-----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, OUPzgBL9XVrPaAYwOeMiKybLTXiMlPI2tSjdQPa1qTPLjJj/m7vF225xiaG4puc+ 0QIsSXxlZjpZ/WX8v1+GGQ== 0000950149-01-500733.txt : 20010516 0000950149-01-500733.hdr.sgml : 20010516 ACCESSION NUMBER: 0000950149-01-500733 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 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: SEC FILE NUMBER: 000-27496 FILM NUMBER: 1636094 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 f72493he10-q.txt CRONOS GLOBAL INCOME FUND, XVI, L.P. FORM 10-Q 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 MARCH 31, 2001 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.) One Front 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 MARCH 31, 2001 TABLE OF CONTENTS
PAGE ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets - March 31, 2001 (unaudited) and December 31, 2000 4 Statements of Operations for the three months ended March 31, 2001 and 2000 (unaudited) 5 Statements of Cash Flows for the three months ended March 31, 2001 and 2000 (unaudited) 6 Notes to Financial Statements (unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 12 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13
2 3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presented herein are the Registrant's balance sheets as of March 31, 2001 and December 31, 2000, statements of operations for the three months ended March 31, 2001 and 2000, and statements of cash flows for the three months ended March 31, 2001 and 2000. 3 4 CRONOS GLOBAL INCOME FUND XVI, L.P. BALANCE SHEETS
March 31, December 31, 2001 2000 ------------ ------------ (Unaudited) Assets Current assets: Cash and cash equivalents, includes $1,148,502 at March 31, 2001 and $1,132,938 at December 31, 2000 in interest-bearing accounts $ 1,173,819 $ 1,379,619 Net lease receivables due from Leasing Company (notes 1 and 2) 280,472 262,463 ------------ ------------ Total current assets 1,454,291 1,642,082 ------------ ------------ Container rental equipment, at cost 31,831,794 31,851,392 Less accumulated depreciation 7,798,150 7,337,421 ------------ ------------ Net container rental equipment 24,033,644 24,513,971 ------------ ------------ Other assets 863,422 868,082 ------------ ------------ Total assets $ 26,351,357 $ 27,024,135 ============ ============ Liabilities and partners' capital Current liabilities: Interest payable $ 26,000 $ 35,000 Current portion of equipment debt 840,600 840,600 ------------ ------------ Total current liabilities 866,600 875,600 Equipment debt less current portion 3,572,550 3,782,700 ------------ ------------ Total liabilities 4,439,150 4,658,300 ------------ ------------ Partners' capital (deficit): General partner (29,269) (25,351) Limited partners 21,941,476 22,391,186 ------------ ------------ Total partners' capital 21,912,207 22,365,835 ------------ ------------ Total liabilities and partners' capital $ 26,351,357 $ 27,024,135 ============ ============
The accompanying notes are an integral part of these financial statements. 4 5 CRONOS GLOBAL INCOME FUND XVI, L.P. STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended ------------------------------- March 31, March 31, 2001 2000 --------- --------- Net lease revenue (notes 1 and 3) $ 791,993 $ 810,544 Other operating expenses: Depreciation 470,289 413,423 Other general and administrative expenses 30,642 20,468 --------- --------- 500,931 433,891 --------- --------- Income from operations 291,062 376,653 Other income (loss): Interest income 17,475 23,255 Interest expense (89,245) -- Net gain (loss) on disposal of equipment 625 (351) --------- --------- (71,145) 22,904 --------- --------- Net income $ 219,917 $ 399,557 ========= ========= Allocation of net income: General partner $ 29,760 $ 30,941 Limited partners 190,157 368,616 --------- --------- $ 219,917 $ 399,557 ========= ========= Limited partners' per unit share of net income $ 0.12 $ 0.23 ========= =========
The accompanying notes are an integral part of these financial statements. 5 6 CRONOS GLOBAL INCOME FUND XVI, L.P. STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended ----------------------------------- March 31, March 31, 2001 2000 ----------- ----------- Net cash provided by operating activities $ 656,154 $ 43,541 Cash flows provided by (used in) investing activities: Proceeds from disposal of equipment 21,741 17,727 Purchase of container rental equipment -- (3,305,600) ----------- ----------- 21,741 (3,287,873) ----------- ----------- Cash flows (used in) provided by financing activities: Proceeds from the issuance of term debt -- 3,305,600 Repayment of term debt (210,150) -- Distribution to partners (673,545) (673,544) ----------- ----------- (883,695) 2,632,056 ----------- ----------- Net decrease in cash and cash equivalents (205,800) (612,276) Cash and cash equivalents at January 1 1,379,619 1,987,885 ----------- ----------- Cash and cash equivalents at March 31 $ 1,173,819 $ 1,375,609 =========== ===========
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 worldwide to ocean carriers. To this extent, the Partnership's operations are subject to the fluctuations of world economic and political conditions. Such factors may affect the pattern and levels of world trade. The Partnership believes that the profitability of, and risks associated with, leases to foreign customers is generally the same as those of leases to domestic customers. The Partnership's leases generally require all payments to be made in United States currency. Cronos Capital Corp. ("CCC") is the general partner and, with its affiliate Cronos Containers Limited (the "Leasing Company"), manages the business of the Partnership. CCC and the Leasing Company also manage the container leasing business for other partnerships affiliated with the general partner. 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 terminated on December 27, 1997. (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 one 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, and 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. (Continued) 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 financial statements are prepared in conformity with accounting principles generally accepted in the United States (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. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year. (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 earned by the Leasing Company under operating leases to ocean carriers for the containers owned by the Partnership. Net lease receivables at March 31, 2001 and December 31, 2000 were as follows:
March 31, December 31, 2001 2000 -------- ------------ Gross lease receivables $865,487 $879,378 Less: Direct operating payables and accrued expenses 323,216 307,566 Damage protection reserve 70,717 99,909 Base management fees payable 110,143 119,286 Reimbursed administrative expenses 38,926 49,538 Allowance for doubtful accounts 42,013 40,616 -------- -------- Net lease receivables $280,472 $262,463 ======== ========
(Continued) 8 9 CRONOS GLOBAL INCOME FUND XVI, L.P. NOTES TO UNAUDITED FINANCIAL STATEMENTS (3) 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 earned by the Leasing Company under operating leases to ocean carriers for the containers owned by the Partnership. Net lease revenue for each of the three-month periods ended March 31, 2001 and 2000 was as follows:
Three Months Ended -------------------------------- March 31, March 31, 2001 2000 ---------- ---------- Rental revenue (note 4) $1,105,738 $1,123,818 Less: Rental equipment operating expenses 186,310 175,068 Base management fees 76,669 77,503 Reimbursed administrative expenses 50,766 60,703 ---------- ---------- $ 791,993 $ 810,544 ========== ==========
(4) Operating Segment The Financial Accounting Standards Board has issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," which changes the way public business enterprises report financial and descriptive information about reportable operating segments. An operating segment is a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the enterprise's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and about which separate financial information is available. Management operates the Partnership's container fleet as a homogenous unit and has determined, after considering the requirements of SFAS No. 131, that as such it has a single reportable operating segment. The Partnership derives its revenues from leasing marine cargo containers. As of March 31, 2001, the Partnership operated 4,489 twenty-foot, 1,490 forty-foot and 1,747 forty-foot high-cube marine dry cargo containers, 89 twenty-foot and 299 forty-foot refrigerated cargo containers, and 52 twenty-four thousand-liter tanks. A summary of gross lease revenue, by product, for each of the three-month periods ended March 31, 2001 and 2000 follows:
Three Months Ended -------------------------------- March 31, March 31, 2001 2000 ---------- ---------- Dry cargo containers $ 725,607 $ 737,971 Refrigerated containers 345,451 345,220 Tank containers 34,680 40,627 ---------- ---------- Total $1,105,738 $1,123,818 ========== ==========
Due to the Partnership's lack of information regarding the physical location of its fleet of containers when on lease in the global shipping trade, it is impracticable to provide the geographic area information required by SFAS No. 131. 9 10 CRONOS GLOBAL INCOME FUND XVI, L.P. NOTES TO UNAUDITED FINANCIAL STATEMENTS (5) Equipment Debt As of March 31, 2001, the Partnership's existing term loan debt was $4,413,150 plus estimated accrued interest of $26,000. On March 30, 2000, the Partnership borrowed $5,043,600 under a term loan for the purpose of acquiring additional equipment. The loan will be repaid in 21 remaining equal quarterly installments plus interest, through May 31, 2006. Interest accrues at the rate of 1.75% above the LIBOR rate which is calculated on the first day of each quarterly interest period. Over the life of the loan, the interest rates ranged from 7.88% to 8.58%. The loan is secured by containers owned by the Partnership, as well as, any income generated in connection with the containers including lease revenue and sales proceeds. A restricted deposit of $750,000 is held in an account with the lender as additional collateral. As of March 31, 2001, the estimated fair value of the term loan debt was $4,111,044. The fair value of the term loan has been calculated using the market rates prevailing at April 30, 2001. ****** 10 11 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 March 31, 2001 and December 31, 2000. At March 31, 2001, the Registrant had $1,173,819 in cash and cash equivalents, a decrease of $205,800 from the cash balances at December 31, 2000. Contributing to this decline was the Registrants' results from operations, which were impacted by conditions created by the slowdown in the global economy. During the first quarter of 2001, cash from operations equivalent to $210,150 was used to repay principal on the Registrant's existing term loan debt. In addition to a restricted deposit of $750,000 held in an account with the lender as additional collateral, the Registrant has increased its working capital reserves by approximately $300,000, equivalent to one quarter's principal and interest payment. The Registrant's operating performance contributed to a 7% increase in net lease receivables at March 31, 2001 when compared to December 31, 2000. The increase is primarily due to a decrease in reimbursable administrative expenses and the provision for damage protection reserve, partially offset by an increase in direct operating payables and accrued expenses. The Registrant's cash distribution from operations for the first quarter of 2001 was 8% (annualized) of the limited partners' original capital contributions, unchanged from the fourth quarter of 2000. These distributions are directly related to the Registrant's results from operations and may fluctuate accordingly. 2) Material changes in the results of operations between the three-month periods ended March 31, 2001 and 2000. In the first quarter of 2001, the worldwide demand for containers was significantly impacted by the slowdown in the global economy. These conditions are reflected in the decline of the Registrant's utilization and per-diem rental rates from December 31, 2000 levels. The Leasing Company has implemented a number of marketing initiatives which are designed to target identified leasing opportunities and enhance inventory management. Net lease revenue for the three-month period ended March 31, 2001 was $791,993, a decrease of approximately 2% from the same three-month period in the prior year. Gross rental revenue (a component of net lease revenue) for the three-month period ended March 31, 2001 was $1,105,738, reflecting a decrease of 2% from the same three-month period in the prior year. Dry cargo container average per-diem rental rates for the three-month period ended March 31, 2001 declined approximately 3% when compared to the same three-month period in the prior year. Refrigerated container average per-diem rental rates for the three-month period ended March 31, 2001 remained unchanged when compared to the same period in the prior year. Tank container average per-diem rental rates for the three-month period ended March 31, 2001 declined 7% when compared to the same period in the prior year. (Continued) 11 12 The Registrant's average fleet size and utilization rates for the three-month periods ended March 31, 2001 and 2000 were as follows:
Three Months Ended ----------------------------- March 31, March 31, 2001 2000 --------- --------- Average fleet size (measured in twenty-foot equivalent units (TEU)) Dry cargo containers 10,966 6,815 Refrigerated containers 687 687 Tank containers 52 52 Average utilization Dry cargo containers 76.3% 80.5% Refrigerated containers 96.9% 95.6% Tank containers 66.3% 75.2%
Rental equipment operating expenses were 17% of the Registrant's gross lease revenue during the three-month period ended March 31, 2001, as compared to 16% during the same three-month period ended March 31, 2000. This increase was largely attributable to an increase in handling and storage costs associated with fluctuating utilization levels, substantially offset by the decreases in repair and maintenance expense and the provision for doubtful accounts. Interest expense of $89,245 was incurred in the first quarter of 2001 related to the Registrant's term loan obtained during 2000. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable. 12 13 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, 1995 3(b) Certificate of Limited Partnership of the ** Registrant 10 Form of Leasing Agent Agreement with Cronos *** Containers Limited
(b) Reports on Form 8-K No reports on Form 8-K were filed by the Registrant during the quarter ended March 31, 2001. - ---------- * Incorporated by reference to Exhibit "A" to the Prospectus of the Registrant dated December 28, 1995, 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) 13 14 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/ Dennis J. Tietz ------------------------------------- Dennis J. Tietz President and Director of Cronos Capital Corp. ("CCC") Principal Executive Officer of CCC By /s/ John Kallas ------------------------------------- John Kallas Chief Financial Officer and Director of Cronos Capital Corp. ("CCC") Principal Financial and Accounting Officer of CCC Date: May 15, 2001 14 15 EXHIBIT INDEX
Exhibit No. Description Method of Filing ------- ----------- ---------------- 3(a) Limited Partnership Agreement of the Registrant, * amended and restated as of December 28, 1995 3(b) Certificate of Limited Partnership of the ** Registrant 10 Form of Leasing Agent Agreement with Cronos *** Containers Limited
- ---------- * Incorporated by reference to Exhibit "A" to the Prospectus of the Registrant dated December 28, 1995, 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) -----END PRIVACY-ENHANCED MESSAGE-----