<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 2-86324
IEA MARINE CONTAINER INCOME FUND V(A)
(Exact name of registrant as specified in its charter)
California 94-2911062
(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 .
--------- ----------
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IEA MARINE CONTAINER INCOME FUND V(A)
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 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 INCOME FUND V(A)
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- ------------
<S> <C> <C>
Assets
------
Current assets:
Cash, includes $75,767 at June 30, 1995 and $88,547
at December 31, 1994 in interest-bearing accounts $ 86,865 $ 97,755
Short-term investments 200,294 150,000
Net lease receivables due from Leasing Company
(notes 1 and 2) 169,425 151,315
---------- ----------
Total current assets 456,584 399,070
---------- ----------
Container rental equipment, at cost 2,732,693 3,009,444
Less accumulated depreciation 1,656,792 1,754,402
---------- ----------
Net container rental equipment 1,075,901 1,255,042
---------- ----------
$1,532,485 $1,654,112
========== ==========
Partners' Capital
-----------------
Partners' capital:
General partners $ 2,293 $ 3,509
Limited partners 1,530,192 1,650,603
---------- ----------
Total partners' capital 1,532,485 1,654,112
---------- ----------
$1,532,485 $1,654,112
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
IEA MARINE CONTAINER INCOME FUND V(A)
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) $118,464 $133,059 $248,612 $265,972
Other operating expenses:
Depreciation 35,013 41,073 71,749 83,119
Other general and administrative expenses 9,671 7,194 15,439 10,830
-------- -------- -------- --------
44,684 48,267 87,188 93,949
-------- -------- -------- --------
Earnings from operations 73,780 84,792 161,424 172,023
Other income:
Interest income 3,633 2,118 6,775 3,901
Net gain on disposal of equipment 26,250 16,526 60,812 32,812
-------- -------- -------- --------
29,883 18,644 67,587 36,713
-------- -------- -------- --------
Net earnings $103,663 $103,436 $229,011 $208,736
======== ======== ======== ========
Allocation of net earnings:
General partners $ 16,051 $ 13,601 $ 29,950 $ 27,200
Limited partners 87,612 89,835 199,061 181,536
-------- -------- -------- --------
$103,663 $103,436 $229,011 $208,736
======== ======== ======== ========
Limited partners' per unit share of net earnings $ 12 $ 12 $ 27 $ 25
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
IEA MARINE CONTAINER INCOME FUND V(A)
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 $ 259,075 $ 249,425
Cash flows from investing activities:
Proceeds from disposal of equipment 130,967 70,075
Cash flows used in financing activities:
Distribution to partners (350,638) (340,622)
--------- ---------
Net increase (decrease) in cash and cash equivalents 39,404 (21,122)
Cash and cash equivalents at January 1 247,755 293,108
--------- ---------
Cash and cash equivalents at June 30 $ 287,159 $ 271,986
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
IEA MARINE CONTAINER INCOME FUND V(A)
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 Income Fund V(A) (the "Partnership") is a
limited partnership organized under the laws of the State of
California on August 8, 1983 for the purpose of owning and leasing
marine cargo containers. The managing general partner is Cronos
Capital Corp. ("CCC"); the associate general partners include four
individuals. 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 INCOME FUND V(A)
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, base management
fees payable, reimbursed administrative expenses and incentive 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 $54,645 at June 30, 1995 and $52,946 at
December 31, 1994 $292,954 $282,897
Less:
Direct operating payables and accrued expenses 51,796 41,730
Damage protection reserve 28,521 46,156
Base management fees 20,058 21,824
Reimbursed administrative expenses 2,004 4,062
Incentive fees 21,150 17,810
-------- --------
$169,425 $151,315
======== ========
</TABLE>
(3) Net Lease Revenue
Net lease revenue is determined by deducting direct operating expenses,
management fees and reimbursed administrative expenses 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 $208,065 $226,131 $421,078 $453,723
Rental equipment
operating expenses 40,831 45,586 79,502 89,930
Base management fees 13,517 15,460 28,517 30,922
Incentive fees 24,490 20,035 42,300 38,959
Reimbursed administrative expenses 10,763 11,991 22,147 27,940
-------- -------- -------- --------
$118,464 $133,059 $248,612 $265,972
======== ======== ======== ========
</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.
The Registrant's cash balances at June 30, 1995 included sales proceeds
from equipment disposals in the amount of $54,766. The Registrant will
distribute these sales proceeds and $118,661 of cash from operations
during the third quarter of 1995, representing distributions to its
limited partners for the second quarter of 1995.
Net lease receivables due from the Leasing Company increased approximately
12% from December 31, 1994. This increase was attributable to a 38%
decline in the reserve for container repairs covered by the damage
protection plan, a component of net lease receivables. During the first
six months of 1995, this reserve was impacted by the Registrant's
declining fleet size and a decrease in the estimated repairs covered by
the plan.
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-month period ended June 30, 1995, the container leasing
market remained consistent with market conditions that existed during the
three-month period ended March 31, 1995. The Registrant continued to
experience the ability to charge higher ancillary revenues, such as
pick-up fees, and reduce incentives offered to ocean carriers. However,
the Registrant remains cautious about any further improvement in market
conditions during the remainder of 1995.
The benefits of the improved market conditions experienced during the
three and six-month periods ended June 30, 1995, as compared to the same
periods in 1994, were partially offset by the effect of the Leasing
Company's efforts to improve the credit quality of its customer portfolio.
In many cases, lessees who maintain a strong credit history may command
favorable lease terms including lower per-diem rental rates. Accordingly,
average per-diem rental rates remained steady as compared to the same
three and six-month periods in 1994, while an increasing proportion of the
lessees within its portfolio shifted to larger, high credit quality
lessees. The Registrant expects to gain long term benefits from the
improvement in the credit quality of its customers, as the allowance for
doubtful accounts and related expenses should decline.
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)) 1,566 1,874 1,635 1,889
Average Utilization 87% 86% 87% 85%
</TABLE>
7
<PAGE> 10
Rental equipment operating expenses, a component of net lease revenue,
declined approximately 10% and 12% during the three and six-month periods
ended June 30, 1995, respectively, as compared to the same periods in the
prior year. The declining fleet size and higher utilization rates were
contributing factors to these declines, as well as to the declines in base
management fees and reimbursed administrative expenses. Incentive
management fees increased approximately 22% and 9% as compared to the same
three and six-month periods in 1994, as a result of the increase in
container disposals.
Approximately 25% and 27% of the Registrant's net earnings for the three
and six-month periods ended June 30, 1995, respectively, were from gain on
disposal of equipment, as compared to approximately 16% for the same three
and six-month periods in the prior year. As the Registrant accelerates
the disposal of its containers in subsequent periods, net gains on
disposals should contribute significantly to the Registrant's net
earnings.
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 INCOME FUND V(A)
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> 287,159
<SECURITIES> 0
<RECEIVABLES> 169,425
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 456,584
<PP&E> 2,732,693
<DEPRECIATION> 1,656,792
<TOTAL-ASSETS> 1,532,485
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,532,485
<TOTAL-LIABILITY-AND-EQUITY> 1,532,485
<SALES> 0
<TOTAL-REVENUES> 316,199
<CGS> 0
<TOTAL-COSTS> 87,188
<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> 229,011
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
