<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 SEPTEMBER 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 SEPTEMBER 30, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C>
Balance Sheets - September 30, 1995 (unaudited) and December 31, 1994 2
Statements of Operations for the three and nine months ended September 30, 1995 and 1994 3
(unaudited)
Statements of Cash Flows for the nine months ended September 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 September
30, 1995 and December 31, 1994, statements of operations for the three
and nine months ended September 30, 1995 and 1994, and statements of
cash flows for the nine months ended September 30, 1995 and 1994.
<PAGE> 4
IEA INCOME FUND X, L.P.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Assets
------
Current assets:
Cash, includes $237,936 at September 30, 1995 and $161,310
at December 31, 1994 in interest-bearing accounts $ 238,330 $ 170,629
Short-term investments 620,000 526,000
Net lease receivables due from Leasing Company
(notes 1 and 2) 516,416 569,194
------------- -------------
Total current assets 1,374,746 1,265,823
------------- -------------
Container rental equipment, at cost 17,677,164 17,698,760
Less accumulated depreciation 5,425,717 4,584,852
------------- -------------
Net container rental equipment 12,251,447 13,113,908
------------- -------------
Organization costs, net 17,814 95,628
------------- -------------
$ 13,644,007 $ 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 (14,548) (28,604)
Limited partners 13,658,555 14,487,913
------------- -------------
Total partners' capital 13,644,007 14,459,309
------------- -------------
$ 13,644,007 $ 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 Nine Months Ended
------------------------------- -----------------------------
September 30, September 30, September 30, September 30,
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net lease revenue (notes 1 and 4) $ 590,165 $ 551,800 $ 1,774,157 $ 1,757,943
Other operating expenses:
Depreciation 394,700 284,326 961,934 854,464
Other general and administrative expenses 4,269 12,822 33,554 36,406
----------- ----------- ------------ ------------
398,969 297,148 995,488 890,870
----------- ----------- ------------ ------------
Earnings from operations 191,196 254,652 778,669 867,073
Other income:
Interest income 10,978 7,496 34,608 18,040
Net gain on disposal of equipment 12,595 6,142 22,209 22,050
----------- ----------- ------------ ------------
23,573 13,638 56,817 40,090
----------- ----------- ------------ ------------
Net earnings $ 214,769 $ 268,290 $ 835,486 $ 907,163
=========== =========== ============ ============
Allocation of net earnings:
General partner $ 43,649 $ 26,776 $ 96,596 $ 88,081
Limited partners 171,120 241,514 738,890 819,082
----------- ----------- ------------ ------------
$ 214,769 $ 268,290 $ 835,486 $ 907,163
=========== =========== ============ ============
Limited partners' per unit share of net earnings $ 4 $ 6 $ 19 $ 21
=========== =========== ============ ============
</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>
Nine Months Ended
--------------------------------
September 30, September 30,
1995 1994
------------- -------------
<S> <C> <C>
Net cash provided by operating activities $ 1,876,868 $ 1,675,249
Cash flows provided by (used in) investing activities:
Proceeds from sale of container rental equipment 73,812 73,722
Purchase of container rental equipment (122,141) -
Acquisition fees paid to general partner (16,050) (124,935)
------------ -----------
Net cash used in investing activities (64,379) (51,213)
------------ -----------
Cash flows used in financing activities:
Distribution to partners (1,650,788) (1,650,789)
------------ -----------
Net increase (decrease) in cash and cash equivalents 161,701 (26,753)
Cash and cash equivalents at January 1 696,629 771,324
------------ -----------
Cash and cash equivalents at September 30 $ 858,330 $ 744,571
============ ===========
</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
SEPTEMBER 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 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 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, the
Leasing Company, 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
September 30, 1995 and December 31, 1994 were as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Lease receivables, net of doubtful accounts
of $118,846 at September 30, 1995 and $149,545
at December 31, 1994 $ 877,436 $ 886,779
Less:
Direct operating payables and accrued expenses 150,876 107,751
Damage protection reserve 105,858 105,611
Base management fees 89,454 88,690
Reimbursed administrative expenses 14,832 15,533
----------- -----------
$ 516,416 $ 569,194
=========== ===========
</TABLE>
(3) Due to General Partner and its Affiliates
The amounts due to CCC and its affiliates at September 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 and the
Leasing Company, 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 nine-month periods ended
September 30, 1995 and 1994, was as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
September 30, September 30, September 30, September 30,
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Rental revenue $ 915,870 $ 866,961 $ 2,600,903 $ 2,528,082
Rental equipment
operating expenses 212,480 199,513 506,058 445,696
Base management fees 58,614 65,851 175,052 176,869
Reimbursed administrative expenses 54,611 49,797 145,636 147,574
----------- ----------- ------------ ------------
$ 590,165 $ 551,800 $ 1,774,157 $ 1,757,943
=========== =========== ============ ============
</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 September 30, 1995 and
December 31, 1994.
The Registrant's cash balances at September 30, 1995 included sales
proceeds from equipment disposals in the amount of approximately $65,000.
The Registrant expects to use these sales proceeds during the fourth
quarter of 1995 to purchase additional containers as replacements for lost
or damaged containers. During the first nine months of 1995, the Registrant
acquired 47 new twenty-foot dry cargo containers at an aggregate
manufacturer's invoice cost of $116,325, replacing containers which had
been lost or damaged beyond repair.
Net lease receivables due from the Leasing Company declined $52,778 from
December 31, 1994. Contributing to this decline was an increase in direct
operating payables and accrued expenses of $43,125. The change in direct
operating payables and accrued expenses was attributable to a
$12,799 increase in accrued operating expenses and a $30,326 increase in
deferred revenue from advance billings to container lessees.
2) Material changes in the results of operations between the three and
nine-month periods ended September 30, 1995 and the three and nine-month
periods ended September 30, 1994.
Net lease revenue for the third quarter of 1995 was $590,165, an increase
of 7% over the third quarter of 1994. Gross rental revenue (a component of
net lease revenue) for the quarter was $915,870, as compared to $866,961
for the same period last year. For the first nine months of 1995, net lease
revenue was $1,774,157, consistent with the first nine months of 1994.
Gross rental revenue increased 3% to $2,600,903 over the same nine-month
period.
Gross rental revenue experienced slight increases when compared to the same
three and nine-month periods in the prior year, as the Registrant continued
to recognize higher ancillary revenues, such as pick-up and drop-off
charges. These ancillary revenues helped to offset the effects of a
slightly smaller fleet size and lower utilization rates. However,
competitive pressures within the container leasing market, as well as the
Leasing Company's efforts to improve the credit quality of its customer
portfolio, combined to create a resistance to higher per-diem rental
rates. Accordingly, average per-diem rental rates remained relatively
stable when compared to the same periods in the prior year. The Registrant
expects to gain long-term benefits from the improvement in the credit
quality of this customer portfolio, as the allowance for doubtful accounts
and related expenses should decline.
The Registrant's average fleet size and utilization rates for the three and
nine-month periods ended September 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
September 30, September 30, September 30, September 30,
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Average Fleet Size (measured in
twenty-foot equivalents (TEU)) 6,559 6,593 5,590 6,606
Average Utilization 89% 90% 89% 90%
</TABLE>
7
<PAGE> 10
During the third quarter of 1995, the container leasing market began to
experience the effects of increasingly competitive market conditions,
including, but not limited to, a resistance to higher per-diem rental
rates, slightly lower utilization rates resulting from an expanding supply
of marine cargo containers within the container industry, and the economic
condition of the shipping industry, which has experienced a current trend
toward consolidation. Accordingly, the Registrant expects a stable
container leasing market during the remainder of 1995 and first half of
1996.
Rental equipment operating expenses increased 6% and 14% during the three
and nine-month periods ended September 30, 1995, respectively, when
compared to the same periods in the prior year. These increases were
attributable to expenses typically associated with lower utilization rates,
including repair and maintenance, storage and handling, as well as those
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
<TABLE>
<CAPTION>
Number Description Method of Filing
------ ----------- ----------------
<S> <C> <C>
27 Financial Data Schedule Filed with this Document
</TABLE>
(b) There were no reports on Form 8-K during the three-month period
ended September 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: November 13, 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 SEPTEMBER 30, 1995 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 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 SEPTEMBER 30, 1995
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 858,330
<SECURITIES> 0
<RECEIVABLES> 516,416
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,374,746
<PP&E> 17,677,164
<DEPRECIATION> 5,425,717
<TOTAL-ASSETS> 13,644,007
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 13,644,007
<TOTAL-LIABILITY-AND-EQUITY> 13,644,007
<SALES> 0
<TOTAL-REVENUES> 1,830,974
<CGS> 0
<TOTAL-COSTS> 995,488
<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> 835,486
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
