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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1998
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the transition period from to
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Commission File Number 333-54011
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ICON Income Fund Eight A L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-4006824
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
600 Mamaroneck Avenue, Harrison, New York 10528-1632
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 698-0600
-----------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class Name of each exchange
on which registered
- ------------------------------------ ---------------------------------------
- ------------------------------------ ---------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
- --------------------------------------------------------------------------------
(Title of class)
- --------------------------------------------------------------------------------
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [ ] No
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
TABLE OF CONTENTS
Item Page
- ---- ----
PART I
1. Business 3-4
2. Properties 4
3. Legal Proceedings 4
4. Submission of Matters to a Vote of Security Holders 4
PART II
5. Market for the Registrant's Securities and Related
Security Holder Matters 5
6. Selected Financial and Operating Data 5
7. General Partner's Discussion and Analysis of Financial
Condition and Results of Operations 6-7
8. Consolidated Financial Statements and Supplementary Data 8-19
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 20
PART III
10. Directors and Executive Officers of the Registrant's
General Partner 20-21
11. Executive Compensation 22
12. Security Ownership of Certain Beneficial Owners
and Management 22
13. Certain Relationships and Related Transactions 22
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 23
SIGNATURES 24
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
PART I
Item 1. Business
General Development of Business
ICON Income Fund Eight A L.P. (the "Partnership"), was formed on July 9,
1997 as a Delaware limited partnership. The Partnership's maximum offering is
$75,000,000. The Partnership commenced business operations on its initial
closing date, October 14, 1998, with the admission of 12,000 limited partnership
units at $100 per unit representing $1,200,000 of capital contributions. Between
October 15, 1998 and December 31, 1998, 124,786.33 additional units were
admitted representing $12,478,633 of capital contributions.
Narrative Description of Business
The Partnership is an equipment leasing income fund. The principal
objective of the Partnership is to obtain the maximum economic return from its
investments for the benefit of its limited partners. To achieve this objective,
the Partnership intends to: (1) acquire a diversified portfolio of low
obsolescence equipment having long lives and high residual values; (2) make
monthly cash distributions to its limited partners from cash from operations,
commencing with each limited partner's admission to the Partnership, continuing
through the Reinvestment Period, which period will end no later than the eighth
anniversary after the final closing date; (3) re-invest substantially all
undistributed cash from operations and cash from sales in additional equipment
and financing transactions during the Reinvestment Period; and (4) sell the
Partnership's investments and distribute the cash from sales of such investments
to its limited partners within twelve to thirty-six months after the end of the
Reinvestment Period.
The equipment leasing industry is highly competitive. In initiating its
leasing transactions, the Partnership will compete with leasing companies,
manufacturers that lease their products directly, equipment brokers and dealers
and financial institutions, including commercial banks and insurance companies.
Many competitors are larger than the Partnership and have greater financial
resources.
The Partnership has no direct employees. The General Partner has full and
exclusive discretion in management and control of the Partnership.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
Lease and Financing Transactions
For the period ended December 31, 1998 the Partnership purchased and leased
or financed $47,233,168 of equipment with a weighted average initial transaction
term of 61 months. The equipment purchased and leased or financed includes
$27,421,810 of equipment leased to Portland General Electric by a joint venture
in which the Partnership has a 98.5% interest. Simultaneously with the
acquisition of the Portland General Electric lease (see Note 3), rent in excess
of the senior debt payments was acquired by an affiliate of the Partnership,
ICON Cash Flow Partners L.P. Six ("L.P. Six") for $3,801,108. Included in the
summary of equipment cost by category below is 100% of the remaining equipment
cost owned by the joint venture. The Partnership accounts for this investment by
consolidating 100% of the assets and liabilities of the joint venture and
reflecting as a liability the related minority interest. At December 31, 1998
the weighted averaged initial transaction term of the portfolio was 60 months. A
summary of the portfolio equipment cost by category held at December 31, 1998 is
as follows:
December 31, 1998
---------------------
Category Cost Percent
-------- ---- -------
Material handling ........................ $23,620,702 54.4%
Computer systems ......................... 17,358,458 40.0
Furniture and fixtures ................... 2,452,900 5.6
----------- -----
$43,432,060 100.0%
=========== =====
The Partnership has one lease which individually represents greater than
10% of the total portfolio equipment cost at December 31, 1998. The lease is
with Portland General Electric (material handling), and the cost of the
equipment represented 54.4% of the total portfolio equipment cost at December
31, 1998.
Item 2. Properties
The Partnership neither owns nor leases office space or equipment for the
purpose of managing its day-to-day affairs.
Item 3. Legal Proceedings
The Partnership is not a party to any pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of 1998.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
PART II
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters
The Partnership's limited partnership interests are not publicly traded nor
is there currently a market for the Partnership's limited partnership units. It
is unlikely that any such market will develop.
Number of Equity Security Holders
Title of Class as of December 31, 1998
-------------- ---------------------------------
Limited Partners 651
General Partner 1
Item 6. Selected Consolidated Financial and Operating Data
Period Ended
December 31, 1998 (1)
---------------------
Total revenue ........................................... $46,998
=======
Net income .............................................. $27,205
=======
Net income allocable to limited partners ................ $26,933
=======
Net income allocable to the General Partner ............. $ 272
=======
Weighted average limited partnership units outstanding .. 95,236
=======
Net income per weighted average limited partnership unit $ .28
=======
Distributions to limited partners ....................... $64,728
=======
Distributions to the General Partner .................... $ 654
=======
December 31, 1998
-----------------
Total assets ........................................ $47,129,579
===========
Partners' equity .................................... $11,794,840
===========
(1) Since the Partnership commenced operations on October 14, 1998, the
initial closing date, revenue and income for 1998 does not reflect a full year's
operations.
The above selected financial data should be read in conjunction with the
consolidated financial statements and related notes appearing elsewhere in this
report.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
Item 7. General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
ICON Income Fund Eight A L.P. (the "Partnership"), was formed on July 9,
1997 as a Delaware limited partnership. The Partnership's maximum offering is
$75,000,000. The Partnership commenced business operations on its initial
closing date, October 14, 1998, with the admission of 12,000 limited partnership
units at $100 per unit representing $1,200,000 of capital contributions. Between
October 15, 1998 and December 31, 1998, 124,786.33 additional units were
admitted representing $12,478,633 of capital contributions bringing the total
admission to 136,786.33 units totaling $13,678,633 in capital contributions.
Results of Operations for the Period Ended December 31, 1998
As the Partnership commenced operations on October 14, 1998, results for
1998 do not reflect a full year's activity.
For the period ended December 31, 1998, the Partnership purchased and
leased or financed equipment with an initial cost of $47,233,168 to three
lessees or equipment users. Simultaneously with the acquisition of the Portland
General Electric lease (see Note 3), rent in excess of the senior debt payments
was acquired by L.P. Six for $3,801,108.
Net income for the period ended December 31, 1998 was $27,205. The net
income per weighted average limited partnership unit was $.28. Revenues for the
period ended December 31, 1998 were $46,998.
Liquidity and Capital Resources
The Partnership's primary sources of funds in 1998 were capital
contributions, net of offering expenses, of $11,832,017, net cash generated from
operations of $1,610,077 and proceeds from sale of receivables of $3,801,108.
These funds, along with borrowings assumed on equipment purchases of $33,753,429
(consisting of $28,753,429 in non-recourse notes and $5,000,000 in note
payable-line of credit) were used to purchase or finance leases costing
$47,233,168 and to fund cash distributions. The Partnership intends to continue
to purchase equipment and fund cash distributions utilizing funds from capital
contributions, additional borrowings and cash from operations.
The Partnership and an affiliate, ICON Cash Flow Partners L.P. Seven ("L.P.
Seven") entered into a joint line of credit agreement (the "Facility") with a
lender in December 1998. The maximum amount available under the Facility is
$5,000,000. The Facility is secured by eligible receivables and residuals and
bears interest at the rate of Prime plus one half percent. At December 31, 1998
the Partnership and L.P. Seven had $5,000,000 and $0, respectively, outstanding
under the Facility.
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 L.P. Seven formed ICON Boardman Funding L.L.C. ("ICON BF"), for the
purpose of acquiring a lease with Portland General Electric. The purchase price
totaled $27,421,810, and was funded with cash and non-recourse debt assumed in
the purchase price. The Partnership, Series C, L.P. Six and L.P. Seven received
a 98.5%, .5%, .5% and .5% interest, respectively, in ICON BF. The Partnership's
financial statements include 100% of the assets and liabilities of ICON BF.
Series C, L.P. Six and L.P. Seven's investment in ICON BF has been reflected as
"minority interests in joint venture." Simultaneously with the acquisition of
the Portland General Electric
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
lease by ICON BF, the rent in excess of the senior debt payments was acquired by
L.P. Six for $3,801,108. No gain or loss was recognized on this transaction.
Cash distributions to the limited partners, which were paid monthly,
aggregated $64,728. The monthly distribution rate in 1998 was 10.75% (on an
annualized basis) of which 4.43% was investment income and 6.32% was a return of
capital, calculated as a percentage of each limited partner's initial capital
contribution. Distributions were calculated based on the number of days each
investment unit was in the Partnership.
As of December 31, 1998, there were no known trends or demands,
commitments, events or uncertainties which are likely to have any material
effect on liquidity. As cash is realized from the continued offering, operations
or borrowings, the Partnership will continue to invest in equipment leases and
financings where it deems it to be prudent while retaining sufficient cash to
meet its reserve requirements and recurring obligations.
Year 2000 Issue
The Year 2000 issue arose because many existing computer programs have been
written using two digits rather than four to define the applicable year. As a
result, programs could interpret dates ending in "00" as the year 1900 rather
than the year 2000. In certain cases, such errors could result in system
failures or miscalculations that disrupt the operation of the affected
businesses.
The Partnership uses computer information systems provided by the General
Partner and has no computer information systems of its own. The software related
to the General Partner's primary computer information systems are provided by
third party vendors. The General Partner has formally communicated with these
vendors and has received assurance that their programs are Year 2000 compliant.
In addition, the General Partner has gathered information about the Year 2000
readiness of significant vendors and third-party servicers and continues to
monitor developments in this area. All of the General Partner's peripheral
computer technologies, such as its network operating system and third party
software applications, including payroll and electronic banking have been
evaluated and have been found to be Year 2000 compliant. The ultimate impact of
the Year 2000 issue on the Partnership will depend to a great extent on the
manner in which the issue is addressed by the Partnership's lessees. Each of the
Partnership's lessees will have a material self interest in resolving any Year
2000 issue, however, non-compliance on the part of a lessee could result in lost
or delayed revenues to the Partnership. The effect of this risk to the
Partnership is not determinable.
The General Partner is responsible for costs relating to the assessment and
development of its Year 2000 compliance remediation plan, as well as the testing
of the hardware and software owned or licensed for its personal computers. The
General Partner's costs incurred to date and expected future costs are not
material.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
Item 8. Consolidated Financial Statements and Supplementary Data
Index to Financial Statements
Page Number
-----------
Independent Auditors' Report 10
Consolidated Balance Sheet as of December 31, 1998 11
Consolidated Statement of Operations for the Period July 9, 1997
(date of inception) to December 31, 1998 12
Consolidated Statement of Changes in Partners' Equity for the
Period July 9, 1997 (date of inception) to December 31, 1998 13
Consolidated Statement of Cash Flows for the Period July 9, 1997
(date of inception) to December 31, 1998 14 - 15
Notes to Consolidated Financial Statements 16 - 19
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Financial Statements
December 31, 1998
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Partners
ICON Income Fund Eight A L.P.:
We have audited the accompanying consolidated balance sheet of ICON Income Fund
Eight A L.P. (a Delaware limited partnership) as of December 31, 1998, and the
related consolidated statement of operations, changes in partners' equity, and
cash flows for the period July 9, 1997 (date of inception) to December 31, 1998.
These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ICON Income Fund
Eight A L.P. as of December 31, 1998, and the results of its operations and its
cash flows for the period July 9, 1997 (date of inception) to December 31, 1998,
in conformity with generally accepted accounting principles.
/s/ KPMG LLP
--------------------------------------
KPMG LLP
March 12, 1999
New York, New York
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Balance Sheet
December 31, 1998
Assets
Cash ......................................................... $ 2,283,067
------------
Investment in finance leases
Minimum rents receivable .................................. 42,719,705
Estimated unguaranteed residual values .................... 14,931,068
Initial direct costs ...................................... 1,413,835
Unearned income ........................................... (14,262,754)
------------
44,801,854
Other assets ................................................. 44,658
Total assets ................................................. $ 47,129,579
============
Liabilities and Partners' Equity
Notes payable - non-recourse ................................. $ 28,758,019
Note payable - line of credit ................................ 5,000,000
Accounts payable - General Partner and affiliate, net ........ 1,232,922
Accounts payable - other ..................................... 172,918
Minority interests in consolidated joint venture ............. 170,880
------------
35,334,739
Commitments and Contingencies
Partners' equity
General Partner ........................................... 618
Limited partners (136,786.33 units
outstanding, $100 per unit original issue price) ........ 11,794,222
------------
Total partners' equity .................................. 11,794,840
Total liabilities and partners' equity ....................... $ 47,129,579
============
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Operations
For the Period July 9, 1997 (date of inception) to December 31, 1998
Revenues
Finance income ............................................. $23,869
Interest income and other .................................. 23,129
-------
Total revenues ............................................. 46,998
Expenses
General and administrative ................................. 10,673
Interest ................................................... 4,590
Amortization of initial direct costs ....................... 3,179
Administrative expense
reimbursements - General Partner ......................... 956
Management fees - General Partner .......................... 395
Total expenses ............................................. 19,793
-------
Net income .................................................... $27,205
=======
Net income allocable to:
Limited partners ........................................... $26,933
General Partner ............................................ 272
-------
$27,205
=======
Weighted average number of limited
partnership units outstanding .............................. 95,236
=======
Net income per weighted average
limited partnership unit ................................... $ .28
=======
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Changes in Partners' Equity
For the Period from July 9, 1997 (date of inception) to December 31, 1998
Limited Partner Distributions
-----------------------------
Return of Investment Limited General
Capital Income Partners Partner Total
--------- ---------- -------- ------- -----
(Per weighted average unit)
Initial partners'
capital contribution
May 6, 1998 $ 1,000 $ 1,000 $ 2,000
Refund of initial
limited partners'
capital contribution (1,000) - (1,000)
Proceeds from issuance
of limited partnership
units (136,786.33 units) 13,678,633 13,678,633
Sales and offering expenses (1,846,616) (1,846,616)
Cash distributions to partners $.40 $.28 (64,728) (654) (65,382)
Net income 26,933 272 27,205
------------ ------- ------------
Balance at
December 31, 1998 $ 11,794,222 $ 618 $ 11,794,840
============ ======= ============
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Cash Flows
For the Period July 9, 1997 (date of inception) to December 31, 1998
Cash flows from operating activities:
Net income .................................................. $ 27,205
------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Finance income portion of receivables paid directly
to lenders by lessees ................................... (6,266)
Interest expense on non-recourse financing paid
directly by lessees ..................................... 4,590
Amortization of initial direct costs ...................... 3,179
Changes in operating assets and liabilities:
Collection of principal - non-financed receivables ...... 47,915
Other assets ............................................ (44,658)
Minority interests in consolidated joint venture ........ 170,880
Accounts payable to General Partner and affiliates, net . 1,232,922
Accounts payable - other ................................ 172,918
Other, net .............................................. 1,392
------------
Total adjustments ..................................... 1,582,872
------------
Net cash provided by operating activities ............... 1,610,077
------------
Cash flows from investing activities:
Equipment and receivables purchased ......................... (18,479,739)
Initial direct costs ........................................ (1,417,014)
------------
Net cash used in investing activities ................... (19,896,753)
------------
Cash flows from financing activities:
Initial partners' capital contribution ...................... 2,000
Issuance of limited partnership units,
net of offering expenses .................................. 11,832,017
Proceeds from note payable - line of credit ................. 5,000,000
Proceeds from sale of receivables ........................... 3,801,108
Cash distributions to partners .............................. (65,382)
------------
Net cash provided by financing activities ............... 20,569,743
------------
Net increase in cash ........................................... 2,283,067
Cash at beginning of the period ................................ --
------------
Cash at end of year ............................................ $ 2,283,067
============
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Cash Flows (continued)
Supplemental Disclosure of Cash Flow Information
- ------------------------------------------------
For the period ended December 31, 1998, non-cash activities included the
following:
Fair value of equipment and receivables purchased for debt .... $(28,753,429)
Non-recourse notes payable assumed in purchase price .......... 28,753,429
------------
$ -
============
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1998
1. Organization
ICON Income Fund Eight A L.P. (the "Partnership") was formed on July 9,
1997 as a Delaware limited partnership with an initial capitalization of $2,000.
It was formed to acquire various types of equipment, to lease such equipment to
third parties and, to a lesser degree, to enter into secured financing
transactions. The Partnership's maximum offering is $75,000,000. The Partnership
commenced business operations on its initial closing date, October 14, 1998,
with the admission of 12,000 limited partnership units at $100 per unit
representing $1,200,000 of capital contributions. As of December 31, 1998,
124,786.33 additional units had been admitted into the Partnership with
aggregate gross proceeds of $12,478,633 bringing the total admission to
136,786.33 units totaling $13,678,633 in capital contributions.
The General Partner of the Partnership is ICON Capital Corp. (the "General
Partner"), a Connecticut corporation. The General Partner will manage and
control the business affairs of the Partnership's equipment, leases and
financing transactions under a management agreement with the Partnership.
ICON Securities Corp., an affiliate of the General Partner, has and will
receive an underwriting commission on the gross proceeds from sales of all
units. The total underwriting compensation to be paid by the Partnership,
including underwriting commissions, sales commissions, incentive fees, public
offering expense reimbursements and due diligence activities will be limited to
13.5% of gross proceeds up to $25,000,000, 13.0% of gross proceeds from
$25,000,000 to $50,000,000 and 12.5% of gross offering proceeds from $50,000,000
to $75,000,000. Such offering expenses aggregated $1,846,616 (including $752,325
paid to the General Partner or its affiliates (See Note 6) and were charged
directly to limited partners' equity.
Profits, losses, cash distributions and disposition proceeds will be
allocated 99% to the limited partners and 1% to the General Partner until each
limited partner has received cash distributions and disposition proceeds
sufficient to reduce its adjusted capital contribution account to zero and
receive, in addition, other distributions and allocations which would provide a
10% per annum cumulative return on its outstanding adjusted capital contribution
account. After such time, the distributions will be allocated 90% to the limited
partners and 10% to the General Partner.
2. Significant Accounting Policies
Basis of Accounting and Presentation - The Partnership's records are
maintained on the accrual basis. The preparation of financial statements in
conformity with generally accepted accounting principles requires the General
Partner's management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates. In addition, management is required to disclose contingent
assets and liabilities.
Consolidation - The consolidated financial statements include the accounts
of the Partnership and its majority owned subsidiary, ICON Boardman Funding
L.L.C. ("ICON BF"). All inter-company accounts and transactions have been
eliminated. The Partnership accounts for its interests in less than 50% owned
joint ventures under the equity method of accounting. In such cases, the
Partnership's original investments are recorded at cost and adjusted for its
share of earnings, losses and distributions thereafter.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
Leases - The Partnership accounts for owned equipment leased to third
parties as finance leases. For finance leases, the Partnership records, at the
inception of the lease, the total minimum lease payments receivable, the
estimated unguaranteed residual values, the initial direct costs related to the
leases and the related unearned income. Unearned income represents the
difference between the sum of the minimum lease payments receivable plus the
estimated unguaranteed residual minus the cost of the leased equipment. Unearned
income is recognized as finance income over the terms of the related leases
using the interest method. Initial direct costs of finance leases are
capitalized and are amortized over the terms of the related leases using the
interest method. Each lease is expected to provide aggregate contractual rents
that, along with residual proceeds, return the Partnership's cost of its
investments along with investment income.
Disclosures About Fair Value of Financial Instruments - Statement of
Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value
of Financial Instruments" requires disclosures about the fair value of financial
instruments, except for lease related instruments. Separate disclosure of fair
value information as of December 31, 1998 with respect to the Company's assets
and certain liabilities is not provided because (i) SFAS No. 107 does not
require disclosures about the fair value of lease arrangements and (ii) the
carrying value of financial assets, other than lease related investments, and
certain payables approximates market value and (iii) fair value information
concerning certain non-recourse debt obligations is not practicable to estimate
without incurring excessive costs to obtain all the information that would be
necessary to derive a market rate.
Impairment of Estimated Residual Values - The Partnership follows Statement
of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
The Partnership's policy with respect to impairment of estimated residual
values is to review, on a quarterly basis, the carrying value of its residuals
on an individual asset basis to determine whether events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable and, therefore, an impairment loss should be recognized. The events
or changes in circumstances which generally indicate that the residual value of
an asset has been impaired are (i) the estimated fair value of the underlying
equipment is less than the Partnership's carrying value or (ii) the lessee is
experiencing financial difficulties and it does not appear likely that the
estimated proceeds from disposition of the asset will be sufficient to satisfy
the remaining obligation to the non-recourse lender and the Partnership's
residual position. Generally in the latter situation, the residual position
relates to equipment subject to third party non-recourse notes payable where the
lessee remits their rental payments directly to the lender and the Partnership
does not recover its residual until the non-recourse note obligation is repaid
in full.
The Partnership measures its impairment loss as the amount by which the
carrying amount of the residual value exceeds the estimated proceeds to be
received by the Partnership from release or resale of the equipment. Generally,
quoted market prices are used as the basis for measuring whether an impairment
loss should be recognized.
Income Taxes - No provision for income taxes has been made as the liability
for such taxes is that of each of the partners rather than the Partnership.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
New Accounting Pronouncements - In June 1998 the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
requires that an entity recognize all derivative instruments as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
SFAS No. 133 is effective for all quarters of fiscal years beginning after June
15, 1999. The adoption of SFAS No. 133 is not expected to have a material effect
on the Partnership's net income, partners' equity or total assets.
3. Investment in Joint Venture
The Partnership and affiliates formed the joint venture discussed below for
the purpose of acquiring and managing various assets.
ICON Boardman Funding L.L.C.
In December 1998 the Partnership and three affiliates, ICON Cash Flow
Partners, L.P., Series C ("Series C"), ICON Cash Flow Partners L.P. Six ("L.P.
Six") and ICON Cash Flow Partners L.P. Seven ("L.P. Seven") formed ICON Boardman
Funding L.L.C. ("ICON BF"), for the purpose of acquiring a lease with Portland
General Electric. The purchase price totaled $27,421,810, and was funded with
cash and non-recourse debt assumed in the purchase price. The Partnership,
Series C, L.P. Six and L.P. Seven received a 98.5%, .5%, .5% and .5% interest,
respectively, in ICON BF. The Partnership's financial statements include 100% of
the assets and liabilities of ICON BF. Series C, L.P. Six and L.P. Seven's
investments in ICON BF have been reflected as "minority interests in joint
venture." Simultaneously with the acquisition of the Portland General Electric
lease by ICON BF, the rent in excess of the senior debt payments was acquired by
L.P. Six for $3,801,108. No gain or loss was recognized on this transaction.
4. Receivables Due in Installments
Non-cancelable minimum annual amounts due on finance leases are as
follows:
Year
----
1999 $ 11,712,022
2000 8,192,984
2001 7,875,315
2002 3,294,285
2003 3,876,618
Thereafter 7,768,481
--------------
$ 42,719,705
==============
5. Notes Payable
Notes payable consists of notes payable non-recourse, which are being paid
directly to the lenders by the lessees, and note payable-line of credit. The
notes bear interest at rates ranging from 7.49% to 10.0%.
The Partnership and an affiliate, ICON Cash Flow Partners L.P. Seven ("L.P.
Seven") entered into a joint line of credit agreement (the "Facility") with a
lender in December 1998. The maximum amount available under the Facility is
$5,000,000. The Facility is secured by eligible receivables and residuals and
bears interest at the rate of Prime plus one half percent. At December 31, 1998
the Partnership and L.P. Seven had $5,000,000 and $0, respectively, outstanding
under the Facility.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements - Continued
The above notes mature as follows:
Notes Payable Note Payable
Year Non-Recourse Recourse Total
---- ------------ ------------ -----
1999 $10,396,652 $ 5,000,000 $15,396,652
2000 6,272,573 -- 6,272,573
2001 5,286,151 -- 5,286,151
2002 1,861,518 -- 1,861,518
2003 1,880,500 -- 1,880,500
Thereafter 3,060,625 -- 3,060,625
----------- ----------- -----------
$28,758,019 $ 5,000,000 $33,758,019
=========== =========== ===========
6. Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the General
Partner or its affiliates for the period ended December 31, 1998 were as
follows:
Organization and offering expenses .... $ 478,752 Charged to equity
Underwriting commissions .............. 273,573 Charged to equity
Acquisition fees ...................... 1,417,014 Capitalized
Administrative expense
reimbursements ...................... 956 Charged to operations
Management fees ....................... 395 Charged to operations
----------
$2,170,690
==========
In December 1998 the Partnership and three affiliates, formed ICON Boardman
Funding LLC ("ICON BF"), for the purpose of acquiring a lease with Portland
General Electric. (See Note 3 for additional information relating to the joint
venture.)
7. Tax Information (Unaudited)
The following table reconciles net income for financial reporting purposes
to income for federal income tax purposes for the period ended December 31,
1998:
Net income per financial statements ...................... $ 27,205
Differences due to:
Direct finance leases .................................. 15,665
Depreciation ........................................... (1,995,119)
Provision for losses ................................... --
Loss on sale of equipment .............................. --
Other .................................................. --
-----------
Partnership income for
federal income tax purposes ............................. $(1,952,249)
===========
As of December 31, 1998, the partners' capital accounts included in the
financial statements totaled $11,794,840 compared to the partners' capital
accounts for federal income tax purposes of $11,663,001 (unaudited). The
difference arises primarily from commissions reported as a reduction in the
partners' capital accounts for financial reporting purposes but not for federal
income tax purposes, and temporary differences related to direct finance leases,
depreciation and provision for losses.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant's General Partner
The General Partner, a Connecticut corporation, was formed in 1985. The
General Partner's principal offices are located at 600 Mamaroneck Avenue,
Harrison, New York 10528-1632, and its telephone number is (914) 698-0600. The
officers of the General Partner have extensive experience with transactions
involving the acquisition, leasing, financing and disposition of equipment,
including acquiring and disposing of equipment subject to leases and full
financing transactions.
The manager of the Partnership's business is the General Partner. The
General Partner is engaged in a broad range of equipment leasing and financing
activities. Through its sales representatives and through various broker
relationships throughout the United States, the General Partner offers a broad
range of equipment leasing services.
The General Partner will perform certain functions relating to the
management of the equipment of the Partnership. Such services include the
collection of lease payments from the lessees of the equipment, re-leasing
services in connection with equipment which is off-lease, inspections of the
equipment, liaison with and general supervision of lessees to assure that the
equipment is being properly operated and maintained, monitoring performance by
the lessees of their obligations under the leases and the payment of operating
expenses.
The officers and directors of the General Partner are as follows:
Beaufort J.B. Clarke Chairman, Chief Executive Officer and Director
Paul B. Weiss President and Director
Thomas W. Martin Executive Vice President and Director
Kevin F. Redmond Chief Financial Officer
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
Item 10. Continued
Beaufort J. B. Clarke, age 53, is Chairman, Chief Executive Officer and
Director of both the General Partner and the Dealer-Manager. Prior to his
present position, Mr. Clarke was founder, President and Chief Executive Officer
of Griffin Equity Partners, Inc. Mr. Clarke formerly was an attorney with
Shearman and Sterling and has over 20 years of senior management experience in
the United States leasing industry.
Paul B. Weiss, age 38, is President and Director of the General Partner.
Mr. Weiss has been exclusively engaged in lease portfolio acquisitions since
1988 from his affiliations with Griffin Equity Partners (as Executive Vice
President and co-founder in 1993); Gemini Financial Holdings (as Senior Vice
President-Portfolio Acquisitions and a member of the executive committee from
1991-1993) and Pegasus Capital Corporation (as Vice President-Portfolio
Acquisitions). He was previously an investment banker and a commercial banker.
Thomas W. Martin, age 45, is Executive Vice President of the General
Partner and Director of the Dealer-Manager. Prior to his present position, Mr.
Martin was the Executive Vice President and Chief Financial Officer of Griffin
Equity Partners, Inc. Mr. Martin has 14 years of senior management experience in
the leasing business.
Kevin F. Redmond, age 36, is Chief Financial Officer of both the General
Partner and the Dealer-Manager. Prior to his present position, Mr. Redmond was
Vice President and Controller of the General Partner, Manager of Accounting at
NationsCredit Corp. and Audit Manager with the accounting firm of Deloitte &
Touche.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
Item 11. Executive Compensation
The Partnership has no directors or officers. The General Partner and its
affiliates were paid or accrued the following compensation and reimbursement for
costs and expenses for the period ended December, 31, 1998.
Entity Capacity Type of Compensation 1998
------ -------- -------------------- ----
ICON Capital Corp. General Partner Organization and offering
expenses $ 478,752
ICON Securities Corp. Dealer-Manager Underwriting commissions 273,573
ICON Capital Corp. Manager Acquisition fees 1,417,014
ICON Capital Corp. General Partner Administrative expense
reimbursements 956
ICON Capital Corp. General Partner Management fees 395
----------
$2,170,690
==========
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) The Partnership is a limited partnership and therefore does not have voting
shares of stock. No person of record owns, or is known by the Partnership
to own beneficially, more than 5% of any class of securities of the
Partnership.
(b) As of March 15, 1999, Directors and Officers of the General Partner do not
own any equity securities of the Partnership.
(c) The General Partner owns the equity securities of the Partnership set forth
in the following table:
Title Percent
of Class Amount Beneficially Owned of Class
-------- ------------------------------------------- --------
General Partner Represents initially a 1% and potentially a 100%
Interest 10% interest in the Partnership's income,
gain and loss deductions.
Item 13. Certain Relationships and Related Transactions
None other than those disclosed in Item 11 herein.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements - See Part II, Item 8 hereof.
2. Financial Statement Schedule - None.
Schedules not listed above have been omitted because they are not
applicable or are not required or the information required to be set
forth therein is included in the Financial Statements or Notes thereto.
3. Exhibits - The following exhibits are incorporated herein by reference:
(i) Amended and Restated Agreement of Limited Partnership (Incorporated by
reference to Exhibit A to Amendment No. 2 to Form S-1 Registration
Statement No. 333-54011 filed with the Securities and Exchange
Commission on September 18, 1998).
(ii) Certificate of Limited Partnership of the Partnership (Incorporated
herein by reference to Exhibit 4.3 to Form S-1 Registration Statement
No. 333-54011 filed with the Securities and Exchange Commission on May
29, 1998.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Partnership during the quarter
ended December 31, 1998.
ICON Income Fund Eight A L.P.
(A Delaware Limited Partnership)
December 31, 1998
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ICON Income Fund Eight A L.P.
File No. 333-54011 (Registrant)
By its General Partner, ICON Capital Corp.
Date: March 31,1999 /s/ Beaufort J.B. Clarke
-----------------------------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacity and on the dates indicated.
ICON Capital Corp.
sole General Partner of the Registrant
Date: March 31, 1999 /s/ Beaufort J.B. Clarke
-----------------------------------------------
Beaufort J.B. Clarke
Chairman, Chief Executive Officer and Director
Date: March 31, 1999 /s/ Paul B. Weiss
-----------------------------------------------
Paul B. Weiss
President and Director
Date: March 31, 1999 /s/ Kevin F. Redmond
-----------------------------------------------
Kevin F. Redmond
Chief Financial Officer
(Principal Financial and Account Officer)
Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrant Which have not Registered Securities Pursuant to
Section 12 of the Act
No annual report or proxy material has been sent to security holders. An annual
report will be sent to the limited partners and a copy will be forwarded to the
Commission.