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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the quarterly period ended June 30, 2004
--------------------------------------------------
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the transition period from _____________________ to ________________________
Commission File Number 0-27912
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ICON Cash Flow Partners, L.P., Series E
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3635208
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
100 Fifth Avenue, New York, New York 10011-1505
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(Address of principal executive offices) (Zip code)
(212) 418-4700
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Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [x] Yes [ ] No
Indicated by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). [ ] Yes [x] No
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Condensed Consolidated Balance Sheets
(unaudited)
June 30, December 31,
2004 2003
---- ----
Assets
Cash and cash equivalents $ 82,879 $ 80,318
--------------- --------------
Investment in finance leases
Minimum rents receivable 706,616 1,466,112
Estimated unguaranteed residual values, net 1,266,007 1,266,007
Unearned income (21,795) (40,551)
Allowance for doubtful accounts (263,385) (578,391)
--------------- --------------
1,687,443 2,113,177
--------------- --------------
Investment in operating leases
Equipment at cost 19,207,984 19,207,984
Accumulated depreciation (9,157,784) (8,357,851)
---------------- --------------
10,050,200 10,850,133
---------------- --------------
Investment in financings
Receivables due in installments 379,672 2,446,433
Unearned income - (13,238)
Allowance for doubtful accounts (330,542) (1,405,763)
--------------- --------------
49,130 1,027,432
--------------- --------------
Equipment held for sale, net 1,199,179 1,199,179
--------------- --------------
Investments in unconsolidated joint ventures 126,413 126,594
--------------- --------------
Other assets, net 86,129 99,847
--------------- --------------
Total assets $ 13,281,373 $ 15,496,680
=============== ==============
(continued on next page)
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Condensed Consolidated Balance Sheets - Continued
(unaudited)
June 30, December 31,
2004 2003
---- ----
Liabilities and Partners' Equity
Notes payable - non-recourse $ 9,565,642 $ 9,565,050
Security deposits, deferred credits and other payables 615,215 684,632
Deferred income 537,985 828,530
Due to affiliates, net 546,903 594,982
Minority interests in consolidated joint ventures (149,054) 58,561
--------------- --------------
Total liabilities 11,116,691 11,731,755
--------------- --------------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (498,077) (482,075)
Limited Partners (607,856 units outstanding,
$100 per unit original issue price) 2,662,759 4,247,000
--------------- --------------
Total partners' equity 2,164,682 3,764,925
--------------- --------------
Total liabilities and partners' equity $ 13,281,373 $ 15,496,680
=============== ==============
See accompanying notes to condensed consolidated financial statements.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Condensed Consolidated Statements of Operations
(unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
---- ---- ---- ----
Revenues
Rental income $ 233,903 $ 266,147 $ 470,357 $ 515,148
Finance income 7,155 105,627 27,713 410,264
Net (loss) gain on sales of equipment (781,446) 1,804 (576,046) 312,721
Interest income and other 165,639 212 168,832 198,651
Income (loss) from investments in
unconsolidated joint ventures 15,865 (8,309) 1,254 (19,688)
------------ ------------- ------------ -------------
Total revenues (358,884) 365,481 92,110 1,417,096
------------ ------------- ------------ -------------
Expenses
Depreciation 399,966 399,966 799,933 799,933
Interest 282,271 284,722 595,508 593,349
General and administrative 49,671 115,776 97,983 320,680
Management fees - General Partner 13,578 50,819 36,471 148,791
Administrative expense reimbursements -
General Partner 5,466 23,386 14,656 97,565
Amortization of initial direct costs 1,078 2,271 1,490 8,365
Minority interest income
in consolidated joint ventures (202,840) (6,294) (156,084) (60,616)
-------------- ------------ ------------- -------------
Total expenses 549,190 870,646 1,389,957 1,908,067
-------------- ------------- ------------- -------------
Net loss $ (908,074) $ (505,165) $ (1,297,847) $ (490,971)
============= ============= ============= ============
Net loss allocable to:
Limited Partners $ (898,993) $ (500,113) $ (1,284,869) $ (486,061)
General Partner (9,081) (5,052) (12,978) (4,910)
------------- -------------- ------------- ------------
$ (908,074) $ (505,165) $ (1,297,847) $ (490,971)
============== ============== ============= ============
Weighted average number of limited
partnership units outstanding 607,856 607,856 607,856 607,856
============= ============== ============= ============
Net loss per weighted average
limited partnership unit $ (1.48) $ (.82) $ (2.11) $ (.80)
============= ============ ============= =============
See accompanying notes to condensed consolidated financial statements.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Condensed Consolidated Statement of Changes in Partners' Equity
For the Six Months Ended June 30, 2004
(unaudited)
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
------- ------ -------- ------- -----
(Per weighted average unit)
Balance at
January 1, 2004 $ 4,247,000 $ (482,075) $ 3,764,925
Cash distributions
to partners $ .49 $ - (299,372) (3,024) (302,396)
Net loss (1,284,869) (12,978) (1,297,847)
--------------- -------------- ----------------
Balance at
June 30, 2004 $ 2,662,759 $ (498,077) $ 2,164,682
=============== ============= ================
See accompanying notes to condensed consolidated financial statements.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30,
(unaudited)
2004 2003
---- ----
Cash flows from operating activities:
Net loss $ (1,297,847) $ (490,971)
---------------- ---------------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 799,933 799,933
Rental income paid directly to lenders by lessees (450,000) (450,000)
Finance income portion of receivables paid directly
to lenders by lessees - (24,965)
Amortization of initial direct costs 1,490 8,365
Net loss (gain) on sales of equipment 576,046 (312,721)
Interest expense on non-recourse financing paid
directly to lenders by lessees 450,000 570,239
(Income) loss from investments in unconsolidated joint ventures (1,254) 19,688
Minority interest income in consolidated joint ventures (156,084) (60,616)
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables 204,399 1,586,189
Other assets, net - 163,990
Security deposits, deferred credits and other payables (69,417) (958,460)
Deferred income 171,463 180,475
Due to General Partner and affiliates (48,079) 31,493
-------------- -----------
Total adjustments 1,478,497 1,553,610
-------------- -----------
Net cash provided by operating activities 180,650 1,062,639
-------------- -----------
Cash flows from investing activities:
Proceeds from sales of equipment 315,957 473,790
Distributions received from unconsolidated joint ventures 1,435 -
Distributions to minority interests in consolidated joint ventures (51,532) -
-------------- -----------
Net cash provided by investing activities 265,860 473,790
-------------- -----------
(continued on next page)
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Condensed Consolidated Statements of Cash Flows - Continued
For the Six Months Ended June 30,
(unaudited)
2004 2003
---- ----
Cash flows from financing activities:
Principal payments on non-recourse debt (141,553) (804,880)
Cash distributions to partners (302,396) (1,164,045)
----------- ------------
Net cash used in financing activities (443,949) (1,968,925)
---------- -----------
Net increase (decrease) in cash and cash equivalents 2,561 (432,496)
Cash and cash equivalents at beginning of period 80,318 746,808
---------- -----------
Cash and cash equivalents at end of period $ 82,879 $ 314,312
========== ===========
(continued on next page)
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Condensed Consolidated Statements of Cash Flows - Continued
Supplemental Disclosures of Cash Flow Information
- -------------------------------------------------
During the six months ended June 30, 2004 and 2003, non-cash activities
included the following:
2004 2003
---- ----
Principal and interest on direct finance receivables
paid directly to lenders by lessees $ - $ 186,220
Rental income paid directly to lenders by lessees 450,000 450,000
Principal and interest on non-recourse
debt paid directly to lenders by lessees (450,000) (636,220)
--------- ---------
$ - $ -
--------- ---------
Non-recourse debt assumed by lessees upon
lease termination $ - $ 604,925
========= ==========
Interest expense on non-recourse financing accrued or
paid directly to lenders by lessees $ 592,145 $ 570,239
Other interest paid 3,363 23,110
--------- ---------
Total interest expense $ 595,508 $ 593,349
--------- ---------
See accompanying notes to condensed consolidated financial statements.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements
June 30, 2004
(unaudited)
1. Basis of Presentation
The condensed consolidated financial statements of ICON Cash Flow Partners,
L.P., Series E (the "Partnership") have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC") and, in the
opinion of management, include all adjustments (consisting only of normal
recurring accruals) necessary for a fair statement of results for each period
shown. Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such SEC rules and regulations. Management
believes that the disclosures made are adequate to make the information
presented not misleading. The results for the interim period are not necessarily
indicative of the results for the full year. These condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes included in the Partnership's 2003 Annual Report
on Form 10-K. Certain 2003 amounts have been reclassified to conform to the 2004
presentation.
2. Disposition Period
The Partnership's reinvestment period ended on July 31, 1998 and the
disposition period commenced on August 1, 1998. 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
continue the orderly termination of its operations and affairs. The Partnership
will not invest in any additional finance or lease transactions during the
disposition period.
3. Related Party Transactions
Fees paid or accrued by the Partnership to the General Partner or its
affiliates for the six months ended June 30, 2004 and 2003, respectively, are as
follows:
2004 2003
---- ----
Management fees $ 36,471 $ 148,791 Charged to operations
Administrative expense
reimbursements 14,656 97,565 Charged to operations
----------- -------------
Total $ 51,127 $ 246,356
=========== =============
At June 30, 2004, the Partnership had a net payable of approximately
$547,000 due to affiliates. The majority of this payable is due to ICON
Receivables 1998-A Inc. ("1998-A") for rents collected on behalf of 1998-A. The
Partnership expects to satisfy this payable with future rental payments and
sales proceeds.
The Partnership and its affiliates have formed five joint ventures for the
purpose of acquiring and managing various assets. The Partnership and its
affiliates have substantially identical investment objectives and participate on
the same terms and conditions. (See note 4 for additional information relating
to these joint ventures).
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
4. Joint Ventures
The Partnership and its affiliates formed five joint ventures for the
purpose of acquiring and managing various assets. The Partnership and its
affiliates have substantially identical investment objectives and participate on
the same terms and conditions. The Partnership has a right of first refusal to
purchase the equipment, on a pro-rata basis, if any of the affiliates desire to
sell their interest in the equipment.
Consolidated Joint Ventures
The two joint ventures described below are majority owned and are
consolidated with the Partnership.
ICON Cash Flow Partners L.L.C.
------------------------------
In September 1994, the Partnership and an affiliate, ICON Cash Flow
Partners L.P. Six ("L.P. Six"), formed a joint venture, ICON Cash Flow Partners
L.L.C. ("ICON Cash Flow LLC") for the purpose of acquiring and managing an
aircraft on lease to a U.S. based commercial airline. The Partnership and L.P.
Six acquired interests of 99% and 1%, respectively, in ICON Cash Flow LLC. In
1997, upon the scheduled termination of the lease, the aircraft was remarketed
to Aerovias de Mexico, S.A. de C.V. ("Aeromexico") under a new lease. This lease
originally was scheduled to expire in October 2002, but has since been extended
twice pursuant to the terms of extension agreements. ICON Cash Flow LLC acquired
the aircraft, assuming non-recourse debt and utilizing cash received from the
Partnership and L.P. Six. Profits, losses, excess cash and disposition proceeds
of the joint venture are allocated 99% to the Partnership and 1% to L.P. Six.
The Partnership's consolidated financial statements include 100% of the assets,
liabilities, revenues and expenses of ICON Cash Flow LLC. L.P. Six's investment
in ICON Cash Flow LLC is reflected as minority interest in joint venture on the
Partnership's condensed consolidated balance sheets and as minority interest
income on its condensed consolidated statements of operations. The outstanding
balance of the non-recourse debt secured by this aircraft was $9,545,147 at June
30, 2004.
ICON Receivables 1997-B LLC
---------------------------
In August 1997, the Partnership and two affiliates, L.P. Six and ICON Cash
Flow Partners L.P. Seven ("L.P. Seven"), formed ICON Receivables 1997-B LLC
("1997-B") for the purpose of securitizing the cash flow collections from a
portfolio of leases. The Partnership, L.P. Six and L.P. Seven each contributed
cash, equipment leases and residuals and own a 75%, 8.33% and 16.67% interest
respectively, in 1997-B.
The Partnership's condensed consolidated financial statements include 100%
of the assets, liabilities, revenues and expenses of 1997-B. L.P. Six and L.P.
Seven's investments in 1997-B have been recorded as minority interests in
consolidated joint ventures on the condensed consolidated balance sheets and
statements of operations.
Unconsolidated Joint Ventures
The three joint ventures described below are less than 50% owned and are
accounted for following the equity method.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
ICON Cash Flow Partners L.L.C. II
---------------------------------
In March 1995, the Partnership and an affiliate, L.P. Six, formed ICON Cash
Flow Partners L.L.C. II ("ICON Cash Flow LLC II"), for the purpose of acquiring
and managing an aircraft on lease to a U.S. based commercial airline. The
Partnership and L.P. Six acquired interests of 1% and 99%, respectively, in ICON
Cash Flow LLC II. In 1997, upon the scheduled termination of the lease, the
aircraft was remarketed to Aeromexico under a new lease. This lease originally
was scheduled to expire in November 2002, but has since been extended twice
pursuant to the terms of extension agreements. ICON Cash Flow LLC II acquired
the aircraft, assuming non-recourse debt and utilizing cash received from the
Partnership and L.P. Six. Profits, losses, excess cash and disposition proceeds
of the joint venture are allocated 1% to the Partnership and 99% to L.P. Six.
The outstanding balance of the non-recourse debt secured by this aircraft was
$9,230,315 at June 30, 2004.
Information as to the unaudited results of operations for the six months
ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- -------------
Net loss $ (907,959) $ (840,274)
============== ==============
Partnership's share of net loss $ (9,080) $ (8,403)
============== ==============
ICON Cash Flow L.L.C. III
-------------------------
In December 1996, the Partnership and an affiliate, L.P. Seven, formed ICON
Cash Flow Partners L.L.C. III ("ICON Cash Flow LLC III"), for the purpose of
acquiring and managing an aircraft which was on lease to Continental Airlines,
Inc. The aircraft is a 1976 McDonnell Douglas DC-10-30 with an original cost of
$11,429,751. The original lease expired on April 30, 2003. Effective May 1,
2003, the aircraft was re-leased to World Airways, Inc. on a "power-by-the-hour"
basis. World Airways has tentatively agreed to a lease extension through March
of 2005 at a fixed rental of $50,000 a month plus maintenance reserves. Aviation
Investors, Inc. has a 50% interest in the DC-10-30F aircraft currently on lease
to World Airways. The Partnership and L.P. Seven contributed 1% and 99% of the
cash required for the acquisition, respectively, to ICON Cash Flow LLC III. ICON
Cash Flow LLC III acquired the aircraft, assuming non-recourse debt and
utilizing contributions received from the Partnership and L.P. Seven. ICON Cash
Flow L.L.C. III has since repaid the entire non-recourse debt secured by this
asset.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
Information as to the unaudited results of operations for the six months
ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- -------------
Net (loss) income $ (134,304) $ 118,340
============== ==============
Partnership's share of net (loss) income $ (1,343) $ 1,183
============== ==============
Distributions $ 143,466 $ -
============== ===============
Partnership's share of distributions $ 1,435 $ -
============== ===============
ICON Receivables 1997-A LLC
---------------------------
In March and September 1997, the Partnership and three affiliates, ICON
Cash Flow Partners, L.P., Series D ("Series D"), L.P. Six and L.P. Seven,
contributed and assigned equipment leases, finance receivables and residuals to
ICON Receivables 1997-A LLC ("1997-A") for the purpose of securitizing the cash
flow collections from a portfolio of leases. As of June 30, 2004, the
Partnership, Series D, L.P. Six and L.P. Seven own 31.19%, 17.81%, 31.03% and
19.97% interests, respectively, in 1997-A.
Information as to the unaudited results of operations for the six months
ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- -------------
Net income (loss) $ 37,436 $ (39,975)
============== ==============
Partnership's share of net income (loss) $ 11,677 $ (12,468)
============== ==============
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
June 30, 2004
Item 2. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-Looking Information - The following discussion and analysis should
be read in conjunction with the audited financial statements and notes included
in the Partnership's annual report on Form 10-K dated December 31, 2003. Certain
statements within this document may constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements are identified by words such as "anticipate," "believe," "estimate,"
"expects," "intend," "predict" or "project" and similar expressions. The
Partnership believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions. Any such forward-looking
statements are subject to risks and uncertainties and the Partnership's future
results of operations could differ materially from historical results or current
expectations. Some of these risks are discussed in this report, and include,
without limitation, fluctuations in oil and gas prices; changing customer
demands for aircraft; acts of terrorism; unsettled political conditions, war,
civil unrest and governmental actions; foreign currency fluctuations; and
environmental and labor laws. The Partnership's actual results could differ
materially from those anticipated by such forward-looking statements due to a
number of factors, some of which may be beyond the Partnership's control,
including, without limitation:
o changes in our industry, interest rates or the general economy;
o the degree and nature of our competition;
o availability of qualified personnel;
o cash flows from operating activities may be less than the Partnership's
current level of expenses;
o the financial condition of lessees; and
o lessee defaults.
a. Overview
The Partnership is an equipment leasing business formed on November 7, 1991
and which began active operations in June 1992. The Partnership is primarily
engaged in the business of acquiring equipment subject to leases and, to a
lesser degree, acquiring ownership rights to items of leased equipment at lease
expiration. The Partnership is currently in the process of selling its remaining
assets in the ordinary course of business, a time frame we call the "liquidation
period". We have not reinvested any of the Partnership's funds during the
current period.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
June 30, 2004
The Partnership's current equipment portfolio, which is held directly or
through interests in joint ventures with affiliates, consists primarily of:
o 120 swapbody containers leased to Nedlloyd Unitrans GMBH. The containers
were purchased for a cash contribution of $721,413. The lease originally
expired on May 22, 2002 and has since been extended twice under one-year
renewals through May 22, 2004. The equipment is currently in the process of
being remarketed.
o A 25% interest in certain equipment used in connection with the production
of sodium chlorate, on lease to EKA Chemicals, Inc. The Partnership's
initial cash contribution was $1,402,960, representing 25% of the total
contribution, and the assumption of $526,499 in non-recourse debt. A
renewal was executed on February 2, 2001, extending the expiration of the
lease to July 2006, at which time title to the equipment will pass to the
lessee. This lease has been accounted for as a finance lease.
o A 99% interest in one McDonnell Douglas MD-83 aircraft on lease with
Aerovias de Mexico, S.A. de C.V. ("Aeromexico") with the base term expiring
in January 2005. The purchase price for the aircraft was $20,577,087
consisting of the Partnership's pro rata share of $3,768,175 of cash and
the assumption of its pro rata share of the $16,508,912 in non-recourse
debt.
o Aircraft rotable parts originally leased to Sabena SA. The Partnership
purchased the equipment for an equity contribution of $1,599,758. The
equipment is currently off lease and in the process of being remarketed.
o A portfolio consisting of various equipment leases including information
technology equipment, network equipment and machine tooling equipment. The
original transaction involved acquiring a portfolio of 44 equipment lease
schedules from Summit Asset Management Limited ("Summit") for a cash
contribution of $2,077,181. The schedules were originally subject to leases
with 22 lessees.
Substantially all of our recurring operating cash flows are generated from
the operations of the single-investor leases in the Partnership's portfolio. On
a monthly basis, we deduct the expenses related to the recurring operations of
the portfolio from such revenues and assess the amount of the remaining cash
flows that will be required to fund known re-leasing costs and equipment
management costs. Any residual operating cash flows are considered available for
distribution to the investors and are paid on a monthly basis.
Industry Factors
Our results continue to be impacted by a number of factors influencing the
equipment leasing industry.
Further Deterioration of the Air Travel Industry.
The aircraft leasing industry is currently experiencing a recession and
this has resulted in depressed sales prices for assets such as the Partnership's
aircraft and rotable parts. A further weakening of the industry could cause the
proceeds realized from the future sale of the Partnership's aircraft and
rotables to be less than suggested by recent appraisals.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
June 30, 2004
Inability to Remarket Assets
If current equipment lessees choose not to renew their leases or purchase
the equipment at lease expiry, the Partnership will need to remarket the
equipment. There is no assurance that the Partnership will be able to locate a
willing buyer or lessee, or if one is located, that the buyer or lessee will pay
a price for the asset at least equal to the carrying value. The Partnership is
currently encountering some difficulty in remarketing the rotable parts that
were previously on lease to Sabena due to the weakness in the airline industry.
The MD-83 aircraft on lease to Aeromexico are subject to non-recourse debt
with FINOVA, bearing interest at 11.83% annually. Given the current market for
aircraft, the rent the lessee pays does not cover the loan payments, resulting
in negative principal amortization. The net effect is that it is highly
unlikely, given the debt and aircraft market, that the Partnership will ever be
in position to realize residual proceeds on these aircraft. Accordingly, the
Partnership is currently exploring the possibility of selling the aircraft back
to FINOVA for the non-recourse debt balance.
b. Results of Operations for the Three Months Ended June 30, 2004 and 2003
Revenues
Net revenues for the three months ended June 30, 2004 (the "2004 Quarter")
were a negative $(358,884), representing a decrease of $724,365 from the three
months ended June 30, 2003 (the "2003 Quarter"). The decrease in revenues
resulted primarily from a decrease in net gain on sales of equipment. Gain on
sales of equipment decreased by $783,250 from a gain of $1,804 in the 2003
Quarter to a loss of $781,446 in the 2004 Quarter. This loss is a result of
significant losses on sales of equipment held in the ICON Receivables 1997-B LLC
("1997-B") portfolio. Unexpected losses occurred when receivables which were not
fully reserved for had to be written off. Finance income decreased by $98,472,
which was due to the continued reduction in the average size of the finance
lease portfolio. Rental income decreased by $32,244 in the 2004 Quarter due to
lease terminations in the Summit portfolio. Offsetting these decreases was an
increase in interest income and other of $165,427. Interest income and other
includes the recovery of $165,286 of receivables which were previously written
off. Income from investments in unconsolidated joint ventures increased by
$24,174 in the 2004 Quarter. This was primarily due to net income from the
Partnership's investment in ICON Receivables 1997-A LLC ("1997-A").
Expenses of the Partnership
Expenses for the 2004 Quarter were $549,190, representing a decrease of
$321,456 from the 2003 Quarter. The decrease in expenses was partially the
result of a decrease in general and administrative expenses of $66,105,
principally due to a reduction in professional fees. Management fees and
administrative expense reimbursements - General Partner also decreased, by
$37,241 and $17,920, respectively, as a result of the reduction in the average
size of the Partnership's lease portfolio. Minority interest income in
consolidated joint ventures increased by $196,546, which is a function of the
level of income or loss in the consolidated joint ventures, particularly the
loss from 1997-B of $793,111.
Net Income/Loss of the Partnership
As a result of the foregoing factors, net loss for the 2004 Quarter and
2003 Quarter was $908,074 and $505,165, respectively. The net loss per weighted
average limited partnership unit was $1.48 and $.82 for the 2004 Quarter and
2003 Quarter, respectively.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
June 30, 2004
c. Results of Operations for the Six Months Ended June 30, 2004 and 2003
Revenues
Revenues for the six months ended June 30, 2004 (the "2004 Period") were
$92,110, representing a decrease of $1,324,986 from the six months ended June
30, 2003 (the "2003 Period"). The decrease in revenues resulted primarily from a
decrease in net gain on sales of equipment. Gain on sales of equipment decreased
by $888,767 from a gain of $312,721 in the 2003 Period to a loss of $576,046 in
the 2004 Period. This loss is a result of significant losses on sales of
equipment held in 1997-B. Unexpected losses occurred when receivables which were
not fully reserved for had to be written off. Finance income decreased by
$382,551, which was due to the continued reduction in the average size of the
finance lease portfolio. Rental income decreased by $44,791 in the 2004 Period
due to lease terminations in the Summit portfolio. Offsetting these decreases
was an increase in income from investments in unconsolidated joint ventures of
$20,942. This was primarily due to net income from the Partnership's investment
in 1997-A.
Expenses of the Partnership
Expenses for the 2004 Period were $1,389,957, representing a decrease of
$518,110 from the 2003 Period. The decrease in expenses was primarily due to
decreases in general and administrative expenses of $222,697, principally due to
a reduction in professional fees. Management fees and administrative expense
reimbursements - General Partner also decreased, by $112,320 and $82,909,
respectively, as a result of the reduction in the average size of the
Partnership's lease portfolio. Minority interest income in consolidated joint
ventures increased by $95,468, which is a function of the level of income or
loss in the consolidated joint ventures, particularly the loss from 1997-B.
Net Income/Loss of the Partnership
As a result of the foregoing factors, net loss for the 2004 Period and 2003
Period was $1,297,847 and $490,971, respectively. The net loss per weighted
average limited partnership unit was $2.11 and $.80 for the 2004 Period and 2003
Period, respectively.
d. Liquidity and Capital Resources
Cash Requirements
The Partnership has sufficient funds necessary to maintain current
operations. However, in the event that cash flow is insufficient to pay the
Partnership's current level of expenses, the Partnership may be required to sell
assets prior to maturity or borrow against future cash flows.
Operations
The Partnership's primary sources of liquidity for the 2004 Period and 2003
Period were net cash provided by operating activities of $180,650 and
$1,062,639, respectively, and proceeds from sales of equipment of $315,957 and
$473,790, respectively. These funds, as well as funds held in reserve by the
Partnership, were used to pay cash distributions and make debt repayments.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
June 30, 2004
Financings and Recourse Borrowings
The Partnership has not made any recourse borrowings and does not rely on
financing to meet its current cash needs.
Distributions
Cash distributions to partners for the 2004 Period and 2003 Period totaled
$302,396 and $1,164,045, respectively. Such distributions are reflected as a
return of capital, as the Partnership recorded losses for both periods. The
Partnership has not made any cash distributions since May 2004 and has no
immediate plan to make any distributions until the Partnership has fulfilled its
current obligations to affiliates.
Capital Resources
As of June 30, 2004, the Partnership is unaware of any specific need
requiring capital resources to be funded by the Partnership.
Uncertainties
As of June 30, 2004, except as noted above in the Overview section and
listed below in the Risk Factors section, and to the best of our knowledge,
there were no known trends or demands, commitments, events or uncertainties
which are likely to have a material effect on liquidity. As cash is realized
from operations, or equipment sales, the Partnership will attempt to retain
sufficient cash to meet its reserve requirements and recurring obligations.
Risk Factors
Set forth below and elsewhere in this report and in other documents we file
with the Securities and Exchange Commission are risks and uncertainties that
could cause our actual results to differ materially from the results
contemplated by the forward-looking statements contained in this report and
other periodic statements we make, including but not limited to, the following:
o The depressed value for aircraft has adversely affected the value of the
Partnership's MD-83s on lease to Aeromexico. The current carrying value of
the aircraft is less than the outstanding balance of the non-recourse debt.
Accordingly, the Partnership is in discussions with the lender concerning
selling both aircraft to the lender for the outstanding debt balance.
o The Partnership may face difficulty remarketing the aircraft rotables. Due
to the current condition of the airline industry, there is depressed market
demand for these rotables.
e. Inflation and Interest Rates
Overall, we do not believe that inflation has had a material adverse impact
on our business or operating results during the period presented. We cannot give
assurance, however, that our business will not be affected by inflation in the
future.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
June 30, 2004
Item 3. Qualitative and Quantitative Disclosures About Market Risk
The Partnership is exposed to certain market risks, including changes in
interest rates and the demand for equipment (and the related residuals) owned by
the Partnership and its investors.
The Partnership manages its interest rate risk by obtaining fixed rate
debt. The fixed rate debt service obligation streams are generally matched by
fixed rate lease receivable streams generated by the Partnership's lease
investments.
The Partnership attempts to manage its exposure to equipment and residual
risk by monitoring the equipment leasing market and maximizing the re-marketing
proceeds received through re-leasing or sale of equipment.
Item 4. Controls and Procedures
The Partnership carried out an evaluation, under the supervision and with
the participation of management of ICON Capital Corp., the General Partner of
the Partnership, including its Chief Executive Officer and the Principal
Financial and Accounting Officer, of the effectiveness of the design and
operation of the Partnership's disclosure controls and procedures as of the end
of the period covered by this report pursuant to the Securities Exchange Act of
1934. Based upon the evaluation, the Chief Executive Officer and the Principal
Financial and Accounting Officer concluded that the Partnership's disclosure
controls and procedures were effective.
There were no significant changes in the Partnership's internal control
over financial reporting during the Partnership's second quarter that have
materially affected, or are likely to materially affect, the Partnership's
internal control over financial reporting.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
PART II - OTHER INFORMATION
- ---------------------------
Item 1 - Legal Proceedings
- --------------------------
The Partnership, from time-to-time, in the ordinary course of business,
commences legal actions when necessary to protect or enforce the rights of the
Partnership. We are not a defendant party to any pending litigation and are not
aware of any pending or threatened litigation against the Partnership.
Item 6 - Exhibits and Reports on Form 8-K
- ------------------------------------------
(a) Exhibits
32.1 Certification of Chairman and Chief Executive Officer.
32.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer.
33.1 Certification of Chairman and Chief Executive Officer pursuant to 18 U.S.C.
(Section)1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
33.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C. (Section)1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K - None
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ICON Cash Flow Partners, L.P., Series E
By its General Partner,
ICON Capital Corp.
August 16, 2004 /s/ Thomas W. Martin
- ------------------------- ---------------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer of
the General Partner of the Partnership)
Exhibit 32.1
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
Certifications - 10-Q
---------------------
I, Beaufort J.B. Clarke, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ICON Cash Flow
Partners, L.P., Series E;
2. Based on my knowledge, this quarterly report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the condensed consolidated financial statements and
other financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; and
c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the General Partner
(or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the registrant's ability to record, process, summarize and
report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Dated: August 16, 2004
/s/ Beaufort J.B. Clarke
- -----------------------------
Beaufort J. B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners, L.P., Series E
Exhibit 32.2
Principal Financial Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
Certifications - 10-Q
---------------------
I, Thomas W. Martin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ICON Cash Flow
Partners, L.P., Series E;
2. Based on my knowledge, this quarterly report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the condensed consolidated financial statements and
other financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; and
c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the General Partner
(or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the registrant's ability to record, process, summarize and
report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Dated: August 16, 2004
/s/ Thomas W. Martin
- ----------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer
of the General Partner of the Registrant)
ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners, L.P., Series E
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
June 30, 2004
EXHIBIT 33.1
I, Beaufort J.B. Clarke, Chairman and Chief Executive Officer of ICON
Capital Corp., the sole General Partner of ICON Cash Flow Partners, L.P., Series
E, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
1350), that, to the best of my knowledge and belief:
(1) the Quarterly Report on Form 10-Q for the period ended June 30, 2004 (the
"Periodic Report") which this statement accompanies fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78m); and
(2) the information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Cash Flow Partners, L.P., Series E.
Dated: August 16, 2004
/s/ Beaufort J.B. Clarke
------------------------------------------------------
Beaufort J.B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners, L.P., Series E
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
June 30, 2004
EXHIBIT 33.2
I, Thomas W. Martin, Executive Vice President (Principal Financial and
Accounting Officer) of ICON Capital Corp., the sole General Partner of ICON Cash
Flow Partners, L.P., Series E, certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), that, to the best of my knowledge
and belief:
(1) the Quarterly Report on Form 10-Q for the period ended June 30, 2004 (the
"Periodic Report") which this statement accompanies fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78m); and
(2) the information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Cash Flow Partners, L.P., Series E.
Dated: August 16, 2004
/s/ Thomas W. Martin
-------------------------------------------------------
Thomas W. Martin
Executive Vice President (Principal
Financial and Accounting Officer)
ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners, L.P., Series E