-----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, U2AMM4lmDaTUYc5BDzA5ocN0LVma04LQDI5MRnXGA80ZIncVRDMwEhcHzbv6eMR7 yAs+KBqR2Q5OFLreod4hIA== 0000849278-00-000003.txt : 20000331 0000849278-00-000003.hdr.sgml : 20000331 ACCESSION NUMBER: 0000849278-00-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICON CASH FLOW PARTNERS LP SERIES B CENTRAL INDEX KEY: 0000849278 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 133518939 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-27822 FILM NUMBER: 585081 BUSINESS ADDRESS: STREET 1: 600 MAMARONECK AVE CITY: HARRISON STATE: NY ZIP: 10528 BUSINESS PHONE: 9146980600 MAIL ADDRESS: STREET 1: 600 MAMARONECK AVENUE CITY: HARRISON STATE: NY ZIP: 10528 10-K 1 ICON CASH FLOW PARTNERS,L.P.,SERIES B 1999-10K 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, 1999 ------------------------------------------------------ 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 0-27822 --------------------------------------------------------- ICON Cash Flow Partners, L.P., Series B - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3518939 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 111 Church Street, White Plains, New York 10601 -1505 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (914) 993-1700 ----------------------------- 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 Interest (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 ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) December 31, 1999 TABLE OF CONTENTS Item Page PART I 1. Business 3-4 2. Properties 5 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 7-8 8. Financial Statements and Supplementary Data 9-21 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 22 PART III 10. Directors and Executive Officers of the Registrant's General Partner 22-23 11. Executive Compensation 23 12. Security Ownership of Certain Beneficial Owners and Management 24 13. Certain Relationships and Related Transactions 24 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 24-25 SIGNATURES 26 ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) December 31, 1999 PART I Item 1. Business General Development of Business ICON Cash Flow Partners, L.P., Series B (the "Partnership") was formed in March 1989 as a Delaware limited partnership. The Partnership commenced business operations on its initial closing date, September 22, 1989, with the admission of 12,414.89 limited partnership units. Between October 1, 1989 and December 31, 1989, 16,647.07 additional units were admitted. Between January 1, 1990 and November 16, 1990 (the final closing date), 170,938.04 additional units were admitted bringing the final admission to 200,000 units totaling $20,000,000 in capital contributions. In 1995 the Partnership redeemed 200 units leaving 199,800 limited partnership units outstanding. The sole general partner is ICON Capital Corp. (the "General Partner"). The Partnership's original reinvestment period was to expire on November 15, 1995, five years after the final closing date. The General Partner distributed a definitive consent statement to the limited partners to solicit approval of two amendments to the Partnership agreement. A majority of the limited partnership units outstanding responded affirmatively and the amendments were adopted. These amendments are effective from and after November 15, 1995 and include: (1) extending the reinvestment period for a maximum of four additional years to November 1999 and likewise delaying the start and end of the liquidation period, and (2) eliminating the Partnership's obligation to pay the General Partner a portion of accrued and unpaid management fees, and any additional management fees which would otherwise accrue. In June 1999, the Partnership paid the remaining $127,000 of previously accrued management fees to the General Partner. The General Partner subsequently remitted this amount back to the Partnership as an additional capital contribution. Narrative Description of Business The Partnership is an equipment leasing income fund. The principal investment objective of the Partnership is to obtain the maximum economic return from its investments for the benefit of its limited partners. To achieve this objective the Partnership attempted to: (1) acquire a diversified portfolio of short-term, high-yield investments; (2) make monthly cash distributions to its limited partners from cash from operations, when cash is available, commencing with each limited partner's admission to the Partnership and continuing through the extended reinvestment period; (3) re-invest substantially all undistributed cash from operations and cash from sales in additional equipment and financing transactions during the extended reinvestment period; and (4) sell the Partnership's investments and distribute the cash from sales of such investments to its limited partners during the liquidation period. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) December 31, 1999 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 For the years ended December 31, 1999 and 1998, the Partnership did not purchase or finance any new investments in equipment. A summary of the portfolio equipment cost by category held at December 31, 1999 and 1998 is as follows: December 31, 1999 December 31, 1998 ----------------- ----------------- Category Cost Percent Cost Percent Restaurant equipment ...... $ 654,672 33.4% $ 716,351 26.7% Telecommunications ........ 582,772 29.7 779,093 29.1 Manufacturing & production 227,145 11.6 417,539 15.6 Computer systems .......... 208,031 10.6 282,799 10.6 Video production .......... 96,292 4.9 118,211 4.4 Office furniture & fixtures 54,254 2.8 85,494 3.2 Printing .................. 48,492 2.5 103,602 3.9 Automotive ................ 44,157 2.3 55,776 2.1 Medical ................... 23,762 1.2 59,574 2.2 Retail systems ............ 21,088 1.0 47,457 1.7 Office equipment .......... -- -- 14,569 0.5 Material handling ......... -- -- -- -- Audio ..................... -- -- -- -- ---------- ----- ---------- ----- $1,960,665 100.0% $2,680,465 100.0% ========== ===== ========== ===== The Partnership has one lease which individually represents greater than 10% of the total portfolio equipment cost at December 31, 1999. The lease is with Hometown Buffet, Inc. The underlying equipment is restaurant equipment and the purchase price of the equipment represents 31.5% of the total portfolio equipment cost at December 31, 1999. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) December 31, 1999 Item 2. Properties The Partnership neither owns nor leases office space or equipment for the purpose of managing its day-to-day affairs. 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 1999. 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, 1999 1998 ---- ---- Limited partners 1,756 1,748 General Partner 1 1 ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) December 31, 1999 Item 6. Selected Financial and Operating Data Years Ended December 31, ---------------------------------------------------------- 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Total revenues ................... $154,278 $400,618 $ 562,650 $ 519,663 $1,196,522 ======== ======== ========== ========== ========== Net income ....................... $ 46,087 $263,893 $ 356,326 $ 549,384 $ 627,878 ======== ======== ========== ========== ========== Net income allocable to limited partners ............... $ 45,626 $261,254 $ 352,763 $ 543,890 $ 621,599 ======== ======== ========== ========== ========== Net income allocable to the General Partner ................ $ 461 $ 2,639 $ 3,563 $ 5,494 $ 6,279 ======== ======== ========== ========== ========== Weighted average limited partnership units outstanding .. 199,800 199,800 199,800 199,800 199,986 ======== ======== ========== ========== ========== Net income per weighted average limited partnership unit $ 0.23 $ 1.31 $ 1.77 $ 2.72 $ 3.11 ======== ======== ========== ========== ========== Distributions to limited partners $199,794 $682,648 $1,798,200 $1,798,200 $1,799,763 ======== ======== ========== ========== ========== Distributions to the General Partner ................ $ 2,017 $ 6,895 $ 18,164 $ 18,164 $ 18,180 ======== ======== ========== ========== ==========
December 31, ------------------------------------------------------------- 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Total assets ... $ 625,435 $1,143,670 $2,066,633 $2,887,443 $5,069,702 ========== ========== ========== ========== ========== Partners' equity $ 387,384 $ 416,108 $ 841,758 $2,301,796 $3,568,776 ========== ========== ========== ========== ========== 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 B (A Delaware Limited Partnership) December 31, 1999 Item 7. General Partner's Discussion and Analysis of Financial Condition and Results of Operations The Partnership's portfolio consisted of a net investment in finance leases and financings of 76% and 24% of total investments, respectively, at December 31, 1999 compared to 68% and 32% of total investments, respectively, at December 31, 1998. For the years ended December 31, 1999 and 1998, the Partnership did not purchase or finance any new investments in equipment. Results of Operations for the Years Ended December 31, 1999 and 1998 Revenues for the year ended December 31, 1999 were $154,278, representing a decrease of $246,340 from 1998. The decrease in revenues was attributable to a decrease in finance income of $83,312, a decrease in gain on sales of equipment of $137,592 and a decrease in interest income and other of $25,436 from 1998. Finance income decreased due to a decrease in the average size of the portfolio from 1999 to 1998. The gain on sales of equipment decreased due to a decrease in the number of leases maturing in which the underlying equipment was sold. The decrease in interest income and other resulted from a decrease in the average cash balance from 1998 to 1999. Expenses for the year ended December 31, 1999 were $108,191, representing a decrease of $28,534 from 1998. The decrease in expenses was attributable to a decrease in interest expense, administrative expense reimbursements and general and administrative expenses partially offset by the fact that the Partnership recorded a reversal in 1998 in the allowance for doubtful accounts of $36,892. The decrease in interest expense resulted from a decrease in the average debt outstanding from 1998 to 1999. Administrative expense reimbursements and general and administrative expenses decreased due to a decrease in the average size of the portfolio from 1998 to 1999. Net income for the years ended December 31, 1999 and 1998 was $46,087 and $263,893, respectively. The net income per weighted average limited partnership unit was $.23 and $1.31 for 1999 and 1998, respectively. Results of Operations for the Years Ended December 31, 1998 and 1997 Revenues for the year ended December 31, 1998 were $400,618, representing a decrease of $162,032 or 29% from 1997. The decrease in revenues was attributable to a decrease in finance income of $99,266 or 36%, a decrease in net gain on sales or remarketing of equipment of $39,999 or 17%, a decrease in income from equity investment in joint venture of $14,232 or 100%, and a decrease in interest income and other of $8,535 or 19% from 1997. Finance income decreased due to a decrease in the average size of the portfolio from 1997 to 1998. The net gain on sales or remarketing of equipment decreased 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. The decrease in income from equity investment in joint venture resulted from the Partnership's 1997 sale of its investment in the joint venture. The decrease in interest income and other resulted from a decrease in the average cash balance from 1997 to 1998. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) December 31, 1999 Expenses for the year ended December 31, 1998 were $136,725, representing a decrease of $69,599 or 34% from 1997. The decrease in expenses was attributable to a decrease in interest expense of $29,195 or 27%, a decrease in administrative expense reimbursements of $19,321 or 49%, and a reversal in 1998 of the allowance for doubtful accounts of $36,892. The decreases in these expenses were partially offset by an increase in general and administrative expenses of $15,809 or 26%. The decrease in interest expense resulted from a decrease in the average debt outstanding from 1997 to 1998. Administrative expense reimbursements and general and administrative expenses decreased due to a decrease in the average size of the portfolio from 1997 to 1998. The reversal of the allowance for doubtful accounts resulted from the ongoing analysis of delinquency trends and loss experience, an assessment of overall credit risk and the continued decline in portfolio balance. The increase in general and administrative expenses was related to increases in legal fees, collection expenses and tax related costs. Net income for the years ended December 31, 1998 and 1997 was $263,893 and $356,326, respectively. The net income per weighted average limited partnership unit was $1.31 and $1.77 for 1998 and 1997, respectively. Liquidity and Capital Resources The Partnership's reinvestment period ended and disposition period began in November 1999. During the disposition period the Partnership has, and will continue to distribute substantially all distributable cash from operations and equipment sales to the partners and begin the orderly termination of its operations and affairs. The Partnership has not, and will not invest in any additional finance or lease transactions during the disposition period. During the disposition period, the Partnership expects to recover, at a minimum, the carrying value of its assets. As a result of the Partnership's entering into the disposition period, future monthly distributions are expected to fluctuate depending on the amount of asset sale and re-lease proceeds received during that period. The Partnership's primary sources of funds in 1999, 1998 and 1997 were net cash provided by operations of $253,244, $761,619 and $879,014, respectively, proceeds from sales of equipment of $153,880, $321,104 and $544,232, respectively, proceeds from the sale of investment in joint venture of $183,598 in 1997 and proceeds related to a term loan of $1,500,000 in 1997. On February 13, 1997, the Partnership borrowed $1,500,000 from a bank pursuant to a four year term loan agreement. The loan agreement grants a security interest in certain Partnership payments and collateral for a specified group of leases and financing transactions. The note bears interest at 9%, and is payable in monthly installments. The Partnership had $197,643 and $589,381 outstanding under the loan at December 31, 1999 and 1998, respectively. Cash distributions to the limited partners for the years ended December 31, 1999, 1998 and 1997, which were paid monthly, totaled $199,794, $682,648 and $1,798,200 of which $45,626, $261,254 and $352,763 was investment income and $154,168, $421,394 and $1,445,437 was a return of capital, respectively. The monthly annualized cash distribution rate for the years ended December 31, 1999, 1998 and 1997 was 1.0%, 3.42% and 9.00%, of which .23%, 1.31% and 1.77% was investment income and .77%, 2.11% and 7.23% 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 in 1999, 1998 and 1997 was $1.00, $3.42 and $9.00 of which $.23, $1.31 and $1.77 was investment income and $.77, $2.11 and $7.23 was a return of capital, respectively. As of December 31, 1999, 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 and sales of remaining equipment, the Partnership will pay distributions where it deems it to be prudent, while retaining sufficient cash to meet its reserve requirements and recurring obligations. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) December 31, 1999 Item 8. Financial Statements and Supplementary Data Index to Financial Statements Page Number ----------- Independent Auditors' Report 11 Balance Sheets as of December 31, 1999 and 1998 12 Statements of Operations for the Years Ended December 31, 1999, 1998 and 1997 13 Statements of Changes in Partners' Equity for the Years Ended December 31, 1999, 1998 and 1997 14 Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997 15-16 Notes to Financial Statements 17-21 ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) Financial Statements December 31, 1999 (With Independent Auditors' Report Thereon) INDEPENDENT AUDITORS' REPORT The Partners ICON Cash Flow Partners, L.P., Series B: We have audited the accompanying balance sheets of ICON Cash Flow Partners, L.P., Series B (a Delaware limited partnership) as of December 31, 1999 and 1998, 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, 1999. 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, the Partnership's reinvestment period ended and the disposition period began in November 1999. During the disposition period, the Partnership has, and will continue to distribute substantially all distributable cash from operations and equipment sales to the partners and begin the orderly termination of its operations and 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 B as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1999, in conformity with generally accepted accounting principles. /s/ KPMG LLP KPMG LLP March 28, 2000 New York, New York ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) Balance Sheets December 31, 1999 1998 ---- ---- Assets Cash ................................................. $ 14,510 $ 73,935 ----------- ----------- Investment in finance leases Minimum rents receivable .......................... 265,980 621,919 Estimated unguaranteed residual values ............ 221,159 240,689 Unearned income ................................... (45,104) (97,223) Allowance for doubtful accounts ................... (28,893) (39,451) ----------- ----------- 413,142 725,934 ----------- ----------- Investment in financings Receivables due in installments ................... 150,724 403,132 Unearned income ................................... (6,778) (39,604) Allowance for doubtful accounts ................... (10,051) (19,827) ----------- ----------- 133,895 343,701 ----------- ----------- Other assets ......................................... 63,888 100 ----------- ----------- Total assets ......................................... $ 625,435 $ 1,143,670 =========== =========== Liabilities and Partners' Equity Note payable ......................................... $ 197,643 $ 589,381 Accounts payable to General Partner and affiliates ... 13,600 109,185 Security deposits, deferred credits and other payables 26,808 28,996 ----------- ----------- 238,051 727,562 ----------- ----------- Commitments and Contingencies Partners' equity (deficiency) General Partner .................................... (42,367) (167,811) Limited partners (199,800 units outstanding, $100 per unit original issue price) ............. 429,751 583,919 ----------- ----------- Total partners' equity ............................... 387,384 416,108 ----------- ----------- Total liabilities and partners' equity ............... $ 625,435 $ 1,143,670 =========== ===========
See accompanying notes to financial statements. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) Statements of Operations For the Years Ended December 31, 1999 1998 1997 ---- ---- ---- Revenues Gain on sales of equipment ................ $ 51,284 $ 188,876 $ 228,875 Finance income ............................ 90,929 174,241 273,507 Income from investment in joint venture ... -- -- 14,232 Interest income and other ................. 12,065 37,501 46,036 --------- --------- --------- Total revenues ............................ 154,278 400,618 562,650 --------- --------- --------- Expenses Interest .................................. 35,206 77,673 106,868 General and administrative ................ 60,332 75,656 59,847 Administrative expense reimbursements - General Partner ....................... 12,653 20,288 39,609 Reversal of allowance for doubtful accounts -- (36,892) -- --------- --------- --------- Total expenses ................... 108,191 136,725 206,324 --------- --------- --------- Net income ................................... $ 46,087 $ 263,893 $ 356,326 ========= ========= ========= Net income allocable to: Limited partners .......................... $ 45,626 $ 261,254 $ 352,763 General Partner ........................... 461 2,639 3,563 --------- --------- --------- $ 46,087 $ 263,893 $ 356,326 ========= ========= ========= Weighted average number of limited partnership units outstanding ............. 199,800 199,800 199,800 ========= ========= ========= Net income per weighted average limited partnership unit .................. $ .23 $ 1.31 $ 1.77 ========= ========= =========
See accompanying notes to financial statements. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) Statements of Changes in Partners' Equity For the Years Ended December 31, 1999, 1998 and 1997 Limited Partner Distributions Return of Investment Limited General Capital Income Partners Partner Total (Per weighted average unit) Balance at December 31, 1996 $ 2,450,750 $(148,954) $ 2,301,796 Cash distributions to partners $7.23 $1.77 (1,798,200) (18,164) (1,816,364) Net income 352,763 3,563 356,326 ----------- --------- ----------- Balance at December 31, 1997 1,005,313 (163,555) 841,758 Cash distributions to partners $2.11 $1.31 (682,648) (6,895) (689,543) Net income 261,254 2,639 263,893 ----------- --------- ----------- Balance at December 31, 1998 583,919 (167,811) 416,108 Cash distributions to partners $ .77 $ .23 (199,794) (2,017) (201,811) Capital contribution - 127,000 127,000 Net income 45,626 461 46,087 ----------- --------- ----------- Balance at December 31, 1999 $ 429,751 $ (42,367) $ 387,384 =========== ========= ===========
See accompanying notes to financial statements. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) Statements of Cash Flows For the Years Ended December 31, 1999 1998 1997 ---- ---- ---- Cash flows provided by operating activities: Net income ................................................ $ 46,087 $ 263,893 $ 356,326 ----------- ----------- ----------- Adjustments to reconcile net income to net cash provided by operating activities: Finance income portion of receivables paid directly to lenders by lessees ....................... -- -- (7,297) Gain on sales of equipment ............................. (51,284) (188,876) (228,875) Interest expense on non-recourse financing paid directly by lessees ............................. -- -- 3,798 Income from equity investment in joint venture ......... -- -- (14,232) Changes in operating assets and liabilities: Collection of principal - non-financed receivables ... 509,479 766,879 826,839 Distributions from joint venture ..................... -- -- 158,062 Allowance for doubtful accounts ...................... -- (33,956) (29,121) Accounts payable to General Partner and affiliates ... (95,585) 5,345 (75,151) Security deposits, deferred credits and other payables (2,188) (43,498) (69,008) Other ................................................ (153,265) (8,168) (42,327) ----------- ----------- ----------- Total adjustments .................................. 207,157 497,726 522,688 ----------- ----------- ----------- Net cash provided by operating activities ............ 253,244 761,619 879,014 ----------- ----------- ----------- Cash flows from investing activities: Proceeds from sales of equipment ....................... 153,880 321,104 544,232 Equipment and receivables purchased .................... -- -- (822,592) Proceeds from sale of equity investment in joint venture ..................................... -- -- 183,598 ----------- ----------- ----------- Net cash provided by (used in) investing activities . 153,880 321,104 (94,762) ----------- ----------- ----------- Cash flows from financing activities: Cash distributions to partners ......................... (201,811) (689,543) (1,816,364) Payments on note payable ............................... (391,738) (459,160) (451,459) Proceeds from General Partner contribution ............. 127,000 -- -- Proceeds from note payable ............................. -- -- 1,500,000 ----------- ----------- ----------- Net cash used in financing activities ................ (466,549) (1,148,703) (767,823) ----------- ----------- ----------- Net (decrease) increase in cash ........................... (59,425) (65,980) 16,429 Cash, beginning of year ................................... 73,935 139,915 123,486 ----------- ----------- ----------- Cash, end of year ......................................... $ 14,510 $ 73,935 $ 139,915 =========== =========== ===========
See accompanying notes to financial statements. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) Statements of Cash Flows (Continued) Supplemental Disclosures of Cash Flow Information Interest expense of $35,206, $77,673 and $106,868 for the years ended December 31, 1999, 1998 and 1997 consisted of: interest expense on note payable. During the years ended December 31, 1999, 1998 and 1997, non-cash activities included the following: 1999 1998 1997 ----- ---- ---- Principal and interest on finance receivables paid directly to lenders by lessees - - $ 268,952 Principal and interest on non-recourse financing paid directly by lessee - - (268,952) -------- ---------- ---------- $ - $ - $ - ======== ========== ==========
See accompanying notes to financial statements. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) Notes to Financial Statements December 31, 1999 1. Organization ICON Cash Flow Partners, L.P., Series B (the "Partnership") was formed on March 27, 1989 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 July 18, 1989 and by its final closing in 1990, 200,000 units had been admitted into the Partnership with aggregate gross proceeds of $20,000,000. During 1995, the Partnership redeemed 200 limited partnership units, leaving 199,800 limited partnership units outstanding at December 31, 1999, 1998 and 1997. The Partnership's reinvestment period ended and disposition period began in November 1999. During the disposition period the Partnership has, and will continue to distribute substantially all distributable cash from operations and equipment sales to the partners and begin the orderly termination of its operations and affairs. The Partnership has not, and will not invest in any additional finance or lease transactions during the disposition period. During the disposition period, the Partnership expects to recover, at a minimum, the carrying value of its assets. As a result of the Partnership's entering into the disposition period, future monthly distributions are expected to fluctuate depending on the amount of asset sale and re-lease proceeds received during that period. 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 of 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 13 1/2% of the gross proceeds received from the sale of the units. Such offering costs aggregated $2,700,000, (including $1,115,218 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 99% to the limited partners and 1% to the General Partner until each limited partner has received cash distributions and disposition proceeds sufficient to reduce its adjusted capital contribution account to zero and receive, in addition, other distributions and allocations which would provide a 10% per annum cumulative return on its outstanding adjusted capital contribution account. After such time, the distributions would be allocated 90% to the limited partners and 10% to the General Partner. 2. Amendments to Partnership Agreement The Partnership's original reinvestment period was to expire on November 15, 1995, five years after the final closing date. The General Partner distributed a definitive consent statement to the limited partners to solicit approval of two amendments to the Partnership agreement. A majority of the limited partnership units outstanding responded affirmatively and the amendments were adopted. These amendments are effective ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) Notes to Financial Statements - Continued from and after November 15, 1995 and include: (1) extending the reinvestment period for a maximum of four additional years to November 1999 and likewise delaying the start and end of the liquidation period, and (2) eliminating the Partnership's obligation to pay the General Partner $241,652 of the $368,652 accrued and unpaid management fees as of December 31, 1996 and all additional management fees which would otherwise accrue. The remaining $127,000 of previously accrued management fees were paid to the General Partner in 1999. The General Partner subsequently remitted this amount back to the Partnership in the form of an additional capital contribution. 3. 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. The Partnership presently has only investments in finance leases. For finance leases, the Partnership records, at the inception of the lease, the total minimum lease payments receivable, the estimated unguaranteed residual values, the initial direct costs related to the leases and the related unearned income. Unearned income represents the difference between the sum of the minimum lease payments receivable plus the estimated unguaranteed residual minus the cost of the leased equipment. Unearned income is recognized as finance income over the terms of the related leases using the interest method. Each lease is expected to provide aggregate contractual rents that, along with residual proceeds, return the Partnership's cost of its investments 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, 1999 and 1998 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. Investment in Joint Venture - The Partnership accounted for its investment in a joint venture under the equity method of accounting. The Partnership's original investment was recorded at cost and was adjusted by its share of earnings, losses and distributions thereafter. The Partnership liquidated its investment in the joint venture in September 1997 and received $183,598 in proceeds for the sale of its investment. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) Notes to Financial Statements - Continued Allowance for Doubtful Accounts - The Partnership records provisions for bad debts to provide for estimated credit losses in the portfolio. The provision is 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, the Partnership reversed $36,892 of amounts previously included in the allowance for doubtful accounts. Impairment of Estimated Residual Values -- The Partnership's policy with respect to impairment of estimated residual values is to review, on a periodic basis, the carrying value of its residuals on an individual asset basis to determine whether events or changes in circumstances indicate that the carrying value of an asset may not be recoverable and, therefore, an impairment loss should be recognized. The events or changes in circumstances which generally indicate that the residual value of an asset has been impaired are (i) the estimated fair value of the underlying equipment is less than the Partnership's carrying value or (ii) the lessee is experiencing financial difficulties and it does not appear likely that the estimated proceeds from disposition of the asset will be sufficient to satisfy the remaining obligation to the non-recourse lender and the Partnership's residual position. Generally in the latter situation, the residual position relates to equipment subject to third party non-recourse notes payable where the lessee remits their rental payments directly to the lender and the Partnership does not recover its residual until the non-recourse note obligation is repaid in full. The Partnership measures its impairment loss as the amount by which the carrying amount of the residual value exceeds the estimated proceeds to be received by the Partnership from release or resale of the equipment. Generally, quoted market prices are used as the basis for measuring whether an impairment loss should be recognized. 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 as amended, is effective for all quarters of fiscal years beginning after June 15, 2000. 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. 4. Receivables Due in Installments Non-cancelable minimum annual amounts receivable on finance leases and financings are as follows: Finance Year Leases Financings Total ---- ------ ---------- ----- 2000 $177,138 $137,620 $314,758 2001 70,805 13,104 83,909 2002 18,037 -- 18,037 -------- -------- $265,980 $150,724 $416,704 ======== ======== ======== ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) Notes to Financial Statements - Continued 5. Allowance for Doubtful Accounts The allowance for doubtful accounts related to the investments in finance leases and investment in financings consisted of the following: Finance Leases Financings Total Balance at December 31, 1996 ................... $ 74,557 $ 47,798 $ 122,355 Accounts written-off ...................... (24,150) (4,971) (29,121) --------- --------- --------- Balance at December 31, 1997 ................... 50,407 42,827 93,234 Accounts written-off ...................... (10,000) -- (10,000) Recovery on accounts previously written off 12,936 -- 12,936 Reversal of allowance for doubtful accounts (17,032) (19,860) (36,892) Transfer within accounts .................. 3,140 (3,140) -- --------- --------- --------- Balance at December 31, 1998 ................... 39,451 19,827 59,278 Accounts written-off ...................... (10,558) (9,776) (20,334) --------- --------- --------- Balance at December 31, 1999 ................... $ 28,893 $ 10,051 $ 38,944 ========= ========= =========
6. Note Payable On February 13, 1997, the Partnership borrowed $1,500,000 from a bank pursuant to a forty five month term loan agreement. The agreement grants a security interest in certain Partnership lease rental payments and collateral relating to a specified group of leases and financing transactions. The loan bears interest at 9%, and the balance outstanding of $197,643 at December 31, 1999 matures in 2000. 7. Related Party Transactions During the years ended December 31, 1999, 1998 and 1997 the Partnership paid or accrued to the General Partner administrative expense reimbursements of $12,653, $20,288 and $39,609, respectively. These reimbursements were charged to operations. As a result of the Partnership Agreement amendments discussed in Note 2, no management fee expense was recorded in 1999, 1998 and 1997. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) Notes to Financial Statements - Continued In February 1995 the Partnership and two affiliates, ICON Cash Flow Partners, L.P., Series C ("Series C"), and ICON Cash Flow Partners L.P. Six ("L.P. Six") formed ICON Asset Acquisition L.L.C. I ("ICON Asset Acquisition LLC") as a special purpose limited liability company. ICON Asset Acquisition LLC was formed for the purpose of acquiring, managing and securitizing a portfolio of leases. ICON Asset Acquisition LLC purchased an existing portfolio of leases and securitized substantially all of its portfolio and became the beneficial owner of a trust. In September 1997, L.P. Six purchased, from the Partnership and Series C, their investment in ICON Asset Acquisition LLC. The Partnership and Series C's investments were purchased at book value, which approximated market value at that time and ICON Asset Acquisition LLC became a 100% owned subsidiary of L.P Six. L.P Six transferred all of ICON Asset Acquisition LLC's assets to its own account and dissolved ICON Asset Acquisition LLC in the fourth quarter 1997. See Note 2 for information relating to the $127,000 capital contribution made by the General Partner in 1999. 8. 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: 1999 1998 1997 ---- ---- ---- Net income per financial statements $ 46,087 $ 263,893 $ 356,326 Differences due to: Direct finance leases .......... 292,149 367,674 625,885 Depreciation ................... (278,448) (349,769) (531,244) Provision for losses ........... (20,334) (33,956) (18,942) Gain (loss) on sale of equipment 3,864 (144,087) (377,615) Other .......................... 491 (82) (9,415) --------- --------- --------- Partnership income for federal income tax purposes .... $ 43,809 $ 103,673 $ 44,995 ========= ========= ========= As of December 31, 1999, the partners' capital accounts included in the financial statements totaled $387,384 compared to the partners' capital accounts for federal income tax purposes of $3,126,086 (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 B (A Delaware Limited Partnership) December 31, 1999 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 111 Church Street, White Plains, New York 10601-1505, and its telephone number is (914) 993-1700. 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 and 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 ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) December 31, 1999 Beaufort J. B. Clarke, age 54, has been Chairman, Chief Executive Officer and Director of the General Partner since 1996. 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. Paul B. Weiss, age 39, is President and Director of the General Partner. Mr. Weiss has been exclusively engaged in lease acquisitions since 1988 from his affiliations with the General Partner since 1996, Griffin Equity Partners (as Executive Vice President from 1993-1996); Gemini Financial Holdings (as Senior Vice President-Portfolio Acquisitions from 1991-1993) and Pegasus Capital Corporation (as Vice President-Portfolio Acquisitions from 1988-1991). He was previously an investment banker and a commercial banker. Thomas W. Martin, age 46, has been Executive Vice President of the General Partner since 1996. Prior to his present position, Mr. Martin was the Executive Vice President and Chief Financial Officer of Griffin Equity Partners, Inc. (1993-1996), Gemini Financial Holdings (as Senior Vice President from 1992-1993) and Chancellor Corporation (as Vice President-Syndications from 1985-1992). Mr. Martin has 17 years of senior management experience in the leasing business. Item 11. Executive Compensation The Partnership has no directors or officers. The General Partner and its affiliates were paid or accrued the following reimbursement for costs and expenses for the years ended December 31, 1999, 1998 and 1997. Entity Capacity Type of Compensation 1999 1998 1997 ------ -------- -------------------- ---- ---- ---- ICON Capital Corp. General Partner Administrative expense reimbursements $12,653 $20,288 $39,609 ------- ------- ------- $12,653 $20,288 $39,609 ======= ======= =======
See Footnotes 2 and 7 within the financial statements under Item 8 for disclosure of amendments made to the Partnership Agreement which eliminated the Partnership's obligation to pay the General Partner management fees. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) December 31, 1999 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 24, 2000, 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 Amount Beneficially Percent of Class Owned of Class -------- ------------------- -------- General Partner Interest Represents initially a 1% and 100% potentially a 10% interest in the Partnership's income, gain and loss deductions. Profits, losses, cash distributions and disposition proceeds are allocated 99% to the limited partners and 1% to the General Partner until each investor has received cash distributions and disposition proceeds sufficient to reduce his 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 90% to the limited partners and 10% to the General Partner. Item 13. Certain Relationships and Related Transactions See Item 11 for a discussion of the Partnership's related party transactions. 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. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) December 31, 1999 3. Exhibits - The following exhibits are incorporated herein by reference: (i) Form of Dealer-Manager Agreement (Incorporated by reference to Exhibit 1.1 to Post-Effective Amendment No. 2 to Form S-1 Registration Statement No. 33-28145 filed with the Securities and Exchange Commission on August 14, 1989) (ii) Form of Selling Dealer Agreement (Incorporated by reference to Exhibit 1.2 to Amendment No. 1 to Form S-1 Registration Statement No. 33-28145 filed with the Securities and Exchange Commission on June 12, 1989) (iii)Amended and Restated Agreement of Limited Partnership (Incorporated by reference to Exhibit A to Amendment No. 2 to Form S-1 Registration Statement No. 33-28145 filed with the Securities and Exchange Commission on July 14, 1989) (iv) 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. 33-28145 filed with the Securities and Exchange Commission on June 12, 1989) (v) The Partnership filed a Definitive Consent Statement with the Securities and Exchange Commission on February 29, 1996 for the purposes of soliciting a vote from the limited partners of record as of February 27, 1996, for amendments to the Partnership Agreement (see Item 4). (b) Reports on Form 8-K No reports on Form 8-K were filed by the Partnership during the quarter ended December 31, 1999. ICON Cash Flow Partners, L.P., Series B (A Delaware Limited Partnership) December 31, 1999 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 B File No. 33-28145 (Registrant) By its General Partner, ICON Capital Corp. Date: March 29, 2000 /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 29, 2000 /s/ Beaufort J. B. Clarke ------------------------- Beaufort J. B. Clarke Chairman, Chief Executive Officer and Director Date: March 29, 2000 /s/ Paul B. Weiss ----------------- Paul B. Weiss President and Director Date: March 29, 2000 /s/ Thomas W. Martin -------------------- Thomas W. Martin Executive Vice President (Principal Financial and Accounting 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. -----END PRIVACY-ENHANCED MESSAGE-----