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 period ended June 30, 1996
-------------------------------------
[ ] 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 2-99858
ICON Cash Flow Partners, L.P., Series A
(Exact name of registrant as specified in its charter)
Delaware 13-3270490
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
600 Mamaroneck Avenue, Harrison, New York 10528
(Address of principal executive offices) (Zip code)
(914) 698-0600
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
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
PART I - FINANCIAL INFORMATION
The following financial statements of ICON Cash Flow Partners, L.P.,
Series A (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 income for each period
shown. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such SEC rules and
regulations. Management believes that the disclosures made are adequate to make
the information represented not misleading. The results for the interim period
are not necessarily indicative of the results for the full year. These financial
statements should be read in conjunction with the financial statements and notes
included in the Partnership's 1995 Annual Report on Form 10-K.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
June 30, 1996
General Partner's Discussion and Analysis of
Financial Condition and Results of Operations
The Partnership's portfolio consisted of a net investment in financings,
finance leases and operating leases representing 78%, 22% and less than 1% of
total investments at June 30, 1996, respectively, and 69%, 30% and 1% of total
investments at June 30, 1995, respectively.
Three Months Ended June 30, 1996 and 1995
For the three months ended June 30, 1995, the Partnership leased or
financed equipment with an initial cost of $41,357 to 2 lessees or equipment
users. The Partnership did not lease or finance equipment for the three months
ended June 30, 1996.
Results of Operations
Revenues for the three months ended June 30, 1996 were $64,560,
representing an increase of $10,701 or 20% from 1995. The increase in revenues
was attributable to the increase in net gain on sales or remarketing of
equipment of $31,800. This was partially offset by a decrease in finance income
of $11,227 or 48% from 1995. The decrease in finance income resulted from the
decrease in the average size of the portfolio from 1995 to 1996. Interest income
and other remained relatively constant from 1995 to 1996, while rental income
decreased by $9,531.
Expenses for the three months ended June 30, 1996 were $20,039,
representing a decrease of $8,381 or 29% from 1995. The decrease in expenses was
primarily attributable to a decrease in interest expense of $7,270 or 68%, a
decrease in depreciation expense of $4,974 or 100%, a decrease in management
fees of $376 or 27%, and a decrease in administrative expense reimbursements of
$672 or 27%. The decrease in interest expense resulted from a decrease in the
average debt outstanding from 1995 to 1996. Depreciation expense decreased as a
result of the Partnership's reduced investment in operating leases. Management
fees and administrative expense reimbursements decreased due to the decrease in
the average size of the portfolio.
Net income for the three months ended June 30, 1996 and 1995 was $44,521
and $25,439, respectively. The net income per weighted average limited
partnership unit was $8.44 and $4.82 for 1996 and 1995, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the three months ended June
30, 1996 and 1995 were net cash provided by operations of $53,127 and $79,372,
respectively, and proceeds from sales of equipment of $59,770 and $21,547,
respectively and General Partner loans totaling $175,000 in 1995. These funds
were used to make payments on borrowings, fund cash distributions and purchase
equipment. The Partnership intends to purchase additional equipment and fund
cash distributions to the extent there are sufficient funds available after
servicing the Partnership's current debt obligation utilizing cash from
operations and proceeds from sales of equipment.
Cash distributions to limited partners for the three months ended June 30,
1996 and 1995, which were paid quarterly, totaled $56,351 and $56,351, of which
$44,521 and $25,439 was investment income and $11,830 and $30,912 was a return
of capital, respectively. The quarterly annualized cash distribution rate to
limited partners was 9.00% and 9.00%, of which 7.11% and 4.06% was investment
income and 1.89% and 4.94% was a return of capital, respectively, calculated as
a percentage of each partners initial capital contribution. The limited partner
distribution per weighted average unit outstanding for the three months ended
June 30, 1996 and 1995 was $11.25 and $11.25, of which $8.89 and $5.08 was
investment income and $2.36 and $6.17 was a return of capital, respectively. The
Partnership had notes payable at June 30, 1996 and 1995 of $215,809 and
$470,118, respectively, and such amounts consisted of $189,363 and $178,863 in
General Partner loans, $26,446 and $75,755 in non-recourse notes and $0 and
$215,500 in secured financing, respectively.
Six Months Ended June 30, 1996 and 1995
Results of Operations
For the six months ended June 30, 1995, the Partnership leased or financed
equipment with an initial cost of $41,356 to 2 lessees or equipment users. The
weighted average initial transaction term relating to these transactions was 50
months. The Partnership did not lease or finance equipment for the six months
ended June 30, 1996.
Revenues for the six months ended June 30, 1996 were $119,861,
representing an increase of $7,382 or 6.6% from 1995. This was partially offset
by a decrease in finance income of $23,179 or 46% from 1995. The increase in
revenues was attributable to the increase in net gain on sales or remarketing of
equipment of $48,059. The decrease in finance income resulted from the decrease
in the average size of the portfolio from 1995 to 1996. Interest income and
other remained relatively constant from 1995 to 1996, while rental income
decreased by $19,062 or 100%.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
June 30, 1996
General Partner's Discussion and Analysis of
Financial Condition and Results of Operations
Expenses for the six months ended June 30, 1996 were $37,921, representing
a decrease of $29,065 or 43% from 1995. The decrease in expenses was primarily
attributable to a decrease in depreciation expense of $9,947 or 100%, a decrease
in interest expense of $13,628 or 60%, a decrease in management fees of $1,120
or 34%, and a decrease in administrative expense reimbursements of $1,188 or 24%
from 1995. Depreciation expense decreased due to the Partnership's reduced
investment in operating leases. The decrease in interest expense resulted from a
decrease in the average debt outstanding from 1995 to 1996. Management fees and
administrative expense reimbursements decreased due to the decrease in the
average size of the portfolio.
Net income for the six months ended June 30, 1996 and 1995 was $81,940 and
$45,493, respectively. The net income per weighted average limited partnership
unit was $15.54 and $8.63 for 1996 and 1995, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the six months ended June
30, 1996 and 1995 were net cash provided by operations of $154,129 and $159,341,
respectively, proceeds from sales of equipment of $111,283 and $49,334,
respectively, and General Partner loans totaling $175,000 in 1995. These funds
were used to make payments on borrowings, fund cash distributions and purchase
equipment. The Partnership intends to purchase additional equipment and fund
cash distributions to the extent there are sufficient funds available after
servicing the Partnership's current debt obligation utilizing cash from
operations and proceeds from sales of equipment.
Cash distributions to limited partners for the six months ended June 30,
1996 and 1995, which were paid quarterly, totaled $112,702 and $112,829, of
which $77,843 and $43,218 was investment income and $34,860 and $69,611 was a
return of capital, respectively. The quarterly annualized cash distribution rate
to limited partners was 9.00% and 9.01%, of which 6.22% and 3.45% was investment
income and 2.78% and 5.56% was a return of capital, respectively, calculated as
a percentage of each partner's initial capital contribution. The limited partner
distribution per weighted average unit outstanding for the six months ended June
30, 1996 and 1995 was $22.50 and $22.53, of which $15.54 and $8.63 was
investment income and $6.96 and $13.90 was a return of capital, respectively.
In December 1994, the consent of the limited partners was solicited to
amend the Limited Partnership Agreement. 151 investors, representing a 74%
majority of the limited partnership units outstanding, responded affirmatively
and the amendments were adopted, effective January 31, 1995. The amendments: (1)
extend the Reinvestment Period from six years to eight to ten years, (2) allow
the General Partner to lend to the Partnership for a term which can exceed
twelve months, up to $250,000 and (3) decrease management fees to a flat rate of
1% for all investments under management.
In February 1995 and March 1995, the General Partner lent $75,000 and
$100,000, respectively, to the Partnership. Principal on the loans will be
repaid only after the extended Reinvestment Period expires, and, the limited
partners receive their minimum return. These notes bear interest at the lower of
6% or prime. Interest on the loans will be paid if the Partnership determines
that there are sufficient funds available.
As of June 30, 1996, except as noted above, there were no known trends or
demands, commitments, events or
uncertainties which are likely to have any material effect on liquidity. As cash
is realized from operations, sales of equipment and borrowings, the Partnership
will invest in equipment leases and financings where it deems it to be prudent
while retaining sufficient cash to meet its reserve requirements and recurring
obligations as they become due.
New Accounting Pronouncement
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which is
effective beginning in 1996. The new standard is similar to the Partnership's
existing accounting policies relating to the impairment of estimated residual
values. As a result, adoption of SFAS No. 121 in the first quarter of 1996 had
no impact on the Partnership's financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Balance Sheets
(unaudited)
June 30, December 31,
1996 1995
Assets
Cash ............................................. $ 110,037 $ 79,759
--------- ---------
Investment in financings
Receivables due in installments ................ 317,682 439,936
Unearned income ................................ (34,241) (54,157)
Allowance for doubtful accounts ................ (20,420) (19,920)
--------- ---------
263,021 365,859
Investment in finance leases
Minimum rents receivable ....................... 68,195 132,210
Estimated unguaranteed residual values ......... 18,373 36,724
Unearned income ................................ (8,536) (15,940)
Allowance for doubtful accounts ................ (20,843) (15,322)
--------- ---------
57,189 137,672
Investment in operating leases
Equipment, at cost ............................. 39,887 67,298
Accumulated depreciation ....................... (39,787) (63,386)
--------- ---------
100 3,912
--------- ---------
Other assets ..................................... 2,487 11,902
--------- ---------
Total assets ..................................... $ 432,834 $ 599,104
========= =========
Liabilities and Partners' Equity
Notes payable - General Partner .................. $ 189,363 $ 184,113
Notes payable - non-recourse ..................... 26,446 51,658
Note payable - term loan ......................... -- 116,500
Accounts payable to General Partner
and affiliates, net ............................ 42,164 31,689
Accounts payable - other ......................... 14,116 14,044
Security deposits and deferred credits ........... 2,963 6,624
275,052 404,628
Commitments and Contingencies
Partners' equity
General Partner ................................ 20,290 22,125
Limited partners (5,009 units outstanding,
$500 per unit original issue price) .......... 137,492 172,351
--------- ---------
Total partners' equity ........................... 157,782 194,476
--------- ---------
Total liabilities and partners' equity ........... $ 432,834 $ 599,104
========= =========
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Statements of Operations
(unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
--------- --------- --------- --------
Revenues
Finance income ................... $ 12,221 $ 23,448 $ 26,829 $ 50,008
Net gain on sales or
remarketing of equipment ....... 50,794 18,994 88,838 40,779
Rental income .................... -- 9,531 -- 19,062
Interest income and other ........ 1,545 1,886 4,194 2,630
-------- -------- -------- --------
Total revenues ................... 64,560 53,859 119,861 112,479
-------- -------- -------- --------
Expenses
Interest ......................... 3,418 10,688 9,205 22,833
General and administrative ....... 13,810 8,900 22,725 15,908
Depreciation ..................... -- 4,974 -- 9,947
Administrative expense
reimbursement
- General Partner .............. 1,793 2,464 3,821 5,008
Management fees - General Partner 1,018 1,394 2,170 3,290
Amortization of initial
direct costs ..................... -- -- -- --
Provision for bad debts .......... -- -- -- 10,000
-------- -------- -------- --------
Total expenses ................... 20,039 28,420 37,921 66,986
-------- -------- -------- --------
Net income ......................... $ 44,521 $ 25,439 $ 81,940 $ 45,493
======== ======== ======== ========
Net income allocable to:
Limited partners ................. $ 42,295 $ 24,167 $ 77,843 $ 43,218
General Partner .................. 2,226 1,272 4,097 2,275
-------- -------- -------- --------
$ 44,521 $ 25,439 $ 81,940 $ 45,493
======== ======== ======== ========
Weighted average number of limited
partnership units outstanding .... 5,009 5,009 5,009 5,009
======== ======== ======== ========
Net income per weighted average
limited partnership unit ......... $ 8.44 $ 4.82 $ 15.54 $ 8.63
======== ======== ======== ========
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Statements of Changes in Partners' Equity
For the Six Months Ended June 30, 1996 and
the Years Ended December 31, 1995, 1994 and 1993
(unaudited)
<TABLE>
Limited Partner
Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
(Per weighted
average unit)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1992 $ 750,516 $(72,449) $ 678,067
Cash distributions
to partners $ 53.61 $ 17.65 (356,915) (18,785) (375,700)
Net income 88,394 4,652 93,046
--------- -------- ---------
Balance at December 31, 1993 481,995 (86,582) 395,413
Cash distributions to partners $ 32.73 $ 13.92 (233,651) (12,297) (245,948)
Net income 69,705 3,669 73,374
Capital contributions - 125,000 125,000
---------- -------- ----------
Balance at December 31, 1994 318,049 29,790 347,839
Cash distributions to partners $ 29.09 $ 15.94 (225,533) (11,867) (237,400)
Net income 79,835 4,202 84,037
--------- -------- ---------
Balance at December 31, 1995 172,351 22,125 194,476
Cash distributions to partners $ 6.96 $ 15.54 (112,702) (5,932) (118,634)
Net income 77,843 4,097 81,940
--------- -------- ---------
Balance at June 30, 1996 $ 137,492 $ 20,290 $ 157,782
=========== ======== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Statements of Cash Flows
For the Six Months Ended June 30,
(unaudited)
1996 1995
---- ----
Cash flows provided by operating activities:
Net income .......................................... $ 81,940 $ 45,493
--------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Finance income portion of receivables paid
directly to lenders by lessees ................... (2,545) (4,806)
Net gain on sales or remarketing of equipment ..... (88,838) (40,779)
Interest expense on non-recourse financing paid
directly by lessees .............................. 1,871 4,051
Depreciation ...................................... -- 9,947
Collection of principal - non-financed receivables 133,521 150,673
Changes in operating assets and liabilities:
Allowance for doubtful accounts .................. 6,021 (8,931)
Accounts payable to General Partner and affiliates 10,475 (30,649)
Accounts payable - other ......................... 5,322 (3,961)
Security deposits and deferred credits ........... (3,661) 15,113
Other, net ....................................... 10,023 23,190
--------- ---------
Total adjustments ............................. 72,189 113,848
--------- ---------
Net cash provided by operating activities ...... 154,129 159,341
--------- ---------
Cash flows provided by investing activities:
Proceeds from sales of equipment .................... 111,283 49,334
Equipment and receivables purchased ................. -- (41,357)
--------- ---------
Net cash provided by investing activities ...... 111,283 7,977
--------- ---------
Cash flows used for financing activities:
Principal payments on term loan ..................... (116,500) (204,500)
Cash distributions to partners ...................... (118,634) (118,768)
Proceeds from General Partner loans ................. -- 175,000
--------- ---------
Net cash used in financing activities .......... (235,134) (148,268)
--------- ---------
Net increase in cash .................................. 30,278 19,050
Cash, beginning of period ............................. 79,759 82,186
--------- ---------
Cash, end of period ................................... $ 110,037 $ 101,236
========= =========
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Statements of Cash Flows (continued)
Supplemental Disclosures of Cash Flow Information
During the six months ended June 30, 1996 and 1995, non-cash activities
included the following:
1996 1995
---- ----
Principal and interest on direct finance receivables
paid directly to lender by lessee $ 27,083 $ 27,083
Principal and interest on non-recourse financing
paid directly by lessee (27,083) (27,083)
$ - $ -
======== =========
Interest expense of $9,205 and $22,833 for the six months ended June 30,
1996 and 1995, respectively, consisted of: interest on non-recourse financing
paid directly to lenders by lessees of $1,871 and $4,051, respectively, interest
on the term loan of $2,084 and $14,919, respectively, and interest on General
Partner loans of $5,250 and $3,863, respectively.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Notes to Financial Statements
June 30, 1996
(unaudited)
1. Basis of Presentation
The financial statements included herein should be read in conjunction with
the Notes to Financial Statements included in the Partnership's 1995 Annual
Report on Form 10-K and have been prepared in accordance with the accounting
policies stated therein.
2. New Accounting Pronouncement
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which is
effective beginning in 1996.
The Partnership's existing policy with respect to impairment of estimated
residual values is to review, on a quarterly basis, the carrying value of its
residuals on an individual asset basis to determine whether events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable and, therefore, an impairment loss should be recognized. The events
or changes in circumstances which generally indicate that the residual value of
an asset has been impaired are (i) the estimated fair value of the underlying
equipment is less than the Partnership's carrying value or (ii) the lessee is
experiencing financial difficulties and it does not appear likely that the
estimated proceeds from disposition of the asset will be sufficient to satisfy
the remaining obligation to the non-recourse lender and the Partnership's
residual position. Generally in the latter situation, the residual position
relates to equipment subject to third party non-recourse notes payable where the
lessee remits their rental payments directly to the lender and the Partnership
does not recover its residual until the non-recourse note obligation is repaid
in full.
The Partnership measures its impairment loss as the amount by which the
carrying amount of the residual value exceeds the estimated proceeds to be
received by the Partnership from release or resale of the equipment. Generally,
quoted market prices are used as the basis for measuring whether an impairment
loss should be recognized.
As a result, the Partnership's policy with respect to measurement and
recognition of an impairment loss associated with estimated residual values is
consistent with the requirements of SFAS No. 121 and, therefore, the
Partnership's adoption of this Statement in the first quarter of 1996 had no
material effect on the financial statements.
3. General Partner Loan
In February 1995 and March 1995, the General Partner lent $75,000 and
$100,000, respectively, to the Partnership. Principal on the loans will be
repaid only after the extended Reinvestment Period expires, and, the limited
partners have received at least a 6% return on their capital. These notes bear
interest at the lower of 6% or prime. Interest on the loans will be paid if the
Partnership determines that there are sufficient funds available.
4. Related Party Transactions
During the six months ended June 30, 1996 and 1995, the Partnership accrued
to the General Partner management fees of $2,170 and $3,290, respectively, and
paid or accrued administrative expense reimbursements of $3,821 and $5,008,
respectively, which were charged to operations.
The payment of management fees have been deferred since September 1, 1993 and
as of June 30, 1996, $33,643 in management fees have been accrued but not paid.
Under the original Partnership agreement, the General Partner was entitled to
management fees at either 2% or 5% of rents, depending on the type of
investments under management. In conjunction with the solicitation to amend the
Limited Partnership Agreement, effective January 31, 1995, the General Partner
reduced its management fees to a flat rate of 1% of rents for all investments
under management. The General Partner previously reduced its management fees on
January 1, 1994 to a flat rate of 2%. The foregone management fees, the
difference between the flat rate (1%) and the allowable rates per the
Partnership agreement (2% or 5%) of rents for certain types of investments,
totaled $5,399 for the six months ended June 30, 1996. These foregone management
fees are not accruable in future years.
There were no acquisition fees paid or accrued by the Partnership for the six
months ended June 30, 1996 and 1995.
The Partnership accrued $5,250 and $3,863 in interest related to the General
Partner loans for 1996 and 1995, respectively (see Note 2).
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
PART II
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6 - Reports and Amendments
The Partnership did not file any amendments during the six months ended June 30,
1996.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(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 A
File No. 2-99858 (Registrant)
By its General Partner,
ICON Capital Corp.
August 13, 1996 Charles Duggan
--------------------------------------------
Date Charles Duggan
Executive Vice President and Chief
Financial Officer
(Principal financial and account officer of
the General Partner of the Registrant)
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000775346
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 110,037
<SECURITIES> 0
<RECEIVABLES> 363,960
<ALLOWANCES> 41,263
<INVENTORY> 0
<CURRENT-ASSETS> * 0
<PP&E> 39,887
<DEPRECIATION> 39,787
<TOTAL-ASSETS> 432,834
<CURRENT-LIABILITIES> ** 0
<BONDS> 215,809
0
0
<COMMON> 0
<OTHER-SE> 157,782
<TOTAL-LIABILITY-AND-EQUITY> 432,834
<SALES> 119,861
<TOTAL-REVENUES> 119,861
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 28,716
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,205
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 81,940
<EPS-PRIMARY> 15.54
<EPS-DILUTED> 15.54
</TABLE>
