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
-------------------- -------------------------
Commission File Number 0-27912
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ICON Cash Flow Partners, L.P., Series E
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3635208
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
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 E
(A Delaware Limited Partnership)
Consolidated Balance Sheets
(unaudited)
<TABLE>
September 30, December 31,
1999 1998
------------ -----------
Assets
<S> <C> <C>
Cash ....................................................... $ 2,091,316 $ 2,336,094
------------ ------------
Investment in finance leases
Minimum rents receivable ................................ 29,481,034 39,904,532
Estimated unguaranteed residual values .................. 9,123,155 11,545,261
Unearned income ......................................... (5,609,672) (8,575,852)
Allowance for doubtful accounts ......................... (1,263,779) (985,300)
------------ ------------
31,730,738 41,888,641
Investment in financings
Receivables due in installments ......................... 20,525,536 28,310,139
Unearned income ......................................... (2,993,065) (4,815,891)
Allowance for doubtful accounts ......................... (742,038) (425,601)
------------ ------------
16,790,433 23,068,647
Investment in operating leases
Equipment, at cost ...................................... 20,707,984 20,707,984
Accumulated depreciation ................................ (3,850,380) (3,409,972)
------------ ------------
16,857,604 17,298,012
Investments in unconsolidated joint ventures ............... 1,075,137 1,264,148
------------ ------------
Accounts receivable from General Partner and affiliates, net -- 160,151
------------ ------------
Other assets ............................................... 1,335,288 902,537
------------ ------------
Total assets ............................................... $ 69,880,516 $ 86,918,230
============ ============
</TABLE>
(continued on next page)
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Balance Sheets (Continued)
(unaudited)
<TABLE>
September 30, December 31,
1999 1998
------------ -----------
Liabilities and Partners' Equity
<S> <C> <C>
Notes payable - securitized debt ...................... $ 28,580,741 $ 36,975,096
Notes payable - non-recourse .......................... 22,572,764 28,492,442
Security deposits, deferred credits and other payables 3,585,292 4,014,873
Minority interests in consolidated joint ventures ..... 502,942 559,749
Accounts payable to General Partner and affiliates, net 145,020 --
------------ ------------
55,386,759 70,042,160
Commitments and Contingencies
Partners' equity (deficiency)
General Partner .................................... (374,928) (351,105)
Limited partners (607,856 units outstanding,
$100 per unit original issue price) .............. 14,868,685 17,227,175
------------ ------------
Total partners' equity ................................ 14,493,757 16,876,070
------------ ------------
Total liabilities and partners' equity ................ $ 69,880,516 $ 86,918,230
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Statements of Operations
(unaudited)
<TABLE>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
---- ---- ---- ----
Revenue
<S> <C> <C> <C> <C>
Finance income ..................... $ 1,370,980 $ 1,754,511 $ 4,603,894 $ 4,163,436
Rental income ...................... 615,000 615,000 1,845,000 1,832,700
Net gain on sales of equipment ..... 535,577 267,230 770,489 538,277
Interest income and other .......... 33,887 193,759 153,236 456,722
Income (loss) from investment
in unconsolidated joint venture .. 75,407 (28,859) 185,887 260,992
----------- ----------- ----------- -----------
Total revenues ..................... 2,630,851 2,801,641 7,558,506 7,252,127
----------- ----------- ----------- -----------
Expenses
Interest ........................... 986,081 1,278,263 3,210,766 3,115,667
Management fees - General Partner .. 191,764 252,121 665,847 951,405
General and administrative ......... 158,584 8,318 546,361 396,949
Depreciation ....................... 146,803 146,802 440,408 398,701
Administrative expense
reimbursement - General Partner . 111,319 148,258 392,633 506,112
Provision for bad debts ............ 900,000 1,049,998 1,000,000 1,249,998
Minority interest in
consolidated joint venture ....... (148,351) (155,757) (1,143) (44,014)
Amortization of initial direct costs 6,375 20,134 27,522 218,557
----------- ----------- ----------- -----------
Total expenses ..................... 2,352,575 2,748,137 6,282,394 6,793,375
----------- ----------- ----------- -----------
Net income ............................ $ 278,276 $ 53,504 $ 1,276,112 $ 458,752
=========== =========== =========== ===========
Net income allocable to:
Limited partners ................... $ 275,493 $ 52,969 $ 1,263,351 $ 454,164
General Partner .................... 2,783 535 12,761 4,588
----------- ----------- ----------- -----------
$ 278,276 $ 53,504 $ 1,276,112 $ 458,752
=========== =========== =========== ===========
Weighted average number of limited
partnership units outstanding ...... 607,863 608,346 607,863 608,358
=========== =========== =========== ===========
Net income per weighted average
limited partnership unit ........... $ .45 $ .09 $ 2.08 $ .75
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated 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 $23,972,938 $(283,244) $ 23,689,694
Cash distribution
to partners $11.04 $1.71 (7,755,553) (78,338) (7,833,891)
Limited partnership
units redeemed
(590 units) (27,439) - (27,439)
Net income 1,037,229 10,477 1,047,706
----------- --------- -----------
Balance at
December 31, 1998 17,227,175 (351,105) 16,876,070
Cash distributions
to partners $ 3.88 $2.08 (3,621,841) (36,584) (3,658,425)
Net income 1,263,351 12,761 1,276,112
----------- --------- -----------
Balance at
September 30, 1999 $14,868,685 $(374,928) $14,493,757
=========== ========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
For the Nine Months Ended September30,
(unaudited)
<TABLE>
1999 1998
---- ----
Cash flows provided by operating activities:
<S> <C> <C>
Net income ...................................................... $ 1,276,112 $ 458,752
------------ ------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ................................................. 440,408 398,701
Provision for bad debt ....................................... 1,000,000 1,249,998
Rental income - paid directly to lenders by lessees .......... (1,845,000) (1,832,700)
Finance income portion of receivables paid directly
to lenders by lessees ..................................... (1,474,515) (1,527,081)
Amortization of initial direct costs ......................... 27,522 218,557
Net gain on sales or remarketing of equipment ................ (770,489) (538,277)
Interest expense on non-recourse financing accrued
or paid directly by lessees ............................... 1,691,241 1,667,081
Income from investments in unconsolidated joint ventures ..... (185,887) (260,992)
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables ........ 8,286,300 5,760,451
Distributions received from unconsolidated joint ventures . 505,778 254,896
Investment in joint venture ............................... (32,405) (87,185)
Accounts payable to General Partner and affiliates, net ... 145,020 497,246
Security deposits, deferred credits and other payables .... (429,581) 2,075,377
Accounts receivable from General Partner and affiliates, net 160,151 7,104
Other assets .............................................. 6,547 876,375
Minority interests in consolidated joint ventures ......... (56,807) (85,246)
Other, net ................................................ (91,736) 43,541
------------ ------------
Total adjustments ....................................... 7,376,547 8,717,846
------------ ------------
Net cash provided by operating activities ............... 8,652,659 9,176,598
------------ ------------
Cash flows from investing activities:
Proceeds from sales of equipment ................................ 3,155,343 1,747,854
Equipment and receivables purchased ............................. -- (28,906,780)
------------ ------------
Net cash provided by (used in) investing activities ..... 3,155,343 (27,158,926)
------------ ------------
</TABLE>
(continued on next page)
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (Continued)
For the Nine Months Ended September 30,
(unaudited)
<TABLE>
1999 1998
---- ----
<S> <C> <C>
Cash flows from financing activities:
Principal payments on securitized debt ............... (8,394,355) (1,458,542)
Proceeds from securitized debt ....................... -- 41,308,464
Cash distributions to partners ....................... (3,658,425) (5,876,180)
Proceeds from warehouse line of credit ............... -- 20,703,918
Principal payments on warehouse line of credit ....... -- (36,804,788)
Redemption of limited partnership units .............. -- (2,395)
------------ ------------
Net cash (used in) provided by financing activities (12,052,780) 17,870,477
------------ ------------
Net decrease in cash .................................... (244,778) (111,851)
Cash at beginning of period ............................. 2,336,094 9,460,337
------------ ------------
Cash at end of period ................................... $ 2,091,316 $ 9,348,486
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (Continued)
Supplemental Disclosures of Cash Flow Information
During the nine months ended September 30, 1999 and 1998, non-cash activities
included the following:
<TABLE>
1999 1998
---- ----
Principal and interest on direct finance receivables
<S> <C> <C>
paid directly to lenders by lessees ..................... $ 5,146,578 $ 9,695,708
Rental income assigned operating lease receivable .......... 1,845,000 1,832,700
Principal and interest on non-recourse financing
paid directly by lessees ................................ (6,991,578) (11,528,408)
Non-recourse notes payable assumed in purchase price ....... -- 17,895,191
Accounts payable - equipment ............................... -- 1,613,896
Fair value of equipment and receivables purchased for debt . -- (19,509,087)
Decrease in investment in finance leases due to terminations 644,704 2,379,961
Decrease in notes payable non-recourse due to terminations . (644,704) (2,379,961)
Decrease in investments in finance leases and financings due
to contribution to joint ventures ....................... (98,475) --
Increase in equity investment in joint ventures ............ 98,475 --
------------ ------------
$ -- $ --
============ ============
</TABLE>
Interest expense of $3,210,766 and $3,115,667 for the nine months ended
September 30, 1999 and 1998 consisted of interest expense on non-recourse
financing accrued or paid directly to lenders by lessees of $1,691,241 and
$1,667,081, respectively, interest expense on securitized debt of $1,519,525 and
$464,861, respectively, and interest expense on a warehouse line of credit of
$983,725 in 1998.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements
September 30, 1999
1. Basis of Presentation
The consolidated financial statements of ICON Cash Flow Partners, L.P.,
Series E (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 presented 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 1998
Annual Report on Form 10-K.
2. Disposition Period
The Partnership's reinvestment period ended on July 31, 1998. The
disposition period commenced on August 1, 1998 and is expected to continue
through July 2003. During the disposition period the Partnership has and will
continue to distribute substantially all distributable cash from operations and
equipment sales to the partners and continue the orderly termination of its
operations and affairs. The Partnership will not invest in any additional
finance or lease transactions during the disposition period. During the
disposition period, the Partnership expects to recover, at a minimum, the
carrying value of its assets.
3. Related Party Transactions
Fees paid or accrued by the Partnership to the General Partner or its
affiliates for the nine months ended September 30, 1999 and 1998 are as follows:
1999 1998
---- ----
Management fees $ 665,847 $ 951,405 Charged to operations
Administrative expense
reimbursements 392,633 506,112 Charged to operations
---------- ----------
Total $1,058,480 $1,457,517
========== ==========
The Partnership has investments in five joint ventures with other
partnerships sponsored by the General Partner. (See Note 4 for additional
information relating to the joint ventures.)
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements - Continued
4. Investments in Joint Ventures
The Partnership and affiliates formed five joint ventures for the purpose
of acquiring and managing various assets.
ICON Receivables 1997-B L.L.C.
In August 1997 the Partnership, ICON Cash Flow Partners L.P. Six ("L.P.
Six") and ICON Cash Flow Partners L.P. Seven ("L.P. Seven") formed ICON
Receivables 1997-B L.L.C. ("1997-B"), a special purpose entity formed for the
purpose of originating leases and securitizing its portfolio. The Partnership,
L.P. Six and L.P. Seven contributed cash and received a 75.00%, 8.33% and 16.67%
interest, respectively in 1997-B. In order to fund the acquisition of leases,
1997-B obtained a warehouse borrowing facility (the "1997-B Warehouse Facility")
from a lender. In October 1998, 1997-B completed an equipment securitization.
The net proceeds from the securitization of these assets were used to pay-off
the remaining 1997-B warehouse facility balance and any remaining proceeds were
distributed to the 1997-B members in accordance with their membership interests.
The Partnership's consolidated financial statements include 100% of the assets
and liabilities of 1997-B. L.P. Six and L.P. Seven's interests in 1997-B have
been reflected as "minority interests in consolidated joint ventures."
ICON Receivables 1997-A L.L.C.
In March 1997 three affiliates of the Partnership, ICON Cash Flow
Partners, L.P., Series D ("Series D"), L.P. Six and L.P. Seven, contributed and
assigned equipment lease and finance receivables and residuals to ICON
Receivables 1997-A L.L.C. ("1997-A"), a special purpose entity created for the
purpose of originating leases, managing existing contributed assets and
securitizing its portfolio. In September 1997 the Partnership, L.P. Six and L.P.
Seven contributed and assigned additional equipment lease and finance
receivables and residuals to 1997-A. The Partnership, Series D, L.P. Six and
L.P. Seven received a 31.19%, 17.81%, 31.03% and 19.97% interest, respectively,
in 1997-A based on the present value of their related contributions. In
September 1997, 1997-A securitized substantially all of its equipment leases and
finance receivables and residuals. 1997-A became the beneficial owner of a
trust. The Partnership's original investment was recorded at cost and is
adjusted by its share of earnings, losses and distributions thereafter.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements - Continued
Information as to the unaudited financial position and results of
operations of 1997-A as of and for the nine months ended September 30, 1999 is
summarized below:
September 30, 1999
------------------
Assets $21,011,645
===========
Liabilities $16,870,651
===========
Equity $ 4,140,994
===========
Partnership's share of equity $ 981,334
===========
Nine Months Ended
September 30, 1999
------------------
Net income $ 562,160
==========
Partnership's share of net income $ 175,365
==========
Distributions $1,621,550
==========
Partnership's share of distributions $ 505,778
==========
ICON Cash Flow L.L.C. III
On December 31, 1996 the Partnership and an affiliate, L.P. Seven, formed
ICON Cash Flow Partners L.L.C. III ("ICON Cash Flow LLC III"), for the purpose
of acquiring and managing an aircraft currently on lease to Continental
Airlines, Inc. The lease is a leveraged lease and the lease term expires in
2003. Profits, losses, excess cash and disposition proceeds are allocated 1% to
the Partnership and 99% to L.P. Seven. The Partnership's investment in the joint
venture is accounted for under the equity method.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements - Continued
Information as to the unaudited financial position and results of
operations of ICON Cash Flow LLC III as of and for the nine months ended
September 30, 1999 is summarized below:
September 30, 1999
------------------
Assets $9,480,354
==========
Liabilities $5,759,820
==========
Equity $3,720,534
==========
Partnership's share of equity $ 37,205
==========
Nine Months Ended
September 30, 1999
------------------
Net income $364,754
========
Partnership's share of net income $ 3,648
========
ICON Cash Flow Partners L.L.C. II
In March 1995 the Partnership and L.P. Six formed a joint venture, ICON
Cash Flow Partners L.L.C. II ("ICON Cash Flow LLC II"), for the purpose of
acquiring and managing an aircraft which was on lease to Alaska Airlines, Inc.
The Partnership and L.P. Six contributed 1% and 99% of the cash required for
such acquisition, respectively, to ICON Cash Flow LLC II. ICON Cash Flow LLC II
acquired the aircraft, assuming non-recourse debt and utilizing contributions
received from the Partnership and L.P. Six. The lease is an operating lease.
Profits, losses, excess cash and disposition proceeds are allocated 1% to the
Partnership and 99% to L.P. Six. The Partnership's investment in the joint
venture is accounted for under the equity method. The original lease term
expired in April 1997 and Alaska Airlines, Inc. returned the aircraft. In June
1997 ICON Cash Flow LLC II released the aircraft to Aerovias de Mexico, S. A. de
C. V. ("Aeromexico"). The new lease is an operating lease which expires in
September 2002.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements - Continued
Information as to the unaudited financial position and results of
operations of ICON Cash Flow LLC II as of and for the nine months ended
September 30, 1999 is summarized below:
September 30, 1999
------------------
Assets $15,664,542
===========
Liabilities $10,004,702
===========
Equity $ 5,659,840
===========
Partnership's share of equity $ 56,598
===========
Nine Months Ended
September 30, 1999
------------------
Net income $687,401
========
Partnership's share of net income $ 6,874
========
ICON Cash Flow Partners L.L.C. I
In September 1994 the Partnership and an affiliate, L.P. Six, formed a
joint venture, ICON Cash Flow Partners L.L.C. I ("ICON Cash Flow LLC I"), for
the purpose of acquiring and managing an aircraft which was on lease to Alaska
Airlines, Inc. The Partnership and L.P. Six contributed 99% and 1% of the cash
required for such acquisition, respectively, to ICON Cash Flow LLC I. ICON Cash
Flow LLC I acquired the aircraft, assuming non-recourse debt and utilizing
contributions received from the Partnership and L.P. Six. The lease is an
operating lease. Profits, losses, excess cash and disposition proceeds are
allocated 99% to the Partnership and 1% to L.P. Six. The Partnership's
consolidated financial statements include 100% of the assets and liabilities of
ICON Cash Flow LLC I. L.P. Six's investment in ICON Cash Flow LLC I has been
reflected as "Minority interest in consolidated joint ventures." The original
lease term expired in April 1997 and Alaska Airlines, Inc. returned the
aircraft. In June 1997 ICON Cash Flow LLC I released the aircraft to Aeromexico.
The new lease is an operating lease which expires in October 2002.
5. Security Deposits, Deferred Credits and Other Payables
Security deposits, deferred credits and other payables at September 30,
1999 and 1998 include $1,320,696 and $570,984, respectively, of proceeds
received on residuals, which will be applied upon final remarketing of the
related equipment.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
September 30, 1999
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, operating leases, and investments in unconsolidated joint
ventures representing 48%, 26%, 25% and 1% of total investments at September 30,
1999, respectively, and 53%, 25%, 20% and 2% of total investments at September
30, 1998, respectively.
Results of Operations
Three Months Ended September 30, 1999 and 1998
For the three months ended September 30, 1999 the Partnership did not
enter into any new leases or financing agreements. For the three months ended
September 30, 1998, the Partnership leased or financed additional equipment with
an initial cost of $17,247,909 to 68 lessees or equipment users.
Revenues for the three months ended September 30, 1999 were $2,630,851,
representing a decrease of $170,790 or 6.1% from 1998. The decrease in revenues
resulted primarily from a decrease in finance income of $383,531 or 21.9% and a
decrease in interest income and other of $159,872 or 82.5%. These decreases were
partially offset by an increase in net gain on sales of equipment of $268,347
and an increase in income from investment in unconsolidated joint ventures of
$104,266. The decrease in finance income resulted from a decrease in the average
size of the finance lease portfolio from 1998 to 1999. Interest income decreased
due to a decrease in the average cash balance from 1998 to 1999. The increase in
net gain on sales or remarketing of equipment resulted from an increase in the
number of leases maturing and the underlying equipment being sold or remarketed
for which proceeds received were in excess of the remaining carrying value. As a
result of an analysis of delinquency, assessment of overall risk and a review of
historical loss experience ICON Receivables 1997-A L.L.C. ("1997-A") recorded a
loss provision for the three months ended September 30, 1998 which resulted in a
decrease for the Partnership in income from investment in unconsolidated joint
ventures.
Expenses for the three months ended September 30, 1999 were $2,352,575,
representing a decrease of $395,562 or 14.4% from 1998. The decrease in expenses
resulted from a decrease in interest expense of $292,182 or 22.9%, a decrease in
provision for bad debt of $149,998 or 14.3%, a decrease in management fees of
$60,357 or 23.9%, a decrease in administrative expenses of $36,939 or 24.9% and
a decrease in amortization of initial direct costs of $13,759 or 68.3%. These
decreases were partially offset by an increase in general and administrative
expense of $150,266 and an increase in minority interest expense in consolidated
joint venture of $7,406. Interest expense decreased due to a decrease in the
average debt outstanding from 1998 to 1999. As a result of an analysis of
delinquency, an assessment of overall risk and a review of historical loss
experience the Partnership determined that a provision for bad debt of $900,000
was required for the three months ended September 30, 1999 compared to a
provision for bad debt of $1,049,998 recorded by the Partnership for the three
months ended September 30, 1998. The decreases in management fees and
administrative expense reimbursements were a result of the fact that 1998
expenses included recognition of previously deferred cumulative management fees
and administrative expense reimbursements related to a lease, which was brought
current. Amortization of initial direct costs decreased due to a decrease in the
average size of the portfolio subject
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
to initial direct costs from 1998 to 1999. For the three months ended September
30, 1999 and 1998, the Partnership's consolidated joint venture, ICON
Receivables 1997-B ("1997-B") had a net loss as a result of recording a
significant provision for bad debt. Therefore, the Partnership recorded a credit
to minority interest expense for 1999 and 1998. The increase in general and
administrative expenses was due primarily to an increase in amortization of
capitalized costs associated with 1997-B, from 1998 to 1999.
Net income for the three months ended September 30, 1999 and 1998 was
$278,276 and $53,504, respectively. The net income per weighted average limited
partnership unit was $.45 and $.09 for 1999 and 1998, respectively.
Nine Months Ended September 30, 1999 and 1998
For the nine months ended September 30, 1999 the Partnership did not enter
into any new leases or financing agreements. For the nine months ended September
30, 1998, the Partnership leased or financed additional equipment with an
initial cost of $48,415,807 to 137 lessees or equipment users.
Revenues for the nine months ended September 30, 1999 were $7,558,506,
representing an increase of $306,379 or 4.2% from 1998. The increase in revenues
resulted primarily from an increase in finance income of $440,458 or 10.6%,
increase in net gain on sales of equipment of $232,212 or 43.1%. These increases
were partially offset by a decrease in interest income and other of $303,486 or
66.5% and a decrease in income from investment in unconsolidated joint ventures
of $75,105 or 28.8 %. The increase in finance income was related to a finance
lease which was acquired by the Partnership at the end of the second quarter of
1998. Finance income for the nine months ended September 30, 1999 includes nine
months of finance income related to this lease compared to three months included
in the nine months ended September 30, 1998. The increase in net gain on sales
or remarketing of equipment resulted from an increase in the number of leases
maturing and the underlying equipment being sold for which proceeds received
were in excess of the remaining carrying value. As a result of an analysis of
delinquency, assessment of overall risk and a review of historical loss
experience ICON Receivables 1997-A L.L.C. ("1997-A") recorded a loss provision
of $270,000 for the three months ended June 30, 1999 which resulted in a
decrease for the Partnership in income from investment in unconsolidated joint
ventures for the nine months ended September 30, 1999.
Expenses for the nine months ended September 30, 1999 were $6,282,394,
representing a decrease of $510,981 or 7.5% from 1998. The decrease in expenses
resulted from a decrease in management fees of $285,558 or 30.0%, a decrease in
the provision for bad debt of $249,998 or 20.0%, a decrease in amortization of
initial direct costs of $191,035 or 87.4% and a decrease in administrative
expense reimbursements of $113,479 or 22.4%. These decreases were partially
offset by an increase in general and administrative expense of $149,412 or
37.6%, an increase in interest expense of $95,099 or 3.1%, an increase in
minority interest expense in consolidated joint venture of $42,871 and an
increase in depreciation expense of $41,707 or 10.5%. The decreases in
management fees and administrative expense reimbursements were a result of the
fact that 1998 expenses included cumulative management fees and administrative
expense reimbursements related to a lease originated in 1995. As a result of an
analysis of delinquency, an assessment of overall risk and a review of
historical loss experience the Partnership determined that a provision for bad
debt of $1,000,000 was required for the nine months ending September 30, 1999
compared to a provision for bad debt of $1,249,998 recorded by the Partnership
for the nine
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
months ended September 30, 1998. Amortization of initial direct costs decreased
due to a decrease in the average size of the portfolio subject to initial direct
costs from 1998 to 1999. For the three months ended September 30, 1999 and 1998,
the Partnership's consolidated joint venture, ICON Receivables 1997-B ("1997-B")
had a net loss as a result of recording a significant provision for bad debt.
Therefore the Partnership recorded a credit to minority interest expense for
1999 and 1998. The increase in general and administrative expenses was due
primarily to an increase in professional fees, bank service charges, postage
costs and amortization of capitalized costs associated with 1997-B, from 1998 to
1999. Interest expense increased due to an increase the average debt outstanding
from 1998 to 1999.
Net income for the nine months ended September 30, 1999 and 1998 was
$1,276,112 and $458,752, respectively. The net income per weighted average
limited partnership unit was $2.08 and $.75 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 $8,652,659
and $9,176,598, respectively, proceeds from sales of equipment of $3,155,343 and
$1,747,854, respectively, proceeds from securitized debt of $41,308,464 in 1998
and proceeds from a warehouse line of credit of $20,703,918 in 1998. These funds
were used to purchase equipment in 1998, fund cash distributions and make
payments on borrowings.
Cash distributions to limited partners for the nine months ended September
30, 1999 and 1998, which were paid monthly, totaled $3,621,841 and $5,817,418,
respectively, of which $1,263,351 and $454,164 was investment income and
$2,358,490 and $5,363,254 was a return of capital, respectively. The monthly
annualized cash distribution rate to limited partners for the nine months ended
September 30, 1999 and 1998 was 7.94% and 12.75%, respectively, of which 2.77%
and 1.0% was investment income and 5.17% and 11.75% 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 $5.96 and
$9.56, respectively, of which $3.88 and $.75 was investment income and $2.08 and
$8.81 was a return of capital, respectively.
The Partnership's reinvestment period ended on July 31, 1998. The
disposition period began August 1, 1998, at which time the Partnership began the
orderly termination of its operations and affairs. During the disposition period
the Partnership has, and will continue to distribute substantially all
distributable cash from operations and equipment sales to the partners. The
Partnership has not, and will not invest in any additional finance or lease
transactions during the disposition period. As a result of the Partnership's
entering into the disposition period, future monthly distributions could, and
are expected to fluctuate depending on the amount of asset sale and re-lease
proceeds received during that period.
As of September 30, 1999, except as noted above, there were no known
trends or demands, commitments, events or uncertainties which are likely to have
a material effect on liquidity. As cash is realized from operations and sales of
equipment, the Partnership will distribute substantially all available cash,
after retaining sufficient cash to meet its reserve requirements and recurring
obligations.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Year 2000 Issue
The Partnership relies on computer information systems for its transaction
processing and for general data processing. 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, the program 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 are provided by
third parties 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 E
(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 E
(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 E
File No. 33-44413 (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
<CIK> 0000881788
<NAME> ICON Cash Flow Partners, L.P., Series E
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,091,316
<SECURITIES> 0
<RECEIVABLES> 50,006,570
<ALLOWANCES> 2,005,817
<INVENTORY> 508,917
<CURRENT-ASSETS> * 0
<PP&E> 20,707,984
<DEPRECIATION> 3,850,380
<TOTAL-ASSETS> 69,880,516
<CURRENT-LIABILITIES> ** 0
<BONDS> 51,153,505
0
0
<COMMON> 0
<OTHER-SE> 14,493,757
<TOTAL-LIABILITY-AND-EQUITY> 69,880,516
<SALES> 7,405,270
<TOTAL-REVENUES> 7,558,506
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,071,628
<LOSS-PROVISION> 1,000,000
<INTEREST-EXPENSE> 3,210,766
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,276,112
<EPS-BASIC> 2.08
<EPS-DILUTED> 2.08
<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>
