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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1999
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the transition period from to
-------------------- --------------------------
Commission File Number 333-54011
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ICON Income Fund Eight A L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-4006824
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
111 Church Street, White Plains, New York 10601-1505
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 993-1700
-----------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class Name of each exchange on which registered
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
- --------------------------------------------------------------------------------
(Title of class)
- --------------------------------------------------------------------------------
(Title of class)
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
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1999
TABLE OF CONTENTS
Item Page
PART I
1. Business 3-4
2. Properties 4
3. Legal Proceedings 4
4. Submission of Matters to a Vote of Security Holders 4
PART II
5. Market for the Registrant's Securities and Related
Security Holder Matters 5
6. Selected Financial and Operating Data 5
7. General Partner's Discussion and Analysis of Financial
Condition and Results of Operations 6-7
8. Consolidated Financial Statements and Supplementary Data 8-21
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 22
PART III
10. Directors and Executive Officers of the Registrant's
General Partner 22-23
11. Executive Compensation 24
12. Security Ownership of Certain Beneficial Owners
and Management 24
13. Certain Relationships and Related Transactions 24
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 25
SIGNATURES 26
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1999
PART I
Item 1. Business
General Development of Business
ICON Income Fund Eight A L.P. (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, 1999, 583,184.58 additional units were
admitted representing $58,318,458 of capital contributions.
Narrative Description of Business
The Partnership is an equipment leasing income 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 low
obsolescence equipment having long lives and high residual values; (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 the eighth
anniversary after the final closing date; (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 twelve to thirty-six months after the end of the
Reinvestment Period.
The equipment leasing industry is highly competitive. In initiating its
leasing transactions, the Partnership will compete 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 Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1999
Lease and Financing Transactions
For the period ended December 31, 1999 the Partnership purchased and leased
or financed $92,843,212 of equipment. At December 31, 1999 the weighted averaged
initial transaction term of the portfolio was 41 months.
In 1999, the Partnership acquired a 43.73% interest in a joint venture
("AIC Trust). The Partnership has less than a 50% interest in the venture, which
is accounted under the equity method. The equipment owned by this joint venture
is not included in the summary of equipment cost by category below.
For the period ended December 31, 1998 the Partnership purchased and leased
or financed $47,233,168 of equipment with a weighted average initial transaction
term of 61 months. The equipment purchased and leased or financed includes
$27,421,810 of equipment leased to Portland General Electric by a joint venture
in which the Partnership has a 98.5% interest. Included in the summary of
equipment cost by category below is 100% of the equipment cost owned by the
joint venture. The Partnership accounts for this investment by consolidating
100% of the assets and liabilities of the joint venture and reflecting as a
liability the related minority interest.
A summary of the portfolio equipment cost by category held at December 31,
1999 and 1998 is as follows:
December 31, 1999 December 31, 1998
------------------------- ------------------------
Category Cost Percent Cost Percent
Aircraft ............. $ 53,878,345 39.5% $ -- --
Computer systems ..... 29,440,123 21.6 17,358,458 40.0
Material handling .... 27,038,665 19.8 23,620,702 54.4
Vessels .............. 12,922,568 9.5 -- --
Telecommunication .... 4,861,629 3.6 -- --
Vehicles ................. 3,521,824 2.6 -- --
Furniture and fixtures 2,452,900 1.8 2,452,900 5.6
Manufacturing ........ 2,159,218 1.6 -- --
------------ ----- ------------ -----
$136,275,272 100.0% $ 43,432,060 100.0%
============ ===== ============ =====
The Partnership has three leases which individually represent greater than
10% of the total portfolio equipment cost at December 31, 1999. The leases are
with Portland General Electric, KLM Royal Dutch Airlines and Oxford Health
Plans, Inc. The cost of the equipment represented 20.1%, 27.9% and 12.3%,
respectively, of the total portfolio equipment cost at December 31, 1999.
Item 2. Properties
The Partnership neither owns nor leases office space or equipment for the
purpose of managing its day-to-day affairs.
Item 3. Legal Proceedings
The Partnership is not a party to any pending legal proceedings.
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 1999.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1999
PART II
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,
-------------- ---------------------------------
1999 1998
---- ----
Limited Partners 2,430 651
General Partner 1 1
Item 6. Selected Consolidated Financial and Operating Data
Year Ended Period Ended
December 31, December 31,
1999 1998 (1)
---- ----
Total revenue .......................................... $9,131,846 $46,998
========== =======
Net income ............................................. $1,262,140 $27,205
========== =======
Net income allocable to limited partners ............... $1,249,519 $26,933
========== =======
Net income allocable to the General Partner ............ $ 12,621 $ 272
========== =======
Weighted average limited partnership units outstanding . 337,936 95,236
========== =======
Net income per weighted average limited partnership unit $ 3.70 $ .28
========== =======
Distributions to limited partners ...................... $3,632,817 $64,728
========== =======
Distributions to the General Partner ................... $ 37,282 $ 654
========== =======
December 31, 1999 December 31, 1998
Total assets $ 137,921,891 $ 47,129,579
=============== ==============
Partners' equity $ 49,476,423 $ 11,794,840
=============== ==============
(1) No data is presented for the periods prior to 1998 since the Partnership
commenced operations on October 14, 1998, the initial closing date. Revenue and
income for 1998 does not reflect a full year's operations.
The above selected financial data should be read in conjunction with the
consolidated financial statements and related notes appearing elsewhere in this
report.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1999
Item 7. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
ICON Income Fund Eight A L.P. (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, 1999, 583,184.58 additional units were
admitted representing $58,318,458 of capital contributions bringing the total
admission to 595,184.58 units totaling $59,518,458 in capital contributions.
Results of Operations for the Period Ended December 31, 1999
For the period ended December 31, 1999, the Partnership purchased and
leased or financed equipment with an initial cost of $92,843,212 to twelve
lessees or equipment users. Major equipment categories were aircraft, computers
and material handling, representing 39.5%, 21.6% and 19.8%, respectively.
Net income for the period ended December 31, 1999 was $1,262,140. The net
income per weighted average limited partnership unit was $3.70. Revenues for the
period December 31, 1999 were $9,131,846.
Results of Operations for the Period Ended December 31, 1998
As the Partnership commenced operations on October 14, 1998, results for
1998 do not reflect a full year's activity.
For the period ended December 31, 1998, the Partnership purchased and
leased or financed equipment with an initial cost of $47,233,168 to three
lessees or equipment users. Simultaneously with the acquisition of the Portland
General Electric lease (see Note 3), rent in excess of the senior debt payments
was acquired by L.P. Six for $3,801,108.
Net income for the period ended December 31, 1998 was $27,205. The net
income per weighted average limited partnership unit was $.28. Revenues for the
period ended December 31, 1998 were $46,998.
Liquidity and Capital Resources
The Partnership's primary sources of funds in 1999 were capital
contributions, net of offering expenses, of $40,089,542 and net cash generated
from operations of $1,825,719. These funds, along with borrowings assumed on
equipment purchases were used to purchase or finance leases costing $92,843,212
and to fund cash distributions. The Partnership intends to continue to purchase
equipment and fund cash distributions utilizing funds from capital
contributions, additional borrowings and cash from operations.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1999
Cash distributions to the limited partners, which were paid monthly,
aggregated $3,632,817 in 1999. The monthly distribution rate in 1999 was 10.75%
(on an annualized basis) of which 3.70% was investment income and 7.05% was a
return of capital, calculated as a percentage of each limited partner's initial
capital contribution. Cash distributions to limited partners in 1998 aggregated
$64,728. The monthly distribution rate was 10.75% (on an annualized basis).
Distributions were calculated based on the number of days each investment unit
was in the Partnership.
As of December 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.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1999
Item 8. Consolidated Financial Statements and Supplementary Data
Index to Financial Statements
Page Number
Independent Auditors' Report 10
Consolidated Balance Sheet as of December 31, 1999 and 1998 11
Consolidated Statement of Operations for the Year Ended December 31, 1999
and for the Period July 9, 1997 (date of inception) to December 31, 1998 12
Consolidated Statement of Changes in Partners' Equity for the Year Ended
December 31, 1999 and for the Period July 9, 1997
(date of inception) to December 31, 1998 13
Consolidated Statement of Cash Flows for the Year Ended December 31, 1999
and for the Period July 9, 1997 (date of inception) to December 31, 1998 14-16
Notes to Consolidated Financial Statements 17-21
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Financial Statements
December 31, 1999
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Partners
ICON Income Fund Eight A L.P.:
We have audited the accompanying consolidated balance sheet of ICON Income Fund
Eight A L.P. (a Delaware limited partnership) as of December 31, 1999 and 1998,
and the related consolidated statement of operations, changes in partners'
equity, and cash flows for the year ended December 31, 1999 and for the period
July 9, 1997 (date of inception) to 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 audit 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 audit provides 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 Income Fund
Eight A L.P. as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the year ended December 31, 1999 and for the period July
9, 1997 (date of inception) to December 31, 1998 in conformity with generally
accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
March 28, 2000
New York, New York
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Balance Sheet
December 31,
1999 1998
---- ----
Assets
Cash ................................................ $ 5,222,028 $ 2,283,067
------------- -------------
Investment in finance leases
Minimum rents receivable ......................... 72,064,245 42,719,705
Estimated unguaranteed residual values ........... 42,536,175 14,931,068
Initial direct costs ............................. 2,327,918 1,413,835
Unearned income .................................. (27,622,947) (14,262,754)
-------------
Allowance for doubtful accounts .................. (385,000) --
------------- -------------
88,920,391 44,801,854
Investment in operating leases
Equipment, at cost ............................... 38,671,600 --
Accumulated depreciation ......................... (594,308) --
------------- -------------
38,077,292 --
------------- -------------
Investment in unguaranteed residual value ........... 1,150,000 --
------------- -------------
Investment in joint venture ......................... 2,989,128 --
------------- -------------
Other assets ........................................ 1,563,052 44,658
------------- -------------
Total assets ........................................ $ 137,921,891 $ 47,129,579
============= =============
Liabilities and Partners' Equity
Notes payable - non-recourse ........................ 82,790,864 $ 28,758,019
Note payable - line of credit ....................... 5,000,000 5,000,000
Security deposits and other ......................... 521,695 172,918
Accounts payable - General Partner and affiliate .... -- 1,232,922
Minority interests in joint venture ................. 132,909 170,880
------------- -------------
88,445,468 35,334,739
Commitments and Contingencies
Partners' equity (deficiency)
General Partner .................................. (24,043) 618
Limited partners (595,184.58 units
outstanding, $100 per unit original issue price) 49,500,466 11,794,222
------------- -------------
Total partners' equity ......................... 49,476,423 11,794,840
------------- -------------
Total liabilities and partners' equity .............. $ 137,921,891 $ 47,129,579
============= =============
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Operations
For the Year Ended December 31, 1999 and for
the Period July 9, 1997 (date of inception) to
December 31, 1998
1999 1998
---- ----
Revenues
Finance income ...................... $ 7,620,751 $ 23,869
Rental income ....................... 1,379,500 --
Interest income and other ........... 142,466 23,129
Loss from investment in joint venture (10,871) --
----------- -----------
Total revenues ...................... 9,131,846 46,998
----------- -----------
Expenses
Interest ............................ 4,397,728 4,590
Amortization of initial direct costs 885,106 3,179
Depreciation ........................ 594,308 --
Management fees - General Partner ... 931,151 395
Administrative expense
reimbursements - General Partner .. 345,358 956
Provision for bad debts ............. 385,000 --
General and administrative .......... 313,181 10,673
Minority interest expense ........... 17,874 --
----------- -----------
Total expenses ...................... 7,869,706 19,793
----------- -----------
Net income ............................. $ 1,262,140 $ 27,205
=========== ===========
Net income allocable to:
Limited partners .................... $ 1,249,519 $ 26,933
General Partner ..................... 12,621 272
----------- -----------
$ 1,262,140 $ 27,205
=========== ===========
Weighted average number of limited
partnership units outstanding ....... 337,936 95,236
=========== ===========
Net income per weighted average
limited partnership unit ............ $ 3.70 $ .28
=========== ===========
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Changes in Partners' Equity
For the Year Ended December 31, 1999 and for
the Period from July 9, 1997 (date of inception) to
December 31, 1998
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
(Per weighted average unit)
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 (458,408 units) 45,840,825 - 45,840,825
Sales and offering expenses (5,751,283) - (5,751,283)
Cash distributions to partners $7.05 $ 3.70 (3,632,817) (37,282) (3,670,099)
Net income 1,249,519 12,621 1,262,140
----------- -------- -----------
Balance at
December 31, 1999 $49,500,466 $(24,043) $49,476,423
=========== ======== ===========
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Cash Flows
For the Year Ended December 31, 1999 and
for the Period July 9, 1997 (date of inception) to
December 31, 1998
1999 1998
---- ----
Cash flows from operating activities:
Net income ................................................ $ 1,262,140 $ 27,205
------------ ------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Finance income portion of receivables paid directly
to lenders by lessees ................................. (5,939,302) (6,266)
Interest expense on non-recourse financing paid
directly by lessees ................................... 4,142,210 4,590
Amortization of initial direct costs .................... 885,106 3,179
Minority interest expense ............................... 17,874 --
Loss from investment in joint venture ................... 10,871 --
Depreciation ............................................ 594,308 --
Provision for bad debts ................................. 385,000 --
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables .... 2,826,053 47,915
Other assets .......................................... (1,518,394) (44,658)
Minority interests in joint venture ................... (55,845) 170,880
Accounts payable to General Partner and affiliates, net (1,232,922) 1,232,922
Security deposits and other ........................... 348,777 172,918
Other ................................................. 99,843 1,392
------------ ------------
Total adjustments ................................... 563,579 1,582,872
------------ ------------
Net cash provided by operating activities ............. 1,825,719 1,610,077
------------ ------------
Cash flows from investing activities:
Equipment purchased ....................................... (40,110,867) (18,479,739)
Initial direct costs ...................................... (1,799,189) (1,417,014)
Investment in joint venture ............................... (3,000,000) --
Investment in unguaranteed residual ....................... (1,150,000) --
------------ ------------
Net cash used in investing activities ................. (46,060,056) (19,896,753)
------------ ------------
(continued on next page)
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Cash Flows (Continued)
For the Year Ended December 31, 1999 and
for the Period July 9, 1997 (date of inception) to
December 31, 1998
1999 1998
---- ----
Cash flows from financing activities:
Initial partners' capital contribution ...... -- 2,000
Issuance of limited partnership units,
net of offering expenses .................. 40,089,542 11,832,017
Proceeds from note payable - line of credit . -- 5,000,000
Proceeds from sale of receivables ........... -- 3,801,108
Cash distributions to partners .............. (3,670,099) (65,382)
Net proceeds from non-recourse borrowing .... 10,753,855 --
------------ ------------
Net cash provided by financing activities 47,173,298 20,569,743
------------ ------------
Net increase in cash ........................... 2,938,961 2,283,067
Cash at beginning of the period ................ 2,283,067 --
------------ ------------
Cash at end of year ............................ $ 5,222,028 $ 2,283,067
============ ============
See accompanying notes to consolidated financial statements.
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 periods ended December 31, 1999 and 1998, non-cash activities
included the following:
Fair value of equipment and receivables purchased for debt $(52,732,345) $(28,753,429)
Non-recourse notes payable assumed in purchase price ..... 52,732,345 28,753,429
Principal and interest on direct finance receivables
paid directly to lenders by lessees .................... 9,453,355 --
Principal and interest on non-recourse financing paid
directly to lenders by lessees ......................... 9,453,355 --
------------ ------------
$ -- $ --
============ ============
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1999
1. Organization
ICON Income Fund Eight A L.P. (the "Partnership") was formed on July 9,
1997 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'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. As of December 31, 1999,
583,184.58 additional units had been admitted into the Partnership with
aggregate gross proceeds of $58,318,458 bringing the total admission to
595,184.58 units totaling $59,518,458 in capital contributions.
The General Partner of the Partnership is ICON Capital Corp. (the "General
Partner"), a Connecticut corporation. The General Partner will manage and
control 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, has and will
receive an underwriting commission on the gross proceeds from sales of all
units. The total underwriting compensation to be paid by the Partnership,
including underwriting commissions, sales commissions, incentive fees, public
offering expense reimbursements and due diligence activities is limited to 13.5%
of gross proceeds up to $25,000,000, 13.0% of gross proceeds from $25,000,000 to
$50,000,000 and 12.5% of gross offering proceeds from $50,000,000 to
$75,000,000. Such offering expenses aggregated $7,597,899 (including $2,833,241
and $752,325 paid to the General Partner or its affiliates in 1999 and 1998,
respectively), (see Note 6) and were charged directly to limited partners'
equity.
Profits, losses, cash distributions and disposition proceeds will be
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 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 the General
Partner's management to make estimates and assumptions that affect the reported
amounts of assets and liabilities 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.
Consolidation - The consolidated financial statements include the accounts
of the Partnership and its majority owned subsidiary, ICON Boardman Funding
L.L.C. ("ICON BF"). 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.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Leases - The Partnership accounts for owned equipment leased to third
parties as finance 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. 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 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 eight 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.
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, except for lease related instruments. Separate disclosure of fair
value information as of December 31, 1999 and 1998 with respect to the Company's
assets and certain 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 instruments, other than lease related investments,
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 rate.
Impairment of Estimated Residual Values -- The Partnership's policy with
respect to impairment of estimated residual values is to review, on a periodic
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.
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.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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 as amended, is effective for all quarters of fiscal years beginning
after June 15, 2000. 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. Investment in Joint Venture
The Partnership and affiliates formed two joint ventures discussed below
for the purpose of acquiring and managing various assets.
AIC Trust
During 1999, L.P. Seven, an affiliate of the Partnership, acquired a
portfolio of equipment leases for $6,854,830. Subsequently, L.P. Seven sold
interests in this portfolio at various dates in 1999 to L.P. Six, an affiliate
of the Partnership, for $1,750,000 and to the Partnership for $3,000,000 at book
value, which approximated fair market value at the dates of sale. L.P. Seven
recognized no gain or loss on the sale of these interests to either Eight A or
to the Partnership.
As a result of the sales of these interests, as of December 31, 1999 the
Partnership and L.P. Six owned interests aggregating 43.73% and 25.51% in the
lease portfolio with L.P. Seven owning a 30.76% interest at that date. The lease
portfolio is owned and operated as a joint venture ("AIC Trust"). Profits,
losses, excess cash and disposition proceeds are allocated based upon the
Partnerships' percentage ownership interests in the venture during the
respective periods the Partnerships held such interests. The Partnership
accounts for its investment under the equity method of accounting.
Information as to the unaudited financial position and results of
operations of the venture as of and for the period of investment through
December 31, 1999 is summarized below:
December 31, 1999
Assets $ 22,058,522
==============
Liabilities $ 15,221,822
==============
Equity $ 6,836,700
==============
Partnership's share of equity $ 2,989,129
==============
Dates of Investments Through
December 31, 1999
Partnership's share of (loss) $ (10,871)
==============
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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, the rent in excess of the senior debt payments was acquired by
L.P. Six for $3,801,108. No gain or loss was recognized on this transaction.
4. Receivables Due in Installments
Non-cancelable minimum annual amounts due on finance leases are as follows:
Year
2000 $ 25,438,678
2001 19,313,218
2002 11,458,215
2003 8,503,581
2004 4,179,726
Thereafter 3,170,827
--------------
$ 72,064,245
5. Notes Payable
Notes payable consists of notes payable non-recourse, which are being paid
directly to the lenders by the lessees, and note payable-line of credit. The
notes bear interest at rates ranging from 7.49% to 10.0%.
The Partnership entered into a 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 December 31, 1999
and 1998, the Partnership had $5,000,000 outstanding under the Facility.
The above notes mature as follows:
Notes Payable Note Payable
Year Non-Recourse Recourse Total
2000 $ 16,089,761 $ 5,000,000 $ 21,089,761
2001 13,430,694 - 13,430,694
2002 9,440,008 - 9,440,008
2003 31,889,562 - 31,889,562
2004 8,744,617 - 8,744,617
Thereafter 3,196,222 - 3,196,222
---------------- -------------- --------------
$ 82,790,864 $ 5,000,000 $ 87,790,864
================ ============== ==============
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
6. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the period ended December 31, 1999 and 1998 were
as follows:
1999 1998
---- ----
Organization and offering expenses $1,642,852 $ 478,752 Charged to equity
Underwriting commissions 1,190,389 273,573 Charged to equity
Acquisition fees 2,327,918 1,417,014 Capitalized
Administrative expense
reimbursements 345,358 956 Charged to operations
Management fees 931,151 395 Charged to operations
---------- ----------
$6,437,668 $2,170,690
========== ==========
In December 1998 the Partnership and three affiliates, formed ICON Boardman
Funding LLC ("ICON BF"), for the purpose of acquiring a lease with Portland
General Electric. During 1999, the Partnership invested with two affiliates in a
joint venture (AIC Trust), which owns a portfolio of equipment leases. (See Note
3 for additional information relating to these joint ventures.)
7. Tax Information (Unaudited)
The following table reconciles net income for financial reporting purposes
to income for federal income tax purposes for the period ended December 31, 1999
and 1998:
1999 1998
---- ----
Net income per financial statements $ 1,262,140 $ 27,205
Differences due to:
Direct finance leases ........... 7,620,751 15,665
Depreciation .................... (12,974,252) (1,995,119)
Provision for losses ............ (385,000) --
Loss on sale of equipment ....... (279,835) --
Interest expense ................ (1,383,573) --
Other ........................... 575,068 --
------------ ------------
Partnership (loss) for
federal income tax purposes ...... $ (5,564,701) $ (1,952,249)
============ ============
As of December 31, 1999, the partners' capital accounts included in the
financial statements totaled $49,476,423 compared to the partners' capital
accounts for federal income tax purposes of $47,825,797 (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, provision for losses and interest expense.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1999
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
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 111 Church Street, White
Plains, New York 10601-1505, and its telephone number is (914) 993-1700. 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
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
Item 10. Continued
Beaufort J. B. Clarke, age 54, has been Chairman, Chief Executive Officer
and Director of the General Partner since 1996. 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 39, is President and Director of the General Partner.
Mr. Weiss has been exclusively engaged in lease acquisitions since 1988 from his
affiliations with the General Partner since 1996, Griffin Equity Partners (as
Executive Vice President from 1993-1996); Gemini Financial Holdings (as Senior
Vice President-Portfolio Acquisitions from 1991-1993) and Pegasus Capital
Corporation (as Vice President-Portfolio Acquisitions from 1988-1991). He was
previously an investment banker and a commercial banker.
Thomas W. Martin, age 46, has been Executive Vice President of the General
Partner since 1996. Prior to his present position, Mr. Martin was the Executive
Vice President and Chief Financial Officer of Griffin Equity Partners, Inc.
(1993-1996), Gemini Financial Holdings (as Senior Vice President from 1992-1993)
and Chancellor Corporation (as Vice President-Syndications from 1985-1992). Mr.
Martin has 17 years of senior management experience in the leasing business.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1999
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 period ended December, 31, 1999 and 1998.
Entity Capacity Type of Compensation 1999 1998
------ -------- -------------------- ---- ----
ICON Capital Corp. General Partner Organization and offering
expenses $1,642,852 $ 478,752
ICON Securities Corp. Dealer-Manager Underwriting commissions 1,190,389 273,573
ICON Capital Corp. Manager Acquisition fees 2,327,918 1,417,014
ICON Capital Corp. General Partner Administrative expense
reimbursements 345,358 956
ICON Capital Corp. General Partner Management fees 931,151 395
---------- ----------
$6,437,668 $2,170,690
========== ==========
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 24, 2000, 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 Amount Beneficially Percent
of Class 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. Certain Relationships and Related Transactions
None other than those disclosed in Item 11 herein.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1999
PART IV
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) Amended and Restated Agreement of Limited Partnership (Incorporated by
reference to Exhibit A to Amendment No. 2 to Form S-1 Registration
Statement No. 333-54011 filed with the Securities and Exchange
Commission on September 18, 1998).
(ii) Certificate of Limited Partnership of the Partnership (Incorporated
herein by reference to Exhibit 4.3 to Form S-1 Registration Statement
No. 333-54011 filed with the Securities and Exchange Commission on May
29, 1998.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Partnership during the quarter
ended December 31, 1999.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1999
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 Income Fund Eight A L.P.
File No. 333-54011 (Registrant)
By its General Partner, ICON Capital Corp.
Date: March 29, 2000 /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 29, 2000 /s/ Beaufort J.B. Clarke
------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Date: March 29, 2000 /s/ Paul B. Weiss
-----------------
Paul B. Weiss
President and Director
Date: March 29, 2000 /s/ Thomas W. Martin
--------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting 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.