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 period ended March 31, 1999
-----------------------------------------------------------
[ ] 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 333-54011
---------------------------------------------------------
ICON Income Fund Eight A L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-4006824
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
600 Mamaroneck Avenue, Harrison, New York 10528-1632
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(914) 698-0600
- --------------------------------------------------------------------------------
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
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Balance Sheets
(unaudited)
<TABLE>
March 31, December 31,
1999 1998
Assets
<S> <C> <C>
Cash ................................................. $ 1,444,422 $ 2,283,067
------------ ------------
Investment in finance leases
Minimum rents receivable .......................... 69,552,652 42,719,705
Estimated unguaranteed residual values ............ 39,738,145 14,931,068
Initial direct costs .............................. 2,523,798 1,413,816
Unearned income ................................... (30,370,655) (14,262,735)
------------ ------------
81,443,940 44,801,854
------------ ------------
Other assets ......................................... 60,882 44,658
------------ ------------
Total assets ......................................... $ 82,949,244 $ 47,129,579
============ ============
Liabilities and Partners' Equity
Notes payable - non-recourse ......................... $ 48,937,945 $ 28,758,019
Note payable - recourse .............................. -- 5,000,000
Accounts payable-equipment ........................... 8,119,903 --
Accounts payable - General Partner and affiliates, net 2,981,856 1,232,922
Security deposits, deferred credits and other payables 83,296 172,918
Minority interest in consolidated joint venture ...... 108,510 170,880
------------ ------------
60,231,510 35,334,739
------------ ------------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ................................... (3,507) 618
Limited partners (267,628.09 and 136,786.33
units outstanding, $100 per unit original
issue price in 1999 and 1998, respectively) ..... 22,721,241 11,794,222
------------ ------------
Total partners' equity .......................... 22,717,734 11,794,840
------------ ------------
Total liabilities and partners' equity ............... $ 82,949,244 $ 47,129,579
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Operations
For the Three Months Ended March 31, 1999
(unaudited)
Revenues
Finance income ........................................ $900,192
Interest income and other ............................. 28,501
--------
Total revenues ........................................ 928,693
--------
Expenses
Interest .............................................. 493,787
Management fees - General Partner ..................... 264,378
Administrative expense
reimbursements - General Partner .................... 93,031
Amortization of initial direct costs .................. 54,724
General and administrative ............................ 11,082
Minority interest expense in consolidated joint venture 5,824
--------
Total expenses ........................................ 922,826
--------
Net income ............................................... $ 5,867
========
Net income allocable to:
Limited partners ...................................... $ 5,808
General Partner ....................................... 59
--------
$ 5,867
========
Weighted average number of limited
partnership units outstanding ......................... 202,420
========
Net income per weighted average
limited partnership unit .............................. $ .03
========
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statements of Changes in Partners' Equity
For the Three Months Ended March 31, 1999 and
for the Period from July 9, 1997 (date of inception) to
December 31, 1998
(unaudited)
<TABLE>
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
(Per weighted average unit)
<S> <C> <C> <C> <C> <C>
Initial Partners'
capital contribution
May 6, 1998 $ 1,000 $1,000 $ 2,000
Refund of initial
limited partners'
capital contribution (1,000) - (1,000)
Proceeds from issuance
of limited partnership
units (136,786.33 units) 13,678,633 - 13,678,633
Sales and
offering expenses (1,846,616) - (1,846,616)
Cash distributions
to partners $ .40 $ .28 (64,728) (654) (65,382)
Net income 26,933 272 27,205
----------- ------ -----------
Balance at
December 31, 1998 11,794,222 618 11,794,840
Proceeds from issuance
of limited partnership
units (130,841.76 units) 13,084,176 - 13,084,176
Sales and
offering expenses (1,748,736) - (1,748,736)
Cash distributions
to partners $ 2.02 $ .03 (414,229) (4,184) (418,413)
Net income 5,808 59 5,867
----------- ------ -----------
Balance at
March 31, 1999 $22,721,241 $(3,507) $22,717,734
=========== ======= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Cash Flows
For the Three Months Ended March 31, 1999
(unaudited)
<TABLE>
Cash flows from operating activities:
<S> <C>
Net income .................................................................. $ 5,867
------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Finance income portion of receivables paid directly
to lenders by lessees .................................................. (535,885)
Interest expense on non-recourse financing paid
directly by lessees .................................................... 425,037
Amortization of initial direct costs ..................................... 54,724
Change in operating assets and liabilities:
Collection of principal - non-financed receivables ................... (184,349)
Other assets .......................................................... (16,224)
Security deposits, deferred credits and other payables ................ (89,622)
Accounts payable to General Partner and affiliates, net ............... 1,748,934
Minority interest in consolidated joint venture ....................... (62,370)
------------
Total adjustments ................................................... 1,340,245
------------
Net cash provided by operating activities .............................. 1,346,112
------------
Cash flows from investing activities:
Equipment and receivables purchased ......................................... (11,483,308)
Initial direct costs ........................................................ (1,164,706)
------------
Net cash used in investing activities ................................. (12,648,014)
------------
Cash flows from financing activities:
Issuance of limited partnership units, net of offering expenses ............. 11,335,440
Net proceeds received from non-recourse borrowings .......................... 4,546,230
Payments on recourse debt ................................................... (5,000,000)
Cash distributions to partners .............................................. (418,413)
------------
Net cash provided by financing activities ............................. 10,463,257
------------
Net decrease in cash ........................................................... (838,645)
Cash at beginning of period .................................................... 2,283,067
------------
Cash at end of period .......................................................... $ 1,444,422
============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Cash Flows (Continued)
Supplemental Disclosure of Cash Flow Information
For the three months ended March 31, 1999, non-cash activities included
the following:
Fair value of equipment and receivables
purchased for debt and payables .... $(27,340,236)
Non-recourse notes payable assumed in
purchase price ..................... 19,220,334
Accounts payable - equipment .......... 8,119,903
Principal and interest on direct
finance receivables paid directly
to lenders by lessees .............. 7,279,005
Principal and interest on non-recourse
financing paid directly to lenders
by lessees ......................... (7,279,005)
-----------
$ --
===========
Interest expense of $493,787 consisted of interest expense on non-recourse
financing paid directly to lenders by lessees of $425,037 and interest on the
recourse note payable of $68,750.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
March 31, 1999
(unaudited)
1. Basis of Presentation
The consolidated financial statements of ICON Income Fund Eight A L.P.
(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 income for each period shown.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such SEC rules and
regulations. Management believes that the disclosures made are adequate to make
the information represented not misleading. The results for the interim period
are not necessarily indicative of the results for the full year. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes included in the Partnership's 1998
Annual Report on Form 10-K. The Partnership commenced business operations on
October 14, 1998 and as a result a comparative consolidated statement of
operations and a comparative consolidated statement of cash flows are not
presented.
2. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the three months ended March 31, 1999 were as
follows:
Underwriting commissions $ 261,684 Charged to Equity
Organization and offering 440,318 Charged to Equity
Acquisition fees 1,164,706 Capitalized
Management fees 264,378 Charged to Operations
Administrative expense
reimbursements 93,031 Charged to Operations
--------------
Total $ 2,224,117
==============
The Partnership and affiliates formed a joint venture for the purpose of
acquiring and managing various assets. (See Note 3 for additional information
relating to the joint ventures.)
3. Investments in Joint Ventures
The Partnership and affiliates formed the joint venture discussed below for
the purpose of acquiring and managing various assets.
In December 1998 the Partnership and three affiliates, ICON Cash Flow
Partners, L.P., Series C ("Series C"), ICON Cash Flow Partners L.P. Six ("L.P.
Six") and ICON Cash Flow Partners L.P. Seven ("L.P. Seven") formed ICON Boardman
Funding L.L.C. ("ICON BF"), for the purpose of acquiring a lease with Portland
General Electric. The purchase price totaled $27,421,810, and was funded with
cash and non-recourse debt assumed in the purchase price. The Partnership,
Series C, L.P. Six and L.P. Seven
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
received a 98.5%, .5%, .5% and .5% interest, respectively, in ICON BF. The
Partnership's financial statements include 100% of the assets and liabilities of
ICON BF. Series C, L.P. Six and L.P. Seven's investments in ICON BF have been
reflected as "minority interests in joint venture." Simultaneously with the
acquisition of the Portland General Electric lease by ICON BF, a portion of the
rent receivable in excess of the senior debt payments was acquired by L.P. Six
from ICON BF for $3,801,108. No gain or loss was recognized on this transaction.
On March 30, 1999, ICON BF acquired L.P. Six's investment in a portion of
the rent in excess of the senior debt payments for $3,097,637 and financed, with
a third party, all of the rent receivable in excess of the senior debt payments.
There was no gain or loss to L.P. Six on this transaction. ICON BF received
$7,643,867 from the financing. The proceeds from the financing, net of the
purchase of L.P. Six's investment, were distributed to the members of ICON BF in
accordance with their ownership interests.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Partnership, was formed on July 9, 1997 as a Delaware limited
partnership. The Partnership's maximum offering is $75,000,000. The Partnership
commenced business operations on its initial closing date, October 14, 1998,
with the admission of 12,000 limited partnership units at $100 per unit
representing $1,200,000 of capital contributions. Between October 15, 1998 and
December 31, 1998, 124,786.33 units were admitted representing $12,478,633 of
capital contributions. Between January 1, 1999 and March 31, 1999, 130,841.76
additional units were admitted representing $13,084,176 of capital contribution
bringing the total admission to 267,628.09 units totaling $26,762,809 in capital
contributions.
Results of Operations for the Three Months Ended March 31, 1999
For the three months ended March 31, 1999 the Partnership leased or
financed additional equipment with an initial cost of $38,823,545. The weighted
average initial transaction term for such acquisitions was 46 months. At March
31, 1999, the weighted average remaining transaction term of the portfolio was
51 months.
Revenues for the three months ended March 31, 1999 were $928,693. Expenses
for the three months ended March 31, 1999 were $922,826. Net income for the
three months ended March 31, 1999 was $5,867. The net income per weighted
average limited partnership unit outstanding was $.03.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the three months ended March
31, 1999 were capital contributions, net of offering expenses, of $11,335,440,
net cash provided by operations of $1,346,112 and net proceeds received from
non-recourse borrowings of $4,546,230. These funds along with borrowings assumed
on equipment purchases of $27,340,236 were used to purchase or finance leases
costing $38,823,545, to make payments on borrowings and fund cash distributions.
The Partnership intends to continue to purchase equipment and fund cash
distributions utilizing funds from capital contributions, cash from operations
and additional borrowings.
The Partnership and an affiliate, L.P. Seven entered into a joint line of
credit agreement (the "Facility") with a lender in December 1998. The maximum
amount available under the Facility is $5,000,000. The Facility is secured by
eligible receivables and residuals and bears interest at the rate of Prime plus
one half percent. At March 31, 1999 the Partnership and L.P. Seven had $0 and
$3,000,000, respectively, outstanding under the Facility.
In December 1998 the Partnership and three affiliates, ICON Cash Flow
Partners, L.P., Series C ("Series C"), ICON Cash Flow Partners L.P. Six ("L.P.
Six") and ICON Cash Flow Partners L.P. Seven ("L.P. Seven") formed ICON Boardman
Funding L.L.C. ("ICON BF"), for the purpose of acquiring a lease with Portland
General Electric. The purchase price totaled $27,421,810, and was funded with
cash and non-recourse debt assumed in the purchase price. The Partnership,
Series C, L.P. Six and L.P. Seven received a 98.5%, .5%, .5% and .5% interest,
respectively, in ICON BF. The Partnership's financial statements include 100% of
the assets and liabilities of ICON BF. Series C, L.P. Six and L.P. Seven's
investments in ICON BF have been reflected as "minority interests in joint
venture." Simultaneously with the acquisition of the Portland General Electric
lease by ICON BF, a portion of the rent receivable in excess of the senior debt
payments was acquired by L.P. Six from ICON BF for $3,801,108. No gain or loss
was recognized on this transaction.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
On March 30, 1999, ICON BF acquired L.P. Six's investment in a portion of
the rent in excess of the senior debt payments for $3,097,637 and financed, with
a third party, all of the rent receivable in excess of the senior debt payments.
There was no gain or loss to L.P. Six on this transaction. ICON BF received
$7,643,867 from the financing. The proceeds from the financing, net of the
purchase of L.P. Six's investment, were distributed to the members of ICON BF in
accordance with their ownership interests.
Cash distributions to limited partners for the three months ended March 31,
1999, which were paid monthly, totaled $414,229. The monthly distribution rate
was 10.75% (on an annualized basis) of which $5,808 was investment income and
$408,421 was a return of capital. The limited partner distribution per weighted
average unit outstanding for the three months ended March 31, 1999 was $2.05, of
which $.03 was investment income and $2.02 was a return of capital,
respectively.
As of March 31, 1999 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 from the continued offering, operations, or
borrowings, the Partnership will continue to 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 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.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed by the Partnership during the quarter ended
March 31, 1999.
<PAGE>
ICON Income Fund Eight A L.P.
(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 Income Fund Eight A L.P.
File No. 333-54011 (Registrant)
By its General Partner,
ICON Capital Corp.
May 14, 1999 /s/ Kevin F. Redmond
- ------------ ---------------------------------------------
Date Kevin F. Redmond
Chief Financial Officer
(Principal financial and account officer
of the General Partner of the Registrant)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 1061134
<NAME> ICON Income Fund Eight A L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,444,422
<SECURITIES> 0
<RECEIVABLES> 69,552,652
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> * 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 82,949,244
<CURRENT-LIABILITIES> ** 0
<BONDS> 48,937,945
0
0
<COMMON> 0
<OTHER-SE> 22,717,734
<TOTAL-LIABILITY-AND-EQUITY> 82,949,244
<SALES> 900,192
<TOTAL-REVENUES> 928,693
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 429,039
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 493,787
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,867
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
<FN>
* The Partnership has an unclassified balance sheet in its financial
statements due to the nature of its industry. A value of "0" was used for
current assets and liabilities.
** The Partnership has an unclassified balance sheet in its financial
statements due to the nature of its industry. A value of "0" was used for
current assets and liabilities.
</FN>
</TABLE>
