<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, 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 0-9228
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, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 1996 (unaudited) and December 31, 1995 4
Statements of Operations for the three and six months ended June 30, 1996 and 1995 (unaudited) 5
Statements of Cash Flows for the six months ended June 30, 1996 and 1995 (unaudited) 6
Notes to Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K during the period 11
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Presented herein are the Registrant's balance sheets as of June 30,
1996 and December 31, 1995, statements of operations for the three and
six months ended June 30, 1996 and 1995, and statements of cash flows
for the six months ended June 30, 1996 and 1995.
3
<PAGE> 4
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------- ------------
Assets
------
<S> <C> <C>
Current assets:
Cash, includes $32,861 at June 30, 1996 and $6,623
at December 31, 1995 in interest-bearing accounts $ 32,971 $ 6,891
Short-term investments 204,731 225,000
Net lease receivables due from Leasing Company
(notes 1 and 2) 253 24,389
--------- --------
Total current assets 237,955 256,280
--------- --------
$ 237,955 $256,280
========= ========
Liabilities and Partners' Capital
---------------------------------
Current liabilities
Accounts payable and accrued expenses $ 3,054 $ 6,941
--------- --------
Total current liabilities 3,054 6,941
--------- --------
Partners' capital (deficit):
General partners (1) 143
Limited partners 234,902 249,196
--------- --------
Total partners' capital 234,901 249,339
--------- --------
$ 237,955 $256,280
========= ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<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,
1996 1995 1996 1995
--------- -------- ---------- --------
<S> <C> <C> <C> <C>
Net lease revenue (notes 1 and 3) $ (9,828) $ 10,278 $ (10,326) $ 90,632
Other operating expenses:
Other general and administrative expenses 5,038 10,146 9,692 15,934
-------- -------- --------- --------
Earnings (loss) from operations (14,866) 132 (20,018) 74,698
Other income (loss):
Interest income 2,755 1,023 5,580 2,329
Net gain (loss) on disposal of equipment -- 6,197 -- 25,076
-------- -------- --------- --------
2,755 7,220 5,580 27,405
-------- -------- --------- --------
Net earnings (loss) $(12,111) $ 7,352 $ (14,438) $102,103
======== ======== ========= ========
Allocation of net earnings (loss):
General partners $ (121) $ 74 $ (144) $ 3,704
Limited partners (11,990) 7,278 (14,294) 98,399
-------- -------- --------- --------
$(12,111) $ 7,352 $ (14,438) $102,103
======== ======== ========= ========
Limited partners' per unit share
of net earnings (loss) $ (.73) $ .28 $ (.87) $ 6.00
======== ======== ========= ========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
June 30, June 30,
1996 1995
--------------------------
<S> <C> <C>
Net cash provided by operating activities $ 3,872 $ 41,852
Cash flows provided by investing activities:
Proceeds from disposal of equipment 1,939 89,505
Cash flows used in financing activities:
Distribution to partners -- (144,977)
-------- ---------
Net increase (decrease) in cash and cash equivalents 5,811 (13,620)
Cash and cash equivalents at January 1 231,891 141,241
-------- ---------
Cash and cash equivalents at June 30 $237,702 $ 127,621
======== =========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(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 entered into a Leasing Agent Agreement whereby the Leasing Company had
the responsibility to manage the leasing operations of all equipment owned
by the Partnership. Pursuant to the Agreement, the Leasing Company was
responsible for leasing, managing and re-leasing the Partnership's
containers to ocean carriers and had full discretion over which ocean
carriers and suppliers of goods and services it dealt with. The Leasing
Agent Agreement permitted 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 has been accounted for as a lease under which
the Partnership is lessor and the Leasing Company is the lessee.
The Leasing Agent Agreement generally provided that the Leasing Company
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 of the
Partnership's containers were 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.
(Continued)
7
<PAGE> 8
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
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.
For comparative purposes, prior year's acccounts payable and accrued
expenses have been reclassified to conform to the current year
presentation.
(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, 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 June 30, 1996 and December 31, 1995
were as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------- ------------
<S> <C> <C>
Lease receivables, net of doubtful accounts
of $38,952 at June 30, 1996 and $30,922 at
December 31, 1995 $ 5,423 $30,513
Less:
Direct operating payables and accrued expenses 5,170 6,124
------- -------
$ 253 $24,389
======= =======
</TABLE>
8
<PAGE> 9
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(3) Net Lease Revenue
Net lease revenue is determined by deducting direct operating expenses and
management fees to CCC and the Leasing Company, 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, 1996 and 1995, was as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------ ------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Rental revenue $ -- $ 27,445 $ -- $124,603
Rental equipment operating expenses 9,828 13,229 10,326 22,179
Base management fees -- 3,938 -- 11,792
-------- -------- -------- --------
$ (9,828) $ 10,278 $(10,326) $ 90,632
======== ======== ======== ========
</TABLE>
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, 1996 and December
31, 1995.
As discussed in the Registrant's report for the year ended December 31,
1995, the Registrant's remaining containers were disposed of during 1995.
The Registrant is currently in the final phase of the liquidation and wind
up stage of operations, focusing on the collection of its lease
receivables and payment of its direct operating payables and accrued
expenses. Accordingly, gross lease receivables and direct operating
payables and accrued expenses declined $25,090 and $954, respectively,
from December 31, 1995. During the first six months of 1996, the
Registrant refrained from distributing cash generated from operations and
sales proceeds to its partners, reserving all excess cash as part of its
working capital in order to maintain sufficient cash reserves for expenses
relating to its final liquidation and subsequent dissolution. The
Registrant anticipates that after the remaining net lease receivables and
liabilities are collected and discharged during 1996, or as soon as
practicable, the Registrant will undertake a final distribution to its
partners and proceed to cancel the Certificate of Limited Partnership. The
Partnership will then be terminated.
2) Material changes in the results of operations between the three and
six-month periods ended June 30, 1996 and the three and six-month periods
ended June 30, 1995.
At the beginning of 1995, the Registrant had 325 containers remaining in
the fleet. These containers were disposed of during 1995. Accordingly, the
Registrant's container operations ceased during the fourth quarter of
1995. The Registrant experienced a net loss of $12,111 and $14,438 during
the three and six-month periods ended June 30, 1996, respectively, as
other general and administrative expenses were in excess of interest
income, the Registrant's sole source of income. Rental equipment operating
expenses, a component of net lease revenue, were $7,937 and $8,435 during
the three and six-month periods ended June 30, 1996, respectively. These
amounts consisted of costs associated with the recovery actions against
the doubtful accounts of certain lessees, including legal expenses and the
provision for doubtful accounts. During the remaining period in the wind
up phase of operations, the Registrant expects to incur net losses, as
certain other general and administrative expenses including investor
processing, tax, legal, and audit expenses, should be in excess of any
other income generated by the Registrant.
10
<PAGE> 11
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 August 1, 1979
3(b) Certificate of Limited Partnership of the Registrant **
27 Financial Data Schedule Filed with this document
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter
ended June 30, 1996
__________
* Incorporated by reference to the Prospectus of the Registrant dated
August 27, 1979, included as part of Registration Statement on Form S-1
(No. 2-64700)
** Incorporated by reference to Exhibit 3.4 to the Registration Statement on
Form S-1 (No. 2-64700)
11
<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 13, 1996
12
<PAGE> 13
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 August 1, 1979
3(b) Certificate of Limited Partnership of the Registrant **
27 Financial Data Schedule Filed with this document
</TABLE>
__________
* Incorporated by reference to the Prospectus of the Registrant dated
August 27, 1979, included as part of Registration Statement on Form S-1
(No. 2-64700)
** Incorporated by reference to Exhibit 3.4 to the Registration Statement on
Form S-1 (No. 2-64700)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT JUNE 30, 1996 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
QUARTERLY PERIOD ENDED JUNE 30, 1996 (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, 1996
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 237,702
<SECURITIES> 0
<RECEIVABLES> 253
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 237,955
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 237,955
<CURRENT-LIABILITIES> 3,054
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 234,901
<TOTAL-LIABILITY-AND-EQUITY> 237,955
<SALES> 0
<TOTAL-REVENUES> (10,326)
<CGS> 0
<TOTAL-COSTS> 9,692
<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> (14,438)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
