-----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, FK8lmMEAIAP3a/T3hSto3kTzSO1u6jypAGCbj2F6TNPYp/9wgIG6P83jwtzXMllL Iu7b4eLTYhDpe9DXuimETA== 0000950149-98-001448.txt : 19980814 0000950149-98-001448.hdr.sgml : 19980814 ACCESSION NUMBER: 0000950149-98-001448 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IEA INCOME FUND X LP CENTRAL INDEX KEY: 0000853735 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [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: 98685032 BUSINESS ADDRESS: STREET 1: 444 MARKET ST 15TH FLR CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4156778990 10-Q 1 QUARTERLY 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, 1998 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, 1998 TABLE OF CONTENTS
PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets - June 30, 1998 (unaudited) and December 31, 1997 4 Statements of Operations for the three and six months ended June 30, 1998 and 1997 (unaudited) 5 Statements of Cash Flows for the six months ended June 30, 1998 and 1997 (unaudited) 6 Notes to 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- OTHER INFORMATION Item 1. Legal Proceedings 12 Item 3. Defaults Upon Senior Securities 13 Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 15
2 3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presented herein are the Registrant's balance sheets as of June 30, 1998 and December 31, 1997, statements of operations for the three and six months ended June 30, 1998 and 1997, and statements of cash flows for the six months ended June 30, 1998 and 1997. 3 4 IEA INCOME FUND X, L.P. BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1998 1997 ------------ ------------ Assets Current assets: Cash and cash equivalents, includes $672,368 at June 30, 1998 and $714,328 at December 31, 1997 in interest-bearing accounts $ 672,468 $ 714,528 Net lease receivables due from Leasing Company (notes 1 and 2) 270,540 247,992 ------------ ------------ Total current assets 943,008 962,520 ------------ ------------ Container rental equipment, at cost 16,983,984 17,249,260 Less accumulated depreciation 7,768,973 7,391,011 ------------ ------------ Net container rental equipment 9,215,011 9,858,249 ------------ ------------ $ 10,158,019 $ 10,820,769 ============ ============ Partners' Capital Partners' capital (deficit): General partner $ (19,420) $ (12,792) Limited partners 10,177,439 10,833,561 ------------ ------------ Total partners' capital 10,158,019 10,820,769 ------------ ------------ $ 10,158,019 $ 10,820,769 ============ ============
The accompanying notes are an integral part of these financial statements. 4 5 IEA INCOME FUND X, L.P. STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended ------------------------ ------------------------ June 30, June 30, June 30, June 30, 1998 1997 1998 1997 --------- --------- --------- --------- Net lease revenue (notes 1 and 3) $ 356,568 $ 355,838 $ 689,448 $ 685,260 Other operating expenses: Depreciation 247,814 255,459 498,051 511,761 Other general and administrative expenses 9,766 11,366 22,753 19,968 --------- --------- --------- --------- 257,580 266,825 520,804 531,729 --------- --------- --------- --------- Earnings from operations 98,988 89,013 168,644 153,531 Other income (loss): Interest income 8,362 6,957 16,921 14,272 Net loss on disposal of equipment (13,110) (26,838) (28,080) (14,927) --------- --------- --------- --------- (4,748) (19,881) (11,159) (655) --------- --------- --------- --------- Net earnings $ 94,240 $ 69,132 $ 157,485 $ 152,876 ========= ========= ========= ========= Allocation of net earnings: General partner $ 14,897 $ 11,994 $ 29,483 $ 30,049 Limited partners 79,343 57,138 128,002 122,827 --------- --------- --------- --------- $ 94,240 $ 69,132 $ 157,485 $ 152,876 ========= ========= ========= ========= Limited partners' per unit share of net earnings $ 2.02 $ 1.45 $ 3.26 $ 3.13 ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements. 5 6 IEA INCOME FUND X, L.P. STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended ------------------------ June 30, June 30, 1998 1997 --------- --------- Net cash provided by operating activities $ 603,160 $ 728,506 Cash flows provided by investing activities: Proceeds from sale of container rental equipment 175,014 51,238 Cash flows used in financing activities: Distribution to partners (820,234) (758,974) --------- --------- Net increase (decrease) in cash and cash equivalents (42,060) 20,770 Cash and cash equivalents at January 1 714,528 642,886 --------- --------- Cash and cash equivalents at June 30 $ 672,468 $ 663,656 ========= =========
The accompanying notes are an integral part of these financial statements. 6 7 IEA INCOME FUND X, L.P. NOTES TO UNAUDITED 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. Cronos Capital Corp. ("CCC") is the general partner and, with its affiliate Cronos Containers Limited (the "Leasing Company"), manages the business of the Partnership. 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. As of June 30, 1998, the Partnership operated 3,911 twenty-foot, 1,119 forty-foot and 92 forty-foot high-cube marine dry cargo containers. (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. 7 (Continued) 8 IEA INCOME FUND X, 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 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. 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. (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, 1998 and December 31, 1997 were as follows:
June 30, December 31, 1998 1997 -------- -------- Lease receivables, net of doubtful accounts of $19,563 at June 30, 1998 and $44,032 at December 31, 1997 $548,540 $544,082 Less: Direct operating payables and accrued expenses 154,819 165,210 Damage protection reserve 55,263 68,241 Base management fees 57,934 52,816 Reimbursed administrative expenses 9,984 9,823 -------- -------- $270,540 $247,992 ======== ========
(Continued) 8 9 IEA INCOME FUND X, 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 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, 1998 and 1997 was as follows:
Three Months Ended Six Months Ended ------------------------- ------------------------- June 30, June 30, June 30, June 30, 1998 1997 1998 1997 ---------- ---------- ---------- ---------- Rental revenue $ 551,406 $ 599,915 $1,112,596 $1,194,351 Less: Rental equipment operating expenses 126,479 169,156 273,911 359,627 Base management fees 37,692 42,073 76,658 83,165 Reimbursed administrative expenses 30,667 32,848 72,579 66,299 ---------- ---------- ---------- ---------- $ 356,568 $ 355,838 $ 689,448 $ 685,260 ========== ========== ========== ==========
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, 1998 and December 31, 1997. At June 30, 1998, the Registrant had $672,468 in cash and cash equivalents, a decrease of $42,060 from the December 31, 1997 cash balances. Net lease receivables at June 30, 1998 increased 9% when compared to December 31, 1997. The Registrant's cash distribution from operations for the second quarter of 1998 was 7% (annualized) of the limited partners' original capital contribution, unchanged from the first quarter of 1998. 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 1998 was 1% (annualized) of the limited partners' original capital contribution, unchanged from the first quarter of 1998. Sales proceeds distributed to its partners may fluctuate in subsequent periods, reflecting the level of container disposals. Imbalances and reductions in trade volumes, fueled by the economic crisis in Asia, continue to affect the container leasing market and Partnership operations. Containerships leaving Asia are operating at full capacity. Yet, on the return eastbound trip they are going back to Asia with only a fraction of their holds utilized. This results in a shortage of containers available for exporting cargo from Asia and a surplus of containers in locations of low demand. As a consequence of this imbalance, container leasing companies are repositioning empty containers from low-demand locations back to Asian ports in order to keep equipment at the source of cargo and, at the same time, reduce the effects of additional depot charges for idle equipment and lost revenue. While there is a cost incurred when repositioning an empty container, revenue is lost while it is in transit. In spite of these market pressures, strong trade with other parts of the world is compensating for the imbalances with Asia. There is renewed demand for leased containers in locations such as Mexico, Canada, China, and areas of Europe where trade volumes of containerized goods are prospering. In light of the current market conditions, the Registrant's focus remains centered on strategic planning in order to reduce equipment imbalances and on improving collections to maximize returns. 2) Material changes in the results of operations between the three and six-month periods ended June 30, 1998 and the three and six-month periods ended June 30, 1997. Net lease revenue for the three and six-month periods ended June 30, 1998 was $356,568 and $689,448, respectively, an increase of approximately 1% from the same periods in the prior year. Gross rental revenue (a component of net lease revenue) for the three and six-month periods ended June 30, 1998 was $551,406 and $1,112,596, respectively, a decline of 8% and 7%, respectively, from the same periods in the prior year. Gross rental revenue was primarily impacted by lower per-diem rental rates. Average per-diem rental rates declined 10% and 12%, respectively, for the three and six-month periods ended June 30, 1998 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, 1998 and 1997 were as follows:
Three Months Ended Six Months Ended ------------------- ------------------- June 30, June 30, June 30, June 30, 1998 1997 1998 1997 ----- ----- ----- ----- Average fleet size (measured in twenty-foot equivalent units (TEU)) 6,351 6,522 6,384 6,538 Average Utilization 81% 76% 80% 75%
10 11 Rental equipment operating expenses were 23% and 25%, respectively, of the Registrant's gross lease revenue during the three and six-month periods ended June 30, 1998, as compared to 28% and 30%, respectively, of the Registrant's gross lease revenue during the three and six-month periods ended June 30, 1997. These decreases were largely attributable to a decrease in costs associated with higher utilization levels, including handling and storage. The Registrant disposed of 32 twenty-foot, nine forty-foot and one forty-foot high-cube marine cargo containers during the second quarter of 1998, as compared to 21 twenty-foot, eight forty-foot and one forty-foot high-cube marine cargo containers during the same period in the prior year. The decision to repair or dispose of a container is made when it is returned by a lessee. This decision is influenced by various factors including the age, condition, suitability for continued leasing, as well as the geographical location of the container when disposed. These factors also influence the amount of sales proceeds received and the related gain on container disposals. Year 2000 The Registrant relies upon the financial and operational systems provided by the Leasing company and its affiliates, as well as the systems provided by other independent third parties to service the three primary areas of its business: investor processing/maintenance; container leasing/asset tracking; and accounting finance. The Registrant has received confirmation from its third-party investor processing/maintenance vendor that their system is Year 2000 compliant. The Registrant does not expect a material increase in its vendor servicing fee to reimburse Year 2000 costs. Container leasing/asset tracking and accounting/finance services are provided to the Registrant by CCC and its affiliate, Cronos Containers Limited (the "Leasing Company"), pursuant to the respective Limited Partnership Agreement and Leasing Agent Agreement. CCC and the Leasing Company have initiated a program to prepare their systems and applications for the Year 2000. Preliminary studies indicate that testing, conversion and upgrading of system applications is expected to cost CCC and the Leasing Company less than $500,000. Pursuant to the Limited Partnership Agreement, CCC or the Leasing Company, may not seek reimbursement of data processing costs associated with the Year 2000 program. The financial impact of making these required system changes is not expected to be material to the Registrant's financial position, results of operations or cash flows. Cautionary Statement This Quarterly Report on Form 10-Q contains statements relating to future results of the Registrant, including certain projections and business trends, that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to changes in: economic conditions; trade policies; demand for and market acceptance of leased marine cargo containers; competitive utilization and per-diem rental rate pressures; as well as other risks and uncertainties, including but not limited to those described in the above discussion of the marine container leasing business under Item 2., Management's Discussion and Analysis of Financial Condition and Results of Operations; and those detailed from time to time in the filings of Registrant with the Securities and Exchange Commission. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable. 11 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings As reported in the Registrant's Current Report on Form 8-K and Amendment No. 1 to Current Report on Form 8-K, filed with the Commission on February 7, 1997 and February 26, 1997, respectively, Arthur Andersen, London, England, resigned as auditors of the Cronos Group, a Luxembourg corporation headquartered in Orchard Lea, England (the "Parent Company"), on February 3, 1997. The Registrant retained a new auditor, Moore Stephens, P.C. on April 10, 1997, as reported in its Current Report on Form 8-K, filed April 14, 1997. In connection with its resignation, Arthur Andersen also prepared a report pursuant to Section 10A(b)(2) of the Securities Exchange Act of 1934 as amended, for filing by the Parent Company with the Securities and Exchange Commission ("SEC") citing its inability to obtain what it considered to be adequate responses to its inquiries primarily regarding the payment of $1.5 million purportedly in respect of professional fees relating to a proposed strategic alliance. This sum was returned to the Parent Company in January 1997. Following the report of Arthur Andersen, the SEC, on February 10, 1997, commenced a private investigation of the Parent Company for the purpose of investigating the matters discussed in such report and related matters. The SEC's investigation can result in several types of civil or administrative sanctions against the Parent Company and individuals associated with the Parent Company, including the assessment of monetary penalties. Actions taken by the SEC do not preclude additional actions by any other federal, civil or criminal authorities or by other regulatory organizations or by third parties. The SEC's investigation is continuing, and some of the Parent Company's present and former officers and directors and others associated with the Parent Company have given testimony. However, no conclusion of any alleged wrongdoing by the Parent Company or any individual has been communicated to the Parent Company by the SEC. The Registrant does not believe that the focus of the SEC's investigation is upon the Registrant or CCC. CCC is unable to predict the outcome of the SEC's ongoing private investigation of the Parent Company. As reported in the Registrant's Current Report on Form 8-K, filed with the SEC on May 21, 1998, the Parent Company reported that its Chairman and CEO, Stefan M. Palatin, was suspended from his duties pending the investigation of fraud charges against him by Austrian government authorities. On June 8, 1998, the Parent Company's Board of Directors removed Mr. Palatin as Managing Director and Chief Executive Officer. Mr. Palatin resigned from the Board of Directors of the Parent Company on July 6, 1998. Mr. Rudolf J. Weissenberger has been appointed to replace Mr. Palatin as an executive director and Chief Executive Officer. Also, on June 8, 1998, the Board approved a proposal to add two independent directors to the Board. The Board engaged legal counsel to provide legal advice and commence legal action, if appropriate, against former officers or directors of the Parent Company (including Mr. Palatin) if it is determined that they engaged in any misfeasance or improper self-dealing. Mr. Palatin had been a director of CCC; he resigned from his position as director on April 23, 1998. CCC further understands that Austrian authorities have initiated investigations of persons in addition to Mr. Palatin, including Mr. Weissenberger and Dr. Axel Friedberg. Dr. Friedberg has been a non-executive director of the Parent Company since 1997. Such investigations, which are still pending, have not resulted in any action being taken against Messrs. Weissenberger or Friedberg, and each has informed the Parent Company that they do not believe that there is any basis for any action to be taken against them. 12 13 Item 3. Defaults Upon Senior Securities See Item 5. Other Information. Item 5. Other Information In 1993, the Parent Company negotiated a credit facility (hereinafter, the "Credit Facility") with several banks for the use of the Parent Company and its affiliates, including CCC. At December 31, 1996, approximately $73,500,000 in principal indebtedness was outstanding under the Credit Facility. As a party to the Credit Facility, CCC is jointly and severally liable for the repayment of all principal and interest owed under the Credit Facility. The obligations of CCC, and the five other subsidiaries of the Parent Company that are borrowers under the Credit Facility, are guaranteed by the Parent Company. Following negotiations in 1997 with the banks providing the Credit Facility, an Amended and Restated Credit Agreement was executed in June 1997, subject to various actions being taken by the Parent Company and its subsidiaries, primarily relating to the provision of additional collateral. This Agreement was further amended in July 1997 and the provisions of the Agreement and its Amendment converted the facility to a term loan, payable in installments, with a final maturity date of May 31, 1998. The terms of the Agreement and its Amendment also provided for additional security over shares in the subsidiary of the Parent Company that owns the head office of the Parent Company's container leasing operations. They also provided for the loans to the former Chairman of $5,900,000 and $3,700,000 to be restructured as obligations of the former Chairman to another subsidiary of the Parent Company (not CCC), together with the pledge to this subsidiary company of 2,030,303 Common Shares beneficially owned by him in the Parent Company as security for these loans. They further provided for the assignment of these loans to the lending banks, together with the pledge of 1,000,000 shares and the assignment of the rights of the Parent Company in respect of the other 1,030,303 shares. Additionally, CCC granted the lending banks a security interest in the fees to which it is entitled for the services it renders to the container leasing partnerships of which it acts as general partner, including its fee income payable by the Registrant. The Parent Company did not repay the Credit Facility at the amended maturity date of May 31, 1998. On June 30, 1998, the Parent Company entered into a third amendment (the "Third Amendment") to the Credit Facility. The Third Amendment became effective as of that date, subject to the satisfaction thereafter of various conditions, including: the Parent Company must deliver its audited financial statements for 1997 by a specified date and; on or prior to July 30, 1998, the Parent Company must furnish proof that any defaults under any other indebtedness have been waived and must also furnish various legal opinions, officers' certificates and other loan documentation. Under the Third Amendment, the remaining principal amount of $36,800,000 will be amortized in varying monthly amounts commencing on July 31, 1998 with $26,950,000 due on September 30 and a final maturity date of January 8, 1999. All of these conditions will be fulfilled by August 14, 1998. The directors of the Parent Company are pursuing alternative sources of financing to meet the amended repayment obligations under the Third Amendment. Failure to meet revised lending terms would constitute an event of default with the lenders. The declaration of an event of default would result in further defaults with other lenders under loan agreement cross-default provisions. Should a default of the term loans be enforced, the Parent Company and CCC may be unable to continue as going concerns. CCC is currently in discussions with the management of the Parent Company to provide assurance that the management of the container leasing partnerships managed by CCC, including the Registrant, is not disrupted pending a refinancing or reorganization of the indebtedness of the Parent Company and its affiliates. 13 14 The Registrant is not a borrower under the Credit Facility, and neither the containers nor the other assets of the Registrant have been pledged as collateral under the Credit Facility. CCC is unable to determine the impact, if any, these concerns may have on the future operating results and financial condition of the Registrant or CCC and the Leasing Company's ability to manage the Registrant's fleet in subsequent periods. 14 15 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 On May 21, 1998, the Registrant filed a Report on Form 8-K reporting changes on the board of directors of the Parent Company. - ---------------- * 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) 15 16 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, 1998 16 17 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 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AT JUNE 30, 1998 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE QUARTER PERIOD ENDED JUNE 30, 1998 (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, 1998. 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 672,468 0 270,540 0 0 943,008 16,983,984 7,768,973 10,158,019 0 0 0 0 0 10,158,019 10,158,019 0 689,448 0 520,804 0 0 0 0 0 0 0 0 0 157,485 0 0
-----END PRIVACY-ENHANCED MESSAGE-----