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, 2001
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from _____ to _____.
Commission file number - 0-21458.
TELECOMMUNICATIONS INCOME FUND IX, L.P.
(Exact name of registrant as specified in its charter)
Iowa 42-1367356
---- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
701 Tama Street, Marion, Iowa 52302
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 319-447-5700
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities pursuant to section 12 (g) of the Act:
Limited Partnership Interests (the "Units")
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K (X).
As of March 1, 2002, 66,122 units were issued and outstanding. Based on the book
value of $.51 per unit at December 31, 2001, the aggregate market value at March
1, 2002 was 33,722.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the prospectus included in the Partnership's Post Effective
Amendment No. 4 to the Registration Statement on Form S-1 filed December 22,
1992 are incorporated by reference into Part IV.
TELECOMMUNICATIONS INCOME FUND IX, L.P.
2001 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PAGE
PART I
Item 1 Business ............................................................ 3
Item 2 Properties .......................................................... 3
Item 3 Legal Proceedings ................................................... 4
Item 4 Submission of Matters to a Vote of Unit Holders ..................... 4
PART II
Item 5 Market for the Registrant's
Common Equity and Related Stockholders Matters ...................... 5
Item 6 Selected Financial Data ............................................. 5
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations ................................. 6
Item 7A Quantitative and Qualitative Disclosures About Market Risk .......... 8
Item 8 Financial Statements and Supplementary Data ......................... 8
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure .............................. 23
PART III
Item 10 Directors and Executive Officers of the Registrant .................. 23
Item 11 Executive Compensation .............................................. 24
Item 12 Security Ownership of Certain Beneficial Owners and Management ...... 25
Item 13 Certain Relationships and Related Transactions ...................... 25
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K ..... 25
SIGNATURES .......................................................... 26
EXHIBIT INDEX ....................................................... 27
2
PART I
ITEM 1. BUSINESS
Telecommunications Income Fund IX, L.P., an Iowa limited partnership (the
"Partnership"), was organized on April 2, 1991. The general partner is Berthel
Fisher & Company Leasing, Inc. (the "General Partner"), an Iowa corporation that
has been in operation since 1988. The Partnership's business and the executive
offices of the General Partner are located at 701 Tama Street, Marion, Iowa
52302. Substantially all of the voting stock of the General Partner is owned by
Berthel Fisher & Company ("Berthel Fisher").
The Partnership began offering Units to the public on October 31, 1991 and
continued to offer Units to the public through April 30, 1993.
The Partnership was originally scheduled to dissolve by December 31, 1999.
However, in November, 1999, the partners voted to extend the Partnership until
December 31, 2005, unless dissolved sooner due to the occurrence of any of the
following events: (i) the vote by limited partners owning a majority of the
Partnership in accordance with the Partnership Agreement; (ii) the withdrawal,
bankruptcy, or dissolution and liquidation or other cessation to exist as a
legal entity of the General Partner (unless any successor general partner
elected in accordance with the provisions of the Partnership Agreement elects to
continue the business of the Partnership); (iii) the final distribution of all
liquidating distributions among the limited partners pursuant to the Partnership
Agreement; or (iv) the sale or disposition of all or substantially all of the
assets of the Partnership without the subsequent reinvestment in equipment.
The Partnership entered the liquidation phase on May 1, 1998 and must be
dissolved by December 31, 2005. During the liquidation process, the orderly
collection of lease payments will continue. Also, early payoff of leases and
sales of equipment will be a priority. If leases can be sold for an adequate
return to the investor, the sale of lease receivables will be pursued. Proceeds
from the sale of net assets, including the sale of any portion of the lease
portfolio, will be distributed to Partners.
The Partnership acquired telecommunications equipment (primarily pay telephones
and call processing equipment) leased to third parties generally under full
payout leases. The Partnership also acquired other types of equipment that is
subject to full payout leases. Full payout leases are leases that are expected
to generate gross rental payments sufficient to recover the purchase price of
the subject equipment and any overhead and acquisition costs.
The General Partner acquired and approved leases on behalf of the Partnership.
The General Partner established guidelines to use in approving lessees.
Generally, before any lease was approved, there was a review of the potential
lessees' financial statements, credit references were checked, and outside
business and/or individual credit reports were obtained.
The Partnership's equipment leases are concentrated in the pay telephones
representing approximately 79%, 34%, and 72% of the Partnership's direct finance
lease portfolio at December 31, 2001, 2000, and 1999, respectively. Computer
equipment represented approximately 19%, 12%, and 12% of the Partnership's
portfolio at December 31, 2001, 2000, and 1999, respectively. At December 31,
2001, three customers accounted for 94% of the Partnership's net investment in
direct financing leases and notes receivable. The Partnership operates in one
segment.
The Partnership has no employees and utilizes the administrative services of the
General Partner for which it pays an administrative service fee.
ITEM 2. PROPERTIES
The Partnership does not own or lease any real estate. The Partnership's
materially important properties consist entirely of equipment under lease, as
described in Item 1.
3
ITEM 3. LEGAL PROCEEDINGS
Telcom Management Systems filed a suit against the Partnership, the General
Partner, and others in Federal Court in Dallas, Texas during February 1998. The
plaintiffs purchased equipment from the Partnership out of a bankruptcy for
approximately $450,000. They alleged that when they attempted to sell the
equipment at a later date, the Partnership had not provided good title. The
General Partner filed a Motion for Summary Judgement. After filing the suit, the
plaintiff transferred assets in lieu of bankruptcy. The bankruptcy trustee is
now reviewing the transfer to determine if the transfer was done in fraud of
creditors. The bankruptcy court had granted several extensions and the
litigation was on hold until the trustee had made a decision, however, in mid
September, 2000, the extension expired and was not renewed. The Motion for
Summary Judgement filed by the General Partner has been denied. No further
action has been taken at this time by the plaintiff. No loss, if any, has been
recorded in the financial statements with respect to this matter.
On January 10, 2001, SA Communications, Inc., a debtor in bankruptcy, filed a
complaint in the United States Bankruptcy Court for the District of Delaware
against the Partnership to avoid transfers and to recover property transferred.
The complaint alleged that on September 10, 1997, the debtor paid a check in the
amount of $45,069.83 to the Partnership which constituted a preferential
transfer in favor of the Partnership. The Partnership filed an answer denying
that the payment constituted a preference. Initially, there was a requirement
that the parties should exchange discovery documents but that exchange of
documents has been continued indefinitely. The Partnership believes that the
payment was received in the ordinary course of business and should not
constitute a preferential transfer. No loss, if any, has been recorded in the
financial statements with respect to this matter.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF UNIT HOLDERS
No matters were submitted to a vote of limited partners, through the
solicitation of proxies or otherwise during the year covered by this report.
4
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Registrants' Units are not publicly traded. There is no market for the
Registrant's Units and it is unlikely that any will develop. The General Partner
will resist the development of a public market for the Units.
Number of Partners
Title of Class at March 1, 2002
- -------------- ----------------
Limited Partners 1,153
General Partner 1
Distributions of $424,940, $300,000, $1,565,000, $8,477,803, and $2,035,780 were
made to investors in 2001, 2000, 1999, 1998, and 1997, respectively. This
represented distributions per unit of $6.39 for 2001, $4.49 for 2000, $23.21 for
1999, $125.23 for 1998, and $30.00 for 1997.
ITEM 6. SELECTED FINANCIAL DATA
(HISTORICAL COST BASIS)
Three
Months Ended Year Ended
Mar. 31, 1998 Dec. 31, 1997
------------- -------------
Total Revenue $ 402,020 $ 2,624,821
Net Income (Loss) 94,123 (220,095)
Provision for Possible Losses 64,711 1,801,233
Net Income (Loss) per Unit 1.39 (3.25)
Distributions per Unit 7.50 30.00
Distributions to Partners 508,064 2,035,780
(HISTORICAL
(LIQUIDATION BASIS) COST BASIS)
----------------------------------------------------------- ------------
Dec. 31, 2001 Dec. 31, 2000 Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1997
------------- ------------- ------------- ------------- -------------
Total Assets $ 129,819 $ 969,554 $ 1,593,434 $ 3,215,954 $11,640,576
Line of Credit -- -- -- -- 50,557
(LIQUIDATION BASIS)
-----------------------------------------------------------
Year Ended Year Ended Year Ended Mar. 31, 1998-
Dec. 31, 2001 Dec. 31, 2000 Dec. 31, 1999 Dec. 31, 1998
------------- ------------- ------------- -------------
Change in net assets, excluding
distributions and withdrawals $ (333,467) $ (85,161) $ 50,608 $ 235,258
Distributions to Partners 424,940 300,000 1,565,000 7,969,739
Distributions per Unit 6.39 4.49 23.21 117.73
The selected financial data above was derived from the liquidation basis
financial statements of the Partnership from March 31, 1998 through December 31,
2001 and the historical cost basis financial statements prior to March 31, 1998.
As of March 31, 1998, the Partnership adopted the liquidation basis of
accounting. Under liquidation basis accounting, assets are presented at
estimated net realizable value and liabilities are presented at estimated
settlement amounts. The change to liquidation basis accounting may materially
affect the comparability of the selected financial data.
The above selected financial data should be read in connection with the
financial statements and related notes appearing elsewhere in this report.
5
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
On May 1, 1998, the Partnership ceased reinvestment in equipment and leases and
began the orderly liquidation of the Partnership in accordance with the
partnership agreement. As a result, the financial statements beginning with the
second quarter of 1998 have been presented under the liquidation basis of
accounting. Under the liquidation basis of accounting, assets are stated at
their estimated net realizable values and liabilities are stated at their
anticipated settlement amounts. Although management will make every effort to
collect leases, sell equipment and maximize equity positions as quickly as
possible, no assurance can be given that the Partnership will be dissolved prior
to December 31, 2005.
As discussed above, the Partnership is in liquidation and does not believe a
comparison of results would be meaningful. The Partnership realized $13,853 in
income from direct financing leases, notes receivable, interest, and other
income for the year ended December 31, 2001. The return on average net assets,
excluding the decrease in the estimate of the liquidation value of net assets
discussed below, was 3.3% for the year ended December 31, 2001. The Partnership
will continue to make distributions to the partners as leases and notes
receivable are collected or sold and other assets are sold. The valuation of
assets and liabilities necessarily requires many estimates and assumptions and
there are uncertainties in carrying out the liquidation of the Partnership's net
assets. The actual value of the liquidating distributions will depend on a
variety of factors, including the actual timing of distributions to the
partners. The actual amounts are likely to differ from the amounts presented in
the financial statements. Through December 31, 2001, there have been
distributions totalling $21,473,163. As of December 31, 2001 the Partnership had
$51,213 of cash on hand.
Management decreased its estimate of the liquidation value of net assets during
2001 by $347,320. This is primarily due to the change in the estimated net
investment in direct financing leases and notes receivable and in the carrying
value of equity securities, as discussed in the paragraphs below. The
Partnership has accrued the estimated expenses of liquidation, which is $87,922
at December 31, 2001. The General Partner reviews this estimate and will adjust
quarterly, as needed.
On April 11, 2001, Actel Integrated Communications, Inc. ("Actel") filed for
Chapter 11 bankruptcy (subsequently, Actel converted this filing to a Chapter
7). The Partnership decreased its estimate of the liquidation value of net
assets due to the change in the value of the 34,947 shares of Actel preferred
stock. This stock has been deemed to have no value and $78,630 was written off
in the first quarter. Also, relating to the Actel bankruptcy, the Partnership
increased the allowance for possible loan and lease losses by $70,000 in the
first quarter, to write off the remaining carrying value of notes receivable of
Murdock Communications Corporation ("Murdock"). Murdock's primary asset was the
preferred stock of Actel.
In August 2000, the Partnership recorded a note receivable for $870,000 for
equipment previously held under operating lease. The buyer was scheduled to make
three payments totalling the $870,000. Payments totalling $329,278 were made in
2000 and 2001, resulting in a balance of $540,722 at the end of the first
quarter of 2001. Due to nonpayment on the note receivable, a new agreement was
signed selling the equipment for $348,000, which has been collected in full. The
new agreement resulted in a loss of $192,722 for the Partnership.
As of December 31, 2001 there were two customers with payments over 90 days past
due. When payments are past due more than 90 days, the Partnership discontinues
recognizing income on those contracts. The Partnership's net investment in these
contracts at December 31, 2001 was $55,913. Management believes its allowance is
adequate related to these customers. Management will continue to monitor any
past due contracts and take the necessary steps to protect the Partnership's
investment.
The General Partner is engaged directly for its own account in the business of
acquiring and leasing equipment. The General Partner serves as the general
partner of Telecommunications Income Fund X, L.P.
6
("TIF X") and Telecommunications Income Fund XI, L.P. ("TIF XI"), publicly owned
limited partnerships that are engaged in the equipment leasing business. Also,
an affiliate of the General Partner serves as a general partner of a privately
offered active limited partnership. As of December 31, 2001, the net proceeds of
the private program, TIF X, and TIF XI have been invested in specific equipment.
TIF X entered the liquidation phase on December 31, 1999. The activities of the
General Partner, in regards to its other leasing activities, has had no impact
on the Partnership to date in management's opinion.
The equipment that the Partnership leases is maintained by the lessee, and it is
the lessee's responsibility to keep the equipment upgraded with any improvements
that may be developed. The Partnership generally establishes the equipment's
residual as 10% of the equipment's original cost. This residual value is
generally expected to be realized by the sale of the equipment at the expiration
of the original lease term. The General Partner monitors the maintenance and
upgrades to the equipment and expects the Partnership to realize residual values
of at least 10%.
The General Partner is not aware of any regulatory issues that may have a
substantial negative impact within the telecommunications industry in which the
Partnership conducts a significant amount of its business. There are, and will
continue to be, regulatory issues within the telecommunications industry that
the General Partner will monitor.
The equipment leases acquired by the Partnership were financed to yield rates of
return between 15% and 20%, and terms varying from 36 to 60 months. Rates
charged on a particular lease depend on a variety of factors, including the size
of the transaction and the financial strength of the lessee. Inflation affects
the cost of equipment purchased and the residual values realized when leases
terminate and equipment is sold.
LIQUIDITY AND CAPITAL RESOURCES
Under terms of the Partnership agreement, the Partnership is required to
establish working capital reserves of no less than 1% of the total capital
raised, or $169,755. At December 31, 2001, actual cash on hand was $51,213.
However, upon entering the liquidation phase, the General Partner has
prioritized the liquidation of assets and distributing remaining proceeds to the
partners. Management believes that the cash on hand at December 31, 2001 is
sufficient to satisfy current operating expenses and costs of the Partnership.
7
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
EQUITY PRICE SENSITIVITY
The following tables provide information about the Partnership's marketable and
not readily marketable equity securities that are sensitive to changes in prices
as of December 31, 2001.
Carrying Amount Fair Value
--------------- ----------
Common Stock-Murdock $ 4,724 $ 4,724
----------- -----------
Marketable equity security $ 4,724 $ 4,724
=========== ===========
Carrying Amount Fair Value
--------------- ----------
Common Stock-Murdock $ 11,434 $ 11,434
----------- -----------
Not readily marketable equity security $ 11,434 $ 11,434
=========== ===========
The Partnership's primary market risk exposure with respect to equity securities
is equity price. The Partnership's general strategy in owning equity securities
is long-term growth in the equity value of emerging companies in order to
increase the rate of return to the limited partners over the life of the
Partnership. The primary risk of the securities held is derived from the
underlying ability of the companies invested in to satisfy debt obligations and
their ability to maintain or improve common equity values. Since the investments
are in a shell company with no operations, the equity price can be volatile. The
Partnership holds 69,473 shares of Murdock as a marketable equity security and
178,645 shares as not readily marketable, due to restrictions imposed by rule
144 of the Securities and Exchange Commission. At December 31, 2001, the total
amount at risk was $16,158.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements and related information as of and for the
years ended December 31, 2001, 2000, and 1999 are included in Item 8:
Independent Auditors' Report
Statements of Net Assets as of December 31, 2001 and 2000 (Liquidation
Basis)
Statements of Changes in Net Assets (Liquidation Basis) for the Years
Ended December 31, 2001, 2000 and 1999
Statements of Cash Flows for the Years Ended December 31, 2001, 2000
and 1999
Notes to Financial Statements
8
INDEPENDENT AUDITORS' REPORT
To the Partners
Telecommunications Income Fund IX, L.P.
We have audited the accompanying statements of net assets (liquidation basis) of
Telecommunications Income Fund IX, L.P. (the "Partnership") as of December 31,
2001 and 2000, and the related statements of changes in net assets (liquidation
basis) and of cash flows for each of the three years in the period ended
December 31, 2001. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As discussed in Note 1 to the financial statements, the Partnership agreement
required that the orderly liquidation of the Partnership's net assets begin in
the second quarter of 1998, and the Partnership commenced liquidation shortly
thereafter. As a result, the Partnership changed its basis of accounting from
the going concern basis to the liquidation basis effective March 31, 1998.
In our opinion, such financial statements present fairly, in all material
respects, the net assets of Telecommunications Income Fund IX, L.P. at December
31, 2001 and 2000, and the changes in its net assets and its cash flows for each
of the three years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States of America on the
basis described in Note 1.
As discussed in Note 1 to the financial statements, because of the inherent
uncertainty of valuation when an entity is in liquidation, the amounts
realizable from the disposition of the remaining assets may differ materially
from the amounts shown in the accompanying financial statements.
/s/ DELOITTE & TOUCHE LLP
Cedar Rapids, Iowa
March 1, 2002
9
TELECOMMUNICATIONS INCOME FUND IX, L.P.
STATEMENTS OF NET ASSETS (LIQUIDATION BASIS)
AS OF DECEMBER 31, 2001 AND 2000
ASSETS 2001 2000
- ------ ---- ----
Cash and cash equivalents $ 51,213 $137,712
Marketable equity security (Note 2) 4,724 5,536
Not readily marketable equity securities (Note 2) 11,434 92,030
Net investment in direct financing leases
and notes receivable (Notes 3 and 4) 59,446 729,450
Other assets 3,002 4,826
-------- --------
Total assets 129,819 969,554
-------- --------
LIABILITIES
Accounts payable 3,469 9,683
Lease security deposits 4,763 9,089
Reserve for estimated costs during the period of liquidation 87,922 157,138
-------- --------
Total liabilities 96,154 175,910
-------- --------
CONTINGENCIES (Notes 3 and 9)
NET ASSETS $ 33,665 $793,644
======== ========
See notes to financial statements.
10
TELECOMMUNICATIONS INCOME FUND IX, L.P.
STATEMENTS OF CHANGES IN NET ASSETS (LIQUIDATION BASIS)
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
NET ASSETS AS OF JANUARY 1, 1999 $ 2,721,580
Income from direct financing leases 124,961
Interest and other income 48,676
Change in estimate of liquidation value of net assets (Note 1) (123,029)
Distributions to partners ($23.21 per unit) (Note 6) (1,565,000)
Withdrawals of limited partners (17,219)
-----------
NET ASSETS AS OF DECEMBER 31, 1999 1,189,969
Income from direct financing leases 13,876
Interest and other income 7,830
Change in estimate of liquidation value of net assets (Note 1) (106,867)
Distributions to partners ($4.49 per unit) (Note 6) (300,000)
Withdrawals of limited partners (11,164)
-----------
NET ASSETS AS OF DECEMBER 31, 2000 793,644
Income from direct financing leases 6,753
Interest and other income 7,100
Change in estimate of liquidation value of net assets (Note 1) (347,320)
Distributions to partners ($6.39 per unit) (Note 6) (424,940)
Withdrawals of limited partners (1,572)
-----------
NET ASSETS AS OF DECEMBER 31, 2001 $ 33,665
===========
See notes to financial statements.
11
TELECOMMUNICATIONS INCOME FUND IX, L.P.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
2001 2000 1999
OPERATING ACTIVITIES:
Change in net assets excluding distributions and withdrawals $ (333,467) $ (85,161) $ 50,608
Adjustments to reconcile to net cash from operating activities:
Liquidation basis adjustments 347,320 106,867 123,029
Noncash dividend income -- (9,850) (22,351)
Changes in operating assets and liabilities:
Other assets 1,824 (4,826) --
Outstanding checks in excess of bank balance -- (94,490) 4,863
Accounts payable (6,214) 148 (27,145)
Due to affiliates -- (477) 477
Accrued expenses and other liabilities (69,216) (122,937) (183,687)
----------- ----------- -----------
Net cash from operating activities (59,753) (210,726) (54,206)
----------- ----------- -----------
INVESTING ACTIVITIES:
Repayments of direct financing leases 391,926 111,496 342,084
Proceeds from sale or termination of direct financing leases 12,166 63,251 743,998
Proceeds from sale of equipment under operating lease -- 336,815 --
Repayments of notes receivable -- 22,043 21,032
Net lease security deposits paid (4,326) (9,799) (46,482)
----------- ----------- -----------
Net cash from investing activities 399,766 523,806 1,060,632
----------- ----------- -----------
FINANCING ACTIVITIES - Distributions and withdrawals paid to partners (426,512) (311,164) (1,582,219)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (86,499) 1,916 (575,793)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 137,712 135,796 711,589
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 51,213 $ 137,712 $ 135,796
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ -- $ 45 $ --
Noncash investing and financing activities:
Direct financing lease converted to notes receivable and
not readily marketable equity security -- 174,811 --
Operating lease converted to note receivable -- 870,000 --
See notes to financial statements.
12
TELECOMMUNICATIONS INCOME FUND IX, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF OPERATIONS- Telecommunications Income Fund IX,
L.P. (the "Partnership") was formed on April 2, 1991 under the Iowa Limited
Partnership Act. The general partner of the Partnership is Berthel Fisher &
Company Leasing, Inc. (the "General Partner"), an Iowa corporation. During
its offering period, the Partnership sold 68,007 units of partnership
interests at a price per unit of $250.
The Partnership operates in one segment. The Partnership's operations are
conducted throughout the United States. The Partnership primarily acquired
equipment for lease to third parties. Certain agreements exceed 10% of the
Partnership's direct finance lease and notes receivable portfolio (see Note
3). The Partnership ceased reinvestment in equipment and leases and began
the orderly liquidation of Partnership assets on May 1, 1998 as required by
the Partnership agreement. Originally, the Partnership was required to
dissolve on December 31, 1999. During November 1999, the limited partners
approved an amendment to extend the term of the Partnership to December 31,
2005 to allow for the orderly liquidation of the remaining assets.
BASIS OF PRESENTATION - The Partnership began the orderly liquidation of
Partnership assets in the second quarter of 1998 as discussed above. As a
result, on March 31, 1998 the Partnership adopted the liquidation basis of
accounting. The statements of net assets and the statements of changes in
net assets have been prepared on the liquidation basis. Accordingly, assets
have been valued at estimated net realizable value and liabilities include
estimated costs associated with carrying out the plan of liquidation.
Changes in the estimated liquidation value of net assets during the years
ended December 31, 2001, 2000 and 1999 are summarized as follows:
2001 2000 1999
Change in estimate of liquidation value of:
Securities $ (81,408) $(180,736) $ (26,341)
Direct financing leases and notes receivable (265,912) 73,869 64,377
Estimated liabilities associated with carrying
out the liquidation -- -- (161,065)
--------- --------- ---------
Total $(347,320) $(106,867) $(123,029)
========= ========= =========
The valuation of assets and liabilities necessarily requires many estimates
and assumptions and there are uncertainties in carrying out the liquidation
of the Partnership's net assets. The actual value of the liquidating
distributions will depend on a variety of factors, including the actual
timing of distributions to partners. The actual amounts are likely to
differ from the amounts presented in the financial statements.
13
USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ significantly from those estimated. Material
estimates that are particularly susceptible to significant change in the
near-term relate to the determination of the net realizable values of the
Partnership's assets and the reserve for estimated costs during the period
of liquidation.
The Partnership's equity security at December 31, 2001 consists of a common
stock investment in one company. A prospective buyer may require a
substantially lower price than currently estimated and the prospects of
this company may deteriorate. These factors, among others, could have a
material near-term impact on the net realizable value of its equity
security.
Most of the Partnership's leases and notes receivable are with customers
that are highly leveraged and require financing in place of or to
supplement financing from banks. Although the Partnership attempts to
mitigate its credit risk through timely collection efforts, failure of the
Partnership's customers to make scheduled payments under their equipment
leases and notes receivable could have a material near-term impact on the
net realizable value of leases and notes receivable.
Realization of residual values on the Partnerships' underlying leased
equipment depends on many factors, several of which are not within the
Partnership's control, including general market conditions at the time of
the lease contract's expiration, whether there has been unusual wear and
tear on, or use of, the equipment, the cost of comparable new equipment,
the extent, if any, to which the equipment has become technologically or
economically obsolete during the contract term and the effects of any
additional or amended government regulations. Also, the market for pay
telephone equipment is volatile. These factors, among others, could have a
material near-term impact on the net realizable value of leases.
CERTAIN RISK CONCENTRATIONS - The Partnership's portfolio of lease and
notes receivable are concentrated in pay telephones and computer equipment,
representing approximately 79% and 19% at December 31, 2001 and 34% and 12%
at December 31, 2000, respectively, of the Partnership's direct finance
lease portfolio.
Three customers represented 94% of the Partnership's net investment in
direct financing leases and notes receivable at December 31, 2001 (two
customers represented 83% at December 31, 2000).
RELATED PARTY TRANSACTIONS - In fulfilling its role as general partner,
Berthel Fisher & Company Leasing, Inc. enters into transactions with the
Partnership in the normal course of business. Further, the Partnership also
enters into transactions with affiliates of Berthel Fisher & Company
Leasing, Inc. These transactions are set forth in the notes that follow.
Management is of the opinion that these transactions are in accordance with
the terms of the Agreement of Limited Partnership.
CASH AND CASH EQUIVALENTS - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to be
cash equivalents.
14
EQUITY SECURITIES - The Partnership's common equity securities are
restricted as to sale in the public market under rule 144 of the Securities
and Exchange Commission. Common equity securities, which can be sold in the
public market within one year, are classified as marketable equity
securities and valued at the published market price, less an estimated
illiquidity discount. Common equity securities, which cannot be sold in the
public market within one year, are classified as not readily marketable and
valued at an estimated discount from the published market price reflective
of their more illiquid nature.
The Partnership's preferred equity security was valued at its estimated net
realizable value, based on benchmark comparisons to similar public
companies.
NET INVESTMENT IN DIRECT FINANCING LEASES - The Partnership's primary
activity consisted of leasing telecommunications equipment under direct
financing leases generally over a period of three to five years. At the
time of closing a direct financing lease, the Partnership recorded the
gross lease contract receivable, the estimated unguaranteed residual value,
and unearned lease income. The unearned lease income represents the excess
of the gross lease receivable plus the estimated unguaranteed residual
value over the cost of the equipment leased. In addition, the Partnership
capitalized all initial direct costs associated with originating the direct
financing lease. The unearned income and initial direct costs are amortized
to income over the lease term so as to produce a constant periodic
rate-of-return on the net investment in the lease. Lessees are responsible
for all taxes, insurance, and maintenance costs.
The realization of the estimated unguaranteed residual value of leased
equipment depends on the value of the leased equipment at the end of the
lease term and is not a part of the contractual agreement with the lessee.
Estimated residual values are based on estimates of amounts historically
realized by the Partnership for similar equipment and are periodically
reviewed by management for possible impairment.
NOTES RECEIVABLE - Notes receivable are carried at the principal balance
outstanding. Interest income on notes receivable is accrued based on the
principal amount outstanding.
ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES - The Partnership performed
credit evaluations prior to approval of a loan and lease. Subsequently, the
creditworthiness of the customer and the value of the underlying assets are
monitored on an ongoing basis. Under its lease agreements, the Partnership
retains legal ownership of the leased asset. The Partnership maintains an
allowance for possible loan and lease losses which could arise should
customers become unable to discharge their obligations under the loan and
lease agreements. The allowance for possible loan and lease losses is
maintained at a level deemed appropriate by management to provide for known
and inherent risks in the loan and lease portfolio. The allowance is based
upon a continuing review of past loss experience, current economic
conditions, delinquent loans and leases, an estimate of potential loss
exposure on significant customers in adverse situations, and the underlying
asset value. The consideration of such future potential losses also
includes an evaluation for other than temporary declines in value of the
underlying assets. Loans and leases, which are deemed uncollectible, are
charged off and deducted from the allowance. The provision for possible
loan and lease losses and recoveries are added to the allowance.
15
NET REALIZABLE VALUE OF NET INVESTMENT IN DIRECT FINANCING LEASES AND NOTES
RECEIVABLE - Management, in arriving at the net realizable value of the
Partnership's net investment in direct financing leases and notes
receivable, considers the contractual repayment schedule, the estimated
duration of the liquidation period, the customer and industry concentration
risk, and interest rate levels, among other factors, in arriving at a
discount to apply to the portfolio to estimate its net realizable value.
SALE OF DIRECT FINANCE LEASES - The Partnership at times sells direct
financing leases, on a limited recourse basis, to lenders in return for a
cash payment. In the case of default by the lessee, the lender has a first
lien on the underlying leased equipment. In the event the sale or re-lease
proceeds from the underlying equipment do not satisfy the remaining
lessee's obligation to the lender, the Partnership is responsible for a
predetermined amount of that obligation. When the sale of direct finance
leases occurs, proceeds from the sale, less the net book value of direct
finance leases sold and an estimated loss allowance, are recorded as a
component of gain on early termination.
TAX STATUS - Under present income tax laws, the Partnership is not liable
for income taxes, as each partner recognizes a proportionate share of the
Partnership income or loss in their income tax return. Accordingly, no
provision for income taxes is made in the financial statements of the
Partnership.
NET DISTRIBUTIONS PER PARTNERSHIP UNIT - Net distributions per partnership
unit is based on the weighted average number of units outstanding
(including both general and limited partners' units).
2. EQUITY SECURITIES
The Partnership's equity securities consist of the following at December
31, 2001 and 2000:
2001 2000
Marketable equity security - 69,473 common shares at December 31,
2001 and 2000 of Murdock Communications Corporation, a public
shell company with no operations $ 4,724 $ 5,536
======= =======
Not readily marketable equity securities:
178,645 common shares at December 31, 2001 and 2000 of
Murdock Communications Corporation $11,434 $13,400
34,947 Series A convertible preferred shares (convertible into
104,841 common shares) of AcTel Integrated Communications,
Inc., a competitive local exchange carrier which operated
in the telecommunications industry, at December 31, 2000 -- 78,630
------- -------
$11,434 $92,030
During April 2001, AcTel Integrated Communications, Inc. ("AcTel") filed for
Chapter 11 bankruptcy which was later converted to a Chapter 7 liquidation.
AcTel preferred shares have been estimated to have no value as of December 31,
2001.
16
3. NET INVESTMENT IN DIRECT FINANCING LEASES AND NOTES RECEIVABLE
The Partnership's net investment in direct financing leases and notes
receivable consists of the following at December 31, 2001 and 2000:
2001 2000
Minimum lease payments receivable $ 82,272 $ 123,016
Estimated unguaranteed residual values 13,047 26,448
Unearned income (9,472) (16,410)
Unamortized initial direct costs 2 57
Notes receivable -- 672,236
Adjustment to estimated net realizable value (26,403) (75,897)
--------- ---------
Net investment in direct financing leases and notes receivable $ 59,446 $ 729,450
========= =========
At December 31, 2001 and 2000, the Partnership's contingent liability under
recourse provisions totals $168,497. No loss, if any, has been recorded in
the financial statements with respect to this matter.
At December 31, 2001, future minimum payments to be received under the
direct financing leases and the estimated unguaranteed residuals to be
realized at the expiration of the direct financing leases are as follows:
MINIMUM ESTIMATED
LEASE UNGUARANTEED
PAYMENTS RESIDUAL
RECEIVABLE VALUES
Years ending December 31:
2002 $78,143 $13,045
2003 4,129 2
------- -------
Total $82,272 $13,047
======= =======
The Partnership leases equipment or provides financing to certain companies
for which the General Partner or its affiliates have an ownership interest
in, provide financing to, or provide investment advisory services for such
companies. The Partnership's net investment in direct financing leases and
notes receivable with these companies approximated $12,762 and $136,963 at
December 31, 2001 and 2000, respectively.
Six customers accounted for 10% or more of the amount of income from direct
financing leases during one or more of the years presented, as follows:
2001 2000 1999
Customer A -% -% 31%
Customer B 49 35 5
Customer C 22 22 4
Customer D -- -- 12
Customer E 18 21 5
Customer F -- -- 22
17
4. ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES
The changes in the allowance for possible loan and lease losses for the
years ended December 31, 2001, 2000 and 1999 are as follows:
2001 2000 1999
Balance at beginning of year $ 75,897 $ 100,343 $ 142,282
Provision 70,000 -- --
Charge-offs, net of recoveries (119,494) (24,446) (41,939)
--------- --------- ---------
Balance at end of year $ 26,403 $ 75,897 $ 100,343
========= ========= =========
The allowance for possible loan and lease losses consisted of specific
allowances of $0, $47,846, and $84,147 for certain leases and general
unallocated allowances of $26,403, $28,051, and $16,196 at December 31,
2001, 2000 and 1999, respectively. The allowance at December 31, 2001, 2000
and 1999 is included in the estimated net realizable value adjustment
discussed in Note 3.
Due to cash flow problems experienced during 1997 by a lessee of the
Partnership, North American Communications Group, Inc. ("NACG"), the
Partnership, in an attempt to protect the assets leased to NACG, advanced
funds to various entities to whom NACG owed money related to the operation
of such leased assets. In addition, the Partnership assisted in arranging a
management agreement between NACG and another entity to attempt to improve
NACG's cash flow generated by the leased assets. In spite of the funds
advanced by the Partnership and the management agreement, the cash flow of
NACG continued to deteriorate. The General Partner actively solicited bids
from parties to purchase the assets associated with the Partnership leases
to NACG. Based on the value of similar assets and contract sites,
management believed the equipment leased to NACG had substantial value.
However, the offers received were not adequate to cover additional funds,
which were required to be advanced to keep the equipment sites operating.
The General Partner, therefore, determined it was no longer economically
feasible to continue to advance funds on behalf of NACG, discontinued doing
so, and informed all site operators of that decision. As a result, the
Partnership decided to provide for a specific allowance of $1,596,739 at
December 31, 1997, which is equal to the carrying value of the leases and
advances associated with NACG. Such leases were charged-off against the
allowance in the first quarter of 1998. The Partnership received $45,000
during 1999 from the sale of assets recovered to date and credited this to
the allowance for possible loan and lease losses.
In December 1998, the Partnership, Telecommunications Income Fund X, the
General Partner, NACG, and others filed a suit against Shelby County,
Tennessee ("County"). The suit alleges, among other things, damages for
wrongful termination of the pay phone contract between NACG and Shelby
County and racial discrimination by the County against NACG. The County
filed an answer and the initial discovery was completed. In 1999,
management determined it was not economical to continue to spend
Partnership funds in an effort to obtain additional information or to
continue the lawsuit.
In June, 2000, the Partnership's two leases with Murdock Communications
Corporation ("Murdock") were converted to notes and stock as part of a
restructuring. At the time of the restructuring, the Partnership's net
investment in the contracts totaled $174,811. The Partnership received two
notes and recorded these at their estimated net realizable value of
$127,879 and 34,947 (adjusted for a stock split) shares of preferred stock
in AcTel, a not readily marketable security. The estimated net realizable
value of the AcTel preferred stock was $78,630 at December 31, 2000. The
Partnership did not accrue interest on the notes receivable due to the
uncertainty of Murdock's ability to pay. The Partnership established a
specific allowance of $47,846 at December 31, 2000 for the notes receivable
related to this uncertainty. The Partnership increased the allowance for
loan and lease losses by
18
$70,000 in 2001 and wrote-off the carrying value of the notes receivable as
Murdock's primary asset was AcTel preferred stock (see Note 2).
At December 31, 2001, two customers were past due over 90 days. The
Partnership's net investment in contracts with these customers totaled
$55,913. Management believes that the underlying collateral is adequate to
recover the Partnership's net investment. If a lease or note receivable is
past due more than 90 days, the Partnership discontinues recognizing income
on the contract.
5. EQUIPMENT
In August 2000, the Partnership recorded a note receivable for $870,000 for
equipment previously held under operating lease. The buyer was scheduled to
make three payments totaling $870,000. Payments totaling $329,278 were made
in 2000 and 2001, resulting in a $540,722 note receivable balance at the
end of the first quarter of 2001. Due to nonpayment on the note receivable,
a new agreement was signed selling the equipment for $348,000, which was
collected in full during 2001. The new agreement resulted in a loss of
$192,722 for the Partnership.
6. LIMITED PARTNERSHIP AGREEMENT
The Partnership was formed pursuant to an Agreement of Limited Partnership
dated as of April 2, 1991 and amended August 12, 1991 (the "Agreement").
The Agreement outlines capital contributions to be made by the partners and
the allocation of cash distributions, net income, and net loss to the
partners. Capital contributions by the partners to the Partnership consist
of the $10,000 contributed by the General Partner and the amounts
contributed by limited partners for the purchase of their units.
Net income or net loss allocated to the limited partners will be
apportioned among them based on the number of limited partnership units
held and on the number of months within the respective year that such units
were held. Any share of Partnership net loss will first be allocated to the
limited partners to the extent of their positive capital account balances.
Any share of additional net loss will be allocated to the General Partner.
Any Partnership net income will first be allocated to partners with
negative capital accounts in proportion to, and to the extent of, such
negative capital accounts. Except as provided below, any additional net
income will then be allocated to the General Partner and limited partners
based on number of units held. During liquidation of the Partnership, when
cash distributions are to be made 80% to the limited partners and 20% to
the General Partner (see below), net income will be allocated 80% to the
limited partners and 20% to the General Partner.
During the Partnership's operating phase, to the extent there is cash
available for distribution, cash distributions will be made on a monthly or
quarterly basis in the following order of priority: first, to reimburse the
General Partner for administrative services it provides to the Partnership,
as further described in the Agreement (see Note 7); second, to the limited
partners up to amounts representing a 12% annual return on their adjusted
capital contribution (as defined), of which 8% annually will be cumulative;
and third, to the General Partner, representing a monthly equipment
management fee of 5% of the gross rental payments received by the
Partnership (see Note 7). To the extent that cash is not available to pay
all or a portion of the equipment management fee pursuant to the above
priority distributions, such fee will accrue and accumulate. Any remaining
cash distributions after payment of the above (including arrearages) will
be paid, at the discretion of the General Partner, to the limited partners.
19
During the Partnership's liquidation phase, cash available for distribution
will be distributed in the following order of priority: first, for payment
of the General Partner's administrative services expense described above;
second, to the limited partners for any arrearage in their 8% cumulative
priority return; third, to the limited partners for 100% of their adjusted
capital contributions; fourth, to the limited partners, distributions
totaling 12% annually, noncompounded, on their adjusted capital
contributions; fifth, to the General Partner for any arrearage in its
equipment management fee; and, sixth, 80% to the limited partners and 20%
to the General Partner (provided, however, that the General Partner will
not receive such amounts unless the limited partners have received total
distributions equal to their capital contribution plus a 12% annualized
return).
7. ADMINISTRATIVE SERVICES AGREEMENT
The General Partner is reimbursed for certain administrative costs under an
administrative services agreement. Amounts incurred by the Partnership
pursuant to this agreement amounted to $12,000, $30,000, and $60,000 for
the years ended December 31, 2001, 2000 and 1999, respectively.
8. RECONCILIATION OF FINANCIAL AND INCOME TAX REPORTING BASIS
A reconciliation of the change in net assets (excluding distributions and
withdrawals) for financial reporting purposes with the related amount
reported for income tax purposes for the years ended December 31, 2001,
2000 and 1999 is as follows:
2001 2000 1999
---- ---- ----
PER PER PER
AMOUNT UNIT AMOUNT UNIT AMOUNT UNIT
Change in net assets
(excluding
distributions and
withdrawals) for
financial reporting
purposes $(333,467) $ (5.01) $ (85,161) $ (1.26) $ 50,608 $ .75
Adjustment to
convert direct
financing leases to
operating leases
for income tax
purposes (385,031) (5.79) (275,501) (4.07) (423,242) (6.27)
Net change in
allowance for
possible loan and
lease losses (119,494) (1.80) 24,445 .36 92,030 1.36
Gain on lease
terminations 6,260 .09 374,384 5.53 -- --
Net realizable
value adjustments 347,320 5.23 106,867 1.58 123,029 1.82
--------- --------- --------- --------- --------- ---------
Net income (loss)
for income tax
reporting purposes $(484,412) $ (7.28) $ 145,034 $ 2.14 $(157,575) $ (2.34)
========= ========= ========= ========= ========= =========
20
9. CONTINGENCIES
Telcom Management Systems filed a suit against the Partnership, the General
Partner, and others in Federal Court in Dallas, Texas during February 1998.
The plaintiffs purchased equipment from the Partnership out of a bankruptcy
for approximately $450,000. They alleged that when they attempted to sell
the equipment at a later date, the Partnership had not provided good title.
The General Partner filed a Motion for Summary Judgment, which was denied.
After filing the suit, the plaintiff transferred assets in lieu of
bankruptcy. No further action has been taken at this time by the plaintiff.
No loss, if any, has been recorded in the financial statements with respect
to this matter.
On January 10, 2001, SA Communications filed a suit against the
Partnership, the General Partner, and others alleging the Partnership
received a preference of approximately $45,000 prior to the filing of its
petition in bankruptcy. The Partnership maintains that it was receiving
regular monthly payments and there was no preference. SA Communications has
been converted from Chapter 11 to Chapter 7 and the plaintiff has taken no
action beyond the discovery phase. No loss, if any, has been recorded in
the financial statements with respect to this matter.
The General Partner's parent has approximately $2.2 million of unsecured
subordinated debt due on December 31, 2002 and may not have sufficient
liquid assets to repay such amounts. The General Partner's parent is
pursuing additional financing, refinancing, and asset sales to meet its
obligations. No assurance can be provided that the General Partner's parent
will be successful in its efforts. The inability of the General Partner to
continue as a going concern as a result of the parent's inability to
restructure its debts would require the Partnership to elect a successor
general partner.
10. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
2001 QUARTERS
-------------
FIRST SECOND THIRD FOURTH 2001
Income from direct
financing leases $ 2,364 $ 1,999 $ 1,408 $ 982 $ 6,753
Interest and other income 2,375 544 3,761 420 7,100
Distributions to partners (99,940) -- (325,000) -- (424,940)
Withdrawals of
limited partners (521) (521) (254) (276) (1,572)
Change in estimate
of liquidation value
of net assets (160,128) (192,218) 21,190 (16,164) (347,320)
--------- --------- --------- --------- ---------
Change in net assets $(255,850) $(190,196) $(298,895) $ (15,038) $(759,979)
========= ========= ========= ========= =========
21
The change in estimate of liquidation value of net assets in the first
quarter of 2001 is primarily due to the bankruptcy of AcTel and its related
impact on Murdock which totaled $148,630 and in the second quarter of 2001
is due to the resale of the equipment at a loss of $192,722 discussed in
Note 5.
2000 QUARTERS
-------------
FIRST SECOND THIRD FOURTH 2000
Income from direct
financing leases $ 4,318 $ 3,573 $ 2,998 $ 2,987 $ 13,876
Interest and other income 5,385 13,243 12,438 (23,236) 7,830
Distributions to partners -- -- -- (300,000) (300,000)
Withdrawals of
limited partners (3,933) (6,234) -- (997) (11,164)
Change in estimate
of liquidation value
of net assets (63,006) 74,660 (43,202) (75,319) (106,867)
--------- --------- --------- --------- ---------
Change in net assets $ (57,236) $ 85,242 $ (27,766) $(396,565) $(396,325)
========= ========= ========= ========= =========
Interest and other income for the fourth quarter of 2000 includes the
reversal of $35,713 of income recognized for the Murdock Communications
Corporation note receivable, which note was estimated to be only partially
collectible in the fourth quarter.
* * * * *
22
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS & EXECUTIVE OFFICERS OF THE REGISTRANT
A. The General Partner of the registrant:
Berthel Fisher & Company Leasing, Inc., an Iowa corporation.
B. Executive officers of the General Partner of the Registrant:
Thomas J. Berthel (age 50) - Mr. Berthel is the Chief Executive
Officer, President, and Director of the General Partner, a position he has held
since the General Partner's inception in 1988. Mr. Berthel is also President and
a Director of the General Partner's parent, Berthel Fisher & Company, Inc.
("Berthel Fisher"), which he founded in 1985, and Berthel Fisher's other
subsidiaries, Berthel Fisher & Company Financial Services, Inc.; Berthel Fisher
& Company Management Corp.; Berthel Fisher & Company Planning, Inc.; and one
other corporation which acts as general partner of a separate private program.
He also serves as the Chairman of the Board and Director of Amana Colonies Golf
Course, Inc. Mr. Berthel holds a bachelor's degree from St. Ambrose College in
Davenport, Iowa (1974). From 1974 to 1982, Mr. Berthel was President and
majority shareholder of Insurance Planning Services Corporation in Maquoketa,
Iowa, which was engaged in the operation of a securities and insurance business.
Mr. Berthel holds a Financial and Operation Principal license issued by the
National Association of Securities Dealers, Inc. Mr. Berthel is also a Certified
Life Underwriter. Mr. Berthel also serves as an individual general partner of
the limited partnership referred to above. Mr. Berthel received a MBA degree
from the University of Iowa in 1993.
Ronald O. Brendengen (age 47) - Mr. Brendengen is the Treasurer, Chief
Operating Officer, Chief Financial Officer, and a Director (1988 to present) of
the General Partner. He was elected to his current offices in January 1998. He
had previously served as Secretary (1994 - March, 1995), Treasurer (August 1995
- - 1988) and Chief Financial Officer (1994 - August 1995) of the General Partner.
He served as Controller (1985-1993), Treasurer (1987-present), Chief Financial
Officer, Secretary and a Director (1987-present), and was also elected Chief
Operating Officer in January 1998, of Berthel Fisher & Company, the parent
company of the General Partner. Mr. Brendengen serves as the Treasurer, Chief
Financial Officer and a Director of Berthel Fisher & Company Planning, Inc., the
trust advisor of Berthel Growth & Income Trust I, a company required to file
reports pursuant to the Securities Exchange Act of 1934. He also serves in
various offices and as a Director of each subsidiary of Berthel Fisher &
Company. Mr. Brendengen holds a certified public accounting certificate and
worked in public accounting during 1984 and 1985. From 1979 to 1984, Mr.
Brendengen worked in various capacities for Morris Plan and MorAmerica Financial
Corp., Cedar Rapids, Iowa. Mr. Brendengen attended the University of Iowa before
receiving a bachelor's degree in Accounting and Business Administration with a
minor in Economics from Mt. Mercy College, Cedar Rapids, Iowa, in 1978.
Timothy J. White (age 48) - Mr. White was elected President of the
General Partner on January 26, 2001. From 1999 to 2001, Mr. White was Vice
President of New Markets for Great America Leasing in Cedar Rapids, Iowa. From
1996 to 1999, Mr. White was Vice President of Business Development for GE
Capital in Cedar Rapids, Iowa. From 1993 to 1996, Mr. White was President of
Aloha Capital Corporation in Syracuse, New York. From 1989 to 1993, Mr. White
was Vice President of Sales for Dana Commercial Credit in Troy, Michigan. During
his career, Mr. White has been responsible for the management of a leasing
business in excess of $200 million and sales budgets in excess of $400 million.
Mr. White holds a Bachelor's degree in Business Management from Walsh College in
Troy, Michigan. Mr. White resigned effective July 13, 2001.
23
ITEM 11. EXECUTIVE COMPENSATION
Set forth is the information relating to all direct remuneration paid or accrued
by the Registrant during the last three years to the General Partner:
(A) (B) (C) (C1) (C2) (D)
Securities of
property
insurance Aggregate
benefits or of
Cash and Cash reimbursement contingent
Name of individual and Year equivalent forms personal or forms of
capacities which served ended of remuneration Fees benefits remuneration
- ----------------------- ----- --------------- ---- -------- ------------
Berthel Fisher & Co. 2001 $0 $ 12,000 $0 $0
Leasing, Inc. 2000 $0 $ 30,000 $0 $0
General Partner 1999 $0 $ 60,000 $0 $0
24
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person owns of record, or is known by the
Registrant to own beneficially, more than five
percent of the Partnership Units.
(b) The General Partner of the Registrant owns Units of
the Registrant set forth in the following table.
(1) (2) (3) (4)
Name and Address of Amount and Nature of
Title of Class Beneficial Ownership Beneficial Ownership Percent of Class
- -------------- -------------------------- -------------------- ----------------
Units Berthel Fisher & Co. Leasing Inc. Forty (40) Units; 0.06%
701 Tama Street
Marion, IA 52302
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related party transactions are described in Notes 3 and 7 of the notes to the
financial statements.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements.
Page No.
--------
Statements of Net Assets as of December 31, 2001 and 2000
(Liquidation Basis) 10
Statements of Changes in Net Assets (Liquidation Basis) for the Years Ended
December 31, 2001, 2000 and 1999 11
Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999 12
Notes to Financial Statements 13
2. Financial Statements Schedules
Information pursuant to Rule 12-09 (Schedule II) is included
in the financial statements and notes thereto.
3. Exhibits
3,4 Amended and Restated Agreement of
Telecommunications Income Fund IX, L.P. currently in
effect dated as of August 12, 1991 (1)
(b) Reports on Form 8-K
No reports on Form 8-K were filed in the fourth quarter of
2001.
(1) Incorporated herein by reference to Partnership
Exhibit A to the prospectus included in the
Partnership's post effective amendment No. 4 to Form
S-1 registration statement filed on December 22,
1992.
25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TELECOMMUNICATIONS INCOME FUND IX, L.P.
(REGISTRANT)
By Berthel Fisher & Company Leasing, Inc.
By: Thomas J. Berthel/s/ Date: March 25, 2002
--------------------------------
Thomas J. Berthel
President, Chief Executive Officer
By Berthel Fisher & Company Leasing, Inc.
By: Ronald O. Brendengen/s/ Date: March 25, 2002
--------------------------------
Ronald O. Brendengen
Chief Operating Officer, Chief Financial Officer, Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Thomas J. Berthel/s/ Date: March 25, 2002
- ------------------------------------
Thomas J. Berthel
Chief Executive Officer
President, Director
Berthel Fisher & Company Leasing, Inc.
Corporate General Partner
Ronald O. Brendengen/s/ Date: March 25, 2002
- ------------------------------------
Ronald O. Brendengen
Chief Operating Officer, Chief Financial Officer, Treasurer, Director
Berthel Fisher & Company Leasing, Inc.
Corporate General Partner
Daniel P. Wegmann/s/ Date: March 25, 2002
- ------------------------------------
Daniel P. Wegmann
Controller
Berthel Fisher & Company Leasing, Inc.
Corporate General Partner
Leslie D. Smith/s/ Date: March 25, 2002
- ------------------------------------
Leslie D. Smith
Director
Berthel Fisher & Company Leasing, Inc.
Corporate General Partner
26
EXHIBIT INDEX
3,4 Amended and Restated Agreement of
Telecommunications Income Fund IX, L.P. currently in
effect dated as of August 12, 1991 (1)
(1) Incorporated herein by reference to Partnership Exhibit A to the
prospectus included in the Partnership's post effective amendment No. 4
to Form S-1 registration statement filed on December 22, 1992.
27