<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 1-11780
IEA INCOME FUND XII, L.P.
(Exact name of registrant as specified in its charter)
California 94-3143940
(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 XII, 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 XII, L.P.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- ------------
<S> <C> <C>
Assets
------
Current assets:
Cash, includes $981,000 at June 30, 1995 and $475,530
at December 31, 1994 in interest-bearing accounts $ 997,491 $ 485,789
Short-term investments 1,600,000 1,675,000
Net lease receivables due from Leasing Company
(notes 1 and 2) 1,340,697 1,417,270
----------- -----------
Total current assets 3,938,188 3,578,059
----------- -----------
Container rental equipment, at cost 63,565,878 63,648,667
Less accumulated depreciation 10,583,706 8,761,517
----------- -----------
Net container rental equipment 52,982,172 54,887,150
----------- -----------
Organizational costs, net 507,318 627,887
----------- -----------
$57,427,678 $59,093,096
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Current liabilities:
Accrued expenses $ 430,500 $ 446,500
Due to general partner (notes 1 and 3) 1,628,382 1,975,382
----------- -----------
Total current liabilities 2,058,882 2,421,882
----------- -----------
Partners' capital (deficit):
General partner (55,461) (55,052)
Limited partners 55,424,257 56,726,266
----------- -----------
Total partners' capital 55,368,796 56,671,214
----------- -----------
$57,427,678 $59,093,096
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
IEA INCOME FUND XII, 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) $2,200,238 $2,008,438 $4,349,181 $4,333,622
Other operating expenses:
Depreciation 987,389 988,312 1,967,983 1,976,353
Other general and administrative expenses 40,796 46,597 70,834 75,415
---------- ---------- ---------- ----------
1,028,185 1,034,909 2,038,817 2,051,768
---------- ---------- ---------- ----------
Earnings from operations 1,172,053 973,529 2,310,364 2,281,854
Other income:
Interest income 36,435 16,789 72,995 32,326
Net gain on disposal of equipment 10,422 31,120 12,743 45,971
---------- ---------- ---------- ----------
46,857 47,909 85,738 78,297
---------- ---------- ---------- ----------
Net earnings $1,218,910 $1,021,438 $2,396,102 $2,360,151
========== ========== ========== ==========
Allocation of net earnings:
General partner $ 96,477 $ 105,091 $ 184,517 $ 193,912
Limited partners 1,122,433 916,347 2,211,585 2,166,239
---------- ---------- ---------- ----------
$1,218,910 $1,021,438 $2,396,102 $2,360,151
========== ========== ========== ==========
Limited partners' per unit share of net earnings $ .32 $ .26 $ .63 $ .62
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
IEA INCOME FUND XII, 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 $ 4,452,088 $ 3,979,898
Cash flows provided by (used in) investing activities:
Proceeds from sale of container rental equipment 89,905 45,145
Purchases of container rental equipment (56,925) (19,600)
Acquisition fees paid to general partner (349,846) (302,552)
----------- -----------
Net cash used in investing activities (316,866) (277,007)
----------- -----------
Cash flows used in financing activities:
Distribution to partners (3,698,520) (3,698,520)
----------- -----------
Net increase in cash and cash equivalents 436,702 4,371
Cash and cash equivalents at January 1 2,160,789 2,200,279
----------- -----------
Cash and cash equivalents at June 30 $ 2,597,491 $ 2,204,650
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
IEA INCOME FUND XII, 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 XII, L.P. (the "Partnership") is a limited
partnership organized under the laws of the State of California on
August 28, 1991 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.
The accompanying notes are an integral part of these statements.
5
<PAGE> 8
IEA INCOME FUND XII, 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 $346,140 at June 30, 1995 and $261,827 at
December 31, 1994 $2,719,193 $3,020,391
Less:
Direct operating payables and accrued expenses 820,014 677,781
Damage protection reserve 237,729 179,328
Base management fees 320,753 578,169
Reimbursed administrative expenses - 167,843
---------- ----------
$1,340,697 $1,417,270
========== ==========
</TABLE>
(3) Due to General Partner
The amounts due to CCC 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 $3,117,040 $2,871,868 $6,061,644 $5,943,784
Rental equipment
operating expenses 545,283 453,384 967,609 848,861
Base management fees 206,321 257,631 417,321 410,895
Reimbursed administrative expenses 165,198 152,415 327,533 350,406
---------- ---------- ---------- ----------
$2,200,238 $2,008,438 $4,349,181 $4,333,622
========== ========== ========== ==========
</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 $436,702.
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 $76,573 decline in net lease receivables due from the Leasing
Company. Additionally, direct operating payables and accrued expenses, a
component of net lease receivables, increased $142,233. This increase
results from a $78,113 increase in accrued operating expenses and a
$64,120 increase in deferred revenue from advance billings to container
lessees. The reserve for container repairs covered under the damage
protection plan increased $58,401 as a result of an increase in the
estimated repairs covered by the plan. The amount due to the General
Partner declined $347,000, 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 23 new
twenty-foot dry cargo containers at an aggregate manufacturers' invoice
cost of $56,925, 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 $49,000. The Registrant will use these sales proceeds in
subsequent periods to purchase additional containers as a 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 6% and 3% 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 20,391 20,385 20,396 20,388
Refrigerated cargo containers 815 815 815 815
Average Utilization
Dry cargo containers 91% 90% 90% 89%
Refrigerated cargo containers 99% 100% 99% 99%
</TABLE>
Rental equipment operating expenses increased 20% and 14% 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 23 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 XII, 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> 2,597,491
<SECURITIES> 0
<RECEIVABLES> 1,340,697
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,938,188
<PP&E> 63,565,878
<DEPRECIATION> 10,583,706
<TOTAL-ASSETS> 57,427,678
<CURRENT-LIABILITIES> 2,058,882
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 55,368,796
<TOTAL-LIABILITY-AND-EQUITY> 57,427,678
<SALES> 0
<TOTAL-REVENUES> 4,434,919
<CGS> 0
<TOTAL-COSTS> 2,038,817
<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> 2,396,102
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
