-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PA1EP6sXFquiV3Dee4LaazDBSER1ozO3PIcsLTWSGu26bk0NhTC3fswBJWxMtHTH yBZYaq2e4Y1HS2m4oHcHZw== 0000950149-97-001551.txt : 19970814 0000950149-97-001551.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950149-97-001551 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRONOS GLOBAL INCOME FUND XVI LP CENTRAL INDEX KEY: 0001002519 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943230380 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27496 FILM NUMBER: 97659033 BUSINESS ADDRESS: STREET 1: 444 MARKET ST 15TH FLOOR STREET 2: C/O CRONOS CAPITAL CORP CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4156778990 MAIL ADDRESS: STREET 1: 444 MARKET ST 15TH FLOOR STREET 2: C/O CRONOS CAPITAL CORP CITY: SAN FRANCISCO STATE: CA ZIP: 94111 10-Q 1 FORM 10-Q FOR PERIOD ENDING 6/30/97 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO ____________ Commission file number 0-27496 CRONOS GLOBAL INCOME FUND XVI, L.P. (Exact name of registrant as specified in its charter) California 94-3230380 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 444 Market Street, 15th Floor, San Francisco, California 94111 (Address of principal executive offices) (Zip Code) (415) 677-8990 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- 2 CRONOS GLOBAL INCOME FUND XVI, L.P. Report on Form 10-Q for the Quarterly Period Ended June 30, 1997 TABLE OF CONTENTS
PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets - June 30, 1997 (unaudited) and December 31, 1996 4 Statement of Operations for the three and six months ended June 30, 1997 and 1996 (unaudited) 5 Statement of Cash Flows for the six months ended June 30, 1997 and 1996 (unaudited) 6 Notes to Unaudited Financial Statements (unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of 10 Operations PART II - OTHER INFORMATION Item 5. Other Materially Important Events 14 Item 6. Exhibits and Reports on Form 8-K 15
2 3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presented herein are the Registrant's balance sheets as of June 30, 1997 and December 31, 1996, statements of operations for the three and six months ended June 30, 1997 and 1996, and statements of cash flows for the six months ended June 30, 1997 and 1996. 3 4 CRONOS GLOBAL INCOME FUND XVI, L.P. Balance Sheets (Unaudited)
June 30, December 31, Assets 1997 1996 ------------ ------------ Current assets: Cash and cash equivalents, includes $1,038,011 at June 30, 1997 and $1,755,486 at December 31, 1996 in interest-bearing accounts $ 1,052,116 $ 1,755,884 Net lease receivables due from Leasing Company (notes 1 and 2) 368,599 208,133 ------------ ------------ Total current assets 1,420,715 1,964,017 ------------ ------------ Container rental equipment, at cost 26,792,576 24,701,402 Less accumulated depreciation 1,662,830 894,114 ------------ ------------ Net container rental equipment 25,129,746 23,807,288 ------------ ------------ Organizational costs, net 205,574 229,005 ------------ ------------ $ 26,756,035 $ 26,000,310 ============ ============ Liabilities and Partners' Capital Current liabilities: Due to general partner (notes 1 and 3) $ - $ 17,299 Container rental equipment purchases payable - 341,486 ------------ ------------ Total current liabilities - 358,785 ------------ ------------ Partners' capital (deficit): General partner (3,859) (1,820) Limited partners 26,759,894 25,643,345 ------------ ------------ Total partners' capital 26,756,035 25,641,525 ------------ ------------ $ 26,756,035 $ 26,000,310 ============ ============
The accompanying notes are an integral part of these financial statements. 4 5 CRONOS GLOBAL INCOME FUND XVI, L.P. Statement of Operations (Unaudited)
Three Months Ended ----------------------- Six For the Period March 29, 1996 June 30, June 30, Months Ended (Commencement of Operations) 1997 1996 June 30, 1997 through June 30, 1996 ---------- --------- -------------- --------------------------- Net lease revenue (notes 1 and 4) $ 769,433 $ 209,056 $1,431,911 $ 210,966 Other operating expenses: Depreciation and amortization 402,935 163,544 793,949 182,302 Other general and administrative expenses 19,392 5,412 32,761 5,412 ---------- ---------- ---------- ---------- 422,327 168,956 826,710 187,714 ---------- ---------- ---------- ---------- Earnings from operations 347,106 40,100 605,201 23,252 Other income: Interest income 17,805 27,874 42,723 27,874 Net gain on disposal of equipment 1,321 - 3,352 - ---------- ---------- ---------- ---------- 19,126 27,874 46,075 27,874 ---------- ---------- ---------- ---------- Net earnings $ 366,232 $ 67,974 $ 651,276 $ 51,126 ========== ========== ========== ========== Allocation of net earnings: General partner $ 30,226 $ 1,940 $ 56,913 $ 1,771 Limited partners 336,006 66,034 594,363 49,355 ---------- ---------- ---------- ---------- $ 366,232 $ 67,974 $ 651,276 $ 51,126 ========== ========== ========== ========== Limited partners' per unit share of net earnings $ .33 $ .26 $ .59 $ .12 ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 5 6 CRONOS GLOBAL INCOME FUND XVI, L.P. Statement of Cash Flows (Unaudited)
For the Period March 29, 1996, Six Months Ended (Commencement of Operations) June 30, 1997 through June 30, 1996 ---------------- --------------------------- Net cash provided by operating activities $ 1,293,383 $ 160,081 Cash flows used in investing activities: Purchase of container rental equipment (2,340,840) (12,063,397) Acquisition fees paid to general partner (117,268) (603,170) ------------ -------------- Net cash used in investing activities (2,458,108) (12,666,567) ------------ -------------- Cash flows provided by (used in) financing activities: Capital contributions 1,931,060 15,786,320 Underwriting commissions (193,196) (1,578,642) Offering and organizational expenses (99,850) (789,321) Distribution to partners (1,177,057) (31,499) ------------ -------------- Net cash provided by financing activities 460,957 13,386,858 ------------ -------------- Net increase (decrease) in cash and cash equivalents (703,768) 880,372 Cash and cash equivalents at January 1 1,755,884 100 ------------ -------------- Cash and cash equivalents at June 30 $ 1,052,116 $ 880,472 ============ =============
The accompanying notes are an integral part of these financial statements. 6 7 CRONOS GLOBAL INCOME FUND XVI, L.P. Notes to Unaudited Financial Statements (1) Summary of Significant Accounting Policies (a) Nature of Operations Cronos Global Income Fund XVI, L.P. (the "Partnership") is a limited partnership organized under the laws of the State of California on September 1, 1995, for the purpose of owning and leasing marine cargo containers, special purpose containers and container related equipment. Cronos Capital Corp. ("CCC") is the general partner and, with its affiliate Cronos Containers Limited (the "Leasing Company"), manages and controls the business of the Partnership. The Partnership shall continue until December 31, 2015, unless sooner terminated upon the occurrence of certain events. The Partnership commenced operations on March 29, 1996, when the minimum subscription proceeds of $2,000,000 were received from over 100 subscribers (excluding from such count Pennsylvania residents, the general partner, and all affiliates of the general partner). On February 3, 1997, CCC suspended the offer and sale of units in the Partnership. The offering terminates on December 27, 1997. As of June 30, 1997, the Partnership operated 3,851 twenty-foot, 1,049 forty-foot and 460 forty-foot high-cube marine dry cargo containers, 90 twenty-foot and 300 forty-foot refrigerated containers and 52 twenty four thousand-liter tanks. (b) Leasing Company and Leasing Agent Agreement The Partnership has entered into a Leasing Agent Agreement whereby the Leasing Company has the responsibility to manage the leasing operations of all equipment owned by the Partnership. Pursuant to the Agreement, the Leasing Company is responsible for leasing, managing and re-leasing the Partnership's containers to ocean carriers and has full discretion over which ocean carriers and suppliers of goods and services it may deal with. The Leasing Agent Agreement permits the Leasing Company to use the containers owned by the Partnership, together with other containers owned or managed by the Leasing Company and its affiliates, as part of a single fleet operated without regard to ownership. Since the Leasing Agent Agreement meets the definition of an operating lease in Statement of Financial Accounting Standards (SFAS) No. 13, it is accounted for as a lease under which the Partnership is lessor and the Leasing Company is lessee. The Leasing Agent Agreement generally provides that the Leasing Company will make payments to the Partnership based upon rentals collected from ocean carriers after deducting direct operating expenses and management fees to CCC and the Leasing Company. The Leasing Company leases containers to ocean carriers, generally under operating leases which are either master leases or term leases (mostly two to five years). Master leases do not specify the exact number of containers to be leased or the term that each container will remain on hire but allow the ocean carrier to pick up and drop off containers at various locations; rentals are based upon the number of containers used and the applicable per-diem rate. Accordingly, rentals under master leases are all variable and contingent upon the number of containers used. Most containers are leased to ocean carriers under master leases; leasing agreements with fixed payment terms are not material to the financial statements. Since there are no material minimum lease rentals, no disclosure of minimum lease rentals is provided in these financial statements. 7 8 CRONOS GLOBAL INCOME FUND XVI, L.P. Notes to Unaudited Financial Statements (c) Basis of Accounting The Partnership utilizes the accrual method of accounting. Net lease revenue is recorded by the Partnership in each period based upon its leasing agent agreement with the Leasing Company. Net lease revenue is generally dependent upon operating lease rentals from operating lease agreements between the Leasing Company and its various lessees, less direct operating expenses and management fees due in respect of the containers specified in each operating lease agreement. (d) Financial Statement Presentation These financial statements have been prepared without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting procedures have been omitted. It is suggested that these financial statements be read in conjunction with the financial statements and accompanying notes in the Partnership's latest annual report on Form 10-K. The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. The interim financial statements presented herewith reflect all adjustments of a normal recurring nature which are, in the opinion of management, necessary to a fair statement of the financial condition and results of operations for the interim periods presented. (2) Net Lease Receivables Due from Leasing Company Net lease receivables due from the Leasing Company are determined by deducting direct operating payables and accrued expenses, base management fees payable, and reimbursed administrative expenses payable to CCC and its affiliates from the rental billings payable by the Leasing Company to the Partnership under operating leases to ocean carriers for the containers owned by the Partnership. Net lease receivables at June 30, 1997 and December 31, 1996 were as follows:
June 30, December 31, 1997 1996 ---------- ---------- Lease receivables, net of doubtful accounts of $13,547 at June 30, 1997 and $7,329 at December 31, 1996 $1,055,560 $ 755,259 Less: Direct operating payables and accrued expenses 338,096 302,271 Damage protection reserve 55,736 17,860 Base management fees 188,038 124,420 Reimbursed administrative expenses 105,091 102,575 ---------- ---------- $ 368,599 $ 208,133 ========== ==========
8 9 CRONOS GLOBAL INCOME FUND XVI, L.P. Notes to Unaudited Financial Statements (3) Due to General Partner The amounts due to CCC and its affiliates at December 31, 1996 consist of acquisition fees. (4) Net Lease Revenue Net lease revenue is determined by deducting direct operating expenses, base management fees and reimbursed administrative expenses to CCC and its affiliates from the rental revenue billed by the Leasing Company under operating leases to ocean carriers for the containers owned by the Partnership. Net lease revenue for the three months ended June 30, 1997 and 1996, the six months ended June 30, 1997 and the period March 29, 1996 (commencement of operations) through June 30, 1996 were as follows:
Three Months Ended ----------------------- Six For the Period March 29, 1996 June 30, June 30, Months Ended (Commencement of Operations) 1997 1996 June 30, 1997 through June 30, 1996 ---------- ---------- ---------------- ----------------------------- Rental revenue $1,089,942 $ 333,195 $2,036,733 $ 335,495 Less: Rental equipment operating expenses 185,171 83,201 351,419 83,201 Base management fees 75,649 22,832 141,700 23,063 Reimburse administrative expenses 59,689 18,106 111,703 18,265 ---------- ---------- ---------- ---------- $ 769,433 $ 209,056 $1,431,911 $ 210,966 ========== ========== ========== ==========
(5) Container Rental Equipment Purchases As of June 30, 1997, the Partnership had purchased the following types of container rental equipment:
Purchased from Purchased Container Total Equipment Type from CCC Manufacturers Purchased -------------- --------- -------------- --------- Dry Cargo Containers: Twenty-foot - 3,853 3,853 Forty-foot - 1,050 1,050 Forty-foot high-cube - 460 460 Refrigerated Cargo Containers: Twenty-foot - 90 90 Forty-foot high-cube - 300 300 Tank Containers: 24,000-liter - 52 52
The aggregate purchase price (excluding acquisition fees) of the equipment acquired by the Partnership through June 30, 1997 was $25,524,394. The aggregate equipment had been acquired from third-party container manufacturers located in South Korea, India, the People's Republic of China, Thailand and the United Kingdom. 9 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations It is suggested that the following discussion be read in conjunction with the Registrant's most recent annual report on Form 10-K. 1) Material changes in financial condition between June 30, 1997 and December 31, 1996. The Registrant is a limited partnership organized under the laws of the State of California on September 1, 1995 for the purpose of owning and leasing marine cargo containers, special purpose containers and container-related equipment. The Registrant was initially capitalized with $100 and commenced offering its limited partnership interests to the public subsequent to December 28, 1995, pursuant to its Registration Statement on Form S-1 (File No. 33-98290). The Registrant commenced operations on March 29, 1996. On February 3, 1997, Cronos Capital Corp. ("CCC"), the general partner, suspended the offer and sale of units in the Registrant. Information concerning the suspended offer and sale of units in the Registrant is incorporated by reference to the discussion in the Supplement dated February 6, 1997 to the Registration Statement on Form S-1, dated December 28, 1995 as supplemented December 27, 1996. The offering terminates December 27, 1997. For the period December 28, 1995 through February 3, 1997, the Registrant raised $31,993,340 in subscription proceeds. The following table sets forth the use of said subscription proceeds as of June 30, 1997.
Percentage of Amount Gross Proceeds ----------- -------------- Gross Subscription Proceeds $31,993,340 100.0% Public Offering Expenses: Underwriting Commissions 3,199,334 10.0% Offering and Organizational Expenses 1,482,116 4.6% ----------- ------- Total Public Offering Expenses 4,681,450 14.6% ----------- ------- Net Proceeds 27,311,890 85.4% Acquisition Fees 1,276,220 4.0% Working Capital Reserve 319,933 1.0% Unexpended Proceeds 191,343 0.6% ----------- ------- Gross Proceeds Invested in Equipment $25,524,394 79.8% =========== =======
The Registrant's cash balances as of June 30, 1997 included proceeds of the offering, together with interest earned thereon, and amounts reserved as working capital. Net lease receivables due from the Leasing Company are determined by deducting direct operating payables and accrued expenses, base management fees payable, and reimbursed administrative expenses payable to CCC and its affiliates from the rental billings payable by the Leasing Company to the Registrant. During the Registrant's first year of operations, the general partner and its affiliates agreed to defer the deduction of all base management fees and reimbursable administrative expenses from the leasing receivables due to the Registrant. Deferral of these fees ceased during the second quarter of 1997. At June 30, 1997, these deferred fees and expenses totaled $278,000. 10 11 The Registrant may rely upon financing to purchase a portion of its equipment. The amount of long-term borrowing secured by the Registrant will not exceed 20% of the aggregate purchase price of the Registrant's equipment. Once the Registrant completes its acquisition of equipment, the Registrant intends to maintain an ongoing reserve approximately equal to the greater of 1% of gross proceeds, or $100,000, to meet anticipated expenses of managing the equipment. The level of reserves will vary from time to time depending upon market conditions and the anticipated needs of the Registrant. The Registrant will not reinvest its revenues for the purchase of additional equipment. Pending expenditure for operations or distribution to the partners, these amounts may be invested in short-term, liquid investments. During 1996, ocean carriers and other transport companies moved away from leasing containers outright, as declining container prices, favorable interest rates and the abundance of available capital resulted in ocean carriers and transport companies purchasing a larger share of equipment for their own account, reducing the demand for leased containers. Once the demand for leased containers began to fall, per-diem rental rates were also adversely affected, contributing to an uncertain start to 1997. Since the beginning of the year, the container leasing industry has experienced an upward trend in container utilization. The impact of this trend on the utilization rates of the Registrant has been mixed. The Registrant's dry container utilization rate increased from 80% at December 31, 1996 to 89% at June 30, 1997, while refrigerated container utilization rates increased from 77% at December 31, 1996 to 100% at June 30, 1997. Tank container utilization also increased from 88% at December 31, 1996 to 90% at June 30, 1997. During 1996, shipping lines and other transport companies had reduced their leased fleets to minimal levels in an attempt to reduce costs. However, increasing cargo volumes and continued equipment imbalances within the container fleets of shipping lines and transport companies have established a need for these companies to replenish their leased fleets. Although there has been a general improvement in container utilization rates, per-diem rental rates continue to remain under pressure. The decline in per-diem rental rates from those evidenced during 1996 can be attributed to the following factors: three new leasing companies have offered new containers and low rental rates in an effort to break into the leasing market; established leasing companies have reduced rates to very low levels; and a continued over supply of containers. Although these conditions are expected to continue to impact the Registrant's financial condition and operating performance throughout 1997, the long-term outlook remains a positive one. 2) Material changes in the results of operations between the three-month periods ended June 30, 1997 and 1996, the six-month period ended June 30, 1996 and the period March 29, 1996 (commencement of operations) to June 30, 1996. Net lease revenue for the three and six-month periods ended June 30, 1997 was $769,433 and $1,431,911, respectively, an increase of approximately 73% and 85% from the same periods in the prior year, respectively. Gross rental revenue (a component of net lease revenue) for the three and six-month periods ended June 30, 1997 was $1,089,942 and $2,036,733, respectively, reflecting an increase of 69% and 84% from the same periods in the prior, respectively. During 1997, gross lease revenue was primarily impacted by an increase in fleet size and utilization rates. The average dry container per-diem rental rate for the three month period ended June 30, 1997 increased 4%, when compared to the same period in prior year. However, dry container per-diem rental rates for the six-month period ended June 30, 1997 declined 4% when compared to the period March 29, 1996 (commencement of operations) to June 30, 1996. Average refrigerated container per-diem rental rates for the three and six-month periods ended June 30, 1997 declined 18% and 10%, respectively, when compared to the same periods in the prior year. The average tank container per-diem rental rate for the three month period ended June 30, 1997 increased 35% and 51%, respectively, when compared to the same periods in the prior year. 11 12 The Registrant's average fleet size and utilization rates for the three-month periods ended June 30, 1997 and 1996, the six-month period ended June 30, 1997 and the period March 29, 1996 (commencement of operations) to June 30, 1996 were as follows:
Three Months Ended ----------------------- Six For the Period March 29, 1996 June 30, June 30, Months Ended (Commencement of Operations) 1997 1996 June 30, 1997 through June 30, 1996 --------- -------- ---------------- ---------------------------- Average Fleet Size (measured in twenty-foot equivalent units (TEU)) Dry cargo containers 6,870 3,367 6,700 2,675 Refrigerated cargo containers 690 267 690 209 Tank containers 52 42 52 36 Average Utilization Dry cargo containers 87% 50% 82% 39% Refrigerated cargo containers 98% 84% 94% 63% Tank containers 90% 49% 87% 37%
Rental equipment operating expenses were 17% of the Registrant's gross lease revenue during each of the three and six-month periods ended June 30, 1997, respectively, as compared to 25% during each of the same periods in the prior year. These decreases were largely attributable to a reduction in costs associated with higher utilization levels, including storage and handling. Direct operating expenses also include repositioning costs, agent fees and insurance premiums, as well as provisions for doubtful accounts and repair costs for containers covered under damage protection clauses. Direct operating costs are affected by the quantity of off-hire containers as well as the frequency at which the containers are redelivered. As reported in the Registrant's Current Report on Form 8-K and Amendment No. 1 to Current Report on Form 8-K, filed with the Commission on February 7, 1997 and February 26, 1997, respectively, Arthur Andersen, London, England, resigned as auditors of The Cronos Group, a Luxembourg Corporation headquartered in Orchard Lea, England (the "Parent Company"), on February 3, 1997. The Parent Company is the indirect corporate parent of Cronos Capital Corp., the general partner of the Registrant. In its letter of resignation to the Parent Company, Arthur Andersen states that it resigned as auditors of the Parent Company and all other entities affiliated with the Parent Company. While its letter of resignation was not addressed to the general partner or the Registrant, Arthur Andersen confirmed to the general partner that its resignation as auditors of the entities referred to in its letter of resignation included its resignation as auditors of Cronos Capital Corp. and the Registrant. Following Arthur Andersen's resignation, the Parent Company subsequently received notification from the Securities and Exchange Commission that it was conducting a private investigation of the Parent Company regarding the events and circumstances leading to Arthur Andersen's resignation. The results of this investigation are still pending. Accordingly, the Registrant does not, at this time, have sufficient information to determine the impact, if any, that the Securities and Exchange Commission investigation of the Parent Company and the concerns expressed by Arthur Andersen in its letter of resignation may have on the future operating results and financial condition of the Registrant or the Leasing Company's ability to manage the Registrant's fleet in subsequent periods. However, the general partner of the Registrant does not believe, based upon the information currently available to it, that Arthur Andersen's resignation was triggered by any concern over the accounting policies and procedures followed by the Registrant. 12 13 Arthur Andersen's report on the financial statements of Cronos Capital Corp. and the Registrant, for either of the previous two years, has not contained an adverse opinion or a disclaimer of opinion, nor was any such report qualified or modified as to uncertainty, audit scope, or accounting principles. During the Registrant's previous two fiscal years and the subsequent interim period preceding Arthur Andersen's resignation, there have been no disagreements between Cronos Capital Corp. or the Registrant and Arthur Andersen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. The Registrant retained a new auditor, Moore Stephens, P.C. ("Moore Stephens") on April 10, 1997, as reported in the Registrant's Current Report on Form 8-K, filed April 14, 1997. The President of the Leasing Company, a subsidiary of the Parent Company, along with two marketing Vice Presidents, resigned in June 1997. These vacancies were filled by qualified, long-time employees who average over 15 years of experience in the container leasing industry, therefore providing continuity in the management of the Leasing Company. The Registrant and general partner do not believe these changes will have a material impact on the future operating results and financial condition of the Registrant. Cautionary Statement This Quarterly Report on Form 10-Q contains statements relating to future results of the Registrant, including certain projections and business trends, that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to changes in: economic conditions; trade policies; demand for and market acceptance of leased marine cargo containers; competitive utilization and per-diem rental rate pressures; as well as other risks and uncertainties, including but not limited to those described in the above discussion of the marine container leasing business under Item 2., Management's Discussion and Analysis of Financial Condition and Results of Operations; and those detailed from time to time in the filings of Registrant with the Securities and Exchange Commission. 13 14 PART II - OTHER INFORMATION Item 5. Other Materially Important Events Equipment Acquisitions Pursuant to its undertakings made in its Registration Statement No. 33-98290, Section 7.2 (h) of the Partnership Agreement, the Registrant had purchased the following types of equipment as of June 30, 1997:
Purchased from Registrant's Purchased Container Total Average Cost Equipment Type from CCC Manufacturers Purchased Per Container -------------- --------- -------------- --------- -------------- Dry Cargo Containers: Twenty-foot - 3,853 3,853 $ 2,369 Forty-foot - 1,050 1,050 $ 3,520 Forty-foot high-cube - 460 460 $ 3,878 Refrigerated Cargo Containers: Twenty-foot - 90 90 $ 21,108 Forty-foot high-cube - 300 300 $ 25,655 Tank Containers: 24,000-liter - 52 52 $ 25,394
The aggregate purchase price (excluding acquisition fees) of the equipment acquired by the Registrant through June 30, 1997 was $25,524,394. The aggregate equipment had been acquired from third-party container manufacturers located in South Korea, India, the People's Republic of China, Thailand and the United Kingdom. 14 15 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits
Exhibit No. Description Method of Filing ------- ----------- ---------------- 3(a) Limited Partnership Agreement of the Registrant, amended and * restated as of December 28, 1996 3(b) Certificate of Limited Partnership of the Registrant ** 10 Form of Leasing Agent Agreement with Cronos Containers Limited *** 27 Financial Data Schedule Filed with this document
(b) Reports on Form 8-K The Registrant filed a Report on Form 8-K, dated April 14, 1997 reporting the appointment of the Registrant's successor certifying accountant. - ---------------- * Incorporated by reference to Exhibit "A" to the Prospectus of the Registrant dated December 28, 1996, included as part of Registration Statement on Form S-1 (No. 33-98290) ** Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-98290) *** Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-98290) 15 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. CRONOS GLOBAL INCOME FUND XVI, L.P. By Cronos Capital Corp. The General Partner By /s/ JOHN KALLAS ---------------------------------------- John Kallas Vice President, Treasurer Principal Financial & Accounting Officer Date: August 14, 1997 16 17 EXHIBIT INDEX
Exhibit No. Description Method of Filing ------- ----------- ---------------- 3(a) Limited Partnership Agreement of the Registrant, amended and * restated as of December 28, 1996 3(b) Certificate of Limited Partnership of the Registrant ** 10 Form of Leasing Agent with Cronos Containers Limited *** 27 Financial Data Schedule Filed with this document
- ---------------- * Incorporated by reference to Exhibit "A" to the Prospectus of the Registrant dated December 28, 1996, included as part of Registration Statement on Form S-1 (No. 33-98290) ** Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-98290) *** Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-98290) EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AT JUNE 30, 1997 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED AS PART OF ITS QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD JUNE 30, 1997. 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1,052,116 0 368,599 0 0 1,420,715 26,792,576 1,662,830 26,756,035 0 0 0 0 0 26,756,035 26,756,035 0 1,431,911 0 826,710 0 0 0 0 0 0 0 0 0 651,276 0 0
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