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 September 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
----------------------------------------------------------
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)
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2004 2003
---- ----
Assets
------
Cash and cash equivalents $ 293,103 $ 80,318
-------------- --------------
Investments in finance leases:
Minimum rents receivable 406,571 1,466,112
Estimated unguaranteed residual values, net 814,587 1,266,007
Unearned income (15,127) (40,551)
Allowance for doubtful accounts (212,996) (578,391)
-------------- --------------
993,035 2,113,177
-------------- --------------
Investments in operating leases:
Equipment at cost 19,207,984 19,207,984
Accumulated depreciation (9,557,751) (8,357,851)
-------------- --------------
9,650,233 10,850,133
-------------- -------------
Investments in financings:
Receivables due in installments 212,660 2,446,433
Unearned income - (13,238)
Allowance for doubtful accounts (185,547) (1,405,763)
------------- --------------
27,113 1,027,432
-------------- --------------
Equipment held for sale, net 1,199,179 1,199,179
Investments in joint ventures 59,741 126,594
Other assets, net 86,154 99,847
-------------- -------------
Total assets $ 12,308,558 $ 15,496,680
============== =============
(continued on next page)
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Balance Sheets - Continued
(Unaudited)
September 30, December 31,
2004 2003
---- ----
Liabilities and Partners' Equity
--------------------------------
Notes payable - non-recourse $ 9,619,518 $ 9,565,050
Security deposits, deferred credits and other payables 540,510 684,632
Deferred rental income 24,540 828,530
Due to affiliates, net - 594,982
Minority interests 25,605 58,561
---------------- -------------
Total liabilities 10,210,173 11,731,755
---------------- -------------
Commitments and Contingencies
Partners' equity (deficiency):
General Partner (498,740) (482,075)
Limited Partners (607,856 units outstanding,
$100 per unit original issue price) 2,597,125 4,247,000
---------------- -------------
Total partners' equity 2,098,385 3,764,925
---------------- -------------
Total liabilities and partners' equity $ 12,308,558 $ 15,496,680
================ =============
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Statements of Operations
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
---- ---- ---- ----
Revenues
Rental income $ 207,194 $ 301,227 $ 677,551 $ 816,375
Finance income 5,368 36,358 33,081 446,622
Net gain (loss) on sales of equipment 86,622 (574) (489,424) 312,147
Interest income and other 639,976 11,975 808,808 210,626
Loss from investments in joint ventures (65,854) (5,334) (64,600) (25,022)
-------------- ------------- ------------- -------------
Total revenues 873,306 343,652 965,416 1,760,748
-------------- ------------- ------------- -------------
Expenses
Depreciation 399,967 399,967 1,199,900 1,199,900
Interest 283,150 293,227 878,658 886,576
General and administrative 50,061 68,763 148,044 389,443
Management fees - General Partner 22,659 35,913 59,130 184,704
Administrative expense reimbursements -
General Partner 9,063 17,022 23,719 114,587
Amortization of initial direct costs 43 2,428 1,533 10,793
Minority interest 174,660 (3,733) 18,576 (64,349)
-------------- ------------- ------------- -------------
Total expenses 939,603 813,587 2,329,560 2,721,654
-------------- ------------- ------------- -------------
Net loss $ (66,297) $ (469,935) $ (1,364,144) $ (960,906)
============== ============= ============= =============
Net loss allocable to:
Limited Partners $ (65,634) $ (465,236) $ (1,350,503) $ (951,297)
General Partner (663) (4,699) (13,641) (9,609)
-------------- ------------- ------------- -------------
$ (66,297) $ (469,935) $ (1,364,144) $ (960,906)
============== ============= ============= =============
Weighted average number of limited
partnership units 607,856 607,856 607,856 607,856
============== ============= ============= =============
Net loss per weighted average
limited partnership unit $ (.11) $ (.77) $ (2.22) $ (1.57)
============== ============= ============= ==============
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Statement of Changes in Partners' Equity
For the Nine Months Ended September 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 $ 0.49 $ - (299,372) (3,024) (302,396)
Net loss (1,350,503) (13,641) (1,364,144)
--------------- ------------- ----------------
Balance at
September 30, 2004 $ 2,597,125 $ (498,740) $ 2,098,385
=============== ============= ================
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30,
(Unaudited)
2004 2003
---- ----
Cash flows from operating activities:
Net loss $ (1,364,144) $ (960,906)
---------------- ---------------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 1,199,900 1,199,900
Rental income paid directly to lenders by lessees (675,000) (675,000)
Finance income portion of receivables paid directly
to lenders by lessees - (33,726)
Amortization of initial direct costs 1,533 10,793
Net loss (gain) on sales of equipment 489,424 (312,147)
Forgiveness of debt due to affiliates (546,903) -
Interest expense on non-recourse financing paid
directly to lenders by lessees 875,009 857,995
Loss from investments in joint ventures 64,600 25,022
Minority interest 18,576 (64,349)
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables 468,115 1,521,676
Other assets, net - 344,722
Security deposits, deferred credits and other payables (134,475) (956,816)
Deferred rental income 9,894 575,277
Due to General Partner and affiliates (48,079) 33,705
---------------- ---------------
Total adjustments 1,722,594 2,527,052
---------------- ---------------
Net cash provided by operating activities 358,450 1,566,146
---------------- ---------------
Cash flows from investing activities:
Proceeds from sales of equipment 351,551 484,966
Distributions received from joint ventures 2,253 1,788
Distributions to minority interest holders (51,532) -
---------------- ---------------
Net cash provided by investing activities 302,272 486,754
---------------- ---------------
Cash flows from financing activities:
Principal payments on non-recourse debt (145,541) (1,040,837)
Cash distributions to partners (302,396) (1,638,361)
---------------- ---------------
Net cash used in financing activities (447,937) (2,679,198)
---------------- ---------------
Net increase (decrease) in cash and cash equivalents 212,785 (626,298)
Cash and cash equivalents at beginning of period 80,318 746,808
---------------- ---------------
Cash and cash equivalents at end of period $ 293,103 $ 120,510
================ ===============
(continued on next page)
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows - Continued
(Unaudited)
Supplemental Disclosures of Cash Flow Information
For the nine months ended September 30, 2004 and 2003, non-cash activities
included the following:
2004 2003
---- ----
Principal and interest from finance leases
paid directly to lenders by lessees $ - $ 232,614
Rental income from operating leases
paid directly to lenders by lessees 675,000 675,000
Principal and interest on non-recourse financing
paid directly to lenders by lessees (675,000) (907,614)
---------- ----------
$ - $ -
========== ==========
Debt assumed by lessee from sale of equipment $ - $ 604,925
========== ==========
Interest accrued or paid directly to lenders by lessees $ 875,009 $ 857,995
Other interest paid 3,649 28,581
---------- ----------
Total interest expense $ 878,658 $ 886,576
========== ==========
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
September 30, 2004
(Unaudited)
1. Basis of Presentation and Consolidation
The accompanying consolidated financial statements of ICON Cash Flow
Partners, L.P., Series E (the "Partnership") have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC") for Form 10-Q. Accordingly,
they do not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes included the
Partnership's 2003 Annual Report on Form 10-K. The results for the interim
period are not necessarily indicative of the results for the full year.
The accompanying consolidated financial statements include the accounts of
the Partnership and its ownership interest in ICON Cash Flow Partners L.L.C. and
ICON Receivables 1997-B LLC at September 30, 2004 and for the three and nine
month periods ended September 30, 2004 and 2003. All material intercompany
balances and transactions have been eliminated in consolidation.
2. Organization
The Partnership was formed on November 7, 1991 for the purpose of acquiring
equipment to engage in equipment leasing and sales activities. The Partnership
is currently in the process of selling its remaining assets in the ordinary
course of business, a time frame called the "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 utilize available cash to pay its
liabilities; distribute substantially all remaining cash, if any, 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.
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 the partnership agreement.
3. Joint Ventures
The Partnership and its affiliates formed five joint ventures, discussed
below, for the purpose of acquiring and managing various assets. The Partnership
and these 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 interests in the equipment or joint venture.
The two joint ventures described below are majority owned and are
consolidated with the Partnership.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
September 30, 2004
(Unaudited)
3. Joint Ventures - continued
ICON Cash Flow Partners L.L.C.
------------------------------
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 LLC") for
the purpose of acquiring and managing a McDonnell Douglas MD-83 (the
"Aircraft"). The Aircraft is currently leased to Aerovias de Mexico, S.A. de
C.V. ("Aeromexico") for $75,000 per month. This lease originally expired in
October 2002, but has since been extended twice pursuant to the terms of
extension agreements and now expires during January 2005. The Partnership and
L.P. Six acquired interests of 99% and 1%, respectively, in ICON LLC. ICON LLC
acquired the Aircraft, assuming non-recourse debt and utilizing cash received
from the Partnership and L.P. Six. The outstanding balance of the non-recourse
debt secured by this Aircraft was $9,603,012 at September 30, 2004.
ICON Receivables 1997-B LLC
---------------------------
The Partnership and two affiliates, L.P. Six and, ICON Cash Flow Partners
L.P. Seven ("L.P. Seven"), formed ICON Receivables 1997-B L.L.C. ("1997-B") for
the purpose of securitizing their cash flow collections. The Partnership, L.P.
Six and L.P. Seven each contributed cash, equipment leases and residuals to
1997-B and own a 75.00%, 8.33% and 16.67% interest, respectively, in 1997-B.
The three joint ventures described below are 50% or less owned by the
Partnership and are accounted for under the equity method, whereby the
Partnership's original investment was recorded at cost and is adjusted by its
share of earnings, losses and distributions of the joint ventures.
ICON Cash Flow Partners L.L.C. II
---------------------------------
The Partnership and an affiliate, L.P. Six, formed ICON Cash Flow Partners
L.L.C. II ("LLC II") for the purpose of acquiring and managing a McDonnell
Douglas MD-83 (the "Aircraft"). The Aircraft is currently leased to Aerovias de
Mexico, S.A. de C.V. ("Aeromexico") for $75,000 per month. This lease originally
expired in November 2002, but has since been extended twice pursuant to the
terms of extension agreements and now expires during January 2005. The
Partnership and L.P. Six acquired interests of 1% and 99%, respectively, in LLC
II. LLC II acquired the Aircraft by assuming certain non-recourse debt and
utilizing cash received from the Partnership and L.P. Six. The outstanding
balance of the non-recourse debt secured by this Aircraft was $9,278,673 at
September 30, 2004.
Information as to the unaudited results of operations of LLC II for the
nine months ended September 30, 2004 and 2003 is summarized below:
Nine Months Ended Nine Months Ended
September 30, 2004 September 30, 2003
------------------ ------------------
Net loss $ (1,313,920) $ (1,256,165)
================= ================
Partnership's share of net loss $ (13,139) $ (12,562)
================= ================
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
September 30, 2004
(Unaudited)
3. Joint Ventures - continued
ICON Cash Flow L.L.C. III
-------------------------
The Partnership and an affiliate, L.P. Seven formed, ICON Cash Flow
Partners L.L.C. III ("LLC III") for the purpose of acquiring and managing a 1976
McDonnell Douglas DC-10-30 (the "Aircraft"). The Aircraft is leased to World
Airways, Inc. The lease was on a "power-by-the-hour" basis until December 2004.
Effective September 1, 2004, the lease has been modified to a fixed rental of
$50,000 per month plus maintenance reserves and the term has been extended
through June 2005. Aviation Investors, Inc. ("Aviation"), an unrelated third
party, was a party to LLC III's acquisition of the Aircraft. Aviation has a 50%
interest in the Aircraft currently on lease to World Airways and accordingly LLC
III and Aviation are each entitled to $25,000 of the monthly rental payments. As
stipulated in the agreement between Aviation and LLC III, LLC III is entitled to
retain 100% the monthly maintenance reserve of $5,000 which will be applied
against future maintenance costs of the Aircraft. The Partnership and L.P. Seven
contributed 1% and 99% of the cash required for such acquisition, respectively.
LLC III acquired the Aircraft, assuming non-recourse debt and utilizing
contributions received from the Partnership and L.P. Seven. LLC III has since
fully repaid the non-recourse debt secured by the Aircraft.
Information as to the unaudited results of operations of ICON Cash Flow LLC
III for the nine months ended September 30, 2004 and 2003 is summarized below:
Nine Months Ended Nine Months Ended
September 30, 2004 September 30, 2003
------------------ ------------------
Net (loss) income $ (191,314) $ 334,563
=========== ============
Partnership's share of net (loss) income $ (1,913) $ 3,345
=========== ============
Distributions $ 225,341 $ 178,800
=========== ============
Partnership's share of distributions $ 2,253 $ 1,788
=========== ============
ICON Receivables 1997-A LLC
---------------------------
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 their cash flow collections. At
September 30, 2004, the Partnership, Series D, L.P. Six and L.P. Seven own
interests of 31.19%, 17.81%, 31.03%, and 19.97%, respectively, in 1997-A.
At September 30, 2004, 1997-A's operations have been liquidated as the note
holders have been fully repaid for their investment in 1997-A and the remaining
receivables relating to the securitizations totaling $345,152, due from an
affiliate of the General Partner relating to lease receivables, were written-off
as uncollectible. The remaining cash is being reserved to pay for potential
property tax; sales tax and other liabilities, if any.
ICON Cash Flow Partners, L.P., Series E
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
September 30, 2004
(Unaudited)
3. Joint Ventures - continued
Information as to the unaudited results of operations of 1997-A for the
nine months ended September 30, 2004 and 2003 is summarized below:
Nine Months Ended Nine Months Ended
September 30, 2004 September 30, 2003
------------------ ------------------
Net loss $ (158,852) $ (50,673)
================ ================
Partnership's share of net loss $ (49,548) $ (15,805)
================ ================
4. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the nine months ended September 30, 2004 and 2003,
respectively, were as follows:
2004 2003
---- -----
Management fees $ 59,130 $ 184,704 Charged to operations
Administrative expense
reimbursements 23,719 114,587 Charged to operations
----------- ----------
Total $ 82,849 $ 299,291
=========== ===========
At September 30, 2004, 1997-B wrote off the remaining liabilities primarily
relating to rents collected on behalf of ICON Receivables 1998-A Inc.
("1998-A"). Since the note holders in both 1997-B and 1998-A have been fully
repaid, management has decided to write off the amounts due to 1998-A of
$546,903 at September 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 consolidated financial statements and
notes included in our 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.
We believe 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 our 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. Our
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 our 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 our current level of
expenses and debt obligations;
o the financial condition of lessees; and
o lessee defaults.
a. Overview
We are an equipment leasing business formed on November 7, 1991 which began
active operations in June 1992. We are primarily engaged in the business of
acquiring equipment subject to leases. We are currently in the process of
selling our remaining assets in the ordinary course of business, a time frame we
call the "disposition period". We have not reinvested any of our funds during
the current period.
Our 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 was sold in October 2004 and
the proceeds are being paid in installments, with final payment due January
2005.
o A 25% interest in certain equipment used in connection with the production
of sodium chlorate, on lease to EKA Chemicals, Inc. Our 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.
o A 99% interest in one McDonnell Douglas MD-83 aircraft subject to 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 our pro rata share of $4,068,175 of cash and the
assumption of our 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 our 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 monthly (up until the liquidation
period).
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 on the downside of a business
cycle and this has resulted in depressed sales prices for assets such as our
aircraft and rotable parts. It does not appear that the industry will recover
significantly in the very near future, although we are optimistic that, within
two to three years, there will be a recovery. However, a further weakening of
the industry could cause the proceeds realized from the future sale of our
aircraft and rotables to be even less than suggested by recent appraisals.
Inability to Remarket Assets
If current lessees choose not to renew their leases or purchase the
equipment when their leases expire, we will need to remarket the equipment.
There is no assurance that we 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 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 we will be in position to
realize residual proceeds on these aircraft. Accordingly, we are currently
discussing with FINOVA the possibility of selling the aircraft back to FINOVA
for the non-recourse debt balance.
b. Results of Operations for the Three Months Ended September 30, 2004 and
2003
Revenues for the quarterly periods ended September 30, 2004 (the "2004
Quarter") and 2003 (the "2003 Quarter") are summarized as follows:
- --------------------------------------- ----------------------------------------
Quarters Ended, September 30, 2004 and 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2004 Quarter 2003 Quarter Change
- --------------------------------------- ------------ ------------ -----------
- --------------------------------------- ------------ ------------ -----------
Total Revenues $873,306 $343,652 $529,654
- --------------------------------------- ------------ ------------ -----------
- --------------------------------------- ------------ ------------ -----------
Rental income $207,194 $301,227 $(94,033)
- --------------------------------------- ------------ ------------ -----------
- --------------------------------------- ------------ ------------ -----------
Finance income $5,368 $36,358 $(30,990)
- --------------------------------------- ------------ ------------ -----------
- --------------------------------------- ------------ ------------ -----------
Gain (loss) on sales of equipment $86,622 $(574) $87,196
- --------------------------------------- ------------ ------------ -----------
- --------------------------------------- ------------ ------------ -----------
Interest income and other $639,976 $11,975 $628,001
- --------------------------------------- ------------ ------------ -----------
- --------------------------------------- ------------ ------------ -----------
Loss from investments in joint
ventures $(65,854) $(5,334) $(60,520)
- --------------------------------------- ------------ ------------ -----------
Revenues for the 2004 Quarter increased $529,654, or 154.13%, as compared
to the 2003 Quarter. Interest income and other increased primarily as a result
of the extinguishment of debt due to an affiliate by 1997-B. There was no
corresponding transaction in the 2003 Quarter. Gains on sales of equipment
increased due to a greater number of lease terminations in the 2004 Quarter.
These increases in income were offset by a decrease in rental income due to
lease terminations in the Summit portfolio. Finance income decreased due to the
continued reduction in the average size of the finance lease portfolio. Losses
from investments in unconsolidated joint ventures increased due to a loss in our
investment in ICON Receivables 1997-A LLC ("1997-A"). The loss was due primarily
to 1997-A writing off approximately $345,000 of receivables due from affiliates
as bad debts.
Expenses for the quarterly periods ended September 30, 2004 and 2003 are
summarized as follows:
- --------------------------------------------------------------------------------
Quarters Ended, September 30, 2004 and 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2004 Quarter 2003 Quarter Change
- ----------------------------------------- ---------- ----------- --------------
- ----------------------------------------- ---------- ----------- --------------
Total Operating Expenses $939,603 $813,587 $126,016
- ----------------------------------------- ---------- ----------- --------------
- ----------------------------------------- ---------- ----------- --------------
Depreciation $399,967 $399,967 -
- ----------------------------------------- ---------- ----------- --------------
- ----------------------------------------- ---------- ----------- --------------
Interest $283,150 $293,227 $(10,077)
- ----------------------------------------- ---------- ----------- --------------
- ----------------------------------------- ---------- ----------- --------------
General and administrative $50,061 $68,763 $(18,702)
- ----------------------------------------- ---------- ----------- --------------
- ----------------------------------------- ---------- ----------- --------------
Management fees - General Partner $22,659 $35,913 $(13,254)
- ----------------------------------------- ---------- ----------- --------------
- ----------------------------------------- ---------- ----------- --------------
Administrative expense reimbursements -
General Partner $9,063 $17,022 $(7,959)
- ----------------------------------------- ---------- ----------- --------------
- ----------------------------------------- ---------- ----------- --------------
Amortization of initial direct costs $43 $2,428 $(2,385)
- ----------------------------------------- ---------- ----------- --------------
- ----------------------------------------- ---------- ----------- --------------
Minority interest $174,660 $(3,733) $178,393
- ----------------------------------------- ---------- ----------- --------------
Expenses for the 2004 Quarter increased $126,016, or 15.5%, as compared to
the 2003 Quarter. Minority interest increased by $178,393, which is a function
of the level of income or loss in the consolidated joint ventures, particularly
in 1997-B. The increase in expenses was offset by a decrease in general and
administrative expenses due principally to a decrease in professional fees
resulting from an overall reduction in the level of our activities due to the
fact that we are in the disposition period. The decrease in management fees and
administrative expense reimbursements - General Partner is a result of the
reduction in the average size of our lease portfolio.
Net Income (Loss)
As a result of the foregoing factors, net loss for the 2004 Quarter and
2003 Quarter was $66,297 and $469,935, respectively. The net loss per weighted
average limited partnership unit was $.11 and $.77 for the 2004 Quarter and 2003
Quarter, respectively.
c. Results of Operations for the Nine Months Ended September 30, 2004 and
2003
Revenues for the nine month periods ended September 30, 2004 (the "2004 Period")
and 2003 (the "2003 Period") are summarized as follows:
- --------------------------------------------------------------------------------
Periods Ended, September 30, 2004 and 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2004 Period 2003 Period Change
- ------------------------------------- ------------ ------------ -------------
- ------------------------------------- ------------ ------------ -------------
Total Revenues $965,416 $1,760,748 $(795,332)
- ------------------------------------- ------------ ------------ -------------
- ------------------------------------- ------------ ------------ -------------
Rental income $677,551 $816,375 $(138,824)
- ------------------------------------- ------------ ------------ -------------
- ------------------------------------- ------------ ------------ -------------
Finance income $33,081 $446,622 $(413,541)
- ------------------------------------- ------------ ------------ -------------
- ------------------------------------- ------------ ------------ -------------
Gain (loss) on sales of equipment
$(489,424) $312,147 $(801,571)
- ------------------------------------- ------------ ------------ -------------
- ------------------------------------- ------------ ------------ -------------
Interest income and other $808,808 $210,626 $598,182
- ------------------------------------- ------------ ------------ -------------
- ------------------------------------- ------------ ------------ -------------
Loss from investments in joint
ventures $(64,600) $(25,022) $(39,578)
- ------------------------------------- ------------ ------------ -------------
Revenues for the 2004 Period decreased $795,332, or 45.2%, as compared to
the 2003 Period. Gains on sales of equipment decreased as 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 due to the continued reduction in the average size
of the finance lease portfolio. Rental income decreased due to lease
terminations in the Summit portfolio. These decreases in income were offset by
an increase in interest income and other primarily as a result of the
extinguishment of debt due to an affiliate by 1997-B. There was no corresponding
transaction in the 2003 Period.
Expenses for the nine month periods ended September 30, 2004 (the "2004 Period")
and 2003 (the "2003 Period") are summarized as follows:
- ----------------------------------------- --------------------------------------
Periods Ended, September 30, 2004 and 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2004 Period 2003 Period Change
- ----------------------------------------- -------------- ------------ ----------
- ----------------------------------------- -------------- ------------ ----------
Total Operating Expenses $2,329,560 $2,721,654 $(392,094)
- ----------------------------------------- -------------- ------------ ----------
- ----------------------------------------- -------------- ------------ ----------
Depreciation $1,199,900 $1,199,900 $-
- ----------------------------------------- -------------- ------------ ----------
- ----------------------------------------- -------------- ------------ ----------
Interest $878,658 $886,576 $(7,918)
- ----------------------------------------- -------------- ------------ ----------
- ----------------------------------------- -------------- ------------ ----------
General and administrative $148,044 $389,443 $(241,399)
- ----------------------------------------- -------------- ------------ ----------
- ----------------------------------------- -------------- ------------ ----------
Management fees - General Partner $59,130 $184,704 $(125,574)
- ----------------------------------------- -------------- ------------ ----------
- ----------------------------------------- -------------- ------------ ----------
Administrative expense reimbursements -
General Partner $23,719 $114,587 $(90,868)
- ----------------------------------------- -------------- ------------ ----------
- ----------------------------------------- -------------- ------------ ----------
Amortization of initial direct costs $1,533 $10,793 $(9,260)
- ----------------------------------------- -------------- ------------ ----------
- ----------------------------------------- -------------- ------------ ----------
Minority interest $18,576 $(64,349) $82,925
- ----------------------------------------- -------------- ------------ ----------
Expenses for the 2004 Period decreased $392,094, or 14.4%, as compared to
the 2003 Period. The decrease in general and administrative expenses was
principally related to a decrease in professional fees resulting from an overall
reduction in our level of activities due to the fact that we are in the
disposition period. The decrease in management fees and administrative expense
reimbursements - General Partner is a result of the reduction in the average
size of our lease portfolio. These decreases in expenses were offset by an
increase in minority interest, which is a function of the level of income or
loss in the consolidated joint ventures, particularly in 1997-B.
Net Loss
As a result of the foregoing factors, net loss for the 2004 Period and 2003
Period was $1,364,144 and $960,906, respectively. The net loss per weighted
average limited partnership unit was $2.22 and $1.57 for the 2004 Period and
2003 Period, respectively.
d. Liquidity and Capital Resources
Cash Requirements
We believe there are sufficient funds necessary to maintain current
operations. However, in the event that cash flow is insufficient to pay our
current level of expenses, we may be required to sell assets prior to maturity
or borrow against future cash flows.
Operations
Our primary sources of liquidity for the 2004 Period and 2003 Period were
net cash provided by operating activities of $358,450 and $1,566,146,
respectively, and proceeds from sales of equipment of $351,551 and $484,966,
respectively. These funds, as well as funds held in reserve by the Partnership,
were used to pay cash distributions and make debt repayments.
Financings and Recourse Borrowings We have not made any recourse borrowings
and we do not plan to rely on financing to meet our current cash needs.
Distributions
Cash distributions to partners for the 2004 Period and 2003 Period totaled
$302,396 and $1,638,361, respectively. Such distributions are reflected as a
return of capital, as we recorded losses for both periods.
Capital Resources
At September 30, 2004, we are unaware of any specific need requiring
capital resources
to be funded by us.
Uncertainties
At September 30, 2004, except as noted above in the Overview section and
listed below in the Risk Factors section, 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.
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
our McDonnell Douglas 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, we are in discussions with the
lender concerning selling both aircraft to the lender for the
outstanding debt balance.
o We 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
The potential effects of inflation on us are difficult to predict. However,
since we are in our disposition phase, the effects are anticipated to be
minimal. If the general economy experiences significant rates of inflation,
however, it could affect us in a number of ways. We do not currently have or
expect to have rent escalation clauses tied to inflation in our leases. The
anticipated residual values to be realized upon the sale or re-lease of
equipment upon lease terminations (and thus the overall cash flow from our
leases may be expected to increase with inflation as the cost of similar new and
used equipment increases).
If interest rates increase significantly, the lease rates that we can
obtain on future leases may be expected to increase as the cost of capital is a
significant factor in the pricing of lease financing. Leases already in place,
for the most part, would not be affected by changes in interest rates.
Item 3. Qualitative and Quantitative Disclosures About Market Risk
We are exposed to certain market risks, including changes in interest rates
and the demand for equipment and residuals owned by us.
We attempt to manage our 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 our lease investments.
We attempt to manage our exposure to equipment and residual risk by
monitoring the market and maximizing re-marketing proceeds received through
re-lease or sale of equipment.
Item 4. Controls and Procedures
We carried out an evaluation, under the supervision and with the
participation of management of ICON Capital Corp., our General Partner,
including its Chief Executive Officer and the Principal Financial and Accounting
Officer, of the effectiveness of the design and operation of our 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 our disclosure controls and procedures were effective.
There were no significant changes in our internal control over financial
reporting during our third quarter that have materially affected, or are likely
to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
From time-to-time, in the ordinary course of business, we are involved in
legal actions when necessary to protect or enforce our rights. We are not a
defendant party to any pending litigation and are not aware of any pending or
threatened litigation against us.
Item 6 - 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.
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.
November 17, 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 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: November 17, 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 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: November 17, 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
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 September 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: November 17, 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 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 September 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: November 17, 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