-----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, Bkm+x1Nd7HpBl8dN4KW0Cj8J5DiYO0D3hWzcjVhbnViFfuAS9ioBvA6DKjedViLN lrLzQ3HLi7wNtjSdIyLuRg== 0000950149-95-000762.txt : 19951119 0000950149-95-000762.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950149-95-000762 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IEA MARINE CONTAINER FUND II CENTRAL INDEX KEY: 0000315806 STANDARD INDUSTRIAL CLASSIFICATION: WATER TRANSPORTATION [4400] IRS NUMBER: 942671761 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09736 FILM NUMBER: 95590378 BUSINESS ADDRESS: STREET 1: 444 MARKET ST 15TH FLR CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4156778990 10-Q 1 FORM 10-Q FOR MARINE CONTAINER FUND II 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 SEPTEMBER 30, 1995 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 0-9736 IEA MARINE CONTAINER FUND II (A CALIFORNIA LIMITED PARTNERSHIP) (Exact name of registrant as specified in its charter) California 94-2671761 (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 IEA MARINE CONTAINER FUND II (A CALIFORNIA LIMITED PARTNERSHIP) REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 TABLE OF CONTENTS
PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets - September 30, 1995 (unaudited) and December 31, 1994 2 Statements of Operations for the three and nine months ended September 3 30, 1995 and 1994 (unaudited) Statements of Cash Flows for the nine months ended September 30, 1995 4 and 1994 (unaudited) Notes to Financial Statements (unaudited) 5 Item 2. Management's Discussion and Analysis of Financial Condition and 7 Results of Operations PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Forms 8-K during the period 8
3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presented herein are the Registrant's balance sheets as of September 30, 1995 and December 31, 1994, statements of operations for the three and nine months ended September 30, 1995 and 1994, and statements of cash flows for the nine months ended September 30, 1995 and 1994. 4 IEA MARINE CONTAINER FUND II (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS (UNAUDITED)
September 30, December 31, 1995 1994 ------------- ------------ Assets ------ Current assets: Cash, includes $80,327 at September 30, 1995 and $90,037 at December 31, 1994 in interest-bearing accounts $ 80,663 $ 102,780 Short-term investments 800,000 300,631 Net lease receivables due from Leasing Company (notes 1 and 2) 98,857 176,348 ----------- ---------- Total current assets 979,520 579,759 ----------- ---------- Container rental equipment, at cost 65,960 3,022,318 Less accumulated depreciation 47,776 2,111,831 ----------- ---------- Net container rental equipment 18,184 910,487 ----------- ---------- $ 997,704 $1,490,246 =========== ========== Partners' Capital ----------------- Partners' capital (deficit): General partners $ 1,124 $ (5,833) Limited partners 996,580 1,496,079 ----------- ---------- Total partners' capital 997,704 1,490,246 ----------- ---------- $ 997,704 $1,490,246 =========== ==========
The accompanying notes are an integral part of these statements. 2 5 IEA MARINE CONTAINER FUND II (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended ----------------------------- ----------------------------- September 30, September 30, September 30, September 30, 1995 1994 1995 1994 ------------- ------------- ------------- ------------- Net lease revenue (notes 1 and 3) $ (4,351) $ 118,444 $ 193,784 $ 444,806 Other operating expenses: Other general and administrative expenses 4,816 7,108 23,095 24,248 ---------- ----------- ---------- ----------- Earnings (loss) from operations (9,167) 111,336 170,689 420,558 Other income: Interest income 10,700 4,778 20,549 13,877 Net gain on disposal of equipment 71,847 55,412 124,311 125,311 ---------- ----------- ---------- ----------- 82,547 60,190 144,860 139,188 ---------- ----------- ---------- ----------- Net earnings $ 73,380 $ 171,526 $ 315,549 $ 559,746 ========== =========== ========== =========== Allocation of net earnings: General partners $ 6,842 $ 4,316 $ 15,038 $ 10,748 Limited partners 66,538 167,210 300,511 548,998 ---------- ----------- ---------- ----------- $ 73,380 $ 171,526 $ 315,549 $ 559,746 ========== =========== ========== =========== Limited partners' per unit share of net earnings $ 3.33 $ 8.36 $ 15.03 $ 27.45 ========== =========== ========== ===========
The accompanying notes are an integral part of these statements. 3 6 IEA MARINE CONTAINER FUND II (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended ------------------------------- September 30, September 30, 1995 1994 ------------- ------------- Net cash provided by operating activities $ 276,609 $ 421,943 Cash flows provided by investing activities: Proceeds from disposal of equipment 1,008,734 493,095 Cash flows used in financing activities: Distribution to partners (808,091) (1,085,872) ----------- ----------- Net increase (decrease) in cash and cash equivalents 477,252 (170,834) Cash and cash equivalents at January 1 403,411 649,488 ----------- ----------- Cash and cash equivalents at September 30 $ 880,663 $ 478,654 =========== ===========
The accompanying notes are an integral part of these statements. 4 7 IEA MARINE CONTAINER FUND II (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO UNAUDITED FINANCIAL STATEMENTS SEPTEMBER 30, 1995 AND DECEMBER 31, 1994 (1) Summary of Significant Accounting Policies (a) Nature of Operations IEA Marine Container Fund II (A California Limited Partnership) (the "Partnership") was organized under the laws of the State of California on January 3, 1980 for the purpose of owning and leasing marine cargo containers. The managing general partner is Cronos Capital Corp. ("CCC"); the associate general partner is Smith Barney Shearson, Inc. CCC, with its affiliate Cronos Containers Limited (the "Leasing Company"), manages and controls the business of the Partnership. (b) Leasing Company and Leasing Agent Agreement Pursuant to the Limited Partnership Agreement of the Partnership, all authority to administer the business of the Partnership is vested in CCC. CCC 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. 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. (c) Basis of Accounting The Partnership utilizes the accrual method of accounting. Revenue is recognized when earned. (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. 5 8 IEA MARINE CONTAINER FUND II (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO UNAUDITED FINANCIAL STATEMENTS (d) Financial Statement Presentation - (Continued) 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, and base management fees payable to CCC, the Leasing Company, 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 September 30, 1995 and December 31, 1994 were as follows;
September 30, December 31, 1995 1994 ------------- ------------ Lease receivables, net of doubtful accounts of $85,873 at September 30, 1995 and $77,495 at December 31, 1994 $ 144,659 $ 334,722 Less: Direct operating payables and accrued expenses 45,802 97,214 Damage protection reserve - 61,160 ---------- ---------- $ 98,857 $ 176,348 ========== ==========
(3) Net Lease Revenue Net lease revenue is determined by deducting direct operating expenses and management fees to CCC and the Leasing Company, 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 and nine-month periods ended September 30, 1995 and 1994, was as follows:
Three Months Ended Nine Months Ended ----------------------------- ----------------------------- September 30, September 30, September 30, September 30, 1995 1994 1995 1994 ------------- ------------- ------------- ------------- Rental revenue $ 10,865 $ 212,065 $ 324,878 $ 700,684 Rental equipment operating expenses 13,017 55,484 84,765 129,936 Base management fees 2,199 38,137 46,329 125,942 ---------- ---------- ---------- ----------- $ (4,351) $ 118,444 $ 193,784 $ 444,806 ========== ========== ========== ===========
6 9 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 September 30, 1995 and December 31, 1994. As discussed in prior quarterly reports, the Managing General Partner has focused its efforts on liquidating the remaining equipment in the fleet and winding up the Registrant's operations. Accordingly, during the first nine months of 1995, the Registrant disposed of 1,290 containers, equal to approximately 23% of its original fleet. Of this amount, 895 containers were sold during the second quarter of 1995, pursuant to an agreement with an unrelated party. The purchase price of these 895 containers totaled $632,577, which equaled approximately 105% of the containers' net book value. The proceeds from this and other container sales have been retained as part of working capital, ensuring the availability of sufficient cash balances during the period preceding the wind up of operations, as cash expenditures for investor processing, tax, legal and audit services, should be in excess of cash generated from operations. At September 30, 1995, the Registrant's remaining fleet consisted of 53 containers. These remaining containers have been targeted for disposal during the fourth quarter of 1995. The diminishing fleet size contributed to declines in the Registrant's lease receivables, direct operating payables and accrued expenses, and the reserve for container repairs covered under the damage protection plan. During the fourth quarter of 1995, a concentrated effort will be made to collect the Registrant's remaining lease receivables and extinguish its remaining payables, with the intent to wind up the Registrant's operations by December 31, 1995 or early 1996. 2) Material changes in the results of operations between the three and nine-month periods ended September 30, 1995 and the three and nine-month periods ended September 30, 1994. During the three and nine-month periods ended September 30, 1995, approximately 98% and 39%, respectively, of the Registrant's earnings were from gain on disposal of equipment, as compared to 32% and 22% for the same periods in the prior year. Net lease revenues were lower as a direct result of these disposals. The diminishing fleet size has had its greatest impact on gross rental revenue, a component of net lease revenue, resulting in a decline of 95% and 54% for the three and nine-month periods ended September 30, 1995, respectively, when compared to the same periods in 1994. Rental equipment operating expenses declined 77% and 35% over the same three and nine-month periods in the prior year. These amounts consisted of, but were not limited to, expenses associated with the recovery actions against the doubtful accounts of certain lessees, including legal and container recovery expenses, as well as the related provision for doubtful accounts. The Registrant's average fleet size and utilization rates for the three and nine-month periods ended September 30, 1995 and 1994 were as follows:
Three Months Ended Nine Months Ended ----------------------------- ----------------------------- September 30, September 30, September 30, September 30, 1995 1994 1995 1994 ------------- ------------- ------------- ------------- Average Fleet Size (measured in twenty-foot equivalents (TEU)) 87 1,686 788 1,853 Average Utilization 45% 80% 65% 80%
During the remaining period in the wind up phase of operations, the Registrant expects to incur net losses, as certain costs including investor processing, tax, legal and audit expenses, should be in excess of net lease revenues generated from operations. The Registrant has increased its cash reserves in anticipation of these expected losses. 7 10 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits
Number Description Method of Filing ------ ----------- ---------------- 27 Financial Data Schedule Filed with this Document
(b) There were no reports on Form 8-K during the three-month period ended September 30, 1995. 8 11 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. IEA MARINE CONTAINER FUND II (A California Limited Partnership) By Cronos Capital Corp. The Managing General Partner By /s/ JOHN KALLAS --------------------------------------- John Kallas Vice President, Chief Financial Officer Principal Accounting Officer Date: November 13, 1995 9 12 EXHIBIT INDEX
Exhibit No. Description ------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AT SEPTEMBER 30, 1995 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (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 SEPTEMBER 30, 1995 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 880,663 0 98,857 0 0 979,520 65,960 47,776 997,704 0 0 0 0 0 997,704 997,704 0 338,644 0 23,095 0 0 0 0 0 0 0 0 0 315,549 0 0
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