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, 2001
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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
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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
- -------------------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 Fifth Avenue, 10th Floor, New York, New York 10011
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 418-4700
-----------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class Name of each exchange on which registered
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- ------------------------- ---------------------------------------------
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interests
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(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, 2001
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 6
7. General Partner's Discussion and Analysis of Financial
Condition and Results of Operations 7-12
8. Consolidated Financial Statements and Supplementary Data 13-32
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 33
PART III
10. Directors and Executive Officers of the Registrant's
General Partner 33-34
11. Executive Compensation 34
12. Security Ownership of Certain Beneficial Owners
and Management 34
13. Certain Relationships and Related Transactions 35
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 35
SIGNATURES 45
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
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 was
$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 May 17, 2000, the date of the Partnership's final closing,
737,965.04 additional units were admitted representing $73,796,504 of capital
contributions bringing the total admission to 749,965.04 units totaling
$74,996,504 in capital contributions. Below is a table summarizing the activity
since the final closing:
Total units issued from offering 749,965.04
Units redeemed - 2000 (3,221.15)
-------------
Total units outstanding at December 31, 2000 746,743.89
Units redeemed - 2001 (880.00)
-------------
Total units outstanding at December 31, 2001 745,863.89
=============
Segment Information
The Partnership has only one operating segment: the business of acquiring
equipment subject to leases with companies that the Partnership believes to be
creditworthy.
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 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 of 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 after
the end of the Reinvestment Period.
The equipment leasing industry is highly competitive. When seeking its
leasing transactions for acquisition, the Partnership competes with leasing
companies, manufacturers that lease their products directly, equipment brokers
and dealers and financial institutions, including commercial banks and insurance
companies. Many competitors are larger than the Partnership and have greater
financial resources.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
The Partnership had three and two lessees who accounted for 10% or more of
total revenue during the years ended December 31, 2001 and 2000, respectively.
In the year ended December 31, 2001, equipment leased to The Boeing Company,
Portland General Electric, and Sky Airlines generated 20%, 19%, 15%
respectively, of total revenue. In the year ended December 31, 2000, equipment
leased to Portland General Electric and KLM Royal Dutch Airlines generated 19%
and 29% respectively, of total revenue.
The Partnership has no direct employees. The General Partner has full and
exclusive discretion in management and control of the Partnership.
Lease and Financing Transactions
During the year ended December 31, 2001 the Partnership did not purchase
nor finance any additional equipment other than an upgrade to one aircraft
subject to lease.
In 2000, the Partnership acquired a 2% interest in a joint venture ("ICON
Aircraft 24846, LLC") with two other affiliates acquiring the remaining joint
venture interests. The Partnership also acquired a 1% interest in a joint
venture ("ICON Cheyenne, LLC") with three other affiliates acquiring the
remaining joint venture interests.
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 year
ended 2001.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
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,
-------------- ----------------------------------------
2001 2000
---- ----
Limited Partners 2,892 2,900
General Partner 1 1
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
Item 6. Selected Consolidated Financial and Operating Data
Years Ended December 31,
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2001 2000 1999 1998 (1)
---- ---- ---- ----
Total revenue $ 12,975,571 $ 14,229,916 $ 9,131,846 $ 46,998
================= ============== ================ ===============
Net (loss) income $ (29,316) $ 102,001 $ 1,262,140 $ 27,205
================= ============== ================ ===============
Net (loss) income allocable to limited partners $ (29,023) $ 100,981 $ 1,249,519 $ 26,933
================= ============== ================ ===============
Net (loss) income allocable to the
General Partner $ (293) $ 1,020 $ 12,621 $ 272
================= ============== ================ ===============
Weighted average limited partnership
units outstanding 746,378 710,779 337,936 $ 95,236
================= ============== ================ ===============
Net (loss) income per weighted average
limited partnership unit $ (.04) $ .14 $ 3.70 $ .28
================ ============== =============== ===============
Distributions to limited partners $ 8,022,337 $ 7,640,879 $ 3,632,817 $ 64,728
================= ============== ================ ===============
Distributions to the General Partner $ 81,039 $ 77,127 $ 37,282 $ 654
================= ============== ================ ===============
December 31,
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2001 2000 1999 1998
---- ---- ---- ----
Total assets $ 107,774,081 $ 130,291,422 $ 137,921,891 $ 47,129,579
================= ============== ================ ===============
Partners' equity $ 47,108,809 $ 55,293,693 $ 49,476,423 $ 11,794,840
================= ============== ================ ===============
(1) No data is presented for periods prior to 1998 since the Partnership
commenced operations on October 14, 1998, the initial closing date. Revenue
and income in 1998 does not reflect a full year's operations.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
Item 7. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
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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 was
$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 May 17, 2000, the date of the Partnership's final closing,
737,965.04 additional units were admitted representing $73,796,504 of capital
contributions bringing the total admission to 749,965.04 units totaling
$74,996,504 in capital contributions. Below is a table summarizing the activity
since the final closing.
Total units issued from offering 749,965.04
Units redeemed - 2000 (3,221.15)
-----------------
Total units outstanding at December 31, 2000 746,743.89
Units redeemed - 2001 (880.00)
-----------------
Total units outstanding at December 31, 2001 745,863.89
=================
Significant Accounting Policies and Management Estimates
Basis of Accounting and Presentation - The Partnership's records are
maintained on the accrual basis. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the dates of the financial statements and revenues and expenses
during the reporting periods. Significant estimates include the allowance for
doubtful accounts and unguaranteed residual values. Management believes that the
estimates and assumptions utilized in preparing its financial statements are
reasonable and prudent. Actual results could differ from those estimates. In
addition, management is required to disclose contingent assets and contingent
liabilities.
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 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
using the straight-line method over the lease terms.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
Investments in Unguaranteed Residual Values - The Partnership carries its
investments in the future estimated unguaranteed residuals of assets at cost,
which is equal to or less than market value, subject to the Partnership's policy
relating to impairments of residuals discussed below. Gains or losses will be
recognized upon the sale or disposition of the investments.
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,
third party appraisals, reviews of future cash flows and anticipated future cash
flows and detailed market analyses are used as the basis for measuring whether
an impairment loss should be recognized.
Allowance for Doubtful Accounts - The Partnership records a provision for
bad debts to provide for estimated credit losses in the portfolio. The allowance
for doubtful accounts is based on the ongoing analysis of delinquency trends,
loss experience and an assessment of overall credit risk. The Partnership's
write-off policy is based on an analysis of the aging of the Partnership's
portfolio, a review of the non-performing receivables and leases, and prior
collection experience. An account is fully reserved for or written off when the
analysis indicates that the probability of collection of the account is remote.
Results of Operations for the Years Ended December 31, 2001 and 2000
Finance lease income decreased by $1,826,177, or approximately 20%, in 2001
as compared to 2000, due to the continued collection of the related finance
lease receivables, which reduced the investments on which such income is based,
the reclassification of two restructured aircraft leases from financing leases
to operating leases in the fourth quarter of 2001, as well as the expiration in
2001 of two leases in accordance with their scheduled terms. The related
equipment was sold in 2001 for gains totaling $288,060.
Rental income (from operating leases) increased by $626,780, or
approximately 13%, in 2001 as compared to 2000, attributable to earning a full
year of rent in 2001 on equipment purchased during 2000, as well as the rent
generated in the fourth quarter of 2001 by the restructured leases of the two
aircraft discussed above.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
During 2001 the Partnership recognized a gain on sale of an option to
acquire an unguaranteed residual of $1,219,910 and gains on the sale of
equipment of $288,060. No similar amounts were recognized in 2000.
During 2001 the Partnership recognized a net loss from investments in joint
ventures of $1,146,543 as compared to net income from investments in joint
ventures of $231,909 in 2000. The principal reason for the Partnership's loss in
2001 was its $1,174,769 share of the loss of $2,687,696 recognized by AIC Trust
(a joint venture in which the Partnership has a 43.73% interest). AIC Trust's
loss was primarily the result of the sale of all of its leased equipment
portfolio at the end of December 2001 for a price which was less than its
carrying value. This was partially offset by income generated by two other joint
ventures in 2001. The AIC Trust generated income of $529,585 in 2000, of which
$231,587 was the Partnership's share.
Interest income and other was $65,490 in 2001 as compared to $249,956 in
2000. The decrease was attributable to a reduction in cash available for
investment in 2001 (due to the continued acquisition of leased equipment during
2000) as well as a reduction in interest rates.
Interest expense decreased by $1,081,456, or approximately 15% in 2001, as
compared to 2000, due principally to the repayment of non-recourse indebtedness
by the application of lease payments in accordance with the repayment schedules,
partially offset by the interest associated with additional non-recourse
borrowings secured by an aircraft leased to The Boeing Company. In addition the
reduction is attributable to the reduction in the variable rate recourse debt
outstanding, as well as the reduction in interest rates on such recourse debt in
2001 as compared to 2000.
Depreciation increased in 2001 by $82,749, or approximately 3%, as compared
to 2000 due to the full year effect in 2001 of investments in operating leases
acquired in 2000, as well as the reclassification of two aircraft previously
accounted for as financing leases to investments in operating leases in the
fourth quarter of 2001. This was partially offset by the fact that no
depreciation was recognized in 2001 on an aircraft for the period that it was
off-lease. Depreciation resumed when the aircraft was released.
Management fees - General Partner increased by $65,750, or approximately 4%
in 2001, as compared to 2000, which was consistent with the change in lease
payments on which such fees are based.
Administrative expense reimbursements - General Partner increased by
$13,642 or approximately 2% in 2001 as compared to 2000 which was consistent
with the Partnership's level of operations.
Amortization of initial direct costs decreased by $117,345, or
approximately 14%, in 2001 as compared to 2000, due principally to the continued
reduction of the amortizable balance of initial direct costs and the method
(interest method) used to calculate amortization of initial direct costs on
finance leases.
General and administrative expenses increased in 2001 by $111,005, or 22%,
as compared to 2000, due principally to an increase in legal fees, appraisal and
inspection costs.
Based upon its review of receivables and the credit quality of the
Partnership's lessees, there was no provision for doubtful accounts recorded in
2001. The Partnership recorded a provision for doubtful accounts of $200,000 in
2000.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
The net loss for the Partnership in 2001 was $29,316 ($(.04) per weighted
average limited Partnership unit) as compared to net income of $102,001 ($.14
per weighted average limited Partnership unit) in 2000. The reduction in finance
income, the loss from investments in joint ventures and the increase in
management fees, administrative expense reimbursements and general and
administrative expenses, which reduced net income in 2001 as compared to 2000,
was partially offset by the increase in rental income, the gains on sale of
investments in unguaranteed residuals and equipment, the reduction in interest
expense, the reduction of amortization of initial direct costs and the reduction
in provision for doubtful accounts.
Results of Operations for the Period Ended December 31, 2000 and 1999
For the years ended December 31, 2000 and 1999, the Partnership purchased
equipment subject to leases with an initial cost of $5,135,357 and $92,843,212,
respectively, involving two and twelve lessees, respectively. In addition, in
2000 the Partnership invested $1,997,000 to acquire an interest in the residual
of an offshore drilling rig on lease to Rowan Companies and $2,526,696 for
residual interests related to a portfolio of technology and other equipment
leases with various lessees in the United Kingdom.
Revenues for the year ended December 31, 2000 were $14,229,916,
representing an increase of $5,098,070 from 1999. The increase in revenues
resulted primarily from an increase in rental income of $3,380,439, finance
income of $1,367,361, income from investments in joint ventures of $242,780 and
interest income and other of $107,490. These increases were due primarily to the
Partnership's higher average outstanding lease investment portfolio in 2000,
which resulted from equipment acquisition activity in 1999 and 2000.
Expenses for the year ended December 31, 2000 were $14,127,915,
representing an increase of $6,258,209 from 1999. The increase in expenses
resulted primarily from increases in interest expense of $2,963,399,
depreciation expense of $2,051,995, management fees of $905,802, administrative
expense reimbursements General Partner of $405,715 and general and
administrative of $183,983. These increases were partially offset by decreases
in the provision for doubtful accounts of $185,000 and amortization of initial
direct costs of $65,758. The increase in interest expense was due to an increase
in the average debt outstanding from 1999 to 2000. The increase in all other
noted expense categories was due to the overall increases in the Partnership's
lease investment portfolios resulting from equipment acquisition activity during
1999 and 2000 and higher levels of operating activity during the 2000 period.
The decrease in the provision for bad debts was the result of determinations
made of the level of reserves required during the 1999 and 2000 periods.
Net income for the years ended December 31, 2000 and 1999 was $102,001 and
$1,262,140, respectively. The net income per weighted average limited
partnership unit was $.14 and $3.70 for 2000 and 1999, respectively.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
Liquidity and Capital Resources
The Partnership's primary sources of funds in the year ended December 31,
2001 were net cash provided by operating activities of $3,143,983, proceeds from
the sale of equipment of $3,664,324, proceeds from the sale of investment of
unguaranteed residual of $2,608,659 distributions from a joint venture of
$362,587 and a non-recourse borrowing of $3,004,674 secured by a 737-400 lease
to The Boeing Company. The Partnership met its distribution objectives of $10.75
per unit in 2001 ($8,103,376 including the General Partner's share). During
2001, the Partnership repaid non-recourse notes payable of $13,327,066 by the
application of the related rental payments and used cash generated during the
year to repay $1,774,113 of recourse notes under the line of credit and
$1,510,523 of non-recourse notes payable.
The Partnership entered into a $5,000,000 recourse line of credit agreement
with an unaffiliated third party bank in 1998. This line of credit is
collateralized by certain receivables and residuals and bears interest at the
bank's prime rate (4.75% at December 31, 2001) plus one half percent. At
December 31, 2001 and 2000, the Partnership had $1,819,912 and $3,594,026
outstanding respectively, under the line of credit.
Cash distributions to the limited partners, which were paid on a monthly
basis, aggregated $8,022,337 in 2001 and $7,640,879 in 2000 and represented a
annualized cash distribution rate of 10.75% ($10.75 per limited partnership
unit). The entire cash distribution in 2001 represented as a return of capital
as compared to $.14 of investment income and $10.61 return of capital in the
2000 period (based upon original capital contribution). Distributions were
calculated based on the number of days each investment unit was in the
Partnership.
During the year ended December 31, 2001, the Partnership's only acquisition
activity consisted of acquiring an upgrade for one aircraft on lease. During the
year, the Partnership sold an option related to an investment in the
unguaranteed residual of an aircraft leased to a US based commercial airline.
The purchase option, which was originally acquired for a price of $1,150,000 in
1999, was sold for $2,369,910, resulting in a gain of $1,219,910. During the
year ended December 31, 2001, the Partnership also recognized gains on sales of
$288,060 upon the expiration of certain finance leases.
As of December 31, 2001 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 operations and additional 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.
New Accounting Pronouncement
Effective January 1, 2002, the Partnership adopted SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144).
This statement requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to the future net
cash flows expected to be generated by the
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
asset. If the carrying amount of the asset exceeds its estimated future
cash flows, an impairment charge is recognized by the amount by which the
carrying amount of the asset exceeds the fair value of the asset. SFAS No. 144
requires companies to separately report discontinued operations and extends that
reporting to a component of an entity that either has been disposed of (by sale,
abandonment or in a distribution to the owners) or classified as held for sale.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value less the costs to sell. The adoption of SFAS No. 144 did not have any
effect on the Partnership's financial position or results of operations as the
provisions of SFAS No. 144 are similar to the partnership's current policy for
impairment review.
Item 7a. Qualitative and Quantitative Disclosures About Market Risk
The Partnership is exposed to certain market risks, including changes in
interest rates and the demand for equipment (and the related residuals) owned by
the Partnership and its investees. Except as described below, the Partnership
believes its exposure to other market risks are insignificant to both its
financial position and results of operations.
The Partnership manages its interest rate risk by obtaining fixed rate
debt. The fixed rate debt service obligation streams are generally matched by
fixed rate lease receivable streams generated by the Partnership's lease
investments.
Additionally the Partnership borrows funds under a floating rate line of
credit and is therefore exposed to interest rate risk until the floating rate
line of credit is repaid. The Partnership's borrowings under the floating rate
line of credit as of December 31, 2001 was $1,819,912 as compared to $3,594,026
at December 31, 2000. The Partnership believes the risk associated with rising
interest rates under this line is not significant.
The Partnership manages its exposure to equipment and residual risk by
monitoring the market and maximizing re-marketing proceeds received through
re-lease or sale of equipment.
The Partnership has an investment in excess of $24 million in equipment on
lease to Portland General Electric (PGE), a utility company, which is a wholly
owned subsidiary of Enron Corporation ("Enron"). In the fourth quarter of 2001,
Enron Corporation filed for Chapter 11 bankruptcy protection. PGE has not filed
for bankruptcy. PGE is current on its lease payments at the date of this report.
Management is continually monitoring the Enron proceedings to the extent that it
could, in the future, impact the Partnership's investment.
In 2000, the Partnership acquired aircraft rotables for a total cost of
$1,961,000, subject to a lease with Sabena Technics SA scheduled to expire in
January 2003. In November 2001 Sabena SA, the parent of Sabena Technics SA,
filed for bankruptcy in Belgium. Sabena Technics SA did not file for bankruptcy.
Through March 2002, Sabena Technics SA has continued to operate and make all
rental payment.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
Item 8. Consolidated Financial Statements and Supplementary Data
Index to Financial Statements
Page Number
Independent Auditors' Report 15
Consolidated Balance Sheets as of December 31, 2001 and 2000 16
Consolidated Statements of Operations for the
Years Ended December 31, 2001, 2000 and 1999 17
Consolidated Statements of Changes in Partners' Equity for the
Years Ended December 31, 2001, 2000 and 1999 18
Consolidated Statements of Cash Flows for the
Years Ended December 31, 2001, 2000 and 1999 19-21
Notes to Consolidated Financial Statements 22-32
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Financial Statements
December 31, 2001
(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, 2001 and 2000,
and the related consolidated statements of operations, changes in partners'
equity and cash flows for each of the years in the three year period ended
December 31, 2001. These consolidated financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ICON Income Fund
Eight A L.P. as of December 31, 2001 and 2000, and the results of its operations
and its cash flows for each of the years in the three year period ended December
31, 2001, in conformity with accounting principles generally accepted in the
United States of America.
/s/ KPMG LLP
---------------------------------------
KPMG LLP
April 15, 2002
New York, New York
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Balance Sheets
December 31,
2001 2000
---- ----
Assets
Cash and cash equivalents $ 3,213,445 $ 3,205,892
-------------- ---------------
Investment in finance leases
Minimum rents receivable 27,530,587 54,638,052
Estimated unguaranteed residual values 32,985,468 43,012,329
Initial direct costs 780,194 1,698,552
Unearned income (10,522,087) (19,821,123)
Allowance for doubtful accounts (585,000) (585,000)
-------------- ---------------
50,189,162 78,942,810
Investment in operating leases
Equipment, at cost 52,734,532 40,688,100
Accumulated depreciation (5,969,663) (3,240,611)
-------------- ---------------
46,764,869 37,447,489
Investments in unguaranteed residual values 4,284,947 5,673,696
-------------- ---------------
Investments in joint ventures 1,870,740 3,379,870
-------------- ---------------
Other assets 1,450,918 1,641,665
-------------- ---------------
Total assets $ 107,774,081 $ 130,291,422
============== ===============
Liabilities and Partners' Equity
Notes payable - non-recourse $ 57,687,654 $ 69,520,569
Note payable - recourse 1,819,912 3,594,026
Security deposits and other 1,044,468 1,197,193
Accounts payable - General Partner and affiliate - 537,085
Minority interests in joint venture 113,238 148,856
------------- ---------------
60,665,272 74,997,729
------------- ---------------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (181,482) (100,150)
Limited partners (745,863.89 and 746,743.89 units
outstanding, $100 per unit original issue price) 47,290,291 55,393,843
------------- ---------------
Total partners' equity 47,108,809 55,293,693
------------- ---------------
Total liabilities and partners' equity $ 107,774,081 $ 130,291,422
============= ===============
See accompanying notes to consolidated financial stat ements
ICON Incom e Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statements of Operations
For the Years Ended December 31, 2001, 2000 and 1999
2001 2000 1999
------------ ------------ ------------
Revenues
Finance income $ 7,161,935 $ 8,988,112 $ 7,620,751
Rental income 5,386,719 4,759,939 1,379,500
Gain on sale of option to acquire an
unguaranteed residual 1,219,910 -- --
Gain on sale of equipment 288,060 -- --
(Loss) income from investments in joint ventures (1,146,543) 231,909 (10,871)
Interest income and other 65,490 249,956 142,466
------------ ------------ ------------
Total revenues 12,975,571 14,229,916 9,131,846
------------ ------------ ------------
Expenses
Interest 6,279,671 7,361,127 4,397,728
Depreciation 2,729,052 2,646,303 594,308
Management fees - General Partner 1,902,703 1,836,953 931,151
Administrative expense
reimbursements - General Partner 764,715 751,073 345,358
Amortization of initial direct costs 702,003 819,348 885,106
General and administrative 608,169 497,164 313,181
Minority interest expense 18,574 15,947 17,874
Provision for doubtful accounts -- 200,000 385,000
------------ ------------ ------------
Total expenses 13,004,887 14,127,915 7,869,706
------------ ------------ ------------
Net (loss) income $ (29,316) $ 102,001 $ 1,262,140
============ ============ ============
Net (loss) income allocable to:
Limited partners $ (29,023) $ 100,981 $ 1,249,519
General Partner (293) 1,020 12,621
------------ ------------ ------------
$ (29,316) $ 102,001 $ 1,262,140
============ ============ ============
Weighted average number of limited
partnership units outstanding 746,378 710,779 337,936
============ ============ ============
Net (loss) income per weighted average
limited partnership unit $ (.04) $ .14 $ 3.70
============ ============ ============
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statements of Changes in Partners' Equity
For the Years Ended December 31, 2001, 2000 and 1999
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
(Per weighted average unit)
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
Proceeds from issuance
of limited partnership
units (154,770.46 units) 15,477,046 - 15,477,046
Sales and offering expenses (1,765,140) - (1,765,140)
Cash distributions to partners $ 10.61 $ .14 (7,640,879) (77,127) (7,718,006)
Limited partnership units
redeemed (3,221.15 units) (278,631) - (278,631)
Net income 100,981 1,020 102,001
--------------- ------------ --------------
Balance at December 31, 2000 55,393,843 (100,150) 55,293,693
Cash distributions to partners $ 10.75 $ - (8,022,337) (81,039) (8,103,376)
Limited partnership units
redeemed (880 units) (52,192) - (52,192)
Net loss (29,023) (293) (29,316)
--------------- ------------ --------------
Balance at December 31, 2001 $ 47,290,291 $ (181,482) $ 47,108,809
=============== ============ ==============
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2001, 2000 and 1999
2001 2000 1999
---- ---- ----
Cash flows from operating activities:
Net (loss) income $ (29,316) $ 102,001 $ 1,262,140
--------------- -------------- ---------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Finance income portion of receivables paid directly
to lenders by lessees (5,563,502) (6,614,810) (5,939,302)
Rental income paid directly to lenders by lessees (4,972,825) (4,603,249) (1,395,000)
Interest expense on non-recourse financing paid
directly by lessees 5,522,977 6,686,835 4,142,210
Depreciation 2,729,052 2,646,303 594,308
Amortization of initial direct costs 702,003 819,348 885,106
Gain of sale of equipment (288,060) - -
Gain on sale of investment in unguaranteed residual (1,219,910) - -
Minority interest expense 18,574 15,947 17,874
Loss (income) from investments in joint ventures 1,146,543 (231,909) 10,871
Provision for doubtful accounts - 200,000 385,000
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables 5,598,071 4,073,479 2,826,053
Other assets 190,747 (78,613) (1,518,394)
Security deposits and others (153,286) 675,498 348,777
Accounts payable to General Partner
and affiliates, net (537,085) 537,085 (1,232,922)
Other -- 241,558 99,843
--------------- -------------- ---------------
Total adjustments 3,173,299 4,367,472 (775,576)
--------------- -------------- ---------------
Net cash provided by operating activities 3,143,983 4,469,473 486,564
--------------- -------------- ---------------
Cash flows from investing activities:
Equipment purchased (1,280,666) (2,255,107) (40,110,867)
Proceeds from sale of equipment 3,664,324 - -
Proceeds from sale of investment of unguaranteed residual 2,608,659 - -
Distribution received from joint venture 362,587 - -
Initial direct costs - (181,214) (1,799,189)
Minority interests in joint ventures - - (55,845)
Investments in joint ventures - (158,832) (3,000,000)
Investments in unguaranteed residual values - (4,523,696) (1,150,000)
Acquisition of minority interest in
consolidated joint venture (55,804) - -
--------------- -------------- ---------------
Net cash provided by (used in) investing activities 5,299,100 (7,118,849) (46,115,901)
--------------- -------------- ---------------
(continued on next page)
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (Continued)
2001 2000 1999
---- ---- ----
Cash flows from financing activities:
Issuance of limited partnership units,
net of offering expenses -- 13,711,906 40,089,542
Redemption of limited partnership units (52,192) (278,631) --
Repayment of recourse debt (1,774,113) (1,405,974) --
Proceeds from non-recourse borrowing 3,004,674 -- 12,148,855
Repayment of non-recourse debt (1,510,523) (3,676,055) --
Cash distributions to partners (8,103,376) (7,718,006) (3,670,099)
------------ ------------ ------------
Net cash (used in) provided by financing activities (8,435,530) 633,240 48,568,298
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 7,553 (2,016,136) 2,938,961
Cash and cash equivalents at beginning of the period 3,205,892 5,222,028 2,283,067
------------ ------------ ------------
Cash and cash equivalents at end of year $ 3,213,445 $ 3,205,892 $ 5,222,028
============ ============ ============
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows (continued)
Supplemental Disclosure of Cash Flow Information
For the periods ended December 31, 2001, 2000 and 1999, non-cash activities
included the following:
2001 2000 1999
---- ---- ----
Fair value of equipment and receivables
purchased for debt $ - $ (2,880,250) $ (52,732,345)
Non-recourse notes payable assumed in purchase price - 2,880,250 52,732,345
Principal and interest on direct finance receivables
paid directly to lenders by lessees 13,877,218 14,558,076 8,058,355
Rental income-assigned - operating lease receivables 4,972,825 4,603,249 1,395,000
paid directly to lenders by lessees
Principal and interest on non-recourse financing
paid directly to lenders by lessees (18,850,043) (19,161,325) (9,453,355)
-------------- -------------- --------------
$ - $ - $ -
============= ============= ==============
Interest paid directly to
non-recourse lenders by lessees $ 5,522,977 $ 6,686,835 $ 4,142,210
Other interest 756,694 674,292 255,518
------------- ------------- --------------
Total interest expense $ 6,279,671 $ 7,361,127 $ 4,397,728
============= ============= ==============
2001 2000 1999
---- ---- ----
Reclassification of finance leases upon lease
restructurings to operating leases $ 10,765,766 $ - $ -
============= ============== ==============
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, 2001
1. Organization
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 was
$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 May 17, 2000, the date of the Partnership's final closing,
737,965.04 additional units were admitted representing $73,796,504 of capital
contributions bringing the total admission to 749,965.04 units totaling
$74,996,504 in capital contributions. Below is a table summarizing activity
since the final closing:
Total units issued from offering 749,965.04
Units redeemed - 2000 (3,221.15)
-----------------
Total units outstanding at December 31, 2000 746,743.89
Units redeemed - 2001 (880.00)
-----------------
Total units outstanding at December 31, 2001 745,863.89
=================
The General Partner of the Partnership is ICON Capital Corp. (the "General
Partner"), a Connecticut corporation. The General Partner manages and controls
the business affairs of the Partnership's equipment, leases and financing
transactions under a management agreement with the Partnership.
ICON Securities Corp., an affiliate of the General Partner, received an
underwriting commission on the gross proceeds from sales of all units. The
General Partner received organization and offering expenses from the gross
proceeds of such sales. The total underwriting compensation paid by the
Partnership, including underwriting commissions, sales commissions, incentive
fees, public offering expense reimbursements and due diligence activities was
limited to 13.5% of gross proceeds up to $25,000,000, 12.5% of gross proceeds
from $25,000,001 to $50,000,000 and 11.5% of gross proceeds from $50,000,001 to
$75,000,000. Such offering expenses aggregated $9,363,039 (including $537,217
and $2,833,241 paid to the General Partner or its affiliates in 2000 and 1999,
respectively) (see Note 8) and were charged directly to limited partners'
equity. No such amounts were paid in 2001.
Profits, losses, cash distributions and disposition proceeds are allocated
99% to the limited partners and 1% to the General Partner until each limited
partner has received cash distributions and disposition proceeds sufficient to
reduce its adjusted capital contribution account to zero and receive, in
addition, other distributions and allocations which would provide an 8% 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.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
2. Significant Accounting Policies
Basis of Accounting and Presentation - The Partnership's records are
maintained on the accrual basis. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the dates of the financial statements and revenues and expenses
during the reporting periods. Significant estimates include the allowance for
doubtful accounts and unguaranteed residual values. Management believes that the
estimates and assumptions utilized in preparing its financial statements are
reasonable and prudent. Actual results could differ from those estimates. In
addition, management is required to disclose contingent assets and contingent
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 50% or less 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.
Cash and Cash Equivalents - Cash and cash equivalents are defined as cash
in banks and highly liquid investments with original maturity dates of three
months or less.
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 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 depreciated
on the straight-line method over the lease terms.
Investments in Unguaranteed Residual Values - The Partnership carries its
investments in the future estimated unguaranteed residual values of assets at
cost, which is equal to or less than market value, subject to the Partnership's
policy relating to impairments of residuals. Gains or losses will be recognized
upon the sale or disposition of the investments.
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
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
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,
third party appraisals, reviews of future cash flows and anticipated future cash
flows and detailed market analyses are used as the basis for measuring whether
an impairment loss should be recognized.
Allowance for Doubtful Accounts - The Partnership records a provision for
bad debts to provide for estimated credit losses in the portfolio. The allowance
for doubtful accounts is based on the ongoing analysis of delinquency trends,
loss experience and an assessment of overall credit risk. The Partnership's
write-off policy is based on an analysis of the aging of the Partnership's
portfolio, a review of the non-performing receivables and leases, and prior
collection experience. An account is fully reserved for or written off when the
analysis indicates that the probability of collection of the account is remote.
Disclosures About Fair Value of Financial Instruments - Statement of
Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value
of Financial Instruments" requires disclosures about the fair value of financial
instruments. Separate disclosure of fair value information as of December 31,
2001 and 2000 with respect to the Company's assets and liabilities is not
provided because (i) SFAS No. 107 does not require disclosures about the fair
value of lease arrangements and (ii) the carrying value of financial assets,
other than lease related investments, and certain other payables approximates
market value and (iii) fair value information concerning certain non-recourse
debt obligations is not practicable to estimate without incurring excessive
costs to obtain all the information that would be necessary to derive a market
interest rate.
Redemption of Limited Partnership Units - The General Partner consented to
the Partnership redeeming 880 units during 2001 and 3,221.15 units in 2000. The
redemption amounts are calculated following the specified redemption formula in
accordance with the Partnership agreement. Redeemed units have no voting rights
and do not share in distributions. The Partnership agreement limits the number
of units which can be redeemed in any one year and redeemed units may not be
reissued. Redeemed limited partnership units are accounted for as a deduction
from partners' equity.
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.
Reclassification - Certain items have been reclassified to conform to the
2001 presentation.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
New Accounting Pronouncement - Effective January 1, 2002, the Partnership
adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" (SFAS No. 144). This statement requires that long-lived assets be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to the future net cash flows expected to be generated by the asset. If
the carrying amount of the asset exceeds its estimated future cash flows, an
impairment charge is recognized by the amount by which the carrying amount of
the asset exceeds the fair value of the asset. SFAS No. 144 requires companies
to separately report discontinued operations and extends that reporting to a
component of an entity that either has been disposed of (by sale, abandonment or
in a distribution to the owners) or classified as held for sale. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
the costs to sell. The adoption of SFAS No. 144 did not have any effect on the
Partnership's financial position or results of operations as the provisions of
SFAS No. 144 are similar to the partnership's current policy for impairment
review.
3. Investments in Joint Ventures
The Partnership and affiliates formed four joint ventures discussed below
for the purpose of acquiring and managing various assets. The Partnership and
its affiliates have identical investment objectives and participate on the same
terms and conditions. The Partnership has a right of first refusal to purchase
the equipment, on a pro-rata basis, if any of the affiliates desire to sell
their interests in the equipment.
The joint venture described below is majority owned and is consolidated
with the Partnership.
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 of a coal
handling facility with Portland General Electric, a utility company. The
purchase price totaled $27,421,810 and was funded with cash and non-recourse
debt. The Partnership, Series C, L.P. Six, and L.P. Seven received a 98.5%, .5%,
.5% and .5% interest, respectively, in ICON BF. In September 2001, ICON BF
acquired Series C's interest in ICON BF, at a cost of $56,370, which represented
Series C's basis in the joint venture and was funded by the Partnership, L.P.
Six and L.P. Seven in accordance with their remaining interests in ICON BF. The
revised ownership interests are now 98.995%, .5025%, and .5025% for the
Partnership, L.P. Six, and L.P. Seven respectively. The Partnership's financial
statements include 100% of the assets and liabilities and 100% of the revenues
and expenses of ICON BF. L.P. Six's and L.P. Seven's interests in ICON BF have
been reflected as minority interests in joint ventures on the consolidated
balance sheets and minority interest expense on the consolidated statements of
operations.
Portland General Electric ("PGE") is a wholly owned subsidiary of Enron
Corporation ("Enron"), which recently filed for Chapter 11 bankruptcy
protection. PGE has not filed for bankruptcy. While Enron owns all of PGE's
outstanding common stock, PGE has its own legal entity, owns its assets and is
responsible for its own day-to-day operations. PGE continues to make its lease
payments and is current through March 2002.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
The three joint ventures described below are less than 50% owned and are
accounted for following the equity method.
AIC Trust
In 1999, ICON/AIC Trust ("AIC Trust") was formed to own and manage a
portfolio of leases in England. The Partnership, L.P. Six and L.P. Seven own
43.73%, 25.51% and 30.76% interests in AIC Trust, respectively. The Partnership
accounts for its investment under the equity method of accounting.
On December 28, 2001, AIC Trust sold its remaining leases, subject to the
related debt, at a loss, for a note receivable of (pound)2,575,000 ($3,744,822
based upon the exchange rate at December 31, 2001) which is payable in six
installments through June 2004. The first installment on the note was collected
in 2002.
Information as to the financial position and results of operations of AIC
Trust as of and for the years ended December 31, 2001 and 2000 is summarized
below:
December 31, 2001 December 31, 2000
----------------- -----------------
Assets $ 3,849,439 $ 15,301,480
=============== ================
Liabilities $ - $ 8,543,026
=============== ================
Equity $ 3,849,439 $ 6,758,454
=============== ================
Partnership's share of equity $ 1,683,360 $ 2,954,912
=============== ================
Year Ended Year Ended
December 31, 2001 December 31, 2000
----------------- -----------------
Net income (loss) $ (2,687,696) $ 529,585
=============== ================
Partnership's share of
net income (loss) $ (1,174,769) $ 231,587
=============== ================
Distributions $ 829,150 $ -
=============== ================
Partnership's share of distributio $ 362,587 $ -
=============== ================
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
ICON Aircraft 24846, LLC
In 2000, the Partnership and two affiliates, L.P. Seven and ICON Income
Fund Eight B ("Fund Eight B"), formed ICON Aircraft 24846, LLC ("ICON Aircraft
24846") for the purpose of acquiring an investment in an aircraft leased to a
commercial airline for a purchase price of $44,515,416, which was funded with
cash of $2,241,371 and non-recourse debt of the $42,274,045. The rents and the
aircraft have been assigned to the non-recourse lender. The lease is scheduled
to expire in March 2003, at which time the balance of the non-recourse debt
outstanding is scheduled to be approximately $34,500,000. The Partnership, L.P.
Seven and Fund Eight B have ownership interests of 2.0%, 2.0% and 96.0%,
respectively, in ICON Aircraft 24846. The Partnership accounts for its
investment under the equity method of accounting.
Information as to the financial position and results of operations of ICON
Aircraft 24846 as of and for the year ended December 31, 2001 and as of December
31, 2000 and for the period of investment through December 31, 2000 is
summarized below:
December 31, 2001 December 31, 2000
----------------- -----------------
Assets $ 41,952,008 $44,450,734
============ ===========
Liabilities $ 38,945,109 $42,193,269
============ ===========
Equity $ 3,006,899 $ 2,257,465
============ ===========
Partnership's share of equity $ 60,138 $ 45,149
============ ===========
Net income $ 749,435 $ 16,100
============ ===========
Partnership's share of net income $ 14,989 $ 322
============ ===========
ICON Cheyenne LLC
In December 2000, the Partnership and three affiliates, L.P. Six, L.P.
Seven and Fund Eight B formed ICON Cheyenne LLC ("ICON Cheyenne")for the purpose
of acquiring a portfolio of leases for an aggregate purchase price of
$29,705,716, which was paid for with cash of $11,401,151 and the assumption of
non-recourse debt with an unaffiliated third party lender of $18,304,565. The
debt is structured to be amortized by the application to the debt of rentals due
under the various term leases. The leases expire on various dates through
September 2006. The Partnership, L.P. Seven, L.P. Six and Fund Eight B have
ownership interests of 1%, 10.31%, 1.0% and 87.69%, respectively, in ICON
Cheyenne. The Partnership accounts for its investment under the equity method of
accounting.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Information as to the financial position and results of operations of ICON
Cheyenne as of and for year ended December 31, 2001 and as of December 31, 2000
and for the period of investment through December 31, 2000 is summarized below:
December 31, 2001 December 31, 2000
----------------- -----------------
Assets $ 23,869,671 $ 29,705,716
================ ===============
Liabilities $ 11,145,506 $ 18,304,565
================ ===============
Equity $ 12,724,165 $ 11,401,151
================ ===============
Partnership's share of equity $ 127,242 $ 114,005
================ ===============
Year ended Year ended
December 31, 2001 December 31, 2000
----------------- -----------------
Net income $ 1,323,014 $ -
================ ===============
Partnership's share of $ 13,237 $ -
================ ===============
Net income
4. Finance Lease Receivables
Non-cancelable minimum annual amounts due on finance leases are as follows:
Year
2002 $ 10,743,572
2003 7,755,517
2004 5,321,969
2005 3,709,529
-------------
$ 27,530,587
5. Investment in Operating Leases
In 1999, the Partnership acquired two Boeing 737-400 aircraft for an
aggregate cost of $37,600,000 plus initial direct costs of $1,071,600. One
aircraft is currently on lease to Boeing through May 2003. The other aircraft is
leased to Sky Airlines through April 2005. This aircraft, like the one currently
on lease to Boeing, had been leased to KLM Dutch Airlines ("KLM") at the date of
purchase. During 2001, after the return of the aircraft from KLM and prior to
the delivery of the aircraft to Sky Airlines, the Partnership expended
$1,280,666 to upgrade the aircraft.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
In 2000 the Partnership acquired aircraft rotables for a total cost of
$1,961,000 subject to a lease with Sabena Technics SA a subsidiary of Sabena
Airlines SA Sabena Airlines S.A. the parent company of Sabena Technics SA filed
for bankruptcy in Belgium in November 2001. Sabena Technics SA has not filed for
bankruptcy and has continued to operate and make all scheduled rent payments.
Effective October 1, 2001, the Partnership restructured two finance leases
with a United States based commercial airline covering two 737-200 HK aircraft.
The carrying value of these aircraft aggregated $10,765,766 as of October 1,
2001. The restructured leases expire in 2005. In connection with the
restructuring, the airline issued to the Partnership $2 million face value,
7.5%, paid in kind convertible notes maturing in 2009. As there is currently no
market value for these notes, the notes have been given a zero value. Any future
increase in value of the notes will be reflected in other comprehensive income
until such notes are sold for cash at which time a realized gain would be
recognized.
The investment in operating leases at December 31, 2001 and 2000 consisted
of the following:
2001 2000
------------ ------------
Equipment cost, beginning of year $ 40,688,100 $ 38,671,600
Equipment acquisition -- 1,961,000
Cost to upgrade aircraft 1,280,666 --
Transfer from finance leases 10,765,766 --
Initial direct costs -- 55,500
------------ ------------
Equipment cost, end of year 52,734,532 40,688,100
------------ ------------
Accumulated depreciation, beginning of year (3,240,611) (594,308)
Depreciation expense (2,729,052) (2,646,303)
------------ ------------
Accumulated depreciation, end of year (5,969,663) (3,240,611)
------------ ------------
Investment in operating leases, end of year $ 46,764,869 $ 37,447,489
============ ============
Non-cancelable minimum annual amounts due on operating leases are as
follows:
Year
2002 $ 7,911,509
2003 5,943,200
2004 4,836,000
2005 2,829,000
------------
$ 21,519,709
============
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
6. Investments in Unguaranteed Residual Values
In the year ended December 31, 2000, the Partnership invested $1,997,000 to
acquire an interest in the residual value of an off-shore oil drilling rig
subject to lease with an unaffiliated third party and $2,526,696 for a residual
interest related to a portfolio of technology and other equipment leases with
various lessees in the United Kingdom. During the year 2001, the Partnership
received $238,749 related to the sale of equipment from the portfolio of
technology and other equipment leased to lessees in the United Kingdom. Such
amount was recorded as a recovery of investment, with no gain or loss
recognized. In 1999, the Partnership purchased an option to acquire an interest
in an aircraft subject to lease with a United States based commercial airline
for $1,150,000. The Partnership sold this option in the second quarter 2001 for
$2,369,910 and realized a gain of $1,219,910 on the sale.
7. Notes Payable
Notes payable consists of notes payable non-recourse, which are being paid
directly to the lenders by the lessees, and a recourse note payable under a line
of credit. The non-recourse notes bear interest at rates ranging from 7.49% to
10.0%. During the year, the Partnership borrowed an additional $3,004,674 on a
non-recourse basis secured by the aircraft on lease to the Boeing Company.
The Partnership entered into a $5,000,000 line of credit agreement (the
"Facility") with an unaffiliated third party lender in December 1998. The
Facility is secured by eligible receivables and residuals, as defined in the
Facility, and bears interest at the rate of prime (4.75% at December 31, 2001)
plus one half percent. The Partnership had $1,819,912 outstanding under the
Facility at December 31, 2001. The Facility expires April 2002 and is renewable
on an annual basis. The Partnership anticipates that the facility will either be
renewed or refinanced with a different lender.
The above notes mature as follows:
Notes Payable Note Payable
Year Non-Recourse Recourse Total
2002 $ 10,373,842 $ 1,819,912 $ 12,193,754
2003 24,647,039 - 24,647,039
2004 7,774,115 - 7,774,115
2005 12,022,450 - 12,022,450
2006 2,870,208 - 2,870,208
------------ ----------- --------------
$ 57,687,654 $ 1,819,912 $ 59,507,566
============ =========== ==============
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
8. 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, 2001, 2000 and 1999
were as follows:
2001 2000 1999
---------- ---------- -----------
Organization and
offering expenses $ -- $ 230,236 $1,642,852 Charged to equity
Underwriting commissions -- 306,981 1,190,389 Charged to equity
Acquisition fees -- 2,149,370 2,327,918 Capitalized
Management fees 1,902,703 1,836,953 931,151 Charged to operations
Administrative expense
reimbursements 764,715 751,073 345,358 Charged to operations
---------- ---------- -----------
$2,667,418 $5,274,613 $6,437,668
========== ========== ===========
In accordance with the Management Agreement, the Partnership pays the
General Partner acquisition fees of 3%, based on equipment value acquired, as
defined, and management fees based on a percentage of rentals received (ranging
from 1% to 7%). In addition, the General Partner is reimbursed for expenses
incurred by it in connection with the Partnership's operations. (See Note 1 for
information relating to organization and offering expenses and underwriting
commissions).
The Partnership has investments in four joint ventures with other
partnerships sponsored by the General Partner. See Note 3 for additional
information relating to the joint ventures.
9. Tax Information (Unaudited)
The following table reconciles net income for financial statement reporting
purposes to income for federal income tax purposes for the period ended December
31, 2001, 2000 and 1999:
2001 2000 1999
---- ---- ----
Net (loss) income for financial statement
reporting purposes $ (29,316) $ 102,001 $ 1,262,140
Temporary differences due to:
Direct finance leases 10,105,194 8,988,112 7,620,751
Depreciation (12,292,786) (17,135,716) (12,974,252)
Provision for losses - (200,000) (385,000)
Loss on sale of equipment (2,608,101) - -
Interest expense (710,659) (1,060,868) (1,383,573)
Other (1,428,868) (1,155,319) 295,233
--------------- --------------- ---------------
Partnership (loss) for
Federal income tax reporting purposes $ (6,964,536) $ (10,461,790) $ (5,564,701)
=============== =============== ===============
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
As of December 31, 2001, the partners' capital accounts included for
financial statement reporting purposes totaled $47,108,809 compared to the
partners' capital accounts for federal income tax purposes of $30,137,742
(unaudited). The difference arises primarily from temporary differences caused
principally by accelerated depreciation for tax purposes, partially offset by
provisions for losses for financial statement reprorting purposes but not for
tax reporting purposes, the differences between financial reporting and tax
reporting of finance leases and the fact that sales commissions and expenses
from the offering are reported as a reduction in the partners' capital accounts
for financial statement reporting purposes but not for federal income tax
reporting purposes.
10. Quarterly Financial Data (Unaudited)
The following table is a summary of financial data by quarter for the years
ended December 31, 2001 and 2000:
For the Quarters Ended
----------------------------------------------------------------------
March 31, June 30, September 30, December 31,
-------- ------- ------------ -----------
2001
Revenues $ 2,892,868 $ 4,612,803 $ 3,379,563 $ 2,090,337
============= ============= ============= ===========
Net income (loss) allocable to
limited partners $ 1,525 $ 1,432,584(1) $ 60,939 $(1,524,071)(2)
============= ============= ============= ===========
Net income (loss) per weighted
average limited partnership unit $ -- $ 1.92 $ 0.08 $ (2.04)
============= ============= ============= ===========
2000
Revenues $ 3,698,477 $ 3,724,307 $ 4,066,633 $ 2,740,499
============= ============= ============= ===========
Net income (loss) allocable to
limited partners $ 174,592 $ 23,234 $ 47,894 $ (144,739)
============= ============= ============= ===========
Net income (loss) per weighted
average limited partnership $ .27 $ .03 $ .06 $ (.22)
============= ============= ============= ===========
(1) The second quarter of 2001 included a $1.2 million gain on the sale of an
option to acquire a residual (see note 6).
(2) The fourth quarter of 2001 included a $1.4 million loss representing the
Partnership's share of the loss from its investment in its joint venture,
AIC Trust (See note 3).
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
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 100 Fifth Avenue, 10th Floor,
New York, New York 10011, and its telephone number is (212) 418-4700. 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 performs 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
Beaufort J. B. Clarke, age 55, 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 41, 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.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
Thomas W. Martin, age 48, 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.
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, 2001, 2000 and 1999.
Type of
Entity Capacity Compensation 2001 2000 1999
------ -------- ------------ ---- ---- ----
ICON Capital Corp. General Partner Organization and
offering expenses $ - $ 230,236 $ 1,642,852
ICON Securities Corp. Dealer-Manager Underwriting
commissions - 306,981 1,190,389
ICON Capital Corp. Manager Acquisition fees - 2,149,370 2,327,918
ICON Capital Corp. General Partner Management fees 1,902,703 1,836,953 931,151
ICON Capital Corp. General Partner Administrative
expense
reimbursements 764,715 751,073 345,358
------------- -------------- -------------
$ 2,667,418 $ 5,274,613 $ 6,437,668
============= ============== =============
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 31, 2002, 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.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
Item 13. Certain Relationships and Related Transactions
None other than those disclosed in Item 11 herein.
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 year ended
December 31, 2001.
(c) Exhibits
(d) Unconsolidated Joint Venture Financial Statements
ICON AIC Trust - as of and for the years ended December 31, 2001 and 2000
ICON/AIC TRUST
Financial Statements
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
38
INDEPENDENT AUDITORS' REPORT
The Partners
ICON/AIC TRUST
We have audited the accompanying balance sheets of ICON/AIC TRUST as of December
31, 2001 and 2000, and the related statements of operations, changes in
beneficial interestholders' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As discussed in Note 3, the Trust sold all of its finance leases, subject to its
remaining non-recourse debt, on December 28, 2001. As a result, as of December
31, 2001, the only significant asset owned by the Trust is a note receivable
representing the proceeds of the sale which is collectible over the two and one
half year period ended June 2004.
In our opinion, the financial statements referred to the above present fairly,
in all material respects, the financial position of ICON/AIC TRUST as of
December 31, 2001 and 2000, and the results of its operations and its cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.
/s/KPMG LLP
--------------------------------------------
KPMG LLP
April 15, 2002
New York, New York
ICON/AIC TRUST
Balance Sheets
December 31,
2001 2000
------------ ------------
Assets
Investment in finance leases
Minimum rents receivable $ -- $ 9,331,709
Unguaranteed residual values -- 7,760,304
Initial direct costs -- 182,260
Unearned income -- (1,972,793)
------------ ------------
-- 15,301,480
------------ ------------
Note receivable (note 3) 3,645,250 --
Due from affiliate (note 4) 204,189 --
------------ ------------
Total assets $ 3,849,439 $ 15,301,480
============ ============
Liabilities and Beneficial Interestholders' Equity
Notes payable - non-recourse $ -- $ 8,543,026
------------ ------------
Beneficial interestholders' equity 3,849,439 6,758,454
------------ ------------
Total liabilities and beneficial
interestholders' equity $ 3,849,439 $ 15,301,480
============ ============
See accompanying notes to financial statements.
ICON/AIC TRUST
Statements of Operations
For the Years Ended December 31,
2001 2000
----------- -----------
Revenue
Finance income $ 921,436 $ 1,540,381
----------- -----------
Total revenue 921,436 1,540,381
----------- -----------
Expenses
Loss from the sales of investments
in finance leases 2,472,400 --
Foreign currency loss 607,831 --
Interest expense 434,526 829,944
Amortization of initial
direct costs 94,375 180,852
----------- -----------
Total expenses 3,609,132 1,010,796
----------- -----------
Net (loss) income $(2,687,696) $ 529,585
=========== ===========
See accompanying notes to financial statements.
ICON/AIC TRUST
Statements of Changes in Beneficial Interestholders' Equity
For the Years Ended December 31,
2001 2000
---- ----
Beneficial interestholders' equity, beginning of the year
(net of accumulated other comprehensive
income of $607,831 and $62,915) $ 6,758,454 $ 6,773,785
Distributions to beneficial interestholders (829,150) -
Net (loss) income $ (2,687,696) $ 529,585
Other comprehensive loss - foreign
translation loss - (544,916)
Realization of foreign translation loss
on sales of investment in finance leases 607,831 -
-------------- --------------
Comprehensive loss (2,079,865) (15,331)
------------- -------------
Beneficial interestholders' equity, end of year $ 3,849,439 $ 6,758,454
============= =============
December 31, 2001 December 31, 2000
----------------- -----------------
Accumulated other comprehensive loss - foreign
translation loss $ - $ (607,831)
Other beneficial interestholders' equity 3,849,439 7,366,285
------------- -------------
Beneficial interestholders' equity $ 3,849,439 $ 6,758,454
============= =============
See accompanying notes to financial statements.
ICON/AIC TRUST
Statements of Cash Flows
For the Years Ended December 31,
2001 2000
---- ----
Cash flows from operating activities:
Net (loss) income $ (2,687,696) $ 529,585
------------- -------------
Adjustments to reconcile net (loss) income to
net cash used in operating activities:
Loss from the sale of investments in finance leases 2,472,400 -
Foreign currency loss 607,831 -
Finance income portion of receivables paid directly
to lenders by lessees (921,436) (1,540,381)
Interest expense on non-recourse financing paid
directly to lenders by lessees 434,526 829,944
Amortization of initial direct costs 94,375 180,852
Changes in operating assets:
Due from affiliate (204,189) -
Collection of principal-non-financed receivables 154,053 -
------------- -------------
Total adjustments 2,637,560 (529,585)
------------- -------------
Net cash used in operating activities (50,136) -
------------- -------------
Cash flows from investing activities:
Proceeds from sales of investments in finance leases 879,286 -
------------- -------------
Cash flows used in financing activities:
Cash distributions to beneficial interestholders (829,150) -
------------- -------------
Net increase in cash - -
Cash at the beginning of the year - -
------------- -------------
Cash at the end of the year $ - $ -
============= =============
See accompanying notes to financial statements.
ICON/AIC TRUST
Statements of Cash Flows (Continued)
For the Years Ended December 31,
Supplemental Disclosure of Cash Flow Information
For the years ended December 31, 2001 and 2000, non-cash activities
included the following:
2001 2000
---- ----
Principal and interest on direct finance
receivables paid directly to lenders by lessees $ 4,973,382 $ 7,368,662
Principal and interest on non-recourse
financing paid directly to lenders by lessees (4,973,382) (7,368,662)
-------------- -------------
$ - $ -
============== =============
Interest expense of $434,526 and $829,944 for the years ended December 31,
2001 and 2000 respectively, consisted of interest expense on non-recourse
financing paid or accrued directly to lenders by lessees.
ICON/AIC TRUST
Notes to Financial Statements
December 31, 2001
1. Organization
ICON/AIC TRUST (the "Trust"), was formed and commenced business operations
in 1999 to accept a contribution of equipment leases in the United Kingdom,
subject to related debt, from ICON Cash Flow Partners L.P. Seven (L.P. Seven).
Subsequently, L.P. Seven sold interests in the Trust to ICON Cash Flow Partners
L.P. Eight A ("Fund Eight A") and to ICON Cash Flow Partners L.P. Six ("L.P.
Six").
2. Significant Accounting Policies
Basis of Accounting and Presentation - The Trust's records are maintained
on the accrual basis. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the dates of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. The contributed leases were all receivable in British pounds sterling
and the related non-recourse debt was payable in British pounds sterling. As a
result, the functional currency of the Trust is the British pounds sterling. The
financial statements are translated into U.S. dollars and resulting translation
gains and losses are included as other comprehensive income.
Leases - The Trust accounted for owned equipment leased to third parties as
finance leases. For finance leases, the Trust recorded, 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. Initial direct costs of finance leases
were capitalized and amortized over the terms of the related leases using the
interest method.
Impairment of Estimated Residual Values - The Trust's policy with respect
to impairment of estimated residual values was to review, on a periodic basis,
the carrying value of its residuals on an individual assets basis to determine
whether events or changes in circumstances indicated that the carrying value of
an asset was not recoverable and, therefore, an impairment loss should have been
recognized. The events or changes in circumstances which generally indicated
that the residual value of an asset had been impaired were (i) the estimated
fair value of the underlying equipment was less than the Trust's carrying value
or (ii) the lessee was experiencing financial difficulties and it did not appear
likely that the estimated proceeds from the disposition of the asset would be
sufficient to satisfy the remaining obligation to the non-recourse lender and
the Trust's residual position.
Income Taxes - No provision for income taxes has been made as the liability
for such taxes is that of each of the beneficial interestholders' rather than
the Trust.
ICON/ AIC TRUST
Notes to Financial Statements (Continued)
December 31, 2001
3. Sale of Finance Leases
On December 28, 2001, the Trust sold its remaining investment in finance
leases subject to the remaining related non-recourse debt, for a note which is
collectible over a two and one half year period. The gross note amount is
(pound)2,575,000 or $3,744,822 based upon the currency exchange rate at December
31, 2001. The receivable (converted into US dollars) is due as follows:
January 2002 (paid) $ 690,792
June 2002 690,793
January 2003 654,435
June 2003 618,077
January 2004 545,362
June 2004 545,363
-------------
3,744,822
Less interest included
in the payments (99,572)
-------------
$ 3,645,250
=============
Foreign currency gains or losses will be recorded as currency rates change.
4. Related Party Transactions
The Trust is managed by the General Partner of the Trust's beneficial
interestholders. The costs were not significant and were absorbed by the members
in proportion to their sharing interests. As of December 31, 2001, amounts due
from an affiliate represented cash held by L.P. Seven on behalf of the Trust.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 2001
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: April 15, 2002 /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: April 15, 2002 /s/ Beaufort J.B. Clarke
----------------------------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Date: April 15, 2002 /s/ Paul B. Weiss
----------------------------------------------
Paul B. Weiss
President and Director
Date: April 15, 2002 /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.