<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 0-18982
IEA INCOME FUND X, L.P.
(Exact name of registrant as specified in its charter)
California 94-3098648
(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 X, 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 7
Operations
PART II - OTHER INFORMATION
Item 5. Other Materially Important Events 9
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 X, L.P.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
<S> <C> <C>
Assets
------
Current assets:
Cash, includes $193,264 at June 30, 1995 and $161,310
at December 31, 1994 in interest-bearing accounts $ 207,523 $ 170,629
Short-term investments 601,606 526,000
Net lease receivables due from Leasing Company
(notes 1 and 2) 492,454 569,194
----------- -----------
Total current assets 1,301,583 1,265,823
----------- -----------
Container rental equipment, at cost 17,724,016 17,698,760
Less accumulated depreciation 5,072,655 4,584,852
----------- -----------
Net container rental equipment 12,651,361 13,113,908
----------- -----------
Organization costs, net 43,752 95,628
----------- -----------
$13,996,696 $14,475,359
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Current liabilities:
Due to general partner (notes 1 and 3) $ - $ 16,050
----------- -----------
Total current liabilities - 16,050
----------- -----------
Partners' capital (deficit):
General partner (29,823) (28,604)
Limited partners 14,026,519 14,487,913
----------- -----------
Total partners' capital 13,996,696 14,459,309
----------- -----------
$13,996,696 $14,475,359
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
IEA INCOME FUND X, 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 (notes 1 and 4) $593,168 $587,991 $1,183,992 $1,206,143
Other operating expenses:
Depreciation 283,936 284,870 567,234 570,138
Other general and administrative expenses 17,615 14,717 29,285 23,584
-------- -------- ---------- -----------
301,551 299,587 596,519 593,722
-------- -------- ---------- -----------
Earnings from operations 291,617 288,404 587,473 612,421
Other income:
Interest income 12,634 5,743 23,630 10,544
Net gain on disposal of equipment 7,648 8,874 9,614 15,908
-------- -------- ---------- -----------
20,282 14,617 33,244 26,452
-------- -------- ---------- -----------
Net earnings $311,899 $303,021 $ 620,717 $ 638,873
======== ======== ========== ==========
Allocation of net earnings:
General partner $ 30,346 $ 29,510 $ 52,947 $ 61,305
Limited partners 281,553 273,511 567,770 577,568
-------- -------- ---------- -----------
$311,899 $303,021 $ 620,717 $ 638,873
======== ======== ========== ==========
Limited partners' per unit share of net earnings $ 7 $ 7 $ 14 $ 15
======== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
IEA INCOME FUND X, 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 $ 1,293,059 $ 1,158,191
Cash flows provided by (used in) investing activities:
Proceeds from sale of container rental equipment 40,962 50,538
Purchase of container rental equipment (116,325) -
Acquisition fees paid to general partner (21,866) (83,290)
----------- -----------
Net cash used in investing activities (97,229) (32,752)
----------- -----------
Cash flows used in financing activities:
Distribution to partners (1,083,330) (1,134,917)
----------- -----------
Net increase (decrease) in cash and cash equivalents 112,500 (9,478)
Cash and cash equivalents at January 1 696,629 771,324
----------- -----------
Cash and cash equivalents at June 30 $ 809,129 $ 761,846
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
IEA INCOME FUND X, 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 X, L.P. (the "Partnership") is a limited partnership
organized under the laws of the State of California on July 18, 1989
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 statement
(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 X, 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 $95,661 at June 30, 1995 and $149,545 at
December 31, 1994 $846,138 $886,779
Less: Direct operating payables and accrued expenses 150,369 107,751
Damage protection reserve 105,945 105,611
Base management fees 88,670 88,690
Reimbursed administrative expenses 8,700 15,533
-------- --------
$492,454 $569,194
======== ========
</TABLE>
(3) Due to General Partner and its Affiliates
The amounts due to CCC and its affiliates at June 30, 1995 and December 31,
1994 consisted of acquisition fees.
(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 $867,000 $841,717 $1,685,033 $1,661,121
Rental equipment
operating expenses 169,420 151,924 293,578 246,183
Base management fees 58,438 59,328 116,438 111,018
Reimbursed administrative expenses 45,974 42,474 91,025 97,777
-------- -------- ---------- ----------
$593,168 $587,991 $1,183,992 $1,206,143
======== ======== ========== ==========
</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.
During the first six months of 1995, the Registrant's collection of
outstanding lease receivables and sales proceeds has been favorable,
contributing to a $112,500 increase in cash and cash equivalents, and a
$76,740 decline in net lease receivables due from the Leasing Company.
Additionally, direct operating payables and accrued expense, a component of
net lease receivables, increased $42,618. This increase results from a
$23,523 increase in accrued operating expenses and a $19,095 increase in
deferred revenue from advance billings to container lessees.
During the first six months of 1995, the Registrant acquired 47 new
twenty-foot dry cargo containers at an aggregate manufacturers' invoice
cost of $116,325, replacing those containers which had been lost or damaged
beyond repair. The Registrant's cash balances at June 30, 1995 include
additional sales proceeds from equipment disposals in the amount of
approximately $32,000. The Registrant will use these sales proceeds in
subsequent periods to purchase additional containers as replacement for
such lost or damaged containers.
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 declined approximately 1% during the three and
six-month periods ended June 30, 1995, 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)) 6,605 6,607 6,590 6,613
Average Utilization 90% 91% 90% 90%
</TABLE>
7
<PAGE> 10
Rental equipment operating expenses increased 12% and 19% 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 container recovery expenses, as well as an increase in
container repair and maintenance.
8
<PAGE> 11
PART II - OTHER INFORMATION
Item 5. Other Materially Important Events
Equipment Acquisitions
During the three-month period ended June 30, 1995, the Registrant
purchased 47 new twenty-foot dry cargo containers at an average cost
of $2,475 per container.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) In lieu of filing a current report on Form 8-K, the Registrant
has provided in Part II, Item 5 hereof, a description of its
purchase of marine cargo containers 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 X, 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 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, 1955 (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 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> 809,129
<SECURITIES> 0
<RECEIVABLES> 492,454
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,301,583
<PP&E> 17,724,016
<DEPRECIATION> 5,072,655
<TOTAL-ASSETS> 13,996,696
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 13,996,696
<TOTAL-LIABILITY-AND-EQUITY> 13,996,696
<SALES> 0
<TOTAL-REVENUES> 1,217,236
<CGS> 0
<TOTAL-COSTS> 596,519
<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> 620,717
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
