-----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, Vb6mBYYsAjV3DA5jO34tkHotG4qSHLd6cHuz4Y6N+E7fOv0re5RNbKLxHcWdWnX/ Jz84ry0XU03bBRigRoD+6Q== 0000950149-00-001144.txt : 20000516 0000950149-00-001144.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950149-00-001144 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IEA INCOME FUND XII LP CENTRAL INDEX KEY: 0000879045 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943143940 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21518 FILM NUMBER: 630940 BUSINESS ADDRESS: STREET 1: 444 MARKET ST 15TH FL CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4156778990 10-Q 1 QUARTERLY REPORT FOR PERIOD ENDED MARCH 31, 2000 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 MARCH 31, 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 0-21518 IEA INCOME FUND XII, L.P. (Exact name of registrant as specified in its charter) California 94-3143940 (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 XII, L.P. REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 TABLE OF CONTENTS
PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets - March 31, 2000 and December 31, 1999 (unaudited) 4 Condensed Statements of Operations for the three months ended March 31, 2000 and 1999 (unaudited) 5 Condensed Statements of Cash Flows for the three months ended March 31, 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 - OTHER 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 March 31, 2000 and December 31, 1999, condensed statements of operations for the three months ended March 31, 2000 and 1999, and condensed statements of cash flows for the three months ended March 31, 2000 and 1999. 3 4 IEA INCOME FUND XII, L.P. CONDENSED BALANCE SHEETS (UNAUDITED)
March 31, December 31, 2000 1999 ------------ ------------ Assets Current assets: Cash and cash equivalents, includes $1,160,889 at March 31, 2000 and $1,111,325 at December 31, 1999 in interest-bearing accounts $ 1,161,034 $ 1,111,425 Net lease receivables due from Leasing Company (notes 1 and 2) 291,211 585,156 ------------ ------------ Total current assets 1,452,245 1,696,581 ------------ ------------ Container rental equipment, at cost 61,594,143 61,857,061 Less accumulated depreciation 26,940,034 26,191,802 ------------ ------------ Net container rental equipment 34,654,109 35,665,259 ------------ ------------ Total assets $ 36,106,354 $ 37,361,840 ============ ============ Liabilities and Partners' Capital Current liabilities: Accrued expenses $ 229,050 $ 254,500 ------------ ------------ Partners' capital (deficit): General partner (128,494) (116,193) Limited partners 36,005,798 37,223,533 ------------ ------------ Total partners' capital 35,877,304 37,107,340 ------------ ------------ Total liabilities and partners' capital $ 36,106,354 $ 37,361,840 ============ ============
The accompanying notes are an integral part of these condensed financial statements. 4 5 IEA INCOME FUND XII, L.P. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended ----------------------------- March 31, March 31, 2000 1999 ----------- ----------- Net lease revenue (notes 1 and 3) $ 954,521 $ 1,093,475 Other operating expenses: Depreciation 905,763 915,896 Other general and administrative expenses 30,483 32,951 ----------- ----------- 936,246 948,847 ----------- ----------- Income from operations 18,275 144,628 Other income (loss): Interest income 14,719 23,953 Net loss on disposal of equipment (40,776) (92,685) ----------- ----------- (26,057) (68,732) ----------- ----------- Net income (loss) $ (7,782) $ 75,896 =========== =========== Allocation of net income (loss): General partner $ 38,756 $ 48,547 Limited partners (46,538) 27,349 ----------- ----------- $ (7,782) $ 75,896 =========== =========== Limited partners' per unit share of net income (loss) $ (0.01) $ 0.01 =========== ===========
The accompanying notes are an integral part of these condensed financial statements. 5 6 IEA INCOME FUND XII, L.P. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended ----------------------------- March 31, March 31, 2000 1999 ----------- ----------- Net cash provided by operating activities $ 1,195,206 $ 1,087,115 Cash flows provided by (used in) investing activities: Proceeds from disposal of equipment 76,656 154,371 Purchase of container rental equipment -- (199,342) Acquisition fees paid to general partner -- (9,967) ----------- ----------- Net cash provided by (used in) investing activities 76,656 (54,938) ----------- ----------- Cash flows used in financing activities: Distribution to partners (1,222,253) (1,290,450) ----------- ----------- Net increase (decrease) in cash and cash equivalents 49,609 (258,273) Cash and cash equivalents at January 1 1,111,425 2,407,614 ----------- ----------- Cash and cash equivalents at March 31 $ 1,161,034 $ 2,149,341 =========== ===========
The accompanying notes are an integral part of these condensed financial statements. 6 7 IEA INCOME FUND XII, L.P. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS (1) Summary of Significant Accounting Policies (a) Nature of Operations IEA Income Fund XII, L.P. (the "Partnership") is a limited partnership organized under the laws of the State of California on August 28, 1991 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, 2011, unless sooner terminated upon the occurrence of certain events. The Partnership commenced operations on January 31, 1992, when the minimum subscription proceeds of $2,000,000 were obtained. The Partnership offered 3,750,000 units of limited partnership interest at $20 per unit, or $75,000,000. The offering terminated on November 30, 1992, at which time 3,513,594 limited partnership units had been purchased. (b) Leasing Company and Leasing Agent Agreement The Partnership 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 and the Leasing Company. 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 XII, 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 March 31, 2000 and December 31, 1999 were as follows:
March 31, December 31, 2000 1999 ------------- ------------- Gross lease receivables $ 1,709,487 $ 1,676,207 Less: Direct operating payables and accrued expenses 682,789 432,023 Damage protection reserve 181,060 189,163 Base management fees payable 244,819 271,648 Reimbursed administrative expenses 69,837 33,911 Allowance for doubtful accounts 239,771 164,306 ------------- ------------- Net lease receivables $ 291,211 $ 585,156 ============= =============
8 9 IEA INCOME FUND XII, 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 and its affiliates 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-month periods ended March 31, 2000 and 1999 were as follows:
Three Months Ended -------------------------------- March 31, March 31, 2000 1999 ------------- ------------- Rental revenue (note 4) $ 1,759,088 $ 1,862,426 Less: Rental equipment operating expenses 565,073 537,698 Base management fees 115,990 128,266 Reimbursed administrative expenses 123,504 102,987 ------------- ------------- $ 954,521 $ 1,093,475 ============= =============
(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 marine cargo containers. As of March 31, 2000, the Partnership operated 9,174 twenty-foot, 5,142 forty-foot and 204 forty-foot high-cube marine dry cargo containers, as well as 195 twenty-foot and 289 forty-foot marine refrigerated cargo containers. A summary of gross lease revenue, by product, for the three-month periods ended March 31, 2000 and 1999 follows:
Three Months Ended ---------------------------- March 31, March 31, 2000 1999 ----------- ----------- Dry cargo containers $ 1,422,865 $ 1,489,917 Refrigerated containers 336,223 372,509 ----------- ----------- Total $ 1,759,088 $ 1,862,426 =========== ===========
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 March 31, 2000 and December 31, 1999. At March 31, 2000, the Registrant had $1,161,034 in cash and cash equivalents, an increase of $49,609 from the cash balances at December 31, 1999. The Registrant's allowance for doubtful accounts increased from $164,306 at December 31, 1999 to $239,771 at March 31, 2000. This increase was attributable to the delinquent account receivable balances of approximately 12 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's operating performance contributed to a 50% decline in net lease receivables at March 31, 2000 when compared to December 31, 1999. The Registrant's cash distribution from operations for the first quarter of 2000 was 5.0% (annualized) of the limited partners' original capital contributions, unchanged from the fourth quarter of 1999. These distributions are directly related to the Registrant's results from operations and may fluctuate accordingly. The cash distribution from sales proceeds for the first quarter of 2000 was 0.25% (annualized) of the limited partners' original capital contribution, a decline from the 1.50% (annualized) in the fourth quarter of 1999. Sales proceeds to its partners may fluctuate in subsequent periods, reflecting the level of container disposals. In order to take advantage of improving market conditions and stronger demand for leased containers, the Registrant undertook a strategy that was aimed at significantly reducing its inventory of idle equipment in some low-demand locations while, at the same time, fulfilling lessee container requirements. As part of this strategy, the Registrant offered leasing incentives to several lessees for picking up off-hire equipment from the Registrant's higher inventory areas. This not only resulted in stronger utilization of the Registrant's equipment, but it also significantly lowered Partnership expenses related to storage and handling. 2) Material changes in the results of operations between the three-month period ended March 31, 2000 and the three-month period ended March 31, 1999. Net lease revenue for the three-month period ended March 31, 2000 was $954,521, a decline of 13% from the same period in the prior year. Gross rental revenue (a component of net lease revenue) for the three-month period ended March 31, 2000 was $1,759,088, reflecting a decline of 6% from the same period in the prior year. Gross lease revenue was primarily impacted by lower per-diem rental rates. Average dry cargo container per-diem rental rates for the three-month period ended March 31, 2000 declined approximately 12%, when compared to the same period in the prior year. Average refrigerated container per-diem rental rates for the three-month period ended March 31, 2000 declined approximately 14%, when compared to the same period in the prior year. 10 11 The Registrant's average fleet size and utilization rates for the three-month periods ended March 31, 2000 and 1999 were as follows:
Three Months Ended ------------------------- March 31, March 31, 2000 1999 --------- --------- Average fleet size (measured in twenty-foot equivalent units (TEU)) Dry cargo containers 19,938 20,135 Refrigerated containers 775 807 Average utilization Dry cargo containers 74% 66% Refrigerated containers 84% 69%
Rental equipment operating expenses were 32% of the Registrant's gross lease revenue during the three-month period ended March 31, 2000, as compared to 29% during the three-month period ended March 31, 1999. The Registrant's operating results contributed to a 10% decline in base management fees when compared to the same period in the prior year. The Registrant disposed of 57 twenty-foot, 28 forty-foot and one forty-foot high-cube marine dry cargo containers, as well as one forty-foot refrigerated cargo container during the first quarter of 2000, compared to 56 twenty-foot, 34 forty-foot and one forty-foot high-cube marine dry 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 or loss 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. Neither the Registrant nor the Leasing Company experienced nor do they currently anticipate any material adverse effects on the Registrant's business, results of operations or financial condition as a result of Year 2000 issues involving internal use systems, third party products or any of their software products. Costs incurred in preparing for Year 2000 issues were expensed as incurred. Neither the Registrant nor the Leasing Company anticipate any additional material costs in connection with Year 2000 uncertainties. 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. 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 December 2, 1991 3(b) Certificate of Limited Partnership of the ** Registrant 10 Form of Leasing Agent Agreement with Cronos *** Containers Limited 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 March 31, 2000. - ------------- * Incorporated by reference to Exhibit "A" to the Prospectus of the Registrant dated December 2, 1991, included as part of Registration Statement on Form S-1 (No. 33-42697) ** Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-42697) *** Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-42697) 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 XII, 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: May 15, 2000 13 14 EXHIBIT INDEX
Exhibit No. Description Method of Filing --------- ------------------------------------------------- -------------------- 3(a) Limited Partnership Agreement of the Registrant, * amended and restated as of December 2, 1991 3(b) Certificate of Limited Partnership of the ** Registrant 10 Form of Leasing Agent Agreement with Cronos *** Containers Limited 27 Financial Data Schedule Filed with this document
- ------------ * Incorporated by reference to Exhibit "A" to the Prospectus of the Registrant dated December 2, 1991, included as part of Registration Statement on Form S-1 (No. 33-42697) ** Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-42697) *** Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-42697) EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AT MARCH 31, 2000 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE QUARTERLY PERIOD ENDED MARCH 31, 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 MARCH 31, 2000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 1,161,034 0 291,211 0 0 1,452,245 61,594,143 26,940,034 36,106,354 229,050 0 0 0 0 35,877,304 36,106,354 0 954,521 0 936,246 0 0 0 0 0 0 0 0 0 (7,782) 0 0
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