Back to GetFilings.com
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, 2004
--------------------------------------------------
[ ] 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 000-50217
----------------------------------------------------------
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 Rule 12b-2 of the Exchange Act) [ ] Yes [X] No
Part I - Financial Information
Item 1. Financial Statements
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Balance Sheets
(unaudited)
March 31, December 31,
2004 2003
---- ----
Assets
------
Cash and cash equivalents $ 12,708,883 $ 14,651,555
-------------- ---------------
Investment in finance leases
Minimum rent receivables 24,466,774 16,958,283
Estimated unguaranteed residual values 1,989,814 1,693,570
Initial direct costs, net 372,235 410,719
Unearned income (3,865,235) (3,462,258)
------------- ---------------
22,963,588 15,600,314
------------- ---------------
Investment in operating leases
Equipment at cost 203,919,993 203,919,993
Accumulated depreciation (37,267,061) (31,186,896)
------------- ---------------
166,652,932 172,733,097
------------- ---------------
Investment in unconsolidated joint ventures 4,034,299 3,954,634
Investment in unguaranteed residual values 4,454,003 4,454,003
Due from affiliates, net 122,378 103,885
Due from Manager 237,791 289,422
Other assets, net 164,964 1,118,267
Total assets $ 211,338,838 $ 212,905,177
============== ===============
Liabilities and Members' Equity
-------------------------------
Notes payable - non-recourse $ 134,936,273 $ 134,463,196
Due to affiliates, net 33,062 -
Accounts payable and other liabilities 478,297 476,253
Deferred income 264,444 -
Minority interest in consolidated joint ventures 2,610,038 2,811,859
--------------- --------------
138,322,114 137,751,308
--------------- --------------
Commitments and Contingencies
Members' equity
Manager (one share outstanding, $1,000 per share
original issue price) (137,567) (115,985)
Additional members (98,876.493 and 98,991.003
shares outstanding, $1000 per share original issue price) 73,154,291 75,269,854
-------------- ---------------
Total members' equity 73,016,724 75,153,869
-------------- ---------------
Total liabilities and members' equity $ 211,338,838 $ 212,905,177
============== ===============
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)
2004 2003
---- ----
Revenues
Rental income $ 8,486,433 $ 8,686,361
Finance income 366,850 -
Income from investments in unconsolidated joint ventures 79,666 36,399
Interest income and other 30,582 25,267
-------------- ------------
Total revenues 8,963,531 8,748,027
-------------- ------------
Expenses
Depreciation and amortization 6,124,632 6,444,393
Interest expense 1,747,706 2,111,127
Management fee - Manager 562,533 494,717
Administrative fee reimbursement - Manager 225,013 197,887
General and administrative 187,727 81,521
Minority interest in consolidated joint venture 25,344 18,569
------------- -------------
Total expenses 8,872,955 9,348,214
------------- -------------
Net income (loss) $ 90,576 $ (600,187)
============= =============
Net income (loss) allocable to:
Managing member $ 906 $ (6,002)
Additional members 89,670 (594,185)
------------- -------------
$ 90,576 $ (600,187)
============= =============
Weighted average number of additional member
shares outstanding 98,933 67,804
============= =============
Net income (loss) per weighted average additional
member shares $ 0.91 $ (8.76)
============= ============
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, 2004
(Unaudited)
Additional Members Distributions
--------------------------------
Return of Investment Additional Managing
Capital Income Members Member Total
------- ------ ------- ------ -----
(Per weighted average share)
Balance at January 1, 2004 $ 75,269,854 $ (115,985) $ 75,153,869
Cash distributions
to members $ 20.41 $ 0.91 (2,108,788) (22,488) (2,131,276)
Additional member shares
redeemed (114.51 shares) (96,445) - (96,445)
Net income 89,670 906 90,576
--------------- ------------ --------------
Balance at March 31, 2004 $ 73,154,291 $ (137,567) $ 73,016,724
=============== ============ ==============
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)
2004 2003
---- ----
Cash flows from operating activities:
Net income (loss) $ 90,576 $ (600,187)
----------------- ---------------
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 6,124,632 6,415,632
Income from investment in unconsolidated joint ventures (79,666) (36,399)
Rental income paid directly to lenders by lessees (7,924,037) (7,914,910)
Minority interest in consolidated joint ventures 25,344 18,569
Interest expense on non-recourse financing
paid directly to lenders by lessees 1,727,548 2,111,127
Changes in operating assets and liabilities:
Collection of principal non-financed receivables 793,964 -
Due from affiliates, net (18,493) (148,836)
Other assets (63,272) 76,746
Due to affiliates, net 33,062 (20,688)
Accounts payable and other liabilities 2,043 (90,356)
------------------ ---------------
Total adjustments 621,125 410,885
------------------ ----------------
Net cash provided by (used in) operating activities 711,701 (189,302)
------------------ ---------------
Cash flows from investing activities:
Investment in finance leases (199,487) -
Investment in joint ventures - (389,518)
Distribution to minority interest in consolidated joint venture (227,165) (343,610)
------------------- ---------------
Net cash used in investing activities (426,652) (733,128)
------------------ ---------------
Cash flows from financing activities:
Issuance of additional membership shares,
net of offering expenses - 20,429,823
Redemption of additional member shares (96,445) (21,725)
Cash distributions to members (2,131,276) (1,422,423)
----------------- ---------------
Net cash (used in) provided by financing activities (2,227,721) 18,985,675
----------------- ----------------
Net (decrease) increase in cash and cash equivalents (1,942,672) 18,063,245
Cash and cash equivalents at beginning of the period 14,651,555 9,456,992
----------------- ---------------
Cash and cash equivalents at end of the period $ 12,708,883 $ 27,520,237
================= ===============
(continued on next page)
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 Disclosures of Cash Flow Information
- -------------------------------------------------
For the three months ended March 31, 2004 and 2003, non-cash activities
included the following:
2004 2003
---- ----
Rental income assigned, operating lease receivables $ 7,924,037 $ 7,914,910
Deferred income on operating lease receivables paid
directly to lenders by lessees 1,309,934 581,562
Principal and interest paid directly to lenders by lessees (9,233,971) (8,496,472)
---------------- ---------------
$ - $ -
================ ===============
Non-cash portion of investment in finance lease $ 7,979,500 $ -
Non-recourse notes payable assumed in investment in finance lease (7,979,500) -
---------------- ---------------
$ - $ -
================ ===============
Interest on non-recourse financing paid directly to lenders by lessees $ 1,727,548 $ 2,111,127
Other interest paid 20,158 -
---------------- ----------------
Total interest expense $ 1,747,706 $ 2,111,127
================ ================
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements
March 31, 2004
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements of the ICON Income Fund
Nine, LLC (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 2003 Annual Report on Form 10-K.
2. Related Party Transactions
Fees and expenses paid or accrued by the LLC to ICON Capital Corp. (the
"Manager") or its affiliates directly or on behalf of joint ventures in which
the LLC has an interest were as follows for the three months ended March 31,
2004 and 2003:
2004 2003
---- ----
Organization and offering expenses $ - $ 346,043 Charged to equity
Underwriting commissions - 461,391 Charged to equity
Acquisition fees - 81,863 Capitalized as part
of investment in
joint venture
Acquisition fees 5,984 - Capitalized as part
of investment in
finance leases
Management fees 562,533 494,717 Charged to operations
Administrative expense reimbursements 225,013 197,887 Charged to operations
--------- ----------
$ 793,530 $1,581,901
========= ==========
The Manager had expected certain transactions to be consummated in the
first quarter of 2004 which would have generated acquisition fees of at least
$289,422. The structure of these transactions changed consequently resulting in
a lower acquisition fee. The Manager returned to the LLC the difference of the
receivables due to the LLC from the fourth quarter 2003 and the actual fees
generated therefrom of $237,791 during the second quarter 2004.
The LLC also paid $45,647 in acquisition fees to the manager for a binding
agreement as outlined in Note 6. The amount is included Under the Caption
("Other Assets") on the balance sheet.
As of March 31, 2004, the LLC had a net receivable of $89,316 due from
affiliates, ICON Income Fund Eight-A L.P., ICON Income Fund Eight-B L.P. ("Fund
Eight B"), and ICON SPK-2023 LLC ("ICON SPK") for reinvestments and
reimbursements of fees paid on behalf of the affiliates.
3. 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.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements - Continued
Consolidated Ventures
The joint ventures described below are owned 95%, 85% and 51%,
respectively, and are consolidated in the condensed consolidated financial
statements of the LLC.
The LLC's condensed consolidated financial statements include 100% of the
assets and liabilities, as well as 100% of the related revenues and expenses of
these ventures. Fund Eight B's interest is accounted for as minority interest in
consolidated joint ventures on the condensed consolidated balance sheets and
statements of operations.
ICON/Kenilworth LLC
-------------------
On September 30, 2002, the LLC and Fund Eight B formed ICON/Kenilworth LLC
for the purpose of acquiring a natural gas-fired 25MW co-generation facility for
a purchase price of $8,410,000 in cash, and assumed non-recourse debt of
$6,918,091 consisting of a senior debt of $6,679,355 and a junior debt of
$238,736. The facility is on 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 as part of the acquisition cost. The
outstanding non-recourse debt at March 31, 2004 was $1,946,594.
The original lease term expires in July 2004. The lessee has entered into a
lease extension until 2009. During the extension term, the rental payment is in
part a function of natural gas prices. If natural gas prices are sustained at
the current record high levels, rental payments will be deferred until natural
gas prices return to previous levels. High natural gas prices, such as the
current level, sustained over the long term will directly affect the viability
of the cogeneration facility and may impede the LLC's ability to capitalize on
its investment.
ICON Aircraft 46835 LLC
-----------------------
In December 2002, the LLC and Fund Eight B formed ICON Aircraft 46835 LLC
for the purpose of acquiring an investment in a McDonnell Douglas DC-10-30F
aircraft on lease to Federal Express. The aircraft was acquired for a purchase
price of $25,291,593, which was funded with cash of $3,000,000 and the
assumption of non-recourse debt in the amount of $22,291,593. In addition, there
was a total of $758,748 in acquisition fees paid to the Manager as part of the
acquisition cost. The lenders have a security interest in the aircraft and have
been assigned the rental payments under the lease. The lease is scheduled to
expire in March 2007, at which time the balance of the non-recourse debt
outstanding will be approximately $2,708,000. At March 31, 2004, the outstanding
balance of the non-recourse debt was $15,156,483.
ICON SPK 2023-A LLC
-------------------
In 2002, the LLC and Fund Eight B formed ICON SPK for the purpose of
acquiring a portfolio of leases for an aggregate purchase price of $7,750,000 in
cash. In addition, there was a total of $232,500 in acquisition fees paid to the
Manager as part of the acquisition cost. The leases expire on various dates
through April 2008.
Unconsolidated Joint Ventures
The joint ventures described below are 50% and 10% owned, respectively, and
are accounted for following the equity method.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements - Continued
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 is subject to non-recourse debt provided by
unaffiliated lenders. As of March 31, 2004, there was $61,946,078 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 paid to the
Manager. Information as to the unaudited results of operations of ICON 126 as of
March 31, 2004 and 2003 is summarized below:
Three Months Ended Three Months Ended
March 31, 2004 March 31, 2003
-------------- --------------
Net income $ 149,756 $ 101,999
=============== ===============
LLC's share of net income $ 74,878 $ 50,999
=============== ===============
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 on lease to Federal Express. 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. In addition, there was a total of $818,629 in acquisition
fees paid to the General Partner of which the LLC's share was $81,863. The
lenders have a security interest in the aircraft and an assignment of the rental
payments under the lease. 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 $2,916,523. The outstanding non-recourse debt at March 31, 2004
was $16,326,065.
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 unaudited results of operations of ICON 47820 as of March 31, 2003 is
summarized below:
Three Months Ended Three Months Ended
March 31, 2004 March 31, 2003
-------------- --------------
Net income $ 47,876 $ (146,006)
=============== ==============
LLC's share of net income $ 4,788 $ (14,600)
=============== ==============
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements - Continued
4. Investments In Consolidated 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 2002, the LLC formed ICON Aircraft 128 LLC ("ICON Aircraft 128") for the
purpose of acquiring 53% (with an option to acquire the remaining 47%) of the
outstanding shares of HXO Aircraft Leasing Limited ("HXO"), a Cayman Islands
registered company, which owns, through an Owner Trust, an Airbus A340-300ER
aircraft on lease to Cathay Pacific through June 2006. The stock was acquired
for $2,250,000 in cash. The LLC also paid $2,041,243 in acquisition fees to the
Manager as a result of the acquisition. Subsequent to the original acquisition,
ICON Aircraft 128 exercised its option and acquired the remaining 47% interest
from HXO for $2,028,000 in cash and paid additional acquisition fees of $30,840
to the Manager.
The aircraft owned by HXO is subject to non-recourse debt to unaffiliated
lenders. As of March 31, 2004, there was $56,355,664 outstanding under the
non-recourse debt.
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 the assumption of
non-recourse debt in the amount of $4,439,334 subject to two separate leases as
follows:
(i) 324 railcars were on lease to Texas Genco LP, of which the LLC sold
eleven of the railcars to the lessee based upon an early termination
provision due to damages during the year ended December 31, 2003. The
lenders have a security interest in the railcars and have been
assigned the rental payments under the lease. The lease is scheduled
to expire in 2007 at which time the balance of the non-recourse debt
will be approximately $1,603,000. In addition, there was a total of
$132,727 in acquisition fees paid to the Manager as part of the
acquisition. As of March 31, 2004, there was $2,635,799 outstanding
under the non-recourse debt.
(ii) 110 railcars were on lease to Trinity Rail Management, Inc. The
lenders have a security interest in the railcars and have been
assigned the rental payments under the lease. The lease is scheduled
to expire in 2010 at which time the balance of the non-recourse debt
will be approximately $387,000. In addition, there was a total of
$37,290 in acquisition fees paid to the Manager as part of the
acquisition. As of March 31, 2004, there was $1,024,534 outstanding
under the non-recourse debt. Subsequent to the acquisition, the LLC
was refunded $14,630, which was recorded as a reduction to the
acquisition cost of the equipment purchased.
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 $2,220,595 in acquisition fees to the Manager as part of
the acquisition. As of March 31, 2004, there was $52,317,126 outstanding under
the non-recourse debt.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements - Continued
5. Investment in Finance Leases
During the first quarter of 2004, the LLC invested $205,471 inclusive of
$5,984 in acquisition fees paid to the Manager, in various computer equipment on
lease to Medco Health Solution, Inc. and Yamaha Motor Corporation, USA. The
leases are subject to non-recourse debt totaling $7,979,500. The leases have
been accounted for as finance leases and are scheduled to expire in December
2006 and December 2007, respectively. The interest rates on the non-recourse
debt range from 4.5% to 5.87% with the non-recourse debt maturing at lease-end.
6. Subsequent Event
The LLC and an affiliate, ICON Income Fund Ten, formed a joint venture,
ICON GeicJV, for the purpose of entering into a binding agreement with Ontario
Credit Corp. to acquire the right, title and interest in four equipment
schedules on lease to Government Employee Insurance Co. ("GEICO"). On April 30,
2004, the LLC closed on its contractual agreement and attained a 26% interest in
the equipment schedules to be managed under the joint venture. The purchase
price for the equipment schedules were $5,852,197, of which the LLC paid
$1,521,571.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
March 31, 2004
Item 2: Manager'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 and notes dated
December 31, 2003 included in the LLC's annual report on Form 10-K. 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, 2004 and 2003
Revenue for the quarter ended March 31, 2004 ("2004 Quarter") was
$8,963,531 representing an increase of $215,504 from the quarter ended March 31,
2003 ("2003 Quarter"). The increase in revenue resulted from investment in
finance leases and income from investment in unconsolidated joint ventures. The
LLC generated finance income of $366,850 for the 2004 Quarter due to its
investment in the second quarter of 2003 and first quarter 2004 in finance
leases. Income from investments in unconsolidated joint ventures increased due
to reduction in interest expenses relating to the debt obligations of such
ventures. Rental income decreased by $199,928 due to terminations since the 2003
Quarter, partially offsetting the increase in revenue.
Expenses for the 2004 Quarter were $8,872,955 representing a decrease of
$475,259 over the 2003 Quarter. The decrease resulted from reduction in
depreciation and amortization expenses of $319,761 and a decrease of $363,421 in
interest expenses. The decrease in depreciation and amortization are directly
related to the termination of investments in operating leases during 2003.
Interest expense decreased due to the reduction in the average outstanding debt
balances. Offsetting the decreases were increases in general and administrative
expenses of $106,206, administration fee reimbursement - Manager of $27,126,
management fees - Manager of $67,816. These increases resulted from the increase
in size of the LLC's lease portfolio and overall growth in the size of its
operations.
Net income (loss) for the 2004 Quarter and the 2003 Quarter was $90,576 and
$(600,187), respectively. The net income (loss) per weighted average additional
member shares outstanding for the 2004 Quarter and the 2003 Quarter was $.91 and
$(8.76), 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. For the 2004
Quarter, the LLC's liquidity decreased over the corresponding period of 2003.
The LLC, while generating more cash from operating activities, generated less
cash from financing activities as expected, since the LLC is no longer offering
shares for subscription.
The LLC's primary source of funds for the three months ended March 31, 2004
was collection of receivables from finance leases. Cash was utilized, in part,
for cash distributions to members of $2,131,276, distributions to minority
interest holder of $227,165 and the acquisition of equipment for $199,487.
Additionally, the LLC anticipates continuing to utilize 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.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
March 31, 2004
From time to time the LLC will invest in industries, equipment, or
geopolitical regions that may be subject to outside influences that may affect
the LLC's investments. While these factors are considered when the investments
are made, unforeseen events such as those that occurred on September 11, 2001
can have far-reaching and unpredictable adverse consequences. The following is
a discussion of some assets that may fall into this category.
Aircraft: The LLC is the lessor of several aircraft on lease throughout the
world. The value of this equipment is subject to the fluctuations of the airline
industry, which are greatly influenced by a number of factors including, but not
limited to, the global economy, fuel prices, political stability, terrorist
activity, and epidemics such as SARS.
Kenilworth: The LLC is the lessor of a cogeneration facility utilized by
the Schering-Plough Corporation at its international headquarters. The original
lease term expires in July 2004. The lessee has entered into a lease extension
until 2009. During the extension term, the rental payment is in part a function
of natural gas prices. If natural gas prices are sustained at the current record
high levels, rental payments will be deferred until natural gas prices return to
previous levels. High natural gas prices, such as the current level, sustained
over the long term will directly affect the viability of the cogeneration
facility and may impede the LLC's ability to capitalize on its investment.
On May 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, 5.00% at March 31, 2004) 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 line of credit was extended to expire December 31, 2004. As of March 31,
2004, the LLC had no outstanding balance under the line. Aggregate borrowing by
all Funds under the line of credit agreement aggregated $14,039,986 on March 31,
2004.
Cash distributions to limited partners for the 2004 Quarter and 2003
Quarter, which were paid monthly, totaled $2,108,788 and $1,408,201,
respectively.
ICON Income Fund Nine, LLC
(A Delaware Limited Liability Company)
March 31, 2004
Subsequent Event - The LLC and an affiliate, ICON Income Fund Ten, formed a
joint venture, ICON GeicJV, for the purpose of entering into a binding agreement
with Ontario Credit Corp. to acquire the right, title and interest in four
equipment schedules on lease to Government Employee Insurance Co. ("GEICO"). On
April 30, 2004, the LLC closed on its contractual agreement and attained a 26%
interest in the equipment schedules to be managed under the joint venture. The
purchase price for the equipment schedules were $5,852,197, of which the LLC
paid $1,521,571.
As of March 31, 2004, except as noted above, and to the best of our
knowledge, 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, 2004
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 investors.
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
The LLC carried out an evaluation, under the supervision and with the
participation of management of ICON Capital Corp., the Manager of the LLC,
including the Principal Executive Officer and the Principal Financial Officer,
of the effectiveness of the design and operation of the LLC's disclosure
controls and procedures as of the end of the period covered by this report
pursuant to the Securities Exchange Act of 1934. Based upon the evaluation, the
Principal Executive Officer and the Principal Financial Officer concluded that
the LLC's disclosure controls and procedures were effective.
There were no significant changes in the LLC's internal control over
financial reporting during the LLC's first quarter that have materially
affected, or are likely to materially affect, the LLC's internal control over
financial reporting.
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
None
(c) Exhibits
32.1 Certification of Chairman and Chief Executive Officer
32.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer.
33.1 Certification of Chairman and Chief Executive Officer pursuant to 18 U.S.C.
(Section)1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
33.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C. (Section)1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
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 17, 2004 /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
Exhibit 32.1 Principal Executive Officer Certification Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
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 (the "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 consolidated financial statements and other
financial information included in this quarterly report, fairly present in
all material respects the consolidated 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-15e and 15d-15e) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; 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;
d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the Corporate
Manager (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the LLC's ability to record, process, summarize and report
financial information and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting
Dated: May 17, 2004
/s/ Beaufort J.B. Clarke
- -----------------------------
Beaufort J. B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
Manager of ICON Income Fund Nine, LLC
Exhibit 32.2 Principal Executive Officer Certification Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
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 (the "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 consolidated financial statements and other
financial information included in this quarterly report, fairly present in
all material respects the consolidated 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-15e and 15d-15e) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; 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;
d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the Corporate
Manager (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the LLC's ability to record, process, summarize and report
financial information and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting
Dated: May 17, 2004
/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, 2004
EXHIBIT 33.1
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, 2004
(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 17, 2004
/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, 2004
EXHIBIT 33.2
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, 2004
(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 17, 2004
/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