e10vq

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005


o		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 0-23886

CRONOS GLOBAL INCOME FUND XV, L.P.

(Exact name of registrant as specified in its charter)


California (State or other jurisdiction of incorporation or organization)		94-3186624 (I.R.S. Employer Identification No.)

One Front Street, Suite 925, 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 þ. No o .

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o. No þ.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o. No þ.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Presented herein are the condensed balance sheets as of September 30, 2005 and December 31, 2004, condensed statements of operations for the three and nine months ended September 30, 2005 and 2004, and condensed statements of cash flows for the nine months ended September 30, 2005 and 2004, (collectively the “Financial Statements”) for Cronos Global Income Fund XV, L.P. (the “Partnership”) prepared by the Partnership without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these Financial Statements be read in conjunction with the financial statements and the notes thereto included in the Partnership’s December 31, 2004 Annual Report on Form 10-K. These Financial Statements reflect, in the opinion of the Partnership and Cronos Capital Corp. (“CCC”), the general partner, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the results for the interim periods. The statements of operations for such interim periods are not necessarily indicative of the results for the full year.

The information in this Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the securities laws. These forward-looking statements reflect the current view of the Partnership with respect to future events and financial performance and are subject to a number of risks and uncertainties, many of which are beyond the Partnership’s control. All statements, other than statements of historical facts included in this report, including the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” regarding the Partnership’s strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of the Partnership are forward-looking statements. When used in this report, the words “will”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project”, and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. All forward-looking statements speak only as of the date of this report. The Partnership does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Although the Partnership believes that its plans, intentions and expectations reflected in or suggested by the forward-looking statements made in this report are reasonable, the Partnership can give no assurance that these plans, intentions or expectations will be achieved. Future economic and industry trends that could potentially impact revenues and profitability are difficult to predict.

CRONOS GLOBAL INCOME FUND XV, L.P.

Condensed Statements of Operations

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2005			2004			2005			2004
Net lease revenue (notes 1 and 4)	$	2,110,455		$	2,349,865		$	6,484,119		$	6,306,272

Other operating income (expenses):
Depreciation		(1,552,825	)		(1,766,855	)		(4,834,394	)		(5,332,851	)
Other general and administrative expenses		(55,317	)		(47,279	)		(175,598	)		(156,382	)
Asset impairment loss		—			—			(125,498	)		—
Net gain (loss) on disposal of equipment		123,448			22,822			441,847			(65,356	)


Income from operations		625,761			558,553			1,790,476			751,683

Other income:
Interest income		32,327			6,650			79,184			11,166


Net income	$	658,088		$	565,203		$	1,869,660		$	762,849


Allocation of net income:
General partner	$	229,405		$	77,696		$	766,651		$	212,580
Limited partners		428,683			487,507			1,103,009			550,269


	$	658,088		$	565,203		$	1,869,660		$	762,849


Limited partners’ per unit share of net income	$	0.06		$	0.07		$	0.15		$	0.08

The accompanying notes are an integral part of these financial statements.

CRONOS GLOBAL INCOME FUND XV, L.P.

Notes to Unaudited Condensed Financial Statements

(1) Summary of Significant Accounting Policies

(a) Nature of Operations

Cronos Global Income Fund XV, L.P. (the “Partnership”) is a limited partnership organized under the laws of the State of California on November 26, 1993, for the purpose of owning and leasing marine cargo containers, special purpose containers and container related equipment worldwide to ocean carriers. The Partnership’s operations are subject to the fluctuations of world economic and political conditions. 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 CCC.

The Partnership commenced operations on February 22, 1994, when the minimum subscription proceeds of $2,000,000 were received from over 100 subscribers (excluding from such count Pennsylvania residents, the general partner, and all affiliates of the general partner). The Partnership offered 7,500,000 units of limited partnership interest at $20 per unit or $150,000,000. The offering terminated on December 15, 1995, at which time 7,151,569 limited partnership units had been sold.

The Partnership has completed its 11th year of operations and has entered its liquidation phase wherein the General Partner focuses its attention on the retirement of the remaining equipment in the Partnership’s container fleet. At September 30, 2005, approximately 79% of the original equipment remained in the Partnership’s fleet. The General Partner will take several factors into consideration when examining options for the timing of the disposal of the containers. These factors include the impact of a diminishing fleet size and current market conditions on the level of gross lease revenue, and fixed operating costs relative to this revenue. Parallel to these considerations will be a projected increase in expenses for devoting significant resources to the additional reporting and compliance requirements of Section 404 of the Sarbanes Oxley Act of 2002, which addresses a range of corporate governance, disclosure, and accounting issues. These costs may include increased accounting and administrative expenses for additional staffing and outside professional services by accountants and consultants. These additional costs, depending on their materiality, may reduce the Partnership’s results from operations and therefore negatively affect future distributions to the Limited Partners.

(b) Leasing Company and Leasing Agent Agreement

A Leasing Agent Agreement exists between the Partnership and the Leasing Company, 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.

(Continued)

CRONOS GLOBAL INCOME FUND XV, L.P.

Notes to Unaudited Condensed Financial Statements

(b) Leasing Company and Leasing Agent Agreement (continued)

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, and 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.

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) Use of Estimates

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which 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 most significant estimates included within the financial statements are the container rental equipment estimated useful lives and residual values, and the estimate of future cash flows from container rental equipment operations, used to determine the carrying value of container rental equipment in accordance with SFAS No. 144. Considerable judgment is required in estimating future cash flows from container rental equipment operations. Accordingly, the estimates may not be indicative of the amounts that may be realized in future periods. As additional information becomes available in subsequent periods, recognition of an impairment of the container rental equipment carrying values may be necessary based upon changes in market and economic conditions.

(Continued)

CRONOS GLOBAL INCOME FUND XV, L.P.

Notes to Unaudited Condensed Financial Statements

(e) Container Rental Equipment

Container rental equipment is depreciated using the straight-line basis. Depreciation policies are also evaluated to determine whether subsequent events and circumstances warrant revised estimates of useful lives.

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” container rental equipment is considered to be impaired if the carrying value of the asset exceeds the expected future cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets are written down to fair value. An analysis is prepared each quarter projecting future cash flows from container rental equipment operations. Current and projected utilization rates, per-diem rental rates, direct operating expenses, fleet size and container disposals are the primary variables utilized by the analysis. Additionally, the Partnership evaluates future cash flows and potential impairment by container type rather than for each individual container, and as a result, future losses could result for individual container dispositions due to various factors, including age, condition, suitability for continued leasing, as well as the geographical location of containers when disposed.

In June 2005 the Partnership recorded an impairment charge of $125,498 related to 404 forty-foot standard off-hire dry cargo containers located in North America (the “North American Dry Containers”). The impairment charge was a result of CCC’s and the Leasing Company’s review of the Partnership’s North American Dry Containers. The purpose of the review was to consider the sale or continued leasing of these containers, and to identify the consequences, if any, from an accounting perspective. CCC and the Leasing Company identified a number of issues that have had an impact on the carrying value of certain equipment at June 1, 2005.

	i.		The age of the North American Dry Containers.

	ii.		The lack of demand for the North American Dry Containers.

	iii.		The cost to reposition the North American Dry Containers to high demand markets.

	iv.		The strong North American container sale market.

CCC and the Leasing Company considered the impact of these factors in June 2005, and determined a change regarding the current marketing strategy for these containers was required. CCC and the Leasing Company concluded that effective June 1, 2005, the North American Dry Containers would be targeted for immediate sale.

Assets to be disposed of: In June 2005, the Leasing Company committed to a plan to dispose of 404 of the Partnership’s North American Dry Containers. It was concluded that the carrying value of these containers, $691,098, exceeded fair value and accordingly, an impairment charge of $125,498 was recorded to operations under impairment losses during June 2005. Fair value was determined by estimating the expected amount to be received at the time of sale. The expected sales price was estimated by evaluating the current sales price of similar containers. During the four-month period ending September 30, 2005, the Partnership sold 114 North American dry containers targeted for sale as of June 1, 2005. The Partnership recognized a gain of $8,574 on the sale of these containers.

(Continued)

CRONOS GLOBAL INCOME FUND XV, L.P.

Notes to Unaudited Condensed Financial Statements

(e) Container Rental Equipment (continued)

In December 2004 the Partnership recorded impairment charges related to 98 refrigerated containers totaling $785,685. The impairment charges were a result of CCC’s and the Leasing Company’s review of the Partnership’s refrigerated containers, specifically those with machinery supplied by a particular manufacturer (the “Sabroe Machinery”). The purpose of the review was to consider the issues concerning the Sabroe Machinery’s reliability for continued use within the lease market, the lack of sufficient quantities of spare parts within the market for required maintenance and repairs of the Sabroe Machinery, and the unwillingness of potential lessees to lease refrigerated containers utilizing the Sabroe Machinery, and to identify the consequences, if any, from an accounting perspective. CCC and the Leasing Company identified a number of issues that have had an impact on the carrying value of certain equipment at December 1, 2004.

	i.		The current lessees of these containers have communicated to the Leasing Company that due to very high operating costs incurred while leasing the containers, they intend to return all of the leased refrigerated containers utilizing the Sabroe Machinery within the next nine months.

	ii.		The Leasing Company is unable to obtain sufficient quantities of spare parts within the market for required maintenance and repairs of the Sabroe Machinery, a direct result of the Sabroe Machinery manufacturer no longer conducting business.

	iii.		CCC and the Leasing Company has noted issues regarding the Sabroe Machinery’s reliability for continued use within the lease market, and have deemed the containers to be beyond economical repair.

CCC and the Leasing Company considered the impact of these factors in December 2004, and determined a change regarding the current marketing strategy for these containers was required. CCC and the Leasing Company concluded that effective December 1, 2004, off-hire inventories of the refrigerated containers utilizing the Sabroe Machinery would be targeted for immediate sale. CCC and the Leasing Company also conducted a review of the refrigerated containers utilizing the Sabroe Machinery that were on lease at December 1, 2004.

Assets to be disposed of: In December 2004, the Leasing Company committed to a plan to dispose of 52 of the Partnership’s refrigerated containers utilizing the Sabroe Machinery. It was concluded that the carrying value of these containers, $539,698, exceeded fair value and accordingly, an impairment charge of $430,548 was recorded to operations under impairment losses during December 2004. During the nine-month period ended September 30, 2005, the Partnership sold the 52 refrigerated containers targeted for sale as of December 1, 2004. The Partnership recognized a gain of $20,715 on the sale of these containers.

Assets to be held and used: CCC and the Leasing Company conducted a review of 46 of the Partnership’s refrigerated containers utilizing the Sabroe Machinery that were on lease at December 1, 2004. It was concluded that the carrying value of these containers, $478,364, exceeded the future cash flows expected to result from the use of these containers and their eventual disposition, and therefore was not recoverable. Accordingly, a charge of $355,137 was recorded to operations under impairment losses during December 2004.

There were no impairment charges to the carrying value of container rental equipment for the three and nine-month periods ended September 30, 2004.

(Continued)

CRONOS GLOBAL INCOME FUND XV, L.P.

Notes to Unaudited Condensed Financial Statements

(f) Partners’ Capital Accounts

Upon dissolution, the assets of the Partnership will be sold and the proceeds thereof distributed as follows: (i) all of the Partnership’s debts and liabilities to persons other than CCC or the limited partners shall be paid and discharged; (ii) all of the Partnership’s debts and liabilities to CCC and the limited partners shall be paid and discharged; and (iii) the balance of such proceeds shall be distributed to CCC and the limited partners in accordance with the positive balances of CCC and the limited partners’ capital accounts. CCC shall contribute to the Partnership, if necessary, an amount equal to the lesser of the deficit balance in its capital account at the time of such liquidation, or 1.01% of the excess of the Limited Partners’ capital contribution to the Partnership over the capital contributions previously made to the Partnership by CCC, after giving effect to the allocation of income or loss arising from the liquidation of the Partnership’s assets.

(g) Financial Statement Presentation

These financial statements have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and accompanying notes in the Partnership’s December 31, 2004 Annual Report on Form 10-K.

The interim financial statements presented herewith reflect in the opinion of management, all adjustments of a normal recurring nature necessary to present fairly the results 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 earned by the Leasing Company under operating leases to ocean carriers for the containers owned by the Partnership, as well as proceeds earned from container disposals. Net lease receivables at September 30, 2005 and December 31, 2004 were as follows:


	September 30,		December 31,
	2005		2004
Gross lease receivables	$	3,506,754	$	2,704,034
Sales-type lease receivables (net of unearned income)		37,972		—

		3,544,726		2,704,034

Less:
Direct operating payables and accrued expenses		706,662		736,263
Damage protection reserve		310,957		278,829
Base management fees		37,231		85,859
Reimbursed administrative expenses		45,093		61,571
Allowance for doubtful accounts		280,988		192,737

		1,380,931		1,355,259

Net lease receivables	$	2,163,795	$	1,348,775

(Continued)

CRONOS GLOBAL INCOME FUND XV, L.P.

Notes to Unaudited Condensed Financial Statements

(3) Sales-Type Lease Receivable

On February 1, 2005, the Leasing Company, on behalf of the Partnership, entered a lease purchase agreement with one lessee to include a bargain purchase option. As a result of the lease purchase agreement, the Partnership classified the lease purchase agreement as a sales-type lease, recorded a sales-type lease receivable and recognized the sale of 6 on-hire containers. The sales-type lease expires on January 31, 2008. At September 30, 2005, the minimum future lease rentals under this sales-type lease, net of unearned income are:


	Gross Sales-Type		Unearned Sales-Type		Net Minimum Future
	Lease Receivable		Lease Income		Sales-Type Lease Rentals
2005	$	4,416	$	597	$	3,819
2006		17,520		1,710		15,810
2007		17,520		659		16,861
2008		1,489		7		1,482


Total	$	40,945	$	2,973	$	37,972

(4) 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 earned by the Leasing Company under operating leases to ocean carriers for the containers owned by the Partnership. Net lease revenue for the three and nine-month periods ended September 30, 2005 and 2004 were as follows:


	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2005		2004		2005		2004
Rental revenue	$	2,946,936	$	3,286,965	$	9,101,824	$	9,685,798
Interest income from sales-type lease		664		—		1,383		—

		2,947,600		3,286,965		9,103,207		9,685,798

Less:
Rental equipment operating expenses		492,004		529,173		1,501,948		2,172,816
Base management fees		202,640		226,718		624,291		671,127
Reimbursed administrative expenses
Salaries		106,395		118,624		355,989		369,312
Other payroll related expenses		9,603		22,498		48,130		47,889
General and administrative expenses		26,503		40,087		88,730		118,382

		837,145		937,100		2,619,088		3,379,526

Net lease revenue	$	2,110,455	$	2,349,865	$	6,484,119	$	6,306,272

(Continued)

CRONOS GLOBAL INCOME FUND XV, L.P.

Notes to Unaudited Condensed Financial Statements

(5) Operating Segment

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. CCC and the Leasing Company operate the Partnership’s container fleet as a homogenous unit and have determined that as such it has a single reportable operating segment.

The Partnership derives its revenues from dry cargo, refrigerated and tank containers used by its customers in global trade routes. As of September 30, 2005, the Partnership operated 20,260 twenty-foot 7,253 forty-foot and 1,957 forty-foot high-cube marine dry cargo containers, as well as 362 twenty-foot and 83 forty-foot high-cube refrigerated cargo containers, and 210 twenty-four thousand-liter tanks. A summary of gross lease revenue, by product, for the three-month periods ended September 30, 2005 and 2004 follows:


	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2005		2004		2005		2004
Dry cargo containers	$	2,538,211	$	2,813,293	$	7,835,005	$	8,209,122
Refrigerated containers		255,639		320,028		785,090		995,848
Tank containers		153,750		153,644		483,112		480,828


Total	$	2,947,600	$	3,286,965	$	9,103,207	$	9,685,798

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, the Partnership believes that it does not possess discernible geographic reporting segments as defined in SFAS No. 131 (“SFAS 131”), “Disclosures about Segments of an Enterprise and Related Information.”

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of the Partnership’s historical financial condition and results of operations should be read in conjunction with the Partnership’s December 31, 2004 Annual Report on Form 10-K and the financial statements and the notes thereto appearing elsewhere in this report.

Market Overview

Commencing in 2004, the Partnership’s 11th year of operations, the Partnership began focusing its attention on the disposition of its fleet in accordance with another of its original investment objectives, realizing the residual value of its containers after the expiration of their economic useful lives, estimated to be between 12 to 15 years after placement in leased service. Accordingly, the Partnership’s financial condition and results from operations are affected by the impact of market conditions on its remaining on-hire containers, as well as market conditions affecting the Partnership’s off-hire containers, including those affecting the container resale market.

The container leasing industry continues to operate under the most favorable market conditions in its 35-year-plus history. During 2003 and 2004, industry observers report that global container trade grew by an estimated 8% and 12%, respectively. In comparison, global container trade grew by a modest 3.7% during 2001, a recession year. These favorable conditions contributed to a strong container leasing market, resulting in high levels of demand for existing containers and a decline in off-hire container inventories. During 2005, demand for existing dry cargo containers eased from the levels experienced in 2004 when demand often exceeded supply, resulting in a more balanced leasing market. As a result, utilization of the Partnership’s combined fleet declined to approximately 90.4% at September 30, 2005 when compared to 91.8% at June 30, 2005, still a very favorable level of utilization when compared to historical levels. Forecasts for economic growth and global container trade remain strong and, while 2005 is expected to finish as one of the strongest years for the container leasing industry, growth in these indicators is expected to be at a more moderate pace than that experienced during 2004. This is due to a number of factors, including the effects of increased crude oil prices on the global economy.

During the three and nine-month periods ending September 30, 2005, high utilization levels continued to contribute to low inventories of off-hire containers as shipping lines employed more leased containers to meet the growth in containerized trade. Declining inventories have also contributed to an increase in the amount of proceeds realized on the sale of used containers, as fewer containers are available at non-factory locations to meet the demand of buyers. The inventory levels experienced during the three and nine-month periods ended September 30, 2005 have generally resulted in substantial decreases in storage and other inventory-related operating expenses. A significant increase in container inventories in future periods may contribute to increases in the Partnership’s storage and related inventory expenses.

The price of a new 20-foot dry cargo container increased to a peak of $2,300 during the first nine months of 2005 and has declined to approximately $1,700 at the end of September 2005 due to reduced demand for new dry cargo containers, a corresponding buildup of new container inventories at Chinese container factories and a recent decline in the price of Corten steel and other raw materials. The decline in orders for new dry cargo containers was further affected by increased efficiencies by the shipping lines, as well as the fact that ports have avoided the congestion problems that occurred in the U.S. and Europe during 2004. The recent decline in the cost of new dry cargo containers was the first to have occurred in over three years. Container prices continue to be tied to energy costs, steel prices and interest rates, and are subject to fluctuations based on these variables. Although the Partnership may no longer purchase new containers, the price of new containers has indirectly contributed to the Partnership’s results of operations, influencing the level of lease per-diems for existing older containers, as well as container sale prices realized upon their eventual disposal.

The sale of the Partnership’s off-hire containers, in accordance with one of its aforementioned original investment objectives, has also positively affected the Partnership’s results from operations, contributing to the Partnership’s high utilization levels, minimizing storage and other inventory-related costs incurred for its off-hire containers, as well as realizing favorable sale proceeds from the sale of its containers. During the third quarter of 2005, buyers continued to demand existing, older containers. In many geographical markets, sales prices for used containers increased as inventories of off-hire containers at non-factory locations declined, reducing the available supply of containers eligible for sale. A significant increase in inventory levels in future periods, as well as significant declines in new container prices, could adversely impact sales proceeds realized on the sale of containers.

The increased trade volumes of recent years have contributed to shortages of both containerships and tonnage capacity. As a result, shipping lines have embarked on a major new shipbuilding program. Industry analysts are expressing concern that the current program of new shipbuilding may create over-capacity within the shipping industry once the new containerships scheduled for delivery during 2006 and 2007 are placed in service. Based on current orders, industry analysts predict that the world’s containership fleet will exceed 10 million TEU by the end of 2007, compared to less than 7 million TEU at the beginning of 2004. Over-capacity may contribute to lower freight rates, resulting in reduced profitability for the shipping lines, that in turn could have adverse implications for container leasing companies.

Results of Operations

Pursuant to the Limited Partnership Agreement of the Partnership, all authority to administer the business of the Partnership is vested in CCC. A Leasing Agent Agreement exists between CCC and the Leasing Company, 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.

The primary component of the Partnership’s results of operations is net lease revenue. Net lease revenue is determined by deducting direct operating expenses, management fees and reimbursed administrative expenses from gross lease revenues billed by the Leasing Company from the leasing of the Partnership’s containers. Net lease revenue is directly related to the size, utilization and per-diem rental rates of the Partnership’s fleet. Direct operating expenses are direct costs associated with the Partnership’s containers. Direct operating expenses may be categorized as follows:

	•		Activity-related expenses including agent and depot costs such as repairs, maintenance and handling.

	•		Inventory-related expenses for off-hire containers, comprising storage and repositioning costs. These costs are sensitive to the quantity of off-hire containers as well as the frequency at which containers are re-delivered.

	•		Legal and other expenses including legal costs related to the recovery of containers and doubtful accounts, insurance and provisions for doubtful accounts.

At September 30, 2005, approximately 79% of the original equipment remained in the Partnership’s fleet, as compared to approximately 86% at December 31, 2004. The following table summarizes the composition of the Partnership’s fleet (based on container type) at September 30, 2005.


	Dry Cargo						Refrigerated				Tank
	Containers						Containers				Containers
					40-Foot				40-Foot
	20-Foot		40-Foot		High-Cube		20-Foot		High-Cube		24,000-Liter
Containers on lease:
Master lease		13,123		4,134		1,444		225		25		129
Term lease
Short term¹		2,115		651		180		63		1		21
Long term²		3,641		1,217		188		—		24		38
Sales-type lease		—		—		—		—		9		—

Subtotal		18,879		6,002		1,812		288		59		188
Containers off lease		1,381		1,251		145		74		24		22

Total container fleet		20,260		7,253		1,957		362		83		210


	Dry Cargo															Refrigerated										Tank
	Containers															Containers										Containers
											40-Foot
	20-Foot					40-Foot					High-Cube					20-Foot					40-Foot					24,000-Liter
	Units		%			Units		%			Units		%			Units		%			Units		%			Units		%
Total purchases		26,446		100	%		8,751		100	%		2,179		100	%		463		100	%		100		100	%		229		100	%
Less disposals		6,186		23	%		1,498		17	%		222		10	%		101		22	%		17		17	%		19		8	%

Remaining fleet at September 30, 2005		20,260		77	%		7,253		83	%		1,957		90	%		362		78	%		83		83	%		210		92	%


1.		Short term leases represent term leases that are either scheduled for renegotiation or that may expire on or before September 30, 2006.

2.		Long term leases represent term leases, the majority of which will expire between October 2006 and December 2010.

Three Months Ended September 30, 2005 Compared to the Three Months Ended September 30, 2004

Net lease revenue was $2,110,455 for the three months ended September 30, 2005 compared to $2,349,865 for the same period in the prior year. The decrease was primarily due to a $340,029 decline in gross rental revenue, partially offset by a $37,169 reduction in rental equipment expenses. Gross rental revenue was impacted by the Partnership’s smaller fleet size, decreases of 3% in both the average per-diem rental rates for dry cargo and refrigerated cargo containers and a decrease in dry cargo utilization rates when compared to the same three month period in the prior year. The decrease in direct operating expenses was primarily attributable to the Partnership’s reduced fleet size in the three-month period ended September 30, 2005, compared to the same period in the prior year, and its impact on activity and inventory-related expenses. The Partnership experienced declines in expenses such as repair and maintenance, and repositioning costs. These decreases in direct operating expenses were partially offset by an increase in handling and storage costs, and the provision for doubtful accounts.

The Partnership’s average fleet size and utilization rates for the three-month periods ended September 30, 2005 and 2004 were as follows:


	Three Months Ended
	September 30,			September 30,
	2005			2004
Fleet size (measured in twenty-foot equivalent units (TEU))
Dry cargo containers		39,078			43,318
Refrigerated containers		546			640
Tank containers		211			219

Average utilization rates
Dry cargo containers		92	%		93	%
Refrigerated containers		81	%		80	%
Tank containers		91	%		89	%

Other components of net lease revenue, including management fees and reimbursed administrative expenses, were lower by a combined $62,786 when compared to the same period in 2004.

Depreciation expense of $1,552,825 for the three months ended September 30, 2005 declined by $214,030 when compared to the corresponding period in 2004, a direct result of the Partnership’s aging and declining fleet size.

Other general and administrative expenses amounted to $55,317 for the three month period ended September 30, 2005, an increase of $8,038 or 17% when compared to the same period in 2004, primarily due to increases in investor communication expenses and other professional fees.

Asset impairment loss was incurred by the Partnership in the second quarter of 2005 relating to off-hire forty-foot dry cargo containers located in North America (the “North American Dry Containers”). CCC and the Leasing Company conducted a review, the purpose of which was to consider the issues concerning the sale or continued leasing of the North American Dry Containers, and to identify the consequences, if any, from an accounting perspective. CCC and the Leasing Company concluded that the North American Dry Containers would be targeted for immediate sale, effective June 1, 2005.

Assets to be disposed of: In June 2005, the Leasing Company committed to a plan to dispose of 404 of the Partnership’s North American dry containers. It was concluded that the carrying value of these containers, $691,098, exceeded fair value and accordingly, an impairment charge of $125,498 was recorded to operations under impairment losses. During the three-month period ended September 30, 2005, 81 North American Dry Containers were sold. The remaining 290 North American Dry Containers are expected to be disposed of over the final quarter of 2005. Fair value was determined by estimating the expected amount to be received at the time of sale. The expected sales price was estimated by evaluating the current sales price of similar containers.

There was no reduction to the carrying value of container rental equipment due to impairment during the three-month period ended September 30, 2004.

Net gain on disposal of equipment for the three months ended September 30, 2005 was $123,448 during the third quarter of 2005, compared to $22,822 for the corresponding period in 2004. The Partnership disposed of 1,004 containers, as compared to 557 containers during the same three-month period in 2004. Included within the 1,004 containers disposed during the third quarter of 2005 were:

	•		One refrigerated container impaired and targeted for sale as of December 1, 2004. A loss of $50 was attributable to the sale of this container.

	•		81 North American Dry Containers impaired and targeted for sale as of June 1, 2005. A gain of $4,109 was attributable to the sale of these 81 containers.

The Partnership believes that the net gain on container disposals in the three-month period ended September 30, 2005 was a result of various factors, including the volume of disposed containers, 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, as well as agreements entered into for the sale of the Partnership’s remaining containers.

Nine Months Ended September 30, 2005 Compared to the Nine Months Ended September 30, 2004

Net lease revenue was $6,484,119 for the nine months ended September 30, 2005 compared to $6,306,272 for the same period in the prior year. The increase was primarily due to a $670,868 reduction in rental equipment expenses, partially offset by a $583,974 decline in gross rental revenue. The decrease in direct operating expenses was attributable to the Partnership’s higher combined utilization rates in the nine-month period ended September 30, 2005, compared to the same period in the prior year, and its impact on activity and inventory-related expenses such as handling, repair and maintenance, repositioning and storage costs. These declines in direct operating expenses were partially offset by an increase in the provision for doubtful accounts. Gross rental revenue was impacted by the Partnership’s smaller fleet size, partially offset by a 1% increase in the average per-diem rental rate for dry cargo containers and an increase in fleet utilization rates when compared to the same nine month period in the prior year.

The Partnership’s average fleet size and utilization rates for the nine-month periods ended September 30, 2005 and 2004 were as follows:


	Nine Months Ended
	September 30,			September 30,
	2005			2004
Fleet size (measured in twenty-foot equivalent units (TEU))
Dry cargo containers		40,527			43,783
Refrigerated containers		566			647
Tank containers		212			220

Average utilization rates
Dry cargo containers		92	%		89	%
Refrigerated containers		83	%		86	%
Tank containers		91	%		89	%

Other components of net lease revenue, including management fees and reimbursed administrative expenses, were lower by a combined $89,570 when compared to the same period in 2004.

Depreciation expense of $4,834,394 for the nine months ended September 30, 2005 declined by $498,457 when compared to the corresponding period in 2004, a direct result of the Partnership’s aging and declining fleet size.

Other general and administrative expenses amounted to $175,598 for the nine month period ended September 30, 2005, an increase of $19,216 or 12% when compared to the same period in 2004 due to increases in investor communication expenses.

Impairment charges were incurred by the Partnership relating to the North American Dry Containers. In the second quarter of 2005, CCC and the Leasing Company undertook a review of the Partnership’s North American Dry Containers. Due to various factors including the age and demand of the North American Dry Containers, as well as the cost to reposition the containers to high demand markets, and the strong North American container sale market, CCC and the Leasing Company concluded that effective June 1, 2005, 404 North American Dry Containers would be targeted for immediate sale. It was concluded that the carrying value of the North American Dry Containers to be disposed of exceeded fair value and accordingly, an impairment charge of $125,498 was recorded to operations under impairment losses.

Net gain on disposal of equipment for the nine months ended September 30, 2005 was $441,847, as compared to a net loss of $65,356 for the corresponding period in 2004. The Partnership disposed of 2,795 containers during the first nine months of 2005, compared to 1,260 containers during the same nine-month period in 2004. Included within the 2,795 containers disposed during the first nine months of 2005 were:

	•		52 refrigerated containers impaired and targeted for sale as of December 1, 2004. A gain of $20,715 was attributable to the sale of these 52 impaired refrigerated containers.

	•		114 North American Dry Containers impaired and targeted for sale as of June 1, 2005. A gain of $8,574 was attributable to the sale of these 114 containers.

The Partnership believes that the net gain on container disposals in the nine-month period ended September 30, 2005, was a result of various factors, including the volume of disposed containers, the age, condition, suitability for continued leasing, as well as the geographical location of the containers when disposed.

The level of the Partnership’s container disposals in subsequent periods, the price of steel, new container prices and the current leasing market’s impact on sales prices for existing older containers such as those owned by the Partnership, as well as agreements entered into for the sale of the Partnership’s remaining containers, will also contribute to fluctuations in the net gain or loss on disposals. There were no reductions to the carrying value of container rental equipment due to impairment during the three and nine-month periods ended September 30, 2004.

Liquidity and Capital Resources

The Partnership’s primary objective is to generate cash flow from operations for distribution to its limited partners. Aside from the initial working capital reserve retained from gross subscription proceeds (equal to approximately 1% of such proceeds), the Partnership relies primarily on container rental receipts to meet this objective, as well as to finance operating needs. Cash generated from container sales proceeds are distributed to its limited partners. No credit lines are maintained to finance working capital. Commencing in 2004, the Partnership’s 11th year of operations, the Partnership began focusing its attention on the disposition of its fleet in accordance with another of its original investment objectives, realizing the residual value of its containers after the expiration of their economic useful lives, estimated to be between 12 to 15 years after placement in leased service. During 2005, the Partnership began to actively dispose of its fleet. Cash proceeds from these container disposals, in addition to cash from operations, will provide the cash flow for distributions to the limited partners.

At September 30, 2005, approximately 79% of the original equipment remained in the Partnership’s fleet. The General Partner will take several factors into consideration when examining options for the timing of the disposal of the containers. These factors include the impact of a diminishing fleet size and current market conditions on the level of gross lease revenue, and fixed operating costs relative to this revenue. Parallel to these considerations will be a projected increase in expenses for the additional reporting and compliance requirements of Section 404 of the Sarbanes Oxley Act of 2002, which addresses a range of corporate governance, disclosure, and accounting issues. These costs may include increased accounting and administrative expenses for additional staffing and outside professional services by accountants and consultants. These additional costs, depending on their materiality, may reduce the Partnership’s results from operations and therefore negatively affect future distributions to the Limited Partners. Upon the liquidation of CCC’s interest in the Partnership, CCC shall contribute to the Partnership, if necessary, an aggregate amount equal to the lesser of the deficit balance in its capital account at the time of such liquidation, or 1.01% of the excess of the Limited Partners’ capital contribution to the Partnership over the capital contributions previously made to the Partnership by CCC, after giving effect to the allocation of income or loss arising from the liquidation of the Partnership’s assets.

Distributions are paid monthly, based primarily on each quarter’s cash flow from operations. Monthly distributions are also affected by periodic increases or decreases to working capital reserves, as deemed appropriate by the general partner. The liquidation of the Partnership’s remaining containers will be the primary factor influencing the future level of cash from operating, investing and financing activities.

At September 30, 2005, the Partnership had $4,267,427 in cash and cash equivalents, a decrease of $1,220,893 from the cash balances at December 31, 2004. The Partnership invests its working capital, as well as cash flows from operations and the sale of containers that have not yet been distributed to CCC or its limited partners, in money market funds. The liquidation of the Partnership’s remaining containers will be the primary factor influencing the future level of cash from operating, investing and financing activities.

Cash from Operating Activities: Net cash provided by operating activities, primarily generated from the billing and collection of net lease revenue, was $6,097,873 during the nine months ended September 30, 2005, compared to $5,875,580 for the same nine month period in 2004.

Cash from Investing Activities: Net cash provided by investing activities was $3,412,386 during the nine months ended September 30, 2005, compared to $1,327,872 in the corresponding period of 2004. The 2005 amount was comprised of $3,404,026 of sales proceeds generated from the sale of container equipment and $8,360 of payment received on the sales-type lease for the sale of rental equipment. In comparison, during the nine-month period ended September 30, 2004, net cash provided by investing activities was comprised of $1,327,872 of sales proceeds generated from the sale of container equipment.

Cash from Financing Activities: Net cash used in financing activities was $10,731,152 during the nine months ended September 30, 2005 compared to $6,108,557 during the nine months ended September 30, 2004. These amounts represent distributions to the Partnership’s general and limited partners.

Critical Accounting Policies

The Partnership’s accounting policies are fundamental to understanding management’s discussion and analysis of results of operations and financial condition. The Partnership has identified three policies as being significant because they require the Partnership to make subjective and/or complex judgments about matters that are inherently uncertain. These policies include the following:

	•		Container equipment — depreciable lives

	•		Container equipment — valuation

	•		Allowance for doubtful accounts

The Partnership, in consultation with its audit committee, has reviewed and approved these significant accounting policies which are further described in the Partnership’s 2004 Annual Report on Form 10-K.

Inflation

The Partnership believes inflation has not had a material adverse effect on the results of its operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Exchange rate risk: Substantially all of the Partnership’s revenues are billed and paid in US dollars and a significant portion of costs are billed and paid in US dollars. The Leasing Company believes that the proportion of US dollar revenues may decrease in future years, reflecting a more diversified customer base and lease portfolio. Of the non-US dollar direct operating expenses, the majority are individually small, unpredictable and incurred in various denominations. Thus, the Leasing Company determined such amounts are not suitable for cost effective hedging. As exchange rates are outside of the control of the Partnership and Leasing Company, there can be no assurance that such fluctuations will not adversely affect the Partnership’s results of operations and financial condition.

Item 4. Controls and Procedures

The principal executive and principal financial officers of CCC have evaluated the disclosure controls and procedures of the Partnership as of the end of the period covered by this quarterly report. As used herein, the term “disclosure controls and procedures” has the meaning given to the term by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and includes the controls and other procedures of the Partnership that are designed to ensure that information required to be disclosed by the Partnership in the reports that it files with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Based upon their evaluation, the principal executive and principal financial officers of CCC have concluded that the Partnership’s disclosure controls and procedures were effective such that the information required to be disclosed by the Partnership in this quarterly report is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms applicable to the preparation of this report and is accumulated and communicated to CCC’s management, including CCC’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

There have been no significant changes in the Partnership’s internal controls or in other factors that could significantly affect the Partnership’s internal controls subsequent to the evaluation described above conducted by CCC’s principal executive and financial officers.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submissions of Matters to a Vote of Securities Holders

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

(a) Exhibits


Exhibit
No.		Description	Method of Filing
	3(a)	Limited Partnership Agreement, amended and restated as of December 15, 1993	*

	3(b)	Certificate of Limited Partnership	**

	10	Form of Leasing Agent Agreement with Cronos Containers Limited	***

	31.1	Rule 13a-14 Certification	Filed with this document

	31.2	Rule 13a-14 Certification	Filed with this document

	32	Section 1350 Certification	Filed with this document ****


*		Incorporated by reference to Exhibit “A” to the Prospectus of the Partnership dated December 17, 1993, included as part of Registration Statement on Form S-1 (No. 33-69356)

**		Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-69356)

***		Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-69356)

****		This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as required by Section 906, is not to be deemed “filed” with the Commission or subject to the rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of said Act.

EXHIBIT INDEX


Exhibit
No.		Description	Method of Filing
	3(a)	Limited Partnership Agreement, amended and restated as of December 15, 1993	*

	3(b)	Certificate of Limited Partnership	**

	10	Form of Leasing Agent Agreement with Cronos Containers Limited	***

	31.1	Rule 13a-14 Certification	Filed with this document

	31.2	Rule 13a-14 Certification	Filed with this document

	32	Section 1350 Certification	Filed with this document ****


*		Incorporated by reference to Exhibit “A” to the Prospectus of the Partnership dated December 17, 1993, included as part of Registration Statement on Form S-1 (No. 33-69356)

**		Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No. 33-69356)

***		Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No. 33-69356)

****		This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as required by Section 906, is not to be deemed “filed” with the Commission or subject to the rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of said Act.


	September 30,			December 31,
	2005			2004
Assets

Current assets:
Cash and cash equivalents, includes $4,252,427 at September 30, 2005 and $5,473,320 at December 31, 2004 in interest-bearing accounts	$	4,267,427		$	5,488,320
Net lease receivables due from Leasing Company (notes 1 and 2)		2,163,795			1,348,775
Container rental equipment held for sale (note 1)		406,001			109,150


Total current assets		6,837,223			6,946,245


Container rental equipment, at cost		100,377,331			110,465,981
Less accumulated depreciation		(62,568,846	)		(63,905,026	)

Net container rental equipment (note 1)		37,808,485			46,560,955


Total assets	$	44,645,708		$	53,507,200


Partners’ Capital

Partners’ capital (deficit):
General partner	$	(571,048	)	$	(916,725	)
Limited partners		45,216,756			54,423,925


Total partners’ capital	$	44,645,708		$	53,507,200


	Nine Months Ended
	September 30,			September 30,
	2005			2004
Net cash provided by operating activities	$	6,097,873		$	5,875,580

Cash provided by investing activities:
Proceeds from disposal of equipment		3,404,026			1,327,872
Payment received on sales-type lease for sale of rental equipment		8,360			—

		3,412,386			1,327,872

Cash used in financing activities:
Distributions to general partner		(420,974	)		(268,107	)
Distributions to limited partners		(10,310,178	)		(5,840,450	)

		(10,731,152	)		(6,108,557	)


Net (decrease) increase in cash and cash equivalents		(1,220,893	)		1,094,895

Cash and cash equivalents at the beginning of the period		5,488,320			3,637,938


Cash and cash equivalents at the end of the period	$	4,267,427		$	4,732,833


	CRONOS GLOBAL INCOME FUND XV, 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

	By	/s/ John Kallas

		John Kallas
		Chief Financial Officer and
		Director of Cronos Capital Corp. (“CCC”)
		Principal Financial and Accounting Officer of CCC

Date: November 11, 2005

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	PAGE
PART I — FINANCIAL INFORMATION		3

Item 1. Financial Statements		3

Condensed Balance Sheets — September 30, 2005 and December 31, 2004 (unaudited)		4

Condensed Statements of Operations for the three and nine months ended September 30, 2005 and 2004 (unaudited)		5

Condensed Statements of Cash Flows for the nine months ended September 30, 2005 and 2004 (unaudited)		6

Notes to Condensed Financial Statements (unaudited)		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3. Quantitative and Qualitative Disclosures About Market Risk		21

Item 4. Controls and Procedures		21

PART II — OTHER INFORMATION		22

Item 1. Legal Proceedings		22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		22

Item 3. Defaults Upon Senior Securities		22

Item 4. Submissions of Matters to a Vote of Securities Holders		22

Item 5. Other Information		22

Item 6. Exhibits		22
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32