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, 1998
-----------------------------------------------------------
[ ] 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 0-27822
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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,
1998 1997
Assets
<S> <C> <C>
Cash $ 14,896 $ 139,915
------------ ------------
Investment in finance leases
Minimum rents receivable 877,520 1,229,282
Estimated unguaranteed residual values 243,189 251,860
Unearned income (148,915) (220,468)
Allowance for doubtful accounts (50,407) (50,407)
------------ ------------
921,387 1,210,267
Investment in financings
Receivables due in installments 571,867 805,841
Unearned income (63,816) (97,213)
Allowance for doubtful accounts (42,827) (42,827)
------------ ------------
465,224 665,801
------------ ------------
Investment in operating lease
Equipment, at cost 119,662 119,662
Accumulated depreciation (119,562) (119,562)
------------ -------------
100 100
------------ ------------
Other assets 12,144 50,550
------------ ------------
Total assets $ 1,413,751 $ 2,066,633
============ ============
Liabilities and Partners' Equity
Notes payable $ 806,242 $ 1,048,541
Accounts payable to General Partner and affiliates, net 100,473 103,840
Accounts payable - other 16,412 58,953
Security deposits and deferred credits 63,520 13,541
------------ ------------
986,647 1,224,875
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (167,700) (163,555)
Limited partners (199,800 units outstanding,
$100 per unit original issue price) 594,804 1,005,313
------------ ------------
Total partners' equity 427,104 841,758
------------ ------------
Total liabilities and partners' equity $ 1,413,751 $ 2,066,633
============ ============
</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,
1998 1997 1998 1997
---- ---- ---- ----
Revenues
<S> <C> <C> <C> <C>
Finance income $ 45,656 $ 75,997 $ 99,433 $ 145,239
Net gain on sales or
remarketing of equipment 66,557 14,323 87,721 42,520
Interest income and other 12,674 7,661 36,887 14,749
Income from equity investment
in joint venture - 11,142 - 15,086
----------- ----------- ----------- ----------
Total revenues 124,887 109,123 224,041 217,594
----------- ----------- ----------- ----------
Expenses
Interest 24,691 31,681 46,457 52,943
General and administrative 18,778 22,214 25,960 36,659
Administrative expense reimbursement
- General Partner 5,409 11,972 11,256 23,894
----------- ----------- ----------- ----------
Total expenses 48,878 65,867 83,673 113,496
----------- ----------- ----------- ----------
Net income $ 76,009 $ 43,256 $ 140,368 $ 104,098
=========== =========== =========== ==========
Net income allocable to:
Limited partners $ 75,249 $ 42,823 $ 138,965 $ 103,057
General Partner 760 433 1,404 1,041
----------- ----------- ----------- ----------
$ 76,009 $ 43,256 $ 140,368 $ 104,098
=========== =========== =========== ==========
Weighted average number of limited
partnership units outstanding 199,800 199,800 199,800 199,800
=========== =========== =========== ==========
Net income per weighted average
limited partnership unit $ .38 $ .21 $ .70 $ .52
============ =========== =========== ===========
</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, 1998 and
the Years Ended December 31, 1997, 1996 and 1995
(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, 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 $ 7.23 $ 1.77 (1,798,200) (18,164) (1,816,364)
Net income 352,763 3,563 356,326
---------- ------------ -----------
Balance at
December 31, 1997 1,005,313 (163,555) 841,758
Cash distributions
to partners $ 2.05 $ .70 (549,474) (5,549) (555,023)
Net income 138,965 1,404 140,368
---------- ------------ -----------
Balance at June 30, 1998 $ 594,804 $ (167,700) $ 427,104
========== ============= ===========
</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>
1998 1997
---- ----
Cash flows provided by operating activities:
<S> <C> <C>
Net income $ 140,368 $ 104,098
------------- ------------
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)
Net gain on sales or remarketing of equipment (87,721) (42,520)
Interest expense on non-recourse financing paid
directly by lessees - 3,798
Collection of principal - non-financed receivables 409.927 400,731
Income from equity investment in joint venture - (15,086)
Distribution from investment in joint venture - 127,699
Changes in operating assets and liabilities:
Accounts payable to General Partner and affiliates, net (3,367) (59,504)
Accounts payable - other (42,541) 3,322
Security deposits and deferred credits 49,979 191,994
Other, net 34,166 37,474
------------- ------------
Total adjustments 360,443 640,816
------------- ------------
Net cash provided by operating activities 500,811 744,914
------------- ------------
Cash flows from investing activities:
Proceeds from sales of equipment 171,492 44,108
Equipment and receivables purchased - (822,592)
------------- ------------
Net cash provided by (used in) investing activities 171,492 (778,484)
------------- ------------
Cash flows from financing activities:
Proceeds from note payable - 1,500,000
Principal payments on note payable - recourse (242,299) (184,592)
Cash distributions to partners (555,023) (908,182)
------------- ------------
Net cash provided by (used in) financing activities (797,322) 407,226
------------- ------------
Net increase (decrease) in cash (125,019) 373,656
Cash, beginning of period 139,915 123,486
------------- ------------
Cash, end of period $ 14,896 $ 497,142
============= ============
</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)
Supplemental Disclosures of Cash Flow Information
During the six months ended June 30, 1998 and 1997, non-cash activities
included the following:
<TABLE>
1998 1997
---- ----
<S> <C> <C>
Principal and interest on direct finance
receivables paid directly to lenders by lessees $ -- $ 268,952
Principal and interest on non-recourse financing
paid directly by lessees -- (268,952)
------------- -------------
$ -- $ --
============= =============
</TABLE>
Interest expense of $46,456 and $52,943 for the six months ended June 30,
1998 and 1997 consisted of interest expense on notes payable of $45,219 and
$49,145, interest expense on an affiliate note of $1,237 and $0, and interest
expense on non-recourse financing accrued or paid directly to lenders by lessees
of $0 and 3,798, respectively
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements
June 30, 1998
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 1997 Annual Report on Form 10-K.
2. Amendment to Partnership Agreement
The Partnership's original 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. A majority of the limited partnership
units outstanding responded affirmatively, and the amendments were adopted.
These amendments are effective from and after November 15, 1995 and were as
follows: (1) extended the Reinvestment Period for a maximum of four additional
years and likewise delayed the start and end of the Liquidation Period, and (2)
eliminated 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.
3. Related Party Transactions
For the six months ended June 30, 1998 and 1997, no management fees were
accrued or paid to the General Partner. (See Note 2 for additional information
regarding management fees.) For the six months ended June 30, 1998 and 1997, the
Partnership paid or accrued to the General Partner administrative expense
reimbursements of $11,256 and $23,894, respectively, which were charged to
operations.
In March 1998, an affiliate, ICON Cash Flow Partners, L.P., Series C, lent
the Partnership $150,000. The loan bore interest at the rate of 11%. The loan
was paid in June 1998. The Partnership paid $1,375 to Series C for interest
related to the note.
For the six months ended June 30, 1998 and 1997 no acquisition fees were
paid or accrued by the Partnership.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
June 30, 1998
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
66%, 34%, 0%, and less than 1%, of total investments at June 30, 1998,
respectively, and 63%, 36%, 8% and less than 1% of total investments at June 30,
1997, respectively.
Results of Operations
Three Months Ended June 30, 1998 and 1997
The Partnership did not lease or finance any equipment for the three months
ended June 30, 1998.
Revenues for the three months ended June 30, 1998 were $124,887,
representing an increase of $15,764 or 14% from 1997. The increase in revenues
was attributable to an increase in net gain on sale or remarketing of equipment
of $52,234 or 365% and an increase in interest income and other of $5,013 or 65%
from 1997. The increase in income was partially offset by a decrease in finance
income of $30,341 or 40%, and a decrease in income from joint venture of $11,142
or 100% from 1997. The increase in net gain on sales or remarketing of equipment
resulted from an increase in the total number of leases maturing and the
underlying equipment being sold or remarketed for which proceeds received were
in excess of the remaining carrying value. The increase in interest income and
other resulted from an increase in the collection of late charges. Finance
income decreased due to a decrease in the average size of the portfolio from
1997 to 1998. The decrease in income from equity investment in joint venture
resulted from the Partnership's 1997 sale of its investment in the joint
venture.
Expenses for the three months ended June 30, 1998 were $48,878,
representing a decrease of $16,989 or 26% from 1997. The decrease in expenses
was primarily attributable to decrease in interest expense of $6,990 or 22%, a
decrease in administrative expense reimbursements of $6,563 or 55%, and a
decrease in general and administrative expense of $3,436 or 16%. The decrease in
interest expense resulted from a decrease in the average debt outstanding from
1997 to 1998. Administrative expense reimbursements and general and
administrative expense decreased due to a decrease in the average size of the
portfolio from 1997 to 1998.
Net income for the three months ended June 30, 1998 and 1997 was $76,009
and $43,256, respectively. The net income per weighted average limited
partnership unit was $.38 and $.21 for 1998 and 1997, respectively.
Six Months Ended June 30, 1998 and 1997
For the six months ended June 30, 1998 and 1997, the Partnership leased or
financed equipment with an initial cost of $0 and $822,592, respectively, to 0
and 10 lessees or equipment users, respectively. The weighted average initial
transaction term relating to these transactions in 1997 was 37 months.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
June 30, 1998
Revenues for the six months ended June 30, 1998 were $224,041, representing
an increase of $6,447 or 3% from 1997. The increase in revenues was attributable
to an increase in net gain on sales or remarketing of equipment of $45,201 or
106%, and an increase in interest income and other of $22,138 or 150%. The
increase was partially offset by a decrease in income from finance income of
$45,806 or 32% and a decrease in income from equity investment in joint venture
of $15,086 or 100% from 1997. The increase in net gain on sales or remarketing
of equipment resulted from an increase in the total number of leases maturing
and the underlying equipment being sold or remarketed for which proceeds
received were in excess of the remaining carrying value. The increase in
interest income and other resulted from an increase in the collection of late
charges. The decrease in finance income resulted from a decrease in the average
size of the portfolio from 1997 to 1998. The decrease in income from equity
investment in joint venture resulted from the Partnership's 1997 sale of its
investment in the joint venture.
Expenses for the six months ended June 30, 1998 were $83,673, representing
an decrease of $29,823 from 1997. The decrease in expenses resulted from the
decrease in administrative expense reimbursements of $12,638 or 53%, and a
decrease in general and administrative expense of $10,699 or 29%,. The decrease
was also due to a decrease in interest expense of $6,486 or 12%. Administrative
expense reimbursement and general and administrative expense decreased due to a
decrease in the average size of the portfolio from 1997 to 1998. Interest
expense decreased due to a decrease in the average debt outstanding from 1997 to
1998.
Net income for the six months ended June 30, 1998 and 1997 was $140,368 and
$104,098, respectively. The net income per weighted average limited partnership
unit was $.70 and $.52 for 1998 and 1997, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the six months ended June
30, 1998 and 1997 were net cash provided by operations of $500,811 and $744,914,
respectively, and proceeds from sales of equipment of $171,492 and $44,108,
respectively. These funds were used to purchase equipment in 1997, to fund cash
distributions and to make payments on borrowings. The Partnership intends to
fund future cash distributions, to the extent funds are available, utilizing
cash provided by operations and proceeds from sales of equipment.
Cash distributions to limited partners for the six months ended June 30,
1998 and 1997, which were paid monthly, totaled $549,474 and $899,100, of which
$138,965 and $103,057 was investment income and $410,509 and $796,043 was a
return of capital, respectively. The monthly annualized cash distribution rate
to limited partners was 5.50% and 9.00% of which 1.39% and 1.03% was investment
income and 4.11% and 7.97% 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, 1998 and 1997 was $2.75 and $4.50, of which $.70 and $.52 was investment
income and $2.05 and $3.98 was a return of capital. As a result of a review and
analysis of the Partnership's projected cash flow, the Partnership has decreased
the distribution rate to an annualized rate of 2%. This change was effective for
the April 1, 1998 distribution.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
June 30, 1998
The Partnership's original 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. A majority of the limited partnership
units outstanding responded affirmatively, and the amendments were adopted.
These amendments are effective from and after November 15, 1995 and were as
follows: (1) extended the Reinvestment Period for a maximum of four additional
years and likewise delay the start and end of the Liquidation Period, and (2)
eliminated 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.
As of June 30, 1998, 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 and sales of
equipment, the Partnership will invest in equipment leases and financings and
make cash distributions 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, 1998.
<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 14, 1998 /s/ 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
<NAME> ICON Cash Flow Partners, L.P., Series B
<CIK> 0000849278
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 14,896
<SECURITIES> 0
<RECEIVABLES> 1,466,281
<ALLOWANCES> 93,234
<INVENTORY> 10,000
<CURRENT-ASSETS> * 0
<PP&E> 119,662
<DEPRECIATION> 119,562
<TOTAL-ASSETS> 1,413,750
<CURRENT-LIABILITIES> ** 0
<BONDS> 806,242
0
0
<COMMON> 0
<OTHER-SE> 427,104
<TOTAL-LIABILITY-AND-EQUITY> 1,413,751
<SALES> 187,154
<TOTAL-REVENUES> 224,041
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 37,217
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46,456
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 140,368
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0.70
<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>
