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, 1997
-----------------------------------------------------------
[ ] 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>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Balance Sheets
(unaudited)
<TABLE>
June 30, December 31,
1997 1996
Assets
<S> <C> <C>
Cash $ 497,142 $ 123,486
------------ ------------
Investment in finance leases
Minimum rents receivable 1,599,827 1,319,810
Estimated unguaranteed residual values 389,608 202,614
Unearned income (307,548) (174,980)
Allowance for doubtful accounts (74,557) (74,557)
------------ ------------
1,607,330 1,272,887
Investment in financings
Receivables due in installments 1,115,900 1,377,159
Unearned income (150,605) (209,095)
Allowance for doubtful accounts (47,798) (47,798)
------------ ------------
917,497 1,120,266
Equity investment in joint venture 238,399 351,012
------------ ------------
Investment in operating leases
Equipment, at cost 119,662 119,662
Accumulated depreciation (119,562) (119,562)
------------ ------------
100 100
------------ ------------
Other assets 15,194 19,692
------------ ------------
Total assets $ 3,275,662 $ 2,887,443
============ ============
Liabilities and Partners' Equity
Note payable - recourse $ 1,315,408 $ -
Notes payable - non-recourse - 265,154
Accounts payable to General Partner and affiliates, net 119,487 178,991
Accounts payable - other 134,470 131,148
Security deposits and deferred credits 208,585 10,354
------------ ------------
1,777,950 585,647
------------ ------------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (156,995) (148,954)
Limited partners (199,800 units outstanding,
$100 per unit original issue price) 1,654,707 2,450,750
------------ ------------
Total partners' equity 1,497,712 2,301,796
------------ ------------
Total liabilities and partners' equity $ 3,275,662 $ 2,887,443
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Statements of Operations
(unaudited)
<TABLE>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
---- ---- ---- ----
Revenues
<S> <C> <C> <C> <C>
Finance income $ 75,997 $ 80,155 $ 145,239 $ 159,820
Net gain on sales or
remarketing of equipment 14,323 24,660 42,520 129,231
Income from equity investment
in joint venture 11,142 9,421 15,086 16,259
Interest income and other 7,661 7,238 14,749 19,228
----------- ----------- ----------- ----------
Total revenues 109,123 121,474 217,594 324,538
----------- ----------- ----------- ----------
Expenses
Interest 31,681 12,990 52,943 28,998
General and administrative 22,214 39,418 36,659 64,528
Administrative expense reimbursement
- General Partner 11,972 12,945 23,894 25,916
Amortization of initial direct costs - 1 - 5
Management fees - General Partner - - - (228,906)
----------- ----------- ----------- ----------
Total expenses 65,867 65,354 113,496 (109,459)
----------- ----------- ----------- ----------
Net income $ 43,256 $ 56,120 $ 104,098 $ 433,997
=========== =========== =========== ==========
Net income allocable to:
Limited partners $ 42,823 $ 55,559 $ 103,057 $ 429,657
General Partner 433 561 1,041 4,340
----------- ----------- ----------- ----------
$ 43,256 $ 56,120 $ 104,098 $ 433,997
=========== =========== =========== ==========
Weighted average number of limited
partnership units outstanding 199,800 199,800 199,800 199,800
=========== =========== =========== ==========
Net income per weighted average
limited partnership unit $ .21 $ .28 $ .52 $ 2.15
=========== =========== =========== ==========
</TABLE>
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, 1997 and
the Years Ended December 31, 1996, 1995 and 1994
(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, 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 $ 6.28 $ 2.72 (1,798,200) (18,164) (1,816,364)
Net income 543,890 5,494 549,384
------------ ---------- -----------
Balance at
December 31, 1996 2,450,750 (148,954) 2,301,796
Cash distributions
to partners $ 3.98 $ .52 (899,100) (9,082) (908,182)
Net income 103,057 1,041 104,098
------------ ---------- -----------
Balance at
June 30, 1997 $ 1,654,707 $ (156,995) $ 1,497,712
============ ========== ===========
</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>
1997 1996
---- ----
Cash flows provided by operating activities:
<S> <C> <C>
Net income $ 104,098 $ 433,997
------------- ------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Finance income portion of receivables paid
directly to lenders by lessees (7,092) (33,081)
Amortization of initial direct costs - 5
Net gain on sales or remarketing of equipment (42,520) (129,231)
Interest expense on non-recourse financing paid
directly by lessees 3,798 28,998
Collection of principal - non-financed receivables 400,731 285,673
Income from equity investment in joint venture (15,086) (16,259)
Distribution from investment in joint venture 127,699 201,651
Changes in operating assets and liabilities:
Allowance for doubtful accounts - (8,395)
Accounts payable to General Partner and affiliates, net (59,504) (233,635)
Accounts payable - other 3,322 (45,259)
Security deposits and deferred credits 191,994 (57,886)
Other, net 37,474 65,322
------------- ------------
Total adjustments 640,816 57,903
------------- ------------
Net cash provided by operating activities 744,914 491,900
------------- ------------
Cash flows from investing activities:
Proceeds from sales of equipment 44,108 367,136
Equipment and receivables purchased (822,592) (523,964)
------------- ------------
Net cash used in investing activities (778,484) (156,828)
------------- ------------
Cash flows from financing activities:
Proceeds from note payable - recourse 1,500,000 -
Principal payments on note payable - recourse (184,592) -
Cash distributions to partners (908,182) (908,182)
------------- ------------
Net cash used in financing activities 407,226 (908,182)
------------- ------------
Net increase (decrease) in cash 373,656 (573,110)
Cash, beginning of period 123,486 860,530
------------- ------------
Cash, end of period $ 497,142 $ 287,420
============= ============
</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, 1997 and 1996, non-cash activities
included the following:
<TABLE>
1997 1996
---- ----
<S> <C> <C>
Principal and interest on direct finance
receivables paid directly to lenders by lessees $ 268,952 $ 268,958
Principal and interest on non-recourse financing
paid directly by lessees (268,952) (268,958)
Decrease in notes payable non-recourse
due to terminations - (44,572)
Increase (decrease) in security deposits
and deferred credits - 44,572
------------- ------------
$ - $ -
============= =============
</TABLE>
Interest expense of $52,943 and $28,998 for the six months ended June 30,
1997 and 1996 consisted of interest expense on non-recourse financing accrued or
paid directly to lenders by lessees of $3,798 and $28,998 respectively, and
interest expense on note payable recourse of $49,145 and $0, respectively.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements
June 30, 1997
(unaudited)
1. Basis of Presentation
The 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 1996 Annual Report on Form 10-K.
2. 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. On February 17, 1995, ICON Asset
Acquisition LLC purchased an existing portfolio of leases. The purchase price of
the portfolio totaled $27,854,266, and the underlying equipment consists of
graphic arts and printing equipment. On September 5, 1995, ICON Asset
Acquisition LLC securitized substantially all of its portfolio and became the
beneficial owner of a trust and the Prudential Insurance Company of America
("Prudential") the lender to the trust. On January 28, 1997, ICON Asset
Acquisition LLC re-financed its outstanding $7,780,000 obligation to Prudential
with proceeds it received from a loan from ICON Cash Flow Partners, L.P., Series
E ("Series E"), an affiliate of the Partnership. The loan is short-term, and is
expected to be re-financed by August 31, 1997. ICON Asset Acquisition LLC is
charged an interest rate that is equal to Series E's cost of funds, which is
approximately 8.0%.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
Information as to the financial position and results of operations of ICON Asset
Acquisition LLC as of and for the six months ended June 30, 1997 is summarized
below:
June 30, 1997
Assets $ 8,468,754
==============
Liabilities 5,797,326
Equity $ 2,671,428
==============
Six Months Ended
June 30, 1997
Net income $ 168,933
=============
3. 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 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
($127,000) will be deferred until the limited partners have received their
cumulative unpaid distribution, or the difference between 14% and 9%.
4. Related Party Transactions
For the six months ended June 30, 1997, no management fees were accrued or
paid to the General Partner. 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. For the six months
ended June 30, 1997 and 1996, the Partnership accrued or paid to the General
Partner administrative expense reimbursements of $23,894 and $25,916,
respectively, which were charged to operations. The payment of remaining
management fees have been deferred and, as of June 30, 1997, $127,000 in
management fees have been accrued but not paid.
The Partnership and two affiliates, Series C 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, 1997 and 1996 no acquisition fees were
paid or accrued by the Partnership.
5. Notes Payable Recourse
On February 13, 1997, the Partnership borrowed $1,500,000 from a bank
pursuant to a four year term loan agreement. The agreement grants a security
interest in certain Partnership lease rental payments and collateral relating to
a specified group of leases and financing transactions. The note bears interest
at 9%, and is payable in monthly installments.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
June 30, 1997
Item 2. 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
63%, 36%, 8% and less than 1% of total investments at June 30, 1997,
respectively, and 49%, 36%, 15% and less than 1% of total investments at June
30, 1996, respectively.
Results of Operations
Three Months Ended June 30, 1997 and 1996
For the three months ended June 30, 1997 and 1996, the Partnership leased
or financed equipment with an initial cost of $0 and $523,964, respectively to 0
and 54 lessees or equipment users, respectively.
Revenues for the three months ended June 30, 1997 were $109,123,
representing a decrease of $12,351 or 10% from 1996. The decrease in revenues
was attributable to a decrease in net gain on sales or remarketing of equipment
of $10,337 or 42% and a decrease in finance income of $4,158 or 5% from 1996.
Results were also affected by an increase in income from joint venture of $1,721
or 18% and an increase in interest income and other of $423 or 6% from 1996. The
decrease in net gain on sales or remarketing of equipment resulted from a
decrease in the total number of leases maturing in 1997 compared to 1996.
Finance income decreased due to a decrease in the average size of the portfolio
from 1996 to 1997.
Expenses for the three months ended June 30, 1997 were $65,867,
representing an increase of $513 or less than 1% from 1996. The increase in
expenses was primarily attributable to an increase in interest expense of
$18,691 or 144%. Results were also affected by a decrease in general and
administrative expense of $17,204 or 44%, and a decrease in administrative
expense reimbursements of $973 or 8%. The increase in interest expense resulted
from an increase in the average debt outstanding from 1996 to 1997. General and
administrative expense and administrative expense reimbursements decreased due
to a decrease in the average size of the portfolio from 1996 to 1997.
Net income for the three months ended June 30, 1997 and 1996 was $43,256
and $56,120, respectively. The net income per weighted average limited
partnership unit was $.21 and $.28 for 1997 and 1996, respectively.
Six Months Ended June 30, 1997 and 1996
For the six months ended June 30, 1997 and 1996, the Partnership leased or
financed equipment with an initial cost of $822,592 and $523,964, respectively,
to 10 and 27 lessees or equipment users, respectively. The weighted average
initial transaction term relating to these transactions was 37 and 42 months,
respectively.
Revenues for the six months ended June 30, 1997 were $217,594, representing
a decrease of $106,944 or 33% from 1996. The decrease in revenues was
attributable to a decrease in net gain on sales or remarketing of equipment of
$86,711 or 67%, a decrease in finance income of $14,581 or 9%, a decrease in
interest income and other of $4,479 or 23% and a decrease in income from equity
investment in joint venture of $1,173 or 7% from 1996. Net gain on sales or
remarketing of equipment decreased due to a decrease in the total number of
leases maturing in 1997 compared to 1996. The decrease in finance income
resulted from a decrease in the average size of the portfolio from 1996 to 1997.
The decrease in interest income and other resulted from a decrease in the
collection of late charges.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Expenses for the six months ended June 30, 1997 were $113,496, representing
an increase of $222,955 from 1996. The increase in expenses resulted primarily
from the reversal of management fees of $228,906 for the six months ended June
30, 1996. The increase in expenses also resulted from an increase in interest
expense of $23,945 or 83%. The increase in expenses was partially offset by
decrease in general and administrative expense of $27,869 or 43%, and a decrease
in administrative expense reimbursements of $2,022 or 8%. Interest expense
increased due to an increase in the average debt outstanding from 1996 to 1997.
General and administrative expense and administrative expense reimbursements
decreased due to a decrease in the average size of the portfolio from 1996 to
1997.
Net income for the six months ended June 30, 1997 and 1996 was $104,098 and
$433,997, respectively. The net income per weighted average limited partnership
unit was $.52 and $2.15 for 1997 and 1996, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the six months ended June
30, 1997 and 1996 were net cash provided by operations of $744,914 and $491,900,
respectively, proceeds from sales of equipment of $44,108 and $367,136,
respectively and proceeds from borrowings of $1,500,000 in 1997. These funds
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,
1997 and 1996, which were paid monthly, totaled $899,100, of which $103,057 and
$429,657 was investment income and $796,043 and $469,443 was a return of
capital, respectively. The monthly annualized cash distribution rate to limited
partners was 9.00% for 1997 and 1996, of which 1.03% and 4.30% was investment
income and 7.97% and 4.70% 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, 1997 and 1996 was $4.50, of which $.52 and $2.15 was investment income and
$3.98 and $2.35 was a return of capital, respectively.
On February 13, 1997, the Partnership borrowed $1,500,000 from a bank
pursuant to a four year term loan agreement. The agreement grants a security
interest in certain Partnership lease rental payments and collateral relating to
a specified group of leases and financing transactions. The note bears interest
at 9%, and is payable in monthly installments.
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 approved and became
effective 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,
($127,000) will be deferred until the limited partners have received their
cumulative unpaid distribution, or the difference between 14% and 9%.
As of June 30, 1997, 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.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
No reports or Form 8-K were filed by the Partnership during the quarter ended
June 30, 1997.
<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, 1997 Gary N. Silverhardt
- --------------- --------------------------------------------------
Date Gary N. Silverhardt
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-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 497,142
<SECURITIES> 0
<RECEIVABLES> 2,647,182
<ALLOWANCES> 122,355
<INVENTORY> 15,194
<CURRENT-ASSETS> * 0
<PP&E> 119,662
<DEPRECIATION> 119,562
<TOTAL-ASSETS> 3,275,662
<CURRENT-LIABILITIES> ** 0
<BONDS> 1,321,645
0
0
<COMMON> 0
<OTHER-SE> 1,497,712
<TOTAL-LIABILITY-AND-EQUITY> 3,275,662
<SALES> 217,594
<TOTAL-REVENUES> 217,594
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 60,553
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52,943
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,098
<EPS-PRIMARY> 0.52
<EPS-DILUTED> 0.52
<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>
