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, 1996
------------------------------------------------------
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 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 (I.R.S. Employer
incorporation or organization) Identification Number)
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 Interest
- --------------------------------------------------------------------------------
(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 B
(A Delaware Limited Partnership)
December 31, 1996
TABLE OF CONTENTS
Item Page
PART I
1. Business 3-4
2. Properties 4
3. Legal Proceedings 4
4. Submission of Matters to a Vote of Security Holders 4
PART II
5. Market for the Registrant's Securities and Related
Security Holder Matters 5
6. Selected Financial and Operating Data 5
7. General Partner's Discussion and Analysis of Financial
Condition and Results of Operations 6-8
8. Financial Statements and Supplementary Data 9-24
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 25
PART III
10. Directors and Executive Officers of the Registrant's
General Partner 25-26
11. Executive Compensation 26
12. Security Ownership of Certain Beneficial Owners
and Management 26
13. Certain Relationships and Related Transactions 27
PART IV
14. Exhibits, Reports and Amendments 27
SIGNATURES 28
Page 2
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
December 31, 1996
PART I
Item 1. Business
General Development of Business
ICON Cash Flow Partners, L.P., Series B (the "Partnership") was formed in
March 1989 as a Delaware limited partnership. The Partnership commenced business
operations on its initial closing date, September 22, 1989, with the admission
of 12,414.89 limited partnership units. Between October 1, 1989 and December 31,
1989, 16,647.07 additional units were admitted. Between January 1, 1990 and
November 16, 1990 (the final closing date), 170,938.04 additional units were
admitted bringing the final admission to 200,000 units totaling $20,000,000 in
capital contributions. During 1995, the Partnership redeemed 200 limited
partnership units leaving 199,800 limited partnership units outstanding at
December 31, 1995 and 1996. The sole general partner is ICON Capital Corp. (the
"General Partner").
Narrative Description of Business
The Partnership is an equipment leasing income fund. The principal
investment objective of the Partnership is to obtain the maximum economic return
from its investments for the benefit of its limited partners. To achieve this
objective, the Partnership has and intends to continue to: (1) acquire a
diversified portfolio of short-term, high-yield investments; (2) make monthly
cash distributions to its limited partners from cash from operations, commencing
with each limited partner's admission to the Partnership and continuing through
the Reinvestment Period; (3) re-invest substantially all undistributed cash from
operations and cash from sales in additional equipment and financing
transactions during the reinvestment period; and (4) sell the Partnership's
investments and distribute the cash from sales of such investments to its
limited partners within five and one-half to seven and one-half years of the
final closing date. In addition to acquiring equipment and entering into leases,
the Partnership also (1) acquires equipment already subject to leases originated
by affiliates and non-affiliated lessors and (2) enters into financing
transactions, which are (i) secured by the equipment financed and lease revenues
therefrom (if any) and additional collateral as deemed necessary by the credit
review committee of the General Partner, and (ii) evidenced by the irrevocable
obligation of the lessees.
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 by March 20, 1996. A majority of the limited
partnership units outstanding responded affirmatively, and the amendments were
adopted accordingly. These amendments are effective from and after November 15,
1995 and are as follows: (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 a portion of accrued and unpaid management fees, and any 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 will be returned to the Partnership in the form
of an additional Capital Contribution by the General Partner.
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 access to more
favorable financing. Competitive factors in the equipment leasing business
primarily involve pricing and other financial arrangements, equipment
remarketing capabilities and servicing of lessees.
Page 3
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
December 31, 1996
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
For the years ended December 31, 1996 and 1995, the Partnership purchased
and leased or financed $523,964 and $1,903,356 of equipment, respectively, with
a weighted average initial transaction term of 55 and 53 months, respectively.
At December 31, 1996, the weighted average initial transaction term of the
portfolio was 48 months. A summary of the portfolio equipment cost by category
held at December 31, 1996 and 1995 is as follows:
<TABLE>
December 31, 1996 December 31, 1995
-------------------------- ------------------------
Category Cost Percent Cost Percent
<S> <C> <C> <C> <C>
Retail systems $ 1,978,377 37.2% $ 3,227,662 39.8%
Restaurant equipment 747,151 14.1 701,485 8.7
Computer systems 731,997 13.8 1,718,467 21.2
Manufacturing & production 692,101 13.0 692,399 8.5
Office furniture & fixtures 446,075 8.4 842,008 10.4
Printing 175,597 3.3 195,233 2.4
Telecommunications 168,953 3.2 242,201 3.0
Video production 164,358 3.1 167,193 2.1
Medical 89,861 1.7 138,422 1.7
Automotive 55,776 1.0 55,776 .7
Material handling 26,533 .5 70,543 .9
Audio 24,542 .5 24,542 .3
Office equipment 14,569 .3 - -
Construction - - 24,724 .3
----------- ------- ----------- -----
$ 5,315,890 100.0% $ 8,100,655 100.0%
=========== ===== =========== =====
</TABLE>
The Partnership has one lease which individually represents greater than 10%
of the total portfolio equipment cost at December 31, 1996. The lease is for
restaurant furniture, fixtures and equipment with Hometown Buffet, Inc. and the
purchase price of the equipment represents 11.6% of the total portfolio
equipment cost at December 31, 1996.
Item 2. Properties
The Partnership neither owns nor leases office space or equipment for the
purpose of managing its day-to-day affairs. The General Partner has exclusive
control over all aspects of the business of the Partnership, including providing
any necessary office space. As such, the General Partner is compensated for
services related to the management of the Partnership's business.
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 1996.
Page 4
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
December 31, 1996
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,
- -------------- ---------------------------------
1996 1995
---- ----
Limited partners 1,764 1,776
General Partner 1 1
Item 6. Selected Financial and Operating Data
<TABLE>
Years Ended December 31,
---------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total revenues $ 519,663 $ 1,196,522 $ 1,616,676 $2,712,304 $4,643,437
=========== =========== =========== ========== ==========
Net income (loss) $ 549,384 $ 627,878 $ 390,036 $ 230,789 $ (397,818)
=========== =========== =========== ========== ==========
Net income (loss) allocable to
limited partners $ 543,890 $ 621,599 $ 386,136 $ 228,481 $ (393,840)
=========== =========== =========== ========== ==========
Net income (loss) allocable to the
General Partner $ 5,494 $ 6,279 $ 3,900 $ 2,308 $ (3,978)
=========== =========== =========== ========== ==========
Weighted average limited
partnership units outstanding 199,800 199,986 200,000 200,000 200,000
========== =========== =========== ========== ==========
Net income (loss) per weighted
average limited
partnership unit $ 2.72 $ 3.11 $ 1.93 $ 1.14 $ (1.97)
=========== =========== =========== ========== ==========
Distributions to limited
partners $ 1,798,200 $ 1,799,763 $ 1,800,000 $2,466,667 $2,800,000
= ========= =========== =========== ========== ==========
Distributions to the
General Partner $ 18,164 $ 18,180 $ 18,182 $ 24,917 $ 28,283
=========== =========== =========== ========== ==========
December 31,
----------------------------------------------------------------
1996 1995 1994 1993 1992
----- ---- ---- ---- ----
Total assets $ 2,887,443 $ 5,069,702 $10,144,096 $19,099,869 $27,521,331
=========== =========== =========== =========== ===========
Partners' equity $ 2,301,796 $ 3,568,776 $ 4,762,808 $ 6,190,954 $ 8,451,749
=========== =========== =========== =========== ===========
</TABLE>
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 5
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
December 31, 1996
Item 7. 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
47%, 41%, 11% and less than 1% at December 31, 1996, respectively, and 57%, 26%,
17% and less than 1% of total investments at December 31, 1995, respectively.
For the years ended December 31, 1996 and 1995, the Partnership leased or
finance equipment with initial costs of $523,964 and $1,903,356, respectively,
to 48 and 54 lessees or equipment users, respectively and invested $1,000,000 in
a joint venture in 1995.
Results of Operations for the Years Ended December 31, 1996 and 1995
Revenues for the year ended December 31, 1996 were $519,663, representing a
decrease of $676,859 or 57% from 1995. The decrease in revenues was primarily
attributable to a decrease in net gain on sales or remarketing of equipment of
$303,757 or 63%, a decrease in finance income of $181,541 or 37%, a decrease in
rental income of $104,841 or 100%, a decrease in income from joint venture of
$58,954 or 85%, and a decrease in interest income and other of $27,766 or 52%
from 1995. Net gain on sales or remarketing of equipment decreased as the result
of a decrease in the total number of leases maturing in 1996 compared to 1995.
Finance income, rental income and income from joint venture decreased due to a
decrease in the average size of the portfolio from 1995 to 1996. The decrease in
interest income and other resulted from a decrease in the average cash balance
from 1995 to 1996.
Expenses for the year ended December 31, 1996 a net credit of $29,721,
representing a change of $598,365 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
$136,800 or 75%, a decrease in depreciation expense of $54,799 or 100%, a
decrease in administrative expense reimbursements of $35,007 or 41% and a
decrease in amortization of initial direct costs of $33,428 or 100% from 1995.
The results were also affected by a decrease in provision for bad debt of
$25,000 or 100% from 1995. Interest expense decreased due to a decrease in the
average debt outstanding from 1995 to 1996. Depreciation, amortization of
initial direct costs and administrative expense reimbursements decreased due to
a decrease in the average size of the portfolio 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 year ended December 31, 1996.
Net income for the years ended December 31, 1996 and 1995 was $549,384 an
$627,878, respectively. The net income per weighted average limited partnership
unit was $2.72 and $3.11 for 1996 and 1995, respectively.
Page 6
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
December 31, 1996
Results of Operations for the Years Ended December 31, 1995 and 1994
Revenues for the year ended December 31, 1995 were $1,196,522, representing
a decrease of $420,154 or 26% from 1994. The decrease in revenues was primarily
attributable to a decrease in finance income of $548,575 or 53%, a decrease in
interest income and other of $70,002 or 57% and a decrease in rental income of
$62,709 or 37% from 1994. Finance income decreased due to a decrease in the
average size of the portfolio from 1994 to 1995. The decrease in interest income
and other resulted from a decrease in the average cash balance from 1994 to
1995. Rental income decreased due to the Partnership's reduced investment in
operating leases. The decrease in revenues was partially offset by an increase
in net gain on sales or remarketing of equipment of $191,967 or 66% and income
from equity investment in joint venture of $69,165. The increase in net gain on
sales or remarketing of equipment resulted from an increase 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 income from equity investment in joint venture resulted from
the Partnership's investment in a joint venture with two affiliates on February
3, 1995.
Expenses for the year ended December 31, 1995 were $568,644, representing a
decrease of $657,996 or 54% from 1994. The decrease in expenses was primarily
attributable to a decrease in interest expense of $430,224 or 70%, a decrease in
amortization of initial direct costs of $67,516 or 67%, a decrease in
administrative expense reimbursements of $67,439 or 44%, a decrease in
management fees of $66,505 or 44% and a decrease in depreciation expense of
$51,202 or 48% from 1994. Interest expense decreased due to a decrease in the
average debt outstanding from 1994 to 1995. Amortization of initial direct
costs, administrative expense reimbursements and management fees decreased due
to the decrease in the average size of the portfolio. Management fees were also
affected by the reduction in management fee rates. Under the original
Partnership Agreement, the General Partner was entitled to management fees at
either 2% or 5% of rents, depending on the type of investments under management.
Effective January 1, 1994, the General Partner elected to reduce its management
fees to a flat rate of 2% of rents for all investments under management. The
forgone management fees, the difference between 2% and 5% of rents for certain
types of investments, totaled $90,313 for the year ended December 31, 1995. The
decrease in expenses was partially offset by an increase in the provision for
bad debts. As a result of an analysis of delinquency, an assessment of overall
risk and a review of historical loss experience, it was determined that a
$25,000 provision for bad debts was required for the year ended December 31,
1995.
Net income for the years ended December 31, 1995 and 1994 was $627,878 and
$390,036, respectively. The net income per weighted average limited partnership
unit was $3.11 and $1.93 for 1995 and 1994, respectively.
Page 7
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
December 31, 1996
Liquidity and Capital Resources
The Partnership's primary sources of funds in 1996, 1995 and 1994 were net
cash provided by operations of $1,002,547, $999,015, and $800,648, respectively,
proceeds from sales of equipment of $600,737, $2,148,030 and $3,443,168,
respectively, and borrowings related to a term loan of $1,600,000 in 1994. These
funds were used to purchase equipment, to make an investment in a joint venture,
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 cash provided by operations and proceeds from sales of
equipment.
The Partnership had notes payable of $265,154 and $802,012 at December 31,
1996 and 1995, respectively, as a result of borrowings secured by equipment.
These amounts consisted of $265,154 and $757,439, respectively, in non-recourse
notes which are being paid directly to the lenders by lessees and $0 and $44,573
in non-recourse residual value notes from 1996 and 1995, respectively.
Cash distributions to the limited partners for the years ended December 31,
1996, 1995 and 1994, which were paid monthly, totaled $1,798,200, $1,799,763 and
$1,800,000 of which $543,890, $621,599 and $386,136 was investment income and
$1,254,310, $1,178,164 and $1,413,864 was a return of capital, respectively. The
monthly annualized cash distribution rate for the years ended December 31, 1996,
1995 and 1994 was 9.00%, of which 2.72%, 3.11% and 1.93% was investment income
and 6.28%, 5.89% and 7.07% 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 in 1996, 1995 and 1994 was
$9.00, $9.00 and $9.00, of which $2.72, $3.11 and $1.93 was investment income
and $6.28, $5.89 and $7.07 was a return of capital, respectively.
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.
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.
As of December 31, 1996, except as noted above, there were no known trends
or demands, commitments, events or uncertainties which are likely to have any
material effect on liquidity. As cash is realized from operations, sales of
equipment and borrowings, the Partnership will continue to invest in equipment
leases and financings where it deems it to be prudent while retaining sufficient
cash to meet its reserve requirements and recurring obligations as they become
due.
Accounting Developments
In June 1996 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities. "SFAS No. 125
establishes, among other things, criteria for determining whether a transfer of
financial assets is a sale or a secured borrowing effective for all transfers
occurring after December 31, 1996. The adoption of SFAS No. 125 is not expected
to have a material impact on the Partnership's net income, partners' equity or
total assets.
Page 8
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
December 31, 1996
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements
Page Number
Independent Auditors' Report 11
Balance Sheets as of December 31, 1996 and 1995 12
Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994 13
Statements of Changes in Partners' Equity for the
Years Ended December 31, 1996, 1995 and 1994 14
Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994 15-16
Notes to Financial Statements 17-24
Page 9
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Financial Statements
December 31, 1996
(With Independent Auditors' Report Thereon)
Page 10
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
ICON Cash Flow Partners, L.P., Series B:
We have audited the accompanying balance sheets of ICON Cash Flow Partners,
L.P., Series B (a Delaware limited partnership) as of December 31, 1996 and
1995, 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,
1996. 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.
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 B as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31,
1996, in conformity with generally accepted accounting principles.
March 7, 1997
New York, New York
Page 11
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Balance Sheets
December 31,
<TABLE>
1996 1995
---- ----
Assets
<S> <C> <C>
Cash $ 123,486 $ 860,530
------------ ------------
Investment in finance leases
Minimum rents receivable 1,319,810 2,315,053
Estimated unguaranteed residual values 202,614 498,371
Initial direct costs - 4
Unearned income (174,980) (322,848)
Allowance for doubtful accounts (74,557) (116,767)
------------ ------------
1,272,887 2,373,813
Investment in financings
Receivables due in installments 1,377,159 1,356,663
Unearned income (209,095) (230,908)
Allowance for doubtful accounts (47,798) (47,798)
------------ ------------
1,120,266 1,077,957
Equity investment in joint venture 351,012 751,860
------------ ------------
Investment in operating leases
Equipment, at cost 119,662 125,592
Accumulated depreciation (119,562) (124,955)
------------ ------------
100 637
------------ ------------
Other assets 19,692 4,905
------------ ------------
Total assets $ 2,887,443 $ 5,069,702
============ ============
Liabilities and Partners' Equity
Notes payable - non-recourse $ 265,154 $ 802,012
Accounts payable to General Partner
and affiliates, net 178,991 392,686
Accounts payable - other 131,148 199,455
Security deposits and deferred credits 10,354 106,773
------------ ------------
585,647 1,500,926
Commitments and contingencies
Partners' equity (deficiency)
General Partner (148,954) (136,284)
Limited partners (199,800 units outstanding,
$100 per unit original issue price) 2,450,750 3,705,060
------------ ------------
Total partners' equity 2,301,796 3,568,776
------------ ------------
Total liabilities and partners' equity $ 2,887,443 $ 5,069,702
============ ============
</TABLE>
See accompanying notes to financial statements.
Page 12
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Statements of Operations
For the Years Ended December 31,
<TABLE>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Revenues
Finance income $ 307,147 $ 488,688 $ 1,037,263
Net gain on sales or remarketing
of equipment 176,924 480,681 288,714
Rental income - 104,841 167,550
Income from equity investment in
joint venture 10,211 69,165 -
Interest income and other 25,381 53,147 123,149
----------- ----------- -----------
Total revenues 519,663 1,196,522 1,616,676
----------- ----------- -----------
Expenses
General and administrative 102,721 102,334 102,444
Administrative expense reimbursements
- General Partner 50,841 85,848 153,287
Interest 45,619 182,419 612,643
Amortization of initial direct costs 4 33,433 100,949
Management fees - General Partner (228,906) 84,811 151,316
Depreciation - 54,799 106,001
Provision for bad debts - 25,000 -
----------- ----------- ---------
Total expenses (credit) (29,721) 568,644 1,226,640
----------- ----------- -----------
Net income $ 549,384 $ 627,878 $ 390,036
=========== =========== ===========
Net income allocable to:
Limited partners $ 543,890 $ 621,599 $ 386,136
General Partner 5,494 6,279 3,900
----------- ----------- -----------
$ 549,384 $ 627,878 $ 390,036
=========== =========== ===========
Weighted average number of limited
partnership units outstanding 199,800 199,986 200,000
=========== =========== ===========
Net income per weighted average
limited partnership unit $ 2.72 $ 3.11 $ 1.93
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
Page 13
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Statements of Changes in Partners' Equity
For the Years Ended December 31, 1996, 1995 and 1994
<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
============ ========== ===========
</TABLE>
See accompanying notes to financial statements.
Page 14
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Statements of Cash Flows
For the Years Ended December 31,
<TABLE>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 549,384 $ 627,878 $ 390,036
---------- ----------- ----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation - 54,799 106,001
Allowance for doubtful accounts - (13,931) (21,458)
Finance income portion of receivables paid
directly to lenders by lessees (54,612) (230,865) (736,703)
Amortization of initial direct costs 4 33,433 100,949
Net gain on sales or remarketing of equipment (176,924) (480,681) (288,714)
Interest expense on non-recourse financing
paid directly by lessees 45,619 154,642 474,829
Interest expense accrued - non-recourse debt - 27,777 73,515
Collection of principal - non-financed receivables 590,520 818,833 1,380,128
Income from equity investment in joint venture (10,211) (69,165) -
Distribution from investment in joint venture 411,059 317,305 -
Rental income - assigned operating lease
receivables - - (53,177)
Change in operating assets and liabilities:
Accounts payable to General Partner
and affiliates, net (213,695) 165,726 (85,691)
Accounts payable - other (68,307) 2,647 33,247
Security deposits and deferred credits (96,419) (378,778) (517,218)
Other, net 26,129 (30,605) (55,096)
---------- ----------- ----------
Total adjustments 453,163 371,137 410,612
---------- ----------- ----------
Net cash provided by operating activities 1,002,547 999,015 800,648
---------- ----------- ----------
Cash flows from investing activities:
Proceeds from sales of equipment 600,737 2,148,030 3,443,168
Investment in joint venture - (1,000,000) -
Equipment and receivables purchased (523,964) (1,856,010) (1,245,071)
---------- ----------- ----------
Net cash provided by (used in) investing
activities 76,773 (707,980) 2,198,097
---------- ----------- ----------
Cash flows from financing activities:
Cash distributions to partners (1,816,364) (1,817,943) (1,818,182)
Redemption of limited partnership units - (3,967) -
Proceeds from term loan - - 1,600,000
Principal payments on term loan - - (1,600,000)
---------- ----------- ----------
Net cash used in financing activities (1,816,364) (1,821,910) (1,818,182)
---------- ----------- ----------
Net (decrease) increase in cash (737,044) (1,530,875) 1,180,563
Cash at beginning of year 860,530 2,391,405 1,210,842
---------- ----------- ----------
Cash at end of year $ 123,486 $ 860,530 $2,391,405
========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
Page 15
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Statements of Cash Flows (Continued)
Supplemental Disclosures of Cash Flow Information
Interest expense of $45,619, $182,419 and $612,643 for the years ended
December 31, 1996, 1995 and 1994, respectively, consisted of: interest expense
on non-recourse financing accrued or paid directly to lenders by lessees of
$45,619, $182,419 and $548,344, respectively, and other interest of $64,299 in
1994.
During the years ended December 31, 1996, 1995 and 1994, non-cash activities
included the following:
<TABLE>
1996 1995 1994
----- ---- ----
<S> <C> <C> <C>
Principal and interest on finance receivables
paid directly to lenders by lessees ......... $ 583,524 $ 1,836,759 $ 5,306,745
Rental income - assigned operating lease receivab -- -- 53,177
Principal and interest on non-recourse financing
paid directly by lessee ..................... (583,524) (1,836,759) (5,359,922)
Decrease in notes payable - non-recourse
due to terminations ......................... (44,572) (1,437,754) --
Decrease in security deposits and
deferred credits ............................ -- (388,746) --
Decrease in investment in finance leases
due to terminations ......................... 44,572 1,826,500 --
Accounts payable - equipment .................... -- 6,697
Fair value of equipment and receivables
purchased for debt and payables ............. -- (6,697)
----------- ----------- -----------
$ -- $ -- $ --
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
Page 16
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements
December 31, 1996
1. Organization
ICON Cash Flow Partners, L.P., Series B (the "Partnership") was formed on
March 27, 1989 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 July 18, 1989 and
by its final closing in 1990, 200,000 units had been admitted into the
Partnership with aggregate gross proceeds of $20,000,000. During 1995, the
Partnership redeemed 200 limited partnership units, leaving 199,800 limited
partnership units outstanding at December 31, 1995 and 1996.
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 of 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 13 1/2% of the gross
proceeds received from the sale of the units. Such offering costs aggregated
$2,700,000, (including $1,115,218 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
99% to the limited partners and 1% 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 will be allocated 90%
to the limited partners and 10% to the General Partner.
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 management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Leases - The Partnership accounts for owned equipment leased to third
parties as finance leases or operating leases. 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. For operating leases, equipment is
recorded at cost and is depreciated on the straight-line method over the lease
terms to their estimated fair market values at lease terminations. Related lease
rentals are recognized on the straight-line method over the lease terms. Billed
and uncollected operating lease receivables, net of allowance for doubtful
accounts, are included in other assets. Initial direct costs of finance leases
are capitalized and are amortized over the terms of the related leases using
Page 17
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
the interest method. Initial direct costs of operating leases are capitalized
and amortized on the straight-line method over the lease terms. The
Partnership's leases have terms ranging from two to five years. Each lease is
expected to provide aggregate contractual rents that, along with residual
proceeds, return the Partnership's cost of its investments 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. The fair value of certain debt obligations as of December 31, 1996
approximate that which is recorded in these financial statements. Fair value
information with respect to the Company's assets and certain non-recourse notes
payable is not provided because (i) SFAS No. 107 does not require disclosures
about the fair value of lease arrangements, (ii) the carrying value of financial
assets other than lease related investments approximates market value and (iii)
fair value information concerning certain non-recourse debt obligations is not
practicable to estimate without incurring excessive costs to obtain all the
information that would be necessary to derive a market interest rate on a lease
by lease basis.
Investment in Joint Venture - The Partnership accounts for its investment in
joint venture under the equity method of accounting. The Partnership's original
investment was recorded at cost and is adjusted by its share of earnings, losses
and distributions thereafter.
Redemption of Limited Partnership Units - The General Partner consented to
the Partnership redeeming 200 limited partnership units during 1995. The
redemption amount was calculated following the specified redemption formula in
accordance with the Partnership agreement. Redeemed units have no voting rights
and do not share in distributions. The Partnership agreement limits the number
of units which can be redeemed in any one year and redeemed units may not be
reissued. Redeemed limited partnership units are accounted for as a reduction
from partner's equity.
Allowance for Doubtful Accounts - The Partnership records a provision for
bad debts to provide for estimated credit losses in the portfolio. The allowance
for doubtful accounts is based on an analysis of delinquency, an assessment of
overall risk and a review of historical loss experience. 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 the
analysis indicates that the probability of collection of the account is remote.
Impairment of Estimated Residual Values - 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.
Page 18
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
The Partnership's 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.
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.
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.
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.
Page 19
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
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.
On January 28, 1997, ICON Asset Acquisition LLC re-financed its outstanding
obligations of $7,780,000 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. The Partnership is charged an interest rate that is equal to Series
E's cost of funds, which is approximately 8.0%. ICON Asset Acquisition LLC has
granted a security interest in all of their underlying assets. Rental receipts
are still remitted to TCB, however, proceeds are then swept back to ICON Asset
Acquisition LLC for use in its normal course of business.
Information as to the financial position and results of operations of ICON
Asset Acquisition LLC as of and for the year ended December 31, 1996 and as of
and for the period ended December 31, 1995 are summarized below:
December 31, 1996 December 31, 1995
Assets $ 12,490,084 $ 24,960,875
============ ============
Liabilities $ 8,557,586 $ 16,539,596
============ ============
Equity $ 3,932,498 $ 8,421,279
============ ============
Year Ended Period Ended
December 31, 1996 December 31, 1995
Net income $ 114,350 $ 774,525
============ ============
Page 20
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
4. Receivables Due in Installments
Non-cancelable minimum annual amounts due on finance leases and financings
are as follows:
Finance
Year Leases Financings Total
---- ------ ---------- -----
1997 $ 672,909 $ 527,330 $1,200,239
1998 303,277 413,232 716,509
1999 245,527 255,114 500,641
2000 79,525 161,659 241,184
2001 18,572 19,824 38,396
----------- ----------- ----------
$ 1,319,810 $ 1,377,159 $2,696,969
=========== =========== ==========
5. Investment in Operating Leases
The investment in operating leases at December 31, 1996, 1995 and 1994
consisted of the following:
<TABLE>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Equipment cost, beginning of year $ 125,592 $ 125,592 $ 754,737
Equipment sold (5,930) - (629,145)
----------- ------------ ------------
Equipment cost, end of year 119,662 125,592 125,592
----------- ------------ ------------
Accumulated depreciation, beginning of year (124,955) (70,156) (479,903)
Depreciation - (54,799) (106,001)
Equipment sold 5,393 - 515,748
----------- ------------ ------------
Accumulated depreciation, end of year (119,562) (124,955) (70,156)
----------- ------------ ------------
Investment in operating leases, end of year $ 100 $ 637 $ 55,436
=========== ============ ============
</TABLE>
Page 21
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
6. Allowance for Doubtful Accounts
The allowance for doubtful accounts related to the investments in finance
leases, financings and operating leases consisted of the following:
<TABLE>
Finance Operating
Leases Financings Leases Total
<S> <C> <C> <C> <C>
Balance at December 31, 1993 $ 161,172 $ 38,093 $ 27,189 $226,454
Accounts written-off (49,194) (7,682) (15,319) (72,195)
Recovery on accounts previously
written-off 45,443 550 4,745 50,738
Transfer within accounts 5,544 4,170 (9,714) -
--------- --------- --------- --------
Balance at December 31, 1994 162,965 35,131 6,901 204,997
Charged to operations 20,000 5,000 - 25,000
Accounts written-off (64,683) (8,216) - (72,899)
Recovery on accounts previously
written-off 11,085 883 22,000 33,968
Transfer within accounts (12,600) 15,000 (2,400) -
--------- --------- --------- --------
Balance at December 31, 1995 116,767 47,798 26,501 191,066
Accounts written-off (77,106) - - (77,106)
Recovery on accounts previously
written-off 8,395 - - 8,395
Transfer within accounts 26,501 - (26,501) -
--------- --------- --------- ---------
Balance at December 31, 1996 $ 74,557 $ 47,798 $ - $122,355
========= ========= ========= ========
</TABLE>
7. Notes Payable
The Partnership entered into a three-year secured revolving credit agreement
(the "Facility") in October 1992. The Facility was secured by an assignment of
eligible receivables and the underlying equipment. The Facility allowed the
Partnership to borrow based on eligible, unencumbered receivables. Interest was
payable at prime plus 1%.
Page 22
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
The Partnership converted the Facility to a $1,600,000 term loan, secured by
leases and financing transactions, in January 1994. The new term loan bore
interest at prime plus 1% and was payable in monthly installments. The term loan
was paid off in November 1994.
The notes payable - non-recourse, bearing interest at rates ranging from
9.3% to 10.25%, mature in 1997.
8. 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. As of March 20, 1996 these amendments were agreed
to by the limited partners 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 and until the limited
partners have received their cumulative unpaid distribution, or the difference
between 14% and 9%, the $127,000 will continue to be deferred.
9. Related Party Transactions
For the year ended December 31, 1996, due to the approval of the amendments
as discussed in Note 8, the Partnership reversed accrued and unpaid management
fees in the amount of $228,906. During the years ended December 31, 1995 and
1994, the Partnership paid or accrued to the General Partner management fees of
$84,811 and $151,316 respectively. During the years ended December 31, 1996,
1995 and 1994 the Partnership paid or accrued to the General Partner
administrative expense reimbursements of $50,841, $85,848 and $153,287,
respectively. These fees and reimbursements were charged to operations.
The Partnership and two affiliates, Series C and L.P. Six, formed a joint
venture, ICON Asset Acquisition LLC (See Note 3 for additional information
relating to the joint venture).
For the years ended December 31, 1996, 1995 and 1994, there were no
acquisition fees paid or accrued by the Partnership.
Page 23
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
(Unaudited)
10. Tax Information
The following table reconciles net income for financial reporting purposes
to income for federal income tax purposes for the years ended December 31:
<TABLE>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net income per financial statements $ 549,384 $ 627,878 $ 390,036
Differences due to:
Direct finance leases 343,508 2,470,125 6,023,908
Depreciation (85,102) (2,312,657) (6,085,660)
Provision for losses (53,479) (185) (28,205)
Gain (loss) on sale of equipment (25,080) 1,561,190 166,589
Other 11,150 16,937 9,039
------------ ------------- -------------
Partnership income for
federal income tax purposes $ 740,381 $ 2,363,288 $ 475,707
============ ============= =============
</TABLE>
As of December 31, 1996, the partners' capital accounts included in the
financial statements totaled $2,301,796 compared to the partners' capital
accounts for federal income tax purposes of $10,758,524 (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 24
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
December 31, 1996
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 operating leases and
full payout leases.
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, including tax-oriented leasing and
financing. In addition, the General Partner offers financial consulting and
placement services for which fees are earned as a result of successful
placements of various secured financings and mortgages.
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, releasing services in connection with equipment which is off-lease,
inspections of the equipment, liaison with and general supervision of lessees to
assure that the equipment is being properly operated and maintained, supervision
of maintenance being performed by third parties, 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 President, Chief Executive Officer and Director
Thomas W. Martin Executive Vice President and Director
Paul B. Weiss Executive Vice President
Gary N. Silverhardt Vice President and Chief Financial Officer
Neil A. Roberts Director
Tim Spring Director
Beaufort J. B. Clarke, age 50, is President, 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.
Thomas W. Martin, age 42, is Executive Vice President of both the General
Partner and 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 over 12 years of senior management experience in
the leasing business, particularly in the area of syndication.
Page 25
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
December 31, 1996
Paul B. Weiss, age 36, is Executive Vice President 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).
Gary N. Silverhardt, age 36, is Vice President and Chief Financial Officer
of the General Partner. He joined the General Partner in 1989. Prior to joining
the General Partner, Mr. Silverhardt was previously employed by Coopers &
Lybrand from 1985 to 1989, most recently as an Audit Supervisor. Prior to 1985,
Mr. Silverhardt was employed by Katz, Schneeberg & Co. from 1983 to 1985. Mr.
Silverhardt received a B.S. degree from the State University of New York at New
Paltz in 1983 and is a Certified Public Accountant.
Neil A. Roberts, age 47, has been the Managing Director of Summit Asset
Management Limited, a subsidiary of The Summit Group PLC, since 1991. Mr.
Roberts has over 25 years of experience in the leasing and finance business,
including positions with Kleinwort Benson Group, the United Kingdom subsidiary
of Hongkong and Shanghai Banking Corporation and Chemical Bank.
Timothy R. Spring, age 39, Commercial Director of Summit Asset Management
Limited, a subsidiary of The Summit Group PLC, since 1991. Mr. Spring has over
13 years of leasing experience in the United Kingdom. He was formerly Lease
Commercial Director at Kleinwort Benson Group, the United Kingdom subsidiary of
Hongkong and Shanghai Banking Corporation and Chemical Bank.
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, 1996, 1995 and 1994.
<TABLE>
Entity Capacity Type of Compensation 1996 1995 1994
------ -------- -------------------- ---- ---- ----
<S> <C> <C> <C> <C> <C>
ICON Capital Corp. General Partner Administrative expense
reimbursements $ 50,841 $ 85,848 $ 153,287
ICON Capital Corp. General Partner Management fees (228,906) 84,811 151,316
---------- --------- ---------
$ (170,865) $ 170,659 $ 304,603
========== ========= =========
</TABLE>
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 7, 1997, Directors and Officers of the General Partner do not
own any equity securities of the Partnership.
Page 26
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
December 31, 1996
(c) The General Partner owns the equity securities of the Partnership set forth
in the following table:
Title Amount Beneficially Percent
of Class Owned of Class
General Partner Represents initially a 1% and 100%
Interest potentially a 10% interest in
the Partnership's income, gain
and loss deductions.
Profits, losses, cash distributions and disposition proceeds are allocated
99% to the limited partners and 1% to the General Partner until each investor
has received cash distributions and disposition proceeds sufficient to reduce
his 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 90%
to the limited partners and 10% to the General Partner.
Item 13. Certain Relationships and Related Transactions
None other than those disclosed in Item 11 herein.
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, 1996.
Page 27
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
December 31, 1996
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 B
File No. 33-28145 (Registrant)
By its General Partner, ICON Capital Corp.
Date: March 28, 1997 Beaufort J.B. Clarke
--------------------------------------------
Beaufort J. B. Clarke
President, 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 28, 1997 Beaufort J. B. Clarke
---------------------------------------------
Beaufort J. B. Clarke
President, Chief Executive Officer
and Director
Date: March 28, 1997 Thomas W. Martin
---------------------------------------------
Thomas W. Martin
Executive Vice President and Director
Date: March 28, 1997 Gary N. Silverhardt
---------------------------------------------
Gary N. Silverhardt
Vice President and Chief Financial 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 28
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000849278
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1996
<CASH> 123,486
<SECURITIES> 0
<RECEIVABLES> 2,515,508
<ALLOWANCES> 122,355
<INVENTORY> 19,692
<CURRENT-ASSETS> * 0
<PP&E> 119,662
<DEPRECIATION> 119,562
<TOTAL-ASSETS> 2,887,443
<CURRENT-LIABILITIES> ** 0
<BONDS> 265,154
0
0
<COMMON> 0
<OTHER-SE> 2,301,796
<TOTAL-LIABILITY-AND-EQUITY> 2,887,443
<SALES> 519,663
<TOTAL-REVENUES> 519,663
<CGS> 5
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (75,345)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,619
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 549,384
<EPS-PRIMARY> 2.72
<EPS-DILUTED> 2.72
<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>
