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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 quarterly period ended March 31, 2004
--------------------------------------------------
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the transition per period from______________________ to ____________________
Commission File Number 333-54011
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ICON Income Fund Eight A L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-4006824
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(State or other jurisdiction of (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
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act) [ ] Yes [X] No
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
- -----------------------------
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Condensed Consolidated Balance Sheets
(unaudited)
March 31, December 31,
2004 2003
---- ----
Assets
------
Cash and cash equivalents $ 217,463 $ 52,101
----------------- ----------------
Investment in finance leases
Minimum rents receivable 6,573,854 10,827,643
Estimated unguaranteed residual values 25,070,358 26,686,729
Initial direct costs, net 205,343 248,472
Unearned income (3,063,490) (3,697,612)
Allowance for doubtful accounts (228,721) (228,721)
----------------- ----------------
28,557,344 33,836,511
----------------- ----------------
Investment in operating leases
Equipment, at cost 10,765,766 10,765,766
Accumulated depreciation (2,455,029) (2,202,024)
----------------- ----------------
8,310,737 8,563,742
----------------- ---------------
Equipment held for lease or sale, net 2,259,010 2,505,332
Investments in unguaranteed residual values 1,997,000 1,997,000
Investment in option 419,672 -
Investments in unconsolidated joint ventures 1,550,100 693,023
Due from affiliates, net 295,386 295,386
Other assets, net 69,478 130,257
----------------- ----------------
Total assets $ 43,676,190 $ 48,073,352
================= ================
Liabilities and Partners' Equity
--------------------------------
Notes payable - non-recourse $ 14,624,410 $ 19,174,180
Note payable - recourse 5,424,547 4,184,547
Security deposits and other 442,391 731,628
Due to General Partner 612,865 -
Due to affiliates, net 271,972 236,822
Minority interests in joint venture 145,024 141,232
----------------- ----------------
21,521,209 24,468,409
----------------- ----------------
Commitments and Contingencies
Partners' equity (deficiency)
General Partner (428,331) (414,398)
Limited partners (741,787.02 and 742,308.87
units outstanding,
$100 per unit original issue price) 22,583,312 24,019,341
----------------- ----------------
Total partners' equity 22,154,981 23,604,943
----------------- ----------------
Total liabilities and partners' equity $ 43,676,190 $ 48,073,352
================= ================
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31,
(unaudited)
2004 2003
---- ----
Revenues
Rental income $ 360,000 $ 1,574,463
Finance income 634,122 723,883
Gain from investment in unguaranteed residual values 37,065 -
Net (loss) gain on sales of equipment (3,421) 391,620
(Loss) income from investments in
unconsolidated joint ventures (20,155) 11,147
Interest income and other 10,745 10
------------- -----------
Total revenues 1,018,356 2,701,123
------------- -----------
Expenses
Interest 398,740 1,167,480
Depreciation 499,327 1,191,989
Management fees - General Partner 290,283 402,482
Administrative expense reimbursements -
General Partner 101,971 157,993
Amortization of initial direct costs 43,129 41,699
General and administrative 67,596 266,495
Minority interest expense 3,792 3,561
------------- -----------
Total expenses 1,404,838 3,231,699
------------- ------------
Net loss $ (386,482) $ (530,576)
============= ===========
Net loss allocable to:
Limited Partners $ (382,617) $ (525,270)
General Partner (3,865) (5,306)
------------- -----------
$ (386,482) $ (530,576)
============= ===========
Weighted average number of limited
partnership units outstanding 741,757 742,958
============= ===========
Net loss per weighted average
limited partnership unit $ (0.52) $ (.71)
============= ============
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Condensed Consolidated Statement of Changes in Partners' Equity
For the Three Months Ended March 31, 2004
(unaudited)
Limited Partner Distributions
-----------------------------
Return of Investment Limited General
Capital Income Partners Partner Total
------- ------ -------- ------- -----
(Per weighted average unit)
Balance at January 1, 2004 $ 24,019,341 $ (414,398) $ 23,604,943
Cash distributions to partners $ 1.28 $ - (946,980) (10,068) (957,048)
Limited partnership units
redeemed (521.85 units) (106,432) - (106,432)
Net loss (382,617) (3,865) (386,482)
--------------- ------------ --------------
Balance at March 31, 2004 $ 22,583,312 $ (428,331) $ 22,154,981
=============== ============ ==============
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31,
(unaudited)
2004 2003
---- ----
Cash flows from operating activities:
Net loss $ (386,482) $ (530,576)
------------ ------------
Adjustments to reconcile net loss to
net cash used in operating activities:
Rental income paid directly to lender by lessee (360,000) (1,574,463)
Finance income portion of receivables paid directly
to lenders by lessees (536,904) (647,752)
Depreciation 499,327 1,191,989
Interest expense on non-recourse financing paid
directly to lenders by lessees 326,460 967,175
Amortization of initial direct costs 43,129 41,699
Minority interest expense 3,792 3,561
Gain from investment in unguaranteed residual values (37,065) -
Loss (income) from investments in
unconsolidated joint ventures 20,155 (11,147)
Net loss (gain) on sales of equipment 3,421 (391,620)
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables 89,723 252,342
Other assets - 266,517
Security deposits and other (259,842) (1,127,538)
Due to/from General Partner and affiliates, net 63,936 145,667
------------ ------------
Total adjustments (143,868) (883,570)
------------ ------------
Net cash used in operating activities (530,350) (1,414,146)
------------ ------------
Cash flows from investing activities:
Proceeds from the sales of equipment 1,154,187 807,620
Proceeds from sale of investment in unguaranteed residual values 37,065 393,186
Distributions received from unconsolidated joint ventures 327,940 318,413
Investment in joint venture (1,000,000) -
------------ ------------
Net cash provided by investing activities 519,192 1,519,219
------------ ------------
Cash flows from financing activities:
Proceeds from note payable - non-recourse - 3,684,718
Proceeds from note payable - recourse 1,240,000 -
Repayments of notes payable - non-recourse - (173,297)
Repayments of notes payable - recourse - (2,246,324)
Cash distributions to partners (957,048) (2,016,489)
Redemption of limited partnership units (106,432) (2,658)
------------ ------------
Net cash provided by (used in) financing activities 176,520 (754,050)
------------ ------------
Net increase (decrease) in cash and cash equivalents 165,362 (648,977)
Cash and cash equivalents at beginning of the period 52,101 819,928
------------ ------------
Cash and cash equivalents at end of the period $ 217,463 $ 170,951
============ ============
(continued on next page)
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Cash Flows - (Continued)
Supplemental Disclosure of Cash Flow Information
- ------------------------------------------------
For the three months ended March 31, 2004 and 2003, non-cash activities
included the following:
2004 2003
---- ----
Principal and interest on direct
finance receivables paid directly to lenders by lessees $ 4,516,230 $ 5,289,897
Rental income assigned - operating lease receivables
paid directly to lenders by lessees 360,000 1,574,463
Principal and interest on non-recourse financing paid
directly to lenders by lessees (4,876,230) (6,864,360)
------------ -----------
$ - $ -
============ ===========
2004 2003
---- ----
Interest on non-recourse financing
paid directly to lenders by lessees $ 326,460 $ 967,175
Other interest paid 72,280 200,305
------------ -----------
Total interest expense $ 398,740 $ 1,167,480
============ ===========
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements
March 31, 2004
(unaudited)
1. Basis of Presentation
The condensed 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 condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes included in the Partnership's 2003 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 three months ended March 31, 2004 and 2003
were as follows:
2004 2003
---- ----
Management fees $ 290,283 $ 402,482 Charged to Operations
Administrative expense
reimbursements 101,971 157,993 Charged to Operations
------------ ------------
Total $ 392,254 $ 560,475
============ =============
As a result of the General Partner's review of its results of operations
for its fiscal year ended March 31, 2004 , administrative expenses incurred by
the General Partner on behalf of the Partnership of $55,000 were identified as
having been incurred by the General Partner in the quarter ended December 31,
2003. Accordingly, this amount was subsequently charged to the Partnership in
the quarter ended March 31, 2004.
For the quarter ended March 31, 2004, the Partnership had a receivable of
$295,386 due from affiliates, primarily resulting from its share of
distributions and rental payments received by affiliates on behalf of the
Partnership. The Partnership also had a payable of $271,972 due to the
affiliates for rental payments received on behalf of the affiliates.
For the quarter ended March 31, 2004, the Partnership had a net payable of
$612,865 to the General Partner for acquisition, management, and administrative
expense reimbursement.
3. Joint Ventures
The Partnership and its affiliates formed five 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.
Consolidated Venture
The joint venture described below is majority owned and is consolidated
with the Partnership.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements
March 31, 2004
ICON/Boardman Facility LLC
--------------------------
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
Facility LLC ("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's financial statements include 100% of the assets and liabilities
and 100% of the revenues and expenses of ICON BF. L.P. Six's (0.5025%) and L.P.
Seven's (0.5025%) interests in ICON BF have been reflected as minority interests
in joint ventures on the condensed consolidated balance sheets and minority
interest expense on the condensed consolidated statements of operations. The
outstanding non-recourse debt at March 31, 2004 was $3,573,324. The non-recourse
debt associated with this equipment was refinanced on May 6, 2004 at an interest
rate of 3.65% maturing January 23, 2010.
Unconsolidated Joint Ventures
The four joint ventures described below are less than 50% owned and are
accounted for following the equity method, whereby the Partnership's original
investment was recorded at cost and is adjusted by its share of earnings, losses
and distributions.
ICON/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 in AIC Trust 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 of
(Pound)475,000 each were collected in 2002, and the third and fourth installment
on the note of (Pound)450,000 and (Pound)425,000 were collected in the first
quarter 2003. As of March 31, 2004, the remaining amount due is (Pound)375,000
($666,209 based upon the exchange rate at March 31, 2004), as the Partnership
collected (Pound)375,000 in the quarter.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
Information as to the unaudited results of its operations for the three
months ended March 31, 2004 and 2003 is summarized below:
Three Months Ended Three Months Ended
March 31, 2004 March 31, 2003
-------------- --------------
Net income $ 4,652 $ 11,051
=============== ================
Partnership's share of
net income $ 2,034 $ 4,833
=============== ================
Distributions $ 683,603 $ 722,005
=============== ================
Partnership's share of distributions $ 298,940 $ 315,733
=============== ================
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 a 767-300 ER
aircraft originally leased to Scandinavian Airline Systems ("SAS") for a
purchase price of $44,515,416. The purchase price was funded with cash of
$2,241,371 and the assumption of non-recourse debt in the amount of $42,274,045.
The lenders have a security interest in the aircraft and an assignment of the
rental payments under the lease. The lease with SAS expired in March 2003, at
which time the balance of the non-recourse debt outstanding was approximately
$34,500,000. The Partnership has been making contributions toward interest only
payments on the outstanding non-recourse debt, during the remarketing of the
aircraft by the General Partner. 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.
Information as to the unaudited results of its operations for the three
months ended March 31, 2004 and 2003 is summarized below:
Three Months Ended Three Months Ended
March 31, 2004 March 31, 2003
-------------- --------------
Net (loss) income $ (958,936) $ 187,359
=============== ================
Partnership's share of net (loss) income $ (19,179) $ 3,747
=============== ===============
Contributions $ 290,557 $ -
=============== ===============
Partnership's share of contributions $ 5,811 $ -
=============== ===============
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements - Continued
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 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 1.0%, 10.31%, 1.0% and 87.69%, respectively, in ICON Cheyenne. The
outstanding non-recourse debt balance at March 31, 2004 was $1,081,435.
Information as to the unaudited results of its operations for the three
months ended March 31, 2004 and 2003 is summarized below:
Three Months Ended Three Months Ended
March 31, 2004 March 31, 2003
-------------- --------------
Net (loss) income $ (301,068) $ 256,681
=============== ================
Partnership's share of net (loss) income $ (3,010) $ 2,567
=============== ================
Distributions $ 2,900,000 $ 268,045
=============== ================
Partnership's share of distributions $ 29,000 $ 2,680
=============== ================
ICON Aircraft 46837, LLC
-------------------------
During March 2004, the Partnership and an affiliate, ICON Income Fund Ten
LLC ("Fund Ten") formed ICON Aircraft 46837, LLC ("ICON Aircraft 46837") for the
purpose of acquiring and managing a McDonnell Douglas DC-10-30F aircraft on
lease with Federal Express through March 2007. The purchase price of the
aircraft totaled $21,250,753, which was funded with cash of $3,566,226, the
assumption of other liabilities of $12,500, and non-recourse debt with an
unaffiliated third party lenders of $17,672,027. The debt has an interest rate
of 4% and matures in March 2007. The lenders have a security interest in the
aircraft and have been assigned the rental payments under the lease. Legal fees
of $36,050 were also paid and capitalized as part of the cost of the aircraft.
The Partnership and Fund Ten have ownership interest of 28.6% and 71.4%,
respectively.
The Partnership also invested an additional $10,000 for an option to
acquire from Fund Ten 61.4% of its share in ICON Aircraft 46837. If the
Partnership exercises this option, the Partnership will have acquired a 90%
interest in ICON Aircraft 46837. The exercise price of the option is $2,130,604
and expires on September 30, 2009.
The Partnership paid a total of $573,770 in acquisition fees to the General
Partner relating to this transaction which includes a fee of $409,672 on the
option which was charged in accordance with the partnership agreement.
4. Equipment sales
The Partnership sold its remaining interest in equipment that was on lease
to Rental Service Inc. The leases with Rental Services, Inc. expired in the
quarter, at which time the Partnership had residual interest in the equipment of
$1,170,400 on an equity investment of $573,694. The lessee purchased the
equipment for $1,166,979 resulting in a book loss of $3,421.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
March 31, 2004
Item 2. General Partner's Discussion and Analysis of Financial Condition
and Results of Operations
Forward-Looking Information - The following discussion and analysis should
be read in conjunction with the audited financial statements and notes dated
December 31, 2003 included in the Partnership's annual report on Form 10-K.
Certain statements within this document may constitute forward-looking
statements made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. These statements are identified by words such as
"anticipate," "believe," "estimate," "expects," "intend," "predict" or "project"
and similar expressions. This information may involve risks and uncertainties
that could cause actual results to differ materially from the forward-looking
statements. Although the Partnership believes that the expectations reflected in
such forward-looking statements are based on reasonable assumptions, such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected.
Accounting Policy - Investment in Option - The Partnership carries its
investment in an option to acquire additional ownership interest in a joint
venture at cost, which is equal to or less than market value, subject to the
Partnership's policy relating to impairments. Gain or loss will be recognized
upon the sale or disposition of the investment.
Results of Operations for the Quarter Ended March 31, 2004 and 2003
Revenues for the quarter ending March 31, 2004 ("2004 Quarter") were
$1,018,356, representing a decrease of $1,682,767 from the quarter ending March
31, 2003 ("2003 Quarter"). Revenues decreased primarily from decreases in rental
income of $1,214,463, gain on sale of equipment of $395,041, finance income of
$89,761, and income from investment in unconsolidated joint ventures of $31,302.
Rental income decreased primarily from the termination of the leases with
Boeing Connexion and Sky Airlines in the third quarter 2003, due to the
equipment being turned over to the lender of the non-recourse debt that was
associated with the equipment. The Partnership did not realize a gain from sale
of equipment in comparison to the 2003 Quarter, as the booked residual value of
the equipment sold in 2004 was much greater than that sold in 2003. Finance
income reduced due to the maturing of leases. The Partnership experienced a loss
from its investment in unconsolidated joint ventures due primarily to its
investment in ICON Aircraft 24846, which returned a net loss of $19,179. These
decreases were partially offset by gain from investment in unguaranteed residual
values of $37,065. The Partnership in the corresponding quarter of 2003, was
recovering its cost of investment in unguaranteed residual values, therefore no
gain or loss was recognized.
Expenses for the 2004 Quarter were $1,404,838, representing a decrease of
$1,826,861 from the 2003 Quarter. Expenses decreased primarily from decreases in
interest expense of $768,740, depreciation of $692,662, general and
administrative expense of $198,899, management fees - General Partner of
$112,199, and administrative expense reimbursement - General Partner of $56,022.
Interest expense decreased primarily from the relinquishment of the non-recourse
debt associated with the Boeing Connexion and Sky Airlines transactions in the
third quarter 2003. Depreciation expense also reduced primarily from the
termination of leases with Boeing Connexion and Sky Airlines. General and
administrative expense and management fees - General Partner reduced due to the
reduction in the level of activities of the Partnership's operation.
Net loss for the quarter 2004 and 2003 was $386,482 and $530,576,
respectively. The net loss per weighted average limited partnership unit was
$0.52 and $0.71 for the 2004 Quarter and 2003 Quarter, respectively. The net
loss was stable due to compensating factors. Reduction in revenue was off-set
with reduction in expenses. Primarily, rental income reduction is associated
with reduction in operating leases, which also resulted in less depreciation
expense.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
March 31, 2004
Liquidity and Capital Resources
The Partnership's primary sources of liquidity in the 2004 Quarter were
proceeds from a recourse note payable of $1,240,000, proceeds from sales of
equipment of $1,154,187, proceeds from sale of investment of unguaranteed
residual values of $37,065, and distributions received from unconsolidated joint
ventures of $327,940 offset by cash used in operating activities of $530,350,
distributions to partners aggregated $957,048, and the Partnership invested
$1,000,000 in a joint venture and an option. As a result of this activity, the
Partnership's liquidity increased over the corresponding quarter March 31, 2003,
as cash used in operating and financing activities reduced by $883,796 and
$930,570, respectively.
The Partnership's investment in a joint venture, with an option agreement
attached, was made in order to progressively fulfill the Partnership's objective
of investing a minimum percentage of capital contribution as outlined in the
Partnership's prospectus.
The Partnership refinanced a non-recourse debt associated with the
equipment on lease to Portland General Electric on May 6, 2004. The amount that
was outstanding at the time of refinancing was $3,573,324. The Partnership
received $7,618,918 from this refinancing, which it intends to utilize in
repaying its recourse debt of $5,424,547 and retain the remainder for
operational expenses. The interest rate is 3.65% and the secured debt is
schedule to mature January 23, 2010. The Partnership will be repaying this debt
with future rental payments from Portland General Electric.
From time to time the Partnership will invest in industries, equipment, or
geopolitical regions that may be subject to outside influences that may affect
the Partnership's investments. While these factors are considered when the
investments are made, unforeseen events such as those that occurred on September
11, 2001 can have far-reaching and unpredictable adverse consequences. The
following is a discussion of some assets that may fall into this category.
Aircraft: The Partnership is the lessor of two (2) Boeing 737 aircraft. The
value of the aircraft is subject to the fluctuations of the airline industry,
which are greatly influenced by a number of factors including, but not limited
to, the global economy, fuel prices, political instability, terrorist activity,
and epidemics such as SARS.
In May 2002, the Partnership entered into a $17,500,000 joint and several
line of credit agreement shared with L.P. Seven and Fund Eight A (the "Initial
Funds"), with Comerica Bank as lender. Under the terms of the agreement, the
Partnership may borrow at a rate equal to the Comerica Bank base rate plus 1%
(together, 5.00% at March 31, 2004) and all borrowings are to be jointly and
severally collateralized by the present values of rents receivable and equipment
owned by all of the Initial Funds sharing in the joint line of credit. On
December 12, 2002, the agreement was amended to admit Fund Nine, collectively
along with the Initial Funds (the "Funds"), as a borrower sharing the
$17,500,000 joint line of credit agreement.
The Funds have entered into a Contribution Agreement, dated as of May 30,
2002, as amended December 12, 2002, pursuant to which the Funds have agreed to
restrictions on the amount and the terms of their respective borrowings under
the line of credit in order to minimize the risk that a Fund would not be able
to repay its allocable portion of the outstanding revolving loan obligation at
any time, including restrictions on any Fund borrowing in excess of the lesser
of (A) an amount each Fund could reasonably expect to repay in one year out of
its projected free cash flow, or (B) the greater of (i) the Borrowing Base (as
defined in the line of credit agreement) as applied to such Fund, and (ii) 50%
of the net worth of such Fund. The Contribution Agreement provides that, in the
event a Fund pays an amount under the agreement in excess of its allocable share
of the obligation under the agreement whether by reason of an Event of Default
or otherwise, the other Funds will immediately make a contribution payment to
such Fund in such amount that the aggregate amount paid by each Fund reflects
its allocable share of the aggregate obligations under the agreement.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
March 31, 2004
The Funds' obligations to each other under the Contribution Agreement are
collateralized by a subordinate lien on the assets of each participating Fund.
The line of credit was extended to expire December 31, 2004. As of March 31,
2004, there were borrowings of $5,424,547 by the Partnership under the line of
credit. Aggregate borrowing by all Funds under the line of credit agreement
aggregated $14,039,986 on March 31, 2004.
Cash distributions to limited partners for the 2004 Quarter and the 2003
Quarter, which were paid monthly, totaled $946,980 and $1,996,320, respectively.
As of March 31, 2004, except as noted above, and to the best of our
knowledge, 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. We do not consider the impact of inflation to be material
in the analysis of our overall operations.
Item 3. 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 investors.
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 aggregate borrowings under the
floating rate line of credit as of March 31, 2004 was $5,424,547 as compared to
$4,184,547 at December 31, 2003. 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.
Item 4. Controls and Procedures
The Partnership carried out an evaluation, under the supervision and with
the participation of management of ICON Capital Corp., the Manager of the
Partnership, including the Chief Executive Officer and the Principal Financial
Officer, of the effectiveness of the design and operation of the Partnership's
disclosure controls and procedures as of the end of the period covered by this
report pursuant to the Securities Exchange Act of 1934. Based upon the
evaluation, the Chief Executive Officer and the Principal Financial Officer
concluded that the Partnership's disclosure controls and procedures were
effective.
There were no significant changes in the Partnership's internal control
over financial reporting during the Partnership's first quarter that have
materially affected, or are likely to materially affect, the Partnership's
internal control over financial reporting.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
March 31, 2004
PART II - OTHER INFORMATION
- ---------------------------
Item 1- Legal Proceedings
- -------------------------
The Company, from time-to-time, in the ordinary course of business,
commences legal actions when necessary to protect or enforce the rights of the
Partnership. We are not a defendant party to any litigation and are not aware of
any pending or threatened litigation against the Partnership.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
(b) Reports on Form 8K
None
(c) Exhibits
32.1 Certification of Chairman and Chief Executive Officer.
32.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer.
33.1 Certification of Chairman and Chief Executive Officer pursuant to 18 U.S.C.
(Section)1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
33.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C. (Section)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)
March 31, 2004
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.
May 17, 2004 /s/ Thomas W. Martin
- -------------------- ------------------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer
of the General Partner of the Registrant)
Exhibit 32.1
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
Certifications - 10-Q
---------------------
I, Beaufort J.B. Clarke, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ICON Income Fund
Eight A L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15e and 15d-15e) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the Corporate
Manager (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the Partnership ability to record, process, summarize and
report financial information and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Dated: May 17, 2004
/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.
Exhibit 32.2
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
Certifications - 10-Q
---------------------
I, Thomas W. Martin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ICON Income Fund
Eight A L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15e and 15d-15e) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the Corporate
Manager (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the Partnership ability to record, process, summarize and
report financial information and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Dated: May 17, 2004
/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.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
March 31, 2004
EXHIBIT 33.1
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 March 31, 2004 (the
"Quarterly 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 Quarterly Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Income Fund Eight A L.P.
Dated: May 17, 2004
/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)
March 31, 2004
EXHIBIT 33.2
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 March 31, 2004 (the
"Quarterly 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 Quarterly Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Income Fund Eight A L.P.
Dated: May 17, 2004
/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.