<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 MARCH 31, 1999
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 0-17942
IEA INCOME FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
California 94-3046886
(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 INCOME FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 1999 (unaudited) and December 31, 1998 4
Statements of Operations for the three months ended March 31, 1999 and 1998 (unaudited) 5
Statements of Cash Flows for the three months ended March 31, 1999 and 1998 (unaudited) 6
Notes to Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 3. Defaults Upon Senior Securities 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 15
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Presented herein are the Registrant's balance sheets as of March 31,
1999 and December 31, 1998, statements of operations for the three
months ended March 31, 1999 and 1998, and statements of cash flows
for the three months ended March 31, 1999 and 1998.
3
<PAGE> 4
IEA INCOME FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- ------------
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents, includes $750,022 at March 31, 1999 and
$543,682 at December 31, 1998 in interest-bearing accounts $ 750,122 $ 543,782
Net lease receivables due from Leasing Company
(notes 1 and 2) 168,939 148,068
Due from general partner (note 3) -- 142,660
----------- -----------
Total current assets 919,061 834,510
----------- -----------
Container rental equipment, at cost 9,360,333 9,794,204
Less accumulated depreciation 5,384,515 5,507,701
----------- -----------
Net container rental equipment 3,975,818 4,286,503
----------- -----------
$ 4,894,879 $ 5,121,013
=========== ===========
Partners' Capital
Partners' capital (deficit):
General partner $ (137,059) $ 4,649
Limited partners 5,031,938 5,116,364
----------- -----------
Total partners' capital 4,894,879 5,121,013
----------- -----------
$ 4,894,879 $ 5,121,013
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
IEA INCOME FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
March 31, March 31,
1999 1998
--------- ---------
<S> <C> <C>
Net lease revenue (notes 1 and 4) $ 206,463 $ 291,622
Other operating expenses:
Depreciation 138,924 155,174
Other general and administrative expenses 12,037 11,411
--------- ---------
150,961 166,585
--------- ---------
Earnings from operations 55,502 125,037
Other income:
Interest income 6,172 8,391
Net gain on disposal of equipment 44,665 29,155
--------- ---------
50,837 37,546
--------- ---------
Net earnings $ 106,339 $ 162,583
========= =========
Allocation of net earnings (loss):
General partner $(104,766) $ 74,576
Limited partners 211,105 88,007
--------- ---------
$ 106,339 $ 162,583
========= =========
Limited partners' per unit share of net earnings $ 9.82 $ 4.09
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
IEA INCOME FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 31, March 31,
1999 1998
--------- ---------
<S> <C> <C>
Net cash provided by operating activities $ 220,249 $ 197,735
Cash flows provided by investing activities:
Proceeds from sale of rental equipment 175,903 142,226
Cash flows from (used in) financing activities:
Repayment of over-distribution to general partner 142,660 --
Distribution to partners (332,472) (452,440)
--------- ---------
Net cash used in financing activities (189,812) (452,440)
--------- ---------
Net increase (decrease) in cash and cash equivalents 206,340 (112,479)
Cash and cash equivalents at January 1 543,782 723,464
--------- ---------
Cash and cash equivalents at March 31 $ 750,122 $ 610,985
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
IEA INCOME FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
(a) Nature of Operations
IEA Income Fund VIII, A California Limited Partnership
(the "Partnership") was organized under the laws of the
State of California on August 31,1987 for the purpose of
owning and leasing marine cargo containers worldwide to
ocean carriers. To this extent, the Partnership's
operations are subject to the fluctuations of world
economic and political conditions. Such factors may affect
the pattern and levels of world trade. The Partnership
believes that the profitability of, and risks associated
with, leases to foreign customers is generally the same as
those of leases to domestic customers. The Partnership's
leases generally require all payments to be made in United
States currency.
Cronos Capital Corp. ("CCC") is the general partner and,
with its affiliate Cronos Containers Limited (the "Leasing
Company"), manages the business of the Partnership. The
Partnership shall continue until December 31, 2008, unless
sooner terminated upon the occurrence of certain events.
The Partnership commenced operations on January 6, 1988,
when the minimum subscription proceeds of $1,000,000 were
obtained. The Partnership offered 40,000 units of limited
partnership interest at $500 per unit, or $20,000,000. The
offering terminated on August 31, 1988, at which time
21,493 limited partnership units had been purchased.
(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 one 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.
(Continued)
7
<PAGE> 8
IEA INCOME FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(c) Basis of Accounting
The Partnership utilizes the accrual method of accounting.
Net lease revenue is recorded by the Partnership in each
period based upon its leasing agent agreement with the
Leasing Company. Net lease revenue is generally dependent
upon operating lease rentals from operating lease
agreements between the Leasing Company and its various
lessees, less direct operating expenses and management
fees due in respect of the containers specified in each
operating lease agreement.
(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.
Actual results could differ from those estimates.
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.
(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 March 31, 1999 and
December 31, 1998 were as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-------- ------------
<S> <C> <C>
Lease receivables, net of doubtful accounts of $48,795
at March 31, 1999 and $63,213 at December 31, 1998 $447,358 $449,861
Less:
Direct operating payables and accrued expenses 117,039 138,341
Damage protection reserve 57,628 60,071
Base management fees 56,463 58,164
Reimbursed administrative expenses 7,829 8,276
Incentive fees 39,460 36,941
-------- --------
$168,939 $148,068
======== ========
</TABLE>
(Continued)
8
<PAGE> 9
IEA INCOME FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(3) Due From General Partner
During 1998, CCC received over-distributions of $142,660. CCC repaid
the over-distribution amount in March 1999.
(4) Net Lease Revenue
Net lease revenue is determined by deducting direct operating
expenses, base management and incentive 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-month periods ended March 31, 1999 and 1998 was as follows:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
March 31, March 31,
1999 1998
-------- ---------
<S> <C> <C>
Rental revenue (note 5) $400,963 $518,439
Less:
Rental equipment operating expenses 102,734 109,314
Base management fees 29,952 36,092
Reimbursed administrative expenses 22,354 36,074
Incentive fees 39,460 45,337
-------- --------
$206,463 $291,622
======== ========
</TABLE>
(5) Operating Segment
The Financial Accounting Standards Board has issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information", which changes the way public business enterprises
report financial and descriptive information about reportable
operating segments. An operating segment is a component of an
enterprise that engages in business activities from which it may earn
revenues and incur expenses, whose operating results are regularly
reviewed by the enterprise's chief operating decision maker to make
decisions about resources to be allocated to the segment and assess
its performance, and about which separate financial information is
available. Management operates the Partnership's container fleet as a
homogenous unit and has determined, after considering the
requirements of SFAS No. 131, that as such it has a single reportable
operating segment.
The Partnership derives its revenues from owning and leasing marine
cargo containers. As of March 31, 1999, the Partnership operated
1,745 twenty-foot, 1,614 forty-foot and 91 forty-foot high-cube
marine dry cargo containers.
Due to the Partnership's lack of information regarding the physical
location of its fleet of containers when on lease in the global
shipping trade, it is impracticable to provide the geographic area
information required by SFAS No. 131. Any attempt to separate
"foreign" operations from "domestic" operations would be dependent on
definitions and assumptions that are so subjective as to render the
information meaningless and potentially misleading.
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 March 31, 1999 and
December 31, 1998.
During the first three months of 1999, the Registrant disposed of 150
containers as part of its ongoing operations. At March 31, 1999, 72%
of the original equipment remained in the Registrant's fleet, as
compared to 75% at December 31, 1998, and was comprised of the
following:
<TABLE>
<CAPTION>
40-Foot
20-Foot 40-Foot High-Cube
------- ------- ---------
<S> <C> <C> <C>
Containers on lease:
Term leases 195 264 16
Master leases 1,017 875 59
----- ----- --
Subtotal 1,212 1,139 75
Containers off lease 533 475 16
----- ----- --
Total container fleet 1,745 1,614 91
===== ===== ==
</TABLE>
<TABLE>
<CAPTION>
40-Foot
20-Foot 40-Foot High-Cube
----------------- ------------- --- ----------------
Units % Units % Units %
----- --- ----- --- ----- ---
<S> <C> <C> <C> <C> <C> <C>
Total purchases 2,244 100% 2,396 100% 150 100%
Less disposals 499 22% 782 33% 59 39%
----- --- ----- --- --- ---
Remaining fleet at March 31, 1999 1,745 78% 1,614 67% 91 61%
===== === ===== === === ===
</TABLE>
The Registrant's operating performance contributed to a 14% increase
in net lease receivables at March 31, 1999 when compared to December
31, 1998. During the first quarter of 1999, distributions from
operations and sales proceeds amounted to $332,472, reflecting
distributions to the general and limited partners for the fourth
quarter of 1998. This represents a decrease from the $369,414
distributed during the fourth quarter of 1998, reflecting
distributions for the third quarter of 1998. In 1994, pursuant to
Section 6.1(b) and (c) of the Partnership Agreement, the allocation
of distributions from operations among the general partner and
limited partners was adjusted to 10% and 90%, respectively. With the
payment of the distribution for the third quarter of 1997, the
limited partners received aggregate distributions in an amount equal
to their adjusted capital contributions plus a 10% cumulative,
compounded (daily), annual return on their adjusted capital
contributions. Thereafter, all distributions were allocated 20% to
the general partner and 80% to the limited partners, pursuant to
Sections 6.1(b) and (c) of the Partnership Agreement. Cash
distributions from operations to the general partner in excess of 10%
of distributable cash are considered an incentive fee and
compensation to the general partner.
10
<PAGE> 11
Growth in intra-Asian trade and improving lease-out activity in some
key locations have expanded the requirement for leased containers in
selected locations. As a result of these slowly improving trends,
trade volumes in several markets are rebounding and utilization of
the Registrant's equipment has been recently improving. However,
per-diem rental rates remain unchanged and container imbalances are
expected to continue for the remainder of 1999. In light of the
encouraging signs mentioned above, the Registrant will selectively
increase its repositioning of available equipment to higher demand
locations when it believes that the impact will have a positive
effect on operations.
2) Material changes in the results of operations between the three-month
period ended March 31, 1999 and the three- month period ended March
31, 1998.
Net lease revenue for the three-month period ended March 31, 1999 was
$206,463, a decrease of 29% from the same three-month period in the
prior year. Approximately 42% of the Registrant's net earnings for
the three-month period ended March 31, 1999 were from gain on
disposal of equipment, as compared to 18% for the same three-month
period in the prior year. As the Registrant's disposals increase in
subsequent periods, net gain on disposal should contribute
significantly to the Registrant's net earnings and may fluctuate
depending on the level of container disposals.
Gross rental revenue (a component of net lease revenue) for the
three-month period ended March 31, 1999 was $400,963, reflecting a
decline of 23% from the same three-month period in 1998. During 1999,
gross rental revenue was impacted by the Registrant's slightly
smaller fleet size and lower per-diem rental rates. Average per-diem
rental rates decreased approximately 5% when compared to the same
three-month period in the prior year. The Registrant's average fleet
size and utilization rates for the three-month periods ended March
31, 1999 and March 31, 1998 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
----------------------
March 31, March 31,
1999 1998
--------- ---------
<S> <C> <C>
Average fleet size (measured in twenty-foot equivalent
units (TEU)) 5,286 5,894
Average Utilization 72% 79%
</TABLE>
The age and declining size of the Registrant's fleet contributed to a
10% decline in depreciation expense when compared to the same
three-month period in the prior year. Rental equipment operating
expenses were 26% of the Registrant's gross lease revenue during the
three-month period ended March 31, 1999, as compared to 21% during
the three-month period ended March 31, 1998.
11
<PAGE> 12
Year 2000
The Registrant relies upon the financial and operational systems
provided by the Leasing Company and its affiliates, as well as the
systems provided by other independent third parties to service the
three primary areas of its business: investor processing/maintenance;
container leasing/asset tracking; and accounting finance. The
Registrant has received confirmation from its third-party investor
processing/maintenance vendor that their system is Year 2000
compliant. The Registrant does not expect a material increase in its
vendor servicing fee to reimburse Year 2000 costs. Container
leasing/asset tracking and accounting/finance services are provided
to the Registrant by CCC and its affiliate, the Leasing Company,
pursuant to the respective Limited Partnership Agreement and Leasing
Agent Agreement. CCC and the Leasing Company have initiated a program
to prepare their systems and applications for the Year 2000.
Preliminary studies indicate that testing, conversion and upgrading
of system applications is expected to cost CCC and the Leasing
Company less than $500,000. Pursuant to the Limited Partnership
Agreement, CCC or the Leasing Company, may not seek reimbursement of
data processing costs associated with the Year 2000 program. The
financial impact of making these required system changes is not
expected to be material to the Registrant's financial position,
results of operations or cash flows.
Cautionary Statement
This Quarterly Report on Form 10-Q contains statements relating to
future results of the Registrant, including certain projections and
business trends, that are "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. Actual results
may differ materially from those projected as a result of certain
risks and uncertainties, including but not limited to changes in:
economic conditions; trade policies; demand for and market acceptance
of leased marine cargo containers; competitive utilization and
per-diem rental rate pressures; as well as other risks and
uncertainties, including but not limited to those described above in
the discussion of the marine container leasing business under Item
2., Management's Discussion and Analysis of Financial Condition and
Results of Operations; and those detailed from time to time in the
filings of the Registrant with the Securities and Exchange
Commission.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
12
<PAGE> 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
As reported in the Registrant's Current Report on Form 8-K and
Amendment No. 1 to Current Report on Form 8-K, filed with the
Commission on February 7, 1997 and February 26, 1997, respectively,
Arthur Andersen, London, England, resigned as auditors of The Cronos
Group, (the "Parent Company"), on February 3, 1997.
The Parent Company is the indirect corporate parent of CCC, the
general partner of the Registrant. In its letter of resignation to
the Parent Company, Arthur Andersen stated that it resigned as
auditors of the Parent Company and all other entities affiliated with
the Parent Company. While its letter of resignation was not addressed
to CCC, Arthur Andersen confirmed to CCC that its resignation as
auditors of the entities referred to in its letter of resignation
included its resignation as auditors of CCC and the Registrant.
CCC does not believe, based upon the information currently available
to it, that Arthur Andersen's resignation was triggered by any
concern over the accounting policies and procedures followed by the
Registrant.
Arthur Andersen's reports on the financial statements of CCC and the
Registrant, for years preceding 1996, had not contained an adverse
opinion or a disclaimer of opinion, nor were any such reports
qualified or modified as to uncertainty, audit scope, or accounting
principles.
During the Registrant's fiscal year ended December 31, 1995 and the
subsequent interim period preceding Arthur Andersen's resignation,
there were no disagreements between CCC or the Registrant and Arthur
Andersen on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
In connection with its resignation, Arthur Andersen also prepared a
report pursuant to the provisions of Section 10A(b)(2) of the
Securities Exchange Act of 1934, as amended, for filing by the Parent
Company with the Securities and Exchange Commission (the "SEC").
Following the report of Arthur Andersen, the SEC, on February 10,
1997, commenced a private investigation of the Parent Company for the
purpose of investigating the matters discussed in such report and
related matters. The Registrant does not believe that the focus of
the SEC's investigation is upon the Registrant or CCC. CCC is unable
to predict the outcome of the SEC's ongoing private investigation of
the Parent Company.
Item 3. Defaults Upon Senior Securities
See Item 5. Other Information.
Item 5. Other Information
In 1993, the Parent Company negotiated a credit facility
(hereinafter, the "Credit Facility") with several banks for the use
by the Parent Company and its subsidiaries, including CCC. At
December 31, 1996, approximately $73,500,000 in principal
indebtedness was outstanding under the Credit Facility. As a party to
the Credit Facility, CCC is jointly and severally liable for the
repayment of all principal and interest owed under the Credit
Facility. The obligations of CCC, and the five other subsidiaries of
the Parent Company that are borrowers under the Credit Facility, are
guaranteed by the Parent Company.
13
<PAGE> 14
Following negotiations in 1997 with the banks providing the Credit
Facility, an Amended and Restated Credit Agreement was executed in
June 1997, subject to various actions being taken by the Parent
Company and its subsidiaries, primarily relating to the provision of
additional collateral. This Agreement was further amended in July
1997 and the provisions of the Agreement and its Amendment converted
the facility to a term loan, payable in installments, with a final
maturity date of May 31, 1998. The terms of the Agreement and its
Amendment also provided for additional security over shares in the
subsidiary of the Parent Company that owns the head office of the
Parent Company's container leasing operations. They also provided for
the loans to the former Chairman of $5,900,000 and $3,700,000 to be
restructured as obligations of the former Chairman to another
subsidiary of the Parent Company (not CCC), together with the pledge
to this subsidiary company of 2,030,303 Common Shares beneficially
owned by him in the Parent Company as security for these loans. They
further provided for the assignment of these loans to the lending
banks, together with the pledge of 1,000,000 shares and the
assignment of the rights of the Parent Company in respect of the
other 1,030,303 shares. Additionally, CCC granted the lending banks a
security interest in the fees to which it is entitled for the
services it renders to the container leasing partnerships of which it
acts as general partner, including its fee income payable by the
Registrant. The Parent Company did not repay the Credit Facility at
the amended maturity date of May 31, 1998.
On June 30, 1998, the Parent Company entered into a third amendment
(the "Third Amendment") to the Credit Facility. Under the Third
Amendment, the remaining principal amount of $36,800,000 was to be
amortized in varying monthly amounts commencing on July 31, 1998 with
$26,950,000 due on September 30, 1998 and a final maturity date of
January 8, 1999. The Parent Company did not repay the amounts due on
September 30, 1998 and January 8, 1999. The balance outstanding on
the Credit Facility at December 31, 1998 was $33,110,000.
In March 1999, the Parent Company agreed to a fourth amendment (the
"Fourth Amendment") to the Bank Facility under which the final
maturity date will be September 1999. The Fourth Amendment became
effective as of March 31, 1999 subject to the satisfaction thereafter
of various conditions, including the delivery of the Parent Company's
audited financial statements for 1998, together with various legal
opinions and other loan documentation by April 15, 1999. This date
was extended to April 30, 1999. The Parent Company furnished the
required legal opinions and other loan documentation which are now
under review.
The directors of the Parent Company also are pursuing alternative
sources of financing to meet the amended repayment obligations
anticipated under the Fourth Amendment. Failure to meet revised
lending terms would constitute an event of default with the lenders.
The declaration of an event of default would result in further
defaults with other lenders under loan agreement cross-default
provisions. Should a default of the term loans be enforced, the
Parent Company and CCC may be unable to continue as going concerns.
The Registrant is not a borrower under the Credit Facility, and
neither the containers nor the other assets of the Registrant have
been pledged as collateral under the Credit Facility.
CCC is unable to determine the impact, if any, these issues may have
on the future operating results, financial condition and cash flows
of the Registrant or CCC and on the Leasing Company's ability to
manage the Registrant's fleet in subsequent periods.
14
<PAGE> 15
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 October 13, 1987 *
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 March 31, 1999.
- -----------------
* Incorporated by reference to Exhibit "A" to the Prospectus of the
Registrant dated October 13, 1987, included as part of Registration
Statement on Form S-1 (No. 33-16984)
** Incorporated by reference to Exhibit 3.4 to the Registration
Statement on Form S-1 (No. 33-16984)
15
<PAGE> 16
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 INCOME FUND VIII,
A California Limited Partnership
By Cronos Capital Corp.
The General Partner
By /s/ Dennis J. Tietz
----------------------------------
Dennis J. Tietz
President and Director of Cronos
Capital Corp. ("CCC")
Principal Executive Officer of CCC
Date: May 15, 1999
16
<PAGE> 17
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 October 13, 1987 *
3(b) Certificate of Limited Partnership of the Registrant **
27 Financial Data Schedule Filed with this document
</TABLE>
- -------------------
* Incorporated by reference to Exhibit "A" to the Prospectus of the
Registrant dated October 13, 1987, included as part of Registration
Statement on Form S-1 (No. 33-16984)
** Incorporated by reference to Exhibit 3.4 to the Registration
Statement on Form S-1 (No. 33-16984)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT MARCH 31, 1999 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
QUARTERLY PERIOD ENDED MARCH 31, 1999 (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 MARCH 31, 1999
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 750,122
<SECURITIES> 0
<RECEIVABLES> 168,939
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 919,061
<PP&E> 9,360,333
<DEPRECIATION> 5,384,515
<TOTAL-ASSETS> 4,894,879
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,894,879
<TOTAL-LIABILITY-AND-EQUITY> 4,894,879
<SALES> 0
<TOTAL-REVENUES> 206,463
<CGS> 0
<TOTAL-COSTS> 150,961
<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> 106,339
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
