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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2003
-------------------------------------------------
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File Number 333-67638
---------------------------------------------------------
ICON Income Fund Nine, LLC
(Exact name of registrant as specified in its charter)
Delaware 13-4183234
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. 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
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) [ ] Yes [X] No
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Balance Sheets
March 31, December 31,
2003 2002
---- ----
(unaudited)
Assets
------
Cash and cash equivalents $ 27,520,237 $ 9,456,992
------------- -------------
Investment in operating leases
Equipment, at cost 203,025,329 203,025,329
Accumulated depreciation and amortization (14,067,097) (7,651,465)
-------------- ----------
188,958,232 195,373,864
-------------- -------------
Investment in unconsolidated joint ventures 3,793,047 3,367,129
Due from affiliates 185,830 36,994
Other assets 1,334,671 1,411,417
-------------- -------------
Total assets $ 221,792,017 $ 209,646,396
============== =============
Liabilities and Members' Equity
-------------------------------
Notes payable - non-recourse $150,569,771 $ 156,955,116
Due to Manager 11,999 32,687
Accounts payable and other liabilities 138,320 236,549
Deferred income 1,349,005 759,569
Minority interest in joint ventures 3,598,624 3,923,665
-------------- -------------
155,667,719 161,907,586
-------------- -------------
Commitments and Contingencies
Members' equity
Manager (one share outstanding, $1,000 per share
original issue price) (47,022) (26,797)
Additional members (80,999.151 and 57,929.604
shares outstanding, $1000 per share original issue price) 66,171,320 47,765,607
-------------- -------------
Total members' equity 66,124,298 47,738,810
-------------- -------------
Total liabilities and members' equity $ 221,792,017 $ 209,646,396
============== =============
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31,
(Unaudited)
2003 2002
----------- -----------
Revenues
Rental income $ 8,686,361 $ 646,469
Interest income and other 25,267 2,059
Income from investment in joint ventures 36,399 3,495
----------- -----------
Total revenues 8,748,027 652,023
----------- -----------
Expenses
Depreciation and amortization 6,415,632 218,670
Interest 2,111,127 -
Management fee - Manager 494,717 16,848
Administrative fee reimbursement - Manager 197,887 6,739
General and administrative 110,282 36,976
Minority interest expense 18,569 211,915
----------- -----------
Total expenses 9,348,214 491,148
----------- -----------
Net (loss) income $ (600,187) $ 160,875
=========== ===========
Net (loss) income allocable to:
Managing member $ (6,003) $ 1,609
Additional members (594,184) 159,266
----------- -----------
$ (600,187) $ 160,875
=========== ===========
Weighted average number of additional member
shares outstanding 67,804 9,708
=========== ===========
Net (loss) income per weighted average additional
member shares $ (8.76) $ 16.40
=========== ===========
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Statement of Changes in Members' Equity
For the Three Months Ended March 31, 2003
(Unaudited)
Additional Members Distributions
--------------------------------
Return of Investment Additional Managing
Capital Income Members Member Total
------- ------ ------- ------ -----
(Per weighted average share)
Balance at January 1, 2003 $ 47,765,607 $ (26,797) $ 47,738,810
Proceeds from issuance
of additional member shares
(23,084.547 shares) 23,084,547 - 23,084,547
Sales and offering expenses (2,654,724) - (2,654,724)
Cash distributions
to members $ 20.63 $ - (1,408,201) (14,222) (1,422,423)
Additional member shares
redeemed (15 shares) (21,725) - (21,725)
Net loss (594,184) (6,003) (600,187)
--------------- ------------ --------------
Balance at March 31, 2003 $ 66,171,320 $ (47,022) $ 66,124,298
============= ============ ==============
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31,
(Unaudited)
2003 2002
---- ----
Cash flows from operating activities:
Net (loss) income $ (600,187) $ 160,875
------------ -----------
Adjustments to reconcile net (loss) income to
net cash used in operating activities:
Depreciation and amortization 6,415,632 218,670
Minority interest expense 18,569 211,915
Income from investment in joint ventures (36,399) (3,495)
Rental income paid directly to lenders by lessees (7,914,910) -
Interest expense on non-recourse financing
paid directly by lessees 2,111,127 -
Changes in operating assets and liabilities:
Other assets 76,746 (82,879)
Due from affiliates (148,836) (920,163)
Due to Manager (20,688) -
Accounts payable and other liabilities (90,356) 285,144
Other - (2,533)
------------ -----------
Total adjustments 410,885 (293,341)
------------ -----------
Net cash used in operating activities (189,302) (132,466)
------------ -----------
Cash flows used in investing activities:
Investment in operating leases - (7,868,575)
Investment in joint ventures (389,518) (3,242,901)
Distribution to minority interest in joint venture (343,610) -
Cash held in escrow - 1,650,000
------------ -----------
Net cash used in investing activities (733,128) (9,461,476)
------------ -----------
Cash flows from financing activities:
Issuance of membership shares,
net of offering expenses 20,429,823 11,335,726
Minority interest contribution - 3,797,500
Redemption of additional member shares (21,725) -
Cash distributions to members (1,422,423) (123,565)
------------ -----------
Net cash provided by financing activities 18,985,675 15,009,661
------------ -----------
Net increase in cash and cash equivalents 18,063,245 5,415,719
Cash and cash equivalents at beginning of the period 9,456,992 804,640
------------ -----------
Cash and cash equivalents at end of the period $ 27,520,237 $ 6,220,359
============ ===========
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31,
(Unaudited)
Supplemental Disclosure of Cash Flow Information
- ------------------------------------------------
For the three months ended March 31, 2003 and 2002, non-cash activities
included the following:
2003 2002
---- ----
Rental income assigned operating lease receivables $ 7,914,910 $ 2,149,539
Deferred income on operating lease receivables paid
directly to lenders by lessees 581,562 -
Principal and interest paid directly to lenders by lessees (8,496,472) (2,149,539)
------------- --------------
$ - $ -
============ =============
Fair value of equipment purchased for debt $ - $ 136,395,234
Non-recourse notes payable assumed in purchase price - (136,395,234)
------------ --------------
$ - $ -
============ =============
Interest paid directly to lenders by lessees
pursuant to non-recourse financings $ 2,111,127 $ -
============ =============
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements
March 31, 2003
(Unaudited)
1. Organization
ICON Income Fund Nine, LLC (the "LLC") was formed on July 11, 2001,
pursuant to the Amended and Restated Operating Agreement of ICON Income Fund
Nine, LLC ("Operating Agreement"). The LLC is 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 subject to leases with third parties and to make related investments
pursuant to the Operating Agreement. The LLC's maximum offering is $100,000,000.
The LLC commenced business operations on December 18, 2001, with the admission
of members representing 1,249.91 additional members' shares at $1,000 per share,
aggregating $1,249,910 of capital contributions. For the year ended December 31,
2002, members representing 56,679.694 additional shares were admitted into the
LLC with aggregate gross proceeds of $56,679,694, bringing the total admissions
at December 31, 2002 to 57,929.604 shares aggregating $57,929,604 in capital
contributions (exclusive of the Manager's interest as a member). During the
quarter ending March 31, 2003, 23,084.547 additional shares were admitted into
the LLC with aggregate proceeds of $23,084,547 in capital contributions, and 15
shares were redeemed bringing the total additional member shares at March 31,
2003 to 80,999.151 shares aggregating $80,999,151 in capital contributions.
On April 30, 2003, the LLC had its final closing with a cumulative total of
99,743.474 units admitted totaling $99,743,474.23 in capital contributions.
2. Basis of Presentation
The condensed consolidated financial statements of the LLC 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 consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such SEC rules and
regulations. Management believes that the disclosures made are adequate to make
the information presented not misleading. The results for the interim periods
are not necessarily indicative of the results for the full year. These condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes included in the LLC's 2002 Annual
Report on Form 10-K. Certain 2002 amounts have been reclassified to conform to
the 2003 presentation.
3. Related Party Transactions
Fees and expenses paid or accrued ($11,999 is due to the Manager at March
31, 2003) by the LLC to the Manager or its affiliates directly or on behalf of
joint ventures in which the LLC has an interest were as follows for the period
ended March 31, 2003 and 2002:
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements - Continued
2003 2002
---- ----
Organization and offering expenses $ 346,043 $ 458,671 Charged to equity
Underwriting commissions 461,391 262,098 Charged to equity
Acquisition fees 81,863 1,117,901 Capitalized as part
of investment in
joint venture
Acquisition fees - 118,575 Capitalized as part
of investment in
operating leases
Management fees 494,717 16,848 Charged to operations
Administrative expense reimbursements 197,887 6,739 Charged to operations
----------- -----------
$ 1,581,901 $ 1,980,832
=========== ===========
4. Consolidated Joint Ventures and Investments in Unconsolidated Joint Ventures
The LLC and its affiliates formed five joint ventures discussed below for
the purpose of acquiring and managing various assets. The LLC and its affiliates
have identical investment objectives and participate on the same terms and
conditions. The LLC has the right of first refusal to purchase the equipment, on
a pro-rata basis, if any of the affiliates desire to sell their interests in the
equipment.
Consolidated Ventures
The joint ventures described below are owned 95%, 85% and 51%,
respectively, and are consolidated in the condensed financial statements of the
LLC.
ICON/Kenilworth LLC
-------------------
In the quarter ended September 30, 2002, the LLC and ICON Income Fund Eight
B L.P. ("Fund Eight B"), an affiliated partnership, 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, with an assumed non-recourse debt
of $7,658,892, consisting of a senior debt of $7,420,156 and a junior debt of
$238,736. The acquisition closed on September 30, 2002. The facility is subject
to a lease with Energy Factors Kenilworth, Inc., and the lease expires in July
2004. In addition, there was a total of $459,843 in acquisition fees paid to the
Manager.
Subsequent to the closing of the acquisition, the purchase price was
adjusted by the following amounts. The cash paid was lowered to $8,410,000 and
the non-recourse debt was reduced to $6,918,091, with an adjustment of $740,801
to the senior debt. The amount is included in the caption other assets on the
balance sheet.
The LLC and Fund Eight B have ownership interests of 95% and 5%,
respectively. The LLC's condensed consolidated financial statements include 100%
of the assets and liabilities of ICON/Kenilworth LLC as well as 100% of the
related revenues and expenses. Fund Eight B's interest is accounted for as
minority interest in joint ventures on the condensed consolidated balance sheets
and minority interest expense on the condensed consolidated statements of
operations.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements - Continued
ICON Aircraft 46835 LLC
-----------------------
In 2002, the LLC and Fund Eight B formed ICON Aircraft 46835 LLC ("ICON
46835") for the purpose of acquiring an investment in a McDonnell Douglas
DC-10-30F aircraft leased to Federal Express through March 2007. The aircraft
was acquired for a purchase price of $25,291,593, which was funded with cash of
$3,000,000 and non-recourse debt of $22,291,593. The rents and the aircraft have
been assigned to the non-recourse lender. The lease is scheduled to expire in
March 2007, at which time the balance of the non-recourse debt outstanding is
scheduled to be approximately $2,708,000. In addition, there was a total of
$758,748 in acquisition fees paid to the Manager of which the LLC's share was
$644,936.
The LLC and Fund Eight B have ownership interests of 85% and 15%,
respectively. The LLC's condensed consolidated financial statements include 100%
of the assets and liabilities of ICON 46835 as well as 100% of the related
revenues and expenses. Fund Eight B's interest is accounted for as minority
interest in joint ventures on the condensed consolidated balance sheets and
minority interest expense on the condensed consolidated statements of
operations.
ICON SPK 2023-A LLC
-------------------
In the quarter ended March 31, 2002, the LLC and Fund Eight B formed ICON
SPK 2023-A LLC for the purpose of acquiring a portfolio of leases for an
aggregate purchase price of $7,750,000 in cash plus $118,575 of acquisition fees
paid by the LLC. The leases expire on various dates commencing April 2003
through April 2008.
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.
The LLC and Fund Eight B have ownership interests of 51% and 49%,
respectively. The LLC's condensed consolidated financial statements include 100%
of the assets and liabilities of ICON SPK 2023-A LLC as well as 100% of the
related revenues and expenses. Fund Eight B's interest is accounted for as
minority interest in joint ventures on the condensed consolidated balance sheets
and minority interest expense on the condensed consolidated statements of
operations.
Investments in Unconsolidated Joint Ventures
The joint ventures described below are 50% and 10% owned, respectively, and
are 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."), an unaffiliated 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 March 31, 2003, there was $66,240,465
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.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements - Continued
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 financial position and results of operations of ICON 126 as of March 31,
2003 and 2002 is summarized below:
March 31, 2003 December 31, 2002
-------------- -----------------
Assets $ 73,372,368 $ 74,332,428
============ ============
Liabilities $ 66,536,111 $ 67,598,170
============ ============
Equity $ 6,836,257 $ 6,734,258
============ ============
LLC's share of equity $ 3,418,128 $ 3,367,129
============ ============
Three Months Ended Three Months Ended
March 31, 2003 March 31, 2002
-------------- --------------
Net income $ 101,999 $ 6,990
============ ============
LLC's share of net income $ 50,999 $ 3,495
============ ============
ICON Aircraft 47820 LLC
-----------------------
In 2003, the LLC and Fund Eight B formed ICON Aircraft 47820 LLC ("ICON
47820") for the purpose of acquiring an investment in a McDonnell Douglas
DC-10-30F leased to Federal Express through March 2007. The aircraft was
acquired for a purchase price of $27,287,644, which was funded with cash of
$3,076,564 and non-recourse debt of $24,211,080. The rents and the aircraft have
been assigned to the non-recourse lender. The lease is scheduled to expire in
March 2007. As of March 31, 2003, there was $21,348,831 outstanding under the
non-recourse debt.
The LLC and Fund Eight B own a 10% and 90% interest, respectively, in ICON
47820. Fund Eight B consolidates the financial position and results of
operations of ICON 47820 in its financial statements.
The LLC's original investment in ICON 47820 was recorded at a cost of
$389,518, inclusive of related acquisition fees of $81,863. Information as to
the consolidated financial position and results of operations of ICON 47820 as
of March 31, 2003 is summarized below:
March 31, 2003
--------------
Assets $ 27,662,209
===============
Liabilities $ 23,913,022
===============
Equity $ 3,749,187
===============
LLC's share of equity $ 374,919
===============
Three Months Ended
March 31, 2003
--------------
Net loss $ (146,006)
================
LLC's share of net loss $ (14,600)
================
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements - Continued
5. Investments In Wholly-Owned Subsidiaries
The following subsidiaries' assets, liabilities, income and expenses are
consolidated on the LLC's condensed consolidated balance sheets and condensed
consolidated statements of operations.
ICON Aircraft 128, LLC
----------------------
In the quarter ended September 30, 2002, the LLC formed ICON Aircraft 128,
LLC ("ICON 128") for the purpose of acquiring 53% of the outstanding shares of
HXO Aircraft Leasing Limited ("HXO"), an unaffiliated Cayman Islands registered
company, which owns, through an Owner Trust, an Airbus A340-300ER aircraft which
is on lease to Cathay Pacific through June 2006. The stock was acquired for
$2,250,000 in cash. The LLC also paid or accrued $2,041,243 in acquisition fees
to the Manager.
As of September 30, 2002 the LLC had a commitment to acquire an additional
23% of the shares of HXO for $1 million cash on or before December 15, 2002. The
LLC also had an option to acquire the remaining 24% of the shares, exercisable
at a price of $1 million plus interest at 7% per annum, calculated from the
initial closing date to the date the option is exercised. The option became an
obligation of the LLC upon the LLC raising $75 million from its offering of
shares.
Subsequent to September 30, 2002, ICON 128 exercised its option and
acquired the remaining 47% interest from HXO for $2,028,000 in cash and incurred
additional acquisition fees of $30,840. As of March 31, 2003, ICON 128 continues
to own 100% of the investment.
The aircraft owned by HXO is subject to non-recourse debt provided by
unaffiliated lenders. As of March 31, 2003, there was $61,268,018 outstanding
under the non-recourse debt. ICON 128 consolidates the financial position and
operations of HXO in its financial statements.
ICON Railcar I LLC
------------------
In November 2002, the LLC formed ICON Railcar I LLC for the purpose of
acquiring a total of 434 coal gondola railcars for a total purchase price of
$5,667,220, which was funded with cash of $1,227,886 and non-recourse debt of
$4,439,334 subject to two separate leases as follows:
(i) 324 railcars were leased to Texas Genco LP for a purchase price of
$4,424,220, which was funded with cash of $1,101,429 and non-recourse
debt of $3,322,791. The rents and railcars have been assigned to the
non-recourse lender. The lease is scheduled to expire in March 2007
with a remarketing period which extends to June 2007 at which time the
balance of the non-recourse debt is scheduled to be approximately
$1,603,000. In addition, there was a total of $132,727 in acquisition
fees paid to the Manager. As of March 31, 2003, there was $3,434,954
outstanding under the non-recourse debt.
(ii) 110 railcars were leased to Trinity Rail Management, Inc. for a
purchase price of $1,243,000, which was funded with cash of $126,457
and non-recourse debt of $1,116,543. The rents and railcars have been
assigned to the non-recourse lender. The lease is scheduled to expire
in April 2010 with a remarketing period which extends to July 2010 at
which time the balance of the non-recourse debt is scheduled to be
approximately $387,000. In addition, there was a total of $37,290 in
acquisition fees paid to the Manager. As of March 31, 2003, there was
$1,098,882 outstanding under the non-recourse debt. Subsequent to the
acquisition, the LLC was refunded $14,630 in cash, which was recorded
as a reduction to the acquisition cost of the equipment purchased.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements - Continued
ICON Trianon LLC, ICON Trinidad LLC, ICON Tancred LLC
-----------------------------------------------------
During the third quarter of 2002, the LLC formed ICON Trianon LLC, ICON
Trinidad LLC and ICON Tancred LLC (collectively known as "Wilhelmsen") for the
purpose of acquiring three car and truck carrying vessels, for $9,690,060 in
cash and the assumption of non-recourse debt of $64,329,764. The vessels are
subject to lease with Wilhelmsen Lines Shipowning, a wholly-owned subsidiary of
Wallenius Wilhelmsen Lines ASA, and the leases expire in December 2008. In
addition, the LLC paid or accrued $2,220,595 in acquisition fees to the Manager.
As of March 31, 2003, there was $59,572,240 outstanding under the non-recourse
debt.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
March 31, 2003
Item 2: General Partner's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-Looking Information - The following discussion and analysis should
be read in conjunction with the audited financial statements dated December 31,
2002. Certain statements within this document may constitute forward-looking
statements made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. These statements are identified by words such as
"anticipate," "believe," "estimate," "expects," "intend," "predict" or "project"
and similar expressions. This information may involve risks and uncertainties
that could cause actual results to differ materially from the forward-looking
statements. Although the LLC believes that the expectations reflected in such
forward-looking statements are based on reasonable assumptions, such statements
are subject to risks and uncertainties that could cause actual results to differ
materially from those projected.
Results of Operations for the Three Months Ended March 31, 2003 and 2002
Revenues for the quarter ended March 31, 2003 (the "2003 Quarter") were
$8,748,027 representing an increase of $8,096,004 over the quarter ended March
31, 2002 (the "2002 Quarter"). The increase in revenue resulted from the
additional investments in three joint ventures and three subsidiaries subsequent
to the 2002 Quarter as compared to a total of two joint ventures at the end of
the 2002 Quarter. Rental income, interest income and joint venture income all
increased due to these additional investments in operating leases made
subsequent to the 2002 Quarter.
Expenses for the 2003 Quarter were $9,348,214 representing an increase of
$8,857,066 over the 2002 Quarter. The increase resulted from the additional
expenses directly related to the new acquisitions subsequent to the 2002 Quarter
as compared to the two joint ventures in the 2002 Quarter. The increase in the
size of the LLC's lease portfolio and overall growth in size of the operations
of the LLC from the 2002 Quarter is consistent with the LLC's increasing level
of operations.
Depreciation and amortization expense increased by $6,196,962, due to the
additional investments in operating leases made subsequent to the 2002 Quarter.
Interest expense increased by $2,111,127 due to the additional debt used to
acquire investments in operating leases subsequent to the 2002 Quarter.
Management fee - Manager increased by $477,869 and administrative fee
reimbursement - Manager increased by $191,148 in the 2003 Quarter as compared to
the 2002 Quarter. The increase in management fees was consistent with increases
in rentals (including operating leases and through joint ventures) on which such
fees are dependent. The increase in administrative fees was consistent with the
increase in operating activities of the LLC. Minority interest expense decreased
by $193,346, and general and administrative expenses increased by $73,306 in the
2003 Quarter as compared to the 2002 Quarter.
Net (loss) income for the 2003 Quarter and the 2002 Quarter was ($600,187)
and $160,875, respectively. The net (loss) income per weighted average
additional member shares outstanding for the 2003 Quarter and the 2002 Quarter
was ($8.76) and $16.40, respectively.
Liquidity and Capital Resources
On April 30, 2003, the LLC had its final closing with a cumulative total of
99,743.474 units admitted totaling $99,743,474.23 in capital contributions. As
cash is realized from operations, the LLC 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.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
March 31, 2003
The LLC's primary source of funds for the three months ended March 31, 2003
was capital contributions, net of offering expenses, of $20,429,823. Cash was
utilized, in part, by cash distributions to members of $1,422,423, distributions
to minority interest holder of $343,610 and investment in a joint venture of
$389,518. 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 March 31, 2003 there were no known trends or demands, commitments,
events or uncertainties, which are likely to have any material effect on
liquidity.
During the quarter ended June 30, 2002, certain affiliated funds entered
into a $17,500,000 joint and several line of credit agreement dated as of May
30, 2002. They were ICON Income Fund Eight A L.P., ICON Income Fund Eight B L.P.
and ICON Cash Flow Partners L.P. Seven (the "Initial Funds"), with Comerica Bank
as lender. Under the terms of the agreement, the Initial Funds may borrow at a
rate equal to the Comerica Bank base rate plus 1% (together, 5.25% at March 31,
2003) and all borrowings are to be jointly and severally collateralized by the
present values of rents receivable and equipment owned by all of the Initial
Funds sharing in the joint line of credit. On December 12, 2002, the agreement
was amended to admit the LLC, collectively along with the Initial Funds (the
"Funds"), as a borrower sharing the $17,500,000 joint line of credit agreement.
The Funds have entered into a Contribution Agreement, dated as of May 30, 2002,
as amended December 12, 2002, pursuant to which the Funds have agreed to
restrictions on the amount and the terms of their respective borrowings under
the line of credit in order to minimize the risk that a Fund would not be able
to repay its allocable portion of the outstanding revolving loan obligation at
any time, including restrictions on any Fund borrowing in excess of the lesser
of (A) an amount each Fund could reasonably expect to repay in one year out of
its projected free cash flow, or (B) the greater of (i) the Borrowing Base (as
defined in the line of credit agreement) as applied to such Fund, and (ii) 50%
of the net worth of such Fund. The Contribution Agreement provides that, in the
event a Fund pays an amount under the agreement in excess of its allocable share
of the obligation under the agreement whether by reason of an Event of Default
or otherwise, the other Funds will immediately make a contribution payment to
such Fund in such amount that the aggregate amount paid by each Fund reflects
its allocable share of the aggregate obligations under the agreement. The Funds'
obligations to each other under the Contribution Agreement are collateralized by
a subordinate lien on the assets of each participating Fund. The expiration date
of this line of credit is May 31, 2003. The LLC violated a financial covenant at
December 31, 2002 creating an Event of Default. The bank granted a waiver to the
LLC with respect to this Event of Default. As of March 31, 2003, there were no
borrowings by the LLC under the line. Aggregate borrowing by all Funds under the
line of credit agreement aggregated $7,484,986 on March 31, 2003.
Cash distributions to limited partners for the 2003 Quarter and 2002
Quarter, which were paid monthly, totaled $1,408,201 and $122,328, respectively.
As of March 31, 2003, there were no known trends or demands, commitments,
events or uncertainties, which are likely to have any material effect on
liquidity. As cash is realized from operations and additional borrowings, the
LLC will continue to invest in equipment leases and financings where it deems it
to be prudent while retaining sufficient cash to meet its reserve requirements
and recurring obligations.
We do not consider the impact of inflation to be material in the analysis
of our overall operations.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
March 31, 2003
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
streams are generally matched by fixed rents receivable by the LLC's lease
investments.
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.
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
Manager of the LLC, have evaluated the disclosure controls and procedures of the
LLC 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 LLC that are
designed to ensure that information required to be disclosed by the LLC 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 the Manager. Based upon their evaluation, Messrs.
Clarke and Martin have concluded that the LLC's disclosure controls and
procedures provide reasonable assurance that the information required to be
disclosed by the LLC 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 LLC's internal controls or in
other factors that could significantly affect the LLC's internal controls
subsequent to the evaluation described above conducted by ICC's principal
executive and financial officers.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
PART II - OTHER INFORMATION
Item 1- Legal Proceedings
- -------------------------
The LLC, from time-to-time, in the ordinary course of business, commences legal
actions when necessary to protect or enforce the rights of the LLC. We are not a
defendant party to any litigation and are not aware of any pending or threatened
litigation against the LLC.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
(b) Reports on Form 8-K
Form 8-K filed on May 6, 2003
Item 4. Changes in Registrant's Certifying Accountant
(c) 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.
May 14, 2003 /s/ Thomas W. Martin
- --------------------------- -------------------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer)
ICON Capital Corp.
Manager of ICON Income Fund Nine, LLC
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
Nine, LLC;
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
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: May 14, 2003
/s/ Beaufort J.B. Clarke
- -----------------------------
Beaufort J. B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
Manager of ICON Income Fund Nine, LLC
Certifications - 10-Q
---------------------
I, Thomas W. Martin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ICON Income Fund
Nine, LLC;
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
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: May 14, 2003
/s/ Thomas W. Martin
- ----------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer)
ICON Capital Corp.
Manager of ICON Income Fund Nine, LLC
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
March 31, 2003
EXHIBIT 99.1
I, Beaufort J.B. Clarke, Chairman and Chief Executive Officer of ICON
Capital Corp, the Manager 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 March 31, 2003
(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: May 14, 2003
/s/ Beaufort J.B. Clarke
--------------------------------------------
Beaufort J.B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
Manager of ICON Income Fund Nine, LLC
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
March 31, 2003
EXHIBIT 99.2
I, Thomas W. Martin, Executive Vice President (Principal Financial and
Accounting Officer) of ICON Capital Corp, the Manager 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 March 31, 2003
(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: May 14, 2003
/s/ Thomas W. Martin
--------------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer)
ICON Capital Corp.
Manager of ICON Income Fund Nine, LLC