<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 0-18169
IEA INCOME FUND IX, L.P.
(Exact name of registrant as specified in its charter)
California 94-3069954
(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 IX, L.P.
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 8
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 INCOME FUND IX, L.P.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- ------------
<S> <C> <C>
Assets
Current assets:
Cash, includes $165,700 at June 30, 1995 and $153,740
at December 31, 1994 in interest-bearing accounts $ 272,672 $ 165,586
Short-term investments 902,220 860,000
Net lease receivables due from Leasing Company
(notes 1 and 2) 664,197 764,902
------------ ------------
Total current assets 1,839,089 1,790,488
------------ ------------
Container rental equipment, at cost 17,223,102 17,342,153
Less accumulated depreciation 5,654,838 5,193,717
------------ ------------
Net container rental equipment 11,568,264 12,148,436
------------ ------------
$ 13,407,353 $ 13,938,924
============ ============
Liabilities and Partners' Capital
------------
Current liabilities:
Due to general partner and its affiliates (notes 1 and 3) $ 20,279 $ 23,446
------------ ------------
Total current liabilities 20,279 23,446
------------ ------------
Due to general partner, net (note 3) 7,384 17,981
------------ ------------
Total liabilities 27,663 41,427
------------ ------------
Partners' capital (deficit):
General partner (5,276) (9,778)
Limited partners 13,384,966 13,907,275
------------ ------------
Total partners' capital 13,379,690 13,897,497
------------ ------------
$ 13,407,353 $ 13,938,924
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
IEA INCOME FUND IX, L.P.
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 (note 4) $691,769 $681,015 $1,354,538 $1,329,314
Other operating expenses:
Depreciation 251,555 261,256 504,708 535,407
Other general and administrative expenses 18,591 16,682 30,239 25,464
-------- -------- ---------- ----------
270,146 277,938 534,947 560,871
-------- -------- ---------- ----------
Earnings from operations 421,623 403,077 819,591 768,443
Other income:
Interest income 17,666 8,415 33,259 15,315
Net gain on disposal of equipment 4,849 3,485 12,254 61,093
-------- -------- ---------- ----------
22,515 11,900 45,513 76,408
-------- -------- ---------- ----------
Net earnings $444,138 $414,977 $ 865,104 $ 844,851
======== ======== ========== ==========
Allocation of net earnings:
General partner $ 33,627 $ 31,706 $ 70,214 $ 63,484
Limited partners 410,511 383,271 794,890 781,367
-------- -------- ---------- ----------
$444,138 $414,977 $ 865,104 $ 844,851
======== ======== ========== ==========
Limited partners' per unit share of net earnings $ 12 $ 11 $ 23 $ 23
======== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
IEA INCOME FUND IX, L.P.
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 $ 1,511,603 $ 1,241,826
Cash flows provided by (used in) investing activities:
Proceeds from sale of container rental equipment 34,377 61,065
Acquisition fees paid to general partner (13,764) (15,237)
----------- -----------
Net cash provided by investing activities 20,613 45,828
----------- -----------
Cash flows used in financing activities:
Distribution to partners (1,382,910) (1,295,265)
----------- -----------
Net increase (decrease) in cash and cash equivalents 149,306 (7,611)
Cash and cash equivalents at January 1 1,025,586 987,057
----------- -----------
Cash and cash equivalents at June 30 $ 1,174,892 $ 979,446
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
IEA INCOME FUND IX, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 1995 AND DECEMBER 31, 1994
(1) Summary of Significant Accounting Policies
(a) Nature of Operations
IEA Income Fund IX, L.P. (the "Partnership") is a limited partnership
organized under the laws of the State of California on June 8, 1988
for the purpose of owning and leasing marine cargo containers.
Cronos Capital Corp. ("CCC") is the general partner and, 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 INCOME FUND IX, L.P.
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, and reimbursed administrative expenses 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 $85,290 at June 30, 1995 and $99,397
at December 31, 1994 $1,023,855 $1,070,802
Less:
Direct operating payables and accrued expenses 159,020 92,447
Damage protection reserve 99,308 105,706
Base management fees 91,403 91,504
Reimbursed administrative expenses 9,927 16,243
---------- ----------
$ 664,197 $ 764,902
========== ==========
</TABLE>
(3) Due to General Partner
The amounts due to CCC at June 30, 1995 and December 31, 1994, were as
follows:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
<S> <C> <C>
Acquisition fees $27,627 $41,427
Less: Non-current portion of acquisition fees,
payable in equal annual installments through 1997 7,348 17,981
------- -------
Total due to general partner, current $20,279 $23,446
======= =======
</TABLE>
(Continued)
6
<PAGE> 9
IEA INCOME FUND IX, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(4) 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 $ 949,890 $ 911,067 $ 1,867,698 $ 1,799,434
Rental equipment
operating expenses 146,210 119,437 290,175 244,927
Base management fees 63,357 66,149 127,357 122,582
Reimbursed administrative expenses 48,554 44,466 95,628 102,611
--------- -------- ----------- -----------
$ 691,769 $ 681,015 $ 1,354,538 $ 1,329,314
========= ========= =========== ===========
</TABLE>
7
<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, 1995 and December
31, 1994.
During the first six months of 1995, the Registrant's collection of
outstanding lease receivables and sales proceeds has been favorable,
contributing to a $149,306 increase in cash and cash equivalents, and a
$100,705 decline in net lease receivables due from the Leasing Company.
Additionally, direct operating payables and accrued expense, a component
of net lease receivables, increased $66,573. This increase results from a
$42,955 increase in accrued operating expenses and a $23,618 increase in
deferred revenue from advance billings to container lessees.
The Registrant's cash balances at June 30, 1995 also included sales
proceeds from equipment disposals in the amount of approximately $12,000.
The Registrant will distribute this amount and additional sales proceeds
in subsequent periods, as deemed appropriate by the General Partner.
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, which
contributed to an increase in the Registrant's gross lease revenues, a
component of net lease revenues. 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)) 6,972 7,055 6,987 7,057
Average Utilization 91% 91% 91% 90%
</TABLE>
Rental equipment operating expenses increased 22% and 18% during the three
and six-month periods ended June 30, 1995, respectively, as compared to
the same periods in the prior year. These increases were attributable to
costs associated with the recovery actions against the doubtful accounts
of certain lessees, including legal, container recovery expenses and the
related provision for doubtful accounts.
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 INCOME FUND IX, L.P.
By Cronos Capital Corp.
The 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 SCEDULE 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> 1,174,892
<SECURITIES> 0
<RECEIVABLES> 664,197
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,839,089
<PP&E> 17,223,102
<DEPRECIATION> 5,654,838
<TOTAL-ASSETS> 13,407,353
<CURRENT-LIABILITIES> 27,663
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 13,379,690
<TOTAL-LIABILITY-AND-EQUITY> 13,407,353
<SALES> 0
<TOTAL-REVENUES> 1,400,051
<CGS> 0
<TOTAL-COSTS> 534,947
<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> 865,104
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
