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 June 30, 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>
June 30, December 31,
1999 1998
Assets
<S> <C> <C>
Cash ....................................................... $ 1,967,264 $ 2,283,067
------------ ------------
Investment in finance leases
Minimum rents receivable ............................... 69,876,420 42,719,705
Estimated unguaranteed residual values ................. 40,908,545 14,931,068
Initial direct costs ................................... 2,341,495 1,413,816
Unearned income ........................................ (29,233,696) (14,262,735)
Allowance for doubtful accounts ........................ (385,000) --
------------ ------------
83,507,764 44,801,854
Investment in estimated unguaranteed residual value ........ 1,150,000 --
------------ ------------
Accounts receivable from General Partner and affiliates, net 233,883 --
------------ ------------
Other assets ............................................... 143,126 44,658
------------ ------------
Total assets ............................................... $ 87,002,037 $ 47,129,579
============ ============
</TABLE>
(continued on next page)
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Balance Sheets (continued)
(unaudited)
<TABLE>
June 30, December 31,
1999 1998
Liabilities and Partners' Equity
<S> <C> <C>
Notes payable - non-recourse .......................... $ 51,111,388 $ 28,758,019
Note payable - line of credit ......................... 600,000 5,000,000
Accounts payable - equipment .......................... 2,044,419 --
Accounts payable to General Partner and affiliates, net -- 1,232,922
Security deposits, deferred credits and other payables 651,462 172,918
Minority interest in consolidated joint venture ....... 113,183 170,880
------------ ------------
54,520,452 35,334,739
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ................................... (7,538) 618
Limited partners (383,817.47 and 136,786.33
units outstanding, $100 per unit original
issue price) .................................... 32,489,123 11,794,222
------------ ------------
Total partners' equity .......................... 32,481,585 11,794,840
------------ ------------
Total liabilities and partners' equity ................ $ 87,002,037 $ 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
(unaudited)
<TABLE>
For the Three For the Six
Months Ended Months Ended
June 30, 1999 June 30, 1999
------------- -------------
Revenues
<S> <C> <C>
Finance income ........................................ $2,346,330 $3,246,522
Interest income and other ............................. 26,541 55,042
---------- ----------
Total revenues ........................................ 2,372,871 3,301,564
---------- ----------
Expenses
Interest .............................................. 1,105,184 1,598,971
Provision for bad debts ............................... 385,000 385,000
Management fees - General Partner ..................... 111,796 376,174
Administrative expense reimbursements - General Partner 56,641 149,672
Amortization of initial direct costs .................. 287,778 342,502
General and administrative ............................ 49,594 60,676
Minority interest expense in consolidated joint venture 4,673 10,497
---------- ----------
Total expenses ........................................ 2,000,666 2,923,492
---------- ----------
Net income ............................................... $ 372,205 $ 378,072
========== ==========
Net income allocable to:
Limited partners ...................................... $ 368,483 $ 374,291
General Partner ....................................... 3,722 3,781
---------- ----------
$ 372,205 $ 378,072
========== ==========
Weighted average number of limited
partnership units outstanding ......................... 325,087 263,898
========== ==========
Net income per weighted average
limited partnership unit .............................. $ 1.13 $ 1.42
========== ==========
</TABLE>
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 Six Months Ended June 30, 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 (247,031.14 units) 24,703,114 - 24,703,114
Sales and
offering expenses (3,201,103) - (3,201,103)
Cash distributions
to partners $ 3.06 $ 1.42 (1,181,401) (11,937) (1,193,338)
Net income 374,291 3,781 378,072
----------- -------- -----------
Balance at
June 30, 1999 $32,489,123 $ (7,538) $32,481,585
=========== ======== ===========
</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 Six Months Ended June 30, 1999
(unaudited)
<TABLE>
Cash flows from operating activities:
<S> <C>
Net income ....................................................... $ 378,072
------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for bad debts ....................................... 385,000
Finance income portion of receivables paid directly
to lenders by lessees ....................................... (2,406,575)
Interest expense on non-recourse financing paid
directly by lessees ......................................... 1,521,971
Amortization of initial direct costs .......................... 342,502
Change in operating assets and liabilities:
Collection of principal - non-financed receivables ........ 589,861
Miscellaneous receivables and other assets ................. (98,468)
Accounts receivable from General Partner and affiliates, net (233,883)
Security deposits, deferred credits and other payables ..... 478,544
Accounts payable to General Partner and affiliates, net .... (1,232,922)
Minority interest in consolidated joint venture ............ (57,697)
Other, net ................................................. 27,350
------------
Total adjustments ........................................ (684,317)
Net cash used by operating activities ....................... (306,245)
------------
Cash flows from investing activities:
Equipment and receivables purchased .............................. (19,194,280)
Initial direct costs ............................................. (1,270,181)
Net cash used in investing activities ...................... (20,464,461)
------------
Cash flows from financing activities:
Issuance of limited partnership units, net of offering expenses .. 21,502,011
Net proceeds received from non-recourse borrowings ............... 4,546,230
Proceeds from note payable - line of credit ...................... 600,000
Payments on note payable - line of credit ........................ (5,000,000)
Cash distributions to partners ................................... (1,193,338)
------------
Net cash provided by financing activities .................. 20,454,903
------------
Net decrease in cash ................................................ (315,803)
Cash at beginning of period ......................................... 2,283,067
Cash at end of period ............................................... $ 1,967,264
============
</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 six months ended June 30, 1999, non-cash activities included the
following:
Fair value of equipment and receivables
purchased for debt and payables .... $(24,303,461)
Non-recourse notes payable assumed in
purchase price ..................... 22,259,042
Accounts payable - equipment .......... 2,044,419
Principal and interest on direct
finance receivables paid directly
to lenders by lessees .............. 9,071,510
Principal and interest on non-recourse
financing paid directly to lenders
by lessees ......................... (9,071,510)
------------
$ --
============
Interest expense of $1,598,971 consisted of interest expense on
non-recourse financing paid directly to lenders by lessees of $1,521,971 and
interest on note payable - line of credit of $77,000.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
June 30, 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 six months ended June 30, 1999 were as
follows:
Underwriting commissions $ 494,062 Charged to Equity
Organization and offering 730,792 Charged to Equity
Acquisition fees 1,270,181 Capitalized
Management fees 376,174 Charged to Operations
Administrative expense
reimbursements 149,672 Charged to Operations
--------------
Total $ 3,020,881
==============
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
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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.
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.
4. Financial Reporting for the Period July 9, 1997 to December 31, 1997
The Partnership was formed on July 9, 1997. There was no reportable
activity for the Partnership for the period July 9, 1997 through December 31,
1997. The Partnership's initial capital contribution was made on May 6, 1998 and
the Partnership commenced business operations on October 14, 1998.
<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 June 30, 1999, 247,031.14
additional units were admitted representing $24,703,114 of capital contribution
bringing the total admission to 383,817.47 units totaling $38,381,747 in capital
contributions.
Results of Operations for the Three Months Ended June 30, 1999
For the three months ended June 30, 1999 the Partnership leased or
financed additional equipment with an initial cost of $3,521,824. The weighted
average initial transaction term for such acquisitions was 57 months. At June
30, 1999, the weighted average remaining transaction term of the portfolio was
52 months.
Revenues for the three months ended June 30, 1999 were $2,372,871.
Expenses for the three months ended June 30, 1999 were $2,000,666.
Net income for the three months ended June 30, 1999 was $372,205. The net
income per weighted average limited partnership unit outstanding was $1.13.
Results of Operations for the Six Months Ended June 30, 1999
For the six months ended June 30, 1999 the Partnership leased or financed
additional equipment with an initial cost of $42,345,369. The weighted average
initial transaction term for such acquisitions was 46 months. At June 30, 1999,
the weighted average remaining transaction term of the portfolio was 52 months.
Revenues for the six months ended June 30, 1999 were $3,301,564.
Expenses for the six months ended June 30, 1999 were $2,923,492.
Net income for the six months ended June 30, 1999 was $378,072. The net
income per weighted average limited partnership unit outstanding was $1.42.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the six months ended June
30, 1999 were capital contributions, net of offering expenses, of $21,502,011,
net proceeds from non-recourse borrowings of $4,546,230 and proceeds from note
payable - line of credit of $600,000. These funds along with borrowings assumed
on equipment purchases of $24,303,461 were used to purchase or finance leases
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
costing $42,345,369, 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,
additional borrowings and, when available, cash from equipment sales.
Cash distributions to limited partners for the six months ended June 30,
1999, which were paid monthly, totaled $1,181,401 of which $374,291 was
investment income and $807,110 was a return of capital. The monthly annualized
cash distribution rate to limited partners was 10.75% of which 3.41% was
investment income and 7.34% was a return of capital. The limited partner
distribution per weighted average unit outstanding for the six months ended June
30, 1999 was $4.48, of which $1.42 was investment income and $3.06 was a return
of capital, respectively.
The Partnership and an affiliate, ICON Cash Flow Partners L. P. Seven
("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. On May 28, 1999 the
Facility was amended and restated removing the Partnership as co-borrower on the
Facility. The Partnership entered into a new line of credit agreement (the
"facility") with a lender on May 28, 1999. The maximum amount available under
the facility is $5,000,000. The maximum amount available under the facility will
be extended to $15,000,000 as the Partnership's eligible receivables and
residuals increase. The facility is secured by eligible receivables and
residuals and bears interest at the rate of prime plus one half percent. At June
30, 1999 the Partnership had $600,000 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 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.
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.
As of June 30, 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.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
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
A Form 8-K was filed by the Partnership during the quarter ended June 30, 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.
August 12, 1999 /s/ Patricia A. Walsh
- --------------- ---------------------------------------
Date Patricia A. Walsh
Vice President and Controller
(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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,967,264
<SECURITIES> 0
<RECEIVABLES> 69,876,420
<ALLOWANCES> 385,000
<INVENTORY> 0
<CURRENT-ASSETS> * 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 88,002,037
<CURRENT-LIABILITIES> ** 0
<BONDS> 51,711,388
0
0
<COMMON> 0
<OTHER-SE> 32,481,585
<TOTAL-LIABILITY-AND-EQUITY> 87,002,037
<SALES> 3,246,522
<TOTAL-REVENUES> 3,301,564
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 939,521
<LOSS-PROVISION> 385,000
<INTEREST-EXPENSE> 1,598,971
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 378,072
<EPS-BASIC> 1.42
<EPS-DILUTED> 1.42
<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>
