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 June 30, 1996
----------------------------------
[ ] 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 33-36376
ICON Cash Flow Partners L.P. Six
(Exact name of registrant as specified in its charter)
Delaware 13-3723089
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
600 Mamaroneck Avenue, Harrison, New York 10528-1632
(Address of principal executive offices) (Zip code)
(914) 698-0600
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>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
PART I - FINANCIAL INFORMATION
The following consolidated financial statements of ICON Cash Flow Partners
L.P. Six (the "Partnership") have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC") and, in the
opinion of management, include all adjustments (consisting only of normal
recurring accruals) necessary for a fair statement of income for each period
shown. Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such SEC rules
and regulations. Management believes that the disclosures made are adequate to
make the information represented not misleading. The results for the interim
period are not necessarily indicative of the results for the full year. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes included in the Partnership's 1995
Annual Report on Form 10-K.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
June 30, 1996
General Partner's Discussion and Analysis of
Financial Condition and Results of Operations
The Partnership's portfolio consisted of a net investment in finance
leases, operating leases, financings and equity investment in a joint venture of
71%, 21%, 7% and less than 1% of total investments at June 30, 1996,
respectively, and 67%, 30%, 3% and less than 1% of total investment at June 30,
1995.
Three Months Ended June 30, 1996 and 1995
Results of Operations
For the three months ended June 30, 1996 and 1995, the Partnership leased
or financed equipment with an initial cost of $806,246 and $3,220,960,
respectively, to 105 and 121 lessees or equipment users, respectively.
Revenues for the three months ended June 30, 1996 were $2,681,902,
representing an increase of $534,948 or 25% from 1995. The increase in revenues
was due to an increase in finance income of $576,529 or 46% an increase in net
gain on sales or remarketing of equipment of $142, 191 and an increase in
interest income and other of $17,045 or 25% from 1995. These increases were
partially offset by a decrease in rental income of $201,051 or 25% from 1995.
The increase in finance income resulted from the increase in the size of the
average finance lease portfolio from 1995 to 1996. Interest income and other
increased due to an increase in the average cash balance from 1995 to 1996. Net
gain on sales or remarketing 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. The decrease in rental income was due to an advance rental received
in the prior year in excess of the scheduled contractual rentals.
Expenses for the three months ended June 30, 1996 were $2,592,893,
representing an increase of $510,603 or 28% from 1995. The increase in expenses
was due to an increase in interest expense of $234,614 or 22%, an increase in
general and administrative expense of $150,702, an increase in amortization of
initial direct cost of $93,439 or 35%, an increase in management fees of $86,326
or 49% and an increase in administrative expense reimbursements of $37,261 or
39%. These increases were partially offset by a decrease in provision for bad
debts of $50,000 or 33% and a decrease in Minority Interest in Joint Venture of
$41,739 from 1995. Interest expense increased due to the increase in 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. 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 lesser
provision for bad debts was required for the three months ended June 30, 1996.
Net income for the three months ending June 30, 1996 and 1995 was $89,009
and $64,664, respectively. The net income per weighted average limited
partnership unit was $.23 and $.28, respectively.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
June 30, 1996
General Partner's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
The Partnership's primary sources of funds for the three months ended June
30, 1996 and 1995 were net cash provided by operations of $2,111,543 and
$5,620,717, respectively, proceeds from sales of equipment of $1,954,342 and
$206,574, respectively, and capital contributions net of offering expenses of
$5,620,717 in 1995. These funds were used to make payments on borrowings, to
fund cash distributions and to purchase equipment. The Partnership intends to
purchase additional equipment and to fund cash distributions utilizing capital
contributions, cash from operations and proceeds from sales of equipment.
Cash distributions to limited partners for the three months ended June 30,
1996 and 1995, which were paid monthly, totaled $1,030,366 and $544,488,
respectively, of which $88,119 and $64,017 was investment income and $942,247
and $480,471 was a return of capital, respectively. The monthly annualized cash
distribution rate to limited partners was 10.75% and 8.25%, of which .92 and
.97% was investment income and 9.83% and 7.28% 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 June 30, 1996 and 1995 was $2.69 and
$2.39 of which $.23 and $.28 was investment income and $2.46 and $2.11 was a
return of capital, respectively. The Partnership had notes payable at June 30,
1996 and 1995 of $62,114,354 and $45,034,220, respectively, and such amounts
consisted of $51,025,920 and $31,424,532 in non-recourse notes, respectively,
and $11,088,434 and $13,609,688 in recourse notes respectively.
Six Months Ended June 30, 1996 and 1995
Results of Operations
For the six months ended June 30, 1996 and 1995, the Partnership leased or
financed equipment with an initial cost of $9,118,552 and $63,721,399,
respectively, to 126 and 1,105 lessees or equipment users, respectively. The
weighted average initial transaction term relating to these transactions was 52
and 35 months, respectively.
Revenues for the six months ended June 30, 1996 were $5,215,019,
representing an increase of $2,440,599 or 88% from 1995. The increase in
revenues was due to an increase in finance income of $1,780,127 or 98%, an
increase in rental income of $402,100 or 50%, an increase in net gain on sales
or remarketing of equipment of $199,561 and interest income and other of $58,340
or 41% from 1995. The increase in finance and rental income resulted from the
increase in the size of the average finance and operating lease portfolios from
1995 to 1996. Net gain on sales or remarketing 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. Interest income and other increased due to an
increase in the average cash balance from 1995 to 1996.
Expenses for the six months ended June 30, 1996 were $5,369,764,
representing an increase of $2,712,951 from 1995. The increase in expenses was
due to an increase in interest expense of $1,173,775 or 89%, an increase in
amortization of initial direct costs of $350,768, an increase in management fees
of $479,795, an increase in depreciation expense of $212,162, an increase in
administrative expense reimbursements of $193,044, an increase in the provision
for bad debts of $100,000, and an increase in general and administrative expense
of $272,819. These increases were partially offset by a decrease in minority
interest in joint venture of $69,412. Interest expense increased due to the
increase in 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. Depreciation expense increased as a result of 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 six months ended June 30, 1996.
Net income (loss) for the six months ending June 30, 1996 and 1995 was
($154,745) and $117,607, respectively. The net income (loss) per weighted
average limited partnership unit was ($.40) and $.66, respectively.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
June 30, 1996
General Partner's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
The Partnership's primary sources of funds for the six months ended June
30, 1996 and 1995 were cash provided by operations of $$3,802,230 and
$5,132,082, respectively, proceeds from sales of equipment of $2,225,019 and
$277,903, respectively, capital contributions, net of offering expenses, of
$11,762,173 in 1995, proceeds from recourse debt of $16,273,793 in 1995,
proceeds from affiliated minority 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, to fund cash distributions and to purchase
equipment. The Partnership intends to purchase additional equipment and to fund
cash distributions utilizing capital contributions, cash from operations,
proceeds from sales of equipment and borrowings.
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 specified 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.
Cash distributions to limited partners for the six months ended June 30,
1996 and 1995, which were paid monthly, totaled $2,061,269 and $897,782,
respectively, of which $0 and $116,431 was investment income and $2,061,269 and
$781,351 was a return of capital, respectively. The monthly annualized cash
distribution rate to limited partners was 10.75% and 8.25%, of which 0% and .97%
was investment income and 10.75% and 7.28% 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 six months ended June 30, 1996 and 1995 was $5.38 and $ 5.09
of which $0 and $.66 was investment income and $5.38 and $4.43 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."
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.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
June 30, 1996
General Partner's Discussion and Analysis of
Financial Condition and Results of Operations
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 June 30, 1996, except as noted above, there were no known trends or
demands, commitments, events or
uncertainties which are likely to have any material effect on liquidity. As cash
is realized from 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.
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 new standard is similar to the Partnership's
existing accounting policies relating to the impairment of estimated residual
values. As a result, adoption of SFAS No. 121 in the first quarter of 1996 had
no impact on the Partnership's financial statements.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Balance Sheets
(unaudited)
June 30, December 31,
1996 1995
Assets
Cash ......................................... $ 5,521,151 $ 8,981,950
------------- -------------
Investment in finance leases
Minimum rents receivable ................... 58,079,030 65,040,140
Estimated unguaranteed residual values ..... 13,306,734 12,881,418
Initial direct costs ....................... 1,452,971 1,674,324
Unearned income ............................ (11,193,897) (2,707,193)
Allowance for doubtful accounts ............ (325,075) (361,941)
------------- -------------
61,319,763 66,526,748
Investment in operating leases
Equipment, at cost ......................... 19,371,603 19,371,603
Initial direct costs ....................... 191,779 335,613
Accumulated depreciation ................... (1,060,811) (636,486)
------------- -------------
18,502,571 19,070,729
Investment in financings
Receivables due in installments ............ 6,921,135 8,649,392
Initial direct costs ....................... 127,662 182,965
Unearned income ............................ (952,010) (1,204,544)
Allowance for doubtful accounts ............ (43,200) (43,200)
------------- -------------
6,053,587 7,584,613
Equity investment in joint venture ........... 43,601 885,346
------------- -------------
Other assets ................................. 1,030,279 41,564
------------- -------------
Total assets ................................. $ 92,470,952 $ 103,090,950
=============
Liabilities and Partners' Equity
Note payable - non-recourse - securitized .... $ 11,088,434 $ 15,183,224
Notes payable - non-recourse ................. 51,025,920 45,166,000
Accounts payable to General Partner and
affiliates, net ............................ -- 1,037,286
Accounts payable - equipment ................. -- 8,678,812
Minority interest in joint venture ........... 1,375,775 1,879,629
Accounts payable - other ..................... 251,663 448,418
Security deposits and deferred credits ....... 555,891 250,768
------------- -------------
64,297,683 72,644,137
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ............................ (48,729) (26,396)
Limited partners (383,114 and 383,592 units
outstanding, $100 per unit original issue
price in 1996 and 1995, respectively) .... 28,221,998 30,473,182
------------- -------------
Total partners' equity ................... 28,173,269 30,446,813
------------- -------------
Total liabilities and partners' equity ....... $ 92,470,952 $ 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)
<TABLE>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue
Finance income ............................. $ 1,836,365 $ 1,259,836 $ 3,590,727 $ 1,810,600
Rental income .............................. 603,151 804,202 1,206,302 804,202
Net gain on sales or remarketing
of equipment ............................. 154,908 12,717 213,505 13,944
Interest income and other .................. 85,910 68,867 201,411 143,071
Income from equity investment in
joint venture ............................ 1,568 1,332 3,074 2,603
---------- ----------- ----------- -----------
Total revenues ............................. 2,681,902 2,146,954 5,215,019 2,774,420
---------- ----------- ----------- -----------
Expenses
Interest ................................... 1,305,058 1,070,444 2,486,017 1,312,242
Amortization of initial direct costs 362,328 268,889 694,047 343,279
Management fees - General Partner .......... 262,952 176,626 752,437 272,642
Depreciation ............................... 212,162 212,162 424,324 212,162
General and administrative ................. 191,923 41,221 360,721 87,902
Administrative expense reimbursement
- General Partner ........................ 133,482 96,221 358,759 165,715
Provision for bad debts .................... 100,000 150,000 250,000 150,000
Minority interest in joint venture ......... 24,988 66,727 43,459 112,871
----------- ----------- ----------- ----------
Total expenses ............................. 2,592,893 2,082,290 5,369,764 2,656,813
----------- ----------- ----------- ----------
Net income (loss) ............................ $ 89,009 $ 64,664 $ (154,745) $ 117,607
=========== =========== =========== ==========
Net income allocable to:
Limited partners ........................... $ 88,119 $ 64,017 $ (153,198) $ 116,431
General Partner ............................ 890 647 1,547 1,176
----------- ----------- ----------- ----------
$ 89,009 $ 64,664 $ (154,745) $ 117,607
=========== =========== ========== ==========
Weighted average number of limited
partnership units outstanding .............. 383,311 227,349 383,311 176,211
=========== =========== ========== ==========
Net income (loss) per weighted average
limited partnership unit ................... $ .23 $ .28 $ (.40) $ .66
=========== =========== =========== ===========
</TABLE>
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 Six Months Ended June 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)
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)
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
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Changes in Partners' Equity (continued)
For the Six Months Ended June 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)
Cash distributions
to partners $ 5.38 $ - (2,061,269) (20,813) (2,082,082)
Limited partnership units
redeemed (478 units) (36,717) - (36,717)
Net loss (153,198) (1,547) (154,745)
-------------- --------- ----------
Balance at
June 30, 1996 $28,221,998 $(48,729) $28,173,269
=========== ======== ===========
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 Six Months Ended June 30,
(unaudited)
<TABLE>
1996 1995
---- ----
<S> <C> <C>
Cash flows provided by operating activities:
Net income .......................................... $ (154,745) $ 117,607
------------ ------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation ....................................... 424,324 212,162
Rental income - assigned operating lease receivables (1,206,302) (804,202)
Finance income portion of receivables paid directly
to lenders by lessees ............................ (1,950,238) (517,982)
Amortization of initial direct costs ............... 694,047 343,279
Net gain on sales or remarketing of equipment ...... (213,505) (13,944)
Income from equity investment ...................... (3,074) (2,603)
Interest expense on non-recourse financing
paid directly by lessees ......................... 1,840,101 406,366
Interest expense accrued on non-recourse debt ...... -- 366,302
Interest expense accrued on recourse debt .......... -- 224,063
Collection of principal - non-financed receivables . 5,300,008 3,637,018
Change in operating assets and liabilities:
Allowance for doubtful accounts ................... 135,562 57,331
Accounts payable to General Partner
and affiliates, net ............................. (1,037,286) 524,606
Accounts payable - other .......................... (196,755) 57,362
Security deposits and deferred credits ............ 305,123 231,510
Minority interest in joint ventures ............... (503,854) 34,027
Other, net ........................................ 147,650 259,180
------------ ------------
Total adjustments ............................... 3,735,801 5,014,475
------------ ------------
Net cash provided by operating activities ........ 3,581,056 5,132,082
------------ ------------
Cash flows used for investing activities:
Proceeds from sales of equipment .................... 2,446,193 277,903
Initial direct costs ................................ (1,070,294) (1,715,797)
Equipment and receivables purchased ................. (7,568,664) (33,037,744)
Net cash used in investing activities ............. (6,192,765) (34,475,638)
------------ ------------
Cash flows provided by financing activities:
Proceeds from non-recourse securitized debt ......... 5,941,893 --
Principal payments on non-recourse securitized debt . (599,938) --
Principal payments on recourse debt ................. (4,094,790) (2,888,168)
Cash distributions to partners ...................... (2,082,082) (906,851)
Redeemed limited partnership units .................. (14,173) --
Proceeds from recourse debt ......................... -- 16,273,793
Issuance of limited partnership units,
net of offering expenses .......................... -- 11,762,173
Proceeds received from affiliated minority
interest investors ................................ -- 2,530,550
------------ ------------
Net cash provided by (used in)
financing activities ............................. (849,090) 26,771,497
------------ ------------
Net decrease in cash .................................. (3,460,799) (2,572,059)
Cash, beginning of year ............................... 8,981,950 7,391,994
------------ ------------
Cash, end of year ..................................... $ 5,521,151 $ 4,819,935
============ ============
</TABLE>
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 six months ended June 30, 1996 and 1995, non-cash activities included
the following:
1996 1995
---- ----
<TABLE>
<S> <C> <C>
Rental income - assigned operating lease receivable $ 1,206,302 $ 804,202
Principal and interest on direct finance
receivables paid directly to
lenders by lessees .................................. 10,234,552 2,733,933
Principal and interest on non-recourse
financing paid directly to lenders by lessees ....... (11,440,854)
Non-recourse notes payable assumed
in purchase price ................................... 10,114,419 30,512,219
Fair value of equipment and receivables
purchased for debt and payables ...................... (10,114,419) (30,512,219)
------------ ------------
$ -- $ --
============ ============
</TABLE>
Interest expense of $2,486,017 and $1,312,242 for the six months ended June
30, 1996 and 1995 consisted of: interest expense on non-recourse financing
accrued or paid directly to lenders by lessees of $1,840,010 and $772,668,
respectively, and other interest of $646,007 and $24,461, respectively.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
June 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 478 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.
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.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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 June 30, 1996 and has been
reflected as "Equity investment in joint venture." The General Partner 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 six months ended June 30, 1996 is summarized below:
June 30, 1996
Assets $18,973,446
Liabilities 14,613,309
Equity $4,360,137
Six Months Ended
June 30, 1996
Net income $ 307,337
==========
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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 six months ended June 30, 1996 and 1995 are as
follows:
1996 1995
Acquisition fees $ 273,557 $1,715,797 Capitalized
Organization and offering - 475,926 Charged to Equity
Underwriting commissions - 271,958 Charged to Equity
Management fees 752,437 272,642 Charged to Operations
Administrative expense reimbursement 358,759 165,715 Charged to Operations
Sales commissions - 800
--------- ----------
$1,384,753 $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).
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)
PART II
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6 - Reports and Amendments
The Partnership filed amendments to the March 31, 1995 10-Q and the December 31,
1994 10-K on July 27, 1995 and August 1, 1995.
<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.
August 13, 1996 Charles Duggan
Date --------------------------------------------
Charles Duggan
Executive Vice President and 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 5,521,151
<SECURITIES> 0
<RECEIVABLES> 67,741,625
<ALLOWANCES> 368,275
<INVENTORY> 206,056
<CURRENT-ASSETS> * 0
<PP&E> 19,371,603
<DEPRECIATION> 1,060,811
<TOTAL-ASSETS> 92,470,952
<CURRENT-LIABILITIES> ** 0
<BONDS> 62,114,354
0
0
<COMMON> 0
<OTHER-SE> 28,173,269
<TOTAL-LIABILITY-AND-EQUITY> 92,470,952
<SALES> 5,215,019
<TOTAL-REVENUES> 5,215,019
<CGS> 1,161,830
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,471,917
<LOSS-PROVISION> 250,000
<INTEREST-EXPENSE> 2,486,017
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (154,745)
<EPS-PRIMARY> (0.40)
<EPS-DILUTED> (0.40)
<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>
