<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, 1995
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 0-9228
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
(Exact name of registrant as specified in its charter)
California 94-2607182
(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
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
REPORT ON FORM 10-Q FOR THE QUARTERLY
PERIOD ENDED JUNE 30, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 1995 (unaudited) and December 31, 1994 2
Statements of Operations for the three and six months ended June 30, 1995 and 1994 3
(unaudited)
Statements of Cash Flows for the six months ended June 30, 1995 and 1994 4
(unaudited)
Notes to Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of 7
Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K during the period 9
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Presented herein are the Registrant's balance sheets as of
June 30, 1995 and December 31, 1994, statements of operations for the
three and six months ended June 30, 1995 and 1994, and statements of
cash flows for the six months ended June 30, 1995 and 1994.
<PAGE> 4
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- ------------
Assets
------
<S> <C> <C>
Current assets:
Cash, includes $119,943 at June 30, 1995 and $28,632
at December 31, 1994 in interest-bearing accounts $ 127,621 $ 41,241
Short-term investments - 100,000
Net lease receivables due from Leasing Company
(notes 1 and 2) 193,205 12,341
---------- ----------
Total current assets 320,826 153,582
---------- ----------
Container rental equipment, at cost 86,536 784,422
Less accumulated depreciation 60,575 548,343
---------- ----------
Net container rental equipment 25,961 236,079
---------- ----------
$ 346,787 $ 389,661
========== ==========
Partners' Capital
-----------------
Partners' capital (deficit):
General partners $ (454) $ (2,710)
Limited partners 347,241 392,371
---------- ----------
Total partners' capital 346,787 389,661
---------- ----------
$ 346,787 $ 389,661
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------- -----------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net lease revenue (notes 1 and 3) $ 10,278 $ 39,473 $ 90,632 $ 98,969
Other operating expenses:
Other general and administrative expenses 10,146 8,214 15,934 13,388
-------- -------- -------- --------
Earnings from operations 132 31,259 74,698 85,581
Other income:
Interest income 1,023 1,418 2,329 2,814
Net gain on disposal of equipment 6,197 20,937 25,076 32,893
-------- -------- -------- --------
7,220 22,355 27,405 35,707
-------- -------- -------- --------
Net earnings $ 7,352 $ 53,614 $102,103 $121,288
======== ======== ======== ========
Allocation of net earnings:
General partners $ 74 $ 1,936 $ 3,704 $ 2,613
Limited partners 7,278 51,678 98,399 118,675
-------- -------- -------- --------
$ 7,352 $ 53,614 $102,103 $121,288
======== ======== ======== ========
Limited partners' per unit share of net earnings $ .28 $ 3.15 $ 6.00 $ 7.23
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
June 30, June 30,
1995 1994
--------- ---------
<S> <C> <C>
Net cash provided by operating activities $ 41,852 $ 110,953
Cash flows provided by investing activities:
Proceeds from disposal of equipment 89,505 112,798
Cash flows used in financing activities:
Distribution to partners (144,977) (289,956)
--------- ---------
Net decrease in cash and cash equivalents (13,620) (66,205)
Cash and cash equivalents at January 1 141,241 262,307
--------- ---------
Cash and cash equivalents at June 30 $ 127,621 $ 196,102
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 1995 AND DECEMBER 31, 1994
(1) Summary of Significant Accounting Policies
(a) Nature of Operations
IEA Marine Container Fund (A California Limited Partnership) (the
"Partnership") was organized under the laws of the State of California
on April 26, 1979 for the purpose of owning and leasing marine cargo
containers. The managing general partner is Cronos Capital Corp.
("CCC"); the associate general partner is Smith Barney Shearson, Inc.
CCC, with its affiliate Cronos Containers Limited (the "Leasing
Company"), manages and controls the business of the Partnership.
(b) Leasing Company and Leasing Agent Agreement
Pursuant to the Limited Partnership Agreement of the Partnership, all
authority to administer the business of the Partnership is vested in
CCC. CCC 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. 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.
(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 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.
(Continued)
5
<PAGE> 8
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(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, and base
management fees 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, 1995 and December 31, 1994 were as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
--------- ------------
<S> <C> <C>
Lease receivables, net of doubtful accounts
of $30,177 at June 30, 1995 and $27,616 at
December 31, 1994 $ 210,353 $ 103,448
Less:
Direct operating payables and accrued expenses 17,148 15,615
Damage protection reserve - 75,492
--------- ---------
$ 193,205 $ 12,341
========= =========
</TABLE>
(3) Net Lease Revenue
Net lease revenue is determined by deducting direct operating expenses and
management fees to CCC 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 and six-month periods
ended June 30, 1995 and 1994, were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- -------------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Rental revenue $ 27,445 $ 62,298 $ 124,603 $ 147,184
Rental equipment
operating expenses 13,229 9,811 22,179 21,201
Base management fees 3,938 13,014 11,792 27,014
--------- --------- --------- ---------
$ 10,278 $ 39,473 $ 90,632 $ 98,969
========= ========= ========= =========
</TABLE>
6
<PAGE> 9
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, 1995 and December
31, 1994.
As discussed in prior quarterly reports, the Managing General Partner has
focused its efforts on liquidating the remaining equipment in the fleet and
winding up the Registrant's operations. Accordingly, during the first six
months of 1995, the Registrant disposed of 299 containers, equal to
approximately 7% of its original fleet. Of this amount, 178 containers were
sold during the second quarter of 1995, pursuant to an agreement with a
non-related party. The purchase price of these 178 containers totaled
$130,789, which equaled approximately 105% of the containers' net book
value. The proceeds related to this sale were received during the third
quarter of 1995, and contributed to the increase in net lease receivables
due from the Leasing Company at June 30, 1995. The proceeds from this sale
will be retained as part of working capital, ensuring the availability of
sufficient cash balances during the third and fourth quarters of 1995, as
cash expenditures for investor processing, tax, legal and audit services,
should be in excess of cash generated from operations. At June 30, 1995 the
Registrant's remaining fleet consisted of 26 containers. These remaining
containers have been targeted for disposal during the third quarter of
1995.
The diminishing fleet size contributed to declines in the Registrant's cash
balances and reserve for container repairs covered under the damage
protection plan. During the next two quarters, a concentrated effort will
be made to collect the Registrant's remaining lease receivables and
extinguish its remaining payables, with the intent to wind up the
Registrant's operations by December 31, 1995 or early 1996.
2) Material changes in the results of operations between the three and
six-month periods ended June 30, 1995 and the three and six-month periods
ended June 30, 1994.
During the three and six-month periods ended June 30, 1995, approximately
84% and 25%, respectively, of the Registrant's earnings were from gain on
disposal of equipment, as compared to 39% and 27% for the same periods in
the prior year. The Registrant's net earnings for the three-month period
ended June 30, 1995 were comprised primarily of gain on disposal of
equipment, as the Registrant disposed of 255 containers. Net lease revenues
were lower as a direct result of these disposals.
The diminishing fleet size has had its greatest impact on gross lease
revenues, a component of net lease revenue, resulting in a decline of 56%
and 15% for the three and six-month periods ended June 30, 1995,
respectively, when compared to the same periods in 1994. Despite the
diminishing fleet size, rental equipment operating expenses increased 35%
and 5% over the same three and six-month periods in the prior year. These
increases were a result of expenses associated with the recovery actions
against the doubtful accounts of certain lessees, including legal and
container recovery expenses, as well as the related provision for doubtful
accounts.
The Registrant's average fleet size and utilization rates for the three and
six-month periods ended June 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Average Fleet Size (measured in
twenty-foot equivalents (TEU)) 193 602 291 628
Average Utilization 63% 73% 70% 76%
</TABLE>
7
<PAGE> 10
During the remaining period in the wind up phase of operations, the Registrant
expects to incur net losses, as certain costs including investor processing,
tax, legal and audit expenses, should be in excess of net lease revenues
generated from operations. The Registrant has increased its cash reserves in
anticipation of these expected losses.
8
<PAGE> 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) There were no reports on Form 8-K during the three-month period
ended June 30, 1995.
9
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
IEA MARINE CONTAINER FUND
(A California Limited Partnership)
By Cronos Capital Corp.
The Managing General Partner
By /s/ JOHN KALLAS
----------------------------
John Kallas
Vice President, Chief Financial Officer
Principal Accounting Officer
Date: August 10, 1995
10
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AT JUNE 30, 1995 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR
THE SIX MONTHS ENDED JUNE 30, 1995 (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 ENDED JUNE 30, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 127,621
<SECURITIES> 0
<RECEIVABLES> 193,205
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 320,826
<PP&E> 86,536
<DEPRECIATION> 60,575
<TOTAL-ASSETS> 346,787
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 346,787
<TOTAL-LIABILITY-AND-EQUITY> 346,787
<SALES> 0
<TOTAL-REVENUES> 118,037
<CGS> 0
<TOTAL-COSTS> 15,934
<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> 102,103
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
