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, 1999
-----------------------------------------------------------
[ ] 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
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
600 Mamaroneck Avenue, Harrison, New York 10528-1632
- --------------------------------------------------------------------------------
(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 I - 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,
1999 1998
------------ -----------
Assets
<S> <C> <C>
Cash ....................................................... $ 2,845,716 $ 125,260
------------ ------------
Investment in operating leases
Equipment, at cost ...................................... 19,100,646 19,100,646
Accumulated depreciation ................................ (3,436,104) (2,967,204)
------------ ------------
15,664,542 16,133,442
------------ ------------
Investment in finance leases
Minimum rents receivable ................................ 8,031,472 13,507,407
Estimated unguaranteed residual values .................. 9,228,742 11,238,451
Initial direct costs .................................... 135,723 275,189
Unearned income ......................................... (1,911,186) (3,371,116)
Allowance for doubtful accounts ......................... (266,620) (231,149)
------------ ------------
15,218,131 21,418,782
------------ ------------
Investments in unconsolidated joint ventures ............... 1,572,540 1,803,243
------------ ------------
Investment in financings
Receivables due in installments ......................... 288,953 5,431,790
Initial direct costs .................................... 970 4,917
Unearned income ......................................... (18,667) (761,705)
Allowance for doubtful accounts ......................... (49,913) (49,913)
------------ ------------
221,343 4,625,089
------------ ------------
Accounts receivable from General Partner and affiliates, net 162,250 --
------------ ------------
Other assets ............................................... 313,064 381,805
------------ ------------
Total assets ............................................... $ 35,997,586 $ 44,487,621
============ ============
</TABLE>
(continued on next page)
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Balance Sheets (Continued)
(unaudited)
<TABLE>
September 30, December 31,
1999 1998
------------ -----------
Liabilities and Partners' Equity
<S> <C> <C>
Notes payable - non-recourse .......................................... $ 17,455,614 $ 22,491,500
Note payable - non-recourse - secured financing ....................... 210,377 887,815
Security deposits, deferred credits and other payables ................ 2,409,249 2,749,039
Minority interest in consolidated joint venture ....................... 56,598 49,724
Accounts payable to General Partner and affiliates, net ............... -- 425,089
------------ ------------
20,131,838 26,603,167
------------ ------------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner .................................................... (169,141) (149,325)
Limited partners (378,368 and 379,353.20 units outstanding,
$100 per unit original issue price in 1999 and 1998, respectively) 16,034,889 18,033,779
------------ ------------
Total partners' equity ........................................... 15,865,748 17,884,454
------------ ------------
Total liabilities and partners' equity ................................ $ 35,997,586 $ 44,487,621
============ ============
</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,
1999 1998 1999 1998
---- ---- ---- ----
Revenues
<S> <C> <C> <C> <C>
Rental income ...................... $ 615,000 $ 615,000 $ 1,845,000 $ 1,820,986
Finance income ..................... 409,867 515,474 1,581,571 1,683,042
Income (loss) from investment
in unconsolidated joint ventures . 25,184 (66,304) 183,598 256,624
Income from leveraged lease, net ... -- 67,103 -- 181,275
Interest income and other .......... 31,612 40,815 42,679 157,339
Net gain on sales of equipment ..... 23,877 88,305 344,730 216,536
----------- ----------- ----------- -----------
Total revenues ..................... 1,105,540 1,260,393 3,997,578 4,315,802
----------- ----------- ----------- -----------
Expenses
Interest ........................... 373,277 536,643 1,244,203 1,680,740
Depreciation ....................... 156,301 175,490 468,900 484,022
Management fees - General Partner .. 138,586 239,244 535,535 738,316
Amortization of initial direct costs 38,112 137,398 143,413 470,302
Administrative expense reimbursement
- General Partner ................ 74,057 120,028 273,183 370,045
General and administrative ......... 83,158 53,222 217,215 215,898
Provision for bad debts ............ -- (47,004) -- 77,996
Minority interest in joint venture . 2,376 3,896 6,874 5,589
----------- ----------- ----------- -----------
Total expenses ..................... 865,867 1,218,917 2,889,323 4,042,908
----------- ----------- ----------- -----------
Net income (loss) ..................... $ 239,673 $ 41,476 $ 1,108,255 $ 272,894
=========== =========== =========== ===========
Net income (loss) allocable to:
Limited partners ................... $ 237,276 $ 41,061 1,097,172 $ 270,165
General Partner .................... 2,397 415 11,083 2,729
----------- ----------- ----------- -----------
$ 239,673 $ 41,476 $ 1,108,255 $ 272,894
=========== =========== =========== ===========
Weighted average number of limited
partnership units outstanding ...... 378,859 380,102 379,187 380,197
=========== =========== =========== ===========
Net income (loss) per weighted average
limited partnership unit ........... $ .63 $ .11 $ 2.89 $ .71
=========== =========== =========== ===========
</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, 1999 and
the Year Ended December 31, 1998
(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, 1997 $21,718,078 $(112,740) $21,605,338
Cash distributions
to partners $9.53 $1.22 (4,085,189) (41,261) (4,126,450)
Limited partnership units
redeemed (1,324.92 units) (62,073) - (62,073)
Net income 462,963 4,676 467,639
----------- --------- -----------
Balance at
December 31, 1998 18,033,779 (149,325) 17,884,454
Cash distributions
to partners $5.17 $2.89 (3,058,578) (30,899) (3,089,477)
Limited partnership units
redeemed (984.73 units) (37,484) - (37,484)
Net income 1,097,172 11,083 1,108,255
----------- --------- -----------
Balance at
September 30, 1999 $16,034,889 $(169,141) $15,865,748
=========== ========= ===========
</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>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................................... $ 1,108,255 $ 272,894
----------- -----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation ...................................................... 468,900 484,022
Provision for bad debts ........................................... -- 77,996
Rental income - paid directly to lenders by lessees ............... (1,845,000) (1,820,986)
Interest expense on non-recourse financing paid directly by lessees 1,212,612 1,574,789
Finance income portion of receivables paid directly
to lenders by lessees ........................................... (1,297,365) (1,329,362)
Amortization of initial direct costs .............................. 143,413 470,302
Income from investments in unconsolidated joint ventures .......... (183,598) (256,624)
Income from leveraged lease, net .................................. -- (181,275)
Net gain on sales or remarketing of equipment ..................... (344,730) (216,536)
Change in operating assets and liabilities:
Collection of principal - non-financed receivables ............. 1,982,792 1,792,962
Distributions received from unconsolidated joint ventures ...... 574,496 431,365
Cash investments in unconsolidated joint ventures, net ......... 37,431 (250,757)
Accounts receivable from General Partner and affiliates, net ... (162,250)
Accounts payable to General Partner and affiliates, net ........ (425,089) (3,747)
Security deposits and deferred credits and other payables ...... (339,790) 437,154
Minority interest in consolidated joint venture ................ 6,874 5,589
Other, net ..................................................... 93,906 39,527
----------- -----------
Total adjustments ............................................ (77,398) 1,254,419
----------- -----------
Net cash provided by operating activities ....................... 1,030,857 1,527,313
----------- -----------
Cash flows from investing activities:
Proceeds from sales of equipment ..................................... 5,493,998 2,215,516
Equipment and receivables purchased .................................. -- (2,268,072)
----------- -----------
Net cash provided by (used in) investing activities ............ 5,493,998 (52,556)
----------- -----------
</TABLE>
(continued on next page)
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (Continued)
For the Nine Months Ended September 30,
<TABLE>
1999 1998
---- ----
<S> <C> <C>
Cash flows from financing activities:
Cash distributions to partners .................... (3,089,477) (3,096,316)
Principal payments on non-recourse securitized debt (677,438) (1,066,051)
Redemption of limited partnership units ........... (37,484) (62,074)
----------- -----------
Net cash used in financing activities ....... (3,804,399) (4,224,441)
----------- -----------
Net increase (decrease) in cash ...................... 2,720,456 (2,749,684)
Cash at beginning of period .......................... 125,260 4,000,250
----------- -----------
Cash at end of period ................................ $ 2,845,716 $ 1,250,566
=========== ===========
</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, 1999 and 1998, non-cash activities
included the following:
<TABLE>
1999 1998
---- ----
<S> <C> <C>
Principal and interest on direct finance
receivables paid directly to lenders by lessees ....... $ 3,882,631 $ 4,932,433
Rental income assigned operating lease receivable ........ 1,845,000 1,820,986
Principal and interest on non-recourse
financing paid directly to lenders by lessees ......... (5,727,631) (6,753,419)
Fair value of equipment and receivables purchased for
debt and payables ..................................... -- (554,531)
Non-recourse notes payable assumed in purchase price ..... -- 526,499
Accounts payable - equipment ............................. -- 28,032
Decrease in investments in finance leases and
financings due to contribution to joint ventures ...... (197,626) --
Increase in equity investment in joint ventures .......... 197,626 --
Increase in security deposits and deferred credits ....... 1,017 --
Decrease in notes payable non-recourse due to terminations (1,017)
----------- -----------
$ -- $ --
=========== ===========
</TABLE>
Interest expense of $1,244,203 and $1,680,740 for the nine months ended
September 30, 1999 and 1998 consisted of interest expense on non-recourse
financing accrued or paid directly to lenders by lessees of $1,212,612 and
$1,574,789, respectively, interest expense on notes payable - non-recourse -
secured financing of $31,591 and $103,825, respectively, and other interest of
$0 and $2,126, respectively.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
September 30, 1999
(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 1998
Annual Report on Form 10-K.
2. Redemption of Limited Partnership Units
The General Partner consented to the Partnership redeeming 985 and 465
limited partnership units during the nine months ended September 30, 1999 and
1998, respectively. The redemption amount was calculated following the specified
redemption formula in 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.
3. Net Investment in Leveraged Lease
In September 1996 the Partnership acquired, subject to a leveraged lease,
the beneficial interest in an aircraft. In December 1998 the Partnership sold
the beneficial interest to Airbus Industrie. The proceeds from the sale totaled
$20,834,705 and were used to pay off the debt and a third party under a residual
sharing agreement. The remaining proceeds were retained by the Partnership and
the Partnership recognized an $884,876 gain on the sale of the beneficial
interest.
4. Related Party Transactions
Fees paid or accrued by the Partnership to the General Partner or its
affiliates for the nine months ended September 30, 1999 and 1998 are as follows:
1999 1998
---- ----
Management fees $535,535 $ 738,316 Charged to operations
Administrative expense
reimbursements 273,183 370,045 Charged to operations
-------- ----------
Total $808,718 $1,108,361
======== ==========
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements (continued)
The Partnership has investments in five joint ventures with affiliates.
(See Note 5 for additional information relating to the joint ventures.)
5. Investments in Joint Ventures
The Partnership has investments in five joint ventures with affiliates for
the purpose of acquiring and managing various assets.
AIC Trust
In July 1999 the Partnership, ICON Income Fund Eight A L.P. ("Fund Eight")
and ICON Cash Flow Partners L. P. Seven ("L. P. Seven") formed a joint venture,
("AIC Trust"), for the purpose of managing a portfolio of lease assets. Profit,
losses, excess cash and disposition proceeds are allocated based on the
Partnership's interest in the venture. The Partnership has acquired a 0%
interest in the venture during the quarter ending September 30, 1999.
ICON Boardman Funding L.L.C.
In December 1998 the Partnership and three affiliates, ICON Cash Flow
Partners, L. P., Series C ("Series C"), ICON Cash Flow Partners L.P. Seven
("L.P. Seven") and ICON Income Fund Eight A L.P. ("Eight A") formed ICON
Boardman Funding L.L.C. ("ICON BF"), for the purpose of acquiring a lease with
Portland General Electric. The purchase price totaled $27,421,810, and was
funded with cash and non-recourse debt assumed in the purchase price. The
Partnership, Series C, L.P. Seven and Eight A received a .5%, .5%, .5% and 98.5%
interest, respectively, in ICON BF. The Partnership's original investment was
recorded at cost of $56,960 and is adjusted by its share of earnings, losses and
distributions thereafter. Simultaneously with the acquisition of the Portland
General Electric lease by ICON BF, a portion of the rent receivable in excess of
the senior debt payments was acquired by the Partnership from ICON BF for
$3,801,108. On March 30, 1999, ICON BF exercised its right to acquire the
Partnership's investment in a portion of the rent receivable in excess of the
senior debt payments for $3,097,637 and simultaneously financed, with a third
party, all of the rent receivable in excess of the senior debt payments. There
was no gain or loss to the Partnership on this transaction. ICON BF received
$7,643,867 from the financing. The proceeds from the financing, net of the
purchase of the Partnership's investment, were distributed to the members of
ICON BF in accordance with their ownership interests.
<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 ICON
BF as of and for the nine months ended September 30, 1999 is summarized below:
September 30, 1999
Assets $26,362,449
===========
Liabilities $18,479,556
===========
Equity $ 7,882,893
===========
Partnership's share of equity $ 39,414
===========
Nine Months Ended
September 30, 1999
Net income $1,037,134
==========
Partnership's share of net income $ 5,186
==========
Distributions $4,546,230
==========
Partnership's share of distributions $ 22,731
==========
ICON Receivables 1997-B L.L.C.
In August 1997 the Partnership, ICON Cash Flow Partners, L. P., Series E
("Series E") and L.P. Seven formed ICON Receivables 1997-B L.L.C. ("1997-B"), a
special purpose entity for the purpose of originating leases and securitizing
its portfolio. The Partnership, Series E and L.P. Seven contributed cash and
received an 8.33%, 75.00% and 16.67% interest, respectively, in 1997-B. The
Partnership's cash contributions amounted to $250,000 in 1997 and $163,978 in
1998. In order to fund the acquisition of leases, 1997-B obtained a warehouse
borrowing facility from a lender (the "1997-B Warehouse Facility"). In October
1998, 1997-B completed an equipment securitization. The net proceeds from the
securitization of these assets were used to pay-off the remaining 1997-B
Warehouse Facility balance and remaining proceeds were distributed to the 1997-B
members in accordance with their membership interests. The Partnership accounts
for its investment in 1997-B under the equity method of accounting. The
Partnership's original investment was recorded at cost and is adjusted by its
share of earnings, losses, contribution 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-B as of and for the nine months ended September 30, 1999 is summarized
below:
September 30, 1999
Assets $31,270,536
===========
Liabilities $29,507,730
===========
Equity $ 1,762,806
===========
Partnership's share of equity $ 146,842
===========
Nine Months Ended
September 30, 1999
Net income $(30,394)
========
Partnership's share of net income $ (2,532)
========
Distributions $582,432
========
Partnership's share of distributions $ 48,517
========
ICON Receivables 1997-A L.L.C.
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 to ICON Receivables 1997-A L.L.C. ("1997-A"),
a special purpose entity created for the purpose of originating leases, managing
existing contributed assets and securitizing its portfolio. In September 1997
the Partnership, Series E and L.P. Seven contributed and assigned additional
equipment lease and finance receivables and residuals to 1997-A. The
Partnership, Series D, Series E and L.P. Seven 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. In September 1997, 1997-A securitized substantially all
of its equipment leases and finance receivables and residuals. 1997-A became the
beneficial owner of a trust. 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, contributions 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, 1999 is summarized
below:
September 30, 1999
Assets $21,011,645
===========
Liabilities $16,870,651
===========
Equity $ 4,140,993
===========
Partnership's share of equity $ 1,324,044
===========
Nine Months Ended
September 30, 1999
Net income $ 562,160
==========
Partnership's share of net income $ 174,488
==========
Distributions $1,621,550
==========
Partnership's share of distributions $ 503,248
==========
ICON Cash Flow Partners L.L.C. 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 which is currently subject to an
operating lease with Aerovias de Mexico, S. A. de C. V. ("Aeromexico") through
October 2002. The Partnership and Series E contributed 99% and 1% of the cash
required for such acquisition, respectively, to ICON Cash Flow LLC II. 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." The
original lease term expired in April 1997 and Alaska Airlines, Inc. returned the
aircraft. In June 1997 ICON Cash Flow LLC II released the aircraft to
Aeromexico. The new lease is an operating lease which expires in September 2002.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements (continued)
ICON Cash Flow Partners L.L.C. 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 is currently subject to
an operating lease with Aeromexico through October 2002. The Partnership and
Series E contributed 1% and 99% of the cash required for such acquisition,
respectively, to ICON Cash Flow LLC I. Profits, losses, excess cash and
disposition proceeds are allocated 1% to the Partnership and 99% to Series E.
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, 1999 is
summarized below:
September 30, 1999
Assets $16,857,604
===========
Liabilities $10,633,627
===========
Equity $ 6,223,977
===========
Partnership's share of equity $ 62,240
===========
Nine Months Ended
September 30, 1999
Net income $645,591
========
Partnership's share of net income $ 6,456
========
6. Security Deposits, Deferred Credits and Other Payables
Security deposits, deferred credits and other payables at September 30,
1999 and 1998 include $635,723 and $654,805, respectively, of proceeds received
on residuals, which will be applied upon final remarketing of the related
equipment.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
September 30, 1999
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 operating
leases, finance leases, investments in unconsolidated joint ventures, financings
and leveraged leases of 47%, 47%, 5%, 1% and 0% of total investments at
September 30, 1999, respectively, and 36%, 52%, 5%, 3% and 4% of total
investments at September 30, 1998, respectively.
Results of Operations for the Three Months Ended September 30, 1999 and 1998
For the three months ended September 30, 1999 and 1998 the Partnership did
not enter into any new leases or financing agreements.
Revenues for the three months ended September 30, 1999 were $1,105,540
representing a decrease of $154,853 or 12% from 1998. The decrease in revenues
was due to a decrease in finance income of $105,607 or 20%, a decrease in income
from leveraged lease, net of $67,103 or 100%, a decrease in net gain on sales of
equipment of $64,428 or 73% and a decrease in interest income and other of
$9,203 or 23%. These decreases were partially offset by income from investment
in unconsolidated joint ventures of $25,184 for the three months ended September
30, 1999 compared to the a loss from investment in unconsolidated joint ventures
of $66,304 for the three months ended September 30, 1998. The decrease in
finance income resulted from a decrease in the average size of the finance lease
portfolio from 1998 to 1999. The decrease in income from leveraged leases was a
result of the Partnership's 1998 termination of its lease with Airbus Industrie.
The decrease in net gain on sales of equipment resulted from a decrease in the
number of leases maturing and a decrease in the amount of underlying equipment
being sold or remarketed for which proceeds received were in excess of the
remaining carrying value. The decrease in interest income and other was due to a
decrease in late charge income. For the three months ended September 30, 1999,
the Partnership did not record any loss provision for 1997-A and the Partnership
earned income from investments in unconsolidated joint ventures. ICON
Receivables 1997-A L.L.C. ("1997-A") recorded a loss provision of $600,000 for
the three months ended September 30, 1998 resulting in a loss to the Partnership
from investments in unconsolidated joint ventures for that period.
Expenses for the three months ended September 30, 1999 were $865,867
representing a decrease of $353,050 or 29% from 1998. The decrease in expenses
was a result of a decrease in interest expense of $163,366 or 30%, a decrease in
management fees of $100,658 or 42%, a decrease in amortization of initial direct
costs of $99,286 or 72%, a decrease in administrative expense reimbursements of
$45,971 or 38%, and a decrease in depreciation expense of $19,189 or 11%. These
decreases were partially offset by an increase in general and administrative
expense of $29,936 or 56%. The reversal in the provision for bad debt reduced
expenses by $47,004 in 1998; the provison for bad debt did not change in the
current quarter. The decrease in interest expense was due to a decrease in the
average debt outstanding from 1998 to 1999. The decreases in management fees,
amortization of initial direct costs, administrative expense reimbursements and
depreciation were a result of a decrease in the average size of the finance
lease portfolio from 1998 to 1999. As a result of an analysis of delinquency,
assessment of overall risk and a review of historical loss experience, the
Partnership recorded a reversal of the provision for bad debt for the three
months ended September 30, 1998 and recorded no provision for the three months
ended September 30, 1999. The increase in general and administrative expense was
due to an increase in professional fees.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Net income for the three months ended September 30, 1999 and 1998 was
$239,673 and $41,476, respectively. The net income per weighted average limited
partnership unit outstanding was $.63 and .11 for 1999 and 1998, respectively.
Results of Operations for the Nine Months Ended September 30, 1999 and 1998
For the nine months ended September 30, 1999 the Partnership did not enter
into any new leases or financing agreements. For the nine months ended September
30, 1998, the Partnership leased or financed additional equipment with an
initial cost of $2,822,604 to 4 lessees.
Revenues for the nine months ended September 30, 1999 were $3,997,578,
representing a decrease of $318,224 or 7%. The decrease in revenues was due to a
decrease in income from leveraged lease, net of $181,275 or 100%, a decrease in
interest income and other of $114,660 or 73%, a decrease in finance income of
$101,471 or 6% and a decrease in income from investment in unconsolidated joint
ventures of $73,026 or 28%. These decrease were partially offset by an increase
in net gain on sales of equipment of $128,194 or 59%. The decrease in income
from leveraged leases was a result of the Partnership's 1998 termination of its
lease with Airbus Industrie. The decrease in interest income and other was
primarily due to a decrease in interest received due to a lower average cash
balance from 1998 to 1999. The decrease in finance income resulted from a
decrease in the average size of the finance lease portfolio from 1998 to 1999.
The increase in net gain on sales of equipment resulted from an increase in the
number of leases maturing and an increase in the amount of underlying equipment
being sold for which proceeds received were in excess of the remaining carrying
value. Based on an analysis of delinquency, assessment of overall risk and a
review of historical loss experience ICON Receivables 1997-B L.L.C. ("(1997-B")
recorded a loss provision of $900,000 for the nine months ended September 30,
1999 compared to a loss provision recorded by ICON Receivables 1997-A L.L.C.
("1997-A") of $600,000 for the nine months ended September 30, 1998, resulting
in a decrease for the Partnership in income from investment in unconsolidated
joint ventures from 1998 to 1999.
Expenses for the nine months ended September 30, 1999 were $2,889,323
representing a decrease of $1,153,585 or 29%. The decrease in expenses was due
to a decrease in interest expense of $436,537 or 26%, a decrease in amortization
of initial direct costs of $326,889 or 70%, a decrease in management fees of
$202,781 or 27%, a decrease in administrative expense remibursement of $96,862
or 26% and a decrease in provision for bad debt of $77,996 or 100%. The decrease
in interest expense was due to a decrease in the average debt outstanding from
1998 to 1999. The decreases in amortization of initial direct costs, management
fees and administrative expense reimbursements were a result of a decrease in
the average size of the finance lease portfolio from 1998 to 1999. As a result
of an analysis of delinquency, assessment of overall risk and a review of
historical loss experience, the Partnership recorded a provision for bad debt of
$77,996 for the nine months ended September 30, 1998. Based on a similar
analysis, the Partnership determined that no additional provision for bad debt
was required for the nine months ended September 30, 1999.
Net income for the nine months ended September 30, 1999 and 1998 was
$1,108,255 and $272,894, respectively. The net income per weighted average
limited partnership unit outstanding was $2.89 and $.71 for 1999 and 1998,
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, 1999 and 1998 were net cash provided by operations of $1,030,857
and $1,527,313, respectively, and proceeds from sales of equipment of $5,493,998
and $2,215,516, respectively. These funds were used to fund cash distributions,
to make payments on borrowings and, in 1998, to purchase equipment. The
Partnership intends to fund cash distributions utilizing cash provided by
operations and to purchase additional equipment utilizing proceeds from sales of
equipment.
Monthly cash distributions to limited partners for the nine months ended
September 30, 1999 and 1998 totaled $3,058,578 and $3,065,352, respectively, of
which $1,097,172 and $270,165 was investment income and $1,961,406 and
$2,795,187 was a return of capital, respectively. The monthly annualized cash
distribution rate to limited partners was 10.75% in 1999 and 1998, of which
3.86% and .95% was investment income and 6.89% and 9.80% was a return of
capital, respectively. The limited partner distribution per weighted average
unit outstanding in 1999 and 1998 was $8.06, of which $2.89 and $.71 was
investment income and $5.17 and $7.35 was a return of capital, respectively. The
proportion of the investment income distribution relative to the return of
capital distribution increased due to the growth of the Partnership's net income
over the prior period.
As of September 30, 1999 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 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.
In December 1998 the Partnership and three affiliates, ICON Cash Flow
Partners, L.P., Series C ("Series C"), L.P. Seven and ICON Income Fund Eight A
L.P. ("Eight A") formed ICON Boardman Funding LLC ("ICON BF"), for the purpose
of acquiring a lease with Portland General Electric. The purchase price totaled
$27,421,810, and was funded with cash and non-recourse debt assumed in the
purchase price. The Partnership, Series C, L.P. Seven and Eight A received a
.5%, .5%, .5% and 98.5% interest, respectively, in ICON BF. The Partnership's
original investment was recorded at cost of $56,960 and will be adjusted by its
share of earnings, losses and distributions, thereafter. Simultaneously with the
acquisition of the Portland General Electric lease by ICON BF, a portion of the
rent receivable in excess of the senior debt payments was acquired by the
Partnership from ICON BF for $3,801,108. On March 30, 1999, ICON BF exercised
its right to acquire the Partnership's investment in a portion of the rent
receivable in excess of the senior debt payments for $3,097,637 and financed,
with a third party, all of the rent receivable in excess of the senior debt
payments. There was no gain or loss to the Partnership on this transaction. ICON
BF received $7,643,867 from the financing. The proceeds from the financing, net
of the purchase of the Partnership's investment, were distributed to the members
of ICON BF in accordance with their ownership interests.
In August 1997 the Partnership, Series E and L.P. Seven formed ICON
Receivables 1997-B LLC ("1997-B"), a special purpose entity formed for the
purpose of originating leases and securitizing its portfolio. The Partnership,
Series E and L.P. Seven 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 leases, 1997-B obtained a warehouse borrowing
facility (the "1997-B Warehouse Facility") from a lender. In October 1998,
1997-B completed an equipment securitization. The net proceeds from
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
the securitization of these assets were used to pay-off the remaining 1997-B
Warehouse Facility balance and any remaining proceeds were distributed to the
1997-B members in accordance with their membership interests. The Partnership
accounts for its investment in 1997-B 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.
Year 2000 Issue
The Year 2000 issue arose because many existing computer programs have
been written using two digits rather than four to define the applicable year. As
a result, programs could interpret dates ending in "00" as the year 1900 rather
than the year 2000. In certain cases, such errors could result in system
failures or miscalculations that disrupt the operation of the affected
businesses.
The Partnership uses computer information systems provided by the General
Partner and has no computer information systems of its own. The software related
to the General Partner's primary computer information systems are provided by
third party vendors. The General Partner has formally communicated with these
vendors and has received assurance that their programs are Year 2000 compliant.
In addition, the General Partner has gathered information about the Year 2000
readiness of significant vendors and third-party servicers and continues to
monitor developments in this area. All of the General Partner's peripheral
computer technologies, such as its network operating system and third party
software applications, including payroll and electronic banking, have been
evaluated and have been found to be Year 2000 compliant. The ultimate impact of
the Year 2000 issue on the Partnership will depend to a great extent on the
manner in which the issue is addressed by the Partnership's lessees. Each of the
Partnership's lessees will have a material self-interest in resolving any Year
2000 issue. However, non-compliance on the part of a lessee could result in lost
or delayed revenues to the Partnership. The effect of this risk to the
Partnership is not determinable.
The General Partner is responsible for costs relating to the assessment
and development of its Year 2000 compliance remediation plan, as well as the
testing of the hardware and software owned or licensed for its personal
computers. The General Partner's costs incurred to date and expected future
costs are not material.
<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 during the quarter ended September 30, 1999.
<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, 1999 /s/ Thomas W. Martin
- ----------------- ---------------------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal financial and accounting 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-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,845,716
<SECURITIES> 0
<RECEIVABLES> 8,320,425
<ALLOWANCES> 316,533
<INVENTORY> 0
<CURRENT-ASSETS> * 0
<PP&E> 19,100,646
<DEPRECIATION> 3,436,104
<TOTAL-ASSETS> 35,997,586
<CURRENT-LIABILITIES> ** 0
<BONDS> 17,665,991
0
0
<COMMON> 0
<OTHER-SE> 15,865,748
<TOTAL-LIABILITY-AND-EQUITY> 35,997,586
<SALES> 3,954,899
<TOTAL-REVENUES> 3,997,578
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,645,120
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,244,203
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,108,255
<EPS-BASIC> 2.89
<EPS-DILUTED> 2.89
<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>
