UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended June 30, 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 0-27912
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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>
June 30, December 31,
1999 1998
Assets
<S> <C> <C>
Cash ....................................................... $ 1,780,785 $ 2,336,094
------------ ------------
Investment in finance leases
Minimum rents receivable ................................ 32,599,417 39,904,532
Estimated unguaranteed residual values .................. 9,781,615 11,545,261
Initial direct costs .................................... 1,571 11,986
Unearned income ......................................... (6,513,513) (8,575,852)
Allowance for doubtful accounts ......................... (956,192) (985,300)
------------ ------------
34,912,898 41,900,627
Investment in financings
Receivables due in installments ......................... 22,906,600 28,310,139
Initial direct costs .................................... 22 106
Unearned income ......................................... (3,524,456) (4,815,891)
Allowance for doubtful accounts ......................... (354,436) (425,601)
------------ ------------
19,027,730 23,068,753
Investment in operating leases
Equipment, at cost ...................................... 20,707,984 20,707,984
Accumulated depreciation ................................ (3,703,578) (3,409,972)
------------ ------------
17,004,406 17,298,012
Investments in unconsolidated joint ventures ............... 1,101,080 1,264,148
------------ ------------
Accounts receivable from General Partner and affiliates, net -- 160,151
------------ ------------
Other assets ............................................... 1,408,634 890,445
------------ ------------
Total assets ............................................... $ 75,235,533 $ 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>
June 30, December 31,
1999 1998
Liabilities and Partners' Equity
<S> <C> <C>
Notes payable - securitized debt ...................... $ 31,284,683 $ 36,975,096
Notes payable - non-recourse .......................... 24,026,718 28,492,442
Security deposits, deferred credits and other payables 4,186,738 4,014,873
Minority interests in consolidated joint ventures ..... 677,663 559,749
Accounts payable to General Partner and affiliates, net 76,754 --
------------ ------------
60,252,556 70,042,160
Commitments and Contingencies
Partners' equity (deficiency)
General Partner .................................... (370,036) (351,105)
Limited partners (607,856 units outstanding,
$100 per unit original issue price) .............. 15,353,013 17,227,175
------------ ------------
Total partners' equity ................................ 14,982,977 16,876,070
------------ ------------
Total liabilities and partners' equity ................ $ 75,235,533 $ 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 Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
Revenue
<S> <C> <C> <C> <C>
Finance income ..................... $1,482,656 $1,030,909 $3,232,914 $2,408,925
Rental income ...................... 615,000 631,962 1,230,000 1,217,700
Net gain on sales or
remarketing of equipment ......... 120,228 701 234,912 271,047
Interest income and other .......... 51,612 128,855 119,349 262,963
Income from equity investment
in unconsolidated joint venture .. 8,669 171,572 110,480 289,851
---------- ---------- ---------- ----------
Total revenues ..................... 2,278,165 1,963,999 4,927,655 4,450,486
---------- ---------- ---------- ----------
Expenses
Interest ........................... 1,061,988 818,271 2,224,685 1,837,404
Management fees - General Partner .. 240,446 266,590 474,083 699,284
General and administrative ......... 183,457 153,714 387,776 243,853
Depreciation ....................... 146,803 291,581 293,606 396,677
Administrative expense
reimbursement - General Partner . 141,475 148,884 281,313 357,854
Provision for bad debts ............ 100,000 -- 100,000
200,000
Minority interest in
consolidated joint venture ....... 53,745 80,948 147,208 111,743
Amortization of initial direct costs 9,202 24,450 21,148 198,423
---------- ---------- ---------- ----------
Total expenses ..................... 1,937,116 1,784,438 3,929,819 4,045,238
---------- ---------- ---------- ----------
Net income ............................ $ 341,049 $ 179,561 $ 997,836 $ 405,248
========== ========== ========== ==========
Net income allocable to:
Limited partners ................... $ 337,639 $ 177,765 $ 987,858 $ 401,196
General Partner .................... 3,410 1,796 9,978 4,052
---------- ---------- ---------- ----------
$ 341,049 $ 179,561 $ 997,836 $ 405,248
========== ========== ========== ==========
Weighted average number of limited
partnership units outstanding ...... 607,856 608,346 607,856 608,363
========== ========== ========== ==========
Net income per weighted average
limited partnership unit ........... $ .56 $ .29 $ 1.63 $ .66
========== ========== ========== ==========
</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 Six Months Ended June 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 $ 3.08 $ 1.63 (2,862,020) (28,909) (2,890,929)
Net income 987,858 9,978 997,836
----------- --------- -----------
Balance at
June 30, 1999 $15,353,013 $(370,036) $14,982,977
=========== ========== ===========
</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 Six Months Ended June 30,
(unaudited)
<TABLE>
1999 1998
---- ----
Cash flows provided by operating activities:
<S> <C> <C>
Net income ...................................................... $ 997,836 $ 405,248
------------ ------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ................................................. 293,606 396,677
Provision for bad debt ....................................... 100,000 200,000
Rental income - paid directly to lenders by lessees .......... (1,230,000) (1,217,700)
Finance income portion of receivables paid directly
to lenders by lessees ..................................... (1,049,639) (783,797)
Amortization of initial direct costs ......................... 21,148 198,423
Net gain on sales or remarketing of equipment ................ (234,912) (271,047)
Interest expense on non-recourse financing paid
directly by lessees ....................................... 1,168,080 1,017,110
Income from investments in unconsolidated joint ventures ..... (110,480) (289,851)
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables ........ 5,569,076 3,388,793
Distributions received from unconsolidated joint ventures . 372,022 254,895
Investments in unconsolidated joint ventures .............. -- (20,274)
Accounts payable to General Partner and affiliates, net ... 76,754 241,076
Security deposits, deferred credits and other payables .... 171,865 1,722,461
Accounts receivable from General Partner and affiliates, net 160,151 7,104
Other assets .............................................. (60,128) 1,133,576
Minority interests in consolidated joint ventures ......... 117,914 603,876
Other, net ................................................ (45,696) (37,686)
------------ ------------
Total adjustments ....................................... 5,319,761 6,543,636
------------ ------------
Net cash provided by operating activities ............... 6,317,597 6,948,884
------------ ------------
Cash flows from investing activities:
Proceeds from sales of equipment ................................ 1,708,436 1,163,590
Equipment and receivables purchased ............................. -- (17,842,210)
------------ ------------
Net cash provided by (used in) investing activities ..... 1,708,436 (16,678,620)
------------ ------------
</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 Six Months Ended June 30,
(unaudited)
<TABLE>
1999 1998
---- ----
Cash flows from financing activities:
<S> <C> <C>
Principal payments on securitized debt ............... (5,690,413) --
Cash distributions to partners ....................... (2,890,929) (3,917,489)
Proceeds from warehouse line of credit ............... -- 15,187,893
Principal payments on warehouse line of credit ....... -- (5,209,951)
Redemption of limited partnership units .............. -- (2,394)
------------ ------------
Net cash provided by (used in) financing activities (8,581,342) 6,058,059
------------ ------------
Net increase (decrease) in cash ......................... (555,309) (3,671,677)
Cash at beginning of period ............................. 2,336,094 9,460,337
------------ ------------
Cash at end of period ................................... $ 1,780,785 $ 5,788,660
============ ============
</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 three months ended June 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 ..................... $ 3,781,041 $ 6,934,383
Rental income assigned operating lease receivable .......... 1,230,000 1,217,700
Principal and interest on non-recourse financing
paid directly by lessees ................................ (5,011,041) (8,152,083)
Non-recourse notes payable assumed in purchase price ....... -- 13,273,100
Fair value of equipment and receivables purchased for debt . -- (13,273,100)
Decrease in investment in finance leases due to terminations (644,704) --
Decrease in notes payable non-recourse due to terminations . 644,704 --
Decrease in investments in finance leases and financings due
to contribution to joint ventures ....................... (98,474) --
Increase in equity investment in joint ventures ............ 98,474 --
------------ ------------
$ -- $ --
============ ============
</TABLE>
Interest expense of $2,224,685 and $1,837,404 for the six months ended June
30, 1999 and 1998 consisted of interest expense on non-recourse financing
accrued or paid directly to lenders by lessees of $1,168,080 and $1,017,110,
respectively, interest expense on secured debt of $1,056,605 in 1999 and
interest expense on warehouse line of credit of $820,294 in 1998.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements
June 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 six months ended June 30, 1999 and 1998 are as follows:
1999 1998
---- ----
Management fees $474,083 $ 699,284 Charged to operations
Administrative expense
reimbursements 281,313 357,854 Charged to operations
-------- ----------
Total $755,396 $1,057,138
======== ==========
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.
The two joint ventures described below are majority owned and are
consolidated with the Partnership.
ICON Cash Flow Partners L.L.C. I
In September 1994 the Partnership and an affiliate, ICON Cash Flow
Partners L.P. Six ("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 Aero Mexico. The new lease is an operating lease which expires
in October 2002.
ICON Receivables 1997-B L.L.C.
In August 1997 the Partnership, L.P. Six and ICON Cash Flow Partners L.P.
Seven ("L.P. Seven") formed 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 $2,250,000 (75.00% interest), $250,000
(8.33% interest) and $500,000 (16.67% interest), respectively to 1997-B. In
order to fund the acquisition of leases, 1997-B obtained a warehouse borrowing
facility from Prudential Securities Credit Corporation. 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."
The three joint ventures described below are less than 50% owned and are
accounted for following the equity method.
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
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements - Continued
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 Aero Mexico. The new lease
is an operating lease which expires in September 2002.
Information as to the unaudited financial position and results of
operations of ICON Cash Flow LLC II as of and for the six months ended June 30,
1999 is summarized below:
June 30, 1999
Assets $15,820,842
===========
Liabilities $10,398,575
===========
Equity $ 5,422,267
===========
Partnership's share of equity $ 54,223
===========
Six Months Ended
June 30, 1999
Net income $ 449,827
===========
Partnership's share of net income $ 4,498
===========
ICON Cash Flow L.L.C. III
In December 1996 the Partnership and an affiliate, ICON Cash Flow
Partners, L.P. Seven ("L.P. Seven"), formed a joint venture, 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
aircraft is a 1976 McDonnell Douglas DC-10-30 and cost $11,429,751. The lease is
a leveraged lease and the lease term expires in March 2003. The Partnership and
L.P. Seven contributed 1% and 99% of the cash required for such acquisition,
respectively, to ICON Cash Flow LLC III. 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 six months ended June 30,
1999 is summarized below:
June 30, 1999
Assets $9,714,574
==========
Liabilities $6,117,438
==========
Equity $3,597,136
==========
Partnership's share of equity $ 35,971
==========
Six Months Ended
June 30, 1998
Net income $ 241,357
==========
Partnership's share of net income $ 2,414
==========
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 six months ended June 30, 1999 is
summarized below:
June 30, 1999
Assets $23,781,936
===========
Liabilities $19,546,193
===========
Equity $ 4,235,743
===========
Partnership's share of equity $ 1,010,886
===========
Six Months Ended
June 30, 1999
Net income $ 331,975
===========
Partnership's share of net income $ 103,568
===========
Distributions $ 1,192,723
Partnership's share of distributions $ 372,022
===========
5. Security Deposits, Deferred Credits and Other Payables
Security deposits, deferred credits and other payables at June 30, 1999 and
1998 include $1,895,353 and $1,515,786, respectively, of proceeds received on
residuals, which will be applied upon final remaketing of the related equipment.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
June 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 49%, 26%, 23% and 2% of total investments at June 30,
1999, respectively, and 51%, 24%, 23% and 2% of total investments at June 30,
1998, respectively.
Results of Operations
Three Months Ended June 30, 1999 and 1998
For the three months ended June 30, 1999 the Partnership did not enter
into any new leases or financing agreements. For the three months ended June 30,
1998, the Partnership leased or financed additional equipment with an initial
cost of $15,136,793 to 44 lessees or equipment users. At June 30, 1999 the
weighted average remaining transaction term of the portfolio was 25 months.
Revenues for the three months ended June 30, 1999 were $2,278,165,
representing an increase of $314,166 or 16.0% from 1998. The increase in
revenues resulted primarily from an increase in finance income of $451,747 or
43.8% and an increase in net gain on sales or remarketing of equipment of
$119,527. These increases were partially offset by a decrease in income from
equity investment in unconsolidated joint ventures of $162,903 or 94.9%, a
decrease in interest income and other of $77,243 or 59.9% and a decrease in
rental income of $16,962 or 2.7%. The increase in finance income resulted from
an increase in the average size of the finance lease portfolio 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 of $270,000 for the three
months ended June 30, 1999 which resulted in a decrease for the Partnership in
income from equity investment in unconsolidated joint ventures. Interest income
decreased due to a decrease in the average cash balance from 1998 to 1999. The
decrease in rental income from 1998 to 1999 resulted from a rent adjustment due
to the Partnership's revision of the operating lease with Aerovias de Mexico,
S.A. de C.V. ("Aero Mexico") in April of 1998.
Expenses for the three months ended June 30, 1999 were $1,937,116,
representing an increase of $152,678 or 8.6% from 1998. The increase in expenses
resulted primarily from an increase in interest expense of $243,717 or 29.8%, an
increase in the provision for bad debts of $100,000 and an increase in general
and administrative expense of $29,743 or 19.3%. These increases were partially
offset by a decrease in depreciation of expense of $144,778 or 49.7%, a decrease
in minority interest in consolidated joint venture of $27,203 or 33.6%, a
decrease in management fees of $26,144 or 9.8%, a decrease in amortization of
initial direct costs of $15,248 or 62.4% and a decrease in administrative
expense reimbursements of $7,409 or 5.0%.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Interest expense increased due to an increase 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 $100,000 was required
for the three months ending June 30, 1999. The increase in general and
administrative expenses was due primarily to an increase in collection related
legal and other fees and increased printing and postage costs from 1998 to 1999.
Minority interest expense decreased due to a decrease in the net income of the
underlying joint venture. 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. 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.
Net income for the three months ended June 30, 1999 and 1998 was $341,049
and $179,561, respectively. The net income per weighted average limited
partnership unit was $0 and $.29 for 1999 and 1998 respectively.
Six Months Ended June 30, 1999 and 1998
For the six months ended June 30, 1999 the Partnership did not enter into
any new leases or financing agreements. For the six months ended June 30, 1998,
the Partnership leased or financed additional equipment with an initial cost of
$31,167,958 to 137 lessees or equipment users. At June 30, 1999 the weighted
average remaining transaction term of the portfolio was 25 months.
Revenues for the six months ended June 30, 1999 were $4,927,655,
representing an increase of $477,169 or 10.7% from 1998. The increase in
revenues resulted primarily from an increase in finance income of $823,989 or
34.2% and an increase in rental income of $12,300 or 1.0%. These increases were
partially offset by a decrease in net gain on sales or remarketing of equipment
of $36,135 or 13.3%, a decrease in income from equity investment in
unconsolidated joint ventures of $179,371 or 61.9% and a decrease in interest
income and other of $143,614 or 54.6%. The increase in finance income resulted
from an increase in the average size of the finance lease portfolio from 1998 to
1999. Rental income increased from 1998 to 1999 due to increased rentals as a
result of the partnership's revision of the operating lease with Aerovias de
Mexico, S.A. de C.V. ("Aero Mexico") in April of 1998. The decrease in net gain
on sales or remarketing of equipment resulted from a decrease 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 of $270,000 for the three months ended June 30, 1999 which
resulted in a decrease for the Partnership in income from equity investment in
unconsolidated joint ventures for the six months ended June 30, 1999.
Expenses for the six months ended June 30, 1999 were $3,929,819,
representing a decrease of $115,419 or 2.9% from 1998. The decrease in expenses
resulted primarily from a decrease in management fees of $225,201 or 32.2%, a
decrease in the provision for bad debt of $100,000 or 50.0%, a decrease in
amortization of initial direct costs of $177,275 or 89.3%, a decrease in
depreciation of expense of $103,071 or 26.0% and a decrease in administrative
expense reimbursements of $76,541 or 21.4%. These decreases were partially
offset by an increase in interest expense of $387,281 or 21.1%, an increase in
general and administrative expense of $143,923 or 59.0% and an increase in
minority interest in consolidated joint venture of $35,465 or 31.7%.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
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.
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. 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 $100,000 was required for the three months ending June 30, 1999.
Interest expense increased due to an increase the average debt outstanding from
1998 to 1999. The increase in general and administrative expenses was due
primarily to an increase in collection related legal and other fees and
increased printing and postage costs from 1998 to 1999. Minority interest
expense increased due to an increase in the net income of the underlying joint
venture.
Net income for the six months ended June 30, 1999 and 1998 was $997,836
and $405,248, respectively. The net income per weighted average limited
partnership unit was $1.07 and $.66 for 1999 and 1998, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the six months ended June
30, 1999 and 1998 were net cash provided by operations of $6,317,597 and
$6,948,884, respectively, proceeds from sales of equipment of $1,551,704 and
$1,163,590, respectively and proceeds from a warehouse line of credit of
$15,187,893 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 six months ended June 30,
1999 and 1998, which were paid monthly, totaled $2,862,020 and $3,878,314,
respectively, of which $987,858 and $401,195 was investment income and
$1,874,162 and $3,477,119 was a return of capital, respectively. The monthly
annualized cash distribution rate to limited partners for the six months ended
June 30, 1999 and 1998 was 9.42% and 12.75%, respectively, of which 3.25% and
1.32% was investment income and 6.17% and 11.43% was a return of capital,
respectively, calculated as a percentage of each partner's initial capital
contribution. The limited partner distribution per weighted average unit
outstanding for the six months ended June 30, 1999 and 1998 was $4.71 and $6.38,
respectively, of which $1.63 and $.66 was investment income and $3.08 and $5.72
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 June 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
June 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.
August 12, 1999 /s/Patricia A. Walsh
- --------------- --------------------------------------
Date Patricia A. Walsh
Vice President and Controller
(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> 0000881788
<NAME> ICON Cash Flow Partners, L.P., Series E
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,780,785
<SECURITIES> 0
<RECEIVABLES> 55,506,017
<ALLOWANCES> 1,310,628
<INVENTORY> 510,807
<CURRENT-ASSETS> * 0
<PP&E> 20,707,984
<DEPRECIATION> 3,703,578
<TOTAL-ASSETS> 75,235,533
<CURRENT-LIABILITIES> ** 0
<BONDS> 55,311,401
0
0
<COMMON> 0
<OTHER-SE> 14,982,977
<TOTAL-LIABILITY-AND-EQUITY> 75,235,533
<SALES> 4,808,306
<TOTAL-REVENUES> 4,927,655
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,605,134
<LOSS-PROVISION> 100,000
<INTEREST-EXPENSE> 2,224,685
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 997,836
<EPS-BASIC> 1.63
<EPS-DILUTED> 1.63
<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>
