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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
COMMISSION FILE NUMBER: 0-27496
(Check One):
[X] Form 10-K [ ] Form 20-F [ ] Form 11-K [ ] Form 10-Q [ ] Form N-SAR
For Period Ended: December 31, 1996
[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
For the Transition Period Ended: ______________________________________
PART I -- REGISTRANT INFORMATION
Cronos Global Income Fune XVI, L.P.
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Full Name of Registrant
Former Name if Applicable
444 Market Street, 15th Floor
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Address of Principal Executive Office (Street and Number)
San Francisco, CA 94111
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City, State and Zip Code
PART II -- RULES 12b-25 (b) AND (c)
If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12b-25(b), the
following should be completed. (Check box if appropriate)
(a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without reasonable effort or expense;
(b) The subject annual report, semi-annual report, transition report on
[X] Form 10-K, Form 20-F, 11-K, Form N-SAR, or portion thereof, will
be filed on or before the fifteenth calendar day following the
prescribed due date; or the subject quarterly report of transition
report on Form 10-Q, or portion thereof will be filed on or before the
fifth calendar day following the prescribed due date; and
(c) The accountant's statement or other exhibit required by Rule 12b-25(c)
has been attached if applicable.
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PART III -- NARRATIVE
As reported in the Registrant's Current Report on Form 8-K, filed February 6,
1997, and Amendment No. 1 to Current Report on Form 8-K, filed February 26,
1997, 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 is resigning as auditors of the
Parent Company and all other entities affiliated with the Parent Company.
While its letter of resignation is not addressed to the General Partner of the
Registrant, Arthur Andersen has confirmed to the General Partner that its
resignation as auditors of the entities referred to in its letter of
resignation includes its resignation as auditors of Cronos Capital Corp. and
the Registrant.
The Registrant has yet to retain a new auditor, and as a result, will be unable
to complete its Annual Report on Form 10-K by March 31, 1997, without
unreasonable effort or expense. The Registrant will undertake to file its
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 with the
Commission no later than 15 days after the required filing date.
PART IV -- OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
John Kallas 415 677-8990
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under section 13 or 15(d)
of the Securities Exchange Act of 1934 or section 30 of the Investment Company
Act of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If the answer is
no, identify report(s).
[X] Yes [ ] No
(3) Is it anticipated that any significant change in results of
operations from the corresponding period for the last fiscal year will be
reflected by the earnings statements to be included in the subject report or
portion thereof?
[X] Yes [ ] No
If so, attach an explanation of the anticipated change, both
narratively and quantitatively, and, if appropriate, state the reasons why a
reasonable estimate of the results cannot be made.
Reference is made to Exhibit I attached hereto.
Cronos Global Income Fund XVI, L.P.
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(Name of Registrant as specified in charter)
has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: March 26, 1997 By Cronos Capital Corp.
The General Partner
By /s/ John Kallas
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John Kallas
Vice President/Treasurer
Principal Accounting and
Finance Officer
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EXHIBIT I
STATEMENT IN RESPONSE TO PART IV-(3)
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 December 31, 1996, the Registrant's net earnings were $384,407,
comprised of net lease revenue, less depreciation and amortization of $913,432,
as well as other general and administrative expenses and interest income.
The Registrant's net lease revenue is determined by deducting direct
operating expenses, management fees and reimbursed administrative expenses,
from the rental revenues billed by Cronos Containers Limited (the "Leasing
Company") from the leasing of the Registrant's containers. The Registrant's
net lease revenue is directly related to the size of its fleet, as well as 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.
The Registrant's fleet size, as measured in twenty-foot equivalent units
("TEU"), and average utilization rates at March 31, 1996, June 30, 1996,
September 30, 1996 and December 31, 1996 were as follows:
<TABLE>
<CAPTION>
March 31, June 30, September 30, December 31,
1996 1996 1996 1996
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<S> <C> <C> <C> <C>
Fleet size (measured in twenty-
foot equivalent units (TEU)):
Dry cargo containers 600 4,386 5,095 5,897
Refrigerated containers 235 490 690 690
Tank containers 17 48 52 52
Average utilization:
Dry cargo containers 15.5% 63.4% 70.4% 79.1%
Refrigerated containers - % 88.7% 52.3% 76.9%
Tank containers - % 75.0% 88.5% 88.5%
</TABLE>
The Registrant commenced its operations during a period that was impacted by
a fall in growth of containerized export trade from key Asian markets,
resulting in sluggish container leasing market conditions. Also contributing
to the sluggish container leasing market conditions were declining container
prices, favorable interest rates and an abundance of available capital, which
resulted in ocean carriers and transport companies purchasing a larger share of
containers 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. In order to counter these market conditions, the
Leasing Company implemented various marketing strategies during 1996, including
but not limited to, offering incentives to shipping companies, repositioning
containers to high demand locations and focusing towards term leases and other
leasing opportunities, including the leasing of containers for local storage.
As the leasing industry's equipment moved into surplus, ocean carriers and
transport companies became increasingly selective about the age and condition
of containers taken on-hire. Many have adopted a policy of only leasing
containers of a certain age or less. It has been the Registrant's experience
that in periods of weak demand, many lessees insist on equipment three to five
years of age. Such criteria currently serves as a barrier to older equipment
being taken on-hire, and did not materially impact the leasing opportunities of
the Registrant's fleet, which averaged less than one year of age at December
31, 1996, or its results of operations. Currently, there are no visible signs
of improvement in the container leasing market, and, hence, further downward
pressure on rental rates and utilization can be expected in 1997. As a result,
these leasing market conditions should restrain the Registrant's results from
operations during 1997.
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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 6, 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 of 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.
The Registrant does not, at this time, have sufficient information to
respond to the concerns raised by Arthur Andersen with respect to its 1996
audit of the Parent Company or the impact, if any, these concerns 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 Managing 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.
Nevertheless, pending clarification of the concerns expressed by Arthur
Andersen in its letter of resignation, clarification of the corporate
governance of the Parent Company, and the appointment of new auditors for the
General Partners and the Registrant, the General Partner suspended the offer
and sale of units in the Registrant, effective February 3, 1997.
Arthur Andersen's report on the financial statements of Cronos Capital
Corp., for either of the past 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. Additionally, Arthur
Andersen's report on the balance sheet of the Registrant for the prior year,
did not contain an adverse opinion or a disclaimer of opinion, nor was any such
report qualified or modified as to uncertainty, audit scope, or accounting
principles.
Since the Registrant's inception 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.
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CRONOS GLOBAL INCOME FUND XVI, L.P.
STATEMENTS OF OPERATIONS
FOR THE PERIOD MARCH 29, 1996 (COMMENCEMENT OF
OPERATIONS) TO DECEMBER 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
1996
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<S> <C>
Net lease revenue $1,270,940
Other operating expenses:
Depreciation and amortization 913,432
Other general and administrative expenses 24,965
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938,397
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Earnings from operations 332,543
Other income:
Interest income 51,864
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Net earnings $ 384,407
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Allocation of net earnings:
General partner $ 30,513
Limited partners 353,894
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$ 384,407
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Limited partners' per unit share of net earnings $ .37
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</TABLE>
