<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, 2000
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 MARCH 31, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - March 31, 2000 and December 31, 1999 (unaudited) 4
Condensed Statements of Operations for the three months ended March 31, 2000 and 1999 (unaudited) 5
Condensed Statements of Cash Flows for the three months ended March 31, 2000 and 1999 (unaudited) 6
Notes to Condensed 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 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Presented herein are the Registrant's condensed balance sheets as of
March 31, 2000 and December 31, 1999, condensed statements of
operations for the three months ended March 31, 2000 and 1999, and
condensed statements of cash flows for the three months ended March 31,
2000 and 1999.
3
<PAGE> 4
IEA INCOME FUND IX, L.P.
CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents, includes $610,002 at March 31, 2000 and
$492,580 at December 31, 1999 in interest-bearing accounts $ 610,117 $ 492,680
Net lease receivables due from Leasing Company
(notes 1 and 2) 151,233 184,713
------------- -------------
Total current assets 761,350 677,393
------------- -------------
Container rental equipment, at cost 12,362,146 12,927,344
Less accumulated depreciation 7,367,165 7,529,966
------------- -------------
Net container rental equipment 4,994,981 5,397,378
------------- -------------
Total assets $ 5,756,331 $ 6,074,771
============= =============
Partners' Capital
Partners' capital (deficit):
General partner $ (59,291) $ (56,106)
Limited partners 5,815,622 6,130,877
------------- -------------
Total partners' capital $ 5,756,331 $ 6,074,771
============= =============
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
4
<PAGE> 5
IEA INCOME FUND IX, L.P.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31,
2000 1999
--------- ---------
<S> <C> <C>
Net lease revenue (notes 1 and 3) $ 230,703 $ 342,744
Other operating expenses:
Depreciation 184,159 206,787
Other general and administrative expenses 13,225 14,144
--------- ---------
197,384 220,931
--------- ---------
Income from operations 33,319 121,813
Other income (loss):
Interest income 6,214 8,245
Net loss on disposal of equipment (37,319) (61,909)
--------- ---------
(31,105) (53,664)
--------- ---------
Net income $ 2,214 $ 68,149
========= =========
Allocation of net income (loss):
General partner $ 9,415 $ 18,572
Limited partners (7,201) 49,577
--------- ---------
$ 2,214 $ 68,149
========= =========
Limited partners' per unit share of net income (loss) $ (0.21) $ 1.46
========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
5
<PAGE> 6
IEA INCOME FUND IX, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
March 31, March 31,
2000 1999
--------- ---------
<S> <C> <C>
Net cash provided by operating activities $ 330,376 $ 345,035
Cash flows provided by investing activities:
Proceeds from sale of container rental equipment 107,714 165,247
Cash flows used in financing activities:
Distribution to partners (320,653) (533,104)
--------- ---------
Net increase (decrease) in cash and cash equivalents 117,437 (22,822)
Cash and cash equivalents at January 1 492,680 780,429
--------- ---------
Cash and cash equivalents at March 31 $ 610,117 $ 757,607
========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
6
<PAGE> 7
IEA INCOME FUND IX, L.P.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(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 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. CCC and the Leasing Company also
manage the container leasing business for other partnerships affiliated
with the general partner. The Partnership shall continue until December
31, 2009, unless sooner terminated upon the occurrence of certain
events.
The Partnership commenced operations on December 5, 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 September 11,
1989, at which time 33,992 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 condensed financial statements.
7
<PAGE> 8
IEA INCOME FUND IX, L.P.
NOTES TO UNAUDITED CONDENSED 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 condensed 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
condensed 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 accounting
principles generally accepted in the United States (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. The
results of operations for such interim periods are not necessarily
indicative of the results to be expected for the full year.
(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 March 31, 2000 and
December 31, 1999 were as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------- -------------
<S> <C> <C>
Gross lease receivables $ 562,706 $ 526,631
Less:
Direct operating payables and accrued expenses 205,045 164,098
Damage protection reserve 44,336 44,497
Base management fees payable 50,603 58,250
Reimbursed administrative expenses 13,874 6,673
Allowance for doubtful accounts 97,615 68,400
------------- -------------
Net lease receivables $ 151,233 $ 184,713
============= =============
</TABLE>
8
<PAGE> 9
IEA INCOME FUND IX, L.P.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(3) Net Lease Revenue
Net lease revenue is determined by deducting direct operating expenses,
base 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-month periods ended March 31, 2000 and 1999 was as
follows:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31,
2000 1999
--------- ---------
<S> <C> <C>
Rental revenue (note 4) $ 391,729 $ 498,090
Less:
Rental equipment operating expenses 109,641 94,475
Base management fees 25,137 36,374
Reimbursed administrative expenses 26,248 24,497
--------- ---------
$ 230,703 $ 342,744
========= =========
</TABLE>
(4) 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 marine dry cargo containers. As
of March 31, 2000, the Partnership operated 1,672 twenty-foot, 583
forty-foot and 1,067 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.
******
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, 2000 and December
31, 1999.
During the first three months of 2000, the Registrant disposed of 141
containers as part of its ongoing container operations. At March 31, 2000,
70% of the original equipment remained in the Registrant's fleet, as
compared to 72% at December 31, 1999, 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 132 95 197
Master leases 1,212 361 671
--------- --------- ---------
Subtotal 1,344 456 868
Containers off lease 328 127 199
--------- --------- ---------
Total container fleet 1,672 583 1,067
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
40-Foot
20-Foot 40-Foot High-Cube
--------------- ---------------- -----------------
Units % Units % Units %
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Total purchases 2,327 100% 799 100% 1,653 100%
Less disposals 655 28% 216 27% 586 35%
----- ----- ----- ----- ----- -----
Remaining fleet at March 31, 2000 1,672 72% 583 73% 1,067 65%
===== ===== ===== ===== ===== =====
</TABLE>
The Registrant's allowance for doubtful accounts increased from $68,400 at
December 31, 1999 to $97,615 at March 31, 2000. This increase was
attributable to the delinquent account receivable balances of approximately
14 lessees. The Leasing Company has either negotiated specific payment
terms with these lessees or is pursuing other alternatives to collect the
outstanding balances. In each instance, the Registrant believes it has
provided sufficient reserves for all doubtful accounts.
During the first quarter of 2000, distributions from operations and sales
proceeds amounted to $320,653, reflecting distributions to the general and
limited partners for the fourth quarter of 1999. This represents a decrease
from the $533,104 distributed during the fourth quarter of 1999, reflecting
distributions for the third quarter of 1999. The Registrant's continuing
disposal of containers should produce lower operating results and,
consequently, lower distributions to its partners in subsequent periods.
Sales proceeds distributed to its partners may fluctuate in subsequent
periods, reflecting the level of container disposals.
In order to take advantage of improving market conditions and stronger
demand for leased containers, the Registrant undertook a strategy that was
aimed at significantly reducing its inventory of idle equipment in some
low-demand locations while, at the same time, fulfilling lessee container
requirements. As part of this strategy, the Registrant offered leasing
incentives to several lessees for picking up off-hire equipment from the
Registrant's higher inventory areas. This not only resulted in stronger
utilization of the Registrant's equipment, but it also significantly
lowered Partnership expenses related to storage and handling.
10
<PAGE> 11
2) Material changes in the results of operations between the three-month
period ended March 31, 2000 and the three-month period ended March 31,
1999.
Net lease revenue for the three-month period ended March 31, 2000 was
$230,703, a decline of approximately 33% from the same three-month period
in the prior year. Gross rental revenue (a component of net lease revenue)
for the three-month period ended March 31, 2000 was $391,729, a decline of
21% from the same three-month period in 1999. Gross rental revenue was
primarily impacted by a smaller fleet size and lower per-diem rental rates.
Average per-diem rental rates for the three-month period ended March 31,
2000 declined 14% 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, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31,
2000 1999
--------- ---------
<S> <C> <C>
Average fleet size (measured in twenty-foot
equivalent units (TEU)) 5,102 5,712
Average utilization 79% 77%
</TABLE>
The Registrant's declining fleet size contributed to a 11% decline in
depreciation expense when compared to the same three-month period in the
prior year. Rental equipment operating expenses were 28% of the
Registrant's gross lease revenue during the three-month period ended March
31, 2000, as compared to 19% during the three-month period ended March 31,
1999.
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. Neither the Registrant nor the Leasing
Company experienced nor do they currently anticipate any material adverse
effects on the Registrant's business, results of operations or financial
condition as a result of Year 2000 issues involving internal use systems,
third party products or any of their software products. Costs incurred in
preparing for Year 2000 issues were expensed as incurred. Neither the
Registrant nor the Leasing Company anticipate any additional material costs
in connection with Year 2000 uncertainties. 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
11
<PAGE> 12
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 September 12, 1988
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, 2000.
- -------------
* Incorporated by reference to Exhibit "A" to the Prospectus of the
Registrant dated September 12, 1988, included as part of Registration
Statement on Form S-1 (No. 33-23321)
** Incorporated by reference to Exhibit 3.4 to the Registration Statement on
Form S-1 (No. 33-23321)
12
<PAGE> 13
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/ Dennis J. Tietz
-------------------------------------
Dennis J. Tietz
President and Director of Cronos
Capital Corp.("CCC")
Principal Executive Officer of CCC
Date: May 15, 2000
13
<PAGE> 14
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 September 12, 1988
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 September 12, 1988, included as part of Registration
Statement on Form S-1 (No. 33-23321)
** Incorporated by reference to Exhibit 3.4 to the Registration Statement on
Form S-1 (No. 33-23321)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT MARCH 31, 2000 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
QUARTERLY PERIOD ENDED MARCH 31, 2000 (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, 2000
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 610,117
<SECURITIES> 0
<RECEIVABLES> 151,233
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 761,350
<PP&E> 12,362,146
<DEPRECIATION> 7,367,165
<TOTAL-ASSETS> 5,756,331
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,756,331
<TOTAL-LIABILITY-AND-EQUITY> 5,756,331
<SALES> 0
<TOTAL-REVENUES> 230,703
<CGS> 0
<TOTAL-COSTS> 197,384
<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> 2,214
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
