UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended September 30, 1996
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[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File Number 33-36376
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ICON Cash Flow Partners L.P. Six
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(Exact name of registrant as specified in its charter)
Delaware 13-3723089
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
600 Mamaroneck Avenue, Harrison, New York 10528-1632
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(Address of principal executive offices) (Zip code)
(914) 698-0600
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Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[ x] Yes [ ] No
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Balance Sheets
(unaudited)
<TABLE>
September 30, December 31,
1996 1995
---- ----
Assets
<S> <C> <C>
Cash ....................................................... $ 7,003,236 $ 8,981,950
------------- -------------
Investment in finance leases
Minimum rents receivable ................................ 52,332,990 65,040,140
Estimated unguaranteed residual values .................. 13,283,330 12,881,418
Initial direct costs .................................... 1,265,323 1,674,324
Unearned income ......................................... (9,778,080) (12,707,193)
Allowance for doubtful accounts ......................... (186,370) (361,941)
------------- -------------
56,917,193 66,526,748
Investment in operating leases
Equipment, at cost ...................................... 19,371,603 19,371,603
Initial direct costs .................................... 119,861 335,613
Accumulated depreciation ................................ (1,272,973) (636,487)
------------- -------------
18,218,491 19,070,729
Investment in financings
Receivables due in installments ......................... 6,590,783 8,649,392
Initial direct costs .................................... 122,597 182,965
Unearned income ......................................... (911,360) (1,204,544)
Allowance for doubtful accounts ......................... (22,200) (43,200)
------------- -------------
5,779,820 7,584,613
------------- -------------
Investment in leveraged leases ............................. 1,997,718 --
Equity investment in joint venture ......................... 44,632 885,346
------------- -------------
Other assets ............................................... 725,087 41,564
------------- -------------
Total assets ............................................... $ 90,686,177 $ 103,090,950
============= =============
Liabilities and Partners' Equity
Notes payable - non-recourse ............................... $ 47,470,885 $ 45,166,000
Note payable - non-recourse - securitized .................. 9,317,903 15,183,224
Security deposits and deferred credits ..................... 5,104,950 250,768
Minority interest in joint venture ......................... 1,010,290 1,879,629
Accounts payable to General Partner and affiliates, net .... 104,844 1,037,286
Accounts payable - other ................................... 528,883 448,418
Accounts payable - equipment ............................... -- 8,678,812
------------- -------------
63,537,755 72,644,137
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ......................................... (58,979) (26,396)
Limited partners (383,292 and 383,592 units outstanding,
$100 per unit original issue price in 1996 and 1995,
respectively) ......................................... 27,207,401 30,473,182
------------- -------------
Total partners' equity ................................ 27,148,422 30,446,813
------------- -------------
Total liabilities and partners' equity ..................... $ 90,686,177 $ 103,090,950
============= =============
See accompanying notes to consolidated financial statements
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Operations
(unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
Revenue
<S> <C> <C> <C> <C>
Finance income $ 1,604,725 $ 1,123,048 $ 5,195,452 $ 2,933,648
Rental income 603,152 603,151 1,809,454 1,407,353
Net gain on sales or remarketing
of equipment 111,820 30,758 325,325 44,702
Interest income and other 64,394 102,884 265,805 245,955
Income from equity investment
in joint venture 1,628 1,388 4,702 3,991
------------ ------------ ------------ ------------
Total revenues 2,385,719 1,861,229 7,600,738 4,635,649
------------ ------------ ------------ ------------
Expenses
Interest 1,095,807 833,497 3,581,824 2,145,739
Amortization of initial direct costs 302,527 228,282 996,574 571,561
Management fees - General Partner 269,025 193,668 1,021,462 466,310
Depreciation 212,163 212,162 636,487 424,324
General and administrative 143,212 72,164 503,933 160,065
Administrative expense reimbursement
- General Partner 134,022 92,003 492,781 257,718
Provision for bad debts 200,000 150,000 450,000 300,000
Minority interest in joint venture 13,880 52,085 57,339 164,957
------------ ------------ ------------ ------------
Total expenses 2,370,636 1,833,861 7,740,400 4,490,674
------------ ------------ ------------ ------------
Net income (loss) $ 15,083 $ 27,368 $ (139,662) $ 144,975
============ ========= =========== ============
Net income allocable to:
Limited partners $ 14,932 $ 27,094 $ (138,265) $ 143,525
General Partner 151 274 (1,397) 1,450
------------ ------------ ------------ ------------
$ 15,083 $ 27,368 $ (139,662) $ 144,975
============ ============ ============ ============
Weighted average number of limited
partnership units outstanding 383,425 292,699 383,425 225,377
============ ============ ============ ============
Net income (loss) per weighted average
limited partnership unit $ .04 $ .09 $ (.36) $ .64
============ ============ ============ ============
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Changes in Partners' Equity
For the Nine Months Ended September 30, 1996,
the Years Ended December 31, 1995 and 1994
and the Period July 8, 1993 to December 31, 1993
(unaudited)
Limited Partner
Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
(Per weighted average unit)
<S> <C> <C> <C> <C> <C>
Initial partners'
capital contribution
- July 8, 1993 $ 1,000 $ 1,000 $ 2,000
------------- --------- ------------
Balance at
December 31, 1993 1,000 1,000 2,000
Refund of initial
limited partners'
capital contribution (1,000) - (1,000)
Proceeds from issuance
of limited partnership
units (127,704.10 units) 12,770,410 - 12,770,410
Sales and
offering expenses (1,724,005) - (1,724,005)
Cash distributions
to partners $ 7.59 $ 2.21 (311,335) (3,145) (314,480)
Net income 70,181 709 70,890
------------ ------ ---------
Balance at
December 31, 1994 10,805,251 (1,436) 10,803,815
Proceeds from issuance
of limited partnership
units (256,153.02 units) 25,615,302 - 25,615,302
Sales and
offering expenses (3,458,068) - (3,458,068)
Cash distributions
to partners $ 9.48 $ .29 (2,543,783) (25,694) (2,569,477)
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Changes in Partners' Equity (continued)
For the Nine Months Ended September 30, 1996,
the Years Ended December 31, 1995 and 1994
and the Period July 8, 1993 to December 31, 1993
(unaudited)
Limited Partner
Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
(Per weighted average unit)
<S> <C> <C> <C> <C> <C>
Limited partnership units
redeemed (265 units) . (20,827) -- (20,827)
Net income .............. 75,307 761 76,068
------------ ------------ ------------
Balance at
December 31, 1995 .... 30,473,182 (26,369) 30,446,813
Cash distributions
to partners .......... $ 8.06 $ -- (3,090,799) (31,213) (3,122,012)
Limited partnership units
redeemed (300 units) . (36,717) -- (36,717)
Net loss ................ (138,265) (1,397) (139,662)
------------ ------------ ------------
Balance at
September 30, 1996 ... $ 27,207,401 $ (58,979) $ 27,148,422
============ ============ ============
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30,
(unaudited)
<S> <C> <C>
1996 1995
---- ----
Cash flows provided by operating activities:
Net income $ (139,662) $ 144,975
------------ ------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation ............................................... 636,487 424,324
Rental income - assigned operating lease receivables ....... (1,809,454) (1,407,353)
Finance income portion of receivables paid directly
to lenders by lessees .................................... (2,830,164) (828,266)
Amortization of initial direct costs ....................... 996,574 571,561
Net gain on sales or remarketing of equipment .............. (325,325) (44,702)
Income from equity investment .............................. (4,702) (3,991)
Distribution from investment in joint venture .............. -- 1,794
Interest expense on non-recourse financing
paid directly by lessees ................................. 2,636,281 1,265,144
Interest expense accrued on non-recourse debt .............. -- 15,233
Interest expense accrued on recourse debt .................. --
Collection of principal - non-financed receivables ......... 7,068,830 5,977,663
Change in operating assets and liabilities:
Allowance for doubtful accounts .......................... 465,362 107,857
Accounts payable to General Partner and affiliates, net .. (932,442) 204,225
Accounts payable - other ................................. 80,465 347,257
Security deposits and deferred credits ................... 4,854,182 195,205
Minority interest in joint ventures ...................... (869,339) 86,112
Other asset .............................................. (251,201) (539,959)
Other, net ............................................... (31,676) (115,197)
------------ ------------
Total adjustments ...................................... 9,683,878 6,256,907
------------ ------------
Net cash provided by operating activities ................ 9,544,216 6,401,882
------------ ------------
Cash flows used for investing activities:
Proceeds from sales of equipment ............................ 3,688,805 836,089
Initial direct costs ........................................ (1,702,406) (2,155,264)
Equipment and receivables purchased ......................... (9,230,987) (39,089,441)
------------ ------------
Net cash used in investing activities .................... (7,244,588) (40,408,616)
------------ ------------
Cash flows provided by financing activities:
Proceeds from non-recourse securitized debt ................. 5,941,893 --
Principal payments on non-recourse securitized debt ......... (1,196,185) --
Principal payments on recourse debt ......................... (5,865,321) (16,269,876)
Cash distributions to partners .............................. (3,122,012) (1,644,111)
Redeemed limited partnership units .......................... (36,717) --
Proceeds from recourse debt ................................. -- 33,151,416
Issuance of limited partnership units,
net of offering expenses .................................. -- 17,823,862
Proceeds received from affiliated minority interest investors -- 2,530,550
Net cash provided by (used in) financing activities ...... (4,278,342) 35,591,841
------------ ------------
Net decrease in cash .......................................... (1,978,714) (1,585,107)
Cash, beginning of year ....................................... 8,981,950 7,391,994
------------ ------------
Cash, end of year ............................................. $ 7,003,236 $ 8,977,101
============ ============
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (continued)
Supplemental Disclosures of Cash Flow Information
For the nine months ended September 30, 1996 and 1995, non-cash activities
included the following:
1996 1995
---- ----
<S> <C> <C>
Rental income - assigned operating lease receivable $ 1,809,454 $ 804,202
Principal and interest on direct finance
receivables paid directly to
lenders by lessees .............................. 13,706,876 2,733,933
Principal and interest on non-recourse
financing paid directly to lenders by lessees ... (15,516,330) (3,538,135)
Non-recourse notes payable assumed
in purchase price ............................... 34,242,429 30,512,219
Fair value of equipment and receivables
purchased for debt and payables .................. (34,242,429) (30,512,219)
------------ ------------
$ -- $ --
============ ============
Interest expense of $3,581,824 and $2,145,739 for the nine months ended
September 30, 1996 and 1995 consisted of: interest expense on non-recourse
financing accrued or paid directly to lenders by lessees of $2,636,281 and
$1,280,377, respectively, interest expense on recourse financing accrued or paid
of $639,967 and $828,475, respectively and other interest of $305,576 and
$36,887, respectively.
</TABLE>
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
September 30, 1996
(unaudited)
1. Basis of Presentation
The consolidated financial statements included herein should be read in
conjunction with the Notes to Consolidated Financial Statements included in the
Partnership's 1995 Annual Report on Form 10-K and have been prepared in
accordance with the accounting policies stated therein.
2. New Accounting Pronouncement
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which is
effective beginning in 1996.
The Partnership's existing policy with respect to impairment of estimated
residual values is to review, on a quarterly basis, the carrying value of its
residuals on an individual asset basis to determine whether events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable and, therefore, an impairment loss should be recognized. The events
or changes in circumstances which generally indicate that the residual value of
an asset has been impaired are (i) the estimated fair value of the underlying
equipment is less than the Partnership's carrying value or (ii) the lessee is
experiencing financial difficulties and it does not appear likely that the
estimated proceeds from disposition of the asset will be sufficient to satisfy
the remaining obligation to the non-recourse lender and the Partnership's
residual position. Generally in the latter situation, the residual position
relates to equipment subject to third party non-recourse notes payable where the
lessee remits their rental payments directly to the lender and the Partnership
does not recover its residual until the non-recourse note obligation is repaid
in full.
The Partnership measures its impairment loss as the amount by which the
carrying amount of the residual value exceeds the estimated proceeds to be
received by the Partnership from release or resale of the equipment. Generally,
quoted market prices are used as the basis for measuring whether an impairment
loss should be recognized.
As a result, the Partnership's policy with respect to measurement and
recognition of an impairment loss associated with estimated residual values is
consistent with the requirements of SFAS No. 121 and, therefore, the
Partnership's adoption of this Statement in the first quarter of 1996 had no
material effect on the financial statements.
3. Redemption of Limited Partnership Units
The General Partner consented to the Partnership redeeming 300 limited
partnership units during 1996. The redemption amount was calculated following
the specific redemption formula as per the Partnership Agreement. Redeemed units
have no voting rights and do not share in distributions. The Partnership
Agreement limits the number of units which can be redeemed in any one year and
redeemed units may not be reissued. Redeemed limited partnership units are
accounted for as a deduction for partners equity.
4. Investment in Joint Ventures
The Partnership Agreement allows the Partnership to invest in joint ventures
with other limited partnerships sponsored by the General Partner provided that
the investment objectives of the joint ventures are consistent with that of the
Partnership.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
ICON Asset Acquisition LLC
On February 3, 1995, the Partnership and two affiliates, ICON Cash Flow
Partners, L.P., Series B ("Series B"), and ICON Cash Flow Partners, L.P., Series
C ("Series C") formed ICON Asset Acquisition L.L.C. I ("ICON Asset Acquisition
LLC") as a special purpose limited liability company. ICON Asset Acquisition LLC
was formed for the purpose of acquiring, managing and securitizing a portfolio
of leases. The Partnership, Series B and Series C contributed $8,700,000 (77.68%
interest), $1,000,000 (8.93% interest) and $1,500,000 (13.39% interest),
respectively, to ICON Asset Acquisition LLC. ICON Asset Acquisition LLC
established a warehouse line of credit with ContiTrade Services Corp. with a
maximum amount available of $20,000,000.
On February 17, 1995, ICON Asset Acquisition LLC purchased 975 leases of an
existing lease portfolio from First Sierra Financial, Inc. utilizing $16,273,793
of proceeds from the warehouse line (See Consolidated Statements of Cash Flows -
Proceeds from recourse debt - Financing activities), $10,857,427 in cash
contributions received from the Partnership and affiliates and $723,046 in cash
adjustments at closing, relating primarily to rents received by the seller from
lessees prior to closing and for the benefit of ICON Asset Acquisition LLC. The
purchase price of the portfolio totalled $27,854,266 (See Consolidated
Statements of Cash Flows - Included in Equipment and receivables purchased
Investing activities), the underlying equipment consists of graphic arts and
printing equipment and the terms of the leases range from 12 to 72 months. ICON
Asset Acquisition LLC acquired lease contracts which were less than 60 days
delinquent, and which met the Partnership's overall credit underwriting
criteria. The purchase price of the portfolio was determined by discounting the
future contractual cash flows. All such leases are net leases and are reported
and accounted for as finance leases. The Partnership's consolidated financial
statements include 100% of the accounts of ICON Asset Acquisition LLC with the
affiliates' share reflected as "minority interest in joint ventures."
On September 5, 1995, ICON Asset Acquisition LLC securitized substantially all
of its portfolio. Proceeds from the securitization were used to pay down its
existing line of credit and excess proceeds were returned to the Partnership
based on its pro rata interest. ICON Asset Acquisition LLC became the beneficial
owner of a trust and the Prudential Insurance Company of America ("Prudential")
is treated as the lender to the trust. The trustee for the trust is Texas
Commerce Bank ("TCB"). In conjunction with this securitization the portfolio as
well as the General Partner's servicing capabilities were rated "A" by Duff &
Phelps, a nationally recognized rating agency. The General Partner, as servicer,
is responsible for managing, servicing, reporting on and administering the
portfolio. All monies received from the portfolio are remitted to TCB. TCB is
responsible for disbursing to Prudential its respective principal and interest
and to ICON Asset Acquisition LLC the excess of cash collected over debt service
from the portfolio. ICON Asset Acquisition LLC accounts for this investment as
an investment in finance leases and financings. Prudential's investment in the
trust is accounted for as non-recourse debt on ICON Asset Acquisition LLC's
books and records. All monies received and remitted to TCB from the securitized
portfolio are accounted for as a reduction in related finance lease and
financing receivables and all amounts paid to Prudential by TCB are accounted
for as a reduction of non-recourse debt.
ICON Cash Flow LLC I
On September 21, 1994, the Partnership and an affiliate, ICON Cash Flow
Partners, L.P., Series E ("Series E"), formed a joint venture, ICON Cash Flow
Partners L.L.C. I ("ICON Cash Flow LLC I"), for the purpose of acquiring and
managing an aircraft currently on lease to Alaska Airlines, Inc. The aircraft is
a 1988 McDonnell Douglas MD- 83. The Partnership and Series E contributed
$37,682 (1%) and $3,730,493 (99%) of the cash required for such acquisition,
respectively, to ICON Cash Flow LLC I. ICON Cash Flow LLC I acquired the
aircraft, assuming $17,003,454 in non-recourse debt and the contributions
received from the Partnership and Series E. The purchase price of the
transaction totalled $20,771,629. The lease is an operating lease and the lease
term expires in March 1997. Profits, losses, excess cash and disposition
proceeds are allocated 1% to the Partnership and 99% to Series E. The
Partnership's 1% investment in ICON Cash Flow LLC I, which is accounted for
under the equity method, totalled $43,601 at September 30, 1996 and has been
reflected as "Equity investment in joint venture." The General Partner
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
manages and controls the business affairs of both the Partnership and Series E.
As a result of this common control and the Partnership's ability to influence
the activities of the joint venture, the Partnership's investment in the joint
venture is accounted for under the equity method. Information as to the
financial position and results of operations of ICON Cash Flow LLC I as of and
for the nine months ended September 30, 1996 is summarized below:
September 30, 1996
Assets $ 18,708,018
=============
Liabilities 14,244,870
Equity $ 4,463,148
=============
Nine Months Ended
September 30, 1996
Net income $ 470,160
=============
ICON Cash Flow LLC II
On March 31, 1995, the Partnership and an affiliate, Series E, formed ICON
Cash Flow Partners L.L.C. II, ("ICON Cash Flow LLC II"), for the purpose of
acquiring and managing an aircraft currently on lease to Alaska Airlines, Inc.
The aircraft is a 1987 McDonnell Douglas MD-83. The Partnership and Series E
contributed $3,024,450 (99%) and $30,550 (1%) (See Consolidated Statements of
Cash Flows - Included in Proceeds from affiliated minority interest investors -
Financing activities) of the cash required for such acquisition, respectively,
to ICON Cash Flow LLC II. ICON Cash Flow LLC II acquired the aircraft, assuming
$16,315,997 in non-recourse debt (See Footnote 4 - Supplemental Disclosures of
Cash Flow Information - Included in Non-recourse notes payable assumed in
purchase price) and the contributions received from the Partnership and Series
E. The purchase price of the transaction totalled $19,370,997. The cash portion
of the purchase price ($3,055,000) is included in the Consolidated Statements of
Cash Flows - Equipment and receivables purchased - Investing activities. The
lease is an operating lease and the lease term expires in March 1997. Profits,
losses, excess cash and disposition proceeds will be allocated 99% to the
Partnership and 1% to Series E. The Partnership's consolidated financial
statements include 100% of ICON Cash Flow LLC II. Series E's investment in ICON
Cash Flow LLC II has been reflected as "Minority interest in joint ventures."
5. 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, 1996 and 1995
are as follows:
1996 1995
---- ----
Acquisition fees $ 900,244 $ 1,715,797 Capitalized
Organization and offering - 475,926 Charged to Equity
Underwriting commissions - 271,958 Charged to Equity
Management fees 1,021,462 272,642 Charged to Operations
Administrative expense
reimbursement 492,781 165,715 Charged to Operations
Sales commissions - 800
---------- -----------
$2,414,487 $ 2,902,838
========== ===========
The Partnership has investments in three joint ventures with other
Partnerships sponsored by the General Partner (See Note 2 for additional
information relating to the joint ventures).
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
6. Note Payable
On January 29, 1996, the Partnership borrowed $5,941,893 by pledging lease
receivables and granting a security interest in the related collateral, or
equipment, of a specific group of leases and financing transactions. The
borrowing was recorded as a non-recourse note payable, bears interest at a fixed
rate of 7.58 %, and is payable only from receivable proceeds from the portfolio
that has secured it.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Partnership's portfolio consisted of a net investment in finance leases,
operating leases, financings, leveraged leases and equity investment in joint
venture of 69%, 22%, 7%, 2% and less than 1% of total investments at September
30, 1996, respectively, and 64%, 25%, 11%, 0% and less than 1% of total
investments at September 30, 1995, respectively.
Three Months Ended September 30, 1996 and 1995
For the three months ended September 30, 1996 and 1995, the Partnership
leased, financed or invested in equipment with an initial cost of $20,889,581
and $14,675,904, respectively, to 23 and 222 lessees or equipment users,
respectively.
Results of Operations
Revenues for the three months ended September 30, 1996 were $2,385,719,
representing an increase of $524,490 or 28% from 1995. The increase in revenues
was due to an increase in finance income of $481,677 or 43% and an increase in
net gain on sales or remarketing of equipment of $81,062 from 1995. The increase
in finance income resulted from the increase in the average size of the finance
lease portfolios from 1995 to 1996. The net gain on sales or remarketing of
equipment increased due to an increase in the number of leases maturing, and the
underlying equipment being sold or remarketed, for which the proceeds received
were in excess of the remaining carrying value of the equipment.
Expenses for the three months ended September 30, 1996 were $2,370,636,
representing an increase of $536,775 or 29% from 1995. The increase in expenses
was due to an increase in interest expense of $262,310 or 31%, an increase in
amortization of initial direct costs of $74,245 or 32%, an increase in
management fees of $75,357 or 39%, an increase in the provision for bad debts of
$50,000 or 37% and an increase in administrative expense reimbursements of
$42,019 or 46%. Interest expense increased due to an increase in the average
debt outstanding from 1995 to 1996. Amortization of initial direct costs,
management fees and administrative expense reimbursements increased due to an
increase in the average size of the portfolio from 1995 to 1996. As a result of
an analysis of delinquency, an assessment of credit risk and a review of
historical loss experience, it was determined that a greater provision for bad
debts was required for the three months ended September 30, 1996.
Net income for the three months ended September 30, 1996 and 1995 was $15,083
and $27,368, respectively. The net income per weighted average limited
partnership unit was $.04 and $.09, respectively.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Liquidity and Capital Resources
The Partnership's primary sources of funds for the three months ended
September 30, 1996 and 1995 were cash provided by operations of $5,741,986 and
$1,269,800, respectively, proceeds from sales of equipment of $1,463,786 and
$558,196, respectively, proceeds from recourse debt of $16,877,623 in 1995 and
capital contributions, net of offering expenses of $6,061,689 in 1995. These
funds were used to make payments on borrowings, fund cash distributions and to
purchase equipment. The Partnership intends to purchase additional equipment and
fund cash distributions utilizing capital contributions, cash provided by
operations, proceeds from sales of equipment and borrowings.
Cash distributions to limited partners for the three months ended September
30, 1996 and 1995, which were paid monthly, totaled $1,029,530 and $729,887,
respectively, of which $14,932 and $27,094 was investment income and $1,014,598
and $702,793 was a return of capital, respectively. The monthly annualized cash
distribution rate to limited partners was 10.75% and 9.97%, of which .16% and
.37% was investment income and 10.59% and 9.60% was a return of capital,
respectively, calculated as a percentage of each partners initial capital
contribution. The limited partner distribution per weighted average unit
outstanding for the three months ended September 30, 1996 and 1995 was $2.69 and
$2.49, of which $.04 and $.09 was investment income and $2.65 and $2.40 was a
return of capital, respectively.
Nine Months Ended September 30, 1996 and 1995
For the nine months ended September 30, 1996 and 1995, the Partnership
leased, financed or invested in equipment with an initial cost of $30,008,132
and $78,397,303, respectively, to 149 and 1,327 lessees or equipment users,
respectively. The weighted average initial transaction term relating to these
transactions was 52 and 37 months, respectively.
Results of Operations
Revenues for the nine months ended September 30, 1996 were $7,600,738,
representing an increase of $2,965,089 or 64% from 1995. The increase in
revenues was due to an increase in finance income of $2,261,804 or 77%, an
increase in rental income of $402,101 or 29%, an increase in interest income and
other of $19,850 or 8%, and an increase in net gain on sales or remarketing of
equipment of $280,623. The increase in finance and rental income resulted from
the increase in the average size of the finance and operating lease portfolios
from 1995 to 1996. Interest income and other increased due to an increase in the
average cash balance from 1995 to 1996. The net gain on sales or remarketing of
equipment increased due to an increase in the number of leases maturing, and the
underlying equipment being sold or remarketed, for which the proceeds received
were in excess of the remaining carrying value of the equipment.
Expenses for the nine months ended September 30, 1996 were $7,740,400,
representing an increase of $3,249,726 from 1995. The increase in expenses was
due to an increase in interest expense of $1,436,085 or 67%, an increase in
amortization of initial direct costs of $425,013 or 74%, an increase in
management fees of $555,152, an increase in depreciation expense of $212,163 or
50%, an increase in the provision for bad debts of $150,000 or 50%, an increase
in administrative expense reimbursements of $235,063 or 91% and an increase in
general and administrative expenses of $343,868. Interest expense increased due
to an increase in the average debt outstanding from 1995 to 1996. Amortization
of initial direct costs, management fees, administrative expense reimbursements
and general and administrative expense increased due to an increase in the
average size of the portfolio. The increase in depreciation expense resulted
from the Partnership's increased investment in operating leases. As a result of
an analysis of delinquency, an assessment of credit risk and a review of
historical loss experience, it was determined that a greater provision for bad
debts was required for the nine months ended September 30, 1996.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Net income (loss) for the nine months ended September 30, 1996 and 1995 was
($139,662) and $144,975, respectively. The net income (loss) per weighted
average limited partnership unit was ($.36) and $.64, respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the nine months ended
September 30, 1996 and 1995 were cash provided by operations of $9,544,216 and
$6,401,882, respectively, proceeds from sales of equipment of $3,688,805 and
$836,089, respectively, capital contribuitons, net of offering expenses of
$17,823,862 in 1995. Proceeds from recourse debt of $16,273,793 in 1995,
proceeds from affiliated minority interest investors of $2,530,550 in 1995, and
proceeds from non-recourse securitization notes of $5,941,893 in 1996. These
funds were used to make payments on borrowings, fund cash distributions and to
purchase equipment. The Partnership intends to purchase additional equipment and
fund cash distributions utilizing capital contributions, cash provided by
operations, proceeds from sales of equipment and borrowings.
Cash distributions to limited partners for the nine months ended September
30, 1996 and 1995, which were paid monthly, totaled $3,090,799 and $1,627,669,
respectively, of which $0 and $143,525 was investment income and $3,090,799 and
$1,484,144 was a return of capital, respectively. The monthly annualized cash
distribution rate to limited partners was 10.75% and 9.63%, of which 0% and .85%
was investment income and 10.75% and 8.78% was a return of capital,
respectively, calculated as a percentage of each partners initial capital
contribution. The limited partner distribution per weighted average unit
outstanding for the nine months ended September 30, 1996 and 1995 was $8.06 and
$7.22, of which $0 and $.64 was investment income and $8.06 and $6.58 was a
return of capital, respectively.
On February 3, 1995, the Partnership and two affiliates, ICON Cash Flow
Partners L.P. Series B ("Series B") and ICON Cash Flow Partners, L.P. Series C
("Series C") formed ICON Asset Acquisition L.L.C. I ("ICON Asset Acquisition
LLC") as a special purpose limited liability company. ICON Asset Acquisition LLC
was formed for the purpose of acquiring, managing and securitizing a portfolio
of leases. The Partnership, Series B and Series C contributed $8,700,000 (77.68%
interest), $1,000,000 (8.93% interest) and $1,500,000 (13.39% interest),
respectively, to ICON Asset Acquisition LLC. ICON Asset Acquisition LLC
established a warehouse line of credit with ContiTrade Services Corp. with a
maximum amount available of $20,000,000.
On February 17, 1995, ICON Asset Acquisition LLC purchased 975 leases of an
existing lease portfolio from First Sierra Financial, Inc. utilizing $16,273,793
of proceeds from the warehouse line (See Consolidated Statements of Cash Flows -
Proceeds from recourse debt - Financing activities), $10,857,427 in cash
contributions received from the Partnership and affiliates and $723,046 in cash
adjustments at closing, relating primarily to rents received by the seller from
lessees prior to closing and for the benefit of ICON Asset Acquisition LLC. The
purchase price of the portfolio totaled $27,854,266 (See Consolidated Statements
of Cash Flows - Included in Equipment and receivables purchased Investing
activities), the underlying equipment consists of graphic arts and printing
equipment and the terms of the leases range from 12 to 72 months. ICON Asset
Acquisition LLC acquired lease contracts which were less than 60 days
delinquent, and which met the Partnership's overall credit underwriting
criteria. The purchase price of the portfolio was determined by discounting the
future contractual cash flows. All such leases are net leases and are reported
and accounted for as finance leases. The Partnership's consolidated financial
statements include 100% of the accounts of ICON Asset Acquisition LLC with the
affiliated Partnerships share reflected as "Minority interest in joint
ventures."
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
On September 5, 1995 ICON Asset Acquisition LLC securitized substantially all
of its portfolio. Proceeds from the securitization were used to pay down its
existing line of credit and excess proceeds will be returned to the Partnership
based on its pro rata interest. ICON Asset Acquisition LLC became the beneficial
owner of a trust and the Prudential Insurance Company of America ("Prudential")
is treated as the lender to the trust. The trustee for the trust is Texas
Commerce Bank ("TCB"). In conjunction with this securitization the portfolio as
well as the General Partner's servicing capabilities were rated "A" by Duff &
Phelps, a nationally recognized rating agency. The General Partner, as servicer,
is responsible for managing, servicing, reporting on and administering the
portfolio. All monies received from the portfolio are remitted to TCB. TCB is
responsible for disbursing to Prudential its respective principal and interest
and to ICON Asset Acquisition LLC the excess of cash collected over debt service
from the portfolio. ICON Asset Acquisition LLC accounts for this investment as
an investment in finance leases and financings. Prudential's investment in the
trust is accounted for as non-recourse debt on ICON Asset Acquisition LLC's
books and records. All monies received and remitted to TCB from the securitized
portfolio are accounted for as a reduction in related finance lease and
financing receivables and all amounts paid to Prudential by TCB are accounted
for as a reduction of non-recourse debt.
As of September 30, 1996, there were no known trends or demands,
commitments, events or uncertainties which are likely to have any material
effect on liquidity. As cash is realized from closings of limited partnership
units, operations, sales of equipment and borrowings, the Partnership will
invest in equipment leases and financings where it deems it to be prudent while
retaining sufficient cash to meet its reserve requirements and recurring
obligations as they become due.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
Form 8-K was filed on September 4, 1996, Item 1, Change in Control of Registrant
<PAGE>
ICON Cash Flow Partners L. P. Six
(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. Six
File No. 33-36376 (Registrant)
By its General Partner,
ICON Capital Corp.
November 12, 1996 Gary N. Silverhardt
- ----------------- ---------------------------------------
Date Gary N. Silverhardt
Chief Financial Officer
(Principal financial and account officer
of the General Partner of
the Registrant)
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000910632
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 7,003,236
<SECURITIES> 0
<RECEIVABLES> 83,089,418
<ALLOWANCES> 208,570
<INVENTORY> 145,017
<CURRENT-ASSETS> * 0
<PP&E> 19,371,603
<DEPRECIATION> 1,272,973
<TOTAL-ASSETS> 108,872,294
<CURRENT-LIABILITIES> ** 0
<BONDS> 74,974,905
0
0
<COMMON> 0
<OTHER-SE> 27,148,422
<TOTAL-LIABILITY-AND-EQUITY> 108,872,294
<SALES> 7,583,022
<TOTAL-REVENUES> 7,583,022
<CGS> 1,941,688
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,766,888
<LOSS-PROVISION> 450,000
<INTEREST-EXPENSE> 3,581,824
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (157,378)
<EPS-PRIMARY> (0.41)
<EPS-DILUTED> (0.41)
<FN>
* The Partnership has an unclassified balance sheet in its financial
statements due to the nature of its industry. A value of "0" was used for
current assets and liabilities.
** The Partnership has an unclassified balance sheet in its financial
statements due to the nature of its industry. A value of "0" was used for
current assets and liabilities.
</FN>
</TABLE>
