-----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, LpHcGrWLnSkYSXSYN6sp/LDuYU/UIvZF5VSVLjt/CYvXqUW39/h3gd9w6xYSBnMT UxlKdqZSNMu/XEWW9SFdtg== 0000950149-95-000769.txt : 19951119 0000950149-95-000769.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950149-95-000769 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 INCOME FUND VIII CENTRAL INDEX KEY: 0000821097 STANDARD INDUSTRIAL CLASSIFICATION: WATER TRANSPORTATION [4400] IRS NUMBER: 943046886 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17942 FILM NUMBER: 95590074 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 TO IEA INCOME FUND VIII 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 0-17942 IEA INCOME FUND VIII, (A CALIFORNIA LIMITED PARTNERSHIP) (Exact name of registrant as specified in its charter) California 94-3046886 (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 INCOME FUND VIII, (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 30, 1995 and 1994 3 (unaudited) Statements of Cash Flows for the nine months ended September 30, 1995 and 1994 4 (unaudited) Notes to Financial Statements (unaudited) 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - OTHER INFORMATION Item 6. Exhibit and Reports on Form 8-K 9
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 INCOME FUND VIII, (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS (UNAUDITED)
September 30, December 31, 1995 1994 ------------- ------------ Assets ------ Current assets: Cash, includes $243,737 at September 30, 1995 and $171,565 at December 31, 1994 in interest-bearing accounts $ 244,192 $ 181,017 Short-term investments 590,000 565,000 Net lease receivables due from Leasing Company (notes 1 and 2) 464,761 506,381 ----------- ------------ Total current assets 1,298,953 1,252,398 ----------- ------------ Container rental equipment, at cost 12,140,750 12,476,930 Less accumulated depreciation 4,641,705 4,245,029 ----------- ------------ Net container rental equipment 7,499,045 8,231,901 ----------- ------------ $ 8,797,998 $ 9,484,299 =========== ============ Liabilities and Partners' Capital --------------------------------- Current liabilities Due to general partner (notes 1 and 3) $ 7,952 $ 12,154 ----------- ------------ Total current liabilities 7,952 12,154 ----------- ------------ Due to general partner, net (note 3) -- 7,111 ----------- ------------ Total liabilities 7,952 19,265 ----------- ------------ Partners' capital (deficit): General partner $ 1,197 $ (6,916) Limited partners 8,788,849 9,471,950 ----------- ------------ Total partners' capital 8,790,046 9,465,034 ----------- ------------ $ 8,797,998 $ 9,484,299 =========== ============
The accompanying notes are an integral part of these statements. 2 5 IEA INCOME FUND VIII, (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 4) $514,655 $ 531,109 $1,686,314 $1,685,591 Other operating expenses: Depreciation 175,579 181,364 531,366 545,429 Other general and administrative expenses 1,894 11,180 29,268 33,373 -------- ---------- ---------- ---------- 177,473 192,544 560,634 578,802 -------- ---------- ---------- ---------- Earnings from operations 337,182 338,565 1,125,680 1,106,789 Other income: Interest income 11,509 7,577 36,012 20,685 Net gain on disposal of equipment 8,415 32,041 38,005 64,762 -------- ---------- ---------- ---------- 19,924 39,618 74,017 85,447 -------- ---------- ---------- ---------- Net earnings $357,106 $ 378,183 $1,199,697 $1,192,236 ======== ========== ========== ========== Allocation of net earnings: General partner $ 65,220 $ 58,036 $ 176,776 $ 153,130 Limited partners 291,886 320,147 1,022,921 1,039,106 -------- ---------- ---------- ---------- $357,106 $ 378,183 $1,199,697 $1,192,236 ======== ========== ========== ========== Limited partners' per unit share of net earnings $ 14 $ 15 $ 48 $ 48 ======== ========== ========== ==========
The accompanying notes are an integral part of these statements. 3 6 IEA INCOME FUND VIII, (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended ------------------------------------- September 30, September 30, 1995 1994 ------------- ------------- Net cash provided by operating activities $1,783,584 $ 1,573,524 Cash flows provided by (used in) investing activities: Proceeds from sale of container rental equipment 190,590 60,336 Acquisition fees paid to general partner (11,314) (20,221) ---------- ----------- Net cash provided by investing activities 179,276 40,115 ---------- ----------- Cash flows used in financing activities: Distribution to partners (1,874,685) (1,898,008) ---------- ----------- Net increase (decrease) in cash and cash equivalents 88,175 (284,369) Cash and cash equivalents at January 1 746,017 981,400 ---------- ----------- Cash and cash equivalents at September 30 $ 834,192 $ 697,031 ========== ===========
The accompanying notes are an integral part of these statements. 4 7 IEA INCOME FUND VIII, (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 Income Fund VIII, A California Limited Partnership (the "Partnership") was organized under the laws of the State of California on August 31, 1987 for the purpose of owning and leasing marine cargo containers. 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. (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. 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. (Continued) 5 8 IEA INCOME FUND VIII, (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO UNAUDITED FINANCIAL STATEMENTS (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, 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 $126,868 at September 30, 1995 and $109,915 at December 31, 1994 $827,329 $855,929 Less: Direct operating payables and accrued expenses 185,048 114,443 Damage protection reserve 85,190 137,410 Base management fees 80,150 82,030 Reimbursed administrative expenses 12,180 15,665 -------- -------- $464,761 $506,381 ======== ========
(3) Due to General Partner The amounts due to CCC at September 30, 1995 and December 31, 1994 consist of acquisition fees. (4) Net Lease Revenue Net lease revenue is determined by deducting direct operating expenses, management fees and reimbursed administrative expenses 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 $ 836,443 $ 843,112 $2,525,657 $2,431,218 Rental equipment operating expenses 215,497 196,825 526,996 425,662 Base management fees 55,495 64,648 170,621 170,197 Reimbursed administrative expenses 50,796 50,530 141,726 149,768 ---------- ---------- ---------- ---------- $ 514,655 $ 531,109 $1,686,314 $1,685,591 ========== ========== ========== ==========
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. The Registrant's cash balances at September 30, 1995 included sales proceeds from equipment disposals in the amount of $67,166. The Registrant will distribute these sales proceeds and $523,897 of cash from operations during the fourth quarter of 1995, representing distributions to its limited partners for the third quarter of 1995. Net lease receivables due from the Leasing Company declined 8% from December 31, 1994. Contributing to this decline was a 62% increase in direct operating payables and accrued expenses, arising from an increase in deferred revenue from advance billings to container lessees. During the first nine months of 1995, the reserve for container repairs covered by the damage protection plan was impacted by a reduction in the number of containers covered under the plan, resulting in a 38% decline, partially offsetting the increase in direct operating payables and accrued expenses. 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. Net lease revenue for the third quarter of 1995 was $514,655, a decline of 3% over the third quarter of 1994. Gross rental revenue (a component of net lease revenue) for the quarter was $836,443, as compared to $843,112 for the same period last year. For the first nine months of 1995, net lease revenue was $1,686,314, consistent with the first nine months of 1994. Gross rental revenue increased 4% to $2,525,657 over the same nine-month period. Gross rental revenue experience little change when compared with the same three and nine-month periods in the prior year, as the Registrant continued to recognize higher ancillary revenues, such as pick-up and drop-off charges. These ancillary revenues helped to offset the effects of a slightly lower fleet size and lower utilization rates. However, competitive pressures within the container leasing market, as well as the Leasing Company's efforts to improve the credit quality of its customer portfolio, combined to create a resistance to higher per-diem rental rates. Accordingly average per-diem rental rates remained relatively stable when compared to the same periods in the prior year. The Registrant expects to gain long-term benefits from the improvement in the credit quality of this customer portfolio, as the allowance for doubtful accounts and related expenses should decline. 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)) 6,933 7,155 6,996 7,173 Average Utilization 88% 90% 87% 89%
7 10 During the third quarter of 1995, the container leasing market began to experience the effects of increasingly competitive market conditions, including, but not limited to, a resistance to higher per-diem rental rates, slightly lower utilization rates resulting from an expanding supply of marine cargo containers within the container industry, and the economic condition of the shipping industry, which has experienced a current trend toward consolidation. Accordingly, the Registrant expects a stable container leasing market during the remainder of 1995 and first half of 1996. Rental equipment operating expenses increased 9% and 24% during the three and nine-month periods ended September 30, 1995, respectively, when compared to the same periods in the prior year. These increases were attributable to expenses typically associated with lower utilization rates, including repair and maintenance, storage and handling, as well as those costs associated with the recovery actions against the doubtful accounts of certain lessees, including legal, container recovery expenses and the related provision for doubtful accounts. 8 11 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. 9 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 INCOME FUND VIII, A California Limited Partnership By Cronos Capital Corp. The General Partner By /s/ JOHN KALLAS --------------------------------------- John Kallas Vice President, Chief Financial Officer Principal Accounting Officer Date: November 13, 1995 10 13 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 834,192 0 464,761 0 0 1,298,953 12,140,750 4,641,705 8,797,998 7,952 0 0 0 0 8,790,046 8,797,998 0 1,760,331 0 560,634 0 0 0 0 0 0 0 0 0 1,199,697 0 0
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