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, 1999
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[ ] 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
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(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,
1999 1998
---- ----
Assets
<S> <C> <C>
Cash .................................................. $ 106,672 $ 73,935
----------- -----------
Investment in finance leases
Minimum rents receivable ........................... 519,999 621,919
Estimated unguaranteed residual values ............. 240,689 240,689
Unearned income .................................... (76,011) (97,223)
Allowance for doubtful accounts .................... (39,451) (39,451)
----------- -----------
645,226 725,934
----------- -----------
Investment in financings
Receivables due in installments .................... 340,587 403,132
Unearned income .................................... (27,271) (38,604)
Allowance for doubtful accounts .................... (19,827) (19,827)
----------- -----------
293,489 343,701
----------- -----------
Total assets .......................................... $ 1,045,387 $ 1,143,570
=========== ===========
Liabilities and Partners' Equity
Note payable .......................................... $ 487,834 $ 589,381
Accounts payable to General Partner and affiliates, net 156,852 109,085
Security deposits, deferred credits and other payables 28,129 28,996
----------- -----------
672,815 727,462
----------- -----------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ..................................... (168,246) (167,811)
Limited partners (199,800 units outstanding,
$100 per unit original issue price) .............. 540,818 583,919
----------- -----------
Total partners' equity ................................ 372,572 416,108
----------- -----------
Total liabilities and partners' equity ................ $ 1,045,387 $ 1,143,570
=========== ===========
</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)
1999 1998
---- ----
Revenues
Finance income ........................ $ 33,296 $ 53,777
Interest income and other ............. 2,386 11,718
Net gain (loss) on sales or remarketing
of equipment ........................ (436) 21,164
--------- ---------
Total revenues ........................ 35,246 86,659
--------- ---------
Expenses
Interest .............................. 10,336 21,765
General and administrative ............ 14,318 7,182
Administrative expense
reimbursements - General Partner .... 3,674 5,848
Reversal of allowance for
doubtful accounts ................... -- (12,495)
--------- ---------
Total expenses ........................... 28,328 22,300
--------- ---------
Net income ............................... $ 6,918 $ 64,359
========= =========
Net income allocable to:
Limited partners ...................... $ 6,849 $ 63,715
General Partner ....................... 69 644
--------- ---------
$ 6,918 $ 64,359
========= =========
Weighted average number of limited
partnership units outstanding ......... 199,800 199,800
========= =========
Net income per weighted average
limited partnership unit .............. $ .03 $ .32
========= =========
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, 1999 and
the Years Ended December 31, 1998, 1997 and 1996
(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, 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 $2.11 $1.31 (682,648) (6,895) (689,543)
Net income 261,254 2,639 263,893
----------- --------- ------------
Balance at
December 31, 1998 583,919 (167,811) 416,108
Cash distributions
to partners $ .22 $ .03 (49,950) (504) (50,454)
Net income 6,849 69 6,918
----------- --------- ------------
Balance at March 31, 1999 $ 540,818 $(168,246) $ 372,572
=========== ========= ============
</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>
1999 1998
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income .............................................. $ 6,918 $ 64,359
--------- ---------
Adjustments to reconcile net income to
net cash provided by operating activities:
Net gain (loss) on sales or remarketing of equipment .. 436 (21,164)
Interest expense accrued on note payable affiliate .... -- 1,238
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables .... 131,169 185,615
Accounts payable to General Partner and affiliates, net 47,767 78,524
Security deposits, deferred credits and other payables (867) 45,308
Other, net ............................................ (12,785) 28,759
--------- ---------
Total adjustments .................................. 165,720 318,280
--------- ---------
Net cash provided by operating activities .............. 172,638 382,639
--------- ---------
Cash flows from investing activities:
Proceeds from sales of equipment ........................ 12,100 22,335
--------- ---------
Net cash provided by investing activities .............. 12,100 22,335
--------- ---------
Cash flows from financing activities:
Cash distributions to partners .......................... (50,454) (454,090)
Proceeds from note payable-affiliate .................... -- 150,000
Principal payments on note payable ...................... (101,547) (127,359)
--------- ---------
Net cash used in financing activities .................. (152,001) (431,449)
--------- ---------
Net increase (decrease) in cash ............................ 32,737 (26,475)
Cash at beginning of period ................................ 73,935 139,915
--------- ---------
Cash at end of period ...................................... $ 106,672 $ 113,440
========= =========
</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
Interest expense of $10,336 and $21,765 for the three months ended March
31, 1999 and 1998 consisted of interest expense on note payable-recourse of
$10,336 and $20,528, respectively, and interest expense on an affiliate note of
$1,237 in 1998.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements
March 31, 1999
(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 1998 Annual Report on Form 10-K.
2. Amendment to Partnership Agreement
The Partnership's original reinvestment period was to expire 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 include: (1) extending the reinvestment period for a maximum of four
additional years and likewise delaying the start and end of the liquidation
period, and (2) eliminating the Partnership's obligation to pay the General
Partner $241,652 of the $368,652 accrued and unpaid management fees as of
December 31, 1996 and all additional management fees which would otherwise
accrue. The remaining $127,000 unpaid management fees will be paid to the
General Partner and subsequently remitted back to the Partnership in the form of
an additional capital contribution by the General Partner.
3. Related Party Transactions
As a result of the approval of the amendments as discussed in Note 2, no
management fees were accrued or paid to the General Partner for the three months
ended March 31, 1999 and 1998. For the three months ended March 31, 1999 and
1998, the Partnership accrued or paid to the General Partner administrative
expense reimbursements of $3,674 and $5,848, respectively, which were charged to
operations.
In March 1998 an affiliate, ICON Cash Flow Partners, L.P., Series C,
("Series C") lent the Partnership $150,000. The loan bore interest at the rate
of 11%. The loan was repaid in June 1998. The Partnership paid $1,238 to Series
C for interest related to the note.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
4. Note Payable
In February 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 lease rental payments and collateral relating to
a specified group of leases and financing transactions. The note bears interest
at 9%, and is payable in consecutive monthly installments. The principal balance
outstanding at March 31, 1999 totaled $487,834.
<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 and operating leases representing 69%, 31% and 0% of total
investments at March 31, 1999, respectively, and 66%, 34% and less than 1% of
total investments at March 31, 1998, respectively.
Results of Operations for the Three Months Ended March 31, 1999 and 1998
For the three months ended March 31, 1999 and 1998, the Partnership did not
enter into any new leases or financing agreements. At March 31,1999 the weighted
average remaining transaction term of the portfolio was 15 months.
Revenues for the three months ended March 31, 1999 were $35,246,
representing a decrease of $51,413 or 59% from 1998. The decrease in revenues
was due to decrease in finance income of $20,481 or 38%, a decrease in interest
income and other of $9,332 or 80% and a loss on sales or remarketing of
equipment of $436 in 1999 as compared to a net gain on sales or remarketing of
equipment of $21,164 in 1998. Finance income decreased due to a decrease in the
average size of the portfolio from 1998 to 1999. Interest income and other
decreased due primarily to a decrease in sales tax credits from 1998.
Expenses for the three months ended March 31, 1999 were $28,328,
representing a an increase of $6,028 or 27% from 1998. Expenses increased due
primarily to the $12,495 reduction in the allowance for doubtful accounts in
1998. There was no provision nor reduction in the allowance for doubtful
accounts in 1999. In addition, general and administrative expense increased by
$7,136 or 99% from 1998. The increases in expenses were partially offset by a
decrease in interest expense of $11,429 or 53% and a decrease in administrative
expense reimbursements of $2,174 or 37% from 1998. General and administrative
expense increased due to the increase in printing and postage costs. Interest
expense and administrative expense reimbursements decreased due to the decrease
in the average size of the portfolio from 1998 to 1999.
Net income for the three months ended March 31, 1999 and 1998 was $6,918
and $64,359, respectively. The net income per weighted average limited
partnership unit was $.03 and $.32 for 1999 and 1998, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the three months ended
March 31, 1999 and 1998 were net cash provided by operations of $172,638 and
$382,639, respectively, proceeds from sales of equipment of $12,100 and $22,335,
respectively and proceeds from borrowings of $150,000 in 1998. These funds were
used 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.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Cash distributions to limited partners for the three months ended March
31, 1999 and 1998, which were paid monthly, totaled $49,950 and $449,550, of
which $6,849 and $63,715 was investment income and $43,101 and $385,835 was a
return of capital, respectively. The monthly annualized cash distribution rate
was 1.00% for 1999 and 9% for 1998, respectively, of which .14% and 1.3% was
investment income and .86% and 7.7% 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, 1999 and 1998 was $.25 and $2.25, respectively, of which
$.03 and $.32 was investment income and $.22 and $1.93 was a return of capital,
respectively.
In 1996 and 1997 the Partnership made monthly cash distributions at a rate
equal to 9% per annum of the limited partners original cash contribution. As a
result of the General Partner's evaluation of the existing portfolio, it was
determined that the previous distribution rate of 9% was not sustainable. As of
March 1, 1998, the monthly distribution to limited partners was decreased to 2%
per month, annualized, of their original capital contribution. As of September
1, 1998 the monthly distribution to limited partners was decreased to 1% per
month, annualized, of their original capital contribution.
On March 31, 1998 an affiliate of the Partnership, ICON Cash Flow
Partners, L.P., Series C ("Series C"), lent the Partnership $150,000. The loan
bore interest at the rate of 11%. The loan was repaid in June 1998.
The Partnership paid $1,238 to Series C for interest related to the note.
The Partnership's original reinvestment period was to expire 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 include: (1) extending the reinvestment period for a maximum of four
additional years and likewise delaying the start and end of the liquidation
period, and (2) eliminating the Partnership's obligation to pay the General
Partner $241,652 of the $368,652 accrued and unpaid management fees as of
December 31, 1996 and all additional management fees which would otherwise
accrue. The remaining $127,000 of unpaid management fees will be paid to the
General Partner and subsequently remitted back to the Partnership in the form of
an additional capital contribution by the General Partner.
As of March 31, 1999 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.
Year 2000 Issue
The Year 2000 issue arose because many existing computer programs have been
written using two digits rather than four to define the applicable year. As a
result, programs could interpret dates ending in "00" as the year 1900 rather
than the year 2000. In certain cases, such errors could result in system
failures or miscalculations that disrupt the operation of the affected
businesses.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
The Partnership uses computer information systems provided by the General
Partner and has no computer information systems of its own. The software related
to the General Partner's primary computer information systems are provided by
third party vendors. The General Partner has formally communicated with these
vendors and has received assurance that their programs are Year 2000 compliant.
In addition, the General Partner has gathered information about the Year 2000
readiness of significant vendors and third-party servicers and continues to
monitor developments in this area. All of the General Partner's peripheral
computer technologies, such as its network operating system and third party
software applications, including payroll and electronic banking have been
evaluated and have been found to be Year 2000 compliant. The ultimate impact of
the Year 2000 issue on the Partnership will depend to a great extent on the
manner in which the issue is addressed by the Partnership's lessees. Each of the
Partnership's lessees will have a material self interest in resolving any Year
2000 issue, however, non-compliance on the part of a lessee could result in lost
or delayed revenues to the Partnership. The effect of this risk to the
Partnership is not determinable.
The General Partner is responsible for costs relating to the assessment and
development of its Year 2000 compliance remediation plan, as well as the testing
of the hardware and software owned or licensed for its personal computers. The
General Partner's costs incurred to date and expected future costs are not
material.
<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, 1999.
<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 13, 1999 /s/ Kevin F. Redmond
- ------------ -------------------------------------------
Date Kevin F. Redmond
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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 106,672
<SECURITIES> 0
<RECEIVABLES> 860,586
<ALLOWANCES> 59,278
<INVENTORY> 0
<CURRENT-ASSETS> * 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,045,387
<CURRENT-LIABILITIES> ** 0
<BONDS> 487,834
0
0
<COMMON> 0
<OTHER-SE> 372,572
<TOTAL-LIABILITY-AND-EQUITY> 1,045,387
<SALES> 32,860
<TOTAL-REVENUES> 35,246
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,992
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,336
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,918
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
<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>
