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 September 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
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
600 Mamaroneck Avenue, Harrison, New York 10528
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(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>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Balance Sheets
(unaudited)
September 30, December 31,
1996 1995
---- ----
Assets
Cash ............................................. $ 120,815 $ 79,759
--------- ---------
Investment in financings
Receivables due in installments ................ 271,701 439,936
Unearned income ................................ (26,482) (54,157)
Allowance for doubtful accounts ................ (20,420) (19,920)
--------- ---------
224,799 365,859
--------- ---------
Investment in finance leases
Minimum rents receivable ....................... 53,197 132,210
Estimated unguaranteed residual values ......... 17,853 36,724
Unearned income ................................ (6,061) (15,940)
Allowance for doubtful accounts ................ (24,010) (15,322)
--------- ---------
40,979 137,672
--------- ---------
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 ..................................... $ 389,180 $ 599,104
========= =========
Liabilities and Partners' Equity
Notes payable - General Partner .................. $ 191,987 $ 184,113
Notes payable - non-recourse ..................... 13,406 51,658
Note payable - term loan ......................... -- 116,500
Accounts payable to General Partner
and affiliates, net ............................ 41,145 31,689
Accounts payable - other ......................... 10,894 14,044
Security deposits and deferred credits ........... 4,339 6,624
261,771 404,628
--------- ---------
Commitments and Contingencies
Partners' equity
General Partner ................................ 18,772 22,125
Limited partners
(5,009 units outstanding,
$500 per unit original issue price) .......... 108,637 172,351
--------- ---------
Total partners' equity ........................... 127,409 194,476
--------- ---------
Total liabilities and partners' equity ........... $ 389,180 $ 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)
<TABLE>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
Revenues
<S> <C> <C> <C> <C>
Net gain on sales or
remarketing of equipment ......... $ 25,133 $ 17,734 $113,971 $ 58,513
Finance income ..................... 10,234 21,079 37,063 71,087
Interest income and other .......... 2,088 1,451 6,282 4,081
Rental income ...................... -- 9,531 -- 28,593
-------- -------- -------- --------
Total revenues ..................... 37,455 49,795 157,316 162,274
-------- -------- -------- --------
Expenses
Interest ........................... 3,126 9,057 12,331 31,890
General and administrative ......... 2,883 11,580 25,609 27,488
Depreciation ....................... -- 4,973 -- 14,920
Administrative expense reimbursement
- General Partner ................ 1,596 2,447 5,416 7,455
Management fees - General Partner .. 906 1,391 3,076 4,681
Provision for bad debts ............ -- -- -- 10,000
-------- -------- -------- --------
Total expenses ..................... 8,511 29,448 46,432 96,434
-------- -------- -------- --------
Net income ............................ $ 28,944 $ 20,347 $110,884 $ 65,840
======== ======== ======== ========
Net income allocable to:
Limited partners ................... $ 27,497 $ 19,330 $105,340 $ 62,548
General Partner .................... 1,447 1,017 5,544 3,292
-------- -------- -------- --------
$ 28,944 $ 20,347 $110,884 $ 65,840
======== ======== ======== ========
Weighted average number of limited
partnership units outstanding ...... 5,009 5,009 5,009 5,009
======== ======== ======== ========
Net income per weighted average
limited partnership unit ........... $ 5.49 $ 3.86 $ 21.03 $ 12.49
======== ======== ======== ========
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 Nine Months Ended September 30, 1996 and
the Years Ended December 31, 1995, 1994 and 1993
(unaudited)
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 $ 12.72 $ 21.03 (169,054) (8,898) (177,951)
Net income ................... 105,340 5,544 110,884
--------- --------- ---------
Balance at September 30, 1996 $ 108,637 $ 18,772 $ 127,409
========= ========= =========
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 Nine Months Ended September 30,
(unaudited)
1996 1995
---- ----
<S> <C> <C>
Cash flows provided by operating activities:
Net income .......................................... $ 110,884 $ 65,840
--------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Finance income portion of receivables paid
directly to lenders by lessees ................... (3,365) (6,798)
Net gain on sales or remarketing of equipment ..... (113,971) (58,513)
Interest expense on non-recourse financing paid
directly by lessees .............................. 2,372 5,680
Depreciation ...................................... -- 14,920
Collection of principal - non-financed receivables 175,768 217,565
Changes in operating assets and liabilities:
Allowance for doubtful accounts .................. 9,189 (8,276)
Accounts payable to General Partner and affiliates 9,456 (50,431)
Accounts payable - other ......................... 2,100 (3,483)
Security deposits and deferred credits ........... (2,285) (647)
Other assets ..................................... 9,416 2,103
Other, net ....................................... 257 23,946
--------- ---------
Total adjustments ............................. 88,937 136,066
--------- ---------
Net cash provided by operating activities ...... 199,821 201,906
--------- ---------
Cash flows provided by investing activities:
Proceeds from sales of equipment .................... 135,686 95,979
Equipment and receivables purchased ................. -- (41,357)
--------- ---------
Net cash provided by investing activities ...... 135,686 54,622
--------- ---------
Cash flows used for financing activities:
Principal payments on term loan ..................... (116,500) (254,000)
Cash distributions to partners ...................... (177,951) (178,085)
Proceeds from General Partner loans ................. -- 175,000
--------- ---------
Net cash used in financing activities .......... (294,451) (257,085)
--------- ---------
Net increase/(decrease) in cash ........................ 41,056 (557)
Cash, beginning of period .............................. 79,759 82,186
--------- ---------
Cash, end of period .................................... $ 120,815 $ 81,629
========= =========
See accompanying notes to financial statements.
</TABLE>
<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 nine months ended September 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 ................. $ 40,625 $ 40,624
Principal and interest on non-recourse financing
paid directly by lessee ........................... (40,625) (40,624)
-------- --------
$ - $ -
======== ========
Interest expense of $12,331 and $31,890 for the nine months ended
September 30, 1996 and 1995, respectively, consisted of: interest on
non-recourse financing paid directly to lenders by lessees of $2,372 and $5,680,
respectively, interest on the term loan of $2,084 and $19,722, respectively, and
interest on General Partner loans of $7,875 and $6,488, respectively.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Notes to Financial Statements
September 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 nine months ended September 30, 1996 and 1995, the Partnership
accrued to the General Partner management fees of $3,076 and $4,681,
respectively, and paid or accrued administrative expense reimbursements of
$5,416 and $7,455, respectively, which were charged to operations.
The payment of management fees have been deferred since September 1, 1993 and
as of September 30, 1996, $34,549 in management fees have been accrued but not
paid.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Notes to Financial Statements (continued)
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 $7,672 for the nine months ended September 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
nine months ended September 30, 1996 and 1995.
The Partnership accrued $7,875 and $6,488 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)
Item 2. Management'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 79%, 20% and 1% of total
investments at September 30, 1996, respectively, and 70%, 29% and 1% of total
investments at September 30, 1995, respectively.
Three Months Ended September 30, 1996 and 1995
For the three months ended September 30, 1996 and 1995, the Partnership did
not lease or finance equipment.
Results of Operations
Revenues for the three months ended September 30, 1996 were $37,455,
representing a decrease of $12,340 or 25% from 1995. The decrease in revenues
was primarily attributable to a decrease in finance income of $10,845 or 51%,
and a decrease in rental income of $9,531 or 100%. The decrease in these
revenues was partially offset by an increase in net gain on sales or remarketing
of equipment of $7,399 or 42%. The overall decrease in finance income and rental
income resulted from a decrease in the average size of the portfolio from 1995
to 1996.
Expenses for the three months ended September 30, 1996 were $8,511,
representing a decrease of $20,937 or 71% from 1995. The decrease in expenses
was primarily attributable to a decrease in general and administrative expenses
of $8,697 or 75% from 1995. Results were also affected by a decrease in interest
expense of $5,931 or 65%, a decrease in depreciation expense of $4,973 or 100%,
a decrease in management fees of $485 or 35% and a decrease in administrative
expense reimbursements of $852 or 35% from 1995. The decrease in general and
administrative expenses, management fees and administrative expense
reimbursements resulted from a decrease in the average size of the portfolio.
The decrease in depreciation expense resulted from the Partnership's reduced
investment in operating leases.
Net income for the three months ended September 30, 1996 and 1995 was $28,944
and $20,347, respectively. The net income per weighted average limited
partnership unit was $5.49 and $3.86 for 1996 and 1995, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the three months ended
September 30, 1996 and 1995 were net cash provided by operations of $45,692 and
$42,565, respectively, and proceeds from sales of equipment of $24,403 and
$46,645, respectively. These funds were used to make payments on borrowings, and
to fund cash distributions. 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 provided by operations and proceeds from sales of equipment.
Cash distributions to limited partners for the three months ended September
30, 1996 and 1995, which were paid quarterly, totaled $56,351 and $56,352, of
which $27,497 and $19,330 was investment income and $28,854 and $37,022 was a
return of capital, respectively. The quarterly annualized cash distribution rate
to limited partners was 9.00% and 9.00%, of which 4.39% and 3.09% was investment
income and 4.61% and 5.91% 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
September 30, 1996 and 1995 was $11.25 and $11.25, of which $5.49 and $3.86 was
investment income and $5.76 and $7.39 was a return of capital, respectively. The
Partnership had notes payable at September 30, 1996 and 1995 of $205,393 and
$411,331, respectively, and such amounts consisted of $191,987 and $181,488 in
General Partner loans, $0 and $166,000 in secured financing and $13,406 and
$63,843 in non-recourse notes, respectively.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Nine Months Ended September 30, 1996 and 1995
For the nine months ended September 30, 1996 and 1995 the Partnership leased
or financed equipment with an initial cost of $41,357 to 2 lessees or equipment
users. The weighted average initial transaction terms relating to these
transactions was 50 months.
Results of Operations
Revenues for the nine months ended September 30, 1996 were $157,316,
representing a decrease of $4,958 from 1995. The decrease in revenues was
primarily attributable to a decrease in finance income of $34,024 or 48%, and a
decrease in rental income of $28,593 or 100% from 1995. The decrease in these
revenues was partially offset by an increase in net gain (loss) on sales or
remarketing of equipment of $55,458 or 95% and an increase in interest income
and other of $2,201 or 54% from 1995. The overall decrease in finance income and
rental income resulted from a decrease in the average size of the portfolio from
1995 to 1996. The net gain on sales or remarketing of equipment increased due to
an increase in the number of month-to-month renewal lease payments received.
Interest income and other increased due to an increase in the average cash
balance from 1995 to 1996.
Expenses for the nine months ended September 30, 1996 were $46,432,
representing a decrease of $50,002 or 52% from 1995. The decrease in expenses
was primarily attributable to a decrease in interest expense of $19,559 or 61%
from 1995. Results were also affected by a decrease in depreciation expense of
$14,920 or 100%, a decrease in reserve for residual impairment/provision for bad
debt expenses of $10,000 or 100%, a decrease in administrative expense
reimbursememt of $2,039 or 3%, a decrease in general and administrative expense
of $1,879 and a decrease in management fees of $1,605 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. General and administrative expenses,
management fees, administrative expense reimbursements and reserve for residual
impairment/provision for bad debt decreased due to the decrease in the average
size of the portfolio.
Net income for the nine months ended September 30, 1996 and 1995 was $110,884
and $65,840, respectively. The net income per weighted average limited
partnership unit was $21.03 and $12.49 for 1996 and 1995, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the nine months ended
September 30, 1996 and 1995 were net cash provided by operations of $199,821 and
$201,906, respectively, proceeds from sales of equipment of $135,686 and
$95,979, respectively, and General Partner loans totaling $175,000 in 1995.
These funds were used to make payments on borrowings, fund cash distributions
and to purchase equipment. The Partnership intends to continue 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 provided by operations and proceeds from sales of
equipment.
Cash distributions to limited partners for the nine months ended September
30, 1996 and 1995, which were paid quarterly, totaled $169,054 and $169,181, of
which $105,340 and $62,548 was investment income and $63,714 and $106,633 was a
return of capital, respectively. The quarterly annualized distribution rate to
limited partners was 9.00% and 9.01%, of which 5.58% and 3.33% was investment
income and 3.42% and 5.68% 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 nine months ended
September 30, 1996 and 1995 was $33.75 and $33.78 of which $21.03 and $12.49 was
investment income and $12.72 and $21.79 was a return of capital, respectively.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
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 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.
As of September 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 continue to 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)
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
Form 8-K was filed on September 4, 1996, Item 1, Change in Control of
Registrant.
<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.
November 12, 1996 Gary N. Silverhardt
- ------------------- ----------------------------------------
DATE Gary N. Silverhardt
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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 120,815
<SECURITIES> 0
<RECEIVABLES> 312,695
<ALLOWANCES> 44,430
<INVENTORY> 0
<CURRENT-ASSETS> * 0
<PP&E> 39,887
<DEPRECIATION> 39,787
<TOTAL-ASSETS> 389,180
<CURRENT-LIABILITIES> ** 0
<BONDS> 205,393
0
0
<COMMON> 0
<OTHER-SE> 127,409
<TOTAL-LIABILITY-AND-EQUITY> 389,180
<SALES> 157,316
<TOTAL-REVENUES> 157,316
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 34,101
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,331
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110,884
<EPS-PRIMARY> 21.03
<EPS-DILUTED> 21.03
<FN>
* The Partnership has an unclassified balance sheet in its financial
statements due to the nature of its industry. A value of "0" was used for
current assets and liabilities.
** The Partnership has an unclassified balance sheet in its financial
statements due to the nature of its industry. A value of "0" was used for
current assets and liabilities.
</FN>
</TABLE>
