UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended March 31, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 33-94458
ICON Cash Flow Partners L.P. Seven
(Exact name of registrant as specified in its charter)
Delaware 13-3835387
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
600 Mamaroneck Avenue, Harrison, New York 10528-1632
(Address of principal executive offices) (Zip code)
(914) 698-0600
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
[ x] Yes [
] No
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ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
PART I - FINANCIAL INFORMATION
The following statements of ICON Cash Flow Partners L.P. Seven
(the "Partnership") have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC")
and, in the opinion of management, include all adjustments
(consisting only of normal recurring accruals) necessary for a fair
statement of income for each period shown. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such SEC
rules and regulations. Management believes that the disclosures
made are adequate to make the information represented not
misleading. The results for the interim period are not necessarily
indicative of the results for the full year. These financial
statements should be read in conjunction with the financial
statements and notes included in the Partnership's 1995 Annual
Report on Form 10-K.<PAGE>
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<TABLE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
March 31, 1996
General Partner's Discussion and Analysis of
Financial Condition and Results of Operations
<S> <C>
ICON Cash Flow Partners L.P. Seven (the Partnership) was
formed on May 23, 1995 as a Delaware limited partnership with an
initial capitalization of $2,000. The Partnership is offering
limited partnership units on a best efforts basis to the general
public with the intention of raising capital of between $1,200,000
and $100,000,000. It was formed to acquire various types of
equipment, to lease such equipment to third parties and, to a
lesser degree, to enter into secured financing transactions. As of
December 31, 1995, subscriptions had been received for 13,481.43
units at $100 per unit, or $1,348,143. The Partnership commenced
business operations on its initial closing date, January 19, 1996,
with the admission of 26,367.95 limited partnership units at $100
per unit representing $2,636,795.17 of capital contributions.
Through March 31, 1996, 76,004.17 additional units were subscribed
to, bringing the total units and capital subscriptions to 89,485.60
and $8,948,560 respectively, at that date.
The Partnerships portfolio consisted of a net investment in
finance leases and financings representing 95% and 5% of total
investments at March 31, 1996.
For the three months ended March 31, 1996, the Partnership
leased or financed equipment with an initial cost of $4,795,666 to
8 lessees or equipment users. The weighted average initial
transaction term was 38 months.
The Partnership commenced operations on January 19, 1996,
therefore a comparison of results of operations and liquidity and
capital resources to prior periods is not possible.
Results of Operations for the Three Months Ended March 31, 1996
Net income for the three months ended March 31, 1996 was
$6,859. The net income per weighted average limited partnership
unit was $.15 for 1996.
Liquidity and Capital Resources
The Partnerships primary sources of funds for the three
months ended March 31, 1996 were capital contributions, net of
offering expenses, of $7,740,504 from limited partners and cash
provided by operations of $154,937. These funds were used to
make payments on borrowings, to fund cash distributions and to
purchase equipment. The Partnership intends to continue to
purchase equipment and to fund cash distributions utilizing funds
from capital contributions and cash provided by operations.
Cash distributions to the limited partners for the three
months ended March 31, 1996, which were paid monthly, totaled
$48,957, of which $6,790 was investment income and $42,167 was a
return of capital. The limited partner distribution per weighted
average unit outstanding for the three months ended March 31,
1996 was $1.09, of which $.15 was investment income and $.94 was
a return of capital.<PAGE>
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ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
March 31, 1996
General Partner's Discussion and Analysis of
Financial Condition and Results of Operations
As of March 31, 1996, except as noted above, there were no
known trends or demands, commitments, events or uncertainties
which are likely to have any material effect on liquidity. As
cash is realized from operations, sales of equipment and
borrowings, the Partnership will invest in equipment leases and
financings where it deems it to be prudent while retaining
sufficient cash to meet its reserve requirements and recurring
obligations as they become due.<PAGE>
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</TABLE>
<TABLE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Balance Sheets
(unaudited)
<CAPTION>
<S> <C> <C>
March 31, December 31,
1996 1995
Assets
Cash $ 6,765,750 $ 2,000
Cash in escrow - 1,348,143
6,765,750 1,350,143
Investment in finance leases
Minimum rents receivable 4,342,150 -
Estimated unguaranteed residual values 605,943 -
Initial direct costs 127,172 -
Unearned income (627,191) -
4,448,074 -
Investment in financings
Receivables due in installments 323,594 -
Initial direct costs 7,403 -
Unearned income (75,224) -
255,773 -
Other assets 163,295 -
Total assets $ 11,632,892 $ 1,350,143
Liabilities and Partners' Equity
Notes payable - non-recourse $ 3,630,043 $ -
Accounts payable to General Partner
and affiliates, net 250,994 -
Accounts payable - other 52,943 -
Subscriptions pending admission - 1,348,143
3,933,980 1,348,143
Commitments and Contingencies
Partners' equity (deficiency)
General Partner 575 1,000
Limited partners (89,485.60 and 0 units
outstanding, $100 per unit original
issue price in 1996 and 1995, respectively) 7,698,337 1,000
Total partners' equity 7,698,912 2,000
Total liabilities and partners' equity $ 11,632,892 $ 1,350,143
See accompanying notes to financial statements.<PAGE>
</TABLE>
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<TABLE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Statement of Operations
For the Three Months Ended March 31,
(unaudited)
<CAPTION>
<S> <C>
1996
Revenues
Finance income $ 49,350
Interest income and other 25,785
Total revenues 75,135
Expenses
Interest 34,897
Management fees - General Partner 13,436
Amortization of initial direct costs 9,237
Administrative expense
reimbursements - General Partner 5,898
General and administrative 4,808
Total expenses 68,276
Net income $ 6,859
Net income allocable to:
Limited partners $ 6,790
General Partner 69
$ 6,859
Weighted average number of limited
partnership units outstanding 44,819
Net income per weighted average
limited partnership unit $ .15
See accompanying notes to financial statements.<PAGE>
</TABLE>
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<TABLE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Statement of Changes in Partners' Equity
For the Three Months Ended March 31, 1996
and the Period from May 23, 1995 (date of inception)
to December 31, 1995
(unaudited)
<CAPTION>
<S> <C> <C>
Limited Partner
Distributions
Return of Investment Limited
General
Capital Income Partners Partner
Total
(Per weighted average unit)
Initial partners
capital contribution
- May 23, 1995 $ 1,000 $ 1,000 $ 2,000
Balance at
December 31, 1995 1,000 1,000
2,000
Refund of initial
limited partners
capital contribution (1,000) -
(1,000)
Proceeds from issuance
of limited partnership
units (89,485.60 units) 8,948,560 -
8,948,560
Sales and
offering expenses (1,208,056) -
(1,208,056)
Cash distributions
to partners $ .94 $ .15 (48,957) (494)
(49,151)
Net income 6,790 69 6,859
Balance at
March 31, 1996 $ 7,698,337 $ 575 $ 7,698,912
See accompanying notes to financial statements.<PAGE>
</TABLE>
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<TABLE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
. Statement of Cash Flows
For the Three Months Ended March 31,
<CAPTION>
<S> <C>
1996
Cash flows from operating activities:
Net income $ 6,859
Adjustments to reconcile net income to
net cash provided by operating activities:
Finance income portion of
receivables paid directly
to lenders by lessees (44,661)
Amortization of initial direct costs 9,238
Interest expense on non-recourse
financing paid directly by lessees 34,897
Collection of principal
- non-financed receivables 9,966
Change in operating assets and liabilities:
Accounts payable to General Partner
and affiliates, net 250,994
Accounts payable - other 52,943
Other assets (163,295)
Other, net (1,384)
Total adjustments 148,698
Net cash provided by operating activities 154,937
Cash flows from investing activities:
Initial direct costs (143,870)
Equipment and receivables purchased (937,990)
Net cash used in investing activities (1,081,860)
Cash flows from financing activities:
Issuance of limited partnership units,
net of offering expenses 7,740,504
Refund of initial limited partners
capital contribution (1,000)
Cash distributions to partners (49,451)
Net cash provided by financing activities 7,690,053
Net increase in cash 6,763,750
Cash at beginning of period 2,000
Cash at end of period $ 6,765,750
See accompanying notes to financial statements.<PAGE>
</TABLE>
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<TABLE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
. Consolidated Statements of Cash Flows (continued)
<CAPTION>
<S> <C> <C>
Supplemental Disclosure of Cash Flow Information
For the three months ended March 31, 1996 and 1995, non-cash
activities included the following:
1996 1995
Fair value of equipment and receivables
purchased for debt and payables $ (3,856,235) $ -
Non-recourse notes payable assumed in
purchase price 3,856,235 -
Principal and interest on direct
finance receivables paid directly
to lenders by lessees 261,089 -
Principal and interest on non-recourse
financing paid directly to lenders
by lessees (261,089) -
$ - $ -
Interest expense for the three months ended March 31, 1996
consisted of interest expense on non-recourse financing paid or
accrued directly to lenders by lessees of $34,897.<PAGE>
</TABLE>
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<TABLE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Financial Statements
March 31, 1996
(unaudited)
<S><C>
1. Organization
ICON Cash Flow Partners L.P. Seven (the "Partnership") was
formed on May 23, 1995 as a Delaware limited partnership with an
initial capitalization of $2,000. The Partnership is offering
limited partnership units on a "best efforts" basis to the general
public with the intention of raising capital of between $1,200,000
and $100,000,000. It was formed to acquire various types of
equipment, to lease such equipment to third parties and, to a
lesser degree, to enter into secured financing transactions. As of
December 31, 1995, subscriptions had been received for 13,481.43
units at $100 per unit, or $1,348,143. The Partnership commenced
business operations on its initial closing date, January 19, 1996,
with the admission of 26,367.95 limited partnership units at $100
per unit representing $2,636,795.17 of capital contributions.
Through March 31, 1996 76,004.17 additional units were subscribed
to, bringing the total units and capital subscriptions to 89,485.60
and $8,948,560 respectively, at that date.
The General Partner of the Partnership is ICON Capital Corp.
(the "General Partner"), a Connecticut corporation. The General
Partner will manage and control the business affairs of the
Partnership's equipment, leases and financing transactions under a
management agreement with the Partnership.
ICON Securities Corp., an affiliate of the General Partner, will
receive an underwriting commission on the gross proceeds from sales
of all units. The total underwriting compensation to be paid by
the Partnership, including underwriting commissions, sales
commissions, incentive fees, public offering expense reimbursements
and due diligence activities will be limited to 13 1/2% of the
gross proceeds received from the sale of the units.
Profits, losses, cash distributions and disposition proceeds
will be allocated 99% to the limited partners and 1% to the General
Partner until each limited partner has received cash distributions
and disposition proceeds sufficient to reduce its adjusted capital
contribution account to zero and receive, in addition, other
distributions and allocations which would provide a 10% per annum
cumulative return, compounded daily, on its outstanding adjusted
capital contribution account. After such time, the distributions
will be allocated 90% to the limited partners and 10% to the
General Partner.
2. Significant Accounting Policies
Basis of Accounting and Presentation - The Partnerships records are
maintained on the accrual basis. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.<PAGE>
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ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Financial Statements (continued)
Leases - The Partnership accounts for owned equipment leased to third parties
as finance leases or operating leases. For finance leases, the Partnership
records, at the inception of the lease, the total minimum lease payments
receivable, the estimated unguaranteed residual values, the initial direct costs
related to the leases and the related unearned income. Unearned income
represents the difference between the sum of the minimum lease payments
receivable plus the estimated unguaranteed residual minus the cost of the leased
equipment. Unearned income is recognized as finance income over the terms of the
related leases using the interest method. For operating leases, equipment is
recorded at cost and is depreciated on the straight-line method over the lease
terms to their estimated fair market values at lease terminations. Related lease
rentals are recognized on the straight-line method over the lease terms. Billed
and uncollected operating lease receivables, net of allowance for doubtful
accounts, are included in other assets. Initial direct costs of finance leases
are capitalized and are amortized over the terms of the related leases using the
interest method. Initial direct costs of operating leases are capitalized and
amortized on the straight-line method over the lease terms. The Partnership's
leases have terms ranging from two to four years. Each lease is expected to
provide aggregate contractual rents that, along with residual proceeds, return
the Partnership's cost of its investment along with investment income.
Investment in Financings - Investment in financings represent the gross
receivables due from the financing of equipment plus the initial direct costs
related thereto less the related unearned income. The unearned income is
recognized as finance income and the initial direct costs are amortized over the
terms of the receivables using the interest method. Financing transactions are
supported by a written promissory note evidencing the obligation of the user to
repay the principal, together with interest, which will be sufficient to return
the Partnership's full cost associated with such financing transaction, together
with some investment income. Furthermore, the repayment obligation is
collateralized by a security interest in the tangible or intangible personal
property.
Disclosures About Fair Value of Financial Instruments - Statement of
Financial Accounting Standards No. 107 (SFAS No. 107"), Disclosures about Fair
Value of Financial Instruments requires disclosures about the fair value of
financial instruments. The fair value of certain debt obligations as of March
31, 1996 approximates that which is recorded in these financial statements. Fair
value information with respect to the Companys assets and certain non-recourse
notes payable is not provided because (i) SFAS No. 107 does not require
disclosures about the fair value of lease arrangements, (ii) the carrying value
of financial assets other than lease related investments approximates market
value and (iii) fair value information concerning certain non-recourse debt
obligations is not practicable to estimate without incurring excessive costs to
obtain all the information that would be necessary to derive a market interest
rate on a lease by lease basis.
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ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Financial Statements (continued)
Impairment of Estimated Residual Values - The Partnership's policy is to
review the carrying value of its residuals on a quarterly basis and write down
a residual if it has been determined to be impaired. Impairment generally occurs
for one of two reasons: (1) when the recoverable value of the underlying
equipment falls below the Partnership's carrying value or (2) when the primary
security holder has foreclosed on the underlying equipment in order to satisfy
the remaining lease obligation and the amount of proceeds received by the primary
security holder in excess of such obligation is not sufficient to recover the
Partnership's residual position. Generally in such cases, the residuals would
relate to equipment for which non-recourse notes payable were outstanding. In
these cases the lessees pay their rents directly to the third party lender and
the Partnership would not realize any cash flow until the lessees have satisfied
the initial note obligations and the equipment is remarketed.
Income Taxes - No provision for income taxes has been made as the liability
for such taxes is that of each of the partners rather than the Partnership.
3. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the three months ended March 31, 1996 were as
follows:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1996
Underwriting commissions $ 894,856 Charged to Equity
Organization and offering 313,200 Charged to Equity
Acquisition fees 143,870 Capitalized
Management fees 13,436 Charged to operations
Administrative expense
reimbursements 5,898 Charged to operations
Total $1,371,260<PAGE>
</TABLE>
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ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
PART II
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6 - Reports and Amendments
The Partnership did not file any Reports or Amendments for the three months ende
d
March 31, 1996
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ICON Cash Flow Partners L. P. Seven
(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. Seven
File No. 33-94458 (Registrant)
By its General Partner,
ICON Capital Corp.
May 15, 1996 Charles Duggan
Date Charles Duggan
Executive Vice President and Chief
Financial Officer
(Principal financial and account officer of
the General Partner of the Registrant)
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