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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the quarterly period ended June 30, 2004
--------------------------------------------------
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the transition period from _______________________ to ______________________
Commission File Number 0-28136
----------------------------------------------------------
ICON Cash Flow Partners L.P. Six
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3723089
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
100 Fifth Avenue, New York, New York 10011-1505
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(212) 418-4700
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Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [x] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) [ ] Yes [x] No
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Condensed Consolidated Balance Sheets
(unaudited)
June 30, December 31,
2004 2003
---- ----
Assets
Cash and cash equivalents $ 54,765 $ 44,339
--------------- --------------
Investment in finance leases
Minimum rents receivable 193,927 383,486
Estimated unguaranteed residual values 463,659 649,909
Unearned income (5,858) (9,700)
Allowance for doubtful accounts - (93,679)
---------------- --------------
651,728 930,016
--------------- --------------
Investment in operating leases
Equipment at cost 17,714,798 17,886,854
Accumulated depreciation (8,668,859) (8,049,110)
--------------- ---------------
9,045,939 9,837,744
--------------- ---------------
Investments in unconsolidated joint ventures 286,229 595,464
--------------- ---------------
Other assets, net 25,063 127,117
--------------- --------------
Total assets $ 10,063,724 $ 11,534,680
=============== ==============
(continued on next page)
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Condensed Consolidated Balance Sheets - Continued
(unaudited)
June 30, December 31,
2004 2003
---- ----
Liabilities and Partners' Equity
Notes payable - non-recourse $ 9,230,215 $ 9,043,249
Security deposits and deferred credits 152,108 161,243
Accounts payable and accrued expenses 6,151 242,988
Due to affiliates, net 344,935 513,757
Minority interest in consolidated joint venture 27,799 36,879
--------------- --------------
Total liabilities 9,761,208 9,998,116
--------------- --------------
Commitment and Contingencies
Partners' equity (deficiency)
General Partner (324,660) (312,319)
Limited Partners (377,758 units outstanding,
$100 per unit original issue price) 627,176 1,848,883
--------------- --------------
Total partners' equity 302,516 1,536,564
--------------- --------------
Total liabilities and partners' equity $ 10,063,724 $ 11,534,680
=============== ==============
See accompanying notes to condensed consolidated financial statements.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Condensed Consolidated Statements of Operations
(unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
---- ---- ---- ----
Revenues
Rental income $ 231,988 $ 319,804 $ 463,975 $ 608,497
Finance income 10,062 11,023 20,129 22,018
Net gain(loss) on sales of equipment 119,346 - 119,346 (150,752)
Loss from investments
in unconsolidated joint ventures (48,260) (6,295) (44,896) (28,787)
Other income 8 15,906 6,198 176,814
---------- ------------- ------------- -----------
Total revenues 313,144 340,438 564,752 627,790
---------- ------------- ------------- ------------
Expenses
Depreciation 357,502 357,503 715,005 715,005
Interest 272,053 277,766 636,966 573,164
General and administrative 47,826 67,875 88,959 208,816
Management fees - General Partner 12,896 18,322 35,156 65,966
Administrative expense reimbursements
- General Partner 5,191 7,703 14,129 22,460
Amortization of initial direct costs - - - 706
Minority interest in consolidated joint venture (4,045) (4,148) (9,079) (8,403)
----------- ------------- ------------ -------------
Total expenses 691,423 725,021 1,481,136 1,577,714
----------- ------------- ------------- ------------
Net loss $ (378,279) $ (384,583) $ (916,384) $ (949,924)
============ ============= ============= =============
Net loss allocable to:
Limited Partners $ (374,496) $ (380,737) $ (907,220) $ (940,425)
General Partner (3,783) (3,846) (9,164) (9,499)
------------- ------------- ------------- -------------
$ (378,279) $ (384,583) $ (916,384) $ (949,924)
============ ============= ============= =============
Weighted average number of limited
partnership units outstanding 377,758 377,758 377,758 377,822
============= ============= ============= ============
Net loss per weighted average
limited partnership unit $ (.99) $ (1.01) $ (2.40) $ (2.49)
============= ============ ============= ===========
See accompanying notes to condensed consolidated financial statements.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Condensed Consolidated Statement of Changes in Partners' Equity
For the Six Months Ended June 30, 2004
(unaudited)
Limited Partner Distributions
-----------------------------
Return of Investment Limited General
Capital Income Partners Partner Total
------- ------ -------- ------- -----
(Per weighted average unit)
Balance at
January 1, 2004 $ 1,848,883 $ (312,319) $ 1,536,564
Cash distributions
to partners $ .83 $ - (314,487) (3,177) (317,664)
Net loss (907,220) (9,164) (916,384)
--------------- ------------- ---------------
Balance at
June 30, 2004 $ 627,176 $ (324,660) $ 302,516
=============== ============= ===============
See accompanying notes to condensed consolidated financial statements.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30,
(unaudited)
2004 2003
---- ----
Cash flows from operating activities:
Net loss $ (916,384) $ (949,924)
---------- -------------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Rental income paid directly to lenders by lessees (450,000) (450,000)
Interest expense on non-recourse financing
paid directly to lenders by lessees 636,966 527,363
Amortization of initial direct costs and loan fees - 46,507
Loss from investments in unconsolidated
joint ventures 44,896 28,787
Depreciation 715,005 715,005
Net (gain) loss on sales of equipment (119,346) 150,752
Minority interest in consolidated joint venture (9,079) (8,403)
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables 369,107 214,562
Other assets, net 11,860 (5,288)
Security deposits and deferred credits (9,135) 646,649
Accounts payable and accrued expenses (52,691) (19,585)
Due to affiliates (168,822) 176
---------- -------------
Total adjustments 968,761 1,846,525
---------- ------------
Net cash provided by operating activities 52,377 896,601
---------- ------------
Cash flows from investing activities:
Proceeds from sales of equipment 5,000 244,346
Distributions received from unconsolidated joint ventures 270,713 191,601
----------- ------------
Net cash provided by investing activities 275,713 435,947
----------- ------------
Cash flows from financing activities:
Cash distributions to partners (317,664) (632,780)
Redemption of limited partnership units - (1,374)
------------ ------------
Net cash used in financing activities (317,664) (634,154)
------------ -------------
Net increase in cash and cash equivalents 10,426 698,394
Cash and cash equivalents at beginning of period 44,339 203,739
---------- -------------
Cash and cash equivalents at end of period $ 54,765 $ 902,133
========== =============
(continued on next page)
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Condensed Consolidated Statements of Cash Flows - Continued
(unaudited)
Supplemental Disclosures of Cash Flow Information
For the six months ended June 30, 2004 and 2003, non-cash activities
included the following:
2004 2003
---- ----
Principal and interest on direct finance
receivables paid directly to lenders by lessees $ - $ 148,503
Rental income paid directly to lenders by lessees 450,000 450,000
Principal and interest on non-recourse
financing paid directly to lenders by lessees (450,000) (598,503)
---------- ---------
$ - $ -
========== =========
2004 2003
---- -----
Interest accrued or paid directly to lenders by lessees $ 636,966 $ 527,363
Other interest paid - 45,801
---------- ---------
Total interest expense $ 636,966 $ 573,164
========== =========
See accompanying notes to condensed consolidated financial statements.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements
June 30, 2004
(unaudited)
1. Basis of Presentation
The condensed consolidated financial statements of ICON Cash Flow Partners
L.P. Six (the "Partnership") have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC") and, in the
opinion of management, include all adjustments (consisting only of normal
recurring accruals) necessary for a fair statement of results for each period
shown. Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such SEC rules and regulations. Management
believes that the disclosures made are adequate to make the information
presented not misleading. The results for the interim period are not necessarily
indicative of the results for the full year. These condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes included in the Partnership's 2003 Annual Report
Form 10-K. Certain 2003 amounts have been reclassified to conform to the 2004
presentation.
2. Disposition Period
The Partnership's reinvestment period ended on November 11, 2000 and the
disposition period commenced 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
continue the orderly termination of its operations and affairs. The Partnership
will not invest in any additional finance or lease transactions during the
disposition period.
3. Related Party Transactions
Fees paid or accrued by the Partnership to the General Partner or its
affiliates for the six months ended June 30, 2004 and 2003, respectively, are as
follows:
2004 2003
---- ----
Management fees $ 35,156 $ 65,966 Charged to operations
Administrative expense
reimbursements 14,129 22,460 Charged to operations
------------ -----------
Total $ 49,285 $ 88,426
============ ==========
At June 30, 2004 the Partnership had a net payable of $344,935 due to
affiliates. Approximately $377,765 of payables relate to distributions received
from ICON/AIC Trust ("AIC Trust") on behalf of two affiliates, ICON Cash Flow
Partners L.P. Seven ("L.P. Seven") and ICON Income Fund Eight A L.P. ("Fund
Eight A"). The Partnership expects to satisfy this payable with future rental
payments and sales proceeds. As of July 2004, approximately $170,000 of this
amount has already been paid. Offsetting these payables was a receivable from
Fund Eight A of $36,406 for distributions received from ICON/Boardman Facility
LLC on behalf of the Partnership.
The Partnership and its affiliates have formed seven joint ventures for the
purpose of acquiring and managing various assets. The Partnership and its
affiliates have substantially identical investment objectives and participate on
the same terms and conditions (See Note 4 for additional information relating to
the joint ventures).
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
4. Consolidated Venture and Investments in Unconsolidated Joint Ventures
The Partnership and affiliates have investments in seven ventures involved
in acquiring and managing various assets.
Consolidated Venture
The joint venture described below is majority owned and is consolidated
with the Partnership.
ICON Cash Flow Partners L.L.C. II
---------------------------------
In March 1995, the Partnership and an affiliate, ICON Cash Flow Partners,
L.P., Series E ("Series E"), formed ICON Cash Flow Partners L.L.C. II ("ICON
Cash Flow LLC II"), for the purpose of acquiring and managing an aircraft on
lease to a U.S. based commercial airline. The Partnership and Series E acquired
interests of 99% and 1%, respectively, in ICON Cash Flow LLC II. In 1997, upon
the scheduled termination of the lease, the aircraft was remarketed to Aerovias
de Mexico, S.A. de C.V. ("Aeromexico") under a new lease. This lease originally
was scheduled to expire in November 2002, but has since been extended twice
pursuant to the terms of extension agreements. ICON Cash Flow LLC II acquired
the aircraft, assuming non-recourse debt and utilizing cash received from the
Partnership and Series E. Profits, losses, excess cash and disposition proceeds
of the joint venture are allocated 99% to the Partnership and 1% to Series E.
The Partnership's consolidated financial statements include 100% of the assets,
liabilities, 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
consolidated joint venture on the Partnership's consolidated balance sheets and
as minority interest in consolidated joint venture on its consolidated
statements of operations. The outstanding balance of the non-recourse debt
secured by this aircraft was $9,230,215 at June 30, 2004.
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.
------------------------------
In September 1994, the Partnership and an affiliate, Series E, formed a
joint venture, ICON Cash Flow Partners L.L.C. ("ICON Cash Flow LLC"), for the
purpose of acquiring and managing an aircraft on lease to a U.S. based
commercial airline. The Partnership and Series E acquired interests of 1% and
99%, respectively, in ICON Cash Flow LLC. In 1997, upon the scheduled
termination of the lease, the aircraft was remarketed to Aeromexico under a new
lease. This lease originally was scheduled to expire in October 2002, but has
since been extended twice pursuant to the terms of extension agreements. ICON
Cash Flow LLC acquired the aircraft, assuming non-recourse debt and utilizing
cash received from the Partnership and Series E. Profits, losses, excess cash
and disposition proceeds of the joint venture are allocated 1% to the
Partnership and 99% to Series E. The outstanding balance of the non-recourse
debt secured by this aircraft was $9,545,147 at June 30, 2004.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
Information as to the unaudited results of operations of ICON Cash Flow LLC
for the six months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- -------------
Net loss $ (970,982) $ (970,367)
================= ===============
Partnership's share of net loss $ (9,710) $ (9,704)
================= ===============
ICON Receivables 1997-A LLC
---------------------------
In March and September 1997, the Partnership and three affiliates, ICON
Cash Flow Partners, L.P., Series D ("Series D"), Series E and L.P. Seven,
contributed and assigned equipment leases, finance receivables and residuals to
ICON Receivables 1997-A LLC ("1997-A") for the purpose of securitizing the cash
flow collections from a portfolio of leases. As of June 30, 2004, 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.
Information as to the unaudited results of operations of 1997-A for the six
months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- --------------
Net income (loss) $ 37,436 $ (39,975)
=============== ===============
Partnership's share of net income (loss) $ 11,618 $ (12,406)
================ ===============
ICON Receivables 1997-B LLC
---------------------------
In August 1997, the Partnership and two affiliates, Series E and L.P.
Seven, formed ICON Receivables 1997-B LLC ("1997-B") and contributed cash,
equipment leases and residuals for the purpose of securitizing the cash flow
collections from a portfolio of leases. The Partnership, Series E and L.P. Seven
each own an 8.33%, 75.00% and 16.67% interest, respectively, in 1997-B.
Information as to the unaudited results of operations of 1997-B for the six
months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- --------------
Net loss $ (585,497) $ (203,652)
================ ===============
Partnership's share of net loss $ (48,772) $ (16,964)
================ ===============
Distributions $ 206,128 $ -
================ ===============
Partnership's share of distributions $ 17,170 $ -
================ ================
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
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 remaining venturers' shares in ICON
BF at June 30, 2004 were .5025%, .5025%, and 98.995% for the Partnership, L.P.
Seven, and Fund Eight A, respectively. The non-recourse debt associated with
this equipment was refinanced on May 6, 2004 at an interest rate of 3.65%
maturing on January 23, 2010. The outstanding balance of the debt secured by
this equipment at June 30, 2004 was $11,255,873. The lender of the non-recourse
debt is assigned the rental payments.
The Partnership is currently in negotiations with Portland General Electric
("PGE") regarding the possibility of PGE purchasing the coal handling facility
from the Partnership, either at the end of the current lease term, or at the end
of the extension term in January 2010.
Information as to the unaudited results of operations of ICON BF for the
six months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- -------------
Net income $ 740,912 $ 701,622
================ ===============
Partnership's share of net income $ 3,723 $ 3,526
================ ===============
Distributions $ 7,245,027 $ -
================ ===============
Partnership's share of distributions $ 36,406 $ -
================ ===============
ICON/AIC Trust
--------------
During 1999, AIC Trust was formed to own and manage a portfolio of leases
for equipment located in England. The Partnership, L.P. Seven and Fund Eight A
own 25.51%, 30.76% and 43.73% interests in AIC Trust, respectively.
On December 28, 2001, AIC Trust sold its remaining leases, subject to the
related debt, in exchange for a note receivable of (Pound)2,575,000 ($3,744,822
converted at the exchange rate at December 31, 2001) which is payable in six
installments through June 2004. At June 30, 2004, the remaining amount
receivable was (Pound)375,000 ($679,718 converted at the exchange rate at June
30, 2004), as AIC Trust collected (Pound)375,000 in the first quarter. In July
of 2004, the final installment on the note was collected.
Information as to the unaudited results of operations of AIC Trust for the
six months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- --------------
Net income $ 7,700 $ 21,313
================ ===============
Partnership's share of net income $ 1,964 $ 5,436
================ ===============
Distributions $ 683,603 $ 722,005
================ ===============
Partnership's share of distributions $ 174,387 $ 184,183
================ ===============
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
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. The purchase price consisted of cash of
$11,401,151 and the assumption of non-recourse debt of $18,304,565. The
non-recourse debt is structured so as to be amortized with rentals due under the
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 outstanding
balance of the non-recourse debt secured by these assets, at June 30, 2004, was
$727,584.
Information as to the unaudited results of operations of ICON Cheyenne for
the six months ended June 30, 2004 and 2003 is summarized below:
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- -------------
Net (loss) income $ (371,961) $ 132,537
================ ===============
Partnership's share of net (loss) income $ (3,719) $ 1,325
================= ===============
Distributions $ 4,275,001 $ 741,759
================ ================
Partnership's share of distributions $ 42,750 $ 7,418
================ ================
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
June 30, 2004
Item 2. Manager's Discussion and Analysis of Financial Condition and Results of
Operations
Forward-Looking Information - The following discussion and analysis should
be read in conjunction with the audited financial statements and notes included
in the Partnership's annual report on Form 10-K dated December 31, 2003. Certain
statements within this document may constitute forward-looking statements within
the meaning 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. The
Partnership believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions. Any such forward-looking
statements are subject to risks and uncertainties and the Partnership's future
results of operations could differ materially from historical results or current
expectations. Some of these risks are discussed in this report, and include,
without limitation, fluctuations in oil and gas prices; changes in capital
spending by customers in the airline industry; changing customer demands for
aircraft; acts of terrorism; unsettled political conditions, war, civil unrest
and governmental actions; foreign currency fluctuations; and environmental and
labor laws. The Partnership's actual results could differ materially from those
anticipated by such forward-looking statements due to a number of factors, some
of which may be beyond the Partnership's control, including, without limitation:
o changes in our industry, interest rates or the general economy;
o the degree and nature of our competition;
o availability of qualified personnel;
o cash flows from operating activities may be less than the Partnership's
current level of expenses;
o the financial condition of lessees; and
o lessee defaults.
a. Overview
The Partnership is an equipment leasing business formed on July 8, 1993 and
which began active operations on November 12, 1993. The Partnership is primarily
engaged in the business of acquiring equipment subject to leases. The
Partnership is currently in the process of selling its remaining assets in the
ordinary course of business, a time frame we call the "disposition period". We
have not reinvested any of the Partnership's funds during the current period.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
June 30, 2004
The Partnership's current equipment portfolio, which is held directly or
through investments in joint ventures with affiliates, consists primarily of:
o A 1% interest in ICON Cheyenne LLC, a portfolio consisting of various
equipment including over the road rolling stock, manufacturing equipment
and materials handling equipment. The original transaction involved
acquiring from Cheyenne Leasing Company a portfolio of 119 leases for a
purchase price of $29,705,716. The purchase price consisted of a cash
contribution of $11,401,151 and the assumption of non-recourse debt of
$18,304,565. Of the original 119 leases, 30 remain active with expiration
dates ranging between January of 2005 and October of 2006.
o A 25% interest in certain equipment used in connection with the production
of sodium chlorate, on lease to EKA Chemicals, Inc. The Partnership's
initial cash contribution was $1,402,960, representing 25% of the total
contribution, and the assumption of $526,499 in non-recourse debt. A lease
renewal was executed on February 2, 2001, extending the expiration of the
lease to July 2006, at which time title to the equipment will pass to the
lessee.
o A .5025% interest in a coal handling facility on lease to Portland General
Electric. The purchase price of the equipment was $27,421,810, of which the
equity contribution was $15,193,097, and assumed non-recourse debt of
$12,228,713. The lease has been extended and is currently set to expire on
January 23, 2005, at which time the lessee has the option to renew for
another 15 years. The Partnership is currently in negotiations with
Portland General Electric about PGE possibly purchasing the coal handling
facility from the Partnership, either at the end of the current lease term,
or at the end of the extension term in January 2010.
o A 99% interest in one McDonnell Douglas MD-83 aircraft subject to lease
with Aerovias de Mexico, S.A. de C.V. ("Aeromexico") with the base term
expiring in January, 2005. The purchase price for the aircraft was
$18,878,699 consisting of the Partnership's cash investment of $3,055,000
and the assumption of $15,823,699 in non-recourse debt.
Substantially all of our recurring operating cash flows are generated from
the operations of the single-investor leases in the Partnership's portfolio. On
a monthly basis, we deduct the expenses related to the recurring operations of
the portfolio from such revenues and assess the amount of the remaining cash
flows that will be required to fund known re-leasing costs and equipment
management costs. Any residual operating cash flows are considered available for
distribution to the investors and are paid monthly (up until the liquidation
period).
Industry Factors
Our results continue to be impacted by a number of factors influencing the
equipment leasing industry.
Further Deterioration of the Air Travel Industry.
The aircraft leasing industry is currently experiencing a recession and
this has resulted in depressed sales prices for assets such as the Partnership's
interest in the Aeromexico aircraft. It does not appear that the industry will
recover significantly in the very near future, and the value of this aircraft
may be adversely impacted.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
June 30, 2004
Inability to Remarket Assets.
If current lessees choose not to renew their leases or purchase the
equipment at lease expiry, the Partnership will need to remarket the equipment.
There is no assurance that the Partnership will be able to locate a willing
buyer or lessee, or if one is located, that the buyer or lessee will pay a price
for the asset at least equal to the carrying value.
The MD-83 aircraft on lease to Aeromexico are subject to non-recourse debt
with FINOVA, bearing interest at 11.83% annually. Given the current market for
aircraft, the rent the lessee pays does not cover the loan payments, resulting
in negative principal amortization. The net effect is that it is highly
unlikely, given the debt and aircraft market, that the Partnership will ever be
in position to realize residual proceeds on these aircraft. Accordingly, the
Partnership is currently exploring the possibility of selling the aircraft back
to FINOVA for the non-recourse debt balance.
b. Results of Operations for the Three Months ended June 30, 2004 and 2003
Revenues
Revenues for the three months ended June 30, 2004 ("2004 Quarter") were
$313,144, representing a decrease of $27,294 or 8% from the three months ended
June 30, 2003. ("2003 Quarter"). The decrease in revenues resulted primarily
from a decrease in rental income. Rental income decreased by $87,816, in the
2004 Quarter, primarily due to the expiration of the National Steel operating
lease in the fourth quarter of 2003. In addition, losses from investments in
unconsolidated joint ventures increased $41,965 to a loss of $48,260. This loss
is driven mostly by its investment in ICON Receivables 1997-B LLC ("1997-B").
1997-B incurred a loss of $793,111 for the 2004 Quarter, of which the
Partnership's interest is 8.33% or $66,066. Other income also decreased by
$15,898 due to loss recoveries received on the Raymond Access Limited lease in
the 2003 Quarter. These decreases were partially offset by an increase in net
gain on sales of equipment of $119,346. This increase in net gain on sales of
equipment resulted from recognition of additional gain of approximately $185,000
on sale of equipment that was leased to National Broadcasting Corp. This amount
was reserved to pay sales tax, however no tax was applicable to the transaction.
Expenses of the Partnership
Expenses for the 2004 Quarter were $691,423, representing a decrease of
$33,598 or 4.6% from the 2003 Quarter. This decrease in expenses was primarily
due to a decrease in general and administrative expenses of $20,049 due
partially to a decrease in professional fees resulting from a reduction in the
level of the Partnership's activities. Management fees and administrative
expense reimbursements - General Partner also decreased, by $5,426 and $2,512,
respectively, as a result of the reduction in the average size of the
Partnership's lease portfolio.
Net Income/Loss of the Partnership
As a result of the foregoing factors, net loss for the 2004 Quarter and
2003 Quarter was $378,279 and $384,583, respectively. The net loss per weighted
average limited partnership unit was $.99 and $1.01 for the 2004 Quarter and
2003 Quarter, respectively.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
June 30, 2004
c. Results of Operations for the Six Months Ended June 30, 2004 and 2003
Revenues
Revenues for the six months ended June 30, 2004 ("2004 Period") were
$564,752, representing a decrease of $63,038 or 10% from the six months ended
June 30, 2003 ("2003 Period"). The decrease in revenues resulted primarily from
a decrease in rental income. Rental income decreased by $144,522, in the 2004
Period, primarily due to the expiration of the National Steel operating lease in
the fourth quarter of 2003. In addition, losses from investments in
unconsolidated joint ventures increased $16,109 to a loss of $44,896. This loss
is driven mostly by its investment in ICON Receivables 1997-B LLC ("1997-B").
1997-B incurred a loss of $585,497 for the 2004 Period, of which the
Partnership's interest is 8.33% or $48,772. Other income also decreased by
$170,616 due to a residual notes obligation adjustment in the 2003 Period which
did not occur in the 2004 Period. These decreases were partially offset by an
increase in net gain (loss) on sales of equipment of $270,098 from a loss of
$150,752 to a gain of $119,346.
Expenses of the Partnership
Expenses for the 2004 Period were $1,481,136, representing a decrease of
$96,578 or 6.1% from the 2003 Period. This decrease in expenses was primarily
due to a decrease in general and administrative expenses of $119,857 due
principally to a decrease in professional fees resulting from a reduction in the
level of the Partnership's activities. Management fees and administrative
expense reimbursements - General Partner also decreased, by $30,810 and $8,331,
respectively, as a result of the reduction in the average size of the
Partnership's lease portfolio. Offsetting these decreases was an increase in
interest expense of $63,802. Interest expense increased due to reconciliation of
the non-recourse note payable debt for accrued interest associated with the
Aeromexico lease.
Net Income/Loss of the Partnership
As a result of the foregoing factors, net loss for the 2004 Period and 2003
Period was $916,384 and $949,924, respectively. The net loss per weighted
average limited partnership unit was $2.40 and $2.49 for the 2004 Period and
2003 Period, respectively.
d. Liquidity and Capital Resources
Cash Requirements
The Partnership has sufficient funds necessary to maintain current
operations. However, in the event that cash flow is insufficient to pay the
Partnership's current level of expenses, the Partnership may be required to sell
assets prior to maturity or borrow against future cash flows.
Operations
The Partnership's primary sources of liquidity for the 2004 Period and 2003
Period was net cash provided by operating activities of $52,377 and $896,601,
respectively, and distributions from unconsolidated joint ventures of $270,713
and $191,601, respectively. In the 2003 Period there were also proceeds of
$244,346 from sales of equipment.
Financings and Recourse Borrowings
The Partnership has not made any recourse borrowings and does not rely on
financing to meet its current cash needs.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
June 30, 2004
Distributions
Cash distributions to partners for the 2004 Period and 2003 Period totaled
$317,664 and $632,780, respectively. Such distributions are treated as a return
of capital, as the Partnership recorded losses for both periods. The Partnership
has not made any cash distributions in the second quarter and has no immediate
plan to make any distributions until the Partnership has fulfilled its current
obligations to affiliates.
Capital Resources
As of June 30, 2004, the Partnership is unaware of any specific need, apart
from those obligations to affiliates, requiring capital resources to be funded
by the Partnership.
Uncertainties
As of June 30, 2004, except as noted above in the Overview section and
listed below in the Risk Factors section, and to the best of our knowledge,
there were no known trends or demands, commitments, events or uncertainties
which are likely to have a material effect on liquidity.
Risk Factors
Set forth below and elsewhere in this report and in other documents we file
with the Securities and Exchange Commission are risks and uncertainties that
could cause our actual results to differ materially from the results
contemplated by the forward-looking statements contained in this report and
other periodic statements we make, including but not limited to, the following:
o The depressed value for aircraft has adversely affected the value of the
Partnership's MD-83s on lease to Aeromexico. The current carrying value of
the aircraft is less than the outstanding balance of the non-recourse debt.
Accordingly, the Partnership is in discussions with the lender concerning
selling both aircraft to the lender for the outstanding debt balance.
e. Inflation and Interest Rates
Overall, we do not believe that inflation has had a material adverse impact
on our business or operating results during the period presented. We cannot give
assurance, however, that our business will not be affected by inflation in the
future.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
June 30, 2004
Item 3. 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 investors.
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 attempts to manage its exposure to equipment and residual
risk by monitoring the market and maximizing re-marketing proceeds received
through re-lease or sale of equipment.
Item 4. Controls and Procedures
The Partnership carried out an evaluation, under the supervision and with
the participation of management of ICON Capital Corp., the General Partner of
the Partnership, including the Chief Executive Officer and the Principal
Financial and Accounting Officer, of the effectiveness of the design and
operation of the Partnership's disclosure controls and procedures as of the end
of the period covered by this report pursuant to the Securities Exchange Act of
1934. Based upon the evaluation, the Chief Executive Officer and the Principal
Financial and Accounting Officer concluded that the Partnership's disclosure
controls and procedures were effective.
There were no significant changes in the Partnership's internal control
over financial reporting during the Partnership's second quarter that have
materially affected, or are likely to materially affect, the Partnership's
internal control over financial reporting.
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
PART II - OTHER INFORMATION
- ---------------------------
Item 1 - Legal Proceedings
- --------------------------
The Partnership, 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 pending litigation and are not
aware of any pending or threatened litigation against the Partnership.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
32.1 Certification of Chairman and Chief Executive Officer
32.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer.
33.1 Certification of Chairman and Chief Executive Officer pursuant to 18 U.S.C.
(Section)1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
33.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C. (Section)1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K - None
ICON Cash Flow Partners L.P. Six
(A Delaware Limited Partnership)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ICON Cash Flow Partners L.P. Six
By its General Partner,
ICON Capital Corp.
August 16, 2004 /s/ Thomas W. Martin
------------------------- -----------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer of
the General Partner of the Partnership)
Exhibit 32.1
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
Certifications - 10-Q
---------------------
I, Beaufort J.B. Clarke, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ICON Cash Flow
Partners, L.P. Six;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the condensed consolidated financial statements and
other financial information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the General Partner
(or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the registrant's ability to record, process, summarize and
report financial information; 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 over financial reporting.
Dated: August 16, 2004
/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
Exhibit 32.2
Principal Financial Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
Certifications - 10-Q
----------------------
I, Thomas W. Martin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ICON Cash Flow
Partners, L.P. Six;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the condensed consolidated financial statements and
other financial information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; and
c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the General Partner
(or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the registrant's ability to record, process, summarize and
report financial information; 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 over financial reporting.
Dated: August 16, 2004
/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)
June 30, 2004
Exhibit 32.1
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 (18 U.S.C.
1350), that, to the best of my knowledge and belief:
(1) the Quarterly Report on Form 10-Q for the period ended June 30, 2004 (the
"Periodic Report") which this statement accompanies, fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78m); and
(2) the information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Cash Flow Partners L.P. Six.
Dated: August 16, 2004
/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)
June 30, 2004
Exhibit 32.2
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 (18 U.S.C. 1350), that, to the best of my knowledge and belief:
(1) the Quarterly Report on Form 10-Q for the period ended June 30, 2004 (the
"Periodic Report") which this statement accompanies, fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78m); and
(2) the information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Cash Flow Partners L.P. Six.
Dated: August 16, 2004
/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