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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1999
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the transition period from to
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Commission File Number 33-36376
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ICON Cash Flow Partners L.P. Six
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3723089
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
111 Church Street, White Plains, New York 10601-1505
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 993-1700
-----------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class Name of each exchange on which registered
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
- --------------------------------------------------------------------------------
(Title of class)
- --------------------------------------------------------------------------------
(Title of class)
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
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
TABLE OF CONTENTS
Item Page
PART I
1. Business 3-4
2. Properties 4
3. Legal Proceedings 5
4. Submission of Matters to a Vote of Security Holders 5
PART II
5. Market for the Registrant's Securities and Related
Security Holder Matters 5
6. Selected Consolidated Financial and Operating Data 6
7. General Partner's Discussion and Analysis of Financial
Condition and Results of Operations 7-9
8. Consolidated Financial Statements and Supplementary Data 10-32
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 33
PART III
10. Directors and Executive Officers of the Registrant's
General Partner 33-34
11. Executive Compensation 35
12. Security Ownership of Certain Beneficial Owners
and Management 35
13. Certain Relationships and Related Transactions 35
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 36
SIGNATURES 37
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
PART I
Item 1. Business
General Development of Business
ICON Cash Flow Partners L.P. Six (the "Partnership") was formed on July 8,
1993 as a Delaware limited partnership. The Partnership commenced business
operations on its initial closing date, March 31, 1994, with the admission of
16,537.73 limited partnership units at $100 per unit representing $1,653,773 of
capital contributions. Between April 1, 1994 and December 31, 1994, 111,166.37
additional units were admitted representing $11,116,637 of capital contributions
and from January 1, 1995 to November 8, 1995 (the final closing date),
256,153.02 additional units were admitted, bringing the final admission to
383,857.12 units totaling $38,385,712 in capital contributions. Between 1995 and
1998 the Partnership redeemed 4,503.92 limited partnership units. In 1999 the
Partnership redeemed 984.73 units leaving 378,368.47 limited partnership units
outstanding at December 31, 1999. The sole general partner is ICON Capital Corp.
(the "General Partner").
Narrative Description of Business
The Partnership is an equipment leasing fund. The principal objective of
the Partnership is to obtain the maximum economic return from its investments
for the benefit of its limited partners. To achieve this objective, the
Partnership intends to: (1) acquire a diversified portfolio of short-term,
high-yield lease and financing transactions, (2) make monthly cash distributions
to its limited partners from cash from operations, commencing with each limited
partner's admission to the Partnership, continuing through the reinvestment
period, which period will end no later than November 2000; (3) re-invest
substantially all undistributed cash from operations and cash from sales in
additional equipment and financing transactions during the reinvestment period;
and (4) sell the Partnership's investments and distribute the cash from sales of
such investments to its limited partners within five to eight and one-half years
of November 1995.
The equipment leasing industry is highly competitive. In initiating its
leasing transactions, the Partnership competes with leasing companies,
manufacturers that lease their products directly, equipment brokers and dealers
and financial institutions, including commercial banks and insurance companies.
Many competitors are larger than the Partnership and have greater financial
resources.
The Partnership has no direct employees. The General Partner has full and
exclusive discretion in management and control of the Partnership.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
Lease and Financing Transactions
For the years ended December 31, 1999 and 1998, the Partnership purchased
and leased or financed $0 and $6,901,428 of equipment, respectively, with a
weighted average initial transaction term of 0 and 33 months, respectively.
Included in the summary of equipment cost by category below is 100% of the
equipment cost acquired by a joint venture in which the Partnership has a 99%
interest. The Partnership accounts for this investment by consolidating 100% of
the assets and liabilities of the joint ventures and reflecting, as a liability,
the related minority interest. The equipment purchased by four other joint
ventures in which the Partnership has a less than 50% interest are not included
in this table. At December 31, 1999, the weighted average initial transaction
term of the portfolio was 37 months. A summary of the portfolio equipment cost
by category held at December 31, 1999 and 1998 is as follows:
December 31, 1999 December 31, 1998
------------------------ -----------------------
Category Cost Percent Cost Percent
Aircraft ................. $19,100,646 39.5% $19,100,646 27.1%
Manufacturing & production 14,458,256 29.9 17,271,925 24.4
Telecommunications ....... 10,497,000 21.7 13,814,671 19.6
Computer systems ......... 1,757,724 3.6 10,579,442 15.0
Construction ............. 702,731 1.5 702,731 1.0
Printing ................. 629,311 1.3 1,376,438 2.0
Restaurant equipment ..... 370,218 0.8 1,290,238 1.8
Furniture and fixtures ... 290,080 0.6 910,706 1.3
Material handling ........ 263,057 0.5 4,084,138 5.8
Medical .................. 192,291 0.4 796,703 1.1
Video production ......... 49,592 0.1 130,023 0.2
Retail systems ........... 9,407 0.1 377,233 0.5
Miscellaneous ............ -- -- 117,118 0.2
----------- ----- ----------- -----
$48,320,313 100.0% $70,552,012 100.0%
=========== ===== =========== =====
The Partnership has one lease which individually represents greater than
10% of the total portfolio equipment cost at December 31, 1999. The lease is
with Aerovias de Mexico, S.A. de C.V. ("Aero Mexico"). The underlying equipment
is an aircraft and the asset represented 39.5% of the total portfolio equipment
cost at December 31, 1999.
Item 2. Properties
The Partnership neither owns nor leases office space or equipment for the
purpose of managing its day-to-day affairs.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
Item 3. Legal Proceedings
The Partnership is not a party to any pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of 1999.
PART II
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters
The Partnership's limited partnership interests are not publicly traded nor
is there currently a market for the Partnership's limited partnership units. It
is unlikely that any such market will develop.
Number of Equity Security Holders
Title of Class as of December 31,
- -------------- ---------------------------------
1999 1998
---- ----
Limited Partners 2,283 2,269
General Partner 1 1
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
Item 6. Selected Consolidated Financial and Operating Data
Year Ended December 31,
----------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Total revenue $5,036,158 $6,162,370 $6,510,932 $9,576,756 $6,729,913
========== ========== ========== ========== ==========
Net income (loss) $1,221,020 $ 467,639 $ 35,620 $ (366,967) $ 76,068
========== ========== ========== ========== ==========
Net income (loss) allocable to
limited partners $1,208,810 $ 462,963 $ 35,264 $ (363,297) $ 75,307
========== ========== ========== ========== ==========
Net income (loss) allocable
to the General Partner $ 12,210 $ 4,676 $ 356 $ (3,670) $ 761
========== ========== ========== ========== ==========
Weighted average limited
partnership units outstanding $ 379,187 379,984 381,687 383,196 260,453
========== ========== ========== ========== ==========
Net income (loss) per weighted
average limited partnership unit $ 3.19 $ 1.22 $ .09 $ (.95) $ .29
========== ========= ========== ========== =========
Distributions to limited partners $4,075,766 $4,085,189 $4,102,940 $4,119,354 $2,543,783
========== ========== ========== ========== ==========
Distributions to the General Partner $ 41,178 $ 41,261 $ 41,444 $ 41,613 $ 25,694
========== ========== ========== ========== ==========
December 31,
------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Total assets ... $ 38,616,693 $ 44,487,621 $ 54,837,228 $ 81,805,142 $103,090,950
============ ============ ============ ============ ============
Partners' equity $ 14,951,046 $ 17,884,454 $ 21,605,338 $ 25,864,652 $ 30,446,813
============ ============ ============ ============ ============
The above selected consolidated financial data should be read in
conjunction with the consolidated financial statements and related notes
appearing elsewhere in this report.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
Item 7. 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, an operating lease, financings and equity investments in joint ventures
representing 46%, 44%, 1% and 9% of total investments at December 31, 1999,
respectively, and 49%, 36%, 11% and 4% of total investments at December 31,
1998, respectively.
Results of Operations
Years Ended December 31, 1999 and 1998
For the years ended December 31, 1999 and 1998, the Partnership purchased
equipment with an initial cost of $0 and $6,901,428, respectively, to 0 and 11
lessees or equipment users, respectively.
Revenues for the year ended December 31, 1999 were $5,036,158, representing
a decrease of $1,126,212 from 1998. The decrease in revenues was due to a
decrease in finance income of $185,113, a decrease in income from leveraged
lease of $213,841, a decrease in income from investments in joint ventures of
$296,483, a decrease in gain on sales of equipment of $396,426 and a decrease in
interest income and other of $58,363. These decreases were partially offset by
an increase in rental income of $24,014 from 1998. The decrease in finance
income resulted from the decrease in the average size of the finance lease
portfolio from 1998 to 1999. Income from the leveraged lease decreased due to
the Partnership's 1998 termination of its lease with Airbus Industrie
("Airbus"). Income from the investments in joint ventures decreased as a result
of one of the underlying joint venture's increasing its provision for bad debts.
Interest income and other decreased due to a decrease in the average cash
balance.
Expenses for the year ended December 31, 1999 were $3,815,138, representing
a decrease of $1,879,593 from 1998. The decrease in expenses was due to a
decrease in amortization of initial direct costs of $718,353, a decrease in
provision for bad debts of $52,997, a decrease in interest expense of $478,510,
a decrease in management fees of $294,521, a decrease in administrative expense
reimbursements of $139,822, a decrease in depreciation expense of $111,594, and
a decrease in general and administrative expense of $86,383. Interest expense
decreased due to a decrease in the average debt outstanding from 1998 to 1999.
Amortization of initial direct costs, management fees, administrative expense
reimbursements and general and administrative expense decreased due to a
decrease in the average size of the portfolio from 1998 to 1999. As a result of
the ongoing analysis of delinquency trends and loss experience, and an
assessment of overall credit risk, the Partnership determined that no additional
provision for bad debt was required for the year ended December 31, 1999.
Net income for the years ended December 31, 1999 and 1998 was $1,221,020
and $467,639, respectively. The net income per weighted average limited
partnership unit was $3.19 and $1.22 for 1999 and 1998, respectively.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
Years Ended December 31, 1998 and 1997
For the years ended December 31, 1998 and 1997, the Partnership purchased
equipment with an initial cost of $6,901,428 and $2,129,099, respectively, to 11
and 33 lessees or equipment users, respectively.
Revenues for the year ended December 31, 1998 were $6,162,370, representing
a decrease of $348,562 or 5% from 1997. The decrease in revenues was due to a
decrease in finance income of $958,314 or 31%, a decrease in income from
leveraged leases of $309,473 or 59% and a decrease in income from equity
investments in joint ventures of $112,916 or 24% from 1997. These decreases were
partially offset by an increase in net gain on sales or remarketing of equipment
of $776,525, an increase in rental income of $187,751 or 8%, and an increase in
interest income and other of $67,865 or 67% 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 the leveraged lease decreased due to
the Partnership's 1998 termination of its lease with Airbus Industrie
("Airbus"). Income from the investments in joint ventures decreased as a result
of one of the underlying joint venture's increasing its provision for bad debts.
In December 1998, the Partnership entered into a new joint venture, however,
there were no revenues generated from such joint venture in 1998. The gain on
sales of equipment increased due primarily to the gain on termination of the
Airbus lease. The Partnership's operating lease with Alaska Air terminated in
April 1997 and the asset was subsequently leased to Aero Mexico at a greater
contractual rental rate, and as a result, rental income increased from 1997 to
1998. Interest income and other increased due to an increase in the average cash
balance, and an increase in late charges from 1997 to 1998.
Expenses for the year ended December 31, 1998 were $5,694,731, representing
a decrease of $780,581 or 12% from 1997. The decrease in expenses was due to a
decrease in interest expense of $483,670 or 18%, a decrease in amortization of
initial direct costs of $177,703 or 17%, a decrease in provision for bad debts
of $130,277 or 71%, a decrease in management fees of $123,168 or 11%, a decrease
in administrative expense reimbursements of $61,991 or 11%, a decrease in
depreciation expense of $8,482 or 1%, and a decrease in minority interest in
joint venture of $1,240 or 16%. These decreases were partially offset by an
increase in general and administrative expense of $205,950 or 115%. Interest
expense decreased due to a decrease in the average debt outstanding from 1997 to
1998. Amortization of initial direct costs, management fees and administrative
expense reimbursements decreased due to a decrease in the average size of the
portfolio from 1997 to 1998. The decrease in depreciation expense resulted from
the Partnership's restructuring of its operating lease when it leased the
aircraft to Aero Mexico. Minority interest in joint venture decreased due to the
Partnership's September 1997 purchase of the minority interests relating to ICON
Asset Acquisition LLC. As a result of the ongoing analysis of delinquency trends
and loss experience, and an assessment of overall credit risk, the Partnership
determined that a provision of $52,997 for bad debt was required for the year
ended December 31, 1998. The increase in general and administrative expenses was
primarily related to an increase in legal expense which included the accelerated
write off of capitalized legal fees related to the Partnership's termination of
its lease with Airbus.
Net income for the years ended December 31, 1998 and 1997 was $467,639 and
$35,620, respectively. The net income per weighted average limited partnership
unit was $1.22 and $.09 for 1998 and 1997, respectively.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
Liquidity and Capital Resources
The Partnership's primary sources of funds for the years ended December 31,
1999, 1998 and 1997 were net cash provided by operations of $2,684,592,
$3,543,778 and $11,225,547 and proceeds from sales of equipment of $6,120,773,
$4,473,161 and $4,336,675, respectively. These funds were used to invest in
joint ventures, purchase equipment, make payments on borrowings and fund cash
distributions. The Partnership intends to purchase additional equipment and fund
cash distributions, utilizing cash from operations, proceeds from sales of
equipment and additional borrowings.
The Partnership's notes payable at December 31, 1999 and 1998 totaled
$20,780,931 and $23,379,315, respectively, and consisted of $20,547,309 and
$22,360,201 in non-recourse notes, respectively, which are being paid directly
to the lenders by the lessees, $130,477 and $131,299 in non-recourse residual
value notes, respectively, which will be paid to the extent proceeds are
available in excess of the Partnership's estimated unguaranteed residuals and
$103,145 and $887,815 in non-recourse secured notes, respectively, which will be
paid from proceeds from the lease portfolio that secures the financing.
Cash distributions to limited partners for the years ended December 31,
1999 and 1998, which were paid monthly, totaled $4,075,766 and $4,085,189,
respectively, of which $1,208,810 and $462,963 were investment income and
$2,866,956 and $3,622,226 was a return of capital, respectively. The monthly
annualized cash distribution rate to limited partners in 1999 and 1998 was
10.75%, of which 3.19% and 1.22% were investment income and 7.56% and 9.53% were
a return of capital, respectively. The limited partner distribution per weighted
average unit outstanding in 1999 and 1998 was $10.75, of which $3.19 and $1.22
were investment income and $7.56 and $9.53 were a return of capital,
respectively.
As of December 31, 1999, 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 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.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
Item 8. Consolidated Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Page Number
Independent Auditors' Report 12
Consolidated Balance Sheets as of December 31, 1999 and 1998 13-14
Consolidated Statements of Operations for the Years Ended
December 31, 1999, 1998 and 1997 15
Consolidated Statements of Changes in Partners' Equity for the
Years Ended December 31, 1999, 1998 and 1997 16
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997 17-19
Notes to Consolidated Financial Statements 20-32
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Financial Statements
December 31, 1999
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Partners
ICON Cash Flow Partners L.P. Six:
We have audited the accompanying consolidated balance sheets of ICON Cash Flow
Partners L.P. Six (a Delaware limited partnership) as of December 31, 1999 and
1998, and the related consolidated statements of operations, changes in
partners' equity and cash flows for each of the years in the three-year period
ended December 31, 1999. These consolidated financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ICON Cash Flow
Partners L.P. Six as of December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1999, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
KPMG LLP
March 28, 2000
New York, New York
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Balance Sheets
December 31,
1999 1998
---- ----
Assets
Cash ....................................... $ 3,991,527 $ 125,260
------------ ------------
Investment in finance leases
Minimum rents receivable ................ 11,854,142 13,507,407
Estimated unguaranteed residual values .. 6,186,947 11,238,451
Initial direct costs .................... 104,184 275,189
Unearned income ......................... (2,586,265) (3,371,116)
Allowance for doubtful accounts ......... (266,670) (231,149)
------------ ------------
15,292,338 21,418,782
Investment in operating leases
Equipment, at cost ...................... 19,100,646 19,100,646
Accumulated depreciation ................ (3,592,403) (2,967,204)
------------ ------------
15,508,243 16,133,442
Investment in financings
Receivables due in installments ......... 134,766 5,431,790
Initial direct costs .................... 334 4,917
Unearned income ......................... (6,008) (761,705)
Allowance for doubtful accounts ......... (4,018) (49,913)
------------ ------------
125,074 4,625,089
------------ ------------
Investments in unconsolidated joint ventures 3,072,508 1,803,243
------------ ------------
Other assets ............................... 627,003 381,805
------------ ------------
Total assets ............................... $ 38,616,693 $ 44,487,621
============ ============
(continued on next page)
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Balance Sheets (continued)
(unaudited)
1999 1998
---- ----
Liabilities and Partners' Equity
Note payable - non-recourse - secured financing ........... $ 103,145 $ 887,815
Notes payable - non-recourse .............................. 20,677,786 22,491,500
Security deposits and deferred credits .................... 2,700,125 2,571,642
Accounts payable - other .................................. 125,530 177,397
Accounts payable to General Partner and affiliates, net ... -- 425,089
Minority interest in joint venture ........................ 59,061 49,724
------------ ------------
23,665,647 26,603,167
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ........................................ (178,293) (149,325)
Limited partners (378,368.47 and 379,353.20
units outstanding, $100 per unit original issue price) 15,129,339 18,033,779
------------ ------------
Total partners' equity ............................... 14,951,046 17,884,454
------------ ------------
Total liabilities and partners' equity .................... $ 38,616,693 $ 44,487,621
============ ============
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Operations
For the Years Ended December 31,
1999 1998 1997
---- ---- ----
Revenues
Rental income ........................... $2,460,000 $2,435,986 $2,248,235
Finance income .......................... 1,970,800 2,155,913 3,114,227
Gain on sales of equipment .............. 438,622 835,048 58,523
Income from leveraged lease ............. -- 213,841 523,314
Income from investments in joint ventures 56,658 353,141 466,057
Interest income and other ............... 110,078 168,441 100,576
---------- ---------- ----------
Total revenues .......................... 5,036,158 6,162,370 6,510,932
---------- ---------- ----------
Expenses
Interest ................................ 1,686,377 2,164,887 2,648,557
Management fees - General Partner ....... 675,025 969,546 1,092,714
Amortization of initial direct costs .... 175,600 893,953 1,071,656
Depreciation ............................ 625,199 736,793 745,275
Administrative expense reimbursements
- General Partner ..................... 345,569 485,391 547,382
General and administrative .............. 298,031 384,414 178,464
Provision for bad debts ................. -- 52,997 183,274
Minority interest expense ............... 9,337 6,750 7,990
---------- ---------- ----------
Total expenses .......................... 3,815,138 5,694,731 6,475,312
---------- ---------- ----------
Net income ................................. $1,221,020 $ 467,639 $ 35,620
========== ========== ==========
Net income allocable to:
Limited partners ........................ $1,208,810 $ 462,963 $ 35,264
General Partner ......................... 12,210 4,676 356
---------- ---------- ----------
$1,221,020 $ 467,639 $ 35,620
========== ========== ==========
Weighted average number of limited
partnership units outstanding ........... 379,187 379,984 381,687
========== ========== ==========
Net income per weighted average
limited partnership unit ................ $ 3.19 $ 1.22 $ .09
========== ========== ==========
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Changes in Partners' Equity
For the Years Ended December 31, 1999, 1998 and 1997
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
(Per weighted average unit)
Balance at
December 31, 1996 $25,936,304 $ (71,652) $25,864,652
Cash distributions
to partners $10.66 $ .09 (4,102,940) (41,444) (4,144,384)
Limited partnership units
redeemed (2,186.00 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 $ 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 $ 7.56 $3.19 (4,075,766) (41,178) (4,116,944)
Limited partnership units
redeemed (984.73 units) (37,484) - (37,484)
Net income 1,208,810 12,210 1,221,020
----------- --------- -----------
Balance at
December 31, 1999 $15,129,339 $(178,293) $14,951,046
=========== ========= ===========
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1999, 1998 and 1997
1999 1998 1997
---- ---- ----
Cash flows from operating activities:
Net income ............................................ $ 1,221,020 $ 467,639 $ 35,620
------------ ------------ ------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation ........................................ 625,199 736,793 745,275
Provision for bad debts ............................. -- 52,997 183,274
Rental income - paid directly to lenders by lessees . (2,460,000) (2,435,986) (2,248,235)
Finance income portion of receivables paid directly
to lenders by lessees ............................. (1,665,251) (1,721,166) (2,544,328)
Amortization of initial direct costs ................ 175,600 893,953 1,071,656
Gain on sales of equipment .......................... (438,622) (835,048) (58,523)
Income from investments in joint ventures ........... (56,658) (353,141) (466,057)
Interest expense on non-recourse financing
paid directly by lessees .......................... 1,652,894 2,041,550 2,408,565
Income from leveraged lease, net .................... -- (213,841) (523,314)
Minority interest expense in joint venture .......... 9,337 6,750 7,990
Changes in operating assets and liabilities:
Allowance for doubtful accounts ................... (10,374) 112,122 (566,156)
Distributions received from
unconsolidated joint ventures ................... 753,857 1,000,802 9,742,849
Investments in joint ventures ..................... (1,788,621) (307,714) (850,000)
Collection of principal - non-financed receivables 5,258,179 2,274,995 6,878,985
Other assets ...................................... (245,198) 49,231 2,012
Security deposits and deferred credits ............ 128,483 815,548 (1,173,286)
Minority interest in consolidated joint venture ... -- (4,177) (838,732)
Accounts payable - other .......................... (51,867) (40,470) (563,934)
Accounts payable to General Partner and affiliates (425,089) 373,766 69,191
Other ............................................. 1,703 629,175 (87,305)
------------ ------------ ------------
Total adjustments ............................... 1,463,572 3,076,139 11,189,927
------------ ------------
Net cash provided by operating activities ......... 2,684,592 3,543,778 11,225,547
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sales of equipment ...................... 6,120,773 4,473,161 4,336,675
Equipment and receivables purchased ................... -- (6,346,897) (2,198,713)
------------ ------------ ------------
Net cash provided by (used in) investing activities 6,120,773 (1,873,736) 2,137,962
------------ ------------ ------------
(continued on next page)
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows - Continued
1999 1998 1997
---- ---- ----
Cash flows from financing activities:
Cash distributions to partners ..................... (4,116,944) (4,126,450) (4,144,384)
Principal payments on non-recourse secured financing (784,670) (1,356,509) (9,889,949)
Redemption of limited partnership units ............ (37,484) (62,073) (150,550)
Proceeds from note payable - affiliate loan ........ -- -- 7,780,328
Principal payments on note payable - affiliate ..... -- -- (7,780,328)
------------ ------------ ------------
Net cash used in financing activities .......... (4,939,098) (5,545,032) (14,184,883)
------------ ------------ ------------
Net increase/(decrease) in cash ....................... 3,866,267 (3,874,990) (821,374)
Cash at beginning of year ............................. 125,260 4,000,250 4,821,624
------------ ------------ ------------
Cash at end of year ................................... $ 3,991,527 $ 125,260 $ 4,000,250
============ ============ ============
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Statements of Cash Flows (Continued)
Supplemental Disclosures of Cash Flow Information
Interest expense of $1,686,377, $2,164,887 and $2,648,557 for the years
ended December 31, 1999, 1998 and 1997 consisted of: interest expense on
non-recourse financing accrued or paid directly to lenders by lessees of
$1,652,894, $2,041,550 and $2,408,565, respectively, interest expense on
recourse secured financing of $33,483, $123,337 and $232,325, respectively, and
other interest of $0, $0 and $7,667, respectively.
For the years ended December 31, 1999, 1998 and 1997 non-cash activities
included the following:
1999 1998 1997
---- ---- ----
Principal and interest on direct finance receivables
paid directly to lenders by lessees .............. $ -- $ 6,583,726 $ 9,689,813
Rental income - assigned operating
lease receivables ................................ 2,460,000 2,435,986 2,248,235
Principal and interest on non-recourse financing
paid directly to lenders by lessees .............. (2,460,000) (9,019,712) (11,938,048)
Fair value of equipment and receivables purchased
for debt and payables ............................ (554,531) (186,715)
Non-recourse notes payable assumed in
purchase price ................................... 526,499 186,715
Accounts payable-equipment ......................... 28,032 --
Decrease in investment in finance leases and
financings due to contribution to
unconsolidated joint venture .................... 177,956 -- 10,625,730
Increase in investments in
unconsolidated joint ventures ................... (177,956) -- (10,625,730)
Decrease in investment in finance leases
due to terminations .............................. -- -- 715,745
Decrease in notes payable non-recourse due
to terminations .................................. -- -- (715,745)
------------ ------------ ------------
$ -- $ -- $ --
============ ============ ============
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1999
1. Organization
ICON Cash Flow Partners L.P. Six (the "Partnership") was formed on July 8,
1993 as a Delaware limited partnership with an initial capitalization of $2,000.
It was formed to acquire various types of equipment, to lease such equipment to
third parties and, to a lesser degree, to enter into secured financing
transactions. The Partnership commenced business operations on its initial
closing date, March 31, 1994 and by its final closing in 1995, 383,857.12 units
had been admitted into the Partnership with aggregate gross proceeds of
$38,385,712. Between 1995 and 1997 the Partnership redeemed 3,179.00 limited
partnership units. In 1999 and 1998 the Partnership redeemed 984.73 and 1,324.92
units, respectively, leaving 378,368.47 limited partnership units outstanding at
December 31, 1999.
The General Partner of the Partnership is ICON Capital Corp. (the "General
Partner"), a Connecticut corporation. The General Partner manages and controls
the business affairs of the Partnership's equipment leases and financing
transactions under a management agreement with the Partnership.
ICON Securities Corp., an affiliate of the General Partner, received an
underwriting commission on the gross proceeds from sales of all units. The total
underwriting compensation paid by the Partnership, including underwriting
commissions, sales commissions, incentive fees, public offering expense
reimbursements and due diligence activities is limited to 13 1/2% of the gross
proceeds received from the sale of the units. Such offering expenses aggregated
$5,182,071 (including $2,111,214 paid to the General Partner or its affiliates),
and were charged directly to limited partners' equity.
Profits, losses, cash distributions and disposition proceeds are allocated
99% to the limited partners and 1% to the General Partner until each limited
partner has received cash distributions and disposition proceeds sufficient to
reduce its adjusted capital contribution account to zero and receive, in
addition, other distributions and allocations which would provide a 10% per
annum cumulative return, compounded daily, on its outstanding adjusted capital
contribution account. After such time, the distributions will be allocated 90%
to the limited partners and 10% to the General Partner.
2. Significant Accounting Policies
Basis of Accounting and Presentation - The Partnership's records are
maintained on the accrual basis. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets at the
date of the financial statements, and revenues and expenses during the reporting
period. Actual results could differ from those estimates. In addition,
management is required to disclose contingent assets and liabilities.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Consolidation - The consolidated financial statements include the accounts
of the Partnership and its majority owned subsidiaries, ICON Six Corp. and ICON
Cash Flow L.L.C. II. All inter-company accounts and transactions have been
eliminated. The Partnership accounts for its interests in less than 50% owned
joint ventures under the equity method of accounting. In such cases, the
Partnership's original investments are recorded at cost and adjusted for its
share of earnings, losses and distributions thereafter.
Leases - The Partnership accounts for owned equipment leased to third
parties as finance leases, leveraged leases or operating leases, as appropriate.
For finance leases, the Partnership records, at the inception of the lease, the
total minimum lease payments receivable, the estimated unguaranteed residual
values, the initial direct costs related to the leases and the related unearned
income. Unearned income represents the difference between the sum of the minimum
lease payments receivable plus the estimated unguaranteed residual minus the
cost of the leased equipment. Unearned income is recognized as finance income
over the terms of the related leases using the interest method. The
Partnership's net investment in leveraged leases consists of minimum lease
payments receivable, the estimated unguaranteed residual values and the initial
direct costs related to the leases, net of the unearned income and principal and
interest on the related non-recourse debt. Unearned income is recognized as
income from leveraged leases over the life of the lease at a constant rate of
return on the positive net investment. For operating leases, equipment is
recorded at cost and is depreciated on the straight-line method over the lease
terms to their estimated fair market values at lease terminations. Related lease
rentals are recognized on the straight-line method over the lease terms. Billed
and uncollected operating lease receivables, net of allowance for doubtful
accounts, are included in other assets. Initial direct costs of finance leases
and leveraged leases are capitalized and are amortized over the terms of the
related leases using the interest method. Initial direct costs of operating
leases are capitalized and amortized on the straight-line method over the lease
terms. The Partnership's leases have terms ranging from two to five years. Each
lease is expected to provide aggregate contractual rents that, along with
residual proceeds, return the Partnership's cost of its investments along with
investment income.
Investment in Financings - Investment in financings represent the gross
receivables due from the financing of equipment plus the initial direct costs
related thereto less the related unearned income. The unearned income is
recognized as finance income, and the initial direct costs are amortized, over
the terms of the receivables using the interest method. Financing transactions
are supported by a written promissory note evidencing the obligation of the user
to repay the principal, together with interest, which will be sufficient to
return the Partnership's full cost associated with such financing transaction,
together with some investment income. Furthermore, the repayment obligation is
collateralized by a security interest in the tangible or intangible personal
property.
Disclosures About Fair Value of Financial Instruments - Statement of
Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value
of Financial Instruments" requires disclosures about the fair value of financial
instruments. Separate disclosure of fair value information as of December 31,
1999 and 1998 with respect to the Company's assets and liabilities is not
provided because (i) SFAS No. 107 does not require disclosures about the fair
value of lease arrangements and (ii) the carrying value of financial assets,
other than lease related investments, and certain other payables approximates
market value and (iii) fair value information concerning certain non-recourse
debt obligations is not practicable to estimate without incurring excessive
costs to obtain all the information that would be necessary to derive a market
interest rate.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Redemption of Limited Partnership Units - The General Partner consented to
the Partnership redeeming 2,186.00 limited partnership units during 1997,
1,324.92 units during 1998 and 984.73 units in 1999. The redemption amount was
calculated following the specified redemption formula in accordance with 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.
Allowance for Doubtful Accounts - The Partnership records a provision for
bad debts to provide for estimated credit losses in the portfolio. The allowance
for doubtful accounts is based on an analysis of delinquency, an assessment of
overall risk and a review of historical loss experience. The Partnership's
write-off policy is based on an analysis of the aging of the Partnership's
portfolio, a review of the non-performing receivables and leases, and prior
collection experience. An account is fully reserved for or written off when the
analysis indicates that the probability of collection of the account is remote.
Impairment of Estimated Residual Values -- The Partnership's policy with
respect to impairment of estimated residual values is to review, on a periodic
basis, the carrying value of its residuals on an individual asset basis to
determine whether events or changes in circumstances indicate that the carrying
value of an asset may not be recoverable and, therefore, an impairment loss
should be recognized. The events or changes in circumstances which generally
indicate that the residual value of an asset has been impaired are (i) the
estimated fair value of the underlying equipment is less than the Partnership's
carrying value or (ii) the lessee is experiencing financial difficulties and it
does not appear likely that the estimated proceeds from disposition of the asset
will be sufficient to satisfy the remaining obligation to the non-recourse
lender and the Partnership's residual position. Generally in the latter
situation, the residual position relates to equipment subject to third party
non-recourse notes payable where the lessee remits their rental payments
directly to the lender and the Partnership does not recover its residual until
the non-recourse note obligation is repaid in full.
The Partnership measures its impairment loss as the amount by which the
carrying amount of the residual value exceeds the estimated proceeds to be
received by the Partnership from release or resale of the equipment. Generally,
quoted market prices are used as the basis for measuring whether an impairment
loss should be recognized.
Income Taxes - No provision for income taxes has been made as the liability
for such taxes is that of each of the partners rather than the Partnership.
New Accounting Pronouncements - In June 1998 the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
requires that an entity recognize all derivative instruments as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
SFAS No. 133, as amended, is effective for all quarters of fiscal years
beginning after June 15, 2000. The adoption of SFAS No. 133 is not expected to
have a material effect on the Partnership's net income, partners' equity or
total assets.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
3. Net Investment in Leveraged Lease
In September 1996 the Partnership acquired, subject to a leveraged lease,
the beneficial interest in an aircraft. The aircraft was an Airbus A-300B4-203
on lease to Airbus Industrie through 2003. The purchase price of the asset was
$19,595,956 and consisted of $1,409,839 in cash, plus the assumption of
non-recourse senior debt and non-recourse junior debt.
In December 1998 the Partnership sold its beneficial interest in the
aircraft to Airbus Industrie. The proceeds from the sale totaled $20,834,705 and
were used to pay off the senior debt, the junior debt and a third party under a
residual sharing agreement. The remaining proceeds ($2,647,482 in cash) were
retained by the Partnership. The Partnership recognized an $884,876 gain on the
sale of the beneficial interest.
4. Investments in Joint Ventures
The Partnership and affiliates formed six joint ventures for the purpose of
acquiring and managing various assets.
The joint venture described below is majority owned and is consolidated
with the Partnership.
ICON Cash Flow Partners L.L.C. II
In March 1995 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. II ("ICON Cash Flow LLC II"), for the purpose of acquiring and managing
an aircraft which was 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." 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 Aero Mexico. The new lease
is an operating lease which expires in September 2002.
The five joint ventures described below are less than 50% owned and are
accounted for following the equity
method.
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 was on lease to Alaska
Airlines, Inc. The Partnership and Series E contributed 1% and 99% of the
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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 is an
operating lease. 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. The
original lease term expired in April 1997 and Alaska Airlines, Inc. returned the
aircraft. In June 1997 ICON Cash Flow LLC I released the aircraft 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 years ended December 31, 1999 and 1998 is
summarized below:
December 31, 1999 December 31, 1998
Assets $ 16,710,801 $ 17,298,011
================ ===============
Liabilities $ 10,254,831 $ 11,719,626
================ ===============
Equity $ 6,455,969 $ 5,578,385
================ ===============
Partnership's share of equity $ 64,560 $ 55,784
================ ===============
Year Ended Year Ended
December 31, 1999 December 31, 1998
Net income $ 877,584 $ 806,232
================ ===============
Partnership's share of net income $ 8,776 $ 8,062
================ ===============
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 leases, managing existing contributed assets 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. The Partnership's
contributions amounted to $10,529,804 in assigned leases and $600,000 of cash in
1997, and $86,776 of cash in 1998 and $4,250 of cash and $177,844 in assigned
leases in 1999. 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
and distributions thereafter. There were no distributions made in 1998 and 1999.
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 years ended December 31, 1999 and 1998 is summarized
below:
December 31, 1999 December 31, 1998
----------------- -----------------
Assets $ 17,967,741 $ 31,845,710
================ ===============
Liabilities $ 14,701,353 $ 27,065,004
================ ===============
Equity $ 3,266,388 $ 4,780,706
================ ===============
Partnership's share of equity $ 1,064,687 $ 1,522,578
================ ===============
Year Ended Year Ended
December 31, 1999 December 31, 1998
Net income $ 108,923 $ 1,050,957
================ ===============
Partnership's share of net income $ 33,826 $ 326,165
================ ===============
Distributions $ 2,171,133 $ 2,367,147
================ ===============
Partnership's share of distributions $ 673,811 $ 719,173
================ ===============
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 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, $163,978 in
1998 and $30,260 in 1999. In order to fund the acquisition of leases, 1997-B
obtained a warehouse borrowing facility from Prudential Securities Credit
Corporation (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
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.
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 years ended December 31, 1999 and 1998 is summarized
below:
December 31, 1999 December 31, 1998
----------------- -----------------
Assets $ 29,921,557 $ 39,665,292
=============== ===============
Liabilities $ 27,991,447 $ 37,649,430
=============== ===============
Equity $ 1,930,110 $ 2,015,862
=============== ===============
Partnership's share of equity $ 165,289 $ 167,921
=============== ===============
Year Ended Year Ended
December 31, 1999 December 31, 1998
----------------- -----------------
Net income $ 293,193 $ 227,057
=============== ===============
Partnership's share of net income $ 24,423 $ 18,914
=============== ===============
Distributions $ 688,051 $ 3,380,904
=============== ===============
Partnership's share of distributions $ 57,315 $ 281,629
=============== ===============
ICON Boardman Funding L.L.C.
In December 1998 the Partnership and three affiliates, Series C, 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. The Partnership invested an additional $4,112 in 1999.
Simultaneously with the acquisition of the Portland General Electric lease by
ICON BF, the rent in excess of the senior debt payments was acquired by the
Partnership for $3,801,108.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Information as to the financial position of ICON BF as of December 31, 1999
and 1998 is summarized below:
December 31, 1999 December 31, 1998
Assets $ 27,740,665 $ 23,620,702
================ ===============
Liabilities $ 18,880,079 $ 12,228,713
================ ===============
Equity $ 8,860,586 $ 11,391,989
================ ===============
Partnership's share of equity $ 44,299 $ 56,960
================ ===============
Net income $ 1,191,629 $ -
================ ===============
Partnership's share of net income $ 5,958 $ -
================ ===============
Distributions $ 4,546,230 $ -
================ ===============
Partnership's share of distributions $ 22,731 $ -
================ ===============
AIC Trust
During 1999, L.P. Seven, an affiliate of the Partnership, acquired a
portfolio of equipment leases for $6,854,830. Subsequently, L.P. Seven sold
interests in this portfolio at various dates in 1999 to Eight A, an affiliate of
the Partnership, for $3,000,000 and to the Partnership for $1,750,000 at book
value, which approximated fair market value at the dates of sale. L.P. Seven
recognized no gain or loss on the sales of these interests to either Eight A or
to the Partnership.
As a result of the sales of these interests, as of December 31, 1999 the
Partnership and Eight A owned interests aggregating 25.51% and 43.73% in the
lease portfolio with L.P. Seven owning a 30.76% interest at that date. The lease
portfolio is owned and operated as a joint venture ("AIC Trust"). Profits,
losses, excess cash and disposition proceeds are allocated based upon the
Partnerships' percentage ownership interests in the venture during the
respective periods the Partnerships held such interests. The Partnership
accounts for its investment under the equity method of accounting.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Information as to the unaudited financial position and results of
operations of the venture as of and for the period of investment through
December 31, 1999 is summarized below:
December 31, 1999
Assets $ 22,058,522
==============
Liabilities $ 15,221,822
==============
Equity $ 6,836,700
==============
Partnership's share of equity $ 1,733,675
==============
Dates of Investments Through
December 31, 1999
Partnership's share of (loss) $ (16,325)
==============
5. Receivables Due in Installments
Non-cancelable minimum annual amounts due on finance leases and financings
are as follows:
Finance
Year Leases Financings Total
2000 $ 4,101,793 $112,887 $ 4,214,680
2001 2,624,276 15,100 2,639,376
2002 2,147,743 5,277 2,153,020
2003 1,703,045 1,502 1,704,547
2004 1,277,285 - 1,277,285
----------- -------- -----------
$11,854,142 $134,766 $11,988,908
=========== ======== ===========
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
6. Investment in Operating Leases
The investment in operating lease at December 31, 1999 and 1998 consisted
of the following:
1999 1998
---- ----
Equipment cost, end of year ......... $ 19,100,646 $ 19,100,646
------------ ------------
Accumulated depreciation,
beginning of year ................. (2,967,204) (2,230,411)
Depreciation ........................ (625,199) (736,793)
------------ ------------
Accumulated depreciation, end of year (3,592,403) (2,967,204)
------------ ------------
Investment in operating lease ....... $ 15,508,243 $ 16,133,442
============ ============
The investment in an operating lease consists of one aircraft owned by ICON
Cash Flow LLC II, a joint venture owned by the Partnership and Series E. In June
1997 ICON Cash Flow LLC II released the aircraft (formally on lease to Alaska
Airlines, Inc.) to Aero Mexico. The new lease is an operating lease which
expires in September 2002. (See Note 4 for additional information relating to
the joint venture.)
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
7. Allowance for Doubtful Accounts
The allowance for doubtful accounts related to the investments in finance
leases and financings consisted of the following:
Finance
Leases Financings Total
Balance at December 31, 1996 $ 485,627 $ 13,198 $ 498,825
Accounts written-off ... (468,020) (107,375) (575,395)
Recoveries on accounts
previously written-off 9,239 -- 9,239
Provision for bad debts 83,274 100,000 183,274
--------- --------- ---------
Balance at December 31, 1997 110,120 5,823 115,943
Accounts written-off ... (16,454) (61,448) (77,902)
Recoveries on accounts
previously written-off 165,724 24,300 190,024
Provision for bad debts 11,919 41,078 52,997
Reclassification ....... (40,160) 40,160 --
--------- --------- ---------
Balance at December 31, 1998 231,149 49,913 281,062
Accounts written-off ... (19,672) (45,895) (65,567)
Recoveries on accounts
previously written-off 55,193 -- 55,193
--------- --------- ---------
Balance at December 31, 1999 $ 266,670 $ 4,018 $ 270,688
========= ========= =========
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
8. Notes Payable
Notes payable consists of the following: (1) notes payable non-recourse,
which is being paid directly to the lenders by the lessees and (2) notes payable
non-recourse-secured financing, which is being paid from collections on lease
receivable transactions. These notes bear interest at rates ranging from 5.18%
to 10.75% and mature as follows:
Notes Payable
Notes Payable Non-Recourse
Non-Recourse Secured Financing Total
2000 $ 5,682,288 $103,145 $ 5,785,433
2001 3,813,380 - 3,813,380
2002 8,152,992 - 8,152,992
2003 1,566,798 - 1,566,798
2004 1,462,328 - 1,462,328
----------- -------- -----------
$20,677,786 $103,145 $20,780,931
=========== ======== ===========
9. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the years ended December 31, 1999, 1998 and 1997
are as follows:
Charged to
Operations
Management fees ..................... $1,092,714
Administrative expense reimbursements 547,382
----------
Year ended December 31, 1997 ........ $1,640,096
==========
Management fees ..................... 969,546
Administrative expense reimbursements 485,391
Year ended December 31, 1998 ........ $1,454,937
==========
Management fees ..................... 675,025
Administrative expense reimbursements 345,569
Year ended December 31, 1999 ........ $1,020,594
==========
The Partnership has investments in five non-consolidated joint ventures
with other Partnerships sponsored by the General Partner (See Note 4 for
additional information relating to the joint ventures).
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
10. Subsidiary
In December 1994 the Partnership formed a wholly owned subsidiary, ICON Six
Corp., a Massachusetts corporation, formed for the purpose of managing equipment
under lease located in the state of Massachusetts. Massachusetts partnerships
are taxed on personal property at a higher rate than corporations, and
therefore, to mitigate such excess property tax, certain leases are being
managed by ICON Six Corp, a corporation. The Partnership's consolidated
financial statements include 100% of the accounts of ICON Six Corp. As of
December 31, 1999, there was no federal tax liability for ICON Six Corp.
11. Commitments and Contingencies
The Partnership entered into remarketing and residual sharing agreements
with third parties. In connection therewith, remarketing or residual proceeds
received in excess of specified amounts will be shared with these parties based
on specified formulas. For the years ended December 31, 1999 and 1998, the
Partnership has not made any payments pursuant to such agreements.
12. Tax Information (Unaudited)
The following table reconciles net income for financial reporting purposes
to income for federal income tax purposes for the years ended December 31:
1999 1998 1997
---- ---- ----
Net income per financial statements $ 1,221,020 $ 467,639 $ 35,620
Differences due to:
Direct finance leases ........... 1,933,804 8,548,014 5,863,979
Depreciation .................... (5,546,928) (7,834,138) (8,004,823)
Provision for losses ............ (119,975) (8,554) (8,554)
Loss on sale of equipment ....... (1,098,989) 50,639 50,639
Other ........................... 204,129 (4,839,645) 908,774
----------- ----------- -----------
Partnership (loss) for
federal income tax purposes ...... $(3,406,939) $(3,616,045) $(1,154,365)
=========== =========== ===========
As of December 31, 1999, the partners' capital accounts included in the
financial statements totaled $14,951,046 compared to the partners' capital
accounts for federal income tax purposes of $12,075,294 (unaudited). The
difference arises primarily from commissions reported as a reduction in the
partners' capital accounts for financial reporting purposes but not for federal
income tax purposes, and temporary differences related to direct finance leases,
depreciation and provision for losses.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1998
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant's General Partner
The General Partner, a Connecticut corporation, was formed in 1985. The
General Partner's principal offices are located at 111 Church Street, White
Plains, New York 10601-1505, and its telephone number is (914) 993-1700. The
officers of the General Partner have extensive experience with transactions
involving the acquisition, leasing, financing and disposition of equipment,
including acquiring and disposing of equipment subject to leases and full
financing transactions.
The manager of the Partnership's business is the General Partner. The
General Partner is engaged in a broad range of equipment leasing and financing
activities. Through its sales representatives and through various broker
relationships throughout the United States, the General Partner offers a broad
range of equipment leasing services.
The General Partner will perform certain functions relating to the
management of the equipment of the Partnership. Such services include the
collection of lease payments from the lessees of the equipment, re-leasing
services in connection with equipment which is off-lease, inspections of the
equipment, liaison with and general supervision of lessees to assure that the
equipment is being properly operated and maintained, monitoring performance by
the lessees of their obligations under the leases and the payment of operating
expenses.
The officers and directors of the General Partner are as follows:
Beaufort J.B. Clarke Chairman, Chief Executive Officer and Director
Paul B. Weiss President and Director
Thomas W. Martin Executive Vice President and Director
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
Beaufort J. B. Clarke, age 54, has been Chairman, Chief Executive Officer
and Director of the General Partner since 1996. Prior to his present position,
Mr. Clarke was founder and the President and Chief Executive Officer of Griffin
Equity Partners, Inc. Mr. Clarke formerly was an attorney with Shearman and
Sterling and has over 20 years of senior management experience in the United
States leasing industry.
Paul B. Weiss, age 39, is President and Director of the General Partner.
Mr. Weiss has been exclusively engaged in lease acquisitions since 1988 from his
affiliations with the General Partner since 1996, Griffin Equity Partners (as
Executive Vice President from 1993-1996); Gemini Financial Holdings (as Senior
Vice President-Portfolio Acquisitions from 1991-1993) and Pegasus Capital
Corporation (as Vice President-Portfolio Acquisitions from 1988-1991). He was
previously an investment banker and a commercial banker.
Thomas W. Martin, age 46, has been Executive Vice President of the General
Partner since 1996. Prior to his present position, Mr. Martin was the Executive
Vice President and Chief Financial Officer of Griffin Equity Partners, Inc.
(1993-1996), Gemini Financial Holdings (as Senior Vice President from 1992-1993)
and Chancellor Corporation (as Vice President-Syndications from 1985-1992). Mr.
Martin has 17 years of senior management experience in the leasing business.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
Item 11. Executive Compensation
The Partnership has no directors or officers. The General Partner and its
affiliates were paid or accrued the following compensation and reimbursement for
costs and expenses for the years ended December, 31, 1999, 1998 and 1997.
Type of
Entity Capacity Compensation 1999 1998 1997
------ -------- ------------ ---- ---- ----
ICON Capital Corp. General Partner Management fees $ 675,025 $ 969,546 $1,092,714
ICON Capital Corp. General Partner Admin. expense
reimbursements 345,569 485,391 547,382
---------- ---------- ----------
$1,020,594 $1,454,937 $1,640,096
========== ========== ==========
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) The Partnership is a limited partnership and therefore does not have voting
shares of stock. No person of record owns, or is known by the Partnership to own
beneficially, more than 5% of any class of securities of the Partnership.
(b) As of March 24, 2000, Directors and Officers of the General Partner do not
own any equity securities of the Partnership.
(c) The General Partner owns the equity securities of the Partnership set forth
in the following table:
Title Amount Beneficially Percent
of Class Owned of Class
General Partner Represents initially a 1% and potentially a 100%
Interest 10% interest in the Partnership's income, gain
and loss deductions.
Item 13. Certain Relationships and Related Transactions
See Item 9 for a discussion of the Partnership's related party
transactions.
See Note 4 for a discussion of the Partnership's related party investments
in joint ventures.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements - See Part II, Item 8 hereof.
2. Financial Statement Schedule - None.
Schedules not listed above have been omitted because they are not
applicable or are not required or the information required to be set forth
therein is included in the Financial Statements or Notes thereto.
3. Exhibits - The following exhibits are incorporated herein by reference:
(i) Form of Dealer-Manager Agreement (Incorporated by reference to Exhibit
1.1 to Amendment No. 1 to Form S-1 Registration Statement No. 33-36376
filed with the Securities and Exchange Commission on November 9, 1993)
(ii) Form of Selling Dealer Agreement (Incorporated by reference to Exhibit
1.2 to Amendment No. 1 to Form S-1 Registration Statement No. 33-36376
filed with the Securities and Exchange Commission on November 9, 1993)
(iii)Amended and Restated Agreement of Limited Partnership (Incorporated
herein by reference to Exhibit A to Amendment No. 1 to Form S-1
Registration Statement No. 33-36376 filed with the Securities and
Exchange Commission on November 9, 1993)
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Partnership during the quarter ended
December 31, 1999.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 1999
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership 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.
Date: March 29, 2000 /s/ Beaufort J.B. Clarke
------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacity and on the dates indicated.
ICON Capital Corp.
sole General Partner of the Registrant
Date: March 29, 2000 /s/ Beaufort J.B. Clarke
------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Date: March 29, 2000 /s/ Paul B. Weiss
-----------------
Paul B. Weiss
President and Director
Date: March 29, 2000 /s/ Thomas W. Martin
--------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer)
Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrant Which have not Registered Securities Pursuant to
Section 12 of the Act
No annual report or proxy material has been sent to security holders. An annual
report will be sent to the limited partners and a copy will be forwarded to the
Commission.