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 March 31, 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
incorporation or organization) Identification Number)
600 Mamaroneck Avenue, Harrison, New York 10528-1632
- --------------------------------------------------------------------------------
(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>
March 31, December 31,
1997 1996
Assets
<S> <C> <C>
Cash $ 638,640 $ 123,486
------------- ------------
Investment in finance leases
Minimum rents receivable 1,928,851 1,319,810
Estimated unguaranteed residual values 390,803 202,614
Unearned income (355,759) (174,980)
Allowance for doubtful accounts (74,557) (74,557)
------------- ------------
1,889,338 1,272,887
Investment in financings
Receivables due in installments 1,247,965 1,377,159
Unearned income (178,415) (209,095)
Allowance for doubtful accounts (47,798) (47,798)
------------- ------------
1,021,752 1,120,266
Equity investment in joint venture 272,353 351,012
------------- ------------
Investment in operating leases
Equipment, at cost 119,662 119,662
Accumulated depreciation (119,562) (119,562)
------------- ------------
100 100
------------- ------------
Other assets 11,767 19,692
------------- ------------
Total assets $ 3,833,950 $ 2,887,443
============= ============
Liabilities and Partners' Equity
Notes payable - recourse $ 1,460,292 $ -
Notes payable - non-recourse 134,148 265,154
Accounts payable to General Partner and affiliates, net 169,046 178,991
Accounts payable - other 135,230 131,148
Security deposits and deferred credits 26,686 10,354
------------- ------------
1,925,402 585,647
------------- ------------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (152,886) (148,954)
Limited partners (199,800 units outstanding,
$100 per unit original issue price) 2,061,434 2,450,750
------------- ------------
Total partners' equity 1,908,548 2,301,796
------------- ------------
Total liabilities and partners' equity $ 3,833,950 $ 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
For the Three Months Ended March 31,
(unaudited)
1997 1996
---- ----
Revenues
Finance income $ 69,242 $ 79,665
Net gain on sales or remarketing
of equipment 28,197 104,571
Interest income and other 7,088 11,990
Income from equity investment
in joint venture 3,944 6,838
---------- ----------
Total revenues 108,471 203,064
---------- ----------
Expenses
Interest 21,262 16,008
General and administrative 14,445 25,110
Administrative expense
reimbursements - General Partner 11,922 12,971
Amortization of initial
direct costs - 4
Management fees - General Partner - (228,906)
---------- ----------
Total expenses 47,629 (174,813)
---------- ----------
Net income $ 60,842 $ 377,877
========== ==========
Net income allocable to:
Limited partners $ 60,234 $ 374,098
General Partner 608 3,779
---------- ----------
$ 60,842 $ 377,877
========== ==========
Weighted average number of limited
partnership units outstanding 199,800 199,800
========== ==========
Net income per weighted average
limited partnership unit $ .30 $ 1.87
========== ==========
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 Three Months Ended March 31, 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)
Balance at
<S> <C> <C> <C> <C> <C>
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 $ 1.95 $ .30 (449,550) (4,540) (454,090)
Net income 60,234 608 60,842
--------------- ------------ --------------
Balance at
March 31, 1997 $ 2,061,434 $ (152,886) $ 1,908,548
=============== ============ ==============
</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 Three Months Ended March 31,
(unaudited)
<TABLE>
1997 1996
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 60,842 $ 377,877
------------ ------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Finance income portion of receivables paid directly to
lenders by lessees (6,244) (17,950)
Amortization of initial direct costs - 4
Net gain on sales or remarketing of equipment (28,197) (104,571)
Interest expense on non-recourse financing paid directly
by lessees 3,470 16,008
Collection of principal - non-financed receivables 183,863 132,508
Income from equity investment in joint venture (3,944) (6,838)
Distribution from equity investment in joint venture 82,603 170,396
Changes in operating assets and liabilities:
Accounts payable to General Partner and affiliates, net (9,945) (254,488)
Allowance for doubtful accounts - 2,725
Accounts payable - other 4,082 (52,335)
Security deposits and deferred credits 16,332 (64,068)
Other, net 318 19,574
------------ ------------
Total adjustments 242,338 (159,035)
------------ ------------
Net cash provided by operating activities 303,180 218,842
------------ ------------
Cash flows from investing activities:
Proceeds from sales of equipment 28,364 335,194
Equipment and receivables purchased (822,592) -
------------ ----------
Net cash provided by (used in) investing activities (794,228) 335,194
------------ ------------
Cash flows from financing activities:
Proceeds from note payable - recourse 1,500,000 -
Principal payments on note payable - recourse (39,708) -
Cash distributions to partners (454,090) (454,091)
------------ ------------
Net cash provided by (used in) financing activities 1,006,202 (454,091)
------------ ------------
Net increase in cash 515,154 99,945
Cash at beginning of period 123,486 860,530
------------ ------------
Cash at end of period $ 638,640 $ 960,475
============ ============
</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 three months ended March 31, 1997 and 1996, non-cash activities
included the following:
1997 1996
---- ----
Principal and interest on direct finance
receivables paid directly to lenders by lessees $ 134,476 $ 102,460
Principal and interest on non-recourse financing
paid directly by lessees (134,476) (102,460)
Decrease in notes payable non-recourse
due to terminations - (44,572)
Decrease in security deposits
and deferred credits - 44,572
--------- ----------
$ - $ -
========= ==========
Interest expense of $21,262 and $16,008 for the three months ended March
31, 1997 and 1996 consisted of interest expense on non-recourse financing
accrued or paid directly to lenders by lessees of $3,470 and $16,008,
respectively, and interest expense on note payable recourse of $17,792 and $0,
respectively.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements
March 31, 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 June 30, 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 quarter ended March 31, 1997 is
summarized below:
March 31, 1997
Assets $ 10,572,361
=============
Liabilities $ 7,520,698
=============
Equity $ 3,051,663
=============
Three Months Ended
March 31, 1997
Net income $ 44,165
=============
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 for 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 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 three months ended March 31, 1997, no management fees were accrued
or paid to the General Partner. For the three months ended March 31, 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
three months ended March 31, 1997 and 1996, the Partnership accrued or paid to
the General Partner administrative expense reimbursements of $11,922 and
$12,971, respectively, which were charged to operations. The payment of
remaining management fees have been deferred and, as of March 31, 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 three months ended March 31, 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 loan agreement grants a
security interest in certain Partnership payments and collateral, or equipment,
of a specified group of leases and financing transactions. The note bears
interest at 9%, and is payable in consecutive monthly installments. In addition,
the loan agreement contains restrictive covenants which include the maintenance
of minimum tangible net worth, as defined, and of certain financial ratios.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
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
representing 65%, 35%, 9% and less than 1% of total investments at March 31,
1997, respectively, and 55%, 28%, 17% and less than 1% of total investments at
March 31, 1996, respectively.
For the three months ended March 31, 1997, the Partnership leased or
financed equipment with an initial cost of $822,592 to 10 lessees or equipment
users, with a weighted average initial transaction term of 37 months.
Results of Operations for the Three Months Ended March 31, 1997 and 1996
Revenues for the three months ended March 31, 1997 were $108,471,
representing a decrease of $94,593 or 47% from 1996. The decrease in revenues
was due to a decrease in net gain on sales or remarketing of equipment of
$76,374 or 73%, a decrease in finance income of $10,423 or 13%, a decrease in
interest income and other of $4,902 or 41% and a decrease in income from equity
investment in joint venture of $2,894 or 42% from 1996. Finance income and
rental income decreased due to a decrease in the average size of the portfolio
from 1996 to 1997. 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. The decrease in income from equity investment in joint venture resulted
from a decrease in the average size of the portfolio under investment.
Expenses for the three months ended March 31, 1997 were $47,629,
representing a change of $222,442 from 1996. The variance in expenses resulted
primarily from the reversal of management fees of $228,906 for the three months
ended March 31, 1996. The increase in expenses also resulted from an increase in
interest expense of $5,254 or 33%. The increase in expenses was partially offset
by a decrease in general and administrative expenses of $10,665 or 42% and a
decrease in administrative expense reimbursements of $1,049 or 8% from 1996.
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 the decrease in the average size of the
portfolio.
Net income for the three months ended March 31, 1997 and 1996 was $60,842
and $377,877, respectively. The net income per weighted average limited
partnership unit was $.30 and $1.87 for 1997 and 1996, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the three months ended
March 31, 1997 and 1996 were net cash provided by operations of $303,180 and
$218,842, respectively, proceeds from sales of equipment of $28,364 and
$335,194, respectively and proceeds from borrowings of $1,500,000 in 1997. These
funds were used to purchase equipment, to fund cash distributions and to make
payments on borrowings. The Partnership intends to continue to purchase
additional equipment and to fund cash distributions utilizing funds from cash
provided by operations and proceeds from sales of equipment.
Cash distributions to limited partners for the three months ended March
31, 1997 and 1996, which were paid monthly, totaled $449,550 and $449,550,
respectively, of which $60,234 and $374,098 was investment income and $389,316
and $75,452 was a return of capital, respectively. The monthly cash distribution
rate was 9.00%, of which 1.0% and 7.50% was investment income and 8.0% and 1.50%
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 three months ended March 31, 1997 and
1996 was $2.25, of which $.30 and $1.87 was investment income and $1.95 and $.38
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 loan agreement grants a
security interest in certain Partnership payments and collateral, or equipment,
of a specified group of leases and financing transactions. The note bears
interest at 9%, and is payable in consecutive monthly installments. In addition,
the loan agreement contains restrictive covenants which include the maintenance
of minimum tangible net worth, as defined, and of certain financial ratios.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
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 March 31, 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
March 31, 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.
May 15, 1997 Gary N. Silverhardt
- ------------- ---------------------------------------
Date Gary N. Silverhardt
Chief Financial Officer
(Principal financial and account
officer of the General Partner of the
Registrant)
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000849278
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 638,640
<SECURITIES> 0
<RECEIVABLES> 3,033,445
<ALLOWANCES> 122,355
<INVENTORY> 11,767
<CURRENT-ASSETS> * 0
<PP&E> 119,662
<DEPRECIATION> 119,562
<TOTAL-ASSETS> 3,833,950
<CURRENT-LIABILITIES> ** 0
<BONDS> 1,594,440
0
0
<COMMON> 0
<OTHER-SE> 1,908,548
<TOTAL-LIABILITY-AND-EQUITY> 3,833,950
<SALES> 108,471
<TOTAL-REVENUES> 108,471
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 26,367
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,262
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60,842
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.30
<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>
