<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 JUNE 30, 1997
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 June 30, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 1997 (unaudited) and December 31, 1996 4
Statement of Operations for the three and six months ended June 30, 1997 and 1996 (unaudited) 5
Statement of Cash Flows for the six months ended June 30, 1997 and 1996 (unaudited) 6
Notes to Unaudited Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of 10
Operations
PART II - OTHER INFORMATION
Item 5. Other Materially Important Events 14
Item 6. Exhibits and Reports on Form 8-K 15
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Presented herein are the Registrant's balance sheets as of June 30,
1997 and December 31, 1996, statements of operations for the three and
six months ended June 30, 1997 and 1996, and statements of cash flows
for the six months ended June 30, 1997 and 1996.
3
<PAGE> 4
CRONOS GLOBAL INCOME FUND XVI, L.P.
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
Assets 1997 1996
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents, includes $1,038,011 at June 30, 1997
and $1,755,486 at December 31, 1996 in interest-bearing accounts $ 1,052,116 $ 1,755,884
Net lease receivables due from Leasing Company
(notes 1 and 2) 368,599 208,133
------------ ------------
Total current assets 1,420,715 1,964,017
------------ ------------
Container rental equipment, at cost 26,792,576 24,701,402
Less accumulated depreciation 1,662,830 894,114
------------ ------------
Net container rental equipment 25,129,746 23,807,288
------------ ------------
Organizational costs, net 205,574 229,005
------------ ------------
$ 26,756,035 $ 26,000,310
============ ============
Liabilities and Partners' Capital
Current liabilities:
Due to general partner (notes 1 and 3) $ - $ 17,299
Container rental equipment purchases payable - 341,486
------------ ------------
Total current liabilities - 358,785
------------ ------------
Partners' capital (deficit):
General partner (3,859) (1,820)
Limited partners 26,759,894 25,643,345
------------ ------------
Total partners' capital 26,756,035 25,641,525
------------ ------------
$ 26,756,035 $ 26,000,310
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
CRONOS GLOBAL INCOME FUND XVI, L.P.
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------------- Six For the Period March 29, 1996
June 30, June 30, Months Ended (Commencement of Operations)
1997 1996 June 30, 1997 through June 30, 1996
---------- --------- -------------- ---------------------------
<S> <C> <C> <C> <C>
Net lease revenue (notes 1 and 4) $ 769,433 $ 209,056 $1,431,911 $ 210,966
Other operating expenses:
Depreciation and amortization 402,935 163,544 793,949 182,302
Other general and
administrative expenses 19,392 5,412 32,761 5,412
---------- ---------- ---------- ----------
422,327 168,956 826,710 187,714
---------- ---------- ---------- ----------
Earnings from operations 347,106 40,100 605,201 23,252
Other income:
Interest income 17,805 27,874 42,723 27,874
Net gain on disposal of equipment 1,321 - 3,352 -
---------- ---------- ---------- ----------
19,126 27,874 46,075 27,874
---------- ---------- ---------- ----------
Net earnings $ 366,232 $ 67,974 $ 651,276 $ 51,126
========== ========== ========== ==========
Allocation of net earnings:
General partner $ 30,226 $ 1,940 $ 56,913 $ 1,771
Limited partners 336,006 66,034 594,363 49,355
---------- ---------- ---------- ----------
$ 366,232 $ 67,974 $ 651,276 $ 51,126
========== ========== ========== ==========
Limited partners' per unit
share of net earnings $ .33 $ .26 $ .59 $ .12
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
CRONOS GLOBAL INCOME FUND XVI, L.P.
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Period March 29, 1996,
Six Months Ended (Commencement of Operations)
June 30, 1997 through June 30, 1996
---------------- ---------------------------
<S> <C> <C>
Net cash provided by operating activities $ 1,293,383 $ 160,081
Cash flows used in investing activities:
Purchase of container rental equipment (2,340,840) (12,063,397)
Acquisition fees paid to general partner (117,268) (603,170)
------------ --------------
Net cash used in investing activities (2,458,108) (12,666,567)
------------ --------------
Cash flows provided by (used in) financing activities:
Capital contributions 1,931,060 15,786,320
Underwriting commissions (193,196) (1,578,642)
Offering and organizational expenses (99,850) (789,321)
Distribution to partners (1,177,057) (31,499)
------------ --------------
Net cash provided by financing activities 460,957 13,386,858
------------ --------------
Net increase (decrease) in cash and cash equivalents (703,768) 880,372
Cash and cash equivalents at January 1 1,755,884 100
------------ --------------
Cash and cash equivalents at June 30 $ 1,052,116 $ 880,472
============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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. The Partnership
shall continue until December 31, 2015, unless sooner terminated upon
the occurrence of certain events.
The Partnership commenced operations on March 29, 1996, 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). On
February 3, 1997, CCC suspended the offer and sale of units in the
Partnership. The offering terminates on December 27, 1997.
As of June 30, 1997, the Partnership operated 3,851 twenty-foot, 1,049
forty-foot and 460 forty-foot high-cube marine dry cargo containers,
90 twenty-foot and 300 forty-foot refrigerated containers and 52
twenty four thousand-liter tanks.
(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.
7
<PAGE> 8
CRONOS GLOBAL INCOME FUND XVI, L.P.
Notes to Unaudited Financial Statements
(c) Basis of Accounting
The Partnership utilizes the accrual method of accounting. Net lease
revenue is recorded by the Partnership in each period based upon its
leasing agent agreement with the Leasing Company. Net lease revenue is
generally dependent upon operating lease rentals from operating lease
agreements between the Leasing Company and its various lessees, less
direct operating expenses and management fees due in respect of the
containers specified in each operating lease agreement.
(d) Financial Statement Presentation
These financial statements have been prepared without audit. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
procedures have been omitted. It is suggested that these financial
statements be read in conjunction with the financial statements and
accompanying notes in the Partnership's latest annual report on Form
10-K.
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires the Partnership to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could
differ from those estimates.
The interim financial statements presented herewith reflect all
adjustments of a normal recurring nature which are, in the opinion of
management, necessary to a fair statement of the financial condition
and results of operations for the interim periods presented.
(2) Net Lease Receivables Due from Leasing Company
Net lease receivables due from the Leasing Company are determined by
deducting direct operating payables and accrued expenses, base management
fees payable, and reimbursed administrative expenses payable to CCC and
its affiliates from the rental billings payable by the Leasing Company to
the Partnership under operating leases to ocean carriers for the
containers owned by the Partnership. Net lease receivables at June 30,
1997 and December 31, 1996 were as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- ----------
<S> <C> <C>
Lease receivables, net of doubtful accounts
of $13,547 at June 30, 1997 and $7,329
at December 31, 1996 $1,055,560 $ 755,259
Less:
Direct operating payables and accrued expenses 338,096 302,271
Damage protection reserve 55,736 17,860
Base management fees 188,038 124,420
Reimbursed administrative expenses 105,091 102,575
---------- ----------
$ 368,599 $ 208,133
========== ==========
</TABLE>
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 December 31, 1996 consist of
acquisition fees.
(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 billed by the Leasing Company under
operating leases to ocean carriers for the containers owned by the
Partnership. Net lease revenue for the three months ended June 30, 1997
and 1996, the six months ended June 30, 1997 and the period March 29, 1996
(commencement of operations) through June 30, 1996 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
----------------------- Six For the Period March 29, 1996
June 30, June 30, Months Ended (Commencement of Operations)
1997 1996 June 30, 1997 through June 30, 1996
---------- ---------- ---------------- -----------------------------
<S> <C> <C> <C> <C>
Rental revenue $1,089,942 $ 333,195 $2,036,733 $ 335,495
Less:
Rental equipment operating expenses 185,171 83,201 351,419 83,201
Base management fees 75,649 22,832 141,700 23,063
Reimburse administrative expenses 59,689 18,106 111,703 18,265
---------- ---------- ---------- ----------
$ 769,433 $ 209,056 $1,431,911 $ 210,966
========== ========== ========== ==========
</TABLE>
(5) Container Rental Equipment Purchases
As of June 30, 1997, the Partnership had purchased the following types of
container rental equipment:
<TABLE>
<CAPTION>
Purchased from
Purchased Container Total
Equipment Type from CCC Manufacturers Purchased
-------------- --------- -------------- ---------
<S> <C> <C> <C>
Dry Cargo Containers:
Twenty-foot - 3,853 3,853
Forty-foot - 1,050 1,050
Forty-foot high-cube - 460 460
Refrigerated Cargo Containers:
Twenty-foot - 90 90
Forty-foot high-cube - 300 300
Tank Containers:
24,000-liter - 52 52
</TABLE>
The aggregate purchase price (excluding acquisition fees) of the equipment
acquired by the Partnership through June 30, 1997 was $25,524,394. 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.
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
It is suggested that the following discussion be read in conjunction with the
Registrant's most recent annual report on Form 10-K.
1) Material changes in financial condition between June 30, 1997 and
December 31, 1996.
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. On February 3, 1997, Cronos Capital Corp.
("CCC"), the general partner, suspended the offer and sale of units in the
Registrant. Information concerning the suspended offer and sale of units
in the Registrant is incorporated by reference to the discussion in the
Supplement dated February 6, 1997 to the Registration Statement on Form
S-1, dated December 28, 1995 as supplemented December 27, 1996. The
offering terminates December 27, 1997. For the period December 28, 1995
through February 3, 1997, the Registrant raised $31,993,340 in
subscription proceeds. The following table sets forth the use of said
subscription proceeds as of June 30, 1997.
<TABLE>
<CAPTION>
Percentage of
Amount Gross Proceeds
----------- --------------
<S> <C> <C>
Gross Subscription Proceeds $31,993,340 100.0%
Public Offering Expenses:
Underwriting Commissions 3,199,334 10.0%
Offering and Organizational Expenses 1,482,116 4.6%
----------- -------
Total Public Offering Expenses 4,681,450 14.6%
----------- -------
Net Proceeds 27,311,890 85.4%
Acquisition Fees 1,276,220 4.0%
Working Capital Reserve 319,933 1.0%
Unexpended Proceeds 191,343 0.6%
----------- -------
Gross Proceeds Invested in Equipment $25,524,394 79.8%
=========== =======
</TABLE>
The Registrant's cash balances as of June 30, 1997 included proceeds of
the offering, together with interest earned thereon, and amounts reserved
as working capital. Net lease receivables due from the Leasing Company are
determined by deducting direct operating payables and accrued expenses,
base management fees payable, and reimbursed administrative expenses
payable to CCC and its affiliates from the rental billings payable by the
Leasing Company to the Registrant. During the Registrant's first year of
operations, the general partner and its affiliates agreed to defer the
deduction of all base management fees and reimbursable administrative
expenses from the leasing receivables due to the Registrant. Deferral of
these fees ceased during the second quarter of 1997. At June 30, 1997,
these deferred fees and expenses totaled $278,000.
10
<PAGE> 11
The Registrant may rely upon financing to purchase a portion of its
equipment. The amount of long-term borrowing secured by the Registrant
will not exceed 20% of the aggregate purchase price of the Registrant's
equipment. Once the Registrant completes its acquisition of equipment, the
Registrant intends to maintain an ongoing reserve approximately equal to
the greater of 1% of gross proceeds, or $100,000, to meet anticipated
expenses of managing the equipment. The level of reserves will vary from
time to time depending upon market conditions and the anticipated needs of
the Registrant. The Registrant will not reinvest its revenues for the
purchase of additional equipment. Pending expenditure for operations or
distribution to the partners, these amounts may be invested in short-term,
liquid investments.
During 1996, ocean carriers and other transport companies moved away from
leasing containers outright, as declining container prices, favorable
interest rates and the abundance of available capital resulted in ocean
carriers and transport companies purchasing a larger share of equipment
for their own account, reducing the demand for leased containers. Once the
demand for leased containers began to fall, per-diem rental rates were
also adversely affected, contributing to an uncertain start to 1997. Since
the beginning of the year, the container leasing industry has experienced
an upward trend in container utilization. The impact of this trend on the
utilization rates of the Registrant has been mixed. The Registrant's dry
container utilization rate increased from 80% at December 31, 1996 to 89%
at June 30, 1997, while refrigerated container utilization rates increased
from 77% at December 31, 1996 to 100% at June 30, 1997. Tank container
utilization also increased from 88% at December 31, 1996 to 90% at June
30, 1997. During 1996, shipping lines and other transport companies had
reduced their leased fleets to minimal levels in an attempt to reduce
costs. However, increasing cargo volumes and continued equipment
imbalances within the container fleets of shipping lines and transport
companies have established a need for these companies to replenish their
leased fleets.
Although there has been a general improvement in container utilization
rates, per-diem rental rates continue to remain under pressure. The
decline in per-diem rental rates from those evidenced during 1996 can be
attributed to the following factors: three new leasing companies have
offered new containers and low rental rates in an effort to break into the
leasing market; established leasing companies have reduced rates to very
low levels; and a continued over supply of containers. Although these
conditions are expected to continue to impact the Registrant's financial
condition and operating performance throughout 1997, the long-term outlook
remains a positive one.
2) Material changes in the results of operations between the three-month
periods ended June 30, 1997 and 1996, the six-month period ended June 30,
1996 and the period March 29, 1996 (commencement of operations) to June
30, 1996.
Net lease revenue for the three and six-month periods ended June 30, 1997
was $769,433 and $1,431,911, respectively, an increase of approximately
73% and 85% from the same periods in the prior year, respectively. Gross
rental revenue (a component of net lease revenue) for the three and
six-month periods ended June 30, 1997 was $1,089,942 and $2,036,733,
respectively, reflecting an increase of 69% and 84% from the same periods
in the prior, respectively. During 1997, gross lease revenue was primarily
impacted by an increase in fleet size and utilization rates. The average
dry container per-diem rental rate for the three month period ended June
30, 1997 increased 4%, when compared to the same period in prior year.
However, dry container per-diem rental rates for the six-month period
ended June 30, 1997 declined 4% when compared to the period March 29, 1996
(commencement of operations) to June 30, 1996. Average refrigerated
container per-diem rental rates for the three and six-month periods ended
June 30, 1997 declined 18% and 10%, respectively, when compared to the
same periods in the prior year. The average tank container per-diem rental
rate for the three month period ended June 30, 1997 increased 35% and 51%,
respectively, when compared to the same periods in the prior year.
11
<PAGE> 12
The Registrant's average fleet size and utilization rates for the
three-month periods ended June 30, 1997 and 1996, the six-month period
ended June 30, 1997 and the period March 29, 1996 (commencement of
operations) to June
30, 1996 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
----------------------- Six For the Period March 29, 1996
June 30, June 30, Months Ended (Commencement of Operations)
1997 1996 June 30, 1997 through June 30, 1996
--------- -------- ---------------- ----------------------------
<S> <C> <C> <C> <C>
Average Fleet Size (measured in
twenty-foot equivalent units (TEU))
Dry cargo containers 6,870 3,367 6,700 2,675
Refrigerated cargo containers 690 267 690 209
Tank containers 52 42 52 36
Average Utilization
Dry cargo containers 87% 50% 82% 39%
Refrigerated cargo containers 98% 84% 94% 63%
Tank containers 90% 49% 87% 37%
</TABLE>
Rental equipment operating expenses were 17% of the Registrant's gross
lease revenue during each of the three and six-month periods ended June
30, 1997, respectively, as compared to 25% during each of the same periods
in the prior year. These decreases were largely attributable to a
reduction in costs associated with higher utilization levels, including
storage and handling. Direct operating expenses also include repositioning
costs, agent fees and insurance premiums, as well as provisions for
doubtful accounts and repair costs for containers covered under damage
protection clauses. Direct operating costs are affected by the quantity of
off-hire containers as well as the frequency at which the containers are
redelivered.
As reported in the Registrant's Current Report on Form 8-K and Amendment
No. 1 to Current Report on Form 8-K, filed with the Commission on February
7, 1997 and February 26, 1997, respectively, Arthur Andersen, London,
England, resigned as auditors of The Cronos Group, a Luxembourg
Corporation headquartered in Orchard Lea, England (the "Parent Company"),
on February 3, 1997.
The Parent Company is the indirect corporate parent of Cronos Capital
Corp., the general partner of the Registrant. In its letter of resignation
to the Parent Company, Arthur Andersen states that it resigned as auditors
of the Parent Company and all other entities affiliated with the Parent
Company. While its letter of resignation was not addressed to the general
partner or the Registrant, Arthur Andersen confirmed to the general
partner that its resignation as auditors of the entities referred to in
its letter of resignation included its resignation as auditors of Cronos
Capital Corp. and the Registrant. Following Arthur Andersen's resignation,
the Parent Company subsequently received notification from the Securities
and Exchange Commission that it was conducting a private investigation of
the Parent Company regarding the events and circumstances leading to
Arthur Andersen's resignation. The results of this investigation are still
pending. Accordingly, the Registrant does not, at this time, have
sufficient information to determine the impact, if any, that the
Securities and Exchange Commission investigation of the Parent Company and
the concerns expressed by Arthur Andersen in its letter of resignation may
have on the future operating results and financial condition of the
Registrant or the Leasing Company's ability to manage the Registrant's
fleet in subsequent periods. However, the general partner of the
Registrant does not believe, based upon the information currently
available to it, that Arthur Andersen's resignation was triggered by any
concern over the accounting policies and procedures followed by the
Registrant.
12
<PAGE> 13
Arthur Andersen's report on the financial statements of Cronos Capital
Corp. and the Registrant, for either of the previous two years, has not
contained an adverse opinion or a disclaimer of opinion, nor was any such
report qualified or modified as to uncertainty, audit scope, or accounting
principles. During the Registrant's previous two fiscal years and the
subsequent interim period preceding Arthur Andersen's resignation, there
have been no disagreements between Cronos Capital Corp. or the Registrant
and Arthur Andersen on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
The Registrant retained a new auditor, Moore Stephens, P.C. ("Moore
Stephens") on April 10, 1997, as reported in the Registrant's Current
Report on Form 8-K, filed April 14, 1997.
The President of the Leasing Company, a subsidiary of the Parent Company,
along with two marketing Vice Presidents, resigned in June 1997. These
vacancies were filled by qualified, long-time employees who average over
15 years of experience in the container leasing industry, therefore
providing continuity in the management of the Leasing Company. The
Registrant and general partner do not believe these changes will have a
material impact on the future operating results and financial condition of
the Registrant.
Cautionary Statement
This Quarterly Report on Form 10-Q contains statements relating to future
results of the Registrant, including certain projections and business
trends, that are "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Actual results may differ
materially from those projected as a result of certain risks and
uncertainties, including but not limited to changes in: economic
conditions; trade policies; demand for and market acceptance of leased
marine cargo containers; competitive utilization and per-diem rental rate
pressures; as well as other risks and uncertainties, including but not
limited to those described in the above discussion of the marine container
leasing business under Item 2., Management's Discussion and Analysis of
Financial Condition and Results of Operations; and those detailed from
time to time in the filings of Registrant with the Securities and Exchange
Commission.
13
<PAGE> 14
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 June 30, 1997:
<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 - 3,853 3,853 $ 2,369
Forty-foot - 1,050 1,050 $ 3,520
Forty-foot high-cube - 460 460 $ 3,878
Refrigerated Cargo Containers:
Twenty-foot - 90 90 $ 21,108
Forty-foot high-cube - 300 300 $ 25,655
Tank Containers:
24,000-liter - 52 52 $ 25,394
</TABLE>
The aggregate purchase price (excluding acquisition fees) of the
equipment acquired by the Registrant through June 30, 1997 was
$25,524,394. 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.
14
<PAGE> 15
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, 1996
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
The Registrant filed a Report on Form 8-K, dated April 14, 1997 reporting
the appointment of the Registrant's successor certifying accountant.
- ----------------
* Incorporated by reference to Exhibit "A" to the Prospectus of the
Registrant dated December 28, 1996, 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)
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
CRONOS GLOBAL INCOME FUND XVI, L.P.
By Cronos Capital Corp.
The General Partner
By /s/ JOHN KALLAS
----------------------------------------
John Kallas
Vice President, Treasurer
Principal Financial & Accounting Officer
Date: August 14, 1997
16
<PAGE> 17
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, 1996
3(b) Certificate of Limited Partnership of the Registrant **
10 Form of Leasing Agent 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, 1996, 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 JUNE 30, 1997 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
QUARTERLY PERIOD ENDED JUNE 30, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED AS PART OF ITS
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD JUNE 30, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,052,116
<SECURITIES> 0
<RECEIVABLES> 368,599
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,420,715
<PP&E> 26,792,576
<DEPRECIATION> 1,662,830
<TOTAL-ASSETS> 26,756,035
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,756,035
<TOTAL-LIABILITY-AND-EQUITY> 26,756,035
<SALES> 0
<TOTAL-REVENUES> 1,431,911
<CGS> 0
<TOTAL-COSTS> 826,710
<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> 651,276
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
