-----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, NIp7uuYkzwUQh8mLTP7WUogcf+Ro8ql9H1f/LF597X0vM5ziycxsMhfPwKqv4wcR +j6k1aVkO+L1DqtnC3A2mA== /in/edgar/work/20000814/0000950149-00-001764/0000950149-00-001764.txt : 20000921 0000950149-00-001764.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950149-00-001764 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IEA INCOME FUND X LP CENTRAL INDEX KEY: 0000853735 STANDARD INDUSTRIAL CLASSIFICATION: [7359 ] IRS NUMBER: 943098648 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18982 FILM NUMBER: 695444 BUSINESS ADDRESS: STREET 1: 444 MARKET ST 15TH FLR CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4156778990 10-Q 1 e10-q.txt QUARTER REPORT 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, 2000 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 0-18982 IEA INCOME FUND X, L.P. (Exact name of registrant as specified in its charter) California 94-3098648 (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 X, L.P. REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000 TABLE OF CONTENTS
PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets - June 30, 2000 and December 31, 1999 (unaudited) 4 Condensed Statements of Operations for the three and six months ended June 30, 2000 and 1999 (unaudited) 5 Condensed Statements of Cash Flows for the six months ended June 30, 2000 and 1999 (unaudited) 6 Notes to Condensed Financial Statements (unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 11 PART II - FINANCIAL INFORMATION Item 6. Exhibits and Reports on Form 8-K 12
2 3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presented herein are the Registrant's condensed balance sheets as of June 30, 2000 and December 31, 1999, condensed statements of operations for the three and six months ended June 30, 2000 and 1999, and condensed statements of cash flows for the six months ended June 30, 2000 and 1999. 19 4 IEA INCOME FUND X, L.P. CONDENSED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 2000 1999 ------------- ------------- Assets Current assets: Cash and cash equivalents, includes $414,984 at June 30, 2000 and $356,206 at December 31, 1999 in interest-bearing accounts $ 472,580 $ 356,306 Net lease receivables due from Leasing Company (notes 1 and 2) 150,586 177,496 ------------- ------------- Total current assets 623,166 533,802 ------------- ------------- Container rental equipment, at cost 14,575,043 15,457,224 Less accumulated depreciation 8,340,471 8,409,983 ------------- ------------- Net container rental equipment 6,234,572 7,047,241 ------------- ------------- Total assets $ 6,857,738 $ 7,581,043 ============= ============= Partners' Capital Partners' capital (deficit): General partner $ (53,494) $ (45,189) Limited partners 6,911,232 7,626,232 ------------- ------------- Total partners' capital $ 6,857,738 $ 7,581,043 ============= =============
The accompanying notes are an integral part of these condensed financial statements. 4 5 IEA INCOME FUND X, L.P. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended ------------------------- ------------------------- June 30, June 30, June 30, June 30, 2000 1999 2000 1999 --------- --------- --------- --------- Net lease revenue (notes 1 and 3) $ 263,594 $ 227,987 $ 507,130 $ 503,588 Other operating expenses: Depreciation 216,105 233,687 437,909 471,442 Other general and administrative expenses 18,184 8,269 31,708 22,845 --------- --------- --------- --------- 234,289 241,956 469,617 494,287 --------- --------- --------- --------- Income (loss) from operations 29,305 (13,969) 37,513 9,301 Other income (loss): Interest income 5,311 6,650 9,164 13,668 Net loss on disposal of equipment (56,581) (17,579) (107,167) (101,497) --------- --------- --------- --------- (51,270) (10,929) (98,003) (87,829) --------- --------- --------- --------- Net loss $ (21,965) $ (24,898) $ (60,490) $ (78,528) ========= ========= ========= ========= Allocation of net (loss): General partner $ 8,500 $ 14,021 $ 17,410 $ 26,040 Limited partners (30,465) (38,919) (77,900) (104,568) --------- --------- --------- --------- $ (21,965) $ (24,898) $ (60,490) $ (78,528) ========= ========= ========= ========= Limited partners' per unit share of net loss $ (0.78) $ (1.00) $ (1.99) $ (2.67) ========= ========= ========= =========
The accompanying notes are an integral part of these condensed financial statements. 5 6 IEA INCOME FUND X, L.P. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended ------------------------- June 30, June 30, 2000 1999 --------- --------- Net cash provided by operating activities $ 553,948 $ 558,357 Cash provided by investing activities: Proceeds from sale of container rental equipment 225,141 260,481 Cash used in financing activities: Distribution to partners (662,815) (905,770) --------- --------- Net increase (decrease) in cash and cash equivalents 116,274 (86,932) Cash and cash equivalents at January 1 356,306 653,851 --------- --------- Cash and cash equivalents at June 30 $ 472,580 $ 566,919 ========= =========
The accompanying notes are an integral part of these condensed financial statements. 6 7 IEA INCOME FUND X, L.P. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Summary of Significant Accounting Policies (a) Nature of Operations IEA Income Fund X, L.P. (the "Partnership") is a limited partnership organized under the laws of the State of California on July 18, 1989 for the purpose of owning and leasing marine cargo containers 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, 2010, unless sooner terminated upon the occurrence of certain events. The Partnership commenced operations on January 17, 1990, when the minimum subscription proceeds of $1,000,000 were obtained. The Partnership offered 40,000 units of limited partnership interest at $500 per unit, or $20,000,000. The offering terminated on October 30, 1990, at which time 39,206 limited partnership units had been purchased. (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 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; 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 condensed financial statements. 7 8 IEA INCOME FUND X, L.P. NOTES TO UNAUDITED CONDENSED 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 condensed 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 condensed 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 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 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, 2000 and December 31, 1999 were as follows:
June 30, December 31, 2000 1999 ------------- ------------- Gross lease receivables $ 575,477 $ 518,979 Less: Direct operating payables and accrued expenses 183,646 154,207 Damage protection reserve 70,082 72,336 Base management fees payable 45,989 51,184 Reimbursed administrative expenses 25,108 8,958 Allowance for doubtful accounts 100,066 54,798 ------------- ------------- Net lease receivables $ 150,586 $ 177,496 ============= =============
8 (Continued) 9 IEA INCOME FUND X, L.P. NOTES TO UNAUDITED CONDENSED 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 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 six-month periods ended June 30, 2000 and 1999 was as follows:
Three Months Ended Six Months Ended ---------------------- ---------------------- June 30, June 30, June 30, June 30, 2000 1999 2000 1999 -------- -------- -------- -------- Rental revenue (note 4) $433,998 $422,429 $871,756 $885,169 Less: Rental equipment operating expenses 113,650 138,962 249,147 267,565 Base management fees 28,767 28,784 56,802 60,955 Reimbursed administrative expenses 27,987 26,696 58,677 53,061 -------- -------- -------- -------- $263,594 $227,987 $507,130 $503,588 ======== ======== ======== ========
(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 dry cargo marine containers. As of June 30, 2000, the Partnership operated 3,415 twenty-foot, 922 forty-foot and 83 forty-foot high-cube dry cargo marine containers. 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 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, 2000 and December 31, 1999. During the first six months of 2000, the Registrant disposed of 269 containers as part of its ongoing container operations. At June 30, 2000, 84% of the original equipment remained in the Registrant's fleet, as compared to 89% at December 31, 1999, and was comprised of the following:
40-Foot 20-Foot 40-Foot High-Cube ------- ------- --------- Containers on lease: Term leases 328 186 19 Master leases 2,433 531 44 ------- ------- ------- Subtotal 2,761 717 63 Containers off lease 654 205 20 ------- ------- ------- Total container fleet 3,415 922 83 ======= ======= =======
40-Foot 20-Foot 40-Foot High-Cube ---------------- ---------------- ----------------- Units % Units % Units % ----- ----- ----- ----- ----- ----- Total purchases 4,000 100% 1,150 100% 100 100% Less disposals 585 15% 228 20% 17 17% ----- ----- ----- ----- ----- ----- Remaining fleet at June 30, 2000 3,415 85% 922 80% 83 83% ===== ===== ===== ===== ===== =====
At June 30, 2000, the Registrant had $472,580 in cash and cash equivalents, an increase of $116,274 from the cash balances at December 31, 1999. The Registrant's allowance for doubtful accounts increased from $54,798 at December 31, 1999 to $100,066 at June 30, 2000. This increase was attributable to the delinquent account receivable balances of approximately 11 lessees. The Leasing Company has either negotiated specific payment terms with these lessees or is pursuing other alternatives to collect the outstanding balances. In each instance, the Registrant believes it has provided sufficient reserves for all doubtful accounts. The Registrant disposed of 111 twenty-foot and 26 forty-foot dry cargo marine containers, as well as one forty-foot high cube dry cargo marine container during the second quarter of 2000, as compared to 82 twenty-foot and 23 forty-foot dry cargo marine containers during the same period in the prior year. These disposals resulted in a loss of $56,581 for the second quarter of 2000, as compared to a loss of $17,579 for the same period in the prior year. The Registrant does not believe that the carrying amount of its containers has been permanently impaired or that events or changes in circumstances have indicated that the carrying amount of its containers may not be fully recoverable. The Registrant believes that the loss on container disposals was a result of various factors including the age, condition, suitability for continued leasing, as well as the geographical location of the containers when disposed. These factors will continue to influence the amount of sales proceeds received and the related gain or loss on container disposals, which may fluctuate in subsequent periods. 10 (Continued) 11 The Registrant's cash distribution from operations for the second quarter of 2000 was 4.50% (annualized) of the limited partners' original capital contribution, unchanged from the first quarter of 2000. These distributions are directly related to the Registrant's results from operations and may fluctuate accordingly. The cash distribution from sales proceeds for the second quarter of 2000 was 2.50% (annualized) of the limited partners' original capital contribution, an increase of 0.50% from the first quarter of 2000. Sales proceeds distributed to its partners may fluctuate in subsequent periods, reflecting the level of container disposals. The growth in the volume of world trade, a rise in exports to the Far East, and the global effects of a strong U.S. economy have resulted in improved market conditions for the container leasing industry. As a result of these and other factors, including repositioning initiatives implemented earlier in the year, utilization of the Registrant's fleet of containers has exhibited steady improvement in recent months. In addition, new container prices, as well as interest rates, have been rising from historically low levels. During such times, ocean carriers tend to reduce their capital spending to supplement their owned fleets of containers in favor of leasing. The pressure on per diem rates has impacted the Registrant's revenues, but there has been some rate stabilization in recent months. The Registrant will continue to take advantage of improving market conditions by repositioning equipment to locations of greatest demand as well as seeking out leasing opportunities that will strengthen utilization and enhance the performance of the fleet. 2) Material changes in the results of operations between the three and six-month periods ended June 30, 2000 and the three and six-month periods ended June 30, 1999. Net lease revenue for the three and six-month periods ended June 30, 2000 was $263,594 and $507,130, respectively, an increase of 16% and 1%, respectively, from the same three and six-month periods in the prior year. Gross rental revenue (a component of net lease revenue) for the three and six-month periods ended June 30, 2000 was $433,998 and $871,756, respectively, an increase of 3% and a decrease of 2% from the respective three and six-month periods in the prior year. Gross rental revenue was primarily impacted by higher utilization levels and lower per-diem rental rates. Average per-diem rental rates for the three and six-month periods ended June 30, 2000 declined 5% and 9%, respectively, when compared to the same periods in the prior year. The Registrant's average fleet size and utilization rates for the three and six-month periods ended June 30, 2000 and 1999 were as follows:
Three Months Ended Six Months Ended ----------------------- ----------------------- June 30, June 30, June 30, June 30, 2000 1999 2000 1999 -------- -------- -------- -------- Average fleet size (measured in twenty-foot equivalent units (TEU)) 5,491 5,954 5,602 6,026 Average Utilization 81% 71% 80% 71%
The age and declining size of the Registrant's fleet contributed to reductions in depreciation expense of 8% and 7%, respectively, when compared to the respective three and six-month periods in the prior year. Rental equipment operating expenses during the three and six-month periods ended June 30, 2000 were 26% and 29%, respectively, of the Registrant's gross lease revenue, as compared to 33% and 30%, respectively, during the same three and six-month periods ended June 30, 1999. The Registrant's declining fleet size and related operating results contributed to a decline in base management fees. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable. 11 12 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 November 7, 1989 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 June 30, 2000. - ------------------ * Incorporated by reference to Exhibit "A" to the Prospectus of the Registrant dated November 7, 1989, included as part of Registration Statement on Form S-1 (No. 33-30245) ** Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-30245) 12 13 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 X, 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 Date: August 14, 2000 13 14 EXHIBIT INDEX
Exhibit No. Description Method of Filing ------- --------------------------------------------------------------------- --------------------------- 3(a) Limited Partnership Agreement of the Registrant, amended and restated * as of November 7, 1989 3(b) Certificate of Limited Partnership of the Registrant ** 27 Financial Data Schedule Filed with this document
- ------------------ * Incorporated by reference to Exhibit "A" to the Prospectus of the Registrant dated November 7, 1989, included as part of Registration Statement on Form S-1 (No. 33-30245) ** Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-30245) EX-27.1 2 ex27-1.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AT JUNE 30, 2000 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000 (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, 2000. 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 472,580 0 150,586 0 0 623,166 14,575,043 8,340,471 6,857,738 0 0 0 0 0 6,857,738 6,857,738 0 507,130 0 469,617 0 0 0 0 0 0 0 0 0 (60,490) 0 0
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