Item 1. Business
General Development of Business
ICON Cash Flow Partners L.P. Six (the "Partnership") was formed on July 8, 1993 as a Delaware limited partnership. The Partnership commenced business operations on its initial closing date, March 31, 1994, with the admission of 16,537.73 limited partnership units at $100 per unit representing $1,653,773 of capital contributions. Between April 1, 1994 and December 31, 1994, 111,166.37 additional units were admitted representing $11,116,637 of capital contributions and from January 1, 1995 to November 8, 1995 (the final closing date), 256,153.02 additional units were admitted, bringing the final admission to 383,857.12 units totaling $38,385,712 in capital contributions. Between 1995 and 1997 the Partnership redeemed 3,179.00 limited partnership units. In 1998 the Partnership redeemed 1,324.92 units leaving 379,353.20 limited partnership units outstanding at December 31, 1998. The sole general partner is ICON Capital Corp. (the "General Partner").
Narrative Description of Business
The Partnership is an equipment leasing fund. The principal objective of the Partnership is to obtain the maximum economic return from its investments for the benefit of its limited partners. To achieve this objective, the Partnership intends to: (1) acquire a diversified portfolio of short-term, high-yield lease and financing transactions, (2) make monthly cash distributions to its limited partners from cash from operations, commencing with each limited partner's admission to the Partnership, continuing through the reinvestment period, which period will end no later than November 2000; (3) re-invest substantially all undistributed cash from operations and cash from sales in additional equipment and financing transactions during the reinvestment period; and (4) sell the Partnership's investments and distribute the cash from sales of such investments to its limited partners within five to eight and one-half years of November 1995.
The equipment leasing industry is highly competitive. In initiating its leasing transactions, the Partnership competes with leasing companies, manufacturers that lease their products directly, equipment brokers and dealers and financial institutions, including commercial banks and insurance companies. Many competitors are larger than the Partnership and have greater financial resources.
The Partnership has no direct employees. The General Partner has full and exclusive discretion in management and control of the Partnership.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
Lease and Financing Transactions
For the years ended December 31, 1998 and 1997, the Partnership purchased and leased or financed $6,901,428 and $2,129,099 of equipment, respectively, with a weighted average initial transaction term of 33 and 58 months, respectively. Included in the summary of equipment cost by category below is 100% of the equipment cost acquired by a joint venture in which the Partnership has a 99% interest. The Partnership accounts for this investment by consolidating 100% of the assets and liabilities of the joint ventures and reflecting, as a liability, the related minority interest. The equipment purchased by four other joint ventures in which the Partnership has a less than 50% interest are not included in this table. At December 31, 1998, the weighted average initial transaction term of the portfolio was 49 months. A summary of the portfolio equipment cost by category held at December 31, 1998 and 1997 is as follows:
December 31, 1998 December 31, 1997 --------------------- ---------------------
Category Cost Percent Cost Percent
Aircraft ................. $19,100,646 27.1% $36,659,753 40.4% Manufacturing & production 17,271,925 24.4 16,137,468 17.8 Telecommunications ....... 13,814,671 19.6 14,363,494 15.8 Computer systems ......... 10,579,442 15.0 16,694,856 18.4 Material handling ........ 4,084,138 5.8 315,222 .3 Printing ................. 1,376,438 2.0 2,127,113 2.3 Restaurant equipment ..... 1,290,238 1.8 1,272,845 1.4 Furniture and fixtures ... 910,706 1.3 1,092,758 1.3 Medical .................. 796,703 1.1 948,076 1.0 Construction ............. 702,731 1.0 -- -- Retail systems ........... 377,233 .5 693,753 .8 Video production ......... 130,023 .2 94,324 .1 Miscellaneous ............ 117,118 .2 341,988 .4 ----------- ----- ----------- -----
$70,552,012 100.0% $90,741,650 100.0% =========== ===== =========== =====
The Partnership has one lease which individually represents greater than 10% of the total portfolio equipment cost at December 31, 1998. The lease is with Aerovias de Mexico, S.A. de C.V. ("Aero Mexico"); the underlying equipment is an aircraft and the asset represented 27.1% of the total portfolio equipment cost at December 31, 1998.
Item 2.
Item 2. Properties
The Partnership neither owns nor leases office space or equipment for the purpose of managing its day-to-day affairs.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
Item 3.
Item 3. Legal Proceedings
The Partnership is not a party to any pending legal proceedings.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth quarter of 1998.
PART II
Item 5.
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, -------------- --------------------------------- 1998 1997 ---- ----
Limited Partners 2,269 2,260 General Partner 1 1
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
Item 6.
Item 6. Selected Consolidated Financial and Operating Data
The above selected consolidated financial data should be read in conjunction with the consolidated financial statements and related notes appearing elsewhere in this report.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
Item 7.
Item 7. General Partner's Discussion and Analysis of Financial Condition and Results of Operations
The Partnership's portfolio consisted of a net investment in finance leases, an operating lease, financings, equity investments in joint ventures and a leveraged lease representing 49%, 36%, 11%, 4%, and 0% of total investments at December 31, 1998, respectively, and 55%, 33%, 4%, 4% and 4% of total investments at December 31, 1997, respectively.
Results of Operations
Years Ended December 31, 1998 and 1997
For the years ended December 31, 1998 and 1997, the Partnership purchased and leased or financed equipment with an initial cost of $3,100,320 and $2,129,099, respectively, to 11 and 33 lessees or equipment users, respectively.
Revenues for the year ended December 31, 1998 were $6,162,370, representing a decrease of $348,562 or 5% from 1997. The decrease in revenues was due to a decrease in finance income of $958,314 or 31%, a decrease in income from leveraged leases of $309,473 or 59% and a decrease in income from equity investments in joint ventures of $112,916 or 24% from 1997. These decreases were partially offset by an increase in net gain on sales or remarketing of equipment of $776,525, an increase in rental income of $187,751 or 8%, and an increase in interest income and other of $67,865 or 67% from 1997. The decrease in finance income resulted from the decrease in the average size of the finance lease portfolio from 1997 to 1998. Income from the leveraged lease decreased due to the Partnership's 1998 termination of its lease with Airbus Industrie ("Airbus"). Income from the equity investments in joint ventures decreased as a result of one of the underlying joint venture's increasing its provision for bad debts. In December 1998, the Partnership entered into a new joint venture, however, there were no revenues generated from such joint venture in 1998. The net gain on sales or remarketing of equipment increased due primarily to the gain on termination of the Airbus lease. The Partnership's operating lease with Alaska Air terminated in April 1997 and the asset was subsequently leased to Aero Mexico at a greater contractual rental rate, and as a result, rental income increased from 1997 to 1998. Interest income and other increased due to an increase in the average cash balance, and an increase in late charges from 1997 to 1998.
Expenses for the year ended December 31, 1998 were $5,694,731, representing a decrease of $780,581 or 12% from 1997. The decrease in expenses was due to a decrease in interest expense of $483,670 or 18%, a decrease in amortization of initial direct costs of $177,703 or 17%, a decrease in provision for bad debts of $130,277 or 71%, a decrease in management fees of $123,168 or 11%, a decrease in administrative expense reimbursements of $61,991 or 11%, a decrease in depreciation expense of $8,482 or 1%, and a decrease in minority interest in joint venture of $1,240 or 16%. These decreases were partially offset by an increase in general and administrative expense of $205,950 or 115%. Interest expense decreased due to a decrease in the average debt outstanding from 1997 to 1998. Amortization of initial direct costs, management fees and administrative expense reimbursements decreased due to a decrease in the average size of the portfolio from 1997 to 1998. The decrease in depreciation expense resulted from the Partnership's restructuring of its operating lease when it leased the aircraft to Aero Mexico. Minority interest in joint venture decreased due to the Partnership's September
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
1997 purchase of the minority interests relating to ICON Asset Acquisition LLC. As a result of the ongoing analysis of delinquency trends and loss experience, and an assessment of overall credit risk, the Partnership determined that a provision of $52,997 for bad debt was required for the year ended December 31, 1998. The increase in general and administrative expenses was primarily related to an increase in legal expense which included the accelerated write off of capitalized legal fees related to the Partnership's termination of its lease with Airbus.
Net income for the years ended December 31, 1998 and 1997 was $467,639 and $35,620, respectively. The net income per weighted average limited partnership unit was $1.22 and $.09 for 1998 and 1997, respectively.
Years Ended December 31, 1997 and 1996
For the years ended December 31, 1997 and 1996, the Partnership purchased and leased or financed equipment with an initial cost of $2,129,099 and $45,524,755, respectively, to 33 and 242 lessees or equipment users, respectively.
Revenues for the year ended December 31, 1997 were $6,510,932, representing a decrease of $3,065,824 or 32% from 1996. The decrease in revenues was due to a decrease in finance income of $3,212,672 or 51%, a decrease in rental income of $164,370 or 7%, a decrease in interest income and other of $251,900 or 71% and a decrease in net gain on sales or remarketing of equipment of $280,051 or 83% from 1996. These decreases were partially offset by an increase in income from equity investment in joint ventures of $459,665 and an increase in income from the leveraged lease of $383,504 from 1996. The decrease in finance income resulted from the decrease in the average size of the finance lease portfolio from 1996 to 1997. The Partnership's operating lease with Alaska Air terminated in April 1997. The asset was subsequently leased to Aero Mexico in June 1997. Although contractual rents under the new Aero Mexico lease are greater than contractual rents under the Alaska Air lease, rental income decreased due to 1997 rental income representing nine months of contractual rents versus a full year of contractual rents in 1996. Interest income and other decreased due to a decrease in the average cash balance and a reduction in late charges from 1996 to 1997. The net gain on sales or remarketing decreased due to a decrease in the number of leases maturing, and the underlying equipment being sold or remarketed for which proceeds received were in excess of carrying value. Income from equity investment in joint ventures increased as a direct result of the Partnership's March and September 1997 contribution to ICON Receivables 1997-A LLC. These contributions consisted of equipment lease and finance receivables, residuals and cash totaling $11,129,804. Income from leveraged leases increased due to the Partnership earning income for the entire twelve month period in 1997 as compared to three months in 1996.
Expenses for the year ended December 31, 1997 were $6,475,312, representing a decrease of $3,468,411 or 35% from 1996. The decrease in expenses was due to a decrease in interest expense of $1,681,987 or 39%, a decrease in provision for bad debt of $566,726 or 76%, a decrease of general and administrative expense of $479,006 or 73%, a decrease in amortization of initial direct costs of $278,321 or 21%, a decrease in management fees of $240,680 or 18%, a decrease in depreciation expense of $103,374 or 12%, a decrease in administrative expense reimbursements of $94,894 or 15% and a decrease in minority interest in the joint venture of $23,423 or 75%. Interest expense decreased due to a decrease in the average debt outstanding from 1996 to 1997. General and administrative expenses, amortization of
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
initial direct costs, management fees, administrative expense reimbursements and depreciation decreased due to a decrease in the average size of the portfolio from 1996 to 1997 and as the result of the Partnership contributing a portion of its portfolio to a joint venture. The minority interest in joint venture decreased as a result of the Partnership's acquisition of ICON Asset Acquisition LLC's entire investment in leases during 1997. As a result of the ongoing analysis of delinquency trends and loss experience, and an assessment of overall credit risk, the Partnership determined that a provision of $183,274 for bad debt was required for the year ended December 31, 1997.
Net income (loss) for the years ended December 31, 1997 and 1996 was $35,620 and ($366,967), respectively. The net income (loss) per weighted average limited partnership unit was $.09 and ($.95), respectively.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the years ended December 31, 1998, 1997 and 1996 were net cash (used in) provided by operations of $3,543,778, $11,225,547 and $9,923,936 and proceeds from sales of equipment of $4,473,161, $4,336,675 and $8,684,744, respectively. These funds were used to invest in joint ventures, purchase equipment, make payments on borrowings and fund cash distributions. The Partnership intends to purchase additional equipment and fund cash distributions, utilizing cash from operations, proceeds from sales of equipment and additional borrowings.
The Partnership's notes payable at December 31, 1998 and 1997 totaled $23,379,315 and $31,187,487, respectively, and consisted of $22,360,201 and $28,811,864 in non-recourse notes, respectively, which are being paid directly to the lenders by the lessees, $131,299 and $131,299 in non-recourse residual value notes, respectively, which will be paid to the extent proceeds are available in excess of the Partnership's estimated unguaranteed residuals and $887,815 and $2,244,324 in non-recourse secured notes, respectively, which will be paid from proceeds from the lease portfolio that secures the financing.
In March 1997 the Partnership, ICON Cash Flow Partners, L.P., Series D ("Series D"), and ICON Cash Flow Partners L.P. Seven ("L.P. Seven"), contributed and assigned equipment lease and finance receivables and residuals to ICON Receivables 1997-A LLC ("1997-A"), a special purpose entity created for the purpose of originating leases, managing existing contributed assets and securitizing its portfolio. In September 1997 the Partnership, ICON Cash Flow Partners, L.P., Series E ("Series E") and L.P. Seven contributed and assigned additional equipment lease and finance receivables and residuals to 1997-A. The Partnership, Series D, Series E and L.P. Seven received a 31.03%, 17.81% 31.19% and 19.97% interest, respectively, in 1997-A based on the present value of their related contributions. In September 1997, 1997-A securitized substantially all of its equipment leases and finance receivables and residuals. 1997-A became the beneficial owner of a trust. The Partnership's original investment was recorded at cost and is adjusted by its share of earnings, losses and distributions thereafter.
In August 1997 the Partnership, Series E and L.P. Seven formed ICON Receivables 1997-B LLC ("1997-B"), a special purpose entity formed for the purpose of originating leases and securitizing its portfolio. The Partnership, Series E and L.P. Seven contributed $250,000 (8.33% interest), $2,250,000 (75.00% interest) and $500,000 (16.67% interest), respectively to 1997-B. In order to fund the acquisition of leases, 1997-B obtained a warehouse borrowing facility from Prudential Securities
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
Credit Corporation (the "1997-B Warehouse Facility"). In October 1998, 1997-B completed an equipment securitization. The net proceeds from the securitization of these assets were used to pay-off the remaining 1997-B Warehouse Facility balance and any remaining proceeds were distributed to the 1997-B members in accordance with their membership interests. The Partnership's original investment was recorded at cost and is adjusted by its share of earnings, losses and distributions thereafter.
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. ("Eight A") formed ICON Boardman Funding LLC ("ICON BF"), for the purpose of acquiring a lease with Portland General Electric. The purchase price totaled $27,421,810, and was funded with cash and non-recourse debt assumed in the purchase price. The Partnership, Series C, L.P. Seven and Eight A received a .5%, .5%, .5% and 98.5% interest, respectively, in ICON BF. The Partnership's original investment was recorded at cost of $56,960 and will be adjusted by its share of earnings, losses and distributions, thereafter. Simultaneously with the acquisition of the Portland General Electric lease by ICON BF, the rent in excess of the senior debt payments was acquired by the Partnership for $3,801,108.
Cash distributions to limited partners for the years ended December 31, 1998 and 1997, which were paid monthly, totaled $4,085,189 and $4,102,940, respectively, of which $462,963 and $35,264 was investment income and $3,622,226 and $4,067,676 was a return of capital, respectively. The monthly annualized cash distribution rate to limited partners in 1998 and 1997 was 10.75%, of which 1.22% and .09% was investment income and 9.53% and 10.66% was a return of capital, respectively. The limited partner distribution per weighted average unit outstanding in 1998 and 1997 was $10.75, of which $1.22 and $.09 was investment income and $9.53 and $10.66 was a return of capital, respectively.
As of December 31, 1998, except as noted above, there were no known trends or demands, commitments, events or uncertainties which are likely to have any material effect on liquidity. As cash is realized operations, sales of equipment and borrowings, the Partnership will invest in equipment leases and financings where it deems it to be prudent while retaining sufficient cash to meet its reserve requirements and recurring obligations.
Year 2000 Issue
The Year 2000 issue arose because many existing computer programs have been written using two digits rather than four to define the applicable year. As a result, programs could interpret dates ending in "00" as the year 1900 rather than the year 2000. In certain cases, such errors could result in system failures or miscalculations that disrupt the operation of the affected businesses.
The Partnership uses computer information systems provided by the General Partner and has no computer information systems of its own. The software related to the General Partner's primary computer information systems are provided by third party vendors. The General Partner has formally communicated with these vendors and has received assurance that their programs are Year 2000 compliant. In addition, the General Partner has gathered information about the Year 2000 readiness of significant vendors and third-party servicers and continues to monitor developments in this area. All of the General Partner's peripheral computer technologies, such as its network operating system and third
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
party software applications, including payroll and electronic banking have been evaluated and have been found to be Year 2000 compliant. The ultimate impact of the Year 2000 issue on the Partnership will depend to a great extent on the manner in which the issue is addressed by the Partnership's lessees. Each of the Partnership's lessees will have a material self interest in resolving any Year 2000 issue, however, non-compliance on the part of a lessee could result in lost or delayed revenues to the Partnership. The effect of this risk to the Partnership is not determinable.
The General Partner is responsible for costs relating to the assessment and development of its Year 2000 compliance remediation plan, as well as the testing of the hardware and software owned or licensed for its personal computers. The General Partner's costs incurred to date and expected future costs are not material.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
Item 8.
Item 8. Consolidated Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Page Number ----------- Independent Auditors' Report 14
Consolidated Balance Sheets as of December 31, 1998 and 1997 15-16
Consolidated Statements of Operations for the Years Ended December 31, 1998, 1997 and 1996 17
Consolidated Statements of Changes in Partners' Equity for the Years Ended December 31, 1998, 1997 and 1996 18
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996 19-21
Notes to Consolidated Financial Statements 22-33
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Consolidated Financial Statements
December 31, 1998
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Partners ICON Cash Flow Partners L.P. Six:
We have audited the accompanying consolidated balance sheets of ICON Cash Flow Partners L.P. Six (a Delaware limited partnership) as of December 31, 1998 and 1997, and the related consolidated statements of operations, changes in partners' equity and cash flows for each of the years in the three-year period ended December 31, 1998. These consolidated financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ICON Cash Flow Partners L.P. Six as of December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1998, in conformity with generally accepted accounting principles.
/s/ KPMG LLP ----------------------------------- KPMG LLP
March 12, 1999 New York, New York
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Consolidated Balance Sheets
December 31,
1998 1997 ---- ----
Assets
Cash ....................................... $ 125,260 $ 4,000,250 ------------ ------------
Investment in finance leases Minimum rents receivable ................ 13,507,407 20,412,591 Estimated unguaranteed residual values .. 11,238,451 10,714,403 Initial direct costs .................... 275,189 826,251 Unearned income ......................... (3,371,116) (4,216,807) Allowance for doubtful accounts ......... (231,149) (110,120) ------------ ------------
21,418,782 27,626,318 Investment in operating leases Equipment, at cost ...................... 19,100,646 19,100,646 Accumulated depreciation ................ (2,967,204) (2,230,411) ------------ ------------
16,133,442 16,870,235 Investment in financings Receivables due in installments ......... 5,431,790 2,029,854 Initial direct costs .................... 4,917 21,918 Unearned income ......................... (761,705) (186,139) Allowance for doubtful accounts ......... (49,913) (5,823) ------------ ------------
4,625,089 1,859,810 ------------ ------------
Investments in unconsolidated joint ventures 1,803,243 2,142,619 ------------ ------------
Investment in leveraged lease, net ......... -- 1,845,641 ------------ ------------
Other assets ............................... 381,805 492,355 ------------ ------------
Total assets ............................... $ 44,487,621 $ 54,837,228 ============ ============
(continued on next page)
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Consolidated Balance Sheets (continued)
(unaudited)
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,
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, 1998, 1997 and 1996
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, 1998, 1997 and 1996
(continued on next page)
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Consolidated Statements of Cash Flows - Continued
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Statements of Cash Flows (Continued)
Supplemental Disclosures of Cash Flow Information
Interest expense of $2,164,887, $2,648,557 and $4,330,544 for the years ended December 31, 1998, 1997 and 1996 consisted of: interest expense on non-recourse financing accrued or paid directly to lenders by lessees of $2,041,550, $2,408,565 and $3,123,670, respectively, interest expense on recourse secured financing of $123,337, $232,325 and $1,133,394, respectively, and other interest of $0, $7,667 and $73,480, respectively.
For the years ended December 31, 1998, 1997 and 1996 non-cash activities included the following:
See accompanying notes to consolidated financial statements.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1998
1. Organization
ICON Cash Flow Partners L.P. Six (the "Partnership") was formed on July 8, 1993 as a Delaware limited partnership with an initial capitalization of $2,000. It was formed to acquire various types of equipment, to lease such equipment to third parties and, to a lesser degree, to enter into secured financing transactions. The Partnership commenced business operations on its initial closing date, March 31, 1994 and by its final closing in 1995, 383,857.12 units had been admitted into the Partnership with aggregate gross proceeds of $38,385,712. Between 1995 and 1997 the Partnership redeemed 3,179.00 limited partnership units. In 1998 the Partnership redeemed 1,324.92 units leaving 379,353.20 limited partnership units outstanding at December 31, 1998.
The General Partner of the Partnership is ICON Capital Corp. (the "General Partner"), a Connecticut corporation. The General Partner manages and controls the business affairs of the Partnership's equipment leases and financing transactions under a management agreement with the Partnership.
ICON Securities Corp., an affiliate of the General Partner, received an underwriting commission on the gross proceeds from sales of all units. The total underwriting compensation paid by the Partnership, including underwriting commissions, sales commissions, incentive fees, public offering expense reimbursements and due diligence activities is limited to 13 1/2% of the gross proceeds received from the sale of the units. Such offering expenses aggregated $5,182,071 (including $2,111,214 paid to the General Partner or its affiliates), and were charged directly to limited partners' equity.
Profits, losses, cash distributions and disposition proceeds are allocated 99% to the limited partners and 1% to the General Partner until each limited partner has received cash distributions and disposition proceeds sufficient to reduce its adjusted capital contribution account to zero and receive, in addition, other distributions and allocations which would provide a 10% per annum cumulative return, compounded daily, on its outstanding adjusted capital contribution account. After such time, the distributions will be allocated 90% to the limited partners and 10% to the General Partner.
2. Significant Accounting Policies
Basis of Accounting and Presentation - The Partnership's records are maintained on the accrual basis. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets at the date of the financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates. In addition, management is required to disclose contingent assets and liabilities.
Certain reclassifications have been made to prior year's statements to conform to the 1998 presentation.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Consolidation - The consolidated financial statements include the accounts of the Partnership and its majority owned subsidiaries, ICON Six Corp. and ICON Cash Flow L.L.C. II. All inter-company accounts and transactions have been eliminated. The Partnership accounts for its interests in less than 50% owned joint ventures under the equity method of accounting. In such cases, the Partnership's original investments are recorded at cost and adjusted for its share of earnings, losses and distributions thereafter.
Leases - The Partnership accounts for owned equipment leased to third parties as finance leases, leveraged leases or operating leases, as appropriate. For finance leases, the Partnership records, at the inception of the lease, the total minimum lease payments receivable, the estimated unguaranteed residual values, the initial direct costs related to the leases and the related unearned income. Unearned income represents the difference between the sum of the minimum lease payments receivable plus the estimated unguaranteed residual minus the cost of the leased equipment. Unearned income is recognized as finance income over the terms of the related leases using the interest method. The Partnership's net investment in leveraged leases consists of minimum lease payments receivable, the estimated unguaranteed residual values and the initial direct costs related to the leases, net of the unearned income and principal and interest on the related non-recourse debt. Unearned income is recognized as income from leveraged leases over the life of the lease at a constant rate of return on the positive net investment. For operating leases, equipment is recorded at cost and is depreciated on the straight-line method over the lease terms to their estimated fair market values at lease terminations. Related lease rentals are recognized on the straight-line method over the lease terms. Billed and uncollected operating lease receivables, net of allowance for doubtful accounts, are included in other assets. Initial direct costs of finance leases and leveraged leases are capitalized and are amortized over the terms of the related leases using the interest method. Initial direct costs of operating leases are capitalized and amortized on the straight-line method over the lease terms. The Partnership's leases have terms ranging from two to five years. Each lease is expected to provide aggregate contractual rents that, along with residual proceeds, return the Partnership's cost of its investments along with investment income.
Investment in Financings - Investment in financings represent the gross receivables due from the financing of equipment plus the initial direct costs related thereto less the related unearned income. The unearned income is recognized as finance income, and the initial direct costs are amortized, over the terms of the receivables using the interest method. Financing transactions are supported by a written promissory note evidencing the obligation of the user to repay the principal, together with interest, which will be sufficient to return the Partnership's full cost associated with such financing transaction, together with some investment income. Furthermore, the repayment obligation is collateralized by a security interest in the tangible or intangible personal property.
Disclosures About Fair Value of Financial Instruments - Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments" requires disclosures about the fair value of financial instruments. Separate disclosure of fair value information as of December 31, 1998 and 1997 with respect to the Company's assets and liabilities is not provided because (i) SFAS No. 107 does not require disclosures about the fair value of lease arrangements and (ii) the carrying value of financial assets, other than lease related investments, and certain other payables approximates market value and (iii) fair value information concerning certain non-recourse debt obligations is not practicable to estimate without incurring excessive costs to obtain all the information that would be necessary to derive a market interest rate.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Redemption of Limited Partnership Units - The General Partner consented to the Partnership redeeming 728.00 limited partnership units during 1996, 2,186.00 limited partnership units during 1997, and 1,324.92 units during 1998. The redemption amount was calculated following the specified redemption formula in accordance with the Partnership agreement. Redeemed units have no voting rights and do not share in distributions. The Partnership agreement limits the number of units which can be redeemed in any one year and redeemed units may not be reissued. Redeemed limited partnership units are accounted for as a deduction from partners' equity.
Allowance for Doubtful Accounts - The Partnership records a provision for bad debts to provide for estimated credit losses in the portfolio. The allowance for doubtful accounts is based on an analysis of delinquency, an assessment of overall risk and a review of historical loss experience. The Partnership's write-off policy is based on an analysis of the aging of the Partnership's portfolio, a review of the non-performing receivables and leases, and prior collection experience. An account is fully reserved for or written off when the analysis indicates that the probability of collection of the account is remote.
Impairment of Estimated Residual Values - In March 1995, the Financial Accounting Standards Board ("FASB") issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which is effective beginning in 1996.
The Partnership's policy with respect to impairment of estimated residual values is to review, on a quarterly basis, the carrying value of its residuals on an individual asset basis to determine whether events or changes in circumstances indicate that the carrying value of an asset may not be recoverable and, therefore, an impairment loss should be recognized. The events or changes in circumstances which generally indicate that the residual value of an asset has been impaired are (i) the estimated fair value of the underlying equipment is less than the Partnership's carrying value or (ii) the lessee is experiencing financial difficulties and it does not appear likely that the estimated proceeds from disposition of the asset will be sufficient to satisfy the remaining obligation to the non-recourse lender and the Partnership's residual position. Generally in the latter situation, the residual position relates to equipment subject to third party non-recourse notes payable where the lessee remits their rental payments directly to the lender and the Partnership does not recover its residual until the non-recourse note obligation is repaid in full.
The Partnership measures its impairment loss as the amount by which the carrying amount of the residual value exceeds the estimated proceeds to be received by the Partnership from release or resale of the equipment. Generally, quoted market prices are used as the basis for measuring whether an impairment loss should be recognized.
As a result, the Partnership's policy with respect to measurement and recognition of an impairment loss associated with estimated residual values is consistent with the requirements of SFAS No. 121 and, therefore, the Partnership's adoption of this Statement in the first quarter of 1996 had no material effect on the financial statements.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Income Taxes - No provision for income taxes has been made as the liability for such taxes is that of each of the partners rather than the Partnership.
New Accounting Pronouncements - In June 1998 the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 requires that an entity recognize all derivative instruments as either assets or liabilities in the balance sheet and measure those instruments at fair value. SFAS No. 133 is effective for all quarters of fiscal years beginning after June 15, 1999. The adoption of SFAS No. 133 is not expected to have a material effect on the Partnership's net income, partners' equity or total assets.
3. Net Investment in Leveraged Lease
In September 1996 the Partnership acquired, subject to a leveraged lease, the beneficial interest in an aircraft. The aircraft was an Airbus A-300B4-203 on lease to Airbus Industrie through 2003. The purchase price of the asset was $19,595,956 and consisted of $1,409,839 in cash, plus the assumption of non-recourse senior debt and non-recourse junior debt. The junior debt represents cash receivable under the lease in excess of debt service obligation to the senior lender.
In December 1998 the Partnership sold its beneficial interest in the aircraft to Airbus Industrie. The proceeds from the sale totaled $20,834,705 and were used to pay off the senior debt, the junior debt and a third party under a residual sharing agreement. The remaining proceeds ($2,647,482 in cash) were retained by the Partnership. The Partnership recognized an $884,876 gain on the sale of the beneficial interest.
4. Investments in Joint Ventures
The Partnership and affiliates formed six joint ventures for the purpose of acquiring and managing various assets.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
The former joint venture described below became 100% owned by the Partnership in 1997, was dissolved and the assets of the joint venture are included with the Partnership's assets.
ICON Asset Acquisition L.L.C. I
In February 1995 the Partnership and two affiliates, ICON Cash Flow Partners, L.P., Series B ("Series B"), and ICON Cash Flow Partners, L.P., Series C ("Series C") formed ICON Asset Acquisition L.L.C. I ("ICON Asset Acquisition LLC") as a special purpose limited liability company. ICON Asset Acquisition LLC was formed for the purpose of acquiring, managing and securitizing a portfolio of leases. The Partnership, Series B and Series C contributed $8,700,000 (77.68% interest), $1,000,000 (8.93% interest) and $1,500,000 (13.39% interest), respectively, to ICON Asset Acquisition LLC. On February 17, 1995, ICON Asset Acquisition LLC purchased an existing portfolio of leases, securitized substantially all of its portfolio and became the beneficial owner of a trust. In September 1997 the Partnership purchased, from Series B and C, their investment in ICON Asset Acquisition LLC. Series B and C's investments were purchased at book value, which approximated market value at that time. ICON Asset Acquisition LLC became a 100% owned subsidiary of the Partnership. The Partnership transferred all of ICON Asset Acquisition LLC's assets to its own account and dissolved ICON Asset Acquisition LLC in the fourth quarter 1997.
The joint venture described below is majority owned and is consolidated with the Partnership.
ICON Cash Flow Partners L.L.C. II
In March 1995 the Partnership and an affiliate, ICON Cash Flow Partners, L.P., Series E ("Series E"), formed a joint venture, ICON Cash Flow Partners L.L.C. II ("ICON Cash Flow LLC II"), for the purpose of acquiring and managing an aircraft which was on lease to Alaska Airlines, Inc. The Partnership and Series E contributed 99% and 1% of the cash required for such acquisition, respectively, to ICON Cash Flow LLC II. ICON Cash Flow LLC II acquired the aircraft, assuming non-recourse debt and utilizing contributions received from the Partnership and Series E. The lease is an operating lease. Profits, losses, excess cash and disposition proceeds are allocated 99% to the Partnership and 1% to Series E. The Partnership's consolidated financial statements include 100% of ICON Cash Flow LLC II. Series E's investment in ICON Cash Flow LLC II has been reflected as "Minority interest in joint venture." The original lease term expired in April 1997 and Alaska Airlines, Inc. returned the aircraft. In June 1997 ICON Cash Flow LLC II released the aircraft to Aero Mexico. The new lease is an operating lease which expires in September 2002.
The four joint ventures described below are less than 50% owned and are accounted for following the equity method.
ICON Cash Flow Partners L.L.C. I
In September 1994 the Partnership and an affiliate, Series E, formed a joint venture, ICON Cash Flow Partners L.L.C. I ("ICON Cash Flow LLC I"), for the purpose of acquiring and managing an aircraft which was on lease to Alaska Airlines, Inc. The Partnership and Series E contributed 1% and 99% of the cash required for such acquisition, respectively, to ICON Cash Flow LLC I. ICON Cash Flow LLC I acquired the aircraft, assuming non-recourse debt and utilizing contributions received from the Partnership and Series E. The lease is an operating lease. Profits, losses, excess cash and
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
disposition proceeds are allocated 1% to the Partnership and 99% to Series E. The Partnership's investment in the joint venture is accounted for under the equity method. The original lease term expired in April 1997 and Alaska Airlines, Inc. returned the aircraft. In June 1997 ICON Cash Flow LLC I released the aircraft to Aero Mexico. The new lease is an operating lease which expires in October 2002.
Information as to the financial position and results of operations of ICON Cash Flow LLC I as of and for the year ended December 31, 1998 and 1997 is summarized below:
December 31, 1998 December 31, 1997
Assets $ 17,298,011 $ 16,870,235 ================ ===============
Liabilities $ 11,719,626 $ 12,155,143 ================ ===============
Equity $ 5,578,385 $ 4,715,092 ================ ===============
Partnership's share of equity $ 55,784 $ 47,151 ================ ===============
Year Ended Year Ended December 31, 1998 December 31, 1997
Net income $ 806,232 $ 744,474 ================ ===============
Partnership's share of net income $ 8,062 $ 7,445 ================ ===============
ICON Receivables 1997-A L.L.C.
In March 1997 the Partnership, ICON Cash Flow Partners, L.P., Series D ("Series D"), and ICON Cash Flow Partners L.P. Seven ("L.P. Seven"), contributed and assigned equipment lease and finance receivables and residuals to ICON Receivables 1997-A L.L.C. ("1997-A"), a special purpose entity created for the purpose of originating leases, managing existing contributed assets securitizing its portfolio. In September 1997 the Partnership, Series E and L.P. Seven contributed and assigned additional equipment lease and finance receivables and residuals to 1997-A. The Partnership, Series D, Series E and L.P. Seven received a 31.03%, 17.81% 31.19% and 19.97% interest, respectively, in 1997-A based on the present value of their related contributions. The Partnership's contributions amounted to $10,529,804 in assigned leases and $600,000 of cash in 1997, and $86,776 of cash in 1998. In September 1997, 1997-A securitized substantially all of its equipment leases and finance receivables and residuals. 1997-A became the beneficial owner of a trust. The Partnership accounts for its investment in 1997-A under the equity method of accounting. The Partnership's original investment was recorded at cost and is adjusted by its share of earnings, losses and distributions thereafter.
ICON Cash Flow Partners L. P. Six (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements (continued)
Information as to the financial position and results of operations of 1997-A as of and for the year ended December 31, 1998 and 1997 is summarized below:
December 31, 1998 December 31, 1997 ----------------- -----------------
Assets $ 31,845,710 $ 50,911,005 ================ ===============
Liabilities $ 27,065,004 $ 45,143,569 ================ ===============
Equity $ 4,780,706 $ 5,767,436 ================ ===============
Partnership's share of equity $ 1,522,578 $ 1,828,810 ================ ===============
Year Ended Year Ended December 31, 1998 December 31, 1997
Net income $ 1,050,957 $ 1,298,430 ================ ===============
Partnership's share of net income $ 326,165 $ 441,854 ================ ===============
Distributions $ 2,367,147 $ 33,965,442 ================ ===============
Partnership's share of distributions $ 719,173 $ 9,742,849 ================ ===============
ICON Receivables 1997-B L.L.C.
In August 1997 the Partnership, Series E and L.P. Seven formed ICON Receivables 1997-B L.L.C. ("1997-B"), for the purpose of originating leases and securitizing its portfolio. The Partnership, Series E and L.P. Seven contributed cash and received an 8.33%, 75.00% and 16.67% interest, respectively, in 1997-B. The Partnership's cash contributions amounted to $250,000 in 1997 and $163,978 in 1998. In order to fund the acquisition of leases, 1997-B obtained a warehouse borrowing facility from Prudential Securities Credit Corporation (the "1997-B Warehouse Facility"). In October 1998, 1997-B completed an equipment securitization. The net proceeds from the securitization of these assets were used to pay-off the remaining 1997-B Warehouse Facility balance and any remaining proceeds were distributed to the 1997-B members in accordance with their membership interests. The Partnership accounts for its investment in 1997-B under the equity method of accounting. The Partnership's original investment was recorded at cost and is adjusted by its share of earnings, losses and distributions thereafter.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Information as to the financial position and results of operations of 1997-B as of and for the year ended December 31, 1998 and 1997 is summarized below:
December 31, 1998 December 31, 1997 ----------------- -----------------
Assets $ 39,665,292 $ 18,209,360 =============== ===============
Liabilities $ 37,649,430 $ 15,008,185 =============== ===============
Equity $ 2,015,862 $ 3,201,175 =============== ===============
Partnership's share of equity $ 167,921 $ 266,658 =============== ===============
Year Ended Year Ended December 31, 1998 December 31, 1997 ----------------- -----------------
Net income $ 227,057 $ 201,175 =============== ===============
Partnership's share of net income $ 18,914 $ 16,758 =============== ===============
Distributions $ 3,380,904 $ - =============== ===============
Partnership's share of distributions $ 281,629 $ - =============== ===============
ICON Boardman Funding L.L.C.
In December 1998 the Partnership and three affiliates, Series C, L.P. Seven and ICON Income Fund Eight A L.P. ("Eight A") formed ICON Boardman Funding L.L.C. ("ICON BF"), for the purpose of acquiring a lease with Portland General Electric. The purchase price totaled $27,421,810, and was funded with cash and non-recourse debt assumed in the purchase price. The Partnership, L.P. Six, L.P. Seven and Eight A received a .5%, .5%, .5% and 98.5% interest, respectively, in ICON BF. The Partnership's original investment was recorded at cost of $56,960 and will be adjusted by its share of earnings, losses and distributions, thereafter. Simultaneously with the acquisition of the Portland General Electric lease by ICON BF, the rent in excess of the senior debt payments was acquired by the Partnership for $3,801,108.
Information as to the financial position of ICON BF as of December 31, 1998 is summarized below:
December 31, 1998
Assets $ 23,620,702 ===============
Liabilities $ 12,228,713 ===============
Equity $ 11,391,989 ===============
Partnership's share of equity $ 56,960 ===============
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
There was no income statement impact of the joint venture in 1998 as the joint venture was formed at the end of the year.
5. Receivables Due in Installments
Non-cancelable minimum annual amounts due on finance leases and financings are as follows:
Finance Year Leases Financings Total ---- ------ ---------- ----- 1999 $ 7,394,930 $ 1,511,544 $ 8,906,474 2000 4,476,283 1,274,933 5,751,216 2001 1,152,141 1,456,701 2,608,842 2002 484,053 1,180,037 1,664,090 Thereafter -- 8,575 8,575 ----------- ----------- -----------
$13,507,407 $ 5,431,790 $18,939,197 =========== =========== ===========
6. Investment in Operating Leases
The investment in operating lease at December 31, 1998, 1997 and 1996 consisted of the following:
The investment in an operating lease consists of one asset owned by ICON Cash Flow LLC II, a joint venture owned by the Partnership and Series E. In June 1997 ICON Cash Flow LLC II released the aircraft (formally on lease to Alaska Airlines, Inc.) to Aero Mexico. The new lease is an operating lease which expires in September 2002. (See Note 4 for additional information relating to the joint venture.)
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
7. Allowance for Doubtful Accounts
The allowance for doubtful accounts related to the investments in finance leases and financings consisted of the following:
Finance Leases Financings Total ------- ---------- ----- Balance at December 31, 1995 $ 361,941 $ 43,200 $ 405,141
Accounts written-off ... (424,699) (275,522) (700,221) Recoveries on accounts previously written-off 43,905 -- 43,905 Provision .............. 504,480 245,520 750,000 --------- --------- ---------
Balance at December 31, 1996 485,627 13,198 498,825
Accounts written-off ... (468,020) (107,375) (575,395) Recoveries on accounts previously written-off 9,239 -- 9,239 Provision .............. 83,274 100,000 183,274 --------- --------- ---------
Balance at December 31, 1997 110,120 5,823 115,943
Accounts written-off ... (16,454) (61,448) (77,902) Recoveries on accounts previously written-off 165,724 24,300 190,024 Provision .............. 11,919 41,078 52,997 --------- --------- ---------
Balance at December 31, 1998 $ 271,309 $ 9,753 $ 281,062 ========= ========= =========
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
8. Notes Payable
Notes payable consists of the following: (1) notes payable non-recourse, which is being paid directly to the lenders by the lessees and (2) notes payable non-recourse-secured financing, which is being paid from collections on lease receivable transactions. These notes bear interest at rates ranging from 5.18% to 10.75% and mature as follows:
Notes Payable Notes Payable Non-Recourse Non-Recourse Secured Financing Total ------------ ----------------- ----- 1999 $ 6,703,635 $ 769,190 $ 7,472,825 2000 6,213,925 118,625 6,332,550 2001 2,827,772 -- 2,827,772 2002 6,728,142 -- 6,728,142 2003 18,026 -- 18,026 ----------- ----------- -----------
$22,491,500 $ 887,815 $23,379,315 =========== =========== ===========
Included in the above are $131,299 in notes payable non-recourse due to various third parties in conjunction with the purchase and assignment of lease transactions. The notes are payable only to the extent residual values are realized. The realization of these residuals is expected to occur in 1999.
9. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General Partner or its affiliates for the years ended December 31, 1998, 1997 and 1996 are as follows:
Charged to Capitalized Operations ----------- ---------- Acquisition fees .................... $1,361,045 $ -- Management fees ..................... -- 1,333,394 Administrative expense reimbursements -- 642,276 ---------- ----------
Year ended December 31, 1996 ........ $1,361,045 $1,975,670 ========== ==========
Management fees ..................... -- 1,092,714 Administrative expense reimbursements -- 547,382 ---------- ----------
Year ended December 31, 1997 ........ $ -- $1,640,096 ========== ==========
Management fees ..................... -- 969,546 Administrative expense reimbursements -- 485,391 ---------- ----------
Year ended December 31, 1998 ........ $ -- $1,454,937 ========== ==========
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
The Partnership has investments in five joint ventures with other Partnerships sponsored by the General Partner (See Note 4 for additional information relating to the joint ventures).
10. Subsidiary
In December 1994 the Partnership formed a wholly owned subsidiary, ICON Six Corp., a Massachusetts corporation, formed for the purpose of managing equipment under lease located in the state of Massachusetts. Massachusetts partnerships are taxed on personal property at a higher rate than corporations, and therefore, to mitigate such excess property tax, certain leases are being managed by ICON Six Corp, a corporation. The Partnership's consolidated financial statements include 100% of the accounts of ICON Six Corp. As of December 31, 1998, there was no federal tax liability for ICON Six Corp.
11. Commitments and Contingencies
The Partnership entered into remarketing and residual sharing agreements with third parties. In connection therewith, remarketing or residual proceeds received in excess of specified amounts will be shared with these parties based on specified formulas. For the year ended December 31, 1998, the Partnership has not made any payments pursuant to such agreements.
12. Tax Information (Unaudited)
The following table reconciles net income for financial reporting purposes to income for federal income tax purposes for the years ended December 31:
As of December 31, 1998, the partners' capital accounts included in the financial statements totaled $17,884,454 compared to the partners' capital accounts for federal income tax purposes of $19,039,349 (unaudited). The difference arises primarily from commissions reported as a reduction in the partners' capital accounts for financial reporting purposes but not for federal income tax purposes, and temporary differences related to direct finance leases, depreciation and provision for losses.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
PART III
Item 10.
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 600 Mamaroneck Avenue, Harrison, New York 10528-1632, and its telephone number is (914) 698-0600. 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
Kevin F. Redmond Chief Financial Officer
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
Beaufort J. B. Clarke, age 53, is Chairman, Chief Executive Officer and Director of both the General Partner and ICON Securities Corp. (the "Dealer-Manager"). 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 38, is President and Director of the General Partner. Mr. Weiss has been exclusively engaged in lease portfolio acquisitions since 1988 from his affiliations with Griffin Equity Partners (as Executive Vice President and co-founder in 1993); Gemini Financial Holdings (as Senior Vice President-Portfolio Acquisitions and a member of the executive committee from 1991-1993) and Pegasus Capital Corporation (as Vice President-Portfolio Acquisitions). He was previously an investment banker and a commercial banker.
Thomas W. Martin, age 45, is Executive Vice President of the General Partner and Director of the Dealer-Manager. Prior to his present position, Mr. Martin was the Executive Vice President and Chief Financial Officer of Griffin Equity Partners, Inc. Mr. Martin has 14 years of senior management experience in the leasing business.
Kevin F. Redmond, age 36, is Chief Financial Officer of both the General Partner and the Dealer-Manager. Prior to his present position, Mr. Redmond was Vice President and Controller of the General Partner, Manager of Accounting at NationsCredit Corp. and Audit Manager with the accounting firm of Deloitte & Touche.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
Item 11.
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, 1998, 1997 and 1996.
Item 12.
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 15, 1999, 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 Percent of Class Amount Beneficially 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.
Item 13. Certain Relationships and Related Transactions
See Item 11 for a discussion of the Partnership's related party transactions.
See Note 4 for a discussion of the Partnership's related party investments in joint ventures.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements - See Part II, Item 8 hereof.
2. Financial Statement Schedule - None.
Schedules not listed above have been omitted because they are not applicable or are not required or the information required to be set forth therein is included in the Financial Statements or Notes thereto.
3. Exhibits - The following exhibits are incorporated herein by reference:
(i) Form of Dealer-Manager Agreement (Incorporated by reference to Exhibit 1.1 to Amendment No. 1 to Form S-1 Registration Statement No. 33-36376 filed with the Securities and Exchange Commission on November 9, 1993)
(ii) Form of Selling Dealer Agreement (Incorporated by reference to Exhibit 1.2 to Amendment No. 1 to Form S-1 Registration Statement No. 33-36376 filed with the Securities and Exchange Commission on November 9, 1993)
(iii)Amended and Restated Agreement of Limited Partnership (Incorporated herein by reference to Exhibit A to Amendment No. 1 to Form S-1 Registration Statement No. 33-36376 filed with the Securities and Exchange Commission on November 9, 1993)
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Partnership during the quarter ended December 31, 1998.
ICON Cash Flow Partners L.P. Six (A Delaware Limited Partnership)
December 31, 1998
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, 1999 /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, 1999 /s/ Beaufort J.B. Clarke ------------------------------------------------ Beaufort J.B. Clarke Chairman, Chief Executive Officer and Director
Date: March 31, 1999 /s/ Paul B. Weiss ------------------------------------------------ Paul B. Weiss President and Director
Date: March 31, 1999 /s/ Kevin F. Redmond ------------------------------------------------ Kevin F. Redmond Chief Financial Officer (Principal Financial and Account 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.