10-Q 1 seriesd.txt 10Q FOR PERIOD ENDING 9/30/03 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2003 -------------------------------------------------- [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 0-27902 ---------------------------------------------------------- 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 (IRS Employer incorporation or organization) Identification Number) 100 Fifth Avenue, New York, New York 10011-1505 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) (212) 418-4700 -------------------------------------------------------------------------------- Registrant's telephone number, including area code Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [x] Yes [ ] No Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). [ ] Yes [x] No PART I - FINANCIAL INFORMATION ------------------------------ Item 1. Financial Statements ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) Condensed Consolidated Balance Sheets September 30, December 31, 2003 2002 ---- ---- (unaudited) Assets Cash and cash equivalents $ 42,757 $ 116,095 --------------- -------------- Investment in finance leases Minimum rents receivable 1,877 4,082 --------------- -------------- Investment in operating leases Equipment, at cost 3,384,869 3,459,597 Accumulated depreciation (2,214,667) (2,059,577) --------------- -------------- 1,170,202 1,400,020 --------------- -------------- Investment in financings Receivables due in installments 1,971,050 2,048,816 Unearned income (160,511) (304,051) Allowance for doubtful accounts (25,000) (25,000) --------------- -------------- 1,785,539 1,719,765 --------------- -------------- Investment in unconsolidated joint venture 45,180 54,208 --------------- -------------- Other assets, net 6,220 127,734 --------------- -------------- Total assets $ 3,051,775 $ 3,421,904 =============== ============== (continued on next page) ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) Condensed Consolidated Balance Sheets - Continued

See accompanying notes to condensed consolidated financial statements. ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) Condensed Consolidated Statement of Changes in Partners' Equity Nine Months Ended September 30, 2003 (unaudited) Limited General Partners Partner Total -------- ------- ----- Balance at January 1, 2003 $ 1,373,976 $ (334,198) $ 1,039,778 Net income 10,702 108 10,810 -------------- ------------- ------------- Balance at September 30, 2003 $ 1,384,678 $ (334,090) $ 1,050,588 ============== ============= ============= See accompanying notes to condensed consolidated financial statements. ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, (unaudited)

(continued on next page) ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) Condensed Consolidated Statements of Cash Flows - Continued Supplemental Disclosures of Cash Flow Information ------------------------------------------------- During the nine months ended September 30, 2003 and 2002, non-cash activities included the following: 2003 2002 ---- ---- Rental income assigned to operating lease receivable $ 208,664 $ 370,001 Principal and interest on recourse financing paid directly by lessees (208,664) (370,001) ---------- ---------- $ - $ - ========== ========== Interest paid directly to lenders by lessees pursuant to recourse financing $ 160,583 $ 127,330 Other interest paid - - ---------- ---------- Total interest expense $ 160,583 $ 127,330 ========== ========== See accompanying notes to condensed consolidated financial statements. ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) Notes to Condensed Consolidated Financial Statements September 30, 2003 (unaudited) 1. Basis of Presentation The condensed consolidated financial statements of ICON Cash Flow Partners, L.P., Series D (the "Partnership") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and, in the opinion of management, include all adjustments (consisting only of normal recurring accruals) necessary for a fair statement of results for each period shown. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The results for the interim period are not necessarily indicative of the results for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Partnership's 2002 Annual Report on Form 10-K. Certain 2002 amounts have been reclassified to conform to the 2003 presentation. The General Partner of the Partnership is ICON Capital Corp. (the "General Partner"), a Connecticut Corporation. The General Partner's manages and controls the business affairs of the Partnership's equipment, leases and financing transactions under a management agreement with the Partnership. 2. Disposition Period The Partnership's reinvestment period ended June 5, 1997 and the disposition period began on June 6, 1997. During the disposition period, the Partnership has and will continue to utilize available cash to pay its liabilities; distribute substantially all remaining cash from operations and equipment sales to the partners; and continue the orderly termination of its operations and affairs. The Partnership has not, and will not invest in any additional finance or lease transactions during the disposition period. 3. Related Party Transactions During the quarters ended September 30, 2003 and 2002, the Partnership made no payment of fees or other expenses pursuant to the General Partner's voluntary decision to waive its right to management fees and expense reimbursements effective July 1, 2000. In 1997, the Partnership financed a portion of the free cash flow relating to a lease owned by an affiliate, ICON Cash Flow Partners L.P. Seven ("L.P. Seven"). The lease expires in July of 2004, at which time the maturity value of the financing was to be $2,000,000. L.P. Seven has exercised its discretionary right to prepay a portion of the financing, and during the year ended December 31, 2002, L.P. Seven prepaid $250,000 to the Partnership. The balance at September 30, 2003 of $1,750,000 is included in the caption "Investment in Financings." The Partnership has an investment in one unconsolidated joint venture with other partnerships sponsored by the General Partner (See Note 4 for additional information relating to the joint venture). ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) Notes to Condensed Consolidated Financial Statements - Continued 4. Investment in Unconsolidated Joint Venture The Partnership and its affiliates formed a joint venture for the purpose of acquiring and managing various assets. The Partnership and its affiliates have identical investment objectives and participate on the same terms and conditions. The Partnership has a right of first refusal to purchase the equipment, on a pro-rata basis, if any of the affiliates desire to sell their interest in the equipment. ICON Receivables 1997-A LLC --------------------------- In March 1997, the Partnership, and affiliates, ICON Cash Flow Partners L.P. Six ("L.P. Six"), and L.P. Seven contributed and assigned equipment lease and finance receivables and residuals to ICON Receivables 1997-A LLC ("1997-A"). In September 1997, ICON Cash Flow Partners, L.P. Series E ("Series E"), L.P. Six and L.P. Seven contributed and assigned additional equipment lease and finance receivables and residuals to 1997-A. As of September 30, 2003, 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. The Partnership accounts for its investment in 1997-A under the equity method of accounting. Information as to the unaudited results of operations of 1997-A for the nine months ended September 30, 2003 and 2002 are summarized below: Nine Months Ended Nine Months Ended September 30, 2003 September 30, 2002 ------------------ ------------------ Net loss $ 50,673 $ 73,135 ============ =========== Partnership's share of net loss $ 9,028 $ 13,025 ============ =========== 5. US Airways, Inc. ---------------- One of the Partnership's significant remaining assets is a DeHavilland DHC-8-102 aircraft which is subject to an operating lease with US Airways, Inc. ("US Air"). The aircraft has a carrying value of $1,170,202 at September 30, 2003, and the related lease is scheduled to expire in the fourth quarter of 2003. The Partnership obtained an appraisal of the aircraft during 2002 which indicated that no impairment provision was required. The aircraft is subject to recourse financing and the lease payments are remitted directly by US Air to the lender. If all payments are made as scheduled, the loan would have a final balloon payment due at the termination date of the lease of approximately $2 million. US Air, since emerging from bankruptcy, has paid all monthly rents through November 2003. 6. Equipment sales --------------- During the nine month period ended September 30, 2003, the Partnership sold equipment with a net book value of $25,364 for total proceeds of $142,303 resulting in a net gain of $116,939. ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) September 30, 2003 Item 2. General Partner's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Information - The following discussion and analysis should be read in conjunction with the audited financial statements dated December 31, 2002. Certain statements within this document may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements are identified by words such as "anticipate," "believe," "estimate," "expects," "intend," "predict" or "project" and similar expressions. This information may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Although the Partnership believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Results of Operations for the Three Months Ended September 30, 2003 and 2002 Revenues for the three months ended September 30, 2003 ("2003 Quarter") were $224,988, representing a decrease of $21,098 from the quarter ended September 30, 2002 ("2002 Quarter"). The decrease in revenues resulted primarily from a decrease in rental income of $141,339, which was partially offset by an increase in gain on sales of equipment of $116,591 during the 2003 Quarter. Rental income decreased primarily due to the restructuring of US Air's lease payments in 2002. Expenses for the 2003 Quarter were $167,856, representing a decrease of $124,033 compared to the 2002 Quarter. The decrease in expenses resulted primarily from a decrease in provision for bad debts of $114,000 and a decrease in depreciation expense of $42,174. An increase in general and administrative expense of $39,031 partially offset these decreases. Increase in general and administrative expense was due primarily to legal fees related to the US Air restructuring. Net income (loss) for the 2003 Quarter and 2002 Quarter was $57,132 and $(45,803), respectively. The net income (loss) per weighted average limited partnership unit outstanding was $0.14 and $(.11) for the 2003 Quarter and 2002 Quarter, respectively. Results of Operations for the Nine Months Ended September 30, 2003 and 2002 Revenues for the nine months ended September 30, 2003 ("2003 Period") were $494,255 representing a decrease of $357,508 from the nine months ended September 30, 2002 ("2002 Period"). The decrease in revenues resulted primarily from a decrease in rental income of $513,003, which was partially offset by an increase in gain on sales of equipment of $128,044 during the 2003 Period. Rental income decreased due primarily to the restructuring of US Air's lease payments. Expenses for the 2003 Period were $483,445, representing a decrease of $244,590 compared to the 2002 Period. The decrease in expenses resulted primarily from a decrease in depreciation expense of $114,064 due to the restructuring of US Air's lease terms effective January 3, 2003 and a decrease in provision for bad debts of $114,000. An increase in general and administrative expense of $10,856 partially offset these decreases. Increase in general and administrative expense was due primarily to legal fees related to the US Air restructuring. ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) September 30, 2003 Net income for the 2003 Period and 2002 Period was $10,810 and $123,728, respectively. The net income per weighted average limited partnership unit outstanding was $.03 and $.31 for the 2003 Period and 2002 Period, respectively. Liquidity and Capital Resources Net cash used in operating activities was $118,829 in the 2003 Period. The Partnership's current sources of cash are proceeds being collected from one financing lease at the rate of $7,000 per month plus certain month to month renewal lease payments. In addition, proceeds from sale of equipment of $142,303 also attributed to the Partnership's sources of cash. The Partnership's cash flow from operating activities may be less than the Partnership's current level of expenses. To the extent that cash flow is insufficient to pay such expenses, the Partnership may be required to sell assets prior to maturity or borrow against future cash flows. It is anticipated that cash distributions, if any, will not be significant until the realization of proceeds from the sale or release of the US Air aircraft and the maturity of the related financing as well as proceeds anticipated from the investment in financing mentioned in the notes to the condensed consolidated financial statements under Related Party Transactions (Note 3). There were no cash distributions to the limited partners for the 2003 Period. The Partnership's reinvestment period ended June 5, 1997, and the disposition period began on June 6, 1997. During the disposition period, the Partnership has and will continue to distribute substantially all distributable cash from operations and equipment sales to the partners and continue the orderly termination of its operations and affairs. The Partnership has not and will not invest in any additional finance or lease transactions during the disposition period. We do not consider the impact of inflation to be material in the analysis of our overall operations. Item 3. Qualitative and Quantitative Disclosures About Market Risk The Partnership is exposed to certain market risks, including changes in interest rates and the demand for equipment (and the related residuals) owned by the Partnership and its investee. The Partnership believes its exposure to other market risks are insignificant to both its financial position and results of operations. The Partnership managed its interest rate risk by obtaining fixed rate debt. The fixed rate debt service obligation stream matches the fixed rate lease receivable stream generated by the Partnership's lease investment. The only outstanding debt at September 30, 2003 is a recourse loan which matures in November 2003, associated with a DeHavilland DHC-8-102 aircraft. At lease termination an approximately $2 million balloon payment is due on the debt, and is expected to be paid with sale or re-lease proceeds. The Partnership manages its exposure to equipment and residual risk by monitoring the market and maximizing the re-marketing proceeds received through re-leasing or sale of equipment. ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) September 30, 2003 Item 4. Controls and Procedures Beaufort J.B. Clarke and Thomas W. Martin, the Principal Executive and Principal Financial Officers, respectively, of ICON Capital Corp. ("ICC"), the General Partner of the Partnership, have evaluated the disclosure controls and procedures of the Partnership as of the quarter ended September 30, 2003. As used herein, the term "disclosure controls and procedures" has the meaning given to the term by Rule 13a-14 under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and includes the controls and other procedures of the Partnership that are designed to ensure that information required to be disclosed by the Partnership in the reports that it files with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. As part of their evaluation, Messrs. Clarke and Martin conferred with the finance and accounting staff of ICC and the finance and accounting staff of ICON Holdings Corp., the parent of ICC. Based upon their evaluation, Messrs. Clarke and Martin have concluded that the Partnership's disclosure controls and procedures provide reasonable assurance that the information required to be disclosed by the Partnership in this report is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms applicable to the preparation of this report. There have been no significant changes in the Partnership's internal controls or in other factors that could significantly affect the Partnership's internal controls subsequent to the evaluation described above conducted by ICC's principal executive and financial officers. ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) PART II - OTHER INFORMATION --------------------------- Item 1 - Legal Proceedings -------------------------- The Partnership, from time-to-time, in the ordinary course of business, commences legal actions when necessary to protect or enforce the rights of the Partnership. We are not a defendant party to any litigation and are not aware of any pending or threatened litigation against the Partnership. Item 6 - Exhibits and Reports on Form 8-K ----------------------------------------- (a) Exhibits 32.1 Certification of Chairman and Chief Executive Officer. 32.2 Certification of Executive Vice President and Principal Financial and Accounting Officer. 33.1 Certification of Chairman and Chief Executive Officer pursuant to 18 U.S.C. (Section)1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 33.2 Certification of Executive Vice President and Principal Financial and Accounting Officer pursuant to 18 U.S.C. (Section)1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ICON CASH FLOW PARTNERS, L.P., SERIES D File No. 33-40044 (Registrant) By its General Partner, ICON Capital Corp. November 13, 2003 /s/ Thomas W. Martin ----------------- ------------------------------- Date Thomas W. Martin Executive Vice President (Principal Financial and Accounting Officer of the General Partner of the Partnership) Certifications - 10-Q --------------------- EXHIBIT 32.1 I, Beaufort J.B. Clarke, certify that: 1. I have reviewed this quarterly report of ICON Cash Flow Partners, L.P., Series D; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Partnership as of, and for, the periods presented in this report; 4. The Partnership's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Partnership and 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 Partnership, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the Partnership's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the Partnership's internal control over financial reporting that occurred during the Partnership's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting; and 5. The Partnership's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Partnership's auditors and the audit committee of the Partnership's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely 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 Partnership's internal control over financial reporting. Dated: November 13, 2003 /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 Certifications - 10-Q --------------------- EXHIBIT 32.2 I, Thomas W. Martin, certify that: 1. I have reviewed this quarterly report of ICON Cash Flow Partners, L.P., Series D; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Partnership as of, and for, the periods presented in this report; 4. The Partnership's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Partnership and 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 Partnership, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the Partnership's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the Partnership's internal control over financial reporting that occurred during the Partnership's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting; and 5. The Partnership's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Partnership's auditors and the audit committee of the Partnership's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely 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 Partnership's internal control over financial reporting. Dated: November 13, 2003 /s/ Thomas W. Martin ---------------------------------------- Thomas W. Martin Executive Vice President (Principal Financial and Accounting Officer of the General Partner of the Partnership) ICON Capital Corp. sole General Partner of ICON Cash Flow Partners, L.P., Series D ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) September 30, 2003 EXHIBIT 33.1 I, Beaufort J.B. Clarke, Chairman and Chief Executive Officer of ICON Capital Corp, the sole General Partner of ICON Cash Flow Partners, L.P., Series D, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Quarterly Report on Form 10-Q for the period ended September 30, 2003 (the "Periodic Report") which this statement accompanies fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m) and (2) information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of ICON Cash Flow Partners, L.P., Series D. Dated: November 13, 2003 /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 ICON Cash Flow Partners, L.P., Series D (A Delaware Limited Partnership) September 30, 2003 EXHIBIT 33.2 I, Thomas W. Martin, Executive Vice President (Principal Financial and Accounting Officer) of ICON Capital Corp, the sole General Partner of ICON Cash Flow Partners, L.P., Series D, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Quarterly Report on Form 10-Q for the period ended September 30, 2003 (the "Periodic Report") which this statement accompanies fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m) and (2) information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of ICON Cash Flow Partners, L.P., Series D. Dated: November 13, 2003 /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

ICON CASH FLOW PARTNERS L P SERIES D 10-Q