<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, 1998
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, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - September 30, 1998 (unaudited) and December 31, 1997 4
Statements of Operations for the three and nine months ended September 30, 1998
and 1997 (unaudited) 5
Statements of Cash Flows for the nine months ended September 30, 1998 and
1997 (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 11
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings 12
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 September 30,
1998 and December 31, 1997, statements of operations for the three and
nine months ended September 30, 1998 and 1997, and statements of cash
flows for the nine months ended September 30, 1998 and 1997.
3
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IEA INCOME FUND X, L.P.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents, includes $605,830 at September 30, 1998 and
$714,328 at December 31, 1997 in interest-bearing accounts $ 605,930 $ 714,528
Net lease receivables due from Leasing Company
(notes 1 and 2) 262,345 247,992
------------ ------------
Total current assets 868,275 962,520
------------ ------------
Container rental equipment, at cost 16,826,673 17,249,260
Less accumulated depreciation 7,941,953 7,391,011
------------ ------------
Net container rental equipment 8,884,720 9,858,249
------------ ------------
$ 9,752,995 $ 10,820,769
============ ============
Partners' Capital
Partners' capital (deficit):
General partner $ (23,470) $ (12,792)
Limited partners 9,776,465 10,833,561
------------ ------------
Total partners' capital 9,752,995 10,820,769
------------ ------------
$ 9,752,995 $ 10,820,769
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<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,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net lease revenue (notes 1 and 3) $ 338,952 $ 354,771 $ 1,028,400 $ 1,040,031
Other operating expenses:
Depreciation 247,464 252,879 745,515 764,640
Other general and administrative expenses 14,486 11,460 37,239 31,428
--------- --------- ----------- -----------
261,950 264,339 782,754 796,068
--------- --------- ----------- -----------
Earnings from operations 77,002 90,432 245,646 243,963
Other income (loss):
Interest income 7,834 7,191 24,755 21,463
Net gain (loss) on disposal of equipment (19,129) 6,714 (47,209) (8,213)
--------- --------- ----------- -----------
(11,295) 13,905 (22,454) 13,250
--------- --------- ----------- -----------
Net earnings $ 65,707 $ 104,337 $ 223,192 $ 257,213
========= ========= =========== ===========
Allocation of net earnings:
General partner $ 13,360 $ 15,120 $ 42,843 $ 45,169
Limited partners 52,347 89,217 180,349 212,044
--------- --------- ----------- -----------
$ 65,707 $ 104,337 $ 223,192 $ 257,213
========= ========= =========== ===========
Limited partners' per unit share of net earnings $ 1.34 $ 2.28 $ 4.60 $ 5.41
========= ========= =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
IEA INCOME FUND X, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------------
September 30, September 30,
1998 1997
------------- -------------
<S> <C> <C>
Net cash provided by operating activities $ 936,624 $ 1,119,240
Cash flows provided by investing activities:
Proceeds from sale of container rental equipment 245,743 91,856
Cash flows used in financing activities:
Distribution to partners (1,290,965) (1,156,839)
----------- -----------
Net increase (decrease) in cash and cash equivalents (108,598) 54,257
Cash and cash equivalents at January 1 714,528 642,886
----------- -----------
Cash and cash equivalents at September 30 $ 605,930 $ 697,143
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
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IEA INCOME FUND X, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(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 the
business of the Partnership. The Partnership shall continue until
December 31, 2010, unless sooner terminated upon the occurrence of
certain events.
The Partnership commenced operations on January 17, 1990, 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 October 30,
1990, at which time 39,206 limited partnership units had been
purchased.
As of September 30, 1998, the Partnership owned and operated 3,883
twenty-foot, 1,105 forty-foot and 90 forty-foot high-cube marine dry
cargo containers.
(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.
(Continued)
7
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IEA INCOME FUND X, L.P.
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, 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 September
30, 1998 and December 31, 1997 were as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Lease receivables, net of doubtful accounts of $44,894
at September 30, 1998 and $44,032 at December 31, 1997 $547,926 $544,082
Less:
Direct operating payables and accrued expenses 154,546 165,210
Damage protection reserve 63,311 68,241
Base management fees 57,436 52,816
Reimbursed administrative expenses 10,288 9,823
-------- --------
$262,345 $247,992
======== ========
</TABLE>
(Continued)
8
<PAGE> 9
IEA INCOME FUND X, L.P.
NOTES TO UNAUDITED 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 and nine-month periods ended September 30, 1998 and
1997 was as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Rental revenue $571,830 $ 580,706 $1,684,426 $1,775,057
Less:
Rental equipment operating expenses 157,543 153,893 431,454 513,520
Base management fees 38,823 39,971 115,481 123,136
Reimbursed administrative expenses 36,512 32,071 109,091 98,370
-------- ---------- ---------- ----------
$338,952 $ 354,771 $1,028,400 $1,040,031
======== ========== ========== ==========
</TABLE>
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 September 30, 1998 and
December 31, 1997.
At September 30, 1998, the Registrant had $605,930 in cash and cash
equivalents, a decrease of $108,598 from the December 31, 1997 cash
balances. Net lease receivables at September 30, 1998 increased 6% when
compared to December 31, 1997.
The Registrant's cash distribution from operations for the third quarter
of 1998 was 6.75% (annualized) of the limited partners' original capital
contribution, a decrease of .25% from the second quarter of 1998. These
distributions are directly related to the Registrant's results from
operations and may fluctuate accordingly. The cash distribution from sales
proceeds for the third quarter of 1998 was 2.50% (annualized) of the
limited partners' original capital contribution, an increase of 1.50% from
the second quarter of 1998. Sales proceeds distributed to its partners may
fluctuate in subsequent periods, reflecting the level of container
disposals.
During the third quarter of 1998, the economic troubles in Asia, as
evidenced by devalued currencies, restricted credit, and negative economic
growth, continued to impact the growth of containerized trade. Significant
trade imbalances, combined with a drop in trade volumes in some locations,
continued to challenge the container leasing industry, with a
corresponding effect on the Registrant's operating performance. The
devaluation of the Asian currencies has led to an increase in exports from
Asia, creating a strong demand for containers in that area of the world.
However, the devalued currencies, together with the effects of restricted
credit, have also reduced the demand in Asia for imports from the West.
This has resulted in lower demand for containers in Europe and North
America. In addition, turmoil in other financial markets, such as Japan
and Russia, threatens to spread to Latin America and other emerging
markets. As a result of these factors, the Registrant does not foresee any
significant change in market conditions in the near future. However, in
response to the current market conditions, the Registrant has been
repositioning containers from low to higher demand locations in order to
reduce its idle inventory. The Registrant will selectively continue to
reposition available equipment when it believes that the impact will have
a positive effect on its operations.
2) Material changes in the results of operations between the three and
nine-month periods ended September 30, 1998 and the three and nine-month
periods ended September 30, 1997.
Net lease revenue for the three and nine-month periods ended September 30,
1998 was $338,952 and $1,028,400, respectively, a decrease of 4% and 1%
from the respective three and nine-month periods ended September 30, 1997.
Gross rental revenue (a component of net lease revenue) for the three and
nine-month periods ended September 30, 1998 was $571,830 and $1,684,426,
respectively, a decline of 2% and 5%, respectively, from the same periods
in the prior year. Gross rental revenue was primarily impacted by lower
per-diem rental rates. Average per-diem rental rates declined 4% and 9%,
respectively, for the three and nine-month periods ended September 30,
1998 when compared to the same periods in the prior year. The Registrant's
average fleet size and utilization rates for the three and nine-month
periods ended September 30, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------- ----------------------------
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Average fleet size (measured in twenty-
foot equivalent units (TEU)) 6,291 6,483 6,356 6,522
Average Utilization 78% 77% 79% 75%
</TABLE>
10
<PAGE> 11
Rental equipment operating expenses were 28% and 26%, respectively, of the
Registrant's gross lease revenue during the three and nine-month periods
ended September 30, 1998, as compared to 27% and 29%, respectively, of the
Registrant's gross lease revenue during the three and nine-month periods
ended September 30, 1997. These changes were largely attributable to a
decrease in costs associated with higher utilization levels, including
handling and storage.
The Registrant disposed of 28 twenty-foot, 14 forty-foot and two
forty-foot high-cube marine cargo containers during the third quarter of
1998, as compared to 37 twenty-foot, five forty-foot and one forty-foot
high-cube marine cargo containers during the same period in the prior
year. The decision to repair or dispose of a container is made when it is
returned by a lessee. This decision is influenced by various factors
including the age, condition, suitability for continued leasing, as well
as the geographical location of the container when disposed. These factors
also influence the amount of sales proceeds received and the related gain
on container disposals.
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, Cronos Containers
Limited (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 in the above 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 Registrant with the Securities and Exchange
Commission.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
11
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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, a Luxembourg corporation headquartered in Orchard Lea, England
(the "Parent Company"), on February 3, 1997.
The Registrant retained a new auditor, Moore Stephens, P.C. on
April 10, 1997, as reported in its Current Report on Form 8-K, filed
April 14, 1997.
In connection with its resignation, Arthur Andersen also prepared a
report pursuant to 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 ("SEC") citing its inability to obtain what it
considered to be adequate responses to its inquiries primarily
regarding the payment of $1.5 million purportedly in respect of
professional fees relating to a proposed strategic alliance. This sum
was returned to the Parent Company in January 1997.
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 SEC's investigation can result in several types of civil
or administrative sanctions against the Parent Company and individuals
associated with the Parent Company, including the assessment of
monetary penalties. Actions taken by the SEC do not preclude additional
actions by any other federal, civil or criminal authorities or by other
regulatory organizations or by third parties.
The SEC's investigation is continuing, and some of the Parent Company's
present and former officers and directors and others associated with
the Parent Company have given testimony. However, no conclusion of any
alleged wrongdoing by the Parent Company or any individual has been
communicated to the Parent Company by the SEC.
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.
As reported in the Registrant's Current Report on Form 8-K, filed with
the SEC on May 21, 1998, the Parent Company reported that its Chairman
and CEO, Stefan M. Palatin, was suspended from his duties pending the
investigation of fraud charges against him by Austrian government
authorities. On June 8, 1998, the Parent Company's Board of Directors
removed Mr. Palatin as Managing Director and Chief Executive Officer.
Mr. Palatin resigned from the Board of Directors of the Parent Company
on July 6, 1998. Mr. Rudolf J. Weissenberger has been appointed to
replace Mr. Palatin as an executive director and Chief Executive
Officer. Also, on June 8, 1998, the Board approved a proposal to add
two independent directors to the Board. The Board engaged legal counsel
to provide legal advice and commence legal action, if appropriate,
against former officers or directors of the Parent Company (including
Mr. Palatin) if it is determined that they engaged in any misfeasance
or improper self-dealing.
Mr. Palatin had been a director of CCC; he resigned from his position
as director on April 23, 1998.
CCC further understands that Austrian authorities have initiated
investigations of persons in addition to Mr. Palatin, including Mr.
Weissenberger and Dr. Axel Friedberg. The investigations which remain
pending have not resulted in any action being taken against Mr.
Weissenberger, and he has informed the Parent Company that he
12
<PAGE> 13
does not believe that there is any basis for any action to be taken
against him. Dr. Friedberg has been a non-executive director of the
Parent Company since 1997. In August 1998, charges were presented
against Dr. Friedberg. Dr. Friedberg has denied any wrongdoing and, on
September 14, 1998, filed objections to the charges against him.
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 of the Parent
Company and its affiliates, 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.
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. The Third Amendment
became effective as of that date, subject to the satisfaction
thereafter of various conditions, including: the Parent Company must
deliver its audited financial statements for 1997 by a specified date
and; on or prior to July 30, 1998, the Parent Company must furnish
proof that any defaults under any other indebtedness have been waived
and must also furnish various legal opinions, officers' certificates
and other loan documentation. All of these conditions were fulfilled by
August 14, 1998. Under the Third Amendment, the remaining principal
amount of $36,800,000 will 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 amount due on September 30, 1998. The directors of the
Parent Company currently are holding discussions with the lenders to
refinance or extend its debt that became due on September 30, 1998.
The directors of the Parent Company also are pursuing alternative
sources of financing to meet the amended repayment obligations under
the Third 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.
13
<PAGE> 14
CCC is currently in discussions with the management of the Parent
Company to provide assurance that the management of the container
leasing partnerships managed by CCC, including the Registrant, is not
disrupted pending a refinancing or reorganization of the indebtedness
of the Parent Company and its affiliates.
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 concerns may have
on the future operating results and financial condition of the
Registrant or CCC and the Leasing Company's ability to manage the
Registrant's fleet in subsequent periods.
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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 November 7, 1989
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 September 30, 1998.
- -----------
* Incorporated by reference to Exhibit "A" to the Prospectus of the
Registrant dated November 7, 1989, included as part of Registration
Statement on Form S-1 (No. 33-30245)
** Incorporated by reference to Exhibit 3.2 to the Registration Statement on
Form S-1 (No. 33-30245)
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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/ Dennis J. Tietz
-------------------------------------
Dennis J. Tietz
President and Director of
Cronos Capital Corp. ("CCC")
Principal Executive Officer of CCC
Date: November 13, 1998
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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 November 7, 1989
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 November 7, 1989, included as part of Registration
Statement on Form S-1 (No. 33-30245)
** Incorporated by reference to Exhibit 3.2 to the Registration Statement on
Form S-1 (No. 33-30245)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT SEPTEMBER 30, 1998 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998 (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, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 605,930
<SECURITIES> 0
<RECEIVABLES> 262,345
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 868,275
<PP&E> 16,826,673
<DEPRECIATION> 7,941,953
<TOTAL-ASSETS> 9,752,995
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,752,995
<TOTAL-LIABILITY-AND-EQUITY> 9,752,995
<SALES> 0
<TOTAL-REVENUES> 1,028,400
<CGS> 0
<TOTAL-COSTS> 782,754
<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> 223,192
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
