<PAGE> 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 0-27496
CRONOS GLOBAL INCOME FUND XVI, L.P.
(Exact name of registrant as specified in its charter)
California 94-3230380
(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 .
--- ---
<PAGE> 2
CRONOS GLOBAL INCOME FUND XVI, L.P.
REPORT ON FORM 10-Q FOR THE QUARTERLY
PERIOD ENDED MARCH 31, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 1996 and December 31, 1995 (unaudited) 4
Statement of Operations for the period March 29, 1996 (Commencement of Operations)
to March 31, 1996 (unaudited) 5
Statement of Cash Flows for the period March 29, 1996, (Commencement of Operations)
to March 31, 1996 (unaudited) 6
Notes to Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of 11
Operations
PART II - OTHER INFORMATION
Item 5. Other Materially Important Events 13
Item 6. Exhibits and Reports on Form 8-K 14
</TABLE>
2
<PAGE> 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, statement of operations for the period
March 29, 1996 (commencement of operations) to March 31, 1996, and
statement of cash flows for the period March 29, 1996 (commencement of
operations) to March 31, 1996.
3
<PAGE> 4
CRONOS GLOBAL INCOME FUND XVI, L.P.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
Assets
<S> <C> <C>
Current assets
Cash $ 2,374,560 $ 100
Net lease receivables due from Leasing Company
(notes 1 and 2) 6,944 -
----------- -----------
Total current assets 2,381,504 100
----------- -----------
Container rental equipment, at cost 3,858,720 -
Less accumulated depreciation 18,758 -
----------- -----------
Net container rental equipment 3,839,962 -
----------- -----------
Organizational costs, net 118,728 -
----------- -----------
$ 6,340,194 $ 100
=========== ===========
Liabilities and Partners' Capital
Current liabilities:
Due to general partner (notes 1 and 3) $ 355,000 $ -
Rental equipment payable 3,674,971 -
Underwriting commissions payable 189,157 -
----------- -----------
Total current liabilities 4,219,128 -
----------- -----------
Partners' capital (deficit):
General partner (169) -
Limited partners 2,121,235 100
----------- -----------
Total partners' capital 2,121,066 100
----------- -----------
$ 6,340,194 $ 100
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
CRONOS GLOBAL INCOME FUND XVI, L.P.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Period March 29, 1996,
Commencement of Operations)
through March 31, 1996
------------------------------
<S> <C>
Net lease revenue (notes 1 and 4) $ 1,910
Other operating expenses:
Depreciation 18,758
--------
Net loss $(16,848)
========
Allocation of net loss:
General partner $ (169)
Limited partners (16,679)
--------
$(16,848)
Limited partners' per unit
share of net loss $ (.14)
========
</TABLE>
The accompanying notes are an integral part of this statement
5
<PAGE> 6
CRONOS GLOBAL INCOME FUND XVI, L.P.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Period March 29, 1996,
(Commencement of Operations)
through March 31, 1996
------------------------------
<S> <C>
Net cash provided by operating activities $ -
Cash flows provided by financing activities:
Capital contributions 2,374,460
Net increase in cash and cash equivalents 2,374,460
Cash and cash equivalents at January 1 100
----------
Cash and cash equivalents at March 31 $2,374,560
==========
</TABLE>
The accompanying notes are an integral part of this statement
6
<PAGE> 7
CRONOS GLOBAL INCOME FUND XVI, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
(a) Nature of Operations
Cronos Global Income Fund XVI, L.P. (the "Partnership") is a limited
partnership organized under the laws of the State of California on
September 1, 1995, for the purpose of owning and leasing marine cargo
containers, special purpose containers and container-related
equipment. 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.
7
<PAGE> 8
CRONOS GLOBAL INCOME FUND XVI, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(d) Financial Statement Presentation
These financial statements have been prepared without audit. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
procedures have been omitted. It is suggested that these financial
statements be read in conjunction with the financial statements and
accompanying notes in the Partnership's latest annual report on Form
10-K.
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires the Partnership to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reported period.
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:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Lease receivables $8,334 $ -
Less:
Direct operating payables and accrued expenses 1,000 -
Base management fees 231 -
Reimbursed administrative expenses 159 -
------ -----
$6,944 $ -
====== =====
</TABLE>
(Continued)
8
<PAGE> 9
CRONOS GLOBAL INCOME FUND XVI, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(3) Due to General Partner
The amounts due to CCC and its affiliates at March 31, 1996 and December
31, 1995, were as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Acquisition fees $183,749 $ -
Offering and organizational expenses 118,728 -
Underwriting commissions 47,489 -
Other 5,034 -
-------- -----
$355,000 $ -
======== =====
</TABLE>
(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 period March 29, 1996
(commencement of operations) through March 31, 1996 was as follows:
<TABLE>
<CAPTION>
For the Period March 29, 1996,
(Commencement of Operations)
through March 31, 1996
------------------------------
<S> <C>
Rental revenue $3,300
Rental equipment operating expenses 1,000
Base management fees 231
Reimbursed administrative expenses 159
------
$1,910
======
</TABLE>
(Continued)
9
<PAGE> 10
CRONOS GLOBAL INCOME FUND XVI, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(5) Equipment Purchases
As of March 31, 1996, the Partnership had purchased the following types of
equipment:
<TABLE>
<CAPTION>
Purchased from
Purchased Container Total
Equipment Type from CCC Manufacturers Purchased
-------------- --------- -------------- ---------
<S> <C> <C> <C>
Dry Cargo Containers:
Twenty-foot - 600 600
Forty-foot - - -
Forty-foot high-cube - - -
Refrigerated Cargo Containers:
Twenty-foot - 35 35
Forty-foot high-cube - 100(1) 100
Tank Containers:
24,000-liter - 17 17
</TABLE>
The aggregate purchase price (excluding acquisition fees) of the equipment
acquired by the Partnership through March 31, 1996 was $3,674,971, of
which the entire amount remained payable to equipment manufacturers. The
aggregate equipment had been acquired from third-party container
manufacturers located in South Korea, India, the People's Republic of
China, Thailand and the United Kingdom. At March 31, 1996, the Partnership
has committed to purchase from container manufacturers an additional 1,300
twenty-foot and 100 forty-foot dry cargo containers, and 20 twenty-foot
and 100 forty-foot high-cube refrigerated cargo containers, as well as 13
24,000-liter tank containers, at an aggregate manufacturers' invoice cost
of approximately $5,635,449. The Partnership expects to accept delivery of
this new equipment during the second quarter of 1996. The Partnership's
purchase obligations are conditional upon its raising sufficient gross
proceeds from its offering and/or borrowing to fund the purchases.
- ------------------
(1) Amount reflects refrigerated container components accepted by the
Partnership. At March 31, 1996, the process of manufacturing each
component into a refrigerated cargo container was not complete. The
containers are expected to be completed and delivered to the
Partnership during the second quarter of 1996.
10
<PAGE> 11
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.
The Registrant is a limited partnership organized under the laws of the
State of California on September 1, 1995 for the purpose of owning and
leasing marine cargo containers, special purpose containers and
container-related equipment. The Registrant was initially capitalized with
$100 and commenced offering its limited partnership interests to the
public subsequent to December 28, 1995, pursuant to its Registration
Statement on Form S-1 (File No. 33-98290). The Registrant commenced
operations on March 29, 1996. The offering shall continue until December
27, 1997, or until all of the limited partnership interests are sold,
whichever occurs first. At March 31, 1996, the Registrant had raised
$2,374,560 through the offering of limited partnership interests. For the
period December 28, 1995 to April 15, 1996, the Registrant raised
$4,957,220 in subscription proceeds. The following table sets forth the
use of said subscription proceeds as of April 15, 1996.
<TABLE>
<CAPTION>
Percentage of
Amount Gross Proceeds
------ --------------
<S> <C> <C>
Gross Subscription Proceeds $ 4,957,220 100.0%
Public Offering Expenses:
Underwriting Commissions 495,722 10.0%
Offering and Organizational Expenses 247,861 5.0%
----------- -----
Total Public Offering Expenses 743,583 15.0%
----------- -----
Net Proceeds 4,213,637 85.0%
Acquisition Fees 76,562 1.5%
Working Capital Reserve 49,572 1.0%
Unexpended Proceeds 2,556,268 51.6%
----------- -----
Gross Proceeds Invested in Equipment $ 1,531,235 30.9%
=========== =====
</TABLE>
At March 31, 1996, the Registrant has committed to purchase from container
manufacturers an additional 1,300 twenty-foot and 100 forty-foot dry cargo
containers, and 20 twenty-foot and 100 forty-foot high-cube refrigerated
cargo containers, as well as 13 24,000-liter tank containers, at an
aggregate manufacturers' invoice cost of approximately $5,635,449. The
Registrant expects to accept delivery of this new equipment during the
second quarter of 1996. The Partnership's purchase obligations are
conditional upon its raising sufficient gross proceeds from its offering
and/or borrowing to fund the purchases.
11
<PAGE> 12
2) Material changes in the results of operations between the period ended
March 29, 1996 (commencement of operations) to March 31, 1996 and the
three-month period ended March 31, 1995.
The Registrant did not commence operations until March 29, 1996, therefore
a discussion of comparative periods cannot be made. For the period March
29, 1996 to March 31, 1996, the Registrant experienced a net loss of
$16,848, as depreciation exceeded net lease revenue.
The Registrant's net lease revenue is directly related to the size of its
fleet and the utilization and lease rates of the equipment owned by the
Registrant. Direct operating expenses include repositioning costs, storage
and handling expenses, agent fees and insurance premiums, as well as
provisions for doubtful accounts and repair costs for containers covered
under damage protection plans. Direct operating costs are affected by the
quantity of off-hire containers as well as the frequency at which the
containers are redelivered. During the build-up phase of the Registrant's
fleet, direct operating costs may be greater if containers purchased
directly from container manufacturers experience an off-hire period while
they are marketed and repositioned for initial lease-out, during which
period the Registrant experiences storage, handling and repositioning
costs. At the same time, direct operating costs may be lessened with
respect to containers purchased directly from the general partner which
are generally on-hire and generating revenues at the time of purchase.
The Registrant's fleet size, as measured in twenty-foot equivalent units
("TEU"), and average utilization rates at March 31, 1996 were as follows:
<TABLE>
<CAPTION>
March 31,
1996
---------
<S> <C>
Fleet size (measured in twenty-foot
equivalent units (TEU))
Dry cargo containers 600
Refrigerated containers 35
Tank containers 17
Average utilization
Dry cargo containers 7.3%
Refrigerated containers -
Tank containers -
</TABLE>
The utilization rates of the Registrant's fleet are expected to fluctuate
during the Registrant's build-up phase of operations during 1996 and 1997.
12
<PAGE> 13
PART II - OTHER INFORMATION
Item 5. Other Materially Important Events
Equipment Acquisitions
Pursuant to its undertakings made in its Registration Statement No.
33-98290, Section 7.2 (h) of the Partnership Agreement, the Registrant
had purchased the following types of equipment as of March 31, 1996:
<TABLE>
<CAPTION>
Purchased from Registrant's
Purchased Container Total Average Cost
Equipment Type from CCC Manufacturers Purchased Per Container
-------------- --------- -------------- --------- -------------
<S> <C> <C> <C> <C>
Dry Cargo Containers:
Twenty-foot - 600 600 $ 2,302
Forty-foot - - - $ -
Forty-foot high-cube - - - $ -
Refrigerated Cargo Containers:
Twenty-foot - 35 35 $ 20,886
Forty-foot high-cube - 100(1) 100 $ 11,327
Tank Containers:
24,000-liter - 17 17 $ 25,308
</TABLE>
The aggregate purchase price (excluding acquisition fees) of the
equipment acquired by the Registrant through March 31, 1996 was
$3,674,971, of which the entire amount remained payable to equipment
manufacturers. The aggregate equipment had been acquired from
third-party container manufacturers located in South Korea, India, the
People's Republic of China, Thailand and the United Kingdom. At March
31, 1996, the Registrant has committed to purchase from container
manufacturers an additional 1,300 twenty-foot and 100 forty-foot dry
cargo containers, and 20 twenty-foot and 100 forty-foot high-cube
refrigerated cargo containers, as well as 13 24,000-liter tank
containers, at an aggregate manufacturers' invoice cost of
approximately $5,635,449.
- ------------------
(1) Amount reflects refrigerated container components accepted by the
Registrant. At March 31, 1996, the process of manufacturing each
component into a refrigerated cargo container was not complete. The
containers are expected to be completed and delivered to the
Registrant during the second quarter of 1996. The average cost of
these refrigerated containers is expected to be $20,827 per
container.
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
------- ----------- ----------------
<S> <C> <C>
3(a) Limited Partnership Agreement of the Registrant, *
amended and restated as of December 28, 1995
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
</TABLE>
(b) Reports on Form 8-K
In lieu of filing a current report on Form 8-K, the Registrant has
provided in Part II, Item 5 hereof, a description of its purchase of
marine cargo containers during the period March 29, 1996 (commencement of
operations) to March 31, 1996.
- ----------------
* Incorporated by reference to Exhibit "A" to the Prospectus of the
Registrant dated December 28, 1995, included as part of Registration
Statement on Form S-1 (No. 33-98290)
** Incorporated by reference to Exhibit 3.2 to the Registration Statement on
Form S-1 (No. 33-98290)
*** Incorporated by reference to Exhibit 10.2 to the Registration Statement on
Form S-1 (No. 33-98290)
14
<PAGE> 15
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.
CRONOS GLOBAL INCOME FUND XVI, 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
15
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
------- ----------- ----------------
<S> <C> <C>
3(a) Limited Partnership Agreement of the Registrant, *
amended and restated as of December 28, 1995
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
</TABLE>
- ----------------
* Incorporated by reference to Exhibit "A" to the Prospectus of the
Registrant dated December 28, 1995, included as part of Registration
Statement on Form S-1 (No. 33-98290)
** Incorporated by reference to Exhibit 3.2 to the Registration Statement on
Form S-1 (No. 33-98290)
*** Incorporated by reference to Exhibit 10.2 to the Registration Statement on
Form S-1 (No. 33-98290)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT MARCH 31, 1996 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
PERIOD MARCH 29, 1996 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996 (UNAUDITED)
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED AS PART OF ITS REPORT ON FORM 10-Q FOR THE PERIOD MARCH 29, 1996
(COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,374,560
<SECURITIES> 0
<RECEIVABLES> 6,944
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,381,504
<PP&E> 3,858,720
<DEPRECIATION> 18,758
<TOTAL-ASSETS> 6,340,194
<CURRENT-LIABILITIES> 4,219,128
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,121,066
<TOTAL-LIABILITY-AND-EQUITY> 6,340,194
<SALES> 0
<TOTAL-REVENUES> 1,910
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,848)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
