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, 1997
-----------------------------------------------------------
[ ] 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 0-28136
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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>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Balance Sheets
(unaudited)
September 30, December 31,
1997 1996
Assets
Cash ......................................... $ 4,858,361 $ 4,821,624
------------ ------------
Investment in finance leases
Minimum rents receivable .................. 21,454,090 45,645,436
Estimated unguaranteed residual values .... 10,937,643 11,924,455
Initial direct costs ...................... 991,088 1,624,309
Unearned income ........................... (4,845,202) (9,073,073)
Allowance for doubtful accounts ........... (151,779) (485,627)
------------ ------------
28,385,840 49,635,500
Investment in operating leases
Equipment, at cost ........................ 17,063,797 19,371,603
Accumulated depreciation .................. (34,082) (1,485,136)
Initial direct costs ...................... -- 47,945
------------ ------------
17,029,715 17,934,412
Investment in financings
Receivables due in installments ........... 2,488,455 7,737,022
Initial direct costs ...................... 29,274 138,928
Unearned income ........................... (239,934) (1,165,426)
Allowance for doubtful accounts ........... (5,823) (13,198)
------------ ------------
2,271,972 6,697,326
------------ ------------
Equity investment in joint ventures .......... 2,575,496 45,724
------------ ------------
Investment in leveraged lease, net ........... 4,946,245 2,086,672
------------ ------------
Other assets ................................. 409,657 583,884
------------ ------------
Total assets ................................. $ 60,477,286 $ 81,805,142
============ ============
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Balance Sheets (continued)
(unaudited)
<TABLE>
September 30, December 31,
1997 1996
Liabilities and Partners' Equity
<S> <C> <C>
Notes payable - non-recourse ......................... $ 32,555,465 $ 39,001,676
Note payable - non-recourse - securitized ............ 2,614,773 12,134,273
Security deposits and deferred credits ............... 1,370,660 2,929,380
Minority interest in joint venture ................... 724,683 877,893
Accounts payable - other ............................. 210,133 753,769
Accounts payable - General Partner and affiliates, net 387,390 --
Accounts payable - equipment ......................... -- 243,499
------------ ------------
37,863,104 55,940,490
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ................................... (102,709) (71,652)
Limited partners (380,678 and 382,864
units outstanding, $100 per unit original
issue price in 1997 and 1996, respectively) ..... 22,716,891 25,936,304
------------ ------------
Total partners' equity .......................... 22,614,182 25,864,652
------------ ------------
Total liabilities and partners' equity ............... $ 60,477,286 $ 81,805,142
============ ============
</TABLE>
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 Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
Revenues
<S> <C> <C> <C> <C>
Finance income ..................... $ 965,035 $ 1,604,725 $ 3,456,383 $ 5,195,452
Rental income ...................... 755,149 603,152 1,657,250 1,809,454
Income from equity investment
in joint venture ................. 97,856 1,628 257,278 4,702
Income from leveraged lease, net ... 86,544 -- 170,660 --
Net gain on sales or
remarketing of equipment ......... 33,474 111,820 236,417 325,325
Interest income and other .......... 30,457 64,394 105,757 265,805
----------- ----------- ----------- -----------
Total revenues ..................... 1,968,515 2,385,719 5,883,745 7,600,738
----------- ----------- ----------- -----------
Expenses
Interest ........................... 846,446 1,095,807 2,539,976 3,581,824
Amortization of initial direct costs 323,123 302,527 1,097,694 996,574
Management fees - General Partner .. 267,066 269,025 832,931 1,021,462
Depreciation ....................... 161,471 212,163 585,795 636,487
Administrative expense reimbursement
- General Partner ................ 132,869 134,022 414,976 492,781
General and administrative ......... 93,345 143,212 287,538 503,933
Provision for bad debts ............ 75,000 200,000 75,000 450,000
Minority interest in joint venture . 4,832 13,880 44,604 57,339
----------- ----------- ----------- -----------
Total expenses ..................... 1,904,152 2,370,636 5,878,514 7,740,400
----------- ----------- ----------- -----------
Net income (loss) ..................... $ 64,363 $ 15,083 $ 5,231 $ (139,662)
=========== =========== =========== ===========
Net income (loss) allocable to:
Limited partners ................... $ 63,719 $ 14,932 $ 5,179 $ (138,265)
General Partner .................... 644 151 52 (1,397)
----------- ----------- ----------- -----------
$ 64,363 $ 15,083 $ 5,231 $ (139,662)
=========== =========== =========== ===========
Weighted average number of limited
partnership units outstanding ...... 380,808 383,425 381,924 383,425
=========== =========== =========== ===========
Net income (loss) per weighted average
limited partnership unit ........... $ .17 $ .04 $ .01 $ (.36)
=========== =========== =========== ===========
</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 Nine Months Ended September 30, 1997 and
the Years Ended December 31, 1996, 1995 and 1994
(unaudited)
<TABLE>
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
(Per weighted average unit)
<S> <C> <C> <C> <C> <C>
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
Cash distributions
to partners $10.75 $ - (4,119,354) (41,613) (4,160,967)
Limited partnership units
redeemed (728 units) (54,227) - (54,227)
Net loss (363,297) (3,670) (366,967)
----------- --------- -----------
Balance at
December 31, 1996 25,936,304 (71,652) 25,864,652
Cash distributions
to partners $ 8.05 $ .01 (3,079,868) (31,109) (3,110,977)
Limited partnership units
redeemed (2,186 units) (144,724) - (144,724)
Net income 5,179 52 5,231
----------- --------- -----------
Balance at
September 30, 1997 $22,716,891 $(102,709) $22,614,182
=========== ========= ===========
</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
For the Nine Months Ended September 30,
(unaudited)
<TABLE>
1997 1996
---- ----
Cash flows provided by operating activities:
<S> <C> <C>
Net income (loss) .......................................... $ 5,231 $ (139,662)
------------ ------------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation ............................................ 585,795 636,487
Rental income - assigned operating lease receivables .... (1,657,250) (1,809,454)
Finance income portion of receivables paid directly
to lenders by lessees ................................. (2,694,721) (2,830,164)
Amortization of initial direct costs .................... 1,097,694 996,574
Net gain on sales or remarketing of equipment ........... (236,417) (325,325)
Income from equity investment in joint ventures ......... (257,278) (4,702)
Income from leveraged lease, net ........................ (170,660) --
Interest expense on non-recourse financing
paid directly by lessees .............................. 1,808,877 2,636,281
Distribution from investment in joint venture ........... 9,544,892 --
Collection of principal - non-financed receivables ...... 6,198,641 7,068,830
Change in operating assets and liabilities:
Allowance for doubtful accounts ....................... (341,223) 465,362
Accounts payable to General Partner and affiliates, net 387,390 (932,442)
Accounts payable - other .............................. (543,636) 80,465
Security deposits and deferred credits ................ (1,558,720) 4,854,182
Minority interest in joint ventures ................... (153,210) (869,339)
Other asset ........................................... 250,199 (251,201)
Other, net ............................................ (148,203) (31,676)
------------ ------------
Total adjustments ................................... 12,112,170 9,683,878
------------ ------------
Net cash provided by operating activities ............. 12,117,401 9,544,216
------------ ------------
Cash flows from investing activities:
Proceeds from sales of equipment ........................... 2,430,490 3,688,805
Equipment and receivables purchased ........................ (1,972,832) (9,230,987)
Investment in joint venture ................................ (250,000) --
Initial direct costs ....................................... -- (1,702,406)
------------ ------------
Net cash provided by (used in) investing activities .. 207,658 (7,244,588)
------------ ------------
Cash flows from financing activities:
Principal payments on non-recourse securitized debt ........ (9,519,500) (1,196,185)
Proceeds from note payable - affiliate ..................... 7,780,328 --
Principal payments on note payable - affiliate ............. (7,780,328) (5,865,321)
Cash distributions to partners ............................. (3,110,977) (3,122,012)
Proceeds from non-recourse debt ............................ 486,879 --
Redeemed limited partnership units ......................... (144,724) (36,717)
Proceeds from non-recourse securitized debt ................ -- 5,941,893
------------ ------------
Net cash used in financing activities ................. (12,288,322) (4,278,342)
------------ ------------
Net increase (decrease) in cash ............................... 36,737 (1,978,714)
Cash, beginning of period ..................................... 4,821,624 8,981,950
------------ ------------
Cash, end of period ........................................... $ 4,858,361 $ 7,003,236
============ ============
</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 nine months ended September 30, 1997 and 1996, non-cash activities
included the following:
<TABLE>
1997 1996
---- ----
<S> <C> <C>
Rental income - assigned operating lease receivable .... $ 1,657,250 $ 1,809,454
Principal and interest on direct finance
receivables paid directly to
lenders by lessees .................................. 10,064,540 13,706,876
Principal and interest on non-recourse
financing paid directly to lenders by lessees ....... (11,721,790) (15,516,330)
Decrease in investments in finance leases and financings
due to contribution to joint venture ................ 11,566,252 --
Increase in equity investment in joint venture ......... (11,566,252) --
Non-recourse notes payable assumed
in purchase price ................................... -- 34,242,429
Fair value of equipment and receivables
purchased for debt and payables ....................... -- (34,242,429)
------------ ------------
$ -- $ --
============ ============
</TABLE>
Interest expense of $2,539,976 and $3,581,824 for the nine months ended
September 30, 1997 and 1996 consisted of: interest expense on non-recourse
financing accrued or paid directly to lenders by lessees of $1,808,877 and
$2,636,281, respectively, interest expense on recourse secured financing of
$144,372 and $639,967, respectively, and other interest of $586,727 and
$305,576, respectively.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
September 30, 1997
(unaudited)
1. Basis of Presentation
The 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 1996
Annual Report on Form 10-K.
2. Net Investment in Leveraged Lease
In September 1996 the Partnership acquired, subject to a leveraged lease,
the residual interest in an aircraft. The aircraft is an A-300B4-203 currently
on lease to Airbus. The purchase price was $19,595,956, consisting of $1,409,839
in cash, the assumption of non-recourse senior debt of $12,495,956 and
non-recourse junior debt of $5,590,161.
The net investment in the leveraged lease as of September 30, 1997 consisted of
the following:
Non-cancelable minimum rents receivable (net of principal and
interest on non-recourse debt) ............................ $ --
Estimated unguaranteed residual values ...................... 4,000,000
Initial direct costs ........................................ 429,636
Unearned income ............................................. 516,609
----------
$4,946,245
The non-cancelable rents are being paid directly to the lenders by the
lessees to satisfy the principal and interest on the non-recourse debt assumed.
Prior to the acquisition, the free cash flow (rent in excess of the
senior debt payments or junior debt) was financed by an affiliated partnership,
ICON Cash Flow Partners, L.P., Series E ("Series E"). On January 29, 1997 the
Partnership re-financed the junior debt with a third party.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements (continued)
3. Redemption of Limited Partnership Units
The General Partner consented to the Partnership redeeming 2,186 limited
partnership units during 1997. The redemption amount was calculated following
the specified 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 from 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. On February 17, 1995, ICON Asset
Acquisition LLC purchased an existing portfolio of leases. The purchase price of
the portfolio totaled $27,854,266, and the underlying equipment consists of
graphic arts and printing equipment. On September 5, 1995, ICON Asset
Acquisition LLC securitized substantially all of its portfolio and became the
beneficial owner of a trust and the Prudential Insurance Company of America
("Prudential") the lender to the trust. On January 28, 1997, ICON Asset
Acquisition LLC re-financed its outstanding $7,780,000 obligation to Prudential
with proceeds it received from a loan from Series E, an affiliate of the
Partnership. The Partnership's consolidated financial statements include 100% of
the accounts of ICON Asset Acquisition LLC with the affiliates' share reflected
as "Minority interests in joint ventures."
On September 19, 1997, ICON Asset Acquisition LLC sold its entire
investment in leases to ICON Cash Flow Partners L.P. Six ("L.P. Six") for
$6,819,996. The proceeds from the sale were used to payoff its obligation
($4,730,328 at September 19, 1997) to Series E. The remaining proceeds will be
distributed to the Partnership, Series B and Series C upon final liquidation of
the remaining net assets of ICON Asset Acquisition LLC.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements (continued)
ICON Cash Flow LLC I
In September 1994 the Partnership and an affiliate, 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 which was on lease to Alaska
Airlines, Inc. The Partnership and Series E contributed 1% and 99% of the cash
required for such acquisition, respectively, to ICON Cash Flow LLC I. ICON Cash
Flow LLC I acquired the aircraft, assuming non-recourse debt and utilizing
contributions received from the Partnership and Series E. The lease was an
operating lease. Profits, losses, excess cash and disposition proceeds are
allocated 1% to the Partnership and 99% to Series E. 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. The lease expired in April
1997.
In June, 1997 ICON Cash Flow LLC I remarketed the aircraft (formally on
lease to Alaska Airlines, Inc.). The aircraft was leased to Aero Mexico. The new
lease is an operating lease which expires in October 2002.
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, 1997 is
summarized below:
September 30, 1997
Assets $ 17,029,715
============
Liabilities $ 12,476,742
============
Equity $ 4,552,973
============
Nine Months Ended
September 30, 1997
Net income $ 636,870
===========
ICON Cash Flow LLC II
In March 1995 the Partnership and an affiliate, Series E, formed a joint
venture, 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 Partnership and Series E contributed 99% and 1% of the cash
required for such acquisition, respectively, to ICON Cash Flow LLC II. ICON Cash
Flow LLC II acquired the aircraft, assuming non-recourse debt and utilizing
contributions received from the Partnership and Series E. The lease is an
operating lease. Profits, losses, excess cash and disposition proceeds are
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 venture." As of September 30, 1997, the lease with Alaska Airlines,
Inc. was terminated and the aircraft was re-leased to Aero Mexico.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements (continued)
ICON Receivables 1997-A LLC
In March 1997 the Partnership, ICON Cash Flow Partners, L.P., Series D
("Series D"), and L.P. Seven, contributed and assigned equipment lease and
finance receivables and residuals with a net book value of $5,553,962,
$4,874,857 and $5,465,238, respectively to ICON Receivables 1997-A LLC
("1997-A"), a special purpose entity created for the purpose of originating new
leases, managing existing contributed assets and, eventually, securitizing its
portfolio. In order to fund the acquisition of new leases, 1997-A obtained a
warehouse borrowing facility from Prudential Securities Credit Corporation (the
"1997-A Facility"). Borrowings under the 1997-A Facility were based on the
present value of the new leases. Outstanding amounts under the 1997-A Facility
bore interest equal to Libor plus 1.5%.
On September 19, 1997 the Partnership and Series E contributed and
assigned equipment lease and finance receivables and residuals with a net book
value of $5,346,909 and $15,698,027, respectively to 1997-A. The partnership,
Series D, Series E and L.P. Seven (collectively the "1997-A Members") received a
31.03%, 17.81% 31.19% and 19.97% interest, respectively, in 1997-A based on the
present value of their related contributions.
On September 19, 1997, 1997-A securitized substantially all of its
equipment leases and finance receivables and residuals. The net proceeds from
the securitization totaled $47,140,183, of which $16,658,877 was used to pay
down the 1997-A Facility, and the remaining proceeds, after establishing
reserves for expenses, were distributed to the 1997-A Members based on their
respective interests. 1997-A became the beneficial owner of a 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 "AA" by Duff & Phelps and Fitch, both nationally
recognized rating agencies. The General Partner, as servicer, is responsible for
managing, servicing, reporting on and administering the portfolio. 1997-A remits
all monies received from the portfolio to TCB. TCB is responsible for disbursing
to the noteholders their respective principal and interest and to 1997-A the
excess of cash collected over debt service from the portfolio. The 1997-A
Members receive their pro rata share of any excess cash on a monthly basis from
1997-A. The Partnership's share of the gross proceeds from the securitization
totaled $9,543,757. The Partnership accounts for its investment in 1997-A under
the equity method of accounting. The Partnership's original investment was
recorded at cost and is adjusted by its share of earnings, losses and
distributions thereafter.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements (continued)
Information as to the financial position and results of operations of
1997-A as of and for the nine months ended September 30, 1997 is summarized
below:
September 30, 1997
Assets $ 54,950,026
============
Liabilities $ 49,149,557
============
Equity $ 5,800,469
============
Nine Months Ended
September 30, 1997
Net income $ 677,434
============
ICON Receivables 1997-B LLC
In August 1997 the Partnership, Series E and L.P. Seven (collectively, the
"1997-B Members") formed ICON Receivables 1997-B LLC ("1997-B"), for the purpose
of originating lease transactions and ultimately securitizing its portfolio. The
1997-B Members contributed $250,000 (8.33% interest), $2,250,000 (75.00%
interest) and $500,000 (16.67% interest), respectively to 1997-B. In order to
fund the acquisition of additional leases, 1997-B obtained a warehouse borrowing
facility from Prudential Securities Credit Corporation (the "1997-B Facility").
Borrowings under the 1997-B Facility are based on the present value of the new
leases, provided that in the aggregate, the amount outstanding cannot exceed
$13,000,000. Outstanding amounts under the 1997-B Facility bear interest equal
to Libor plus 1.5%. Collections of receivables from leases are used to pay down
the 1997-B Facility, however, in the event of a default, all of 1997-B's assets
are available to cure such default. The net proceeds from the expected
securitization of these assets will be used to pay-off the remaining 1997-B
Facility balance and the remaining proceeds will be distributed to the 1997-B
Members in accordance with their membership interests. The Partnership accounts
for its investment in 1997-A under the equity method of accounting. The
Partnership's original investment was recorded at cost and is adjusted by its
share of earnings, losses and distributions thereafter.
Information as to the financial position and results of operations of
1997-B as of and for the nine months ended September 30, 1997 is summarized
below:
September 30, 1997
Assets $ 5,788,006
===========
Liabilities $ 2,756,456
===========
Equity $ 3,031,550
===========
Nine Months Ended
September 30, 1997
Net income $ 31,550
==========
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements (continued)
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, 1997 and 1996
are as follows:
<TABLE>
1997 1996
---- ----
<S> <C> <C> <C>
Acquisition fees ................... $ -- $ 900,244 Capitalized
Organization and offering .......... -- --
Underwriting commissions ........... -- --
Management fees .................... 832,931 1,021,462 Charged to Operations
Administrative expense reimbursement 414,976 492,781 Charged to Operations
Sales commissions .................. -- --
---------- ----------
$1,247,907 $2,414,487
========== ==========
</TABLE>
The Partnership has investments in three joint ventures with other
Partnerships sponsored by the General Partner (See Note 4 for additional
information relating to the joint ventures).
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
September 30, 1997
Item 2. 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, leveraged leases, equity investment in a joint venture and
financings, of 51%, 31%, 9%, 5% and 4% of total investments at September 30,
1997, respectively, and 69%, 22%, 2%, less than 1% and 7% of total investment at
September 30, 1996.
Results of Operations
Three Months Ended September 30, 1997 and 1996
For the three months ended September 30, 1997 and 1996, the Partnership
leased or financed equipment with an initial cost of $92,699 and $20,889,581,
respectively, to 1 and 23 lessees or equipment users, respectively.
Revenues for the three months ended September 30, 1997 were $1,968,515,
representing a decrease of $417,204 or 17% from 1996. The decrease in revenues
was due to a decrease in finance income of $639,690 or 40%, a decrease in net
gain on sales or remarketing of equipment of $78,346 or 70%, a decrease in
interest income and other of $33,937 or 53% from 1996. These decreases were
partially offset by an increase in the rental income of $151,997 or 25%, an
increase in income from equity investment in joint venture of $96,228 and an
increase in income from leveraged leases of $86,544 or 100% from 1996. The
decrease in finance income resulted from the decrease in the average size of the
finance lease portfolio from 1996 to 1997. The net gain on sales or remarketing
decreased due to a decrease in the number of leases maturing, and the underlying
equipment being sold or remarketed. Interest income and other decreased due to a
decrease in the average cash balance from 1996 to 1997. Rental income increased
due to the Partnership's increased investment in operating leases. Income from
equity investment in joint ventures and income from leveraged lease increased
due to the Partnership's increased investment in these transactions in December
1996 and June 1997.
Expenses for the three months ended September 30, 1997 were $1,904,152,
representing a decrease of $466,484 or 20% from 1996. The decrease in expenses
was due to a decrease in interest expense of $249,361 or 23%, a decrease in
provision for bad debts of $125,000 or 63%, a decrease in depreciation of
$50,692 or 24%, a decrease of general and administrative expense of $49,867 or
35%, a decrease in minority interest in joint venture of $9,048 or 65%, a
decrease in management fees of $1,959 or 1% and a decrease in administrative
fees of $1,153 or 1%. These decreases were partially offset by an increase in
amortization of initial direct cost of $20,596 or 7%. Interest expense decreased
due to a decrease in the average debt outstanding from 1996 to 1997.
Depreciation decreased due to the Partnership's reduced investment. General and
administrative decreased due to a decrease in legal fees and printing charges.
Amortization of initial direct costs increased due to an increase in the average
size of the portfolio from 1996 to 1997 and as the result of the Partnership
contributing a portion of its portfolio to a joint venture. Based on an analysis
of delinquency, an assessment of overall risk and historical loss experience, it
was determined that no provision for bad debt was required for the nine months
ended September 30, 1997.
Net income for the three months ended September 30, 1997 and 1996 was
$64,363 and $15,083, respectively. The net income per weighted average limited
partnership unit was $.17 and $.04, respectively.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Nine Months Ended September 30, 1997 and 1996
For the nine months ended September 30, 1997 and 1996, the Partnership
leased or financed equipment with an initial cost of $1,918,026 and $30,008,132,
respectively, to 5 and 149 lessees or equipment users, respectively. The
weighted average initial transaction term relating to these transactions was 25
and 52 months, respectively.
Revenues for the nine months ended September 30, 1997 were $5,883,745,
representing a decrease of $1,716,993 or 23% from 1996. The decrease in revenues
was due to a decrease in finance income of $1,739,069 or 33%, a decrease in
interest income and other of $160,048 or 60%, a decrease in rental income of
$152,204 or 8% and a decrease in net gain on sales or remarketing of equipment
of $88,908 or 27% from 1996. These decreases were partially offset by an
increase in income from equity investment in joint venture of $252,576 and an
increase in income from leveraged leases of $170,660 or 100% from 1996. The
decrease in finance and rental income resulted from a decrease in the size of
the average finance and operating lease portfolios from 1996 to 1997. Net gain
on sales or remarketing of equipment decreased due to a decrease in the number
of leases maturing, and the underlying equipment being sold or remarketed.
Interest income and other decreased due to a decrease in the average cash
balance from 1996 to 1997. Income from equity investment in joint ventures and
income from leveraged lease increased due to the Partnership's increased
investment in these transactions in December 1996 and June 1997.
Expenses for the nine months ended September 30, 1997 were $5,878,514
representing a decrease of $1,861,886 or 24% from 1996. The decrease in expenses
was due to a decrease in interest expense of $1,041,848 or 29%, a decrease in
provision for bad debts of $375,000 or 83%, a decrease in general and
administrative expense of $216,395 or 43%, a decrease in management fees of
$188,531 or 18%, a decrease in administrative expense reimbursements of $77,805
or 16%, a decrease in depreciation of $50,692 or 8% and a decrease in minority
interest in joint venture of $12,735 or 22% from 1996. These decreases were
partially offset by an increase in amortization of initial direct cost of
$101,120 or 10% from 1996. Interest expense decreased due to a decrease in
average debt outstanding from 1996 to 1997. Based on an analysis of delinquency,
an assessment of overall risk and historical loss experience, it was determined
that no provision for bad debt was required for the nine months ended September
30, 1997. Management fees, general and administrative and administrative expense
reimbursements decreased due to a decrease in the average size of the portfolio
from 1996 to 1997 and as the result of the Partnership contributing a portion of
its portfolio to a joint venture.
Net income (loss) for the nine months ended September 30, 1997 and 1996 was
$5,231 and $(139,662), respectively. The net loss per weighted average limited
partnership unit was $.01 and $(.36), 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 nine months ended
September 30, 1997 and 1996 were cash provided by operations of $11,867,401 and
$9,544,216, respectively, proceeds from sales of equipment of $2,430,490 and
$3,688,805, respectively and proceeds from note payable affiliate of $7,780,328
in 1997. 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.
Cash distributions to limited partners for the nine months ended September
30, 1997 and 1996, which were paid monthly, totaled $3,079,868 and $3,090,799,
respectively, of which $5,179 and $0 was investment income and $3,074,689 and
$3,090,799 was a return of capital, respectively. The monthly annualized cash
distribution rate to limited partners was 10.75%, of which .02% and 0% was
investment income and 10.73% and 10.75% 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, 1997 and 1996 was $8.06 of which $.01 and $0 was
investment income and $8.05 and $8.06 was a return of capital, respectively.
In March 1997 the Partnership, ICON Cash Flow Partners, L.P., Series D
("Series D"), and L.P. Seven, contributed and assigned equipment lease and
finance receivables and residuals with a net book value of $5,553,962,
$4,874,857 and $5,465,238, respectively to ICON Receivables 1997-A LLC
("1997-A"), a special purpose entity created for the purpose of originating new
leases, managing existing contributed assets and, eventually, securitizing its
portfolio. In order to fund the acquisition of new leases, 1997-A obtained a
warehouse borrowing facility from Prudential Securities Credit Corporation (the
"1997-A Facility"). Borrowings under the 1997-A Facility were based on the
present value of the new leases. Outstanding amounts under the 1997-A Facility
bore interest equal to Libor plus 1.5%.
On September 19, 1997 the Partnership and Series E contributed and
assigned equipment lease and finance receivables and residuals with a net book
value of $5,346,909 and $15,698,027, respectively to 1997-A. The partnership,
Series D, Series E and L.P. Seven (collectively the "1997-A Members") received a
31.03%, 17.81% 31.19% and 19.97% interest, respectively, in 1997-A based on the
present value of their related contributions.
On September 19, 1997, 1997-A securitized substantially all of its
equipment leases and finance receivables and residuals. The net proceeds from
the securitization totaled $47,140,183, of which $16,658,877 was used to pay
down the 1997-A Facility, and the remaining proceeds, after establishing
reserves for expenses, were distributed to the 1997-A Members based on their
respective interests. 1997-A became the beneficial owner of a 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 "AA" by Duff & Phelps and Fitch, both nationally
recognized rating agencies. The General Partner, as servicer, is responsible for
managing, servicing, reporting on and administering the portfolio. 1997-A remits
all monies received from the portfolio to TCB. TCB is responsible for disbursing
to the noteholders their respective principal and interest and to 1997-A the
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
excess of cash collected over debt service from the portfolio. The 1997-A
Members receive their pro rata share of any excess cash on a monthly basis from
1997-A. The Partnership's share of the gross proceeds from the securitization
totaled $9,543,757. The Partnership accounts for its investment in 1997-A under
the equity method of accounting. The Partnership's original investment was
recorded at cost and is adjusted by its share of earnings, losses and
distributions thereafter.
In August 1997 the Partnership, Series E and L.P. Seven (collectively, the
"1997-B Members") formed ICON Receivables 1997-B LLC ("1997-B"), for the purpose
of originating lease transactions and ultimately securitizing its portfolio. The
1997-B Members contributed $250,000 (8.33% interest), $2,250,000 (75.00%
interest) and $500,000 (16.67% interest), respectively to 1997-B. In order to
fund the acquisition of additional leases, 1997-B obtained a warehouse borrowing
facility from Prudential Securities Credit Corporation (the "1997-B Facility").
Borrowings under the 1997-B Facility are based on the present value of the new
leases, provided that in the aggregate, the amount outstanding cannot exceed
$13,000,000. Outstanding amounts under the 1997-B Facility bear interest equal
to Libor plus 1.5%. Collections of receivables from leases are used to pay down
the 1997-B Facility, however, in the event of a default, all of 1997-B's assets
are available to cure such default. The net proceeds from the expected
securitization of these assets will be used to pay-off the remaining 1997-B
Facility balance and the remaining proceeds will be distributed to the 1997-B
Members in accordance with their membership interests. The Partnership accounts
for its investment in 1997-A under the equity method of accounting. The
Partnership's original investment was recorded at cost and is adjusted by its
share of earnings, losses and distributions thereafter.
As of September 30, 1997, 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.
<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
No reports on Form 8-K were filed by the Partnership during the quarter ended
September 30, 1997.
<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 14, 1997 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
<NAME> ICON Cash Flow Partners L.P. Six
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,858,361
<SECURITIES> 0
<RECEIVABLES> 52,399,438
<ALLOWANCES> 157,602
<INVENTORY> 81,931
<CURRENT-ASSETS> * 0
<PP&E> 17,063,797
<DEPRECIATION> 34,082
<TOTAL-ASSETS> 60,477,286
<CURRENT-LIABILITIES> ** 0
<BONDS> 19,714,599
0
0
<COMMON> 0
<OTHER-SE> 22,614,182
<TOTAL-LIABILITY-AND-EQUITY> 60,477,286
<SALES> 5,883,745
<TOTAL-REVENUES> 5,883,745
<CGS> 1,728,093
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,535,445
<LOSS-PROVISION> 75,000
<INTEREST-EXPENSE> 2,539,976
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,231
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
<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>
