<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 0-23158
CRONOS GLOBAL INCOME FUND XIV, L.P.
(Exact name of registrant as specified in its charter)
California 94-3163375
(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
CRONOS GLOBAL INCOME FUND XIV, L.P.
REPORT ON FORM 10-Q FOR THE QUARTERLY
PERIOD ENDED SEPTEMBER 30, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
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
CRONOS GLOBAL INCOME FUND XIV, L.P.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- -------------
<S> <C> <C>
Assets
------
Current assets:
Cash, includes $661,193 at September 30, 1995 and $440,530
at December 31, 1994 in interest-bearing accounts $ 661,665 $ 459,823
Short-term investments 1,110,000 300,489
Net lease receivables due from Leasing Company
(notes 1 and 2) 1,259,520 1,721,691
------------- -------------
Total current assets 3,031,185 2,482,003
------------- -------------
Container rental equipment, at cost 53,079,061 53,222,086
Less accumulated depreciation 7,119,888 4,493,371
------------- -------------
Net container rental equipment 45,959,173 48,728,715
------------- -------------
Organizational costs, net 782,842 990,958
------------- -------------
$ 49,773,200 $ 52,201,676
============= =============
Liabilities and Partners' Capital
---------------------------------
Current liabilities
Due to general partner (notes 1 and 3) $ 574,040 $ 1,024,040
------------- -------------
Total current liabilities 574,040 1,024,040
------------- -------------
Partners' capital (deficit):
General partner 438 (17,387)
Limited partners 49,198,722 51,195,023
------------- -------------
Total partners' capital 49,199,160 51,177,636
------------- -------------
$ 49,773,200 $ 52,201,676
============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
CRONOS GLOBAL INCOME FUND XIV, 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) $ 2,123,554 $ 1,962,677 $ 6,159,852 $ 5,821,480
Other operating expenses:
Depreciation 1,176,401 845,265 2,866,556 2,526,154
Other general and administrative expenses 13,852 27,046 74,989 91,474
------------ ------------ ------------ ------------
1,190,253 872,311 2,941,545 2,617,628
------------ ------------ ------------ ------------
Earnings from operations 933,301 1,090,366 3,218,307 3,203,852
Other income:
Interest income 21,853 10,129 61,704 17,786
Net gain on disposal of equipment 30,457 4,949 81,856 67,416
------------ ------------ ------------ ------------
52,310 15,078 143,560 85,202
------------ ------------ ------------ ------------
Net earnings $ 985,611 $ 1,105,444 $ 3,361,867 $ 3,289,054
============ ============ ============ ============
Allocation of net earnings:
General partner $ 104,599 $ 78,427 $ 284,843 $ 242,657
Limited partners 881,012 1,027,017 3,077,024 3,046,397
------------ ------------ ------------ ------------
$ 985,611 $ 1,105,444 $ 3,361,867 $ 3,289,054
============ ============ ============ ============
Limited partners' per unit share of net earnings $ .29 $ .35 $ 1.03 $ 1.02
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
CRONOS GLOBAL INCOME FUND XIV, 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 $ 6,696,837 $ 4,938,028
Cash flows provided by (used in) investing activities:
Proceeds from sale of container rental equipment 167,230 87,511
Purchase of container rental equipment (62,370) -
Acquisition fees paid to general partner (450,000) (300,000)
------------ -----------
Net cash used in investing activities (345,140) (212,489)
------------ -----------
Cash flows used in financing activities:
Distribution to partners (5,340,344) (4,584,750)
------------ -----------
Net increase in cash and cash equivalents 1,011,353 140,789
Cash and cash equivalents at January 1 760,312 581,211
------------ -----------
Cash and cash equivalents at September 30 $ 1,771,665 $ 722,000
============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
CRONOS GLOBAL INCOME FUND XIV, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(1) Summary of Significant Accounting Policies
(a) Nature of Operations
Cronos Global Income Fund XIV, L.P. (the "Partnership") is a limited
partnership organized under the laws of the State of California on
July 30, 1992, 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 releasing 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.
(Continued)
5
<PAGE> 8
CRONOS GLOBAL INCOME FUND XIV, 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 $190,921 at September 30, 1995 and $129,453
at December 31, 1994 $ 2,472,752 $ 2,761,841
Less:
Direct operating payables and accrued expenses 680,222 605,400
Damage protection reserve 243,463 154,231
Base management fees 241,581 227,340
Reimbursed administrative expenses 47,966 53,179
------------ ------------
$ 1,259,520 $ 1,721,691
============ ============
</TABLE>
(3) Due to General Partner
The amounts due to CCC at September 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, the Leasing
Company, 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 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 $ 2,854,894 $ 2,805,217 $ 8,385,646 $ 8,128,794
Rental equipment
operating expenses 383,054 475,861 1,193,126 1,255,410
Base management fees 193,155 205,053 579,412 575,684
Reimbursed administrative expenses 155,131 161,626 453,256 476,220
------------ ------------ ------------ ------------
$ 2,123,554 $ 1,962,677 $ 6,159,852 $ 5,821,480
============ ============ ============ ============
</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.
During the first nine months of 1995, the Registrant's cash balances
increased by $760,312 to $1,771,665. Additionally, 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 $462,171 decline in net lease receivables due from
the Leasing Company. Direct operating payables and accrued expenses, a
component of net lease receivables, increased $74,822. This increase
results from a $30,417 increase in accrued operating expenses and a $44,405
increase in deferred revenue from advance billings to container lessees.
The reserve for container repairs covered under the damage protection plan
increased $89,232 as a result of an increase in the number of containers
covered by the plan. The amount due to the General Partner declined
$450,000, 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 nine months of 1995, the Registrant acquired 24 new
twenty-foot dry cargo containers at an aggregate manufacturers' invoice
cost of $59,400, replacing containers which had been lost or damaged beyond
repair. The Registrant's cash balances at September 30, 1995 include
additional sales proceeds from equipment disposals in the amount of
approximately $123,000. The Registrant will use these sales proceeds in
subsequent periods to purchase additional containers as replacements for
lost or damaged containers.
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 $2,123,554, an increase
of 8% over the third quarter of 1994. Gross rental revenue (a component of
net lease revenue) for the quarter was $2,854,894, as compared to
$2,805,217 for the same period last year. For the first nine months of
1995, net lease revenue was $6,159,852, an increase of 6% when compared to
the first nine months of 1994. Gross rental revenue increased 3% to
$8,385,646 over the same nine-month period.
Gross rental revenue increased 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 enhanced the results contributed by a stable fleet
size and stable utilization rates. 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 average dry cargo container per-diem rental rates.
Accordingly, these 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. However, average refrigerated container per-diem rental
rates increased approximately 2% and 1% when compared with the three and
nine-month periods ended September 30, 1994, respectively.
7
<PAGE> 10
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))
Dry cargo containers 15,496 15,493 15,509 15,500
Refrigerated containers 1,155 1,160 1,157 1,160
Average Utilization
Dry cargo containers 89% 91% 90% 89%
Refrigerated containers 99% 96% 99% 98%
</TABLE>
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.
Declines in the provision for repairs covered by the damage protection
plan, and the provision for doubtful accounts, were contributing factors to
declines in rental equipment operating expenses of 20% and 5%, when
compared to the same three and nine-month periods ended September 30, 1994,
respectively.
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.
CRONOS GLOBAL INCOME FUND XIV, 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> 1,771,665
<SECURITIES> 0
<RECEIVABLES> 1,259,520
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,031,185
<PP&E> 53,079,061
<DEPRECIATION> 7,119,888
<TOTAL-ASSETS> 49,773,200
<CURRENT-LIABILITIES> 574,040
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 49,199,160
<TOTAL-LIABILITY-AND-EQUITY> 49,773,200
<SALES> 0
<TOTAL-REVENUES> 6,303,412
<CGS> 0
<TOTAL-COSTS> 2,941,545
<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> 3,361,867
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
