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 33-28145
ICON Cash Flow Partners, L.P., Series B
(Exact name of registrant as specified in its charter)
Delaware 13-3518939
(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 B
(A Delaware Limited Partnership)
PART I - FINANCIAL INFORMATION
The following financial statements of ICON Cash Flow Partners, L.P.,
Series B (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 B
(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 finance
leases, financings, equity investment in joint venture and operating leases of
49%, 36%, 15% and less than 1% of total investments at June 30, 1996,
respectively, and 70%, 15%, 14% and 1% of total investments at June 30, 1995,
respectively.
Three Months Ended June 30, 1996 and 1995
Results of Operations
For the three months ended June 30, 1996 and 1995, the Partnership leased
or financed equipment with an initial cost of $523,964 and $599,163,
respectively to 54 and 27 lessees or equipment users, respectively.
Revenues for the three months ended June 30, 1996 were $121,474,
representing a decrease of $100,884 or 45% from 1995. The decrease in revenues
was primarily attributable to a decrease in finance income of $51,664 or 39% and
rental income of $28,593 or 100% from 1995. Results were also affected by a
decrease in net gain on sales or remarketing of equipment of $952 or 4% and a
decrease in interest income and other of $3,326 or 31% from 1995. The overall
decrease in finance income resulted from the decrease in the size of the average
portfolio from 1995 to 1996. Net gain on sales or remarketing of equipment
decreased due to a decrease in the number of leases maturing, and the underlying
equipment being sold or remarketed for which the proceeds received were in
excess of the remaining carrying value of the equipment. Rental income decreased
due to the Partnership's reduced investment in operating leases. The decrease in
interest income and other resulted from the decrease in the average cash balance
from 1995 to 1996.
Expenses for the three months ended June 30, 1996 were $65,354,
representing a decrease of $79,908, or 55% from 1995. The decrease in expenses
was primarily attributable to a decrease in interest expense of $38,421 or 75%
and a decrease in management fees of $21,255 or 100% from 1995. Results were
also affected by a decrease in amortization of initial direct costs of $5,857 or
100%, a decrease in depreciation expense of $14,945 or 100%, a decrease in
administrative expense reimbursements of $8,470 or 40%, and an increase in
general and administrative expense of $9,040 or 30% from 1995. The decrease in
interest expense resulted from a decrease in the average debt outstanding from
1995 to 1996. Amortization of initial direct costs, depreciation expense and
administrative expense reimbursements, decreased due to the decrease in the
average size of the portfolio from 1995 to 1996. The decrease in management fees
was attributable to an amendment to the Partnership agreement, which was adopted
on March 20, 1996. The amendment eliminates the Partnership's obligation to pay
management fees effective from and after November 15, 1995.
Net income for the three months ended June 30, 1996 and 1995 was $56,120
and $77,096, respectively. The net income per weighted average limited
partnership unit was $.28 and $.38 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 $273,158 and $205,814,
respectively, and proceeds from sales of equipment of $31,942 and $434,573,
respectively. These funds, along with previously accumulated excess cash from
operations and proceeds from sales of equipment, were used to make payments on
borrowings, to fund cash distributions and to purchase equipment. The
Partnership intends to continue to purchase additional equipment and to fund
cash distributions utilizing cash accumulated from prior periods, cash from
operations, proceeds from sales of equipment and borrowings.
Cash distributions to limited partners for the three months ended June 30,
1996 and 1995, which were paid monthly, totaled $449,550 and $450,000,
respectively, of which $55,559 and $76,325 was investment income and $393,991
and $373,675 was a return of capital, respectively. The monthly annualized cash
distribution rate to limited partners was 9.00%, of which 1.11% and 1.53% was
investment income and 7.89% and 7.47% 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 $2.25, of which $.28 and $.38 was
investment income and $1.97 and $1.87 was a return of capital, respectively. The
Partnership had non-recourse notes payable at June 30, 1996 and 1995 of $517,586
and $2,438,493, respectively.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
June 30, 1996
General Partner's Discussion and Analysis of
Financial Condition and Results of Operations
Six Months Ended June 30, 1996 and 1995
Results of Operations
For the six months ended June 30, 1996 and 1995, the Partnership leased or
financed equipment with an initial cost of $523,964 and $1,491,729 to 27 and 40
lessees or equipment users, respectively. The weighted average initial
transaction term relating to these transactions was 42 and 53 months,
respectively.
Revenues for the six months ended June 30, 1996 were $324,538,
representing a decrease of $266,147 or 45% from 1995. The decrease in revenues
was primarily attributable to a decrease in finance income of $114,878 or 42%, a
decrease in rental income of $57,186 or 100% and a decrease in income from
equity investment in joint venture of $27,974 or 6% from 1995. Results were also
affected by a decrease in net gain on sales or remarketing of equipment of
$53,998 or 29% and a decrease in interest income and other of $12,111 or 39%
from 1995. The overall decrease in finance income resulted from the decrease in
the average size of the portfolio from 1995 to 1996. Rental income decreased due
to the Partnership's reduced investment in operating leases. Net gain on sales
or remarketing of equipment decreased due to a decrease in the number of leases
maturing, and the underlying equipment being sold or remarketed for which the
proceeds received were in excess of the remaining carrying value of the
equipment. The decrease in interest income and other resulted from the decrease
in the average cash balance from 1995 to 1996.
Expenses for the six months ended June 30, 1996 were ($109.459),
representing a decrease of $447,414 from 1995. The decrease in expenses resulted
primarily from a reversal of accrued and unpaid management fees of $228,906.
This reversal was attributable to the solicitation of an affirmative vote of the
limited partners to amend the Partnership agreement. The amendment, which was
adopted on March 20, 1996, is effective from and after November 15, 1995, and
specifically eliminates the Partnership's obligation to pay such fees. The
decrease in expenses also resulted from a decrease in interest expense of
$84,883 or 75%, a decrease in the provision for bad debts of $25,000 or 100%, a
decrease in amortization of initial direct costs of $26,671 or 100%, a decrease
in depreciation expense of $29,890 or 100%, and a decrease in administrative
expense reimbursements of $18,959 or 42% from 1995. Interest expense decreased
due to a decrease in the average debt outstanding from 1995 to 1996. As a result
of an analysis of delinquency, an assessment of overall risk and a review of
historical loss experience, it was determined that no provision for bad debts
was required for the six months ended June 30, 1996. Amortization of initial
direct costs, depreciation expense, 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 $433,997
and $252,730, respectively. The net income per weighted average limited
partnership unit was $2.15 and $1.25 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 $491,900 and $276,877,
respectively, proceeds from sales of equipment of $367,136 and $1,123,941,
respectively. These funds, along with previously accumulated excess cash from
operations and proceeds from sales of equipment, were used to make payments on
borrowings, to fund cash distributions and to purchase equipment. The
Partnership intends to continue to purchase additional equipment and to fund
cash distributions utilizing cash accumulated from prior periods, cash from
operations, proceeds from sales of equipment and borrowings.
Cash distributions to limited partners for the six months ended June 30,
1996 and 1995, which were paid monthly, totaled $899,100 and $900,000,
respectively, of which $429,657 and $250,203 was investment income and $469,443
and $649,797 was a return of capital, respectively. The monthly annualized cash
distribution rate to limited partners was 9.00% for 1996 and 1995, of which
4.30% and 2.50% was investment income and 4.70% and 6.50% 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 $4.50, of which
$2.15 and $1.25 was investment income and $2.35 and $3.25 was a return of
capital, respectively.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
June 30, 1996
General Partner's Discussion and Analysis of
Financial Condition and Results of Operations
The Partnership's Reinvestment Period expired on November 15, 1995, five
years after the Final Closing Date. The General Partner distributed a Definitive
Consent Statement to the Limited Partners to solicit approval of two amendments
to the Partnership Agreement. As of March 20, 1996 these amendments were agreed
to and are effective from and after November 15, 1995. The amendments: (1)
extend the Reinvestment Period for a maximum of four additional years and
likewise delay the start and end of the Liquidation Period, and (2) eliminate
the Partnership's obligation to pay the General Partner $220,000 of the $347,000
accrued and unpaid management fees as of November 15, 1995, and $171,000 of
additional management fees which would otherwise accrue during the present
Liquidation Period. The portion of the accrued and unpaid management fees that
would be payable to the General Partner, or $127,000 ($347,000 less $220,000)
will be returned to the Partnership in the form of an additional Capital
Contribution by the General Partner.
On February 3, 1995, the Partnership and two affiliates, ICON Cash Flow
Partners, L.P., Series C ("Series C"), and ICON Cash Flow Partners L.P. Six
("L.P. Six") formed ICON Asset Acquisition L.L.C. I ("ICON Asset Acquisition
LLC") as a special purpose limited liability company. ICON Asset Acquisition LLC
was formed for the purpose of acquiring, managing and securitizing a portfolio
of leases. The Partnership, Series C and L.P. Six contributed $1,000,000 (8.93%
interest), $1,500,000 (13.39% interest) and $8,700,000 (77.68% interest),
respectively, to ICON Asset Acquisition LLC. ICON Asset Acquisition LLC
established a warehouse line of credit with ContiTrade Services Corp. with a
maximum amount available of $20,000,000.
On February 17, 1995, ICON Asset Acquisition LLC purchased 975 finance
leases of an existing portfolio from First Sierra Financial, Inc. utilizing
$16,273,793 of proceeds from the warehouse line, $10,857,427 in contributions
received from the Partnership and affiliates and $723,046 in cash adjustments at
closing, (relating primarily to rents received by the seller from lessees prior
to closing and for the benefit of ICON Asset Acquisition LLC.) The purchase
price of the portfolio totaled $27,854,266, and the underlying equipment
consists of graphic arts and printing equipment. The terms of the leases in this
portfolio range from 12 to 72 months. ICON Asset Acquisition LLC acquired lease
contracts which were less than 60 days delinquent and which met the
Partnership's overall credit underwriting criteria. The purchase price of the
portfolio was determined by discounting the future contractual cash flows. All
such leases are net leases and are reported and accounted for as finance leases.
The Partnership accounts for its investment in ICON Asset Acquisition LLC as an
equity investment.
On September 5, 1995, ICON Asset Acquisition LLC securitized substantially
all of its portfolio. Proceeds from the securitization were used to pay down its
existing line of credit and excess proceeds were returned to the Partnership
based on its pro rata interest. ICON Asset Acquisition LLC became the beneficial
owner of a trust and the Prudential Insurance Company of America ("Prudential")
is treated as the lender to the trust. The trustee for the trust is Texas
Commerce Bank ("TCB"). In conjunction with this securitization, the portfolio,
as well as the General Partner's servicing capabilities, were rated "A" by Duff
& Phelps, a nationally recognized rating agency. The General Partner, as
servicer, is responsible for managing, servicing, reporting on, and
administering the portfolio. All monies received from the portfolios are
remitted to TCB. TCB is responsible for disbursing to Prudential its respective
principal and interest, and to ICON Asset Acquisition LLC, the excess of cash
collected over debt service from the portfolio. ICON Asset Acquisition LLC
accounts for this investment as an investment in finance leases and financings.
Prudential's investment in the trust is accounted for as non-recourse debt on
ICON Asset Acquisition LLC's books and records. All monies received and remitted
to TCB from the securitized portfolio are accounted for as a reduction in
related finance lease and financing receivables and all amounts paid to
Prudential by TCB are accounted for as a reduction of non-recourse debt.
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 B
(A Delaware Limited Partnership)
Balance Sheets
(unaudited)
June 30, December 31,
1996 1995
Assets
Cash ............................................. $ 287,420 $ 860,530
----------- -----------
Investment in finance leases
Minimum rents receivable ....................... 1,888,454 2,315,053
Estimated unguaranteed residual values ......... 245,026 498,371
Initial direct costs ........................... -- 4
Unearned income ................................ (262,161) (322,848)
Allowance for doubtful accounts ................ (125,445) (116,767)
----------- -----------
1,745,874 2,373,813
Investment in financings
Receivables due in installments ................ 1,657,150 1,356,663
Unearned income ................................ (279,038) (230,908)
Allowance for doubtful accounts ................ (47,798) (47,798)
----------- -----------
1,330,314 1,077,957
Equity investment in joint venture ............... 566,468 751,860
----------- -----------
Investment in operating leases
Equipment, at cost ............................. 125,592 125,592
Accumulated depreciation ....................... (124,955) (124,955)
----------- -----------
637 637
----------- -----------
Other assets ..................................... 43,499 4,905
----------- -----------
Total assets ..................................... $ 3,974,212 $ 5,069,702
===========
Liabilities and Partners' Equity
Notes payable - non-recourse ..................... $ 517,486 $ 802,012
Accounts payable to General Partner and
affiliates, net ................................ 159,051 392,686
Accounts payable - other ......................... 154,196 199,455
Security deposits and deferred credits ........... 48,888 106,773
----------- -----------
879,621 1,500,926
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ................................ (141,026) (136,284)
Limited partners (199,800 and 200,000
units outstanding, $100 per unit original
issue price in 1995 and 1994, respectively) .. 3,235,617 3,705,060
----------- -----------
Total partners' equity ........................... 3,094,491 3,568,776
-----------
Total liabilities and partners' equity ........... $ 3,974,212 $ 5,069,702
=========== ===========
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(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 ................. $ 80,155 $ 131,819 $ 159,820 $ 274,698
Net gain on sales or
remarketing of equipment ..... 24,660 25,612 129,231 183,229
Income from equity investment
in joint venture ............. 9,421 25,770 16,259 44,233
Rental income .................. -- 28,593 -- 57,186
Interest income and other ...... 7,238 10,564 19,228 31,339
--------- --------- --------- ---------
Total revenues ................. 121,474 222,358 324,538 590,685
--------- --------- --------- ---------
Expenses
General and administrative ..... 39,418 30,378 64,528 53,320
Interest ....................... 12,990 51,411 28,998 113,881
Administrative expense
reimbursement
- General Partner ............. 12,945 21,415 25,916 44,875
Amortization of initial
direct costs ................. 1 5,858 5 26,676
Management fee
- General Partner ............ -- 21,255 (228,906) 44,313
Depreciation ................... -- 14,945 -- 29,890
Provision for bad debts ........ -- -- -- 25,000
--------- --------- --------- ---------
Total expenses ................. 65,354 145,262 (109,459) 337,955
--------- --------- --------- ---------
Net income ....................... $ 56,120 $ 77,096 $ 433,997 $ 252,730
========= ========= ========= =========
Net income allocable to:
Limited partners ............... $ 55,559 $ 76,325 $ 429,657 $ 250,203
General Partner ................ 561 771 4,340 2,527
--------- --------- --------- ---------
$ 56,120 $ 77,096 $ 433,997 $ 252,730
========= ========= ========= =========
Weighted average number of limited
partnership units outstanding .. 199,800 200,000 199,800 200,000
========= ========= ========= =========
Net income per weighted average
limited partnership unit ....... $ .28 $ .38 $ 2.15 $ 1.25
========= ========= ========= =========
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(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, 1993 and 1992
(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 $ 8,539,241 $ (87,492) $ 8,451,749
Cash distributions to partners $11.19 $1.14 (2,466,667) (24,917) (2,491,584)
Net income 228,481 2,308 230,789
---------- -------- ----------
Balance at December 31, 1993 6,301,055 (110,101) 6,190,954
Cash distributions to partners $ 7.07 $1.93 (1,800,000) (18,182) (1,818,182)
Net income 386,136 3,900 390,036
---------- -------- ----------
Balance at December 31, 1994 4,887,191 (124,383) 4,762,808
Cash distributions to partners $ 5.89 $3.11 (1,799,763) (18,180) (1,817,943)
Limited partnership units
redeemed (200 units) (3,967) - (3,967)
Net income 621,599 6,279 627,878
---------- -------- ----------
Balance at December 31, 1995 3,705,060 (136,284) 3,568,776
Cash distributions to partners $ 2.35 $2.15 (899,100) (9,082) (908,182)
Net income 429,657 4,340 433,997
---------- -------- ----------
Balance at June 30, 1996 $ 3,235,617 $(141,026) $ 3,094,591
=========== ========= ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Statements of Cash Flows
For the Six Months Ended June 30,
(unaudited)
<TABLE>
1996 1995
---- ----
<S> <C> <C>
Cash flows provided by operating activities:
Net income ........................................... $ 433,997 $ 252,730
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ....................................... -- 29,890
Finance income portion of receivables paid
directly to lenders by lessees .................... (33,081) (142,838)
Amortization of initial direct costs ............... 5 26,676
Net gain on sales or remarketing of equipment ...... (129,231) (183,229)
Interest expense on non-recourse financing paid
directly by lessees ............................... 28,998 96,916
Interest expense accrued on non-recourse debt ...... -- 16,965
Collection of principal - non-financed receivables . 285,673 532,439
Income from equity investment in joint venture ..... (16,259) (44,233)
Distribution from investment in joint venture ...... 201,651 31,545
Rental income - assigned operating lease receivables -- --
Changes in operating assets and liabilities:
Allowance for doubtful accounts ................... (8,395) (2,440)
Accounts payable to General Partner and
affiliates, net .................................. (233,635) 21,557
Accounts payable - other .......................... (45,259) (15,920)
Security deposits and deferred credits ............ (57,886) (261,384)
Other assets ...................................... (12,094) (23,200)
Other, net ........................................ 77,416 (58,597)
----------- -----------
Total adjustments .............................. 57,903 24,147
----------- -----------
Net cash provided by operating activities .......... 491,900 276,877
----------- -----------
Cash flows provided by (used in) investing activities:
Proceeds from sales of equipment ..................... 367,136 1,231,941
Investment in joint venture .......................... -- (1,000,000)
Equipment and receivables purchased .................. (523,964) (1,444,381)
Net cash used in investing activities .............. (156,828) (1,212,440)
----------- -----------
Cash flows used in financing activities:
Cash distributions to partners ....................... (908,182) (909,091)
----------- -----------
Net cash used in financing activities .............. (908,182) (909,091)
----------- -----------
Net decrease in cash ................................... (573,110) (1,844,654)
Cash, beginning of period .............................. 860,530 2,391,405
----------- -----------
Cash, end of period .................................... $ 287,420 $ 546,751
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Statements of Cash Flows (continued)
(unaudited)
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 lenders by lessees $ 268,958 $ 930,668
Principal and interest on non-recourse financing
paid directly by lessees ........................ (268,958) (930,668)
Decrease in notes payable non-recourse
due to terminations ............................ (44,572) (744,493)
Increase (decrease) in security deposits
and deferred credits ........................... 44,572 (299,114)
Decrease in investment in finance leases
due to terminations ............................ -- 1,043,607
----------- -----------
$ -- $ --
=========== ===========
Interest expense for the six months ended June 30, 1996 and 1995 consisted
of interest expense on non-recourse financing accrued or paid directly to
lenders by lessees of $28,998 and $113,881, respectively.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(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. Investment in Joint Venture
The Partnership Agreement allows the Partnership to invest in joint
ventures with other limited partnerships sponsored by the General Partner
provided that the investment objectives of the joint ventures are consistent
with that of the Partnership.
On February 3, 1995, the Partnership and two affiliates, ICON Cash Flow
Partners, L.P. Series C ("Series C"), and ICON Cash Flow Partners L.P. Six
("L.P. Six") formed ICON Asset Acquisition L.L.C. I ("ICON Asset Acquisition
LLC") as a special purpose limited liability company. ICON Asset Acquisition LLC
was formed for the purpose of acquiring, managing and securitizing a portfolio
of leases. The Partnership, Series C and L.P. Six contributed $1,000,000 (8.93%
interest), $1,500,000 (13.39% interest) and $8,700,000 (77.68% interest),
respectively, to ICON Asset Acquisition LLC. ICON Asset Acquisition LLC
established a warehouse line of credit with ContiTrade Services Corp. with a
maximum amount available of $20,000,000. The warehouse line expires on August
31, 1995 and borrowings under the line bear interest at the rate of LIBOR plus
3%. The Partnership's 8.93% investment in ICON Asset Acquisition LLC, which is
accounted for under the equity method, totaled $1,012,688 at June 30, 1996. The
General Partner manages and controls the business affairs of the Partnership,
Series C and L.P. Six. As a result of this common control and the Partnership's
ability to influence the activities of the joint venture, the Partnership's
investment in the joint venture is accounted for under the equity method.
Profits, losses, excess cash and disposition proceeds are allocated to the
Partnership in direct relation to its respective interest in the joint venture.
On February 17, 1995, ICON Asset Acquisition LLC purchased 975 finance
leases of an existing lease portfolio from First Sierra Financial, Inc.
utilizing $16,273,793 of proceeds from the warehouse line, $10,857,427 in
contributions received from the Partnership and affiliates and $723,046 in cash
adjustments at closing, relating primarily to rents received by the seller from
lessees prior to closing and for the benefit of ICON Asset Acquisition L.L.C.
The purchase price of the portfolio totaled $27,854,266, the underlying
equipment consists of graphic arts and printing equipment and the terms of the
leases range from 12 to 72 months. ICON Asset Acquisition LLC acquired lease
contracts which were less than 60 days delinquent, and, which met the
Partnership's
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
overall credit underwriting criteria. The purchase price of the portfolio was
determined by discounting the future contractual cash flows. All such leases are
net leases and are reported and accounted for as finance leases. The Partnership
accounts for its investment in ICON Asset Acquisition LLC as an equity
investment.
On September 5, 1995, ICON Asset Acquisition LLC securitized substantially
all of its portfolio. Proceeds from the securitization were used to pay down its
existing line of credit and excess proceeds were returned to the Partnership
based on its pro rata interest. ICON Asset Acquisition LLC became the beneficial
owner of a trust and the Prudential Insurance Company of America ("Prudential")
is treated as the lender to the trust. The trustee for the trust is Texas
Commerce Bank ("TCB"). In conjunction with this securitization, the portfolio,
as well as the General Partner's servicing capabilities, were rated "A" by Duff
& Phelps, a nationally recognized rating agency. The General Partner, as
servicer, is responsible for managing, servicing, reporting on, and
administering the portfolio. All monies received from the portfolio are remitted
to TCB. TCB is responsible for disbursing to Prudential its respective principal
and interest, and to ICON Asset Acquisition LLC, the excess of cash collected
over debt service from the portfolio. ICON Asset Acquisition LLC accounts for
this investment as an investment in finance leases and financings. Prudential's
investment in the trust is accounted for as non-recourse debt on ICON Asset
Acquisition LLC's books and records. All monies received and remitted to TCB
from the securitized portfolio are accounted for as a reduction in related
finance lease and financing receivables and all amounts paid to Prudential by
TCB are accounted for as a reduction of non-recourse debt. Information as to the
financial position and results of operations of ICON Asset Acquisition LLC as of
and for the three months ended June 30, 1996 is summarized below:
June 30, 1996
Assets $18,156,505
Liabilities 11,811,289
Equity $ 6,345,216
===========
Six Months Ended
June 30, 1996
Net income $ 182,069
==========
4. Amendment to Partnership Agreement
The Partnership's Reinvestment Period expired on November 15, 1995, five
years after the Final Closing Date. The General Partner distributed a Definitive
Consent Statement to the Limited Partners to solicit approval of two amendments
to the Partnership Agreement. These amendments were agreed to and are effective
from and after November 15, 1995. The amendments: (1) extend the Reinvestment
Period for a maximum of four additional years and likewise delay the start and
end of the Liquidation Period, and (2) eliminate the Partnership's obligation to
pay the General Partner $220,000 of the $347,000 accrued and unpaid management
fees as of November 15, 1995, and $171,000 of additional management fees which
would otherwise accrue during the present Liquidation Period. The portion of the
accrued and unpaid management fees that would be payable to the General Partner,
or $127,000 ($347,000 less $220,000) will be returned to the Partnership in the
form of an additional Capital Contribution by the General Partner.
5. Related Party Transactions
For the six months ended June 30, 1996, due to the approval of the
amendments as discussed in Note 3, the Partnership reversed accrued and unpaid
management fees in the amount of $228,906. During the six months ended June 30,
1995, the Partnership paid or accrued to the General Partner management fees of
$44,313. For the six months ended June 30, 1996 and 1995, the Partnership paid
or accrued to the General Partner administrative expense reimbursements of
$25,916 and $44,875 respectively, which were charged to operations. The payment
of the remaining management fees have been deferred and as of March 31, 1996,
$127,000 in management fees have been accrued but not paid (see Note 2).
The Partnership and two affiliates, Series E and L.P. Six, formed a joint
venture, ICON Asset Acquisition LLC (see Note 2 for additional information
relating to the joint venture).
For the six months ended June 30, 1996 and 1995, there were no acquisition
fees paid or accrued by the Partnership.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(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 B
(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 B
File No. 33-28145 (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> 0000849278
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 287,420
<SECURITIES> 0
<RECEIVABLES> 3,249,431
<ALLOWANCES> 173,243
<INVENTORY> 43,499
<CURRENT-ASSETS> * 0
<PP&E> 125,592
<DEPRECIATION> 124,955
<TOTAL-ASSETS> 3,974,212
<CURRENT-LIABILITIES> ** 0
<BONDS> 517,486
0
0
<COMMON> 0
<OTHER-SE> 3,094,591
<TOTAL-LIABILITY-AND-EQUITY> 3,974,212
<SALES> 324,538
<TOTAL-REVENUES> 324,538
<CGS> 5
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (138,462)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,998
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 433,997
<EPS-PRIMARY> 2.15
<EPS-DILUTED> 2.15
<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>
