<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 SEPTEMBER 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 SEPTEMBER 30, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C>
Balance Sheets - September 30, 1996 (unaudited) and December 31, 1995 4
Statements of Operations for the three and nine months ended September 30, 1996 and 1995 (unaudited) 5
Statements of Cash Flows for the nine months ended September 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 September
30, 1996 and December 31, 1995, statements of operations for the three
and nine months ended September 30, 1996 and 1995, and statements of
cash flows for the nine months ended September 30, 1996 and 1995.
3
<PAGE> 4
IEA MARINE CONTAINER FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------ -----------
Assets
Current assets:
<S> <C> <C>
Cash, includes $26,287 at September 30, 1996 and $6,623
at December 31, 1995 in interest-bearing accounts $ 27,869 $ 6,891
Short-term investments 207,479 225,000
Net lease receivables due from Leasing Company
(notes 1 and 2) -- 24,389
--------- --------
Total current assets 235,348 256,280
--------- --------
$ 235,348 $256,280
========= ========
Liabilities and Partners' Capital
Current liabilities
Accounts payable and accrued expenses $ 19,131 $ 6,941
--------- --------
Total current liabilities 19,131 6,941
--------- --------
Partners' capital (deficit):
General partners (188) 143
Limited partners 216,405 249,196
--------- --------
Total partners' capital 216,217 249,339
--------- --------
$ 235,348 $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 Nine Months Ended
------------------------------ -----------------------------
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
------------ ------------- -----------------------------
<S> <C> <C> <C> <C>
Net lease revenue (expense) (notes 1 and 3) $ (4,612) $ 16,908 $ (14,938) $107,540
Other operating expenses:
Other general and administrative expenses 16,889 4,396 26,581 20,330
-------- -------- --------- --------
Earnings (loss) from operations (21,501) 12,512 (41,519) 87,210
Other income:
Interest income 2,817 2,346 8,397 4,675
Net gain on disposal of equipment -- 544 -- 25,620
-------- -------- --------- --------
2,817 2,890 8,397 30,295
-------- -------- --------- --------
Net earnings (loss) $(18,684) $ 15,402 $ (33,122) $117,505
======== ======== ========= ========
Allocation of net earnings (loss):
General partners $ (187) $ 1,293 $ (331) $ 4,997
Limited partners (18,497) 14,109 (32,791) 112,508
-------- -------- --------- --------
$(18,684) $ 15,402 $ (33,122) $117,505
======== ======== ========= ========
Limited partners' per unit share
of net earnings (loss) $ (1.13) $ .86 $ (2.00) $ 6.86
======== ======== ========= ========
</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>
Nine Months Ended
--------------------------------
September 30, September 30,
1996 1995
------------- -------------
<S> <C> <C>
Net cash provided by (used in) operating activities $ (11,219) $ 59,155
Cash flows provided by investing activities:
Proceeds from disposal of equipment 14,560 263,425
Cash flows used in financing activities:
Distribution to partners -- (207,110)
--------- ---------
Net increase in cash and cash equivalents 3,341 115,470
Cash and cash equivalents at January 1 231,891 141,241
--------- ---------
Cash and cash equivalents at September 30 $ 235,232 $ 256,711
========= =========
</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 accounts 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 September 30, 1996
and December 31, 1995 were as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Lease receivables, net of doubtful accounts
of $nil at September 30, 1996 and $30,922 at
December 31, 1995 $ -- $30,513
Less:
Direct operating payables and accrued expenses -- 6,124
------- -------
$ -- $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
(expense) for the three and nine-month periods ended September 30, 1996
and 1995, was as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------- ------------------------------
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Rental revenue $ -- $ 19,696 $ -- $144,299
--------
Rental equipment operating expenses 4,612 2,213 14,938 24,392
Base management fees -- 575 -- 12,367
-------- -------- --------- --------
$ (4,612) $ 16,908 $ (14,938) $107,540
======== ======== ========= ========
</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 September 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. During this phase, 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 related to its final liquidation and subsequent dissolution.
During the first nine months of 1996, the Registrant focused on the
collection of its lease receivables and payment of its direct operating
payables and accrued expenses. At September 30, 1996, the remaining
gross lease receivables were deemed to be uncollectible and
accordingly, charged against the existing allowance for doubtful
accounts. Additionally, at September 30, 1996 the Registrant accrued
for the remaining costs associated with the termination of the
Partnership, including, but not limited to, accounting, tax and legal
fees. The Registrant anticipates that during the fourth quarter of 1996
it will discharge the remaining direct operating payables and accrued
expenses, undertake a final distribution to its partners, cancel the
Certificate of Limited Partnership and terminate the Partnership.
2) Material changes in the results of operations between the three and
nine-month periods ended September 30, 1996 and the three and
nine-month periods ended September 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
$18,684 and $33,122 during the three and nine-month periods ended
September 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 $4,612 and $14,938 during the three and
nine-month periods ended September 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. General and administrative
expenses included investor processing, tax, legal, and audit expenses.
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 September 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, Treasurer
Principal Financial & Accounting Officer
Date: November 11, 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 SEPTEMBER 30, 1996 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
QUARTERLY PERIOD ENDED SEPTEMBER 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 SEPTEMBER 30, 1996
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 235,348
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 235,348
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 235,348
<CURRENT-LIABILITIES> 19,131
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 216,217
<TOTAL-LIABILITY-AND-EQUITY> 235,348
<SALES> 0
<TOTAL-REVENUES> (14,938)
<CGS> 0
<TOTAL-COSTS> 26,581
<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> (33,122)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
