-----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, VOr8+Flch+LH35JJNooHGYbSpRLrzR9+UWq+NGj0Fv0Xe7sGLKO0mF9hWqCPHzPo G0JyFCqcv2CI8pfIO1HFkg== 0000950149-96-000609.txt : 19960517 0000950149-96-000609.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950149-96-000609 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IEA INCOME FUND XII LP CENTRAL INDEX KEY: 0000879045 STANDARD INDUSTRIAL CLASSIFICATION: WATER TRANSPORTATION [4400] IRS NUMBER: 943143940 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21518 FILM NUMBER: 96564965 BUSINESS ADDRESS: STREET 1: 444 MARKET ST 15TH FL CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4156778990 10-Q 1 IEA INCOME FUND XII, LP 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, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____ Commission file number 0-21518 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, 1996 TABLE OF CONTENTS
PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets - March 31, 1996 (unaudited) and December 31, 1995 4 Statements of Operations for the three months ended March 31, 1996 and 1995 (unaudited) 5 Statements of Cash Flows for the three months ended March 31, 1996 and 1995 (unaudited) 6 Notes to Financial Statements (unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of 10 Operations 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 balance sheets as of March 31, 1996 and December 31, 1995, statements of operations for the three months ended March 31, 1996 and 1995, and statements of cash flows for the three months ended March 31, 1996 and 1995. 3 4 IEA INCOME FUND XII, L.P. BALANCE SHEETS (UNAUDITED)
March 31, December 31, 1996 1995 ---- ---- Assets ------ Current assets: Cash, includes $649,859 at March 31, 1996 and $459,603 at December 31, 1995 in interest-bearing accounts $ 660,095 $ 459,786 Short-term investments 1,825,000 2,367,716 Net lease receivables due from Leasing Company (notes 1 and 2) 1,349,966 1,300,391 ------------ ------------ Total current assets 3,835,061 4,127,893 ------------ ------------ Container rental equipment, at cost 63,290,704 63,426,137 Less accumulated depreciation 13,264,797 12,361,962 ------------ ------------ Net container rental equipment 50,025,907 51,064,175 ------------ ------------ Organizational costs, net 326,465 386,749 ------------ ------------ $ 54,187,433 $ 55,578,817 ============ ============ Liabilities and Partners' Capital --------------------------------- Current liabilities Accrued expenses $ 430,500 $ 430,500 Due to general partner (notes 1 and 3) 658,382 889,475 Due to manufacturer -- 221,850 ------------ ------------ Total current liabilities 1,088,882 1,541,825 ------------ ------------ Partners' capital (deficit): General partner (45,272) (58,767) Limited partners 53,143,823 54,095,759 ------------ ------------ Total partners' capital 53,098,551 54,036,992 ------------ ------------ $ 54,187,433 $ 55,578,817 ============ ============
The accompanying notes are an integral part of these statements. 4 5 IEA INCOME FUND XII, L.P. STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended March 31, March 31, 1996 1995 ---- ---- Net lease revenue (notes 1 and 4) $1,862,918 $2,148,943 Other operating expenses: Depreciation 984,261 980,594 Other general and administrative expenses 23,397 30,038 ---------- ---------- 1,007,658 1,010,632 ---------- ---------- Earnings from operations 855,260 1,138,311 Other income: Interest income 32,449 36,560 Net gain on disposal of equipment 23,110 2,321 ---------- ---------- 55,559 38,881 ---------- ---------- Net earnings $ 910,819 $1,177,192 ========== ========== Allocation of net earnings: General partner $ 105,957 $ 88,040 Limited partners 804,862 1,089,152 ---------- ---------- $ 910,819 $1,177,192 ========== ========== Limited partners' per unit share of net earnings $ .23 $ .31 ========== ==========
The accompanying notes are an integral part of these statements. 5 6 IEA INCOME FUND XII, L.P. STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended ------------------ March 31, March 31, 1996 1995 ---- ---- Net cash provided by operating activities $ 1,804,482 $ 2,174,018 Cash flows provided by (used in) investing activities: Proceeds from sale of container rental equipment 155,314 40,487 Purchase of container rental equipment (221,850) -- Acquisition fees paid to general partner (231,093) -- ----------- ----------- Net cash provided by (used in) investing activities (297,629) 40,487 ----------- ----------- Cash flows used in financing activities: Distribution to partners (1,849,260) (1,849,260) ----------- ----------- Net increase (decrease) in cash and cash equivalents (342,407) 365,245 Cash and cash equivalents at January 1 2,827,502 2,160,789 ----------- ----------- Cash and cash equivalents at March 31 $ 2,485,095 $ 2,526,034 =========== ===========
The accompanying notes are an integral part of these statements. 6 7 IEA INCOME FUND XII, L.P. NOTES TO UNAUDITED 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. 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 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 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. The Partnership has determined that for accounting purposes the Leasing Agent Agreement is a lease, and the receivables, payables, gross revenues and operating expenses attributable to the containers managed by the Leasing Company are, for accounting purposes, those of the Leasing Company and not of the Partnership. Consequently, the Partnership's balance sheets and statements of operations display the payments to be received by the Partnership from the Leasing Company as the Partnership's receivables and revenues. (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. (Continued) 7 8 IEA INCOME FUND XII, L.P. NOTES TO UNAUDITED FINANCIAL STATEMENTS The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. The interim financial statements presented herewith reflect all adjustments of a normal recurring nature which are, in the opinion of management, necessary to a fair statement of the financial condition and results of operations for the interim periods presented. (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 March 31, 1996 and December 31, 1995 were as follows:
March 31, December 31, 1996 1995 Lease receivables, net of doubtful accounts of $371,114 at March 31, 1996 and $343,373 at December 31, 1995 $2,652,777 $2,675,630 Less: Direct operating payables and accrued expenses 697,023 746,823 Damage protection reserve 249,788 241,172 Base management fees 306,385 334,219 Reimbursed administrative expenses 49,615 53,025 ---------- ---------- $1,349,966 $1,300,391 ========== ==========
(3) Due to General Partner The amounts due to CCC at March 31, 1996 and December 31, 1995 consist of acquisition fees. (Continued) 8 9 IEA INCOME FUND XII, L.P. NOTES TO UNAUDITED FINANCIAL STATEMENTS (4) Net Lease Revenue Net lease revenue is determined by deducting direct operating expenses, management fees and reimbursed administrative expenses to CCC, the Leasing Company, 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, 1996 and 1995 was as follows:
Three Months Ended ------------------ March 31, March 31, 1996 1995 ---- ---- Rental revenue $2,816,426 $2,944,604 Rental equipment operating expenses 606,934 422,326 Base management fees 192,140 211,000 Reimbursed administrative expenses 154,434 162,335 ---------- ---------- $1,862,918 $2,148,943 ========== ==========
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, 1996 and December 31, 1995. At March 31, 1996, the Registrant had $2,485,095 in cash and cash equivalents, a decrease of $342,407 from the December 31, 1995 cash balances. During the first quarter of 1996, the Registrant expended $221,850 of cash generated from sales proceeds to pay for containers accepted during the fourth quarter of 1995. At March 31, 1996, the Registrant had approximately $212,000 in cash generated from equipment sales reserved as part of its cash balances. Throughout the remainder of 1996, the Registrant will continue using cash generated from equipment sales to purchase and replace containers which have been lost or damaged beyond repair. Net lease receivables at March 31, 1996 increased when compared to December 31, 1995, as cash collections of outstanding receivables slowed. Additionally, a decline in direct operating payables and base management fees of $49,800 and $27,834, respectively, also contributed to the increase in net lease receivables. The statements contained in the following discussion are based on current expectations. These statements are forward looking and actual results may differ materially. The container leasing market generally softened during the fourth quarter of 1995 and has remained so during the first quarter of 1996. At March 31, 1996, container inventories remained at larger-than-usual levels, resulting in a decline in the Registrant's dry cargo container utilization rate from 89% at December 31, 1995 to 83% at March 31, 1996. The Registrant's refrigerated container utilization rate declined from 97% at December 31, 1995 to 91% at March 31, 1996. During the first quarter of 1996, the Leasing Company implemented various marketing strategies, including but not limited to, offering incentives to shipping companies and repositioning containers to high demand locations in order to counter these market conditions. The Leasing Company expects the Registrant to recognize the benefits of these efforts during the next few quarters of 1996. However, base per-diem rental rates have recently become subject to downward pressures within the container leasing market. A reduction in per-diem rental rates, combined with current utilization levels, could impact the Registrant's results from operations during the remainder of 1996. 2) Material changes in the results of operations between the three-month period ended March 31, 1996 and the three-month period ended March 31, 1995. Net lease revenue for the first quarter of 1996 was $1,862,918, a decline of approximately 13% from the first quarter of 1995. Gross rental revenue (a component of net lease revenue) for the quarter was $2,816,426, a decline of 4% from the same period last year. During 1996, gross rental revenue was primarily impacted by the Registrant's lower dry cargo and refrigerated utilization rates. Average dry cargo container per-diem rental rates declined approximately 2% when compared to the same period in the prior year. Average refrigerated container per-diem rates declined approximately 2% 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, 1996 and 1995 were as follows:
Three Months Ended ------------------ March 31, March 31, 1996 1995 ---- ---- Average Fleet Size (measured in twenty-foot equivalent units (TEU)) Dry cargo containers 20,317 20,395 Refrigerated containers 813 815 Average Utilization Dry cargo containers 83% 90% Refrigerated containers 91% 99%
Rental equipment operating expenses were 22% of the Registrant's gross lease revenue during the three-month period ended March 31, 1996, as compared to 14% during the three-month period ended March 31, 1995. This increase was largely attributable to an increase in costs associated with lower utilization levels, including handling, storage and repositioning. The Registrant disposed of 24 twenty-foot, 15 forty-foot, and two high-cube dry cargo containers during the first quarter of 1996, as compared to 13 twenty-foot and four forty-foot dry cargo containers during the same period in the prior year. 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, 1996 - ----------------------- * 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/ JOHN KALLAS --------------------------------- John Kallas Vice President, Chief Financial Officer Principal Accounting Officer Date: May 14, 1996 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, 1996 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED AS PART OF ITS QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD MARCH 31, 1996 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 2485095 0 1349966 0 0 3835061 63290704 13264797 54187433 1088882 0 0 0 0 53098551 54187433 54187433 0 1862918 0 1007658 0 0 0 0 0 0 0 0 910819 0 0
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