UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended September 30, 2000
-----------------------------------------------------------
[ ] 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
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ICON Cash Flow Partners L.P. Seven
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(Exact name of registrant as specified in its charter)
Delaware 13-3835387
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
111 Church Street, White Plains, New York 10601-1505
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(Address of principal executive offices) (Zip code)
(914) 993-1700
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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. Seven
(A Delaware Limited Partnership)
Consolidated Balance Sheets
(unaudited)
<TABLE>
September 30, December 31,
2000 1999
Assets
<S> <C> <C>
Cash ............................................... $ 7,527,367 $ 4,688,025
------------- -------------
Investment in finance leases
Minimum rents receivable ........................ 37,792,431 54,878,965
Estimated unguaranteed residual values .......... 73,499,967 67,880,746
Initial direct costs ............................ 402,635 1,604,755
Unearned income ................................. (21,520,462) (17,093,326)
Allowance for doubtful accounts ................. (1,067,610) (1,067,610)
------------- -------------
89,106,961 106,203,530
Investment in estimated unguaranteed residual values 19,393,541 31,718,541
------------- -------------
Net investment in leveraged leases ................. 24,923,217 22,555,086
------------- -------------
Investment in financings
Receivables due in installments ................. 1,236,337 2,062,546
Initial direct costs ............................ 2,880 3,528
Unearned income ................................. (207,020) (457,150)
Allowance for doubtful accounts ................. (9,611) (9,611)
------------- -------------
1,022,586 1,599,313
Investments in unconsolidated joint ventures ....... 3,354,106 3,292,324
------------- -------------
Other assets ....................................... 1,807,777 1,950,469
------------- -------------
Total assets ....................................... $ 147,135,555 $ 172,007,288
============= =============
</TABLE>
(continued on next page)
<PAGE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Consolidated Balance Sheets (Continued)
(unaudited)
<TABLE>
September 30, December 31,
2000 1999
Liabilities and Partners' Equity
<S> <C> <C>
Notes payable - non-recourse .............................. $ 55,647,270 $ 71,944,352
Note payable - recourse ................................... 24,618,116 28,599,963
Accounts payable - General Partner and affiliates ......... -- 101,333
Security deposits, deferred credits and other payables .... 634,986 1,278,045
Minority interest in consolidated joint ventures .......... 41,821 38,457
------------- -------------
80,942,193 101,962,150
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ........................................ (195,106) (156,961)
Limited partners (989,588 and 990,238 units outstanding,
$100 per unit original issue price) .................. 66,388,468 70,202,099
------------- -------------
Total partners' equity ............................... 66,193,362 70,045,138
------------- -------------
Total liabilities and partners' equity .................... $ 147,135,555 $ 172,007,288
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Consolidated Statements of Operations
(unaudited)
<TABLE>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
---- ---- ---- ----
Revenues
<S> <C> <C> <C> <C>
Finance income ............................. $ 4,664,280 $ 3,941,337 $12,795,317 $14,228,803
Income from leveraged leases ............... 789,377 385,156 2,368,131 1,128,069
(Loss) income from investments in
unconsolidated joint ventures ............ (33,708) (52,767) 176,566 112,369
Gain on sales of equipment ................. 125,013 6,889 129,157 115,428
Interest income and other .................. 88,842 2,763 112,728 15,171
----------- ----------- ----------- -----------
Total revenues .......................... 5,633,804 4,283,378 15,581,899 15,599,840
----------- ----------- ----------- -----------
Expenses
Interest ................................ 2,176,846 1,936,747 5,797,783 7,266,539
Management Fees - General Partner ....... 850,246 744,345 2,535,423 2,218,128
Amortization of initial direct costs .... 446,913 463,214 1,423,137 1,713,101
Administrative expense reimbursements-
General Partner ....................... 190,850 313,944 924,551 936,526
Provision for bad debts ................. -- -- -- 200,000
General and administrative .............. 216,781 107,156 649,407 400,555
Minority interest expense in consolidated
joint venture ......................... 840 5,761 3,364 8,175
----------- ----------- ----------- -----------
Total expenses ............................. 3,882,476 3,571,167 11,333,665 12,743,024
----------- ----------- ----------- -----------
Net income ................................. $ 1,751,328 $ 712,211 $ 4,248,234 $ 2,856,816
=========== =========== =========== ===========
Net income allocable to:
Limited partners ........................ $ 1,733,815 $ 705,089 $ 4,205,752 $ 2,828,248
General Partner ......................... 17,513 7,122 42,482 28,568
----------- ----------- ----------- -----------
$ 1,751,328 $ 712,211 $ 4,248,234 $ 2,856,816
=========== =========== =========== ===========
Weighted average number of limited
partnership units outstanding 989,813 991,415 990,074 993,734
=========== =========== ========== ===========
Net income per weighted average
limited partnership unit $ 1.75 $ .71 $ 4.25 $ 2.85
=========== =========== ========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Consolidated Statements of Changes in Partners' Equity
For the Nine Months Ended September 30, 2000 and
the Year Ended December 31, 1999
(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, 1998 $ 77,825,682 $ (84,234) $ 77,741,448
Limited partnership units
redeemed (6,232 units) (425,558) - (425,558)
Cash distributions to partners $ 7.25 $ 3.50 (10,677,316) (107,872) (10,785,188)
Net income 3,479,291 35,145 3,514,436
------------ --------- ------------
Balance at
December 31, 1999 70,202,099 (156,961) 70,045,138
Cash distributions to partners $ 3.81 $ 4.25 (7,982,131) (80,627) (8,062,758)
Limited partnership units
redeemed (650 units) (37,252) - (37,252)
Net income 4,205,752 42,482 4,248,234
------------ --------- ------------
Balance at September 30, 2000 $ 66,388,468 $(195,106) $ 66,193,362
============ ========= ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30,
(unaudited)
<TABLE>
2000 1999
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income .................................................... $ 4,248,234 $ 2,856,816
------------ ------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Finance income portion of receivables paid directly
to lenders by lessees .................................... (9,443,755) (12,451,110)
Interest expense on non - recourse financing paid
directly by lessees ...................................... 5,234,442 6,832,671
Interest accrued on notes payable-recourse ................. 162,355 149,170
Amortization of initial direct costs ....................... 1,423,137 1,713,101
Income from leveraged leases ............................... (2,368,131) (1,128,069)
Provision for bad debts .................................... -- 200,000
Income from investments in unconsolidated joint venture .... (176,566) (112,369)
Gain on sales of equipment ................................. (129,157) (115,428)
Change in operating assets and liabilities:
Collection of principal - non-financed receivables ..... 2,382,272 2,090,957
Distributions received from unconsolidated joint ventures 114,784 443,565
Other assets ............................................ 142,692 36,668
Security deposits, deferred credits and other payables .. (643,059) 251,673
Accounts payable - General Partner and affiliates ....... (101,333) (352,912)
Minority interest in consolidated joint venture ......... 3,364 3,016,881
Other ................................................... (21,121) (307,017)
------------ ------------
Total adjustments ....................................... (3,420,076) 267,781
------------ ------------
Net cash provided by operating activities ................ 828,158 3,124,597
------------ ------------
Cash flows from investing activities:
Equipment and receivables purchased ........................... (14,892,241) (672,309)
Proceeds from sale of equipment ............................... 3,717,767 1,222,327
Proceeds from sale of interest in consolidated joint venture .. 2,250,000 --
Acquisition of minority interest in consolidated joint venture (2,362,500) --
Liquidation of investment in unguaranteed residual value ...... 12,325,000 --
------------ ------------
Net cash provided by investing activities ............... 1,038,026 550,018
------------ ------------
</TABLE>
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (Continued)
For the Nine Months Ended September 30,
(unaudited)
<TABLE>
2000 1999
---- ----
Cash flows from financing activities:
<S> <C>
Proceeds from non-recourse debt ......................... 15,819,651 --
Proceeds from recourse debt ............................. 2,775,111 5,000,000
Principal payments on notes payable - recourse .......... (6,756,958) (2,412,785)
Principal payments on notes payable - non-recourse ...... (2,764,636) (407,417)
Cash distributions to partners .......................... (8,062,758) (8,097,177)
Redemption of limited partnership units ................. (37,252) (414,983)
------------ ------------
Net cash provided by (used in) financing activities 973,158 (6,332,362)
------------ ------------
Net increase (decrease) in cash ............................ 2,839,342 (2,657,747)
Cash at beginning of period ................................ 4,688,025 3,899,054
------------ ------------
Cash at end of period ...................................... $ 7,527,367 $ 1,241,307
============ ============
</TABLE>
See accompanying notes to consolidated 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 nine months ended September 30, 2000 and 1999, non-cash activities
included the following:
<TABLE>
2000 1999
---- ----
<S> <C> <C>
Principal and interest on direct
finance receivables paid directly
to lenders by lessees .......................... $ 34,586,539 $ 35,865,625
Principal and interest on non-recourse and recourse
financing paid directly to lenders by lessees .. (34,586,539) (35,865,625)
------------ ------------
$ -- $ --
============ ============
</TABLE>
Interest expense of $5,797,783 and $7,266,539 for the nine months ended
September 2000 and 1999 consisted of interest expense on non-recourse financing
paid or accrued directly to lenders by lessees of $5,234,442 and $6,832,671,
respectively, interest on notes payable-recourse of $563,341 and $338,748,
respectively, and interest on notes payable non-recourse of $95,120 in 1999.
<PAGE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
September 30, 2000
(unaudited)
1. Basis of Presentation
The consolidated 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 1999
Annual Report on Form 10-K.
2. Redemption of Limited Partnership Units
There were 650 units of limited partnership redeemed during the nine
months ended September 30, 2000. Redemption amounts are calculated following the
redemption formula specified in 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.
3. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the nine months ended September 30, 2000 and 1999
were as follows:
2000 1999
---- ----
Management fees $2,535,423 $2,218,128 Charged to Operations
Administrative expense
reimbursements 924,551 936,526 Charged to Operations
---------- ----------
Total $3,459,974 $3,154,654
========== ==========
The Partnership has formed five joint ventures with affiliates for the
purpose of acquiring and managing various assets. (See Note 5 for additional
information relating to the joint ventures.)
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
4. Net Investment in Leveraged Leases
The Partnership has ownership interests in two DC-10-30 aircraft subject to
leveraged leases with Continental Airlines, Inc. (through 2003) and Federal
Express (through 2004).
The net investment in the leveraged leases as of September 30, 2000 consisted of
the following:
Non-cancelable minimum rents receivable (net of
principal and interest on non-recourse debt) $ 10,002,726
Estimated unguaranteed residual values 24,818,000
Initial direct costs 591,868
Unearned income (10,489,377)
------------
$ 24,923,217
Unearned income is recognized from leveraged leases over the life of the
lease at a constant rate of return based on the positive net investment in the
lease in years such investment is positive.
5. Investments in Joint Ventures
The Partnership and affiliates formed five joint ventures for the purpose
of acquiring and managing various assets. See Footnote 6 regarding the
dissolution of the Rowan joint venture in the third quarter of 2000.
The joint venture described below is majority owned and is consolidated
with the Partnership.
ICON Cash Flow Partners L.L.C. III
On December 31, 1996, the Partnership and an affiliate, ICON Cash Flow
Partners, L.P., Series E ("Series E") formed ICON Cash Flow Partners L.L.C. III
("ICON Cash Flow LLC III"), for the purpose of acquiring and managing an
aircraft currently on lease to Continental Airlines, Inc. The 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 (see Note 4). Profits, losses, excess
cash and disposition proceeds are allocated 99% to the Partnership and 1% to
Series E. The Partnership's financial statements include 100% of the assets and
liabilities of ICON Cash Flow LLC III. Series E's investment in ICON Cash Flow
LLC III has been reflected as "Minority interest in consolidated joint venture."
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
The four joint ventures described below are less than 50% owned and are
accounted for following the equity method.
ICON Receivables 1997-A L.L.C.
In March 1997 the Partnership, ICON Cash Flow Partners, L.P., Series D
("Series D"), and L.P. Six, 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, Series E and L.P. Six contributed and assigned additional
equipment lease and finance receivables and residuals to 1997-A. The
Partnership, Series D, Series E and L.P. Six received a 19.97%, 17.81%, 31.19%
and 31.03% 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.
Information as to the financial position and results of operations of
1997-A as of and for the nine months ended September 30, 2000 is summarized
below:
September 30, 2000
Assets $ 10,906,112
===============
Liabilities $ 8,391,993
===============
Equity $ 2,514,119
===============
Partnership's share of equity $ 645,389
===============
Nine Months Ended
September 30, 2000
Net loss $ (340,318)
===============
Partnership's share of net loss $ (67,930)
===============
Distributions $ 450,867
===============
Partnership's share of distributions $ 90,016
===============
1997-A recorded a provision for bad debts of $500,000 during the three
month period ended September 30, 2000.
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
ICON Receivables 1997-B L.L.C.
In August 1997 the Partnership, Series E and L.P. Six formed ICON
Receivables 1997-B L.L.C. ("1997-B"), a special purpose entity formed for the
purpose of originating leases and securitizing its portfolio. The Partnership,
Series E and L.P. Six contributed cash and received a 16.67%, 75.00% and 8.33%
interest, respectively, in 1997-B. In order to fund the acquisition of leases,
1997-B obtained a warehouse borrowing facility from Prudential Securities Credit
Corporation (the "1997-B Warehouse Facility"). 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 original investment was recorded
at cost and is adjusted by its share of earnings, losses and distributions
thereafter.
Information as to the financial position and results of operations of
1997-B as of and for the nine months ended September 30, 2000 is summarized
below:
September 30, 2000
Assets $ 21,338,478
===============
Liabilities $ 18,843,767
===============
Equity $ 2,494,711
===============
Partnership's share of equity $ 415,868
===============
Nine Months Ended
September 30, 2000
Net income $ 659,027
===============
Partnership's share of net income $ 109,860
===============
Distributions $ 148,578
===============
Partnership's share of distributions $ 24,768
===============
ICON Boardman Funding L.L.C.
In December 1998 the Partnership and three affiliates, ICON Cash Flow
Partners, L.P., Series C ("Series C"), L.P. Six and ICON Income Fund Eight A
L.P. ("Eight A") formed ICON Boardman Funding L.L.C. ("ICON BF"), for the
purpose of acquiring a lease with Portland General Electric. The purchase price
totaled $27,421,810, and was funded with cash and non-recourse debt assumed in
the purchase price. The Partnership, Series C, L.P. Six, and Eight A received a
.5%, .5%, .5% and 98.5% interest, respectively, in ICON BF. The Partnership's
original investment was recorded at cost
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
of $56,960 and is adjusted by its share of earnings, losses and distributions,
thereafter. Simultaneously with the acquisition of the Portland General Electric
lease by ICON BF, a portion of the rent receivable in excess of the senior debt
payments was acquired by L.P. Six from ICON BF for $3,801,108.
On March 30, 1999, ICON BF acquired L.P. Six's investment in a portion of
the rent in excess of the senior debt payments for $3,097,637 and financed, with
a third party, all of the rent receivable in excess of the senior debt payments.
There was no gain or loss to L.P. Six on this transaction. ICON BF received
$7,643,867 from the financing. The proceeds from the financing, net of the
purchase of L.P. Six's investment, were distributed to the members of ICON BF in
accordance with their ownership interests.
Information as to the financial position and results of operations of ICON BF as
of September 30, 2000 is summarized below:
September 30, 2000
Assets $ 26,055,869
===============
Liabilities $ 16,003,804
===============
Equity $ 10,052,065
===============
Partnership's share of equity $ 48,637
===============
Nine Months Ended
September 30, 2000
Net income $ 867,657
===============
Partnership's share of net income $ 4,337
===============
AIC Trust
The Partnership acquired a portfolio of equipment leases and in 1999
contributed such leases, subject to related debt, with a book value of
$6,854,830 to a wholly owned trust ("AIC Trust"). Subsequently, the Partnership
sold interests in this trust at various dates in 1999 to Eight A, an affiliate
of the Partnership, for $3,000,000 and to L.P. Six, an affiliate of the
Partnership, for $1,750,000. These transactions were at book value, which
approximated fair market value at the dates of sale. Therefore, the Partnership
recognized no gain or loss on the sales of these interests to either Eight A or
to L.P. Six.
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
As a result of the sales of these interests, at September 30, 2000 and at
December 31, 1999, respectively, L.P. Six and Eight A owned interests
aggregating 25.51% and 43.73% in the trust, respectively, with the Partnership
owning a 30.76% interest. The trust is operated as a joint venture. Profits,
losses, excess cash and disposition proceeds are allocated based upon the
Partnerships' percentage ownership interests in the venture during the
respective periods the Partnerships held such interests. The Partnership
accounts for its investment under the equity method of accounting.
Information as to the financial position and results of operations of AIC
Trust as of and for the nine months ended September 30, 2000 is summarized
below:
September 30, 2000
Assets $ 17,681,716
===============
Liabilities $ 10,421,507
===============
Equity $ 7,260,209
===============
Partnership's share of equity $ 2,244,212
===============
Nine Months Ended
September 30, 2000
Net income $ 423,509
===============
Partnership's share of net income $ 130,299
===============
6. Dissolution of Rowan Joint Venture
In December 1996, the Partnership purchased for $12,325,000 a 50% share of
an option to acquire the 100% interest in a drilling rig, currently on lease to
Rowan Companies, Inc.
In March 2000, the Partnership formed a joint venture for the purpose of
owning the 50% share of the option to acquire the residual interest in the
drilling rig. The Partnership contributed its investment in the option with a
book value of $12,394,328 to the joint venture ("Rowan Joint Venture").
Simultaneously, the Partnership sold an interest in this joint venture to
ICON Cash Flow Partners L.P. Six ("L.P. Six"), an affiliate of the Partnership,
for $2,250,000. This transaction was recorded at book value, which approximated
fair market value. Therefore, the Partnership recognized no gain or loss on the
sale of this joint venture to L.P. Six.
<PAGE>
ICON Cash Flow Partners L. P. Seven
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
As a result, the Partnership and L.P. Six owned interests aggregating
81.85% and 18.15% in the venture, respectively. Profits, losses and cash
distributions were allocated based upon the Partnerships' ownership interests.
L.P. Six had the right to put its interest in the joint venture back to the
Partnership at any time on or after September 15, 2000 for 110% of the purchase
price. The Partnership had the right to repurchase the interest in the joint
venture from L.P. Six at any time prior to September 15, 2000 for an amount
equal to 105% of L.P. Six's purchase price. The Partnership exercised this right
and repurchased the interest in the third quarter of 2000, dissolving the joint
venture. The underlying option to acquire the drilling rig currently on lease to
Rowan Companies, Inc. was exercised. Accordingly, the Partnership has presented
its investment in the drilling rig and the underlying lease with Rowan
Companies, Inc. as an investment in finance lease on the September 30, 2000
balance sheet.
<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
The Partnership's portfolio consisted of a net investment in finance
leases, estimated unguaranteed residual values, leveraged leases, financings and
investments in unconsolidated joint ventures, representing 65%, 14%, 18%, 1% and
2% of total investments at September 30, 2000, respectively, and 74%, 17%, 7%,
1% and 1% of total investments at September 30, 1999, respectively.
Results of Operations for the Three Months Ended September 30, 2000 and 1999
Revenues for the three months ended September 30, 2000 were $5,633,804
representing an increase of $1,350,426 from 1999. The increase in revenues
resulted primarily from increases in finance income of $722,943, income from
leveraged leases of $404,221 and gain on sales of equipment of $118,124. Finance
income increased as a result of a higher level of renewal rents received in the
2000 period. Income from leveraged leases increased due to an additional
leveraged lease investment made in the fourth quarter of 1999. Gain on sales of
equipment increased due primarily to the sale of a Boeing 737-236 to Lan Chile
in the 2000 period.
Expenses for the three months ended September 30, 2000 were $3,882,476
representing an increase of $311,309 from 1999. The increase in expenses
resulted primarily from increases in interest expense of $240,099, management
fees - general partner of $105,901 and general and administrative expense of
$109,625. Interest expense increased as a result of adjustments recorded in the
1999 period which had the effect of reducing third quarter 1999 interest
expense. Management fees - General Partner increased as a result of higher
levels of renewal rent received in the 2000 period. General and administrative
expense increased primarily due to higher professional fees.
Net income for the three months ended September 30, 2000 and 1999 was
$1,751,328 and $712,211, respectively. The net income per weighted average
limited partnership unit was $1.75 and $.71, respectively.
Results of Operations for the Nine Months Ended September 30, 2000 and 1999
Revenues for the nine months ended September 30, 2000 was $15,581,899
representing a $17,941 decrease from 1999. The decrease in revenues resulted
from a decrease in finance income of $1,433,486. This decrease was partially
offset by increases in income from leveraged leases of $1,240,062, income from
investments in unconsolidated joint ventures of $64,197, gain on sales of
equipment of $13,729 and interest income and other of $97,557. The decrease in
finance income was the result of a decrease in the average size of the finance
lease portfolio from 1999 to 2000, partially offset by a higher level of renewal
income in the third quarter of 2000. Income from leveraged leases increased due
to an additional leveraged lease investment made in the fourth quarter of 1999.
Income from investments in unconsolidated joint ventures increased primarily as
a result of income realized in 2000 by the Partnership in the AIC Trust which
was formed in the second half of 1999. Gain on sales of equipment increased as
the result of the sale in the third quarter of 2000 of a Boeing 737-236 to Lan
Chile. Interest income and other increased primarily as a result of higher
average cash levels in the 2000 period.
<PAGE>
ICON Cash Flow Partners L.P. Seven
(A Delaware Limited Partnership)
Expenses for the nine months ended September 30, 2000 were $11,333,665
representing a decrease of $1,409,359 from 1999. The decrease in expenses
resulted primarily from decreases in interest expense of $1,468,756,
amortization of initial direct costs of $289,964 and provision for bad debts of
$200,000. These decreases were partially offset by an increase in management
fees - General Partner of $317,295 and general and administrative expense of
$248,852. Interest expense decreased as a result of a decrease in the average
debt outstanding from 1999 to 2000. The decrease in amortization of initial
direct costs resulted from a decrease in the average size of the finance lease
portfolio from 1999 to 2000. As a result of an analysis of delinquency,
assessment of overall risk and a review of historical loss experience, the
Partnership determined that no additional provision for bad debt was required
for the nine months ended September 30, 2000. Management fees General Partner
increased primarily as a result of higher levels of renewal rent received in the
third quarter of 2000. General and administrative expense increased primarily as
a result of higher professional fees.
Net income for the nine months ended September 30, 2000 and 1999 was
$4,248,234 and $2,856,816, respectively. The net income per weighted average
limited partnership unit was $4.25 and $2.85, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the nine months ended
September 30, 2000 and 1999 were proceeds from borrowings of $18,594,762 in 2000
and $5,000,000 in 1999, proceeds from the sale of equipment of $3,717,767 in
2000 and $1,222,327 in 1999 and net cash provided by operations of $828,158 in
2000 and $3,124,597 in 1999. These funds were used primarily to make payments on
borrowings and fund cash distributions to partners. Cash distributions to
limited partners for the nine months ended September 30, 2000 and 1999 totaled
$7,982,131 and $8,016,190, respectively.
As of September 30, 2000 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.
<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
September 30, 2000.
<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.
November 10, 2000 /s/ Thomas W. Martin
----------------- ---------------------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal financial and accounting officer
of the General Partner of the Registrant)
