UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended September 30, 1998
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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>
September 30, December 31,
1998 1997
Assets
<S> <C> <C>
Cash ....................................................... $ 9,348,486 $ 9,460,337
------------ ------------
Investment in finance leases
Minimum rents receivable ................................ 44,026,484 21,979,203
Estimated unguaranteed residual values .................. 11,649,421 7,380,296
Initial direct costs .................................... 22,758 225,158
Unearned income ......................................... (9,888,048) (3,811,419)
Allowance for doubtful accounts ......................... (908,724) (553,114)
------------ ------------
44,901,891 25,220,124
Investment in financings
Receivables due in installments ......................... 25,632,375 13,732,305
Initial direct costs .................................... 754 1,117
Unearned income ......................................... (4,220,919) (2,563,681)
Allowance for doubtful accounts ......................... (479,646) (102,532)
------------ ------------
20,932,564 11,067,209
------------ ------------
Investment in operating leases
Equipment, at cost ...................................... 20,707,984 20,707,984
Accumulated depreciation ................................ (3,263,170) (2,864,469)
------------ ------------
17,444,814 17,843,515
Equity investment in joint ventures ........................ 1,649,404 1,556,123
------------ ------------
Accounts receivable from General Partner and affiliates, net -- 7,104
Other assets ............................................... 724,263 1,762,605
------------ ------------
Total assets ............................................... $ 95,001,422 $ 66,917,017
============ ============
</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,
1998 1997
------------ -----------
Liabilities and Partners' Equity
<S> <C> <C>
Notes payable - securitization ............................ $ 39,849,922 $ --
Notes payable - non-recourse .............................. 30,825,967 25,172,064
Note payable - warehouse line of credit ................... -- 16,100,870
Security deposits and deferred credits .................... 2,711,645 675,412
Accounts payable to General Partner and affiliates, net ... 497,246 --
Minority interest in joint venture ........................ 768,883 854,129
Accounts payable - equipment .............................. 1,613,896 --
Accounts payable - other .................................. 463,992 424,848
------------ ------------
76,731,551 43,227,323
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ........................................ (337,418) (283,244)
Limited partners (608,346 and 608,446 units outstanding,
$100 per unit original issue price in 1998 and 1997,
respectively) ........................................ 18,607,289 23,972,938
------------ ------------
Total partners' equity .................................... 18,269,871 23,689,694
------------ ------------
Total liabilities and partners' equity .................... $ 95,001,422 $ 66,917,017
============ ============
</TABLE>
See accompanying notes to unaudited 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,
1998 1997 1998 1997
---- ---- ---- ----
Revenue
<S> <C> <C> <C> <C>
Finance income ..................... $ 1,754,511 $ 657,485 $ 4,163,436 $ 2,742,315
Rental income ...................... 615,000 748,444 1,832,700 1,425,637
Net gain on sales or
remarketing of equipment ......... 267,230 744,793 538,277 1,072,791
Interest income and other .......... 193,759 237,462 456,722 764,667
Income (loss) from equity
investment in joint ventures ..... (28,859) (93,588) 260,992 (89,342)
----------- ----------- ----------- -----------
Total revenues ..................... 2,801,641 2,294,596 7,252,127 5,916,068
----------- ----------- ----------- -----------
Expenses
Interest ........................... 1,278,263 721,848 3,115,667 1,900,270
Provision for bad debts ............ 1,049,998 -- 1,249,998 --
Management fees - General Partner .. 252,121 254,421 951,405 728,972
Administrative expense
reimbursement - General Partner . 148,258 131,647 506,112 380,549
Depreciation ....................... 146,802 105,095 398,701 370,523
Amortization of initial direct costs 20,134 96,200 218,557 421,606
General and administrative ......... 8,318 38,293 396,949 301,358
Minority interest in joint venture . (155,757) 11,237 (44,014) 13,409
----------- ----------- ----------- -----------
Total expenses ..................... 2,748,137 1,358,741 6,793,375 4,116,687
----------- ----------- ----------- -----------
Net income ............................ $ 53,504 $ 935,855 $ 458,752 $ 1,799,381
=========== =========== =========== ===========
Net income allocable to:
Limited partners ................... $ 52,969 $ 926,496 $ 454,164 $ 1,781,387
General Partner .................... 535 9,359 4,587 17,994
----------- ----------- ----------- -----------
$ 53,504 $ 935,855 $ 458,752 $ 1,799,381
=========== =========== =========== ===========
Weighted average number of limited
partnership units outstanding ...... 608,346 609,246 608,358 609,290
=========== =========== =========== ===========
Net income per weighted average
limited partnership unit ........... $ .09 $ 1.52 $ .75 $ 2.92
=========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited 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, 1998 and the
Years Ended December 31, 1997, 1996 and 1995
(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, 1994 $ 41,185,614 $ (109,751) $ 41,075,863
Cash distributions
to partners ..... $ 10.17 $ 2.58 (7,773,082) (78,512) (7,851,594)
Limited partnership
units redeemed
(45 units) ...... (2,370) -- (2,370)
Net income ......... 1,569,944 15,858 1,585,802
------------ ------------ ------------
Balance at
December 31, 1995 34,980,106 (172,405) 34,807,701
Cash distribution
to partners ..... $ 9.11 $ 3.64 (7,771,164) (78,496) (7,849,660)
Limited partnership
units redeemed
(193 units) ..... (8,960) -- (8,960)
Net income ......... 2,221,444 22,439 2,243,883
------------ ------------ ------------
Balance at
December 31, 1996 29,421,426 (228,462) 29,192,964
</TABLE>
(continued on next page)
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Statements of Changes in Partners' Equity (Continued)
For the Nine Months Ended September 30, 1998 and the
Years Ended December 31, 1997, 1996 and 1995
(unaudited)
<TABLE>
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
(Per weighted average unit)
Cash distribution
<S> <C> <C> <C> <C> <C>
to partners ...... $ 8.90 $ 3.85 (7,768,316) (78,468) (7,846,784)
Limited partnership
units redeemed
(1,000 units) .... (25,071) -- (25,071)
Net income .......... 2,344,899 23,686 2,368,585
------------ ------------ ------------
Balance at
December 31, 1997 23,972,938 (283,244) 23,689,694
Cash distributions
to partners ...... $ 8.81 $ .75 (5,817,418) (58,762) (5,876,180)
Limited partnership
units redeemed
(100 units) ...... (2,395) -- (2,395)
Net income .......... 454,164 4,588 458,752
------------ ------------ ------------
Balance at
September 30, 1998 $ 18,607,289 $ (337,418) $ 18,269,871
============ ============ ============
</TABLE>
See accompanying notes to unaudited 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 September 30,
(unaudited)
<TABLE>
1998 1997
---- ----
Cash flows provided by operating activities:
<S> <C> <C>
Net income ...................................................... $ 458,752 $ 1,799,381
------------ ------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ................................................. 398,701 370,523
Rental income - paid directly to lenders by lessees .......... (1,832,700) (1,425,637)
Finance income portion of receivables paid directly
to lenders by lessees ..................................... (1,527,081) (874,753)
Amortization of initial direct costs ......................... 218,557 421,606
Net gain on sales or remarketing of equipment ................ (538,277) (1,072,791)
Interest expense on non-recourse financing paid
directly by lessees ....................................... 1,667,081 418,789
Interest expense accrued on debt ............................. -- 131,788
Collection of principal - non-financed receivables ........... 5,760,451 7,690,395
Income (loss) from equity investment in joint ventures ....... (260,992) 89,342
Distribution from investment in joint venture ................ 254,896 14,627,437
Changes in operating assets and liabilities:
Accounts payable to General Partner and affiliates, net ... 497,246 13,305
Security deposits and deferred credits .................... 2,036,233 19,680
Allowance for doubtful accounts ........................... 878,718 (314,540)
Other assets .............................................. 876,375 739,562
Accounts payable - other .................................. 39,144 34,187
Accounts receivable from General Partner and affiliates, net 7,104 (281,100)
Minority interest in joint venture ........................ (85,246) 764,076
Other, net ................................................ 43,541 (358,918)
------------ ------------
Total adjustments ....................................... 8,433,751 20,992,951
------------ ------------
Net cash provided by operating activities ............... 8,892,503 22,792,332
------------ ------------
Cash flows from investing activities:
Proceeds from sales of equipment ................................ 2,119,134 14,802,451
Equipment and receivables purchased ............................. (28,906,780) (9,032,599)
Investment in joint venture ..................................... (87,185) (2,250,000)
------------ ------------
Net cash provided by (used in) investing activities ..... (26,874,831) 3,519,852
------------ ------------
</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>
1998 1997
---- ----
Cash flows from financing activities:
<S> <C> <C>
Proceeds from warehouse line of credit ............... 20,703,918 2,684,035
Payments of warehouse line of credit ................. (36,804,788) --
Proceeds of securitization debt ...................... 41,308,464 --
Principal payments on securitization debt ............ (1,458,542) --
Cash distributions to partners ....................... (5,876,180) (5,885,195)
Redemption of limited partnership units .............. (2,395) (7,238)
Loans to affiliates .................................. -- (11,280,328)
Principal payments received on affiliate notes ....... -- 11,280,328
Proceeds from revolving credit facility .............. -- 4,400,000
Principal payments on revolving credit facility ...... -- (17,400,000)
------------ ------------
Net cash provided by (used in) financing activities 17,870,477 (16,208,398)
------------ ------------
Net increase (decrease) in cash ......................... (111,851) 10,103,786
Cash at beginning of period ............................. 9,460,337 1,203,626
------------ ------------
Cash at end of period ................................... $ 9,348,486 $ 11,307,412
============ ============
</TABLE>
See accompanying notes to unaudited 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, 1998 and 1997, non-cash activities
included the following:
<TABLE>
1998 1997
---- ----
Fair value of equipment and receivables purchased
<S> <C> <C>
for debt and payables ............................................ $(19,509,087) $ --
Non-recourse notes payable assumed in purchase
price ............................................................ 17,895,191 --
Accounts payable - equipment ........................................ 1,613,896 --
Principal and interest on direct finance receivables
paid directly to lenders by lessees .............................. 9,695,708 18,686,210
Rental income assigned operating lease receivable ................... 1,832,700 1,425,637
Principal and interest on non-recourse financing
paid directly by lessees ......................................... (11,528,408) (20,111,847)
Decrease in investment in finance leases due to termination of leases 2,379,961 --
Decrease in notes payable - non-recourse due to termination of leases (2,379,961) --
Decrease in investments in finance leases and
financings due to contribution to joint venture ................... -- 15,698,027
Increase in equity investment in joint venture ...................... -- (15,698,027)
------------ ------------
$ -- $ --
============ ============
</TABLE>
Interest expense of $3,115,667 and $1,900,270 for the nine months ended
September 30, 1998 and 1997 consisted of: interest expense on warehouse line of
credit of $983,725 in 1998, interest expense on securitization debt of $464,861
in 1998, interest expense on non-recourse financing accrued or paid directly by
lenders to lessees of $1,667,081 and $418,789, respectively, interest expense on
revolving credit facility of $603,449 in 1997 and other interest of $0 and
$878,032, respectively.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements
September 30, 1998
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 1997
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 February 1, 2001. During the Disposition Period the Partnership will
distribute cash from operations and sales in excess of its reserve requirements
and anticipated obligations. The Partnership will not reinvest in any leased
equipment during the Disposition Period.
3. Redemption of Limited Partnership Units
The General Partner consented to the Partnership redeeming limited
partnership units during the nine months ended September 30, 1998. The
redemption amount was calculated following the specified redemption formula as
per the Partnership Agreement. Redeemed units have no voting rights and do not
share in distributions. The Partnership Agreement limits the number of units
which can be redeemed in any one year and redeemed units may not be reissued.
Redeemed limited partnership units are accounted for as a reduction from
partners equity.
4. Related Party Transactions
During the nine months ended September 30, 1998 and 1997, the Partnership
paid or accrued to the General Partner management fees of $951,405 and $728,972,
respectively, and administrative expense reimbursements of $506,112 and
$380,549, respectively, which were charged to operations.
For the nine months ended September 30, 1998 and 1997 no acquisition fees
were paid or accrued by the Partnership.
5. Year 2000
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.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements - Continued
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.
6. Investment in Joint Ventures
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.
ICON Cash Flow 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.
The Partnership and L.P. Six contributed 99% and 1% of the cash required for
such acquisition, respectively, to ICON Cash Flow LLC I. The Partnership's
consolidated financial statements include 100% of the assets and liabilities of
ICON Cash Flow LLC I.
ICON Cash Flow L.L.C. II
In March 1995 the Partnership and L.P. Six formed ICON Cash Flow Partners
L.L.C. II, ("ICON Cash Flow LLC II"), for the purpose of acquiring and managing
an aircraft. The Partnership and L.P. Six contributed 1% and 99% of the cash
required for such acquisition, respectively, to ICON Cash Flow LLC II.
Information as to the unaudited financial position and results of
operations of ICON LLC II at September 30, 1998 is summarized below:
September 30, 1998
Assets $ 16,385,282
==============
Liabilities $ 11,529,918
==============
Equity $ 4,855,364
==============
Nine Months Ended
September 30, 1998
Net income $ 557,957
==============
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 ICON Cash Flow Partners L.L.C. III ("ICON Cash
Flow LLC III"), for the purpose of acquiring and managing an aircraft. The
Partnership and L.P. Seven contributed 1% and 99% of the cash required for such
acquisition, respectively, to ICON Cash Flow LLC III.
<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 LLC III at September 30, 1998 is summarized below:
September 30, 1998
Assets $ 13,153,998
==============
Liabilities $ 10,783,188
==============
Equity $ 2,370,810
==============
Nine Months Ended
September 30, 1998
Net income $ 337,302
==============
ICON Receivables 1997-A L.L.C.
In March 1997 the Partnership, ICON Cash Flow Partners, L.P., Series D
("Series D"), L.P. Six and L.P. Seven (collectively the "1997-A Members"),
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 new leases, to manage existing contributed assets
and, eventually, to securitize 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.
Information as to the unaudited financial position and results of
operations of 1997-A at September 30, 1998 is summarized below:
September 30, 1998
Assets $ 37,097,268
=============
Liabilities $ 31,058,715
==============
Equity $ 6,038,553
============
Nine Months Ended
September 30, 1998
Net income $ 808,805
============
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements - Continued
ICON Receivables 1997-B L.L.C.
In August 1997 the Partnership, L.P. Six and L.P. Seven formed ICON
Receivables 1997-B L.L.C. ("1997-B"), for the purpose of originating leases and
securitizing its portfolio. The Partnership, L.P. Six and L.P. Seven
(collectively the "1997-B members") contributed $2,250,000, $249,900 and
$500,100 to 1997-B on August 19, 1997 and received a 75.00%, 8.33% and 16.67%
interest, respectively, in 1997-B based on their contribution. On July 30, 1998,
ICON Holdings Corp. ("Holdings"), the parent of the General Partner and 1997-B
completed an equipment lease securitization. The securitization is comprised of
two senior notes, issued from ICON Equipment Lease Trust 1998 S-1 (Holdings) and
ICON Equipment Lease Trust 1998 S-2 (1997-B). The net proceeds from the 1997-B
securitization totaled $40,806,901, of which $30,850,936 was used to pay down
1997-B's warehouse line of credit, and the remaining proceeds, after
establishing reserves for expenses, were distributed to the 1997-B Members based
on their respective interests. In connection with the securitization, 1997-B
became the beneficial owner of a trust. The trustee for the trust is
Manufacturers and Traders Trust Company ("M&T"). In conjunction with the
securitization, the portfolio as well as the General Partner's servicing
capabilities were rated by Duff & Phelps and Fitch IBCA, both nationally
recognized rating agencies. The General Partner, as servicer, is responsible for
managing, servicing, reporting on and administering the portfolio. 1997-B remits
all monies received from the portfolio to M&T. M&T is responsible for disbursing
to the noteholders their respective principal and interest (91.5% of projected
cash flows) and to 1997-B the excess of cash collected over debt service (8.5%
of projected cash flows after any write-offs) from the portfolio. The 1997-B
Members receive their pro rata share of any excess cash on a monthly basis from
1997-B. The Partnership's share of the net proceeds from the securitization
totaled $1,500,000. The Partnership's consolidated financial statements include
100% of the assets and liabilities of 1997-B, while L.P. Six and L.P. Seven's
minority interests have been reflected as a liability on the consolidated
balance sheets.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
September 30, 1998
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 equity investment in joint ventures
representing 53%, 25%, 20%, and 2% of total investments at September 30, 1998,
respectively, and 47%, 39%, 12% and 2% of total investments at September 30,
1997, respectively.
Results of Operations
Three Months Ended September 30, 1998 and 1997
For the three months ended September 30, 1998 and 1997, the Partnership
leased or financed equipment with an initial cost of $17,247,909 and
$12,243,572, respectively, to 68 and 186 lessees or equipment users,
respectively.
Revenues for the three months ended September 30, 1998 were $2,801,641,
representing an increase of $507,045 or 22% from 1998. The increase in revenues
was due to an increase in finance income of $1,097,026 or 167%, and a change in
the income (loss) from equity investment in joint ventures of $64,729. The
increase in finance income and the change in income (loss) from equity
investment in joint venture was partially offset by a decrease in net gain on
sales or remarketing of equipment of $477,563 or 64%, a decrease in rental
income of $133,444 or 18% and a decrease in interest income and other of $43,703
or 18%. Finance income increased due to an increase in the average size of the
portfolio from 1997 to 1998. The loss from equity investment in joint ventures
as of September 30, 1998 and September 30, 1997 was due primarily to a provision
for bad debts recorded for 1997-A. The decrease in net gain on sales or
remarketing of equipment was due to a decrease in the number of leases maturing
and the underlying equipment being sold or remarketed, for which the proceeds
received were in excess of the average carrying value of the equipment. The
Partnership's operating lease with Alaska Air terminated in the second quarter
1997, at which point the aircraft was released to Aero Mexico. Rental income for
the third quarter 1997 includes four months of rent under the new lease,
resulting in a decrease in rental income from the third quarter 1998 compared to
1997. Interest income and other decreased from 1997 due to a decrease in the
average cash balance from 1997 to 1998.
Expenses for the three months ended September 30, 1998 were $2,748,137,
representing an increase of $1,389,396 or 102% from 1997. The increase in
expenses resulted primarily from an increase in the provision for bad debts of
$1,049,998 or 100%, an increase in interest expense of $556,415 or 77%, an
increase in depreciation expense of $41,707 or 40% and an increase in
administrative expense reimbursements to the General Partner of $16,611 or 13%.
These increases were partially offset by a change in minority interest in joint
venture of $166,994, a decrease in amortization of initial direct costs of
$76,066 or 79%, a decrease in general and administrative expenses of $29,975 or
78% and a decrease in management fees of $2,300 or 1%. The increase in the
provision for bad debts was as a result of the significant growth in
receivables, an analysis of delinquency, an assessment of overall risk and a
review of historical loss experience. The increase in interest expense was
primarily due to the increase in the average debt outstanding. Depreciation
expense increased due to the 1998 restructuring and releasing of the operating
lease. Administrative expense reimbursements increased due to an
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
September 30, 1998
increase in the average size of the portfolio from 1997 to 1998. The change in
minority interest in joint venture was due primarily to 1997-B recording a
significant provision for bad debts in 1998. Amortization of initial direct
costs decreased from 1997 to 1998 due to a decrease in the portfolio of leases
which are subject to initial direct costs.
Net income for the three months ended September 30, 1998 and 1997 was
$53,504 and $935,855, respectively. The net income per weighted average limited
partnership unit was $.09 and $1.52 for 1998 and 1997, respectively.
Nine Months Ended September 30, 1998 and 1997
For the nine months ended September 30, 1998 and 1997, the Partnership
leased or financed equipment with an initial cost of $48,415,867 and
$29,316,817, respectively, to 137 and 54 lessees or equipment users,
respectively. The weighted average initial transaction term relating to these
transactions was 49 and 51 months, respectively.
Revenues for the nine months ended September 30, 1998 were $7,252,127,
representing an increase of $1,336,059 or 23% from 1997. The increase in
revenues is attributable to an increase in finance income of $1,421,121 or 52%,
an increase in rental income of $407,063 or 29% and a change in income (loss)
from equity investment in joint ventures of $350,334. These increases were
partially offset by a decrease in net gain on sales or remarketing of equipment
of $534,514 or 50% and a decrease in interest income and other of $307,945 or
40%. Finance income increased due to the increase in the average size of the
portfolio from 1997 to 1998. The Partnership's operating lease with Alaska Air
terminated in the second quarter 1997, at which point the aircraft was released
to Aero Mexico. Rents under the new Aero Mexico lease are greater than rents
under the previous Alaska Air lease. The loss from equity investment in joint
venture as of September 30, 1997 was due primarily to a provision for bad debts
recorded for 1997-A. The net gain on sales or remarketing of equipment decreased
due to a decrease in the number of leases maturing and the underlying equipment
being sold or remarketed, for which the proceeds received were in excess of the
average carrying value of the equipment. Interest income and other income
decreased as a result of a decrease in the average cash balance from 1997 to
1998.
Expenses for the nine months ended September 30, 1998 were $6,793,375,
representing an increase of $2,676,688 or 65% from 1997. The increase in
expenses is attributable to an increase in the provision for bad debt of
$1,249,998 or 100%, an increase in interest expense of $1,215,397 or 64%, an
increase in management fees of $222,433 or 31%, an increase in administrative
expense reimbursements of $125,563 or 33%, an increase in general and
administrative expense of $95,591 or 32% and an increase in depreciation expense
of $40,617 or 11%. These increases were partially offset by a decrease in
amortization of initial direct costs of $203,049 or 48% and a change in minority
interest in joint venture of $57,423 or 428%. The increase in the provision for
bad debts was as a result of the significant growth in receivables, an analysis
of delinquency, an assessment of overall risk and a review of historical loss
experience. Interest expense increased as a result of the increase in the
average outstanding debt from 1997 to 1998. Management fees, administrative
expense reimbursements and general and administrative expenses increased as a
result of the increase in the average size of the portfolio from
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
September 30, 1998
1997 to 1998. Depreciation expense increased due to the 1998 restructuring and
releasing of the operating lease. Amortization of initial direct costs decreased
due to a decrease in the portfolio of leases which are subject to initial direct
costs from 1997 to 1998. The change in minority interest in joint ventures was
due primarily to 1997-B recording a significant provision for bad debts in the
third quarter 1998.
Net income for the nine months ended September 30, 1998 and 1997 was
$458,752 and $1,799,381, respectively. The net income per weighted average
limited partnership unit was $.75 and $2.92 for 1998 and 1997, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the nine months ended
September 30, 1998 and 1997 were net cash provided by operations of $8,892,503
and $22,792,332, respectively, proceeds from sales of equipment of $2,119,134
and $14,802,451, respectively , proceeds from the warehouse line of credit of
$20,703,918 and $2,684,035, respectively, proceeds from securitization debt of
$41,308,464 in 1998 and proceeds from the revolving credit facility of
$4,400,000 in 1997. These funds were used to purchase equipment, fund cash
distributions and make payments on borrowings. The Partnership intends to
continue to fund cash distributions utilizing cash provided by operations and
proceeds from sales of equipment.
Cash distributions to limited partners for the nine months ended September
30, 1998 and 1997, which were paid monthly, totaled $5,817,418 and $5,826,343,
respectively, of which $454,164 and $1,781,387 was investment income and
$5,363,254 and $4,044,956 was a return of capital, respectively. The monthly
annualized cash distribution rate to limited partners was 12.75% for 1998 and
1997, of which 1.0% and 3.90% was investment income and 11.75% and 8.85% 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, 1998 and 1997
was $9.56, of which $.34 and $2.92 was investment income and $8.81 and $6.64 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 sales to the Partners. The Partnership
has not, and will not reinvest in any leased equipment during the Disposition
Period. As a result of the Partnership's entering into the Disposition Phase,
future monthly distributions could, and are expected to fluctuate depending on
the amount of asset sale and re-lease proceeds received during that period.
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.
<PAGE>
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
September 30, 1998
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.
As of September 30, 1998, 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 make cash distributions, 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 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, 1998.
<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.
February 18, 1999 /s/ Kevin F. Redmond
- ------------------------------ -------------------------------------------
Date Kevin F. Redmond
Vice President and 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> 0000881788
<NAME> ICON Cash Flow Partners, L.P., Series E
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 9,348,486
<SECURITIES> 0
<RECEIVABLES> 69,658,859
<ALLOWANCES> 1,692,981
<INVENTORY> 27,938
<CURRENT-ASSETS> * 0
<PP&E> 20,707,984
<DEPRECIATION> 3,263,170
<TOTAL-ASSETS> 95,001,422
<CURRENT-LIABILITIES> ** 0
<BONDS> 70,675,889
0
0
<COMMON> 0
<OTHER-SE> 18,269,871
<TOTAL-LIABILITY-AND-EQUITY> 95,001,422
<SALES> 6,795,405
<TOTAL-REVENUES> 7,252,127
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,427,710
<LOSS-PROVISION> 1,249,998
<INTEREST-EXPENSE> 3,115,667
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 458,752
<EPS-PRIMARY> 0.75
<EPS-DILUTED> 0.75
<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>
