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, 2001
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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 0-28136
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ICON Cash Flow Partners L.P. Six
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3723089
- -------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 Fifth Avenue, 10th Floor New York, New York 10011
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 418-4700
-----------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class Name of each exchange on which registered
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- --------------------------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
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(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, 2001
TABLE OF CONTENTS
Item Page
PART I
1. Business 3-4
2. Properties 4
3. Legal Proceedings 4
4. Submission of Matters to a Vote of Security Holders 4
PART II
5. Market for the Registrant's Securities and Related
Security Holder Matters 4
6. Selected Consolidated Financial and Operating Data 5
7. General Partner's Discussion and Analysis of Financial
Condition and Results of Operations 6-10
8. Consolidated Financial Statements and Supplementary Data 11-34
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 35
PART III
10. Directors and Executive Officers of the Registrant's
General Partner 35-36
11. Executive Compensation 36
12. Security Ownership of Certain Beneficial Owners
and Management 36
13. Certain Relationships and Related Transactions 36
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 37
SIGNATURES 75
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
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 November 8, 1995 (the final
closing date), 367,319.39 additional units were admitted, bringing the total
admissions to 383,857.12 units aggregating $38,385,712 in capital contributions.
Between 1995 and 2001 the Partnership redeemed 5,568.65 limited partnership
units leaving 378,288.47 limited partnership units outstanding at December 31,
2001. The sole general partner is ICON Capital Corp. (the "General Partner").
The Partnership's reinvestment period ended November 11, 2000 and the
Partnership immediately commenced the disposition period. During the disposition
period the Partnership has and will continue to distribute substantially all
distributable cash from operations and equipment sales to the partners and begin
the orderly termination of its operations and affairs. The Partnership has not
and will not invest in any additional finance or lease transactions during the
disposition period.
Segment Information
The Partnership has only one operating segment: the business of managing
equipment subject to leases with companies that the Partnership believes to be
creditworthy.
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 has: (1) acquired a diversified portfolio of short-term, high-yield
lease and financing transactions, (2) made monthly cash distributions to its
limited partners from cash from operations and cash from sales and disposition
of equipment, commencing with each limited partner's admission to the
Partnership; (3) re-invested substantially all undistributed cash from
operations and cash from sales of equipment and financing transactions during
the reinvestment period; and (4) begun to sell the Partnership's investments and
distribute the cash from sales of such investments to its limited partners.
The equipment leasing industry is highly competitive. When seeking leasing
transactions for acquisition, the Partnership competed 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. Because the reinvestment period of the Partnership has ended, it will
no longer be competing for acquisitions. However, competition and supply and
demand may affect the Partnership's ability to optimize value upon the sale of
its equipment.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
The Partnership has no direct employees. The General Partner has full and
exclusive discretion in management and control of the Partnership.
Lease and Financing Transactions
During the year ended December 31, 2000 prior to the end of its
Reinvestment Period, the Partnership purchased a portfolio of operating lease
equipment for an aggregate purchase price of $7,316,239. During 2001 the
Partnership did not purchase any equipment, leases or financing agreements.
During 2001, the Partnership sold equipment subject to operating and financing
leases for proceeds totaling $3,121,860.
The Partnership has one lease which individually represents greater than
10% of the Partnership's revenue for the year ended December 31, 2001. The lease
is with Aerovias de Mexico, S.A. de C.V. ("Aeromexico"). The underlying
equipment is an aircraft and the carrying value of the aircraft represented
52.9% of the Partnership's assets at December 31, 2001.
Item 2. Properties
The Partnership neither owns nor leases office space or equipment for the
purpose of managing its day-to-day affairs.
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 2001.
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,
2001 2000
---- ----
Limited Partners 2,267 2,267
General Partner 1 1
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
Item 6. Selected Consolidated Financial and Operating Data
Year Ended December 31,
--------------------------------------------------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Total revenue $ 4,724,024 $ 5,893,091 $ 5,036,158 $ 6,162,370 $ 6,510,932
============= ============== ============= ============= =============
Net (loss) income $ (348,138) $ 2,289,451 $ 1,221,020 $ 467,639 $ 35,620
============= ============== ============= ============= =============
Net (loss) income allocable to
limited partners $ (344,657) $ 2,266,556 $ 1,208,810 $ 462,963 $ 35,264
============= ============== ============= ============= =============
Net (loss) income allocable
to the General Partner $ (3,481) $ 22,895 $ 12,210 $ 4,676 $ 356
============= ============== ============= ============= =============
Weighted average limited
partnership units outstanding 378,288 378,383 379,187 379,984 381,687
============= ============== ============= ============= =============
Net (loss) income per weighted
average limited partnership unit $ (.91) $ 5.99 $ 3.19 $ 1.22 $ .09
============= ============= ============= ============= ============
Distributions to limited partners $ 3,488,143 $ 3,858,906 $ 4,075,766 $ 4,085,189 $ 4,102,940
============= ============== ============= ============= =============
Distributions to the General Partner $ 35,204 $ 38,995 $ 41,178 $ 41,261 $ 41,444
============= ============== ============= ============= =============
December 31,
------------------------------------------------------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Total assets $ 26,589,619 $ 36,337,813 $ 38,616,693 $ 44,487,621 $ 54,837,228
================ =============== ================ ============= ===============
Partners' equity $ 9,463,279 $ 13,334,764 $ 14,951,046 $ 17,884,454 $ 21,605,338
================ =============== ================ ============= ===============
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
Item 7. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
The Partnership's portfolio interests were comprised as follows at December
31, 2001 and 2000:
2001 2000
---- ----
Net investment in finance leases 28% 28%
Operating leases 67% 64%
Equity investments in joint ventures 5% 8%
Significant Accounting Policies and Management Estimates
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 and
liabilities at the dates of the financial statements and revenues and expenses
during the reporting periods. Significant estimates include the allowance for
doubtful accounts and unguaranteed residual values. Management believes that the
estimates and assumptions utilized in preparing its financial statements are
reasonable and prudent. Actual results could differ from those estimates. In
addition, management is required to disclose contingent assets and liabilities.
Leases - The Partnership accounts for owned equipment leased to third
parties as finance 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. 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 are
included in other assets. Initial direct costs of finance 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.
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
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
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,
third party appraisals, reviews of future cash flows and anticipated future cash
flows and detailed market analyses are used as the basis for measuring whether
an impairment loss should be recognized.
Allowance for Doubtful Accounts - The Partnership records a provision for
doubtful accounts 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.
Results of Operations
Years ended December 31, 2001 and 2000
There were no equipment purchases during 2001. In 2000 the Partnership
purchased, equipment under operating leases with original costs totaling
$7,316,239.
Revenues for the year ended December 31, 2001 were $4,724,024, representing
a decrease of $1,169,067 from 2000. The decrease in revenues resulted primarily
from decreases in finance income of $1,730,265, an increase in losses from
investments in joint ventures of $1,568,036 and a decrease in interest income
and other of $169,167. These decreases were offset by increases in rental income
of $1,618,942, and gains on sales of equipment of $679,459. The decrease in
finance income resulted primarily from a high level of renewal rent received in
the second quarter of 2000 on certain leases which were in excess of the
remaining residual values and to a lesser extent from a decrease in the average
size of the finance lease portfolio from 2000 to 2001. The loss from equity
investment in joint ventures was the result of provisions for bad debts recorded
by two of the underlying joint ventures, 1997-A and 1997-B of $1,825,000 and
$2,162,304, respectively, in the 2001 period versus a provision for 1997-A and
1997-B bad debts of $850,000 and $500,000 recorded in the 2000 period,
respectively. Also, all of the leases in an underlying joint venture, AIC Trust,
were sold in 2001 at a loss. The assets were sold for a note which is
collectible over 2 1/2 years. Rental income increased as a result of the
Partnership's acquisition of a portfolio of operating lease equipment in the
fourth quarter of 2000. Gain on sale of equipment increased primarily from the
sale of equipment in the first quarter of 2001, which generated a gain of
$470,000, and the sale of equipment in the fourth quarter of 2001 which
generated a gain of $190,054.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
Expenses for the year ended December 31, 2001 were $5,072,162 representing
an increase of $1,468,522 from 2000. The increase in expenses resulted primarily
from an increase in depreciation expense of $1,364,895 and interest expense of
$102,389. Depreciation expense increased in 2001 due to a change in estimate
related to a review of the estimated salvage value of operating lease equipment.
This change in estimate caused depreciation expense to increase by an additional
$201,204 in 2001. In addition, the partnership acquired a portfolio of leases at
the end of December 2000. The cost of these leases was $7,316,239 and the
related depreciation expense on the operating leases included therein was
$1,130,812 in 2001. The increase in interest expense was due to additional
borrowings related to lease acquisitions at the end of December 2000. The
additional borrowings were $3,218,916. The increased interest expense related to
these borrowings was partially offset by the continual repayment of outstanding
debt.
Net (loss) income for the years ended December 31, 2001 and 2000 was
$(348,138) and $2,289,451, respectively. The decrease from year to year was
primarily the result of the Partnership's share in losses in less than 50% joint
ventures. The net (loss) income per weighted average limited partnership unit
was $(.91) and $5.99 for 2001 and 2000, respectively.
Results of Operations
Years Ended December 31, 2000 and 1999
During 2000, the Partnership purchased, equipment under operating leases
for purchase prices totaling $7,316,239. There were no equipment purchases
during 1999.
Revenues for the year ended December 31, 2000 were $5,893,091, representing
an increase of $856,933 from 1999. The increase in revenues resulted primarily
from increases in finance income of $587,996, gain on sales of equipment of
$150,925, interest income and other of $77,636, and income from investments in
joint ventures of $32,876. Finance income increased primarily as a result of
renewal rent payments received on certain leases which were in excess of the
remaining residual values of those leases. The increase in gain on sales of
equipment resulted primarily from one sale transaction in 2000 which generated a
gain of approximately $417,000. Interest income and other increased due to an
increase in the average cash balance from 1999 to 2000. The increase in income
from investments in joint ventures resulted primarily from the recognition in
2000 of income realized upon the disposition of the interest in the Rowan joint
venture and the recognition of a full year of income in 2000 from the AIC Trust
in which the Partnership invested in the fourth quarter of 1999.
Expenses for the year ended December 31, 2000 were $3,603,640, representing
a decrease of $211,498 from 1999. The decrease in expenses was primarily due to
decreases in management fees - General Partner of $208,503, amortization of
initial direct costs of $132,822, and administrative expense reimbursements -
General Partner of $113,410. These decreases were partially offset by an
increase in interest expense of $242,248. The decreases in management fees -
General Partner, amortization of initial direct costs and administrative expense
reimbursements - General Partner were a result of a decrease in the average size
of the Partnership's finance lease portfolio from 1999 to 2000. The increase in
interest expense was primarily the result of a higher average debt level in 2000
as compared to 1999.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
Net income for the years ended December 31, 2000 and 1999 was $2,289,451
and $1,221,020, respectively. The net income per weighted average limited
partnership unit was $5.99 and $3.19 for 2000 and 1999, respectively.
Liquidity and Capital Resources
The Partnership's reinvestment period ended November 11, 2000 and the
disposition period began on November 12, 2000. During the disposition period the
Partnership has and will continue to distribute substantially all distributable
cash from operations cash from sales generated to partners and begin the orderly
termination of its operations and affairs. The Partnership has not and will not
invest in any additional finance or lease transactions during the disposition
period. As a result of the Partnership's entering into the disposition period,
future monthly distributions are expected to fluctuate depending on the amount
of asset sale and re-lease proceeds generated during the period.
The Partnership's primary source of cash in 2001 was cash provided by
operating activities of $748,771, cash from sales of equipment of $3,121,860 and
distributions from an unconsolidated joint ventures of $211,516. The Partnership
repaid non-recourse debt (excluding amounts paid by rents assigned directly to
lenders) of $1,012,598 and made distributions to partners aggregating
$3,523,347. Because these uses of cash exceeded cash generated during the year,
the Partnership's liquidity was reduced. As described, the Partnership is in the
disposition period and will distribute all cash generated other than amounts
required to fund its anticipated obligations. The Partnership's notes payable in
the amount of $15,596,106 at December 31, 2001 are non-recourse and are secured
by leased equipment and related receivables and are payable from rentals and
residuals realized from such investments. The lease of an aircraft (in which the
Partnership has a 99% interest) represents 52.9% of the Partnership's total
assets and expires in November 2002, unless extended. The aircraft had a
carrying value of $14,057,000 at December 31, 2001 and related non-recourse debt
outstanding of $9,878,000 at such date. The Partnership's ability to release
remarket, or sell the aircraft and refinance the related debt will significantly
affect the Partnership's future cash flow.
Cash distributions to limited partners for the years ended December 31,
2001 and 2000, which were paid on a monthly basis, totaled $3,488,143, and
$3,858,906, respectively, of which $0 and $2,266,556 were investment income and
$3,488,143 and $1,592,350 was a return of capital, respectively. The annualized
cash distribution rate to limited partners in 2001 and 2000 was 9.22% ($9.22 per
limited partnership unit) and 10.20% ($10.20 per Limited Partnership units)
respectively, of which 0% and 5.99% were investment income and 9.22% and 4.21%
were a return of capital, in 2001 and 2000, respectively.
As of December 31, 2001, except as noted above, there were no known trends
or demands, commitments, events or uncertainties which are likely to have a
material effect on liquidity. As cash is realized from operations and sales of
equipment, the Partnership will distribute to partners substantially all
available cash, after retaining sufficient cash to meet its reserve requirements
and recurring obligations.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
New Accounting Pronouncements
Effective January 1, 2002, the Partnership adopted SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144).
This statement requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to the future net
cash flows expected to be generated by the asset. If the carrying amount of the
asset exceeds its estimated future cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. SFAS No. 144 requires companies to separately report
discontinued operations and extends that reporting to a component of an entity
that either has been disposed of (by sale, abandonment or in a distribution to
the owners) or classified as held for sale. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less the costs to
sell. The adoption of SFAS No. 144 did not have any effect on the Partnership's
financial position or results of operations as the provisions of SFAS No. 144
are similar to the partnership's current policy for impairment review.
Item 7a. Qualitative and Quantitative Disclosures About Market Risk
The Partnership is exposed to certain market risks, primarily changes in
interest rates and the demand for equipment and residuals owned by the
Partnership and its investees. The Partnership believes its exposure to other
market risks are insignificant to both its financial position and results of
operations.
The Partnership manages its interest rate risk by obtaining fixed rate
debt. The fixed rate debt service obligation streams are generally matched by
fixed rate lease receivable streams generated by the Partnership's lease
investments.
The Partnership manages its exposure to equipment and residual risk by
monitoring the market and maximizing the re-marketing proceeds received.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
Item 8. Consolidated Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Page Number
Independent Auditors' Report 13
Consolidated Balance Sheets as of December 31, 2001 and 2000 14
Consolidated Statements of Operations for the Years Ended
December 31, 2001, 2000 and 1999 15
Consolidated Statements of Changes in Partners'
Equity for the Years Ended
December 31, 2001, 2000 and 1999 16
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2001, 2000 and 1999 17-19
Notes to Consolidated Financial Statements 20-34
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Financial Statements
December 31, 2001
(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, 2001 and
2000, 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, 2001. 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 auditing standards generally accepted
in the United States of America. 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.
As discussed in Note 1, the Partnership's reinvestment period ended
November 11, 2000 and the disposition period began on November 12, 2000. During
the disposition period the Partnership has and will continue to distribute
substantially all distributable cash from operations and equipment sales to the
partners and begin the orderly termination of its operations and affairs.
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, 2001 and 2000, and the results of its
operations and its cash flows for each of the years in the three year period
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.
/s/ KPMG LLP
--------------------------------------------
KPMG LLP
April 15, 2002
New York, New York
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Balance Sheets
December 31,
2001 2000
---- ----
Assets
Cash and cash equivalents ...................... $ 384,816 $ 838,897
------------ ------------
Investment in finance leases
Minimum rents receivable .................... 5,635,382 7,289,853
Estimated unguaranteed residual values ...... 2,033,755 3,829,489
Initial direct costs ........................ 5,563 61,740
Unearned income ............................. (650,225) (1,304,117)
Allowance for doubtful accounts ............. (277,068) (277,068)
------------ ------------
6,747,407 9,599,897
------------ ------------
Investment in operating leases
Equipment, at cost .......................... 22,051,594 26,416,885
Accumulated depreciation .................... (5,831,958) (4,217,602)
------------ ------------
16,219,636 22,199,283
Investments in unconsolidated joint ventures ... 1,321,509 3,011,244
------------ ------------
Other assets ................................... 1,916,251 688,492
------------ ------------
Total assets ................................... $ 26,589,619 $ 36,337,813
============ ============
Liabilities and Partners' Equity
Notes payable - non-recourse ................... $ 15,596,106 $ 21,194,679
Security deposits and deferred credits ......... 1,022,524 1,463,719
Accounts payable - other ....................... 340,828 278,253
Accounts payable - General partner and affiliate 94,812 --
Minority interest in joint venture ............. 72,070 66,398
------------ ------------
17,126,340 23,003,049
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ............................. (233,078) (194,393)
Limited partners (378,288 units outstanding,
$100 per unit original issue price) ....... 9,696,357 13,529,157
------------ ------------
Total partners' equity .................... 9,463,279 13,334,764
------------ ------------
Total liabilities and partners' equity ......... $ 26,589,619 $ 36,337,813
============ ============
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,
2001 2000 1999
---- ---- ----
Revenues
Rental income $ 4,086,442 $ 2,467,500 $ 2,460,000
Finance income 828,531 2,558,796 1,970,800
Gains on sales of equipment 1,269,006 589,547 438,622
(Loss) income from investments in unconsolidated
joint ventures (1,478,502) 89,534 56,658
Interest income and other 18,547 187,714 110,078
----------- ----------- -----------
Total revenues 4,724,024 5,893,091 5,036,158
----------- ----------- -----------
Expenses
Interest 2,031,014 1,928,625 1,686,377
Management fees - General Partner 481,734 466,522 675,025
Amortization of initial direct costs 16,669 42,778 175,600
Depreciation 1,990,094 625,199 625,199
Administrative expense reimbursements
- General Partner 239,947 232,159 345,569
General and administrative 307,032 291,257 298,031
Provision for bad debts -- 9,763 --
Minority interest expense 5,672 7,337 9,337
----------- ----------- -----------
Total expenses 5,072,162 3,603,640 3,815,138
----------- ----------- -----------
Net (loss) income $ (348,138) $ 2,289,451 $ 1,221,020
=========== =========== ===========
Net (loss) income allocable to:
Limited partners $ (344,657) $ 2,266,556 $ 1,208,810
General Partner (3,481) 22,895 12,210
----------- ----------- -----------
$ (348,138) $ 2,289,451 $ 1,221,020
=========== =========== ===========
Weighted average number of limited
partnership units outstanding 378,288 378,383 379,187
=========== =========== ===========
Net (loss) income per weighted average
limited partnership unit $ (.91) $ 5.99 $ 3.19
=========== =========== ===========
Gain on sale of joint venture interest
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, 2001, 2000 and 1999
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
------- ------ -------- ------- -----
(Per weighted average unit)
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
Cash distributions
to partners $ 4.21 $ 5.99 (3,858,906) (38,995) (3,897,901)
Limited partnership units
redeemed (200 units) (7,832) - (7,832)
Net income 2,266,556 22,895 2,289,451
--------------- ------------- ---------------
Balance at
December 31, 2000 13,529,157 (194,393) 13,334,764
Cash distributions
to partners $ 9.22 $ - (3,488,143) (35,204) (3,523,347)
Net loss (344,657) (3,481) (348,138)
--------------- ------------- ---------------
Balance at
December 31, 2001 $ 9,696,357 $ (233,078) $ 9,463,279
=============== ============= ===============
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,
2001 2000 1999
---- ---- ----
Cash flows from operating activities:
Net (loss) income $ (348,138) $ 2,289,451 $ 1,221,020
----------- ----------- -----------
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation 1,990,094 625,199 625,199
Provision for doubtful accounts -- 9,763 --
Rental income - paid directly to lenders by lessees (3,993,234) (2,467,500) (2,460,000)
Finance income portion of receivables paid directly
to lenders by lessees (599,313) (1,244,276) (1,665,251)
Amortization of initial direct costs 16,669 42,778 175,600
Gains on sales of equipment (1,269,006) (589,547) (438,622)
Loss (income) from investments in unconsolidated
joint ventures 1,478,502 (89,534) (56,658)
Interest expense on non-recourse financing
paid directly by lessees 1,901,870 1,850,592 1,652,894
Minority interest expense in joint venture 5,672 7,337 9,337
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables 1,448,705 2,355,598 5,247,805
Other assets 400,758 (45,612) (245,198)
Security deposits and deferred credits (441,195) (1,236,406) 128,483
Accounts payable - other 62,575 152,723 (51,867)
Accounts payable to General Partner and affiliates 94,812 -- (425,089)
Other -- 72,415 1,703
----------- ----------- -----------
Total adjustments 1,096,909 (556,470) 2,498,336
----------- ----------- -----------
Net cash provided by operating activities 748,771 1,732,981 3,719,356
----------- ----------- -----------
(continued on next page)
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows - Continued
2001 2000 1999
---- ---- ----
Cash flows from investing activities:
Proceeds from sales of equipment $ 3,121,860 $ 1,708,805 $ 6,120,773
Equipment purchased -- (4,097,323) --
Distributions received from
unconsolidated joint ventures 211,516 152,303 753,857
Investments in unconsolidated joint ventures (283) (114,005) (1,788,621)
Investment in unconsolidated joint venture -- (2,250,000) --
Proceeds from disposition of investment in
unconsolidated joint venture -- 2,362,500 --
------------ ------------ ------------
Net cash provided by (used in) investing activities 3,333,093 (2,237,720) 5,086,009
------------ ------------ ------------
Cash flows from financing activities:
Cash distributions to partners (3,523,347) (3,897,901) (4,116,944)
Proceeds from notes payable - non-recourse debt -- 11,752,147 --
Principal payment on notes payable - non-recourse debt (1,012,598) (10,391,160) --
Principal payments on non-recourse secured financing -- (103,145) (784,670)
Redemption of limited partnership units -- (7,832) (37,484)
------------ ------------ ------------
Net cash used in financing activities (4,535,945) (2,647,891) (4,939,098)
------------ ------------ ------------
Net (decrease) increase in cash (454,081) (3,152,630) 3,866,267
Cash at beginning of year 838,897 3,991,527 125,260
------------ ------------ ------------
Cash at end of year $ 384,816 $ 838,897 $ 3,991,527
============ ============ ============
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
For the years ended December 31, 2001, 2000 and 1999 non-cash activities
included the following:
2001 2000 1999
---- ---- ----
Principal and interest on direct finance receivables
paid directly to lenders by lessees $ 2,494,611 $ 3,446,102 $ --
Rental income paid directly to lenders by lessees 3,993,234 2,467,500 2,460,000
Principal and interest on non-recourse financing
paid directly to lenders by lessees (6,487,845) (5,913,602) (2,460,000)
Fair value of equipment and receivables purchased
for debt -- (3,218,916) --
Non-recourse notes payable assumed in
purchase price -- 3,218,916 --
Decrease in investment in finance leases and
financings due to contribution to
unconsolidated joint venture -- -- 177,956
Increase in investments in
unconsolidated joint ventures -- (177,956)
----------- ----------- -----------
$ -- $ -- $ --
=========== =========== ===========
2001 2000 1999
---- ---- ----
Interest expense:
Interest paid directly to lenders
by lessees pursuant to non-recourse financings $1,901,870 $1,850,592 $1,652,894
Other interest 129,144 78,033 33,483
---------- ---------- ----------
Total interest expense $2,031,014 $1,928,625 $1,686,377
========== ========== ==========
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, 2001
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, 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 November 8, 1995 (the final closing
date), 367,319.39 additional units were admitted, bringing the total admissions
to 383,857.12 units aggregating $38,385,712 in capital contributions. Between
1995 and 2001 the Partnership redeemed 5,568.65 limited partnership units
leaving 378,288.47 limited partnership units outstanding at December 31, 2001.
The Partnership's reinvestment period ended November 11, 2000 and the
Partnership began the disposition period. During the disposition period the
Partnership has and will continue to distribute substantially all distributable
cash from operations and equipment sales to the partners and begin the orderly
termination of its operations and affairs. The Partnership has not and will not
invest in any additional finance or lease transactions during the disposition
period.
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
General Partner received organization and offering expenses from the gross
proceeds of such sales. The total underwriting compensation paid by the
Partnership, including underwriting commissions, sales commissions, incentive
fees, public offering expense reimbursements and due diligence activities was
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 and
liabilities at the dates of the financial statements and revenues and expenses
during the reporting periods.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Significant estimates include the allowance for doubtful accounts and
unguaranteed residual values. Management believes that the estimates and
assumptions utilized in preparing its financial statements are reasonable and
prudent. Actual results could differ from those estimates. In addition,
management is required to disclose contingent assets and contingent liabilities.
Consolidation - The consolidated financial statements include the accounts
of the Partnership and its majority owned subsidiaries. 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.
Cash and Cash Equivalents - Cash and cash equivalents are defined as cash
in banks and highly liquid investments with original maturity dates of three
months or less.
Leases - The Partnership accounts for owned equipment leased to third
parties as finance 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. 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 are
included in other assets. Initial direct costs of finance 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.
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.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Allowance for Doubtful Accounts - The Partnership records a provision for
doubtful accounts 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.
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,
2001 and 2000 with respect to the Company's assets and liabilities is not
provided because (i) SFAS 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.
Redemption of Limited Partnership Units - The General Partner consented to
the Partnership redeeming 984.73 units during 1999 and 200 units in 2000. The
redemption amounts are 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. No units were redeemed in 2001.
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.
Reclassifications - Certain items have been reclassified to conform with
the 2001 presentation.
New Accounting Pronouncement - Effective January 1, 2002, the Partnership
adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" (SFAS No. 144). This statement requires that long-lived assets be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to the future net cash flows expected to be generated by the asset. If
the carrying amount of the asset exceeds its estimated future cash flows, an
impairment charge is recognized by the amount by which the carrying amount of
the asset exceeds the fair value of the asset. SFAS No. 144 requires companies
to separately report discontinued operations and extends that reporting to a
component of an entity that either has been disposed of (by sale, abandonment or
in a distribution to the owners) or classified as held for sale. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
the costs to sell. The adoption of SFAS No. 144 did not have any effect on the
Partnership's financial position or results of operations as the provisions of
SFAS No. 144 are similar to the partnership's current policy for impairment
review.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
3. Investments in Joint Ventures
The Partnership and affiliates formed eight joint ventures discussed below
for the purpose of acquiring and managing various assets. The Partnership and
its affiliates have identical investment objectives and participate on the same
terms and conditions. The Partnership has a right of first refusal to purchase
the equipment, on a pro-rata basis, if any of the affiliates desire to sell
their interest in the equipment.
The joint venture described below is majority owned and is consolidated
with the Partnership.
ICON Cash Flow Partners LLC 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 owning a commercial
aircraft subject to lease. 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, cash flow and disposition proceeds are
allocated 99% to the Partnership and 1% to Series E. The Partnership's
consolidated financial statements include 100% of the assets and liabilities and
revenues and expenses 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 on the
Partnership's consolidated balance sheets and as minority interest expense the
consolidated statements of operations. The lease of the aircraft is scheduled to
expire in November 2002, unless renewed. The aircraft had a net book value of
approximately $14,057,000 and related outstanding non-recourse debt of
$9,878,000 at December 31, 2001.
The seven joint ventures described below are less than 50% owned and are
accounted for following the equity method. The Partnership's interest in the
Rowan Joint Venture was sold in the third quarter of 2000.
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 purchasing a commercial aircraft subject to lease. The
Partnership and Series E contributed 1% and 99% of the cash required for such
acquisition, respectively, to ICON Cash Flow LLC I. ICON Cash Flow LLC I
acquired the aircraft, assuming non-recourse debt and utilizing contributions
received from the Partnership and Series E. The lease 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 of accounting whereby the
Partnership's original investment was recorded at cost and was adjusted by its
share of income, losses and distributions thereafter. The lease of the aircraft
is scheduled to expire in October 2002, unless renewed.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Information as to the financial position and results of operations of ICON
Cash Flow LLC I as of and for the years ended December 31, 2001 and 2000 is
summarized below:
December 31, 2001 December 31, 2000
Assets $ 17,856,299 $ 18,443,551
================ ===============
Liabilities $ 10,158,274 $ 11,280,394
================ ===============
Equity $ 7,698,025 $ 7,163,157
================ ===============
Partnership's share of equity $ 76,981 $ 71,632
================ ===============
Year Ended Year Ended
December 31, 2001 December 31, 2000
Net income $ 534,868 $ 707,188
================ ===============
Partnership's share of net income $ 5,349 $ 7,072
================ ===============
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). 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. As of December 31, 2001, the Partnership,
Series D, Series E and L.P. Seven own 31.03%, 17.81%, 31.19% and 19.97%
interests, respectively, in 1997- A. The Partnership accounts for its investment
in 1997-A 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 financial position and results of operations of
1997-A as of and for the years ended December 31, 2001 and 2000 is summarized
below:
December 31, 2001 December 31, 2000
----------------- -----------------
Assets $ 1,856,582 $ 9,002,519
================ ===============
Liabilities $ 1,707,445 $ 6,848,927
================ ===============
Equity $ 149,137 $ 2,153,592
================ ===============
Partnership's share of equity $ 46,277 $ 719,335
================ ===============
Year Ended Year Ended
December 31, 2001 December 31, 2000
Net loss $ (2,004,455) $ (661,929)
================ ===============
Partnership's share of net loss $ (673,058) $ (205,424)
================ ===============
Distributions $ - $ 450,867
================ ===============
Partnership's share of distributions $ - $ 139,926
================ ===============
1997A recorded a provisions for bad debts of $1,825,000 and $850,000 during
the years ended December 31, 2001 and 2000, respectively.
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"). The Partnership, Series E and L.P. Seven
each contributed cash, equipment leases and residuals and received an 8.33%,
75.00% and 16.67% interest, respectively, in 1997-B. The Partnership accounts
for its investment in 1997-B 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 financial position and results of operations of
1997-B as of and for the years ended December 31, 2001 and 2000 is summarized
below:
December 31, 2001 December 31, 2000
----------------- -----------------
Assets $ 8,265,689 $ 18,324,933
=============== ===============
Liabilities $ 7,876,692 $ 16,068,825
=============== ===============
Equity $ 388,997 $ 2,256,108
=============== ===============
Partnership's share of equity $ 32,403 $ 187,933
=============== ===============
Year Ended Year Ended
December 31, 2001 December 31, 2000
----------------- -----------------
Net (loss) income $ (1,867,111) $ 420,423
=============== ===============
Partnership's share of net (loss) income $ (155,530) $ 35,021
=============== ===============
Distributions $ - $ 148,578
=============== ===============
Partnership's share of distributions $ - $ 12,377
=============== ===============
1997-B recorded provisions for bad debts of $2,162,304 and $500,000 during
the years ended December 31, 2001 and 2000, respectively.
ICON Boardman Funding L.L.C.
In December 1998, the Partnership and three affiliates, ICON Cash Flow
Partners, L.P., Series C ("Series C"), L.P. Seven and ICON Income Fund Eight A
L.P. ("Fund Eight A") formed ICON Boardman Funding L.L.C. ("ICON BF"), for the
purpose of acquiring a lease for a coal handling facility with Portland General
Electric, a utility company. The purchase price totaled $27,421,810, and was
funded with cash and non-recourse debt. The Partnership, Series C, L.P. Seven,
and Fund Eight A received a .5%, .5%, .5% and 98.5% interest, respectively, in
ICON BF. The Partnership accounts for its investment under the equity method of
accounting.
In 2001 the other joint venturers in ICON BF acquired Series C's interest
in accordance with their proportionate shares of ICON BF, at an aggregate cost
of $56,370, which represented Series C's carrying value of the investment. The
Partnership's share of the purchase price was $283. The remaining venturers'
shares in ICON BF at December 31, 2001 were .5025%, .5025%, and 98.995% for the
Partnership, L.P. Seven, and Fund Eight A respectively.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Portland General Electric ("PGE") is a wholly owned subsidiary of Enron
Corporation ("Enron"), which recently filed for Chapter 11 bankruptcy
protection. PGE has not filed for bankruptcy. While Enron owns all of PGE's
outstanding common stock, PGE has its own legal entity, owns its assets and is
responsible for its own day-to-day operations. PGE continues to make its lease
payments and is current through March 2002.
Information as to the financial position and results of operations of ICON
BF as of and for the years ended December 31, 2001 and 2000 is summarized below:
December 31, 2001 December 31, 2000
Assets $ 24,855,375 $ 26,274,686
================ ===============
Liabilities $ 13,588,934 $ 16,350,122
================ ===============
Equity $ 11,266,441 $ 9,924,564
================ ===============
Partnership's share of equity $ 56,614 $ 49,620
================ ===============
Year Ended Year Ended
December 31, 2001 December 31, 2000
Net income $ 1,341,877 $ 1,063,978
================ ===============
Partnership's share of net income $ 6,711 $ 5,321
================ ===============
AIC Trust
In 1999, ICON/AIC Trust ("AIC Trust") was formed to own and manage a
portfolio of leases in England. The Partnership, L.P. Seven and Fund Eight A own
25.51%, 30.76% and 43.73% interests in AIC Trust, respectively. The Partnership
accounts for its investment under the equity method of accounting.
On December 28, 2001, AIC Trust sold its remaining leases, subject to the
related debt at a loss, for a note receivable of (pound)2,575,000 ($3,744,822
based upon the exchange rate at December 31, 2001) which is payable in six
installments through June 2004. The first installment on the rate was collected
in 2002.
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 AIC
Trust as of and for the years ended December 31, 2001 and 2000 is summarized
below:
December 31, 2001 December 31, 2000
Assets $ 3,849,439 $ 15,301,480
================ ================
Liabilities $ - $ 8,543,026
================ ================
Equity $ 3,849,439 $ 6,758,454
================ ================
Partnership's share of equity $ 981,992 $ 1,713,661
================ ================
Year Ended Year Ended
December 31, 2001 December 31, 2000
----------------- -----------------
Net (loss) income $ (2,687,696) $ 529,585
================ ================
Partnership's share of (loss) income $ (675,211) $ 135,044
================ ================
Distributions $ 829,150 $ -
================ ================
Partnership's share of distributions $ 211,516 $ -
================ ================
ICON Cheyenne LLC
At the end of December 2000, the Partnership and three affiliates, L.P.
Seven, Fund Eight A and ICON Income Fund Eight B ("Fund Eight B") formed ICON
Cheyenne LLC ("ICON Cheyenne") for the purpose of acquiring a portfolio of lease
investments. The purchase price totaled $29,705,716 and was funded with cash of
$11,401,151 and the assumption of non-recourse debt with an unaffiliated third
party lender of $18,304,565. The debt is structured to be amortized by the
application to the debt of rentals due under the various term leases. The
Partnership, L.P. Seven, Fund Eight A and Fund Eight B received a 1%, 10.31%, 1%
and 87.69% interest, respectively in the joint venture. 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 financial position and results of operations of ICON
Cheyenne as of and for the year ended December 31, 2001 and as of and for the
period of investment to December 31, 2000 is summarized below:
December 31,2001 December 31, 2000
Assets $ 23,869,671 $ 29,705,716
================ ===============
Liabilities $ 11,145,506 $ 18,304,565
================ ===============
Equity $ 12,724,165 $ 11,401,151
================ ===============
Partnership's share of equity $ 127,242 $ 114,005
================ ===============
Year Ended Year Ended
December 31, 2001 December 31, 2000
Net income $ 1,323,014 $ -
================ ===============
Partnership's share of income $ 13,237 $ -
================ ===============
Rowan Joint Venture
L.P. Seven had a $9,000,000 investment in a 50% share of an option to
acquire an interest in a drilling rig on lease to Rowan Companies, Inc.
In March 2000, L.P. Seven formed a joint venture for the purpose of owning
the investment.
L.P. Seven contributed its investment to the joint venture ("Rowan Joint
Venture"). Simultaneously, the Partnership acquired an interest in this joint
venture for $2,250,000. No gain or loss was recognized by L.P. Seven. The
Partnership had the right to put its interest in the joint venture back to L.P.
Seven at any time on or after September 15, 2000 for 110% of the purchase price.
L.P. Seven had the right to repurchase the interest in the joint venture from
the Partnership at any time prior to September 15, 2000 for an amount equal to
105% of the Partnership's purchase price, which right it exercised in the third
quarter 2000. As a result, the Partnership recognized a gain on the sale of its
investment in this joint venture of $112,500.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
4. Finance Lease Receivables
Non-cancelable minimum annual amounts due on finance leases are as follows:
Year Amount
2002 $ 2,831,305
2003 1,992,971
2004 811,106
----------------
$ 5,635,382
5. Investment in Operating Leases
The investment in operating leases at December 31, 2001 and 2000 consisted
of the following:
2001 2000
---- ----
Equipment cost, beginning of year $ 26,416,885 $ 19,100,646
Equipment acquisitions -- 7,316,239
Equipment dispositions (4,365,291) --
------------ ------------
Equipment cost, end of year 22,051,594 26,416,885
------------ ------------
Accumulated depreciation,
beginning of year (4,217,602) (3,592,403)
Depreciation expense (1,957,210) (625,199)
Accumulated depreciation, equipment dispositions 342,854 --
------------ ------------
Accumulated depreciation, end of year (5,831,958) (4,217,602)
------------ ------------
Investment in operating lease, end of year $ 16,219,636 $ 22,199,283
============ ============
Non-cancelable minimum rentals of $3,153,685 on operating leases are due in
2002.
At December 31, 2000, the investment in operating leases consisted of one
aircraft owned by ICON Cash Flow LLC II, a joint venture owned 99% by the
Partnership and 1% by Series E. The aircraft is leased under an operating lease
which expires in November 2002. (See Note 3 for additional information relating
to the joint venture). Additional equipment acquisitions in 2000 consisted of
manufacturing, transportation and other equipment on lease to eight lessees. The
leases expire through November 2002.
During 2001, the Partnership sold equipment in the first quarter generating
a gain of $470,000 and in the fourth quarter generating a gain of $190,054. The
proceeds of the fourth quarter sale of $1,552,256 is carried as a receivable in
other assets at December 31, 2001. Such amount was collected in January 2002.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
6. Allowance for Doubtful Accounts
The allowance for doubtful accounts related to the investments in finance
leases consisted of the following:
Balance at December 31, 1998 $ 231,149
Accounts written-off (19,672)
Recoveries on accounts
previously written-off 55,193
-------------
Balance at December 31, 1999 266,670
Recoveries on accounts
previously written-off 635
Provision for doubtful accounts 9,763
-------------
Balance at December 31, 2001 and 2000 $ 277,068
=============
7. Notes Payable
Notes payable non-recourse bear interest at fixed rates ranging from 5.18%
to 10.75% and mature as follows:
Notes Payable
Non-Recourse
2002 $ 4,121,343
2003 10,255,666
2004 1,219,097
----------------
$ 15,596,106
These non-recourse notes payable are secured by equipment with net book
values aggregating $21,289,645.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
8. 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, 2001, 2000 and 1999
are as follows:
Charged to
Operations
Management fees $ 675,025
Administrative expense reimbursements 345,569
--------------
Year ended December 31, 1999 $ 1,020,594
==============
Management fees $ 466,522
Administrative expense reimbursements 232,159
--------------
Year ended December 31, 2000 $ 698,681
==============
Management fees $ 481,734
Administrative expense reimbursements 239,947
--------------
Year ended December 31, 2001 $ 721,681
==============
In accordance with the Management Agreement, the Partnership pays the
General Partner management fees based on a percentage of rentals received
(ranging from 1% to 7%). In addition, the General Partner is reimbursed for
expenses incurred by it in connection with the Partnership's operations. (See
Note 1 for information relating to organization and offering expenses and
underwriting commissions).
The Partnership had investments in eight joint ventures with other
Partnerships sponsored by the General Partner, one of which was sold in 2000.
(See Note 3 for additional information relating to the joint ventures).
9. 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. During the years ended December 31, 2001, 2000 and 1999,
the Partnership did not incur any obligations pursuant to such agreements.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
10. Tax Information (Unaudited)
The following table reconciles net income for financial statement reporting
purposes to income for federal income tax reporting purposes for the years ended
December 31:
2001 2000 1999
---- ---- ----
Net (loss) income for financial statement
reporting purposes $ (348,138) $ 2,289,451 $ 1,221,020
Differences due to:
Direct finance leases 2,198,744 1,996,665 1,933,804
Depreciation (1,698,494) (4,158,021) (5,546,928)
Provision for losses -- (271,528) (119,975)
Gain (loss) on sales of equipment 1,727,630 (411,606) (1,098,989)
Other (1,092,430) 9,631 204,129
----------- ----------- -----------
Partnership income (loss) for
federal income tax reporting purposes $ 787,312 $ (545,408) $(3,406,939)
=========== =========== ===========
As of December 31, 2001, the partners' capital accounts included in the
financial statements totaled $9,463,279 compared to the partners' capital
accounts for federal income tax reporting purposes of $4,888,117 (unaudited).
The difference arises primarily from sales expenses and commissions reported as
a reduction in the partners' capital accounts for financial statement reporting
purposes but not for federal income tax reporting purposes, offset by temporary
differences related to direct finance leases, depreciation and provision for
losses.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
11. Quarterly Financial Data (Unaudited)
The following table is a summary of financial data by quarter for the years
ended December 31, 2001 and 2000:
For the Quarters Ended
----------------------------------------------------------------------
March 31, June 30, September 30, December 31,
-------- ------- ------------ -----------
2001
Revenues $ 1,901,441 $ 843,580 $ 1,248,352 $ 730,651
============= ============= ============= =============
Net income (loss) allocable to
limited partners $ 680,424 $ (339,097) $ 174,492 $ (860,476)
============= ============= ============= =============
Net income (loss) per weighted
average limited partnership unit $ 1.80 $ (0.90) $ 0.46 $ (2.27)
============= ============= ============ =============
2000
Revenues $ 1,195,997 $ 1,818,017 $ 1,790,912 $ 1,088,165
============= ============= ============= =============
Net income allocable to
limited partners $ 334,848 $ 926,252 $ 940,638 $ 64,818
============= ============= ============= =============
Net income per weighted
average limited partnership unit $ 0.88 $ 2.45 $ 2.49 $ 0.17
============= ============= ============ =============
(1) The fourth quarter of 2001 includes the Partnership's share of the loss of
its joint venture investee, AIC Trust (see note 3), of approximately
$787,000.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
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 100 Fifth Avenue, 10th Floor,
New York, New York 10011, and its telephone number is (212) 418-4700. 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
Beaufort J. B. Clarke, age 55, 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 41, 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.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
Thomas W. Martin, age 48, 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.
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, 2001, 2000 and 1999.
Type of
Entity Capacity Compensation 2001 2000 1999
------ -------- ------------ ---- ---- ----
ICON Capital Corp. General Partner Management fees $ 481,734 $ 466,522 $ 675,025
ICON Capital Corp. General Partner Admin. expense
reimbursements 239,947 232,159 345,569
------------- ------------- --------------
$ 721,681 $ 698,681 $ 1,020,594
============= ============= ==============
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 April 1, 2001, 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 11 for a discussion of the Partnership's related party
transactions.
See also Notes 3,5 and 8 for a discussion of the Partnership's related
party transactions.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
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, 2001.
(c) Exhibits
(d) Unconsolidated Joint Venture Financial Statements
ICON Receivables 97-A LLC - as of and for the years ended December 31, 2001
and 2000
ICON Receivables 97-B LLC - as of and for the year ended December 31, 2001
AIC Trust - as of and for the years ended December 31, 2001 and 2000
ICON Cheyenne LLC - as of and for the year ended December 31, 2001
ICON Receivables 1997-A L.L.C.
Financial Statements
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Members ICON Receivables 1997-A L.L.C.
We have audited the accompanying balance sheets of ICON Receivables 1997-A
L.L.C. (the "Company") as of December 31, 2001 and 2000, and the related
statements of operations, changes in members' equity, and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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.
As discussed in Note 1, the Company is winding down its portfolio and will
distribute available cash to its members when all assets are liquidated and all
obligations are paid.
In our opinion, the consolidated financial statements referred to the above
present fairly, in all material respects, the financial position of ICON
Receivables 1997-A L.L.C. as of December 31 2001 and 2000, and the results of
its operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
/s/KPMG LLP
-------------------------------------------
KPMG LLP
April 15, 2002
New York, New York
ICON Receivables 1997-A L.L.C.
Balance Sheets
December 31,
Assets 2001 2000
------ ---- ----
Cash $ 673,740 $ 619,719
----------- -----------
Investment in finance leases
Minimum rents receivable 2,984,147 4,594,866
Estimated unguaranteed residual values 269,211 565,788
Unearned income (134,914) (354,592)
Allowance for doubtful accounts (2,174,224) (786,560)
----------- -----------
944,220 4,019,502
----------- -----------
Investment in financings
Minimum rents receivable -- 4,570,567
Unearned income -- (245,371)
Allowance for doubtful accounts -- (802,699)
----------- -----------
-- 3,522,497
----------- -----------
Other assets 238,622 840,801
----------- -----------
Total assets $ 1,856,582 $ 9,002,519
=========== ===========
Liabilities and Members' Equity
Notes payable non-recourse $ 1,157,730 $ 5,016,098
Security deposits, deferred credits and other payables 549,715 1,832,829
----------- -----------
Total liabilities 1,707,445 6,848,927
----------- -----------
Members' equity 149,137 2,153,592
----------- -----------
Total liabilities and members' equity $ 1,856,582 $ 9,002,519
=========== ===========
See accompanying notes to financial statement.
ICON Receivables 1997-A L.L.C.
Statements of Operations
For the Years Ended December 31,
2001 2000
---- ----
Revenue
Finance income $ 465,049 $ 960,903
Interest income and other 56,001 135,580
Gain on remarketing of equipment 26,997 161,410
----------- -----------
Total revenues 548,047 1,257,893
----------- -----------
Expenses
General and administrative and other expenses 531,747 450,902
Interest expense 195,755 618,920
Provision for doubtful accounts 1,825,000 850,000
----------- -----------
Total expenses 2,552,502 1,919,822
----------- -----------
Net loss $(2,004,455) $ (661,929)
=========== ===========
See accompanying notes to financial statement.
ICON Receivables 1997-A L.L.C.
Statements of Changes in Members' Equity
For the Years Ended December 31, 2001 and 2000
Total
Balance at December 31, 1999 $ 3,266,388
-----------
Net loss (661,929)
Distributions to members (450,867)
-----------
Balance at December 31, 2000 2,153,592
Net loss (2,004,455)
-----------
Balance at December 31, 2001 $ 149,137
===========
See accompanying notes to financial statement.
ICON Receivables 1997-A L.L.C.
Statements of Cash Flows
For the Years Ended December 31,
2001 2000
---- ----
Cash flows from operating activities:
Net loss $(2,004,455) $ (661,929)
----------- -----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain from the sale of finance leases (26,997) (161,410)
Provision for doubtful accounts 1,825,000 850,000
Changes in operating assets and liabilities:
Collection of principal 4,476,202 5,518,901
Other assets 602,179 349,534
Security deposits, deferred credits and other payables (1,283,114) 340,695
----------- -----------
Total adjustments 5,593,270 6,897,720
----------- -----------
Net cash provided by operating activities 3,588,815 6,235,791
----------- -----------
Cash flows from investing activities:
Proceeds from the sales of equipment 323,574 1,379,988
----------- -----------
Net cash provided by investing activities 323,574 1,379,988
----------- -----------
Cash flows from financing activities:
Principal payments on notes payable non-recourse (3,858,368) (8,193,119)
Distributions to members -- (450,867)
----------- -----------
Net cash used in investing activities (3,858,368) (8,643,986)
----------- -----------
Net increase (decrease) in cash 54,021 (1,028,207)
Cash at the beginning of the year 619,719 1,647,926
----------- -----------
Cash at the end of the year $ 673,740 $ 619,719
=========== ===========
Supplemental information-interest paid $ 194,555 $ 640,625
=========== ===========
See accompanying notes to financial statement.
ICON RECEIVABLES 1997-A L.L.C.
Notes to Financial Statement
December 31, 2001
1. Organization
ICON Receivables 1997-A L.L.C. (the "Company"), was formed in March 1997
and commenced business operations in 1997. In 1997, ICON Cash Flow Partners
L.P., Series D ("Series D"), ICON Cash Flow Partners, L.P., Series E ("Series
E"), ICON Cash Flow Partners L.P. Six ("L.P. Six") and ICON Cash Flow Partners
L.P. Seven ("L.P. Seven") contributed and assigned equipment leases and finance
receivables and residuals to the Company. The financial statements reflect the
Company's management of such contributed assets. Since its formation, the
Company has not entered into any new transactions other than owning and managing
the assets contributed for the benefit of the members. The Company is managed by
the General Partner of the Company's members. The Company is winding down its
portfolio and will distribute available cash to its members when all assets are
liquidated and all obligations are paid.
2. Significant Accounting Policies
Basis of Accounting and Presentation - The Company'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 and liabilities at
the dates of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.
Leases - The Company's leases are accounted for as finance leases. As such,
the Company recorded, at the inception of the lease, the total minimum lease
payments receivable, the estimated unguaranteed residual values 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.
Investment in Financings - Investment in financings represented the gross
receivables due from the financing of equipment less the related unearned
income. The unearned income was recognized as finance income over the terms of
the receivables using the interest method.
Allowance for Doubtful Accounts - The Company records a provision for
doubtful accounts 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
Company's write-off policy is based on an analysis of the aging of the Company'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.
Income Taxes - No provision for income taxes has been made as the liability
for such taxes is that of each of the members rather than the Company.
ICON RECEIVABLES 1997-A L.L.C.
Notes to Financial Statement
December 31, 2001
Impairment of Estimated Residual Values - The Company'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 assets 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 that the estimated fair
value of the underlying equipment is less than the Company's carrying value.
The Company 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 Company from release or resale of the equipment.
Effective January 1, 2002, the Company adopted SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144). This
statement requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to the future net cash flows
expected to be generated by the asset. If the carrying amount of the asset
exceeds its estimated future cash flows, an impairment charge is recognized by
the amount by which the carrying amount of the asset exceeds the fair value of
the asset. SFAS No. 144 requires companies to separately report discontinued
operations and extends that reporting to a component of an entity that either
has been disposed of (by sale, abandonment or in a distribution to the owners)
or classified as held for sale. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less the costs to sell. The adoption
of SFAS No. 144 did not have any effect on the Company's financial position or
results of operations as the provisions of SFAS No. 144 are similar to the
Company's current policy for impairment review.
3. Finance Lease Receivables
Non-cancelable minimum annual amounts due on finance leases at December 31,
2001 are as follows:
Year Amount
2002 $ 2,926,097
2003 40,036
2004 18,014
-----------
$ 2,984,147
The Company's allowance for doubtful accounts relates to a significant
amount of past due receivables which are reflected in the above table as due in
2002.
ICON RECEIVABLES 1997-A L.L.C.
Notes to Financial Statement
December 31, 2001
4. 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, 1999 $ 101,122 $ 66,788 $ 167,910
Recoveries on accounts
previously written-off 274,938 296,411 571,349
Provision for doubtful accounts 410,500 439,500 850,000
----------- ----------- -----------
Balance at December 31, 2000 786,560 802,699 1,589,259
Accounts written-off (437,336) (802,699) (1,240,035)
Provision for doubtful accounts 1,825,000 -- 1,825,000
----------- ----------- -----------
Balance at December 31, 2001 $ 2,174,224 $ -- $ 2,174,224
=========== =========== ===========
5. Notes Payable
The notes payable are non-recourse, bear interest at rates ranging from
6.435% to 6.95% and are secured by and payable from the collections of finance
lease receivables and proceeds from the sales of residuals.
6. Other Assets
Other assets include amounts due from affiliates of $206,421 and $263,700
at December 31, 2001 and 2000, respectively which represent amounts collected by
an affiliate on the Company's behalf.
ICON Receivables 1997-B L.L.C.
Financial Statement
December 31, 2001
(With Independent Auditors' Report Thereon)
56
Last printed 04/16/02 3:08 PM
INDEPENDENT AUDITORS' REPORT
The Partners ICON Receivables 1997-B L.L.C.
We have audited the accompanying balance sheet of ICON Receivables 1997-B L.L.C.
(the "Company") as of December 31, 2001, and the related statement of
operations, changes in members' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provides a
reasonable basis for our opinion.
As discussed in Note 1, the Company is winding down its portfolio and will
distribute available cash to its members when all assets are liquidated and all
obligations are paid.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ICON Receivables 1997-B L.L.C.
as of December 31 2001, and the results of its operations and its cash flows for
the year then ended, in conformity with accounting principles generally accepted
in the United States of America.
/s/KPMG LLP
--------------------------------------------
KPMG LLP
April 15, 2002
New York, New York
ICON Receivables 1997-B L.L.C.
Balance Sheet
December 31, 2001
Assets
Cash $ 622,425
-----------
Investment in finance leases
Minimum rents receivable 3,216,235
Estimated unguaranteed residual values 255,001
Unearned income (145,673)
Allowance for doubtful accounts (1,098,719)
-----------
2,226,844
Investment in financings
Receivables due in installments 6,783,818
Unearned income (408,920)
Allowance for doubtful accounts (1,161,097)
-----------
5,213,801
Other assets 202,619
-----------
Total assets $ 8,265,689
===========
Liabilities and Members' Equity
Notes payable - non recourse $ 6,982,448
Other liabilities 638,550
Due to affiliates 255,694
-----------
Total liabilities 7,876,692
-----------
Members' equity 388,997
-----------
Total liabilities and members' equity $ 8,265,689
===========
See accompanying notes to financial statements.
ICON Receivables 1997-B L.L.C.
Statement of Operations
For the Year Ended December 31, 2001
Revenue
Finance income $ 1,154,382
Interest income and other 76,235
Gain from the sale of investments 49,540
-----------
Total revenues 1,280,157
-----------
Expenses
General and administrative expense 215,859
Interest expense 645,798
Amortization of loan origination fees 123,307
Provision for doubtful accounts 2,162,304
-----------
Total expenses 3,147,268
-----------
Net loss $(1,867,111)
===========
See accompanying notes to financial statements.
ICON Receivables 1997-B L.L.C.
Statement of Changes in Members' Equity
For the Year Ended December 31, 2001
Balance at December 31, 2000 $ 2,256,108
Net loss (1,867,111)
-------------
Balance at December 31, 2001 $ 388,997
=============
See accompanying notes to financial statements.
ICON Receivables 1997-B L.L.C.
Statement of Cash Flows
For the Year Ended December 31, 2001
Cash flows from operating activities:
Net loss $(1,867,111)
-----------
Adjustments to reconcile net loss to
net cash provided by operating activities:
Gain from the sale of investments (49,540)
Amortization of loan origination fees 123,307
Provision for doubtful accounts 2,162,304
Changes in operating assets and liabilities:
Collection of principal on leases and financings 5,991,296
Other assets (35,125)
Other liabilities 818
Due to affiliates 518,082
-----------
Total adjustments 8,711,142
-----------
Net cash provided by operating activities 6,844,031
-----------
Cash flows from investing activities:
Proceeds from the sale of equipment 410,759
-----------
Net cash provided by investing activities 410,759
-----------
Cash flows from financing activities:
Principal payments on notes payable - non-recourse (7,335,811)
-----------
Net cash used in investing activities (7,335,811)
-----------
Net decrease in cash (81,021)
Cash at the beginning of the year 703,446
-----------
Cash at the end of the year $ 622,425
===========
Supplemental disclosures of cash flow information:
Interest paid during the year $ 645,798
===========
See accompanying notes to financial statements.
ICON Receivables 1997-B L.L.C.
Notes to Financial Statement
December 31, 2001
3. Organization
ICON Receivables 1997-B L.L.C. (the "Company"), was formed in August 1997
by three affiliated partnerships, ICON Cash Flow Partners L.P., Series E
("Series E"), ICON Cash Flow Partners L.P. Six ("L.P. Six") and ICON Cash Flow
Partners L.P. Seven ("L.P. Seven"), who contributed and assigned equipment
leases and finance receivables and residuals to the Company. These financial
statements reflect the Company's management of such contributed assets. Since
its formation, the Company has not entered into any transactions other than
owning and managing the assets contributed for the benefit of the members. The
servicing of the assets is provided by ICON Capital Corp, the general partner of
each of the members. The Company is winding down its portfolio and will
distribute available cash to its members when all assets are liquidated and all
obligations are paid.
4. Significant Accounting Policies
Basis of Accounting and Presentation - The Company'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 and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Leases - The Company accounts for owned equipment leased to third parties
as finance leases. As such, the Company recorded the total minimum lease
payments, the estimated unguaranteed residual values 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 following the interest method.
Investment in Financings - Investment in financings represent the gross
receivables due from the financing of equipment less the related unearned
income. The unearned income is recognized as finance income over the terms of
the financings following the interest method.
Allowance for Doubtful Accounts - The Company records a provision for
doubtful accounts 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
Company'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 Company'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 that the estimated fair
value of the underlying equipment is less than the Company's carrying value.
ICON Receivables 1997-B L.L.C.
Notes to Financial Statement-Continued
The Company 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 Company from release or resale of the equipment.
Income Taxes - No provision for income taxes has been made as the liability
for such taxes is that of each of the members rather than the Company.
3. Receivables Due in Installments
Non-cancelable minimum annual amounts due on finance leases and financing
are as follows:
Finance
Year Leases Financings Total
2002 $ 2,872,076 $ 3,333,605 $ 6,205,681
2003 344,159 1,580,054 1,924,213
2004 - 1,870,159 1,870,159
---------------- ------------- -------------
$ 3,216,235 $ 6,783,818 $ 10,000,053
================ ============= =============
The Company's allowance for doubtful accounts relates to a significant
amount of past due receivables which are reflected in the above table as due in
2002.
4. 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, 2000 $ 500,913 $ 1,181,770 $ 1,682,683
Accounts written-off (177,442) (1,407,729) (1,585,171)
Provision for doubtful accounts 775,248 1,387,056 2,162,304
----------- ----------- -----------
Balance at December 31, 2001 $ 1,098,719 $ 1,161,097 $ 2,259,816
=========== =========== ===========
ICON Receivables 1997-B L.L.C.
Notes to Financial Statement-Continued
5. Notes Payable
The notes payable are non-recourse, bear interest at a rate of 6.19% and
are secured by and payable from the collections of finance lease receivables and
financings and proceeds from the sales of residuals. Loan origination fees are
being amortized over the life of the loan.
6. Due to Affiliates
The amount due to affiliates represents collected rentals deposited in the
Company's bank account on behalf of affiliated companies.
ICON/AIC TRUST
Financial Statements
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
58
Last printed 04/16/02 3:08 PM
INDEPENDENT AUDITORS' REPORT
The Partners
ICON/AIC TRUST
We have audited the accompanying balance sheets of ICON/AIC TRUST as of December
31, 2001 and 2000, and the related statements of operations, changes in
beneficial interestholders' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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.
As discussed in Note 3, the Trust sold all of its finance leases, subject to its
remaining non-recourse debt, on December 28, 2001. As a result, as of December
31, 2001, the only significant asset owned by the Trust is a note receivable
representing the proceeds of the sale which is collectible over the two and one
half year period ended June 2004.
In our opinion, the financial statements referred to the above present fairly,
in all material respects, the financial position of ICON/AIC TRUST as of
December 31, 2001 and 2000, and the results of its operations and its cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.
/s/KPMG LLP
--------------------------------------------
KPMG LLP
April 15, 2002
New York, New York
ICON/AIC TRUST
Balance Sheets
December 31,
2001 2000
---- ----
Assets
Investment in finance leases
Minimum rents receivable $ -- $ 9,331,709
Unguaranteed residual values -- 7,760,304
Initial direct costs -- 182,260
Unearned income -- (1,972,793)
------------ ------------
-- 15,301,480
------------ ------------
Note receivable (note 3) 3,645,250 --
Due from affiliate (note 4) 204,189 --
------------ ------------
Total assets $ 3,849,439 $ 15,301,480
============ ============
Liabilities and Beneficial Interestholders' Equity
Notes payable - non-recourse $ - $ 8,543,026
------------- ---------------
Beneficial interestholders' equity 3,849,439 6,758,454
------------- ---------------
Total liabilities and beneficial
interestholders' equity $ 3,849,439 $ 15,301,480
============= ===============
See accompanying notes to financial statements.
ICON/AIC TRUST
Statements of Operations
For the Years Ended December 31,
2001 2000
---- ----
Revenue
Finance income $ 921,436 $ 1,540,381
----------- -----------
Total revenue 921,436 1,540,381
----------- -----------
Expenses
Loss from the sales of investments in finance leases 2,472,400 --
Foreign currency loss 607,831 --
Interest expense 434,526 829,944
Amortization of initial direct costs 94,375 180,852
----------- -----------
Total expenses 3,609,132 1,010,796
----------- -----------
Net (loss) income $(2,687,696) $ 529,585
=========== ===========
See accompanying notes to financial statements.
ICON/AIC TRUST
Statements of Changes in Beneficial Interestholders' Equity
For the Years Ended December 31,
2001 2000
---- ----
Beneficial interestholders' equity, beginning of the year
(net of accumulated other comprehensive
income of $607,831 and $62,915) $ 6,758,454 $ 6,773,785
Distributions to beneficial interestholders (829,150) -
Net (loss) income $ (2,687,696) $ 529,585
Other comprehensive loss - foreign
translation loss - (544,916)
Realization of foreign translation loss
on sales of investment in finance leases 607,831 -
-------------- --------------
Comprehensive loss (2,079,865) (15,331)
------------- -------------
Beneficial interestholders' equity, end of year $ 3,849,439 $ 6,758,454
================ ============
December 31, 2001 December 31, 2000
----------------- -----------------
Accumulated other comprehensive loss - foreign
translation loss $ - $ (607,831)
Other beneficial interestholders' equity 3,849,439 7,366,285
------------- -------------
Beneficial interestholders' equity $ 3,849,439 $ 6,758,454
============= =============
See accompanying notes to financial statements.
ICON/AIC TRUST
Statements of Cash Flows
For the Years Ended December 31,
2001 2000
---- ----
Cash flows from operating activities:
Net (loss) income $(2,687,696) $ 529,585
----------- -----------
Adjustments to reconcile net (loss) income to
net cash used in operating activities:
Loss from the sale of investments in finance leases 2,472,400 --
Foreign currency loss 607,831 --
Finance income portion of receivables paid directly
to lenders by lessees (921,436) (1,540,381)
Interest expense on non-recourse financing paid
directly to lenders by lessees 434,526 829,944
Amortization of initial direct costs 94,375 180,852
Changes in operating assets:
Due from affiliate (204,189) --
Collection of principal-non-financed receivables 154,053 --
----------- -----------
Total adjustments 2,637,560 (529,585)
----------- -----------
Net cash used in operating activities (50,136) --
----------- -----------
Cash flows from investing activities:
Proceeds from sales of investments in finance leases 879,286 --
----------- -----------
Cash flows used in financing activities:
Cash distributions to beneficial interestholders (829,150) --
----------- -----------
Net increase in cash -- --
Cash at the beginning of the year -- --
----------- -----------
Cash at the end of the year $ -- $ --
=========== ===========
See accompanying notes to financial statements.
ICON/AIC TRUST
Statements of Cash Flows (Continued)
For the Years Ended December 31,
Supplemental Disclosure of Cash Flow Information
For the years ended December 31, 2001 and 2000, non-cash activities included
the following:
2001 2000
---- ----
Principal and interest on direct finance
receivables paid directly to lenders by lessees $ 4,973,382 $ 7,368,662
Principal and interest on non-recourse
financing paid directly to lenders by lessees (4,973,382) (7,368,662)
-------------- -------------
$ - $ -
============== =============
Interest expense of $434,526 and $829,944 for the years ended December 31,
2001 and 2000 respectively, consisted of interest expense on non-recourse
financing paid or accrued directly to lenders by lessees.
ICON/AIC TRUST
Notes to Financial Statements
December 31, 2001
1. Organization
ICON/AIC TRUST (the "Trust"), was formed and commenced business operations
in 1999 to accept a contribution of equipment leases in the United Kingdom,
subject to related debt, from ICON Cash Flow Partners L.P. Seven (L.P. Seven).
Subsequently, L.P. Seven sold interests in the Trust to ICON Cash Flow Partners
L.P. Eight A ("Fund Eight A") and to ICON Cash Flow Partners L.P. Six ("L.P.
Six").
2. Significant Accounting Policies
Basis of Accounting and Presentation - The Trust'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 and liabilities at
the dates of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. The contributed leases were all receivable in British pounds sterling
and the related non-recourse debt was payable in British pounds sterling. As a
result, the functional currency of the Trust is the British pounds sterling. The
financial statements are translated into U.S. dollars and resulting translation
gains and losses are included as other comprehensive income.
Leases - The Trust accounted for owned equipment leased to third parties as
finance leases. For finance leases, the Trust recorded, 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. Initial direct costs of finance leases
were capitalized and amortized over the terms of the related leases using the
interest method.
Impairment of Estimated Residual Values - The Trust's policy with respect
to impairment of estimated residual values was to review, on a periodic basis,
the carrying value of its residuals on an individual assets basis to determine
whether events or changes in circumstances indicated that the carrying value of
an asset was not recoverable and, therefore, an impairment loss should have been
recognized. The events or changes in circumstances which generally indicated
that the residual value of an asset had been impaired were (i) the estimated
fair value of the underlying equipment was less than the Trust's carrying value
or (ii) the lessee was experiencing financial difficulties and it did not appear
likely that the estimated proceeds from the disposition of the asset would be
sufficient to satisfy the remaining obligation to the non-recourse lender and
the Trust's residual position.
Income Taxes - No provision for income taxes has been made as the liability
for such taxes is that of each of the beneficial interestholders' rather than
the Trust.
ICON/ AIC TRUST
Notes to Financial Statements (Continued)
December 31, 2001
3. Sale of Finance Leases
On December 28, 2001, the Trust sold its remaining investment in finance
leases subject to the remaining related non-recourse debt, for a note which is
collectible over a two and one half year period. The gross note amount is
(pound)2,575,000 or $3,744,822 based upon the currency exchange rate at December
31, 2001. The receivable (converted into US dollars) is due as follows:
January 2002 (paid) $ 690,792
June 2002 690,793
January 2003 654,435
June 2003 618,077
January 2004 545,362
June 2004 545,363
-------------
3,744,822
Less interest included
in the payments (99,572)
----------------
$ 3,645,250
Foreign currency gains or losses will be recorded as currency rates change.
4. Related Party Transactions
The Trust is managed by the General Partner of the Trust's beneficial
interestholders. The costs were not significant and were absorbed by the members
in proportion to their sharing interests. As of December 31, 2001, amounts due
from an affiliate represented cash held by L.P. Seven on behalf of the Trust.
ICON Cheyenne L.L.C.
Financial Statements
December 31, 2001
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Members
ICON Cheyenne L.L.C.
We have audited the accompanying balance sheet of ICON Cheyenne L.L.C. (the
"Company") as of December 31, 2001 and the related statements of operations,
changes in members' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to the above present fairly,
in all material respects, the financial position of ICON Cheyenne L.L.C. as of
December 31, 2001, and the results of its operations and its cash flows for the
year ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.
/s/KPMG LLP
-------------------------------------------
KPMG LLP
April 15, 2002
New York, New York
ICON Cheyenne L.L.C.
Balance Sheet
December 31, 2001
ASSETS
Cash $ 279,550
------------
Investment in operating leases:
Equipment cost 28,832,836
Accumulated depreciation (6,386,270)
------------
22,446,566
Due from affiliates 878,015
Other assets 265,540
------------
Total assets $ 23,869,671
============
LIABILITIES AND MEMBERS' EQUITY
Notes payable, non-recourse $ 10,223,768
Accounts payable 25,318
Deferred income and other 896,420
------------
11,145,506
Member's equity 12,724,165
------------
Total liabilities and members' equity $ 23,869,671
============
See accompanying notes to financial statements.
ICON Cheyenne L.L.C.
Statement of Operations
For the Year Ended December 31, 2001
Revenues
Rental income $8,830,255
Gain on sale of equipment 92,695
Interest income and other 90,230
----------
Total revenues 9,013,180
----------
Expenses
Depreciation expense 6,722,261
Interest expense 931,643
General and administrative 36,262
----------
Total expenses 7,690,166
----------
Net income $1,323,014
==========
See accompanying notes to financial statements.
ICON Cheyenne L.L.C.
Statement of Changes in Members' Equity
For the Year Ended December 31, 2001
Members' equity at December 31, 2000 $ 11,401,151
Net income 1,323,014
----------------
Members' equity as of December. 31, 2001 $ 12,724,165
================
See accompanying notes to financial statements.
ICON Cheyenne L.L.C.
Statement of Cash Flows
For the Year Ended December 31, 2001
Cash flows from operating activities:
Net income $ 1,323,014
-----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation expense 6,722,261
Rental income paid directly
to lenders by lessees (8,426,301)
Interest expense on non-recourse financing paid
directly by lessees 931,643
Gain on sale of equipment (92,695)
Changes in operating assets and liabilities:
Due from affiliates (878,015)
Accounts payable 25,318
Deferred income and other 896,420
Other assets (265,540)
-----------
Total adjustments (1,086,909)
-----------
Net cash provided by operating activities 236,105
-----------
Cash flows from investing activities:
Proceeds from sale of equipment 629,514
-----------
Cash flows used in financing activities:
Repayment of non-recourse debt (586,069)
-----------
Net change in cash 279,550
Cash at the beginning of the year --
-----------
Cash at the end of the year $ 279,550
===========
See accompanying notes to financial statements.
ICON Cheyenne L.L.C.
Statement of Cash Flows (Continued)
Supplemental Disclosure of Cash Flow Information
For the years December 31, 2001 and 2000, non-cash activities included the
following:
2001
Rental income paid directly to lenders by lessees $ 8,426,301
Principal and interest on non-recourse debt
paid directly to lenders by lessees (8,426,301)
--------------
$ -
==============
Interest expense of $931,643 for the year ended December 31, 2001 consisted
solely of interest expense on non-recourse financing paid or accrued directly to
lenders by lessees.
See accompanying notes to financial statements.
ICON Cheyenne L.L.C.
Notes to Financial Statements
December 31, 2001
1. Organization
ICON Cheyenne LLC (the "LLC") was formed December 27, 2000 as a joint
venture between four affiliates; ICON Income Fund Eight B ("Fund Eight B"), ICON
Cash Flow Partners L.P. Seven ("L.P. Seven"), ICON Cash Flow Partner L.P. Six
("L.P. Six") and ICON Income Fund Eight A ("Fund Eight A"). The purpose of the
LLC was to acquire a portfolio of leases consisting of various types of
industrial and manufacturing equipment. The total purchase price of the
portfolio acquired was $29,705,716 and was financed by cash of $11,401,151 and
non-recourse debt of $18,304,565. Fund Eight B has a majority interest of
87.69%, while L.P. Seven, L.P. Six and Fund Eight A have 10.31%, 1% and 1%
interests, respectively.
Profits, losses, cash distributions and disposition proceeds are allocated
to the members in accordance to their share of interest.
2. Significant Accounting Policies
Basis of Accounting and Presentation - The LLC'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 and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Leases - All leases in the LLC's portfolio are classified as operating
leases. 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 following the
straight-line method over the lease terms. Billed and uncollected operating
lease receivables are included in other assets.
Impairment of Assets - The LLC's policy with respect to impairment of
estimated salvage values of operating leases is to review, on a periodic basis,
the carrying value on an individual asset 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 LLC'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 LLC's carrying
value. Generally in the latter situation, the carrying value relates to
equipment subject to third party non-recourse notes payable where the lessee
remits its rental payments directly to the lender and the LLC does not recover
its carrying value until the non-recourse note obligation is repaid in full.
Income Taxes - No provisions for income taxes has been made as liability
for such taxes is that of each member rather than the LLC.
ICON Cheyenne L.L.C.
Notes to Financial Statements (Continued)
December 31, 2001
3. Investment In Operating Leases
In December 2000, the LLC acquired a portfolio of operating leases
involving various types of equipment for a total cost of $29,705,716. During the
year ended December 31, 2001, the LLC sold a portion of such equipment upon
termination of the underlying leases with lessees.
The investment in operating leases at December 31, 2001 consisted of the
following:
Equipment cost, January 1, 2001 $ 29,705,716
Equipment sold (872,880)
------------
Equipment cost, December 31, 2001 28,832,836
------------
Accumulated depreciation, January 1, 2001 --
Depreciation expense (6,722,261)
Accumulated depreciation on equipment sold 335,991
------------
Accumulated depreciation, December 31, 2001 (6,386,270)
------------
Investment in operating leases, December 31, 2001 $ 22,446,566
============
Non-cancellables rents from operating leases are due as follows:
Year Amount
2002 $ 5,788,426
2003 3,786,622
2004 1,354,145
2005 644,354
2006 61,360
--------------
$ 11,634,907
ICON Cheyenne L.L.C.
Notes to Financial Statements (Continued)
December 31, 2001
4. Notes Payable
Notes payable consists of notes payable, non-recourse, which
accrue interest at rates ranging from 5.52% to 10.05%, and which are being paid
directly to the lenders by the lessees.
The notes mature as follows:
Year Amount
2002 $ 4,765,112
2003 3,556,465
2004 1,279,030
2005 623,161
--------------
$ 10,223,768
5. Related Party Transactions
Amounts due from affiliates represent rental payments received by Income
Fund Eight B of $797,307 and rental payments received by L.P. Six of $80,708 on
behalf of the LLC. Such amounts were remitted to the LLC in 2002.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2001
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: April 15, 2002 /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: April 15, 2002 /s/ Beaufort J.B. Clarke
--------------------------------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Date: April 15, 2002 /s/ Paul B. Weiss
--------------------------------------------------
Paul B. Weiss
President and Director
Date: April 15, 2002 /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.