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, 2005
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[ ] 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.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
100 Fifth Avenue, New York, New York 10011-1505
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(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 Exchange Act Rule 12b-2). [ ] Yes [x] No
ICON Income Fund Eight A L.P.
Index
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets at March 31, 2005 (Unaudited)
and December 31, 2004 3-4
Consolidated Statements of Operations for the three months ended
March 31, 2005 and 2004 (Unaudited) 5
Consolidated Statement of Changes in Partners' Equity for the three
months ended March 31, 2005 (Unaudited) 6
Consolidated Statements of Cash Flows for the three months ended March
31, 2005 and 2004 (Unaudited) 7-8
Notes to Consolidated Financial Statements (Unaudited) 9-13
Item 2. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations 14-22
Item 3. Quantitative and Qualitative Disclosures About Market Risk 22
Item 4. Controls and Procedures 22-23
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 24
Item2. Unregistered Sales of Equity Securities and Use of Proceeds 24
Item 3. Defaults Upon Senior Securities 24
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 5. Other Information 24
Item 6. Exhibits 25
Signatures 25
Certifications 26-29
2
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Balance Sheets
ASSETS
(Unaudited)
March 31, December 31,
2005 2004
Cash and cash equivalents $ 320,604 $ 718,195
-------------- ----------------
Investments in finance leases:
Minimum rents receivable 1,433,212 5,142,302
Estimated unguaranteed residual values 16,400,000 16,589,619
Unearned income (803,264) (1,318,548)
Allowance for doubtful accounts (125,842) (125,842)
------------- ----------------
Net investments in finance leases 16,904,106 20,287,531
------------- ----------------
Investments in operating leases:
Equipment, at cost 37,873,680 37,873,680
Accumulated depreciation (9,795,650) (7,752,404)
-------------- ----------------
Net investments in operating leases 28,078,030 30,121,276
------------- ----------------
Equipment held for sale or lease, net 1,614,227 1,621,154
Investments in estimated unguaranteed residual values 1,997,000 1,997,000
Investments in joint ventures 271,835 274,054
Convertible notes receivable
and accrued interest receivable 676,043 625,000
Other assets, net 218,568 273,986
Total assets $ 50,080,413 $ 55,918,196
============== ================
See accompanying notes to consolidated financial statements.
3
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Balance Sheets
LIABILITIES AND PARTNERS' EQUITY
(Unaudited)
March 31, December 31,
2005 2004
Notes payable - non-recourse $ 27,185,366 $ 33,646,477
Notes and accrued interest payable - recourse 5,400,000 4,625,000
Due to General Partner and affiliates 73,169 73,682
Deferred rental income 1,748,950 540,114
Security deposits and other payables 18,385 818
Minority interest 446,200 424,127
------------- -------------
Total liabilities 34,872,070 39,310,218
------------- -------------
Commitments and contigencies
Partners' equity:
General Partner (503,727) (489,833)
Limited Partners: (739,515.40 units outstanding,
$100 per unit original issue price) 15,097,270 16,472,811
Accumulated other comprehensive income 614,800 625,000
------------- -------------
Total partners' equity 15,208,343 16,607,978
------------- -------------
Total liabilities and partners' equity $ 50,080,413 $ 55,918,196
============== =============
See accompanying notes to consolidated financial statements.
4
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statements of Operations
Three Months Ended March 31,
(Unaudited)
2005 2004
Revenue:
Rental income $ 2,292,330 $ 360,000
Finance income 508,564 634,122
Income (loss) from investments in joint ventures 279 (20,155)
Net loss on sales of equipment (59,539) -
Gain on sale of investment in unguaranteed residual values 2,021 37,065
Interest and other income 71,609 10,745
-------------- ------------------
Total revenue 2,815,264 1,021,777
-------------- ------------------
Expenses:
Loss on lease termination - 3,421
Depreciation 2,043,246 499,327
Interest 528,417 398,740
General and administrative 80,671 67,596
Management fees - General Partner 338,527 290,283
Administrative expense reimbursements - General Partner 137,654 101,971
Amortization of initial direct costs and loan costs 49,419 43,129
Minority interest 22,073 3,792
-------------- ------------------
Total expenses 3,200,007 1,408,259
-------------- ------------------
Net loss $ (384,743) $ (386,482)
=============== ==================
Net loss allocable to:
Limited Partners $ (380,896) $ (382,617)
General Partner (3,847) (3,865)
---------------- ------------------
$ (384,743) $ (386,482)
=============== ==================
Weighted average number of
limited partnership units outstanding 739,515 741,757
============== ==================
Net loss per weighted average limited
partnership unit $ (0.52) $ (0.52)
============== ==================
See accompanying notes to consolidated financial statements.
5
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Statement of Changes in Partners' Equity
Three Months Ended March 31, 2005
(Unaudited)
Limited Partner Distributions Accumulated
(Per weighted average unit) Other Total
Return of Investment Limited General Comprehensive Partners'
Capital Income Partners Partner Income (Loss) Equity
------- ------ -------- ------- ------------- ------
Balance, January 1, 2005 $ 16,472,811 $ (489,833) $ 625,000 $ 16,607,978
Cash distributions to partners $ (1.34) $ - (994,645) (10,047) - (1,004,692)
Valuation adjustment on convertible notes - - (10,200) (10,200)
Net loss (380,896) (3,847) - (384,743)
------------- ------------- ------------ -------------
Balance, March 31, 2005 $ 15,097,270 $ (503,727) $ 614,800 $ 15,208,343
============= ============= ============ =============
See accompanying notes to consolidated financial statements.
6
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
Three Months Ended March 31,
(Unaudited)
2005 2004
---- ----
Cash flows from operating activities:
Net loss $ (384,743) $ (386,482)
Adjustments to reconcile net loss to net cash used in
operating activities:
Rental income paid directly to lenders by lessees (2,292,330) (360,000)
Interest expense on non-recourse financing paid directly
to lenders by lessees 448,787 326,460
Finance income portion of receivable paid directly
to lenders by lessees (508,564) (536,904)
Net loss on sales of equipment 59,539 -
Gain on sale of investment in unguaranteed residual value (2,021) (37,065)
Loss on lease termination - 3,421
Amortization of initial direct costs and loan fees 49,419 43,129
Depreciation 2,043,246 499,327
(Income) loss from investments in joint ventures (279) 20,155
Minority interest 22,073 3,792
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables 192,595 89,723
Accrued interest income (61,243) -
Due to General Partner and affiliates, net (513) 63,936
Deferred rental income 3,118 -
Security deposits and other payables 17,567 (259,842)
-------------- ------------
Net cash used in operating activities (413,349) (530,350)
-------------- ------------
Cash flows from investing activities:
Proceeds from investments in unguaranteed residual values 2,021 37,065
Proceeds from sales of equipment 240,929 1,154,187
Investment in joint venture - (1,000,000)
Contributions made to joint ventures - 327,940
Distributions received from joint ventures 2,500 -
-------------- ------------
Net cash provided by investing activities 245,450 519,192
-------------- ------------
Cash flows from financing activities:
Cash distributions to partners (1,004,692) (957,048)
Redemption of additional members' shares - (106,432)
Proceeds from notes payable - recourse 775,000 1,240,000
-------------- ------------
Net cash (used in) provided by financing activities (229,692) 176,520
--------------- ------------
Net (decrease) increase in cash and cash equivalents (397,591) 165,362
Cash and cash equivalents, beginning of the period 718,195 52,101
-------------- ------------
Cash and cash equivalents, end of the period $ 320,604 $ 217,463
============== ============
See accompanying notes to consolidated financial statements.
7
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
Three Months Ended March 31,
(Unaudited)
2005 2004
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 79,630 $ 72,280
============== ==============
Supplemental disclosure of non-cash investing and financing activities:
Principal and interest paid directly to lenders by lessees $ 6,909,899 $ 4,876,230
============== ==============
See accompanying notes to consolidated financial statements.
8
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
March 31, 2005
(Unaudited)
(1) Basis of Presentation and Consolidation
The accompanying consolidated financial statements of ICON Income Fund
Eight A L.P. (the "Partnership") have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission for Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete financial
statements. In the opinion of management, all adjustments (consisting only of
normal recurring accruals) considered necessary for a fair presentation have
been included. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes included in the
Partnership's 2004 Annual Report on Form 10-K. The results for the interim
period are not necessarily indicative of the results for the full year.
The consolidated financial statements include the accounts of the
Partnership and its majority owned subsidiary. All intercompany accounts and
transactions have been eliminated in consolidation. The Partnership accounts for
its interests in minority 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. In
joint ventures where the Partnership's ownership interest is majority owned,
minority interest represents the minority venturer's proportionate share of
their equity in the joint venture. The minority interest is adjusted for the
minority venturer's share of the earnings or loss of the joint venture.
(2) Organization
The Partnership was formed on July 9, 1997 as a Delaware limited
partnership for the purpose of acquiring equipment subject to leases and, to a
lesser degree, acquiring ownership rights to items of leased equipment at lease
expiration.
The Partnership is currently in its "reinvestment" phase, wherein the
Partnership seeks to purchase equipment from time to time through the summer of
2005. After the "reinvestment period", the Partnership will then begin to sell
its assets in the ordinary course of business during a time frame called the
"disposition period". If the Partnership believes it would be beneficial to
reinvest the cash flow in equipment during the disposition period, the
Partnership may do so, but the General Partner will not receive any additional
fees in connection with such reinvestments.
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 the terms of a management agreement with the Partnership.
Additionally, the General Partner has a 1% ownership interest in the
Partnership.
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 a 10% per
annum cumulative return on their outstanding adjusted capital contribution
account. After such time, the distributions will be allocated 90% to the limited
partners and 10% to the General Partner.
9
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
March 31, 2005
(Unaudited)
(2) Organization - continued
Certain reclassifications have been made to the accompanying consolidated
financial statements for the three months ended March 31, 2004 to conform to the
current period presentation.
(3) Joint Ventures
The Partnership and its affiliates, entities managed and controlled by the
General Partner, formed four joint ventures, discussed below, for the purpose of
acquiring and managing various assets. The Partnership and these affiliates have
substantially identical investment objectives and participate on the same terms
and conditions. The Partnership and the other joint venturers have a right of
first refusal to purchase the equipment, on a pro-rata basis, if any of the
other joint venturers desire to sell their interests in the equipment or joint
venture.
The two joint ventures described below are majority owned and consolidated
with the Partnership.
ICON Aircraft 46837, LLC
The Partnership and ICON Income Fund Ten, LLC ("Fund Ten"), formed a joint
venture, ICON Aircraft 46837, LLC ("ICON Aircraft 46837"), for the purpose of
acquiring a 1979 McDonnell Douglas DC-10-30F aircraft on lease to Federal
Express Corporation ("FedEx") with a remaining lease term of 36 months. During
September 2004, the Partnership exercised its option to acquire an additional
61.4% ownership interest in ICON Aircraft 46837 from Fund Ten. At March 31, 2005
the Partnership and Fund Ten own 90% and 10%, respectively, of ICON Aircraft
46837. The outstanding balance of the non-recourse debt secured by this aircraft
was $10,240,269 at March 31, 2005.
ICON/Boardman Facility LLC
The Partnership and an affiliate, ICON Cash Flow Partners L.P. Six ("L.P.
Six") have ownership interests of 99.4975% and .5025%, respectively, in
ICON/Boardman Facility LLC ("ICON BF"). ICON BF owned a coal handling facility
on lease with Portland General Electric ("PGE"), a utility company.
The General Partner entered into a Memorandum of Agreement with PGE to sell
the coal handling facility effective May 27, 2005. The sales price was
approximately $21,300,000. The Partnership anticipates that its portion of the
gain will be approximately $2,634,000.
The two joint ventures described below are minority owned by the
Partnership and are accounted for under the equity method, whereby the
Partnership's original investment was recorded at cost and is adjusted by its
share of earnings, losses and distributions of the joint ventures.
10
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
March 31, 2005
(Unaudited)
(3) Joint Ventures - continued
ICON Cheyenne LLC
The Partnership and three affiliates, L.P. Six, L.P. Seven and ICON Income
Fund Eight B L.P. ("Fund Eight B") formed ICON Cheyenne LLC ("ICON Cheyenne")
for the purpose of acquiring and managing a portfolio of equipment leases
consisting of over the road rolling stock, manufacturing equipment and materials
handling equipment. The original transaction involved acquiring from Cheyenne
Leasing Company a portfolio of 119 leases, of which 26 remain active, with
expiration dates ranging between March 2005 and October 2006. At March 31, 2005,
the Partnership, L.P. Six, L.P. Seven and Fund Eight B had ownership interests
of 1.00%, 1.0%, 1.27%, and 96.73%, respectively, in ICON Cheyenne.
Information as to the unaudited results of operations of ICON Cheyenne is
summarized below:
Three Months Ended
March 31,
2005 2004
------------- -------------
Net loss $ (210,502) $ (301,068)
============= =============
Partnership's share of net loss $ (2,105) $ (3,010)
============= =============
Distributions $ 250,000 $ 2,900,000
============= =============
Partnership's share of distributions $ 2,500 $ 29,000
============= =============
North Sea (Connecticut) Limited Partnership
The Partnership has a .8% interest in the profits, losses and future cash
flows of North Sea (Connecticut) Limited Partnership ("North Sea"). North Sea
owns a mobile offshore drilling rig leased to the Rowan Companies, Inc. which is
in operation in the Gulf of Mexico.
(4) Related Party Transactions
The Partnership had a net payable of $73,169 due to the General Partner and
affiliates at March 31, 2005. Of this amount, the Partnership owed the General
Partner $32,896 for unpaid administrative expense reimbursements. The remaining
amount of approximately $40,200 is due to an affiliate, L.P. Seven, for the
advances made to L.P. Seven.
In accordance with the terms of the Management Agreement, the Partnership
pays the General Partner (i) management fees ranging from 1% to 7% based on a
percentage of the rentals received either directly by the Partnership or through
joint ventures and (ii) acquisition fees of 3% calculated based on the gross
value of the transactions. In addition, the General Partner is reimbursed for
administrative expenses incurred in connection with the Partnership's
operations.
11
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
March 31, 2005
(Unaudited)
(4) Related Party Transactions - continued
Fees and other expenses charged to operations by the Partnership to the
General Partner or its affiliates were as follows:
Three Months Ended
March 31,
2005 2004
------------- -------------
Management fees $ 338,527 $ 290,283
Administrative expense reimbursements 137,654 101,971
------------- -------------
$ 476,181 $ 392,254
============= =============
(5) Line of Credit Agreement
On May 30, 2002, the Partnership, along with certain of its affiliates;
L.P. Seven, Fund Eight B and Fund Nine, (collectively, the "Initial Funds"),
entered into a $17,500,000 line of credit agreement with Comerica Bank. The
Initial Funds accrue interest, on all outstanding balances, at an interest rate
equal to the Comerica Bank base interest rate plus 1% (together, 6.75% at March
31, 2005). Under the terms of the line of credit agreement, the Initial Funds
may borrow from Comerica Bank with all borrowings to be jointly and severally
collateralized by (i) cash and (ii) the present values of certain rents
receivable and equipment owned by the Initial Funds. Effective August 5, 2004,
the line of credit agreement was amended to add ICON Income Fund Ten LLC ("Fund
Ten") as a borrower. The Initial Funds and Fund Ten are collectively referred to
as the Borrowers. On December 6, 2004, the Loan and Security Agreement with
Comerica Bank was extended to December 30, 2005.
The Initial Funds entered into a Contribution Agreement, dated May 30,
2002, as subsequently amended to include Fund Ten, pursuant to which the
Borrowers have agreed to certain restrictions on the amounts and terms of their
respective borrowings under the line of credit agreement in order to minimize
the risk that a Borrower would be unable to repay its allocable portion of
outstanding line of credit obligations at any time. These restrictions include
borrowing in excess of the lesser of (a) an amount each Borrower could
reasonably expect to repay in one year from its projected cash flow, or (b) the
greater of (i) the borrowing base, as defined in the line of credit agreement,
as applied to such and (ii) 50% of the net worth of such Borrower. The
Contribution Agreement provides that, in the event a Borrower is required to pay
an amount under this agreement in excess of its allocable share of the total
obligations under the line of credit agreement, whether by reason of an event or
default or otherwise, the other Borrowers will immediately make a contribution
payment to such Borrower and in such amount that the aggregate amount paid by
each Borrower reflects its allocable share of the aggregate obligations under
the line of credit agreement. The Borrowers' obligations to each other under the
Contribution Agreement are collateralized by a subordinate lien on the assets of
each participating Borrower.
Aggregate borrowings by the Borrowers under the Loan Agreement amounted to
$11,830,000 at March 31, 2005. The Partnership had advances of $5,400,000
outstanding under this line of credit at March 31, 2005. During May 2005, the
Partnership repaid all of its outstanding debt on the Comerica note using a
portion from the cash received from the sale of the coal handling facility owned
by ICON BF.
12
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes To Consolidated Financial Statements
March 31, 2005
(Unaudited)
(5) Line of Credit Agreement - continued
Effective March 8, 2005, the Initial Funds and Fund Ten entered into a
Seventh Amendment to the Loan and Security Agreement with Comerica Bank. This
Agreement releases L.P. Seven from all of its rights and obligations under the
Loan and Security Agreement dated as of May 30, 2002. As such, L.P. Seven is no
longer a party to the $17,500,000 line of credit.
(6) Other Comprehensive Income (Loss)
Other comprehensive income (loss) consists of the following:
Three Months Ended March 31,
2005 2004
Net loss $ (384,743) $ (386,482)
Other Comprehensive income (loss):
Change in valuation of interest rate
swap contracts during the period (10,200) -
-------------- --------------
Comprehensive income (loss) $ (394,943) $ (386,482)
============== ==============
(7) Recent Accounting Pronouncements
On June 1, 2005 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 154 "Accounting Changes and Error
Corrections" ("SFAS 154") which replaces Accounting Principles Board Opinion No.
20, "Accounting Changes" ("APB 20") and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements," and changes the requirements for the
accounting for and reporting of a change in accounting principle. SFAS 154
requires retrospective application to prior periods' financial statements of a
voluntary change in accounting principle unless it is impracticable. APB 20
previously required that most voluntary changes in accounting principle be
recognized by including in net income of the period of the change the cumulative
effect of changing to the new accounting principle. The Partnership does not
expect the adoption of SFAS 154 to have an impact on our financial position or
results of operations.
Management does not believe that any recently issued, but not yet effective
accounting pronouncements, if currently adopted, would have a material effect on
the accompanying consolidated financial statements.
13
Item 2. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
The following is a discussion of our results of operations and current
financial position. This discussion should be read in conjunction with our
unaudited consolidated financial statements and related notes included elsewhere
in this report and the audited consolidated financial statements and related
notes included in our Annual Report on Form 10-K for the year ended December 31,
2004.
As used in this quarterly report on Form 10-Q, references to "we," "us,"
"our" or similar terms include ICON Income Fund Eight A and its consolidated
subsidiaries.
Forward-Looking Information - Certain statements within this document may
constitute forward-looking statements within the meaning 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. We believe 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. Any such forward-looking
statements are subject to risks and uncertainties and our future results of
operations could differ materially from historical results or current
expectations. Some of these risks are discussed in this report, and include,
without limitation, fluctuations in oil and gas prices; level of fleet additions
by competitors and industry overcapacity; changing customer demands for
aircraft; acts of terrorism; unsettled political conditions, war, civil unrest
and governmental actions, and environmental and labor laws. Our actual results
could differ materially from those anticipated by such forward-looking
statements due to a number of factors, some of which may be beyond our control,
including, without limitation:
o changes in our industry, interest rates or the general economy;
o the degree and nature of our competition;
o availability of qualified personnel;
o cash flows from operating activities may be less than our current level of
expenses and debt obligations;
o the financial condition of lessees; and
Business Overview
We are an equipment leasing business formed on July 9, 1997 which began
active operations on October 14, 1998. We primarily engage in the business of
acquiring equipment subject to lease and, to a lesser degree, acquiring
ownership rights to items of leased equipment at lease expiration. Some of our
equipment leases are acquired for cash and are expected to provide current cash
flow, which we refer to as "income" leases. The majority of the purchase price
of our other equipment leases will be financed, so these leases will generate
little or no current cash flow because substantially all of the rental payments
received from a lessee will be paid to a lender. For these "growth" leases, we
anticipate that the future value of the leased equipment will exceed the cash
portion of the purchase price paid for the equipment. We are currently in our
"reinvestment" phase, wherein we seek to purchase equipment from time to time
through the summer of 2005.
14
We initially invested most of the net proceeds from our offering in items
of equipment subject to a lease. Additionally, additional investments have been
made with the cash generated from our initial investments to the extent that
cash has not been needed for expenses, reserves and distributions to investors.
The investment in additional equipment in this manner is called "reinvestment."
We anticipate purchasing equipment from time to time until five years from the
date we completed the offering of limited partnership interests. That time frame
is called the "reinvestment period," which we may extend for an additional three
years, at our discretion. After the "reinvestment period," we will then sell our
assets in the ordinary course of business during a time frame called the
"disposition period." If we believe it would benefit investors to reinvest our
cash flow in equipment during the disposition period, we may do so, but the
General Partner will not receive any additional fees in connection with such
reinvestments. Our goal is to complete the disposition period in three years
after the end of the reinvestment period, but it may take longer to do so.
Accordingly, an investor should expect to hold his units for at least 10 years
from the time he invests.
Substantially all of our recurring operating cash flows are generated from
the operations of the "income" leases in our portfolio. On a monthly basis, we
deduct the expenses related to the recurring operations of the portfolio from
such revenues and assess the amount of the remaining cash flows that will be
required to fund known or anticipated re-leasing costs and equipment management
costs. Any residual operating cash flows are considered available for
distribution to the partners and paid monthly (up until the disposition period).
Our current portfolio, which we hold either directly or through joint
venture investments with affiliates and others, consists primarily of the
following equipment subject to lease:
Air Transportation Industry:
o We have a 90% interest in a McDonnell Douglas DC-10-30F aircraft subject to
lease with FedEx. The lease has a remaining term of 24 months as of March
31, 2005. Our portion of the purchase price was approximately $18,999,000
consisting of approximately $3,783,000 in cash and the assumption of
non-recourse debt of approximately $15,216,000. The lender has a security
interest in the aircraft and an assignment of the rental payments under the
lease.
o We have a 100% interest in a Boeing 737-200 aircraft on lease to America
West Corporation. The lease is scheduled to expire on December 31, 2005.
The total aggregate purchase price was approximately $6,569,000 consisting
of approximately $1,535,000 in cash and the assumption of non-recourse debt
of approximately $5,034,000. The lender has a security interest in the
aircraft and an assignment of the rental payments under the lease.
o We have a 100% interest in a Boeing 737-200 aircraft on lease to America
West Corporation. The lease is scheduled to expire on December 31, 2005.
The total aggregate purchase price was approximately $6,650,000 consisting
of approximately $1,615,000 in cash and the assumption of non-recourse debt
of approximately $5,035,000. The lender has a security interest in the
aircraft and an assignment of the rental payments under the lease.
o We have a 100% interest in various aircraft rotables that were originally
on lease to Sabena Belgian World Airways and Sabena Oman. The aggregate
purchase price of the parts for Sabena Belgian World Airways and Sabena
Oman was $2,978,345 and $1,961,000, respectively. All of this equipment is
currently off lease and being remarketed.
Energy Industry
o We have a 100% interest in one tugboat ("M/V MICHIGAN") bearing official
number 650770 and one oil barge ("GREAT LAKES") bearing official number
650771 on lease to Keystone Great Lakes, whose obligations are ultimately
guaranteed by BP Amoco Plc. The lease is scheduled to expire on January 1,
2008. The purchase price of the equipment was approximately $12,923,000,
consisting of approximately $5,628,000 in cash and the assumption of
approximately $7,295,000 of non-recourse debt.
15
2005 Portfolio Activity
Modular Furniture
During November 2004, we were notified of the lessee's intent to exercise
its fair market value purchase option for modular furniture they were leasing.
The lease expired during February 2005 and the lessee purchased the equipment
for approximately $234,000, in cash. We incurred a loss on this sale of
approximately $59,500.
Coal Handling Facility
On May 27, 2005, the General Partner completed the sale of our coal
handling facility, owned by ICON BF, on lease to Portland General Electric
("PGE"). The sale price was $21,250,000. In connection with the sale we repaid
the remaining balance of the non-recourse debt, netting us approximately
$13,600,000 in cash. The Partnership anticipates that its portion of the gain
will be approximately $2,634,000.
Economic and Industry Factors
Our results continue to be impacted by a number of factors influencing the
United States of America's economy as well as the equipment leasing industry,
some of which are discussed below.
United States Economy
The economy of the United States of America appears to be recovering, and
the leasing industry's outlook for the foreseeable future is encouraging. We
foresee an increase in capital spending by corporations through 2007 which
should increase available leases, and to that end, we believe there will be more
opportunities in this market. Nonetheless, a key obstacle still facing the
leasing industry is the continued low interest rate environment, which reduces
leasing volume inasmuch as customers are more prone to purchase than lease.
Other factors which may negatively affect the leasing industry are the proposed
legal and regulatory changes that may affect tax benefits of leasing and the
continued misperception by potential lessees, stemming from Enron, WorldCom and
others, that leasing should not play a central role as a financing alternative.
However, as economic growth continues and interest rates inevitably begin to
rise over time, we are optimistic that more lessees will return to the
marketplace.
Air Transportation Industry
The domestic aircraft leasing industry has been on the downside of a
business cycle and continues to remain there. This has resulted in depressed
sales prices for assets such as our aircraft interests. It does not appear that
the industry will recover significantly in the very near future especially with
the recent increases in the price of gasoline and the fare wars within the
domestic air transportation industry. We are optimistic that a recovery will
occur within two to three years. However, a further weakening of the industry
could cause the proceeds realized from the future sale of our aircraft to be
even less than suggested by recent appraisals.
Energy Industry
The energy industry, which includes our investment in the coal handling
facility and our investment in the tug boat, is highly cyclical and dependent on
numerous factors, including the current level of exploration and development of
offshore oil areas. Despite the current high prices of oil, oil companies are
reluctant to make the capital investment necessary in shelf drilling, as the
high energy prices are perceived as being temporary by oil companies.
16
Inability to Remarket Assets
The market for some of our assets is not very liquid. If current equipment
lessees choose not to renew their leases or purchase other equipment upon
expiration of the existing lease, we will need to remarket the equipment. There
is no assurance that we will be able to locate a willing buyer or lessee for our
assets, or if one is located, that the buyer or lessee will pay a price for the
asset at least equal to the appraised value.
Critical Accounting Policies
An appreciation of our critical accounting policies is necessary to
understand our financial results. These policies may require the General Partner
to make difficult and subjective judgments regarding uncertainties, and as a
result, such estimates may significantly impact our financial results. The
precision of these estimates and the likelihood of future changes depend on a
number of underlying variables and a range of possible outcomes. We applied our
critical accounting policies and estimation methods consistently in all periods
presented. We consider the following accounting policies to be critical to our
business:
o Lease classification and revenue recognition
o Asset impairments
o Depreciation
Lease Classification and Revenue Recognition
The equipment we lease to third parties is classified either as a finance
lease, a leveraged lease, or an operating lease, which is determined based upon
the terms of each lease. Initial direct costs are capitalized and amortized over
the term of the related lease for both a finance lease and a leveraged lease.
For an operating lease, the initial direct costs are included as a component of
the cost of the equipment and depreciated.
For finance leases, we record, at lease inception, the total minimum lease
payments receivable from the lessee, the estimated unguaranteed residual value
of the equipment at lease termination, the initial direct costs related to the
lease 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 ratably over the term of the lease.
For leveraged leases, we record, at lease inception, our net investment in
the equipment which consists of the minimum lease payments receivable, the
estimated unguaranteed residual value of the equipment at lease termination and
the initial direct costs related to the lease, net of the unearned income and
principal and interest on the related non-recourse debt. Unearned income is
recognized as income over the life of the lease at a constant rate of return on
the positive net investment.
For operating leases, income is recorded as rental income and is recognized
on the straight line method over the lease term.
Our General Partner has an Investment Committee that approves each new
equipment acquisition. As part of their process they determine the residual
value to be used once the acquisition has been approved. The factors considered
in determining the residual value include, but are not limited to, the
creditworthiness of the potential lessee, the type of equipment being
considered, how the equipment is integrated into the potential lessees business,
the length of the lease and industry in which the potential lessee operates.
Residual values are reviewed in accordance with our policy to review all
significant assets in our portfolio.
17
Asset Impairments
The significant assets in our asset portfolio are periodically reviewed, at
least annually, by management, to determine whether events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. Management uses qualified third party appraisers to assist in the
review process. An impairment loss will be recognized if the carrying amount of
a long-lived asset is not recoverable and exceeds its fair value. In such
circumstances, we will estimate the future cash flows (undiscounted and without
interest charges) expected to result from the use of the asset and its eventual
disposition. Future cash flows are the future cash inflows expected to be
generated by an asset less the future cash outflows expected to be necessary to
obtain those inflows. An impairment loss will be measured as the amount by which
the carrying amount of a long-lived asset exceeds its fair value.
The events or changes in circumstances which generally indicate that an
asset may be impaired are (i) the estimated fair value of the underlying
equipment is less than our carrying value or (ii) the lessee is experiencing
financial difficulties and it does not appear likely that the estimated proceeds
from the disposition of the asset will be sufficient to satisfy the remaining
obligation to the lender and our residual position in the asset. Generally in
the latter situation, the residual position relates to equipment subject to
third party notes payable where the lessee remits their rental payments directly
to the lender and we do not recover our residual position until the note payable
is repaid in full.
Depreciation
We record depreciation expense on equipment classified as an operating
lease. In order to calculate depreciation we first determine the depreciable
equipment cost, which is the cost less estimated salvage value. The estimated
salvage value is our estimate of the value of the equipment at lease
termination. The estimated residual value is reviewed annually, by management,
to determine whether an impairment charge may be required. Management uses
qualified third party appraisers to assist in the review process. Depreciation
expense is recorded ratably over the term of the related lease.
New Accounting Pronouncements
On June 1, 2005 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 154 "Accounting Changes and Error
Corrections" ("SFAS 154") which replaces Accounting Principles Board Opinion No.
20, "Accounting Changes" ("APB 20") and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements," and changes the requirements for the
accounting for and reporting of a change in accounting principle. SFAS 154
requires retrospective application to prior periods' financial statements of a
voluntary change in accounting principle unless it is impracticable. APB 20
previously required that most voluntary changes in accounting principle be
recognized by including in net income of the period of the change the cumulative
effect of changing to the new accounting principle.
Management does not believe that any recently issued, but not yet effective
accounting pronouncements, if currently adopted, would have a material effect on
the accompanying consolidated financial statements.
Results of Operations for the Three Months Ended March 31, 2005 (the "2005
Quarter") and 2004 (the "2004 Quarter")
We are currently in our reinvestment period and anticipate entering our
disposition period during the summer of 2005 unless we extend the reinvestment
period for an additional three years. While in the reinvestment period we
continue to look for equipment leases to purchase, either with cash or with a
combination of cash and financing. As such, we expect our revenue will fluctuate
due to our selling some equipment leases while purchasing other equipment
leases. We also expect to have gains and losses from the sales of equipment
during this time period. As for expenses we anticipate interest expense to
decrease our outstanding debt decreases. If we enter into an equipment lease
where we finance a portion of the purchase price then interest expense may
increase.
18
Once we enter our disposition period we will begin the process of selling
our assets in the ordinary course of business. As such, rental income and
finance income will decrease over time as will expenses related to our assets
such as depreciation. Additionally, interest expense should decrease as we reach
the expiration of leases that were financed and we fully repay the debt.
Revenue for the 2005 Quarter and the 2004 Quarter are summarized as
follows:
Three Months Ended March 31,
2005 2004 Change
Total revenue $ 2,815,264 $1,021,777 $ 1,793,487
=========== =========== ===========
Rental income $ 2,292,330 $ 360,000 $ 1,932,330
Finance income 508,564 634,122 (125,558)
Income (loss) from investments in joint ventures 279 (20,155) 20,434
Net gain (loss) on sales of equipment (59,539) - (59,539)
Gain from investment in unguaranteed residual values 2,021 37,065 (35,044)
Interest and other income 71,609 10,745 60,864
Total revenue for the 2005 Quarter increased by $1,793,487, or 176% as
compared to the 2004 Quarter. Rental income increased as a result of the
consolidation of ICON Aircraft 46837, beginning September 1, 2004. Finance
income decreased primarily due to the renegotiation of our lease with Regus and
the expiration of our lease with E*Trade during February 2005. The increase in
net gain or loss on sale of equipment results from the sale of the modular
furniture on lease to E*Trade which resulted in a loss of $59,539, as compared
to the prior year with no similar sales. The increase in interest and other
income is due primarily to accrued interest recorded on the convertible notes
receivable.
Expenses for the 2005 Quarter and the 2004 Quarter are summarized as
follows:
Three Months Ended March 31,
2005 2004 Change
Total expenses $ 3,200,007 $ 1,408,259 $ 1,791,748
=========== =========== ===========
Loss on lease termination - 3,421 (3,421)
Depreciation 2,043,246 499,327 1,543,919
Interest 528,417 398,740 129,677
General and administrative 80,671 67,596 13,075
Management fees - General Partner 338,527 290,283 48,244
Administrative expense reimbursements -
General Partner 137,654 101,971 35,683
Amortization of initial direct costs
and loan costs 49,419 43,129 6,290
Minority interest 22,073 3,792 18,281
Expenses for the 2005 Quarter increased by $1,791,748, or 127%, as compared
to the 2004 Quarter. The increase in depreciation, interest, management and
administrative fees and minority interest is primarily due to our consolidation
of ICON Aircraft 46837 beginning September 2004.
19
Net Loss
As a result of the foregoing factors, net loss in the 2005 Quarter and the
2004 Quarter was $384,743 and $386,482 respectively. Net loss per weighted
average number of limited partnership units outstanding was $0.51 and $0.52 for
the 2005 Quarter and the 2004 Quarter, respectively.
Liquidity and Capital Resources
We believe that with the cash we currently have available, cash being
generated from our leases, and proceeds from equipment sales we have sufficient
cash to continue our operation into the foreseeable future.
Our primary source of cash for the three months ended March 31, 2005 was
from investing activities while our primary source of cash for the three months
ended March 31, 2004 was from both investing activities and financing
activities. During the three months ended March 31, 2005 we increased our
recourse debt by $775,000 and had proceeds from the sales of equipment of
approximately $241,000. During the three months ended March 31, 2004 we
increased our recourse debt by $1,240,000 and had proceeds from the sales of
equipment of approximately $1,154,000.
Our primary use of cash for the three months ended March 31, 2005 was
distributions to partners of approximately $1,005,000. Our primary use of cash
for the three months ended March 31, 2004 distributions to partners of
approximately $957,000, redemption of limited partnership units of approximately
$106,000 and an investment in a joint venture of $1,000,000.
We have amounts available to borrow, if necessary, under our line of credit
agreement with Comerica Bank.
Financings and Borrowings
We have both non-recourse debt and recourse debt at March 31, 2005. Our
non-recourse debt consists of notes payable in which the lenders have a security
interest in the equipment and an assignment of the rental payments under the
leases. The lenders are being paid directly by the lessees. Our non-recourse
debt accrues interest at rates ranging from 3.65% per year to 10.63% per year.
The outstanding balances of our non-recourse notes payable at March 31, 2005 was
$27,185,366. During May 2005, we utilized a portion of the proceeds from the
sale of ICON BF to repay the remaining non-recourse debt relating to this asset
of approximately $7,650,000.
We and certain of our affiliates, specifically L.P. Seven; ICON Income Fund
Eight B L.P. and ICON Income Fund Nine, LLC (collectively, the "Initial Funds"),
entered into a $17,500,000 line of credit agreement with Comerica Bank as of May
30, 2002, as amended. Interest accrues on all outstanding balances, at an
interest rate equal to the Comerica Bank base interest rate plus 1% (together is
6.75% at March 31, 2005). Under the terms of the line of credit agreement, the
Initial Funds may borrow money from Comerica Bank with all borrowings to be
jointly and severally collateralized by (i) cash and (ii) the present values of
certain rents receivable and equipment owned by the Initial Funds. Effective
August 5, 2004, the line of credit agreement was amended to add Fund Ten as a
borrower. The Initial Funds and Fund Ten are collectively referred to as the
Borrowers. The line of credit agreement expires on December 30, 2005.
20
The Initial Funds entered into a Contribution Agreement, dated May 30,
2002, as subsequently amended to include Fund Ten, pursuant to which the
Borrowers have agreed to certain restrictions on the amounts and terms of their
respective borrowings under the line of credit agreement in order to minimize
the risk that a Borrower would be unable to repay its allocable portion of
outstanding line of credit obligations at any time. These restrictions include
borrowing in excess of the lesser of (a) an amount each Borrower could
reasonably expect to repay in one year from its projected cash flow, or (b) the
greater of (i) the borrowing base, as defined in the line of credit agreement,
as applied to such and (ii) 50% of the net worth of such Borrower. The
Contribution Agreement provides that, in the event a Borrower pays an amount
under this agreement in excess of its allocable share of the total obligations
under the line of credit agreement, whether by reason of an event or default or
otherwise, the other Borrowers will immediately make a contribution payment to
such Borrower and in such amount that the aggregate amount paid by each Borrower
reflects its allocable share of the aggregate obligations under the line of
credit agreement. The Borrowers' obligations to each other under the
Contribution Agreement are collateralized by a subordinate lien on the assets of
each participating Borrower.
Effective March 8, 2005, the Initial Funds and Fund Ten entered into a
Seventh Amendment to the Loan and Security Agreement with Comerica Bank. This
Agreement releases L.P. Seven from all of its rights and obligations under the
Loan and Security Agreement dated as of May 30, 2002. As such, L.P. Seven is no
longer a party to the $17,500,000 line of credit.
The aggregate borrowing by all Funds under the Loan Agreement was
$11,830,000 at March 31, 2005. At March 31, 2005, we had $5,400,000 outstanding
under the Loan Agreement. During May 2005, we utilized a portion of the cash
from the sale of ICON BF to repay the entire outstanding balance with Comerica
Bank.
Distributions
We do not, in the normal course of business, pay dividends. We do pay
monthly distributions to our partners beginning with their admission to the
Partnership through the termination of the operating period, which we anticipate
will be during the summer of 2005. For the quarter ended March 31, 2005 and
2004, we paid distributions to our limited partners totaling $994,645 and
$946,980, respectively. For the quarter ended March 31, 2005 we paid
distributions to our General Partner totaling $10,047 and $10,068, respectively.
Commitments
At March 31, 2005 we are a party to both recourse and non-recourse debt.
The lenders have security interests in equipment relating to the non-recourse
debt and an assignment of the rental payments under the leases. If the lessee
were to default on the non-recourse debt the equipment would be returned to the
lender as extinguishment of the non-recourse debt. The recourse debt relates to
the Comerica Bank line of credit which is more fully discussed in the financings
and borrowings section above. At March 31, 2005 we had an outstanding balance of
$27,185,366 in non-recourse borrowings.
Risks and Uncertainties
At March 31, 2005, except as noted above in the Business Overview section
and listed below, and to the best of our knowledge, there were no known trends
or demands, commitments, events or uncertainties which are likely to have a
material effect on our liquidity.
Set forth below and elsewhere in this report and in other documents we file
with the Securities and Exchange Commission are risks and uncertainties that
could cause our actual results to differ materially from the results
contemplated by the forward-looking statements contained in this report and
other periodic statements we make, including but not limited to, the following:
o The market for aircraft is currently depressed due to an overabundance of
aircraft on the market resulting from the overall downturn in the aviation
industry following the events of September 11, 2001. While the market for
these aircraft is cyclical, there can be no assurance that the market will
recover. Failure of the market to recover significantly may result in our
inability to realize our investment in the residuals of the aircraft in our
portfolio.
21
o We may face difficulty remarketing the aircraft rotables. Aircraft rotables
are replacement spare parts that are held in inventory by an airline. We
own rotables for both the Boeing 737-300 aircraft and the Airbus aircraft.
We believe that over time we will be able to remarket these rotables, but
the aircraft industry has been in an overall down cycle and we may face
difficulty in remarketing these assets.
Inflation and Interest Rates
The potential effects of inflation on us are difficult to predict. If the
general economy experiences significant rates of inflation, however, it could
affect us in a number of ways. We do not currently have or expect to have rent
escalation clauses tied to inflation in our leases. The anticipated residual
values to be realized upon the sale or re-lease of equipment upon lease
terminations (and thus the overall cash flow from our leases) may be expected to
increase with inflation as the cost of similar new and used equipment increases.
If interest rates increase significantly, the lease rates that we can
obtain on future leases may be expected to increase as the cost of capital is a
significant factor in the pricing of lease financing. Leases already in place,
for the most part, would not be affected by changes in interest rates.
Item 3. Qualitative and Quantitative Disclosures About Market Risk
We, like most other companies, are exposed to certain market risks, which
includes changes in interest rates and the demand for equipment (and the related
residuals) owned by us. We believe to the best of our knowledge that our
exposure to other market risks, including foreign currency exchange rate risk,
commodity risk and equity price risk, are insignificant, at this time, to both
our financial position and our results of operations.
In general, we manage our exposure to interest rate risk by obtaining fixed
rate debt. The fixed rate debt is structured so as to match the cash flows
required to service the debt to the payment streams under fixed rate lease
receivables. The payments under the leases are assigned to the lenders in
satisfaction of the debt. We may finance leases with a floating interest rate
and we are therefore exposed to interest rate risk until fixed rate financing is
arranged.
We borrow funds under a floating rate line of credit and are therefore
exposed to interest rate risk until the floating rate line of credit is repaid.
We had $5,400,000 outstanding under the floating rate line of credit at March
31, 2005.
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures
We carried out an evaluation, under the supervision and with the
participation of management of ICON Capital Corp., our General Partner,
including the Chief Executive Officer and the Principal Financial and Accounting
Officer, of the effectiveness of the design and operation of our 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,
except as noted below, the Chief Executive Officer and the Principal Financial
and Accounting Officer concluded that our disclosure controls and procedures
were effective.
22
While evaluating our disclosure controls and procedures we recognized that
greater internal controls were needed to aid in a more efficient closing of our
financial statements, thereby requiring additional skilled accounting staff.
Towards the end of the third quarter of 2004, the Partnership hired a new senior
vice president of accounting and the Partnership is in the process of seeking
additional accounting staff in order to better effectuate its internal controls.
We will continue to evaluate our disclosure controls and procedures to determine
their effectiveness and adequacy and will take the steps necessary, in our
opinion, to ensure the adequacy of the Partnership's disclosure controls and
procedures.
In designing and evaluating our disclosure controls and procedures, we
recognized that disclosure controls and procedures, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the
objectives of the disclosure controls and procedures are met. Our disclosure
controls and procedures have been designed to meet reasonable assurance
standards. Disclosure controls and procedures cannot detect or prevent all error
and fraud. Some inherent limitations in disclosure controls and procedures
include costs of implementation, faulty decision-making, simple error and
mistake. Additionally, controls can be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management override of
the controls. The design of any system of controls is based, in part, upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
anticipated and unanticipated future conditions. Over time, controls may become
inadequate because of changes in conditions, or the degree of compliance with
established policies or procedures.
Our General Partner's Chief Executive Officer and Principal Financial and
Accounting Officer have determined that no weakness in disclosure controls and
procedures had any material effect on the accuracy and completeness of the
Partnership's financial reporting and disclosure included in this report.
23
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of conducting our business, there may be certain
claims, suits, and complaints filed against us. In the opinion of management,
the outcome of such matters, if any, will not have a material impact on our
consolidated financial position or results of operations. No material legal
proceedings are currently pending against us or against any of our assets.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Default Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote Of Security Holders
No matters were submitted to a vote of security holders during the
first quarter 2005.
Item 5. Other Information
Not applicable.
Item 6 - Exhibits
31.1 Certification of Chairman and Chief Executive Officer.
31.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer.
32.1 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.
32.2 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.
24
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. (Registrant) By its General Partner, ICON Capital Corp.
Date: July 1, 2005 /s/ Beaufort J.B. Clarke
---------------------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer
Date: July 1, 2005 /s/ Thomas W. Martin
---------------------------------------
Thomas W. Martin
Executive Vice President
Principal Financial and Accounting Officer)
25
Exhibit 31.1
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. ss.1350)
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 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
report;
3. Based on my knowledge, the financial statements and other financial
information included in this 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 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-15(e) and 15d-15(e)) 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 report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end
of the period covered by this report based on such evaluation; and
c) presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
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 General Partner
(or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control which are reasonably likely to
materially affect the registrant's 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: July 1, 2005
/s/ Beaufort J.B. Clarke
- -----------------------------
Beaufort J. B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
General Partner of ICON Income Fund Eight A L.P.
26
Exhibit 31.2
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. ss.1350)
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 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
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
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-15(e) and 15d-15(e)) 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 report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end
of the period covered by this report based on such evaluation; and
c) presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
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 General Partner
(or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control which are reasonably likely to
materially affect the registrant's 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: July 1, 2005
/s/ Thomas W. Martin
- ----------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer)
ICON Capital Corp.
General Partner of ICON Income Fund Eight A L.P.
27
Exhibit 32.1
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. ss.1350)
I, Beaufort J.B. Clarke, Chairman and Chief Executive Officer of ICON Capital
Corp, the General Partner, in connection with the Quarterly Report of ICON
Income Fund Eight A L.P. (the "Partnership") on Form 10-Q for the quarterly
period ended March 31, 2005, as filed with the Securities and Exchange
Commission on the date hereof (the "Periodic Report") certify, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge
and belief:
(1) the Periodic Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
(2) the information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of the
Partnership.
Dated: July 1, 2005
/s/ Beaufort J.B. Clarke
------------------------------------------------------
Beaufort J.B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
General Partner of ICON Income Fund Eight A L.P.
A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.
The information contained in this Exhibit 32.2 is being furnished and shall not
be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liabilities of that section.
The information contained in this Exhibit 32.2 shall not be incorporated by
reference into any registration statement or other document pursuant to the
Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as
amended, except as shall be expressly set forth by specific reference to this
Exhibit 32.2 in such filing.
28
Exhibit 32.2
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. ss.1350)
I, Thomas W. Martin, Executive Vice President (Principal Financial and
Accounting Officer) of ICON Capital Corp, the General Partner, in connection
with the Quarterly Report of ICON Income Fund Eight A L.P. (the "Partnership")
on Form 10-Q for the quarterly period ended March 31, 2005, as filed with the
Securities and Exchange Commission on the date hereof (the "Periodic Report")
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the
best of my knowledge and belief:
(1) the Periodic Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
(2) the information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of the
Partnership.
Dated: July 1, 2005
/s/ Thomas W. Martin
- -------------------------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer)
ICON Capital Corp.
General Partner of ICON Income Fund Eight A L.P.
A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.
The information contained in this Exhibit 32.2 is being furnished and shall not
be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liabilities of that section.
The information contained in this Exhibit 32.2 shall not be incorporated by
reference into any registration statement or other document pursuant to the
Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as
amended, except as shall be expressly set forth by specific reference to this
Exhibit 32.2 in such filing.
29