Attached files
| file | filename |
|---|---|
| 8-K - 8-K - ICON LEASING FUND ELEVEN, LLC | body.htm |
Exhibit 99.1
LEASING
FUND
ELEVEN,
LLC
ANNUAL
PORTFOLIO
OVERVIEW
2009
LETTER FROM THE
CEOs As of As of April 22,
2010
Dear
investor in ICON Leasing Fund Eleven, LLC:
We write
to briefly summarize our activity for 2009. A more detailed analysis,
which we encourage you to read, is contained in our Form 10-K. Our
Form 10-K and our other annual, quarterly and current reports are available in
the Investor Relations section of our website, www.iconcapital.com.
As of
December 31, 2009, Fund Eleven was in its operating period. As of
December 31st, we
had invested $429,842,2671 of capital, or 134.38% of capital available
for investment, in approximately $796,316,9732 worth of business-essential equipment and
corporate infrastructure. Further, our distribution coverage
ratio3 for the fourth quarter was 344.26%. As
of December 31st,
Fund Eleven maintained a leverage ratio of 0.90:14. Fund Eleven collected
approximately 91.69%5 of all scheduled rent and loan receivables due
for the fourth quarter of 2009, with the uncollected receivables primarily
relating to the semiconductor manufacturing equipment on lease to Equipment
Acquisition Resources, Inc., which, during the fourth quarter, filed for
reorganization under Chapter 11 of the U.S. Bankruptcy Code, which you can read
about in further detail in the portfolio overview section that follows this
letter.
As you
may already be aware, on December 1, 2009, we agreed to terminate certain
schedules to our lease with Global Crossing Telecommunications, Inc. and
simultaneously sold the equipment to Global Crossing Telecommunications, Inc.
for the aggregate purchase price of $8,390,853. We are pleased to
report that we received a cash-on-cash return of approximately 143% in rental
and sale proceeds related to this investment.
While the
vast majority of our portfolio’s active investments are performing in the face
of a challenging economy, our portfolio has not been completely spared from the
recent recession. In particular, we continue to closely monitor our
shipping investments given the state of the market for these assets and the
continued unprecedented decline in charter rates and asset values. More
specifically, our investments in certain container vessels that were purchased
during a strong market will be challenged to achieve a return on investment
given their age and the negative outlook for this asset class.
We
continue to actively manage our investments by working with our lessees and
borrowers to help them accomplish their business goals while at the same time
attempting to achieve our economic return on these investments. We
agreed to restructure Teal Jones lease payment obligations to provide them with
short-term cash flow flexibility. We also amended the bareboat
charters with ZIM Integrated Shipping Services to reduce the charterer’s monthly
payment obligations while extending the payment obligations well beyond the
expiration of the bareboat charters. This structure should allow us
to collect all amounts due to us in accordance with the charters and increase
the possibility to remarket the vessels in a more favorable
market. For a more detailed description, please refer to the
portfolio overview section that follows this letter. Since Fund
Eleven is fully invested, we did not make any new investments in equipment
during the fourth quarter of 2009.
We invite
you to read through our portfolio overview on the pages that follow for a more
detailed explanation of the above described investments. As always,
thank you for entrusting ICON with your investment assets.
Sincerely,
 |
 |
|
Michael
A. Reisner
|
Mark Gatto |
|
Co-President
and Co-Chief Executive Officer
|
Co-President and Co-Chief Executive Officer |
|
4
|
Pursuant
to Fund Eleven’s financials, prepared in accordance with US
GAAP. Leverage ratio is defined as total liabilities divided by
total equity.
|
|
5
|
Collections
as of March 31, 2010.
|
ICON LEASING FUND ELEVEN, LLC
- Annual
Portfolio Overview -
-
2009 -
We are
pleased to present ICON Leasing Fund Eleven, LLC’s (the “Fund”) annual Portfolio
Overview for 2009. References to “we,” “us” and “our” are references to the
Fund, and references to the “Manager” are references to the manager of the Fund,
ICON Capital Corp.
The
Fund
We raised
$365,198,690 commencing with our initial offering on April 21, 2005 through the
closing of the offering on April 21, 2007.
During
2009, we continued in our operating period, during which time we continued to
seek to finance equipment subject to lease or to structure financings secured
primarily by equipment. Cash generated from these investments is used to make
distributions to our members. Availability of cash to be used for
reinvestment depends on the requirements for expenses, reserves and
distributions to members.
Our
operating period is anticipated to continue for a period of five years from the
closing of the offering, unless extended at our Manager’s sole
discretion. Following our operating period, we will enter our
liquidation period, during which time the leases and loans we own will mature or
be sold in the ordinary course of business.
Recent
Transactions
|
·
|
On
December 1, 2009, we, through our wholly-owned subsidiary, ICON Global
Crossing III, LLC (“ICON Global Crossing III”), and Global Crossing
Telecommunications, Inc. (“Global Crossing”) agreed to terminate certain
schedules to our lease and, simultaneously with the termination, ICON
Global Crossing III sold the equipment to Global Crossing for the
aggregate purchase price of $8,390,853. We received a
cash-on-cash return of approximately 143% in rental and sale proceeds
related to this investment.
|
Portfolio
Overview
Our
portfolio consists of investments that we have made directly, as well as those
that we have made with our affiliates. As of December 31, 2009, our
portfolio consisted primarily of the following investments.
|
·
|
Equipment,
plant and machinery used by The Teal Jones Group and Teal Jones Lumber
Services, Inc. (collectively, “Teal Jones”) in their lumber processing
operations in Canada and the United States. We, through two
wholly-owned subsidiaries, entered into a lease financing arrangement with
Teal Jones totaling approximately $36,000,000 in November
2006. The equipment and machinery are being leased back to Teal
Jones pursuant to an eighty-four month lease that is scheduled to expire
in November 2013. On December 10, 2009, we, through two
wholly-owned subsidiaries, restructured the lease payment obligations of
Teal Jones to provide them with cash flow flexibility while at the same
time attempting to preserve our projected economic return on this
investment.
|
|
·
|
ICON
Northern Leasing, LLC, a joint venture among us, ICON Income Fund Ten, LLC
(“Fund Ten”) and ICON Leasing Fund Twelve, LLC (“Fund Twelve”), affiliates
of our Manager, purchased four promissory notes (the “Notes”) and received
an assignment of the underlying Master Loan and Security Agreement, dated
July 28, 2006. We, Fund Ten and Fund Twelve have ownership interests of
35%, 12.25% and 52.75%, respectively. The aggregate purchase price for the
Notes was approximately $31,573,000 and the Notes are secured by an
underlying pool of leases for credit card machines. The Notes accrue
interest at rates ranging from 7.97% to 8.40% per year and require monthly
payments ranging from approximately $183,000 to $422,000. The Notes mature
between October 15, 2010 and August 14, 2011 and require balloon payments
at the end of each note ranging from approximately $594,000 to $1,255,000.
Our share of the purchase price was approximately
$11,051,000.
|
|
·
|
ICON
Pliant, LLC (“ICON Pliant”) acquired from and simultaneously leased back
to Pliant Corporation (“Pliant”) equipment that manufactures plastic films
and flexible packaging for consumer products for a purchase price of
$12,115,000. We and Fund Twelve have ownership interests of 55%
and 45% in ICON Pliant, respectively. The lease expires on September 30,
2013. On February 11, 2009, Pliant commenced a voluntary
Chapter 11 proceeding in U.S. Bankruptcy Court to eliminate all of its
high-yield debt. In connection with this action, Pliant
submitted a financial restructuring plan to eliminate its debt as part of
a pre-negotiated package with its high-yield creditors. On
September 22, 2009, Pliant assumed ICON Pliant’s lease in full as part of
its financial restructuring and on December 3, 2009, Pliant emerged from
bankruptcy. As of December 31, 2009, Pliant has made all of its
lease payments.
|
1
|
·
|
Machining
and metal working equipment subject to a lease with W Forge Holdings, Inc.
(“W Forge”) and MW Scott, Inc. (“Scott,” together with W Forge,
collectively referred to as the “MW Group”), each of which is a
wholly-owned subsidiary of MW Universal, Inc. (“MWU”). We
acquired the equipment for the aggregate purchase price of approximately
$22,200,000. The equipment is subject to sixty month leases
with the MW Group that commenced on January 1, 2008. In
addition, we acquired the manufacturing assets of MW General, Inc.
(“General”) and AMI Manchester, LLC (“Manchester”), each of which is also
a wholly-owned subsidiary of MWU, for purchase prices of $400,000 and
$1,700,000, respectively. These assets are subject to leases
that commenced on January 1, 2008 and will continue for a period of sixty
months. On February 27, 2009, we, Fund Ten, Fund Twelve and
IEMC Corp. entered into an Amended Forbearance Agreement with MWU, W
Forge, Scott, MW Gilco, LLC, General, Manchester and four other
subsidiaries of MWU with respect to certain lease defaults. On
December 31, 2009, we, through our wholly-owned subsidiary, and W Forge
agreed to terminate our lease and simultaneously with the termination, we
sold the equipment to W Forge for approximately $9,437,000. As
additional consideration for the sale of the equipment, Cerion MPI, LLC,
an entity formerly affiliated with W Forge (“Cerion MPI”), delivered a
promissory note to us in the principal amount of approximately
$10,015,000. The promissory note bears interest at the rate of
14% per annum and is payable monthly in arrears for the period beginning
January 1, 2010 to December 31, 2013. The promissory note is
guaranteed by Cerion MPI’s parent company, Cerion,
LLC.
|
|
·
|
We
own a 13.26% interest in a joint venture with Fund Ten and ICON Income
Fund Nine, LLC (“Fund Nine”), an affiliate of our Manager, who have
interests of 72.34% and 14.40%, respectively, that owns telecommunications
equipment subject to a forty-eight month lease with Global
Crossing. The lease is scheduled to expire on October 31,
2010. ICON Global Crossing III owns telecommunications
equipment which was acquired for an aggregate purchase price of
approximately $26,080,000. The equipment is subject to six
leases with Global Crossing, all of which are for thirty-six months and
expire between March 2011 and September 2011. In addition, we formed a
joint venture, ICON Global Crossing V, LLC (“ICON Global Crossing V”),
with Fund Ten. We own a 55% interest in ICON Global Crossing V,
which leases telecommunications equipment to Global Crossing. This
equipment was purchased for approximately $12,982,000 and is subject to a
thirty-six month lease that expires on December 31,
2010.
|
|
·
|
Auto
parts manufacturing equipment leased to Heuliez SA (“HSA”) and Heuliez
Investissements SNC (“HISNC,” together with HSA, collectively referred to
as “Heuliez”). We, through our wholly-owned subsidiary,
purchased the equipment for approximately $11,994,000 and it is subject to
a sixty month lease that is scheduled to expire on March 31,
2012. On April 15, 2009, Groupe Henri Heuliez and HSA filed for
“Redressement Judiciaire,” a proceeding under French law similar to
Chapter 11 reorganization under the U.S. Bankruptcy Code. HISNC
subsequently filed for Redressement Judiciaire on June 10,
2009. Since the time of the Redressement Judiciaire filings,
two French government agencies agreed to provide Heuliez with financial
support and a third party, Bernard Krief Consultants (“BKC”), has agreed
to purchase Heuliez. On July 8, 2009, the French Commercial
Court approved the sale of Heuliez to BKC, which approval included the
transfer of our leases. Subsequently, Heuliez has requested a
restructuring of its lease payments and we are actively negotiating terms
acceptable to both parties. We have agreed to reduce Heuliez’s
lease payments during the period of these negotiations, but expect to
collect all amounts due to us in accordance with the
lease.
|
|
·
|
Two
Aframax 95,649 DWT (deadweight tonnage) product tankers, the M/T Senang
Spirit (the “Senang Spirit”) and the M/T Sebarok Spirit (the “Sebarok
Spirit”), that are bareboat chartered to an affiliate of Teekay
Corporation (“Teekay”). We, through two wholly-owned subsidiaries,
purchased the Senang Spirit and the Sebarok Spirit for an aggregate
purchase price of approximately $88,000,000, comprised of approximately
$21,300,000 in cash and a non-recourse loan in the amount of approximately
$66,700,000. The sixty month bareboat charters with the
affiliate of Teekay are scheduled to expire in April
2012.
|
|
·
|
ICON
EAR, LLC (“ICON EAR”) acquired and simultaneously leased back
semiconductor manufacturing equipment to Equipment Acquisition Resources,
Inc. (“EAR”). We paid approximately $3,121,000 for our interest
in the equipment. ICON EAR also acquired and simultaneously
leased back to EAR semiconductor manufacturing equipment for a total
purchase price of approximately $8,795,000. The equipment
consists of silicone wafer slicers, dicers, backgrinders, lappers, and
polishers that are designed to size microchips from embryo
wafers. EAR’s obligations under the lease are secured by the
owner’s real estate located in Jackson Hole, Wyoming, as well as personal
guarantees from the owners of EAR. We and Fund Twelve have
ownership interests of 45% and 55%, respectively, in ICON
EAR. The leases commenced on July 1, 2008 and will continue for
a period of sixty months. In addition, our wholly-owned
subsidiary, ICON EAR II, LLC (“ICON EAR II”), acquired and simultaneously
leased back semiconductor manufacturing equipment to EAR for a purchase
price of approximately $6,348,000. That lease commenced on July
1, 2008 and will continue for a period of sixty months. In
October 2009, certain facts came to light that led our Manager to believe
that EAR was perpetrating a fraud against EAR’s lenders, including ICON
EAR and ICON EAR II. On October 23, 2009, EAR filed a petition for
reorganization under Chapter 11 of the U.S. Bankruptcy
Code. Due to the bankruptcy filing and ongoing investigation
regarding the alleged fraud, at this time it is not possible to determine
our ability to collect the amounts due to us in accordance with the leases
or the security we received.
|
2
|
·
|
Four
3,300 TEU (twenty-foot equivalent unit) container vessels, the M/V ZIM
Andaman Sea (the “ZIM Andaman Sea”), the M/V ZIM Hong Kong (the “ZIM Hong
Kong”), the M/V ZIM Israel (the “ZIM Israel“) and the M/V ZIM Japan Sea
(the “ZIM Japan Sea”), that are subject to bareboat charters with ZIM
Integrated Shipping Services, Ltd. The bareboat charters for
the ZIM Japan Sea and the ZIM Andaman Sea are each scheduled to expire in
November 2010 and the bareboat charters for the ZIM Hong Kong and the ZIM
Israel are each scheduled to expire in January 2011. The
purchase price for the four vessels was approximately $142,500,000,
comprised of approximately $35,876,000 in cash, a first priority
non-recourse loan in the amount of approximately $93,325,000, and a second
priority non-recourse loan in the amount of approximately
$12,000,000. On October 30, 2009, we, through our wholly-owned
subsidiaries, amended the bareboat charters for the vessels to restructure
each respective charterer’s payment obligations so that we will continue
to receive payments through September 30, 2014 in accordance with each
amended charter (the “European Containers Charter
Amendments”). On February 9, 2010, we, through our wholly-owned
subsidiaries, amended the loan to correspond with the revised payment
schedule in the European Containers Charter
Amendments.
|
|
·
|
Four
45,720 – 47,094 DWT product carrying vessels, the M/T Doubtless, the M/T
Faithful, the M/T Spotless and the M/T Vanguard collectively, the “Top
Ships Vessels”. The original purchase price for the four
vessels was approximately $112,650,000, comprised of approximately
$22,650,000 in cash, a first priority non-recourse loan in the amount of
approximately $80,000,000, and a second priority non-recourse loan in the
amount of approximately $10,000,000. On June 24, 2009, our
wholly-owned subsidiaries, ICON Doubtless, LLC, ICON Faithful, LLC, ICON
Spotless, LLC and Isomar Marine Co. Ltd. (each an “ICON Entity” and
collectively, the “ICON Entities”), terminated their bareboat charters
with subsidiaries of Top Ships, Inc. (“Top Ships”) for the
vessels. Each ICON Entity took an assignment of the current
time charter for its respective vessel. Simultaneously with the
terminations and assignments, the loan to the ICON Entities for the
vessels was terminated and a new two year loan was entered into in the
aggregate amount of $26,500,000. The interest rate on the loan
was fixed at an annual rate of 7.62%. In addition, at closing,
Top Ships, on behalf of the bareboat charterers, paid termination fees
consisting of (i) bareboat charter hire in the aggregate amount of
$4,093,440, (ii) a termination payment in the amount of $8,500,000, (iii)
a payment for repairs and surveys of the vessels in the amount of
$2,250,000, and (iv) an additional payment for expenses in the amount of
$1,000,000. In addition, Top Ships waived its right to collect
the non-recourse loan obligations of $10,000,000 that were owed by the
ICON Entities in connection with the vessels. The time charters
expire on various dates between May 2010 and November 2010. On
April 1, 2010, we, through the ICON Entities, amended the loan in
connection with the Top Ships Vessels. The amended loan will
become effective upon certain conditions being satisfied, which we expect
to occur prior to April 30, 2010.
|
Revolving
Line of Credit
We and
certain entities managed by our Manager, ICON Income Fund Eight B L.P., Fund
Nine, Fund Ten, Fund Twelve and ICON Equipment and Corporate Infrastructure Fund
Fourteen, L.P. (collectively, the “Borrowers”), are parties to a Commercial Loan
Agreement, as amended (the “Loan Agreement”), with California Bank &
Trust. The Loan Agreement provides for a revolving line of credit of
up to $30,000,000 pursuant to a senior secured revolving loan facility (the
“Facility”), which is secured by all assets of the Borrowers not subject to a
first priority lien. The Facility expires on June 30,
2011. The interest rate at December 31, 2009 was
4.0%. Aggregate borrowings by all Borrowers under the Facility
amounted to $2,360,000 at December 31, 2009, $2,260,000 of which was
attributable to the Fund. Subsequent to December 31, 2009, the Fund
repaid all of its outstanding loan balance.
10%
Status Report
As of
December 31, 2009, the Senang Spirit and the Sebarok Spirit were the two assets
that individually constituted at least 10% of the aggregate purchase price of
our equipment portfolio. The Senang Spirit and the Sebarok Spirit are
each scheduled to remain on bareboat charter during the 2010 calendar
year.
As of
December 31, 2009, the bareboat charters of the Senang Spirit and the Sebarok
Spirit each had 28 monthly payments remaining. At the time we
acquired our interests in the vessels, the vessels were previously commissioned,
and to the best of our Manager’s knowledge, each vessel remains seaworthy, is
maintained in good commercial marine standards and in accordance with applicable
laws and the regulations of the governing shipping registry as required under
each bareboat charter.
3
Distribution
Analysis
During
the year ended December 31, 2009, we continued to make monthly distributions at
a rate of 9.1% per annum. From the inception of the offering period,
we have made 57 monthly distributions to our members. During the year ended
December 31, 2009, we paid our members approximately $33,381,000 in cash
distributions. As of December 31, 2009, a $10,000 investment made at the initial
closing would have received $4,546 in cumulative distributions representing a
return of approximately 45% of such initial investment.
|
Source
of Distributions
|
||||||||||||||||||||
|
Cash
from current period operations
|
Cash
accumulated from operations of prior periods
|
Cash
from current period disposition of assets
|
Capital
contributions used to establish the initial reserve
|
Total
distributions
|
||||||||||||||||
|
For
the year ended
|
||||||||||||||||||||
|
December
31, 2009
|
$
|
33,380,906
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
33,380,906
|
||||||||||
Transactions
with Related Parties
We
entered into certain agreements with our Manager and with ICON Securities Corp.
(“ICON Securities”), a wholly-owned subsidiary of our Manager, whereby we pay
certain fees and reimbursements to those parties. Our Manager was entitled to
receive an organizational and offering expense allowance of 3.5% on capital
raised up to $50,000,000, 2.5% of capital raised between $50,000,001 and
$100,000,000 and 1.5% of capital raised over $100,000,000. ICON
Securities was entitled to receive a 2% underwriting fee from the gross proceeds
from sales of shares to additional members.
In
accordance with the terms of our amended and restated limited liability company
agreement, we pay or paid our Manager (i) management fees ranging from 1% to 7%
based on the type of transaction and (ii) acquisition fees, through the end of
the operating period, of 3% of the purchase price of our
investments. The purchase price includes the cash paid, indebtedness
incurred, assumed or to which our gross revenues from the investment are
subject, or the value of the equipment secured by or subject to such investment,
and the amount of the related acquisition fees on such investment, plus that
portion of the expenses incurred by our Manager or any of its affiliates in
making investments on an arm’s length basis with a view to transferring such
investments to us, which is allocated to the investments in question in
accordance with allocation procedures employed by our Manager or such affiliate
from time to time and within generally accepted accounting
principles. In addition, our Manager will be reimbursed for
administrative expenses incurred in connection with our operations.
Our
Manager performs certain services relating to the management of our equipment
leasing and other financing activities. Such services include, but
are not limited to, the collection of lease payments from the lessees of the
equipment or loan payments from borrowers, re-leasing services in connection
with equipment which is off-lease, inspections of the equipment, liaising with
and general supervision of lessees and borrowers to ensure that the equipment is
being properly operated and maintained, monitoring performance by the lessees
and borrowers of their obligations under the leases and loans and the payment of
operating expenses.
Administrative
expense reimbursements are costs incurred by our Manager or its affiliates that
are necessary to our operations. These costs include our Manager’s and its
affiliates’ legal, accounting, investor relations and operations personnel, as
well as professional fees and other costs that are charged to us based upon the
percentage of time such personnel dedicate to us. Excluded are salaries
and related costs, office rent, travel expenses and other administrative costs
incurred by individuals with a controlling interest in our Manager.
On July
1, 2009, our Manager suspended its collection of a portion of its management
fees through January 31, 2010. For the period from February 1, 2010 through
March 31, 2010, we had a payable of approximately $354,000 due to our Manager
and its affiliates that consisted of administrative expense reimbursements and
management fees. Our Manager will continue to review this suspension
on a month-to-month basis.
Our
Manager also has a 1% interest in our profits, losses, cash distributions and
liquidation proceeds. We paid distributions to our Manager in the
amounts of $333,811, $334,071 and $375,190 for the years ended December 31,
2009, 2008 and 2007, respectively. Our Manager’s interest in our net
loss was $450,959, $57,977 and $24,790 for the years ended December 31, 2009,
2008 and 2007, respectively.
4
Fees and
other expenses paid or accrued by us to our Manager or its affiliates were as
follows:
|
Entity
|
Capacity
|
Description
|
2009
|
2008
|
2007
|
|||||||||||
|
|
|
|
||||||||||||||
| ICON Capital Corp. | Manager |
Organization
and offering
expenses (1)
|
$ | - | $ | - | $ | 1,095,103 | ||||||||
|
ICON
Securities Corp.
|
Managing
broker-dealer
|
Underwriting
fees (1)
|
- | - | 1,460,137 | |||||||||||
|
ICON
Capital Corp.
|
Manager
|
Acquisition
fees (2)
|
- | 1,204,384 | 4,624,646 | |||||||||||
|
ICON
Capital Corp.
|
Manager
|
Management
fees (3) (4)
|
2,185,858 | 5,110,375 | 6,662,395 | |||||||||||
|
ICON
Capital Corp.
|
Manager
|
Administrative
expense reimbursements (3)
|
1,951,850 | 3,586,973 | 5,423,388 | |||||||||||
|
Total
fees paid to related parties
|
$ | 4,137,708 | $ | 9,901,732 | $ | 19,265,669 | ||||||||||
|
(1) Charged
directly to members' equity.
|
||||||||||||||||
|
(2) Capitalized
and amortized to operations over the estimated service period in
accordance with the LLC's accounting policies.
|
||||||||||||||||
|
(3) Charged
directly to operations.
|
||||||||||||||||
|
(4) The
Manager suspended the collection of its management fees in the amount of
$1,355,498 during the year ended December 31, 2009.
|
||||||||||||||||
At
December 31, 2009, we had a payable of $300,223 due to our Manager and its
affiliates that consisted primarily of an accrual for administrative expense
reimbursements. Members may obtain a summary of administrative
expense reimbursements upon request.
Your
participation in the Fund is greatly appreciated.
We
are committed to protecting the privacy of our investors in compliance with all
applicable laws. Please be advised that, unless required by a regulatory
authority such as the FINRA or ordered by a court of competent jurisdiction, we
will not share any of your personally identifiable information with any third
party.
5
|
(A
Delaware Limited Liability Company)
|
||||||||
|
Consolidated
Balance Sheets
|
||||||||
|
Assets
|
||||||||
|
December 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 18,615,323 | $ | 7,670,929 | ||||
|
Current
portion of net investment in finance leases
|
9,613,853 | 7,576,361 | ||||||
|
Accounts
receivable, net
|
594,082 | 719,365 | ||||||
|
Current
portion of note receivable
|
725,049 | - | ||||||
|
Assets
held for sale, net
|
3,813,647 | - | ||||||
|
Other
current assets
|
3,656,127 | 1,222,031 | ||||||
|
Total
current assets
|
37,018,081 | 17,188,686 | ||||||
|
Non-current
assets:
|
||||||||
|
Net
investment in finance leases, less current portion
|
15,067,299 | 23,908,072 | ||||||
|
Leased
equipment at cost (less accumulated depreciation of
|
||||||||
|
$158,488,912
and $120,637,537, respectively)
|
183,614,179 | 333,224,351 | ||||||
|
Mortgage
note receivable
|
12,722,006 | 12,722,006 | ||||||
|
Note
receivable, less current portion
|
9,289,951 | - | ||||||
|
Investments
in joint ventures
|
11,578,687 | 18,659,329 | ||||||
|
Deferred
income taxes, net
|
943,053 | 206,101 | ||||||
|
Other
non-current assets, net
|
2,446,154 | 2,269,614 | ||||||
|
Total
non-current assets
|
235,661,329 | 390,989,473 | ||||||
|
Total
Assets
|
$ | 272,679,410 | $ | 408,178,159 | ||||
|
Liabilities
and Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Current
portion of non-recourse long-term debt
|
$ | 43,603,558 | $ | 42,995,346 | ||||
|
Revolving
line of credit, recourse
|
2,260,000 | 5,000,000 | ||||||
|
Derivative
instruments
|
5,049,327 | 9,257,854 | ||||||
|
Deferred
revenue
|
706,656 | 4,494,922 | ||||||
|
Due
to Manager and affiliates
|
300,223 | 288,802 | ||||||
|
Accrued
expenses and other liabilities
|
5,841,639 | 1,040,521 | ||||||
|
Total
current liabilities
|
57,761,403 | 63,077,445 | ||||||
|
Non-current
liabilities:
|
||||||||
|
Non-recourse
long-term debt, less current portion
|
71,335,500 | 120,454,287 | ||||||
|
Total
Liabilities
|
129,096,903 | 183,531,732 | ||||||
|
Commitments
and contingencies
|
||||||||
|
Equity:
|
||||||||
|
Members'
Equity:
|
||||||||
|
Additional
members
|
139,684,262 | 217,496,668 | ||||||
|
Manager
|
(1,820,378 | ) | (1,035,608 | ) | ||||
|
Accumulated
other comprehensive loss
|
(1,485,640 | ) | (6,275,279 | ) | ||||
|
Total
Members' Equity
|
136,378,244 | 210,185,781 | ||||||
|
Noncontrolling
Interests
|
7,204,263 | 14,460,646 | ||||||
|
Total
Equity
|
143,582,507 | 224,646,427 | ||||||
|
Total
Liabilities and Equity
|
$ | 272,679,410 | $ | 408,178,159 | ||||
6
|
(A
Delaware Limited Liability Company)
|
||||||||||||
|
Consolidated
Statements of Operations
|
||||||||||||
|
Years Ended December 31,
|
||||||||||||
|
2009
|
2008
|
2007
|
||||||||||
|
Revenue:
|
||||||||||||
|
Rental
income
|
$ | 64,099,850 | $ | 90,009,529 | $ | 103,487,305 | ||||||
|
Time
charter revenue
|
5,559,524 | - | - | |||||||||
|
Finance
income
|
2,548,139 | 4,651,273 | 7,415,414 | |||||||||
|
Income
from investments in joint ventures
|
345,938 | 2,071,019 | 80,502 | |||||||||
|
Net
gain on lease termination
|
25,141,909 | - | - | |||||||||
|
Net
gain on sales of new equipment
|
- | 278,082 | 772,799 | |||||||||
|
Net
gain (loss) on sales of leased equipment
|
2,050,594 | (720,385 | ) | (112,167 | ) | |||||||
|
Net
loss on sale of portfolio
|
- | (11,921,785 | ) | - | ||||||||
|
Interest
and other income
|
3,448,283 | 2,399,168 | 5,973,253 | |||||||||
|
Total
revenue
|
103,194,237 | 86,766,901 | 117,617,106 | |||||||||
|
Expenses:
|
||||||||||||
|
Management
fees - Manager
|
2,185,858 | 5,110,375 | 6,662,395 | |||||||||
|
Administrative
expense reimbursements - Manager
|
1,951,850 | 3,586,973 | 5,423,388 | |||||||||
|
General
and administrative
|
3,683,435 | 3,711,909 | 2,172,591 | |||||||||
|
Vessel
operating expense
|
13,926,255 | - | - | |||||||||
|
Depreciation
and amortization
|
73,052,380 | 65,065,983 | 82,127,392 | |||||||||
|
Interest
|
9,937,136 | 13,674,261 | 17,467,704 | |||||||||
|
Impairment
loss
|
42,208,124 | - | 122,774 | |||||||||
|
(Gain)
loss on financial instruments
|
(346,739 | ) | 830,336 | 2,846,069 | ||||||||
|
Total
expenses
|
146,598,299 | 91,979,837 | 116,822,313 | |||||||||
|
(Loss)
income before income taxes
|
(43,404,062 | ) | (5,212,936 | ) | 794,793 | |||||||
|
Benefit
(provision) for income taxes
|
153,480 | 1,462,652 | (2,204,227 | ) | ||||||||
|
Net
loss
|
(43,250,582 | ) | (3,750,284 | ) | (1,409,434 | ) | ||||||
|
Less:
Net income attributable to noncontrolling interests
|
(1,845,334 | ) | (2,047,437 | ) | (1,069,559 | ) | ||||||
|
Net
loss attributable to Fund Eleven
|
$ | (45,095,916 | ) | $ | (5,797,721 | ) | $ | (2,478,993 | ) | |||
|
Net
loss attributable to Fund Eleven allocable to:
|
||||||||||||
|
Additional
members
|
$ | (44,644,957 | ) | $ | (5,739,744 | ) | $ | (2,454,203 | ) | |||
|
Manager
|
(450,959 | ) | (57,977 | ) | (24,790 | ) | ||||||
| $ | (45,095,916 | ) | $ | (5,797,721 | ) | $ | (2,478,993 | ) | ||||
|
Weighted
average number of additional shares of
|
||||||||||||
|
limited
liability company interests outstanding
|
363,139 | 363,414 | 352,197 | |||||||||
|
Net
loss attributable to Fund Eleven per weighted
|
||||||||||||
|
average
additional share of limited liability company interests
|
$ | (122.94 | ) | $ | (15.79 | ) | $ | (6.97 | ) | |||
7
|
(A
Delaware Limited Liability Company)
|
||||||||||||||||||||||||||||
|
Consolidated
Statements of Changes in Equity
|
||||||||||||||||||||||||||||
|
Members'
Equity
|
||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Additional
|
|
Accumulated
|
|
|
|
|||||||||||||||||||||||
|
Shares
of Limited Liability |
Additional Members |
Manager
|
Other
Comprehensive Income
(Loss)
|
Total Members'
Equity |
Noncontrolling Interests |
Total Equity |
||||||||||||||||||||||
|
Balance,
December 31, 2006
|
292,164 | $ | 232,868,044 | $ | (243,580 | ) | $ | 272,021 | $ | 232,896,485 | $ | 8,312,503 | $ | 241,208,988 | ||||||||||||||
|
Comprehensive
income:
|
||||||||||||||||||||||||||||
|
Net
(loss) income
|
- | (2,454,203 | ) | (24,790 | ) | - | (2,478,993 | ) | 1,069,559 | (1,409,434 | ) | |||||||||||||||||
|
Unrealized
loss on warrants
|
- | - | - | (538,072 | ) | (538,072 | ) | - | (538,072 | ) | ||||||||||||||||||
|
Change
in valuation of derivative instruments
|
- | - | - | (1,734,951 | ) | (1,734,951 | ) | - | (1,734,951 | ) | ||||||||||||||||||
|
Currency
translation adjustments
|
- | - | - | 7,114,343 | 7,114,343 | - | 7,114,343 | |||||||||||||||||||||
|
Total
comprehensive income
|
4,841,320 | 2,362,327 | 1,069,559 | 3,431,886 | ||||||||||||||||||||||||
|
Proceeds
from issuance of additional shares
|
||||||||||||||||||||||||||||
|
of
limited liability company interests
|
72,982 | 72,981,829 | - | - | 72,981,829 | - | 72,981,829 | |||||||||||||||||||||
|
Shares
of limited liability company interests repurchased
|
(1,287 | ) | (1,097,980 | ) | - | - | (1,097,980 | ) | - | (1,097,980 | ) | |||||||||||||||||
|
Sales
and offering expenses
|
- | (8,392,522 | ) | - | - | (8,392,522 | ) | - | (8,392,522 | ) | ||||||||||||||||||
|
Cash
distributions
|
- | (37,151,073 | ) | (375,190 | ) | - | (37,526,263 | ) | (2,834,480 | ) | (40,360,743 | ) | ||||||||||||||||
|
Investment
in joint venture by noncontrolling interest
|
- | - | - | - | - | 5,841,830 | 5,841,830 | |||||||||||||||||||||
|
Balance,
December 31, 2007
|
363,859 | 256,754,095 | (643,560 | ) | 5,113,341 | 261,223,876 | 12,389,412 | 273,613,288 | ||||||||||||||||||||
|
Comprehensive
(loss) income:
|
||||||||||||||||||||||||||||
|
Net
(loss) income
|
- | (5,739,744 | ) | (57,977 | ) | - | (5,797,721 | ) | 2,047,437 | (3,750,284 | ) | |||||||||||||||||
|
Change
in valuation of derivative instruments
|
- | - | - | (3,769,112 | ) | (3,769,112 | ) | - | (3,769,112 | ) | ||||||||||||||||||
|
Currency
translation adjustments
|
- | - | - | (7,619,508 | ) | (7,619,508 | ) | - | (7,619,508 | ) | ||||||||||||||||||
|
Total
comprehensive (loss) income
|
(11,388,620 | ) | (17,186,341 | ) | 2,047,437 | (15,138,904 | ) | |||||||||||||||||||||
|
Shares
of limited liability company interests repurchased
|
(603 | ) | (444,760 | ) | - | - | (444,760 | ) | - | (444,760 | ) | |||||||||||||||||
|
Cash
distributions
|
- | (33,072,923 | ) | (334,071 | ) | - | (33,406,994 | ) | (5,591,936 | ) | (38,998,930 | ) | ||||||||||||||||
|
Investment
in joint venture by noncontrolling interest
|
- | - | - | - | - | 5,615,733 | 5,615,733 | |||||||||||||||||||||
|
Balance,
December 31, 2008
|
363,256 | 217,496,668 | (1,035,608 | ) | (6,275,279 | ) | 210,185,781 | 14,460,646 | 224,646,427 | |||||||||||||||||||
|
Comprehensive
(loss) income:
|
||||||||||||||||||||||||||||
|
Net
(loss) income
|
- | (44,644,957 | ) | (450,959 | ) | - | (45,095,916 | ) | 1,845,334 | (43,250,582 | ) | |||||||||||||||||
|
Change
in valuation of derivative instruments
|
- | - | - | 4,570,879 | 4,570,879 | - | 4,570,879 | |||||||||||||||||||||
|
Currency
translation adjustments
|
- | - | - | 218,760 | 218,760 | - | 218,760 | |||||||||||||||||||||
|
Total
comprehensive (loss) income
|
4,789,639 | (40,306,277 | ) | 1,845,334 | (38,460,943 | ) | ||||||||||||||||||||||
|
Shares
of limited liability company interests repurchased
|
(163 | ) | (120,354 | ) | - | - | (120,354 | ) | - | (120,354 | ) | |||||||||||||||||
|
Deconsolidation
of a noncontrolling interest
|
- | - | - | - | - | (3,442,066 | ) | (3,442,066 | ) | |||||||||||||||||||
|
Cash
distributions
|
- | (33,047,095 | ) | (333,811 | ) | - | (33,380,906 | ) | (5,659,651 | ) | (39,040,557 | ) | ||||||||||||||||
|
Balance,
December 31, 2009
|
363,093 | $ | 139,684,262 | $ | (1,820,378 | ) | $ | (1,485,640 | ) | $ | 136,378,244 | $ | 7,204,263 | $ | 143,582,507 | |||||||||||||
8
|
Consolidated
Statements of Cash Flows
|
||||||||||||
|
Years Ended December 31,
|
||||||||||||
|
2009
|
2008
|
2007
|
||||||||||
|
Cash
flows from operating activities:
|
||||||||||||
|
Net
loss
|
$ | (43,250,582 | ) | $ | (3,750,284 | ) | $ | (1,409,434 | ) | |||
|
Adjustments
to reconcile net loss to net cash
|
||||||||||||
|
provided
by operating activities:
|
||||||||||||
|
Rental
income paid directly to lenders by lessees
|
(12,478,000 | ) | (12,872,440 | ) | (11,494,960 | ) | ||||||
|
Finance
income
|
(2,548,139 | ) | (4,651,273 | ) | (7,415,414 | ) | ||||||
|
Income
from investments in joint ventures
|
(345,938 | ) | (2,071,019 | ) | (80,502 | ) | ||||||
|
Net
gain on sales of new equipment
|
- | (278,082 | ) | (772,799 | ) | |||||||
|
Net
(gain) loss on sales of leased equipment
|
(2,050,594 | ) | 720,385 | 112,167 | ||||||||
|
Net
gain on lease termination
|
(12,468,659 | ) | - | - | ||||||||
|
Net
loss on sale of portfolio
|
- | 11,921,785 | - | |||||||||
|
Depreciation
and amortization
|
73,052,376 | 65,065,983 | 82,127,392 | |||||||||
|
Amortization
of deferred time charter expense
|
2,235,738 | - | - | |||||||||
|
Impairment
loss
|
42,208,124 | - | 122,774 | |||||||||
|
Bad
debt expense
|
1,569,221 | - | - | |||||||||
|
Interest
expense on non-recourse financing paid directly to lenders by
lessees
|
4,062,952 | 3,815,247 | 2,720,385 | |||||||||
|
Interest
expense from amortization of debt financing costs
|
356,227 | 523,882 | 168,309 | |||||||||
|
(Gain)
loss on financial instruments
|
(755,739 | ) | 710,938 | 2,821,045 | ||||||||
|
Deferred
tax (benefit) provision
|
(648,771 | ) | 595,016 | 1,911,210 | ||||||||
|
Changes
in operating assets and liabilities:
|
||||||||||||
|
Collection
of finance leases
|
9,142,256 | 19,820,439 | 32,589,325 | |||||||||
|
Accounts
receivable
|
(2,756,653 | ) | (1,768,596 | ) | (1,432,011 | ) | ||||||
|
Other
assets, net
|
(2,829,868 | ) | 2,968,201 | (929,005 | ) | |||||||
|
Payables,
deferred revenue and other current liabilities
|
(1,331,415 | ) | (11,591,135 | ) | 2,859,590 | |||||||
|
Due
to/from Manager and affiliates
|
11,421 | 59,610 | (319,742 | ) | ||||||||
|
Distributions
from joint ventures
|
1,850,262 | 835,966 | 140,337 | |||||||||
|
Net
cash provided by operating activities
|
53,024,219 | 70,054,623 | 101,718,667 | |||||||||
|
Cash
flows from investing activities:
|
||||||||||||
|
Investments
in equipment subject to lease
|
- | (45,040,317 | ) | (144,227,277 | ) | |||||||
|
Proceeds
from sales of new and leased equipment
|
23,911,312 | 7,842,386 | 30,978,193 | |||||||||
|
Proceeds
from sale of portfolio
|
- | 7,316,137 | - | |||||||||
|
Investment
in financing facility
|
- | (164,822 | ) | (4,202,233 | ) | |||||||
|
Repayment
of financing facility
|
- | 4,367,055 | - | |||||||||
|
Investments
in joint ventures
|
- | (15,458,255 | ) | (3,214,373 | ) | |||||||
|
Distributions
received from joint ventures in excess of profits
|
5,576,318 | 1,432,688 | 10,375,896 | |||||||||
|
Other
assets, net
|
(26,579 | ) | 486,876 | (714,591 | ) | |||||||
|
Net
cash provided by (used in) investing activities
|
29,461,051 | (39,218,252 | ) | (111,004,385 | ) | |||||||
|
Cash
flows from financing activities:
|
||||||||||||
|
Proceeds
from non-recourse long-term debt
|
- | 14,044,437 | 37,178,099 | |||||||||
|
Repayments
of non-recourse long-term debt
|
(29,572,000 | ) | (50,961,719 | ) | (77,577,846 | ) | ||||||
|
Proceeds
from revolving line of credit, recourse
|
2,260,000 | 5,000,000 | - | |||||||||
|
Repayments
of revolving line of credit, recourse
|
(5,000,000 | ) | - | - | ||||||||
|
Issuance
of additional shares of limited liabilty company
|
||||||||||||
|
interests,
net of sales and offering expenses
|
- | - | 64,589,307 | |||||||||
|
Repurchase
of additional shares of limited liability company
interests
|
(120,354 | ) | (444,760 | ) | (1,097,980 | ) | ||||||
|
Due
to Manager and affiliates
|
- | - | (94,636 | ) | ||||||||
|
Cash
distributions to members
|
(33,380,906 | ) | (33,406,994 | ) | (37,526,263 | ) | ||||||
|
Investments
in joint ventures by noncontrolling interests
|
- | 5,615,733 | 5,841,830 | |||||||||
|
Distributions
to noncontrolling interests
|
(5,659,651 | ) | (5,591,936 | ) | (2,834,480 | ) | ||||||
|
Net
cash used in financing activities
|
(71,472,911 | ) | (65,745,239 | ) | (11,521,969 | ) | ||||||
|
Effects
of exchange rates on cash and cash equivalents
|
(67,965 | ) | 240,248 | 1,946,561 | ||||||||
|
Net
increase (decrease) in cash and cash equivalents
|
10,944,394 | (34,668,620 | ) | (18,861,126 | ) | |||||||
|
Cash
and cash equivalents, beginning of the year
|
7,670,929 | 42,339,549 | 61,200,675 | |||||||||
|
Cash
and cash equivalents, end of the year
|
$ | 18,615,323 | $ | 7,670,929 | $ | 42,339,549 | ||||||
9
|
ICON
Leasing Fund Eleven, LLC
|
||||||||||||
|
(A
Delaware Limited Liability Company)
|
||||||||||||
|
Consolidated
Statements of Cash Flows
|
||||||||||||
|
Years Ended December
31,
|
||||||||||||
|
2009
|
2008
|
2007
|
||||||||||
|
Supplemental
disclosure of cash flow information:
|
||||||||||||
|
Cash
paid during the year for interest
|
$ | 5,195,787 | $ | 9,338,831 | $ | 14,399,452 | ||||||
|
Cash
paid during the year for income taxes
|
$ | 629,763 | $ | 177,252 | $ | 4,390,849 | ||||||
|
Supplemental
disclosure of non-cash investing and financing activities:
|
||||||||||||
|
Non-cash
portion of equipment purchased with non-recourse long-term
debt
|
$ | - | $ | - | $ | 66,656,754 | ||||||
|
Principal
and interest paid on non-recourse long term debt
|
||||||||||||
|
directly
to lenders by lessees
|
$ | 12,478,000 | $ | 12,872,440 | $ | 12,630,780 | ||||||
|
Transfer
of non-recourse debt in connection with the
|
||||||||||||
|
sale
of a leasing portfolio
|
$ | - | $ | 73,187,369 | $ | - | ||||||
|
Deconsolidation
of noncontrolling interest in connection with
|
||||||||||||
|
the
sale of a controlling interest in ICON Global Crossing,
LLC
|
$ | 3,442,066 | $ | - | $ | - | ||||||
|
Deconsolidation
of the carrying value of leased equipment in connection
|
||||||||||||
|
with
the sale of a controlling interest in ICON Global Crossing,
LLC
|
$ | 3,370,458 | $ | - | $ | - | ||||||
|
Note
receivable received in connection with the sale of
manufacturing
|
||||||||||||
|
equipment
to W Forge Holdings, Inc.
|
$ | 10,015,000 | $ | - | $ | - | ||||||
|
Transfer
of leased equipment at cost to assets held for sale
|
$ | 3,914,775 | $ | - | $ | - | ||||||
10
Forward-Looking Information –
Certain statements within this document may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (“PSLRA”). These statements are being made pursuant to the
PSLRA, with the intention of obtaining the benefits of the “safe harbor”
provisions of the PSLRA, and, other than as required by law, we assume no
obligation to update or supplement such statements. Forward-looking
statements are those that do not relate solely to historical
fact. They include, but are not limited to, any statement that may
predict, forecast, indicate or imply future results, performance, achievements
or events. You can identify these statements by the use of words such
as “may,” “will,” “could,” “anticipate,” “believe,” “estimate,” “expect,”
“continue,” “further,” “plan,” “seek,” “intend,” “predict” or “project” and
variations of these words or comparable words or phrases of similar
meaning. These forward-looking statements reflect our current beliefs
and expectations with respect to future events and are based on assumptions and
are subject to risks and uncertainties and other factors outside our control
that may cause actual results to differ materially from those
projected. We undertake no obligation to update publicly or review
any forward-looking statement, whether as a result of new information, future
developments or otherwise.
Additional
Required Disclosure
To
fulfill our promises to you we are required to make the following disclosures
when applicable:
A
detailed financial report on SEC Form 10-Q or 10-K (whichever is applicable) is
available to you. It is typically filed either 45 or 90 days after
the end of a quarter or year, respectively. Usually this means a
filing will occur on or around March 31, May 15, August 15, and November 15 of
each year. It contains financial statements and detailed sources and
uses of cash plus explanatory notes. You are always entitled to these
reports. Please access them by:
|
·
|
Visiting
www.iconcapital.com
|
or
|
·
|
Visiting
www.sec.gov
|
or
|
·
|
Writing
us at: Angie Seenauth c/o ICON Capital Corp., 120 Fifth Avenue,
8th
Floor, New York, NY 10011
|
We do not
distribute these reports to you directly in order to keep our expenses down as
the cost of mailing this report to all investors is
significant. Nevertheless, the reports are immediately available upon
your request.
11