<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 0-13432
IEA MARINE CONTAINER INCOME FUND V(B)
(Exact name of registrant as specified in its charter)
California 94-2911066
(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(B)
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(B)
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- -------------
<S> <C> <C>
Assets
------
Current assets:
Cash, includes $111,635 at June 30, 1995 and $102,749
at December 31, 1994 in interest-bearing accounts $ 123,279 $ 111,846
Short-term investments 451,136 451,523
Net lease receivables due from Leasing Company
(notes 1 and 2) 337,907 334,734
---------- ----------
Total current assets 912,322 898,103
---------- ----------
Container rental equipment, at cost 5,988,808 6,566,166
Less accumulated depreciation 3,620,217 3,810,244
---------- ----------
Net container rental equipment 2,368,591 2,755,922
---------- ----------
$3,280,913 $3,654,025
========== ==========
Partners' Capital
-----------------
Partners' capital (deficit):
General partners $ (1,242) $ 2,490
Limited partners 3,282,155 3,651,535
---------- ----------
Total partners' capital 3,280,913 3,654,025
---------- ----------
$3,280,913 $3,654,025
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
IEA MARINE CONTAINER INCOME FUND V(B)
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) $240,982 $257,723 $491,823 $508,205
Other operating expenses:
Depreciation 77,585 92,173 158,813 187,299
Other general and administrative expenses 14,956 12,175 22,327 19,264
-------- -------- -------- --------
92,541 104,348 181,140 206,563
-------- -------- -------- --------
Earnings from operations 148,441 153,375 310,683 301,642
Other income:
Interest income 9,280 4,942 16,924 9,233
Net gain on disposal of equipment 34,917 68,923 98,529 94,597
-------- -------- -------- --------
44,197 73,865 115,453 103,830
-------- -------- -------- --------
Net earnings $192,638 $227,240 $426,136 $405,472
======== ======== ======== ========
Allocation of net earnings:
General partners $ 35,306 $ 30,518 $ 67,312 $ 60,604
Limited partners 157,332 196,722 358,824 344,868
-------- -------- -------- --------
$192,638 $227,240 $426,136 $405,472
======== ======== ======== ========
Limited partners' per unit share of net earnings $ 9 $ 11 $ 21 $ 20
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
IEA MARINE CONTAINER INCOME FUND V(B)
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 $540,845 $484,012
Cash flows from investing activities:
Proceeds from disposal of equipment 269,449 254,174
Cash flows used in financing activities:
Distribution to partners (799,248) (709,285)
-------- --------
Net increase in cash and cash equivalents 11,046 28,901
Cash and cash equivalents at January 1 563,369 638,928
-------- --------
Cash and cash equivalents at June 30 $574,415 $667,829
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
IEA MARINE CONTAINER INCOME FUND V(B)
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(B) (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(B)
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 $92,134 at June 30, 1995 and $87,666 at
December 31, 1994 $588,146 $589,082
Less: Direct operating payables and accrued expenses 109,986 81,968
Damage protection reserve 55,402 79,405
Base management fees 38,805 42,762
Reimbursed administrative expenses 4,255 8,422
Incentive fees 41,791 41,791
-------- --------
$337,907 $334,734
======== ========
</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 $427,335 $491,799 $852,385 $962,889
Rental equipment
operating expenses 88,752 129,693 167,853 242,985
Base management fees 28,061 32,006 58,061 66,329
Incentive fees 47,014 47,015 88,805 86,193
Reimbursed administrative expenses 22,526 25,362 45,843 59,177
-------- -------- -------- --------
$240,982 $257,723 $491,823 $508,205
======== ======== ======== ========
</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 $96,380. The Registrant will
distribute these sales proceeds and $246,304 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 remained consistent with
the December 31, 1994 balance. However, the reserve for container repairs
covered by the damage protection plan, a component of net lease
receivables, declined 30%. During the first six months of 1995, this
reserve was impacted by the Registrant's declining fleet size and the
number of containers covered under the plan. Deferred lease revenue from
advance billings on container rentals contributed to a 24% increase in
direct operating payables and accrued expenses, and offset the decline in
the damage protection plan reserve.
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)) 3,204 3,902 3,331 3,946
Average Utilization 88% 86% 88% 85%
</TABLE>
7
<PAGE> 10
Rental equipment operating expenses, a component of net lease revenue,
declined approximately 32% and 31% 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.
Approximately 18% and 23% 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 30% and 23% 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(B)
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> 574,415
<SECURITIES> 0
<RECEIVABLES> 337,907
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 912,322
<PP&E> 5,988,808
<DEPRECIATION> 3,620,217
<TOTAL-ASSETS> 3,280,913
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,280,913
<TOTAL-LIABILITY-AND-EQUITY> 3,280,913
<SALES> 0
<TOTAL-REVENUES> 607,276
<CGS> 0
<TOTAL-COSTS> 181,140
<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> 426,136
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
