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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2002
-----------------------------------------------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
Commission File Number 0-28136
--------------------------------------------------------
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
- -------------------------------------------------------------------------------
(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
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interests
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) [ ] Yes [X] No
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last day of the registrant's most recently completed second fiscal quarter:
Not applicable. There is no established market for units of limited partnership
interest in the registrant.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2002
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
7A. Qualitative and Quantitative Disclosures About Market Risk 10
8. Consolidated Financial Statements and Supplementary Data 11-35
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 36
PART III
10. Directors and Executive Officers of the Registrant's
General Partner 36-37
11. Executive Compensation 37
12. Security Ownership of Certain Beneficial Owners
and Management 37
13. Certain Relationships and Related Transactions 37
14. Controls and Procedures 38
PART IV
15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 38-39
SIGNATURES 40
Certifications 41-44
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2002
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 2002 the Partnership redeemed 5,598.65 limited partnership
units leaving 378,258.47 limited partnership units outstanding at December 31,
2002. 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 its 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. During the disposition period the Partnership expects to
recover, at a minimum, the carrying value of its assets.
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) make 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, 2002
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
For the years ended December 31, 2002 and 2001, the Partnership did not
finance or purchase any new equipment.
The lease of an aircraft to Aerovias de Mexico, S.A. de C.V. ("Aeromexico")
represents more than 10% of the Partnership's revenue for the year ended
December 31, 2002. The carrying value of the Aeromexico aircraft represented
approximately 73.9% of the Partnership's assets at December 31, 2002.
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 Company, from time-to-time, in the ordinary course of business,
commences legal actions when necessary to protect or enforce the rights of the
Partnership. We are not a defendant party to any litigation and are not aware of
any pending or threatened litigation against the Partnership.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matters were submitted to a vote of security holders during the year
ended 2002.
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,
2002 2001
---- ----
Limited Partners 2,267 2,267
General Partner 1 1
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2002
Item 6. Selected Consolidated Financial and Operating Data
--------------------------------------------------
Year Ended December 31,
-----------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Total revenue $ 4,835,007 $ 4,724,024 $ 5,893,091 $ 5,036,158 $ 6,162,370
============= ============== ============= ============= =============
Net income (loss) $ 114,894 $ (348,138) $ 2,289,451 $ 1,221,020 $ 467,639
============= ============== ============= ============= =============
Net income (loss) allocable to
limited partners $ 113,745 $ (344,657) $ 2,266,556 $ 1,208,810 $ 462,963
============= ============== ============= ============= =============
Net income (loss) allocable
to the General Partner $ 1,149 $ (3,481) $ 22,895 $ 12,210 $ 4,676
============= ============== ============= ============= =============
Weighted average limited
partnership units outstanding 378,278 378,288 $ 378,383 379,187 379,984
============= ============== ============= ============= =============
Net income (loss) per weighted
average limited partnership unit $ .30 $ (.91) $ 5.99 $ 3.19 $ 1.22
============= ============= ============= ============= ============
Distributions to limited partners $ 2,462,627 $ 3,488,143 $ 3,858,906 $ 4,075,766 $ 4,085,189
============= ============== ============= ============= =============
Distributions to the General Partner $ 24,875 $ 35,204 $ 38,995 $ 41,178 $ 41,261
============= ============== ============= ============= =============
December 31,
------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Total assets $ 17,096,062 $ 26,589,619 $ 36,337,813 $ 38,616,693 $ 44,487,621
================ =============== ================ ============= ===============
Partners' equity $ 7,089,371 $ 9,463,279 $ 13,334,764 $ 14,951,046 $ 17,884,454
================ =============== ================ ============= ===============
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2002
Item 7. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
-----------------------------------------------------------------------
The Partnership's portfolio consisted of a net investment in finance
leases, operating leases and equity investments in unconsolidated joint ventures
representing 9%, 82%, and 6% of total investments at December 31, 2002,
respectively, and 28%, 67%, and 5% of total investments at December 31, 2001,
respectively. The Partnership did not finance or purchase any new equipment in
2002 or 2001.
Forward-Looking Information - The following discussion and analysis should
be read in conjunction with the audited financial statements included herein.
Certain statements within this document may constitute forward-looking
statements made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. These statements are identified by words such as
"anticipate," "believe," "estimate," "expects," "intend," "predict" or "project"
and similar expressions. This information may involve risks and uncertainties
that could cause actual results to differ materially from the forward-looking
statements. Although the Partnership believes that the expectations reflected in
such forward-looking statements are based on reasonable assumptions, such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected.
Critical Accounting Policies and Management Estimates
The policies discussed below are considered by the General Partner to be
critical to an understanding of the Partnership's financial statements because
their application places the most significant demands on the General Partner's
judgments, with financial reporting results relying on estimation about the
effects of matters that are inherently uncertain. Specific risks for these
critical accounting policies are described in the following paragraphs. For all
of these policies, the General Partner cautions that future events rarely
develop exactly as forecast, and the best estimates routinely require
adjustment.
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 in the United States of
America 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 contingent liabilities.
Leases and Revenue Recognition - 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
ICON Cash Flow
Partners L.P. Six (A Delaware Limited Partnership)
December 31, 2002
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 re-lease or sale 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 its 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, 2002 and 2001
For the years ended December 31, 2002 and 2001, the Partnership did not
finance or purchase any new equipment.
Revenues for the year ended December 31, 2002 were $4,835,007, representing
an increase of $110,983 or 2.3% from 2001. The increase in revenues resulted
primarily from an increase in income from equity investments in unconsolidated
joint ventures of $1,617,848. This was the result of reversals of provisions for
bad debts recorded by one of the underlying joint ventures, 1997-A, of $268,834
in 2002 versus a provision for bad debts for 1997-A and another underlying joint
venture, 1997-B, of $1,825,000 and $2,162,304, respectively, in 2001. This
increase to revenue was partially offset by a decrease in rental income of
$992,897. The decrease was due to the expiration of operating leases (and
subsequent
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2002
sale of underlying equipment). Finance lease income also decreased by $381,546
due primarily to the continued collection of rentals reducing the investment in
financing leases, on which finance lease income is based.
Expenses for the year ended December 31, 2002 were $4,720,113, representing
a decline of $352,049 or 6.9% from 2001. The decline in expenses resulted
primarily from a decrease in interest expense of $426,130. The decrease in
interest expense resulted from a reduction in the average debt outstanding from
2001 to 2002. Additionally, management fees decreased by $161,596 and
administrative expense reimbursements decreased by $97,886. Both were a result
of the reduction in the average size of the finance lease portfolio. These
decreases were partially offset by an increase in general and administrative
expenses of $237,913, brought on by an increase in professional fees. As well,
depreciation expense increased by $116,593. This increase was the result of a
change (reduction) in the estimate of the residual value of an aircraft in the
fourth quarter of 2001.
Net income (loss) for the years ended December 31, 2002 and 2001 was
$114,894 and $(348,138), respectively. The net income (loss) per weighted
average limited partnership unit was $.30 and $(.91) for 2002 and 2001,
respectively.
Years Ended December 31, 2001 and 2000
Revenues for the year ended December 31, 2001 were $4,724,024, representing
a decrease of $1,169,067 or 19.8% from 2001. The decrease in revenues resulted
primarily from a decline in finance lease income of $1,730,265. Finance lease
income decreased primarily as a result of renewal rent received on certain
leases which was in excess of the remaining residual values of those leases and
to a lesser extent from a decrease in the average size of the finance lease
portfolio from 2000 to 2001. Additionally, income from equity investments in
unconsolidated joint ventures decreased $1,568,036 to a loss of $1,478,502. The
loss 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 provisions for 1997-A and 1997-B of
$850,000 and $500,000, respectively, in the 2000 period. These decreases were
offset by an increase in rental income of $1,618,942. Rental income increased as
a result of the Partnership's acquisition of a portfolio of operating lease
equipment in the fourth quarter of 2000. Gains on sales of equipment also
increased by $679,459. This was a result of an increase in the amount of
equipment sold where the proceeds received were in excess of the remaining
carrying value.
Expenses for the year ended December 31, 2001 were $5,072,162, representing
an increase of $1,468,522 or 40.8% from 2001. The increase in expenses was
primarily the result of an increase in depreciation expense of $1,332,011.
Depreciation expense increased as a result of a change (reduction) in the
estimate of the residual value of an aircraft in the forth quarter of 2001.
Additionally, interest expense increased by $102,389. This was due to additional
borrowings related to the lease acquisitions in the fourth quarter of 2000.
Net (loss) income for the years ended December 31, 2001 and 2000 was
$(348,138) and $2,289,451, respectively. The net (loss) income per weighted
average limited partnership unit was $(.91) and $5.99 for 2001 and 2000,
respectively.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2002
Liquidity and Capital Resources
The Partnership's primary sources of liquidity in 2002, 2001 and 2000 were
proceeds from sales of equipment of $2,309,673, $3,121,860 and $1,708,805 and
distributions from unconsolidated joint ventures of $508,966, $211,516 and
$152,303. These funds were used to pay operating expenses and cash distributions
to partners. The Partnership made distributions to limited partners for the
years ended December 31, 2002, 2001 and 2000 of $2,462,627, $3,488,143 and
$3,858,906, respectively.
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. 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.
As of December 31, 2002, 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 substantially all available cash,
after retaining sufficient cash to meet its reserve requirements and recurring
obligations.
New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for
Asset Retirement Obligations" ("SFAS No. 143") which is effective for fiscal
years beginning after June 15, 2002. SFAS No. 143 addresses financial accounting
and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The Partnership
does not expect that the adoption of SFAS No. 143 will have a material impact on
its financial position, results of operations or cash flows.
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)
December 31, 2002
Effective January 1, 2002, the Partnership adopted SFAS No. 145, "Recession
of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("SFAS No. 145"). SFAS No. 145 amends SFAS No. 13
Accounting for Leases to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. The provisions of the Statement related to
Statement No. 13 were effective for transactions occurring after May 15, 2002,
the adoption of which did not have a material effect on the Partnership's
financial statements.
On July 30, 2002, the FASB issued SFAS No. 146 "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS No. 146"). The standard
replaced Emerging Issues Task Force (EITF) issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)" and requires
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan. Examples of costs covered by the standard include lease termination costs
and certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, or other exit or disposal activity. SFAS
No. 146 is effective prospectively to exit or disposal activities initiated
after December 31, 2002. The impact on the Partnership's financial statement
from the application of this standard is dependent on any exit or disposal
activities in 2003.
The Partnership does not believe that any other recently issued but not yet
effective accounting standards will have a material effect on the Partnership's
financial position or results of operations.
We do not consider the impact of inflation to be material in the analysis
of our overall operations.
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. Except as discussed below, the Partnership
believes its exposure to other market risks are insignificant to both its
financial position and results of operations.
National Steel, with whom the Partnership has an operating lease, filed for
bankruptcy protection in 2002. National Steel has not disaffirmed its lease and
continues to make its quarterly lease payments and is current through January
2003. The bankruptcy court has not ruled on the affirmation of the leases as of
the date of this report.
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 equipment leasing market and maximizing the re-marketing proceeds
received.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2002
Item 8. Consolidated Financial Statements and Supplementary Data
--------------------------------------------------------
Index to Consolidated Financial Statements
Page Number
Independent Auditors' Reports 13-14
Consolidated Balance Sheets as of December 31, 2002 and 2001 15
Consolidated Statements of Operations for the Years Ended
December 31, 2002, 2001 and 2000 16
Consolidated Statements of Changes in Partners' Equity for the Years Ended
December 31, 2002, 2001 and 2000 17
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2002, 2001 and 2000 18-20
Notes to Consolidated Financial Statements 21-35
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Financial Statements
December 31, 2002
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITOR'S REPORT
The Partners
ICON Cash Flow Partners L.P. Six:
We have audited the accompanying consolidated balance sheet of ICON Cash Flow
Partners L.P. Six (a Delaware limited partnership) as of December 31, 2002 and
the related consolidated statements of operations, changes in partners' equity
and cash flows for the year then ended. 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, 2002 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/ Hays & Company LLP
------------------------
Hays & Company LLP
March 13, 2003
New York, New York
INDEPENDENT AUDITOR'S REPORT
The Partners
ICON Cash Flow Partners L.P. Six:
We have audited the accompanying consolidated balance sheet of ICON Cash Flow
Partners L.P. Six (a Delaware limited partnership) as of December 31, 2001 and
the related consolidated statements of operations, changes in partners' equity,
and cash flows for each of the years in the two 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. 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 the results of its operations and
its cash flows for each of the years in the two 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,
2002 2001
---- ----
Assets
Cash and cash equivalents $ 203,739 $ 384,816
--------------- --------------
Investment in finance leases
Minimum rents receivable 755,103 5,635,382
Estimated unguaranteed residual values 1,105,178 2,033,755
Initial direct costs 706 5,563
Unearned income (26,665) (650,225)
Allowance for doubtful accounts (277,068) (277,068)
--------------- --------------
1,557,254 6,747,407
--------------- --------------
Investment in operating leases
Equipment, at cost 21,965,262 22,051,594
Accumulated depreciation (7,876,081) (5,831,958)
--------------- --------------
14,089,181 16,219,636
Investments in unconsolidated joint ventures 1,019,138 1,321,509
--------------- --------------
Other assets, net 226,750 1,916,251
--------------- --------------
Total assets $ 17,096,062 $ 26,589,619
=============== ==============
Liabilities and Partners' Equity
Notes payable - non-recourse $ 9,190,418 $ 15,596,106
Security deposits and deferred credits 373,569 1,022,524
Accounts payable - other 299,706 340,828
Deferred gain 67,249 --
Accounts payable - General partner and affiliate 7,138 94,812
Minority interest in joint venture 68,611 72,070
--------------- --------------
Total liabilities 10,006,691 17,126,340
--------------- --------------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (256,804) (233,078)
Limited partners (378,258 and 378,288 units outstanding,
$100 per unit original issue price) 7,346,175 9,696,357
--------------- --------------
Total partners' equity 7,089,371 9,463,279
--------------- --------------
Total liabilities and partners' equity $ 17,096,062 $ 26,589,619
=============== ==============
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,
2002 2001 2000
---- ---- ----
Revenues
Rental income $ 3,093,545 $ 4,086,442 $ 2,467,500
Finance lease income 446,985 828,531 2,558,796
Gains on sales of equipment 1,153,371 1,269,006 589,547
Income (loss) from investments in
unconsolidated joint ventures 139,346 (1,478,502) 89,534
Other income 1,760 18,547 187,714
-------------- ------------- -------------
Total revenues 4,835,007 4,724,024 5,893,091
-------------- ------------- -------------
Expenses
Depreciation 2,073,803 1,957,210 625,199
Interest 1,604,884 2,031,014 1,928,625
General and administrative 577,829 339,916 291,257
Management fees - General Partner 320,138 481,734 466,522
Administrative expense reimbursements
- General Partner 142,061 239,947 232,159
Amortization of initial direct costs 4,857 16,669 42,778
Provision for bad debts - - 9,763
Minority interest (income) expense (3,459) 5,672 7,337
-------------- ------------- -------------
Total expenses 4,720,113 5,072,162 3,603,640
-------------- ------------- -------------
Net income (loss) $ 114,894 $ (348,138) $ 2,289,451
============== ============= =============
Net income (loss) allocable to:
Limited partners $ 113,745 $ (344,657) $ 2,266,556
General Partner 1,149 (3,481) 22,895
-------------- ------------- -------------
$ 114,894 $ (348,138) $ 2,289,451
============== ============= =============
Weighted average number of limited
partnership units outstanding 378,278 378,288 378,383
============== ============= =============
Net income (loss) per weighted average
limited partnership unit $ .30 $ (.91) $ 5.99
============= ============= =============
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, 2002, 2001 and 2000
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
------- ------ -------- ------- -----
(Per weighted average unit)
Balance at
January 1, 2000 $ 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
Cash distributions
to partners $ 6.21 $ .30 (2,462,627) (24,875) (2,487,502)
Limited partnership units
redeemed (30 units) (1,300) - (1,300)
Net income 113,745 1,149 114,894
--------------- ------------- ---------------
Balance at
December 31, 2002 $ 7,346,175 $ (256,804) $ 7,089,371
=============== ============= ===============
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,
2002 2001 2000
---- ---- ----
Cash flows from operating activities:
Net income (loss) $ 114,894 $ (348,138) $ 2,289,451
------------- -------------- -------------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 2,073,803 1,957,210 625,199
Provision for doubtful accounts - - 9,763
Rental income - paid directly to lenders by lessees (2,914,890) (3,993,234) (2,467,500)
Finance income portion of receivables paid directly
to lenders by lessees (402,157) (599,313) (1,244,276)
Amortization of initial direct costs and loan fees 134,001 145,813 118,112
Gains on sales of equipment (1,153,371) (1,269,006) (589,547)
(Income) loss from investments in unconsolidated
joint ventures (139,346) 1,478,502 (89,534)
Interest expense on non-recourse financing
paid directly by lessees 1,475,740 1,901,870 1,850,592
Minority interest (income) expense in consolidated
joint venture (3,459) 5,672 7,337
Changes in operating assets and liabilities, net 303,871 1,469,395 1,223,384
------------- -------------- -------------
Total adjustments (625,808) 1,096,909 (556,470)
------------- -------------- -------------
Net cash (used in) provided by operating activities (510,914) 748,771 1,732,981
------------- -------------- -------------
Cash flows from investing activities:
Proceeds from sales of equipment 2,309,673 3,121,860 1,708,805
Equipment purchased - - (4,097,323)
Distributions received from
unconsolidated joint ventures 508,966 211,516 152,303
Investments in unconsolidated joint ventures - (283) (2,364,005)
Proceeds from disposition of investment in
unconsolidated joint venture - - 2,362,500
------------- -------------- -------------
Net cash provided by (used in) investing activities 2,818,639 3,333,093 (2,237,720)
------------- -------------- -------------
(continued on next page)
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows - (Continued)
2002 2001 2000
---- ---- ----
Cash flows from financing activities:
Cash distributions to partners (2,487,502) (3,523,347) (3,897,901)
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)
Redemption of limited partnership units (1,300) - (7,832)
------------- -------------- -------------
Net cash used in financing activities (2,488,802) (4,535,945) (2,647,891)
------------- -------------- -------------
Net decrease in cash and cash equivalents (181,077) (454,081) (3,152,630)
Cash and cash equivalents at beginning of year 384,816 838,897 3,991,527
------------- -------------- -------------
Cash and cash equivalents at end of year $ 203,739 $ 384,816 $ 838,897
============= ============== =============
(continued on next page)
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, 2002, 2001 and 2000, non-cash activities
included the following:
2002 2001 2000
---- ---- ----
Principal and interest on direct finance receivables
paid directly to lenders by lessees $ 4,966,538 $ 2,494,611 $ 3,446,102
Rental income paid directly to lenders by lessees 2,914,890 3,993,234 2,467,500
Principal and interest on non-recourse financing
paid directly to lenders by lessees (7,881,428) (6,487,845) (5,913,602)
Fair value of equipment and receivables purchased
for debt - - (3,218,916)
Non-recourse notes payable assumed in
purchase price - - 3,218,916
--------------- ---------------- ----------------
$ - $ - $ -
=============== ================ ================
2002 2001 2000
---- ---- ----
Interest expense:
Interest paid directly to lenders
by lessees pursuant to non-recourse financings $ 1,475,740 $ 1,901,870 $ 1,850,592
Other interest 129,144 129,144 78,033
--------------- ---------------- ----------------
Total interest expense $ 1,604,884 $ 2,031,014 $ 1,928,625
=============== ================ ================
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2002, 2001 and 2000
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 2002 the Partnership redeemed 5,598.65 limited partnership units
leaving 378,258.47 limited partnership units outstanding at December 31, 2002.
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 accounting principles generally accepted in the United States of
America 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
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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 in consolidation. 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. The Partnership's cash and cash equivalents are held principally
at one financial institution and at times may exceed insured limits.
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. 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.
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 its 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 No. 107, "Disclosures about Fair Value of
Financial Instruments" ("SFAS 107") requires disclosures about the fair value of
financial instruments. Separate disclosure of fair value information as of
December 31, 2002 and 2001 with respect to the Partnership'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 200 units in 2000 and 30 units in 2002. 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 recorded since the
liability for such taxes is that of each of the partners rather than the
Partnership. The Partnership's income tax returns are subject to examination by
the federal and state taxing authorities, and changes, if any could adjust the
individual income taxes of the partners.
Reclassifications - Certain items from prior years have been reclassified
to conform to the presentation used in 2002.
New Accounting Pronouncements - In June 2001, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143")
which is effective for fiscal years beginning after June 15, 2002. SFAS No. 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. The Partnership does not expect that the adoption of SFAS No. 143 will
have a material impact on its financial position, results of operations or cash
flows.
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
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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.
Effective January 1, 2002, the Partnership adopted SFAS No. 145, "Recession
of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("SFAS No. 145"). SFAS No. 145 amends SFAS No. 13
Accounting for Leases to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. The provisions of the Statement related to
Statement No. 13 were effective for transactions occurring after May 15, 2002,
the adoption of which did not have a material effect on the Partnership's
financial statements.
On July 30, 2002, the FASB issued SFAS No. 146 "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS No. 146"). The standard
replaced Emerging Issues Task Force (EITF) issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)" and requires
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan. Examples of costs covered by the standard include lease termination costs
and certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, or other exit or disposal activity. SFAS
No. 146 is effective prospectively to exit or disposal activities initiated
after December 31, 2002. The impact on the Partnership's financial statement
from the application of this standard is dependent on any exit or disposal
activities in 2003.
The Partnership does not believe that any other recently issued but not yet
effective accounting standards will have a material effect on the Partnership's
financial position or results of operations.
3. Consolidated Ventures and Investments in Unconsolidated Joint Ventures
The Partnership and its affiliates formed seven 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.
Consolidated Venture
The joint venture described below is majority owned and consolidated with
the Partnership.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
ICON Cash Flow Partners L.L.C. II
---------------------------------
In March 1995, the Partnership and an affiliate, ICON Cash Flow Partners,
L.P., Series E ("Series E"), formed ICON Cash Flow Partners L.L.C. II ("ICON
Cash Flow LLC II"), for the purpose of acquiring and managing an aircraft
subject to an operating lease with a U.S. based commercial airline. In 1997,
upon the scheduled termination of the lease, the aircraft was remarketed to
Aeromexico under a lease that expired in November 2002. At that time an
extension agreement was consummated with Aeromexico. The lease extension terms
call for a 15 month rental with payment for months one through seven at a power
by the hour rate of $525 per flight hour, not to exceed $75,000 per month. After
seven months the rental would be $75,000 per month. At the end of the 15 months,
Aeromexico has an option to renew for two twelve-month renewal periods at the
then current fair market value rental rate. The Partnership and Series E
acquired interests of 99% and 1%, respectively, in 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. Profits, losses,
excess cash and disposition proceeds are allocated 99% to the Partnership and 1%
to Series E. The Partnership's consolidated financial statements include 100% of
the assets and liabilities and revenues and expenses of ICON Cash Flow LLC II.
Series E's investment in ICON Cash Flow LLC II is reflected as minority interest
in joint venture on the Partnership's consolidated balance sheets and as
minority interest (income) expense on the consolidated statements of operations.
Investments in Unconsolidated Joint Ventures
The six joint ventures described below are less than 50% owned and are
accounted for following the equity method.
ICON Cash Flow Partners L.L.C. I
--------------------------------
In September 1994, the Partnership and an affiliate, Series E, formed a
joint venture, ICON Cash Flow Partners L.L.C. I ("ICON Cash Flow LLC I"), for
the purpose of acquiring and managing an aircraft subject to an operating lease
with a U.S. based commercial airline. In 1997, the aircraft was remarketed to
Aeromexico under a lease which expired in October 2002. In November 2002 an
extension agreement was consummated with Aeromexico. The lease extension terms
call for a 15 month rental at $75,000 per month. At the end of the 15 months,
Aeromexico has an option to renew for two twelve-month renewal periods at the
then current fair market value rental rate. The Partnership and Series E
acquired interests of 1% and 99%, respectively, in 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. 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 whereby the Partnership's original investment was
recorded at cost and is adjusted by its share of earnings, losses and
distributions.
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, 2002 and 2001 is
summarized below:
December 31, 2002 December 31, 2001
Assets $ 16,653,215 $ 17,856,299
================ ===============
Liabilities $ 9,235,949 $ 10,158,274
================ ===============
Equity $ 7,417,266 $ 7,698,025
================ ===============
Partnership's share of equity $ 74,173 $ 76,981
================ ===============
For the Year Ended For the Year Ended
December 31, 2002 December 31, 2001
Net (loss) income $ (280,759) $ 534,868
================ ===============
Partnership's share of net
(loss) income $ (2,808) $ 5,349
================ ===============
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
ICON Receivables 1997-A LLC
In March 1997, the Partnership and affiliates, 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 LLC ("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, 2002, 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.
Information as to the financial position and results of operations of
1997-A as of and for the years ended December 31, 2002 and 2001 is summarized
below:
December 31, 2002 December 31, 2001
Assets $ 694,761 $ 1,856,582
================ ===============
Liabilities $ 390,389 $ 1,707,445
================ ===============
Equity $ 304,372 $ 149,137
================ ===============
Partnership's share of equity $ 94,446 $ 46,277
================ ===============
For the Year Ended For the Year Ended
December 31, 2002 December 31, 2001
Net income (loss) $ 155,235 $ (2,004,455)
================ ===============
Partnership's share of net
income (loss) $ 48,169 $ (673,058)
================ ===============
1997-A reversed a provision for bad debts of $268,834 for the year ended
December 31, 2002 and recorded a provision for bad debts of $1,825,000 for the
year ended December 31, 2001.
ICON Receivables 1997-B LLC
In August 1997, the Partnership and affiliates, Series E and L.P. Seven,
formed ICON Receivables 1997-B LLC ("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, 2002 and 2001 is summarized
below:
December 31, 2002 December 31, 2001
Assets $ 3,241,761 $ 8,265,689
================ ===============
Liabilities $ 2,825,588 $ 7,876,692
================ ===============
Equity $ 416,173 $ 388,997
================ ===============
Partnership's share of equity $ 34,666 $ 32,403
================ ===============
For the Year Ended For the Year Ended
December 31, 2002 December 31, 2001
Net income (loss) $ 223,402 $ (1,867,111)
================ ===============
Partnership's share of net income (loss) $ 18,609 $ (155,530)
================ ===============
Distributions $ 196,226 $ -
================ ===============
Partnership's share of distributions $ 16,346 $ -
================ ===============
1997-B recorded a provision for bad debts of $2,162,304 during the year
ended December 31, 2001.
ICON/Boardman Facility LLC
--------------------------
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 Facility LLC ("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 in ICON BF 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, 2002 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 filed for Chapter 11 bankruptcy protection in
December 2001. PGE has not filed a petition for bankruptcy protection. While
Enron owns all of PGE's outstanding common stock, PGE is a separate 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 2003.
Information as to the financial position and results of operations of ICON
BF as of and for the years ended December 31, 2002 and 2001 is summarized below:
December 31, 2002 December 31, 2001
Assets $ 23,193,438 $ 24,855,375
================ ===============
Liabilities $ 10,583,632 $ 13,588,934
================ ===============
Equity $ 12,609,806 $ 11,266,441
================ ===============
Partnership's share of equity $ 63,364 $ 56,614
================ ===============
For the Year Ended For the Year Ended
December 31, 2002 December 31, 2001
Net income $ 1,343,365 $ 1,341,877
================ ===============
Partnership's share of net income $ 6,750 $ 6,711
================ ===============
ICON/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 in AIC Trust 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 two installments on the note were
collected in 2002. As of December 31, 2002, the remaining amount due is
(pound)1,625,000 ($2,572,522 of (pound)475,000 each on a discounted basis based
upon the exchange rate at December 31, 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, 2002 and 2001 is summarized
below:
December 31, 2002 December 31, 2001
Assets $ 2,572,522 $ 3,849,439
================ ===============
Liabilities $ - $ -
================ ===============
Equity $ 2,572,522 $ 3,849,439
================ ===============
Partnership's share of equity $ 656,250 $ 981,992
================ ===============
For the Year Ended For the Year Ended
December 31, 2002 December 31, 2001
Net income (loss) $ 212,349 $ (2,687,696)
================ ===============
Partnership's share of net income (loss) $ 54,170 $ (675,211)
================ ===============
Distributions $ 1,752,885 $ 829,150
================ ===============
Partnership's share of distributions $ 447,161 $ 211,516
================ ===============
ICON Cheyenne LLC
In December 2000, the Partnership and three affiliates, L.P. Seven, Fund
Eight A and ICON Income Fund Eight B L.P. ("Fund Eight B") formed ICON Cheyenne
LLC ("ICON Cheyenne") for the purpose of acquiring a portfolio of leases for an
aggregate purchase price of $29,705,716, which was paid for 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 leases. The leases
expire on various dates through September 2006. The Partnership, L.P. Seven,
Fund Eight A and Fund Eight B have ownership interests of 1%, 10.31%, 1% and
87.69%, respectively, in ICON Cheyenne. 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 years ended December 31, 2002 and 2001 is summarized
below:
December 31,2002 December 31, 2001
Assets $ 14,765,333 $ 23,869,671
================ ===============
Liabilities $ 5,141,481 $ 11,145,506
================ ===============
Equity $ 9,623,852 $ 12,724,165
================ ===============
Partnership's share of equity $ 96,239 $ 127,242
================ ===============
For the Year Ended For the Year Ended
December 31, 2002 December 31, 2001
Net income $ 1,445,607 $ 1,323,014
================ ===============
Partnership's share of net income $ 14,456 $ 13,237
================ ===============
Distributions $ 4,545,920 $ -
================ ===============
Partnership's share of distributions $ 45,459 $ -
================ ===============
4. Finance Lease Receivables
Non-cancelable minimum annual amounts due on finance leases are as follows:
Year ending December 31, Amount
2003 $ 382,603
2004 372,500
----------------
$ 755,103
================
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
5. Investment in Operating Leases
The investment in operating leases at December 31, 2002 and 2001 consisted
of the following:
2002 2001
---- ----
Equipment cost, beginning of year $ 22,051,594 $ 26,416,885
Equipment dispositions (86,332) (4,365,291)
-------------- --------------
Equipment cost, end of year 21,965,262 22,051,594
-------------- --------------
Accumulated depreciation, beginning of year (5,831,958) (4,217,602)
Depreciation expense (2,073,803) (1,957,210)
Accumulated depreciation, equipment dispositions 29,680 342,854
-------------- --------------
Accumulated depreciation, end of year (7,876,081) (5,831,958)
-------------- --------------
Investment in operating lease, end of year $ 14,089,181 $ 16,219,636
============== ==============
Non-cancelable minimum annual amounts due on operating leases are as
follows:
Year ending December 31, Amount
2003 $ 927,912
2004 98,260
----------------
$ 1,026,172
================
6. Notes Payable
The notes payable consist of $9,190,418 in non-recourse notes bearing
interest at rates ranging from 7.48% to 11.83%, $8,883,832 of which is secured
by the aircraft on an operating lease with a net book value of $12,626,636 at
December 31, 2002.
The notes mature as follows:
Year ending December 31, Amount
2003 $ 147,169
2004 9,043,249
----------------
$ 9,190,418
================
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
7. 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, 2002, 2001 and 2000
are as follows:
Charged to
Operations
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
==============
Management fees $ 320,138
Administrative expense reimbursements 142,061
--------------
Year ended December 31, 2002 $ 462,199
==============
In accordance with the terms of 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 has investments in seven joint ventures with other
partnerships sponsored by the General Partner. See Note 3 for additional
information relating to the joint ventures.
8. 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, 2002, 2001 and 2000,
the Partnership did not incur any additional obligations pursuant to such
agreements.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
9. Tax Information (Unaudited)
The following table reconciles net income (loss) for financial statement
reporting purposes to income (loss) for federal income tax reporting purposes
for the years ended December 31:
2002 2001 2000
---- ---- ----
Net income (loss) for financial statement
reporting purposes $ 114,894 $ (348,138) $ 2,289,451
Differences due to:
Direct finance leases (432,017) 2,198,744 1,996,665
Depreciation 1,311,741 (1,698,494) (4,158,021)
Provision for losses - - (271,528)
Gain (loss) on sales of equipment 50,505 1,727,630 (411,606)
Other 438,863 (1,092,430) 9,631
------------ ------------ --------------
Partnership income (loss) for
federal income tax reporting purposes $ 1,483,986 $ 787,312 $ (545,408)
============ ============ ==============
As of December 31, 2002, the partners' capital accounts included in the
financial statements totaled $7,089,371 compared to the partners' capital
accounts for federal income tax reporting purposes of $3,988,380 (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, provision for losses
and gain (loss) on sales of equipment.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
10. Quarterly Financial Data (Unaudited)
-----------------------------------
The following table is a summary of financial data by quarter for the years
ended December 31, 2002 and 2001:
For the Quarter Ended
March 31, June 30, September 30, December 31,
-------- ------- ------------ -----------
2002
Revenues $ 1,094,522 $ 1,113,828 $ 1,064,158 $ 1,562,499
============= ============= ============= =============
Net income (loss) allocable to
limited partners $ (200,488) $ (87,034) $ (214,188) $ 615,455 (1)
============== ============= ============= ==============
Net income (loss) per weighted
average limited partnership unit $ (.53) $ (.23) $ (.57) $ 1.63
============== =============- ============ =============
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) (2)
============= ============= ============= =============
Net income (loss) per weighted
average limited partnership unit $ 1.80 $ (0.90) $ 0.46 $ (2.27)
============= ============= ============ =============
(1) The fourth quarter of 2002 includes net gains on sales of equipment of
$1,117,589.
(2) The fourth quarter of 2001 includes the Partnership's share of the loss
from its joint venture investee, AIC Trust (see note 3), of approximately
$787,000.
11. Significant lessees
The Partnership had one lessee that contributed more than 10% of total
revenue. Aeromexico's revenue of $2,200,000 represents 45.5% of the
Partnership's total revenues.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2002
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
---------------------------------------------------------------------
The information required by Item 304 of Regulation S-K was previously filed
as part of the Partnership's Current Reports on Form 8-K filed on February 5,
2003.
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 56, 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 42, 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, 2002
Thomas W. Martin, age 49, 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, 2002, 2001 and 2000.
Type of
Entity Capacity Compensation 2002 2001 2000
------ -------- ------------ ---- ---- ----
ICON Capital Corp. General Partner Management fees $ 320,138 $ 481,734 $ 466,522
ICON Capital Corp. General Partner Admin. expense
reimbursements 142,061 239,947 232,159
------------- ------------- --------------
$ 462,199 $ 721,681 $ 698,681
============= ============= ==============
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
(a) The Partnership is a limited partnership and therefore does not have voting
shares of stock. No person of record owns, or is known by the Partnership to own
beneficially, more than 5% of any class of securities of the Partnership.
(b) As of March 31, 2003, 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, 2002
Item 14. Controls and Procedures
-----------------------
Beaufort J.B. Clarke and Thomas W. Martin, the Principal Executive and
Principal Financial Officers, respectively, of ICON Capital Corp. ("ICC"), the
General Partner of the Partnership, have evaluated the disclosure controls and
procedures of the Partnership within 90 days prior to the filing of this annual
report. As used herein, the term "disclosure controls and procedures" has the
meaning given to the term by Rule 13a-14 under the Securities Exchange Act of
1934, as amended ("Exchange Act"), and includes the controls and other
procedures of the Partnership that are designed to ensure that information
required to be disclosed by the Partnership in the reports that it files with
the SEC under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms. As part of their
evaluation, Messrs. Clarke and Martin conferred with the finance and accounting
staff of ICC and the finance and accounting staff of ICON Holdings Corp., the
parent of ICC. Based upon their evaluation, Messrs. Clarke and Martin have
concluded that the Partnership's disclosure controls and procedures provide
reasonable assurance that the information required to be disclosed by the
Partnership in this report is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms applicable to the
preparation of this report.
There have been no significant changes in the Partnership's internal
controls or in other factors that could significantly affect the Partnership's
internal controls subsequent to the evaluation described above conducted by
ICC's principal executive and financial officers.
PART IV
Item 15. 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)
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2002
(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
Form 8-K filed on February 5, 2003.
Item 4. Changes in Registrant's Certifying Accountant
(c) Exhibits
99.1 Certification of Chairman and Chief Executive Officer pursuant to 18
U.S.C.ss.1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Certification Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C.ss.1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
(d) Unconsolidated Joint Venture Financial Statements
ICON Receivables 97-A LLC - as of and for the years ended December 31, 2002
and 2001
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, 2002 and 2001
ICON Cheyenne LLC - as of and for the years ended December 31, 2002 and
2001
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2002
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ICON CASH FLOW PARTNERS L.P. Six
File No. 33-36376 (Registrant)
By its General Partner, ICON Capital Corp.
Date: March 31, 2003 /s/ Beaufort J.B. Clarke
-------------------------------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacity and on the dates indicated.
ICON Capital Corp.
sole General Partner of the Registrant
Date: March 31, 2003 /s/ Beaufort J.B. Clarke
------------------------------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Date: March 31, 2003 /s/ Paul B. Weiss
------------------------------------------------
Paul B. Weiss
President and Director
Date: March 31, 2003 /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.
Certifications - 10-K
I, Beaufort J.B. Clarke, certify that:
1. I have reviewed this annual report on Form 10-K of ICON Cash Flow Partners
L.P. Six;
2. Based on my knowledge, this annual report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: March 31, 2003
/s/ Beaufort J.B. Clarke
- -----------------------------
Beaufort J. B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners L.P. Six
Certifications
I, Thomas W. Martin, certify that:
1. I have reviewed this annual report on Form 10-K of ICON Cash Flow Partners
L.P. Six;
2. Based on my knowledge, this annual report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: March 31, 2003
/s/ Thomas W. Martin
- ----------------------------------------
Thomas W. Martin
Executive Vice President
(Principal financial and accounting officer of the General Partner of the
Registrant) ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners L.P. Six
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2002
EXHIBIT 99.1
I, Beaufort J.B. Clarke, Chairman and Chief Executive Officer of ICON
Capital Corp., the sole General Partner of ICON Cash Flow Partners L.P. Six,
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Annual Report on Form 10-K for the period ended December 31,
2002 (the "Annual Report") which this statement accompanies fully
complies with the requirements of Section 13(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m) and
(2) information contained in the Annual Report fairly presents, in all
material respects, the financial condition and results of
operations of ICON Cash Flow Partners L.P. Six.
Dated: March 31, 2003
/s/ Beaufort J.B. Clarke
------------------------------------------------------
Beaufort J.B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners L.P. Six
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
December 31, 2002
EXHIBIT 99.2
I, Thomas W. Martin, Executive Vice President (Principal Financial and
Accounting Officer) of ICON Capital Corp., the sole General Partner of ICON Cash
Flow Partners L.P. Six, certify, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) the Annual Report on Form 10-K for the period ended December 31, 2002
(the "Annual Report") which this statement accompanies fully complies
with the requirements of Section 13(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78m) and
(2) information contained in the Annual Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Cash Flow Partners L.P. Six.
Dated: March 31, 2003
/s/ Thomas W. Martin
-------------------------------------------------------
Thomas W. Martin
Executive Vice President (Principal
Financial and Accounting Officer)
ICON Capital Corp.
sole General Partner of ICON Cash Flow Partners L.P. Six
ICON Receivables 1997-A LLC
Financial Statements
December 31, 2002 and 2001
(With Independent Auditor's Report Thereon)
INDEPENDENT AUDITOR'S REPORT
The Members
ICON Receivables 1997-A LLC
We have audited the accompanying balance sheet of ICON Receivables 1997-A LLC
(the "Company") as of December 31, 2002, 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. The financial statements of ICON Receivables 1997-A LLC as of
December 31, 2001, were audited by other auditors whose report dated April 15,
2002, expressed an unqualified opinion on those statements.
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 2002 financial statements referred to the above present
fairly, in all material respects, the financial position of ICON Receivables
1997-A LLC as of December 31 2002, 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/Hays & Company LLP
---------------------
Hays & Company LLP
March 13, 2003
New York, New York
ICON Receivables 1997-A LLC
Balance Sheets
December 31,
Assets 2002 2001
---- ----
Cash $ 64,889 $ 673,740
Investment in finance leases
Minimum rents receivable 684,130 2,984,147
Estimated unguaranteed residual values 169,186 269,211
Unearned income (76,362) (134,914)
Allowance for doubtful accounts (492,234) (2,174,224)
284,720 944,220
Other assets 345,152 238,622
Total assets $ 694,761 $ 1,856,582
Liabilities and Members' Equity
Notes payable non-recourse $ -- $ 1,157,730
Security deposits, deferred credits and other payables 390,389 549,715
Total liabilities 390,389 1,707,445
Commitments and Contingencies
Members' equity 304,372 149,137
Total liabilities and members' equity $ 694,761 $ 1,856,582
See accompanying notes to financial statements.
ICON Receivables 1997-A LLC
Statements of Operations
For the Years Ended December 31,
2002 2001
---- ----
Revenue
Finance income $ 49,798 $ 465,049
Interest income and other 5,342 56,001
(Loss) gain on sale of investments (12,763) 26,997
Total revenues 42,377 548,047
Expenses
General and administrative and other expenses 119,347 531,747
Interest expense 36,629 195,755
(Reversal of) provision for doubtful accounts (268,834) 1,825,000
Total expenses (112,858) 2,552,502
Net income (loss) $ 155,235 $(2,004,455)
See accompanying notes to financial statements.
ICON Receivables 1997-A LLC
Statements of Changes in Members' Equity
For the Years Ended December 31, 2002 and 2001
Balance at January 1, 2001 $ 2,153,592
Net loss (2,004,455)
Balance at December 31, 2001 149,137
Net income 155,235
Balance at December 31, 2002 $ 304,372
See accompanying notes to financial statements.
ICON Receivables 1997-A LLC
Statements of Cash Flows
For the Years Ended December 31,
2002 2001
---- ----
Cash flows from operating activities:
Net income (loss) $ 155,235 $(2,004,455)
Adjustments to reconcile net income (loss) to
net cash (used in) provided by operating activities:
Loss (gain) on sale of investments 12,763 (26,997)
(Reversal of) provision for doubtful accounts (268,834) 1,825,000
Changes in operating assets and liabilities:
Other assets (106,530) 602,179
Security deposits, deferred credits and other payables (159,326) (1,283,114)
Change in operating assets and liabilities 238,748 4,476,202
Total adjustments (283,179) 5,593,270
Net cash (used in) provided by operating activities (127,944) 3,588,815
Cash flows from investing activities:
Proceeds from the sale of investments 676,823 323,574
Net cash provided by investing activities 676,823 323,574
Cash flows from financing activities:
Principal payments on notes payable non-recourse (1,157,730) (3,858,368)
Net cash used in financing activities (1,157,730) (3,858,368)
Net (decrease) increase in cash (608,851) 54,021
Cash at beginning of year 673,740 619,719
Cash at end of year $ 64,889 $ 673,740
Supplemental information-interest paid $ 36,629 $ 194,555
See accompanying notes to financial statements.
ICON Receivables 1997-A LLC
Notes to Financial Statements
December 31, 2002
1. Organization
ICON Receivables 1997-A LLC (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 each 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
accounting principles generally accepted in the United States of America
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.
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. In addition, management is required to disclose contingent assets and
contingent liabilities. Actual results could differ from those estimates.
Leases and Revenue Recognition - 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 or written off when the
analysis indicates that the probability of collection of the account is remote.
ICON Receivables 1997-A LLC
Notes to Financial Statements - Continued
December 31, 2002
Income Taxes - No provision for income taxes has been recorded since the
liability for such taxes is that of each of the members rather than the Company.
The Company's income tax returns are subject to examination by the federal and
state taxing authorities, and changes, if any could adjust the individual income
taxes of the members.
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.
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 re-lease or sale of the equipment.
3. Finance Lease Receivables
Non-cancelable minimum annual rental amounts due on finance leases at
December 31, 2002 are as follows:
Year Ending
December 31, Amount
------------ -------
2003 $ 666,116
2004 18,014
---------
$ 684,130
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
2003.
ICON Receivables 1997-A LLC
Notes to Financial Statements - Continued
December 31, 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 January 1, 2001 $ 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
Accounts written-off (1,413,156) -- (1,413,156)
Reversal of provision for doubtful accounts (268,834) -- (268,834)
Balance at December 31, 2002 $ 492,234 $ -- $ 492,234
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 $345,152 and $206,421
at December 31, 2002 and 2001, respectively, which represent amounts collected
by an affiliate on the Company's behalf.
ICON Receivables 1997-B LLC
Financial Statements
December 31, 2002 and 2001
(With Independent Auditor's Report Thereon)
INDEPENDENT AUDITOR'S REPORT
The Members
ICON Receivables 1997-B LLC
We have audited the accompanying balance sheet of ICON Receivables 1997-B LLC
(the "Company") as of December 31, 2002, 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. The financial statements of ICON Receivables 1997-B LLC as of
December 31, 2001, were audited by other auditors whose report dated April 15,
2002, expressed an unqualified opinion on those statements.
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 2002 financial statements referred to the above present
fairly, in all material respects, the financial position of ICON Receivables
1997-B LLC as of December 31 2002 , 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/Hays & Company LLP
---------------------------------
Hays & Company LLP
March 13, 2003
New York, New York
ICON Receivables 1997-B LLC
Balance Sheets
December 31,
Assets 2002 2001
------ ---- ----
Cash ......................................... $ 460,650 $ 622,425
----------- -----------
Investment in finance leases
Minimum rents receivable .................. 1,196,746 3,216,235
Estimated unguaranteed residual values .... 220,804 255,001
Unearned income ........................... (14,224) (145,673)
Allowance for doubtful accounts ........... (398,566) (1,098,719)
----------- -----------
1,004,760 2,226,844
----------- -----------
Investment in financings
Receivables due in installments ........... 3,097,995 6,783,818
Unearned income ........................... (77,716) (408,920)
Allowance for doubtful accounts ........... (1,278,110) (1,161,097)
----------- -----------
1,742,169 5,213,801
----------- -----------
Other assets ................................. 34,182 202,619
----------- -----------
Total assets ................................. $ 3,241,761 $ 8,265,689
=========== ===========
Liabilities and Members' Equity
Notes payable non-recourse ................... $ 1,245,283 $ 6,982,448
Other liabilities ............................ 1,061,993 638,550
Due to affiliates ............................ 518,312 255,694
----------- -----------
Total liabilities ............................ 2,825,588 7,876,692
----------- -----------
Commitments and Contingencies
Members' equity .............................. 416,173 388,997
----------- -----------
Total liabilities and members' equity ........ $ 3,241,761 $ 8,265,689
=========== ===========
See accompanying notes to financial statements.
ICON Receivables 1997-B LLC
Statements of Operations
For the Years Ended December 31,
2002 2001
---- ----
Revenue
Finance income ............................. $ 408,147 $ 1,154,382
Interest income and other .................. 52,625 76,235
Gain from the sale of investments .......... 216,451 49,540
----------- -----------
Total revenues ............................. 677,223 1,280,157
----------- -----------
Expenses
General and administrative ................. 170,385 215,859
Interest expense ........................... 221,867 645,798
Amortization of loan origination fees ...... 61,569 123,307
Provision for doubtful accounts ............ -- 2,162,304
----------- -----------
Total expenses ............................. 453,821 3,147,268
----------- -----------
Net income (loss) ............................. $ 223,402 $(1,867,111)
=========== ===========
See accompanying notes to financial statements.
ICON Receivables 1997-B LLC
Statements of Changes in Members' Equity
For the Years Ended December 31, 2002 and 2001
Balance at January 1, 2001 ............................. $ 2,256,108
Net loss ............................................... (1,867,111)
-----------
Balance at December 31, 2001 ........................... 388,997
Distributions .......................................... (196,226)
Net income ............................................. 223,402
-----------
Balance at December 31, 2002 ........................... $ 416,173
===========
See accompanying notes to financial statements.
ICON Receivables 1997-B LLC
Statements of Cash Flows
For the Years Ended December 31,
2002 2001
---- ----
Cash flows from operating activities:
Net income (loss) ............................... $ 223,402 $(1,867,111)
----------- -----------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Gain from the sale of investments ........... (216,451) (49,540)
Amortization of loan origination fees ....... 61,569 123,307
(Reversal of) provision for doubtful accounts (583,140) 2,162,304
Change in operating assets and liabilities .. 5,179,388 6,475,071
----------- -----------
Total adjustments ......................... 4,441,366 8,711,142
----------- -----------
Net cash provided by operating activities ... 4,664,768 6,844,031
----------- -----------
Cash flows from investing activities:
Cash distributions to partners .................. (196,227) --
Proceeds from the sales of equipment ............ 1,106,849 410,759
----------- -----------
Net cash provided by investing activities ... 910,622 410,759
----------- -----------
Cash flows from financing activities:
Principal payments on notes payable non-recourse (5,737,165) (7,335,811)
----------- -----------
Net cash used in financing activities ....... (5,737,165) (7,335,811)
----------- -----------
Net decrease in cash ............................... (161,775) (81,021)
Cash at the beginning of the year .................. 622,425 703,446
----------- -----------
Cash at the end of the year ........................ $ 460,650 $ 622,425
=========== ===========
Supplemental information-interest paid ............. $ 221,867 $ 645,798
=========== ===========
See accompanying notes to financial statements.
ICON Receivables 1997-B LLC
Notes to Financial Statements
December 31, 2002
1. Organization
ICON Receivables 1997-B LLC (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. 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
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.
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
accounting principles generally accepted in the United States of America
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.
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. In addition, management is required to disclose contingent assets and
contingent liabilities. Actual results could differ from those estimates.
Leases and Revenue Recognition - 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 is 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 or written off when the
analysis indicates that the probability of collection of the account is remote.
ICON Receivables 1997-B LLC
Notes to Financial Statement
December 31, 2002
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.
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 re-lease or sale of the equipment.
Income Taxes - No provision for income taxes has been made since the
liability for such taxes is that of each of the members rather than the Company.
The Partnership's income tax returns are subject to examination by the federal
and state taxing authorities, and changes, if any could adjust the individual
income taxes of the partners.
3. Receivables Due in Installments
Non-cancelable minimum annual rental amounts due on finance leases and
financings are as follows:
Finance
Year Leases Financings Total
2003 $ 1,196,746 $ 3,097,995 $ 4,294,741
2004 - - -
--------------- --------------- ----------------
$ 1,196,746 $ 3,097,995 $ 4,294,741
=============== =============== ================
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
2003.
ICON Receivables 1997-B LLC
Notes to Financial Statements
December 31, 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 January 1, 2001 .................. $ 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
Accounts written-off ........................ (700,153) 700,153 --
(Reversal of) provision for doubtful accounts -- (583,140) (583,140)
----------- ----------- -----------
Balance at December 31, 2002 ................ $ 398,566 $ 1,278,110 $ 1,676,676
=========== =========== ===========
5. Notes Payable
The notes payable are non-recourse, bear interest at 6.19% and are secured
by and payable from the collections of finance lease receivables and proceeds
from the sales of residuals. Loan origination fees are being amortized over the
life of the notes.
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, 2002 and 2001
(With Independent Auditor's Report Thereon)
INDEPENDENT AUDITOR'S REPORT
The Beneficiaries
ICON/AIC TRUST
We have audited the accompanying balance sheet of ICON/AIC TRUST as of December
31, 2002, and the related statements of operations, changes in beneficial
interestholders' equity, and cash flows for the year 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 audit. The
financial statements of ICON/AIC TRUST as of December 31, 2001, were audited by
other auditors whose report dated April 15, 2002, expressed an unqualified
opinion on those statements.
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.
In our opinion, the 2002 financial statements referred to the above present
fairly, in all material respects, the financial position of ICON/AIC TRUST as of
December 31, 2002, 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/Hays & Company LLP
--------------------------------
Hays & Company LLP
March 13, 2003
New York, New York
ICON/AIC TRUST
Balance Sheets
December 31,
2002 2001
---- ----
Assets
Note receivable (Note 3) .................................. $2,572,522 $3,645,250
Due from affiliate (Note 4) ............................... -- 204,189
---------- ----------
Total assets .............................................. $2,572,522 $3,849,439
========== ==========
Liabilities and Beneficial Interestholders' Equity
Beneficial interestholders' equity ........................ $2,572,522 $3,849,439
---------- ----------
Total liabilities and beneficial interestholders' equity .. $2,572,522 $3,849,439
========== ==========
See accompanying notes to financial statements.
ICON/AIC TRUST
Statements of Operations
For the Years Ended December 31,
2002 2001
---- ----
Revenue
Finance income ..................................... $ -- $ 921,436
Interest income .................................... 63,500 --
Other income ....................................... 148,849 --
----------- -----------
Total revenue ...................................... 212,349 921,436
----------- -----------
Expenses
Loss from the sales of investments in finance leases -- 2,472,400
Foreign currency loss .............................. -- 607,831
Interest expense ................................... -- 434,526
Amortization of initial direct costs ............... -- 94,375
----------- -----------
Total expenses ..................................... -- 3,609,132
----------- -----------
Net income (loss) .................................. $ 212,349 $(2,687,696)
=========== ===========
See accompanying notes to financial statements.
ICON/AIC TRUST
Statements of Changes in Beneficial Interestholders' Equity
For the Years Ended December 31,
2002 2001
---- ----
Beneficial interestholders' equity, beginning of the year
(including accumulated other comprehensive
income of $0 and $607,831) $ 3,849,439 $6,758,454
Distributions to beneficial interestholders (1,752,885) (829,150)
Net income (loss) $ 212,349 $ (2,687,696)
Other comprehensive income - foreign
translation gain 263,319 -
Realization of foreign translation loss
on sales of investment in finance leases - 607,831
-------------- --------------
Comprehensive income (loss) 475,668 (2,079,865)
------------- -------------
Beneficial interestholders' equity, end of year
(including accumulated other comprehensive
income of $263,319 and $0) $ 2,572,522 $ 3,849,439
============= =============
See accompanying notes to financial statements.
ICON/AIC TRUST
Statements of Cash Flows
For the Years Ended December 31,
2002 2001
---- ----
Cash flows from operating activities:
Net income (loss) .................................... $ 212,349 $(2,687,696)
----------- -----------
Adjustments to reconcile net income (loss) to
net cash provided by (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)
Interest expense on non-recourse financing paid
directly to lenders by lessees ..................... -- 434,526
Amortization of initial direct costs ................. -- 94,375
Changes in operating assets:
Due from affiliate ................................. 204,189 (204,189)
Collection of principal-non-financed receivables ... -- 154,053
----------- -----------
Total adjustments .................................... 204,189 2,637,560
----------- -----------
Net cash provided by (used in) operating activities .. 416,538 (50,136)
----------- -----------
Cash flows from investing activities:
Collections of notes receivable ...................... 1,336,347 --
Proceeds from sales of investments in finance leases . -- 879,286
----------- -----------
Net cash provided by investing activities ............ 1,336,347 879,286
----------- -----------
Cash flows used in financing activities:
Cash distributions to beneficial interestholders ..... (1,752,885) (829,150)
----------- -----------
Net increase in cash .................................... -- --
Cash at beginning of year ............................... -- --
----------- -----------
Cash at end of year ..................................... $ -- $ --
=========== ===========
(continued on next page)
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, 2002 and 2001, non-cash activities
included the following:
2002 2001
---- ----
Principal and interest on direct finance
receivables paid directly to lenders by lessees $ -- $ 4,973,382
Principal and interest on non-recourse
financing paid directly to lenders by lessees . -- (4,973,382)
--------- -----------
$ -- $ --
========= ===========
Interest expense of $0 and $434,526 for the years ended December 31, 2002
and 2001 respectively, consisted of interest expense on non-recourse financing
paid or accrued directly to lenders by lessees.
See accompanying notes to financial statements.
ICON/AIC TRUST
Notes to Financial Statements
December 31, 2002
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. 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. In addition, management is required to
disclose contingent assets and contingent liabilities. 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 and Revenue Recognition - 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 represented 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 was 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.
ICON/ AIC TRUST
Notes to Financial Statements (Continued)
December 31, 2002
Income Taxes - No provision for income taxes has been recorded since the
liability for such taxes is that of each of the beneficial interestholders'
rather than the Trust. The Trust's income tax returns are subject to examination
by the federal and state taxing authorities, and changes, if any could adjust
the individual income taxes of the beneficial interestholders.
3. Sale of Finance Leases and Note Receivable
On December 28, 2001, the Trust sold its remaining investment in finance
leases subject to the remaining related non-recourse debt, for a non-interest
bearing note which is collectible over a two and one half year period. The gross
note amount was (pound)2,575,000 or $3,744,822 based upon the currency exchange
rate at December 31, 2001 and discounted for imputed interest. The gross note
amount is (pound)1,625,000 or $2,572,522 based upon the currency exchange rate
at December 31, 2002 and discounted for imputed interest. The note receivable is
due as follows:
January 2003 (pound) 450,000
June 2003 425,000
January 2004 375,000
June 2004 375,000
-------------
(pound) 1,625,000
=============
Foreign currency translation gains or losses are recorded as other
comprehensive income or loss.
4. Related Party Transactions
The Trust is managed by the General Partner of the Trust's beneficial
interestholders. The costs of administering the Trust were not significant and
were absorbed by the beneficiaries in proportion to their sharing interests.
ICON Cheyenne LLC
Financial Statements
December 31, 2002 and 2001
(With Independent Auditor's Report Thereon)
INDEPENDENT AUDITOR'S REPORT
The Members
ICON Cheyenne LLC
We have audited the accompanying balance sheet of ICON Cheyenne LLC (the
"Company") as of December 31, 2002 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 audit. The financial statements of ICON Cheyenne LLC as of December 31,
2001, were audited by other auditors whose report dated April 15, 2002,
expressed an unqualified opinion on those statements.
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 audits provide a
reasonable basis for our opinion.
In our opinion, the 2002 financial statements referred to the above present
fairly, in all material respects, the financial position of ICON Cheyenne LLC as
of December 31, 2002, 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/Hays & Company LLP
Hays & Company LLP
March 13, 2003
New York, New York
ICON Cheyenne LLC
Balance Sheets
December 31,
2002 2001
---- ----
Assets
Cash $ 305,358 $ 279,550
--------------- ----------------
Investment in operating leases:
Equipment cost 22,496,293 28,832,836
Accumulated depreciation (9,523,221) (6,386,270)
--------------- -----------------
12,973,072 22,446,566
--------------- ----------------
Equipment held for sale or lease 1,211,669 -
Due from affiliates - 878,015
Other assets 275,234 265,540
--------------- ----------------
Total assets $ 14,765,333 $ 23,869,671
=============== ================
Liabilities And Members' Equity
Notes payable, non-recourse $ 4,796,713 $ 10,223,768
Deferred income and other liabilities 331,604 921,738
Due to affiliates 13,164 -
--------------- ----------------
Total liabilities 5,141,481 11,145,506
--------------- ----------------
Commitments and Contingencies
Members' equity 9,623,852 12,724,165
--------------- ----------------
Total liabilities and members' equity $ 14,765,333 $ 23,869,671
=============== ================
See accompanying notes to financial statements.
ICON Cheyenne LLC
Statements of Operations
For the Years Ended December 31,
2002 2001
---- ----
Revenues
Rental income $ 6,903,098 $ 8,830,255
Gain on sales of equipment 275,489 92,695
Interest income and other - 90,230
------------- -------------
Total revenues 7,178,587 9,013,180
------------- -------------
Expenses
Depreciation expense 5,173,296 6,722,261
Interest expense 490,733 931,643
General and administrative 68,951 36,262
------------- -------------
Total expenses 5,732,980 7,690,166
------------- -------------
Net income $ 1,445,607 $ 1,323,014
============= =============
See accompanying notes to financial statements.
ICON Cheyenne LLC
Statement of Changes in Members' Equity
For the Years Ended December 31, 2002 and 2001
Members' equity at January 1, 2001 $ 11,401,151
Net income 1,323,014
----------------
Members' equity at December 31, 2001 12,724,165
Distributions to members (4,545,920)
Net income 1,445,607
----------------
Members' equity at December 31, 2002 $ 9,623,852
================
See accompanying notes to financial statements.
ICON Cheyenne LLC
Statements of Cash Flows
For the Years Ended December 31,
2002 2001
---- ----
Cash flows from operating activities:
Net income $ 1,445,607 $ 1,323,014
----------- -------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 5,173,296 6,722,261
Rental income paid directly to lenders by lessees (4,894,866) (8,426,301)
Interest expense on non-recourse financing paid
directly by lessees 490,733 931,643
Gain on sales of equipment (275,489) (92,695)
Changes in operating assets and liabilities:
Due to/from affiliates 891,179 (878,015)
Deferred income and other liabilities (590,134) 921,738
Other assets (9,694) (265,540)
----------- -------------
Total adjustments 785,025 (1,086,909)
----------- -------------
Net cash provided by operating activities 2,230,632 236,105
----------- -------------
Cash flows from investing activities:
Proceeds from sales of equipment 2,341,096 629,514
----------- -------------
Cash flows from financing activities:
Distributions to members (4,545,920) -
Repayment of non-recourse debt - (586,069)
------------ -------------
Net cash used in financing activities (4,545,920) (586,069)
----------- -------------
Net increase in cash 25,808 279,550
Cash at beginning of year 279,550 -
----------- -------------
Cash at end of year $ 305,358 $ 279,550
=========== =============
(continued on next page)
ICON Cheyenne LLC
Statements of Cash Flows (Continued)
Supplemental Disclosure of Cash Flow Information
For the years ended December 31, 2002 and 2001, non-cash activities
included the following:
2002 2001
---- ----
Rental income paid directly to lenders by lessees $ 4,894,866 $ 8,426,301
Principal and interest on non-recourse financing
paid directly to lenders by lessees (4,894,866) (8,426,301)
------------------ ----------------
$ - $ -
================== ================
Interest expense on non-recourse financing
accrued or paid directly to lenders by lessees $ 490,733 $ 931,643
================== ================
Non-recourse debt assumed by lessees
upon lease termination $ 1,022,922 $ -
================== ================
See accompanying notes to financial statements.
ICON Cheyenne LLC
Notes to Financial Statements
December 31, 2002
1. Organization
ICON Cheyenne LLC (the "LLC") was formed December 27, 2000 as a joint
venture between four affiliates; ICON Income Fund Eight B L.P. ("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 L.P. ("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 with 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
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date 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. In addition, management is
required to disclose contingent assets and contingent liabilities. Actual
results could differ from those estimates.
Leases and Revenue Recognition- 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 on the straight-line method over the lease terms. Billed and
uncollected operating lease receivables are included in other assets.
Equipment Held for Lease or Sale - The off-lease equipment are carried at
cost, less accumulated depreciation, subject to the Partnership's impairment
policy.
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 salvage 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.
ICON Cheyenne LLC
Notes to Financial Statements (Continued)
December 31, 2002
Income Taxes - No provision for income taxes has been recorded since
liability for such taxes is that of each member rather than the LLC. The LLC's
income tax returns are subject to examination by the federal and state taxing
authorities, and changes, if any could adjust the individual income taxes of the
partners.
Reclassifications - Certain items from the prior years have been
reclassified to conform to the classifications used in 2002.
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
years ended December 31, 2002 and 2001 the LLC sold a portion of such equipment
upon termination of the underlying leases.
The investment in operating leases at December 31, 2002 and 2001 consisted
of the following:
2002 2001
---- ----
Equipment cost, beginning of year $ 28,832,836 $ 29,705,716
Transfer to equipment held for sale or lease (1,211,669) -
Equipment dispositions (5,124,874) (872,880)
---------------- ----------------
Equipment cost, end of year 22,496,293 28,832,836
---------------- ----------------
Accumulated depreciation, beginning of year (6,386,270) -
Depreciation expense (5,173,296) (6,722,261)
Accumulated depreciation on equipment sold 2,036,345 335,991
---------------- ----------------
Accumulated depreciation, end of year (9,523,221) (6,386,270)
---------------- ----------------
Investment in operating leases, end of year $ 12,973,072 $ 22,446,566
================ ================
Non-cancellable rents due on operating leases are as follows:
YearEnding
December 31, Amount
2003 $ 3,880,525
2004 1,116,519
2005 414,756
2006 14,264
--------------
$ 5,426,064
==============
ICON Cheyenne LLC
Notes to Financial Statements (Continued)
December 31, 2002
4. Notes Payable
Notes payable consist of non-recourse notes, which accrue interest at rates
ranging from 5.52% to 8.02%, and which are being paid directly to lenders by
lessees.
The notes mature as follows:
YearEnding
December 31, Amount
2003 $ 3,325,400
2004 1,065,119
2005 399,351
2006 6,843
--------------
$ 4,796,713
==============
5. Related Party Transactions
The amount due to affiliates represents net rental payments received by the
LLC on behalf of affiliated companies.