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 [Fee Required]
For the fiscal year ended December 31, 1998
------------------------------------------------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the transition period from to
----------------------- ----------------------
Commission File Number 2-99858
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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 (I.R.S. Employer Identification Number)
incorporation or organization)
600 Mamaroneck Avenue, Harrison, New York 10528-1632
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 698-0600
-----------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class Name of each exchange on
which registered
- --------------------------------- --------------------------------------
- --------------------------------- --------------------------------------
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interests
- --------------------------------------------------------------------------------
(Title of class)
- --------------------------------------------------------------------------------
(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.
[X] Yes [ ] No
Page 1
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
TABLE OF CONTENTS
Item Page
PART I
1. Business 3-4
2. Properties 4
3. Legal Proceedings 5
4. Submission of Matters to a Vote of Security Holders 5
PART II
5. Market for the Registrant's Securities and Related
Security Holder Matters 5
6. Selected Financial and Operating Data 6
7. General Partner's Discussion and Analysis of Financial
Condition and Results of Operations 7-9
8. Financial Statements and Supplementary Data 10-23
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 24
PART III
10. Directors and Executive Officers of the
Registrant's General Partner 24-25
11. Executive Compensation 25
12. Security Ownership of Certain Beneficial Owners
and Management 26
13. Certain Relationships and Related Transactions 26
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 27
SIGNATURES 28
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
PART I
Item 1. Business
General Development of Business
ICON Cash Flow Partners, L.P., Series A (the "Partnership") was formed in
May 1985 as a Delaware limited partnership. The Partnership commenced business
operations on its initial closing date, May 6, 1988, with the admission of 2,415
limited partnership units. Between June 1, 1988 and December 31, 1988, 1,352
additional units were admitted. Between January 1, 1989 and February 1, 1989
(the final closing date), 1,242 additional units were admitted bringing the
final admission to 5,009 units totaling $2,504,500 in capital contributions.
The sole general partner is ICON Capital Corp. (the "General Partner").
The Partnership's original reinvestment period was to end on February 1,
1995. In December 1994, the consent of the 225 limited partners was solicited to
amend, effective January 31, 1995, the Partnership agreement. The vote was
passed 151 affirmative to 31 negative with 43 abstaining. The amendments to the
Partnership agreement include: (1) extending the reinvestment period from six
years, to eight to ten years, (2) allowing the General Partner to lend funds to
the Partnership for a term in excess of 12 months and up to $250,000 and (3)
decreasing the management fees to a flat rate of 1% of rents for all investments
under management.
The General Partner contributed $125,000 to the Partnership in the form of
capital in 1994. These contributions increased the General Partner's basis in
the Partnership; however, profits, losses, cash distributions and disposition
proceeds will continue to be allocated 95% to the limited partners and 5% to the
General Partner until each limited partner has received cash distributions and
disposition proceeds sufficient to reduce its adjusted capital account to zero.
In February and March 1995, the General Partner lent $75,000 and $100,000,
respectively, to the Partnership. Principal on the loans was to be repaid only
after the extended reinvestment period expired, and the limited partners
received at least a 6% return on their capital. These notes bore interest at the
lower of 6% or prime. In September 1997 the General Partner converted the
principal outstanding on the loan, $175,000, into a capital contribution. This
contribution increased the General Partner's basis in the Partnership; however,
profits, losses, cash distributions and disposition proceeds will continue to be
allocated 95% to the limited partners and 5% to the General Partner. Interest on
the loans was paid in November 1997.
As of December 31, 1998, the Partnership had one financing transaction
remaining. The financing is with McGinn Tool & Engineering; the monthly payments
are $595 and the financing matures in March 2000. The General Partner is
exploring the possibility of disposing of or terminating the lease early and
beginning the orderly termination of the Partnership's affairs.
Narrative Description of Business
The Partnership is an equipment leasing income fund. The principal
investment objective of the Partnership was to acquire a diversified portfolio
of equipment on lease to credit-worthy lessees which would: (1) preserve,
protect and return the Partnership's invested capital; (2) generate cash
available for distribution from which the
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
Partnership has made distributions to the partners, with any remaining balance
used to purchase additional equipment during the reinvestment period, and (3)
provide cash distributions and net disposition and re-lease proceeds,
periodically, following the reinvestment period until all the equipment
purchased by the Partnership has been sold. In addition to acquiring equipment
for lease the Partnership also provided financing to certain manufacturers,
lessors and lessees.
The equipment leasing industry is highly competitive. In initiating its
leasing transactions the Partnership competes with leasing companies,
manufacturers that lease their products directly, equipment brokers and dealers
and financial institutions, including commercial banks and insurance companies.
Many competitors are larger than the Partnership and have greater financial
resources.
The Partnership has no direct employees. The General Partner has full and
exclusive discretion in management and control of the Partnership.
Lease and Financing Transactions
The Partnership did not lease or finance any additional equipment for the
years ended December 31, 1998 and 1997. At December 31, 1998 the remaining
transaction term of the remaining financing was 15 months. A summary of the
portfolio equipment cost by category held at December 31, 1998 and 1997 is as
follows:
December 31, 1998 December 31, 1997
-------------------- ---------------------
Cost Percent Cost Percent
Manufacturing
& production $ 27,000 100.0% $ 198,530 29.4%
Computer systems - - 193,059 28.5
Retail systems - - 99,794 14.8
Copiers - - 53,149 7.9
Telecommunications - - 41,535 6.1
Printing - - 33,033 4.9
Material handling - - 27,258 4.0
Video production - - 16,975 2.5
Medical - - 12,962 1.9
-------- ------ --------- ------
$ 27,000 100.0% $ 676,295 100.0%
======== ====== ========= ======
As of December 31, 1998, the Partnership had one financing transaction
remaining. The financing is with McGinn Tool and Engineering; the monthly
payments are $595 and the financing matures in March 2000. The General Partner
is exploring the possibility of selling the lease and beginning the orderly
termination of the Partnership's affairs.
Item 2. Properties
The Partnership neither owns nor leases office space or equipment for the
purpose of managing its day-to-day affairs.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
Item 3. Legal Proceedings
The Partnership is not a party to any pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of 1998.
PART II
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters
The Partnership's limited partnership interests are not publicly traded nor
is there currently a market for the Partnership's limited partnership interests.
It is unlikely that any such market will develop.
Number of Equity Security Holders
Title of Class as of December 31,
- -------------- ---------------------------------
1998 1997
---- ----
Limited partners 223 225
General Partner 1 1
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
Item 6. Selected Financial and Operating Data
Years Ended December 31,
----------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Total revenues ..... $ 80,666 $105,935 $195,278 $203,905 $276,133
======== ======== ======== ======== ========
Net income ......... $ 81,983 $ 90,421 $136,746 $ 84,037 $ 73,374
======== ======== ======== ======== ========
Net income
allocable to
limited partners .. $ 77,884 $ 85,900 $129,909 $ 79,835 $ 69,705
======== ======== ======== ======== ========
Net income
allocable to the
General Partner ... $ 4,099 $ 4,521 $ 6,837 $ 4,202 $ 3,669
======== ======== ======== ======== ========
Weighted average
limited partnership
units outstanding . 5,009 5,009 5,009 5,009 5,009
======== ======== ======== ======== ========
Net income
per weighted
average limited
partnership unit .. $ 15.55 $ 17.15 $ 25.94 $ 15.94 $ 13.92
======== ======== ======== ======== ========
Distributions to
limited partners . $181,576 $225,405 $225,405 $225,533 $233,651
======== ======== ======== ======== ========
Distributions to
General Partner .. $ 9,557 $ 11,863 $ 11,863 $ 11,867 $ 12,297
======== ======== ======== ======== ========
December 31,
------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Total assets $23,500 $137,992 $349,219 $599,104 $978,652
====== ======== ======== ======== ========
Partners' equity $12,957 $122,107 $ 93,954 $194,476 $347,839
======= ======== ======== ======== ========
The above selected financial and operating data should be read in
conjunction with the financial statements and related notes appearing elsewhere
in this report.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
( A Delaware Limited Partnership)
December 31, 1998
Item 7. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
The Partnership's portfolio consisted one financing representing 100% of
total investments and no finance leases at December 31, 1998, as compared to 98%
and 2% of total investments, respectively, at December 31, 1997.
.
Results of Operations
Years Ended December 31, 1998 and 1997
Revenues for the year ended December 31, 1998 were $80,666, representing a
decrease of $25,269 or 24% from 1997. The decrease in revenues was attributable
to a decrease in net gain on sales or remarketing of equipment of $6,349 or 8%,
a decrease in finance income of $16,098 or 87%, and a decrease in interest
income and other of $2,822 or 59%. The decrease in net gain on sales or
remarketing of equipment was due to a decrease in the number of leases maturing
in which the underlying equipment was sold or remarketed, and proceeds received
were in excess of the remaining carrying value of the equipment. Finance income
decreased due to a decrease in the average size of the portfolio from 1997 to
1998. The decrease in interest income and other was a result of a decrease in
the average cash balance from 1997 to 1998.
Expenses for the year ended December 31, 1998 totaled a net credit of
$1,317, representing a decrease of $16,831 or 108%. The decrease in expenses was
attributable to a decrease in interest expense of $7,875 or 100%, a decrease in
administrative expense reimbursements of $2,643 or 58% and a decrease in
management fees of $1,549 or 61%. In addition, as a result of the ongoing
analysis of delinquency trends and loss experience, an assessment of overall
credit risk and the continued decline in portfolio balance, the Partnership
reduced the allowance for doubtful accounts by $22,242. These changes were
partially offset by an increase in general and administrative expense of $478 or
3%. Interest expense decreased as a result of a decrease in the average debt
outstanding from 1997 to 1998. The decreases in administrative expense
reimbursements and management fees are due to the decrease in the average size
of the portfolio from 1997 to 1998. General and administrative expense increased
as a result of legal and other professional fees incurred related to collection
of receivables.
Net income for the years ended December 31, 1998 and 1997 was $81,983 and
$90,421, respectively. The net income per weighted average limited partnership
unit was $15.55 and $17.15 for 1998 and 1997, respectively.
Years Ended December 31, 1997 and 1996
Revenues for the year ended December 31, 1997 were $105,935, representing a
decrease of $89,343 or 46% from 1996. The decrease in revenues was attributable
to a decrease in net gain on sales or remarketing of equipment of $59,661 or
42%, a decrease in finance income of $27,215 or 59% and a decrease in interest
income and other of $2,467 or 34%. The net gain on sales or remarketing of
equipment decreased due to a reduction in the number of leases maturing in which
the underlying equipment was sold or remarketed and proceeds received were in
excess of the remaining carrying value of the equipment. Finance income
decreased due to a decrease in the average size of the portfolio from 1996 to
1997. The decrease in interest income and other was a result of a decrease in
the average cash balance from 1996 to 1997.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
Expenses for the year ended December 31, 1997 were $15,514, representing a
decrease of $43,018 or 73% from 1996. The decrease in expenses was attributable
to a decrease in general and administrative expenses of $14,687 or 46%, a
decrease in interest expense of $7,217 or 48%, a decrease in administrative
expense reimbursements of $2,612 or 37%, a decrease in management fees of $1,502
or 37%, and a reduction of the allowance for doubtful accounts of $17,000.
General and administrative expenses, administrative expense reimbursements and
management fees decreased due to a decrease in the average size of the portfolio
from 1996 to 1997. The decrease in interest expense resulted from a decrease in
the average debt outstanding from 1996 to 1997. The reversal of the allowance
for doubtful accounts was the result of the ongoing analysis of delinquency
trends and loss experience, an assessment of overall credit risk and the
continued decline in portfolio balance.
Net income for the years ended December 31, 1997 and 1996 was $90,421 and
$136,746, respectively. The net income per weighted average limited partnership
unit was $17.15 and $25.94 for 1997 and 1996, respectively.
Liquidity and Capital Resources
As of December 31, 1998, the Partnership had one financing transaction
remaining. The financing is with McGinn Tool & Engineering; the monthly rents
are $595 and the lease matures in March 2000. The General Partner is exploring
the possibility of disposing of or terminating the lease early and beginning the
orderly termination of the Partnership's affairs.
The Partnership's primary sources of funds in 1998, 1997 and 1996 were net
cash provided by operations of $24,760, $90,316 and $210,327, respectively, and
proceeds from sales of equipment of $94,160, $112,356 and $202,787,
respectively. These funds were used to pay cash distributions, and during 1996,
to purchase equipment and make payments on borrowings.
In February and March 1995, the General Partner lent $75,000 and $100,000,
respectively, to the Partnership. Principal on the loans was to be repaid only
after the extended Reinvestment Period expired, and, the limited partners
received at least a 6% return on their capital. These notes bore interest at the
lower of 6% or prime. In September 1997 the General Partner converted the
principal outstanding on the loan, $175,000, into a capital contribution. This
contribution increased the General Partner's basis in the Partnership, however,
profits, losses, cash distributions and disposition proceeds will continue to be
allocated 95% to the limited partners and 5% to the General Partner. Interest on
the loans was paid in November 1997.
The Partnership's original reinvestment period expired on February 1, 1995,
six years after the final closing date. In December 1994 the consent of the
limited partners was solicited to amend the Partnership agreement of which 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 to February
1999, (2) allow the General Partners to lend to the Partnership for a term in
excess of twelve months and up to $250,000 and (3) decrease management fees to a
flat rate of 1% for all investments under management.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
Cash distributions to limited partners in 1998, 1997 and 1996, which were
paid quarterly, totaled $181,576, $225,405 and $225,405, respectively, of which
$77,884, $85,900 and $129,909 was investment income and $103,692, $139,505 and
$95,496 was a return of capital, respectively. The quarterly annualized
distribution rate to limited partners in 1998, 1997 and 1996 was 7.25%, 9.00%
and 9.00%, respectively, of which 3.11%, 3.43% and 5.19% was investment income
and 4.14%, 5.57% and 3.81% 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 years ended December
31, 1998, 1997 and 1996 was $36.25, $45.00 and $45.00 of which $15.55, $17.15
and $25.94 was investment income and $20.70, $27.85 and $19.06 was a return of
capital, respectively. As a result of a review and analysis of the Partnership's
projected cash flow, the Partnership decreased the distribution rate to an
annualized rate of 2%, effective for both the October 15, 1998 and January 15,
1999 distributions.
Year 2000 Issue
The Year 2000 issue arose because many existing computer programs have been
written using two digits rather than four to define the applicable year. As a
result, programs could interpret dates ending in "00" as the year 1900 rather
than the year 2000. In certain cases, such errors could result in system
failures or miscalculations that disrupt the operation of the affected
businesses.
The Partnership uses computer information systems provided by the General
Partner and has no computer information systems of its own. The software related
to the General Partner's primary computer information systems are provided by
third party vendors. The General Partner has formally communicated with these
vendors and has received assurance that their programs are Year 2000 compliant.
In addition, the General Partner has gathered information about the Year 2000
readiness of significant vendors and third-party servicers and continues to
monitor developments in this area. All of the General Partner's peripheral
computer technologies, such as its network operating system and third party
software applications, including payroll and electronic banking have been
evaluated and have been found to be Year 2000 compliant. The ultimate impact of
the Year 2000 issue on the Partnership will depend to a great extent on the
manner in which the issue is addressed by the Partnership's lessees. Each of the
Partnership's lessees will have a material self interest in resolving any Year
2000 issue, however, non-compliance on the part of a lessee could result in lost
or delayed revenues to the Partnership. The effect of this risk to the
Partnership is not determinable.
The General Partner is responsible for costs relating to the assessment and
development of its Year 2000 compliance remediation plan, as well as the testing
of the hardware and software owned or licensed for its personal computers. The
General Partner's costs incurred to date and expected future costs are not
material.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements
Page Number
-----------
Independent Auditors' Report 12
Balance Sheets as of December 31, 1998 and 1997 13
Statements of Operations for the Years Ended
December 31, 1998, 1997 and 1996 14
Statements of Changes in Partners' Equity for
the Years Ended December 31, 1998, 1997 and 1996 15
Statements of Cash Flows for the Years Ended
December 31, 1998, 1997 and 1996 16-17
Notes to Financial Statements 18-23
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Financial Statements
December 31, 1998
(With Independent Auditors' Report Thereon)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
ICON Cash Flow Partners, L.P., Series A:
We have audited the accompanying balance sheets of ICON Cash Flow Partners,
L.P., Series A (a Delaware limited partnership) as of December 31, 1998 and
1997, and the related statements of operations, changes in partners' equity, and
cash flows for each of the years in the three-year period ended December 31,
1998. 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 generally accepted auditing
standards. 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, as of December 31, 1998, ICON Cash Flow Partners, L.P.,
Series A had one financing transaction remaining. The General Partner is
exploring the possibility of disposing of or terminating the lease early and
beginning the orderly termination of the partnership's affairs.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ICON Cash Flow Partners, L.P.,
Series A as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31,
1998, in conformity with generally accepted accounting principles.
/s/ KPMG LLP
---------------------------------
KPMG LLP
March 12, 1999
New York, New York
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Balance Sheets
December 31,
1998 1997
---- ----
Assets
Cash ......................................... 16,999 $ 89,212
--------- ---------
Investment in financings
Receivables due in installments ........... 8,934 59,625
Unearned income ........................... (569) (3,181)
Allowance for doubtful accounts ........... (1,864) (19,407)
--------- ---------
6,501 37,037
--------- ---------
Investment in finance leases
Minimum rents receivable .................. -- 4,062
Unearned income ........................... -- (1,212)
Allowance for doubtful accounts ........... -- (2,123)
--------- ---------
-- 727
--------- ---------
Other assets ................................. -- 11,016
--------- ---------
Total assets ................................. $ 23,500 $ 137,992
========= =========
Liabilities and Partners' Equity
Accounts payable - other ..................... $ 9,818 $ 14,840
Security deposits and deferred credits ....... 725 1,045
--------- ---------
10,543 15,885
--------- ---------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ........................... 179,299 184,757
Limited partners (5,009 units outstanding,
$500 per unit original issue price) ..... (166,342) (62,650)
--------- ---------
Total partners' equity ....................... 12,957 122,107
--------- ---------
Total liabilities and partners' equity ....... $ 23,500 $ 137,992
========= =========
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Statements of Operations
For the Years Ended December 31,
<TABLE>
1998 1997 1996
---- ---- ----
Revenues
Net gain on sales or
<S> <C> <C> <C>
remarketing of equipment ...................... $ 76,227 $ 82,576 $ 142,237
Finance income .................................. 2,459 18,557 45,772
Interest income and other ....................... 1,980 4,802 7,269
--------- --------- ---------
Total revenues .................................. 80,666 105,935 195,278
--------- --------- ---------
Expenses
General and administrative ...................... 18,043 17,565 32,252
Interest ........................................ -- 7,875 15,092
Administrative expense reimbursements
- General Partner ............................. 1,878 4,521 7,133
Management fees - General Partner ............... 1,004 2,553 4,055
Reversal of allowance for doubtful accounts ..... (22,242) (17,000) --
--------- --------- ---------
Total expenses (credit) ......................... (1,317) 15,514 58,532
--------- --------- ---------
Net income ......................................... $ 81,983 $ 90,421 $ 136,746
========= ========= =========
Net income allocable to:
Limited partners ................................ $ 77,884 $ 85,900 $ 129,909
General Partner ................................. 4,099 4,521 6,837
--------- --------- ---------
$ 81,983 $ 90,421 $ 136,746
========= ========= =========
Weighted average number of limited
partnership units outstanding ................... 5,009 5,009 5,009
========= ========= =========
Net income per weighted average
limited partnership unit ........................ $ 15.55 $ 17.15 $ 25.94
========= ========= =========
</TABLE>
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 Years Ended December 31, 1998, 1997, and 1996
<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, 1995 $ 172,351 $ 22,125 $ 194,476
Cash distributions
to partners $ 19.06 $ 25.94 (225,405) (11,863) (237,268)
Net income 129,909 6,837 136,746
--------- -------- ---------
Balance at
December 31, 1996 76,855 17,099 93,954
Conversion of General Partner
note payable to a
capital contribution - 175,000 175,000
Cash distributions
to partners $ 27.85 $17.15 (225,405) (11,863) (237,268)
Net income 85,900 4,521 90,421
--------- -------- ---------
Balance at
December 31, 1997 (62,650) 184,757 122,107
Cash distributions
to partners $ 20.70 $ 15.55 (181,576) (9,557) (191,133)
Net income 77,884 4,099 81,983
--------- -------- ---------
Balance at
December 31, 1998 $(166,342) $179,299 $ 12,957
========= ======== =========
</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 Years Ended December 31,
<TABLE>
1998 1997 1996
---- ---- ----
Cash flows from operating activities:
<S> <C> <C> <C>
Net income .................................................. $ 81,983 $ 90,421 $ 136,746
--------- --------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Net gain on sales or remarketing of equipment .............. (76,227) (82,576) (142,237)
Finance income portion of receivables
paid directly to lenders by lessees ...................... -- -- (3,863)
Interest expense on non-recourse
financing paid directly by lessees ....................... -- -- 2,508
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables ........ 49,020 176,604 206,054
Allowance for doubtful accounts ........................... (20,878) (23,013) (9,301)
Accounts payable to General Partner
and affiliates, net ..................................... -- (43,760) 12,071
Accounts payable - other .................................. (5,022) 1,765 6,906
Accrued interest on General Partner loan .................. -- (19,613) --
Security deposits and deferred credits .................... (320) (2,772) (2,807)
Other, net ................................................ (3,796) (6,740) 4,250
--------- --------- ---------
Total adjustments ....................................... (57,223) (105) 73,581
--------- --------- ---------
Net cash provided by operating activities ............... 24,760 90,316 210,327
--------- --------- ---------
Cash flows from investing activities:
Proceeds from sales of equipment ............................ 94,160 112,356 202,787
Equipment and receivables purchased ......................... -- -- (15,297)
--------- --------- ---------
Net cash provided by investing activities ............... 94,160 112,356 187,490
--------- --------- ---------
Cash flows from financing activities:
Cash distributions to partners .............................. (191,133) (237,268) (237,268)
Principal payments on term loan ............................. -- -- (116,500)
--------- --------- ---------
Net cash used in financing activities .................... (191,133) (237,268) (353,768)
--------- --------- ---------
Net (decrease) increase in cash ............................... (72,213) (34,596) 44,049
Cash, beginning of year ....................................... 89,212 123,808 79,759
--------- --------- ---------
Cash, end of year ............................................. $ 16,999 $ 89,212 $ 123,808
========= ========= =========
</TABLE>
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
Interest expense of $7,875 and $15,092 for the years ended December 31, 1997
and 1996, respectively, consisted of: interest expense on non-recourse financing
paid directly to lenders by lessees of $0 and $2,508, respectively, interest on
a term loan of $0 and $2,084, respectively, and interest on General Partner
loans of $7,875 and $10,500, respectively. There was no interest expense
incurred in 1998.
During the years ended December 31, 1998, 1997 and 1996, non-cash activities
included the following:
1998 1997 1996
---- ---- ----
Principal and interest on finance
receivables paid directly to
lender by lessee $ - $ - $ 40,625
Principal and interest on non-recourse
financing paid directly by lessee - - (40,625)
Conversion of principal portion of notes
payable - General Partner to a capital
contribution - 175,000 -
Capital contribution - General Partner - (175,000) -
---------- ---------- ---------
$ - $ - $ -
========== ========== =========
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Notes to Financial Statements
December 31, 1998
1. Organization
ICON Cash Flow Partners, L.P., Series A (the "Partnership") was formed on
May 28, 1985 as a Delaware limited partnership with an initial capitalization of
$2,000. It was formed to acquire various types of equipment, to lease such
equipment to third parties and, to a lesser degree, enter into secured financing
transactions. The Partnership's offering period commenced on January 9, 1987 and
by its final closing in 1989, 5,009 units had been admitted into the Partnership
with aggregate gross proceeds of $2,504,500.
The General Partner of the Partnership is ICON Capital Corp. (the "General
Partner"), a Connecticut corporation. The General Partner manages and controls
the business affairs of the Partnership's equipment leases and financing
transactions under a management agreement with the Partnership.
ICON Securities Corp., an affiliate of the General Partner, received an
underwriting commission on the gross proceeds from sales of all units. The total
underwriting compensation paid by the Partnership, including underwriting
commissions, sales commissions, incentive fees, public offering expense
reimbursements and due diligence activities was limited to 14 1/2% of the gross
proceeds received from the sale of the units. Such offering costs aggregated
$363,152, (including $176,152 paid to the General Partner or its affiliates) and
were charged directly to limited partners' equity.
Profits, losses, cash distributions and disposition proceeds are allocated
95% to the limited partners and 5% to the General Partner until each limited
partner has received cash distributions and disposition proceeds sufficient to
reduce its adjusted capital contribution account to zero and receive, in
addition, other distributions and allocations which would provide a 10% per
annum cumulative return, compounded daily, on its outstanding adjusted capital
contribution account. After such time, the distributions would be allocated 85%
to the limited partners and 15% to the General Partner.
As of December 31, 1998, the Partnership had one financing transaction
remaining. The financing is with McGinn Tool & Engineering; the monthly payments
are $595 and the financing matures in March 2000. The General Partner is
exploring the possibility of disposing of or terminating the lease early and
beginning the orderly termination of the Partnership's affairs.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
2. Significant Accounting Policies
Basis of Accounting and Presentation - The Partnership's records are
maintained on the accrual basis. The preparation of financial statements in
conformity with generally accepted accounting principles requires the General
Partner's management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates. In addition, management is required to disclose contingent
assets and liabilities.
Leases - The Partnership accounts for owned equipment leased to third
parties as finance leases or operating leases, as appropriate. For finance
leases, the Partnership records, at the inception of the lease, the total
minimum lease payments receivable, the estimated unguaranteed residual values,
the initial direct costs related to the leases and the related unearned income.
Unearned income represents the difference between the sum of the minimum lease
payments receivable plus the estimated unguaranteed residual minus the cost of
the leased equipment. Unearned income is recognized as finance income over the
terms of the related leases using the interest method.. Initial direct costs of
finance leases are capitalized and are amortized over the terms of the related
leases using the interest method. Each lease is expected to provide aggregate
contractual rents that, along with residual proceeds, return the Partnership's
cost of its investment along with investment income.
Investment in Financings - Investment in financings represent the gross
receivables due from the financing of equipment plus the initial direct costs
related thereto less the related unearned income. The unearned income is
recognized as finance income and the initial direct costs are amortized over the
terms of the receivables using the interest method. Financing transactions are
supported by a written promissory note evidencing the obligation of the user to
repay the principal, together with interest, which will be sufficient to return
the Partnership's full cost associated with such financing transaction, together
with some investment income. Furthermore, the repayment obligation is
collateralized by a security interest in the tangible or intangible personal
property.
Disclosures About Fair Value of Financial Instruments - Statement of
Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value
of Financial Instruments" requires disclosures about the fair value of financial
instruments. Separate disclosure of fair value information as of December 31,
1998 and 1997 with respect to the Company's assets and liabilities is not
provided because (i) SFAS No. 107 does not require disclosures about the fair
value of lease arrangements and (ii) the carrying value of financial assets,
other than lease related investments, and payables approximates market value.
Allowance for Doubtful Accounts - The Partnership recorded provisions for
bad debts to provide for estimated credit losses in the portfolio. The provision
was based on an analysis of delinquency trends and loss experience and an
assessment of overall credit risk. The Partnership's write-off policy is based
on an analysis of the aging of the Partnership's portfolio, a review of the
non-performing receivables and leases, and prior collection experience. An
account is fully reserved for or written off when such analysis indicates that
the probability of collection of the account is remote. In 1998 and 1997, the
Partnership reversed $22,242 and $17,000 of amounts previously included in the
allowance for doubtful accounts, respectively.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
Income Taxes - No provision for income taxes has been made as the liability
for such taxes is that of each of the partners rather than the Partnership.
New Accounting Pronouncements - In June 1998 the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
requires that an entity recognize all derivative instruments as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
SFAS No. 133 is effective for all quarters of fiscal years beginning after June
15, 1999. The adoption of SFAS No. 133 is not expected to have a material effect
on the Partnership's net income, partners' equity or total assets.
3. General Partner Capital Contribution
In February and March 1995, the General Partner lent $75,000 and $100,000,
respectively, to the Partnership. Principal on the loans was to be repaid only
after the extended Reinvestment Period expired, and, the limited partners
received at least a 6% return on their capital. These notes bore interest at the
lower of 6% or prime. In September 1997 the General Partner converted the
principal outstanding on the loan, $175,000, into a capital contribution. This
contribution increased the General Partner's basis in the Partnership, however,
profits, losses, cash distributions and disposition proceeds will continue to be
allocated 95% to the limited partners and 5% to the General Partner. Accrued
interest of $27,487 on the loans was paid in November 1997.
4. Receivables Due in Installments
Non-cancelable minimum annual amounts receivable on financings are as
follows:
Year Financings
---- ----------
1999 $ 7,147
2000 1,787
-------
$ 8,934
=======
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
5. Allowance for Doubtful Accounts
The allowance for doubtful accounts related to the investments in
financings, finance leases and operating leases consisted of the following:
<TABLE>
Finance Operating
Financings Leases Leases Total
<S> <C> <C> <C> <C>
Balance at December 31, 1995 ....................... $ 19,920 $ 15,322 $ 1,212 $ 36,454
Accounts written-off ......................... -- (29) -- (29)
Recovery on accounts previously
written-off ................................ 500 8,830 -- 9,330
-------- -------- -------- --------
Balance at December 31, 1996 ....................... 20,420 24,123 1,212 45,755
Transfer within accounts ..................... 15,000 (15,000) -- --
Accounts written-off ......................... (6,013) -- -- (6,013)
Reversal of allowance for
doubtful accounts .......................... (10,000) (7,000) -- (17,000)
-------- -------- -------- --------
Balance at December 31, 1997 ....................... 19,407 2,123 1,212 22,742
Accounts written-off ......................... (3,136) -- -- (3,136)
Recovery on accounts
previously written-off ..................... 4,500 -- -- 4,500
Reversal of allowance for
doubtful accounts .......................... (18,907) (2,123) (1,212) (22,242)
-------- -------- -------- --------
Balance at December 31, 1998 ....................... $ 1,864 $ -- $ -- $ 1,864
======== ======== ======== ========
</TABLE>
6. Related Party Transactions
During the years ended December 31, 1998, 1997 and 1996, the Partnership
paid to the General Partner management fees of $1,004, $2,553 and $4,055 and
administrative expense reimbursements of $1,878, $4,521 and $7,133,
respectively. These items were charged to operations.
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
investment under management. Effective, January 31, 1995, the General Partner
reduced its management fees to a flat rate of 1% of rents for all investments
under management.
In February and March 1995, the General Partner lent $75,000 and $100,000,
respectively, to the Partnership. Principal on the loans was to be repaid only
after the extended Reinvestment Period expired, and, the limited partners
received at least a 6% return on their capital. These notes bore interest at the
lower of 6% or prime. In September 1997 the General Partner converted the
principal outstanding on the loan, $175,000, into a capital contribution. This
contribution increased the General Partner's basis in the Partnership, however,
profits, losses, cash distributions and disposition proceeds will continue to be
allocated 95% to the limited partners and 5% to the General Partner. Accrued
interest of $27,487 on the loans was paid in November 1997.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
7. Tax Information (Unaudited)
The following table reconciles net income for financial reporting
purposes to income for federal income tax purposes for the years ended December
31:
1998 1997 1996
---- ---- ----
Net income per financial statements $ 81,983 $ 90,421 $136,746
Differences due to:
Direct finance leases 14,269 24,972 60,629
Depreciation (5,315) (15,273) -
Provision for losses (20,879) (23,013) 9,356
Loss on sale of equipment (10,101) (12,498) (8,208)
Other (2,437) (1,791) -
-------- -------- --------
Partnership income for
federal income tax purposes $ 57,520 $ 62,818 $198,523
======== ======== ========
As of December 31, 1998, the partners' capital accounts included in the
financial statements totaled $12,957 compared to the partners' capital accounts
for federal income tax purposes of $1,007,723 (unaudited). The difference arises
primarily from commissions reported as a reduction in the partners' capital for
financial reporting purposes but not for federal income tax purposes, and
temporary differences related to direct finance leases, depreciation and
provision for losses.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant's General Partner
The General Partner, a Connecticut corporation, was formed in 1985. The
General Partner's principal offices are located at 600 Mamaroneck Avenue,
Harrison, New York 10528-1632, and its telephone number is (914) 698-0600. The
officers of the General Partner have extensive experience with transactions
involving the acquisition, leasing, financing and disposition of equipment,
including acquiring and disposing of equipment subject to leases and full
financing transactions.
The manager of the Partnership's business is the General Partner. The
General Partner is engaged in a broad range of equipment leasing and financing
activities. Through its sales representatives and through various broker
relationships throughout the United States, the General Partner offers a broad
range of equipment leasing services.
The General Partner is performing or causing to be performed certain functions
relating to the management of the equipment of the Partnership. Such services
include the collection of lease payments from the lessees of the equipment,
re-leasing services in connection with equipment which is off-lease, inspections
of the equipment, liaison with the general supervision of lessees to assure that
the equipment is being properly operated and maintained, monitoring performance
by the lessees of their obligations under the leases and the payment of
operating expenses.
The officers and directors of the General Partner are as follows:
Beaufort J.B. Clarke Chairman, Chief Executive Officer and Director
Paul B. Weiss President and Director
Thomas W. Martin Executive Vice President and Director
Kevin F. Redmond Chief Financial Officer
Beaufort J. B. Clarke, age 53, is Chairman, Chief Executive Officer and
Director of both the General Partner and ICON Securities Corp. (the
"Dealer-Manager"). Prior to his present position, Mr. Clarke was founder and the
President and Chief Executive Officer of Griffin Equity Partners, Inc. Mr.
Clarke formerly was an attorney with Shearman and Sterling and has over 20 years
of senior management experience in the United States leasing industry.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
Paul B. Weiss, age 38, is President and Director of the General Partner.
Mr. Weiss has been exclusively engaged in lease portfolio acquisitions since
1988 from his affiliations with Griffin Equity Partners (as Executive Vice
President and co-founder in 1993); Gemini Financial Holdings (as Senior Vice
President-Portfolio Acquisitions and a member of the executive committee from
1991-1993) and Pegasus Capital Corporation (as Vice President-Portfolio
Acquisitions). He was previously an investment banker and a commercial banker.
Thomas W. Martin, age 45, is Executive Vice President of the General
Partner and Director of the Dealer-Manager. Prior to his present position, Mr.
Martin was the Executive Vice President and Chief Financial Officer of Griffin
Equity Partners, Inc. Mr. Martin has 14 years of senior management experience in
the leasing business.
Kevin F. Redmond, age 36, is Chief Financial Officer of both the General
Partner and the Dealer-Manager. Prior to his present position, Mr. Redmond was
Vice President and Controller of the General Partner, Manager of Accounting at
NationsCredit Corp. and Audit Manager with the accounting firm of Deloitte &
Touche.
Item 11. Executive Compensation
The Partnership has no directors or officers. The General Partner and its
affiliates were paid or accrued the following compensation and reimbursement for
costs and expenses for the years ended December 31, 1998, 1997 and 1996.
Type of
Entity Capacity Compensation 1998 1997 1996
------ -------- ------------ ---- ---- ----
ICON Capital Corp. General Partner Administrative
expense
Reimbursements $1,878 $ 4,521 $ 7,133
ICON Capital Corp. General Partner Interest - 7,875 10,500
ICON Capital Corp. General Partner Management fees 1,004 2,553 4,055
------ ------- -------
$2,882 $14,949 $21,688
====== ======= =======
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) The Partnership is a limited partnership and therefore does not have voting
shares of stock. No person of record owns, or is known by the Partnership
to own beneficially, more than 5% of any class of securities of the
Partnership.
(b) As of March 15, 1999, Directors and Officers of the General Partner do not
own any equity securities of the Partnership.
(c) The General Partner owns the equity securities of the Partnership set forth
in the following table:
Title of Class Amount Beneficially Owned Percent of Class
-------------- ------------------------- ----------------
General Partner Interest Represents initially a 5% and 100%
potentially a 15% interest in
the Partnership's income, gain
and loss deductions.
Profits, losses, cash distributions and disposition proceeds are
allocated 95% to the limited partners and 5% to the General Partner until each
investor has received cash distributions and disposition proceeds sufficient to
reduce its adjusted capital contribution account to zero and receive, in
addition, other distributions and allocations which would provide a 10% per
annum cumulative return, compounded daily, on the outstanding adjusted capital
contribution account. After such time, the distributions will be allocated 85%
to the limited partners and 15% to the General Partner.
Item 13. Certain Relationships and Related Transactions
See Item 11 for a discussion of the Partnership's related party
transactions.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements - See Part II, Item 8 hereof.
2. Financial Statement Schedule - None.
Schedules not listed above have been omitted because they are not
applicable or are not required or the information required to be set
forth therein is included in the Financial Statements or Notes thereto.
3. Exhibits - The following exhibits are incorporated herein by reference:
(i) Amended and Restated Agreement of Limited Partnership (Incorporated by
reference to Exhibit A to Amendment No. 2 to Form S-1 Registration
Statement No. 2-99858 filed with the Securities and Exchange
Commission on December 12, 1986).
(ii) Certificate of Limited Partnership of the Partnership (Incorporated
herein by reference to Exhibit 3.01 to Form S-1 Registration Statement
No. 2-99858 filed with the Securities and Exchange Commission on
August 23, 1985 and to Exhibit 3.01 to Amendment No. 1 to Form S-1
Registration Statement No. 2-99858 filed with the Securities and
Exchange Commission on August 27, 1986).
(iii)Form of Management Agreement between the Partnership and Crossgate
Leasing, Inc. (Incorporated herein by reference to Exhibit 10.01 to
Amendment No. 1 to Form S-1 Registration Statement No. 2-99858 filed
with the Securities and Exchange Commission on August 27, 1986).
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Partnership during the quarter
ended December 31, 1998.
<PAGE>
ICON Cash Flow Partners, L.P., Series A
(A Delaware Limited Partnership)
December 31, 1998
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ICON CASH FLOW PARTNERS, L.P., Series A
File No. 2-99858 (Registrant)
By its General Partner, ICON Capital Corp.
Date: March 30, 1999 /s/ Beaufort J. B. Clarke
----------------------------------------------
Beaufort J. B. Clarke
Chairman, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacity and on the dates indicated.
ICON Capital Corp.
sole General Partner of the Registrant
Date: March 30, 1999 /s/ Beaufort J. B. Clarke
-------------------------
Beaufort J. B. Clarke
Chairman, Chief Executive Officer and Director
Date: March 30, 1999 /s/ Paul B. Weiss
-----------------
Paul B. Weiss
President and Director
Date: March 30, 1999 /s/ Kevin F. Redmond
--------------------
Kevin F. Redmond
Chief Financial Officer
(Principal Financial and Account Officer)
Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrant Which have not Registered Securities Pursuant to
Section 12 of the Act
No annual report or proxy material has been sent to security holders. An annual
report will be sent to the limited partners and a copy will be forwarded to the
Commission.
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000775346
<NAME> ICON Cash Flow Partners, L.P., Series A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 16,999
<SECURITIES> 0
<RECEIVABLES> 8,934
<ALLOWANCES> 1,864
<INVENTORY> 0
<CURRENT-ASSETS> * 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,500
<CURRENT-LIABILITIES> ** 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 12,957
<TOTAL-LIABILITY-AND-EQUITY> 23,500
<SALES> 78,686
<TOTAL-REVENUES> 80,666
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,925
<LOSS-PROVISION> (22,242)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 81,983
<EPS-PRIMARY> 15.55
<EPS-DILUTED> 15.55
<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>
