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 September 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>
September 30, December 31,
1999 1998
------------ -----------
Assets
<S> <C> <C>
Cash .............................................. $ 1,984,921 $ 2,283,067
------------- -------------
Investment in finance leases
Minimum rents receivable ...................... 70,595,412 42,719,705
Estimated unguaranteed residual values ........ 41,806,931 14,931,068
Initial direct costs .......................... 2,420,498 1,413,816
Unearned income ............................... (27,732,287) (14,262,735)
Allowance for doubtful accounts ............... (385,000) --
------------- -------------
86,705,554 44,801,854
------------- -------------
Investment in operating leases .................... 38,728,000 --
------------- -------------
Investment in estimated unguaranteed residual value 1,150,000 --
------------- -------------
Investment in unconsolidated joint venture ........ 3,004,527 --
------------- -------------
Other assets ...................................... 293,849 44,658
------------- -------------
Total assets ...................................... $ 131,866,851 $ 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>
September 30, December 31,
1999 1998
------------ -----------
Liabilities and Partners' Equity
<S> <C> <C>
Notes payable - non-recourse .......................... $ 81,068,879 $ 28,758,019
Note payable - line of credit ......................... 5,000,000 5,000,000
Accounts payable - equipment .......................... 3,686,902 --
Accounts payable to General Partner and affiliates, net 426,624 1,232,922
Security deposits, deferred credits and other payables 395,518 172,918
Minority interest in consolidated joint venture ....... 118,244 170,880
------------- -------------
90,696,167 35,334,739
------------- -------------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner ................................... (15,357) 618
Limited partners (491,407.04 and 136,786.33
units outstanding, $100 per unit original
issue price) .................................... 41,186,041 11,794,222
------------- -------------
Total partners' equity .......................... 41,170,684 11,794,840
------------- -------------
Total liabilities and partners' equity ................ $ 131,866,851 $ 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 Nine
Months Ended Months Ended
September 30, 1999 September 30, 1999
------------------ ------------------
Revenues
<S> <C> <C>
Finance income ........................................ $2,288,637 $5,535,159
Interest income and other ............................. 27,731 82,772
Income from investment in unconsolidated joint venture 4,527 4,527
---------- ----------
Total revenues ........................................ 2,320,895 5,622,458
---------- ----------
Expenses
Interest .............................................. 1,083,223 2,682,194
Provision for bad debts ............................... -- 385,000
Management fees - General Partner ..................... 378,553 754,727
Administrative expense reimbursements - General Partner 132,979 282,651
Amortization of initial direct costs .................. 220,997 563,499
General and administrative ............................ 132,461 193,137
Minority interest expense in consolidated joint venture 5,060 15,556
---------- ----------
Total expenses ........................................ 1,953,273 4,876,764
---------- ----------
Net income ............................................... $ 367,622 $ 745,694
========== ==========
Net income allocable to:
Limited partners ...................................... $ 363,946 $ 738,237
General Partner ....................................... 3,676 7,457
---------- ----------
$ 367,622 $ 745,694
========== ==========
Weighted average number of limited
partnership units outstanding ......................... 441,905 323,641
========== ==========
Net income per weighted average
limited partnership unit .............................. $ .82 $ 2.28
========== ==========
</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 Nine Months Ended September 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 (354,620.71 units) 35,462,071 - 35,462,071
Sales and
offering expenses (4,545,973) - (4,545,973)
Cash distributions
to partners $4.71 $2.28 (2,262,516) (23,432) (2,285,948)
Net income 738,237 7,457 745,694
----------- -------- -----------
Balance at
September 30, 1999 $41,186,041 $(15,357) $41,170,684
=========== ========= ===========
</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 Nine Months Ended September 30, 1999
(unaudited)
Cash flows from operating activities:
Net income .................................................. $ 745,694
------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Income from investments in unconsolidated joint venture .. (4,527)
Provision for bad debts .................................. 385,000
Finance income portion of receivables paid directly
to lenders by lessees .................................. (4,188,513)
Interest expense on non-recourse financing paid
directly by lessees .................................... 2,540,009
Amortization of initial direct costs ..................... 563,499
Change in operating assets and liabilities:
Collection of principal - non-financed receivables ... 1,351,490
Miscellaneous receivables and other assets ............ (147,434)
Security deposits, deferred credits and other payables 222,600
Accounts payable to General Partner and affiliates, net (806,298)
Minority interest in consolidated joint venture ....... (52,636)
Other, net ............................................ (214,809)
------------
Total adjustments ................................... (351,619)
------------
Net cash provided by operating activities .............. 394,075
------------
Cash flows from investing activities:
Equipment and receivables purchased ......................... (28,068,663)
Investment in unconsolidated joint venture .................. (3,000,000)
Initial direct costs ........................................ (2,799,938)
------------
Net cash used in investing activities ................. (33,868,601)
------------
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Cash Flows
For the Nine Months Ended September 30,
(unaudited)
1999
----
Cash flows from financing activities:
Issuance of limited partnership units, net of offering expenses 30,916,098
Net proceeds received from non-recourse borrowings ............ 4,546,230
Proceeds from note payable - line of credit ................... 5,000,000
Payments on note payable - line of credit ..................... (5,000,000)
Cash distributions to partners ................................ (2,285,948)
------------
Net cash provided by financing activities ............... 33,176,380
------------
Net decrease in cash ............................................. (298,146)
Cash at beginning of period ...................................... 2,283,067
------------
Cash at end of period ............................................$ 1,984,921
============
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 nine months ended September 30, 1999, non-cash activities included
the following:
Fair value of equipment and receivables
purchased for debt and payables .... $(57,647,330)
Non-recourse notes payable assumed in
purchase price ..................... 53,960,428
Accounts payable - equipment .......... 3,686,902
Principal and interest on direct
finance receivables paid directly
to lenders by lessees .............. 11,833,443
Principal and interest on non-recourse
financing paid directly to lenders
by lessees ......................... (11,833,443)
------------
$ --
============
Interest expense of $2,682,194 consisted of interest expense on
non-recourse financing paid directly to lenders by lessees of $2,540,009 and
interest on note payable - line of credit of $142,185.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
September 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 presented 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 nine months ended September 30, 1999 were as
follows:
Underwriting commissions $ 709,241 Charged to Equity
Organization and offering 999,765 Charged to Equity
Acquisition fees 2,799,938 Capitalized
Management fees 754,727 Charged to Operations
Administrative expense
reimbursements 282,651 Charged to Operations
----------
Total $5,546,322
==========
The Partnership and affiliates formed two joint ventures 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 two joint ventures for the purpose
of acquiring and managing various assets.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
AIC Trust
In July 1999 the Partnership, ICON Cash Flow Partners L. P. Seven ("L. P.
Seven") and ICON Cash Flow Partners L.P. Six ("L.P. Six") formed a joint
venture, ("AIC Trust"), for the purpose of managing a portfolio of lease assets.
Profit, losses, excess cash and disposition proceeds are allocated based on the
Partnership's interest in the venture. The Partnership has acquired a 43.7%
interest in the venture during the quarter ending September 30, 1999. The
Partnership has less than a 50% interest in the venture which is accounted for
in the financial statements of the Partnership under the equity method.
Information as to the unaudited financial position and results of
operations of the venture as of and for the period of inception through
September 30, 1999 is summarized below:
September 30, 1999
------------------
Assets $23,935,001
===========
Liabilities $17,215,135
===========
Equity $ 6,719,866
===========
Partnership's share of equity $ 3,004,527
===========
Period of Inception Through
September 30, 1999
------------------
Net income $17,082
=======
Partnership's share of net income $ 4,527
=======
ICON Boardman Funding L.L.C.
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)
Notes to Consolidated Financial Statements - Continued
On March 30, 1999, ICON BF exercised it right to acquire L.P. Six's
investment in a portion of the rent receivable in excess of the senior debt
payments for $3,097,637 and simultaneously 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.
The Partnership's interest in ICON Boardman Funding L.L.C. is majority
owned and therefore consolidated in the financial statements of the Partnership.
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 September 30, 1999,
354,620.71 additional units were admitted representing $35,462,071 of capital
contribution bringing the total admission to 491,407.04 units totaling
$49,140,704 in capital contributions.
Results of Operations for the Three Months Ended September 30, 1999
For the three months ended September 30, 1999 the Partnership leased or
financed additional equipment with an initial cost of $42,218,252.
Revenues for the three months ended September 30, 1999 were $2,320,895.
Expenses for the three months ended September 30, 1999 were $1,953,273.
Net income for the three months ended September 30, 1999 was $ 367,622. The
net income per weighted average limited partnership unit outstanding was $.82.
Results of Operations for the Nine Months Ended September 30, 1999
For the nine months ended September 30, 1999 the Partnership leased or
financed additional equipment with an initial cost of $84,563,621.
Revenues for the nine months ended September 30, 1999 were $5,622,458.
Expenses for the nine months ended September 30, 1999 were $4,876,764.
Net income for the nine months ended September 30, 1999 was $745,694. The
net income per weighted average limited partnership unit outstanding was $2.28.
Liquidity and Capital Resources
The Partnership's primary sources of funds for the nine months ended
September 30, 1999 were capital contributions, net of offering expenses, of
$30,916,098, net cash provided by operations of $394,075, net proceeds from
non-recourse borrowings of $4,546,230 and proceeds from note payable - line of
credit of $5,000,000. These funds along with borrowings assumed on equipment
purchases of $53,960,428 were used to purchase or finance leases costing
$84,563,621, 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.
<PAGE>
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Cash distributions to limited partners for the nine months ended September
30, 1999, which were paid monthly, totaled $2,262,516 of which $738,237 was
investment income and $1,524,279 was a return of capital. The monthly annualized
cash distribution rate to limited partners was 10.75% of which 3.51% was
investment income and 7.24 % was a return of capital. The limited partner
distribution per weighted average unit outstanding for the nine months ended
September 30, 1999 was $6.99, of which $2.28 was investment income and $4.71 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 "Old
Facility") with a lender in December 1998. The maximum amount available under
the Old Facility was $5,000,000. The Old Facility was secured by eligible
receivables and residuals and bore interest at the rate of Prime plus one half
percent. On May 28, 1999 the Old Facility was amended and restated removing the
Partnership as co-borrower. The Partnership entered into a new line of credit
agreement (the "Facility") with that lender on May 28, 1999. 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 September 30, 1999 the Partnership had $5,000,000 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 exercised its right to acquire L.P. Six's
investment in a portion of the rent receivable in excess of the senior debt
payments for $3,097,637 and simultaneously 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 September 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
No reports on Form 8-K were filed by the Partnership during the quarter ended
September 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.
November 12, 1999 /s/ Thomas W. Martin
- ----------------- --------------------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal financial and accounting 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,984,921
<SECURITIES> 0
<RECEIVABLES> 70,595,412
<ALLOWANCES> 385,000
<INVENTORY> 0
<CURRENT-ASSETS> * 0
<PP&E> 38,728,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 131,866,851
<CURRENT-LIABILITIES> ** 0
<BONDS> 86,068,879
0
0
<COMMON> 0
<OTHER-SE> 41,170,684
<TOTAL-LIABILITY-AND-EQUITY> 131,866,851
<SALES> 5,539,686
<TOTAL-REVENUES> 5,622,458
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,809,570
<LOSS-PROVISION> 385,000
<INTEREST-EXPENSE> 2,682,194
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 745,694
<EPS-BASIC> 2.28
<EPS-DILUTED> 2.28
<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>
