<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 0-19770
IEA INCOME FUND XI, L.P.
(Exact name of registrant as specified in its charter)
California 94-3122430
(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 XI, 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 (unaudited) 3
Statements of Cash Flows for the six months ended June 30, 1995 and 1994 (unaudited) 4
Notes to Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION
Item 5. Other Materially Important Events 9
Item 6. Exhibit 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 XI, L.P.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
Assets ----------- ---------------
------
<S> <C> <C>
Current assets:
Cash, includes $433,473 at June 30, 1995 and $247,749
at December 31, 1994 in interest-bearing accounts $ 447,964 $ 258,118
Short-term investments 1,553,982 1,312,739
Net lease receivables due from Leasing Company
(notes 1 and 2) 1,005,904 1,276,240
----------- -----------
Total current assets 3,007,850 2,847,097
----------- -----------
Container rental equipment, at cost 36,092,198 36,194,456
Less accumulated depreciation 8,149,119 7,141,246
----------- -----------
Net container rental equipment 27,943,079 29,053,210
----------- -----------
Organization costs, net 236,594 306,917
----------- -----------
$31,187,523 $32,207,224
=========== ===========
Liabilities and Partners' Capital
Current liabilities:
Accrued expenses $ 75,000 $ 75,000
Due to general partner (notes 1 and 3) 175,176 347,994
----------- -----------
Total current liabilities 250,176 422,994
----------- -----------
Partners' capital (deficit):
General partner (40,686) (50,994)
Limited partners 30,978,033 31,835,224
----------- -----------
Total partners' capital 30,937,347 31,784,230
----------- -----------
$31,187,523 $32,207,224
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
IEA INCOME FUND XI, 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) $1,260,857 $1,402,069 $2,491,316 $2,629,308
Other operating expenses:
Depreciation 561,822 562,675 1,114,843 1,125,572
Other general and administrative expenses 29,814 33,693 52,132 53,583
---------- ---------- ---------- ----------
591,636 596,368 1,166,975 1,179,155
---------- ---------- ---------- ----------
Earnings from operations 669,221 805,701 1,324,341 1,450,153
Other income:
Interest income 27,903 13,318 55,212 24,428
Net gain on disposal of equipment 10,645 14,031 18,966 24,756
---------- ---------- ---------- ----------
38,548 27,349 74,178 49,184
---------- ---------- ---------- ----------
Net earnings $ 707,769 $ 833,050 $1,398,519 $1,499,337
========== ========== ========== ==========
Allocation of net earnings:
General partner $ 63,227 $ 56,132 $ 122,578 $ 108,957
Limited partners 644,542 776,918 1,275,941 1,390,380
---------- ---------- ---------- ----------
$ 707,769 $ 833,050 $1,398,519 $1,499,337
========== ========== ========== ==========
Limited partners' per unit share of net
earnings $ .32 $ .39 $ .64 $ .70
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
IEA INCOME FUND XI, 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 $ 2,831,818 $ 2,377,347
Cash flows provided by (used in) investing activities:
Proceeds from sale of container rental equipment 72,065 49,711
Purchases of container rental equipment (51,975) (19,600)
Acquisition fees paid to general partner (175,417) (173,646)
----------- -----------
Net cash used in investing activities (155,327) (143,535)
----------- -----------
Cash flows used in financing activities:
Distribution to partners (2,245,402) (2,105,064)
----------- -----------
Net increase in cash and cash equivalents 431,089 128,748
Cash and cash equivalents at January 1 1,570,857 1,649,034
----------- -----------
Cash and cash equivalents at June 30 $ 2,001,946 $ 1,777,782
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
IEA INCOME FUND XI, 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 XI, L.P. (the "Partnership") is a limited partnership
organized under the laws of the State of California on July 30, 1990
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
The Partnership 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 and the Leasing Company. 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.
5
<PAGE> 8
IEA INCOME FUND XI, 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 $153,350 at June 30, 1995 and $181,262 at
December 31, 1994 $1,707,878 $1,892,212
Less:
Direct operating payables and accrued expenses 299,396 239,620
Damage protection reserve 206,471 164,467
Base management fees 177,846 179,226
Reimbursed administrative expenses 18,261 32,659
---------- ----------
$1,005,904 $1,276,240
========== ==========
</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 consist 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 its
affiliates 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 $1,806,295 $1,865,808 $3,535,147 $3,604,269
Rental equipment
operating expenses 327,419 226,906 608,090 527,505
Base management fees 121,758 146,103 244,758 243,999
Reimbursed administrative expenses 96,261 90,730 190,983 203,457
---------- ---------- ---------- ----------
$1,260,857 $1,402,069 $2,491,316 $2,629,308
========== ========== ========== ==========
</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.
At June 30, 1995, the Registrant's cash balances increased $431,089,
allowing the Registrant to increase its cash distribution from operations
for the second time during 1995. This distribution, payable in August 1995,
increased from 11% (annualized) to 11.5% (annualized) of the limited
partners' original capital contribution. During the first six months of
1995, the Registrant's collection of outstanding lease receivables and sales
proceeds has been favorable, contributing to the aforementioned increase in
cash and cash equivalents, and to a $270,336 decline in net lease
receivables due from the Leasing Company. Additionally, direct operating
payables and accrued expenses, a component of net lease receivables,
increased $59,776. This increase results from a $26,621 increase in accrued
operating expenses and a $33,155 increase in deferred revenue from advance
billings to container lessees. The reserve for container repairs covered
under the damage protection plan increased $42,004 as a result of an
increase in the estimated repairs covered by the plan. The amount due to the
General Partner declined $172,818, as the Registrant continued to make
payments to the General Partner for acquisition fees deferred during the
build-up phase of the Registrant's fleet and operations.
During the first six months of 1995, the Registrant acquired 21 new
twenty-foot dry cargo containers at an aggregate manufacturers' invoice cost
of $51,975 , replacing 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
$31,000. 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. 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 dry
cargo container per-diem rental rates remained steady as compared to the
same three and six-month periods in 1994, while an increasing proportion of
the lessees within its portfolio shifted to larger, high credit quality
lessees. However, the refrigerated container per-diem rental rates declined
approximately 13% and 8% from the three and six-month periods ended June 30,
1994, respectively, as many of the term leases originally entered into
during the Registrant's initial year of operations have since been renewed
at lower, current market rates. 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.
7
<PAGE> 10
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))
Dry cargo containers 13,092 13,110 13,102 13,115
Refrigerated cargo containers 200 200 200 200
Average Utilization
Dry cargo containers 90% 90% 90% 88%
Refrigerated cargo containers 97% 99% 98% 99%
</TABLE>
Rental equipment operating expenses increased 44% and 15% 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 and the provision for doubtful accounts,
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 21 twenty-foot dry 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 XI, 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, 1995 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED AS PART OF ITS QUARTERLY
REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,001,946
<SECURITIES> 0
<RECEIVABLES> 1,005,904
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,007,850
<PP&E> 36,092,198
<DEPRECIATION> 8,149,119
<TOTAL-ASSETS> 31,187,523
<CURRENT-LIABILITIES> 250,176
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 30,937,347
<TOTAL-LIABILITY-AND-EQUITY> 31,187,523
<SALES> 0
<TOTAL-REVENUES> 2,565,494
<CGS> 0
<TOTAL-COSTS> 1,166,975
<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> 1,398,519
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
