-----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, U8oh50/q7t42F+BUZeGmrcDyRbwZmAYMvYYJqUSMksbJ13gVQtKFiK7EhKi7gQ4V RFDlgUSMDeTGW+0lcdHQSQ== 0000950149-96-001802.txt : 19961113 0000950149-96-001802.hdr.sgml : 19961113 ACCESSION NUMBER: 0000950149-96-001802 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 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: 96658775 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 PERIOD ENDING SEPTEMBER 30, 1996 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, 1996 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, 1996 TABLE OF CONTENTS PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets - September 30, 1996 (unaudited) and December 31, 1995 4 Statements of Operations for the three and nine months ended September 30, 1996 and 1995 (unaudited) 5 Statements of Cash Flows for the nine months ended September 30, 1996 and 1995 (unaudited) 6 Notes to Financial Statements (unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Forms 8-K during the period 11 2 3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presented herein are the Registrant's balance sheets as of September 30, 1996 and December 31, 1995, statements of operations for the three and nine months ended September 30, 1996 and 1995, and statements of cash flows for the nine months ended September 30, 1996 and 1995. 3 4 IEA MARINE CONTAINER FUND II (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS (UNAUDITED)
September 30, December 31, 1996 1995 ------------- ------------ Assets Current assets: Cash, includes $34,821 at September 30, 1996 and $19,376 at December 31, 1995 in interest-bearing accounts $ 36,820 $ 19,586 Short-term investments 716,858 730,000 Net lease receivables due from Leasing Company (notes 1 and 2) -- 66,618 -------- -------- Total current assets 753,678 816,204 -------- -------- $753,678 $816,204 ======== ======== Liabilities and Partners' Capital Current liabilities: Accounts payable and accrued expenses $ 32,825 $ 6,943 -------- -------- Total current liabilities 32,825 6,943 -------- -------- Partners' capital: General partners 243 1,127 Limited partners 720,610 808,134 -------- -------- Total partners' capital 720,853 809,261 -------- -------- $753,678 $816,204 ======== ========
The accompanying notes are an integral part of these statements. 4 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, 1996 1995 1996 1995 ------------- ------------- ------------- ------------- Net lease revenue (expense) (notes 1 and 3) $ (25,309) $ (4,351) $ (38,306) $ 193,784 Other operating expenses: Other general and administrative expenses 17,870 4,816 27,475 23,095 --------- --------- --------- --------- Earnings (loss) from operations (43,179) (9,167) (65,781) 170,689 Other income: Interest income 9,423 10,700 27,879 20,549 Net gain on disposal of equipment -- 71,847 -- 124,311 --------- --------- --------- --------- 9,423 82,547 27,879 144,860 --------- --------- --------- --------- Net earnings (loss) $ (33,756) $ 73,380 $ (37,902) $ 315,549 ========= ========= ========= ========= Allocation of net earnings (loss): General partners $ (338) $ 6,842 $ (379) $ 15,038 Limited partners (33,418) 66,538 (37,523) 300,511 --------- --------- --------- --------- $ (33,756) $ 73,380 $ (37,902) $ 315,549 ========= ========= ========= ========= Limited partners' per unit share of net earnings (loss) $ (1.67) $ 3.33 $ (1.88) $ 15.03 ========= ========= ========= =========
The accompanying notes are an integral part of these statements. 5 6 IEA MARINE CONTAINER FUND II (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended ------------------------------- September 30, September 30, 1996 1995 ------------- ------------- Net cash provided by operating activities $ 25,644 $ 276,609 Cash flows provided by investing activities: Proceeds from disposal of equipment 28,547 1,008,734 Cash flows used in financing activities: Distribution to partners (50,506) (808,091) ----------- ----------- Net increase in cash and cash equivalents 3,685 477,252 Cash and cash equivalents at January 1 749,586 403,411 ----------- ----------- Cash and cash equivalents at September 30 $ 753,271 $ 880,663 =========== ===========
The accompanying notes are an integral part of these statements. 6 7 IEA MARINE CONTAINER FUND II (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO UNAUDITED FINANCIAL STATEMENTS (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 entered into a Leasing Agent Agreement whereby the Leasing Company had the responsibility to manage the leasing operations of all equipment owned by the Partnership. Pursuant to the Agreement, the Leasing Company was responsible for leasing, managing and re-leasing the Partnership's containers to ocean carriers and had full discretion over which ocean carriers and suppliers of goods and services it dealt with. The Leasing Agent Agreement permitted 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 has been accounted for as a lease under which the Partnership is lessor and the Leasing Company is the lessee. The Leasing Agent Agreement generally provided that the Leasing Company 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 of the Partnership's containers were 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. The Partnership has determined that for accounting purposes the Leasing Agent Agreement is a lease, and the receivables, payables, gross revenues and operating expenses attributable to the containers managed by the Leasing Company are, for accounting purposes, those of the Leasing Company and not of the Partnership. Consequently, the Partnership's balance sheets and statements of operations display the payments to be received by the Partnership from the Leasing Company as the Partnership's receivables and revenues. (Continued) 7 8 IEA MARINE CONTAINER FUND II (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO UNAUDITED FINANCIAL STATEMENTS (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. 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. For comparative purposes, prior year's accounts payable and accrued expenses have been reclassified to conform to the current year presentation. (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, 1996 and December 31, 1995 were as follows:
September 30, December 31, 1996 1995 ------------- ------------ Lease receivables, net of doubtful accounts of $nil at September 30, 1996 and $86,097 at December 31, 1995 $ -- $77,559 Less: Direct operating payables and accrued expenses -- 10,941 ------ ------- $ -- $66,618 ====== =======
(Continued) 8 9 IEA MARINE CONTAINER FUND II (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO UNAUDITED FINANCIAL STATEMENTS (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 (expense) for the three and nine-month periods ended September 30, 1996 and 1995, was as follows:
Three Months Ended Nine Months Ended ------------------------------ ------------------------------ September 30, September 30, September 30, September 30, 1996 1995 1996 1995 ------------- ------------- ------------- ------------- Rental revenue $ -- $ 10,865 $ -- $ 324,878 Rental equipment operating expenses 25,309 13,017 38,306 84,765 Base management fees -- 2,199 -- 46,329 --------- --------- --------- --------- $ (25,309) $ (4,351) $ (38,306) $ 193,784 ========= ========= ========= =========
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 September 30, 1996 and December 31, 1995. As discussed in the Registrant's report for the year ended December 31, 1995, the Registrant's remaining containers were disposed of during 1995. The Registrant is currently in the final phase of the liquidation and wind up stage of operations. During this phase, the Registrant refrained from distributing cash generated from operations and sales proceeds to its partners, reserving all excess cash as part of its working capital in order to maintain sufficient cash reserves for expenses related to its final liquidation and subsequent dissolution. During the first nine months of 1996, the Registrant focused on the collection of its lease receivables and payment of its direct operating payables and accrued expenses. At September 30, 1996, the remaining gross lease receivables were deemed to be uncollectible and accordingly, charged against the existing allowance for doubtful accounts. Additionally, at September 30, 1996, the Registrant accrued for the remaining costs associated with the termination of the Partnership, including, but not limited to, accounting, tax, and legal fees. The Registrant anticipates that during the fourth quarter of 1996 it will discharge the remaining direct operating payables and accrued expenses, undertake a final distribution to its partners, cancel the Certificate of Limited Partnership and terminate the Partnership. 2) Material changes in the results of operations between the three and nine-month periods ended September 30, 1996 and the three and nine-month periods ended September 30, 1995. At the beginning of 1995, the Registrant had 1,343 containers remaining in its fleet. These containers were disposed of during 1995. Accordingly, the Registrant's container operations ceased during the fourth quarter of 1995. The Registrant experienced a net loss of $33,756 and $37,902 during the three and nine-month periods ended September 30, 1996, respectively, as interest income, the Registrant's sole source of income, was in excess of other general and administrative expenses. Rental equipment operating expenses, a component of net lease revenue, were $25,309 and $38,306 during the three and nine-month periods ended September 30, 1996, respectively. These amounts consisted of costs associated with the recovery actions against the doubtful accounts of certain lessees, including legal expenses and the provision for doubtful accounts. General and administrative expenses included investor processing, tax, legal, and audit expenses. 10 11 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 May 20, 1980 3(b) Certificate of Limited Partnership of the Registrant ** 27 Financial Data Schedule Filed with this document
(b) Reports on Form 8-K No reports on Form 8-K were filed by the Registrant during the quarter ended September 30, 1996 - ---------- * Incorporated by reference to the Prospectus of the Registrant dated May 21, 1980, included as part of Registration Statement on Form S-1 (No. 2-67065) ** Incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1 (No. 2-67065) 11 12 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, Treasurer Principal Financial & Accounting Officer Date: November 11, 1996 12 13 EXHIBIT INDEX
Exhibit No. Description Method of Filing - ------- ----------- ---------------- 3(a) Limited Partnership Agreement of the Registrant, amended and * restated as of May 20, 1980 3(b) Certificate of Limited Partnership of the Registrant ** 27 Financial Data Schedule Filed with this document
- ---------- * Incorporated by reference to the Prospectus of the Registrant dated May 21, 1980, included as part of Registration Statement on Form S-1 (No. 2-67065) ** Incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1 (No. 2-67065) EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AT SEPTEMBER 30, 1996 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 (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, 1996 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 753,678 0 0 0 0 753,678 0 0 753,678 32,825 0 0 0 0 720,853 753,678 0 (38,306) 0 27,475 0 0 0 0 0 0 0 0 0 (37,902) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----