UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended March 31, 1997
-----------------------------------------------------------
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
--------------------- ------------------------
Commission File Number 33-40044
---------------------------------------------------------
ICON Cash Flow Partners, L.P., Series D
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3602979
- --------------------------------------------------------------------------------
(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 D
(A Delaware Limited Partnership)
Consolidated Balance Sheets
(unaudited)
<TABLE>
March 31, December 31,
1997 1996
Assets
<S> <C> <C>
Cash $ 1,564,411 $ 413,845
--------------- --------------
Investment in finance leases
Minimum rents receivable 14,241,316 16,784,360
Estimated unguaranteed residual values 7,181,364 7,587,992
Initial direct costs 280,106 484,908
Unearned income (2,552,405) (2,955,625)
Allowance for doubtful accounts (652,560) (651,546)
--------------- --------------
18,497,821 21,250,089
Equity investment in joint venture 4,893,418 -
--------------- --------------
Investment in financings
Receivables due in installments 3,984,087 15,510,321
Initial direct costs 22,592 93,060
Unearned income (1,320,896) (3,086,270)
Allowance for doubtful accounts (258,419) (252,223)
--------------- --------------
2,427,364 12,264,888
Other assets 655,294 334,318
--------------- --------------
Total assets $ 28,038,308 $ 34,263,140
=============== ==============
Liabilities and Partners' Equity
Notes payable - non-recourse $ 10,179,833 $ 11,955,886
Note payable - non-recourse - securitized 1,843,391 2,128,538
Security deposits and deferred credits 692,018 269,582
Accounts payable - other 89,752 129,647
Note payable - revolving credit facility - 3,386,421
Accounts payable to General Partner and affiliates, net - 18,406
--------------- --------------
12,804,994 17,888,480
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (192,266) (180,852)
Limited partners (399,158 units outstanding, $100
per unit original issue price) 15,425,580 16,555,512
--------------- --------------
Total partners' equity 15,233,314 16,374,660
--------------- --------------
Total liabilities and partners' equity $ 28,038,308 $ 34,263,140
=============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Operations
For the Three Months Ended March 31,
(unaudited)
<TABLE>
1997 1996
---- ----
Revenues
<S> <C> <C>
Finance income $ 530,669 $ 599,140
Net gain on sales or remarketing
of equipment 302,687 119,071
Interest income and other 33,985 34,788
Income from equity investment in joint venture 18,561 -
Income from leveraged leases, net - 369,511
--------------- --------------
Total revenues 885,902 1,122,510
--------------- --------------
Expenses
Interest 265,859 396,577
Management fees - General Partner 138,961 142,090
Amortization of initial direct costs 108,858 165,475
Administrative expense reimbursements
- General Partner 64,555 57,889
General and administrative 37,849 45,690
--------------- --------------
Total expenses 616,082 807,721
--------------- --------------
Net income $ 269,820 $ 314,789
=============== ==============
Net income allocable to:
Limited partners $ 267,122 $ 311,641
General Partner 2,698 3,148
--------------- --------------
$ 269,820 $ 314,789
=============== ==============
Weighted average number of limited
partnership units outstanding 399,158 399,233
=============== ==============
Net income per weighted average
limited partnership unit $ .67 $ .78
=============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Changes in Partners' Equity
For the Three Months Ended March 31, 1997, and
the Years Ended December 31, 1996, 1995 and 1994
(unaudited)
<TABLE>
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
(Per weighted average unit)
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1993 $ 26,485,996 $ (80,957) $ 26,405,039
Cash distributions
to partners $ 9.99 $ 4.01 (5,596,503) (56,530) (5,653,033)
Limited partnership units
redeemed (767 units) (39,205) - (39,205)
Net income 1,604,039 16,202 1,620,241
-------------- ------------- --------------
Balance at
December 31, 1994 22,454,327 (121,285) 22,333,042
Cash distributions
to partners $ 7.07 $ 6.93 (5,589,207) (56,457) (5,645,664)
Limited partnership
units redeemed (25 units) (764) - (764)
Net income 2,765,805 27,937 2,793,742
-------------- ------------- --------------
Balance at
December 31, 1995 19,630,161 (149,805) 19,480,356
Cash distributions
to partners $ 7.70 $ 6.30 (5,588,508) (56,450) (5,644,958)
Limited partnership units
redeemed (50 units) (1,071) - (1,071)
Net income 2,514,930 25,403 2,540,333
-------------- ------------- --------------
Balance at
December 31, 1996 16,555,512 (180,852) 16,374,660
Cash distributions
to partners $ 2.83 $ .67 (1,397,054) (14,112) (1,411,166)
Net income 267,122 2,698 269,820
-------------- ------------- --------------
Balance at
March 31, 1997 $ 15,425,580 $ (192,266) $ 15,233,314
============== ============= ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
For the Three Months Ended March 31,
(unaudited)
<TABLE>
1997 1996
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 269,820 $ 314,789
------------- -------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Finance income portion of receivables paid directly to
lenders by lessees (273,202) (385,465)
Amortization of initial direct costs 108,858 165,475
Net gain on sales or remarketing of equipment (302,687) (119,071)
Interest expense on non-recourse financing paid directly by lessees 202,682 298,869
Interest expense accrued on non-recourse debt - 4,376
Interest expense accrued on non-recourse securitized debt - 44,793
Collection of principal - non-financed receivables 702,130 538,119
Income from leveraged leases, net - (369,511)
Income from equity investment in joint venture (18,561) -
Changes in operating assets and liabilities:
Allowance for doubtful accounts 7,210 20,068
Accounts payable to General Partner and affiliates, net (18,406) 173,937
Accounts payable - other (39,895) (14,291)
Security deposits and deferred credits 422,436 103,592
Other, net (155,873) 16,166
------------- -------------
Total adjustments 634,692 477,057
------------- -------------
Net cash provided by operating activities 904,512 791,846
------------- -------------
Cash flows from investing activities:
Proceeds from sales of equipment 8,738,593 260,317
Equipment and receivables purchased (3,409,805) (2,779,092)
Initial direct costs - (273,069)
------------- -------------
Net cash provided by (used in) investing activities 5,328,788 (2,791,844)
------------- -------------
Cash flows from financing activities:
Principal payments on notes payable-revolving credit facility (3,386,421) -
Principal payments on non-recourse securitized debt (285,147) (541,033)
Cash distributions to partners (1,411,166) (1,411,342)
Proceeds from revolving line of credit - 1,000,000
------------- -------------
Net cash used in financing activities (5,082,734) (952,375)
------------- -------------
Net increase (decrease) in cash 1,150,566 (2,952,373)
Cash at beginning of period 413,845 3,751,899
------------- -------------
Cash at end of period $ 1,564,411 $ 799,526
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (continued)
Supplemental Disclosures of Cash Flow Information
During the three months ended March 31, 1997 and 1996, non-cash activities
included the following:
<TABLE>
1997 1996
---- ----
<S> <C> <C>
Principal and interest on direct finance
receivables paid directly to lenders by lessees $ 1,978,735 $ 1,639,957
Principal and interest on non-recourse financing
paid directly by lessees (1,814,552) (1,639,957)
Decrease in investments in finance leases and
financings due to contribution to joint venture 4,874,857 -
Increase in equity investment in joint venture (4,874,857) -
Non-recourse notes payable assumed
in purchase price - 6,074,561
Fair value of equipment and receivables
purchased for debt and payables - (6,074,561)
--------------- ----------------
$ - $ -
=============== ===========
</TABLE>
Interest expense of $265,859 and $396,577 for the three months ended
March 31, 1997 and 1996 consisted of: interest expense on non-recourse financing
paid or accrued directly to lenders by lessees of $202,682 and $348,038,
respectively, interest expense on non-recourse securitized note payable of
$62,477 and $0, respectively, and other interest of $700 and $48,539,
respectively.
<PAGE>
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
March 31, 1997
(unaudited)
1. Basis of Presentation
The consolidated financial statements of ICON Cash Flow Partners, L.P.,
Series D (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
consolidated 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
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes included in the Partnership's 1996
Annual Report on Form 10-K.
2. Security Deposits and Deferred Credits
Security deposits and deferred credits at March 31, 1997 and December 31,
1996 include $364,401 and $34,476, respectively, of proceeds received on
residuals which will be applied upon final remarketing of the related equipment.
3. Related Party Transactions
During the three months ended March 31, 1997 and 1996, the Partnership
paid or accrued to the General Partner management fees of $138,961 and $142,090,
respectively, and administrative expense reimbursements of $64,555 and $57,889,
respectively. These fees and reimbursements were charged to operations.
Included in the Partnership's acquisitions for the year ended December 31,
1996 is a financing transaction for $8,756,291. This transaction represents the
financing of free cash and first priority rights of the first $4,000,000 of
residual proceeds from the eventual sale of the equipment related to a leveraged
lease. The free cash results from lease rental payments being greater than the
debt payments. The financing is secured by the underlying equipment, a 1986
McDonnell Douglas DC-10-30F aircraft, currently on lease to Federal Express
Corp. In August 1996 ICON Cash Flow Partners L.P. Seven ("L.P. Seven"), an
affiliate of the Partnership, acquired the residual interest in the leveraged
lease and assumed the related outstanding non-recourse debt. In January 1997
L.P. Seven re-financed the free cash and $2,000,000 of its residual position
with a third party. As a result of this re-financing, the Partnership received
proceeds of $7,221,452 and reduced its interest in the investment to $1,201,090.
4. 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 March 11, 1997, the Partnership and two affiliates, ICON Cash Flow
Partners L.P. Six and ICON Cash Flow Partners L.P. Seven, (collectively "the
Members"), contributed and assigned $5,794,273, $6,712,631 and $6,582,150 in
equipment lease and finance receivables and residuals with a net book value of
$4,874,857, $5,553,962 and $5,465,238, respectively, to ICON Receivables 1997-A
LLC ("1997-A"), a special purpose entity created by the Members. The Members
received a 30.67%, 34.94% and 34.39% interest, respectively, in 1997-A based on
the present value of their related contributions. 1997-A was formed for the
purpose of originating new leases, managing existing contributed assets and,
eventually, securitizing its portfolio. In order to fund the acquisition of new
leases, 1997-A obtained a warehouse borrowing facility from Prudential
Securities Credit Corporation (the "Facility"). Borrowings under the Facility
are based on the present value of the new leases, provided that in the
aggregate, the amount outstanding cannot exceed $20,000,000. Outstanding amounts
under the Facility bear interest equal
<PAGE>
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
to Libor plus 1.5%. Collections of receivables from new leases are used to pay
down the Facility, however, in the event of a default, all of 1997-A's assets
are available to cure such default. The net proceeds from the expected
securitization of these assets will be used to pay-off the remaining Facility
balance and the remaining proceeds will be distributed to the Members in
accordance with their membership interests. The Partnership accounts for its
investment in 1997-A under the equity method.
Information as to the financial position and results of operations of
1997-A as of and for the quarter ended March 31, 1997 is summarized below:
March 31, 1997
Assets $ 23,430,264
=================
Liabilities $ 7,475,691
=================
Equity $ 15,954,573
=================
Three Months Ended
March 31, 1997
Net income $ 60,516
=================
<PAGE>
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
March 31, 1997
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, equity investment in joint venture, financings and leveraged leases
representing 72%, 18%, 10% and 0% of total investments at March 31, 1997,
respectively, and 64%, 0%, 8% and 28% of total investments at March 31, 1996,
respectively.
For the three months ended March 31, 1997 and 1996, the Partnership leased
or financed equipment with initial costs of $3,409,803 and $6,826,715,
respectively, to 40 and 60 lessees or equipment users, respectively. The
weighted average initial transaction term for each year was 28 and 33 months,
respectively.
Results of Operations for the Three Months Ended March 31, 1997 and 1996
Revenues for the three months ended March 31, 1997 were $885,902,
representing a decrease of $236,608 or 21% from 1996. The decrease in revenues
resulted primarily from a decrease in income from leveraged leases of $369,511
or 100% and a decrease in finance income of $68,471 or 11%, from 1996. This
decrease was partially offset by an increase in net gain on sales or remarketing
of equipment of $183,616 and an increase in income from investment in joint
venture of $18,561. Income from leveraged leases decreased as a result of the
April 1996 sale of all of the underlying equipment relating to the Partnership's
investment in leveraged leases. Finance income decreased due to a decrease in
the average size of the portfolio from 1996 to 1997. The increase in net gain on
sales or remarketing of equipment was due to 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.
Expenses for the three months ended March 31, 1997 were $616,082,
representing a decrease of $191,639 or 24% from 1996. The decrease in expenses
resulted primarily from a decrease in interest expense of $130,718 or 33%, a
decrease in amortization of initial direct costs of $56,617 or 34%, a decrease
in general and administrative expenses of $7,841 or 17% and a decrease in
management fees of $3,129 or 2% from 1996. These decreases were partially offset
by an increase in administrative expense reimbursements of $6,666 or 12%. The
decrease in interest expense resulted from a decrease in the average debt
outstanding from 1996 to 1997. Amortization of initial direct costs, general and
administrative expenses and management fees decreased due to a decrease in the
average size of the portfolio from 1996 to 1997.
Net income for the three months ended March 31, 1997 and 1996 was $269,820
and $314,789, respectively. The net income per weighted average limited
partnership unit was $.67 and $.78 for 1997 and 1996, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the three months ended March
31, 1997 and 1996 were net cash provided by operations of $904,512 and $791,846,
respectively, proceeds from sales of equipment of $8,738,593 and $260,317,
respectively, and a borrowing of $1,000,000 from a revolving line of credit in
1996. These funds were used to purchase equipment, to fund cash distributions
and to make payments on borrowings. The Partnership intends to continue to fund
cash distributions utilizing cash provided by operations and proceeds from sales
of equipment.
<PAGE>
ICON Cash Flow Partners, L.P., Series D
(A Delaware Limited Partnership)
Cash distributions to the limited partners for the three months ended March
31, 1997 and 1996, which were paid monthly, totaled $1,397,054 and $1,397,229,
respectively, of which $267,122 and $311,641 was investment income and
$1,129,932 and $1,085,588 was a return of capital, respectively. The monthly
annualized cash distribution rate for the three months ended March 31, 1997 and
1996 was 14.00%, of which 2.67% and 3.12% was investment income and 11.33% and
10.88% was a return of capital, respectively, calculated as a percentage of each
limited partner's initial capital contribution. The limited partner distribution
per weighted average unit outstanding was $3.50, of which $.67 and $.78 was
investment income and $2.83 and $2.72 was a return of capital, respectively.
The Partnership entered into a revolving credit agreement (the "Facility")
in October 1992. The facility was amended in March 1996. The maximum amount
available under the Facility was $5,000,000 and at December 31, 1996 the
Partnership had $3,386,421 available for borrowing under the Facility, all of
which was outstanding at year end. The facility had a final maturity date of
January 31, 1997, at which time the Partnership paid the outstanding balance and
terminated the agreement.
Included in the Partnership's acquisitions for the year ended December 31,
1996 is a financing transaction for $8,756,291. This transaction represents the
financing of free cash and first priority rights of the first $4,000,000 of
residual proceeds from the eventual sale of the equipment related to a leveraged
lease. The free cash results from lease rental payments being greater than the
debt payments. The financing is secured by the underlying equipment, a 1986
McDonnell Douglas DC-10-30F aircraft, currently on lease to Federal Express
Corp. In August 1996 ICON Cash Flow Partners L.P. Seven ("L.P. Seven"), an
affiliate of the Partnership, acquired the residual interest in the leveraged
lease and assumed the related outstanding non-recourse debt. In January 1997
L.P. Seven re-financed the free cash and $2,000,000 of its residual position
with a third party. As a result of this re-financing, the Partnership received
proceeds of $7,221,452 and reduced its interest in the investment to $1,201,090.
On March 11, 1997, the Partnership and two affiliates, ICON Cash Flow
Partners L.P. Six and ICON Cash Flow Partners L.P. Seven, (collectively "the
Members"), contributed and assigned $5,794,273, $6,712,631 and $6,582,150 in
equipment lease and finance receivables and residuals with a net book value of
$4,874,857, $5,553,962 and $5,465,238, respectively, to ICON Receivables 1997-A
LLC ("1997-A"), a special purpose entity created by the Members. The Members
received a 30.67%, 34.94% and 34.39% interest, respectively, in 1997-A based on
the present value of their related contributions. 1997-A was formed for the
purpose of originating new leases, managing existing contributed assets and,
eventually, securitizing its portfolio. In order to fund the acquisition of new
leases, 1997-A obtained a warehouse borrowing facility from Prudential
Securities Credit Corporation (the "Facility"). Borrowings under the Facility
are based on the present value of the new leases, provided that in the
aggregate, the amount outstanding cannot exceed $20,000,000. Outstanding amounts
under the Facility bear interest equal to Libor plus 1.5%. Collections of
receivables from new leases are used to pay down the Facility, however, in the
event of a default, all of 1997-A's assets are available to cure such default.
The net proceeds from the expected securitization of these assets will be used
to pay-off the remaining Facility balance and any remaining proceeds will be
distributed to the Members in accordance with their membership interests. The
Partnership accounts for its investment in 1997-A under the equity method.
The Partnership's Reinvestment Period ends June 5, 1997. The Disposition
Period begins June 6, 1997 and is expected to continue through June 5, 2002.
During the Disposition Period the Partnership will distribute substantially all
distributable cash from operations and sales to the Partners and begin the
orderly termination of its operations and affairs. The Partnership will not
reinvest in any leased equipment during the Disposition Period.
As of March 31, 1997, except as noted above, there were no known trends or
demands, commitments, events or uncertainties which are likely to have any
material effect on liquidity. As cash is realized from operations, sales of
equipment and borrowings, the Partnership will invest in equipment leases and
financings where it deems it to be prudent while retaining sufficient cash to
meet its reserve requirements and recurring obligations as they become due.
<PAGE>
ICON Cash Flow Partners, L.P., Series D
(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 during the quarter ended March 31, 1997.
<PAGE>
ICON Cash Flow Partners, L.P., Series D
(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 D
File No. 33-40044 (Registrant)
By its General Partner,
ICON Capital Corp.
May 15, 1997 Gary N. Silverhardt
- --------------- ------------------------------------------------
Date Gary N. Silverhardt
Chief Financial Officer
(Principal financial and account officer of
the General Partner of the Registrant)
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000874320
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,564,411
<SECURITIES> 0
<RECEIVABLES> 21,836,164
<ALLOWANCES> 910,979
<INVENTORY> 26,212
<CURRENT-ASSETS> * 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,038,308
<CURRENT-LIABILITIES> ** 0
<BONDS> 12,023,224
0
0
<COMMON> 0
<OTHER-SE> 15,233,314
<TOTAL-LIABILITY-AND-EQUITY> 28,038,308
<SALES> 885,902
<TOTAL-REVENUES> 885,902
<CGS> 108,858
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 241,365
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 265,859
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 269,820
<EPS-PRIMARY> 0.67
<EPS-DILUTED> 0.67
<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>
