-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CjAILm8CIJt9h2lsZdDf/OsVrt73vzyi4wJE0c8ksZ7Ns6vfSY2lfPp1fv4HhtRS xI6HBGnBr0T2/P4R0yY7Pg== 0000775346-99-000005.txt : 19990331 0000775346-99-000005.hdr.sgml : 19990331 ACCESSION NUMBER: 0000775346-99-000005 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICON CASH FLOW PARTNERS L P SERIES A CENTRAL INDEX KEY: 0000775346 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 133270490 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 002-99858 FILM NUMBER: 99578018 BUSINESS ADDRESS: STREET 1: 600 MAMARONECK AVENUE CITY: HARRISON STATE: NY ZIP: 10528 BUSINESS PHONE: 9146980600 MAIL ADDRESS: STREET 1: 600 MAMARONECK AVENUE CITY: HARRISON STATE: NY ZIP: 10528 FORMER COMPANY: FORMER CONFORMED NAME: ICON INCOME FUND L P SERIES A DATE OF NAME CHANGE: 19860902 10-K 1 ICON CASH FLOW PARTNERS, L.P., SERIES A 1998-10K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the fiscal year ended December 31, 1998 ------------------------------------------------------ or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the transition period from to ----------------------- ---------------------- Commission File Number 2-99858 --------------------------------------------------------- ICON Cash Flow Partners, L.P., Series A - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3270490 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 600 Mamaroneck Avenue, Harrison, New York 10528-1632 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (914) 698-0600 ----------------------------- Securities registered pursuant to Section 12(b) of the Act: None Title of each class Name of each exchange on which registered - --------------------------------- -------------------------------------- - --------------------------------- -------------------------------------- Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interests - -------------------------------------------------------------------------------- (Title of class) - -------------------------------------------------------------------------------- (Title of class) 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 1 ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 TABLE OF CONTENTS Item Page PART I 1. Business 3-4 2. Properties 4 3. Legal Proceedings 5 4. Submission of Matters to a Vote of Security Holders 5 PART II 5. Market for the Registrant's Securities and Related Security Holder Matters 5 6. Selected Financial and Operating Data 6 7. General Partner's Discussion and Analysis of Financial Condition and Results of Operations 7-9 8. Financial Statements and Supplementary Data 10-23 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 24 PART III 10. Directors and Executive Officers of the Registrant's General Partner 24-25 11. Executive Compensation 25 12. Security Ownership of Certain Beneficial Owners and Management 26 13. Certain Relationships and Related Transactions 26 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 27 SIGNATURES 28 ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 PART I Item 1. Business General Development of Business ICON Cash Flow Partners, L.P., Series A (the "Partnership") was formed in May 1985 as a Delaware limited partnership. The Partnership commenced business operations on its initial closing date, May 6, 1988, with the admission of 2,415 limited partnership units. Between June 1, 1988 and December 31, 1988, 1,352 additional units were admitted. Between January 1, 1989 and February 1, 1989 (the final closing date), 1,242 additional units were admitted bringing the final admission to 5,009 units totaling $2,504,500 in capital contributions. The sole general partner is ICON Capital Corp. (the "General Partner"). The Partnership's original reinvestment period was to end on February 1, 1995. In December 1994, the consent of the 225 limited partners was solicited to amend, effective January 31, 1995, the Partnership agreement. The vote was passed 151 affirmative to 31 negative with 43 abstaining. The amendments to the Partnership agreement include: (1) extending the reinvestment period from six years, to eight to ten years, (2) allowing the General Partner to lend funds to the Partnership for a term in excess of 12 months and up to $250,000 and (3) decreasing the management fees to a flat rate of 1% of rents for all investments under management. The General Partner contributed $125,000 to the Partnership in the form of capital in 1994. These contributions increased the General Partner's basis in the Partnership; however, profits, losses, cash distributions and disposition proceeds will continue to be allocated 95% to the limited partners and 5% to the General Partner until each limited partner has received cash distributions and disposition proceeds sufficient to reduce its adjusted capital account to zero. In February and March 1995, the General Partner lent $75,000 and $100,000, respectively, to the Partnership. Principal on the loans was to be repaid only after the extended reinvestment period expired, and the limited partners received at least a 6% return on their capital. These notes bore interest at the lower of 6% or prime. In September 1997 the General Partner converted the principal outstanding on the loan, $175,000, into a capital contribution. This contribution increased the General Partner's basis in the Partnership; however, profits, losses, cash distributions and disposition proceeds will continue to be allocated 95% to the limited partners and 5% to the General Partner. Interest on the loans was paid in November 1997. As of December 31, 1998, the Partnership had one financing transaction remaining. The financing is with McGinn Tool & Engineering; the monthly payments are $595 and the financing matures in March 2000. The General Partner is exploring the possibility of disposing of or terminating the lease early and beginning the orderly termination of the Partnership's affairs. Narrative Description of Business The Partnership is an equipment leasing income fund. The principal investment objective of the Partnership was to acquire a diversified portfolio of equipment on lease to credit-worthy lessees which would: (1) preserve, protect and return the Partnership's invested capital; (2) generate cash available for distribution from which the ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 Partnership has made distributions to the partners, with any remaining balance used to purchase additional equipment during the reinvestment period, and (3) provide cash distributions and net disposition and re-lease proceeds, periodically, following the reinvestment period until all the equipment purchased by the Partnership has been sold. In addition to acquiring equipment for lease the Partnership also provided financing to certain manufacturers, lessors and lessees. The equipment leasing industry is highly competitive. In initiating its leasing transactions the Partnership competes with leasing companies, manufacturers that lease their products directly, equipment brokers and dealers and financial institutions, including commercial banks and insurance companies. Many competitors are larger than the Partnership and have greater financial resources. The Partnership has no direct employees. The General Partner has full and exclusive discretion in management and control of the Partnership. Lease and Financing Transactions The Partnership did not lease or finance any additional equipment for the years ended December 31, 1998 and 1997. At December 31, 1998 the remaining transaction term of the remaining financing was 15 months. A summary of the portfolio equipment cost by category held at December 31, 1998 and 1997 is as follows: December 31, 1998 December 31, 1997 -------------------- --------------------- Cost Percent Cost Percent Manufacturing & production $ 27,000 100.0% $ 198,530 29.4% Computer systems - - 193,059 28.5 Retail systems - - 99,794 14.8 Copiers - - 53,149 7.9 Telecommunications - - 41,535 6.1 Printing - - 33,033 4.9 Material handling - - 27,258 4.0 Video production - - 16,975 2.5 Medical - - 12,962 1.9 -------- ------ --------- ------ $ 27,000 100.0% $ 676,295 100.0% ======== ====== ========= ====== As of December 31, 1998, the Partnership had one financing transaction remaining. The financing is with McGinn Tool and Engineering; the monthly payments are $595 and the financing matures in March 2000. The General Partner is exploring the possibility of selling the lease and beginning the orderly termination of the Partnership's affairs. Item 2. Properties The Partnership neither owns nor leases office space or equipment for the purpose of managing its day-to-day affairs. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 Item 3. Legal Proceedings The Partnership is not a party to any pending legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the fourth quarter of 1998. PART II Item 5. Market for the Registrant's Securities and Related Security Holder Matters The Partnership's limited partnership interests are not publicly traded nor is there currently a market for the Partnership's limited partnership interests. It is unlikely that any such market will develop. Number of Equity Security Holders Title of Class as of December 31, - -------------- --------------------------------- 1998 1997 ---- ---- Limited partners 223 225 General Partner 1 1 ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 Item 6. Selected Financial and Operating Data Years Ended December 31, ---------------------------------------------------- 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- Total revenues ..... $ 80,666 $105,935 $195,278 $203,905 $276,133 ======== ======== ======== ======== ======== Net income ......... $ 81,983 $ 90,421 $136,746 $ 84,037 $ 73,374 ======== ======== ======== ======== ======== Net income allocable to limited partners .. $ 77,884 $ 85,900 $129,909 $ 79,835 $ 69,705 ======== ======== ======== ======== ======== Net income allocable to the General Partner ... $ 4,099 $ 4,521 $ 6,837 $ 4,202 $ 3,669 ======== ======== ======== ======== ======== Weighted average limited partnership units outstanding . 5,009 5,009 5,009 5,009 5,009 ======== ======== ======== ======== ======== Net income per weighted average limited partnership unit .. $ 15.55 $ 17.15 $ 25.94 $ 15.94 $ 13.92 ======== ======== ======== ======== ======== Distributions to limited partners . $181,576 $225,405 $225,405 $225,533 $233,651 ======== ======== ======== ======== ======== Distributions to General Partner .. $ 9,557 $ 11,863 $ 11,863 $ 11,867 $ 12,297 ======== ======== ======== ======== ======== December 31, ------------------------------------------------ 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- Total assets $23,500 $137,992 $349,219 $599,104 $978,652 ====== ======== ======== ======== ======== Partners' equity $12,957 $122,107 $ 93,954 $194,476 $347,839 ======= ======== ======== ======== ======== The above selected financial and operating data should be read in conjunction with the financial statements and related notes appearing elsewhere in this report. ICON Cash Flow Partners, L.P., Series A ( A Delaware Limited Partnership) December 31, 1998 Item 7. General Partner's Discussion and Analysis of Financial Condition and Results of Operations The Partnership's portfolio consisted one financing representing 100% of total investments and no finance leases at December 31, 1998, as compared to 98% and 2% of total investments, respectively, at December 31, 1997. . Results of Operations Years Ended December 31, 1998 and 1997 Revenues for the year ended December 31, 1998 were $80,666, representing a decrease of $25,269 or 24% from 1997. The decrease in revenues was attributable to a decrease in net gain on sales or remarketing of equipment of $6,349 or 8%, a decrease in finance income of $16,098 or 87%, and a decrease in interest income and other of $2,822 or 59%. The decrease in net gain on sales or remarketing of equipment was due to a decrease in the number of leases maturing in which the underlying equipment was sold or remarketed, and proceeds received were in excess of the remaining carrying value of the equipment. Finance income decreased due to a decrease in the average size of the portfolio from 1997 to 1998. The decrease in interest income and other was a result of a decrease in the average cash balance from 1997 to 1998. Expenses for the year ended December 31, 1998 totaled a net credit of $1,317, representing a decrease of $16,831 or 108%. The decrease in expenses was attributable to a decrease in interest expense of $7,875 or 100%, a decrease in administrative expense reimbursements of $2,643 or 58% and a decrease in management fees of $1,549 or 61%. In addition, as a result of the ongoing analysis of delinquency trends and loss experience, an assessment of overall credit risk and the continued decline in portfolio balance, the Partnership reduced the allowance for doubtful accounts by $22,242. These changes were partially offset by an increase in general and administrative expense of $478 or 3%. Interest expense decreased as a result of a decrease in the average debt outstanding from 1997 to 1998. The decreases in administrative expense reimbursements and management fees are due to the decrease in the average size of the portfolio from 1997 to 1998. General and administrative expense increased as a result of legal and other professional fees incurred related to collection of receivables. Net income for the years ended December 31, 1998 and 1997 was $81,983 and $90,421, respectively. The net income per weighted average limited partnership unit was $15.55 and $17.15 for 1998 and 1997, respectively. Years Ended December 31, 1997 and 1996 Revenues for the year ended December 31, 1997 were $105,935, representing a decrease of $89,343 or 46% from 1996. The decrease in revenues was attributable to a decrease in net gain on sales or remarketing of equipment of $59,661 or 42%, a decrease in finance income of $27,215 or 59% and a decrease in interest income and other of $2,467 or 34%. The net gain on sales or remarketing of equipment decreased due to a reduction in the number of leases maturing in which the underlying equipment was sold or remarketed and proceeds received were in excess of the remaining carrying value of the equipment. Finance income decreased due to a decrease in the average size of the portfolio from 1996 to 1997. The decrease in interest income and other was a result of a decrease in the average cash balance from 1996 to 1997. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 Expenses for the year ended December 31, 1997 were $15,514, representing a decrease of $43,018 or 73% from 1996. The decrease in expenses was attributable to a decrease in general and administrative expenses of $14,687 or 46%, a decrease in interest expense of $7,217 or 48%, a decrease in administrative expense reimbursements of $2,612 or 37%, a decrease in management fees of $1,502 or 37%, and a reduction of the allowance for doubtful accounts of $17,000. General and administrative expenses, administrative expense reimbursements and management fees decreased due to a decrease in the average size of the portfolio from 1996 to 1997. The decrease in interest expense resulted from a decrease in the average debt outstanding from 1996 to 1997. The reversal of the allowance for doubtful accounts was the result of the ongoing analysis of delinquency trends and loss experience, an assessment of overall credit risk and the continued decline in portfolio balance. Net income for the years ended December 31, 1997 and 1996 was $90,421 and $136,746, respectively. The net income per weighted average limited partnership unit was $17.15 and $25.94 for 1997 and 1996, respectively. Liquidity and Capital Resources As of December 31, 1998, the Partnership had one financing transaction remaining. The financing is with McGinn Tool & Engineering; the monthly rents are $595 and the lease matures in March 2000. The General Partner is exploring the possibility of disposing of or terminating the lease early and beginning the orderly termination of the Partnership's affairs. The Partnership's primary sources of funds in 1998, 1997 and 1996 were net cash provided by operations of $24,760, $90,316 and $210,327, respectively, and proceeds from sales of equipment of $94,160, $112,356 and $202,787, respectively. These funds were used to pay cash distributions, and during 1996, to purchase equipment and make payments on borrowings. In February and March 1995, the General Partner lent $75,000 and $100,000, respectively, to the Partnership. Principal on the loans was to be repaid only after the extended Reinvestment Period expired, and, the limited partners received at least a 6% return on their capital. These notes bore interest at the lower of 6% or prime. In September 1997 the General Partner converted the principal outstanding on the loan, $175,000, into a capital contribution. This contribution increased the General Partner's basis in the Partnership, however, profits, losses, cash distributions and disposition proceeds will continue to be allocated 95% to the limited partners and 5% to the General Partner. Interest on the loans was paid in November 1997. The Partnership's original reinvestment period expired on February 1, 1995, six years after the final closing date. In December 1994 the consent of the limited partners was solicited to amend the Partnership agreement of which 151 investors, representing a 74% majority of the limited partnership units outstanding, responded affirmatively and the amendments were adopted, effective January 31, 1995. The amendments: (1) extend the reinvestment period to February 1999, (2) allow the General Partners to lend to the Partnership for a term in excess of twelve months and up to $250,000 and (3) decrease management fees to a flat rate of 1% for all investments under management. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 Cash distributions to limited partners in 1998, 1997 and 1996, which were paid quarterly, totaled $181,576, $225,405 and $225,405, respectively, of which $77,884, $85,900 and $129,909 was investment income and $103,692, $139,505 and $95,496 was a return of capital, respectively. The quarterly annualized distribution rate to limited partners in 1998, 1997 and 1996 was 7.25%, 9.00% and 9.00%, respectively, of which 3.11%, 3.43% and 5.19% was investment income and 4.14%, 5.57% and 3.81% 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 years ended December 31, 1998, 1997 and 1996 was $36.25, $45.00 and $45.00 of which $15.55, $17.15 and $25.94 was investment income and $20.70, $27.85 and $19.06 was a return of capital, respectively. As a result of a review and analysis of the Partnership's projected cash flow, the Partnership decreased the distribution rate to an annualized rate of 2%, effective for both the October 15, 1998 and January 15, 1999 distributions. Year 2000 Issue 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, programs 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 party vendors. The General Partner has formally communicated with these vendors and has received assurance that their programs are Year 2000 compliant. In addition, the General Partner has gathered information about the Year 2000 readiness of significant vendors and third-party servicers and continues to monitor developments in this area. All of the General Partner's peripheral computer technologies, such as its network operating system and third party software applications, including payroll and electronic banking have been evaluated and have been found to be Year 2000 compliant. The ultimate impact of the Year 2000 issue on the Partnership will depend to a great extent on the manner in which the issue is addressed by the Partnership's lessees. Each of the Partnership's lessees will have a material self interest in resolving any Year 2000 issue, however, non-compliance on the part of a lessee could result in lost or delayed revenues to the Partnership. The effect of this risk to the Partnership is not determinable. The General Partner is responsible for costs relating to the assessment and development of its Year 2000 compliance remediation plan, as well as the testing of the hardware and software owned or licensed for its personal computers. The General Partner's costs incurred to date and expected future costs are not material. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 Item 8. Financial Statements and Supplementary Data Index to Financial Statements Page Number ----------- Independent Auditors' Report 12 Balance Sheets as of December 31, 1998 and 1997 13 Statements of Operations for the Years Ended December 31, 1998, 1997 and 1996 14 Statements of Changes in Partners' Equity for the Years Ended December 31, 1998, 1997 and 1996 15 Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996 16-17 Notes to Financial Statements 18-23 ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) Financial Statements December 31, 1998 (With Independent Auditors' Report Thereon) INDEPENDENT AUDITORS' REPORT The Partners ICON Cash Flow Partners, L.P., Series A: We have audited the accompanying balance sheets of ICON Cash Flow Partners, L.P., Series A (a Delaware limited partnership) as of December 31, 1998 and 1997, and the related statements of operations, changes in partners' equity, and cash flows for each of the years in the three-year period ended December 31, 1998. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 1, as of December 31, 1998, ICON Cash Flow Partners, L.P., Series A had one financing transaction remaining. The General Partner is exploring the possibility of disposing of or terminating the lease early and beginning the orderly termination of the partnership's affairs. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ICON Cash Flow Partners, L.P., Series A as of December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1998, in conformity with generally accepted accounting principles. /s/ KPMG LLP --------------------------------- KPMG LLP March 12, 1999 New York, New York ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) Balance Sheets December 31, 1998 1997 ---- ---- Assets Cash ......................................... 16,999 $ 89,212 --------- --------- Investment in financings Receivables due in installments ........... 8,934 59,625 Unearned income ........................... (569) (3,181) Allowance for doubtful accounts ........... (1,864) (19,407) --------- --------- 6,501 37,037 --------- --------- Investment in finance leases Minimum rents receivable .................. -- 4,062 Unearned income ........................... -- (1,212) Allowance for doubtful accounts ........... -- (2,123) --------- --------- -- 727 --------- --------- Other assets ................................. -- 11,016 --------- --------- Total assets ................................. $ 23,500 $ 137,992 ========= ========= Liabilities and Partners' Equity Accounts payable - other ..................... $ 9,818 $ 14,840 Security deposits and deferred credits ....... 725 1,045 --------- --------- 10,543 15,885 --------- --------- Commitments and Contingencies Partners' equity (deficiency) General Partner ........................... 179,299 184,757 Limited partners (5,009 units outstanding, $500 per unit original issue price) ..... (166,342) (62,650) --------- --------- Total partners' equity ....................... 12,957 122,107 --------- --------- Total liabilities and partners' equity ....... $ 23,500 $ 137,992 ========= ========= See accompanying notes to financial statements. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) Statements of Operations For the Years Ended December 31, 1998 1997 1996 ---- ---- ---- Revenues Net gain on sales or remarketing of equipment ...................... $ 76,227 $ 82,576 $ 142,237 Finance income .................................. 2,459 18,557 45,772 Interest income and other ....................... 1,980 4,802 7,269 --------- --------- --------- Total revenues .................................. 80,666 105,935 195,278 --------- --------- --------- Expenses General and administrative ...................... 18,043 17,565 32,252 Interest ........................................ -- 7,875 15,092 Administrative expense reimbursements - General Partner ............................. 1,878 4,521 7,133 Management fees - General Partner ............... 1,004 2,553 4,055 Reversal of allowance for doubtful accounts ..... (22,242) (17,000) -- --------- --------- --------- Total expenses (credit) ......................... (1,317) 15,514 58,532 --------- --------- --------- Net income ......................................... $ 81,983 $ 90,421 $ 136,746 ========= ========= ========= Net income allocable to: Limited partners ................................ $ 77,884 $ 85,900 $ 129,909 General Partner ................................. 4,099 4,521 6,837 --------- --------- --------- $ 81,983 $ 90,421 $ 136,746 ========= ========= ========= Weighted average number of limited partnership units outstanding ................... 5,009 5,009 5,009 ========= ========= ========= Net income per weighted average limited partnership unit ........................ $ 15.55 $ 17.15 $ 25.94 ========= ========= =========
See accompanying notes to financial statements. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) Statements of Changes in Partners' Equity For the Years Ended December 31, 1998, 1997, and 1996 Limited Partner Distributions Return of Investment Limited General Capital Income Partners Partner Total (Per weighted average unit) Balance at December 31, 1995 $ 172,351 $ 22,125 $ 194,476 Cash distributions to partners $ 19.06 $ 25.94 (225,405) (11,863) (237,268) Net income 129,909 6,837 136,746 --------- -------- --------- Balance at December 31, 1996 76,855 17,099 93,954 Conversion of General Partner note payable to a capital contribution - 175,000 175,000 Cash distributions to partners $ 27.85 $17.15 (225,405) (11,863) (237,268) Net income 85,900 4,521 90,421 --------- -------- --------- Balance at December 31, 1997 (62,650) 184,757 122,107 Cash distributions to partners $ 20.70 $ 15.55 (181,576) (9,557) (191,133) Net income 77,884 4,099 81,983 --------- -------- --------- Balance at December 31, 1998 $(166,342) $179,299 $ 12,957 ========= ======== =========
See accompanying notes to financial statements. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) Statements of Cash Flows For the Years Ended December 31, 1998 1997 1996 ---- ---- ---- Cash flows from operating activities: Net income .................................................. $ 81,983 $ 90,421 $ 136,746 --------- --------- --------- Adjustments to reconcile net income to net cash provided by operating activities: Net gain on sales or remarketing of equipment .............. (76,227) (82,576) (142,237) Finance income portion of receivables paid directly to lenders by lessees ...................... -- -- (3,863) Interest expense on non-recourse financing paid directly by lessees ....................... -- -- 2,508 Changes in operating assets and liabilities: Collection of principal - non-financed receivables ........ 49,020 176,604 206,054 Allowance for doubtful accounts ........................... (20,878) (23,013) (9,301) Accounts payable to General Partner and affiliates, net ..................................... -- (43,760) 12,071 Accounts payable - other .................................. (5,022) 1,765 6,906 Accrued interest on General Partner loan .................. -- (19,613) -- Security deposits and deferred credits .................... (320) (2,772) (2,807) Other, net ................................................ (3,796) (6,740) 4,250 --------- --------- --------- Total adjustments ....................................... (57,223) (105) 73,581 --------- --------- --------- Net cash provided by operating activities ............... 24,760 90,316 210,327 --------- --------- --------- Cash flows from investing activities: Proceeds from sales of equipment ............................ 94,160 112,356 202,787 Equipment and receivables purchased ......................... -- -- (15,297) --------- --------- --------- Net cash provided by investing activities ............... 94,160 112,356 187,490 --------- --------- --------- Cash flows from financing activities: Cash distributions to partners .............................. (191,133) (237,268) (237,268) Principal payments on term loan ............................. -- -- (116,500) --------- --------- --------- Net cash used in financing activities .................... (191,133) (237,268) (353,768) --------- --------- --------- Net (decrease) increase in cash ............................... (72,213) (34,596) 44,049 Cash, beginning of year ....................................... 89,212 123,808 79,759 --------- --------- --------- Cash, end of year ............................................. $ 16,999 $ 89,212 $ 123,808 ========= ========= =========
See accompanying notes to financial statements. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) Statements of Cash Flows (Continued) Supplemental Disclosures of Cash Flow Information Interest expense of $7,875 and $15,092 for the years ended December 31, 1997 and 1996, respectively, consisted of: interest expense on non-recourse financing paid directly to lenders by lessees of $0 and $2,508, respectively, interest on a term loan of $0 and $2,084, respectively, and interest on General Partner loans of $7,875 and $10,500, respectively. There was no interest expense incurred in 1998. During the years ended December 31, 1998, 1997 and 1996, non-cash activities included the following: 1998 1997 1996 ---- ---- ---- Principal and interest on finance receivables paid directly to lender by lessee $ - $ - $ 40,625 Principal and interest on non-recourse financing paid directly by lessee - - (40,625) Conversion of principal portion of notes payable - General Partner to a capital contribution - 175,000 - Capital contribution - General Partner - (175,000) - ---------- ---------- --------- $ - $ - $ - ========== ========== ========= See accompanying notes to financial statements. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) Notes to Financial Statements December 31, 1998 1. Organization ICON Cash Flow Partners, L.P., Series A (the "Partnership") was formed on May 28, 1985 as a Delaware limited partnership with an initial capitalization of $2,000. It was formed to acquire various types of equipment, to lease such equipment to third parties and, to a lesser degree, enter into secured financing transactions. The Partnership's offering period commenced on January 9, 1987 and by its final closing in 1989, 5,009 units had been admitted into the Partnership with aggregate gross proceeds of $2,504,500. The General Partner of the Partnership is ICON Capital Corp. (the "General Partner"), a Connecticut corporation. The General Partner manages and controls 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, received an underwriting commission on the gross proceeds from sales of all units. The total underwriting compensation paid by the Partnership, including underwriting commissions, sales commissions, incentive fees, public offering expense reimbursements and due diligence activities was limited to 14 1/2% of the gross proceeds received from the sale of the units. Such offering costs aggregated $363,152, (including $176,152 paid to the General Partner or its affiliates) and were charged directly to limited partners' equity. Profits, losses, cash distributions and disposition proceeds are allocated 95% to the limited partners and 5% 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 would be allocated 85% to the limited partners and 15% to the General Partner. As of December 31, 1998, the Partnership had one financing transaction remaining. The financing is with McGinn Tool & Engineering; the monthly payments are $595 and the financing matures in March 2000. The General Partner is exploring the possibility of disposing of or terminating the lease early and beginning the orderly termination of the Partnership's affairs. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) Notes to Financial Statements - Continued 2. Significant Accounting Policies Basis of Accounting and Presentation - The Partnership's records are maintained on the accrual basis. The preparation of financial statements in conformity with generally accepted accounting principles requires the General Partner's management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. In addition, management is required to disclose contingent assets and liabilities. Leases - The Partnership accounts for owned equipment leased to third parties as finance leases or operating leases, as appropriate. 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.. Initial direct costs of finance leases are capitalized and are amortized over the terms of the related leases using the interest method. 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 ("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments" requires disclosures about the fair value of financial instruments. Separate disclosure of fair value information as of December 31, 1998 and 1997 with respect to the Company's assets and liabilities is not provided because (i) SFAS No. 107 does not require disclosures about the fair value of lease arrangements and (ii) the carrying value of financial assets, other than lease related investments, and payables approximates market value. Allowance for Doubtful Accounts - The Partnership recorded provisions for bad debts to provide for estimated credit losses in the portfolio. The provision was based on an analysis of delinquency trends and loss experience and an assessment of overall credit risk. The Partnership's write-off policy is based on an analysis of the aging of the Partnership's portfolio, a review of the non-performing receivables and leases, and prior collection experience. An account is fully reserved for or written off when such analysis indicates that the probability of collection of the account is remote. In 1998 and 1997, the Partnership reversed $22,242 and $17,000 of amounts previously included in the allowance for doubtful accounts, respectively. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) Notes to Financial Statements - Continued 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. New Accounting Pronouncements - In June 1998 the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 requires that an entity recognize all derivative instruments as either assets or liabilities in the balance sheet and measure those instruments at fair value. SFAS No. 133 is effective for all quarters of fiscal years beginning after June 15, 1999. The adoption of SFAS No. 133 is not expected to have a material effect on the Partnership's net income, partners' equity or total assets. 3. General Partner Capital Contribution In February and March 1995, the General Partner lent $75,000 and $100,000, respectively, to the Partnership. Principal on the loans was to be repaid only after the extended Reinvestment Period expired, and, the limited partners received at least a 6% return on their capital. These notes bore interest at the lower of 6% or prime. In September 1997 the General Partner converted the principal outstanding on the loan, $175,000, into a capital contribution. This contribution increased the General Partner's basis in the Partnership, however, profits, losses, cash distributions and disposition proceeds will continue to be allocated 95% to the limited partners and 5% to the General Partner. Accrued interest of $27,487 on the loans was paid in November 1997. 4. Receivables Due in Installments Non-cancelable minimum annual amounts receivable on financings are as follows: Year Financings ---- ---------- 1999 $ 7,147 2000 1,787 ------- $ 8,934 ======= ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) Notes to Financial Statements - Continued 5. Allowance for Doubtful Accounts The allowance for doubtful accounts related to the investments in financings, finance leases and operating leases consisted of the following: Finance Operating Financings Leases Leases Total Balance at December 31, 1995 ....................... $ 19,920 $ 15,322 $ 1,212 $ 36,454 Accounts written-off ......................... -- (29) -- (29) Recovery on accounts previously written-off ................................ 500 8,830 -- 9,330 -------- -------- -------- -------- Balance at December 31, 1996 ....................... 20,420 24,123 1,212 45,755 Transfer within accounts ..................... 15,000 (15,000) -- -- Accounts written-off ......................... (6,013) -- -- (6,013) Reversal of allowance for doubtful accounts .......................... (10,000) (7,000) -- (17,000) -------- -------- -------- -------- Balance at December 31, 1997 ....................... 19,407 2,123 1,212 22,742 Accounts written-off ......................... (3,136) -- -- (3,136) Recovery on accounts previously written-off ..................... 4,500 -- -- 4,500 Reversal of allowance for doubtful accounts .......................... (18,907) (2,123) (1,212) (22,242) -------- -------- -------- -------- Balance at December 31, 1998 ....................... $ 1,864 $ -- $ -- $ 1,864 ======== ======== ======== ========
6. Related Party Transactions During the years ended December 31, 1998, 1997 and 1996, the Partnership paid to the General Partner management fees of $1,004, $2,553 and $4,055 and administrative expense reimbursements of $1,878, $4,521 and $7,133, respectively. These items were charged to operations. Under the original Partnership agreement, the General Partner was entitled to management fees at either 2% or 5% of rents, depending on the type of investment under management. Effective, January 31, 1995, the General Partner reduced its management fees to a flat rate of 1% of rents for all investments under management. In February and March 1995, the General Partner lent $75,000 and $100,000, respectively, to the Partnership. Principal on the loans was to be repaid only after the extended Reinvestment Period expired, and, the limited partners received at least a 6% return on their capital. These notes bore interest at the lower of 6% or prime. In September 1997 the General Partner converted the principal outstanding on the loan, $175,000, into a capital contribution. This contribution increased the General Partner's basis in the Partnership, however, profits, losses, cash distributions and disposition proceeds will continue to be allocated 95% to the limited partners and 5% to the General Partner. Accrued interest of $27,487 on the loans was paid in November 1997. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) Notes to Financial Statements - Continued 7. Tax Information (Unaudited) The following table reconciles net income for financial reporting purposes to income for federal income tax purposes for the years ended December 31: 1998 1997 1996 ---- ---- ---- Net income per financial statements $ 81,983 $ 90,421 $136,746 Differences due to: Direct finance leases 14,269 24,972 60,629 Depreciation (5,315) (15,273) - Provision for losses (20,879) (23,013) 9,356 Loss on sale of equipment (10,101) (12,498) (8,208) Other (2,437) (1,791) - -------- -------- -------- Partnership income for federal income tax purposes $ 57,520 $ 62,818 $198,523 ======== ======== ======== As of December 31, 1998, the partners' capital accounts included in the financial statements totaled $12,957 compared to the partners' capital accounts for federal income tax purposes of $1,007,723 (unaudited). The difference arises primarily from commissions reported as a reduction in the partners' capital for financial reporting purposes but not for federal income tax purposes, and temporary differences related to direct finance leases, depreciation and provision for losses. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None PART III Item 10. Directors and Executive Officers of the Registrant's General Partner The General Partner, a Connecticut corporation, was formed in 1985. The General Partner's principal offices are located at 600 Mamaroneck Avenue, Harrison, New York 10528-1632, and its telephone number is (914) 698-0600. The officers of the General Partner have extensive experience with transactions involving the acquisition, leasing, financing and disposition of equipment, including acquiring and disposing of equipment subject to leases and full financing transactions. The manager of the Partnership's business is the General Partner. The General Partner is engaged in a broad range of equipment leasing and financing activities. Through its sales representatives and through various broker relationships throughout the United States, the General Partner offers a broad range of equipment leasing services. The General Partner is performing or causing to be performed certain functions relating to the management of the equipment of the Partnership. Such services include the collection of lease payments from the lessees of the equipment, re-leasing services in connection with equipment which is off-lease, inspections of the equipment, liaison with the general supervision of lessees to assure that the equipment is being properly operated and maintained, monitoring performance by the lessees of their obligations under the leases and the payment of operating expenses. The officers and directors of the General Partner are as follows: Beaufort J.B. Clarke Chairman, Chief Executive Officer and Director Paul B. Weiss President and Director Thomas W. Martin Executive Vice President and Director Kevin F. Redmond Chief Financial Officer Beaufort J. B. Clarke, age 53, is Chairman, Chief Executive Officer and Director of both the General Partner and ICON Securities Corp. (the "Dealer-Manager"). Prior to his present position, Mr. Clarke was founder and the President and Chief Executive Officer of Griffin Equity Partners, Inc. Mr. Clarke formerly was an attorney with Shearman and Sterling and has over 20 years of senior management experience in the United States leasing industry. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 Paul B. Weiss, age 38, is President and Director of the General Partner. Mr. Weiss has been exclusively engaged in lease portfolio acquisitions since 1988 from his affiliations with Griffin Equity Partners (as Executive Vice President and co-founder in 1993); Gemini Financial Holdings (as Senior Vice President-Portfolio Acquisitions and a member of the executive committee from 1991-1993) and Pegasus Capital Corporation (as Vice President-Portfolio Acquisitions). He was previously an investment banker and a commercial banker. Thomas W. Martin, age 45, is Executive Vice President of the General Partner and Director of the Dealer-Manager. Prior to his present position, Mr. Martin was the Executive Vice President and Chief Financial Officer of Griffin Equity Partners, Inc. Mr. Martin has 14 years of senior management experience in the leasing business. Kevin F. Redmond, age 36, is Chief Financial Officer of both the General Partner and the Dealer-Manager. Prior to his present position, Mr. Redmond was Vice President and Controller of the General Partner, Manager of Accounting at NationsCredit Corp. and Audit Manager with the accounting firm of Deloitte & Touche. Item 11. Executive Compensation The Partnership has no directors or officers. The General Partner and its affiliates were paid or accrued the following compensation and reimbursement for costs and expenses for the years ended December 31, 1998, 1997 and 1996. Type of Entity Capacity Compensation 1998 1997 1996 ------ -------- ------------ ---- ---- ---- ICON Capital Corp. General Partner Administrative expense Reimbursements $1,878 $ 4,521 $ 7,133 ICON Capital Corp. General Partner Interest - 7,875 10,500 ICON Capital Corp. General Partner Management fees 1,004 2,553 4,055 ------ ------- ------- $2,882 $14,949 $21,688 ====== ======= ======= ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 Item 12. Security Ownership of Certain Beneficial Owners and Management (a) The Partnership is a limited partnership and therefore does not have voting shares of stock. No person of record owns, or is known by the Partnership to own beneficially, more than 5% of any class of securities of the Partnership. (b) As of March 15, 1999, Directors and Officers of the General Partner do not own any equity securities of the Partnership. (c) The General Partner owns the equity securities of the Partnership set forth in the following table: Title of Class Amount Beneficially Owned Percent of Class -------------- ------------------------- ---------------- General Partner Interest Represents initially a 5% and 100% potentially a 15% interest in the Partnership's income, gain and loss deductions. Profits, losses, cash distributions and disposition proceeds are allocated 95% to the limited partners and 5% to the General Partner until each investor 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 the outstanding adjusted capital contribution account. After such time, the distributions will be allocated 85% to the limited partners and 15% to the General Partner. Item 13. Certain Relationships and Related Transactions See Item 11 for a discussion of the Partnership's related party transactions. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) 1. Financial Statements - See Part II, Item 8 hereof. 2. Financial Statement Schedule - None. Schedules not listed above have been omitted because they are not applicable or are not required or the information required to be set forth therein is included in the Financial Statements or Notes thereto. 3. Exhibits - The following exhibits are incorporated herein by reference: (i) Amended and Restated Agreement of Limited Partnership (Incorporated by reference to Exhibit A to Amendment No. 2 to Form S-1 Registration Statement No. 2-99858 filed with the Securities and Exchange Commission on December 12, 1986). (ii) Certificate of Limited Partnership of the Partnership (Incorporated herein by reference to Exhibit 3.01 to Form S-1 Registration Statement No. 2-99858 filed with the Securities and Exchange Commission on August 23, 1985 and to Exhibit 3.01 to Amendment No. 1 to Form S-1 Registration Statement No. 2-99858 filed with the Securities and Exchange Commission on August 27, 1986). (iii)Form of Management Agreement between the Partnership and Crossgate Leasing, Inc. (Incorporated herein by reference to Exhibit 10.01 to Amendment No. 1 to Form S-1 Registration Statement No. 2-99858 filed with the Securities and Exchange Commission on August 27, 1986). (b) Reports on Form 8-K No reports on Form 8-K were filed by the Partnership during the quarter ended December 31, 1998. ICON Cash Flow Partners, L.P., Series A (A Delaware Limited Partnership) December 31, 1998 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ICON CASH FLOW PARTNERS, L.P., Series A File No. 2-99858 (Registrant) By its General Partner, ICON Capital Corp. Date: March 30, 1999 /s/ Beaufort J. B. Clarke ---------------------------------------------- Beaufort J. B. Clarke Chairman, Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated. ICON Capital Corp. sole General Partner of the Registrant Date: March 30, 1999 /s/ Beaufort J. B. Clarke ------------------------- Beaufort J. B. Clarke Chairman, Chief Executive Officer and Director Date: March 30, 1999 /s/ Paul B. Weiss ----------------- Paul B. Weiss President and Director Date: March 30, 1999 /s/ Kevin F. Redmond -------------------- Kevin F. Redmond Chief Financial Officer (Principal Financial and Account Officer) Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrant Which have not Registered Securities Pursuant to Section 12 of the Act No annual report or proxy material has been sent to security holders. An annual report will be sent to the limited partners and a copy will be forwarded to the Commission. EX-27 2 ART.5 FDS FOR SERIES A 1998-10K WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 0000775346 ICON Cash Flow Partners, L.P., Series A 12-MOS DEC-31-1998 DEC-31-1998 16,999 0 8,934 1,864 0 * 0 0 0 23,500 ** 0 0 0 0 0 12,957 23,500 78,686 80,666 0 0 20,925 (22,242) 0 0 0 0 0 0 0 81,983 15.55 15.55 * 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.
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