarized as follows:
Years Ended December 31,
-----------------------
2003 2002 Change
---- ----- ------
Total expenses $ 619,095 $ 931,720 $ (312,625)
Depreciation 252,456 408,696 (156,240)
Interest 213,428 245,280 (31,852)
General and administrative 153,211 143,386 9,825
Amortizatrion of Intitial Direct Costs - 455 (455)
Provision for impairment - 133,903 (133,903)
Expenses for 2003 decreased $312,625 or 34% from 2002. Depreciation expense
decreased due to the restructuring of the US Airway's lease terms effective
January 3, 2003. We made no provision for bad debt, as the current allowance is
adequate to cover current delinquencies with the view of future delinquency
being remote.
Net Income/Loss
As a result of the foregoing factors, the net (loss) income in 2003 and
2002 was $(18,781) and $662,388, respectively. The net (loss) income per
weighted average number of limited partner's shares outstanding was $(.05) and
$1.64, respectively, for 2003 and 2002.
13
d. Liquidity and Capital Resources
Sources of Cash
We believe that with the cash we have currently available, and from the
cash being generated from our leases and sales proceeds, we have sufficient cash
to continue our limited operations into the foreseeable future. Net cash
provided by operating activities was approximately $1,090,000 for the year ended
December 31, 2004. Approximately $1,200,000 is non-recurring. Our current
sources of cash are proceeds being collected from one financing lease at the
rate of $7,000 per month.
Our cash flow from operating activities may be less than our current level
of expenses. To that extent our cash flow is insufficient to pay such expenses,
we may be required to sell assets prior to maturity or borrow against future
cash flows. Our primary source of cash outflow is for the repayment of our
recourse debt.
For the year ended December 31, 2004 and 2003 we had cash flows provided by
(used in) operating activities of approximately $1,090,000 and $(117,000),
respectively. Refer to our statement of cash flows located in Item 8, Financial
Statements and Supplementary Data for more information relating to our cash
flows.
Financings and Recourse Borrowings
During March 2004, we amended our note payable - recourse related to the US
Airways Aircraft and extended the due date until December 2006 with monthly
principal and interest payments of $45,244. This note payable - recourse accrues
interest at 11.0% per year. We utilized approximately $576,000 of the amount
received from an affiliate to repay a portion of the note payable - recourse.
The recourse debt allows us to make the required monthly payments without a
lessee. We are currently making the required monthly payments. At December 31,
2004, the balance on the note payable - recourse was $1,209,575.
Distributions
Our reinvestment period ended June 5, 1997, and the disposition period
began on June 6, 1997. During the disposition period, we have and will continue
to distribute substantially all distributable cash from operations and equipment
sales to the partners and continue the orderly termination of its operations and
affairs. We have not and will not invest in any additional finance or lease
transactions during the disposition period.
We do not, in the normal course of business, pay dividends. For the years
ended December 31, 2004 and 2003, we have not paid distributions to our limited
partners or the General Partner.
Commitments
We have a commitment regarding one note payable - recourse. Principal
maturities of our note payable consist of the following at December 31, 2004:
Year Ending
December 31,
2005 $ 431,183
2006 778,392
---------------
$ 1,209,575
14
Risks and Uncertainties
At December 31, 2004, except as noted above in the Overview section and
listed below in the Risk Factors section, and to the best of our knowledge,
there were no known trends or demands, commitments, events or uncertainties
which are likely to have a material effect on our liquidity.
Set forth below and elsewhere in this report and in other documents we file
with the Securities and Exchange Commission are risks and uncertainties that
could cause our actual results to differ materially from the results
contemplated by the forward-looking statements contained in this report and
other periodic statements we make, including, but not limited to, the following:
o The de Havilland DHC-8-102 aircraft is powered by twin-turbo propeller
engines and, as such, is being replaced in the market by faster, more
efficient, regional jets. Accordingly, we may have difficulty
remarketing the Aircraft for an amount sufficient to satisfy our
outstanding loan obligations.
o Our operations are subject to the jurisdiction of a number of federal
agencies, including the Federal Aviation Administration. New
regulatory rulings may negatively impact our financial results and the
economic value of our assets.
e. Inflation and Interest Rates
The potential effects of inflation on us are difficult to predict. If the
general economy experiences significant rates of inflation, however, it could
affect us in a number of ways. We do not currently have or expect to have rent
escalation clauses tied to inflation in our leases. The anticipated residual
values to be realized upon the sale or re-lease of equipment upon lease
terminations (and thus the overall cash flow from our leases) may be expected to
increase with inflation as the cost of similar new and used equipment increases.
15
Item 7A. Qualitative and Quantitative Disclosures About Market Risk
We, like most other companies, are exposed to certain market risks, which
includes changes in interest rates and the demand for equipment (and the related
residuals) owned by us. We believe to the best of our knowledge that our
exposure to other market risks, including foreign currency exchange rate risk,
commodity risk and equity price risk, are insignificant, at this time, to both
our financial position and our results of operations.
In general, we manage our exposure to interest rate risk by obtaining fixed
rate debt. The fixed rate debt is structured so as to match the cash flows
required to service the debt to the payment streams under fixed rate lease
receivables. The payments under the leases are assigned to the lenders in
satisfaction of the debt. We may finance leases with a floating interest rate
and we are therefore exposed to interest rate risk until fixed rate financing is
arranged.
16
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm 18
Consolidated Balance Sheets at December 31, 2004 and 2003 19
Consolidated Statements of Operations for the Years Ended
December 31, 2004, 2003 and 2002 20
Consolidated Statement of Changes in Partners' Equity for the Years Ended
December 31, 2002, 2003 and 2004 21
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2004, 2003 and 2002 22-23
Notes to Consolidated Financial Statements 24-32
17
The Partners
ICON Cash Flow Partners, L.P., Series D
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying consolidated balance sheets of ICON Cash Flow
Partners, L.P., Series D (a Delaware limited partnership) and subsidiaries as of
December 31, 2004 and 2003, and the related consolidated statements of
operations, changes in partners' equity, and cash flows for each of the three
years in the period ended December 31, 2004. 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 the standards of the Public Company
Accounting Oversight Board (United States). 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.
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 and subsidiaries as of December 31, 2004 and 2003, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2004 in conformity with accounting principles
generally accepted in the United States of America.
As discussed in Note 1, the Partnership's reinvestment period ended June 5, 1997
and its disposition period commenced. During the disposition period the
Partnership will distribute substantially all distributable cash from operations
and equipment sales to the partners and begin the orderly termination of its
operations and affairs.
/s/ Hays & Company LLP
March 18, 2005
New York, New York
18
ICON Cash Flow Partners, L. P., Series D
(A Delaware Limited Partnership)
Consolidated Balance Sheets
December 31,
ASSETS
2004 2003
---- ----
Cash and cash equivalents $ 404,288 $ 44,342
------------ ------------
Investments in finance leases:
Minimum rents receivable 106,762 1,957,988
Unearned income (4,677) (111,491)
Allowance for doubtful accounts (25,000) (26,032)
------------- ------------
Net investments in finance leases 77,085 1,820,465
------------ ------------
Investments in operating leases:
Equipment, at cost - 3,384,869
Accumulated depreciation - (2,274,667)
------------- ------------
Net investments in operating leases - 1,110,202
------------ ------------
Equipment held for sale 1,010,202 -
Investments in joint ventures 8,053 38,412
------------ ------------
Total assets $ 1,499,628 $ 3,013,421
============ ============
LIABILITIES AND PARTNERS' EQUITY
Notes payable - recourse $ 1,209,575 $ 1,934,027
Due to affiliates - 49,486
Security deposits, and other payables 16,520 8,911
------------ ------------
Total liabilities 1,226,095 1,992,424
------------ ------------
Commitments and contigencies
Partners' equity:
General partner (341,861) (334,386)
Limited partners: 399,118 and 399,118 units
outstanding, $100 per unit original issue price 615,394 1,355,383
------------ ------------
Total partners' equity 273,533 1,020,997
------------ ------------
Total liabilities and partners' equity $ 1,499,628 $ 3,013,421
============ ============
See accompanying notes to consolidated financial statements
19
ICON Cash Flow Partners, L. P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Operations
Years Ended December 31,
2004 2003 2002
----- ---- -----
Revenue:
Rental income $ 160,000 $ 284,045 $ 822,848
Finance income 105,911 192,560 184,301
(Loss) income from investments in joint ventures (30,359) (15,796) 27,647
Net (loss) gain on sales of equipment (4,762) 116,939 (8,001)
Interest and other income 24,229 22,566 567,313
----------------- --------------- ------------
Total revenue 255,019 600,314 1,594,108
----------------- --------------- ------------
Expenses:
Depreciation 100,000 252,456 408,696
Interest 208,911 213,428 245,280
General and administrative 197,197 153,211 143,386
Amortization of initial direct costs - - 455
Provision for bad debt 496,375 - 133,903
------------------ --------------- -------------
Total expenses 1,002,483 619,095 931,720
------------------ --------------- ------------
Net (loss) income $ (747,464) $ (18,781) $ 662,388
================== =============== ============
Net (loss) income allocable to:
Limited Partners $ (739,989) $ (18,593) $ 655,764
General Partners (7,475) (188) 6,624
------------------ --------------- ------------
$ (747,464) $ (18,781) $ 662,388
================== =============== ============
Weighted average number of limited partnership
units outstanding 399,118 399,118 399,118
================= =============== =============
Net (loss) income per weighted average limited
partnership unit $ (1.85) $ (0.05) $ 1.64
================= =============== =============
See accompanying notes to consolidated financial statements
20
ICON Cash Flow Partners, L. P., Series D
(A Delaware Limited Partnership)
Consolidated Statement of Changes in Partners' Equity
Years Ended December 31, 2002, 2003 and 2004
Total
Limited General Partners'
Partners Partners Equity
-------- -------- ------
Balance, January 1, 2002 $ 718,212 $ (340,822) $ 377,390
Net income 655,764 6,624 662,388
----------------- ----------------- ----------------
Balance, December 31, 2002 1,373,976 (334,198) 1,039,778
Net loss (18,593) (188) (18,781)
------------------ ----------------- -----------------
Balance, December 31, 2003 1,355,383 (334,386) 1,020,997
Net loss (739,989) (7,475) (747,464)
------------------ ----------------- -----------------
Balance, December 31, 2004 $ 615,394 $ (341,861) $ 273,533
================= ================= ================
See accompanying notes to consolidated financial statements
21
ICON Cash Flow Partners, L. P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
Years Ended December 31,
Increase (decrease) in cash and cash equivalents 2004 2003 2002
----- ----- ----
Cash flows from operating activities
Net (loss) income $ (747,464) $ (18,781) $ 662,388
Adjustments to reconcile net (loss) income
to net cash provided by (used in) operating activities:
Depreciation 100,000 252,456 408,696
Rental income paid directly to lenders by lessees (160,000) (268,664) (388,591)
Finance income portion of receivable paid directly
to lenders by lessees - - (156,684)
Interest expense on recourse financing paid directly
to lenders by lessees 113,251 213,428 127,330
Net (gain) loss on sales of equipment 4,762 (116,939) 8,001
Provision for doubtful accounts 496,375 - 133,903
Amortization of initial direct costs - - 455
Amortization of loan fees 54,228 - -
Loss (income) from investments in joint ventures 30,359 15,796 (27,647)
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables 1,244,344 (85,653) 370,078
Other assets - 128,767 (270,682)
Security deposits, deferred credits and other payables 7,609 (149,987) (647,619)
Due from/to General Partner and affiliates, net (49,486) (87,667) -
------------------ ---------------- ------------
Net cash provided by (used in) operating activities 1,093,978 (117,244) 219,628
------------------ --------------- ------------
Cash flows from investing activities:
Proceeds from sales of equipment - 142,303 1,494
------------------ --------------- ------------
Net cash provided by investing activities - 142,303 1,494
------------------ --------------- ------------
Cash flows from financing activities:
Principal payments on notes payable - recourse (679,804) - -
Principal payments on notes payable - non-recourse - (96,812) (179,154)
Other payments - loan fee (54,228) - -
------------------ --------------- ------------
Net cash used in financing activities (734,032) (96,812) (179,154)
Net increase (decrease) in cash and cash equivalents 359,946 (71,753) 41,968
Cash and cash equivalents, beginning of the year 44,342 116,095 74,127
------------------ --------------- -------------
Cash and cash equivalents, end of the year $ 404,288 $ 44,342 $ 116,095
================== =============== ============
See accompanying notes to consolidated financial statements
22
ICON Cash Flow Partners, L. P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
Years Ended December 31,
2004 2003 2002
----- ----- ----
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 84,572 $ 127,330 $ 301,551
================ ============= ==============
Supplemental disclosure of non-cash investing and financing activities:
Principal and interest on notes payable - recourse paid
directly to lenders by lessees $ 160,000 $ 268,664 $ 388,591
================ ============== ==============
Rental income from operating leases paid directly to
lenders by lessees $ 160,000 $ 268,664 $ 388,591
================ ============== ==============
See accompanying notes to consolidated financial statements
23
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
December 31, 2004 and 2003
(1) Organization
ICON Cash Flow Partners, L.P., Series D (the "Partnership") was formed on
February 21, 1991 as a Delaware limited partnership. The Partnership is engaged
in one business segment, the business of acquiring equipment subject to leases.
The principal objective of the Partnership is to obtain the maximum
economic return from its investments for the benefit of its partners. To achieve
this objective, the Partnership: (i) acquired a diversified portfolio of leases
and financing transactions; (ii) made monthly cash distributions to its partners
commencing with each partner's admission to the Partnership, continuing through
the reinvestment period, which ended on June 5, 1997; (iii) re-invested
substantially all undistributed cash from operations and cash from sales of
equipment and financing transactions during the reinvestment period; and (iv) is
selling the Partnership's investments and is distributing the cash from sales of
such investments to its partners during the disposition period.
The Partnership's reinvestment period ended June 5, 1997 and the
Partnership commenced its disposition period. During the disposition period the
Partnership is distributing substantially all distributable cash from operations
and equipment sales to the partners and will continue the orderly termination of
its operations and affairs. The Partnership will not invest in any additional
finance or lease transactions during the disposition period.
Our maximum offering was $40,000,000 and we commenced business operations
on our initial closing date, August 23, 1991, with the admission of 26,905.59
limited partnership units at $100 per unit representing $2,690,559 in capital
contributions. The Partnership was capitalized with an initial capitalization of
$100. by ICON Capital Corp. (the "General Partner"). 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
commenced business operations on its initial closing date, August 23, 1991 and
by its final closing on June 5, 1992, 400,000 limited partnership units at $100
per unit had been admitted into the Partnership with aggregate gross proceeds of
$40,000,000. From 1994 through 2004, the Partnership redeemed 882 limited
partnership units leaving 399,118 limited partnership units outstanding at
December 31, 2004.
The General Partner is a Connecticut corporation. The General Partner
manages and controls the business affairs of the Partnership's equipment leases
and financing transactions under the terms of a management agreement with the
Partnership. Additionally, the General Partner has a 1% ownership interest in
the Partnership.
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.
24
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
December 31, 2004 and 2003
(2) Summary of Significant Accounting Policies
Consolidation and Minority Interest
The consolidated financial statements include the accounts of the
Partnership and its majority owned subsidiary. All significant intercompany
accounts and transactions have been eliminated in consolidation. The Partnership
accounts for its interests in minority owned joint ventures under the equity
method of accounting. In such cases, the Partnership's original investment is
recorded at cost and adjusted for its share of earnings, losses and
distributions. In joint ventures where the Partnership's ownership interest is
minority owned, minority interest represents the minority venturer's
proportionate share of their equity in the joint venture. The minority interest
is adjusted for the minority venturer's share of the earnings or loss of the
joint venture.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks and highly liquid
investments with original maturity dates of three months or less.
Concentration of Credit Risk
Concentrations of credit risk with respect to minimum rents receivable are
limited to lessees dispersed across the different industries segments within the
United States of America; accordingly the Partnership is exposed to business and
economic risk. Although the Partnership does not currently foresee a
concentrated credit risk associated with these minimum rents receivable,
repayment is dependent upon the financial stability of these segments of the
economy.
Allowance for Doubtful Accounts
The Partnership estimates collectibility of minimum rents receivable by
analyzing historical bad debts, lessee concentrations and credit worthiness and
current economic trends when evaluating the adequacy of the allowance for
doubtful accounts. The Partnership records an allowance for doubtful accounts
when the analysis indicates that the probability of full collection is unlikely.
Investments in Operating Leases
Operating leases are stated at cost less accumulated depreciation.
Depreciation is being provided for using the straight-line method over the term
of the related equipment lease to its estimated residual value at lease end.
Upon final disposition of the equipment, the cost and related accumulated
depreciation will be removed from the accounts and the resulting profit or loss
will be reflected in the consolidated statement of operations. Revenues from
operating leases are recognized on a straight line basis over the lives of the
related leases.
25
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
December 31, 2004 and 2003
(2) Summary of Significant Accounting Policies - continued
Equipment Held for Sale
Equipment held for sale is recorded at the lower of cost or fair value
expected to be realized upon sale and consists of equipment previously leased to
end users which has been returned to the Partnership following lease expiration.
Asset Impairments
The Partnership's asset portfolio is periodically reviewed, at least
annually, to determine whether events or changes in circumstances indicate that
the carrying value of an asset may not be recoverable. An impairment loss shall
be recognized only if the carrying amount of a long-lived asset is not
recoverable and exceeds its fair value. In such circumstances, the Partnership
will estimate the future cash flows (undiscounted and without interest charges)
expected to result from the use of the asset and its eventual disposition.
Future cash flows are the future cash inflows expected to be generated by an
asset less the future outflows expected to be necessary to obtain those inflows.
An impairment loss shall be measured as the amount by which the carrying amount
of a long-lived asset exceeds its fair value.
The events or changes in circumstances which generally indicate that an
asset may be impaired are (i) the estimated fair value of the underlying
equipment is less than our carrying value or (ii) the lessee is experiencing
financial difficulties and it does not appear likely that the estimated proceeds
from the disposition of the asset will be sufficient to satisfy the remaining
obligation to the lender and our residual position in the asset. Generally in
the latter situation, the residual position relates to equipment subject to
third party notes payable where the lessee remits their rental payments directly
to the lender and we do not recover our residual position until the note payable
is repaid in full.
Redemption of Limited Partnership Units
The Partnership may, at its discretion, redeem units from a limited number
of its limited partners, in any one year, as defined in the partnership
agreement. The redemption amounts are calculated following the specified
redemption formula in accordance with the partnership agreement. Redeemed units
have no voting rights and do not share in distributions. Redeemed limited
partnership units are accounted for as a deduction from partners' equity.
Per Unit Data
Net income (loss) and distributions per unit are based upon the weighted
average number of units outstanding during the period.
26
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
December 31, 2004 and 2003
(2) Summary of Significant Accounting Policies - continued
Revenue Recognition
The partnership leases equipment to third parties which may be classified
as either a finance lease or an operating lease, which is determined based upon
the terms of each lease. Initial direct costs are capitalized and amortized over
the term of the related lease for a finance lease. For an operating lease, the
initial direct costs are included as a component of the cost of the equipment
and depreciated.
For finance leases, the Partnership records, at lease inception, the total
minimum lease payments receivable from the lessee, the estimated unguaranteed
residual value of the equipment at lease termination, the initial direct costs
related to the lease 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 ratably over the term of the lease.
For operating leases, rental income is recognized on the straight line
method over the lease term. Billed and uncollected operating lease receivables
are included in other assets. Deferred income is the difference between the
timing of the cash payments and the income recognized on a straight line basis.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures
About Fair Values of Financial Instruments," requires disclosures about the fair
value of financial instruments, except for lease related assets and liabilities.
Separate disclosure of fair value information at December 31, 2004 and 2003 with
respect to the Partnership's assets and liabilities is not separately provided
since (i) SFAS No. 107 does not require fair value disclosures of lease
arrangements and (ii) the carrying value of financial assets, other than lease
related investments, and the recorded value of payables approximates market
value. The estimated fair value of the Partnership's recourse note payable at
December 31, 2004 is approximately $1,067,000.
Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting period. Significant estimates primarily include
the allowance for doubtful accounts and unguaranteed residual values. In
addition, management is required to disclose contingent assets and contingent
liabilities. Actual results could differ from those estimates.
Recent Accounting Pronouncements
In December 2004, SFAS Statement No. 153 "Exchanges of Nonmonetary
Assets--an amendment of APB Opinion No. 29" was issued. SFAS 153 is based on the
principle that exchanges of nonmonetary assets should be measured based on the
27
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
December 31, 2004 and 2003
(2) Summary of Significant Accounting Policies - continued
fair value of the assets exchanged. The guidance in Opinion 29, however,
included certain exceptions to that principle. SFAS 153 amends Opinion 29 to
eliminate the exception for nonmonetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of nonmonetary assets
that do not have commercial substance. SFAS 153 is effective for nonmonetary
exchanges occurring in fiscal periods beginning after June 15, 2005. The
Partnership has not entered into any nonmonetary transactions: therefore, SFAS
153 did not have an impact on our financial position, results of operations or
cash flows.
Management does not believe that any recently issued, but not yet effective
accounting pronouncements, if currently adopted, would have a material effect on
the accompanying consolidated financial statements.
Reclassifications
Certain reclassifications have been made to the accompanying consolidated
financial statements for the prior years in order to conform to the current year
presentation.
(3) Joint Venture
The Partnership and its affiliates, entities also managed by the General
Partner, formed one joint venture, discussed below, for the purpose of acquiring
and managing various assets. The Partnership and these affiliates have
substantially identical investment objectives and participate on the same terms
and conditions. The Partnership and the other joint venturers have a right of
first refusal to purchase the equipment, on a pro-rata basis, if any of the
other joint venturers desire to sell their interests in the equipment or joint
venture.
ICON Receivables 1997-A LLC
The Partnership and three affiliates, ICON Cash Flow Partners L.P., Series
E ("Series E"), ICON Cash Flow Partners L.P. Six ("L.P. Six"), and ICON Cash
Flow Partners L.P. Seven ("L.P. Seven") contributed and assigned equipment
leases, finance receivables and residuals to ICON Receivables 1997-A LLC
("1997-A") for the purpose of securitizing their cash flow collections. At
December 31, 2004, the Partnership, Series E, L.P. Six and L.P. Seven own
17.81%, 31.19%, 31.03% and 19.97% interests, respectively, in 1997-A.
At December 31, 2004, 1997-A's operations have been liquidated as the note
holders have been fully repaid for their investment in 1997-A and the remaining
receivables relating to the securitizations totaling $345,152, due from an
affiliate of the General Partner relating to lease receivables, were written-off
as uncollectible. The remaining cash is being reserved to pay for potential
property tax; sales tax and other liabilities, if any.
Information as to the financial position and results of operations of
1997-A as of and for the years ended December 31, 2004 and 2003 is summarized
below:
28
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
December 31, 2004 and 2003
(3) Joint Venture - continued
December 31,
2004 2003
------------- -------------
Assets $ 107,229 $ 810,802
============= =============
Liabilities $ 62,005 $ 595,106
============= =============
Equity $ 45,224 $ 215,696
============= =============
Partnership's share of equity $ 8,054 $ 38,412
============= =============
Years Ended December 31,
2004 2003
------------- -------------
Net loss $ (170,468) $ (88,676)
============ =============
Partnership's share of net loss $ (30,359) $ (15,796)
============= =============
(4) Minimum Rents Receivable
Substantially all of our recurring cash flow at December 31, 2004 is
generated from one finance lease which expires during January 2006.
The allowance for doubtful accounts relating to minimum rents receivable
consists of the following:
2004 2003 2002
------------- ------------- -------------
Balance, beginning of year $ (26,032) $ (25,000) $ (92,097)
Provision for doubtful accounts (496,375) (1,032) -
Write-offs 497,407 - 67,097
------------- ------------- -------------
Balance, end of year $ (25,000) $ (26,032) $ (25,000)
============= ============= =============
(5) Investments in Operating Leases
Investments in operating leases consist of the following at December 31:
2004 2003 2002
------------- ------------- -------------
Equipment at cost, beginning of year $ 3,384,869 $ 3,459,597 $ 3,384,869
Equipment acquisitions - - -
Transfer from financing to operating lease - - 74,728
Transfer of equipment to held for sale (3,384,869) - -
Equipment dispositions - (74,728) -
-------------- -------------- -------------
Equipment at cost, end of year - 3,384,869 3,459,597
-------------- ------------- -------------
Accumulated depreciation, beginning of year (2,274,667) (2,059,577) (1,650,881)
Accumulated depreciation on equipment
dispositions - 37,366 -
Accumulated depreciation transferred
to held for sale 2,374,667 - -
Depreciation expense (100,000) (252,456) (408,696)
-------------- ------------- -------------
Accumulated depreciation, end of year - (2,274,667) (2,059,577)
-------------- ------------- -------------
Net investment in operating leases, end of year $ - $ 1,110,202 $ 1,400,020
============== ============= =============
29
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
December 31, 2004 and 2003
(5) Investments in Operating Leases - continued
The allowance for doubtful accounts relating to investments in
operating leases consists of the following:
2004 2003 2002
------------- ------------- -------------
Balance, beginning of year $ - $ (201,000) $ -
Provision for doubtful accounts - - (201,000)
Reversal of provision for doubtful accounts - 201,000 -
------------- ------------- -------------
Balance, end of year $ - $ - $ (201,000)
============= ============= =============
(6) Equipment Held for Sale
The Partnership's sole remaining asset is a de Havilland DHC-8-102 aircraft
(the "Aircraft") which was on lease to US Airways, Inc. ("US Airways") through
October 2004. On September 12, 2004, US Airways filed for bankruptcy protection
under Chapter 11 of the United States Bankruptcy Code and indicated, during
October 2004, they would seek to reject the lease at September 30, 2004 and not
pay the final rental payment due. US Airways has made all required payments
under the terms of the operating lease through September 30, 2004. The Aircraft
is held as collateral against a recourse note payable with Transamerica Aviation
LLC.
Management is currently reviewing our options with respect to the Aircraft.
These options include finding another party to lease the Aircraft on a
short-term basis or selling the Aircraft to a third party. Management believes
that the current net book value of the Aircraft, at December 31, 2004, including
the anticipated maintenance upgrade required to continue its air worthiness, is
less than the amount anticipated in a sale or re-lease.
(7) Note Payable - Recourse
During March 2004, the Partnership amended its recourse note payable
related to the Aircraft and extended the due date until December 2006 with
monthly principal and interest payments of $45,244 and a final balloon payment
in the amount of $297,313. This note payable accrues interest at 11.0% per
annum. The Partnership utilized $576,442 of the amount received from the
collection of its finance lease receivable to repay a portion of the note
payable. The Partnership is currently making the required monthly debt service
payments required under the note. At December 31, 2004, the outstanding balance
of the note payable was $1,209,575.
Principal maturities of the Partnership's notes payable - recourse consist
of following at December 31, 2004:
Year Ending
December 31,
2005 $ 431,183
2006 778,392
---------------
$ 1,209,575
===============
30
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
December 31, 2004 and 2003
(8) Related Party Transactions
In accordance with the terms of the management agreement, the Partnership
is required to pay the General Partner management fees based on a percentage of
rentals received either directly by the Partnership or through its joint venture
(ranging from 1% to 7%). In addition, the General Partner is reimbursed for
expenses incurred by it in connection with the Partnership's operations.
No management fees or administrative expense reimbursements were made to
the General Partner during the years ended December 31, 2004, 2003 and 2002 due
to the General Partners voluntary decision to waive its right to such fees and
expense reimbursements effective July 1, 2000.
During 2004 the Partnership paid $49,486 due to several affiliates. This
amount was non-interest bearing and no interest has been accrued.
The Partnership was due $2,000,000 from L.P. Seven relating to the
financing of the free cash portion, including the proceeds from the sale or
disposal of the equipment, relating to a leveraged lease transaction entered
into by L.P. Seven. L.P. Seven exercised its right to prepay a portion of the
financing with the Partnership, and prepaid $250,000 during 2002 and $1,253,625
during 2004. The lease expired in July 2004. As a result the Partnership
recorded a provision for bad debt for $496,375 for the year ended December 31,
2004.
(9) Income Taxes (Unaudited)
No provision for income taxes has been recorded since the liability for
such taxes is that of each of the individual partners rather than the
Partnership. The Partnership's income tax returns are subject to examination by
the Federal and state taxing authorities, and changes, if any could adjust the
individual income tax of the partners.
At December 31, 2004, the partners' equity accounts included in the
consolidated financial statements totaled $273,533 compared to the partners'
equity accounts for Federal income tax purposes of 5,815,263 (unaudited). The
differences arise primarily from commissions reported as a reduction in the
partners' equity accounts for financial reporting purposes but not for Federal
income tax purposes, and temporary differences relating to direct finance
leases, depreciation and provisions for losses.
The following table reconciles net (loss) income for financial statement
reporting purposes to the loss for Federal income tax purposes as follows:
Years Ended December 31,
------------------------------------------------
2004 2003 2002
------------- ------------- -------------
Net (loss) income per financial statements $ (747,464) $ (18,781) $ 662,388
Differences due to:
Direct finance leases financings - - -
Provision for doubtful accounts - (201,000) 133,903
Depreciation and impairments (150,619) 3,101 87,156
(Recovery of) provision for losses - - -
Gain (loss) on sale of equipment - 25,017 (3,104)
Other (88,232) (312,167) (467,762)
-------------- -------------- -------------
Net (loss) income for Federal income tax purposes $ (986,315)$ $ (503,830) $ 412,581
============== ============== ==============
31
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
December 31, 2004 and 2003
(10) Concentration Risks
For the year ended December 31, 2004, the Partnership had two leases that
accounted for 100% of total rental and finance income. For the year ended
December 31, 2003, the Partnership had three leases that accounted for 65% of
total rental and finance income. For the year ended December 31, 2002, the
Partnership had one lease that accounted for 37% of total rental and finance
income. No other individual leases accounted for an excess of 10% of total
revenue in any of the years reported.
The Partnership's cash and cash equivalents are held principally at one
financial institution and at times may exceed insured limits. The Partnership
has placed these funds in a high quality institution in order to minimize the
risk.
(11) Selected Quarterly Financial Data (Unaudited)
Quarters Ended in 2004
----------------------
March 31, June 30, September 30, December 31,
--------- -------- ------------- ------------
Revenue $ 102,600 $ 119,797 $ 28,574 $ 4,048
================ ============== ========== ==========
Net income (loss) allocable to limited partners $ 17,012 $ (553,194) $ (103,514) $ (100,293)
=============== ============== ========== ==========
Net income (loss) per weighted average
limited partnership unit $ 0.04 $ (1.39) $ (0.26) $ (0.24)
=============== ============== =========== ==========
Quarters Ended in 2003
-----------------------
March 31, June 30, September 30, December 31,
--------- -------- ------------- -----------
Revenue $ 131,886 $ 137,381 $ 224,988 $ 106,059
=============== ============== ========== ==========
Net income (loss) allocable to limited partners $ (37,925) $ (7,934) $ 56,561 $ (29,295)
================ ============== ========== ==========
Net income (loss) per weighted average
limited partnership unit $ (0.10) $ (0.02) $ 0.14 $ (0.07)
================ =============== ========== ==========
32
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
During the year ended December 31, 2004, we had no disagreements with our
accountants on any matters of accounting or financial reporting.
Item 9a. Controls and Procedures
We carried out an evaluation, under the supervision and with the
participation of management of ICON Capital Corp., our General Partner,
including the Principal Executive Officer and the Principal Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report pursuant to the
Securities Exchange Act of 1934. Based upon the evaluation, the Principal
Executive Officer and the Principal Financial Officer concluded that our
disclosure controls and procedures were effective.
There were no significant changes in our internal control over financial
reporting during our fourth fiscal quarter that have materially affected, or are
likely to materially affect, our internal control over financial reporting.
Item 9b. Other Information
Not applicable.
33
PART III
Item 10. Directors and Executive Officers of the Registrant's General Partner
Our General Partner, ICON Capital Corp., a Connecticut corporation, was
formed in 1985. The General Partner's principal offices are located at 100 Fifth
Avenue, 10th Floor, New York, New York 10011, and the telephone number is (212)
418-4700. The officers of the General Partner have extensive experience with
transactions involving the acquisition, leasing, financing and disposition of
equipment, including acquiring and disposing of equipment subject to leases and
full financing transactions.
The General Partner is engaged in a broad range of equipment leasing and
financing activities. Through its sales representatives and through various
broker relationships throughout the United States, the General Partner offers a
broad range of equipment leasing services.
The General Partner performs certain functions relating to the management
of our equipment. 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.
Our officers and directors are:
Beaufort J.B. Clarke Chairman, Chief Executive Officer and Director
Paul B. Weiss President and Director
Thomas W. Martin Executive Vice President, Chief Financial Officer and
Director
Michael A. Reisner Senior Vice President and General Counsel
Sean E. Hoel Senior Vice President
Beaufort J. B. Clarke, 58, has been our Chairman, Chief Executive Officer
and Director since August of 1996. He was our President from August of 1996
until December 31, 1998. Prior to his present positions, Mr. Clarke was founder,
President and Chief Executive Officer of Griffin Equity Partners, Inc. (a
purchaser of equipment leasing portfolios) from October 1993 through August
1996. Prior to that, Mr. Clarke was President of Gemini Financial Holdings, Inc.
(an equipment leasing company) from June 1990 through September 1993.
Previously, Mr. Clarke was a Vice President of AT&T Systems Leasing. Mr. Clarke
formerly was an attorney with Shearman and Sterling. Mr. Clarke received a B.A.
degree from the George Washington University and a J.D. degree from the
University of South Carolina. Mr. Clarke has been in the equipment leasing
business, as a business person and lawyer, since 1979.
Paul B. Weiss, 44, has been our President and Director since January 1,
1999. Mr. Weiss was our Director and Executive Vice President responsible for
lease acquisitions from November of 1996 until December 31, 1998. Mr. Weiss
served as Executive Vice President and co-founder of Griffin Equity Partners,
Inc. from October of 1993 through November of 1996. Prior to that, Mr. Weiss was
Senior Vice President of Gemini Financial Holdings, Inc. from 1991 to 1993 and
Vice President of Pegasus Capital Corporation (an equipment leasing company)
from 1988 through 1991. Mr. Weiss received a B.A. in Economics from Connecticut
College. Mr. Weiss has been in the equipment leasing business since 1988.
Thomas W. Martin, 51, has been our Executive Vice President, Chief
Financial Officer and Director (and Director, President and Chief Financial
Officer of the dealer-manager as well) since August of 1996. Mr. Martin was the
Executive Vice President, Chief Financial Officer and a co-founder of Griffin
Equity Partners, Inc. from October 1993 to August 1996. Prior to that, Mr.
Martin was Senior Vice President of Gemini Financial Holdings, Inc. from April
1992 to October 1993 and he held the position of Vice President at Chancellor
Corporation (an equipment leasing company) for 7 years. Mr. Martin received a
B.S. degree from the University of New Hampshire. Mr. Martin has been in the
equipment leasing business since 1983.
34
Michael A. Reisner, Esq., 34, has been our Senior Vice President and
General Counsel since January 2004. Mr. Reisner was our Vice President and
Associate General Counsel from March 2001 until December 2003. Previously, from
1996 to 2001, Mr. Reisner was an attorney with Brodsky Altman & McMahon, LLP in
New York, concentrating on commercial transactions. Mr. Reisner received a J.D.
from New York Law School and a B.A. from the University of Vermont.
Sean E. Hoel, 35, has been our Senior Vice President since June 1999. Mr.
Hoel is responsible for the acquisition of equipment subject to lease. Mr. Hoel
has a Masters Degree in Finance from Seattle University, preceded by Law School
at the University of Oslo, a B.A. in Finance at the University of Wyoming, as
well as three years of military service as a naval officer.
Code of Ethics
The General Partner, on our behalf, has adopted a code of ethics for its
Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer.
The Code of Ethics is available free of charge by requesting it in writing from
our General Partner. The General Partner's address is 100 Fifth Avenue, 10th
Floor, New York, New York 10011.
Item 11. Executive Compensation
We have no directors or officers. In accordance with the terms of the
Management Agreement, we are required to pay the General Partner management fees
based on a percentage of rentals received either directly by us or through its
joint venture (ranging from 1% to 7%). In addition, the General Partner is
reimbursed for expenses incurred by it in connection with our operations.
No management fees or administrative expense reimbursements were made to
the General Partner during the years ended December 31, 2004, 2003 and 2002 due
to the General Partners voluntary decision to waive its right to such fees and
expense reimbursements effective July 1, 2000.
The General Partner also has a 1% interest in our profits and
distributions. We paid no distributions to the General Partner for the years
ended December 31, 2004, 2003 and 2002. Additionally, the General Partner's
interest in our net (loss) income was $(7,475), $(188) and $6,624, respectively,
for the years ended December 31, 2004, 2003 and 2002.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) We are a limited partnership and therefore do not have voting shares
of stock. No person of record owns, or is known by us to own
beneficially, more than 5% of any class of our securities.
(b) As of March 18, 2005, directors and officers of the General Partner do
not own any of our equity securities.
(c) The General Partner owns our equity securities, as follows; a General
Partner Interest which represents initially a 1% and potentially a 10%
interest in our income, gain and losses. The General Partner owns 100%
of the General Partner Interest.
35
Item 13. Certain Relationships and Related Transactions
See Item 11 for a discussion of our related party transactions. See Notes 3
and 7 to our financial statements for a discussion of our related party activity
and investments in joint ventures.
Item 14. Principal Accountant Fees and Services
During the year ended December 31, 2004 and 2003 our auditors provided
audit services relating to our annual report on Form 10-K and our quarterly
reports on Form 10-Q. Additionally, our auditors provided other services in the
form of tax compliance work. Their fees are shown in the table below:
2004 2003
------------- -------------
Audit fees $ 16,000 $ 13,500
Audit related fees - -
Tax fees (for compliance) 11,600 600
------------- -------------
$ 27,600 $ 14,100
============= =============
36
PART IV
Item 15. Financial Statement Schedules and Exhibits
(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 consolidated Financial
Statements or Notes thereto.
3. Exhibits - :
(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).
(iv) On December 31, 2004, Jeremiah Silkowski, resigned from his position of
Senior Vice President of ICON Capital Corp., the Company's general partner,
so that he may pursue other opportunities (incorporated by reference to
Current Report on Form 8-K, dated January 6, 2005).
(b) 10.1 Sixth Amendment to the Loan and Security Agreement dated May 30,
2002 as amended.
31.1 Rule 13a-14(a)/15d-14(a) certifications
31.2 Rule 13a-14(a)/15d-14(a) certifications
32.1 Certification of Chairman and Chief Executive Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
(c) Unconsolidated Joint Venture Financial Statements, See Part II, Item 8,
Note 3.
37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership 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
by its General Partner, ICON Capital Corp.
Date: April 15, 2005 /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: April 15, 2005 /s/ Beaufort J.B. Clarke
-----------------------------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Date: April 15, 2005 /s/ Paul B. Weiss
-----------------------------------------------
Paul B. Weiss
President and Director
Date: April 15, 2005 /s/ Thomas W. Martin
-----------------------------------------------
Thomas W. Martin
Executive Vice President and Director
(Principal Financial and Accounting Officer)
Supplemental Information to be furnished with reports filed pursuant to
Section 15(d) of the Act by Registrant which has 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 members and a copy will be forwarded to the
Commission.
38
Exhibit 31.1
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) I, Beaufort J.B. Clarke, certify
that:
1. I have reviewed this annual report on Form 10-K of ICON Cash Flow Partners,
L.P., Series D;
2. Based on my knowledge, this annual report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15e and 15d-15e) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this annual report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this annual report based on such
evaluation; 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 of internal control over financial reporting, to
the registrant's auditors and the board of directors of the General Partner
(or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the Partnership's ability to record, process, summarize and
report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Dated: April 15, 2005
/s/ Beaufort J.B. Clarke
-----------------------------
Beaufort J. B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
General Partner of ICON Cash Flow Partners, L.P., Series D
39
Exhibit 31.2
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
I, Thomas W. Martin, certify that:
1. I have reviewed this annual report on Form 10-K of ICON Cash Flow Partners,
L.P., Series D;
2. Based on my knowledge, this annual report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15e and 15d-15e) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this annual report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this annual report based on such
evaluation; 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 of internal control over financial reporting, to
the registrant's auditors and the board of directors of the General Partner
(or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the Partnership's ability to record, process, summarize and
report financial information and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Dated: April 15, 2005
/s/ Thomas W. Martin
----------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer)
ICON Capital Corp.
General Partner of ICON Cash Flow Partners, L.P., Series D
40
Exhibit 32.1
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
I, Beaufort J.B. Clarke, Chairman and Chief Executive Officer of ICON Capital
Corp, the General Partner of the Partnership in connection with the Annual
Report of ICON Cash Flow Partners, L.P., Series D (the "Partnership") on Form
10-K for the year ended December 31, 2004, as filed with the Securities and
Exchange Commission on the date hereof (the "Annual Report") certify, pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my
knowledge and belief:
(1) the Annual Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
(2) the information contained in the Annual Report fairly presents, in all
material respects, the financial condition and results of operations of the
Partnership.
Dated: April 15, 2005
/s/ Beaufort J.B. Clarke
- ------------------------------------------------------
Beaufort J.B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
General Partner of ICON Cash Flow Partners, L.P., Series D
41
Exhibit 32.2
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
I, Thomas W. Martin, Executive Vice President (Principal Financial and
Accounting Officer) of ICON Capital Corp, the General Partner of the Partnership
in connection with the Annual Report of ICON Cash Flow Partners, L.P., Series D
(the "Partnership") on Form 10-K for the year ended December 31, 2004, as filed
with the Securities and Exchange Commission on the date hereof (the "Annual
Report") certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that to the best of my knowledge and belief:
(1) the Annual Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
(2) the information contained in the Annual Report fairly presents, in all
material respects, the financial condition and results of operations of the
Partnership.
Dated: April 15, 2005
/s/ Thomas W. Martin
-------------------------------------------------------
Thomas W. Martin
Executive Vice President (Principal
Financial and Accounting Officer)
ICON Capital Corp.
General Partner of ICON Cash Flow Partners, L.P., Series D
42