UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended September 30, 1998
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[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
-------------------- -------------------------
Commission File Number 0-28136
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ICON Cash Flow Partners L.P. Six
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(Exact name of registrant as specified in its charter)
Delaware 13-3723089
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
600 Mamaroneck Avenue, Harrison, New York 10528-1632
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(Address of principal executive offices) (Zip code)
(914) 698-0600
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Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[ x ] Yes [ ] No
<PAGE>
PART 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,
1998 1997
---- ----
Assets
Cash .................................... $ 1,250,566 $ 4,000,250
------------ ------------
Investment in finance leases
Minimum rents receivable ............. 15,337,694 20,412,591
Estimated unguaranteed residual values 11,619,521 10,714,403
Initial direct costs ................. 399,191 826,251
Unearned income ...................... (3,793,211) (4,216,807)
Allowance for doubtful accounts ...... (267,151) (110,120)
------------ ------------
23,296,044 27,626,318
Investment in operating leases
Equipment, at cost ................... 19,100,646 19,100,646
Accumulated depreciation ............. (2,552,325) (2,230,411)
------------ ------------
16,548,321 16,870,235
Equity investment in joint ventures ..... 2,225,420 2,149,404
------------ ------------
Net investment in leveraged lease ....... 2,026,916 1,845,641
------------ ------------
Investment in financings
Receivables due in installments ...... 1,136,356 2,029,854
Initial direct costs ................. 7,689 21,918
Unearned income ...................... (70,675) (186,139)
Allowance for doubtful accounts ...... (21,685) (5,823)
------------ ------------
1,051,685 1,859,810
------------ ------------
Other assets ............................ 301,626 485,510
------------ ------------
Total assets ............................ $ 46,700,578 $ 54,837,228
============ ============
(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,
1998 1997
Liabilities and Partners' Equity
<S> <C> <C>
Note payable - non-recourse - secured financing ....... $ 1,178,273 $ 2,244,324
Notes payable - non-recourse .......................... 24,291,032 28,943,163
Security deposits and deferred credits ................ 2,242,815 1,756,094
Accounts payable ...................................... 168,300 189,835
Minority interest in joint venture .................... 52,740 47,151
Accounts payable to General Partner and affiliates, net 47,576 51,323
------------ ------------
27,980,736 33,231,890
Commitments and Contingencies
Partners' equity (deficiency)
General Partner .................................... (140,975) (112,740)
Limited partners (380,103 and 380,678
units outstanding, $100 per unit original
issue price in 1998 and 1997, respectively) ...... 18,860,817 21,718,078
------------ ------------
Total partners' equity ........................... 18,719,842 21,605,338
------------ ------------
Total liabilities and partners' equity ................ $ 46,700,578 $ 54,837,228
============ ============
</TABLE>
See accompanying notes to unaudited 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,
1998 1997 1998 1997
---- ---- ---- ----
Revenues
<S> <C> <C> <C> <C>
Rental income ...................... $ 615,000 $ 755,149 $ 1,820,986 $ 1,657,250
Finance income ..................... 515,474 965,035 1,683,042 3,442,826
Net gain on sales or
remarketing of equipment ......... 88,305 33,474 216,536 236,417
Income from leveraged lease, net ... 67,103 86,544 181,275 184,217
Interest income and other .......... 40,815 30,457 157,339 105,757
Income (loss) from equity investment
in joint venture ................. (66,304) 97,856 256,624 257,278
----------- ----------- ----------- -----------
Total revenues ..................... 1,260,393 1,968,515 4,315,802 5,883,745
----------- ----------- ----------- -----------
Expenses
Interest ........................... 536,643 846,446 1,680,740 2,539,976
Management fees - General Partner .. 239,244 267,066 738,316 832,931
Amortization of initial direct costs 137,398 323,123 470,302 1,097,694
Administrative expense reimbursement
- General Partner ................ 120,028 132,869 370,045 414,976
Depreciation ....................... 175,490 175,490 484,022 585,795
General and administrative ......... 53,222 79,326 215,898 287,538
Minority interest in joint venture . 3,896 4,832 5,589 44,604
Provision for bad debts ............ (47,004) 75,000 77,996 75,000
----------- ----------- ----------- -----------
Total expenses ..................... 1,218,917 1,904,152 4,042,908 5,878,514
----------- ----------- ----------- -----------
Net income ............................ $ 41,476 $ 64,363 $ 272,894 $ 5,231
=========== =========== =========== ===========
Net income allocable to:
Limited partners ................... $ 41,061 $ 63,719 $ 270,165 $ 5,179
General Partner .................... 415 644 2,729 52
----------- ----------- ----------- -----------
$ 41,476 $ 64,363 $ 272,894 $ 5,231
=========== =========== =========== ===========
Weighted average number of limited
partnership units outstanding ...... 380,102 380,808 380,197 381,924
=========== =========== =========== ===========
Net income per weighted average
limited partnership unit ........... $ .11 $ .17 $ .71 $ .01
=========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited 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, 1998 and
the Years Ended December 31, 1997, 1996 and 1995
(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, 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
</TABLE>
(continued on next page)
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Changes in Partners' Equity (Continued)
For the Nine Months Ended September 30, 1998 and
the Years Ended December 31, 1997, 1996 and 1995
(unaudited)
<TABLE>
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
(Per weighted average unit)
Cash distributions
<S> <C> <C> <C> <C> <C>
to partners .......... $ 10.66 $ .09 (4,102,940) (41,444) (4,144,384)
Limited partnership units
redeemed (2,186 units) (150,550) -- (150,550)
Net income .............. 35,264 356 35,620
------------ ------------ ------------
Balance at
December 31, 1997 .... 21,718,078 (112,740) 21,605,338
Cash distributions
to partners .......... $ 7.35 $ .71 (3,065,352) (30,964) (3,096,316)
Limited partnership units
redeemed (1,215 units) (62,074) -- (62,074)
Net income .............. 270,165 2,729 272,894
------------ ------------ ------------
Balance at
September 30, 1998 ... $ 18,860,817 $ (140,975) $ 18,719,842
============ ============ ============
</TABLE>
See accompanying notes to unaudited 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>
1998 1997
---- ----
Cash flows provided by operating activities:
<S> <C> <C>
Net income ................................................. $ 272,894 $ 5,231
------------ ------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation ............................................ 484,022 585,795
Rental income - paid directly to lenders by lessees ..... (1,820,986) (1,657,250)
Finance income portion of receivables paid directly
to lenders by lessees ................................. (1,329,362) (2,694,721)
Amortization of initial direct costs .................... 470,302 1,097,694
Net gain on sales or remarketing of equipment ........... (216,536) (236,417)
Income from equity investment in joint ventures ......... (256,624) (257,278)
Income from leveraged lease, net ........................ (181,275) (170,660)
Interest expense on non-recourse financing
paid directly by lessees .............................. 1,574,789 1,808,877
Distribution from investment in joint venture ........... 431,365 9,544,892
Collection of principal - non-financed receivables ...... 1,792,962 6,198,641
Change in operating assets and liabilities:
Security deposits and deferred credits ................ 486,721 (1,558,720)
Allowance for doubtful accounts ....................... 220,476 (341,223)
Minority interest in joint ventures ................... 5,589 (153,210)
Accounts payable - other .............................. (49,567) (543,636)
Accounts payable to General Partner and affiliates, net (3,747) 387,390
Other, net ............................................ 39,527 101,996
------------ ------------
Total adjustments ................................... 1,647,656 12,112,170
------------ ------------
Net cash provided by operating activities ............. 1,920,550 12,117,401
------------ ------------
Cash flows from investing activities:
Proceeds from sales of equipment ........................... 2,073,036 2,430,490
Equipment and receivables purchased ........................ (2,268,072) (1,972,832)
Investment in joint venture ................................ (250,757) (250,000)
------------ ------------
Net cash provided by (used in) investing activities .. (445,793) 207,658
------------ ------------
</TABLE>
<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,
(unaudited)
<TABLE>
1998 1997
---- ----
Cash flows from financing activities:
<S> <C> <C>
Cash distributions to partners ..................... (3,096,316) (3,110,977)
Principal payments on non-recourse secured financing (1,066,051) (9,519,500)
Proceeds from non-recourse debt .................... -- 486,879
Proceeds from note payable - affiliate ............. -- 7,780,328
Principal payments on note payable - affiliate ..... -- (7,780,328)
Redeemed limited partnership units ................. (62,074) (144,724)
------------ ------------
Net cash used in financing activities ......... (4,224,441) (12,288,322)
------------ ------------
Net (decrease) increase in cash ....................... (2,749,684) 36,737
Cash, beginning of period ............................. 4,000,250 4,821,624
------------ ------------
Cash, end of period ................................... $ 1,250,566 $ 4,858,361
============ ============
</TABLE>
See accompanying notes to unaudited 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, 1998 and 1997, non-cash activities
included the following:
<TABLE>
1998 1997
---- ----
<S> <C> <C>
Rental income - assigned operating lease receivable .... $ 1,820,986 $ 1,657,250
Principal and interest on direct finance
receivables paid directly to
lenders by lessees .................................. 4,932,433 10,064,540
Principal and interest on non-recourse
financing paid directly to lenders by lessees ....... (6,753,419) (11,721,790)
Fair value of equipment and receivable 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 venture ................ -- 11,566,252
Increase in equity investment in joint venture ......... -- (11,566,252)
------------ ------------
$ -- $ --
============ ============
</TABLE>
Interest expense of $1,680,740 and $2,539,976 for the nine months ended
September 30, 1998 and 1997 consisted of: interest expense on non-recourse
financing accrued or paid directly to lenders by lessees of $1,574,789 and
$1,808,877, respectively, interest expense on recourse secured financing of
$103,825 and $144,372, respectively, and other interest of $2,126 and $586,727,
respectively.
<PAGE>
ICON Cash Flow Partners L. P. Six
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements
September 30, 1998
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 presented 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 1997 Annual Report
on Form 10-K.
2. Redemption of Limited Partnership Units
The General Partner consented to the Partnership redeeming 465 limited
partnership units during 1998. 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.
3. Related Party Transactions
During the nine months ended September 30, 1998 and 1997, the Partnership
paid or accrued to the General Partner management fees of $738,316 and $832,931,
respectively, and administrative expense reimbursements of $370,045 and
$414,976, respectively, which were charged to operations.
For the nine months ended September 30, 1998 and 1997 no acquisition fees
were paid or accrued by the Partnership.
4. Year 2000
The Partnership relies on computer information systems for its transaction
processing and for general data processing. 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, the program 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 parties 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)
Notes to Unaudited Consolidated Financial Statements -Continued
5. 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 and $18,186,117 in non-recourse debt.
The net investment in the leveraged lease as of September 30, 1998 consisted of
the following:
Non-cancelable minimum rents receivable (net of principal and
interest on non-recourse debt) ............................ $ --
Estimated unguaranteed residual value ....................... 4,000,000
Initial direct costs ........................................ 314,881
Unearned income ............................................. (2,287,965)
-----------
$ 2,026,916
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.
6. 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 Cash Flow L.L.C. I
In September 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 L.L.C. I"), for the purpose of acquiring and
managing an aircraft. The Partnership and Series E contributed 1% and 99% of the
cash required for such acquisition, respectively, to ICON Cash Flow L.L.C. I
Information as to the unaudited financial position and results of
operations of ICON Cash Flow L.L.C. I at September 30, 1998 is summarized below:
September 30, 1998
Assets ...................................................... $17,444,814
===========
Liabilities ................................................. $12,065,454
===========
Equity ...................................................... $ 5,379,360
===========
Nine Months Ended
September 30, 1998
Net income .................................................. $ 700,193
===========
ICON Cash Flow L.L.C. II
In March 1995 the Partnership and Series E formed a joint venture, ICON
Cash Flow Partners L.L.C. II ("ICON Cash Flow L.L.C. II"), for the purpose of
acquiring and managing an aircraft. The Partnership and Series E contributed 99%
and 1% of the cash required for such acquisition, respectively, to ICON Cash
Flow L.L.C. II. The Partnership's consolidated financial statements include 100%
of the assets and liabilities of ICON Cash Flow Partners L.L.C. II while Series
E's minority interest has been reflected as a liability on the consolidated
balance sheets.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements - Continued
ICON Receivables 1997-A L.L.C.
In March 1997 the Partnership, ICON Cash Flow Partners, L.P., Series D
("Series D"), and ICON Cash Flow Partners L.P. Seven ("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 new leases, managing existing contributed assets and
securitizing its portfolio. In September 1997 the Partnership and Series E
contributed and assigned additional equipment lease and finance receivables and
residuals 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.
Information as to the unaudited financial position and results of
operations of 1997-A at September 30, 1998 is summarized below:
September 30, 1998
Assets ....................................................... $37,097,268
===========
Liabilities .................................................. $31,058,715
===========
Equity ....................................................... $ 6,038,553
===========
Nine Months Ended
September 30, 1998
Net income ................................................... $ 808,805
===========
ICON Receivables 1997-B L.L.C.
In August 1997 the Partnership, Series E and L.P. Seven formed ICON
Receivables 1997-B L.L.C. ("1997-B"), for the purpose of originating leases and
securitizing its portfolio. The Partnership, Series E and L.P. Seven
(collectively the "1997-B members") contributed $249,900, $2,250,000 and
$500,100 to 1997-B on August 19, 1997 and received an 8.33%, 75.00% and 16.67%
interest, respectively, in 1997-B based on their contributions. On July 30,
1998, ICON Holdings Corp. ("Holdings"), the parent of the General Partner and
1997-B completed an equipment lease securitization. The securitization is
comprised of two senior notes, issued from ICON Equipment Lease Trust 1998 S-1
(Holdings) and ICON Equipment Lease Trust 1998 S-2 (1997-B). The net proceeds
from the securitization totaled $40,806,901, of which $30,850,936 was used to
pay down 1997-B's debt, and the remaining proceeds, after establishing reserves
for expenses, were distributed to the 1997-B Members based on their respective
interests. In connection with the securitization, 1997-B became the beneficial
owner of a trust. The trustee for the trust is Manufacturers and Traders Trust
Company ("M&T"). In conjunction with this securitization, the portfolio as well
as the General Partner's servicing capabilities were rated by Duff & Phelps and
Fitch IBCA, both nationally recognized rating agencies. The General Partner, as
servicer, is responsible for managing, servicing, reporting on and administering
the portfolio. 1997-B remits all monies received from the portfolio to M&T. M&T
is responsible for disbursing to the noteholders their respective principal and
interest (91.5% of projected cash flows) and to 1997-B the excess of cash
collected over debt service (8.5% of projected cash flows after any write-offs)
from the portfolio. The 1997-B Members receive their pro rata share of any
excess cash on a monthly basis from 1997-B. The Partnership's share of the net
proceeds from the securitization totaled $166,600.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Unaudited Consolidated Financial Statements - Continued
Information as to the unaudited financial position and results of
operations of 1997-B at September 30, 1998 is summarized below:
September 30, 1998
Assets ....................................................... $43,328,524
===========
Liabilities .................................................. $40,559,157
===========
Equity ....................................................... $ 2,969,367
===========
Nine Months Ended
September 30, 1998
Net income ................................................... $ 834
===========
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
September 30, 1998
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, equity investment in joint ventures, leveraged leases and
financings of 52%, 36%, 5%, 4% and 3% of total investments at September 30,
1998, respectively, and 65%, 28%, 4%, 3% and less than 1% of total investment at
September 30, 1997.
Results of Operations
Three Months Ended September 30, 1998 and 1997
For the three months ended September 30, 1998 and 1997, the Partnership
leased or financed equipment with an initial cost of $2,632,190 and $84,184,
respectively, to 2 and 1 lessees or equipment users, respectively.
Revenues for the three months ended September 30, 1998 were $1,260,393
representing a decrease of $708,122 or 36% from 1997. The decrease in revenues
was due to a decrease in finance income of $449,561 or 47%, a change in income
(loss) from equity investment in joint venture of $164,160, a decrease in rental
income of $140,149 or 19% and a decrease in income from leveraged leases of
$19,441 or 22%. These decreases were partially offset by an increase in net gain
on sales or remarketing of equipment of $54,831 or 164% and an increase in
interest income and other of $10,358 or 34%, from 1997. The decrease in finance
income resulted from the decrease in the average size of the finance lease
portfolio from 1997 to 1998. Income from equity investment in joint ventures
decreased due to 1997-B's increase in provision for bad debts. The Partnership's
operating lease with Alaska Air terminated in the second quarter 1997, at which
point the aircraft was released to Aero Mexico. Rental income for the third
quarter 1997 includes four months of rent under the new lease, resulting in a
decrease in rental income for the third quarter 1998 compared to 1997. Income
from leveraged leases decreased due to the decrease in the average size of the
leveraged lease portfolio. The net gain on sales or remarketing of equipment
increased due to an increase in the number of leases maturing and the underlying
equipment being sold or remarketed for which the proceeds received were in
excess of the average carrying value of the equipment. Interest income and other
increased due to an increase in the average cash balance from 1997 to 1998.
Expenses for the three months ended September 30, 1998 were $1,218,917,
representing a decrease of $685,235 or 36% from 1997. The decrease in expenses
was due to a decrease in interest expense of $309,803 or 37%, a decrease in
amortization of initial direct costs of $185,725 or 57%, a change in the
provision for bad debt of $122,004, a decrease in general and administrative of
$26,104 or 33%, a decrease in management fees of $27,822 or 10%, a decrease in
administrative expense reimbursements of $12,841 or 10% and a decrease in
minority interest in joint venture of $936. Interest expense decreased due to a
decrease in the average debt outstanding from 1997 to 1998. Amortization of
initial indirect costs, management fees, administrative expense reimbursements
and general and administrative expenses decreased due to a decrease in the
average size of the portfolio from 1997 to 1998. Expense related to the minority
interest in joint venture decreased due to the liquidation of a joint venture in
the fourth quarter 1997. The change in the provision for bad debt resulted from
a reversal of prior provision based on an analysis of delinquency, an assessment
of overall risk and historical loss experience.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
September 30, 1998
Net income for the three months ended September 30, 1998 and 1997 was
$41,476 and $64,363, respectively. The net income per weighted average limited
partnership unit was $.11 and $.17, respectively.
Nine Months Ended September 30, 1998 and 1997
For the nine months ended September 30, 1998 and 1997, the Partnership
leased or financed equipment with an initial cost of $2,822,604 and $1,918,026,
respectively, to 4 and 5 lessees or equipment users, respectively. The weighted
average initial transaction term relating to these transactions was 49 and 25
months, respectively.
Revenues for the nine months ended September 30, 1998 were $4,315,862,
representing a decrease of $1,567,883 or 27% from 1997. The decrease in revenues
was due to a decrease in finance income of $1,773,341 or 51%, a decrease in net
gain on sales or remarketing of equipment of $19,881 or 8%, a decrease in income
from leveraged leases of $2,942 and a decrease in income from equity investment
in joint venture of $654. These decreases were partially offset by an increase
in rental income of $163,736 or 10%, an increase in interest income and other of
$51,582 or 49% and an increase in income from leveraged leases of $10,615 or 6%.
The decrease in finance income resulted from a decrease in the average size of
the finance lease portfolios from 1997 to 1998. 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. The Partnership's operating
lease with Alaska Air terminated in the second quarter 1997, at which point the
aircraft was released to Aero Mexico. Rents under the new Aero Mexico lease are
greater than rents under the Alaskan Air lease. Income from leveraged leases
decreased due to the decrease in the average size of the leveraged lease
portfolio. Interest income and other increased due to an increase in the average
cash balance from 1997 to 1998.
Expenses for the nine months ended September 30, 1998 were $4,042,908,
representing a decrease of $1,835,606 or 31% from 1997. The decrease in expenses
was due to a decrease in interest expense of $859,236 or 34%, a decrease in the
amortization of initial direct costs of $627,392 or 57%, a decrease in
depreciation of $101,773 or 17%, a decrease in management fees of $94,615 or
11%, a decrease in general and administrative expense of $71,640 or 25%, a
decrease in administrative expense reimbursements of $44,931 or 11% and a
decrease in minority interest in joint ventures of $39,015 or 87%. These
decreases were partially offset by an increase in the provision for bad debts of
$2,996 or 4%. Interest expense decreased due to a decrease in average debt
outstanding from 1997 to 1998. Amortization of initial direct costs, management
fees, administrative expense reimbursements and general and administrative
expenses decreased due to a decrease in the average size of the portfolio from
1997 to 1998. Depreciation expense decreased from 1997 due to the 1998
restructuring of the operating lease. Expense related to the minority interest
in joint venture decreased due to the liquidation of a joint venture in the
fourth quarter 1997. Based on an analysis of delinquency, an assessment of
overall risk and historical loss experience, it was determined that a provision
of $2,996 for bad debt was required for the nine months ended September 30,
1998.
Net income for the nine months ended September 30, 1998 and 1997 was
$272,894 and $5,231, respectively. Net income per weighted average limited
partnership unit was $.71 and $.01, respectively.
<PAGE>
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
September 30, 1998
Liquidity and Capital Resources
The Partnership's primary sources of funds for the nine months ended
September 30, 1998 and 1997 were cash provided by operations of $1,920,550 and
$12,117,401, respectively, and proceeds from sales of equipment of $2,073,036
and $2,430,490, respectively. 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 cash from operations, proceeds from sales of equipment
and borrowings.
Cash distributions to limited partners for the nine months ended September
30, 1998 and 1997, which were paid monthly, totaled $3,065,352 and $3,079,868,
respectively, of which $270,165 and $5,179 was investment income and $2,795,187
and $3,074,689 was a return of capital, respectively. The monthly annualized
cash distribution rate to limited partners was 10.75%, of which .95% and .02%
was investment income and 9.8% and 10.73% 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, 1998 and 1997 was $8.06 of which $.71 and $.01 was
investment income and $7.35 and $8.05 was a return of capital, respectively.
The Partnership relies on computer information systems for its transaction
processing and for general data processing. 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, the program 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 parties 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.
As of September 30, 1998, 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 operations, sales of
equipment and borrowings, the Partnership will invest in equipment leases and
financings and make distributions to limited partners 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, 1998.
<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.
February 18, 1999 /s/Kevin F. Redmond
- --------------------------- ----------------------------------------------
Date Kevin F. Redmond
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
<NAME> ICON Cash Flow Partners L.P. Six
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,250,566
<SECURITIES> 0
<RECEIVABLES> 32,899,107
<ALLOWANCES> 336,419
<INVENTORY> 0
<CURRENT-ASSETS> * 0
<PP&E> 19,100,646
<DEPRECIATION> 2,552,325
<TOTAL-ASSETS> 46,700,578
<CURRENT-LIABILITIES> ** 0
<BONDS> 40,069,449
0
0
<COMMON> 0
<OTHER-SE> 18,719,842
<TOTAL-LIABILITY-AND-EQUITY> 46,700,578
<SALES> 4,158,463
<TOTAL-REVENUES> 4,315,802
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,284,172
<LOSS-PROVISION> 77,996
<INTEREST-EXPENSE> 1,680,740
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 272,894
<EPS-PRIMARY> 0.71
<EPS-DILUTED> 0.71
<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>
