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 March 31, 1997
-----------------------------------------------------------
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
----------------------- -----------------------
Commission File Number 33-94458
---------------------------------------------------------
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
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Balance Sheets
(unaudited)
<TABLE>
March 31, December 31,
1997 1996
Assets
<S> <C> <C>
Cash $ 3,846,273 $ 698,301
-------------- --------------
Investment in finance leases
Minimum rents receivable 47,885,065 15,894,245
Estimated unguaranteed residual values 22,233,092 6,667,481
Initial direct costs 1,595,034 869,559
Unearned income (12,384,736) (3,515,258)
Allowance for doubtful account (65,000) (65,000)
-------------- --------------
59,263,455 19,851,027
Investment in estimated unguaranteed residual value 12,325,000 12,325,000
-------------- --------------
Net investment in leveraged leases 10,298,137 9,980,633
-------------- --------------
Investment in financings
Receivables due in installments 1,040,154 6,619,755
Initial direct costs 20,005 143,565
Unearned income (234,965) (1,271,152)
Allowance for doubtful account (10,000) (10,000)
-------------- --------------
815,194 5,482,168
Equity investment in joint venture 5,486,047 -
-------------- -----------
Other assets 869,600 148,941
-------------- --------------
Total assets $ 92,903,706 $ 48,486,070
============== ==============
</TABLE>
<PAGE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Balance Sheets
(unaudited)
<TABLE>
March 31, December 31,
1997 1996
Liabilities and Partners' Equity
<S> <C> <C>
Notes payable - non-recourse $ 46,043,835 $ 11,089,945
Note payable - recourse 10,075,000 12,225,000
Accounts payable - equipment 4,673,893 1,790,717
Note payable - affiliate 4,250,000 -
Accounts payable - General Partner and affiliate 737,811 438,297
Accounts payable - other 38,056 54,114
Security deposits and deferred credits 26,383 6,188
Minority interest 17,049 15,955
-------------- --------------
65,862,027 25,620,216
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (15,191) (8,694)
Limited partners (331,318.27 and 275,540.47 units
outstanding, $100 per unit original
issue price in 1997 and 1996, respectively) 27,056,870 22,874,548
-------------- --------------
Total partners' equity 27,041,679 22,865,854
-------------- --------------
Total liabilities and partners' equity $ 92,903,706 $ 48,486,070
============== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Statements of Operations
For the Three Months Ended March 31,
(unaudited)
<TABLE>
1997 1996
---- ----
Revenues
<S> <C> <C>
Finance income $ 1,099,525 $ 49,350
Income from leveraged leases, net 380,630 -
Net gain on sales or remarketing of equipment 32,891 -
Interest income and other 24,165 25,785
Income from equity investment in joint venture 20,808 -
-------------- ---------------
Total revenues 1,558,019 75,135
-------------- ---------------
Expenses
Interest 574,541 34,897
Management fees - General Partner 357,477 13,436
Amortization of initial direct costs 310,609 9,237
Administrative expense
reimbursements - General Partner 151,194 5,898
General and administrative 37,561 4,808
Minority interest in joint venture 1,094 -
-------------- ---------------
Total expenses 1,432,476 68,276
-------------- ---------------
Net income $ 125,543 $ 6,859
============== ===============
Net income allocable to:
Limited partners $ 124,288 $ 6,790
General Partner 1,255 69
-------------- ---------------
$ 125,543 $ 6,859
============== ===============
Weighted average number of limited
partnership units outstanding 314,146 44,819
============== ===============
Net income per weighted average
limited partnership unit $ .40 $ 0.15
============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Statements of Changes in Partners' Equity
For the Three Months Ended March 31, 1997, the Year
Ended December 31, 1996 and the Period from
May 23, 1995 (date of inception)
to December 31, 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>
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 (275,540.47 units) 27,554,047 - 27,554,047
Sales and offering expenses (3,719,796) - (3,719,796)
Cash distributions
to partners $ 6.14 $ 2.57 (1,361,099) (13,749) (1,374,848)
Net income 401,396 4,055 405,451
---------------- ----------- ----------------
Balance at
December 31, 1996 22,874,548 (8,694) (22,865,854)
Proceeds from issuance of
limited partnership units
(55,880.51 units) 5,588,050 - 5,588,050
Sales and offering expenses (754,387) - (754,387)
Limited partnership units
redeemed (102.71 units) (8,061) - (8,061)
Cash distributions
to partners $ 2.05 $ .40 (767,568) (7,752) (775,320)
Net income 124,288 1,255 125,543
---------------- ----------- ----------------
Balance at
March 31, 1997 $ 27,056,870 $ (15,191) $ 27,041,679
================ =========== ================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Statements of Cash Flows
For the Three Months Ended March 31,
(unaudited)
<TABLE>
1997 1996
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 125,543 $ 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 (958,529) (44,661)
Amortization of initial direct costs 310,609 9,238
Gain on sale of equipment (32,891) -
Interest expense on non-recourse financing paid
directly by lessees 552,215 34,897
Collection of principal - non-financed receivables 634,268 9,908
Income from equity investment in joint venture (20,808) -
Income from leveraged leases, net (380,630) -
Change in operating assets and liabilities:
Accounts payable - General Partner and affiliates, net 299,514 253,949
Accounts payable - other (32,438) 151,433
Security deposits and deferred credits 20,195 -
Minority interest in joint venture 1,094 -
Other assets (720,659) (163,295)
Other, net (41,937) (1,384)
---------------- ---------------
Total adjustments (369,997) 250,085
---------------- ---------------
Net cash provided by (used in) operating activities (244,454) 256,944
---------------- ---------------
Cash flows from investing activities:
Equipment and receivables purchased (3,395,281) (1,036,480)
Initial direct costs (1,164,222) (146,767)
Proceeds from sale of equipment 1,793,586 -
---------------- ------------
Net cash used in investing activities (2,765,917) (1,183,247)
---------------- ----------------
Cash flows from financing activities:
Issuance of limited partnership units, net of offering expenses 4,833,663 7,740,504
Proceeds from note payable affiliate 4,250,000 -
Principal payments on recourse debt (2,150,000) -
Cash distributions to partners (775,320) (49,451)
Refund of initial limited partners' capital contribution - (1,000)
---------------- ---------------
Net cash provided by financing activities 6,158,343 7,690,053
---------------- ---------------
Net increase in cash 3,147,972 6,763,750
Cash at beginning of period 698,301 2,000
---------------- ---------------
Cash at end of period $ 3,846,273 $ 6,765,750
================ ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (continued)
Supplemental Disclosure of Cash Flow Information
For the three months ended March 31, 1997 and 1996, non-cash activities
included the following:
<TABLE>
1997 1996
---- ----
Fair value of equipment and receivables
<S> <C> <C>
purchased for debt and payables $ (38,220,051) $ (3,856,235)
Non-recourse notes payable assumed in
purchase price 37,741,972 3,856,235
Accounts payable - equipment 478,079 -
Principal and interest on direct
finance receivables paid directly
to lenders by lessees 3,682,924 261,089
Principal and interest on non-recourse
financing paid directly to lenders
by lessees (3,682,924) (261,089)
Decrease in investments in finance leases and financings
due to contributions to joint venture 5,190,238 -
Increase in equity investment in joint venture (5,190,238) -
---------------- ---------------
$ - $ -
================ ===============
</TABLE>
Interest expense of $574,541 and $34,897 for the three months ended March
31, 1997 and 1996 consisted of interest expense on non-recourse financing paid
or accrued directly to lenders by lessees of $552,216 and $34,897, respectively,
and other interest of $22,325 and $0, respectively.
<PAGE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Financial Statements
September 30, 1996
(unaudited)
1. Basis of Presentation
The financial 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 consolidated
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such SEC rules and
regulations. Management believes that the disclosures made are adequate to make
the information represented not misleading. The results for the interim period
are not necessarily indicative of the results for the full year. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes included in the Partnership's 1996
Annual Report on Form 10-K.
2. Net Investment in Leveraged Leases
On August 20, 1996 the partnership acquired, subject to a leveraged lease,
the residual interest in an aircraft. The aircraft is a McDonnell Douglas
DC-10-30F currently on lease to Federal Express. The purchase price was
$40,973,585, consisting of $6,000,000 in cash and the assumption of non-recourse
senior debt of $26,217,294 and non-recourse junior debt of $8,756,291.
On December 31, 1996 the Partnership acquired, subject to a leveraged
lease, the residual interest in an aircraft. The aircraft is a 1976 McDonnell
Douglas DC-10-30 currently on lease to Continental Airlines. The purchase price
was $11,320,923, consisting of $2,104,262 in cash and the assumption of
non-recourse senior debt of $9,216,661.
The net investment in leveraged leases as of March 31, 1997 consisted of the
following:
Non-cancelable minimum rents receivable (net of
principal and interest on non-recourse debt) $ 910,000
Estimated unguaranteed residual values 24,818,000
Initial direct costs 1,428,392
Unearned income (16,858,255)
----------------
$ 10,298,137
Unearned income is recognized from leveraged leases over the life of the
lease at a constant rate of return on the positive net investment.
Prior to the acquisition of the Federal Express transaction, the free cash
flow, the rent in excess of the senior debt payments, was financed by an
affiliated partnership, ICON Cash Flow Partners, L.P., Series D, (i.e., the
junior debt). On January 29, 1997, the Partnership refinanced a portion of the
junior debt with a third party.
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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, 1997 and 1996
were as follows:
<TABLE>
1997 1996
---- ----
<S> <C> <C> <C>
Underwriting commissions $ 111,761 $ 179,419 Charged to Equity
Organization and offering 195,582 313,200 Charged to Equity
Acquisition fees 1,314,893 146,767 Capitalized
Management fees 357,477 13,436 Charged to operations
Administrative expense
reimbursements 151,194 5,898 Charged to operations
------------ ------------
Total $ 2,130,907 $ 658,720
============ ============
</TABLE>
On March 11, 1997, the Partnership borrowed $4,250,000 from ICON
Receivables 1997-A LLC ("1997- A"), an affiliate of the Partnership (see Note
4). This is a short term note, which bears interest at the rate of Libor plus
1.5% and is paid from the Partnership's share of cash flow and securitization
proceeds from the equipment lease and finance receivables.
4. Investment in Joint Venture
The Partnership Agreement allows the Partnership to invest in joint
ventures with other limited partnerships sponsored by the General Partner
provided that the investment objectives of the joint ventures are consistent
with that of the Partnership.
On March 11, 1997, the Partnership and two affiliates, ICON Cash Flow
Partners, L.P., Series D and ICON Cash Flow Partners L.P. Six, (collectively
"the Members"), contributed and assigned $6,582,150, $5,794,273 and $6,712,631
in equipment lease and finance receivables and residuals with a net book value
of $5,465,238, $4,874,857 and $5,553,962, respectively to ICON Receivables
1997-A LLC ("1997-A"), a special purpose entity created by the Members. The
Members received a 34.39%, 30.67% and 34.94% interest, respectively, in 1997-A
based on the present value of their related contributions. 1997-A was formed for
the purpose of originating new leases, managing existing contributed assets and,
eventually, securitizing its portfolio. In order to fund the acquisition of new
leases, 1997-A obtained a warehouse borrowing facility from Prudential
Securities Credit Corporation (the "Facility"). Borrowings under the Facility
are based on the present value of the new leases, provided that in the
aggregate, the amount outstanding cannot exceed $20,000,000. Outstanding amounts
under the Facility bear interest equal to Libor plus 1.5%. Collections of
receivables from new leases are used to pay down the Facility, however, in the
event of a default, all of 1997- A's assets are available to cure such default.
The net proceeds from the expected securitization of these assets will be used
to pay-off the remaining Facility balance and the remaining proceeds will be
distributed to the Members in accordance with their membership interests. The
Partnership accounts for its investment in 1997- A under the equity method.
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Information as to the financial position and results of operations of
1997-A as of and for the quarter ended March 31, 1997 is summarized below:
March 31, 1997
Assets $ 23,430,264
=================
Liabilities $ 7,475,691
=================
Equity $ 15,954,573
=================
Three Months Ended
March 31, 1997
Net income $ 60,516
=================
<PAGE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
ICON Cash Flow Partners L.P. Seven (the "Partnership") was formed
on May 23, 1995 as a Delaware limited partnership. 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, 1997, 305,053.03
additional units were subscribed to, bringing the total units and capital
subscriptions to 331,420.98 and $33,142,098, respectively.
The Partnership's portfolio consisted of a net investment in
finance leases, leveraged leases, equity investment in joint venture and
financings representing 78%, 14%, 7% and 1% of total investments at March 31,
1997, respectively and 95%, 0%, 0% and 5% at March 31, 1996, respectively.
For the three months ended March 31, 1997 and 1996 the Partnership
leased or financed equipment with an initial cost of $44,009,376 and
$4,894,1546, respectively to 15 and 9 lessees or equipment users respectively.
The weighted average initial transaction term for each year was 44 and 38 months
respectively.
Results of Operations for the Three Months Ended March 31, 1997 and 1996
Revenue for the three months ended March 31, 1997 were $1,558,019,
representing an increase of $1,482,884 from 1996. The increase in revenues
resulted primarily from an increase in finance income of $1,050,175, an increase
in income from leveraged leases, of $380,630, an increase in net gain on sales
or remarketing of equipment of $32,891 and an increase in income from equity
investment in joint venture of $20,808. These increases were partially offset by
a decrease in interest income and other of $1,620. The increase in finance
income resulted from the increase in the average size of the portfolio from 1996
to 1997. Income from leveraged leases, and income from equity investment in
joint venture increased due to the Partnership's increased investment in these
types of transactions. The net gain on sales or remarketing of equipment
increased due to the early termination of a financing transaction. Interest
income and other decreased due to a decrease in the average cash balance from
1996 to 1997.
Expenses for the three months ended March 31, 1997 were
$1,432,476, representing an increase of $1,364,200 from 1996. The increase in
expenses was due to an increase in interest expense of $539,644, an increase in
management fees of $344,041, an increase in amortization of initial direct costs
of $301,372, an increase in administrative expense reimbursements of $145,296,
an increase in general and administrative expense of $32,753 and an increase in
minority interest in joint venture of $1,094. Interest expense increased due to
an increase in the average debt outstanding from 1996 to 1997. Management fees,
amortization of initial direct costs, administrative expense reimbursement and
general and administrative expense increased due to an increase in the average
size of the portfolio from 1996 to 1997.
Net income for the three months ended March 31, 1997 and 1996 was
$125,543 and $6,859, respectively. The net income per weighted average limited
partnership unit was $0.40 and $0.15, respectively.
<PAGE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Liquidity and Capital Resources
The Partnership's primary sources of funds for the three months
ended March 31, 1997 and 1996 were capital contributions, net of offering
expenses, of $4,833,663 and $7,740,504, from limited partners, respectively, net
cash provided by operations of $256,944 in 1996, proceeds from sale of equipment
of $1,793,586 in 1997 and proceeds from affiliate note of $4,250,000 in 1997.
These funds were used to make payments on borrowings, fund cash distributions
and to purchase equipment. The Partnership intends to purchase additional
equipment and fund cash distributions utilizing capital contributions cash
provided by operations, proceeds from sales of equipment and borrowings.
Cash distributions to limited partners for the three months ended
March 31, 1997 and 1996, which were paid monthly, totaled $767,568 and $48,957,
respectively, of which $124,288 and $6,790 was investment income and $643,280
and $42,167 was a return of capital, respectively. The monthly annualized cash
distributions rate to limited partners was 9.8% and 4.4% of which 1.6% and .6%
was investment income and 8.2% and 3.8% was a return of capital, respectively.
The limited partner distribution per weighted average unit outstanding for the
three months ended March 31, 1997 and 1996 was $2.45 and $1.09, respectively, of
which $.40 and $.15 was investment income and $2.05 and $.94 was a return of
capital, respectively.
On March 11, 1997, the Partnership and two affiliates, ICON Cash
Flow Partners, L.P., Series D and ICON Cash Flow Partners L.P. Six,
(collectively "the Members"), contributed and assigned $6,582,150, $5,794,273
and $6,712,631 in equipment lease and finance receivables and residuals with a
net book value of $5,465,238, $4,874,857 and $5,553,962, respectively to ICON
Receivables 1997-A LLC ("1997-A"), a special purpose entity created by the
Members. The Members received a 34.39%, 30.67% and 34.94% interest,
respectively, in 1997-A based on the present value of their related
contributions. 1997-A was formed for the purpose of originating new leases,
managing existing contributed assets and, eventually, securitizing its
portfolio. In order to fund the acquisition of new leases, 1997-A obtained a
warehouse borrowing facility from Prudential Securities Credit Corporation (the
"Facility"). Borrowings under the Facility are based on the present value of the
new leases, provided that in the aggregate, the amount outstanding cannot exceed
$20,000,000. Outstanding amounts under the Facility bear interest equal to Libor
plus 1.5%. Collections of receivables from new leases are used to pay down the
Facility, however, in the event of a default, all of 1997-A's assets are
available to cure such default. The net proceeds from the expected
securitization of these assets will be used to pay-off the remaining Facility
balance and the remaining proceeds will be distributed to the Members in
accordance with their membership interests. The Partnership accounts for its
investment in 1997-A under the equity method.
As of March 31, 1997, except as noted above, there were no known
trends or demands, commitments, events or uncertainties which are likely to have
any material effect on liquidity. As cash is realized from operations, sales of
equipment and borrowings, the Partnership will invest in equipment leases and
financings where it deems it to be prudent while retaining sufficient cash to
meet its reserve requirements and recurring obligations as they become due.
<PAGE>
ICON Cash Flow Partners L. P. Seven
(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
March 31, 1997.
<PAGE>
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 27, 1997 Gary N. Silverhardt
- ------------ -----------------------------------------------
Date Gary N. Silverhardt
Chief Financial Officer
(Principal financial and account officer
of the General Partner of the Registrant)
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000947986
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,846,273
<SECURITIES> 0
<RECEIVABLES> 131,353,191
<ALLOWANCES> 75,000
<INVENTORY> 173,920
<CURRENT-ASSETS> * 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 92,903,706
<CURRENT-LIABILITIES> ** 0
<BONDS> 14,368,899
0
0
<COMMON> 0
<OTHER-SE> 27,041,679
<TOTAL-LIABILITY-AND-EQUITY> 92,903,706
<SALES> 1,558,019
<TOTAL-REVENUES> 1,558,019
<CGS> 311,703
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 546,232
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 574,541
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 125,543
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.40
<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>
