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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended September 30, 2002
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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 333-37504
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ICON Income Fund Eight B L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-4101114
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
100 Fifth Avenue, New York, New York 10011
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(212) 418-4700
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[ x] Yes [ ] No
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2002 2001
---- ----
Assets
------
Cash $ 10,852,104 $ 5,684,652
------------- -------------
Investment in finance leases
Minimum rents receivable 26,354,195 32,769,190
Estimated unguaranteed residual values 2,711,893 2,711,893
Initial direct costs 524,379 746,106
Unearned income (4,445,326) (6,568,703)
------------- -------------
25,145,141 29,658,486
------------- -------------
Investment in operating leases
Equipment, at cost 168,367,834 95,156,568
Accumulated depreciation (20,435,151) (11,456,484)
------------- -------------
147,932,683 83,700,084
------------- -------------
Investment in joint ventures 6,999,601 -
Due from affiliates 78,144 3,730,884
Investments in unguaranteed
residual values 2,342,589 2,406,128
Investment in option ` 2,100,000 2,100,000
Other assets 1,208,574 2,915,266
Cash held in escrow - 13,723,196
------------- -------------
Total assets $ 196,658,836 $ 143,918,696
============= =============
Liabilities and Partners' Equity
--------------------------------
Notes payable - non-recourse $ 137,375,873 $ 76,852,204
Note payable - recourse 400,000 2,900,000
Due to affiliates 466,654 -
Deferred rental income 835,884 -
Security deposits and other liabilities 1,027,618 1,269,603
Minority interests in joint ventures 1,494,667 1,684,289
------------- -------------
141,600,696 82,706,096
------------- -------------
Partners' equity
General Partner (103,354) (42,960)
Limited Partners (748,474.09 and 750,000
units outstanding, $100 per unit original
issue price) 55,161,494 61,255,560
------------- -------------
Total partners' equity 55,058,140 61,212,600
------------- -------------
Total liabilities and partners' equity $ 196,658,836 $ 143,918,696
============= =============
See accompanying notes to financial statements.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Operations
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2002 2001 2002 2001
---- ---- ---- ----
Revenues
Rental income $ 5,634,449 $ 4,504,568 $ 16,452,664 $ 13,159,408
Finance income 665,077 675,440 2,123,377 1,620,766
Gain on sale of equipment 166,306 46,608 407,890 46,608
Income from investment in
joint venture 48,190 8,629 310,997 8,629
Interest income and other 13,821 59,567 41,488 113,070
------------- ------------- ------------- -------------
Total revenues 6,527,843 5,294,812 19,336,416 14,948,481
------------- ------------- ------------- -------------
Expenses
Depreciation 3,686,757 3,133,942 10,663,674 8,854,350
Interest 1,988,314 1,396,592 5,376,706 4,016,703
Management fees - General Partner 532,732 380,673 1,667,406 946,330
Administrative expense
reimbursements - General Partner 244,209 169,180 747,887 401,913
General and administrative 115,022 104,924 414,059 281,884
Amortization of initial direct costs 70,410 64,443 221,727 139,081
Minority interest expense 36,852 39,309 177,381 125,944
------------- ------------- ------------- -------------
Total expenses 6,674,296 5,289,063 19,268,840 14,766,205
------------- ------------- ------------- -------------
Net (loss) income $ (146,453) $ 5,749 $ 67,576 $ 182,276
============= ============= ============= =============
Net (loss) income allocable to:
Limited partners $ (144,988) $ 5,692 $ 66,900 $ 180,453
General Partner (1,465) 57 676 1,823
------------- ------------- ------------- -------------
$ (146,453) $ 5,749 $ 67,576 $ 182,276
============= ============= ============= =============
Weighted average number of limited
partnership units outstanding 749,496 526,730 749,765 375,564
============= ============= ============= =============
Net (loss) income per weighted average
limited partnership unit $ (0.19) $ .01 $ 0.09 $ .48
============= ============= ============= =============
See accompanying notes to consolidated financial statements.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Statement of Changes in Partners' Equity
For the Nine Months Ended September 30, 2002
and the Year Ended December 31, 2001
(Unaudited)
Limited Partner Distributions
-----------------------------
Return of Investment Limited General
Capital Income Partners Partner Total
------- ------ -------- ------- -----
(Per weighted average unit)
Balance at
December 31, 2000 $ 18,765,497 $ (1,316) $ 18,764,181
Proceeds from issuance
of limited partnership
units (530,186.35 units) 53,018,635 - 53,018,635
Sales and offering expenses (6,407,516) - (6,407,516)
Cash distributions
to partners $ 8.20 $ 1.62 (4,932,964) (49,845) (4,982,809)
Net income 811,908 8,201 820,109
-------------- ------------ --------------
Balance at
December 31, 2001 61,255,560 (42,960) 61,212,600
Redeemed (1,525.91 units) (115,103) - (115,103)
Cash distributions to partners $ 7.97 $ 0.09 (6,045,863) (61,070) (6,106,933)
Net income 66,900 676 67,576
-------------- ----------- --------------
Balance at
September 30, 2002 $ 55,161,494 $ (103,354) $ 55,058,140
============== =========== ==============
See accompanying notes to financial statements.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Statement of Cash Flows
For the Nine Months Ended September 30,
(Unaudited)
2002 2001
---- ----
Cash flows from operating activities:
Net income $ 67,576 $ 182,276
------------ ------------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Finance income paid directly to lenders
by lessees (1,037,322) (434,270)
Depreciation 10,663,674 8,854,350
Amortization of initial direct costs 221,727 139,081
Minority interest expense 177,381 125,944
Income from investment in joint venture (310,997) (8,629)
Gain on sale of equipment (407,890) (46,608)
Rental income paid directly to lender
by lessees (13,952,222) (12,175,367)
Interest expense on non-recourse
financing paid directly by lessees 4,973,860 3,583,073
Changes in operating assets and
liabilities:
Collection of principal - non-financed
receivables 1,066,645 1,559,603
Other assets 1,706,692 341,197
Due from affiliates 3,652,740 -
Deferred rental income 835,884 345,926
Security deposits and other liabilities (241,985) 278,897
Due to affiliates 466,654 -
------------ ------------
Total adjustments 7,814,841 2,563,197
------------ ------------
Net cash provided by operating
activities 7,882,417 2,745,473
------------ ------------
Cash flows used in investing activities:
Receipt of cash held in escrow 13,723,196 -
Proceeds from sale of equipment 2,174,602 263,054
Distribution received from unconsolidated
joint venture 921,655 -
Proceeds from sale of unguaranteed residual 63,539 -
Equipment purchased (4,250,000) (10,838,100)
Investment in unguaranteed residual - (2,331,850)
Investments in joint ventures (7,610,259) (3,273,407)
Cash held in escrow - (5,186,296)
Initial direct costs (2,242,352) (1,082,921)
Distribution to minority interest in
joint venture (367,003) -
------------ ------------
Net cash provided by (used in) investing
activities 2,413,378 (22,449,520)
------------ ------------
See accompanying notes to financial statements.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Statement of Cash Flows - Continued
For the Nine Months Ended September 30,
(Unaudited)
2002 2001
---- ----
Cash flows from financing activities:
Proceeds from non-recourse borrowings 3,593,693 -
Issuance of limited partnership units,
net of offering expenses - 40,672,703
Payment of non-recourse borrowings - (1,348,581)
Payment of recourse borrowing (2,500,000) (7,000,000)
Cash distributions to partners (6,106,933) (3,061,418)
Redemption of limited partnership units (115,103) -
------------- -------------
Net cash (used in) provided by
financing activities (5,128,343) 29,262,704
------------- -------------
Net increase in cash 5,167,452 9,558,657
Cash at beginning of the period 5,684,652 1,315,706
------------- -------------
Cash at end of period $10,852,104 $ 10,874,363
============= =============
See accompanying notes to financial statements.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Consolidated Statement of Cash Flows (continued)
Supplemental Disclosure of Cash Flow Information
- ------------------------------------------------
For the nine months ended September 30, 2002 and 2001, non-cash activities
included the following:
2002 2001
---- ----
Principal and interest on direct finance
receivables paid directly to lenders
by lessees $ 4,586,720 $ 859,282
Rental income assigned operating lease
receivables 13,952,222 12,175,367
Principal and interest paid directly to
lenders by lessees (18,538,942) (13,034,649)
--------------- ----------------
$ - $ -
=============== ================
Fair value of equipment
purchased for debt $ 70,495,058 $ 25,259,285
Non-recourse notes payable
assumed in purchase price (70,495,058) (25,259,285)
--------------- ----------------
$ - $ -
=============== ================
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements
September 30, 2002
(Unaudited)
1. Organization
ICON Income Fund Eight B L.P. (the "Partnership") was formed on February 7,
2000 as a Delaware limited partnership with an initial capitalization of $2,000.
It was primarily formed to acquire various types of equipment subject to lease
with third parties. The Partnership's maximum offering was $75,000,000. The
Partnership commenced business operations on its initial closing date, June 14,
2000, with the admission of limited partners representing 15,815.51 limited
partnership units at the offering price of $100 per unit aggregating $1,581,551
of capital contributions. As of October 17, 2001 (the final closing date),
734,184.49 additional units had been admitted into the Partnership with
aggregate gross proceeds of $73,418,449 bringing the total admission to 750,000
units totaling $75,000,000 in capital contributions. During the nine months
ended September 30, 2002, 1,525.91 units were redeemed for $115,103. Total
outstanding units at September 30, 2002 was 748,474.09.
The General Partner of the Partnership is ICON Capital Corp. (the "General
Partner"), a Connecticut corporation. The General Partner manages and controls
the business affairs of the Partnership's equipment, leases and financing
transactions under a management agreement with the Partnership.
2. Basis of Presentation
The financial statements of the Partnership have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission (the "SEC")
and, in the opinion of management, include all adjustments (consisting only of
normal recurring accruals) necessary for a fair statement of results for each
period shown. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted pursuant
to such SEC rules and regulations. Management believes that the disclosures made
are adequate to make the information presented not misleading. The results for
the interim periods are not necessarily indicative of the results for the full
year. These financial statements should be read in conjunction with the
financial statements and notes included in the Partnership's 2001 Annual Report
on Form 10-K.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
3. Related Party Transactions
Fees and expenses paid or accrued by the Partnership to the General Partner
or its affiliates directly or on behalf of joint ventures in which the
Partnership has an interest for the period ended September 30, 2002 and 2001
were as follows:
2002 2001
---- ----
Organization and
offering expenses $ - $ 1,005,001 Charged to equity
Underwriting
commissions - 926,171 Charged to equity
Acquisition fees 2,242,352 2,918,237 Capitalized as part of
investment in
operating leases
Acquisition fees 1,256,259 - Capitalized as part of
investment in joint
venture
Management fees 1,667,406 946,330 Charged to operations
Administrative
expense reimbursements 747,887 401,913 Charged to operations
------------- ------------
$ 5,913,904 $ 6,197,652
============= ============
During the period ended September 30, 2002, the Partnership paid $2,242,352
and $1,117,901, respectively, as acquisition fees with respect to its
investments in ICON Aircraft 123 LLC ("ICON 123") and ICON Aircraft 126 LLC
("ICON 126"). These amounts represent part of the Partnership's investment in
acquiring a 100% interest in ICON 123, and a 50% interest in ICON 126. The
amounts are included under the captions investments in operating leases and
investments in joint ventures, respectively. In addition, the Partnership
accrued $24,433 as acquisition fees with respect to its investment in
ICON/Kenilworth, LLC. See note 4.
4. Consolidated Ventures and Investments in Unconsolidated Joint Ventures
The Partnership and affiliates formed five joint ventures discussed below
for the purpose of acquiring and managing various assets.
Consolidated Ventures
The two joint ventures described below are majority owned and are
consolidated with the Partnership.
ICON Cheyenne LLC
- -----------------
In December 2000, the Partnership and three affiliates, ICON Cash Flow
Partners L.P. Six ("L.P. Six"), ICON Cash Flow Partners L.P. Seven ("L.P.
Seven") and ICON Income Fund Eight A L.P. ("Fund Eight A") formed ICON Cheyenne
LLC ("ICON Cheyenne") for the purpose of acquiring a portfolio of leases for an
aggregate purchase price of $29,705,716, which was paid with cash of $11,401,151
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
and the assumption ofnon-recourse debt with an unaffiliated third party lender
of $18,304,565. The debt is structured to be amortized from the application to
the debt of rentals due under the various leases. The leases expire on various
dates through September 2006. The Partnership, L.P. Seven, L.P. Six and Fund
Eight A have ownership interests of 87.69%, 10.31%, 1.0% and 1.0%, respectively,
in ICON Cheyenne. The Partnership's consolidated financed statements include
100% of the assets and liabilities as well as 100% of the related revenues and
expenses of ICON Cheyenne. The interests of L.P. Seven, L.P. Six and Fund Eight
A in ICON Cheyenne have been reflected as minority interests in joint ventures
on the consolidated balance sheets and minority interest expense on the
consolidated statements of operations.
ICON Aircraft 24846, LLC
------------------------
In 2000, the Partnership and two affiliates, L.P. Seven and Fund Eight A
formed ICON Aircraft 24846 LLC ("ICON Aircraft 24846") for the purpose of
acquiring an investment in an 767-300ER aircraft leased to Scandinavian Airline
Systems for a purchase price of $44,515,416, which was funded with cash of
$2,241,371 and non-recourse debt of $42,274,045. The rents and the aircraft have
been assigned to the unaffiliated non-recourse lender. The lease is scheduled to
expire in March 2003, at which time the balance of the non-recourse debt
outstanding is scheduled to be approximately $34,500,000. The Partnership, L.P.
Seven and Fund Eight A have ownership interests of 96.0%, 2.0% and 2.0%,
respectively, in ICON Aircraft 24846. The Partnership's consolidated financial
statements include 100% of the assets and liabilities of ICON Aircraft 24846 as
well as 100% of the related revenues and expenses. L.P. Seven and Fund Eight A's
interest in ICON Aircraft 24846 have been reflected as minority interests in
joint ventures on the consolidated balance sheets and minority interest expense
on the consolidated statements of operations.
Investments in Unconsolidated Joint Ventures
The three joint ventures described below are 50%, 49% and 5% owned by the
Partnership and are accounted for under the equity method.
ICON Aircraft 126, LLC
----------------------
In early 2002, the Partnership and ICON Income Fund Nine LLC ("Fund Nine")
formed ICON 126 for the purpose of acquiring all of the outstanding shares of
Delta Aircraft Leasing Limited ("D.A.L."), a Cayman Islands registered company,
which owns, through an Owner Trust, an Airbus A340-313X aircraft which is on
lease to Cathay Pacific through March 2006. The stock was acquired for
$4,250,000 in cash. The aircraft owned by D.A.L. is subject to non-recourse debt
provided by unaffiliated lenders. As of September 30, 2002, there was
$68,311,565 of debt outstanding under the non-recourse debt.
The Partnership and Fund Nine each own a 50% interest in ICON 126. ICON 126
consolidates the financial position and results of operations of D.A.L. in its
financial statements.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
The Partnership's original investment in ICON 126 was recorded at a cost of
$3,242,901, inclusive of related acquisition fees of $1,117,901. Information as
to the consolidated financial position and results of operations of ICON 126 as
of and for the quarter ended September 30, 2002 is summarized below:
September 30, 2002
------------------
Assets $ 75,343,390
===============
Liabilities $ 68,703,392
===============
Equity $ 6,639,998
===============
Partnership's share of equity $ 3,319,999
===============
Nine Months Ended
September 30, 2002
------------------
Net income $ 154,196
===============
Partnership's share of net income $ 77,098
===============
ICON SPK 2023-A, LLC
--------------------
In the quarter ended March 31, 2002, the Partnership and Fund Nine formed
ICON SPK 2023-A, LLC ("ICON SPK") for the purpose of acquiring a portfolio
leases for an aggregate purchase price of $7,750,000 in cash. In June 2002, the
Partnership paid $113,925 of acquisition fees into the venture for its pro-rata
share of the acquisition fees. The leases expires on various dates commencing
April 2003 through April 2008.
The Partnership and Fund Nine have ownership interest of 49% and 51%
respectively. The Partnership accounts for the investment following the equity
method. The Partnership's original investment was recorded at a cost of
$3,797,500 and is adjusted for its share of earnings, losses, and distributions
thereafter.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
Information as to the financial position and results of operations of ICON
SPK as of and for the quarter ended September 30, 2002 is summarized below:
September 30, 2002
------------------
Assets $ 7,097,043
===============
Liabilities $ 518,127
===============
Equity $ 6,578,916
===============
Partnership's share of equity $ 3,223,669
===============
Nine Months Ended
September 30, 2002
------------------
Net income $ 477,345
===============
Partnership's share of net income $ 233,899
===============
Distributions $ 1,880,929
===============
Partnership's share of distributions $ 921,655
===============
ICON/Kenilworth LLC
-------------------
In the quarter ended September 30, 2002, the Partnership and Fund Nine
formed ICON/Kenilworth LLC for the purpose of acquiring a natural gas-fired 25MW
co-generation facility for a total purchase price of $8,630,000 in cash, and
assumed non-recourse debt of $7,658,892, consisting of senior debt of $7,420,156
and junior debt of $238,736. The acquisition closed on September 30, 2002. The
facility is subject to lease with Energy Factors Kenilworth, Inc., which expires
in July 2004. In addition, there was a total of $488,667 in acquisition fees
paid to the Manager.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
The Partnership and Fund Nine have ownership interests of 5% and 95%
respectively. The Partnership accounts for the investment following the equity
method. The Partnership's original investment was recorded at a cost of
$455,933, inclusive of related acquisition fees of $24,433. Information as to
the financial position of ICON/Kenilworth as of September 30, 2002 is summarized
below:
September 30, 2002
------------------
Assets $ 16,777,559
===============
Liabilities $ 7,658,892
===============
Equity $ 9,118,667
===============
Partnership's share of equity $ 455,933
===============
5. Investments in Subsidiary
In early 2002, the Partnership formed ICON 123 as a wholly owned subsidiary
for the purpose of acquiring all of the outstanding shares of Alpha Aircraft
Leasing Limited ("A.A.L."), a Cayman Islands registered company, which owns,
through an Owner Trust, an Airbus A340-313X aircraft which is on lease to Cathay
Pacific through March 2006. The stock was acquired in the first quarter of 2002
for $4,250,000 in cash. The aircraft owned by Alpha is subject to non-recourse
debt provided by unaffiliated lenders. The lenders have a security interest in
the aircraft and an assignment of the rentals under the lease. The fair value of
the aircraft was approximately $75 million at the date of acquisition and the
principal balance of the debt was approximately $70.5 million at such date. ICON
123 consolidates the financial position and results of operations of A.A.L. in
its financial statements. The assets and liabilities of ICON 123 are
consolidated in the Partnership financial statements.
6. New Financing
On May 4, 2002, the Partnership borrowed $3,593,693 under a non-recourse
note using the present value of the remaining rentals due under an aircraft
lease as security. As of September 30, 2002, the outstanding balance of such
note was $3,431,609.
During the period ended September 30, 2002, the Partnership entered into a
$17,500,000 joint line of credit agreement shared with Fund Eight A and L.P.
Seven, with Comerica Bank as lender. Under the terms of the agreement, the
Partnership may borrow at a rate equal to the Comerica Bank base rate plus 1%
(5.75% at September 30, 2002) and all borrowings are to be collateralized by the
present values of rents receivable and residuals. The expiration date of this
line of credit is May 31, 2003. As of September 30, 2002, there were no
borrowings by the Partnership under the line.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements - Continued
7. Contingencies
Limited partners who purchased units after June 7, 2001 and before August
18, 2001 had the right to require the Partnership to repurchase his or her units
within the one-year period following such purchase since certain information
contained in the prospectus used during this period was not as current as
required by the rules of the SEC. The repurchase price would have been equal to
the offering price per unit less any distributions received with respect to such
units. 142,049.4793 units were sold during this period resulting in gross
offering proceeds of $14,204,947.93 which units comprise 18.94% of all units
that the Partnership sold. There were no unit repurchase transactions as a
result of this repurchase offer through August 18, 2002 and the rights of such
partners to put his (her) units back to the partnership have lapsed.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
September 30, 2002
Item 2: General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations for the Three Months Ended September 30, 2002 and 2001
Revenues for the quarter ended September 30, 2002 ("2002 Quarter") were
$6,527,843 representing an increase of $1,233,031 over the quarter ended
September 30, 2001 ("2001 Quarter"). The increase in revenue resulted from
continued purchase of equipment subject to lease. Increases were comprised of
increases in rental income of $1,129,881, gain on sale of equipment of $119,698,
and $39,561 from investment in joint venture. During the 2002 quarter, the
Partnership sold equipment from the Cheyenne portfolio for total proceeds of
$1,065,937 which resulted in a gain of $166,306. These increases in revenue were
partially offset by decreases in finance income of $10,363 and interest income
and other of $45,746.
Expenses for the 2002 Quarter were $6,674,296 representing an increase of
$1,385,233 over the 2001 Quarter. The increase in expenses resulted from the
increase in the size of the Partnership's lease portfolio, an increase in the
Partnership's borrowing levels and overall growth in size of the operations of
the Partnership from one year ago and is consistent with the Partnership's level
of operations.
Depreciation expense increased by $552,815, due to the additional
investments in operating leases made subsequent to September 30, 2001. Interest
expense increased by $591,722, due to an increase in the Partnership's borrowing
levels. Management fees - General Partner increased by $152,059 and
administrative expense reimbursements-General Partner increased by $75,029. The
increase in management fees was consistent with increases in rentals (including
operating leases, finance leases and through joint ventures) on which such fees
are dependant. The increase in administrative expense reimbursement - General
Partner was consistent with the increase in operating activities of the
Partnership. General and administrative expenses increased by $10,098 and
amortization of initial direct cost of increased by $5,967. These increases were
partially off-set by a decrease in minority interest expense of $2,457. Minority
interest expense decreased due to the reduction of the lease portfolio size of
ICON Cheyenne.
Net (loss) income for the 2002 Quarter and the 2001 Quarter was $(146,453)
and $5,749, respectively. The net (loss) income per weighted average limited
partnership unit outstanding was $(0.19) and $0.01 for the 2002 Quarter and 2001
Quarter, respectively.
As of September 30, 2002 there were no known trends or demands,
commitments, events or uncertainties, which are likely to have any material
effect on net revenues and the results of operations.
Results of Operations for the Nine Months Ended September 30, 2002 and 2001
Revenues for the nine months ended September 30, 2002 ("2002 Period") were
$19,336,416 representing an increase of $4,387,935 over the nine months ended
September 30, 2001 ("2001 Period"). The increase in revenue resulted from
continued purchase of equipment subject to lease. Increases in rental income of
$3,293,256, finance income of $502,611, income from investment in joint venture
of $302,368, and gain on sale of equipment of $361,282, were partially off-set
by a decrease in interest income and other of $71,582. During the 2002 Period
the Partnership sold equipment from the Cheyenne portfolio for total proceeds of
$2,174,602 which resulted in a gain of $407,890.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
September 30, 2002
Expenses for 2002 Period were $19,268,840 representing an increase of
$4,502,635 over the 2001 Period. The increase in expenses resulted from the
increase in the size of the Partnership's lease portfolio, an increase in the
Partnership's borrowing levels and overall growth in size of the operations of
the Partnership from one year ago and is consistent with the Partnership's level
of operations.
Depreciation expense increased by $1,809,324, due to the additional
investments in operating leases made subsequent to September 30, 2001.
Management fees - General Partner increased by $721,076 and administrative
expense reimbursements - General Partner increased by $345,974 in the 2002
Period as compared to the 2001 Period. The increase in management fees was
consistent with increases in rentals (including operating leases, finances
leases and through joint ventures) on which such fees are dependant. The
increase in administrative expense reimbursements - General Partner was
consistent with the increase in operating activities of the Partnership.
Minority interest expense increased by $51,437, amortization of initial direct
costs increased by $82,646, interest expense increased by $1,360,003 and general
and administrative expenses increased by $132,175 in the 2002 Period as compared
to 2001 Period.
Net income for the 2002 Period and 2001 Period was $67,576 and $182,276,
respectively. The net income per weighted average limited partnership unit
outstanding was $0.09 and $0.48 for the 2002 and 2001 periods, respectively.
As of September 30, 2002 there were no known trends or demands,
commitments, events or uncertainties, which are likely to have any material
effect on net revenues and the results of operations.
Liquidity and Capital Resources
The Partnership's primary source of funds for the 2002 Period was access to
debt associated with the Partnerships investments in unconsolidated joint
ventures in the amount of $35,138,367 and subsidiaries of $70,495,058. In
addition, the Partnership had cash provided by operating activities of
$7,882,417, which included the collection of sales proceeds due from L.P. Seven
of $3,644,701 from the sale of an interest in a joint venture in December 2001.
In addition, the Partnership received funds from the return of $13,723,196 from
cash held in escrow and proceeds from non-recourse borrowings of $3,593,693.
Such funds were utilized for investments in leases and joint ventures, with
related costs aggregating $14,102,611, (including initial direct costs
(acquisition fees) of $2,266,785), repayment of amounts outstanding under a line
of credit of $2,500,000, and cash to make cash distributions to partners of
$6,106,933. As cash is realized from operations and with proceeds from
additional borrowings, the Partnership will continue to invest in equipment
leases and financings where it deems it to be prudent while retaining sufficient
cash to meet its reserve requirements and recurring obligations.
During the 2002 Period, the Company and an affiliate, Fund Nine, have
formed several joint ventures for the purpose of acquiring and managing various
assets. The Company and the affiliate have identical investment objectives and
participate on the same terms and conditions. The Company has a right of first
refusal to purchase the equipment, on a pro-rata basis, if the affiliate desires
to sell its interest in the equipment or in the joint venture. In the instance
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
September 30, 2002
where the Company is not the majority owner, the investment is accounted for
following the equity method. Where the Company is the majority owner, the joint
venture is consolidated, with the other joint venturer's interest reflected on
the Company's balance sheet as "Minority interest in joint venture". The net
investment in the unconsolidated joint venture is recorded on the Company's
balance sheet as "Investment in unconsolidated joint venture", with the
summarized financial data of the unconsolidated joint venture presented in
footnote 4 to the Company's consolidated financial statements. The Company's
share of equity, income and distributions (if any) are also presented in the
footnote. The Company's share of income of the non-consolidated joint venture is
reflected on the statement of operations as income from investment in joint
venture. Because the Company's share of the joint venture is pari passu with the
other joint venturer, the impact on net income is the same as if the joint
venture were consolidated.
During the second quarter of 2002, the Partnership entered into a new
$17,500,000 joint line of credit agreement, shared with Fund Eight A and L.P.
Seven. Under the new line, the Partnership may borrow at a rate equal to the
Comerica Bank base rate plus 1% (5.75% at September 30, 2002), with borrowings
collateralized by the present values of rents receivable and residuals. The line
expires May 31, 2003. As of September 30, 2002, no amounts were borrowed by the
Partnership under the line.
As of September 30, 2002 there were no known trends or demands,
commitments, events or uncertainties, which are likely to have any material
effect on liquidity.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
September 30, 2002
Item 3. Qualitative and Quantitative Disclosures About Market Risk
The Partnership is exposed to certain market risks, including changes in
interest rates. The Partnership believes its exposure to other market risks are
insignificant to both its financial position and results of operations.
The Partnership manages its interest rate risk by obtaining fixed rate
debt. The fixed rate debt service obligation streams are generally matched by
fixed rate lease receivable streams generated by the Partnership's lease
investments.
The Partnership may borrow funds under a floating rate line of credit and
therefore may be exposed to interest rate risk until the floating rate line of
credit is repaid. The Partnership had no borrowings outstanding under the
floating rate line of credit as of September 30, 2002.
Kmart, Inc., with whom the Partnership has five leases, filed for
bankruptcy in January 2002. The Partnership's finance leases with Kmart were
acquired during 2001 for prices aggregating $18,234,262, comprised of a cash
investment of $681,720 and the assumption of $17,552,542 of non-recourse debt.
Through October 1, 2002, Kmart has made all scheduled rental payments. The
bankruptcy court has not ruled on the affirmation of the Partnership's leases as
of the date of this report.
Item 4. Controls and Procedures
Beaufort J.B. Clarke and Thomas W. Martin, the Principal Executive and
Principal Financial Officers, respectively, of ICON Capital Corp. ("ICC"), the
General Partner of the Partnership, have evaluated the disclosure controls and
procedures of the Partnership within 90 days prior to the filing of this
quarterly report. As used herein, the term "disclosure controls and procedures"
has the meaning given to the term by Rule 13a-14 under the Securities Exchange
Act of 1934, as amended ("Exchange Act"), and includes the controls and other
procedures of the Partnership that are designed to ensure that information
required to be disclosed by the Partnership in the reports that it files with
the SEC under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms. As part of their
evaluation, Messrs. Clarke and Martin conferred with the finance and accounting
staff of ICC and the finance and accounting staff of ICON Holdings Corp., the
parent of ICC. Management has presented the results of its most recent
evaluation to the Partnership's independent auditors, KPMG LLP. Based upon their
evaluation, Messrs. Clarke and Martin have concluded that the Partnership's
disclosure controls and procedures provide reasonable assurance that the
information required to be disclosed by the Partnership in this report is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms applicable to the preparation of this report.
There have been no significant changes in the Partnership's internal
controls or in other factors that could significantly affect the Partnership's
internal controls subsequent to the evaluation described above conducted by
ICC's principal executive and financial officers.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed by the Partnership during the quarter ended
September 30, 2002.
Exhibits
99.1 Certification of Chairman and Chief Executive Officer pursuant to 18
U.S.C.ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
99.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C.ss.1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ICON Income Fund Eight B L.P.
File No. 333-37504(Registrant)
By its General Partner,
ICON Capital Corp.
November 14, 2002 /s/ Thomas W. Martin
- -------------------------- -------------------------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer of the
Manager of the Registrant)
Certifications - 10-Q
I, Beaufort J.B. Clarke, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ICON Income Fund
Eight B L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures 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 as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; 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; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: November 14, 2002
/s/ Beaufort J.B. Clarke
- -----------------------------
Beaufort J. B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
Manager of ICON Income Fund Eight B L.P.
I, Thomas W. Martin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ICON Income Fund
Eight B L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
a) designed such disclosure controls and procedures 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 as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; 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; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: November 14, 2002
/s/ Thomas W. Martin
- ----------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer
of the Manager of the Registrant)
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
September 30, 2002
EXHIBIT 99-1
I, Beaufort J.B. Clarke, Chairman and Chief Executive Officer of ICON
Capital Corp, the sole General Partner of ICON Income Fund Eight B L.P.,
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Quarterly Report on Form 10-Q for the period ended September 30, 2002
(the "Periodic Report") which this statement accompanies fully complies
with the requirements of Section 13(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78m) and
(2) information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Income Fund Eight B L.P..
Dated: November 14, 2002
/s/ Beaufort J.B. Clarke
-------------------------------------------------
Beaufort J.B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
Manager of ICON Income Fund Eight B L.P.
ICON Income Fund Eight B L.P.
(A Delaware Limited Partnership)
September 30, 2002
EXHIBIT 99-2
I, Thomas W. Martin, Executive Vice President (Principal Financial and
Accounting Officer) of ICON Capital Corp, the sole General Partner of ICON
Income Fund Eight B L.P., certify, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) the Quarterly Report on Form 10-Q for the period ended September 30, 2002
(the "Periodic Report") which this statement accompanies fully complies
with the requirements of Section 13(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78m) and
(2) information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Income Fund Eight B L.P..
Dated: November 14, 2002
/s/ Thomas W. Martin
---------------------------------------------------
Thomas W. Martin
Executive Vice President (Principal
Financial and Accounting Officer)
ICON Capital Corp.
Manager of ICON Income Fund Eight B L.P.