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 September 30, 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
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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
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(Address of principal executive offices) (Zip code)
(914) 698-0600
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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>
September 30, December 31,
1999 1998
---- ----
Assets
<S> <C> <C>
Cash ....................................................... $ 74,466 $ 73,935
----------- -----------
Investment in finance leases
Minimum rents receivable ................................ 300,580 621,919
Estimated unguaranteed residual values .................. 237,159 240,689
Unearned income ......................................... (43,097) (97,223)
Allowance for doubtful accounts ......................... (28,893) (39,451)
----------- -----------
465,749 725,934
----------- -----------
Investment in financings
Receivables due in installments ......................... 189,488 403,132
Unearned income ......................................... (10,801) (39,604)
Allowance for doubtful accounts ......................... (10,051) (19,827)
----------- -----------
168,636 343,701
----------- -----------
Accounts receivable from General Partner and affiliates, net 3,070 --
----------- -----------
Total assets ............................................... $ 711,921 $ 1,143,570
=========== ===========
Liabilities and Partners' Equity
Note payable ............................................... $ 292,055 $ 589,381
Accounts payable to General Partner and affiliates, net .... -- 109,085
Security deposits, deferred credits and other payables ..... 20,554 28,996
----------- -----------
312,609 727,462
----------- -----------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner .......................................... (42,248) (167,811)
Limited partners (199,800 units outstanding,
$100 per unit original issue price) ................... 441,560 583,919
----------- -----------
Total partners' equity ..................................... 399,312 416,108
----------- -----------
Total liabilities and partners' equity ..................... $ 711,921 $ 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
(unaudited)
<TABLE>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
---- ---- ---- ----
Revenues
<S> <C> <C> <C> <C>
Finance income ...................... $ 19,952 $ 39,999 $ 77,569 $ 139,433
Net gain/(loss) on sales of equipment (280) 98,473 6,162 186,194
Interest income and other ........... 1,091 2,610 5,325 27,002
--------- --------- --------- ---------
Total revenues ...................... 20,763 141,082 89,056 352,629
--------- --------- --------- ---------
Expenses
General and administrative .......... 16,263 15,153 42,112 41,112
Interest ............................ 7,586 16,839 29,410 63,296
Administrative expense reimbursement
- General Partner ................. 2,889 4,890 9,972 16,147
Reversal of allowance for
doubtful accounts ................. -- (36,892) -- (36,892)
--------- --------- --------- ---------
Total expenses ...................... 26,738 (10) 81,494 83,663
--------- --------- --------- ---------
Net income/(loss) ...................... $ (5,975) $ 141,092 $ 7,562 $ 268,966
========= ========= ========= =========
Net income/(loss) allocable to:
Limited partners .................... $ (5,915) $ 139,681 $ 7,487 $ 266,276
General Partner ..................... (60) 1,411 75 2,690
--------- --------- --------- ---------
$ (5,975) $ 141,092 $ 7,562 $ 268,966
========= ========= ========= =========
Weighted average number of limited
partnership units outstanding ....... 199,800 199,800 199,800 199,800
========= ========= ========= =========
Net income/(loss) per weighted average
limited partnership unit ............ $ (.03) $ .70 $ .04 $ 1.33
========= ========= ========= =========
</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 Nine Months Ended September 30, 1999 and
the Year Ended December 31, 1998
(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, 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 $ .71 $ .04 (149,846) (1,512) (151,358)
Capital contribution - 127,000 127,000
Net income 7,487 75 7,562
---------- --------- ---------
Balance at
September 30, 1999 $ 441,560 $ (42,248) $ 399,312
========== ========= =========
</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 Nine Months Ended September 30,
(unaudited)
<TABLE>
1999 1998
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income .................................................... $ 7,562 $ 268,966
--------- ---------
Adjustments to reconcile net income to
net cash provided by operating activities:
Net gain (loss) on sales or remarketing of equipment ........ (6,162) (186,194)
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables ......... 392,549 590,232
Accounts receivable from General Partner and affiliates, net (2,970) --
Accounts payable to General Partner and affiliates, net .... (109,085) (1,880)
Security deposits, deferred credits and other payables ..... (8,442) (48,429)
Allowance for doubtful accounts ............................ -- (34,398)
Other, net ................................................. (20,620) (2,938)
--------- ---------
Total adjustments ........................................ 245,270 316,393
--------- ---------
Net cash provided by operating activities .................... 252,832 585,359
--------- ---------
Cash flows from investing activities:
Proceeds from sales of equipment .............................. 69,383 307,098
--------- ---------
Net cash provided by investing activities .................... 69,383 307,098
--------- ---------
Cash flows from financing activities:
Cash distributions to partners ................................ (151,358) (639,090)
Proceeds from General Partner capital contribution ............ 127,000 --
Principal payments on note payable ............................ (297,326) (350,997)
--------- ---------
Net cash used in financing activities ........................ (321,684) (990,087)
--------- ---------
Net increase (decrease) in cash .................................. 531 (97,630)
Cash at beginning of period ...................................... 73,935 139,915
--------- ---------
Cash at end of period ............................................ $ 74,466 $ 42,285
========= =========
</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 $29,410 and $63,296 for the nine months ended
September 30, 1999 and 1998 consisted of interest expense on note payable of
$29,410 and $62,058 respectively, and interest expense on an affiliate note of
$1,238 in 1998.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Notes to Financial Statements
September 30, 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. In June 1999, the Partnership paid the remaining $127,000 of previously
accrued management fees to the General Partner. The General Partner subsequently
remitted this amount back to the Partnership as an additional capital
contribution.
3. Related Party Transactions
As a result of the approval of the amendments as discussed in Note 2, no
management fees were accrued to the General Partner for the nine months ended
September 30, 1999 and 1998. For the nine months ended September 30, 1999 and
1998, the Partnership accrued or paid to the General Partner administrative
expense reimbursements of $9,972 and $16,147, respectively, which were charged
to operations.
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 September 30, 1999 totaled $292,055.
<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 and financings representing 73 % and 27 % of total investments at
September 30, 1999, respectively, and 67% and 33 % of total investments at
September 30, 1998, respectively.
Results of Operations for the Three Months Ended September 30, 1999 and 1998
For the three months ended September 30, 1999 and 1998, the Partnership
did not enter into any new leases or financing agreements.
Revenues for the three months ended September 30, 1999 were $20,763
representing a decrease of $120,319 or 85% from 1998. The decrease in revenues
was due to a decrease in net gain on sales or remarketing of equipment of
$98,753 or 100%, a decrease in finance income of $20,047 or 50% and a decrease
in interest income and other of $1,519 or 58%. The decrease in net gain on sales
or remarketing of equipment resulted from a decrease in the number of leases
maturing and a decrease in the amount of underlying equipment being sold or
remarketed for which proceeds received were in excess of the remaining carrying
value.
Expenses for the three months ended September 30, 1999 were $26,738
representing an increase of $26,748 from 1998. The increase was primarily due to
the reduction of allowance for doubtful accounts of $36,892 in 1998.
Net (loss)/income for the three months ended September 30, 1999 and 1998
was ($5,975) and $141,092, respectively. The net income per weighted average
limited partnership unit was ($0.03) and $0.70 for 1999 and 1998, respectively.
Results of Operations for the Nine Months Ended September 30, 1999 and 1998
For the nine months ended September 30, 1999 and 1998, the Partnership did
not enter into any new leases or financing agreements.
Revenues for the nine months ended September 30, 1999 were $89,056,
representing a decrease of $263,573 or 75% from 1998. The decrease in revenues
was due to a decrease in net gain on sales or remarketing of equipment of
$180,032 or 97%, a decrease in finance income of $61,864 or 44% and a decrease
in interest income and other of $21,677 or 80%. The decrease in net gain on
sales or remarketing of equipment resulted from a decrease in the number of
leases maturing and a decrease in the amount of underlying equipment being sold
or remarketed for which proceeds received were in excess of the remaining
carrying value. The decrease in finance income was due to a decrease in the
average size of the finance lease portfolio from 1998 to 1999. The decrease in
interest income and other was due to a decrease in the collection of late
charges from 1998 to 1999.
Expenses for the nine months ended September 30, 1999 were $81,494,
representing a decrease of $2,169 or 3% from 1998. The decrease in expenses was
due to a decrease in interest expense of $33,886 or 54%, a decrease in
administrative expense reimbursements of $6,175 or 38% offset by the $36,892
reduction in the allowance for doubtful account in 1998. The decrease in
interest expense was due to a decrease in the average debt outstanding from 1998
to 1999. The decrease in administrative expense reimbursements was due to a
decrease in the average size of the finance lease portfolio from 1998 to 1999.
<PAGE>
ICON Cash Flow Partners, L.P., Series B
(A Delaware Limited Partnership)
Net income for the nine months ended September 30, 1999 and 1998 was
$7,562 and $268,966, respectively. The net income per weighted average limited
partnership unit was $0.04 and $1.33 for 1999 and 1998, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the nine months ended
September 30, 1999 and 1998 were net cash provided by operations of $252,832 and
$585,359, respectively, and proceeds from sales of equipment of $69,383 and
$307,098, respectively. 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.
Cash distributions to limited partners for the nine months ended September
30, 1999 and 1998, which were paid monthly, totaled $149,846 and $632,700, of
which $7,487 and $266,276 was investment income and $142,359 and $366,424 was a
return of capital, respectively. The monthly annualized cash distribution rate
was 1.00% for 1999 and 4.22% for 1998, respectively, of which .05% and 1.78% was
investment income and .95% and 2.44% 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 nine
months ended September 30, 1999 and 1998 was $.75 and $3.17, respectively, of
which $.04 and $1.33 was investment income and $.71 and $1.84 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 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.
As of September 30, 1999 there were no known trends or demands,
commitments, events or uncertainties that 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.
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 is 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
<PAGE>
ICON Cash Flow Partners, L. P., Series B
(A Delaware Limited Partnership)
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 on Form 8-K were filed by the Partnership during the quarter ended
September 30, 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.
November 12, 1999 /s/ Thomas W. Martin
- ----------------- ---------------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal financial and accounting
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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 74,466
<SECURITIES> 0
<RECEIVABLES> 490,068
<ALLOWANCES> 38,944
<INVENTORY> 0
<CURRENT-ASSETS> * 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 711,921
<CURRENT-LIABILITIES> ** 0
<BONDS> 292,055
0
0
<COMMON> 0
<OTHER-SE> 399,312
<TOTAL-LIABILITY-AND-EQUITY> 711,921
<SALES> 83,731
<TOTAL-REVENUES> 89,056
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 52,084
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,410
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,562
<EPS-BASIC> 0.04
<EPS-DILUTED> 0.04
<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>
