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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended June 30, 2002
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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
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Commission File Number 333-67638
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ICON Income Fund Nine, LLC
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(Exact name of registrant as specified in its charter)
Delaware 13-4183234
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
100 Fifth Avenue, 10th floor, New York, New York 10011
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(Address of principal executive offices) (Zip Code)
(212) 418-4700
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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 Nine, LLC
(A Delaware Limited Liability Company)
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2002 2001
---- ----
Assets
Cash $ 4,727,638 $ 804,640
------------ ------------
Cash held in escrow 10,448,500 1,650,000
------------ ------------
Investment in operating leases
Equipment, at cost 7,982,500 --
Accumulated depreciation (874,312) --
------------ ------------
7,108,188
Investment in unconsolidated joint ventures 3,284,910 --
Other assets 2,221,606 --
------------ ------------
Total assets $ 27,790,842 $ 2,454,640
============ ============
Liabilities and Members' Equity
Due to affiliates $ 3,597 $ --
Security deposits and other liabilities 79,481 --
Minority interest in joint venture 3,595,229 --
Accrued offering expenses - Manager -- 2,533
------------ ------------
3,678,307 2,533
------------ ------------
Members' equity
Manager (one share outstanding, $1,000
per share original issue price) (3,605) 997
Additional Members (28,355.963 and 2,834.024
shares outstanding, $1000 per share
original issue price) 24,116,140 2,451,110
------------ ------------
Total members' equity 24,112,535 2,452,107
------------ ------------
Total liabilities and members' equity $ 27,790,842 $ 2,454,640
============ ============
See accompanying notes to financial statements.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Consolidated Statements of Operations
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2002 2002
---- ----
Revenues
Rental income $ 678,451 $1,324,920
Interest income and other 22,347 24,406
Income from investment in
joint venture 38,514 42,009
---------- ----------
Total revenues 739,312 1,391,335
---------- ----------
Expenses
Depreciation and amortization expense 655,642 874,312
General and administrative 72,440 109,416
Management fee payable to Manager 68,974 85,822
Administrative fee reimbursement
payable to Manager 27,586 34,325
Minority interest expense 8,883 220,798
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Total expenses 833,525 1,324,673
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Net (loss) income $ (94,213) $ 66,662
========== ==========
Net (loss) income allocable to:
Managing member $ (942) $ 667
Additional members (93,271) 65,995
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$ (94,213) $ 66,662
========== ==========
Weighted average number of member
shares outstanding 21,865 15,764
========== ==========
Net (loss) income per weighted average
Additional member shares $ (4.27) $ 4.19
========== ==========
See accompanying notes to consolidated financial statements.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Consolidated Statement of Changes Members' Equity
For the Six Months Ended June 30, 2002
and the year ended December 31, 2001
(Unaudited)
Additional Members Distributions
Return of Investment Additional Managing
Capital Income Members Members Total
(Per weighted average share)
Managing member's capital contribution $ - $ 1,000 $ 1,000
Proceeds from issuance of additional
members shares (2,834.024 shares) 2,834,024 - 2,834,024
Sales and offering expenses (382,593) - (382,593)
Net loss (321) (3) (324)
Balance at
December 31, 2001 2,451,110 997 2,452,107
Proceeds from issuance
of additional member shares
(25,521.939 shares) 25,521,939 - 25,521,939
Sales and offering expenses (3,401,340) - (3,401,340)
Cash distributions
to members $ 0.29 $ 4.19 (521,564) (5,269) (526,833)
Net income 65,995 667 66,662
------------- --------- -------------
Balance at
June 30, 2002 $ 24,116,140 $ (3,605) $ 24,112,535
============= ========= =============
See accompanying notes to financial statements.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Consolidated Statement of Cash Flows
For the Six Months Ended June 30,
(Unaudited)
Cash flows from operating activities:
Net loss $ 66,662
------------
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 874,312
Minority interest expense 220,798
Income from investment in joint venture (42,009)
Changes in operating assets and liabilities:
Other assets (2,221,606)
Due to affiliates 3,597
Security deposits and other liabilities 79,481
Other (2,533)
------------
Total adjustments (1,087,960)
------------
Net cash used in operating activities (1,021,298)
------------
Cash flows used in investing activities:
Investment in operating leases (7,982,500)
Investment in unconsolidated joint venture (3,242,901)
Investment held in escrow (10,448,500)
Cash received from escrow 1,650,000
------------
Net cash used in investing activities (20,023,901)
------------
Cash flows from financing activities:
Issuance of membership shares,
net of offering expenses 22,120,599
Minority interest contribution (net) 3,374,431
Cash distributions to members (526,833)
------------
Net cash provided by financing activities 24,968,197
------------
Net increase in cash and cash equivalents 3,922,998
Cash and cash equivalents at beginning of the period 804,640
------------
Cash and cash equivalents at end of the period $ 4,727,638
============
See accompanying notes to financial statements.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements
June 30, 2002
(Unaudited)
1. Organization
ICON Income Fund Nine, LLC ("the Company"or the "LLC") was formed on July
11, 2001 as a Delaware limited liability company with an initial capitalization
of $1,000 by ICON Capital Corp. (the "Manager") for one member share. 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 Company's maximum offering is $100,000,000. The Company commenced business
operations on December 18, 2001, with the admission of members representing
1,249.91 additional shares at $1,000 per share, aggregating $1,249,910 of
capital contributions. As of December 31, 2001, members representing 1,584.114
additional shares had been admitted into the Company totaling gross proceeds of
$1,584,114, bringing the total admissions to 2,834.024 shares, totaling
$2,834,024 in capital contributions at that date (exclusive of the Manager's
interest as a member). From January 1, 2002, through June 30, 2002, an
additional 25,521.939 shares were sold for gross proceeds of $25,521,939. As of
June 30, 2002, total member share was 28,355.963, totaling $28,355,963 in
capital contributions.
The Manager is a Connecticut corporation. The Manager manages and controls
the business affairs of the Company's equipment, leases and financing
transactions under a management agreement with The Company.
ICON Securities Corp., an affiliate of the Manager, receives or is entitled
to receive, a sales commission and underwriting fee from the gross proceeds from
sales of all shares. The Manager is entitled to receive organization and
offering expenses from the gross proceeds of such sales. The total underwriting
compensation paid by the Company, including underwriting commissions, sales
commissions, incentive fees, public offering expense reimbursements and due
diligence activities is limited to 13.5% of gross proceeds up to the first
$25,000,000 raised, 12.5% of gross offering proceeds from $25,000,001 to
$50,000,000 and 11.5% of gross offering proceeds from $50,000,001 to
$100,000,000. During the six months at June 30, 2002, such offering expenses
aggregated $3,401,340 of which $2,033,945 was paid to third parties and
$1,367,395 was paid to the Manager. The Company paid or accrued offering
expenses of $382,593 during the period ended December 31, 2001, which were
charged directly to members' equity.
Profits, losses, cash distributions and disposition proceeds will be
allocated 99% to Members and 1% to the Manager until each Member 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 an 8% per annum cumulative
return on its outstanding adjusted capital contribution account. After such
time, the distributions will be allocated 90% to the Members and 10% to the
Manager.
2. Basis of Presentation
The financial statements of the Company 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
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements - Continued
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 Company's
2001 Annual Report on Form 10-K.
3. Related Party Transactions
Fees and expenses paid or accrued by the Company to the Manager or its
affiliates directly or on behalf of joint ventures in which the company has an
interest were as follows for the period ended June 30, 2002:
Organization and offering
expenses $ 856,956 Charged to equity
Underwriting commissions 510,439 Charged to equity
Acquisition fees 232,500 Capitalized as part of investment
in operating leases
Acquisition fees 1,117,901 Capitalized as part of investment
in joint venture
Management fees 85,822 Charged to operations
Administrative expense
reimbursements 34,325 Charged to operations
-------------
$ 2,837,943
=============
At June 30, 2002, the LLC had amounts aggregating $2,127,684 paid to the
Manager for acquisition fees on deals for which binding agreements exist that
are expected to be consummated in the third quarter 2002. These amounts are not
included above. Such amounts are recorded under the caption Other Assets on the
balance sheet.
4. Consolidated Joint Ventures and Investments in Unconsolidated Joint
Ventures
The LLC and affiliates formed two ventures discussed below for the purpose
of acquiring and managing various assets.
Consolidated Venture
The venture described below is majority owned and is consolidated with the
LLC.
ICON SPK 2023-A, LLC
In the quarter ended March 31, 2002, the LLC and ICON Income Fund Eight B
L.P. ("Fund Eight B"), an affiliated partnership, formed ICON SPK 2023-A, LLC
for the purpose of acquiring a portfolio of leases for an aggregate purchase
price of $7,750,000 plus $118,575 of acquisition fees paid by the LLC. The
purchase was funded with cash. The leases expire on various dates commencing
April 2003 through April 2008. The LLC and Fund Eight B have ownership interests
of 51% and 49% respectively. The assets and liabilities of the venture are
consolidated with the LLC. Fund Eight B's interest is accounted for as minority
interest in joint venture on the consolidated balance sheet and minority
interest expense on the consolidated statement of operations.
In June 2002, Fund Eight B paid $113,925 into the venture for its share of
acquisition fees which in turn was paid to the Manager on behalf of the LLC.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements - Continued
Investment in Unconsolidated Joint Venture
The joint venture described below is 50% owned and is accounted for
following the equity method.
ICON Aircraft 126, LLC
In early 2002, the LLC and Fund Eight-B formed ICON Aircraft 126, LLC
("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 as of March 4, 2002
for a total purchase price of $4,250,000 in cash. The aircraft owned by D.A.L.
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. As of June 30, 2002, there was $69,311,550 outstanding under the
non-recourse debt. The LLC and Fund Eight-B each own a 50% interest in ICON 126.
ICON 126 consolidates the financial position and operations of D.A.L. in its
financial statements.
The LLC'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 June 30, 2002 is summarized below:
June 30, 2002
Assets $ 76,402,520
===============
Liabilities $ 69,832,701
===============
Equity $ 6,569,819
===============
Partnership's share of equity $ 3,284,910
===============
Quarter Ended
June 30, 2002
Net income $ 84,017
===============
Partnership's share of net income $ 42,009
===============
5. Cash Held In Escrow
At June 30, 2002, the Fund Nine had deposited $8,198,500 with an
unaffiliated third party to be utilized to make a 95% investment in a joint
venture with an affiliated partnership, Fund Eight B L.P., to acquire a natural
gas-fired 30MW co-generation facility. This transaction is expected to be
consummated in the third quarter 2002. The LLC also had $2,250,000 deposited
with the unaffiliated third party which was utilized in purchasing an A340
airbus through a majority-owned subsidiary in the third quarter 2002.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
June 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 June 30, 2002
During the three months ended June 30, 2002, the LLC deposited $8,198,500
into escrow for utilization in a joint venture with an affiliate, Fund Eight B,
to acquire a natural gas-fired 30MW co-generation facility. The LLC also had
$2,250,000 deposited into escrow with an unaffiliated third party to acquire an
A340 airbus through a majority-owned subsidiary. The proposed investments are
discussed in Note 5.
The LLC commenced operations on December 18, 2001, therefore a comparison
to the second quarter of 2001 is not discussed.
Revenues for the three months ended June 30, 2002 were $739,312. These
revenues were composed of rental income of $678,451 from the ICON SPK 2023-A,
LLC ("ICON 2023-A") venture, interest income and other of $22,347 and income
from an investment in ICON Aircraft 126, LLC ("ICON 126") of $38,514.
Expenses for the three months ended June 30, 2002 were $833,525. These
expenses included depreciation and amortization expense of $655,642, related to
equipment included in ICON 2023-A, general and administrative expenses of
$72,440, management fee payable to the Manager of $68,974, administrative
expense reimbursement paid to the Manager of $27,586 and minority interest
expense of $8,883.
Net loss for the three months ended June 30, 2002 was $94,213. The net loss
per weighted average additional members shares was $4.27. The revenue and
expenses for the quarter were consistent with the LLC's level of activity based
upon the transactions completed.
Results of Operations for the Six Months Ended June 30, 2002
During the six months ended June 30, 2002, the LLC invested $7,313,976 for
its share of two joint ventures, ICON 2023-A and ICON 126. In addition, the LLC
had investments aggregating $10,448,500 held in escrow for deals expected to be
consummated in the third quarter 2002. The investments are discussed in Note 5.
The LLC commenced operations on December 18, 2001, therefore a comparison
to the six months ended June 30, 2001 is not discussed.
Revenues for the six months ended June 30, 2002 were $1,391,335. These
revenues were composed of rental income of $1,324,920 from the ICON 2023-A
venture, interest income and other of $24,406 and income from an investment in
ICON 126 of $42,009.
Expenses for the six months ended June 30, 2002 were $1,324,673. These
expenses included depreciation and amortization expense of $874,312 related to
equipment included in ICON 2023-A, general and administrative expense of
$109,416, management fee payable to the Manager of $85,822, administrative
expense reimbursement payable to the Manager of $34,325 and minority interest
expense of $220,798.
Net income for the six months ended June 30, 2002 was $66,662. The net
income per weighted average additional members shares was $4.19.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
June 30, 2002
Liquidity and Capital Resources
The LLC's primary source of funds for the six months ended June 30, 2002
was capital contributions, net of offering expenses, of $22,120,599 and the
minority interest investment in ICON 2023-A of $3,374,431.
Cash was utilized, in part, for investments in leases of $7,982,500, of
which $1,650,000 was utilized from cash placed in escrow at December 31, 2001,
an investment in ICON 126 of $3,242,901, and cash distributions to members of
$526,833. It is anticipated that as the LLC continues to receive proceeds from
the sales of membership shares, it will continue to invest in equipment leases
while retaining sufficient cash to meet its reserve requirements and recurring
obligations. Additionally, the LLC anticipates using non-recourse debt to
increase the size and diversification of the leased equipment portfolio.
Further, the LLC intends to reinvest cash generated from operations and sales in
excess of its distribution objectives and reserve requirements in additional
leased equipment.
As of June 30, 2002 there were no known trends or demands, commitments,
events or uncertainties, which are likely to have any material effect on
liquidity.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
June 30, 2002
Item 3. Qualitative and Quantitative Disclosures About Market Risk
The LLC is exposed to certain market risks, including changes in interest
rates and the demand for equipment (and the related residuals) owned by the LLC
and its investee. Except as described below, the LLC believes its exposure to
other market risks are insignificant to both its financial position and results
of operations.
The LLC manages its interest rate risk by obtaining fixed rate debt either
directly or through its joint ventures. The fixed rate debt service obligation
in ICON 126 is matched with a fixed rate lease receivable stream generated by
the lease of the aircraft.
The LLC manages its exposure to equipment and residual risk by monitoring
the market and maximizing re-marketing proceeds received through re-lease or
sale of equipment.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed by the Partnership during the quarter ended
June 30, 2002.
Exhibits
99.1 Certification of Chairman and Chief Executive Officer pursuant to 18
U.S.C.ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
99.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C.ss.1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
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 Nine, LLC
File No. 333-67638(Registrant)
By its General Partner,
ICON Capital Corp.
August 14, 2002 /s/ Thomas W. Martin
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Date Thomas W. Martin
Executive Vice President
(Principal financial and accounting officer of the
General Partner of the Registrant)
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
June 30, 2002
EXHIBIT 99-1
I, Beaufort J.B. Clarke, Chairman and Chief Executive Officer of ICON
Capital Corp, the sole General Partner of ICON Income Fund Nine, LLC, certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Quarterly Report on Form 10-Q for the period ended June 30, 2002 (the
"Periodic Report") which this statement accompanies fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78m) and
(2) information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Income Fund Nine, LLC.
Dated: August 14, 2002
/s/ Beaufort J.B. Clarke
------------------------------------------------------
Beaufort J.B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
sole General Partner of ICON Income Fund Nine, LLC
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
June 30, 2002
EXHIBIT 99-2
I, Thomas W. Martin, Executive Vice President (Principal Financial and
Accounting Officer) of ICON Capital Corp, the sole General Partner of ICON
Income Fund Nine, LLC, certify, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) the Quarterly Report on Form 10-Q for the period ended June 30, 2002 (the
"Periodic Report") which this statement accompanies fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78m) and
(2) information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
ICON Income Fund Nine, LLC.
Dated: August 14, 2002
/s/ Thomas W. Martin
-------------------------------------------------------
Thomas W. Martin
Executive Vice President (Principal
Financial and Accounting Officer)
ICON Capital Corp.
sole General Partner of ICON Income Fund Nine, LLC