UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K





þ
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934For
      the fiscal year ended December 31,
      2008ORo
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934





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 incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)100
      Fifth Avenue, 4th
      Floor
              New
      York, New York
            
            10011(Address
      of principal executive offices)
            
            (Zip
      Code)





(212)
418-4700


(Registrant’s
telephone number, including area code)




Securities
registered pursuant to Section 12(b) of the Act:  None




Securities
registered pursuant to Section 12(g) of the Act: Shares
of Limited Liability Company Interests




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.Yes     No þ




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act.Yes     No
þ




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. Yes þ    No





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  Yes þ    No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer,  a non-accelerated filer or a smaller reporting
company.  See definition of “accelerated filer”, “large accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.


Large
accelerated filer      Accelerated
filer       Non-accelerated
filer  þ     Smaller
reporting company  




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).Yes     No þ




State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last day of the registrant’s most recently completed second fiscal
quarter:  Not
applicable.




There is
no established market for shares of the registrant.




Number of
outstanding shares of limited liability company interests of the Registrant
on February 28, 2009 is 97,955.





DOCUMENTS
INCORPORATED BY REFERENCE


None.
















Table of ContentsPagePART
      I
            1Item 1.
      Business
            1Item 1A. Risk
      Factors
            4Item 1B.
      Unresolved Staff Comments
            16Item 2.
      Properties
            16Item 3. Legal
      Proceedings
            16Item 4.
      Submission of Matters to a Vote of Security
    Holders
            16PART
      II
            17Item 5. Market
      for the Registrant's Securities, Related Security Holder Matters and
      Issuer Purchases of Equity Securities
            17Item 6. Selected
      Financial Data
            19Item
      7. Manager's Discussion and Analysis of Financial Condition and
      Results of Operations
            20Item 7A.
      Quantitative and Qualitative Disclosures About Market
      Risk
            38Item 8.
      Consolidated Financial Statements and Supplementary
      Data
            39Item
      9. Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure
            73Item
      9A(T). Controls and
      Procedures
            74Item 9B. Other
      Information
            74PART
      III
            75Item 10.
      Directors, Executive Officers of the Registrant's Manager and Corporate
      Governance
            75Item 11.
      Executive Compensation
            77Item 12.
      Security Ownership of Certain Beneficial Owners and the Manager and
      Related Security Holder Matters
            77Item 13.
      Certain Relationships and Related Transactions, and Director
      Independence
            77Item 14.
      Principal Accounting Fees and Services
            78PART
      IV
            79Item 15.
      Exhibits, Financial Statement Schedules
            79SIGNATURES
            92




Table of Contents
  PART I
 
 Forward-Looking
Statements
 
 Certain
statements within this Annual Report on Form 10-K 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.
 
 Item 1. Business
 
 Our
History
  ICON
Income Fund Nine, LLC (the “LLC”) was formed on July 11, 2001 as a Delaware
limited liability company.  The LLC will continue until December 31,
2020, unless terminated sooner.  When used in this Annual Report on
Form 10-K, the terms “we,” “us,” “our” or similar terms refer to the LLC
and its consolidated subsidiaries.
  Our
manager is ICON Capital Corp. (our “Manager”), a Delaware corporation. Our
Manager manages and controls our business affairs, including, but not limited
to, our equipment leases and other financing transactions, under the terms of
our amended and restated limited liability company agreement (our “LLC
Agreement”).
  We are
currently in our liquidation period. Our initial capitalization was $1,000,
which was contributed by our Manager.  We offered shares of limited
liability company interests (“Shares”) with the intent to raise up to
$100,000,000 of capital and we commenced business operations on our initial
closing date, December 18, 2001, when we issued 1,250 Shares, representing
$1,249,910 of capital contributions.  Between December 19, 2001 and
April 30, 2003, our final closing date, we sold an additional 98,416 Shares
representing $98,403,564 of capital contributions, bringing the total sale of
Shares and capital contributions to 99,666 and $99,653,474,
respectively.  Through December 31, 2008, we redeemed 1,711 Shares,
bringing the total number of outstanding Shares to 97,955.
  Our
Business
  We
operate as an equipment leasing program in which the capital our members
invested was pooled together to make investments, pay fees and establish a small
reserve. We primarily acquired equipment subject to lease, purchased equipment
and leased it to third-party end users or financed equipment for third parties
and, to a lesser degree, acquired ownership rights to leased equipment at lease
expiration. Some of our equipment leases were acquired for cash and provide
current cash flow, which we refer to as “income” leases. For the other equipment
leases, we financed the majority of the purchase price through borrowings from
third parties. We refer to these leases as “growth” leases. These growth leases
generated little or no current cash flow because substantially all of the rental
payments received from the lessee are used to service the indebtedness
associated with acquiring or financing the lease. For these leases, we
anticipated that the future value of the leased equipment would exceed our cash
portion of the purchase price.
   1
 Table of Contents
 
 We divide
the life of the program into three distinct phases:
 
 (1)
      Offering Period:
      We invested most of the net proceeds from the sale of Shares in equipment
      leases and other financing
transactions.
 
 (2)
      OperatingPeriod: After the
      close of the offering period, we reinvested and continued to reinvest the
      cash generated from our initial investments to the extent that cash
      was not needed for our expenses, reserves and distributions to
      members. Our operating period ended on April 30,
  2008.
 
 (3)
      Liquidation
      Period: We began our liquidation period on May 1, 2008. Since the
      beginning of the liquidation period, we have sold and will continue to
      sell our assets in the ordinary course of business. Our goal is to
      complete the liquidation period within three years from the end of the
      operating period, but it may take longer to do
  so.
 
 As we
sell our assets during our liquidation period, both rental income and finance
income will decrease over time as will expenses related to our assets such as
depreciation and amortization expense. Additionally, interest expense should
decrease as we reach the expiration of leases that were financed and the debt is
repaid to the lender.  As leased equipment is sold, we will incur
gains or losses on these sales. We will continue to liquidate our portfolio
during this period and we expect to see a reduction in revenue and expenses
accordingly.
 
 At
December 31, 2008 and 2007, we had total assets of $114,231,144 and
$139,570,167, respectively.  For the year ended December 31, 2008,
three lessees accounted for approximately 83% of our total rental and finance
income of $21,820,889.  We had net income for the year ended December
31, 2008 of $1,047,818. For the year ended December 31, 2007, three lessees
accounted for approximately 77% of our total rental and finance income of
$20,579,263. We had net income for the year ended December 31, 2007 of
$7,940,018.  For the year ended December 31, 2006, three lessees
accounted for approximately 88% of our total rental and finance income of
$24,325,355.  We had a net loss for the year ended December 31, 2006
of $667,903.
  At
December 31, 2008, our portfolio, which we hold either directly or through joint
ventures, consisted primarily of the following investments:
  Air
Transportation Equipment
 
 ·
              We
      own one Airbus A340-313X aircraft (“Aircraft 128”) and have a 50%
      ownership interest through a joint venture with ICON Income Fund Eight B
      L.P. (“Fund Eight B”), an entity also managed by our Manager, in a second
      Airbus A340-313X aircraft (“Aircraft 126”). Both aircraft are on lease to
      Cathay Pacific Airways Limited (“Cathay”), which are currently in lease
      extensions that are scheduled to expire on December 1, 2011 and July 1,
      2011, respectively.
 
 Marine
Vessels
 
 ·
              We
      own three car and truck carrying vessels (the “Vessels”) on bareboat
      charter to Wilhelmsen Lines Shipowning AS (“Wilhelmsen”). Effective May
      18, 2006, the terms of the bareboat charters were extended through
      December 22, 2013.
 
 ·
              We
      own the Samar Spirit (“Samar”), an Aframax product tanker, which is
      subject to bareboat charter with an affiliate of the Teekay Corporation
      (“Teekay”) that expires in July
2011.
  Manufacturing
Industry Equipment
 
 ·
              We
      own microprocessor manufacturing devices and semi-conductor memory testing
      equipment currently subject to three leases with Spansion LLC
      (“Spansion”). One of the leases had an original expiration date of June
      30, 2007 and the other two had an original expiration date of July 31,
      2007. All three leases have been extended to June 30,
  2009.
 
 ·
              We
      own various manufacturing equipment subject to several leases with
      Wildwood Industries, Inc. (“Wildwood”). The leases expire on various dates
      between February and September
2009.
   2
 Table of Contents
 
 Telecommunications
Equipment
 
 ·
              We
      have a 14.40% ownership interest in ICON Global Crossing II, LLC
      (“Global Crossing II”), which purchased telecommunications equipment that
      is subject to a lease with Global Crossing Telecommunications, Inc. and
      Global Crossing North American Networks, Inc. (collectively, the “Global
      Crossing Group”).  The lease expires on October 31,
      2010.
 
 For a
discussion of our lease and other significant transactions for the years ended
December 31, 2008, 2007 and 2006, please refer to “Item 7. Manager’s Discussion
and Analysis of Financial Condition and Results of Operations.”
 
 Segment
Information
 
 We have
only one operating segment: the business of leasing and financing equipment to
companies that we believe to be creditworthy.
 
 Competition
 
 The commercial leasing and financing
industry is highly competitive and is characterized by competitive factors that
vary based upon product and geographic region. When we made our investments, we
competed, and as we seek to liquidate our portfolio, we compete with a variety
of competitors including other equipment leasing and finance funds, hedge funds,
captive and independent finance companies, commercial and industrial banks,
manufacturers and vendors. Competition from both traditional competitors and new
market entrants has intensified in recent years due to growing marketplace
liquidity and increasing recognition of the attractiveness of the commercial
leasing and finance industry.  Our competitors may have been and/or
are in a position to offer equipment to prospective customers on financial terms
that were more favorable than those that we could offer or that we can offer in
liquidating our portfolio, which may have affected our ability to make
investments and may affect our ability to liquidate our portfolio, in each case,
in a manner that would enable us to achieve our investment
objectives.  For additional information about our competition and
other risks related to our operations, please see “Risk Factors” in Item
1A.
 
 Employees
 
 We have
no direct employees.  Our Manager has full and exclusive control over
our management and operations.
 
 Available
Information
 
 Our
Annual Report on Form 10-K, our most recent Quarterly Reports on Form 10-Q and
amendments to those reports, if any, and our Current Reports on Form 8-K
and any amendments to those reports are available free of charge on our
Manager’s internet website at http://www.iconcapital.com as soon as reasonably
practicable after such reports are electronically filed with or furnished to the
Securities and Exchange Commission (the “SEC”). The information contained
on our Manager’s website is not deemed part of this Annual Report on Form
10-K. Our Reports are also available on the SEC’s website at
http://www.sec.gov.
 
 
 3
 Table of Contents
 
 
 Financial
Information Regarding Geographic Areas
 
 We have long-lived assets, which
include finance leases, operating leases and revenues in geographic areas
outside of the United States. For additional information, see Note 15 to our
consolidated financial statements.
 
 Item 1A. Risk Factors
 
 We are subject to a number of
risks.  Careful consideration should be given to the following risk
factors, in addition to the other information included in this Annual
Report.  The risks and uncertainties described below are not the only
ones we may face.  Each of these risk factors could adversely affect
our business operating results and/or financial condition, as well as adversely
affect the value of an investment in our Shares.  In addition to the
following disclosures, please refer to the other information contained in this
report including the consolidated financial statements and the related
notes.
 
 General
Investment Risks
 
 All
or a substantial portion of your distributions may be a return of capital and
not a return on capital, which will not necessarily be indicative of our
performance.
 
 The portion of total distributions that
is a return of capital and the portion that is economic return will depend upon
a number of factors that cannot be determined until all of our investments have
been sold or otherwise matured. At that time, you will be able to compare the
total amount of all cash distributions you receive to your total capital
invested in order to determine your economic return.
 
 The Internal Revenue Service may deem
the majority of your distributions to be a return of capital for tax purposes
during our early years. Distributions would be deemed to be a return of capital
for tax purposes to the extent that we are distributing cash in an amount
greater than our taxable income. The fact that the Internal Revenue Service
deems distributions to be a return of capital in part and we report an adjusted
tax basis to you on Form K-1 is not an indication that we are performing greater
than or less than expectations and cannot be utilized to forecast what your
final return might be.
 
 Your
ability to resell your Shares is limited by the absence of a public trading
market and, therefore, you should be prepared to hold your Shares for the life
of the LLC, which is anticipated to be at least 10 years.
 
 We do not
anticipate that a public market will develop for our Shares, our Shares will not
be listed on any national securities exchange at any time, and we will take
steps to assure that no public trading market develops for our Shares. In
addition, our LLC Agreement imposes significant restrictions on your right to
transfer your Shares.  We have established these restrictions to
comply with federal and State securities laws and so that we will not be
considered to be a publicly traded partnership that is taxed as a corporation
for federal income tax purposes. Your ability to sell or otherwise transfer your
Shares is extremely limited and will depend on your ability to identify a buyer.
Thus, you will probably not be able to sell or otherwise liquidate your Shares
in the event of an emergency and if you were able to arrange a sale, the price
you receive would likely be at a substantial discount to the price you paid for
your Shares.  As a result, you must view your investment in our Shares
as a long-term, illiquid investment that may last for at least 10
years.
 
 If
you choose to request that we redeem your Shares, you may receive significantly
less than you would receive if you were to hold your Shares for the life of the
LLC.
 
 After you
have been admitted as a member and have held your Shares for at least one year,
you may request that we redeem up to all of your Shares. We are under no
obligation to do so, however, and will only have limited cash available for this
purpose. If we redeem your Shares, the redemption price has been unilaterally
set and, depending upon when you request redemption, the redemption price may be
less than the unreturned amount of your investment. If your Shares are redeemed,
the redemption price may provide you a significantly lower value than the value
you would realize by retaining your Shares for the duration of the
LAC.
   4
 Table of Contents
 
 You
may not receive cash distributions every month and, therefore, you should not
rely on any income from your Shares.
 
 You
should not rely on the cash distributions from your Shares as a source of
income. During the liquidation period, although we expect that lump sums will be
distributed from time to time if and when financially significant assets are
sold, regularly scheduled distributions will decrease because there will be
fewer investments available to generate cash flow.
 
 Our
assets may be plan assets for ERISA purposes, which could subject our Manager to
additional restrictions on its ability to operate our business.
 
 ERISA and
the Internal Revenue Code may apply what is known as the look-through rule to an
investment in our Shares. Under that rule, the assets of an entity in which a
qualified plan or IRA has made an equity investment may constitute assets of the
qualified plan or IRA. If you are a fiduciary of a qualified plan or IRA, you
should consult with your advisors and carefully consider the effect of that
treatment if that were to occur. If the look-through rule were to apply, our
Manager may be viewed as an additional fiduciary with respect to the qualified
plan or IRA to the extent of any decisions relating to the undivided interest in
our assets represented by the Shares held by such qualified plan or IRA. This
could result in some restriction on our Manager’s willingness to engage in
transactions that might otherwise be in the best interest of all Share holders
due to the strict rules of ERISA regarding fiduciary actions.
 
 The
statements of value that we will include in our Annual Reports on Form 10-K and
that we will send to fiduciaries of plans subject to ERISA and to certain others
parties is only an estimate and may not reflect the actual value of our
Shares.
 
 The
statements of estimated value are based on the estimated value of each Share (i)
as of the close of our fiscal year, for the annual statements included in our
Annual Reports on Form 10-K and (ii) as of September 30 of each fiscal year, for
annual statements sent to fiduciaries of plans subject to ERISA and certain
other parties. Management, in part, will rely upon third-party sources and
advice in arriving at this estimated value. No independent appraisals on the
particular value of our Shares will be obtained and the value will be based upon
an estimated fair market value as of the referenced date for such value. Because
this is only an estimate, we may subsequently revise any valuation that is
provided. We cannot assure that:
 
 ·
              this
      estimate of value could actually be realized by us or by our members upon
      liquidation;
 ·
              members
      could realize this estimate of value if they were to attempt to sell their
      Shares;
 ·
              this
      estimate of value reflects the price or prices that our Shares would or
      could trade at if they were listed on a national stock exchange or
      included for quotation on a national market system, because no such market
      exists or is likely to develop; or
 ·
              the
      statement of value, or the method used to establish value, complies with
      any reporting and disclosure or valuation requirements under ERISA,
      Internal Revenue Code requirements or other applicable
  law.
 
 You
have limited voting rights and are required to rely on our Manager to make all
of our investment decisions and achieve our investment objectives.
 
 Our
Manager will make all of our investment decisions, including determining the
investments we made and the dispositions we will make in the future. Our success
will depend upon the quality of the investment decisions our Manager makes,
particularly relating to our investments in equipment and the realization of
such investments. You are not permitted to take part in managing, establishing
or changing our investment objectives or policies.
   5
 Table of Contents
 
 The
decisions of our Manager may be subject to conflicts of interest.
 
 The
decisions of our Manager may be subject to various conflicts of interest arising
out of its relationship to us and our affiliates. Our Manager could be
confronted with decisions in which it will, directly or indirectly, have an
economic incentive to place its respective interests or the interests of our
affiliates above ours. As of December 31, 2008, our Manager, sponsored, and is
currently managing, seven other equipment leasing and finance funds. See “Item
13.  Certain Relationships and Related Transactions, and Director
Independence”.  These conflicts may include, but are not limited
to:
 
 ·
              our
      Manager may have received more fees for making investments in which we
      incurred indebtedness to fund these investments than if indebtedness was
      not incurred;
 ·
              our
      LLC Agreement does not prohibit our Manager or any of our affiliates from
      competing with us for investments and engaging in other types of
      business;
 ·
              our
      Manager may have had opportunities to earn fees for referring a
      prospective investment opportunity to
others;
 ·
              the
      lack of separate legal representation for us and our Manager and lack of
      arm’s-length negotiations regarding compensation payable to our
      Manager;
 ·
              our
      Manager is our tax matters partner and is able to negotiate with the IRS
      to settle tax disputes that would bind us and our members that might not
      be in your best interest given your individual tax situation;
      and
 ·
              our
      Manager can make decisions as to when and whether to sell a jointly-owned
      asset when the co-owner is another business it
  manages.
 
 The
Investment Committee of our Manager is not independent.
 
 Any
conflicts in determining and allocating investments between us and our Manager,
or between us and another fund managed by our Manager, were resolved by our
Manager’s investment committee, which also serves as the investment committee
for other funds sponsored and managed by our Manager. Since all of the members
of our Manager’s investment committee are officers of our Manager and are not
independent, matters determined by such investment committee, including
conflicts of interest between us and our Manager and our affiliates involving
investment opportunities may not have been as favorable to you and our other
investors as they would be if independent members were on the committee.
Generally, if an investment was appropriate for more than one fund our Manager’s
investment committee allocated the investment to a fund (which includes us)
after taking into consideration at least the following factors:
 
 ·
              whether
      the fund had the cash required for the
  investment;
 ·
              whether
      the amount of debt to be incurred with respect to the investment was
      acceptable for the fund;
 ·
              the
      effect the investment would have on the fund’s cash
  flow;
 ·
              whether
      the investment would further diversify, or unduly concentrate, the fund’s
      investments in a particular lessee/borrower, class or type of equipment,
      location, industry, etc.;
 ·
              whether
      the term of the investment was within the term of the fund;
      and
 ·
              which
      fund had been seeking investments for the longest period of
      time.
 
 Notwithstanding
the foregoing, our Manager’s investment committee may have made exceptions to
these general policies when, in our Manager’s judgment, other circumstances made
application of these policies inequitable or economically undesirable. In
addition, our LLC Agreement permits our Manager and our affiliates to engage in
equipment acquisitions, financing secured loans, refinancing, leasing and
releasing opportunities on their own behalf or on behalf of other funds even if
they compete with us.
 
 Our
Manager’s officers and employees manage other businesses and did not and will
not devote their time exclusively to managing us and our business.
 
 We do not
and will not employ our own full-time officers, managers or employees. Instead,
our Manager will supervise and control our business affairs. Our Manager’s
officers and employees will also be spending time supervising the affairs of
other equipment leasing and finance funds it manages. Therefore, such officers
and employees devoted and will devote the amount of time that they think is
necessary to conduct our business, which may not be the same amount of time that
would be devoted to us if we had separate officers and employees.
   6
 Table of Contents
 
 Our
Manager may have difficulty managing its growth, which may divert its resources
and limit its ability to expand its operations successfully.
 
 The
amount of assets that our Manager manages has grown substantially since our
Manager was formed in 1985 and our Manager and its affiliates intend to continue
to sponsor and manage, as applicable, funds similar to us that may be concurrent
with us and they expect to experience further growth in their respective assets
under management. Our Manager’s future success will depend on the ability of its
and its affiliates’ officers and key employees to implement and improve their
operational, financial and management controls, reporting systems and
procedures, and manage a growing number of assets and investment funds. They,
however, may not implement improvements to their management information and
control systems in an efficient or timely manner and they may discover
deficiencies in their existing systems and controls. Thus, our Manager’s
anticipated growth may place a strain on its administrative and operations
infrastructure, which could increase its costs and reduce its efficiency and
could negatively impact our operations, business and financial
condition.
 
 Operational
risks may disrupt our business and result in losses.
 
 We may
face operational risk from errors made in the execution, confirmation or
settlement of transactions. We may also face operational risk from our
transactions not being properly recorded, evaluated or accounted for. We rely
heavily on our Manager’s financial, accounting, and other software systems. If
any of these systems fail to operate properly or become disabled, we could
suffer financial loss and a disruption of our business.  In addition,
we are highly dependent on our Manager’s information systems and technology.
There can be no assurance that these information systems and technology will be
able to accommodate our Manager’s growth or that the cost of maintaining such
systems will not increase from its current level. Such a failure to accommodate
growth, or an increase in costs related to such information systems, could also
negatively affect our liquidity and cash flows, and could negatively affect our
profitability.  Furthermore, we depend on the headquarters of our
Manager, which are located in New York City, for the operation of our business.
A disaster or a disruption in the infrastructure that supports our businesses,
including a disruption involving electronic communications or other services
used by us or third parties with whom we conduct business, or directly affecting
our headquarters, may have an adverse impact on our ability to continue to
operate our business without interruption that could have a material adverse
effect on us. Although we have disaster recovery programs in place, there can be
no assurance that these will be sufficient to mitigate the harm that may result
from such a disaster or disruption. In addition, insurance and other safeguards
might only partially reimburse us for any losses.  Finally, we rely on
third-party service providers for certain aspects of our business, including
certain accounting and financial services. Any interruption or deterioration in
the performance of these third parties could impair the quality of our
operations and could adversely affect our business and result in
losses.
 
 Our
internal controls over financial reporting may not be effective or our
independent registered public accounting firm may not be able to certify as to
their effectiveness, which could have a significant and adverse effect on our
business.
 
 Our
Manager is required to evaluate our internal controls over financial reporting
in order to allow management to report on, and if and when required, our
independent registered public accounting firm to attest to, our internal
controls over financial reporting, as required by Section 404 of the
Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations of the SEC
thereunder, which we refer to as “Section 404.” During the course of testing,
our Manager may identify deficiencies that it may not be able to remediate in
time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with
the requirements of Section 404. In addition, if we fail to achieve and maintain
the adequacy of our internal controls, as such standards are modified,
supplemented or amended from time to time, we may not be able to ensure that we
can conclude on an ongoing basis that we have effective internal controls over
financial reporting in accordance with Section 404. We cannot be certain as to
the timing of completion of our evaluation, testing and any remediation actions
or the impact of the same on our operations. If we are not able to implement the
requirements of Section 404 in a timely manner or with adequate compliance, we
may be subject to sanctions or investigation by regulatory authorities, such as
the SEC. As a result, we may be required to incur costs in improving our
internal control system and the hiring of additional personnel. Any such action
could negatively affect our results of operations and the achievement of our
investment objectives.
   7
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 We
are subject to certain reporting requirements and are required to file certain
periodic reports with the SEC.
 
 We are
subject to reporting requirements under the Securities Exchange Act of 1934,
including the filing of quarterly and annual reports. Prior public funds
sponsored by our Manager have been and are subject to the same requirements.
Some of these funds have been required to amend previously filed reports to,
among other things, restate the audited or unaudited financial statements filed
in such reports. As a result, the prior funds have been delinquent in filing
subsequent quarterly and annual reports when they became due. If we experience
delays in the filing of our reports, our investors may not have access to timely
information concerning us, our operations, and our financial
results.
 
 Your
ability to institute a cause of action against our Manager and its affiliates is
limited by our LLC Agreement.
 
 Our LLC
Agreement provides that neither our Manager nor any of its affiliates will have
any liability to us for any loss we suffer arising out of any action or inaction
of our Manager or an affiliate if the Manager or affiliate determined, in good
faith, that the course of conduct was in our best interests and did not
constitute negligence or misconduct. As a result of these provisions in our LLC
Agreement, your right to institute a cause of action against our Manager may be
more limited than it would be without these provisions.
 
 Business
Risks
 
 Our
business could be hurt by economic downturns.
 
 Our
business is affected by a number of economic factors, including the level of
economic activity in the markets in which we operate. A decline in economic
activity in the United States or internationally could materially affect our
financial condition and results of operations. The equipment leasing and
financing industry is influenced by factors such as interest rates, inflation,
employment rates and other macroeconomic factors over which we have no control.
Any decline in economic activity as a result of these factors typically results
in a decrease in the number of transactions in which we participate and in our
profitability.
 
 Uncertainties
associated with the equipment leasing and financing industry may have an adverse
effect on our business and may adversely affect our ability to give you any
economic return from our Shares or a complete return of your
capital.
 
 There are
a number of uncertainties associated with the equipment leasing and financing
industry that may have an adverse effect on our business and may adversely
affect our ability to make cash distributions to you that will, in total, be
equal to a return of all of your capital, or provide for any economic return
from our Shares. These include:
 
 ·
              fluctuations
      in demand for equipment and fluctuations in interest rates and inflation
      rates;
 ·
              fluctuations
      in the availability and cost of
credit;
 ·
              the
      continuing economic life and value of equipment at the time our
      investments mature;
 ·
              the
      technological and economic obsolescence of
  equipment;
 ·
              potential
      defaults by lessees, borrowers or other
  counterparties;
 ·
              supervision
      and regulation by governmental authorities;
and
 ·
              increases
      in our expenses, including taxes and insurance
  expenses.
   8
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 The
risks and uncertainties associated with the industries of our lessees,
borrowers, and other counterparties may indirectly affect our business,
operating results and financial condition.
 
 We are
indirectly subject to a number of uncertainties associated with the industries
of our lessees, borrowers, and other counterparties. We invested in a pool of
equipment by, among other things, acquiring equipment subject to lease,
purchasing equipment and leasing equipment to third-party end users, financing
equipment for third-party end users, acquiring ownership rights to items of
leased equipment at lease expiration, and acquiring interests or options to
purchase interests in the residual value of equipment. The lessees, borrowers,
and other counterparties to these transactions operate in a variety of
industries. As such, we are indirectly subject to the various risks and
uncertainties that affect our lessees’, borrowers’, and other counterparties’
businesses and operations. If such risks or uncertainties were to affect our
lessees, borrowers, or other counterparties, we may indirectly suffer a loss on
our investment, lose future revenues or experience adverse consequences to our
business, operating results and financial condition.
 
 Because
we borrowed money to make our investments, losses as a result of lessee,
borrower or other counterparty defaults may be greater than if such borrowings
were not incurred.
 
 Although
we acquired some of our investments for cash, we borrowed a substantial portion
of the purchase price of certain of our investments. While we believe the use of
leverage resulted in us being able to make more investments with less risk than
if leverage was not utilized, there can be no assurance that the benefits of
greater size and diversification of our portfolio will offset the heightened
risk of loss in an individual investment using leverage.  With respect
to non-recourse borrowings, if we are unable to pay our debt service obligations
because a lessee, borrower or other counterparty defaults, a lender could
foreclose on the investment securing the non-recourse indebtedness. This could
cause us to lose all or part of our investment or could force us to meet debt
service payment obligations so as to protect our investment subject to such
indebtedness and prevent it from being subject to
repossession.  Additionally, while the majority of our borrowings were
non-recourse, we are jointly and severally liable for recourse
indebtedness incurred under a revolving line of credit facility with
California Bank & Trust (“CB&T”) that is secured by certain of our
assets that are not otherwise pledged to other lenders. CB&T has a security
interest in such assets and the right to sell those assets to pay off the
indebtedness if we default on our payment obligations.  This recourse
indebtedness may increase our risk of loss because we must meet the debt service
payment obligations regardless of the revenue we receive from the investment
that is subject to such secured indebtedness.
 
 Restrictions
imposed by the terms of our indebtedness may limit our financial
flexibility.
 
 We,
together with certain of our affiliates (entities sponsored and organized by our
Manager), Fund Eight B, ICON Income Fund Ten, LLC (“Fund Ten”), ICON Leasing
Fund Eleven, LLC (“Fund Eleven”) and ICON Leasing Fund Twelve, LLC (“Fund
Twelve”) are party to the revolving line of credit agreement with
CB&T.  The terms of that agreement could restrict us from paying
distributions to our members if such payments would cause us not to be in
compliance with our financial covenants in that agreement.  For
additional information on the terms of our credit agreement, see “Item 7.
Manager’s Discussion and Analysis of Financial Condition and Results of
Operations – Liquidity and Capital Resources.”
 
 Guarantees
made by the guarantors of some of our lessees, borrowers and other
counterparties may be voided under certain circumstances and we may be required
to return payments received from such guarantors.
 
 Under
federal bankruptcy law and comparable provisions of State fraudulent transfer
laws, a guarantee could be voided, or claims in respect of a guarantee could be
subordinated to all other debts of that guarantor if, among other things, the
guarantor, at the time it incurred the indebtedness evidenced by its
guarantee:
 
 ·
              received
      less than reasonably equivalent value or fair consideration for the
      incurrence of such guarantee; and
 ·
              was
      insolvent or rendered insolvent by reason of such incurrence;
      or
 ·
              was
      engaged in a business or transaction for which the guarantor’s remaining
      assets constituted unreasonably small capital;
  or
 ·
              intended
      to incur, or believed that it would incur, debts beyond its ability to pay
      such debts as they mature.
   9
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 In
addition, any payment by that guarantor pursuant to its guarantee could be
voided and required to be returned to the guarantor, or to a fund for the
benefit of the creditors of the guarantor.
 
 The
measures of insolvency for purposes of these fraudulent transfer laws will vary
depending upon the law applied in any proceeding to determine whether a
fraudulent transfer has occurred. Generally, however, a guarantor would be
considered insolvent if:
 
 ·
              the
      sum of its debts, including contingent liabilities, was greater than the
      fair saleable value of all of its
assets;
 ·
              if
      the present fair saleable value of its assets was less than the amount
      that would be required to pay its probable liability on its existing
      debts, including contingent liabilities, as they become absolute and
      mature; or
 ·
              it
      could not pay its debts as they become
due.
 
 We cannot
assure you as to what standard a court would apply in making these
determinations or that a court would agree with our conclusions in this regard.
We also can not make any assurances as to the standards that courts in foreign
jurisdictions may use or that courts in foreign jurisdictions will take a
position similar to that taken in the United States.
 
 If
the value of our investments declines more rapidly than we anticipate, our
financial performance may be adversely affected.
 
 A
significant part of the value of a significant portion of the equipment that we
invested in is expected to be the potential value of the equipment once the
lease term expires (with respect to leased equipment) or when our interests in
or options to purchase interests in the residual value of equipment mature.
Generally, equipment is expected to decline in value over its useful life. In
making these types of investments, we assumed a residual value for the equipment
at the end of the lease or other investment that, at maturity, was expected to
be enough to return the cost of our investment in the equipment and provide a
rate of return despite the expected decline in the value of the equipment over
the term of the investment. However, the actual residual value of the equipment
at maturity and whether that value meets our expectations will depend to a
significant extent upon the following factors, many of which are beyond our
control:
 
 ·
              our
      ability to acquire or enter into agreements that preserved or enhanced the
      relative value of the equipment;
 ·
              our
      ability to maximize the value of the equipment at maturity of our
      investment;
 ·
              market
      conditions prevailing at maturity;
 ·
              the
      cost of new equipment at the time we are remarketing used
      equipment;
 ·
              the
      extent to which technological or regulatory developments reduce the market
      for such used equipment;
 ·
              the
      strength of the economy; and
 ·
              the
      condition of the equipment at
maturity.
 
 We cannot
assure you that our assumptions with respect to value will be accurate or that
the equipment will not lose value more rapidly than we anticipate.
   10
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 If
equipment is not properly maintained, its residual value may be less than
expected.
 
 If a
lessee or other counterparty fails to maintain equipment in accordance with the
terms of our agreements, we may have to make unanticipated expenditures to
repair the equipment in order to protect our investment. In addition, some of
the equipment we invested in was used equipment. While we planned to inspect
most used equipment prior to making an investment, there is no assurance that an
inspection of used equipment prior to purchasing it revealed any or all defects
and problems with the equipment that may occur after it was acquired by
us.
 
 We
typically obtained representations from the sellers and lessees of used
equipment that:
 
 ·
              the
      equipment has been maintained in compliance with the terms of applicable
      agreements;
 ·
              that
      neither the seller nor the lessee, was in violation of any material terms
      of such agreements; and
 ·
              the
      equipment was in good operating condition and repair and that, with
      respect to leases, the lessee had no defenses to the payment of rent for
      the equipment as a result of the condition of such
    equipment.
 
 We have
rights against the seller of equipment for any losses arising from a breach of
representations made to us and against the lessee for a default under the lease.
However, we cannot assure you that these rights will make us whole with respect
to our entire investment in the equipment or our expected returns on the
equipment, including legal costs, costs of repair and lost revenue from the
delay in being able to sell or re-lease the equipment due to undetected problems
or issues. These costs and lost revenue could negatively affect our liquidity
and cash flows, and could negatively affect our profitability if we are unable
to recoup such costs from the lessee or other third parties.
 
 If
a lessee, borrower or other counterparty defaults on its obligations to us, we
could incur losses.
 
 We
entered into transactions with parties that had senior debt rated below
investment grade. We did not require such parties to have a minimum credit
rating. Lessees, borrowers, and other counterparties with such lower credit
ratings may default on payments to us more frequently than lessees, borrowers or
other counterparties with higher credit ratings. For example, if a lessee does
not make lease payments to us or to a lender on our behalf or a borrower does
not make loan payments to us when due, or violates the terms of its contract in
another important way, we may be forced to terminate our agreements with such
parties and attempt to recover the equipment. We may do this at a time when we
may not be able to arrange for a new lease or to sell our investment right away,
if at all. We would then lose the expected revenues and might not be able to
recover the entire amount or any of our original investment. The costs of
recovering equipment upon a lessee’s or borrower’s default, enforcing the
obligations under the contract, and transporting, storing, repairing, and
finding a new lessee or purchaser for the equipment may be high and may
negatively affect the value of our investment in the equipment. These costs
could also negatively affect our liquidity and cash flows, and could negatively
affect our profitability.
 
 If
a lessee, borrower or other counterparty files for bankruptcy, we may have
difficulty enforcing the terms of the contract and may incur
losses.
 
 If a
lessee, borrower or other counterparty files for protection under the bankruptcy
laws, the remaining term of the lease, loan or other financing contract could be
shortened or the contract could be rejected by the bankruptcy court, which could
result in, among other things, any unpaid pre-bankruptcy lease, loan or other
contractual payments being cancelled as part of the bankruptcy proceeding. We
may also experience difficulties and delays in recovering equipment from a
bankrupt lessee or borrower that is involved in a bankruptcy proceeding or has
been declared bankrupt by a bankruptcy court. If a contract is rejected in a
bankruptcy, we would bear the cost of retrieving and storing the equipment and
then have to remarket such equipment. In addition, the bankruptcy court would
treat us as an unsecured creditor for any amounts due under the lease, loan or
other contract. These costs and lost revenues could also negatively affect our
liquidity and cash flows and could negatively affect our
profitability.
   11
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 Investing
in equipment in foreign countries may be riskier than domestic investments and
may result in losses.
 
 We made
investments in equipment for use by domestic or foreign parties outside of the
United States. We may have difficulty enforcing our rights under foreign
transaction documents. In addition, we may have difficulty repossessing
equipment if a foreign party defaults and enforcement of our rights outside the
United States could be more expensive. Moreover, foreign jurisdictions may
confiscate our equipment. Use of equipment in a foreign country will be subject
to that country’s tax laws, which may impose unanticipated taxes. While we
sought to require lessees, borrowers, and other counterparties to reimburse us
for all taxes imposed on the use of the equipment and require them to maintain
insurance covering the risks of confiscation of the equipment, we cannot assure
you that we will be successful in doing so or that insurance reimbursements will
be adequate to allow for recovery of and a return on foreign
investments.
 
 In
addition, we invested in equipment that may travel to or between locations
outside of the United States. Regulations in foreign countries may adversely
affect our interest in equipment in those countries. Foreign courts may not
recognize judgments obtained in U.S. courts and different accounting or
financial reporting practices may make it difficult to judge the financial
viability of a lessee, borrower or other counterparty, heightening the risk of
default and the loss of our investment in such equipment, which could have a
material adverse effect on our results of operations and financial
condition.
 
 In
addition to business uncertainties, our investments may be affected by
political, social, and economic uncertainty affecting a country or region. Many
financial markets are not as developed or as efficient as those in the U.S. and,
as a result, liquidity may be reduced and price volatility may be higher. The
legal and regulatory environment may also be different, particularly with
respect to bankruptcy and reorganization. Financial accounting standards and
practices may also differ and there may be less publicly available information
with respect to such companies. While our Manager considered these when making
investment decisions, no assurance can be given that we will be able to fully
avoid these risks or generate sufficient risk-adjusted returns.
 
 Sellers
of leased equipment could use their knowledge of the lease terms for gain at our
expense.
 
 We may
have acquired equipment subject to lease from leasing companies that have an
ongoing relationship with the lessees. A seller could use its knowledge of the
terms of the lease, particularly the end of lease options and date the lease
ends, to compete with us. In particular, a seller may approach a lessee with an
offer to substitute similar equipment at lease end for lower rental amounts.
This may adversely affect our opportunity to maximize the residual value of the
equipment and potentially negatively affect our profitability.
 
 Investment
in joint ventures may subject us to risks relating to our co-investors that
could adversely impact the financial results of such joint
ventures.
 
 We
invested in joint ventures with other businesses our Manager sponsors and
manages, as well as with unrelated third parties. Investing in joint ventures
involves additional risks not present when acquiring leased equipment that will
be wholly owned by us. These risks include the possibility that our co-investors
might become bankrupt or otherwise fail to meet financial commitments, thereby
obligating us to pay all of the debt associated with the joint venture, as each
party to a joint venture may be required to guarantee all of the joint venture’s
obligations. Alternatively, the co-investors may have economic or business
interests or goals that are inconsistent with our investment objectives and want
to manage the joint venture in ways that do not maximize our return. Among other
things, actions by a co-investor might subject leases that are owned by the
joint venture to liabilities greater than those contemplated by the joint
venture agreement. Also, when none of the joint owners control a joint venture,
there might be a stalemate on decisions, including when to sell the equipment or
the prices or terms of a lease. Finally, while we typically have the right to
buy out the other joint owner’s interest in the equipment in the event of the
sale, we may not have the resources available to do so. These risks could
negatively affect our profitability and could result in legal and other costs,
which would negatively affect our liquidity and cash flows.
   12
 Table of Contents
 
 We
may not be able to obtain insurance for certain risks and would have to bear the
cost of losses from non-insurable risks.
 
 Equipment
may be damaged or lost. Fire, weather, accidents, theft or other events can
cause damage or loss of equipment. While our transaction documents generally
require lessees and borrowers to have comprehensive insurance and assume the
risk of loss, some losses, such as from acts of war, terrorism or earthquakes
may either be uninsurable or not economically feasible to insure. Furthermore,
not all possible liability claims or contingencies affecting equipment can be
anticipated or insured against, and, if insured, the insurance proceeds may not
be sufficient to cover a loss. If such a disaster occurs to the equipment, we
could suffer a total loss of any investment in the affected equipment. In
investing in some types of equipment, we may have been exposed to environmental
tort liability. Although we used our best efforts to minimize the possibility
and exposure of such liability including by means of attempting to obtain
insurance, we cannot assure you that our assets will be protected against any
such claims. These risks could negatively affect our profitability and could
result in legal and other costs, which would negatively affect our liquidity and
cash flows.
 
 We
could suffer losses from failure to maintain our equipment registration and from
unexpected regulatory compliance costs.
 
 Many
types of transportation assets are subject to registration requirements by U.S.
governmental agencies, as well as foreign governments if such equipment is to be
used outside of the United States. Failing to register the equipment, or losing
such registration, could result in substantial penalties, forced liquidation of
the equipment and/or the inability to operate and lease the equipment.
Governmental agencies may also require changes or improvements to equipment and
we may have to spend our own funds to comply if the lessee, borrower or other
counterparty is not required to do so under the transaction documents. These
changes could force the equipment to be removed from service for a period of
time. The terms of the transaction documents may provide for payment reductions
if the equipment must remain out of service for an extended period of time or
are removed from service. We may then have reduced income from our investment
for this equipment. If we do not have the funds to make a required change, we
might be required to sell the affected equipment. If so, we could suffer a loss
on our investment, lose future revenues and experience adverse tax
consequences.
 
 If
any of our investments become subject to usury laws, we could have reduced
revenues or possibly a loss on such investments.
 
 In
addition to credit risks, we may be subject to other risks in equipment
financing transactions in which we are deemed to be a lender. For example,
equipment leases have sometimes been held by U.S. courts to be loan transactions
subject to State usury laws, which limit the interest rate that can be charged.
Uncertainties in the application of some laws may result in inadvertent
violations that could result in reduced investment returns or, possibly, loss on
our investment in the affected equipment. Although part of our business strategy
was to enter into or acquire leases that we believe were structured so that they
avoid being deemed loans, and would therefore not be subject to usury laws, we
cannot assure you that we were successful in doing so. If an equipment lease is
held to be a loan with a usurious rate of interest, the amount of the lease
payment could be reduced and adversely affect our revenue.
 
 State
laws determine what rates of interest are deemed usurious, when the applicable
rate of interest is determined, and how it is calculated. In addition, some U.S.
courts have also held that certain lease features, such as equity interests,
constitute additional interest. Although we generally sought assurances and/or
opinions to the effect that our transactions do not violate applicable usury
laws, a finding that our transactions violate usury laws, the interest
obligation to us could be declared void and we could be liable for damages and
penalties under applicable law. We cannot assure you as to what standard a court
would apply in making these determinations or that a court would agree with our
conclusions in this regard. We also cannot make any assurances as to the
standards that courts in foreign jurisdictions may use or that courts in foreign
jurisdictions will take a position similar to that taken in the United
States.
   13
 Table of Contents
 
 We
competed with a variety of financing sources for our investments, which may
affect our ability to achieve our investment objectives.
 
 The
commercial leasing and financing industry is highly competitive and is
characterized by competitive factors that vary based upon product and geographic
region. Our competitors are varied and include other equipment leasing and
finance funds, hedge funds, captive and independent finance companies,
commercial and industrial banks, manufacturers and vendors. Competition from
both traditional competitors and new market entrants has intensified in recent
years due to growing marketplace liquidity and increasing recognition of the
attractiveness of the commercial leasing and finance industry.
 
 When we
made our investments, we competed primarily on the basis of pricing, terms and
structure. To the extent that our competitors competed aggressively on any
combination of those factors, we could fail to achieve our investment
objectives.  In addition, our competitors may have been and/or are in
a position to offer equipment to prospective customers on financial terms that
were more favorable than those that we could offer or that we can offer in
liquidating our portfolio, which may have affected our ability to make
investments and may affect our ability to liquidate our portfolio, in each case,
in a manner that would enable us to achieve our investment
objectives.
 
 General
Tax Risks
 
 If
the IRS classifies us as a corporation rather than a partnership, your
distributions would be reduced under current tax law.
 
 We did
not and will not apply for an IRS ruling that we will be classified as a
partnership for federal income tax purposes. Although counsel rendered an
opinion to us that we will be taxed as a partnership and not as a corporation,
that opinion is not binding on the IRS and the IRS has not ruled on any federal
income tax issue relating to us. If the IRS successfully contends that we should
be treated as a corporation for federal income tax purposes rather than as a
partnership, then:
 
 ·
              our
      realized losses would not be passed through to
  you;
 ·
              our
      income would be taxed at tax rates applicable to corporations, thereby
      reducing our cash available to distribute to you;
  and
 ·
              your
      distributions would be taxed as dividend income to the extent of current
      and accumulated earnings and
profits.
 
 In
addition, we could be taxed as a corporation if we are treated as a publicly
traded partnership by the IRS. To minimize this possibility, our LLC Agreement
places significant restrictions on your ability to transfer our
Shares.
 
 We
could lose cost recovery or depreciation deductions if the IRS treats our leases
as sales or financings.
 
 We expect
that, for federal income tax purposes, we will be treated as the owner and
lessor of the equipment that we leased. However, the IRS may challenge the
leases and instead assert that they are sales or financings. If the IRS
determines that we are not the owner of our leased equipment, we would not be
entitled to cost recovery, depreciation or amortization deductions, and our
leasing income might be deemed to be portfolio income instead of passive
activity income. The denial of such cost recovery or amortization deductions
could cause your tax liabilities to increase.
 
 You
may incur tax liability in excess of the cash distributions you receive in a
particular year.
 
 In any
particular year, your tax liability from owning our Shares may exceed the cash
distributions you receive from this investment. While we expect that your net
taxable income from owning our Shares for most years will be less than your cash
distributions in those years, to the extent any of our debt is repaid with
income or proceeds from equipment sales, taxable income could exceed the amount
of cash distributions you receive in those years. Additionally, a sale of our
investments may result in taxes in any year that are greater than the amount of
cash from the sale, resulting in a tax liability in excess of cash
distributions. Additionally, due to the operation of the various loss
disallowance rules, in a given tax year you may have taxable income when, on a
net basis, we have a loss, or you may recognize a greater amount of taxable
income than our net income because, due to a loss disallowance, income from some
of our activities cannot be offset by losses from some of our other
activities.
   14
 Table of Contents
 
 You
may be subject to greater income tax obligations than originally anticipated due
to special depreciation rules.
 
 We may
have acquired equipment subject to lease that the Internal Revenue Code requires
us to depreciate over a longer period than the standard depreciation period.
Similarly, some of the equipment that we purchased was not be eligible for
accelerated depreciation under the Modified Accelerated Costs Recovery System,
which was established by the Tax Reform Act of 1986 to set forth the guidelines
for accelerated depreciation under the Internal Revenue Code. Further, if we
acquired equipment that the Internal Revenue Code deems to be tax-exempt use
property and the leases did not satisfy certain requirements, losses
attributable to such equipment are suspended and may be deducted only against
income we receive from such equipment or when we dispose of such equipment.
Depending on the equipment that we acquired and its eligibility for accelerated
depreciation under the Internal Revenue Code, we may have less depreciation
deductions to offset gross lease revenue, thereby increasing our taxable
income.
 
 There
are limitations on your ability to deduct our losses.
 
 Your
ability to deduct your share of our losses is limited to the amounts that you
have at risk from owning our Shares. This is generally the amount of your
investment, plus any profit allocations and minus any loss allocation and
distributions. This determination is further limited by a tax rule that applies
the at-risk-rules on an activity by activity basis, further limiting losses from
a specific activity to the amount at risk in that activity. Additionally, your
ability to deduct losses attributable to passive activities is restricted. Some
of our operations will constitute passive activities and you can only use our
losses from such activities to offset passive activity income in calculating tax
liability. Furthermore, passive activity losses may not be used to offset
portfolio income.
 
 The
IRS may allocate more taxable income to you than our LLC Agreement
provides.
 
 The IRS
might successfully challenge our allocations of taxable income or losses. If so,
the IRS would require reallocation of our taxable income and loss, resulting in
an allocation of more taxable income or less loss to you than our LLC Agreement
allocates.
 
 If
you are a tax-exempt organization, you will have unrelated business taxable
income from this investment.
 
 Tax-exempt
organizations are subject to income tax on unrelated business taxable income
(“UBTI”). Such organizations are required to file federal income tax returns if
they have UBTI from all sources in excess of $1,000 per year. Our leasing income
will constitute UBTI. Furthermore, tax-exempt organizations in the form of
charitable remainder trusts will be subject to an excise tax equal to 100% of
their UBTI.
 
 This
investment may cause you to pay additional taxes.
 
 You may
be required to pay alternative minimum tax in connection with owning our Shares,
since you will be allocated a proportionate share of our tax preference items.
Our Manager’s operation of our business affairs may lead to other adjustments
that could also increase your alternative minimum tax. Alternative minimum tax
is treated in the same manner as the regular income tax for purposes of making
estimated tax payments.
   15
 Table of Contents
 
 You
may incur State tax and foreign tax liabilities and have an obligation to file
State or foreign tax returns.
 
 You may
be required to file tax returns and pay foreign, State or local taxes, such as
income, franchise or personal property taxes, as a result of an investment in
our Shares, depending upon the laws of the jurisdictions in which the equipment
that we own is located.
 
 Any
adjustment to our tax return as a result of an audit by the IRS may result in
adjustment to your tax return.
 
 If we
adjust our tax return as a result of an IRS audit, such adjustment may result in
an examination of other items in your returns unrelated to us, or an examination
of your tax returns for prior years. You could incur substantial legal and
accounting costs in contesting any challenge by the IRS, regardless of the
outcome. Further, because you will be treated for federal income tax purposes as
a partner in a partnership by investing in our Shares, an audit of our
tax return could potentially lead to an audit of your individual tax return.
Finally, under certain circumstances, the IRS may automatically adjust your
personal return without the opportunity for a hearing if it adjusts our tax
return.
 
 Some
of the distributions on our Shares will be a return of capital, in whole or in
part, which will complicate your tax reporting and could cause unexpected tax
consequences at liquidation.
 
 As we
depreciated our investments in leased equipment over the term of our existence,
a portion of each distribution to you was likely considered a return of capital,
rather than income. Therefore, the dollar amount of each distribution should not
be considered as necessarily being all income to you. As your capital in our
Shares is reduced for tax purposes over the life of your investment, you will
not receive a lump sum distribution upon liquidation that equals the purchase
price you paid for our Shares, such as you might expect if you had purchased a
bond. Also, payments made upon our liquidation will be taxable to the extent
that such payments are not a return of capital.
 
 As you
receive distributions throughout the life of your investment, you will not know
at the time of the distribution what portion of the distribution represents a
return of capital and what portion represents income. The Schedule K-1 statement
you received and continue to receive from us each year will specify the amounts
of capital and income you received throughout the prior year.
 
 Item 1B. Unresolved Staff Comments
 
 None.
 
 Item 2. Properties
 
 We
neither own nor lease office space or any other real property in our business at
the present time.
 
 Item 3. Legal Proceedings
 
 In the
ordinary course of conducting our business, we may be subject to certain claims,
suits, and complaints filed against us.  In our Manager’s opinion, the
outcome of such matters, if any, will not have a material impact on our
consolidated financial position or results of operations.  We are not
aware of any material legal proceedings that are currently pending against us or
against any of our assets.
 
 Item 4. Submission of Matters to a Vote of Security
Holders
 
 No
matters were submitted to a vote of security holders during the fourth quarter
of 2008.
   16
 Table of Contents
 PART II
  
 Item 5. Market for the Registrant's Securities, Related Security
Holder Matters and Issuer Purchases of Equity
Securities
 Our
Shares are not publicly traded and there is no public market for our Shares. It
is unlikely that any such market will develop.
 
 Number
      of MembersTitle of Class
                            
                            as of February 28, 2009Manager
      (as a member)
                            
                            1Additional
      members
                            
                            3,245
 
 We, at
our Manager's discretion, paid monthly distributions to each of our
members beginning the first month after each member was admitted to the LLC
through the end of our operating period, which occurred on April 30,
2008.  We paid distributions to additional members totaling
$7,678,004, $8,825,274 and $8,831,229, respectively, for the years ended
December 31, 2008, 2007 and 2006. Additionally, our Manager was paid
distributions of $77,556, $89,144 and $89,204 for the years ended December 31,
2008, 2007 and 2006, respectively.  The terms of our loan agreement
with CB&T could restrict us from paying cash distributions to our members if
such payment would cause us to not be in compliance with our financial
covenants. See “Item 7. Manager’s Discussion and Analysis of Financial Condition
and Results of Operations – Liquidity and Capital Resources.”
 
 In order
for Financial Industry Regulatory Authority, Inc. (“FINRA”) members and their
associated persons to participate in the offering and sale of Shares pursuant to
the offering or to participate in any future offering of our Shares, we are
required pursuant to FINRA Rule 2810(b)(5) to disclose in each Annual Report
distributed to our members a per Share estimated value of our Shares, the method
by which we developed the estimated value, and the date used to develop the
estimated value. In addition, our Manager prepares statements of our estimated
Share values to assist fiduciaries of retirement plans subject to the annual
reporting requirements of the Employee Retirement Income Security Act (“ERISA”)
in the preparation of their reports relating to an investment in our
Shares.  For these purposes, the estimated value of our Shares is
deemed to be $445.76 per Share as of December 31, 2008.  This
estimated value is provided to assist plan fiduciaries in fulfilling their
annual valuation and reporting responsibilities and should not be used for any
other purpose.  Because this is only an estimate, we may subsequently
revise this valuation.
 
 Following
the termination of the offering of our Shares, the estimated value of our Shares
is based on the estimated amount that a holder of a Share would receive if all
of our assets were sold in an orderly liquidation as of the close of our fiscal
year and all proceeds from such sales, without reduction for transaction costs
and expenses, together with any cash held by us, were distributed to the members
upon liquidation.  To estimate the amount that our members would
receive upon such liquidation, we calculated the sum of:  (i) the
unpaid finance lease and note receivable payments on our existing finance leases
and notes receivable, discounted at the implicit yield for each such
transaction, (ii) the fair market value of our operating leases, equipment held
for sale or lease, and other assets, as determined by the most recent third
party appraisals we have obtained for certain assets or our
Manager’s  estimated values of certain other assets, as applicable,
and (iii) our cash on hand.  From this amount, we then subtracted our
total debt outstanding and then divided that sum by the total number of Shares
outstanding.
 
 The
foregoing valuation is an estimate only.  The appraisals that we
obtained and the methodology utilized by our management in estimating our per
Share value were subject to various limitations and were based on a number of
assumptions and estimates that may or may not be accurate or complete. No
liquidity discounts or discounts relating to the fact that we are currently
externally managed were applied to our estimated per Share valuation, and no
attempt was made to value us as an enterprise.
 
 
 17
 Table of Contents
 
 As noted
above, the foregoing valuation was performed solely for the ERISA and FINRA
purposes described above and was based solely on our Manager’s perception of
market conditions and the types and amounts of our assets as of the reference
date for such valuation and should not be viewed as an accurate reflection of
our Shares or our assets. Except for independent third-party appraisals of
certain assets, no independent valuation was sought. In addition, as stated
above, as there is no significant public trading market for our Shares at this
time and none is expected to develop, there can be no assurance that members
could receive $445.76 per Share if such a market did exist and they sold their
Shares or that they will be able to receive such amount for their Shares in the
future. Furthermore, there can be no assurance:
 
 ·
              as
      to the amount members may actually receive if and when we seek to
      liquidate our assets or the amount of lease and note receivable payments
      and asset disposition proceeds we will actually receive over our remaining
      term; the total amount of distributions our members may receive may be
      less than $1,000 per Share primarily due to the fact that the funds
      initially available for investment were reduced from the gross offering
      proceeds in order to pay selling commissions, underwriting fees,
      organizational and offering expenses, and acquisition or formation
      fees;
 ·
              that
      the foregoing valuation, or the method used to establish value, will
      satisfy the technical requirements imposed on plan fiduciaries under
      ERISA; or
 ·
              that
      the foregoing valuation, or the method used to establish value, will not
      be subject to challenge by the IRS if used for any tax (income, estate,
      gift or otherwise) valuation purposes as an indicator of the current value
      of the Shares.
 
 The
redemption price we offer in our redemption plan utilizes a different
methodology than that which we use to determine the current value of our Shares
for the ERISA and FINRA purposes described above and, therefore, the $445.76 per
Share does not reflect the amount that a member would currently receive under
our redemption plan.  In addition, there can be no assurance that you
will be able to redeem your Shares under our redemption plan.
   18
 Table of Contents
  
 Item 6. Selected Financial Data
 
 The
selected financial data should be read in conjunction with the consolidated
financial statements and related notes included in “Item 8. Consolidated
Financial Statements and Supplementary Data” contained elsewhere in this Annual
Report on Form 10-K.
 
 Years Ended December 31,2008
                                    
                                    
                                    2007
                                    
                                    
                                    2006
                                    
                                    
                                    2005
                                    
                                    
                                    2004Total
      revenue (a)
                                    
                                    $
                                    20,158,872
                                    
                                    
                                    $
                                    23,460,086
                                    
                                    
                                    $
                                    24,885,153
                                    
                                    
                                    $
                                    30,349,467
                                    
                                    
                                    $
                                    33,240,316Net
      income (loss) (b)
                                    
                                    $
                                    1,047,818
                                    
                                    
                                    $
                                    7,940,018
                                    
                                    
                                    $
                                    (667,903
                                    )
                                    
                                    $
                                    (2,777,128
                                    )
                                    
                                    $
                                    (17,768
                                    )Net
      income (loss) allocable to additional members
                                    
                                    $
                                    1,037,340
                                    
                                    
                                    $
                                    7,860,618
                                    
                                    
                                    $
                                    (661,224
                                    )
                                    
                                    $
                                    (2,749,357
                                    )
                                    
                                    $
                                    (17,590
                                    )Net
      income (loss) allocable to the Manager
                                    
                                    $
                                    10,478
                                    
                                    
                                    $
                                    79,400
                                    
                                    
                                    $
                                    (6,679
                                    )
                                    
                                    $
                                    (27,771
                                    )
                                    
                                    $
                                    (178
                                    )Weighted
      average number of additional sharesof
      limited liability company interests outstanding
                                    
                                    
                                    97,955
                                    
                                    
                                    
                                    98,052
                                    
                                    
                                    
                                    98,123
                                    
                                    
                                    
                                    98,215
                                    
                                    
                                    
                                    98,695Net
      income (loss) per weighted average additionalshare
      of limited liability company interests
                                    
                                    $
                                    10.59
                                    
                                    
                                    $
                                    80.17
                                    
                                    
                                    $
                                    (6.74
                                    )
                                    
                                    $
                                    (27.99
                                    )
                                    
                                    $
                                    (0.18
                                    )Distributions
      to additional members
                                    
                                    $
                                    7,678,004
                                    
                                    
                                    $
                                    8,825,274
                                    
                                    
                                    $
                                    8,831,229
                                    
                                    
                                    $
                                    8,840,105
                                    
                                    
                                    $
                                    8,758,942Distributions
      per weighted average additional shareof
      limited liability company interests
                                    
                                    $
                                    78.38
                                    
                                    
                                    $
                                    90.01
                                    
                                    
                                    $
                                    90.00
                                    
                                    
                                    $
                                    90.01
                                    
                                    
                                    $
                                    88.75Distributions
      to the Manager
                                    
                                    $
                                    77,556
                                    
                                    
                                    $
                                    89,144
                                    
                                    
                                    $
                                    89,204
                                    
                                    
                                    $
                                    89,294
                                    
                                    
                                    $
                                    89,744December 31,2008
                                    
                                    
                                    2007
                                    
                                    
                                    2006
                                    
                                    
                                    2005
                                    
                                    
                                    2004Total
      assets    (c)
                                    
                                    $
                                    114,231,144
                                    
                                    
                                    $
                                    139,570,167
                                    
                                    
                                    $
                                    137,187,658
                                    
                                    
                                    $
                                    151,635,559
                                    
                                    
                                    $
                                    184,100,455Notes
      payable (d)
                                    
                                    $
                                    77,448,699
                                    
                                    
                                    $
                                    96,122,281
                                    
                                    
                                    $
                                    92,480,648
                                    
                                    
                                    $
                                    97,782,942
                                    
                                    
                                    $
                                    117,261,455Members'
      equity
                                    
                                    $
                                    31,783,252
                                    
                                    
                                    $
                                    39,909,465
                                    
                                    
                                    $
                                    42,333,349
                                    
                                    
                                    $
                                    52,543,253
                                    
                                    
                                    $
                                    64,455,803(a) 
      The decline in revenue is due to the winding down of our operating period
      and the beginning of our liquidation period on May 1, 2008. During our
      liquidation period, we are selling and will continue to sell our assets in
      the ordinary course of business. As we sell our assets, both rental
      income and finance income will continue to decrease over
    time.(b) 
      In 2008, we recorded impairment losses of approximately $3,900,000 on our
      investment in Aircraft 128 and approximately $1,950,000 related to our 50%
      investment in Aircraft 126. During 2007, we sold the assets that were
      previously on lease to Federal Express Corporation and Texas Genco
      LP, which resulted in an overall net gain of approximately $2,429,000. The
      termination of these leases also resulted in a total decrease in
      depreciation and amortization expense of approximately $2,406,000. During
      2006, we reclassified the three Wilhelmsen bareboat charters from
      investments in operating leases to investments in finance leases,
      resulting in a decrease in depreciation and amortization expense of
      approximately 50%. During 2006, 2005 and 2004, we recorded impairment
      losses of approximately $3,005,000, $3,182,000 and $236,000,
      respectively.(c) 
      The decrease in total assets from December 31, 2007 to December 31, 2008
      is primarily the result of the following factors:- Leased equipment at cost decreased approximately $10.5 million due to
      (a) the impairment of approximately $3.9 million on our investment
      inAircraft 128 and (b) depreciation expense incurred during
      2008.- Investment in finance leases decreased approximately $6.5 million
      primarily due to collection in the ordinary course of
      business.- Cash decreased approximately $5 million primarily due to distributions
      to members.- Investment in joint ventures decreased approximately $2.5 million
      primarily due to the impairment loss on our investment in Aircraft
      126.(d) 
      The decrease in notes payable from December 31, 2007 to December 31, 2008
      is related to the paydown of our debt related to our acquisition of
      Aircraft 128, the Vessels and Samar in the ordinary course of
      business.
 
 
  19
 Table of Contents
  
 Item 7. Manager's Discussion and Analysis of Financial Condition and
Results of Operations
 Our Manager’s Discussion and
Analysis of Financial Condition and Results of Operations relates to our
consolidated financial statements and should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in this Annual Report
on Form 10-K. Statements made in this section may be considered forward-looking.
These statements are not guarantees of future performance and are based on
current expectations and assumptions that are subject to risks and
uncertainties.  Actual results could differ materially because of
these risks and assumptions, including, among other things, factors discussed in
“Part I. Forward-Looking Statements” and “Item 1A. Risk Factors” located
elsewhere in this Annual Report on Form
10-K.
 
 Overview
 
 We
operate as an equipment leasing program in which the capital our members
invested was pooled together to make investments, pay fees and establish a small
reserve. We primarily acquired equipment subject to lease, purchased equipment
and leased it to third-party end users or financed equipment for third parties,
provided equipment and other financing and, to a lesser degree, acquired
ownership rights to items of leased equipment at lease expiration. Some of our
equipment leases were acquired for cash and provide current cash flow, which we
refer to as “income” leases. For the other equipment leases, we financed the
majority of the purchase price through borrowings from third parties. We
refer to these leases as “growth” leases. These growth leases generate little or
no current cash flow because substantially all of the rental payments received
from the lessee are used to service the indebtedness associated with
acquiring or financing the lease. For these leases, we anticipated that the
future value of the leased equipment would exceed our cash portion of the
purchase price.
 
 Our
Manager manages and controls our business affairs, including, but not limited
to, our equipment leases and other financing transactions, under the terms of
our LLC Agreement. We completed our operating period on April 30, 2008 and
entered our liquidation period effective May 1, 2008. During our liquidation
period, we are selling and will continue to sell our assets in the ordinary
course of business. As we sell our assets, both rental income and finance income
will decrease over time as will expenses related to our assets such as
depreciation and amortization expense. Additionally, interest expense should
decrease as we reach the expiration of leases that were financed and the debt is
repaid to lenders. As leased equipment is sold, we will incur gains or
losses on these sales. We will continue to liquidate our assets during this
period and we expect to see a reduction in revenue and expenses
accordingly.
 
 Current
Business Environment and Outlook
  In the
second half of the twentieth century, financing became one of the most popular
methods by which domestic and many global businesses satisfied their capital
equipment needs.  We believe that domestic and, as global finance
markets continue to develop, global equipment leasing and financing volume is
correlated to overall business investments in equipment. According to the 2007 − 2008 U.S. Equipment Finance
Market Study, which was prepared by Global Insight, Inc., a global
forecasting company, and the Equipment Leasing and Finance Foundation, a
non-profit foundation dedicated to providing research regarding the equipment
leasing and finance industry, total domestic business investment in
equipment and software has increased annually from approximately $868
billion in 2002 to approximately $1,088 billion in 2006, with total investments
of approximately $1,106 billion estimated for 2007. Similarly, during the
same period, total domestic equipment leasing and financing volume
increased from approximately $483 billion in 2002 to approximately
$598 billion in 2006, with financing volume of approximately $625 billion
estimated for 2007. In 2008, domestic business investment in equipment and
software is forecasted to reach an estimated $1,159 billion with
a corresponding increase in equipment leasing and finance volume to an
estimated $657 billion.
  As
illustrated above, approximately 53% to 57% of all domestic business investment
in equipment and software was financed. Global Insight
estimates, based on the latest full year information available, that
approximately 56.5% of such investment during 2007 was financed, up from
approximately 55% during 2006. In particular, Global Insight estimates, based on
the latest full year information available, that lease
financing represented approximately 17% and term loans represented
approximately 9% of equipment and software financing in 2007, while line of
credit financing represented approximately 29% of equipment and
software financing in 2007, of which more than 50% was interim
financing.
   20
 Table of Contents
  According
to the World Leasing Yearbook
2009, which was published by Euromoney Institutional Investor PLC, global
equipment leasing volume has increased annually from approximately $462 billion
in 2002 to approximately $760 billion in 2007.  The most significant
source of that increase was due to increased volume in Europe, Asia and South
America.  For example, during the same period, total equipment leasing
volume in Europe increased from approximately $162 billion in 2002 to
approximately $367 billion in 2007, total equipment leasing volume in Asia
increased from approximately $71 billion in 2002 to approximately $119 billion
in 2007 and total equipment leasing volume in South America increased from
approximately $3 billion in 2002 to approximately $41 billion in
2007.  We believe that global business investment in equipment and
global equipment financing volume has increased as well during the same
period.
  The
volume of equipment financing typically reflects general economic conditions. As
the economy slows or builds momentum, the demand for productive equipment
generally slows or builds and equipment financing volume generally
decreases or increases. The economy in the United States experienced a downturn
from 2001 through 2003, resulting in a decrease in equipment leasing and
financing volume during that period. Since then, the economy in the United
States, including business investment in equipment and equipment leasing
financing volume, had recovered as noted above.
  In
general, the global credit markets have deteriorated significantly over the past
year.  The U.S. economy entered into a recession in December 2007 and
the global credit markets continue to experience dislocation and
tightening.  Recent statistical data on the domestic leasing market
provided by the Equipment Leasing and Finance Association, a trade association
representing financial services companies and manufacturers in the U.S.
equipment finance sector and an affiliate of the Equipment Leasing and Finance
Foundation, indicates that domestic equipment leasing volume has generally
deteriorated over the past year.
  A
significant portion of the statistical data regarding the equipment leasing
market’s performance, however, is provided by the leasing divisions of
commercial and industrial banks, large independent leasing and finance
companies, and captive and vendor leasing and finance companies. These
institutions (i) generally provide financing to companies seeking to lease small
ticket and micro ticket equipment, (ii) use credit scoring methodologies to
underwrite a lessee’s creditworthiness, and (iii) rely heavily on the issuance
of commercial paper and/or lines of credit from other financial institutions to
finance new business. Our investment objectives and strategy, on the other hand,
(i) focused on financing middle- to large-ticket, business-essential equipment
and other capital assets, (ii) we generally underwrote and structured such
financing in a manner similar to providers of senior indebtedness (i.e., our
underwriting includes both creditworthiness and asset due diligence and
considerations and our structuring often includes guarantees, equity pledges,
warrants, liens on related assets, etc.), and (iii) we were not reliant on
receiving outside financing through the issuance of commercial paper or from
lines of credit to finance new business or meet our investment objectives.
Accordingly, the performance of the overall equipment leasing market is not
directly correlated to our performance and our Manager does not expect that
there will be any material adverse impact on the demand for equipment (and the
related residuals) that we own.
  Other
factors that may negatively affect the leasing and financing industry are: (i)
the proposed legal and regulatory changes that may affect tax benefits of
leasing, and (ii) the continued misperception by potential lessees, stemming
from published issues at Enron, WorldCom and others, that leasing should not
play a central role as a financing alternative. However, as companies tend to
preserve cash and lease or otherwise finance (rather than purchase) equipment in
recessionary economies, we are optimistic that equipment leasing and finance
volume will continue to increase over the long term.
 
  21
 Table of Contents
  
 Lease
and Other Significant Transactions
 
 We
entered into the following leases and other significant transactions during the
years ended December 31, 2008, 2007 and 2006:
 
 Aircraft
 
 Sale of two McDonnell
Douglas DC10-30F Aircraft
 
 During
March 2003, we and Fund Eight B formed a joint venture, ICON Aircraft 47820, LLC
(“Aircraft 47820”), in which we and Fund Eight B had ownership interests of 10%
and 90%, respectively. Aircraft 47820 was formed for the purpose of acquiring an
investment in a McDonnell Douglas DC10-30F aircraft and two spare engines (the
“Aircraft and Engines”) on lease to Federal Express Corporation (“FedEx”). On
March 11, 2003, Aircraft 47820 acquired the Aircraft and Engines for
approximately $27,288,000, including approximately $24,211,000 of non-recourse
debt. Our portion of the cash purchase price was approximately $308,000. On
March 30, 2007, Aircraft 47820 sold the Aircraft and Engines to FedEx for
$5,475,000 and recognized a loss on the sale of approximately
$1,025,000.
 
 During
December 2002, we and Fund Eight B formed a joint venture, ICON Aircraft
46835, LLC (“Aircraft 46835”), in which we had ownership interests of 85% and
15%, respectively. Aircraft 46835 was formed for the purpose of acquiring a
McDonnell Douglas DC10-30F aircraft on lease with FedEx. On December 27, 2002,
the joint venture acquired the aircraft for approximately $25,292,000, including
approximately $22,292,000 of non-recourse debt. Our portion of the cash purchase
price was approximately $2,550,000. On March 30, 2007, Aircraft 46835 sold the
aircraft to FedEx for $4,260,000 and recognized a loss on the sale of
approximately $640,000.
 
 Lease Extension,
Non-Recourse Debt Refinancing and Impairment of Two Airbus
Aircraft
 
 During
July 2002, we formed a wholly-owned subsidiary, ICON Aircraft 128, LLC (“ICON
128”), for the purpose of acquiring Aircraft 128 for approximately $69,000,000,
including the assumption of approximately $64,800,000 of non-recourse
debt.  Effective June 7, 2006, we entered into a lease extension with
Cathay through December 1, 2011. Effective June 12, 2006, in connection with the
Cathay lease extension, the non-recourse debt of approximately $44,250,000 was
refinanced (the “Initial Refinancing”). We were required by the lender to pay
down approximately $6,754,000 of the balloon payment on the original loan as
part of the Initial Refinancing. The non-recourse debt incurred in the Initial
Refinancing was scheduled to mature on December 1, 2011, required a balloon
payment of approximately $11,550,000 and accrued interest at the London
Interbank Eurocurrency Offered Rate (“LIBOR”) plus 0.80% per year. We incurred
approximately $197,000 of costs in connection with the Initial Refinancing and
expensed these costs to interest expense during the third quarter of
2006.
 
 On August
1, 2006, we were able to negotiate more favorable terms with a new lender and
refinanced the Initial Refinancing (the “Second Refinancing”). In connection
with the Second Refinancing, we were able to borrow approximately $6,242,000 of
additional non-recourse debt. The non-recourse debt incurred in the Second
Refinancing matures on December 1, 2011, requires a balloon payment of
approximately $22,750,000 and accrues interest at 6.85% per year. We paid
approximately $749,000 of costs in connection with the Second Refinancing. At
December 31, 2008, the fair market value of the non-recourse debt was
approximately $37,086,000.
 
 During
February 2002, we and Fund Eight B formed ICON Aircraft 126 LLC (“ICON 126”) for
the purpose of acquiring all of the outstanding shares of Delta Aircraft Leasing
Limited (“D.A.L.”), a Cayman Islands registered company that owns, through an
owner trust, Aircraft 126. ICON 126 completed the transaction during March 2002.
The lease was initially scheduled to expire in March 2006, but has been extended
until July 1, 2011. We and Fund Eight B each have ownership interests of 50% in
ICON 126. ICON 126 consolidates the financial position and operations of D.A.L.
in its consolidated financial statements.
   22
 Table of Contents
  Effective March 27, 2006, in connection
with the lease extension, approximately $52,850,000 of non-recourse debt
associated with Aircraft 126 was refinanced after applying $583,000 from a
reserve account established in connection with the original lease with Cathay.
The refinanced non-recourse debt matures on July 1, 2011 and requires a balloon
payment of approximately $33,000,000 at maturity. The interest rate of the
refinanced debt was fixed at 6.104% under the terms of the debt agreement,
effective October 3, 2006.
  ICON 126
had a commitment with respect to Aircraft 126 to pay certain maintenance costs
that were incurred on or prior to March 27, 2006. ICON 126 established a
maintenance reserve cash account under the original lease to pay for its portion
of these costs. This account was funded by free cash from the lease payments in
accordance with the terms of the original lease. During 2006, ICON 126 received
$182,021 of capital contributions from both of its members, of which $50,000 was
for amounts relating to the maintenance reserve cash account and $132,021 was
related to costs paid by its members relating to the refinancing of the
non-recourse debt. During September 2006, approximately $1,153,000 was paid for
maintenance costs. The maintenance account for Aircraft 126 was
cross-collateralized with the maintenance account for ICON Aircraft 123 LLC,
(“ICON 123”) which owns an Airbus A340-31X aircraft on lease
to Cathay (“Aircraft 123”) and is a wholly owned subsidiary of Fund
Eight B. Under the terms of this agreement, ICON 126 was required to pay on
behalf of ICON 123, any maintenance cost shortfalls incurred by the affiliate.
On January 30, 2007, ICON 126 paid approximately $143,000 in maintenance costs
from its maintenance account on behalf of ICON 123.  The maintenance
account and related security interests were then
terminated.   ICON 123 will reimburse ICON 126 when the aircraft
is sold. The excess cash remaining in ICON 126’s account at December 31, 2008 is
approximately $97,000, which includes accreted interest in the amount of
approximately $38,000 through December 31, 2008.
 
 In
connection with the purchase of Aircraft 123, the owner trustee entered into two
first priority charge on cash deposit agreements pursuant to which, as discussed
above, the maintenance account for Aircraft 126 was cross-collateralized with
the maintenance account for Aircraft 123.  In addition, ICON 123 and
ICON 126 are parties to a residual sharing agreement with respect to the
aircraft. (See Note 13 in “Part II, Item 8. Consolidated Financial Statements
and Supplementary Information”).
 
 In light
of recent, unprecedented high fuel prices during 2008 and the related impact on
the airline industry, as of June 30, 2008, our Manager reviewed our investments
in Aircraft 126 and Aircraft 128.  In accordance with the provisions
of Financial Accounting Standards Board (“FASB”) Statement No. 144, “Accounting
for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”) and based
upon recent changes in the airline industry, our Manager determined that each
of  Aircraft 126 and Aircraft 128 were impaired.
 
 Based on
our Manager’s review, the residual values of Aircraft 126 and
Aircraft 128 exceeded the expected undiscounted future cash flows of
Aircraft 126 and Aircraft 128 and, as a result, we recorded an impairment charge
representing the difference between the residual value and the expected
discounted future cash flows of Aircraft 126 and Aircraft 128. The expected
discounted future cash flows of Aircraft 126 and Aircraft 128 were determined
using a market approach, a recent appraisal for Aircraft 126 and Aircraft 128
and recent sales of similar aircraft, as well as other factors, including those
discussed below.  As a result, we recorded an impairment loss on
Aircraft 128 of approximately $3,900,000 as of June 30, 2008. In addition, as of
June 30, 2008, ICON 126 recorded an impairment loss on Aircraft 126 of
approximately $3,900,000, of which our share was approximately
$1,950,000.
 
 The
following factors, among others, indicated that the full residual values of
Aircraft 126 and Aircraft 128 might not be recoverable: (i) indications
that lenders were willing to finance less of the acquisition cost of four-engine
aircraft, which increased with each dollar rise of the price of fuel, thereby
undermining the residual value expectations of such aircraft; (ii) the rising
cost of fuel was increasing the operating costs of four-engine aircraft and
similar capacity twin-engine aircraft, thereby making such aircraft less
attractive investments at the time and thereby depressing the market for
Aircraft 126 and Aircraft 128; and (iii) the likelihood of aircraft operators
switching to more efficient aircraft, thereby depressing the market for Aircraft
126 and Aircraft 128.
   23
 Table of Contents
 
 Vessels
 
 Acquisition of ICONSamar
 
 On July
24, 2007, ICON Samar, LLC (“ICON Samar”), our wholly owned subsidiary, purchased
Samar from Teekay. The purchase price for the Samar was $40,250,000, including
the assumption of approximately $23,382,000 of non-recourse debt under a secured
loan agreement with Fortis Capital Corp. (“Fortis”). In addition, ICON Samar
paid an arrangement fee to Fortis of approximately $175,000 and has a payable to
our Manager for approximately $54,000 related to legal fees incurred.
Simultaneous with the purchase of the Samar, a bareboat charter was entered
into with Teekay for a term of 48 months. The charter commenced on July 24, 2007
and is scheduled to expire on July 24, 2011. Simultaneously with the borrowing,
we entered into an interest rate swap contract with Fortis in order to fix the
debt interest rate at 6.35% per year. Our Manager waived acquisition fees
payable in connection with the purchase.
 
 Lease Extension and
Non-Recourse Debt Refinancing of Vessels
 
 On March
14, 2006, we extended the term of our bareboat charters with Wilhelmsen through
December 22, 2013. The charter extensions provide Wilhelmsen with the option to
own the three car and truck carrying vessels (the “Vessels”) at the expiration
of the charter extensions for a nominal amount.
 
 On May
18, 2006, we refinanced the non-recourse debt related to the Vessels and
borrowed approximately an additional $22,043,000. The principal amount of the
refinanced non-recourse debt is $51,000,000, which matures on December 22, 2013
and accrues interest at LIBOR plus 1.50% per year. The lender has a security
interest in the Vessels and an assignment of the rental payments under the
charter. We paid approximately $630,000 in costs associated with the
non-recourse debt refinancing. We expensed approximately $417,000 of debt
financing costs associated with the original non-recourse debt to interest
expense.
 
 Simultaneously
with the execution of the refinanced non-recourse debt, we entered into three
interest rate swap contracts with Fortis Bank NV/SA, New York Branch in the
aggregate amount of $51,000,000 in order to fix the variable interest rate on
the non-recourse debt and minimize our risk of interest rate fluctuation. The
interest rate swap contracts fixed the interest rate at 7.02% per year. On May
22, 2006, we terminated the original three interest rate swap contracts that
applied to the original financing of the Vessels. We recognized a gain on
settlement of the swaps of approximately $26,000.
 
 Railcars
 
 SaleofTexasGencoRailcars
 
 During
November 2002, we acquired 324 railcars on lease to Texas Genco LP (“Texas
Genco”).  On May 7, 2007, we sold the equipment to an unrelated
third party for $4,960,000, of which approximately $1,500,000 was used to repay
the related long-term debt.  We recognized a gain on sale of
approximately $3,100,000.
 
 Saleof Railcars by ICON
Rail
 
 On
January 28, 2008, ICON Railcar I, LLC (“ICON Rail”), our wholly-owned
subsidiary, sold its entire interest in 110 railcars (the “Railcars”) to an
unrelated third party that was leasing and operating the Railcars.  We
recognized a gain on the sale of approximately $313,000.
 
  24
 Table of Contents
 
 
 Telecommunications and
Computer Equipment
 
 Sale and Return of
Information Technology Equipment of Insight
Investments
 
 
 During
March 2004, we acquired two leases for computer equipment and corresponding
parts from Insight Investments Corporation (“Insight”).  The leases
expired on December 1, 2006.  The aggregate purchase price was
approximately $4,787,000, including the assumption of approximately $4,670,000
of non-recourse debt. The equipment was uninstalled during December 2006
and returned to us during January 2007.  The associated estimated
residual value of the equipment was subsequently reclassified to equipment held
for sale as of December 31, 2006.  At December 31, 2006, we recorded
an impairment loss of approximately $154,000 based on sales estimates. The
remaining assets’ value of an immaterial amount was written off at September 30,
2007.
 
 During
March 2004, we acquired from Insight various computer equipment, consisting of
DMX hard drives, Brocade 12000 Directors with 128 usable ports and associated
hardware. The lease was scheduled to expire on December 1, 2007.  The
purchase price was approximately $3,392,000, including the assumption of
approximately $3,309,000 of non-recourse debt. During October 2006, the
lessee purchased the leased equipment by prepaying the remaining outstanding
non-recourse debt balance of approximately $1,100,000 and paying us
approximately $30,000.  We recognized a loss of approximately $87,000
on the sale of this equipment.
 
 Information Technology
Equipment on lease with GEICO
 
 On March
31, 2004, we and Fund Ten formed a joint venture, ICON GeicJV, for the purpose
of purchasing information technology equipment subject to a 36-month lease with
Government Employees Insurance Company (“GEICO”). We along with Fund Ten have
ownership interests of 26% and 74%, respectively in the joint
venture.  On April 30, 2004, ICON GeicJV acquired the technology
equipment subject to lease for a total cost of approximately $5,853,000, of
which our portion was approximately $1,522,000.
 
 During
2007, GEICO returned equipment with a cost basis of approximately $5,798,000 and
extended the leases on other equipment on a month-to-month basis with a cost
basis of approximately $55,000. Of the equipment that was returned, our Manager
sold equipment with a net book value of approximately $781,000. ICON GeicJV
realized proceeds of approximately $775,000 and recognized a loss of
approximately $6,000 on the sale of that equipment. The remaining returned
equipment had a net book value of approximately $58,000.
 
 During
2008, the joint venture sold all of the remaining equipment previously on lease
to GEICO.  The joint venture realized proceeds of approximately
$96,000 and recognized a gain on the sale of equipment of approximately
$31,000.
 
 Impairment and Sale of
Noritsu QSS 3011 Digital Mini-Labs
 
 During
December 2004, we acquired four Noritsu QSS 3011 digital mini-labs subject to
leases with Rite Aid Corporation. The leases expired during November 2007
and were extended on a month-to-month renewal basis. The purchase price of
this equipment was approximately $399,000. At December 31, 2006, the Manager
determined, based upon an appraisal, that we should record an impairment loss of
approximately $80,000. During September and October of 2008, the four digital
mini-labs were sold.  The aggregate proceeds from the sale was
approximately $38,000 and we recorded a gain of approximately
$2,000.
 
 Investment in ICON Global
Crossing II, LLC
  On
September 27, 2006, we along with Fund Ten, formed ICON Global Crossing II, LLC
(“Global Crossing II”) with original ownership interests of approximately 17%
and 83%, respectively. The total capital contributions made to Global Crossing
II as of December 31, 2006, were approximately $12,044,000, of which our share
was approximately $2,000,000.
   25
 Table of Contents
  On
September 28, 2006, Global Crossing II purchased telecommunications equipment
for approximately $12,044,000. We collected interim rent until the commencement
of the lease term. This equipment is subject to a 48-month lease, with Global
Crossing Telecommunications, Inc. (“Global Crossing”) that commenced on November
1, 2006. We incurred acquisition fees, payable to our Manager, in the amount of
$60,000 related to this transaction. On October 31, 2006, Fund Eleven made a
capital contribution of approximately $1,841,000 to Global Crossing II. The
contribution changed our ownership interests in Global Crossing II and the
ownership interests of Fund Ten and Fund Eleven at October 31, 2006 to 14.40%,
72.34% and 13.26%, respectively. The additional contribution was used to
purchase telecommunications equipment subject to a 48-month lease with Global
Crossing that commenced on November 1, 2006.
  Manufacturing and Other
Investments
 
 Saleof Manufacturing
Equipment
 
 On May
30, 2003, we acquired lathes, presses and robotic manufacturing equipment on
lease to Metaldyne Corporation (“Metaldyne”) through December 2009, for
approximately $2,412,000. During March 2006, the equipment on lease to Metaldyne
was sold for approximately $1,931,000 and we recognized a gain of approximately
$302,000.
 
 Sale of Co-generation
Facility
 
 We and
Fund Eight B formed a joint venture, ICON/Kenilworth LLC (“Kenilworth”), to
acquire a natural gas-fired 25MW co-generation facility on lease to
Schering-Plough Corporation through July 2004, which was subsequently extended
through June 19, 2009.  We had a 95% interest in this joint venture.
Our portion of the purchase price of the co-generation facility was
approximately $14,562,000, including the assumption of approximately $6,572,000
of non-recourse debt.  During December 2004, we transferred a 25.87%
interest in ICON SPK 2023-A, LLC (“ICON SPK”), a joint venture with Fund Eight
B, to Fund Eight B in exchange for its entire 5% interest in the co-generation
facility.  After the exchange, we had a 100% interest in the
co-generation facility and a 25.13% interest in ICON SPK. On April 20, 2006, we
sold the co-generation facility to a third party for $4,800,000. We incurred a
loss of approximately $2,770,000 on the sale of the co-generation facility,
which was recorded as an impairment loss at the end of March 2006.
 
 Lease Renewal ofWildwoodManufacturing
Equipment
 
 On April
30, 2003, we acquired a Double Kraft Paper Forming Tubing Unit on lease to
Wildwood Industries, Inc. (“Wildwood”) through February 2007 for approximately
$1,350,000. Effective March 1, 2007, pursuant to the terms of the lease, the
lease was extended for an additional twelve months.  Effective March
1, 2008, this lease was again extended for an additional twelve months and was
reclassified as an operating lease. Subject to the terms of the lease renewal,
there is a residual interest sharing agreement with a third party broker,
payable upon attainment of a minimum return on investment, whereby all sales
proceeds received above $150,000 will be shared equally with the third party.
For the years ended December 31, 2008 and 2007, approximately $130,000 and
$87,000, respectively, was distributed to the third party in accordance with the
residual interest sharing agreement. On August 31, 2008 and September 30, 2008,
two other finance leases with Wildwood expired and were renewed for a
twelve-month period commencing September 1, 2008 and October 1, 2008,
respectively, and expiring August 31, 2009 and September 30, 2009,
respectively.
 
 At
December 31, 2008, our Manager determined that all three assets on lease to
Wildwood were impaired based on the estimate that lease proceeds would be
insufficient to cover the residual position and we recorded an aggregate
impairment loss of approximately $283,000 and bad debt expense for uncollectable
receivables of approximately $201,000.
 
 On
January 21, 2009, we filed a lawsuit in the U.S. District Court for the Southern
District of New York against Wildwood and its owners who guaranteed Wildwood’s
obligations to us.  Our claims are for breaches of the leases and
guarantees for Wildwood’s failure to pay rents. On March 5, 2009, an involuntary
petition under Chapter 11 of the United States Bankruptcy Code was filed against
Wildwood by three of Wildwood’s creditors in United States Bankruptcy Court. At
this time it is not possible to determine the effect of the bankruptcy filing on
our ability to collect the remaining rental payments due to us under the
leases.
   26
 Table of Contents
 
 Lease Renewal ofSpansionManufacturing
Equipment
 
 On June
20, 2003, we acquired microprocessor manufacturing devices currently on
lease through June 2007 to Spansion LLC (“Spansion”) for approximately
$6,391,000.  Effective July 1, 2007, this modified lease was extended
for an additional 12 months and was reclassified from a finance lease to an
operating lease. Effective July 1, 2008, this lease was again extended for an
additional twelve months.
 
 On
August 1, 2003, we acquired semi-conductor memory testing equipment subject
to two leases through July 2007 currently with Spansion for approximately
$4,561,000.  These leases were extended on a month-to-month basis.
Effective August 1, 2007, these modified leases were reclassified upon the
extensions of the leases from finance leases to operating leases. The two leases
with Spansion expired on March 31, 2008. Each lease was renewed for a fifteen
month period commencing on April 1, 2008.
 
 For all
three Spansion leases, there is a residual interest sharing agreement with a
third party broker that is payable when a minimum return on investment was
attained. Subject to the original terms, all proceeds received above
approximately $633,000 will be shared 35% with the third party.  As of
December 31, 2008, approximately $739,000 was distributed to the third party in
accordance with the terms of the residual interest sharing
agreements.
 
 On March
1, 2009, Spansion commenced a voluntary Chapter 11 proceeding in United States
Bankruptcy Court.  On March 12, 2009, Spansion rejected the two leases
that were renewed on April 1, 2008 and the equipment will be returned.  In
addition, Spansion confirmed the lease that was extended on July 1, 2008. 
Based on our Manager's assessment of the equipment and knowledge of the market
for such equipment, the lease rejections are not expected to have a material
adverse affect.
  Recent
Accounting Pronouncements
  In
September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS")
No. 157, “Accounting for Fair Value Measurements” (“SFAS No.
157”).  SFAS No. 157 defines fair value, establishes a framework for
measuring fair value, and enhances fair value measurement disclosure. In
February 2008, the FASB issued FASB Staff Position (“FSP”) No. 157-2,
"Effective Date of FASB Statement No. 157” (“FSP 157-2”).
FSP 157-2 delays the effective date of SFAS No. 157 for all
non-financial assets and non-financial liabilities, except for items that
are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually), until the beginning of the first quarter of
2009. The measurement and disclosure requirements related to financial assets
and financial liabilities were effective for us beginning in the first quarter
of 2008.   The adoption of SFAS No. 157 for financial assets and
financial liabilities did not have a significant impact on our consolidated
financial statements.  Our Manager is currently evaluating the
impact that SFAS No. 157 will have on our consolidated financial statements when
it is applied to non-financial assets and non-financial liabilities beginning in
the first quarter of 2009. The resulting fair values calculated under SFAS No.
157 after adoption may be different from the fair values that would have been
calculated under previous guidance.
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements — an Amendment of ARB No. 51” (“SFAS No.
160”). SFAS No. 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the retained interest and gain
or loss when a subsidiary is deconsolidated. This statement is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 with earlier adoption prohibited. Our Manager is
currently evaluating the impact of SFAS No. 160 on our consolidated financial
statements.
 
 In
March 2008, the FASB issued Statement of Financial Accounting Standards
(“SFAS”) No. 161, “Disclosures about Derivative Instruments and Hedging
Activities - an amendment of FASB Statement No. 133” (“SFAS No.
161”).  SFAS No. 161 requires enhanced disclosures about an
entity’s derivative and hedging activities, and is effective for financial
statements issued for reporting periods beginning after
November 15, 2008, with early application encouraged. Since
SFAS No. 161 requires only additional disclosures concerning
derivatives and hedging activities, adoption of SFAS No. 161 will not
affect our financial condition, results of operations or cash
flows.
   27
 Table of Contents
 Critical
Accounting Policies
 
 An
understanding of our critical accounting policies is necessary to understand our
financial results. The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires our Manager to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities as of the date
of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Significant estimates primarily
include the determination of allowance for doubtful accounts, depreciation and
amortization, impairment losses, estimated useful lives and residual
values.  Actual results could differ from those estimates. We applied
our critical accounting policies and estimation methods consistently in all
periods presented.  We consider the following accounting policies to be
critical to our business:
 ·
              Lease
      classification and revenue
recognition;
 ·
              Asset
      impairments;
 ·
              Depreciation;
 ·
              Initial
      direct costs;
 ·
              Acquisition
      fees;
 ·
              Foreign
      currency translation
 ·
              Financial
      instruments; and
 ·
              Derivative
      financial instruments.
 
 Lease
Classification and Revenue Recognition
 
 Each
equipment lease we entered into is classified either as a finance or an
operating lease, which is determined based upon the terms of each
lease. For a finance lease, the initial direct costs were capitalized and
amortized over the lease term.  For an operating lease, the initial direct
costs were included as a component of the cost of the equipment and depreciated
over the estimated useful life of the equipment.
 
 For
finance leases, we recorded, at lease inception, the total minimum lease
payments receivable from the lessee, the estimated unguaranteed residual value
of the equipment at lease termination, the initial direct costs related to the
lease and the related unearned income.  Unearned income represents the
difference between the sum of the minimum lease payments receivable plus the
estimated unguaranteed residual value minus the cost of the leased equipment.
 Unearned income is recognized as finance income over the term of the lease
using the effective interest rate method.
  For
operating leases, rental income is recognized on a straight-line basis
over the lease term.  Billed operating lease receivables are included
in accounts receivable until collected.  Deferred revenue is the
difference between the timing of the receivables billed and the income
recognized on a straight-line basis.
 
 Our
Manager has an investment committee that approved each new equipment
lease and other financing transaction.  As part of its process it
determined the residual value, if any, to be used once the investment was
approved.  The factors considered in determining the residual value
included, but were not limited to, the creditworthiness of the potential lessee,
the type of equipment considered, how the equipment was integrated into the
potential lessee’s business, the length of the lease and the industry in which
the potential lessee operated. Residual values are reviewed for impairment in
accordance with our impairment review policy.
 
 The
residual value assumed, among other things, that the asset would be utilized
normally in an open, unrestricted and stable market. Short-term fluctuations in
the market place were disregarded and it was assumed that there was no necessity
either to dispose of a significant number of the assets, if held in quantity,
simultaneously or to dispose of the asset quickly.  The residual value
was calculated using information from various external sources, such as trade
publications, auction data, equipment dealers, wholesalers and industry experts,
as well as inspection of the physical asset and other economic
indicators.
 
 Asset
Impairments
 
 The
significant assets in our portfolio are periodically reviewed, no less
frequently than annually, to determine whether events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. An impairment loss will be recognized only if the carrying value of
a long-lived asset is not recoverable and exceeds its fair market value. If
there is an indication of impairment, we will estimate the future cash flows
(undiscounted and without interest charges) expected from the use of the asset
and its eventual disposition. Future cash flows are the future cash inflows
expected to be generated by an asset less the future outflows expected to be
necessary to obtain those inflows.  If an impairment is determined to
exist, the impairment loss will be measured as the amount by which the carrying
value of a long-lived asset exceeds its fair value and recorded in the
consolidated statements of operations in the period the determination is
made.
   28
 Table of Contents
 
 The
events or changes in circumstances that generally indicate that an asset may be
impaired are (i) the estimated fair value of the underlying equipment is less
than its carrying value or (ii) the lessee is experiencing financial
difficulties and it does not appear likely that the estimated proceeds from the
disposition of the asset will be sufficient to satisfy the residual position in
the asset and, if applicable, the remaining obligation to the non-recourse
lender.  Generally in the latter situation, the residual position relates
to equipment subject to third-party non-recourse debt where the lessee
remits its rental payments directly to the lender and we do not recover its
residual position until the non-recourse debt is repaid in full. The preparation
of the undiscounted cash flows requires the use of assumptions and estimates,
including the level of future rents, the residual value expected to be realized
upon disposition of the asset, estimated downtime between re-leasing events and
the amount of re-leasing costs. Our Manager’s review for impairment includes a
consideration of the existence of impairment indicators including third party
appraisals, published values for similar assets, recent transactions for similar
assets, adverse changes in market conditions for specific asset types and the
occurrence of significant adverse changes in general industry and market
conditions that could affect the fair value of the asset.
 
 Depreciation
 
 We record
depreciation expense on leased equipment classified as an operating lease. 
In order to calculate depreciation, we first determined the depreciable
equipment cost, which is the cost less the estimated residual value.  The
estimated residual value is our estimate of the value of the equipment at lease
termination.  Depreciation expense is recorded by applying the
straight-line method of depreciation to the depreciable equipment cost over the
lease term.
 
 Initial
Direct Costs
 
 We
capitalized initial direct costs associated with the origination and funding of
leased assets and other financing transactions in accordance with SFAS
No. 91 “Accounting for Nonrefundable Fees and Costs Associated with
Originating or Acquiring Loans and Initial Direct Costs of Leases.” The costs
were amortized on a lease by lease basis based on actual lease term using a
straight-line method for operating leases and the effective interest rate method
for direct finance leases. Costs related to leases or other financing
transactions that were not consummated were expensed as an acquisition
expense.
 
 Acquisition
Fees
 
 Pursuant
to our LLC Agreement, we pay acquisition fees to our Manager equal to 3% of
the purchase price for our investments. These fees are capitalized and included
in the cost of the investment.
 
 Foreign
Currency Translation
 
 Assets
and liabilities having non-U.S. dollar functional currencies are translated
at month-end exchange rates. Contributed capital accounts are
translated at the historical rate of exchange when the capital was contributed
or distributed.  Revenues, expenses and cash flow items are translated
at weighted average exchange rates for the period. Resulting translation
adjustments are recorded as a separate component of accumulated other
comprehensive income or loss.
 
  29
 Table of Contents
 
 Derivative
Financial Instruments
 
 We may
enter into derivative transactions for purposes of reducing hedging specific
financial exposures, including movements in foreign currency exchange rates and
changes in interest rates. These instruments are entered into only for hedging
underlying exposures. We do not hold or issue derivative financial instruments
for purposes other than hedging, except for warrants, which are not hedges.
 Certain derivatives may not meet the established criteria to be designated
as qualifying accounting hedges, even though we believe that these are effective
economic hedges.
 
 We
account for derivative financial instruments in accordance with SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”),
which established accounting and reporting standards for derivative financial
instruments.  SFAS No. 133, as amended, requires us to recognize all
derivatives as either assets or liabilities in the consolidated balance sheets
and measure those instruments at fair value. We recognize the fair value of all
derivatives as either assets or liabilities in the consolidated balance sheets
and changes in the fair value of such instruments are recognized immediately in
earnings unless certain accounting criteria established by SFAS No. 133 are
met.  These criteria demonstrate that the derivative is expected to be
highly effective at offsetting changes in the fair value or expected cash flows
of the underlying exposure at both the inception of the hedging relationship and
on an ongoing basis and include an evaluation of the counterparty risk and the
impact, if any, on the effectiveness of the derivative.  If these
criteria are met, which we must document and assess at inception and on an
ongoing basis, we recognize the changes in fair value of such instruments in
accumulated other comprehensive income, a component of members’ equity on the
consolidated balance sheets.  Changes in the fair value of the
ineffective portion of all derivatives are recognized immediately in
earnings.
 
 Results
of Operations for the Years Ended December 31, 2008 (“2008”) and 2007
(“2007”)
 
 We
completed our operating period on April 30, 2008 and entered our liquidation
period on May 1, 2008. During our liquidation period, we are selling and will
continue to sell our assets in the ordinary course of business. As we sell our
assets, both rental income and finance income will decrease over time as will
expenses related to our assets such as depreciation and amortization expense.
Additionally, interest expense should decrease as we reach the expiration of
leases that were financed and as the debt is repaid to the lender. As leased
equipment is sold, we will incur gains or losses on these sales. We will
continue to liquidate our assets during this period and we expect to see a
reduction in revenue and expenses accordingly.
   30
 Table of Contents
 
 Revenue
for 2008 and 2007 are summarized as follows:
 
 Years Ended December 31,2008
                  
                  
                  2007
                  
                  
                  ChangeRental
      income
                  
                  $
                  16,053,175
                  
                  
                  $
                  13,832,058
                  
                  
                  $
                  2,221,117Finance
      income
                  
                  
                  5,767,714
                  
                  
                  
                  6,747,205
                  
                  
                  
                  (979,491
                  )(Loss)
      income from investments in joint ventures
                  
                  
                  (1,996,825
                  )
                  
                  
                  2,305
                  
                  
                  
                  (1,999,130
                  )Net
      gain on sales of equipment
                  
                  
                  519,729
                  
                  
                  
                  2,291,397
                  
                  
                  
                  (1,771,668
                  )Interest
      and other (expense) income
                  
                  
                  (184,921
                  )
                  
                  
                  587,121
                  
                  
                  
                  (772,042
                  )Total
      revenue
                  
                  $
                  20,158,872
                  
                  
                  $
                  23,460,086
                  
                  
                  $
                  (3,301,214
                  )
 
 Total
revenue for 2008 decreased $3,301,214, or 14.1%, as compared to 2007. This
decrease was primarily due to the loss from investments in joint ventures in
2008, a decrease in gain on sales of equipment, the decrease in finance income
and interest and other (expense) income, partly offset by an increase in rental
income. The decrease in investments in joint ventures was primarily due to the
impairment loss of approximately $1,950,000 recorded as of June 2008 on our
investment in Aircraft 126. The decrease in net gain on sales of equipment was
primarily due to there being several larger sales and corresponding net gains in
2007 compared to fewer and smaller sales in 2008. During 2007, the sale of the
Texas Genco railcars during May 2007 resulted in a total gain of approximately
$3,100,000, partly offset by a loss of approximately $640,000 on the sale of the
aircraft owned by Aircraft 46835 during the first quarter of 2007. During 2008,
we recorded gains on sales of equipment of approximately $313,000 for the sale
of the Railcars and approximately $204,000 for assets within our Summit Asset
Management portfolio (See Part II, Item 8, Note 6 of the Notes to the
Consolidated Financial Statements). The decrease in finance income was primarily
due to the normal lifecycle of our finance leases which experience scheduled,
declining revenue over the course of the lease. The decrease in interest and
other income is a result of our lower cash balances in interest bearing accounts
during 2008 as compared to 2007, primarily from the use of cash to invest in
ICON Samar. Interest and other income became a loss position due to the loss
recorded on cash accounts maintaining balances denominated in foreign
currencies. The decreases in revenue were partly offset by the increase in
rental income of approximately $2,200,000. The increase in rental income was
primarily due to the addition of a bareboat charter with Teekay through ICON
Samar, which commenced on July 24, 2007. Accordingly, 2008 contains a full
twelve months of revenue whereas 2007 contains only five and one-half months of
such revenue.
 
 Expenses
for 2008 and 2007 are summarized as follows:
 
 Years Ended December 31,2008
                  
                  
                  2007
                  
                  
                  ChangeManagement
      fees - Manager
                  
                  $
                  526,469
                  
                  
                  $
                  1,780,581
                  
                  
                  $
                  (1,254,112
                  )Administrative
      expense reimbursements - Manager
                  
                  
                  149,844
                  
                  
                  
                  677,965
                  
                  
                  
                  (528,121
                  )General
      and administrative
                  
                  
                  2,025,636
                  
                  
                  
                  751,566
                  
                  
                  
                  1,274,070Interest
                  
                  
                  6,497,709
                  
                  
                  
                  6,657,968
                  
                  
                  
                  (160,259
                  )Depreciation
      and amortization
                  
                  
                  5,762,239
                  
                  
                  
                  5,628,072
                  
                  
                  
                  134,167Impairment
      loss
                  
                  
                  4,149,157
                  
                  
                  
                  10,000
                  
                  
                  
                  4,139,157Total
      expenses
                  
                  $
                  19,111,054
                  
                  
                  $
                  15,506,152
                  
                  
                  $
                  3,604,902
 
 Total
expenses for 2008 increased $3,604,902, or 23.2%, as compared to 2007. The
increase in expense is primarily due to the impairment charge of approximately
$3,900,000 on Aircraft 128. General and administrative expenses also increased
primarily due to the additional expense related to two residual interest sharing
agreements that began in the third quarter of 2007. The increase was partly
offset by decreases in the management fees and administrative expense
reimbursement due to our Manager as a result of the sale of assets owned by
Aircraft 46835 and ICON Rail, as well as our Manager’s decision to waive certain
fees following the commencement of our liquidation period.
   31
 Table of Contents
 
 Minority
Interest
 
 Minority
interest expense for 2008 decreased $13,916, or 100% as compared to 2007. The
decrease in minority interest expense was due to the sale of the aircraft owned
by Aircraft 46835 on March 30, 2007, which was the only remaining entity
containing a non-controlling interest.
 
 Net
Income
 
 As a
result of the foregoing changes from 2007 to 2008, net income for 2008 was
$1,047,818 as compared to net income for 2007 of $7,940,018. The net income per
weighted average additional Share for 2008 was $10.59 as compared to net income
per weighted average additional Share for 2007 of $80.17.
 
 Results
of Operations for the Years Ended December 31, 2007 (“2007”) and 2006
(“2006”)
 
 Revenue
for 2007 and 2006 are summarized as follows:
 
 Years Ended December 31,2007
                  
                  
                  2006
                  
                  
                  ChangeRental
      income
                  
                  $
                  13,832,058
                  
                  
                  $
                  17,863,494
                  
                  
                  $
                  (4,031,436
                  )Finance
      income
                  
                  
                  6,747,205
                  
                  
                  
                  6,461,861
                  
                  
                  
                  285,344Income
      (loss) from investments in joint ventures
                  
                  
                  2,305
                  
                  
                  
                  (279,072
                  )
                  
                  
                  281,377Net
      gain on sales of equipment
                  
                  
                  2,291,397
                  
                  
                  
                  128,181
                  
                  
                  
                  2,163,216Interest
      and other income
                  
                  
                  587,121
                  
                  
                  
                  710,689
                  
                  
                  
                  (123,568
                  )Total
      revenue
                  
                  $
                  23,460,086
                  
                  
                  $
                  24,885,153
                  
                  
                  $
                  (1,425,067
                  )
 
 Total
revenue for 2007 decreased $1,425,067, or 5.7%, as compared to 2006. This
decrease was primarily due to a decrease in rental income partly offset by an
increase in net gain on sales of equipment. On March 14, 2006, we extended our
charters with Wilhelmsen and we reclassified the charters from operating leases
to finance leases. This change in lease classification caused our rental income
to decrease by approximately $2,471,000, while increasing our finance income. On
March 31, 2007, we sold our aircraft on lease with FedEx, which resulted in a
decrease in rental income of approximately $4,308,000. In addition, the lease
extension with Cathay during March 2006 included a reduction in the monthly
rents receivable and resulted in a total reduction of approximately $1,077,000
for 2007. The total reduction in the rental income of approximately $4,031,000
was partly offset by an increase in rental income during 2007 due to the
addition of ICON Samar and the reclassification of the modified leases with
Spansion from finance leases to operating leases. The increase in rental income
for both ICON Samar and Spansion were approximately $2,722,000 and $936,000,
respectively. The increase in net gain on sales of equipment was due to the sale
of railcars that were previously on lease to Texas Genco during the second
quarter of 2007. The net gain on the sale of the railcars was approximately
$3,074,000, which was partly offset by the net loss on sale of the Aircraft
46835 of approximately $640,000.
 
 
 Expenses
for 2007 and 2006 are summarized as follows:
 
 Years Ended December 31,2007
                  
                  
                  2006
                  
                  
                  ChangeManagement
      fees - Manager
                  
                  $
                  1,780,581
                  
                  
                  $
                  2,114,283
                  
                  
                  $
                  (333,702
                  )Administrative
      expense reimbursements - Manager
                  
                  
                  677,965
                  
                  
                  
                  596,881
                  
                  
                  
                  81,084General
      and administrative
                  
                  
                  751,566
                  
                  
                  
                  607,142
                  
                  
                  
                  144,424Interest
                  
                  
                  6,657,968
                  
                  
                  
                  6,897,802
                  
                  
                  
                  (239,834
                  )Depreciation
      and amortization
                  
                  
                  5,628,072
                  
                  
                  
                  10,579,026
                  
                  
                  
                  (4,950,954
                  )Impairment
      loss
                  
                  
                  10,000
                  
                  
                  
                  3,005,403
                  
                  
                  
                  (2,995,403
                  )Maintenance
      expense
                  
                  
                  -
                  
                  
                  
                  1,317,361
                  
                  
                  
                  (1,317,361
                  )Total
      expenses
                  
                  $
                  15,506,152
                  
                  
                  $
                  25,117,898
                  
                  
                  $
                  (9,611,746
                  )
   32
 Table of Contents
 
 Total
expenses for 2007 decreased $9,611,746, or 38.3%, as compared to 2006. This
decrease was primarily the result of the decrease in depreciation and
amortization, impairment loss and maintenance expense. The decrease in
depreciation and amortization expense was due to the change in the lease
classification of our charters with Wilhelmsen on March 14, 2006, that resulted
in a total decrease of approximately $1,800,000, the extension of our lease with
Cathay for Aircraft 128 that resulted in a reduction of approximately
$1,863,000, and the sales of the aircraft and railcars that were previously on
lease to FedEx and Texas Genco, that resulted in a total reduction of
approximately $1,958,000 and $448,000, respectively. The total decrease in
depreciation and amortization expense was partly offset by the increase due to
the addition of the Samar charter in July 2007, which resulted in approximately
$1,162,000 of additional depreciation expense for the year. The impairment loss
in 2006 was due to the loss recognized on the sale of the co-generation
facility. The decrease in maintenance expense was due to a one time charge for
maintenance costs for Aircraft 128 of $1,371,361 in 2006.
 
 Minority
Interest
 
 Minority
interest expense for 2007 decreased by $421,242, or 96.8%, as compared to 2006.
The decrease in minority interest expense was due to the sale of the aircraft
previously on lease to FedEx by Aircraft 46835 on March 30, 2007.
 
 Net
Income (Loss)
 
 As a
result of the foregoing changes from 2006 to 2007, net income for 2007 was
$7,940,018 as compared to a net loss for 2006 of $667,903. The net income per
weighted average additional Share for 2007 was $80.17 as compared to net loss
per weighted average additional Share for 2006 of $6.74.
 
 
 Financial
Condition
 This
section discusses the major balance sheet variances from 2008 compared to
2007.
 
 Total
Assets
 
 Total
assets decreased $25,339,023, from $139,570,167 at December 31, 2007 to
$114,231,144 at December 31, 2008. The decrease was primarily due to the
reduction of our net investment in finance leases through collections in the
ordinary course of business, the use of cash for distributions to our members
and the sale of various assets in the Summit Asset Management
portfolio.  Total assets also decreased due to impairment losses
recognized by ICON 128 and ICON 126 during 2008.  These aggregate
impairment charges represented approximately $5,800,000 of the decrease in total
assets.
 
 Current Assets
 
 Current
assets decreased $5,953,459, from $11,974,889 at December 31, 2007 to $6,021,430
at December 31, 2008. The decrease was primarily due to the use of cash for
distributions to our members and the reduction of our net investment in finance
leases through collections in the ordinary course of business.  These
decreases were partially offset by the cash collections from our non-financed
receivables, primarily our Wildwood and Spansion leases, as well as the cash
received from the sale of the Railcars in January 2008.
 
 Total
Liabilities
 
 Total
liabilities decreased $17,212,810, from $99,660,702 at December 31, 2007 to
$82,447,892 at December 31, 2008. The decrease was primarily due to the
repayment of the outstanding balance on the non-recourse debt obligation
upon the sale of the Railcars, the paydown of debt in the ordinary course of
business and a decrease in deferred revenue resulting from the timing related to
certain customer payments.
   33
 Table of Contents
 
 Current
Liabilities
 
 Current
liabilities decreased $1,643,984, from $21,654,778 at December 31, 2007 to
$20,010,794 at December 31, 2008. The decrease was primarily due to a decrease
in the current portion of our non-recourse debt as ICON Rail’s debt was paid in
full, as well as the paydown of debt in the ordinary course of
business.
 
 Members’
Equity
 
 Members’ equity decreased $8,126,213,
from $39,909,465 at December 31, 2007 to $31,783,252 at December 31, 2008. The
decrease was primarily due to distributions to our members and the change in the
valuation of our interest rate swap contracts, which was partially offset by the
results of our operations.
 
 
 Liquidity
and Capital Resources
 Sources and Uses of
Cash
 
 At
December 31, 2008 and 2007, we had cash and cash equivalents of $779,544 and
$5,571,481, respectively. During our operating period, our main source of cash
was from the proceeds from sales of equipment as well as from collections on
non-financed operating and direct finance leases, which we expect to continue
during our liquidation period. During our operating period, which ended on April
30, 2008, our main use of cash was for financing activities, principally
distributions to our members, which we anticipate will continue during our
liquidation period.
 
 Operating
Activities
  Sources
of Cash
  Sources
of cash from operating activities increased $518,587, from $1,091,429 in 2007 to
$1,610,016 in 2008. The increase was primarily due to our Manager’s decision to
waive an aggregate of approximately $1,383,000 of management fees and
administrative expense reimbursements in April and May 2008, respectively. This
was offset by an increase in amounts paid related to residual sharing agreements
in 2008 of approximately $726,000.
  Our main
source of cash from operating activities in 2007 was primarily from the
collection of receivables from finance leases of approximately $2,499,000 and
$3,965,000 for 2007 and 2006, respectively. The decrease was due to a reduction
in cash from operating activities from Spansion and Wildwood of approximately
$1,360,000 and $328,000, respectively, in connection with the reclassifications
of the leases from finance to operating leases during 2007. The decrease was
partly offset by an increase in cash from operating activities from Wilhelmsen
due to the reclassification of the charters from operating to finance
lease.
  Investing
Activities
  Sources
of Cash
  Sources
of cash from investing activities decreased $9,244,939, from $10,621,046 in 2007
to $1,376,107 in 2008. The decrease was primarily due to a reduction in proceeds
from the sales of equipment and distributions received from our joint ventures
in excess of profits. During 2008, our proceeds from sales of equipment were
$941,011, which consisted of proceeds received from the sale of the investment
in unguaranteed residual values of approximately $686,000, from the sale of the
Railcars of approximately $223,000 and from the sale of equipment on lease to
Rite Aid Corporation of $32,000. Proceeds from the sales of equipment in 2007
were $9,356,762, which consisted primarily of the proceeds received from the
sale of the aircraft owned by Aircraft 46835 of approximately $3,621,000, the
sale of the Texas Genco railcars for approximately $4,960,000 and the amount
received through our investment in unguaranteed residual values of approximately
$710,000. Distributions received from our joint ventures in excess of profits of
$435,096 for 2008 consisted primarily of distributions of approximately $392,000
from Global Crossing II and distributions of approximately $43,000 from ICON
GeicJV. Distributions received from our joint ventures in excess of profits of
$1,264,284 for 2007 consisted primarily of distributions from Global Crossing II
of approximately $406,000, approximately $548,000 from Aircraft 47820,
approximately $290,000 from ICON GeicJV and approximately $21,000 from ICON
SPK.
   34
 Table of Contents
 
 Our main
source of cash from investing activities in 2007 was primarily from proceeds
from sale of equipment and distributions received from our joint ventures.
Proceeds from sales of equipment for 2007 were $9,356,762, which consisted
primarily of proceeds received from the sale of the aircraft owned by Aircraft
46835 for approximately $3,621,000, the sale of the Texas Genco railcars for
approximately $4,960,000 and the amount received through our investment in
unguaranteed residual values of approximately $710,000. During 2006, our
proceeds from sales of equipment were $7,864,799, which consisted of proceeds
received from the sale of the Kenilworth facility for approximately $4,800,000,
the sale of the manufacturing equipment leased to Metaldyne for approximately
$1,931,000 and the sale of investments in unguaranteed residual values.
Distributions received from our joint ventures of $1,264,284 for 2007 consisted
primarily of distributions from Global Crossing II of approximately $406,000,
approximately $548,000 from Aircraft 47820, approximately $290,000 from ICON
GeicJV and approximately $21,000 from ICON SPK. Distributions received from our
joint ventures in 2006 were $812,508, of which we received approximately
$471,000 from ICON GeicJV, approximately $237,000 from ICON SPK and
approximately $105,000 from Global Crossing II.
 
 Uses
of Cash
 
 Uses of
cash in investing activities decreased $16,856,582, from $16,879,082 in 2007 to
$22,500 in 2008. We made no significant acquisitions of investments during 2008
as we were in our liquidation period whereas in 2007, we acquired the Samar on
bareboat charter with Teekay for $16,867,667.
 
 Our use
of cash from investing activities in 2007 was mainly for the acquisition of the
Samar for $16,867,667, whereas we did not make any investments in
2006.
 
 Financing
Activities
 
 Sources
of Cash
 
 We had no
sources of cash from financing activities in 2008 or 2007.
 
 Uses
of Cash
 
 Uses of
cash in financing activities decreased $1,236,952, from $8,992,512 in 2007 to
$7,755,560 in 2008. The decrease was primarily due to cash distributions of
approximately $7,756,000 paid to our members in 2008 versus distributions of
approximately $8,914,000 paid to our members in 2007.
 
 Our main
use of cash in financing activities in 2007 was the cash distributions of
approximately $8,914,000 paid to our members as compared to approximately
$8,920,000 paid to our members in 2006.
 
 Financings
and Borrowings
 
 Non-Recourse
Debt
 
 On May
18, 2006, we refinanced the non-recourse debt related to the Vessels and
borrowed an additional amount of approximately $22,043,000. The principal amount
of refinanced non-recourse debt of $51,000,000 matures on December 22, 2013 and
accrues interest at LIBOR plus 1.50% per year. The refinanced non-recourse debt
requires quarterly payments ranging from $450,000 to $800,000. The lender has a
security interest in the Vessels and an assignment of the rental payments under
the bareboat charter.
 
 On July
24, 2007, we, through our wholly-owned subsidiary, ICON Samar, borrowed
approximately $23,382,000 in connection with a bareboat charter with Teekay. The
long-term debt matures on July 25, 2011 and accrues interest at LIBOR plus 1.00%
per year.  The long-term debt requires monthly payments ranging from
$480,000 to $530,000. The lender has a security interest in the vessel and an
assignment of the rental payments under the bareboat charter.
   35
 Table of Contents
 
 Effective
June 12, 2006, in connection with the Cathay lease extension, the outstanding
non-recourse debt related to ICON 128 (the “Initial Refinancing”) of
approximately $44,250,000 was refinanced. We were required by the lender to pay
down approximately $6,754,000 of the balloon payment as part of the Initial
Refinancing. The non-recourse debt incurred in the Initial Refinancing was
scheduled to mature on December 1, 2011, required a balloon payment of
approximately $11,550,000 and accrued interest at LIBOR plus 0.80% per year. We
incurred approximately $197,000 of costs in connection with the Initial
Refinancing and expensed these costs to interest expense during the third
quarter of 2006.
 
 On August
1, 2006, we were able to negotiate more favorable terms with a new lender and
refinanced the Initial Refinancing (the “Second Refinancing”). In connection
with the Second Refinancing, we were able to borrow approximately $6,242,000 of
additional non-recourse debt. The non-recourse debt incurred in the Second
Refinancing matures on December 1, 2011, requires a balloon payment of
approximately $22,750,000 and accrues interest at 6.85% per year. We paid
approximately $749,000 of costs in connection with the Second Refinancing. At
December 31, 2008, the fair market value of the non-recourse debt was
approximately $37,086,000.
 
 As of
December 31, 2008 and 2007, we had net debt financing costs of $489,835 and
$665,443, respectively. For the years ended December 31, 2008, 2007 and 2006, we
recognized amortization expense of $450,205, $145,817 and $108,418,
respectively.
 
 Revolving
Line of Credit, Recourse
 
 We, along
with Fund Eight B, Fund Ten, Fund Eleven and Fund Twelve, (entities
sponsored and managed by our Manager) (collectively, the “Borrowers”), are
parties to a Commercial Loan Agreement, as amended (the “Loan Agreement”), with
CB&T. 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, as defined in the Loan Agreement. Each of the Borrowers is
jointly and severally liable for all amounts borrowed under the Facility.
Amounts available under the Facility are subject to a borrowing base that is
determined, subject to certain limitations, on the present value of the future
receivables under certain lease agreements in which the Borrowers have a
beneficial interest.
 
 The
Facility expires on April 30, 2010 and the Borrowers may request a one year
extension to the revolving line of credit within 390 days of the expiration
date, but CB&T has no obligation to extend. The interest rate for general
advances under the Facility is CB&T’s prime rate and the interest rate on up
to five separate advances that are permitted to be made under the Facility is
the rate at which U.S. dollar deposits can be acquired by CB&T in
the London Interbank Eurocurrency Market plus 2.5% per year. The interest rate
at December 31, 2008 was 3.25%. In addition, the Borrowers are obligated to pay
a quarterly commitment fee of 0.25% on unused commitments under the
Facility.
 
 Aggregate
borrowings by all Borrowers under the Facility amounted to $6,185,000 at
December 31, 2008. We had no borrowings outstanding under the Facility as of
such date. The balances of $1,185,000 and $5,000,000 were borrowed by Fund Eight
B and Fund Eleven, respectively. On February 26, 2009, Fund Eleven borrowed an
additional $600,000 under the Facility. For additional information, see Note 8
to our consolidated financial statements.
 
 Our
Manager believes that with the cash we currently have available, the cash being
generated from our remaining leases, and the proceeds from equipment and asset
sales, we have sufficient cash to continue our operations into the foreseeable
future. We have the ability to borrow additional funds under the Facility if
necessary. However, our ability to generate cash in the future is subject to
general economic, financial, competitive, regulatory and other factors that
affect us and our lessees’ businesses that are beyond our
control.  See “Part I, Item 1A.  Risk Factors.” At December
31, 2008, we had approximately $6,021,000 of current assets and approximately
$20,011,000 of current liabilities, which results in an approximately
$13,990,000 working capital deficit. Of this amount, approximately $12,762,000
consisted of direct payments to a lender made by our lessee. These direct
payments are for a debt that had no corresponding current assets due to the
classification of these transactions as operating leases. Therefore, when
considering our overall working capital, direct payments should be excluded. The
exclusion of these payments yields a working capital deficit of approximately
$1,228,000 at December 31, 2008.
   36
 Table of Contents
 
 Distributions
 
 We, at
our Manager’s discretion, paid monthly distributions to each of our additional
members beginning the first month after each such member was admitted through
the end of our operating period, which was on April 30, 2008. During the
liquidation period, we plan to make distributions in accordance with the terms
of our LLC Agreement. We expect that distributions made during the liquidation
period will vary, depending on the timing of the sale of our assets, our receipt
of rental income, and income from our investments. We paid distributions to
additional members for the years ended December 31, 2008, 2007 and 2006 in the
amount of $7,678,004, $8,825,274 and $8,831,229, respectively. We paid
distributions to our Manager for the year ended December 31, 2008, 2007 and 2006
of $77,556, $89,144 and $89,204, respectively.
 
 Commitments
and Contingencies and Off Balance Sheet Transactions
 
 At
December 31, 2008, we had non-recourse debt obligations. The lender has a
security interest in equipment relating to each non-recourse debt instrument and
an assignment of the rental payments under the lease associated with the
equipment. In that case, the lender is being paid directly by the lessee. If the
lessee defaults on the lease, the equipment would be returned to the lender in
extinguishment of the non-recourse debt.  At December 31, 2008, our
outstanding non-recourse debt obligations were $77,448,699. We are a party to
the Facility, as discussed in the Financing and Borrowings section above,
although we had no borrowings under the Facility at December 31,
2008.
 
 Principal
maturities of our debt and related interest consisted of the following at
December 31, 2008:
 
 Payments Due by PeriodLess
      Than 1
                      
                      
                      1 -
      3
                      
                      
                      3 -
      5Total
                      
                      
                      Year
                      
                      
                      Years
                      
                      
                      YearsNon-recourse
      debt
                      
                      $
                      77,448,699
                      
                      
                      $
                      15,011,604
                      
                      
                      $
                      51,637,095
                      
                      
                      $
                      10,800,000Non-recourse
      interest
                      
                      
                      12,291,286
                      
                      
                      
                      4,910,599
                      
                      
                      
                      6,562,770
                      
                      
                      
                      817,917$
                      89,739,985
                      
                      
                      $
                      19,922,203
                      
                      
                      $
                      58,199,865
                      
                      
                      $
                      11,617,917
 
 We
entered into residual sharing agreements with various third parties. In
connection with these agreements, residual proceeds received in excess of
specific amounts will be shared with these third parties based on specific
formulas.
 
 
 Inflation
and Interest Rates
 The
potential effects of inflation on us are difficult to predict. If the general
economy experiences significant rates of inflation, however, it could affect us
in a number of ways.  We do not currently have or expect to have rent
escalation clauses tied to inflation in our leases. The anticipated residual
values to be realized upon the sale or re-lease of equipment upon lease
termination (and thus the overall cash flow from our leases) may be expected to
increase with inflation as the cost of similar new and used equipment
increases.
    37
 Table of Contents
 
 
 Item 7A.  Quantitative and Qualitative Disclosures About
Market Risk
 We, like
most other companies, are exposed to certain market risks, which include changes
in interest rates and the demand for equipment (and the related residuals) owned
by us.  We believe that our exposure to other market risks, including
foreign currency exchange rate risk, commodity risk and equity price risk, are
insignificant, at this time, to both our financial position and our results of
operations.
 
 We
currently have six outstanding notes payable, five of which are non-recourse
debt and the other is associated with our recourse revolving line of
credit.  Due to the fixed nature of the non-recourse debt, the
conditions in the credit markets as of December 31, 2008 have not had any impact
on us.  With respect to our revolving line of credit, which is subject
to a variable interest rate, our Manager has evaluated the impact of the
condition of the credit markets on the outstanding balance and has determined
that it will not have any material impact on us.  Furthermore, we are
currently in our liquidation period and, therefore, as we have no current
intentions of obtaining additional external financing or refinancing our
existing indebtedness, we do not expect any adverse impact on our cash flows
should credit conditions in general remain the same or deteriorate
further.
 
 In
general, we managed our exposure to interest rate risk by obtaining fixed rate
debt. The fixed rate debt was structured so as to match the cash flows required
to service the debt to the payment streams under fixed rate lease receivables.
The payments under each lease are assigned to the lender in satisfaction of the
debt.
 
 To hedge
our variable interest rate risk, we entered into interest rate swap contracts
that effectively convert the underlying floating interest rates to a fixed
interest rate. In general, these swap agreements reduced our interest rate risk
associated with variable interest rate borrowings.  However, we are
exposed to and manage credit risk associated with our counterparties to our swap
agreement by dealing only with institutions our Manager considered financially
sound.
 
 Effective
March 14, 2006, we refinanced the non-recourse debt obligations related to the
three car and truck carrying vessels that are subject to bareboat charters with
Wilhelmsen. The non-recourse debt accrues interest at LIBOR plus 1.50% per
year.  Simultaneously with the refinancing, we entered into three
identical interest rate swap contracts, each having a notional amount of
$17,000,000, with Fortis Bank NV/SA, New York Branch.  We entered into
these agreements in order to effectively fix the variable interest rate on the
non-recourse debt.  The interest rate swap contracts fixed the
interest rate with respect to the non-recourse debt at 7.02% per year. On May
22, 2006, we terminated the original three interest rate swap contracts that
applied to the original financing of the Vessels. We recognized a gain on
settlement of the swaps of approximately $26,000.
 
 On July
24, 2007, we, through ICON Samar, borrowed approximately $23,382,000 in
connection with a bareboat charter with Teekay. The long-term debt matures on
July 25, 2011 and accrues interest at LIBOR plus 1.00% per
year.  Simultaneously with the borrowing, we entered into an interest
rate swap contract with Fortis Bank NV/SA, New York Branch in order to fix the
debt interest rate at 6.35% per year.
 
 We manage
our exposure to equipment and residual risk by monitoring the markets our leased
equipment are in and maximizing remarketing proceeds through the re-lease or
sale of equipment.
  38
 Table of Contents






Item 8. Consolidated Financial Statements








PageReports of Independent Registered Public Accounting
      Firms
              40Consolidated Balance Sheets
              42Consolidated Statements of Operations
              43Consolidated Statements of Changes in Members’
      Equity
              44Consolidated Statements of Cash Flows
              45Notes to Consolidated Financial Statements
              47Schedule II
              72








39
 Table of Contents





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM





The
Members


ICON
Income Fund Nine, LLC







We have
audited the accompanying consolidated balance sheets of ICON Income Fund Nine,
LLC (the “Company”) as of December 31, 2008 and 2007, and the related
consolidated statements of operations, changes in members’ equity, and cash
flows for each of the two years in the period ended December 31, 2008. Our
audits also included the financial statement schedule listed in the index at
Item 15(a)(2). These financial statements and schedule are the responsibility of
the Company’s management.  Our responsibility is to express an opinion
on these financial statements and schedule based on our audits.






We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  We were
not engaged to perform an audit of the Company’s internal control over financial
reporting.  Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting.  Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation.  We believe that our audits provide
a reasonable basis for our opinion.






In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of ICON Income Fund Nine,
LLC at December 31, 2008 and 2007, and the consolidated results of its
operations and its cash flows for each of the two years in the period ended
December 31, 2008, in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth
therein.






/s/ Ernst
& Young, LLP





March 24,
2009


New York,
New York







40
 Table of Contents







The
Members


ICON
Income Fund Nine, LLC








REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




We have
audited the accompanying consolidated statements of operations, changes in
members’ equity, and cash flows of ICON Income Fund Nine, LLC and subsidiaries
for the year ended December 31, 2006. These consolidated financial statements
are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting.  Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting.  Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management,  as well as
evaluating the overall financial statement presentation.  We believe
that our audit provides a reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of ICON
Income Fund Nine, LLC and subsidiaries, in conformity with accounting principles
generally accepted in the United States of America.





/s/ Hays
& Company LLP





April  2
, 2007


New York,
New York







41
 Table of Contents








ICON Income Fund Nine, LLC(A
      Delaware Limited Liability Company)Consolidated
      Balance SheetsAssetsDecember 31,2008
                    
                    
                    2007Current
      assetsCash
      and cash equivalents
                    
                    $
                    779,544
                    
                    
                    $
                    5,571,481Current
      portion of net investment in finance leases
                    
                    
                    4,931,094
                    
                    
                    
                    6,116,872Other
      current assets
                    
                    
                    310,792
                    
                    
                    
                    286,536Total
      current assets
                    
                    
                    6,021,430
                    
                    
                    
                    11,974,889Non-current
      assetsNet
      investment in finance leases, less current portion
                    
                    
                    23,254,147
                    
                    
                    
                    28,572,690Leased
      equipment at cost (less accumulated depreciation of$12,060,032
      and $8,414,864, respectively)
                    
                    
                    80,239,768
                    
                    
                    
                    90,756,741Investments
      in joint ventures
                    
                    
                    2,386,093
                    
                    
                    
                    4,966,239Investment
      in unguaranteed residual values
                    
                    
                    830,764
                    
                    
                    
                    1,312,364Other
      non-current assets, net
                    
                    
                    1,498,942
                    
                    
                    
                    1,987,244Total
      non-current assets
                    
                    
                    108,209,714
                    
                    
                    
                    127,595,278Total
      Assets
                    
                    $
                    114,231,144
                    
                    
                    $
                    139,570,167Liabilities
      and Members' EquityCurrent
      liabilitiesCurrent
      portion of non-recourse long-term debt
                    
                    $
                    15,011,601
                    
                    
                    $
                    18,116,357Interest
      rate swap contracts
                    
                    
                    3,513,483
                    
                    
                    
                    2,016,033Deferred
      revenue
                    
                    
                    988,634
                    
                    
                    
                    997,116Due
      to Manager
                    
                    
                    -
                    
                    
                    
                    87,475Accrued
      expenses and other current liabilities
                    
                    
                    497,076
                    
                    
                    
                    437,797Total
      current liabilities
                    
                    
                    20,010,794
                    
                    
                    
                    21,654,778Non-current
      liabilitiesNon-recourse
      long-term debt, net of current portion
                    
                    
                    62,437,098
                    
                    
                    
                    78,005,924Total
      Liabilities
                    
                    
                    82,447,892
                    
                    
                    
                    99,660,702Commitments
      and contingencies (Note 13)Members'
      EquityManager
                    
                    
                    (508,786
                    )
                    
                    
                    (441,708
                    )Additional
      Members
                    
                    
                    35,721,203
                    
                    
                    
                    42,361,867Accumulated
      other comprehensive loss
                    
                    
                    (3,429,165
                    )
                    
                    
                    (2,010,694
                    )Total
      Members' Equity
                    
                    
                    31,783,252
                    
                    
                    
                    39,909,465Total
      Liabilities and Members' Equity
                    
                    $
                    114,231,144
                    
                    
                    $
                    139,570,167









42
 Table of Contents





ICON Income Fund Nine, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of OperationsYears Ended December 31,2008
                
                
                2007
                
                
                2006Revenue:Rental
      income
                
                $
                16,053,175
                
                
                $
                13,832,058
                
                
                $
                17,863,494Finance
      income
                
                
                5,767,714
                
                
                
                6,747,205
                
                
                
                6,461,861(Loss)
      income from investments in joint ventures
                
                
                (1,996,825
                )
                
                
                2,305
                
                
                
                (279,072
                )Net
      gain on sales of equipment
                
                
                519,729
                
                
                
                2,291,397
                
                
                
                128,181Interest
      and other (expense) income
                
                
                (184,921
                )
                
                
                587,121
                
                
                
                710,689Total
      revenue
                
                
                20,158,872
                
                
                
                23,460,086
                
                
                
                24,885,153Expenses:Management
      fees - Manager
                
                
                526,469
                
                
                
                1,780,581
                
                
                
                2,114,283Administrative
      expense reimbursements - Manager
                
                
                149,844
                
                
                
                677,965
                
                
                
                596,881General
      and administrative
                
                
                2,025,636
                
                
                
                751,566
                
                
                
                607,142Interest
                
                
                6,497,709
                
                
                
                6,657,968
                
                
                
                6,897,802Depreciation
      and amortization
                
                
                5,762,239
                
                
                
                5,628,072
                
                
                
                10,579,026Impairment
      loss
                
                
                4,149,157
                
                
                
                10,000
                
                
                
                3,005,403Maintenance
      expense
                
                
                -
                
                
                
                -
                
                
                
                1,317,361Total
      expenses
                
                
                19,111,054
                
                
                
                15,506,152
                
                
                
                25,117,898Income
      before minority interest
                
                
                1,047,818
                
                
                
                7,953,934
                
                
                
                (232,745
                )Minority
      interest
                
                
                -
                
                
                
                (13,916
                )
                
                
                (435,158
                )Net
      income (loss)
                
                $
                1,047,818
                
                
                $
                7,940,018
                
                
                $
                (667,903
                )Net
      income (loss) allocable to:Additional
      Members
                
                $
                1,037,340
                
                
                $
                7,860,618
                
                
                $
                (661,224
                )Manager
                
                
                10,478
                
                
                
                79,400
                
                
                
                (6,679
                )$
                1,047,818
                
                
                $
                7,940,018
                
                
                $
                (667,903
                )Weighted
      average number of additional sharesof
      limited liability company interests outstanding
                
                
                97,955
                
                
                
                98,052
                
                
                
                98,123Net
      income (loss) per weighted average additionalshare
      of limited liability company interests
                
                $
                10.59
                
                
                $
                80.17
                
                
                $
                (6.74
                )










43
 Table of Contents








ICON Income Fund Nine, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of Changes in Members' EquityAccumulatedAdditional
      Member
                              
                              
                              Additional
                              
                              
                              
                              
                              
                              Other
                                Comprehensive
                              
                              
                              TotalMembers'Shares
                              
                              
                              Members
                              
                              
                              Manager
                              
                              
                              Loss
                              
                              
                              EquityBalance,
      January 1, 2006
                              
                              
                              98,144
                              
                              
                              $
                              52,924,519
                              
                              
                              $
                              (336,081
                              )
                              
                              $
                              (45,185
                              )
                              
                              $
                              52,543,253Net
      loss
                              
                              
                              -
                              
                              
                              
                              (661,224
                              )
                              
                              
                              (6,679
                              )
                              
                              
                              -
                              
                              
                              
                              (667,903
                              )Foreign
      currency translationadjustment
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              45,185
                              
                              
                              
                              45,185Change
      in valuation of interest rateswap
      contracts
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (639,304
                              )
                              
                              
                              (639,304
                              )Comprehensive
      loss
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (1,262,022
                              )Redemption
      of additional shares of limited liability companyinterests
                              
                              
                              (42
                              )
                              
                              
                              (27,449
                              )
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (27,449
                              )Cash
      distributions to members
                              
                              
                              -
                              
                              
                              
                              (8,831,229
                              )
                              
                              
                              (89,204
                              )
                              
                              
                              -
                              
                              
                              
                              (8,920,433
                              )Balance,
      December 31, 2006
                              
                              
                              98,102
                              
                              
                              
                              43,404,617
                              
                              
                              
                              (431,964
                              )
                              
                              
                              (639,304
                              )
                              
                              
                              42,333,349Net
      income
                              
                              
                              -
                              
                              
                              
                              7,860,618
                              
                              
                              
                              79,400
                              
                              
                              
                              -
                              
                              
                              
                              7,940,018Change
      in valuation of interest rateswap
      contracts
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (1,371,390
                              )
                              
                              
                              (1,371,390
                              )Comprehensive
      income
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              6,568,628Redemption
      of additional shares of limited liability companyinterests
                              
                              
                              (147
                              )
                              
                              
                              (78,094
                              )
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (78,094
                              )Cash
      distributions to members
                              
                              
                              -
                              
                              
                              
                              (8,825,274
                              )
                              
                              
                              (89,144
                              )
                              
                              
                              -
                              
                              
                              
                              (8,914,418
                              )Balance,
      December 31, 2007
                              
                              
                              97,955
                              
                              
                              
                              42,361,867
                              
                              
                              
                              (441,708
                              )
                              
                              
                              (2,010,694
                              )
                              
                              
                              39,909,465Net
      income
                              
                              
                              -
                              
                              
                              
                              1,037,340
                              
                              
                              
                              10,478
                              
                              
                              
                              -
                              
                              
                              
                              1,047,818Change
      in valuation of interest rateswap
      contracts
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (1,418,471
                              )
                              
                              
                              (1,418,471
                              )Comprehensive
      loss
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (370,653
                              )Cash
      distributions to members
                              
                              
                              -
                              
                              
                              
                              (7,678,004
                              )
                              
                              
                              (77,556
                              )
                              
                              
                              -
                              
                              
                              
                              (7,755,560
                              )Balance,
      December 31, 2008
                              
                              
                              97,955
                              
                              
                              $
                              35,721,203
                              
                              
                              $
                              (508,786
                              )
                              
                              $
                              (3,429,165
                              )
                              
                              $
                              31,783,252









44
 Table of Contents








ICON Income Fund Nine, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of Cash FlowsYears Ended December 31,2008
                
                
                2007
                
                
                2006Cash
      flows from operating activitiesNet
      income (loss)
                
                $
                1,047,818
                
                
                $
                7,940,018
                
                
                $
                (667,903
                )Adjustments
      to reconcile net income (loss) to net cashprovided
      by operating activities:Rental
      income paid directly to lenders by lessees
                
                
                (12,762,000
                )
                
                
                (11,756,059
                )
                
                
                (13,470,826
                )Finance
      income
                
                
                (5,767,714
                )
                
                
                (6,747,205
                )
                
                
                (6,461,861
                )Loss
      (income) from investments in joint ventures
                
                
                1,996,825
                
                
                
                (2,305
                )
                
                
                279,072Net
      gain on sale of equipment
                
                
                (519,729
                )
                
                
                (2,291,397
                )
                
                
                (128,181
                )Net
      gain on termination of interest rate swap contracts
                
                
                -
                
                
                
                -
                
                
                
                (25,656
                )Depreciation
      and amortization
                
                
                5,762,239
                
                
                
                5,628,072
                
                
                
                10,579,026Uncollectible
      receivables
                
                
                200,547
                
                
                
                -
                
                
                
                -Interest
      expense from amortization of debt financing costs
                
                
                450,205
                
                
                
                145,817
                
                
                
                108,418Interest
      expense on non-recourse financing paid directlyto
      lenders by lessees
                
                
                6,118,572
                
                
                
                6,500,557
                
                
                
                5,850,979Change
      in fair value of interest rate swap contracts
                
                
                
                
                
                
                5,336
                
                
                
                41,114Impairment
      loss
                
                
                4,149,157
                
                
                
                10,000
                
                
                
                3,005,403Minority
      interest
                
                
                -
                
                
                
                13,916
                
                
                
                435,158Changes
      in operating assets and liabilities:Collection
      of finance leases
                
                
                867,898
                
                
                
                2,498,952
                
                
                
                3,965,426Other
      assets, net
                
                
                (89,382
                )
                
                
                (1,530,926
                )
                
                
                588,592Deferred
      revenue
                
                
                (9,762
                )
                
                
                997,116
                
                
                
                (1,613,143
                )Due
      to Manager and affiliates
                
                
                (87,476
                )
                
                
                (106,005
                )
                
                
                133,567Accrued
      expenses and other current liabilities
                
                
                82,093
                
                
                
                (477,995
                )
                
                
                347,212Distributions
      to/from minority interest holders and joint ventures
                
                
                170,725
                
                
                
                263,537
                
                
                
                -Net
      cash provided by operating activities
                
                
                1,610,016
                
                
                
                1,091,429
                
                
                
                2,966,397Cash
      flows from investing activities:Proceeds
      from sales of equipment
                
                
                941,011
                
                
                
                9,356,762
                
                
                
                7,864,799Purchase
      of equipment
                
                
                -
                
                
                
                (16,867,667
                )
                
                
                -Investments
      in joint ventures
                
                
                (22,500
                )
                
                
                (11,415
                )
                
                
                (2,091,010
                )Distributions
      to joint ventures in excess of profits
                
                
                435,096
                
                
                
                1,264,284
                
                
                
                812,508Net
      cash provided by (used in) investing activities
                
                
                1,353,607
                
                
                
                (6,258,036
                )
                
                
                6,586,297Cash
      flows from financing activities:Cash
      distributions to members
                
                
                (7,755,560
                )
                
                
                (8,914,418
                )
                
                
                (8,920,433
                )Proceeds
      from non-recourse long-term debt
                
                
                -
                
                
                
                -
                
                
                
                28,722,634Financing
      costs
                
                
                -
                
                
                
                -
                
                
                
                (1,182,198
                )Repayment
      of non-recourse long-term debt
                
                
                -
                
                
                
                -
                
                
                
                (6,867,630
                )Proceeds
      from revolving line of credit
                
                
                -
                
                
                
                -
                
                
                
                875,000Repayment
      of revolving line of credit
                
                
                -
                
                
                
                -
                
                
                
                (5,410,000
                )Proceeds
      from sale of interest rate swap contracts
                
                
                -
                
                
                
                -
                
                
                
                705,000Redemption
      of additional shares of limited liability company
interests
                
                
                -
                
                
                
                (78,094
                )
                
                
                (27,449
                )Net
      cash (used in) provided by financing activities
                
                
                (7,755,560
                )
                
                
                (8,992,512
                )
                
                
                7,894,924Effects
      of exchange rates on cash and cash equivalents
                
                
                -
                
                
                
                -
                
                
                
                45,185Net
      (decrease) increase in cash and cash equivalents
                
                
                (4,791,937
                )
                
                
                (14,159,119
                )
                
                
                17,492,803Cash
      and cash equivalents, beginning of the period
                
                
                5,571,481
                
                
                
                19,730,600
                
                
                
                2,237,797Cash
      and cash equivalents, end of the period
                
                $
                779,544
                
                
                $
                5,571,481
                
                
                $
                19,730,600









45
 Table of Contents







ICON
      Income Fund Nine, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of Cash FlowsYears Ended December 31,2008
                
                
                2007
                
                
                2006Supplemental
      disclosure of cash flow information:Cash
      paid during the period for interest
                
                $
                -
                
                
                $
                -
                
                
                $
                164,267Supplemental
      disclosure of non-cash investing and financing activities:Principal
      and interest paid on non-recourse long-term debtpaid
      directly to lenders by lessees
                
                $
                24,762,786
                
                
                $
                22,243,188
                
                
                $
                28,473,277Borrowings
      assumed on acquisition of leased equipment
                
                $
                -
                
                
                $
                23,382,333
                
                
                $
                -Reclassification
      of net assets from investments in leased equipmentto
      investment in finance leases
                
                $
                240,000
                
                
                $
                -
                
                
                $
                45,399,576Reclassification
      of net assets from investment in finance leasesto
      leased equipment
                
                $
                -
                
                
                $
                848,166
                
                
                $
                -Sale
      proceeds paid directly to minority interest holder from
    lessee
                
                $
                -
                
                
                $
                639,000
                
                
                $
                -










46
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(1)
              Organization


ICON
Income Fund Nine, LLC (the “LLC”) was formed on July 11, 2001 as a Delaware
limited liability company. The LLC is engaged in one business segment, the
business of purchasing equipment and leasing it to third-party end users,
providing equipment and other financing, acquiring equipment subject to lease
and, to a lesser degree, acquiring ownership rights to items of leased equipment
at lease expiration. The LLC will continue until December 31, 2020, unless
terminated sooner.





The LLC’s
principal investment objective is to obtain the maximum economic return from its
investments for the benefit of its members. To achieve this objective, the LLC:
(i) acquired a diversified portfolio of leases and financing transactions; (ii)
made monthly cash distributions, at the Manager’s discretion, to its members
commencing with each member's admission to the LLC, continuing through the
liquidation period, which commenced on May 1, 2008; (iii) re-invested
substantially all undistributed cash from operations and cash from sales of
equipment and financing transactions during the operating period; and (iv) began
to dispose of its investments and distribute the excess cash from sales of such
investments to its members with the commencement of the liquidation
period.





The LLC’s
operating period ended and the LLC commenced its liquidation period on May 1,
2008. During the liquidation period, the LLC is distributing substantially all
of its distributable cash from operations and equipment sales to the partners
and will continue the orderly termination of its operations and affairs. The LLC
will not invest in any additional finance or lease transactions during the
liquidation period.





The
manager of the LLC is ICON Capital Corp. (the “Manager”), a Delaware
corporation. The Manager manages and controls the business affairs of the
LLC, including, but not limited to, the equipment leases and other financing
transactions that the LLC entered into pursuant to the terms of the amended and
restated limited liability company agreement (the “LLC
Agreement”).  Additionally, the Manager has a 1% interest in the
profits, losses, cash distributions and liquidation proceeds of the
LLC.





The
initial capitalization of the LLC was $1,000 contributed by the
Manager.  The LLC offered shares of limited liability company
interests (“Shares”) with the intention of raising up to $100,000,000 of capital
from additional members.  The LLC commenced business operations on its
initial closing date, December 18, 2001, when it sold 1,250 Shares,
representing $1,249,910 of capital contributions. Between December 19, 2001 and
April 30, 2003, the final closing date, the LLC admitted additional members
owning 98,416 Shares, representing $98,403,564 of capital contributions and
bringing the total sale of Shares to 99,666 representing $99,653,474 of capital
contributions.  For the year ended December 31, 2008, the LLC did not
redeem any additional Shares, leaving 97,955 additional Shares outstanding as of
such date.





The LLC
invested most of the net proceeds from its offering in equipment subject to
leases, other financing transactions and residual ownership rights in leased
equipment. After the net offering proceeds were invested, additional investments
were made with the cash generated from the LLC’s initial investments to the
extent that cash was not needed for expenses, reserves and distributions to
members. The investment in additional equipment in this manner is called
“reinvestment.”





Members’
capital accounts are increased for their initial capital contribution plus their
proportionate share of earnings and decreased by their proportionate share of
losses and distributions. Profits, losses, cash distributions and liquidation
proceeds are allocated 99% to the members and 1% to the Manager until each
additional member has (a) received cash distributions and liquidation proceeds
sufficient to reduce their capital account to zero and (b) received, in
addition, other distributions
and allocations which would provide an 8% per year cumulative return on their
outstanding adjusted capital account.  After such time, distributions
will be allocated 90% to the additional members and 10% to the
Manager.






47
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008




(2)
            Summary
      of Significant Accounting Policies





Basis of
Presentation and Consolidation





The
accompanying consolidated financial statements of the LLC have been prepared in
accordance with U.S. generally accepted accounting principles (“US
GAAP”).





The
consolidated financial statements include the accounts of the LLC and all
subsidiaries and other controlled entities. All intercompany accounts and
transactions have been eliminated in consolidation.





The LLC
accounts for its noncontrolling interests in joint ventures where the LLC has
influence over financial and operational matters, generally 50% or less
ownership interest, under the equity method of accounting. In such cases, the
LLC's original investments are recorded at cost and adjusted for its share of
earnings, losses and distributions.  The LLC accounts for investments
in joint ventures where the LLC has virtually no influence over financial and
operational matters using the cost method of accounting.  In such
cases, the LLC's original investments are recorded at cost and any distributions
received are recorded as revenue.  All of the LLC's investments in
joint ventures are subject to its impairment review policies.





In joint
ventures where the LLC’s interest is majority owned, the financial condition and
results of operations of the joint venture are consolidated.  Minority
interest represents the minority owner’s proportionate share of its equity in
the joint venture. The minority interest is adjusted for the minority owner’s
share of the earnings, losses and distributions of the joint
venture.





Cash and
cash equivalents





Cash and
cash equivalents include cash in banks and highly liquid investments with
original maturity dates of three months or less.





The LLC's
cash and cash equivalents are held principally at two financial institutions and
at times may exceed insured limits. The LLC has placed these funds in high
quality institutions in order to minimize risk relating to exceeding
insured limits.





Risks and
Uncertainties





In the
normal course of business, the LLC is exposed to two significant types of
economic risk: credit and market.  Credit risk is the risk of a
lessee’s inability or unwillingness to make contractually required
payments.  Concentrations of credit risk with respect to lessees are
dispersed across different industry segments within the United States of America
and throughout the world.  Although the LLC does not currently foresee
a concentrated credit risk associated with these customers, lease payments are
dependent upon the financial stability of the industry segments in which they
operate.  See Note 12 for concentration of risk.





Market
risk reflects the change in the value of debt instruments and credit
facilities due to a change in interest rate spreads or other market
factors.  The LLC believes that the carrying value of its investments
are reasonable taking into consideration these risks, along with estimated
collateral values, payment history and other relevant information.






48
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
  (2)
              Summary
      of Significant Accounting Policies –
continued


Allowance
for Doubtful Accounts





When
evaluating the adequacy of the allowance for doubtful accounts, the LLC
estimates the uncollectibility of receivables by analyzing lessee, borrower and
other counterparty concentrations, creditworthiness and current economic
trends. The LLC records an allowance for doubtful accounts when the analysis
indicates that the probability of full collection is unlikely. At December 31,
2008 and 2007, the LLC recorded an allowance of $155,318 and $0,
respectively.





Debt
Financing Costs





Expenses
associated with the incurrence of debt are capitalized and amortized over the
term of the debt instrument using the effective interest rate
method.  These costs are included in other current and other
non-current assets.





Leased
Equipment at Cost





Investments
in leased equipment are stated at cost less accumulated
depreciation.  Leased equipment is depreciated on a straight-line
basis over the lease term, which ranges from 4 to 5 years to the asset’s
residual value.





The
Manager has an investment committee that approved each new equipment lease and
other financing transaction.  As part of its process, it
determined the residual value, if any, to be used once the investment was
approved.  The factors considered in determining the residual value
included, but were not limited to, the creditworthiness of the potential lessee,
the type of equipment considered, how the equipment was integrated into the
potential lessees’ business, the length of the lease and the industry in which
the potential lessee operated.  Residual values are reviewed for
impairment in accordance with the LLC’s impairment review policy.





The
residual value assumes, among other things, that the asset is utilized normally
in an open, unrestricted and stable market. Short-term fluctuations in the
market place are disregarded and it is assumed that there is no necessity either
to dispose of a significant number of the assets, if held in quantity,
simultaneously or to dispose of the asset quickly.  The residual value
is calculated using information from various external sources, such as trade
publications, auction data, equipment dealers, wholesalers and industry experts,
as well as inspection of the physical asset and other economic
indicators.





Asset
Impairments





The
significant assets in the LLC’s portfolio are periodically reviewed, no
less frequently than annually, to determine whether events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. An impairment loss will be recognized only if the carrying value of
a long-lived asset is not recoverable and exceeds its fair market value. If
there is an indication of impairment, the LLC will estimate the future cash
flows (undiscounted and without interest charges) expected from the use of the
asset and its eventual disposition. Future cash flows are the future cash
inflows expected to be generated by an asset less the future cash outflows
expected to be necessary to obtain those inflows.  If an impairment is
determined to exist, the impairment loss will be measured as the amount by which
the carrying value of a long-lived asset exceeds its fair value and recorded in
the consolidated statement of operations in the period the determination is
made.





The
events or changes in circumstances that generally indicate that an asset may be
impaired are (i) the estimated fair value of the underlying equipment is less
than its carrying value or (ii) the lessee is experiencing financial
difficulties and it does not appear likely that the estimated proceeds from the
disposition of the asset will be sufficient to satisfy the residual position in
the asset and, if applicable, the remaining obligation to the non-recourse
lender.  Generally in the latter situation, the residual position relates
to equipment subject to third party non-recourse debt where the lessee
remits its rental payments directly to the lender and the LLC does not recover
its residual position until the non-recourse debt is repaid in full. The
preparation of the undiscounted cash flows requires the use of assumptions and
estimates, including the level of future rents, the residual value expected to
be realized upon disposition of the asset, estimated downtime between re-leasing
events and the amount of re-leasing costs. The Manager’s review for impairment
includes a consideration of the existence of impairment indicators including
third party appraisals, published values for similar assets, recent transactions
for similar assets, adverse changes in market conditions for specific asset
types and the occurrence of significant adverse changes in general industry and
market conditions that could affect the fair value of the asset.




49
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
  (2)
              Summary
      of Significant Accounting Policies -
continued


Equipment
Held for Sale





Equipment
held for sale is recorded at the lower of cost or estimated fair value,
less anticipated costs to sell and consists of equipment previously leased to
end users which has been returned to the LLC following lease
expiration.





Equipment
held for sale is not depreciated and related deferred costs are not amortized.
Subsequent changes to the asset’s fair value, either increases or decreases, are
recorded as adjustments to the carrying value of the equipment; however, any
such adjustment would not exceed the original carrying value of the equipment
held for sale.





Unguaranteed
Residual Values





The LLC
carries its investments in estimated unguaranteed residual values at cost. The
net book value is equal to or less than fair value at each reporting period and
is subject to the LLC's impairment review policy.





Revenue
Recognition





The LLC
leased equipment to third parties and each such lease is classified as either a
finance lease or an operating lease, which is based upon the terms of each
lease. For a finance lease, initial direct costs are capitalized and
amortized over the term of the related lease for a
finance lease.  For an operating lease, the initial direct costs
are included as a component of the cost of the equipment and
depreciated.





For
finance leases, the LLC recorded, at lease inception, the total minimum lease
payments receivable from the lessee, the estimated unguaranteed residual value
of the equipment upon lease termination, the initial direct costs related to the
lease and the related unearned income.  Unearned income represents the
difference between the sum of the minimum lease payments receivable plus the
estimated unguaranteed residual value, minus the cost of the leased
equipment.  Unearned income is recognized as finance income over the
term of the lease using the effective interest rate method.





For
operating leases, rental income is recognized on a straight-line basis over the
lease term.  Billed operating lease receivables are included in
accounts receivable until collected.  Accounts receivable are stated
at their estimated net realizable value.  Deferred revenue
is the difference between the timing of the reveivables
billed and the income recognized on a straight-line basis.







50
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
  (2)
              Summary
      of Significant Accounting Policies -
continued




Initial
Direct Costs





The LLC
capitalized initial direct costs associated with the origination and funding of
lease assets in accordance with Statement of Financial Accounting Standards
(“SFAS”) No. 91 “Accounting for Nonrefundable Fees and Costs Associated
with Originating or Acquiring Loans and Initial Direct Costs of Leases.” The
costs were amortized on a lease by lease basis based on actual lease term using
a straight-line method for operating leases and the effective interest rate
method for finance leases. Costs related to leases that were not consummated
were expensed as an acquisition expense.





Acquisition
Fees





Pursuant
to the LLC Agreement, acquisition fees paid to the Manager are based on 3% of
the purchase price of the LLC’s investment. These fees were capitalized and
included in the cost of the investment.





Income
Taxes





The LLC
is taxed as a partnership for federal and State income tax
purposes.  No provision for income taxes has been recorded since the
liability for such taxes is that of each of the individual members rather than
the LLC.  The LLC's income tax returns are subject to examination by
the federal and State taxing authorities, and changes, if any, could adjust the
individual income tax of the members.





Per Share
Data





Net
income (loss) per Share is based upon the weighted average number of additional
member Shares outstanding during the year.





Share
Redemption





The LLC
may, at its discretion, redeem Shares from a limited number of its additional
members, as provided for in its LLC Agreement. The redemption price for any
Shares approved for redemption is based upon a formula, as provided in the LLC
Agreement.  Additional members are required to hold their Shares for
at least one year before redemptions will be permitted.





Comprehensive
Income (Loss)





Comprehensive
income (loss) is reported in the accompanying consolidated statements of changes
in members’ equity and accumulated other comprehensive income (loss) and
consists of net income (loss) and other gains and losses affecting members’
equity that are excluded from net income (loss).





Foreign
Currency Translation





Assets
and liabilities having non-U.S. dollar functional currencies are translated
at month-end exchange rates. Contributed capital accounts are translated at the
historical rate of exchange when the capital was contributed or
distributed.  Revenues, expenses and cash flow items are
translated at weighted average exchange rates for the period. Resulting
translation adjustments are recorded as a separate component of accumulated
other comprehensive income or loss.






51
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
  (2)
              Summary
      of Significant Accounting Policies -
continued




Derivative
Financial Instruments





The LLC
may enter into derivative transactions for purposes of reducing hedging specific
financial exposures, including movements in foreign currency exchange rates and
changes in interest rates. The LLC enters into these instruments only for
hedging underlying exposures. The LLC does not hold or issue derivative
financial instruments for purposes other than hedging, except for warrants,
which are not hedges.  Certain derivatives may not meet the established
criteria to be designated as qualifying accounting hedges, even though the LLC
believes that these are effective economic hedges.





The LLC
accounts for derivative financial instruments in accordance with SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”),
which established accounting and reporting standards for derivative financial
instruments.  SFAS No. 133, as amended, requires the LLC to recognize all
derivatives as either assets or liabilities in the consolidated balance sheets
and measure those instruments at fair value. The LLC recognizes the fair value
of all derivatives as either assets or liabilities in the consolidated balance
sheets and changes in the fair value of such instruments are recognized
immediately in earnings unless certain accounting criteria established by SFAS
No. 133 are met. These criteria demonstrate that the derivative is expected to
be highly effective at offsetting changes in the fair value or expected cash
flows of the underlying exposure at both the inception of the hedging
relationship and on an ongoing basis and include an evaluation of the
counterparty risk and the impact, if any, on the effectiveness of the
derivative. If these criteria are met, which the LLC must document and assess at
inception and on an ongoing basis, the LLC recognizes the changes in fair value
of such instruments in accumulated other comprehensive income, a component of
members’ equity on the consolidated balance sheets. Changes in the fair value of
the ineffective portion of all derivatives are recognized immediately in
earnings.







52
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
  (2)
              Summary
      of Significant Accounting Policies -
continued







Use of
Estimates





The
preparation of financial statements in conformity with US GAAP requires the
Manager to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities as
of the date of the condensed consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. Significant
estimates primarily include the determination of allowance for doubtful
accounts, depreciation and amortization, impairment losses, estimated useful
lives and residual values. Actual results could differ from those
estimates.





Recent
Accounting Prouncements




In September 2006, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 157, “Accounting for
Fair Value Measurements” (“SFAS No. 157”).  SFAS No. 157 defines fair
value, establishes a framework for measuring fair value, and enhances fair value
measurement disclosure. In February 2008, the FASB issued FASB Staff
Position (“FSP”) No. 157-2, "Effective Date of FASB Statement No. 157”
(“FSP 157-2”).FSP 157-2 delays the effective
date of SFAS No. 157 for all non-financial assets and non-financial
liabilities, except for items that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least annually),
until the beginning of the first quarter of 2009. The measurement and disclosure
requirements related to financial assets and financial liabilities were
effective for us beginning in the first quarter of 2008.   The
adoption of SFAS No. 157 for financial assets and financial liabilities did not
have a significant impact on the LLC's consolidated financial
statements.  The Manager is currently evaluating the impact that
SFAS No. 157 will have on the LLC's consolidated financial statements when
it is applied to non-financial assets and non-financial liabilities beginning in
the first quarter of 2009. The resulting fair values calculated under SFAS No.
157 after adoption may be different from the fair values that would have been
calculated under previous guidance.


In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements — an Amendment of ARB No. 51” (“SFAS No.
160”). SFAS No. 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the retained interest and gain
or loss when a subsidiary is deconsolidated. This statement is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 with earlier adoption prohibited. The Manager is
currently evaluating the impact of SFAS No. 160 on the LLC’s consolidated
financial statements.





In March 2008, the FASB issued
SFAS No. 161, “Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133. (“SFAS No.
161”).” SFAS No. 161 requires
enhanced disclosures about an entity’s derivative and hedging activities, and is
effective for financial statements issued for reporting periods beginning afterNovember 15, 2008, with early application encouraged.
Since SFAS No. 161 requires only additional disclosures concerning
derivatives and hedging activities, adoption of SFAS No. 161 will not
affect the LLC’s financial condition, results of operations or cash
flows.




Reclassifications





Certain
reclassifications have been made to the accompanying consolidated financial
statements in prior years to conform to the current presentation.





53
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
  (3)
              Net
      Investment in Finance
Leases




Net
investment in finance leases consisted of the following at December 31, 2008 and
2007:





2008
                
                
                2007Minimum
      rents receivable
                
                $
                41,504,866
                
                
                $
                53,278,914Estimated
      residual values
                
                
                37,201
                
                
                
                209,200Initial
      direct costs, net
                
                
                -
                
                
                
                3,103Unearned
      income
                
                
                (13,356,826
                )
                
                
                (18,801,655
                )Net
      investment in finance leases
                
                
                28,185,241
                
                
                
                34,689,562Less:  Current
      portion of netinvestment
      in finance leases
                
                
                4,931,094
                
                
                
                6,116,872Net
      investment in finance leases,less
      current portion
                
                $
                23,254,147
                
                
                $
                28,572,690





During
March 2004, The LLC acquired two leases for computer equipment and corresponding
parts from Insight Investments Corporation (“Insight”).  The leases
expired on December 1, 2006.  The aggregate purchase price was
approximately $4,787,000, including the assumption of approximately $4,670,000
of non-recourse debt. The equipment was uninstalled during December 2006
and returned to us during January 2007.  The associated estimated
residual value of the equipment was subsequently reclassified to equipment held
for sale as of December 31, 2006.  At December 31, 2006, the LLC
recorded an impairment loss of approximately $154,000 based on sales estimates.
The remaining assets’ value of an immaterial amount was written off at September
30, 2007.





During
March 2004, the LLC acquired various pieces of computer equipment consisting of
DMX hard drives, Brocade 12000 Directors with 128 usable ports and associated
hardware from Insight for approximately $3,392,000, including the assumption of
approximately $3,309,000 of non-recourse debt.  The equipment was
leased to an unrelated third-party lessee under a lease which was scheduled to
expire in December 2007. During October 2006, the lessee purchased the leased
equipment by prepaying the remaining outstanding non-recourse debt balance of
approximately $1,100,000 and paying the LLC approximately
$30,000.  The LLC recognized a loss of approximately $87,000 on this
sale during the year ended December 31, 2006.





During
May 2003, the LLC acquired lathes, presses and robotic manufacturing equipment
on lease to Metaldyne Corporation (“Metaldyne”) through December 2009, for
approximately $2,412,000. The Manager was paid an acquisition fee of
approximately $72,000 relating to this transaction.  During March
2006, the equipment on lease to Metaldyne was sold for approximately $1,931,000
and the LLC recognized a gain of approximately $302,000.





During
August and September of 2003, the LLC acquired various manufacturing equipment
on lease to Wildwood Industries, Inc. (“Wildwood”) for approximately $986,000
and $1,200,000, respectively.  At lease expiration, each lease was
typically extended for an additional twelve month period, most recently on
September 1, 2008 and October 1, 2008, respectively.  At December 31,
2008, the Manager determined that both assets were impaired based upon the
estimate that lease proceeds would be insufficient to cover the residual
position and recorded an aggregate impairment loss of approximately $205,000 and
bad debt expense for uncollectable receivables of approximately $136,000 (See
Note 18 – Subsequent Events).






54
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
  (3)
                Net
      Investment in Finance Leases -
continued




During
September 2002, the LLC acquired three car and truck carrying vessels (the
“Vessels”) on bareboat charter to Wilhelmsen Lines Shipowning AS (“Wilhelmsen”)
through December 22, 2008. Effective March 14, 2006, the LLC extended the terms
of its bareboat charters with Wilhelmsen through December 22, 2013. The charter
extension includes a provision that provides Wilhelmsen to own the Vessels at
the expiration of the charter extension for a nominal amount. Accordingly, the
LLC reclassified the net book value of the Vessels of approximately $45,399,000
from operating leases to investment in finance leases. The non-recourse
long-term debt associated with the Vessels was refinanced on May 18, 2006 (See
Note 7).





Non-cancelable
minimum annual amounts due on investments in finance leases over the next five
years were as follows at December 31, 2008:





Years
      EndingDecember 31,2009
                
                $
                9,558,2412010
                
                
                9,061,1252011
                
                
                8,322,0002012
                
                
                8,322,0002013
                
                
                6,241,500$
                41,504,866





(4)
            Leased
      Equipment at Cost





Leased
equipment at cost consisted of the following at December 31, 2008 and
2007:





2008
                
                
                2007Aircraft
                
                $
                52,319,731
                
                
                $
                52,319,731Marine
      vessels
                
                
                40,285,787
                
                
                
                40,304,192Railcars
                
                
                -
                
                
                
                1,265,660Manufacturing,
      telecommunicationsand
      computer equipment
                
                
                3,560,833
                
                
                
                5,282,02296,166,351
                
                
                
                99,171,605Less:
      Accumulated depreciation
                
                
                (12,060,032
                )
                
                
                (8,414,864
                )Less:
      Asset impairment
                
                
                (3,866,551
                )
                
                
                -$
                80,239,768
                
                
                $
                90,756,741





Depreciation expense was $5,701,646,
$5,435,083 and $10,356,731 for the years ended December 31, 2008, 2007 and 2006,
respectively.





Aircraft





During
December 2002, the LLC and ICON Income Fund Eight B L.P. (“Fund Eight B”), an
entity also managed by the Manager, formed a joint venture, ICON Aircraft 46835,
LLC (“Aircraft 46835”), with ownership interests of 85% and 15%, respectively.
Aircraft 46835 was formed for the purpose of acquiring an investment in a
McDonnell Douglas DC10-30F aircraft on lease with Federal Express Corporation
(“FedEx”). On December 27, 2002, Aircraft 46835 acquired the aircraft for
approximately $25,292,000 including approximately $22,292,000 of non-recourse
debt. The Manager was paid
an acquisition fee of approximately $759,000 relating to this transaction, of
which the LLC paid approximately $645,000. On March 30, 2007, Aircraft 46835
sold the aircraft to FedEx for $4,260,000 and recognized a loss on the sale of
approximately $640,000. The final lease payment was paid to the lender,
satisfying all remaining debt obligations.





55
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(4)
            Leased
      Equipment at Cost - continued




During
July 2002, the LLC formed a wholly-owned subsidiary, ICON Aircraft 128 LLC
(“ICON 128”), for the purpose of acquiring an Airbus A340-313X aircraft
(“Aircraft 128”) on lease to Cathay Pacific Airways Limited (“Cathay”) for
approximately $69,000,000, including the assumption of approximately $64,800,000
of non-recourse debt.  Effective June 7, 2006, the LLC entered into a
lease extension with Cathay through December 1, 2011. Simultaneously with the
lease extension of the aircraft, the LLC refinanced the non-recourse debt
associated with the aircraft (See Note 7).





In light
of recent, unprecedented high fuel prices during 2008 and the related impact on
the airline industry, as of June 30, 2008, the Manager reviewed the LLC’s
investment in Aircraft 128. In accordance with the provisions of FASB Statement
No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS
No. 144”) and based upon recent changes in the airline industry, the Manager
determined that Aircraft 128 was impaired.





Based on
the Manager’s review, the residual value of Aircraft 128 exceeded its expected
undiscounted future cash flows and, as a result, ICON 128 recognized an
impairment representing the difference between the aircraft residual value and
its fair market. The fair market value was generally determined using a market
approach, a recent appraisal for Aircraft 128 and recent sales of similar
aircraft, as well as other factors, including those discussed
above.  As a result, ICON 128 recognized an impairment loss on
Aircraft 128 of approximately $3,900,000 as of June 30, 2008.





The
following factors, among others, indicated that the full residual values of
Aircraft 126 and Aircraft 128 might not be recoverable: (i) indications that
lenders were willing to finance less of the acquisition cost of four-engine
aircraft, which increased with each dollar rise of the price of fuel, thereby
undermining the residual value expectations of such aircraft; (ii) the rising
cost of fuel was increasing the operating costs of four-engine aircraft and
similar capacity twin-engine aircraft, thereby making such aircraft less
attractive investments at the time and thereby depressing the market for
Aircraft 126 and Aircraft 128; and (iii) the likelihood of aircraft operators
switching to more efficient aircraft, thereby depressing the market for Aircraft
126 and Aircraft 128.





Marine
Vessels





On July
24, 2007, the LLC, through its wholly-owned subsidiary, ICON Samar, LLC (“ICON
Samar”) purchased a 98,640 DWT Aframax product tanker - the Samar Spirit – from
an affiliate of the Teekay Corporation (“Teekay”). The purchase price for the
Samar Spirit was $40,250,000, including the assumption of approximately
$23,382,000 of non-recourse debt under a secured loan agreement with Fortis
(“Fortis”). In addition, ICON Samar paid an arrangement fee to Fortis of
approximately $175,000 and has a payable to the Manager for approximately
$54,000 related to legal fees incurred. Simultaneously with the closing of the
purchase of the Samar Spirit, a bareboat charter was entered into with
Teekay for a term of 48 months. The charter commenced on July 24, 2007 and is
scheduled to expire on July 24, 2011. The Manager waived acquisition fees
payable in connection with the purchase.





Railcars





During
November 2002, the LLC acquired 324 railcars on lease to Texas Genco
LP.  On May 7, 2007, the LLC sold the equipment to an unrelated third
party for $4,960,000, of which approximately $1,500,000 was used to repay the
related long-term debt and legal fees of $5,000.  The
LLC recognized a gain on the sale of approximately $3,100,000.






56
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (4)
              Leased
      Equipment at Cost - continued




On
January 28, 2008, ICON Railcar I, LLC (“ICON Rail”), the LLC’s wholly-owned
subsidiary, sold its entire interest in 110 railcars (the “Railcars”) to an
unrelated third party that was leasing and operating the
railcars.  The LLC recognized a gain on the sale of approximately
$313,000.





Manufacturing,
Telecommunication and Computer Equipment





On April
30, 2003, the LLC acquired a Double Kraft Paper Forming Tubing Unit on lease to
Wildwood through February 2007 for approximately $1,350,000 in cash. Effective
March 1, 2007, pursuant to the terms of the lease, the lease was extended for an
additional twelve months. Effective March 1, 2008, this lease was again extended
for an additional twelve months and was reclassified as an operating lease.
Subject to the terms of the lease renewal, there is a residual interest sharing
agreement with a third-party broker that was payable when a minimum return on
investment was attained, whereby all sales proceeds received above $150,000 will
be shared equally with the third party.  For the years ended December
31, 2008 and 2007, approximately $130,000 and $87,000 was distributed to the
third party in accordance with the terms of the residual interest sharing
agreement. At December 31, 2008, the Manager determined that the asset was
impaired based upon the estimate that lease proceeds would be insufficient to
cover the residual position and recorded an impairment loss of approximately
$77,000 and bad debt expense for uncollectable receivables of approximately
$65,000 (See Note 18 – Subsequent Events).




On June20, 2003, the LLC acquired
microprocessormanufacturingdevicescurrentlyon lease through June 2007 toSpansion LLC(“Spansion”) for approximately $6,391,000 in
cash.Effective
July 1, 2007, this modified lease was extended for an additional 12 months and
was reclassified upon extension of the lease from a finance lease to an
operating lease. Effective July 1, 2008,this lease was again extended for an
additional twelve months. On August 1, 2003, the LLC acquired
semi-conductor memory testing equipment subject to two leases through July 2007
currently with Spansion for approximately $4,561,000 in cash.  These
leases were extended on a month-to-month basis. Effective August 1, 2007, these
modified leases were reclassified upon the extensions of the leases from finance
leases to operating leases. The two leases with Spansion expired on March 31,
2008. Each lease was renewed for a fifteen month period commencing on April 1,
2008 (See Note 18 – Subsequent Events).





The
Manager was paid acquisition fees of approximately $329,000 relating to the
initial purchase of the assets currently leased to Spansion. For all three
Spansion leases, there is a residual interest sharing agreement with a
third-party broker that is payable when a minimum return on investment was
attained. Subject to the original terms, all sales proceeds received above
approximately $633,000 will be shared 35% with the third party.  For
the year ended December 31, 2008, approximately $739,000 was distributed to the
third party in accordance with the terms of the residual interest
sharing.





During
May 2002, the LLC and Fund Eight B formed ICON/Kenilworth LLC (“Kenilworth”) for
the purpose of acquiring a natural gas-fired 25MW co-generation facility (the
“Kenilworth Facility”) on lease to Schering-Plough Corporation until June 19,
2004, which was subsequently extended through July 1, 2009. The LLC paid
approximately $7,990,000 in cash for its investment in Kenilworth. The LLC and
Fund Eight B had ownership interests of 95% and 5%, respectively. The Manager
was paid an acquisition fee totaling approximately $460,000 relating to this
transaction, of which the LLC paid approximately $437,000.





57
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (4)
              Leased
      Equipment at Cost - continued




Kenilworth
acquired the Kenilworth Facility subject to the lease for a total cost of
approximately $15,328,000, consisting of approximately $8,410,000 in cash and
non-recourse debt of approximately $6,918,000, which matured on July 1, 2004. On
December 1, 2004, Fund Eight B transferred its entire 5% interest in Kenilworth
to the LLC in exchange for a 25.87% interest in ICON SPK 2023-A LLC (“ICON
SPK”).  The Manager determined the fair value of the Kenilworth
interest and the ICON SPK interest was approximately $488,000 and was based upon
the Manager’s knowledge of current market conditions and a concurrent appraisal
received with the transaction. On April 20, 2006, the Kenilworth Facility was
sold to a third party for approximately $4,800,000.  The LLC incurred
a loss of approximately $2,770,000 on the sale of this equipment, which was
recorded as an impairment loss at the end of March 2006.  The Manager
determined that it was in the best interest of the LLC to sell the co-generation
facility for the cash received.  The decision to sell the asset was
based on the outlook of pricing in the natural gas industry.





During
December 2004, the LLC acquired four Noritsu QSS 3011 digital mini-labs on lease
to Rite Aid Corporation (“Rite Aid”) through November 2007 for approximately
$399,000 in cash.  The Manager was paid acquisition fees of
approximately $12,000 relating to this transaction. At December 31, 2006, the
Manager determined, based upon an appraisal, that the LLC should record an
impairment of approximately $80,000. As of December 31, 2007, the lease was
extended on a month-to-month basis. Subsequent to December 31, 2007, Rite Aid
notified the Manager of its intent to return to the LLC all the digital
mini-labs that were subject to lease with Rite Aid. One of the digital mini-labs
was returned to the LLC in August 2008 and the remaining three units were
returned in September 2008. The Rite Aid lease was then terminated. All four
units were subsequently sold for an amount that closely approximated carrying
value resulting in an immaterial gain.





During
December 2004, the LLC acquired from Varilease Technology Finance Group, Inc. a
portfolio of medical equipment subject to two leases that expired in December
2008 for approximately $2,046,000 in cash.





During
December 2004, the LLC acquired a Mitel Networks 3340 Global Branch Office
Solution Phone System subject to lease with CompUSA, Inc.  The lease
term was to expire during December 2008. The purchase price was approximately
$173,000 in cash. During December 2007, the phone system was sold for total
proceeds of approximately $45,000 and a gain on sale of approximately $6,000 was
recognized.





Aggregate
annual minimum future rentals receivable from each of the LLC’s non-cancelable
leases consisted of the following at December 31, 2008:





Years
      EndingDecember 31,2009
                
                $
                13,856,2242010
                
                $
                12,493,5472011
                
                $
                7,891,000





(5)
            Investments
      in Joint Ventures





The LLC
and certain of its affiliates, entities also managed by the Manager, formed the
joint ventures discussed below, for the purpose of acquiring and managing
various leased equipment.  The LLC and these affiliates have
substantially identical investment objectives and participate on identical terms
and conditions.  The LLC and the other joint venture members have a
right of first refusal to purchase
the equipment, on a pro-rata basis, if any of the other joint venture members
desire to sell their interests in the equipment or joint
venture.




58
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(5)
            Investments
      in Joint Ventures - continued




ICON
Global Crossing II, LLC





On
September 27, 2006, the LLC along with ICON Income Fund Ten, LLC (“Fund Ten”),
an entity also managed by the Manager, formed ICON Global Crossing II, LLC
(“Global Crossing II”), with original ownership interests of approximately 17%
and 83%, respectively. The total capital contributions made to Global Crossing
II were approximately $12,044,000, of which the LLC’s share was approximately
$2,000,000.





On
September 28, 2006, Global Crossing II purchased telecommunications equipment
for approximately $12,044,000. The LLC collected interim rent until the
commencement of the lease term. This equipment is subject to a 48-month lease
with Global Crossing that commenced on November 1, 2006. The Manager was paid an
acquisition fee totaling $60,000 relating to this transaction, which was
included in other assets and will be amortized to operations over the life of
the related lease with Global Crossing. On October 31, 2006, ICON Leasing Fund
Eleven, LLC (“Fund Eleven”), an entity also managed by the Manager, made a
capital contribution of approximately $1,841,000 to Global Crossing
II.  The contribution changed the ownership interests for the LLC,
Fund Ten and Fund Eleven at October 31, 2006 to 14.40%, 72.34% and 13.26%,
respectively.  The additional contribution was used to purchase
telecommunications equipment subject to a 48 month base lease term with Global
Crossing that commenced on November 1, 2006.





ICON SPK
2023-A, LLC





On
December 31, 2001, the LLC and Fund Eight B formed ICON SPK for the purpose of
acquiring and managing a portfolio of equipment leases consisting of
manufacturing, telecommunication and computer equipment.  The LLC paid
approximately $3,953,000 for its investment in ICON SPK.  The LLC and
Fund Eight B originally had ownership interests of 51% and 49%, respectively.
ICON SPK completed the transaction, with a total cost of approximately
$7,750,000 in cash.  The Manager was paid an acquisition fee totaling
approximately $233,000 relating to this transaction, of which the LLC paid
approximately $119,000.





During
2006, ICON SPK sold various pieces of its portfolio of equipment for
approximately $460,000 in cash and recognized a loss of approximately $106,000
on these sales. During the second quarter of 2007, ICON SPK sold all of its
remaining equipment to a third party for total sales proceeds of approximately
$348,000.  ICON SPK recognized a gain on the sale of approximately
$264,000.





ICON
GeicJV




On March
31, 2004, the LLC along with Fund Ten, formed a joint venture, ICON GeicJV, for
the purpose of purchasing information technology equipment subject to a lease
with Government Employees Insurance Company (“GEICO”).  The LLC paid
approximately $1,522,000 for its investment in the joint venture.  The
LLC and Fund Ten have ownership interests of 26% and 74%,
respectively.  On April 30, 2004, the joint venture acquired the
technology equipment subject to lease for a total cost of approximately
$5,853,000 in cash.  The LLC paid the Manager an acquisition fee
totaling approximately $46,000 relating to this transaction.




During
2007, GEICO returned equipment with a cost basis of approximately
$5,798,000 and extended on a month–to-month basis equipment with a cost
basis of approximately $55,000. Of the equipment that was returned, the Manager
has sold equipment with a net book value of approximately $781,000. The joint
venture realized proceeds of approximately $775,000 and recognized a loss of
approximately $6,000 on the sale of the equipment. The remaining returned
equipment had a net book value of approximately $58,000. During 2008,
the joint venture sold all of the remaining equipment previously on
lease to GEICO.  The joint venture realized proceeds of approximately
$96,000 and recognized a gain on the sale of equipment of approximately
$31,000.




59
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (5)
              Investments
      in Joint Ventures - continued




ICON
Aircraft 47820 LLC





During
March 2003, the LLC and Fund Eight B L.P., formed a joint venture, ICON Aircraft
47820 LLC (“Aircraft 47820”), in which the LLC and Fund Eight B had ownership
interests of 10% and 90%, respectively. Aircraft 47820 was formed for the
purpose of acquiring an investment in a McDonnell Douglas DC10-30F aircraft and
two spare engines (the “Aircraft and Engines”) on lease to Federal Express
Corporation (“FedEx”). On March 11, 2003, Aircraft 47820 acquired the Aircraft
and Engines for approximately $27,288,000, including approximately $24,211,000
of non-recourse debt. The LLC’s portion of the cash purchase price was
approximately $308,000. On March 30, 2007, Aircraft 47820 sold the Aircraft and
Engines to FedEx for $5,475,000 and recognized a loss on the sale of
approximately $1,025,000.





ICON
Aircraft 126 LLC





During
February 2002, the LLC and Fund Eight B formed ICON Aircraft 126 LLC (“ICON
126”) for the purpose of acquiring all of the outstanding shares of Delta
Aircraft Leasing Limited (“D.A.L.”), a Cayman Islands registered company that
owns, through an owner trust, an Airbus A340-313X aircraft (“Aircraft 126”) that
is on lease to Cathay. ICON 126 completed the transaction during March 2002. The
lease was initially scheduled to expire in March 2006, but has been extended
until July 1, 2011. The LLC and Fund Eight B each have ownership interests of
50% in ICON 126. ICON 126 consolidates the financial position and operations of
D.A.L. in its consolidated financial statements.





Effective
March 27, 2006, in connection with the lease extension, approximately
$52,850,000 of non-recourse debt associated with Aircraft 126 was refinanced
after applying $583,000 from a reserve account established in connection with
the original lease with Cathay. The refinanced non-recourse debt matures on July
1, 2011 and requires a balloon payment of approximately $33,000,000
at maturity. The interest rate of the refinanced debt was fixed at 6.104%
under the terms of the debt agreement, effective October 3, 2006.





ICON
126 had a commitment with respect to Aircraft 126 to pay certain maintenance
costs that were incurred on or prior to March 27, 2006. ICON 126 established a
maintenance reserve cash account under the original lease to pay for its portion
of these costs. This account was funded by free cash from the lease payments in
accordance with the terms of the original lease. During 2006, ICON 126 received
$182,021 of capital contributions from both of its members, of which $50,000 was
for amounts relating to the maintenance reserve cash account and $132,021 was
related to costs paid by its members relating to the refinancing of the
non-recourse debt. During September 2006, approximately $1,153,000 was paid for
maintenance costs. The maintenance account for Aircraft 126 was
cross-collateralized with the maintenance account for ICON Aircraft 123 LLC,
(“ICON 123”) which owns an Airbus A340-31X aircraft on lease to
Cathay (“Aircraft 123”) and is a wholly own subsidiary of Fund Eight
B.  Under the terms of this agreement, ICON 126 was required to pay on
behalf of ICON 123, any maintenance cost shortfalls incurred by the affiliate.
On January 30, 2007, ICON 126 paid approximately $143,000 in maintenance costs
from its maintenance account on behalf of ICON 123.  The maintenance
account and related security interests were then
terminated.   ICON 123 will reimburse ICON 126 when the aircraft
is sold. The excess cash remaining in ICON 126’s account at December 31, 2008 is approximately
$97,000, which includes accreted interest in the amount of approximately $38,000
through December 31, 2008.






60
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (5)
              Investments
      in Joint Ventures - continued




In
connection with the purchase of the Aircraft 123, the owner trustee entered into
two first priority charge on cash deposit agreements pursuant to which, as
discussed above, the maintenance account for Aircraft 126 was
cross-collateralized with the maintenance account for Aircraft
123.  In addition, ICON 123 and ICON 126 are parties to a residual
sharing agreement with respect to the aircraft (See Note 13).





In light
of recent, unprecedented high fuel prices during 2008 and the related impact on
the airline industry, as of June 30, 2008, the Manager reviewed the LLC’s
investment in Aircraft 126.  In accordance with the provisions of FASB
Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets” (“SFAS No. 144”) and based upon recent changes in the airline industry,
the Manager determined that Aircraft 126 was impaired.





Based on
the Manager’s review, the residual values of Aircraft 126 exceeded their
expected undiscounted future cash flows and, as a result, ICON 126 recognized an
impairment representing the difference between the aircraft residual value and
their fair market. The fair market value of the aircraft were generally
determined using a market approach, a recent appraisal for Aircraft 126 and
recent sales of similar aircraft, as well as other factors, including those
discussed above.  As a result, as of June 30, 2008, ICON 126
recorded an impairment loss on Aircraft 126 of approximately $3,900,000, of
which the LLC’s share was approximately $1,950,000.




The
following factors, among others, indicated that the full residual value of
Aircraft 126 might not be recoverable: (i) indications that lenders were willing
to finance less of the acquisition cost of four-engine aircraft, which increased
with each dollar rise of the price of fuel, thereby undermining the residual
value expectations of such aircraft; (ii) the rising cost of fuel was increasing
the operating costs of four-engine aircraft and similar capacity twin-engine
aircraft, thereby making such aircraft less attractive investments at the time
and thereby depressing the market for Aircraft 126; and (iii) the likelihood of
aircraft operators switching to more efficient aircraft, thereby depressing the
market for Aircraft 126.





ICON 126
is a party to a residual sharing agreement (the “Airtrade Residual Sharing
Agreement”) with ICON 123 and Airtrade Capital Corp.
(“Airtrade”).  Pursuant to the terms of the Airtrade Residual Sharing
Agreement, all proceeds received in connection with the sale or lease extension
of the aircraft owned by ICON 123 and ICON 126 in excess of $8,500,000 (in the
aggregate) of the debt associated with each aircraft (net of expenses) will be
allocated 55% to ICON 123 or ICON 126, as applicable, and 45% will be allocated
to Airtrade.




(6)
              Investments
      in Unguaranteed Residual
Values


On
December 31, 2003, the LLC entered into an agreement with Summit Asset
Management to acquire a 90% interest in the unguaranteed residual values of
manufacturing and technology equipment valued at approximately $37,713,000 and
on lease to various lessees located in the United Kingdom for approximately
$4,454,000 in cash.  The LLC’s investment return is contingent upon
the residual value of the equipment after repayment of the debt.  The
Manager was paid an acquisition fee of approximately $1,131,000 related to this
transaction.





At
December 31, 2008, 2007 and 2006, the LLC received approximately $686,000,
$710,000 and $1,104,000, respectively, in proceeds for the sale of various
pieces of equipment and recognized a gain for the year ended December 31, 2008
of approximately $204,000 and a loss of $157,000 and $87,000 for the years ended
December 31, 2007 and 2006, respectively.




61
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (6)
              Investments
      in Unguaranteed Residual Values -
continued




Additionally,
for the years ended December 31, 2008, 2007 and 2006, the LLC received
approximately $20,000, $250,000 and $310,000, respectively, in renewal income
that is classified as rental income in the accompanying consolidated statements
of operations.





(7)
            Non-Recourse
      Long-Term Debt





The LLC
acquired the Vessels on bareboat charter to Wilhelmsen for cash and non-recourse
long-term debt (See Note 3). On May 18, 2006, in connection with the
charter extension through December 22, 2013, the LLC refinanced the non-recourse
long-term debt related to the Vessels and borrowed an additional $22,043,000.
The principal amount of the refinanced non-recourse long-term debt is
$51,000,000, which debt matures on December 22, 2013 and accrues interest at
LIBOR plus 1.50% per year. The refinanced non-recourse long-term debt requires
quarterly payments ranging from $450,000 to $800,000. The lender has a security
interest in the Vessels and an assignment of the rental payments under the
charter. The LLC paid approximately $630,000 in costs associated with the
non-recourse long-term debt refinancing, which were capitalized to other assets
and are being amortized to operations over the term of the non-recourse
long-term debt. In 2006, the LLC wrote off approximately $417,000 of debt
financing costs associated with the original non-recourse long-term debt to
interest expense. As of December 31, 2008, approximately $184,000 was recorded
to interest expense related to the amortization of the non-recourse long-term
debt financing costs.





Simultaneously
with the execution of the refinancing and borrowing of the non-recourse
long-term debts of the Vessels, the LLC entered into three interest rate
swap contracts with Fortis Bank NV/SA, New York Branch (“Fortis Bank”) in the
aggregate amount of $51,000,000 in order to fix the variable interest rate on
the non-recourse long-term debt and minimize the risk of interest rate
fluctuation. The interest rate swap contracts fixed the refinanced debt interest
rate at 7.02%.





On May
22, 2006, the LLC terminated the initial interest rate swap contracts in
connection with the non-recourse long-term debt refinancing and received
$705,000 from the swap provider to terminate the existing three interest rate
swap contracts. The LLC recognized a gain on this termination of approximately
$26,000 during the year ended December 31, 2006.





On July
24, 2007, the LLC, through its wholly-owned subsidiary, ICON Samar, borrowed
approximately $23,382,000 in connection with a bareboat charter with
Teekay. The non-recourse long-term debt matures on July 25, 2011 and accrues
interest at LIBOR plus 1.00% per year.  The
non-recourse long-term debt requires monthly payments ranging from $480,000
to $530,000. The lender has a security interest in the vessel and an assignment
of the rental payments under the bareboat charter. Simultaneously with the
borrowing, we entered into an interest rate swap contract with Fortis Bank in
order to fix the debt interest rate at 6.35% per year. The LLC paid
approximately $175,000 in costs associated with the debt, which was capitalized
as debt financing costs. As of December 31, 2008, approximately $80,000 was
recorded to interest expense related to the amortization of the non-recourse
long-term debt financing costs.





The LLC
designated its interest rate swaps as cash flow hedges and accounts for them in
accordance with SFAS No. 133, as amended, by recording the interest rate swap
contracts at their estimated fair market values, and recognizing the periodic
change in their fair market values of effective hedges as other comprehensive
income. At December 31, 2008 and 2007, the fair value of the interest rate swap
contracts was a liability of $3,513,483 and $2,016,033,
respectively.





62
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (7)
                Non-Recourse
      Long-Term Debt -
continued


The LLC
acquired its interest in Aircraft 128 for cash and the assumption of
non-recourse long-term debt (See Note 4).Effective
June 7, 2006, the owner trustee, in connection with the Cathay lease extension
for ICON 128, refinanced the non-recourse long-term debt related to the
aircraft (the “Initial Refinancing”).  The Initial Refinancing was
entered into because the original non-recourse long-term debt of
approximately $44,250,000 was due to be repaid on June 12, 2006. The LLC was
required by the lender to pay down approximately $6,754,000 of the balloon
payment as part of the Initial Refinancing. The principal balance of the Initial
Refinancing was approximately $37,495,000, and was scheduled to mature on
December 1, 2011, required a balloon payment of approximately $11,550,000 and
accrued interest at LIBOR plus 0.80% per year. The Initial Refinancing required
monthly payments of approximately $545,000 through May 2010 and approximately
$495,000 through December 2011. The LLC incurred approximately $197,000 of costs
in connection with the Initial Refinancing. The non-recourse long-term debt
lender had a security interest in the aircraft and an assignment of the lease
payments. The LLC expensed these costs to interest expense during the year ended
December 31, 2006.





On August
1, 2006, the owner trustee was able to negotiate more favorable terms with a new
lender and refinanced the Initial Refinancing (the “Second Refinancing”). In
connection with the Second Refinancing, the LLC was able to borrow approximately
an additional $6,242,000. The principal balance of the Second Refinancing was
approximately $43,800,000, and matures on December 1, 2011, requires a balloon
payment of approximately $22,750,000 and accrues interest at 6.85% per year. The
Second Refinancing requires monthly payments of approximately $545,000 through
May 2010 and approximately $495,000 through December 2011. The LLC paid
approximately $438,000 of costs in connection with the Second Refinancing, which
were capitalized as debt financing costs and will be amortized to operations
over the term of the Second Refinancing.As
of December 31, 2008, approximately $185,000 was recorded to interest expense
related to the amortization of the non-recourse long-term debt financing
costs.





As
discussed in Notes 3 and 4, the LLC has non-recourse notes outstanding in
connection with various lease acquisitions.





As of
December 31, 2008 and 2007, the LLC had net debt financing costs of $489,835 and
$665,443, respectively. For the years ended December 31, 2008, 2007 and 2006,
the LLC recognized amortization expense of $450,205, $145,817 and $108,418,
respectively.





The
aggregate maturities of non-recourse long-term debt, including the effects of
refinancing discussed above, consisted of the following at December 31,
2008:





Years
      EndingDecember 31,2009
                
                $
                15,011,6042010
                
                
                15,262,9072011
                
                
                36,374,1882012
                
                
                5,400,000Thereafter
                
                
                5,400,000$
                77,448,699




63
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (8)
                Revolving
      Line of Credit,
Recourse


The LLC
and certain of its affiliates (entities sponsored and organized by our Manager),
Fund Eight B, Fund Ten and Fund Eleven (collectively, the
“Borrowers”), entered into a Commercial Loan Agreement (the “Loan
Agreement”), with California Bank & Trust (“CB&T”). The Loan Agreement
provided for a revolving line of credit of up to $17,000,000 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, as defined in the
Loan Agreement. Each of the Borrowers is jointly and severally liable for all
amounts borrowed under the Facility. Amounts available under the Facility are
subject to a borrowing base that is determined, subject to certain limitations,
on the present value of the future receivables under certain lease agreements in
which the Borrowers have a beneficial interest.





As part
of the Loan Agreement, the Borrowers are required to comply with certain
financial covenants, including a minimum debt coverage ratio, a tangible net
worth covenant, a leverage ratio and a minimum liquidity covenant. The Loan
Agreement prohibits any Borrower from declaring or paying any distribution to
investors if such a payment would cause such Borrower to become non-compliant
with the financial covenants in the Loan Agreement.  The
Borrowers were obligated to pay a quarterly commitment fee of 0.5% on
unused commitments under the Facility.





In
addition, the Borrowers previously entered into a Contribution Agreement (the
“Contribution Agreement”), pursuant to which the Borrowers have agreed to
certain restrictions on the amounts and terms of their respective borrowings
under the Facility in order to minimize the risk that a Borrower would be unable
to repay its portion of the outstanding obligations under the Facility at any
time. The Contribution Agreement also provides that, in the event a Borrower
pays an amount under the Contribution Agreement in excess of its share of the
total obligations under the Facility, whether by reason of an event of default
or otherwise, the other Borrowers will immediately make a contribution payment
to such Borrower in such amount that the aggregate amount paid by each Borrower
reflects its allocable share of the aggregate obligations under the Facility.
The Borrowers’ obligations to each other under the Contribution Agreement are
collateralized by a subordinate lien on the assets of each
Borrower.





On
December 26, 2006, the Borrowers entered into a Loan Modification Agreement (the
“Loan Modification”) to the Loan Agreement. The Loan Modification extended the
Facility from August 31, 2007 to September 30, 2008 and lowered (i) the interest
rate for advances under the Facility from CB&T’s prime rate plus 0.25% to
CB&T’s prime rate and (ii) the interest rate on the five separate advances
that are permitted to be made under the Facility at the rate at which United
States dollar deposits can be acquired by CB&T in the London Interbank
Eurocurrency Market (the “LIEM Rate”) plus 2.75% per year to the LIEM
Rate plus 2.5% per year. In addition, pursuant to the terms of the Loan
Modification, the Borrowers no longer have to maintain a cash
reserve.





On June
20, 2007, the Loan Agreement, the Contribution Agreement and the Loan
Modification were modified to add Fund Twelve as a Borrower.





On May 1,
2008, the Borrowers entered into an additional loan modification agreement.
The agreement increased the revolving line of credit up to $30,000,000 and
extended the expiration date to April 30, 2010. The Borrowers may request a one
year extension to the revolving line of credit within 390 days of the expiration
date, but CB&T has no obligation to extend. The quarterly unused commitment
fee of 0.5% was reduced to 0.25% on unused commitments under the Facility. The
interest rate at December 31, 2008 was 3.25%.





The
Borrowers were in compliance with the covenants under the Loan Agreement at
December 31, 2008 and 2007.  The Borrowers were also in compliance
with the Contribution Agreement at December 31, 2008 and 2007 and no amounts
were due to or payable by the LLC under the Contribution Agreement as of such
date.




Aggregate
borrowings by all Borrowers under the Facility amounted to $6,185,000 at
December 31, 2008. The balances of $1,185,000 and $5,000,000 were borrowed by
Fund Eight B and Fund Eleven, respectively. On February 26, 2009, Fund
Eleven borrowed an additional $600,000 under the Facility.




64
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(9)
            Transactions
      with Related Parties





In
accordance with the terms of the LLC Agreement, the LLC paid the Manager (i)
management fees ranging from 1% to 7% based on a percentage of the rentals
recognized either directly by the LLC or through its joint ventures, and (ii)
acquisition fees, through the end of the operating period, of 3% of the purchase
price of the LLC’s investments.  In addition, the Manager was
reimbursed for certain administrative expenses incurred in connection with the
LLC’s operations.





The
Manager performs certain services relating to the management of the LLC’s
equipment leasing and 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 assure
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 are costs incurred by the Manager or its affiliates that
are necessary to the LLC’s operations.  These costs include the Manager’s
and its affiliates’ legal, accounting, investor relations and operations
personnel, as well as professional fees and other costs that are charged to the
LLC based upon the percentage of time such personnel dedicate to the
LLC. Excluded are salaries and related costs, travel expenses and other
administrative costs incurred by individuals with a controlling interest in the
Manager.





The
Manager also has a 1% interest in the LLC’s profits, losses, cash distributions
and liquidation proceeds. The LLC paid distributions to the Manager of $77,556,
$89,144 and $89,204 for the years ended December 31, 2008, 2007 and 2006,
respectively.  The Manager’s interest in the LLC’s net income was
$10,478 and $79,400 for the years ended December 31, 2008 and 2007,
respectively, and loss of $6,679 for the year ended December 31,
2006.





Fees and
other expenses paid or accrued by the LLC to the Manager or its affiliates for
the years ended December 31, 2008, 2007 and 2006, were as follows:





Entity
                          
                          Capacity
                          
                          Description
                          
                          2008
                          
                          
                          2007
                          
                          
                          2006ICON
      Capital Corp.
                          
                          Manager
                          
                          Acquisition
      fees (1)
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          60,000ICON
      Capital Corp.
                          
                          Manager
                          
                          Management
      fees (2)
                          
                          
                          526,469
                          
                          
                          
                          1,780,581
                          
                          
                          
                          2,114,283ICON
      Capital Corp.
                          
                          Manager
                          
                          Administrative
      expense reimbursements (2)
                          
                          
                          149,844
                          
                          
                          
                          677,965
                          
                          
                          
                          596,881$
                          676,313
                          
                          
                          $
                          2,458,546
                          
                          
                          $
                          2,771,164(1)
      Amount capitalized and amortized to operations.(2)
      Amount charged directly to operations.





At
December 31, 2008 and 2007, the LLC owed $0 and $87,475 to the Manager,
respectively.




Effective
April 1, 2008 and May 1, 2008, the Manager waived its rights to all future
administrative expense reimbursements and management fees,
respectively.  As of December 31, 2008, the Manager waived $364,877 of
administrative expense reimbursements and $1,018,551 of management
fees.




65
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (10)
              Derivative
      Financial Instruments


The LLC
is exposed to interest rate risk on the floating-rate non-recourse debt and uses
floating-to-fixed interest rate swaps to hedge this exposure. As of December 31,
2008, the LLC had four floating-to-fixed interest rate swaps designated as a
cash flow hedge with notional amounts of $42,859,805. As of December 31, 2007,
the LLC had four floating-to-fixed interest rate swaps that were designated as
cash flow hedges with an aggregate notional amount of $56,879,743.





The
hedging strategy of the LLC is to match the projected future business cash flows
with the underlying debt service. When the derivative financial instrument is
deemed to be highly effective in offsetting variability in the hedged item,
changes in its fair value are recorded in accumulated other comprehensive income
(loss) and recognized contemporaneously with the earnings effects of the hedged
item. The fair value was determined using market prices and pricing models at
December 31, 2008 and 2007.





At
December 31, 2008, the LLC had four floating-to-fixed interest rate swaps
related to the Wilhelmsen vessels and the Samar. The total amount recorded to
accumulated other comprehensive loss related to the change in fair value of
these interest rate swaps was $3,429,165.





For the
year ended December 31, 2008 and 2007, a loss of $78,982 and $0 were recorded in
earnings representing the ineffective portion of the hedge. The LLC expects to
transfer approximately $1,646,000 from accumulated other comprehensive income
(loss) to earnings in the next 12
months, as the derivative financial instruments and their underlying hedged
items are paid down, along with the earnings effects of the related forecasted
transactions in the next 12 months.





The LLC
manages exposure to possible defaults on derivative financial instruments by
monitoring the concentration of risk that the LLC has with any individual bank
and through the use of minimum credit quality standards for all counterparties.
The LLC does not require collateral or other security in relation to derivative
financial instruments.  Since it is the LLC’s policy to only enter
into derivative contracts with banks of internationally acknowledged standing,
the LLC considers the counterparty risk to be remote.






(11)
            Fair
      Value of Financial Instruments





SFAS
No. 157





Effective
January 1, 2008, the LLC adopted SFAS No. 157.  See Note 2, Summary of
Significant Accounting Policies.








66
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (11)
              Fair
      Value of Financial Instruments –
continued




SFAS No.
157 requires that assets and liabilities carried at fair value be classified and
disclosed in one of the following three categories:





·
            Level
      1:  Quoted market prices available in active markets for
      identical assets or liabilities as of the reporting
  date.


·
            Level
      2:  Pricing inputs other than quoted prices in active markets
      included in Level 1, which are either directly or indirectly observable as
      of the reporting date.


·
            Level
      3:  Pricing inputs that are generally unobservable and can not
      be corroborated by market data.





Financial
assets and liabilities are classified in their entirety based on the lowest
level of input that is significant to the fair value measurement. The LLC’s
assessment of the significance of a particular input to the fair value
measurement requires judgment, and may affect the valuation of the assets and
liabilities being measured and their placement within the fair value
hierarchy.





The
following table summarizes the valuation of the LLC’s material financial assets
and liabilities measured at fair value on a recurring basis as of December 31,
2008:





Level
      1(1)
                    
                    
                    Level
      2(2)
                    
                    
                    Level
      3(3)
                    
                    
                    TotalLiabilities:Derivative
      Liabilities
                    
                    $
                    -
                    
                    
                    $
                    3,513,483
                    
                    
                    $
                    -
                    
                    
                    $
                    3,513,483(1)
      quoted prices in active markets for identical assets or
      liabilities(2)
      observable inputs other than quoted prices in active markets for identical
      assets and liabilities(3)
      no observable pricing inputs in the market





The LLC’s
derivative contracts, including interest rate swaps, are valued using models
based on readily observable market parameters for all substantial terms of the
LLC’s derivative contracts and are classified within Level 2.  As
permitted by SFAS No. 157, the LLC uses market prices and pricing models for
fair value measurements of its derivative instruments.  The fair value
of the derivative liabilities was recorded in interest rate swap
contracts.





SFAS
No. 107





Fair
value information with respect to the LLC's leased assets and liabilities is not
separately provided since (i) SFAS No. 107, “Disclosures About Fair Values of
Financial Instruments,” does not require fair value disclosures of lease
arrangements and (ii) the carrying value of financial assets, other than lease
related investments, and the recorded value of recourse debt, if any,
approximates fair value due to their short-term maturities and variable interest
rates. The fair value of the LLC’s fixed rate note payable is estimated using a
discounted cash flow analysis, based on the current incremental borrowing rate
of the most recent borrowings by the other programs sponsored by the
Manager.





67
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (11)
                Fair
      Value of Financial Instruments –
continued





Carrying Amount
                
                
                Fair ValueFixed
      rate non-recourse long-term debt
                
                $
                34,588,894
                
                
                $
                37,086,253





(12)
            Concentrations
      of Risk





At times,
the LLC's cash and cash equivalents may exceed insured limits. The LLC has
placed these funds in high quality institutions in order to minimize the risk of
loss relating to exceeding insured limits.





Concentrations
of credit risk with respect to lessees are dispersed across different industry
segments within the United States of America and throughout the
world.  Accordingly, the LLC may be exposed to business and economic
risk. Although the LLC does not currently foresee a concentrated credit risk
associated with these lessees, lease payments are dependent upon the financial
stability of the lessees.





For the
year ended December 31, 2008, the LLC had three lessees that accounted for
approximately 83% of its rental and finance income.  Wilhelmsen,
Cathay and Teekay accounted for approximately 25%, 29% and 29%, respectively.
For the year ended December 31, 2007, the LLC had three lessees that accounted
for approximately 77% of its rental and finance income.  Wilhelmsen
accounted for approximately 32%.  For the year ended December 31,
2006, the LLC had three lessees which accounted for approximately 88% of its
rental and finance income.  Wilhelmsen accounted for approximately
34%.





For the
year ended December 31, 2008, the LLC had one aircraft that accounted for
approximately 52% of operating assets and one vessel that accounted for
approximately 45%. For the year ended December 31, 2007, the LLC had one
aircraft that accounted for approximately 53% of operating assets and one vessel
that accounted for approximately 43%.





(13)
            Commitments
      and Contingencies and Off-Balance Sheet
  Transactions





The LLC
has entered into residual sharing agreements with various third
parties.  In connection with these agreements residual proceeds
received in excess of specific amounts will be shared with these third parties
based on specific formulas.





ICON 128
is a party to a residual sharing agreement with Airfleet Credit Corporation and
HXO Leasing Limited.  Pursuant to the terms of the Airfleet Residual
Sharing Agreement, all proceed received in connection with the sale or lease
extension of the aircraft in excess of $4,250,000 of the loan balance associated
with the aircraft will be allocated 55% to ICON 128 and 45% to
Airfleet.





ICON 128
had a commitment with respect to the Cathay aircraft to pay certain maintenance
costs, which were incurred during June 2006. The total estimated costs were
approximately $1,300,000.  During November 2006, the LLC paid
approximately $1,300,000 for these costs.





On
February 23, 2005, ICON Cash Flow Partners L.P. Seven (“L.P. Seven”) assigned to
the LLC 3.02% of its rights to the profits, losses, and cash flows from its
limited partnership interest in an entity that owns a 100% interest in a mobile
offshore drilling rig.  L.P. Seven assigned the rights to the LLC as
repayment of its $755,000 outstanding debt obligation pursuant to a contribution
agreement that the LLC entered into with some of its affiliates in connection
with the line of credit agreement
the LLC had with Comerica Bank.  This assignment increased the LLC’s
rights to the profits, losses and cash flows from L.P. Seven’s limited
partnership interest from 2.60%, which were assigned to the LLC in November 2004
as repayment of its $650,000 outstanding debt obligation, to
5.62%.  The repayment amount represented the Manager’s estimated fair
value of L.P. Seven's interest in the mobile offshore drilling rig at February
23, 2005. The fair value of this interest was determined using an appraisal and
cash flow analysis.  During the year ended December 31, 2006, the LLC
received approximately $253,000 in cash distributions related to this
assignment.





At the
time the LLC acquires or divests of its interest in an equipment lease or other
financing transaction, the LLC may, under very limited circumstances, agree to
indemnify the seller or buyer for specific contingent liabilities. The Manager
believes that any liability of the LLC that may arise as a result of any such
indemnification obligation will not have a material adverse effect on the
consolidated financial condition of the LLC taken as a whole.




68
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (14)
                Share
      Redemptions




The LLC
redeemed no Shares for the year ended 2008 and redeemed 147 and 42 Shares for
the years ended December 31, 2007 and 2006, respectively.  The
redemption amounts are calculated according to a specified redemption formula
pursuant to the LLC Agreement.  Redeemed Shares have no voting rights
and do not share in distributions.  The LLC Agreement limits the
number of Shares that can be redeemed in any one year and redeemed Shares may
not be reissued.  Redeemed Shares are accounted for as a reduction of
members' equity.





(15)
            Geographic
      Information





Geographic
information for revenue, based on the country of origin, and long-lived assets,
which includes finance leases, operating leases, net of accumulated
depreciation, investments in joint ventures and investments in unguaranteed
residual values were as follows:





Year Ended December 31,
2008United
                
                
                United
                
                
                MarineStates
                
                
                Kingdom
                
                
                Vessels (a)
                
                
                Asia
                
                
                TotalRevenue:Rental
      income
                
                $
                2,510,464
                
                
                $
                22,473
                
                
                $
                6,206,808
                
                
                $
                7,313,430
                
                
                $
                16,053,175Finance
      income
                
                
                269,091
                
                
                
                -
                
                
                
                5,498,623
                
                
                
                -
                
                
                
                5,767,714Income
      (loss) from investments in joint ventures
                
                
                170,726
                
                
                
                -
                
                
                
                -
                
                
                
                (2,167,551
                )
                
                
                (1,996,825
                )




At December 31, 2008United
                
                
                United
                
                
                MarineStates
                
                
                Kingdom
                
                
                Vessels (a)
                
                
                Asia
                
                
                TotalInvestment
      in finance leases
                
                $
                196,910
                
                
                $
                -
                
                
                $
                27,988,331
                
                
                $
                -
                
                
                $
                28,185,241Leased
      equipment at cost, net
                
                
                1,658,297
                
                
                
                -
                
                
                
                36,532,547
                
                
                
                42,048,924
                
                
                
                80,239,768Investments
      in joint ventures
                
                
                1,118,703
                
                
                
                -
                
                
                
                -
                
                
                
                1,267,390
                
                
                
                2,386,093Investment
      in unguaranteed residual values
                
                
                -
                
                
                
                830,764
                
                
                
                -
                
                
                
                -
                
                
                
                830,764




69
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (15)
                  Geographic
      Information -
continued








Year Ended December 31,
2007United
                
                
                United
                
                
                MarineStates
                
                
                Kingdom
                
                
                Vessels (a)
                
                
                Asia
                
                
                TotalRevenue:Rental
      income
                
                $
                3,900,854
                
                
                $
                264,248
                
                
                $
                2,722,170
                
                
                $
                6,944,786
                
                
                $
                13,832,058Finance
      income
                
                
                153,612
                
                
                
                -
                
                
                
                6,542,523
                
                
                
                51,070
                
                
                
                6,747,205Income
      (loss) from investments in joint ventures
                
                
                291,765
                
                
                
                -
                
                
                
                -
                
                
                
                (289,460
                )
                
                
                2,305




At December 31, 2007United
                
                
                United
                
                
                MarineStates
                
                
                Kingdom
                
                
                Vessels (a)
                
                
                Asia
                
                
                TotalLong-lived
      assets:Investment
      in finance leases
                
                $
                621,600
                
                
                $
                -
                
                
                $
                34,067,962
                
                
                $
                -
                
                
                
                34,689,562Leased
      equipment at cost, net
                
                
                3,164,118
                
                
                
                -
                
                
                
                39,164,844
                
                
                
                48,427,779
                
                
                
                90,756,741Investments
      in joint ventures
                
                
                1,552,735
                
                
                
                -
                
                
                
                -
                
                
                
                3,413,504
                
                
                
                4,966,239Investments
      in unguaranteed residual values
                
                
                -
                
                
                
                1,312,364
                
                
                
                -
                
                
                
                -
                
                
                
                1,312,364




(a)
            Three
      of the LLC’s vessels are chartered to Wilhelmsen, a Norway based company.
      The fourth vessel is chartered to Teekay, a Canada based company. When the
      LLC charters a vessel to a charterer, the charterer is free to trade the
      vessel worldwide.







(16)
              Selected
      Quarterly Financial
Data


The
following table is a summary of selected financial data by quarter:





(unaudited)
                  Quarters Ended in 2008
                
                
                Year
      EndedMarch 31,
                
                
                June 30,
                
                
                September 30,
                
                
                December 31,
                
                
                December 31, 2008Revenue
                
                $
                6,258,478
                
                
                $
                3,697,958
                
                
                $
                5,178,898
                
                
                $
                5,023,538
                
                
                $
                20,158,872Net
      income (loss) allocable to additional members
                
                $
                2,114,888
                
                
                $
                (3,964,750
                )
                
                $
                1,968,762
                
                
                $
                918,440
                
                
                $
                1,037,340Weighted
      average number of additional sharesof
      limited liability company interests outstanding
                
                
                97,955
                
                
                
                97,955
                
                
                
                97,955
                
                
                
                97,955
                
                
                
                97,955Net
      income (loss) per weighted average additionalshare
      of limited liability company interests
                
                $
                21.59
                
                
                $
                (40.48
                )
                
                $
                20.10
                
                
                $
                9.38
                
                
                $
                10.59




(unaudited)
                  Quarters Ended in 2007
                
                
                Year
      EndedMarch 31,
                
                
                June 30,
                
                
                September 30,
                
                
                December 31,
                
                
                December 31, 2007Revenue
                
                $
                4,992,494
                
                
                $
                6,980,685
                
                
                $
                5,561,696
                
                
                $
                5,925,211
                
                
                $
                23,460,086Net
      income (loss) allocable to additional members
                
                $
                699,919
                
                
                $
                3,807,880
                
                
                $
                1,549,754
                
                
                $
                1,803,065
                
                
                $
                7,860,618Weighted
      average number of additional sharesof
      limited liability company interests outstanding
                
                
                98,102
                
                
                
                98,097
                
                
                
                98,057
                
                
                
                98,052
                
                
                
                98,052Net
      income per weighted average additionalshare
      of limited liability company interests
                
                $
                7.13
                
                
                $
                38.82
                
                
                $
                15.80
                
                
                $
                18.39
                
                
                $
                80.17




70
 Table of Contents
 ICON Income Fund Nine, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (17)
                    Income
      Tax Reconciliation
  (unaudited)


No
provision for income taxes has been recorded by the LLC since the liability for
such taxes is the responsibility of each of the individual members rather than
the LLC.  The LLC’s income tax returns are subject to examination by
federal and State taxing authorities, and changes, if any could adjust the
individual income taxes of the members.





At
December 31, 2008 and 2007, the members’ capital accounts included in the
consolidated financial statements totaled $31,783,252 and $39,909,465,
respectively.  The members’ capital for federal income tax purposes at
December 31, 2008 and 2007 totaled $73,590,494 and $72,708,647,
respectively.  The difference arises primarily from sales and offering
expenses reported as a reduction in the additional members’ capital accounts for
financial reporting purposes, but not for federal income tax reporting purposes
and differences in depreciation and amortization between financial reporting
purposes and federal income tax purposes.





The
following table reconciles net income (loss) for financial statement reporting
purposes to the net income for federal income tax purposes:





Years Ended December 31,2008
                
                
                2007
                
                
                2006Net
      income (loss) per consolidated financial statements
                
                $
                1,047,818
                
                
                $
                7,940,018
                
                
                $
                (667,903
                )Finance
      leases
                
                
                7,004,410
                
                
                
                6,733,396
                
                
                
                12,039,904Depreciation
      expense
                
                
                (5,206,714
                )
                
                
                7,063,467
                
                
                
                1,018,532Interest
      expense - consolidating joint venture
                
                
                -
                
                
                
                (2,235,890
                )
                
                
                (1,734,784
                )Maintenance
      expense - consolidating joint venture
                
                
                -
                
                
                
                (1,476,431
                )
                
                
                (1,317,361
                )Gain
      (loss) on sale of equipment
                
                
                302,371
                
                
                
                (1,917,987
                )
                
                
                497,486Rent
      - consolidating joint venture
                
                
                -
                
                
                
                (5,196,661
                )
                
                
                (5,472,966
                )Tax
      gain from joint venture
                
                
                4,571,741
                
                
                
                993,943
                
                
                
                2,994,299Change
      in valuation of interest swap contracts
                
                
                -
                
                
                
                -
                
                
                
                20,455Other
                
                
                917,781
                
                
                
                (866,739
                )
                
                
                594,864Net
      income for federal income tax purposes
                
                $
                8,637,407
                
                
                $
                11,037,116
                
                
                $
                7,972,526







(18)
              Subsequent
      Events


On
January 21, 2009, we filed a lawsuit in the U.S. District Court for the Southern
District of New York against Wildwood and its owners who guaranteed Wildwood’s
obligations to us.  Our claims are for breaches of the leases and
guarantees for Wildwood’s failure to pay rents. On March 5, 2009, an involuntary
petition under Chapter 11 of the United States Bankruptcy Code was filed against
Wildwood by three of Wildwood’s creditors in United States Bankruptcy Court. At
this time it is not possible to determine the effect of the bankruptcy filing on
our ability to collect the remaining rental payments due to us under the
leases.





On March
1, 2009, Spansion filed for financial restructuring in the United States
Bankruptcy Court. On March 12, 2009, Spansion rejected the two leases that
were renewed on April 1, 2008 and the equipment will be returned. In addition,
Spansion confirmed the lease that was extended on July 1, 2008.  Based
on the Manager's assessment of the equipment and knowledge of the market
for such equipment, the lease rejections are not expected to have a material
adverse affect on the LLC.






71






ICON Income Fund Nine, LLC(A
      Delaware Limited Liability Company)Schedule
      II - Valuation and Qualifying AccountsBalance
      at
                                                Additions
      ChargedBeginning of
                                                to
      Cost, Expenses,
                                                
                                                
                                                
                                                Balance
      atDescription
                                                
                                                Year
                                                
                                                
                                                Revenues
                                                
                                                
                                                Deductions
                                                
                                                
                                                End of YearYear
      Ended December
      31, 2008Allowance
      forDoubtful Accounts
                                                
                                                
                                                -
                                                
                                                
                                                $
                                                155,318
                                                
                                                
                                                
                                                -
                                                
                                                
                                                $
                                                155,318Year
      Ended December
      31, 2007Allowance
      forDoubtful Accounts
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Year
      Ended December
      31, 2006Allowance
      forDoubtful Accounts
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -







72
 Table of Contents









Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure





On
November 26, 2007, ICON Income Fund Nine, LLC (the “Registrant”) terminated the
services of Hays & Company LLP (“Hays”) as its independent registered public
accounting firm for the fiscal year ended December 31, 2007.  The
decision to dismiss Hays was recommended and approved by the board of directors
of ICON Capital Corp. (the “Manager”), the Manager of the Registrant (“Board of
Directors”).  The audit report of Hays on the balance sheet as of
December 31, 2006 contained no adverse opinion or disclaimer of opinion and was
not qualified or modified as to uncertainty, audit scope or accounting
principle.





During
the Registrant’s fiscal year ended December 31, 2006, and the subsequent interim
period through November 26, 2007, (i) there were no “disagreements” (as defined
in Item 304(a)(1)(iv) of Regulation S-K and related instructions) with Hays on
any matter of accounting principle or practice, financial statement disclosure,
or auditing scope or procedure that, if not resolved to the satisfaction of
Hays, would have caused Hays to make reference to the subject matter of the
disagreement in connection with its report and (ii) there were no “reportable
events” (as defined in Item 304(a)(1)(v) of Regulation S-K and related
instructions), except the following with regard to the internal controls of the
Registrant’s Manager:




While
evaluating the Manager’s disclosure controls and procedures during 2006, Hays
advised the Manager and the Manager recognized that greater internal controls
were needed to aid in a more efficient closing of the Registrant’s financial
statements, thereby requiring the Manager to hire additional skilled accounting
staff.  In response, the Manager hired seven additional accounting
staff members, two tax staff members, including a director of tax, and replaced
the accounting management team over the past two years.  The most senior
accountants are certified public accountants and/or have significant experience
with public reporting entities and make up the accounting management team,
including the Senior Vice President and Chief Financial Officer.  These
accountants have more than 18, 17, 17, and 12 years, respectively, of experience
with public reporting entities. The director of tax has more than 35 years of
experience with public reporting entities.





The
Registrant provided Hays with a copy of this disclosure and Hays furnished the
Registrant with a letter dated November 30, 2007, addressed to the Securities
and Exchange Commission (the “SEC”) stating whether or not it agrees with the
above statements.  A copy of Hays’ letter dated November 30, 2007, is
attached as Exhibit 16.1 to the Form 8-K that was filed with the SEC on November
30, 2007.





On
November 26, 2007, the Board of Directors engaged Ernst & Young LLP (“Ernst
& Young”) as the Registrant’s independent registered public accounting firm
for the fiscal year ended December 31, 2007. During the Registrant’s fiscal year
ended December 31, 2006 and the subsequent interim period through November 26,
2007, neither the Registrant nor any one acting on its behalf consulted with
Ernst & Young regarding (i) the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Registrant’s consolidated financial
statements and no written report or oral advice was provided by Ernst &
Young to the Registrant that Ernst & Young concluded was an important factor
considered by the Registrant in reaching a decision as to the accounting,
auditing or financial reporting issue or (ii) any matter that was either the
subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K
and related instructions) or (iii) a “reportable event” (as defined in Item
304(a)(1)(v) of Regulation S-K and related instructions).







73
 Table of Contents








Item 9A(T). Controls and Procedures





Evaluation of disclosure controls
and procedures





In
connection with the preparation of this Annual Report on Form 10-K for the
period ended December 31, 2008, as well as the financial statements for our
Manager, our Manager carried out an evaluation, under the supervision and with
the participation of the management of our Manager, including its Co-Chief
Executive Officers and the Chief Financial Officer, of the effectiveness of the
design and operation of our Manager’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 on the foregoing evaluation, the Co-Chief Executive Officers
and the Chief Financial Officer concluded that our Manager’s disclosure controls
and procedures were effective.





In
designing and evaluating our Manager’s disclosure controls and procedures, our
Manager recognized that disclosure controls and procedures, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the disclosure controls and procedures are met.  Our
Manager’s disclosure controls and procedures have been designed to meet
reasonable assurance standards. Disclosure controls and procedures cannot detect
or prevent all error and fraud. Some inherent limitations in disclosure controls
and procedures include costs of implementation, faulty decision-making, simple
error and mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of the controls. The design of any system of controls is based, in
part, upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all anticipated and unanticipated future conditions. Over time, controls
may become inadequate because of changes in conditions, or the degree of
compliance with established policies or procedures.





Our
Manager’s Co-Chief Executive Officers and Chief Financial Officer have
determined that no weakness in disclosure controls and procedures had any
material effect on the accuracy and completeness of our financial reporting and
disclosure included in this Annual Report on Form 10-K.





Evaluation
of internal control over financial reporting





Our
Manager is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934, as amended, as a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures that (1)
pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial
statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risks that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.





Our
Manager assessed the effectiveness of its internal control over financial
reporting as of December 31, 2008. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in "Internal Control — Integrated
Framework."





Based on
its assessment, our Manager believes that, as of December 31, 2008, its internal
control over financial reporting is effective.





This
Annual Report does not include an attestation report of our registered
public accounting firm pursuant to the temporary rules of the Securities and
Exchange Commission that permits us to only provide management’s reports in
this Annual Report.





Item 9B. Other Information





Not
applicable.





74
 Table of Contents







PART III





Item 10. Directors, Executive Officers of the Registrant's Manager
and Corporate Governance




Our
Manager, ICON Capital Corp., a Delaware corporation (“ICON”), was formed in
1985.  Our Manager's principal offices are located at 100 Fifth
Avenue, 4th Floor, New York, New York 10011, and the telephone number is
(212) 418-4700.





In
addition to the primary services related to our making of and disposing of
investments, our Manager provides services relating to the day-to-day
management of our equipment. These services include collecting payments due from
lessees, borrowers and other counterparties; remarketing equipment that is
off-lease; inspecting equipment; serving as a liaison with lessees, borrowers,
and other counterparties; supervising equipment maintenance; and monitoring
performance by lessees, borrowers and other counterparties of their obligations,
including payment of contractual payments and all operating
expenses.





Name
                      
                      Age
                      
                      TitleThomas
      W. Martin
                      
                      55
                      
                      Chairman
      and DirectorMichael
      A. Reisner
                      
                      38
                      
                      Co-Chief
      Executive Officer, Co-President and DirectorMark
      Gatto
                      
                      36
                      
                      Co-Chief
      Executive Officer, Co-President and DirectorJoel
      S. Kress
                      
                      36
                      
                      Executive
      Vice President — Business and Legal AffairsAnthony
      J. Branca
                      
                      40
                      
                      Senior
      Vice President  and Chief Financial OfficerH.
      Daniel Kramer
                      
                      57
                      
                      Senior
      Vice President and Chief Marketing OfficerDavid
      J. Verlizzo
                      
                      36
                      
                      Senior
      Vice President — Business and Legal AffairsCraig
      A. Jackson
                      
                      50
                      
                      Senior
      Vice President — Remarketing and Asset ManagementHarry
      Giovani
                      
                      34
                      
                      Senior
      Vice President —
Risk





Thomas W.
Martin, Chairman, has been a Director since August 1996.  Prior
to joining ICON, Mr. Martin was the Executive Vice President, Chief Financial
Officer, and a co-founder of Griffin Equity Partners, Inc. from October 1993 to
August 1996.  Prior to that, Mr. Martin was Senior Vice President of
Gemini Financial Holdings, Inc. from April 1992 to October 1993 and he held the
position of Vice President at Chancellor Corporation (an equipment leasing
company) for 7 years. Mr. Martin has a B.S. degree from University of New
Hampshire. Mr. Martin has been in the equipment leasing business since
1983.





Michael A.
Reisner, Co-Chief Executive Officer, Co-President, and Director joined
ICON in 2001. Mr. Reisner was previously Executive Vice President, Chief
Financial Officer, and Director.  In addition, Mr. Reisner was
formerly General Counsel and he also formerly held the position of Executive
Vice President – Acquisitions.  Previously, from 1996 to 2001, Mr.
Reisner was an attorney with Brodsky Altman & McMahon, LLP in New York,
concentrating on commercial transactions.  Mr. Reisner received a J.D.
from New York Law School and a B.A. from the University of
Vermont.





Mark
Gatto, Co-Chief Executive Officer, Co-President, and Director originally
joined ICON in 1999 and was previously Executive Vice President, Chief
Acquisitions Officer and Director.  Mr. Gatto was formerly Executive
Vice President – Business Development from February 2006 to May 2007 and
Associate General Counsel from November 1999 through October
2000.  Mr. Gatto is responsible for business and corporate
development, including the acquisition of equipment subject to
lease.  Before serving as Associate General Counsel, Mr. Gatto was an
attorney with Cella & Goldstein in New Jersey, concentrating on commercial
transactions and general litigation matters. From November 2000 to June 2003,
Mr. Gatto was Director of Player Licensing for the Topps Company and, in July
2003, he co-founded a specialty business consulting firm in New York City and
served as its managing partner before re-joining ICON in April
2005.  Mr. Gatto received an M.B.A from the W. Paul Stillman School of
Business at Seton Hall University, a J.D. from Seton Hall University
School of Law, and a B.S. from
Montclair State University.






75
 Table of Contents





Joel S.
Kress, Executive Vice President – Business and Legal Affairs, started his
tenure with ICON in August 2005 as Vice President and Associate General
Counsel.  In February 2006, he was promoted to Senior Vice President
and General Counsel, and in May 2007 he was promoted to his current
position.  Previously, from 2001 to 2005, Mr. Kress was an attorney
with Fried, Frank, Harris, Shriver & Jacobson LLP in New York and London,
England, concentrating on mergers and acquisitions, corporate finance and
financing transactions (including debt and equity issuances) and private equity
investments.  Mr. Kress received a J.D. from Boston University School
of Law and a B.A. from Connecticut College.





Anthony J.
Branca,Chief Financial
Officer, originally joined ICON in January 2007 and was previously Senior Vice
President – Accounting and Finance. Mr. Branca was Director of Corporate
Reporting & Analysis for The Nielsen Company (formerly VNU) from May 2005
until January 2007, and held various other management positions with The Nielsen
Company from July 1997 through May 2005.  Previously, from 1994
through 1997, Mr. Branca was employed as a senior accountant at Fortune
Brands and started his career as an auditor with KPMG Peat Marwick in
1991.  Mr. Branca received a B.B.A. from
Pace University.





H. Daniel
Kramer, Senior Vice President and Chief Marketing Officer, joined ICON in
2008.  Mr. Kramer has more than 30 years of equipment leasing and
structured finance experience. Most recently, from 2006 to 2008, Mr. Kramer was
part of CIT Commercial Finance, Equipment Finance Division offering equipment
leasing and financing solutions to complement public and private companies’
capital structure.  Prior to that role, from 2003 to 2006, Mr. Kramer
was Senior Vice President, National Sales Manager with GMAC Commercial Equipment
Finance leading a direct sales origination team, from 2001 to 2003, Senior Vice
President and National Sales Manager for ORIX Commercial Structured Equipment
Finance division, and President of Kramer, Clark & Company for 12 years
providing financial consulting services to private and public companies,
including structuring and syndicating private placements, equipment leasing and
recapitalizations.





David J.
Verlizzo has been Senior Vice President – Business and Legal Affairs
since July 2007.  Mr. Verlizzo was formerly Vice President and Deputy
General Counsel from February 2006 to July 2007 and was Assistant Vice President
and Associate General Counsel from May 2005 until January
2006.  Previously, from 2001 to 2005, Mr. Verlizzo was an
attorney with Cohen Tauber Spievack & Wagner LLP in New York,
concentrating on public and private securities offerings, securities law
compliance and corporate and commercial
transactions.  Mr. Verlizzo received a J.D. from Hofstra
University School of Law and a B.S. from The University of
Scranton.





Craig A.
Jackson has been Senior Vice President – Remarketing and Asset Management
since March 2008. Mr. Jackson was previously Vice President – Remarketing and
Portfolio Management from February 2006 through March 2008. Previously, from
October 2001 to 2006, Mr. Jackson was President and founder of Remarketing
Services, Inc., a transportation equipment remarketing company. Prior to 2001,
Mr. Jackson served as Vice President of Remarketing and Vice President of
Operations for Chancellor Fleet Corporation (an equipment leasing
company).  Mr. Jackson received a B.A. from
Wilkes University.





Harry
Giovani, Senior Vice President – Risk, joined ICON in April 2008. Most
recently, from 2007 to 2008, he was Vice President for FirstLight Financial
Corporation, responsible for underwriting and syndicating middle market
leveraged loan transactions. Previously, from 2004 to 2007, he spent three years
at GE Commercial Finance, initially as an Assistant Vice President in the
Intermediary Group, where he was responsible for executing middle market
transactions in a number of industries including manufacturing, steel, paper,
pharmaceutical, technology, chemicals and automotive, and later as a Vice
President in the Industrial Project Finance Group where he originated highly
structured project finance transactions. He started his career at Citigroup’s
Citicorp Securities and CitiCapital divisions, where he spent six years in a
variety of roles of increasing responsibility including underwriting,
origination and strategic marketing/business development. Mr. Giovani graduated
from Cornell University in 1996 with a B.S. in Finance.






76
 Table of Contents





Code
of Ethics





Our
Manager, on our behalf, has adopted a code of ethics for its Co-Chief Executive
Officers and Chief Financial Officer.  The Code of Ethics is available
free of charge by requesting it in writing from our Manager.  Our
Manager's address is 100 Fifth Avenue, 4th Floor,
New York, New York 10011.





Item 11. Executive Compensation





We have
no directors or officers. Our Manager and its affiliates were paid or accrued
the following compensation and reimbursement for costs and expenses for the
years ended December 31, 2008, 2007 and 2006.





Entity
                  Capacity
                  Description
                  
                  2008
                  
                  
                  2007
                  
                  
                  2006ICON
      Capital Corp.
                  Manager
                  Acquisition
      fees (1)
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  60,000ICON
      Capital Corp.
                  Manager
                  Management
      fees (2)
                  
                  
                  526,469
                  
                  
                  
                  1,780,581
                  
                  
                  
                  2,114,283ICON
      Capital Corp.
                  Manager
                  Administrative
      expense reimbursements (2)
                  
                  
                  149,844
                  
                  
                  
                  677,965
                  
                  
                  
                  596,881$
                  676,313
                  
                  
                  $
                  2,458,546
                  
                  
                  $
                  2,771,164(1)
      Amount capitalized and amortized to operations.(2)
      Amount charged directly to operations.





Our
Manager also has a 1% interest in our profits, losses, cash distributions and
liquidation proceeds. We paid distributions to our Manager of $77,556, $89,144
and $89,204, respectively, for the years ended December 31, 2008, 2007 and
2006.  Additionally, our Manager’s interest in our net income was
$10,478 and $79,400 for the years ended December 31, 2008 and 2007. Our
Manager’s interest in our net loss was $6,679 for the year ended December 31,
2006.




Item
12. Security Ownership of Certain Beneficial Owners and the Manager and Related
Security Holder Matters


(a)
            We
      do not have any securities authorized for issuance under any equity
      compensation plan. No person of record owns, or is known by us to own,
      beneficially more than 5% of any class of our
  securities.





(b)
            As
      of February 28, 2009, Directors and Officers of our Manager do not own any
      of our equity securities.





(c)
            Neither
      we nor our Manager are aware of any arrangements with respect to our
      securities, the operation of which may at a subsequent date result in a
      change of control of us.




Item 13. Certain Relationships and Related Transactions, and
Director Independence





See Item
11 for a discussion of our related party transactions.  See Notes 5, 9 and
13 to our consolidated financial statements for a discussion of our investments
in joint ventures and transactions with related parties.








77
 Table of Contents








Item 14. Principal Accounting Fees and Services





During
the years ended December 31, 2008 and 2007, our auditors provided audit services
relating to our Annual Report on Form 10-K and our Quarterly Reports on Form
10-Q.  Additionally, our auditors provided other services in the form of
tax compliance work.





Hays
& Company LLP (“Hays”) was our independent registered public accounting firm
in 2006 and 2007.  On November 26, 2007, the Board of Directors of our
Manager terminated the services of Hays as our independent registered public
accounting firm.  As a result of Hays’ termination, Hays did not
complete the audit of our financial statements for the year ended December 31,
2007.   On November 26, 2007, the Board of Directors engaged
Ernst & Young LLP as the Registrant’s independent registered public
accounting firm for the fiscal year ending December 31, 2007.  The
following table presents the fees for both audit and non – audit services
rendered for the years ended December 31, 2008 and 2007:





Principal
      Audit Firm - Ernst & Young LLP2008
                
                
                2007Audit
      fees
                
                $
                298,565
                
                
                $
                309,000Tax
      fees
                
                
                55,750
                
                
                
                73,750$
                354,315
                
                
                $
                382,750Predecessor
      Audit Firm - Hays & Company LLP2008
                
                
                2007Audit
      fees
                
                $
                4,000
                
                
                $
                62,699Tax
      fees
                
                
                -
                
                
                
                -$
                4,000
                
                
                $
                62,699







78
 Table of Contents








PART IV




Item 15. Exhibits, Financial Statement Schedules





(a)
                      1.
      Financial StatementsSee
      index to financial statements included as Item 8 to this Annual Report on
      Form 10-K hereof.2.
      Financial Statement SchedulesFinancial
      Statement Schedule II – Valuation and Qualifying Accounts is filed with
      this Annual Report on Form 10-K.  Schedules not listed above
      have been omitted because they are not applicable or the information
      required to be set forth therein is included in the financial statements
      or notes thereto.3.
      Exhibits:3.1   
      Certificate
      of Limited Liability Company of Registrant (Incorporated by reference to
      Exhibit 4.3 to Registrant’s Registration Statement on Form S-1 filed with
      the SEC on August 15, 2001 (File No.
      333-67638)).4.1   
      Amended
      and Restated Limited Liability Company Agreement of Registrant
      (Incorporated by reference to Exhibit A to Amendment No. 1 to Registrant’s
      Registration Statement on Form S-1 filed with the SEC on October 12, 2001
      (File No. 333-67638)).10.1   Commercial
      Loan Agreement, by and between California Bank & Trust, ICON Income
      Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten,
      LLC and ICON Leasing Fund Eleven, LLC, dated August 31, 2005 (Incorporated
      by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K
      dated August 31, 2005).10.2   Loan
      Modification Agreement, by and between California Bank & Trust and
      ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON
      Income Fund Ten, LLC and ICON Leasing Fund Eleven, LLC, dated December 26,
      2006 (Incorporated by reference to Exhibit 10.1 to Registrant’s Current
      Report on Form 8-K dated December 29, 2006).10.3  
      Loan
      Modification Agreement dated as of May 1, 2008 between California
      Bank & Trust, ICON Income Fund Eight B L.P., ICON Income Fund
      Nine, LLC, ICON Income Fund Ten, LLC, ICON Leasing Fund Eleven, LLC and
      ICON Leasing Fund Twelve, LLC (Incorporated by reference to Exhibit 10.3
      to Registrant’s Quarterly Report on Form 10-Q dated May 20,
      2008).31.1  
      Rule 13a-14(a)/15d-14(a). Certification of Co-Chief Executive
      Officer.31.2  
      Rule 13a-14(a)/15d-14(a). Certification of Co-Chief Executive
      Officer.31.3  
      Rule 13a-14(a)/15d-14(a). Certification of Chief Financial
      Officer.32.1  
      Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2  
      Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.3  
      Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.(b)
                      1.
      Consolidated Financial Statements of ICON Aircraft 126
  LLC







79
 Table of Contents





ICON
Aircraft 126 LLC
 (A
Delaware Limited Liability Company)
 
 
 Table of
Contents
 
  PageReports of Independent Registered Public Accounting
      Firms
                        81Consolidated Balance Sheets
                        83Consolidated Statements of
Operations
                        84Consolidated Statements of Changes in Members’
      Equity
                        85Consolidated Statements of Cash Flows
                        86Notes to Consolidated Financial
      Statements
                        87
  
  80
 Table of Contents
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
 
 The
Members
 ICON
Aircraft 126 LLC
 
 We have
audited the accompanying balance sheets of ICON Aircraft 126 LLC (the “Company”)
as of December 31, 2008 and 2007, and the related statements of operations,
changes in members’ equity, and cash flows for the each of the two years in the
period ended December 31, 2008. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Company's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of ICON Aircraft 126 LLC at December
31, 2008 and 2007, and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 2008 in conformity with U.S.
generally accepted accounting principles.
 
 
 /s/ Ernst & Young,
LLP
 
 March 24,
2009
 New York,
New York
 
 
  81
 Table of Contents
  The
Members
 ICON
Aircraft 126, LLC
 
 REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
  We have
audited the consolidated statements of operations, changes in members’ equity
and cash flows of ICON Aircraft 126 LLC (a Delaware limited liability company)
and subsidiary, for the year ended December 31, 2006. These consolidated
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
  We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of ICON Aircraft 126 LLC and subsidiary for the year ended December 31, 2006, in
conformity with accounting principles generally accepted in the United States of
America.
 /s/ Hays
& Company LLP
 
 August
20, 2007
 New York,
New York
  82
 Table of Contents
  
 
 ICON Aircraft 126 LLC(A
      Delaware Limited Liability Company)Consolidated
      Balance SheetsAssetsDecember 31,2008
                        
                        
                        2007Leased
      equipment at cost, net (less accumulated depreciation of$28,543,495
      and $24,556,920, respectively)
                        
                        $
                        45,080,089
                        
                        
                        $
                        52,966,664Other
      non-current assets, net
                        
                        
                        304,823
                        
                        
                        
                        354,159Total
      Assets
                        
                        $
                        45,384,912
                        
                        
                        $
                        53,320,823Liabilities
      and Members' EquityCurrent
      liabilitiesCurrent
      portion of non-recourse long-term debt
                        
                        $
                        4,044,096
                        
                        
                        $
                        3,810,027Deferred
      rental income
                        
                        
                        471,428
                        
                        
                        
                        300,000Accrued
      interest
                        
                        
                        228,697
                        
                        
                        
                        233,783Total
      current liabilities
                        
                        
                        4,744,221
                        
                        
                        
                        4,343,810Non-current
      liabilitiesNon-recourse
      long-term debt, net of current portion
                        
                        
                        38,105,910
                        
                        
                        
                        42,150,006Total
      Liabilities
                        
                        
                        42,850,131
                        
                        
                        
                        46,493,816Commitments
      and contingenciesMembers'
      Equity
                        
                        
                        2,534,781
                        
                        
                        
                        6,827,007Total
      Liabilities and Members' Equity
                        
                        $
                        45,384,912
                        
                        
                        $
                        53,320,823
 83
 Table of Contents
 ICON Aircraft 126 LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of OperationsYears Ended December 31,2008
                    
                    
                    2007
                    
                    
                    2006Revenue:Rental
      income
                    
                    $
                    6,368,571
                    
                    
                    $
                    6,368,571
                    
                    
                    $
                    6,753,785Interest
      and other income
                    
                    
                    2,328
                    
                    
                    
                    5,615
                    
                    
                    
                    62,883Total
      revenue
                    
                    
                    6,370,899
                    
                    
                    
                    6,374,186
                    
                    
                    
                    6,816,668Expenses:General
      and administrative
                    
                    
                    45,000
                    
                    
                    
                    22,829
                    
                    
                    
                    50,002Interest
                    
                    
                    2,772,778
                    
                    
                    
                    2,924,382
                    
                    
                    
                    3,089,780Depreciation
      and amortization
                    
                    
                    3,990,347
                    
                    
                    
                    4,003,772
                    
                    
                    
                    4,148,392Impairment
      loss
                    
                    
                    3,900,000
                    
                    
                    
                    -
                    
                    
                    
                    -Aircraft
      maintenance
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,152,698Total
      expenses
                    
                    
                    10,708,125
                    
                    
                    
                    6,950,983
                    
                    
                    
                    8,440,872Net
      loss
                    
                    $
                    (4,337,226
                    )
                    
                    $
                    (576,797
                    )
                    
                    $
                    (1,624,204
                    )
  84
 Table of Contents
  
 ICON Aircraft 126 LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of Changes in Members' EquityMembers'EquityBalance,
      January 1, 2006
                    
                    $
                    8,823,158Net
      loss
                    
                    
                    (1,624,204
                    )Investment
      from members
                    
                    
                    182,021Balance,
      December 31, 2006
                    
                    
                    7,380,975Net
      loss
                    
                    
                    (576,797
                    )Investment
      from members
                    
                    
                    22,829Balance,
      December 31, 2007
                    
                    
                    6,827,007Net
      loss
                    
                    
                    (4,337,226
                    )Investment
      from members
                    
                    
                    45,000Balance,
      December 31, 2008
                    
                    $
                    2,534,781
 
  85
 Table of Contents
  ICON Aircraft 126 LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of Cash FlowsYears Ended December 31,2008
                    
                    
                    2007
                    
                    
                    2006Cash
      flows from operating activities:Net
      loss
                    
                    $
                    (4,337,226
                    )
                    
                    $
                    (576,797
                    )
                    
                    $
                    (1,624,204
                    )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Rental
      income paid directly to lenders by lessees
                    
                    
                    (6,540,000
                    )
                    
                    
                    (6,540,000
                    )
                    
                    
                    (6,753,785
                    )Interest
      and other income on maintenance reserve
                    
                    
                    (2,328
                    )
                    
                    
                    (5,615
                    )
                    
                    
                    (55,784
                    )Depreciation
      and amortization
                    
                    
                    3,990,347
                    
                    
                    
                    4,003,772
                    
                    
                    
                    4,148,392Impairment
      Loss
                    
                    
                    3,900,000
                    
                    
                    
                    -
                    
                    
                    
                    -Interest
      expense from amortization of debt financing costs
                    
                    
                    47,892
                    
                    
                    
                    (6,737
                    )
                    
                    
                    16,031Interest
      expense on non-recourse financing paiddirectly
      to lenders by lessees
                    
                    
                    2,729,973
                    
                    
                    
                    2,948,336
                    
                    
                    
                    3,060,190Change
      in operating assets and liabilities:Other
      non-current assets
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    868,978Deferred
      rental income
                    
                    
                    171,429
                    
                    
                    
                    171,429
                    
                    
                    
                    128,571Accrued
      interest
                    
                    
                    (5,087
                    )
                    
                    
                    (17,217
                    )
                    
                    
                    29,590Net
      cash used in operating activities
                    
                    
                    (45,000
                    )
                    
                    
                    (22,829
                    )
                    
                    
                    (182,021
                    )Cash
      flows from financing activities:Contributions
      received
                    
                    
                    45,000
                    
                    
                    
                    22,829
                    
                    
                    
                    182,021Net
      increase in cash
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Cash,
      beginning of the year
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Cash,
      end of the year
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
 Years Ended December 31,2008
                          
                          
                          2007
                          
                          
                          2006Supplemental
      disclosure of non-cash investing and financing activities:Principal
      and interest paid on non-recourse long-term debtdirectly
      to lenders by lessee
                          
                          $
                          6,540,000
                          
                          
                          $
                          6,540,000
                          
                          
                          $
                          6,753,785Other
      assets used to pay down non-recourse debt
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          582,509
 
  86
 Table of Contents
  ICON Aircraft 126 LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 
 (1)
                  Organization
 ICON
Aircraft 126 LLC (the “LLC”) was formed on February 15, 2002 as a Delaware
limited liability company. The LLC is a joint venture between two affiliated
entities, ICON Income Fund Eight B L.P. (“Fund Eight B”) and ICON Income Fund
Nine, LLC (“Fund Nine”) (collectively, the “LLC’s Members”). Fund Eight B and
Fund Nine each have a 50% ownership interest in the LLC’s profits, losses and
cash distributions.
 
 On March
4, 2002, the LLC acquired all of the outstanding shares of Delta Aircraft
Leasing Limited (“D.A.L.”), a Cayman Islands registered company, for
approximately $75,288,000, which was largely comprised of approximately
$4,250,000 of cash and the assumption of approximately $70,280,000 of
non-recourse debt. D.A.L. owns, through an owner trust, an Airbus A340-313X
aircraft that is on lease to Cathay Pacific Airways Limited (“Cathay”). The
lender has a security interest in the aircraft and an assignment of the rental
payments under the lease. The lease was initially scheduled to expire in March
2006, but was extended to July 1, 2011.
 
 The
Manager of the LLC’s Members is ICON Capital Corp. (the “Manager”), a Delaware
corporation. The Manager manages and controls the business affairs of the LLC,
including, but not limited to, the equipment leases and other financing
transactions that the LLC entered into pursuant to the terms of the respective
limited partnership and limited liability company agreements with the LLC’s
Members.
 
 (2)
                Summary
      of Significant Accounting Policies
 
 Basis of
Presentation and Consolidation
 
 The
accompanying consolidated financial statements of the LLC have been prepared in
accordance with U.S. generally accepted accounting principles (“US
GAAP”).
 
 The
consolidated financial statements include the accounts of the LLC and its
wholly-owned subsidiary.  All intercompany accounts and transactions
have been eliminated in consolidation.
 
 Debt
Financing Costs
 
 Expenses
associated with the issuance of debt are capitalized and amortized over the term
of the debt instrument using the effective interest rate
method.  These costs are included in other non-current
assets.
 
 Leased
Equipment at Cost
 
 Investments
in leased equipment are stated at cost less accumulated depreciation. Leased
equipment is depreciated on a straight-line basis over the lease term, which
ranges from 4 to 5 years to the asset’s residual value.
 
 The
Manager has an investment committee that approved each new equipment
lease and other financing transaction. As part of its process, it
determined the residual value, if any, to be used once the investment was
approved.  The factors considered in determining the residual value
included, but were not limited to, the creditworthiness of the potential lessee,
the type of equipment considered, how the equipment was integrated into the
potential lessee’s business, the length of the lease and the industry in which
the potential lessee operated. Residual values are reviewed for impairment in
accordance with each LLC’s Member’s impairment review policy.
 
 
 87
 Table of Contents
  ICON
Aircraft 126 LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 
 
 (2)
                Summary
      of Significant Accounting Policies -
continued
 
 The
residual value assumes, among other things, that the asset is utilized normally
in an open, unrestricted and stable market. Short-term fluctuations in the
marketplace are disregarded and it is assumed that there is no necessity either
to dispose of a significant number of the assets, if held in quantity,
simultaneously or to dispose of the asset quickly.  The residual value
is calculated using information from various external sources, such as trade
publications, auction data, equipment dealers, wholesalers and industry experts,
as well as inspection of the physical asset and other economic
indicators.
 
 Asset
Impairments
 
 The asset
in the LLC’s portfolio is periodically reviewed, no less frequently than
annually, to determine whether events or changes in circumstances indicate
that the carrying value of an asset may not be recoverable. An impairment loss
will be recognized only if the carrying value of a long-lived asset is not
recoverable and exceeds its fair market value. If there is an indication of
impairment, the LLC will estimate the future cash flows (undiscounted and
without interest charges) expected from the use of the asset and its eventual
disposition. Future cash flows are the future cash inflows expected to be
generated by an asset less the future outflows expected to be necessary to
obtain those inflows.  If an impairment is determined to exist, the
impairment loss will be measured as the amount by which the carrying value of a
long-lived asset exceeds its fair value and recorded in the consolidated
statement of operations in the period the determination is made.
 
 The
events or changes in circumstances that generally indicate that an asset may be
impaired are (i) the estimated fair value of the underlying equipment is less
than its carrying value or (ii) the lessee is experiencing financial
difficulties and it does not appear likely that the estimated proceeds from the
disposition of the asset will be sufficient to satisfy the residual position in
the asset and, if applicable, the remaining obligation to the non-recourse
lender.  Generally in the latter situation, the residual position relates
to equipment subject to third party non-recourse debt where the lessee remits
its rental payments directly to the lender and the LLC does not recover its
residual position until the non-recourse debt is repaid in full. The preparation
of the undiscounted cash flows requires the use of assumptions and estimates,
including the level of future rents, the residual value expected to be realized
upon disposition of the asset, estimated downtime between re-leasing events and
the amount of re-leasing costs. The Manager’s review for impairment includes a
consideration of the existence of impairment indicators including third party
appraisals, published values for similar assets, recent transactions for similar
assets, adverse changes in market conditions for specific asset types and the
occurrence of significant adverse changes in general industry and market
conditions that could affect the fair value of the asset.
 
 Revenue
Recognition
 
 Each
equipment lease the LLC enters into is classified as either a finance lease or
an operating lease, which is based upon the terms of each lease.  For
a finance lease, initial direct costs are capitalized and amortized over the
term of the related lease.  For an operating lease, the initial direct
costs are included as a component of the cost of the equipment and depreciated.
The LLC has not entered into any finance leases.
   88
 Table of Contents
  ICON
Aircraft 126 LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 
 (2)
                Summary
      of Significant Accounting Policies -
continued
 
 For
operating leases, rental income is recognized on a straight-line basis over the
lease term.  Billed operating lease receivables are included in
accounts receivable until collected.  Accounts receivable is stated at
its estimated net realizable value.  Deferred income is the
difference between the timing of the receivables billed and the income
recognized on a straight-line basis.
 
 Initial
Direct Costs
 
 The LLC
capitalized initial direct costs associated with the origination and funding of
lease assets in accordance with Statement of Financial Accounting Standards
(“SFAS”) No. 91 “Accounting for Nonrefundable Fees and Costs Associated
with Originating or Acquiring Loans and Initial Direct Costs of Leases”. The
costs are amortized on a lease by lease basis based on the actual lease term
using a straight-line method for operating leases and the effective interest
rate method for finance leases. Costs related to leases that are not consummated
are expensed as an acquisition expense.
 
 Income
Taxes
 
 The LLC
is taxed as a partnership for federal and State income tax
purposes.  No provision for income taxes has been recorded since the
liability for such taxes is that of each of the members of the LLC’s Members
rather than the LLC. The LLC's income tax returns are subject to examination by
the federal and State taxing authorities, and changes, if any, could adjust the
individual income tax of the members of the LLC’s Members.
 
 Use of
Estimates
 
 The
preparation of financial statements in conformity with US GAAP requires the
Manager to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities as
of the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant estimates
primarily include the determination of allowance for doubtful accounts,
depreciation and amortization, impairment losses, estimated useful lives and
residual values.  Actual results could differ from those
estimates.
 
 (3)
                Leased
      Equipment at Cost
 
 The LLC’s
sole investment at December 31, 2008 and 2007 is an Airbus A340-313X aircraft
(“Aircraft 126”) on lease to Cathay. The lease was initially scheduled to expire
in March 2006, but was extended to July 1, 2011.
 
 The LLC
had a commitment with respect to the Aircraft 126 to pay certain maintenance
costs that were incurred on or prior to March 27, 2006. The LLC had established
a maintenance reserve cash account under the original lease to pay for its
portion of these costs. This account was funded by free cash from the lease
payments in accordance with the terms of the original lease. During 2006, the
LLC received $182,021 of capital contributions from the LLC’s Members, of which
$50,000 was for amounts relating to the maintenance reserve cash account and
$132,021 was related to costs paid by its members relating to the refinancing of
the non-recourse debt. During September 2006, approximately $1,153,000 was paid
for the maintenance costs. The maintenance account for Aircraft 126 was
cross-collateralized with the maintenance account for ICON Aircraft 123 LLC
(“ICON 123”). Under the terms of this agreement, the LLC was required to pay on
behalf of ICON 123, any maintenance cost shortfalls incurred by the affiliate.
On January 30, 2007, the LLC paid approximately $143,000 in maintenance costs
from its maintenance account on behalf of ICON 123.  The maintenance
account and related security interests were then terminated. ICON 123 will
reimburse the LLC when the Airbus A340-313X aircraft (“Aircraft 123”), also on
lease to Cathay and owned by ICON 123, is sold. The excess cash remaining in the
LLC’s account of approximately $97,000 includes interest accreted in the amount
of approximately $38,000 through December 31, 2008.
 
  89
 Table of Contents
 ICON
Aircraft 126 LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 
 (3)
                Leased
      Equipment at Cost - continued
  In
connection with the purchase of the aircraft, the owner trustee entered into two
first priority charge on cash deposit agreements pursuant to which, as discussed
above, the maintenance reserve cash account for the aircraft was
cross-collateralized with the maintenance reserve cash account for Aircraft 123.
In addition, ICON 123 and the LLC are parties to a residual sharing agreement
with respect to the aircraft.
 
 In light
of recent, unprecedented high fuel prices during 2008 and the related impact on
the airline industry, the Manager reviewed the LLC’s Members investments in
Aircraft 126 as of June 30, 2008. In accordance with the provisions of FASB
Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets” (“SFAS No. 144”) and based upon recent changes in the airline industry,
the Manager determined that Aircraft 126 was impaired.
 
 Based on
the Manager’s review, the residual value of Aircraft 126 exceeded the expected
undiscounted future cash flows of Aircraft 126 and, as a result, the LLC
recorded an impairment charge representing the difference between the residual
value and the expected discounted future cash flows of Aircraft
126.  The expected discounted future cash flows of Aircraft 126
was determined using a market approach, a recent appraisal for Aircraft 126 and
recent sales of similar aircraft, as well as other factors, including those
discussed below.  As a result, as of June 30, 2008, the LLC recorded
an impairment loss on Aircraft 126 of approximately $3,900,000.
 
 The
following factors, among others, indicated that the full residual value of
Aircraft 126 might not be recoverable: (i) indications that lenders were willing
to finance less of the acquisition cost of four-engine aircraft, which increased
with each dollar rise of the price of fuel, thereby undermining the residual
value expectations of such aircraft; (ii) the rising cost of fuel was increasing
the operating costs of four-engine aircraft and similar capacity twin-engine
aircraft, thereby making such aircraft less attractive investments at the time
and thereby depressing the market for Aircraft 126; and (iii) the likelihood of
aircraft operators switching to more efficient aircraft, thereby depressing the
market for Aircraft 126.
 
 Depreciation
expense was $3,986,575, $4,000,000, and $4,115,432 for the years ended December
31, 2008, 2007, and 2006, respectively.
 
 Aggregate
annual minimum future rentals receivable from the LLC’s non-cancelable lease
consisted of the following at December 31, 2008:
 
 Years
      EndingDecember 31,2009
                    
                    $
                    6,540,0002010
                    
                    $
                    5,940,0002011
                    
                    $
                    2,970,000
 
 
 90
 Table of Contents
  ICON
Aircraft 126 LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 
 (4)
                Non-Recourse
      Long-Term Debt
 
 Effective
March 27, 2006, in connection with the lease extension, approximately
$52,850,000 of non-recourse debt associated with Aircraft 126 was refinanced
after applying $583,000 from a reserve account established in connection with
the original lease with Cathay. The refinanced non-recourse debt matures on July
1, 2011 and requires a balloon payment of approximately $33,000,000 at maturity.
The interest rate of the refinanced debt was fixed at 6.104% under the terms of
the debt agreement, effective October 3, 2006.
  The
aggregate maturities of non-recourse long-term debt, including the effects of
refinancing discussed above, consisted of the following at December 31,
2008:
 
 Years
      EndingDecember 31,2009
                    
                    
                    4,044,0962010
                    
                    
                    3,684,4492011
                    
                    
                    34,421,461$
                    42,150,006
 
 (5)
                Residual
      Sharing Agreement
 
 The LLC
is a party to a residual sharing agreement (the “Airtrade Residual Sharing
Agreement”) with ICON 123 and Airtrade Capital Corp. (“Airtrade”), a
third-party. Pursuant to the terms of the Airtrade Residual Sharing Agreement,
all proceeds received in connection with the sale or lease extension of the
aircraft owned by the LLC and ICON 123 in excess of $8,500,000 (in the
aggregate) of the debt associated with each aircraft (net of expenses) will be
allocated 55% to the LLC or ICON 123, as applicable, and 45% will be allocated
to Airtrade.
 
 (6)
                Fair
      Value of Financial Instruments
 
 Fair
value information with respect to the LLC's leased assets and liabilities is not
separately provided since (i) SFAS No. 107, “Disclosures About Fair Values of
Financial Instruments,” does not require fair value disclosures of lease
arrangements and (ii) the carrying value of financial assets, other than lease
related investments, and the recorded value of recourse debt, if any,
approximates fair value due to their short-term maturities and variable interest
rates. The fair value of the LLC's non-recourse debt of approximately
$44,375,000 at December 31, 2008, is estimated using a discounted cash flow
analysis, based on the current incremental borrowing rate of the most recent
borrowings by the LLC and the other programs sponsored by the
Manager.
 
 (7)
                  Transactions
      with Related Parties
 The LLC
does not maintain a separate bank account and, therefore, in the normal course
of operations, the LLC’s Members will pay certain operating and general and
administrative expenses on behalf of the LLC in proportion with their membership
interests.
 
 The financial condition and results of
operations of the LLC, as reported, are not necessarily indicative of the
results that would have been reported had the LLC operated completely
independently.
 
 (8)
                Concentrations
      of Risk
 
 For the
years ended December 31, 2008, 2007, and 2006, the LLC had one lessee that
accounted for 100% of total rental income and one lender that accounted for 98%
of total liabilities.
   91
 Table of Contents


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) 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.




File No.
000-50217


ICON
Capital Corp.
   Date:
March 27,
2009
 
 /s/Michael A.
Reisner
 Michael
A. Reisner
 Co-Chief
Executive Officer, and Co-President
 (Co-Principal
Executive Officer)
 
 /s/Mark
Gatto
 Mark
Gatto
 Co-Chief
Executive Officer and Co-President
 (Co-Principal
Executive Officer)
  
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacity and on the dates indicated.
 
 ICON
Capital Corp.
 Manager
of the Registrant
 
 Date:
March 27,
2009
 
 /s/Michael A.
Reisner
 Michael
A. Reisner
 Co-Chief
Executive Officer, Co-President and Director
   /s/Mark
Gatto
 Mark
Gatto
 Co-Chief
Executive Officer, Co-President and Director
   /s/Anthony
Branca
 Anthony
Branca
 Chief
Financial Officer
 
 /s/Thomas W.
Martin
 Thomas W.
Martin
 Chairman
and Director
  Supplemental
Information to be furnished with reports filed pursuant to Section 15(d) of the
Act by Registrant which have not registered securities pursuant to Section 12 of
the Act. No Annual
Report or proxy material has been sent to security holders.






92