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| 8-K - FORM 8K - ICON INCOME FUND EIGHT B LP | body.htm |
Exhibit 99.1
INCOME FUND
EIGHT B L.P.
PORTFOLIO OVERVIEW
THIRD QUARTER
2010
Letter from the CEOs As of January 7, 2010
Dear investor in ICON Income Fund Eight B L.P.:
We write to briefly summarize our activity for the third quarter of 2010. A more detailed analysis, which we encourage you to read, is contained in our Form 10-Q. Our Form 10-Q and our other quarterly, annual, and current reports are available in the Investor Relations section of our website, www.iconcapital.com.
As of September 30, 2010, Fund Eight B was in its liquidation period. During the remainder of the liquidation period, distributions generated from net rental income and proceeds from equipment sales generally fluctuate as remaining leases come to maturity or equipment is sold. During the third quarter of 2010, we made distributions in the aggregate amount of $530,979.
We currently own various innovative telecommunications voice transport systems and high capacity conferencing servers, including equipment manufactured by Juniper Networks and Sonus Networks. The equipment is subject to a lease with an affiliate of Global Crossing Limited, a publicly traded company on the NASDAQ Stock Exchange and a leading global IP solutions provider. This lease is set to expire in March 2011.
We also currently own interests in two aircraft that are subject to lease with Cathay Pacific Airways Limited, a publicly traded company on the Hong Kong Stock Exchange, which are scheduled to come off lease during the second half of 2011. We are actively remarketing the aircraft and are hopeful that we will be able to realize on this investment in a favorable manner.
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.
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Sincerely,
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Michael A. Reisner
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Mark Gatto
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Co-President and Co-Chief Executive Officer
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Co-President and Co-Chief Executive Officer
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1
ICON Income Fund Eight B L.P.
Third Quarter 2010 Portfolio Overview
We are pleased to present ICON Income Fund Eight B L.P.’s (the “Fund”) Portfolio Overview for the third quarter of 2010. References to “we,” “us,” and “our” are references to the Fund, and references to the “General Partner” are references to the general partner of the Fund, ICON Capital Corp.
The Fund
We raised $75,000,000 commencing with our initial offering on May 19, 2000 through the closing of the offering on October 17, 2001. During the third quarter of 2010, we continued to operate in our liquidation period.
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 September 30, 2010, our portfolio consisted primarily of the following investments.
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Telecommunications equipment subject to a forty-eight month lease with Global Crossing Telecommunications, Inc. We paid a purchase price of approximately $7,755,000 for the equipment and the lease is scheduled to expire on March 31, 2011.
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Two Airbus A340-313X aircraft (B-HXM and B-HXN) leased to Cathay Pacific Airways Limited. We own all of the interests in the entity that owns B-HXM and have a 50% interest in B-HXN through a joint venture with ICON Income Fund Nine, LLC (“Fund Nine”), an entity managed by our General Partner. The combined purchase price of the interests in both aircraft was approximately $112,008,000, comprised of approximately $6,375,000 in cash and a non-recourse loan in the amount of approximately $105,633,000. The original lease for B-HXM was due to expire on March 14, 2006, but was extended until October 1, 2011. The original lease for B-HXN was due to expire on March 27, 2006, but was extended until July 1, 2011. In connection with both lease extensions, the outstanding debt attributable to each aircraft was refinanced. The new loans are scheduled to mature concurrently with the respective lease expiration dates for each aircraft.
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Revolving Line of Credit
We and certain entities managed by our General Partner, Fund Nine, ICON Income Fund Ten, LLC, ICON Leasing Fund Eleven, LLC, ICON Leasing Fund Twelve, LLC 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 September 30, 2010 was 4.0%. None of the Borrowers had any loans outstanding under the Facility at September 30, 2010.
Transactions with Related Parties
Prior to May 1, 2006 and in accordance with the terms of our amended and restated agreement of limited partnership, we paid our General Partner (i) management fees ranging from 1% to 5% based on the type of transaction, and (ii) acquisition fees, through the reinvestment period, of 3% of the purchase price of our investments. In addition, our General Partner was reimbursed for administrative expenses incurred in connection with our operations. Our General Partner also has a 1% interest in our profits, losses, cash distributions, and liquidation proceeds.
Our General Partner 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, re-leasing services in connection with equipment which is off-lease, inspections of the equipment, liaising with and general supervision of lessees to ensure that the equipment is being properly operated and maintained, monitoring performance by the lessees of their obligations under the leases and the payment of operating expenses.
Administrative expense reimbursements were costs incurred by our General Partner or its affiliates that were necessary to our operations. These costs included our General Partner’s and its affiliates’ legal, accounting, investor relations and operations personnel, as well as professional fees and other costs that were charged to us based upon the percentage of time such personnel dedicated to us. Excluded were salaries and related costs, office rent, travel expenses, and other administrative costs incurred by individuals with a controlling interest in our General Partner.
Although our General Partner continues to provide the services described above, in 2006, our General Partner waived its right to future management fees and administrative expense reimbursements.
Our General Partner also has a 1% interest in our profits, losses, cash distributions and liquidation proceeds. We paid distributions to our General Partner in the amounts of $5,310 and $15,412 for the three and nine months ended September 30, 2010, respectively. Additionally, our General Partner’s interest in our net income for the three and nine months ended September 30, 2010 was $677 and $1,373, respectively.
Your participation in the Fund is greatly appreciated.
We are committed to protecting the privacy of our investors in compliance with all applicable laws. Please be advised that, unless required by a regulatory authority such as FINRA or ordered by a court of competent jurisdiction, we will not share any of your personally identifiable information with any third party.
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ICON Income Fund Eight B L.P.
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(A Delaware Limited Partnership)
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Consolidated Balance Sheets
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Assets
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September 30,
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2010
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December 31,
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(unaudited)
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2009
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Current assets:
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Cash and cash equivalents
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$ | 213,021 | $ | 149,843 | ||||
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Current portion of net investment in finance lease
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1,222,709 | 2,290,231 | ||||||
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Other current assets
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42,895 | 36,540 | ||||||
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Total current assets
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1,478,625 | 2,476,614 | ||||||
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Non-current assets:
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Net investment in finance lease, less current portion
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- | 621,280 | ||||||
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Leased equipment at cost (less accumulated depreciation
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of $36,553,378 and $33,739,596, respectively)
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38,863,342 | 41,677,124 | ||||||
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Investment in joint venture
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1,232,643 | 1,200,986 | ||||||
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Other non-current assets, net
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1,233,430 | 1,256,267 | ||||||
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Total non-current assets
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41,329,415 | 44,755,657 | ||||||
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Total Assets
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$ | 42,808,040 | $ | 47,232,271 | ||||
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Liabilities and Partners’ Equity
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Current liabilities:
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Current portion of non-recourse long-term debt
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$ | 3,852,906 | $ | 3,826,797 | ||||
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Deferred revenue
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436,364 | 613,636 | ||||||
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Due to affiliates
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143,070 | 143,070 | ||||||
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Accrued expenses and other current liabilities
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248,546 | 207,164 | ||||||
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Total current liabilities
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4,680,886 | 4,790,667 | ||||||
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Non-current liabilities:
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Non-recourse long-term debt, less current portion
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31,579,716 | 34,490,236 | ||||||
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Total Liabilities
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36,260,602 | 39,280,903 | ||||||
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Commitments and contingencies
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Partners’ Equity:
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Limited Partners
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7,131,024 | 8,520,914 | ||||||
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General Partner
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(583,586 | ) | (569,546 | ) | ||||
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Total Partners’ Equity
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6,547,438 | 7,951,368 | ||||||
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Total Liabilities and Partners’ Equity
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$ | 42,808,040 | $ | 47,232,271 | ||||
3
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ICON Income Fund Eight B L.P.
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(A Delaware Limited Partnership)
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Consolidated Statements of Operations
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(unaudited)
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Three Months Ended September 30,
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Nine Months Ended September 30,
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2010
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2009
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2010
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2009
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Revenue:
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Rental income
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$ | 1,594,091 | $ | 1,594,091 | $ | 4,782,273 | $ | 4,782,273 | ||||||||
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Finance income
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49,143 | 124,650 | 206,379 | 425,213 | ||||||||||||
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Income (loss) from investment in joint venture
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10,002 | (13,726 | ) | 31,657 | (54,405 | ) | ||||||||||
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Total revenue
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1,653,236 | 1,705,015 | 5,020,309 | 5,153,081 | ||||||||||||
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Expenses:
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Depreciation and amortization
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940,948 | 961,248 | 2,824,561 | 2,886,499 | ||||||||||||
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Interest
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577,673 | 635,479 | 1,723,471 | 1,937,533 | ||||||||||||
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General and administrative
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66,936 | 68,040 | 334,996 | 356,686 | ||||||||||||
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Total expenses
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1,585,557 | 1,664,767 | 4,883,028 | 5,180,718 | ||||||||||||
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Net income (loss)
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$ | 67,679 | $ | 40,248 | $ | 137,281 | $ | (27,637 | ) | |||||||
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Net income (loss) allocable to:
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Limited Partners
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$ | 67,003 | $ | 39,845 | $ | 135,909 | $ | (27,361 | ) | |||||||
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General Partner
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676 | 403 | 1,372 | (276 | ) | |||||||||||
| $ | 67,679 | $ | 40,248 | $ | 137,281 | $ | (27,637 | ) | ||||||||
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Weighted average number of units of limited
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partnership interests outstanding
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740,380 | 740,380 | 740,380 | 740,380 | ||||||||||||
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Net income (loss) per weighted average
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unit of limited partnership interests outstanding
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$ | 0.09 | $ | 0.05 | $ | 0.18 | $ | (0.04 | ) | |||||||
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ICON Income Fund Eight B L.P.
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(A Delaware Limited Partnership)
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Consolidated Statements of Changes in Partners’ Equity
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Units of Limited
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Total
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Partnership
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Limited
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General
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Partners'
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Interests
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Partners
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Partner
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Equity
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Balance, December 31, 2009
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740,380 | $ | 8,520,914 | $ | (569,546 | ) | $ | 7,951,368 | ||||||||
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Cash distributions
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- | (499,755 | ) | (5,048 | ) | (504,803 | ) | |||||||||
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Net loss
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- | (33,385 | ) | (337 | ) | (33,722 | ) | |||||||||
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Balance, March 31, 2010 (unaudited)
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740,380 | 7,987,774 | (574,931 | ) | 7,412,843 | |||||||||||
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Cash distributions
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- | (500,375 | ) | (5,054 | ) | (505,429 | ) | |||||||||
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Net income
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- | 102,291 | 1,033 | 103,324 | ||||||||||||
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Balance, June 30, 2010 (unaudited)
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740,380 | $ | 7,589,690 | $ | (578,952 | ) | $ | 7,010,738 | ||||||||
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Cash distributions
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- | (525,669 | ) | (5,310 | ) | (530,979 | ) | |||||||||
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Net income
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- | 67,003 | 676 | 67,679 | ||||||||||||
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Balance, September 30, 2010 (unaudited)
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740,380 | $ | 7,131,024 | $ | (583,586 | ) | $ | 6,547,438 | ||||||||
5
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ICON Income Fund Eight B L.P.
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(A Delaware Limited Partnership)
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Consolidated Statements of Cash Flows
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(unaudited)
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Nine Months Ended
September 30,
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2010
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2009
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Cash flows from operating activities:
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Net income (loss)
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$ | 137,281 | $ | (27,637 | ) | |||
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Adjustments to reconcile net income (loss) to net cash provided by
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operating activities:
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Rental income paid directly to lenders by lessees
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(4,605,000 | ) | (4,905,000 | ) | ||||
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Finance income
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(206,379 | ) | (425,213 | ) | ||||
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(Income) loss from investment in joint venture
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(31,657 | ) | 54,405 | |||||
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Depreciation and amortization
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2,824,561 | 2,886,499 | ||||||
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Interest expense on non-recourse financing paid directly to lenders by lessees
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1,697,933 | 1,885,198 | ||||||
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Interest expense from amortization of debt financing costs
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25,538 | 25,392 | ||||||
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Changes in operating assets and liabilities:
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Collection of finance leases
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1,884,402 | 1,884,403 | ||||||
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Other assets, net
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(9,056 | ) | 28,915 | |||||
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Deferred revenue
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(177,272 | ) | 122,727 | |||||
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Accrued expenses and other current liabilities
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64,038 | (120,473 | ) | |||||
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Net cash provided by operating activities
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1,604,389 | 1,409,216 | ||||||
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Cash flows from financing activities:
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Repayment of revolving line of credit
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- | (820,000 | ) | |||||
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Cash distributions to partners
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(1,541,211 | ) | (706,725 | ) | ||||
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Net cash used in financing activities
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(1,541,211 | ) | (1,526,725 | ) | ||||
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Net increase (decrease) in cash and cash equivalents
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63,178 | (117,509 | ) | |||||
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Cash and cash equivalents, beginning of period
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149,843 | 167,128 | ||||||
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Cash and cash equivalents, end of period
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$ | 213,021 | $ | 49,619 | ||||
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Supplemental disclosure of cash flow information:
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Cash paid during the period for interest
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$ | - | $ | 26,943 | ||||
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Supplemental disclosure of non-cash operating activities:
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Principal and interest paid on non-recourse long-term debt directly to
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lenders by lessees
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$ | 4,605,000 | $ | 4,905,000 | ||||
6
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:
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Visiting www.iconcapital.com
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or
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Visiting www.sec.gov
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or
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Writing us at: Angie Seenauth c/o ICON Capital Corp., 120 Fifth Avenue, 8th Floor, New York, NY 10011
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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.
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