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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended June 30, 2002
-----------------------------------------------------------
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
--------------------- ------------------------
Commission File Number 333-54011
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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 (IRS Employer
incorporation or organization) Identification Number)
100 Fifth Avenue, New York, New York 10011
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(212) 418-4700
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[ x ] Yes [ ] No
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Balance Sheets
(unaudited)
June 30, December 31,
Assets 2002 2001
------ ---- ----
Cash and cash equivalents $ 345,045 $ 3,213,445
------------- -------------
Investment in finance leases
Minimum rents receivable 20,740,365 27,530,587
Estimated unguaranteed residual values 32,645,840 32,985,468
Initial direct costs 607,809 780,194
Unearned income (8,125,066) (10,522,087)
Allowance for doubtful accounts (585,000) (585,000)
------------- -------------
45,283,948 50,189,162
Investment in operating leases
Equipment, at cost 52,734,532 52,734,532
Accumulated depreciation (8,010,582) (5,969,663)
------------- -------------
44,723,950 46,764,869
Investments in unguaranteed
residual values 4,093,380 4,284,947
------------- -------------
Investments in unconsolidated
joint ventures 1,527,134 1,870,740
------------- -------------
Due from affiliates 78,621 --
------------- -------------
Other assets 1,410,240 1,450,918
------------- -------------
Total assets $ 97,462,318 $ 107,774,081
============= =============
Liabilities and Partners' Equity
Notes payable, non-recourse $ 51,102,900 $ 57,687,654
Note payable - line of credit 2,405,871 1,819,912
Due to affiliates 46,810 --
Security deposits and other payables 954,462 1,044,468
Minority interests in joint venture 119,800 113,238
------------- -------------
54,629,843 60,665,272
Partners' equity (deficiency)
General Partner (223,576) (181,482)
Limited partners (744,725.27 units
outstanding, $100 per unit original
issue price) 43,056,051 47,290,291
------------- -------------
Total partners' equity 42,832,475 47,108,809
------------- -------------
Total liabilities and partners' equity $ 97,462,318 $ 107,774,081
============= =============
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Operations
(unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
---- ---- ---- ----
Revenues
Rental income $ 1,780,309 $ 1,407,720 $ 3,560,617 $ 2,186,102
Finance income 1,158,582 1,914,937 2,397,021 3,929,188
Income from investment in joint ventures 100,932 59,193 128,688 121,912
Interest income and other 580 11,043 28,183 48,559
Gain on sale of investment in
unguaranteed residual - 1,219,910 - 1,219,910
Gain on sale of equipment 78,834 - 78,834 -
------------- ------------- ------------- -------------
Total revenues 3,119,237 4,612,803 6,193,343 7,505,671
------------- ------------- ------------- -------------
Expenses
Interest 1,297,138 1,475,548 2,641,246 2,967,385
Depreciation 1,020,460 712,131 2,040,919 1,029,012
Management fees - General Partner 128,367 461,895 726,603 960,798
Administrative expense reimbursements
General Partner 58,480 185,886 322,728 385,785
Amortization of initial direct costs 92,033 171,584 172,385 393,942
General and administrative 263,828 152,870 445,199 309,657
Minority interest expense in consolidated
joint venture 3,222 5,834 6,562 10,497
------------- ------------- ------------- -------------
Total expenses 2,863,528 3,165,748 6,355,642 6,057,076
------------- ------------- ------------- -------------
Net income (loss) $ 255,709 $ 1,447,055 $ (162,299) $ 1,448,595
============= ============= ============= =============
Net income (loss) allocable to:
Limited partners $ 253,152 $ 1,432,584 $ (160,676) $ 1,434,109
General Partner 2,557 14,471 (1,623) 14,486
------------- ------------- ------------- -------------
$ 255,709 $ 1,447,055 $ (162,299) $ 1,448,595
============= ============= ============= =============
Weighted average number of limited
partnership units outstanding 745,153 746,444 744,704 746,565
============= ============= ============= =============
Net income (loss) per weighted average
limited partnership unit $ 0.34 $ 1.92 $ (0.22) $ 1.92
============= ============= ============= =============
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 Six Months Ended June 30, 2002
and the Year ended December 31, 2001
(unaudited)
Limited Partner Distributions
Return of Investment Limited General
Capital Income Partners Partner Total
(Per weighted average unit)
Balance at
December 31, 2000 $ 55,393,843 $ (100,150) $ 55,293,693
Sales and offering expenses
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
Cash distributions
to partners $5.38 $ - (4,006,505) (40,471) (4,046,976)
Limited partnership units
redeemed (1,138.62 units) (67,059) - (67,059)
Net loss (160,676) (1,623) (162,299)
--------------- ------------ --------------
Balance at
June 30, 2002 $ 43,056,051 $ (223,576) $ 42,832,475
=============== ============ ==============
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 Six Months Ended June 30,
(unaudited)
2002 2001
---- ----
Cash flows from operating activities:
Net (loss) income $ (162,299) $ 1,448,595
----------- -----------
Adjustments to reconcile net income to
net cash (used in) provided by operating
activities:
Finance income portion of receivables
paid directly to lenders by lessees (2,066,662) (3,014,325)
Rental income paid directly to lender
by lessee (3,311,753) (1,328,640)
Interest expense on non-recourse
financing paid directly by lessees 2,445,980 2,735,396
Amortization of initial direct costs 172,385 393,942
Income from investments in joint venture (128,688) (121,912)
Depreciation 2,040,919 1,029,012
Gain on sale of equipment (78,834) --
Gain on sale of investment in unguaranteed
residual -- (1,219,910)
Minority interest expense 6,562 10,497
Change in operating assets and liabilities:
Non-financed receivables 740,883 2,681,277
Due from affiliates (78,621) --
Due to affiliates 46,810 --
Other assets 40,678 (661,332)
Security deposits, deferred credits and
other payables (90,006) 702,180
Accounts payable - General Partner
and affiliates -- (537,085)
----------- -----------
Total adjustments (260,347) 669,100
----------- -----------
Net cash (used in) provided by
operating activities (422,646) 2,117,695
----------- -----------
Cash flows from investing activities:
Equipment and receivables purchased -- (946,109)
Distribution from unconsolidated
joint ventures 472,294 --
Proceeds from sale of investment of
unguaranteed residuals 191,567 2,549,252
Proceeds from sale of equipment 418,461 --
----------- -----------
Net cash provided by investing activities 1,082,322 1,603,143
----------- -----------
(continued on next page)
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Cash Flows (Continued)
For the Six Months Ended June 30,
(unaudited)
2002 2001
---- ----
Cash flows from financing activities:
Proceeds from line of credit 2,405,871 --
Repayments of notes payable - line of credit (1,819,912) (156,208)
Proceeds from non-recourse debt borrowings -- 1,012,555
Repayments of notes payable, non-recourse -- (1,384,580)
Redeemed units (67,059) (22,428)
Cash distributions to partners (4,046,976) (4,053,668)
----------- -----------
Net cash used in financing activities (3,528,076) (4,604,329)
----------- -----------
Net decrease in cash and cash equivalents (2,868,400) (883,491)
Cash and cash equivalents at beginning of period 3,213,445 3,205,892
----------- -----------
Cash and cash equivalents at end of period $ 345,045 $ 2,322,401
=========== ===========
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 six months ended June 30, 2002 and 2001, non-cash activities
included the following:
2002 2001
---- ----
Principal and interest on direct
finance receivables paid directly to
lenders by lessees $ 5,718,981 $ 9,208,148
Rental income assigned - operating
lease receivables 3,311,753 1,328,640
Principal and interest on non-recourse
financing paid directly to lenders
by lessees (9,030,734) (10,536,788)
------------ ------------
$ - $ -
============ ============
Interest expense of $2,641,246 and $2,967,385 for the six months ended June
30, 2002 and 2001 consisted of interest expense on non-recourse financing paid
directly to lenders by lessees of $2,445,980 and $2,735,396 and other interest
of $195,266 and $231,989, respectively.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
1. Basis of Presentation
The consolidated financial statements of ICON Income Fund Eight A L.P. (the
"Partnership") have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC") and, in the opinion of
management, include all adjustments (consisting only of normal recurring
accruals) necessary for a fair statement of income for each period shown.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted pursuant
to such SEC rules and regulations. Management believes that the disclosures made
are adequate to make the information presented not misleading. The results for
the interim period are not necessarily indicative of the results for the full
year. These consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes included in the Partnership's
2001 Annual Report on Form 10-K.
2. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the six months ended June 30, 2002 and 2001 were
as follows:
2002 2001
---- ----
Management fees $ 726,603 $ 960,798 Charged to Operations
Administrative expense
reimbursements 322,728 385,785 Charged to Operations
------------ -----------
Total $ 1,049,331 $ 1,346,583
============ ===========
The Partnership and affiliates formed four joint ventures for the purpose
of acquiring and managing various assets. (See Note 3 for additional information
relating to the joint ventures).
3. Consolidated Ventures and Investments in Unconsolidated Joint Ventures
The Partnership and affiliates formed four ventures discussed below for the
purpose of acquiring and managing various assets.
Consolidated Venture
The 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.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements-continued
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 August 2002.
Investments In Unconsolidated Joint Ventures
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 two installments on the note were
collected in January and June 2002, respectively. As of June 30, 2002, the gross
amount due is (pound)1,625,000 ($2,407,821 on a discounted basis based upon the
exchange rate at June 30, 2002).
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements-continued
Information as to the unaudited financial position of AIC Trust as of and
for the six months ended June 30, 2002 and 2001 and is summarized below:
June 30, 2002 December 31, 2001
------------- -----------------
Assets $ 3,127,943 $ 3,849,439
=============== ================
Liabilities $ 57,447 $ -
=============== ================
Equity $ 3,070,496 $ 3,849,439
=============== ================
Partnership's share of equity $ 1,342,728 $ 1,683,360
=============== ================
For the Six Months For the Six Month
Ended June 30, 2002 Ended June 30, 2001
------------------- -------------------
Net income $ 253,820 $ 252,958
=============== ================
Partnership's share of net income $ 110,996 $ 110,619
=============== ================
Distributions $ 1,032,763 $ -
=============== ================
Partnerships share of distributions $ 451,628 $ -
=============== ================
AIC Trust recorded a foreign exchange loss of $71,152 in the quarter ended
March 31, 2002 and a foreign exchange gain of $198,082 in the quarter ended June
30, 2002.
ICON Aircraft 24846, LLC
In 2000, the Partnership and two affiliates, L.P. Seven and ICON Income
Fund Eight B L.P. ("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 $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%,
respectively, in ICON Aircraft 24846. 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 unaudited financial position of ICON Aircraft as of
June 30, 2002 and December 31, 2001 and its results of operations for the six
months ended June 30, 2002 and 2001 is summarized below:
June 30, 2002 December 31, 2001
------------- -----------------
Assets $ 40,599,897 $ 41,952,008
================ ===============
Liabilities $ 37,218,282 $ 38,945,109
================ ===============
Equity $ 3,381,615 $ 3,006,899
================ ===============
Partnership's share of equity $ 67,632 $ 60,138
================ ===============
For the Six Months For the Six Months
Ended June 30, 2002 Ended June 30, 2001
Net income $ 374,716 $ 254,046
================ ===============
Partnership's share of net income $ 7,494 $ 5,081
================ ===============
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 lease investments. The purchase price
totaled $29,705,716 and was funded 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 Partnership, L.P. Six, L.P. Seven and Fund
Eight B received a 1%, 1%, 10.31% and 87.69% interest, respectively, in ICON
Cheyenne. The Partnership accounts for this investment under the equity method
of accounting.
Information as to the unaudited financial position of ICON Cheyenne as of
June 30, 2002 and December 31, 2001 and its results of operations for the six
months ended June 30, 2002 and 2001 is summarized below:
June 30, 2002 December 31, 2001
------------- -----------------
Assets $ 19,967,473 $ 23,869,671
================ ===============
Liabilities $ 8,290,031 $ 11,145,506
================ ===============
Equity $ 11,677,442 $ 12,724,165
================ ===============
Partnership's share of equity $ 116,774 $ 127,242
================ ===============
For the Six Months For the Six Months
Ended June 30, 2002 Ended June 30, 2001
Net income $ 1,019,824 $ 621,225
================ ===============
Partnership's share of net income $ 10,198 $ 6,212
================ ===============
Distributions $ 2,066,547 $ -
================ ===============
Partnership's share of distributions $ 20,666 $ -
================ ===============
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
June 30, 2002
4. Line of Credit
During the quarter ended June 30, 2002, the Partnership entered into a new
$17,500,000 joint line of credit agreement, shared with Fund Eight B and L.P.
Seven, with Comerica Bank as lender, replacing its prior line of credit
agreement. The Partnership borrowed $2,405,871 under the new agreement and used
$1,819,912 to pay off its borrowings under its prior line of credit. Under the
terms of the agreement, the Partnership may borrow at a rate equal to the
Comerica Bank base rate plus 1% (5.75% at June 30, 2002) and all borrowings are
to be collateralized by the present values of rents receivable and residuals.
The expiration date of the new line of credit agreement is May 31, 2003.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
June 30, 2002
Item 2. 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 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. In 2000 and 2001, a total of 4,101.15
units were redeemed. During the six months ended June 30, 2002, $1,138.62 units
were redeemed. Total units outstanding at both June 30, 2002 and December 31,
2001 were 744,725.27 and 745,836.89 respectively.
Results of Operations for the Three Months Ended June 30, 2002 and 2001
Revenue decreased by $1,493,566 from $4,612,803 in the quarter ended June
30, 2001 to $3,119,237 in the quarter ended June 30, 2002. The decline in
revenue resulted primarily from a gain on the sale of an investment in an
unguaranteed residual of $1,219,910 in the quarter ended June 30, 2001. Finance
income decreased by $756,355 from $1,914,937 in the quarter ended June 30, 2001
to $1,158,582 in the quarter ended June 30, 2002. The decrease in finance income
resulted from a reduction in the size of the Partnership's portfolio of leases,
as well as a restructuring of two aircraft finance leases in October 2001 which
caused the leases to be re-classified as operating leases. The decline in the
above stated categories of revenue were offset partially by an increase in
rental income of $372,589 from $1,407,720 in the quarter ended June 30, 2001 to
$1,780,309 in the quarter ended June 30, 2002. The increase in rental income
resulted primarily from the restructuring of the aircraft leases mentioned
above. In addition, gain on sale of equipment of $78,834 was realized by the
Partnership in 2002, and income from investment in joint ventures increased by
$41,739.
Expenses for the three months ended June 30, 2002 totaled $2,863,528 as
compared to $3,165,748 in the 2001 quarter, representing a decrease of $302,220.
The reduction in expense resulted primarily from a decrease in management
fees-general partner of $333,528 from $461,895 in the quarter ended June 30,
2001 to $128,367 in the quarter ended June 30, 2002. This decrease resulted from
the reduction of the Partnership's portfolio of leases, upon which such fees are
dependable. Interest expense decreased by $178,410 from $1,475,548 in the
quarter ended June 30, 2001 to $1,297,138 in the quarter ended June 30, 2002, as
a result of a decline in the average non-recourse indebtedness by way of
application of lease payments in accordance with the repayment schedules. In
addition, administrative expense reimbursements - general partner decreased by
$127,406 from $185,886 in the quarter ended June 30, 2001 to $58,480 in the
quarter ended June 30, 2002. The decrease resulted from the reduction of the
Partnership's portfolio of leases upon which such expenses are dependable.
Amortization of initial direct cost decreased by $79,551 from $171,584 in the
quarter ended June 30, 2001 to $92,033 in the quarter ended June 30, 2002. This
decrease resulted from the continued reduction of the amortization
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
June 30, 2002
balance of initial direct costs and the method (interest method) used to
calculate amortization of initial direct costs on finance leases.
An increase in depreciation expense of $308,329 from $712,131 in the
quarter ended June 30, 2001 to $1,020,460 in the quarter ended June 30, 2002
resulted from the additional aircraft operating leases discussed above. In
addition, general and administrative expenses increased by $110,958 from
$152,870 in the quarter ended June 30, 2001 to $263,828 in the quarter ended
June 30, 2002.
Net income for the quarter ended June 30, 2002 and 2001 was $255,709 and
$1,447,055, respectively. The net income per weighted average limited
partnership unit was $0.34 and $1.92 for the quarter 2002 and 2001 respectively.
Results of Operations for the 2002 Six Months Ended June 30, 2002 and 2001
For the six months ended June 30, 2002 and 2001, the Partnership did not
lease or finance any additional equipment.
Revenue decreased by $1,312,328 from $7,505,671 in the six months ended
June 30, 2001 to $6,193,343 in the six months ended June 30, 2002. The decline
in revenue resulted primarily from a gain on the sale of an investment in a
unguaranteed residual of $1,219,910 in the six months ended June 30, 2001.
Finance income decreased by $1,532,167 from $3,929,188 in the six months ended
June 30, 2001 to $2,397,021 in the six months ended June 30, 2002. The decrease
in finance income resulted from a reduction in the size of the Partnership's
portfolio of leases, as well as a restructuring of two aircraft finance leases
in October 2001 which caused the leases to be re-classified as operating leases.
The decline in the above stated categories of revenue were offset partially by
an increase in rental income of $1,374,515 from $2,186,102 in the six months
ended June 30, 2001 to $3,560,617 in the six months ended June 30, 2002. The
increase in rental income resulted from the restructuring of the two aircraft
leases mentioned above along with the re-leasing of an off lease aircraft to a
replacement lessee in April 2001. Such aircraft had been off lease in 2001 until
it was re-leased. In addition, gain on sale of equipment of $78,834 was realized
by the Partnership, and income from investment in joint ventures increased by
$6,776.
Expenses for the six months ended June 30, 2002 totaled $6,355,642 as
compared to $6,057,076 in the 2001 quarter, representing an increase of
$298,566. The increase in expense resulted primarily from an increase in
depreciation expense of $1,011,907 from $1,029,012 in the six months ended June
30, 2001 to $2,040,919 in the six months ended June 30, 2002. This increase
resulted from the additional aircraft operating leases discussed above, along
with the re-leasing of an aircraft for which no depreciation expense was taken
during the off-lease period in 2001. General and administrative expenses
increased by $135,542 from $309,657 in the six months ended June 30, 2001 to
$445,199 in the six months ended June 30, 2002. These increases in depreciation
and general and administrative expenses were partially off-set by decreases in
interest expense of $326,139, management fees - general partner of $234,195,
amortization of initial direct cost of $221,557, and administrative expense
reimbursements - general partner of $63,057.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
June 30, 2002
Decreases in the interest expense, management fees general partner and
administrative expense reimbursement general partner resulted from a reduction
in the size of the Partnership's portfolio of leases. The decrease in the
amortization of initial direct cost resulted from the continued reduction of the
amortization balance of initial direct costs and the method (interest method)
used to calculate amortization of initial direct costs on finance leases.
Net (loss) income for the six months ended June 30, 2002 and 2001 was
$(162,299) and $1,448,595 respectively. The net (loss) income per weighted
average limited partnership unit was $(0.22) and $1.92 for the six months 2002
and 2001 respectively.
Liquidity and Capital Resources
In early 2002, the Partnership extended and amended its existing line of
credit arrangement with an unaffiliated third party lender. Under the terms of
the amendment, the maturity date was extended to December 31, 2002, but no
additional borrowings were permitted. During the second quarter of 2002, the
loan was fully paid with proceeds from a newly established line of credit with
Comerica Bank, from which it borrowed $2,405,871. Under the new line, which was
jointly entered into with Fund Eight B and L.P. Seven and has a joint limit of
$17,500,000, the Partnership may borrow at a rate equal to the Comerica Bank
base rate plus 1% (5.75% at June 30, 2002) with borrowings collateralized by the
present value of rents receivable and residuals. The line expires May 31, 2003.
Besides proceeds from the new line of credit, the Partnership's primary
source of funds for the six months ended June 30, 2002 was cash provided by
investing activities of $1,082,322. Cash used in operating activities was
$422,646 and the Partnership repaid $1,819,912 of its recourse notes payable-old
line of credit during 2002 with proceeds from the newly established line of
credit with Comerica Bank. Because the Partnership paid distributions to
partners totaling $4,046,976, its liquidity was reduced.
Cash distributions to limited partners for the six months ended June 30,
2002 and 2001, which were paid monthly, totaled $4,006,505 and $4,013,132
respectively.
As of June 30, 2002, 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.
Item 3. Qualitative and Quantitative Disclosures About Market Risk
The Partnership is exposed to certain market risks, including changes in
interest rates. 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.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
June 30, 2002
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 June 30, 2002 was $2,405,871. 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 of approximately $22.3 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.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed by the Partnership during the quarter ended
June 30, 2002.
Exhibits
99.1 Certification of Chairman and Chief Executive Officer pursuant to 18
U.S.C.ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
99.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C.ss.1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ICON Income Fund Eight A L.P.
File No. 333-54011 (Registrant)
By its General Partner,
ICON Capital Corp.
August 14, 2002 /s/ Thomas W. Martin
- ------------------------- --------------------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal financial and accounting officer
of the General Partner of the Registrant)
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
June 30, 2002
EXHIBIT 99-1
I, Beaufort J.B. Clarke, Chairman and Chief Executive Officer of ICON
Capital Corp, the sole General Partner of ICON Income Fund Eight A L.P.,
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Quarterly Report on Form 10-Q for the period ended June 30, 2002 (the
"Periodic Report") which this statement accompanies fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78m) and
(2) information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Income Fund Eight A L.P..
Dated: August 14, 2002
/s/ Beaufort J.B. Clarke
-------------------------------------------------------
Beaufort J.B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
sole General Partner of ICON Income Fund Eight A L.P.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
June 30, 2002
EXHIBIT 99-2
I, Thomas W. Martin, Executive Vice President (Principal Financial and
Accounting Officer) of ICON Capital Corp, the sole General Partner of ICON
Income Fund Eight A L.P., certify, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) the Quarterly Report on Form 10-Q for the period ended June 30, 2002 (the
"Periodic Report") which this statement accompanies fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78m) and
(2) information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Income Fund Eight A L.P..
Dated: August 14, 2002
/s/ Thomas W. Martin
-------------------------------------------------------
Thomas W. Martin
Executive Vice President (Principal
Financial and Accounting Officer)
ICON Capital Corp.
sole General Partner of ICON Income Fund Eight A L.P.