##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD FROM _________
 TO _________
 Commission file number 0-27496
 CRONOS GLOBAL INCOME FUND XVI, L.P.
  California
(State or other jurisdiction of
incorporation or organization)
    
    94-3230380
(I.R.S. Employer
Identification No.)
   
 þ o
 o þ
 o þ




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Report on Form 10-Q for the Quarterly Period
Ended September 30, 2005
 TABLE OF CONTENTS
 PAGEPART I  FINANCIAL INFORMATION
    
    
    3Item 1.
    
    Financial Statements
    
    
    3Condensed Balance Sheets  September 30, 2005 and December 31, 2004 (unaudited)
    
    
    4Condensed Statements of Operations for the three and nine months ended September 30, 2005 and 2004 (unaudited)
    
    
    5Condensed Statements of Cash Flows for the nine months ended September 30, 2005 and 2004 (unaudited)
    
    
    6Notes to Condensed Financial Statements (unaudited)
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4.
    
    Controls and Procedures
    
    
    18PART II  OTHER INFORMATION
    
    
    19Item 1.
    
    Legal Proceedings
    
    
    19Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3.
    
    Defaults Upon Senior Securities
    
    
    19Item 4.
    
    Submissions of Matters to a Vote of Securities Holders
    
    
    19Item 5.
    
    Other Information
    
    
    19Item 6.
    
    Exhibits
    
    
    19EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32
  2




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PART I  FINANCIAL INFORMATION
 
 Financial Statements
   3




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 
 Condensed Balance Sheets
 (Unaudited)
 September 30,
    
    
    December 31,2005
    
    
    2004AssetsCurrent assets:Cash and cash equivalents, includes $728,490 at September 30, 2005 and
$433,066 at December 31, 2004 in interest-bearing accounts
    
    $
    743,514
    
    
    $
    448,065Net lease receivables due from Leasing Company
(notes 1 and 2)
    
    
    524,495
    
    
    
    321,212Container rental equipment held for sale (note 1)
    
    
    92,400
    
    
    
    Total current assets
    
    
    1,360,409
    
    
    
    769,277Container rental equipment, at cost
    
    
    29,879,605
    
    
    
    31,152,445Less accumulated depreciation
    
    
    (15,447,234
    )
    
    
    (14,708,265
    )Net container rental equipment (note 1)
    
    
    14,432,371
    
    
    
    16,444,180Total assets
    
    $
    15,792,780
    
    
    $
    17,213,457Partners capitalPartners capital (deficit):General partner
    
    $
    (16,962
    )
    
    $
    (40,565
    )Limited partners
    
    
    15,809,742
    
    
    
    17,254,022Total partners capital
    
    $
    15,792,780
    
    
    $
    17,213,457
  4




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 
 Condensed Statements of Operations
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net lease revenue (notes 1 and 3)
    
    $
    702,478
    
    
    $
    799,494
    
    
    $
    2,115,072
    
    
    $
    2,186,946Other operating income (expenses):Depreciation
    
    
    (455,996
    )
    
    
    (515,030
    )
    
    
    (1,392,625
    )
    
    
    (1,479,970
    )Other general and administrative
expenses
    
    
    (19,550
    )
    
    
    (16,019
    )
    
    
    (60,804
    )
    
    
    (54,689
    )Asset impairment loss
    
    
    
    
    
    
    
    
    
    
    (37,972
    )
    
    
    Net gain on disposal of equipment
    
    
    24,600
    
    
    
    10,956
    
    
    
    38,929
    
    
    
    16,775Income from operations
    
    
    251,532
    
    
    
    279,401
    
    
    
    662,600
    
    
    
    669,062Other income (expense):Interest income
    
    
    5,150
    
    
    
    1,515
    
    
    
    10,208
    
    
    
    4,740Interest expense
    
    
    
    
    
    
    (25,434
    )
    
    
    
    
    
    
    (54,317
    )5,150
    
    
    
    (23,919
    )
    
    
    10,208
    
    
    
    (49,577
    )Net income
    
    $
    256,682
    
    
    $
    255,482
    
    
    $
    672,808
    
    
    $
    619,485Allocation of net income:General partner
    
    $
    50,261
    
    
    $
    36,741
    
    
    $
    117,507
    
    
    $
    92,821Limited partners
    
    
    206,421
    
    
    
    218,741
    
    
    
    555,301
    
    
    
    526,664$
    256,682
    
    
    $
    255,482
    
    
    $
    672,808
    
    
    $
    619,485Limited partners per unit share
of net income
    
    $
    0.13
    
    
    $
    0.14
    
    
    $
    0.35
    
    
    $
    0.33
  5




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 
 Condensed Statements of Cash Flows
 (Unaudited)
 Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004Net cash provided by operating activities
    
    $
    1,946,208
    
    
    $
    2,795,479Cash flows provided by investing activities:Proceeds from disposal of equipment
    
    
    442,726
    
    
    
    101,207Cash flows used in financing activities:Distributions to general partner
    
    
    (93,904
    )
    
    
    (89,349
    )Distributions to limited partners
    
    
    (1,999,581
    )
    
    
    (1,772,964
    )Total distribution to partners
    
    
    (2,093,485
    )
    
    
    (1,862,313
    )Repayment of term debt
    
    
    
    
    
    
    (2,101,500
    )Net cash used in financing activities
    
    
    (2,093,485
    )
    
    
    (3,963,813
    )Net increase (decrease) in cash and cash equivalents
    
    
    295,449
    
    
    
    (1,067,127
    )Cash and cash equivalents at the beginning of the period
    
    
    448,065
    
    
    
    1,276,250Cash and cash equivalents at the end of the period
    
    $
    743,514
    
    
    $
    209,123
  6




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 
 Notes to Unaudited Condensed Financial Statements
 Summary of Significant Accounting Policies
 Nature of Operations
     Leasing Company and Leasing Agent Agreement
   7




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 Leasing
Company and Leasing Agent Agreement (continued)
  Basis of Accounting
  Use of Estimates
    8




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 Container Rental Equipment
    i.
    
    The age of the North American Dry Containers.ii.
    
    The lack of demand for the North American Dry
Containers.iii.
    
    The cost to reposition the North American Dry
Containers to high demand markets.iv.
    
    The strong North American container sale market.
  Assets to be disposed of:
   9




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 Partners Capital Accounts
  Financial Statement Presentation
   Net Lease Receivables Due from Leasing Company
  September 30,
    
    
    December 31,2005
    
    
    2004Gross lease receivables
    
    $
    994,381
    
    
    $
    726,979Less:Direct operating payables and accrued expenses
    
    
    295,520
    
    
    
    276,571Damage protection reserve
    
    
    69,813
    
    
    
    47,725Base management fees payable
    
    
    11,909
    
    
    
    15,418Reimbursed administrative expenses
    
    
    13,261
    
    
    
    17,415Allowance for doubtful accounts
    
    
    79,383
    
    
    
    48,638469,886
    
    
    
    405,767Net lease receivables
    
    $
    524,495
    
    
    $
    321,212
  10




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 Net Lease Revenue
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Rental revenue (note 4)
    
    $
    972,640
    
    
    $
    1,046,190
    
    
    $
    2,959,458
    
    
    $
    3,055,154Less:Rental equipment operating expenses
    
    
    157,543
    
    
    
    119,814
    
    
    
    485,886
    
    
    
    497,250Base management fees
    
    
    66,810
    
    
    
    72,576
    
    
    
    203,338
    
    
    
    211,903Reimbursed administrative expensesSalaries
    
    
    34,202
    
    
    
    35,550
    
    
    
    112,137
    
    
    
    109,647Other payroll related expenses
    
    
    3,087
    
    
    
    6,742
    
    
    
    15,084
    
    
    
    14,251General and administrative
expenses
    
    
    8,520
    
    
    
    12,014
    
    
    
    27,941
    
    
    
    35,157270,162
    
    
    
    246,696
    
    
    
    844,386
    
    
    
    868,208Net lease revenue
    
    $
    702,478
    
    
    $
    799,494
    
    
    $
    2,115,072
    
    
    $
    2,186,946
 Operating Segment
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Dry cargo containers
    
    $
    675,006
    
    
    $
    703,455
    
    
    $
    2,032,805
    
    
    $
    2,044,044Refrigerated containers
    
    
    260,054
    
    
    
    305,296
    
    
    
    807,689
    
    
    
    896,248Tank containers
    
    
    37,580
    
    
    
    37,439
    
    
    
    118,964
    
    
    
    114,862Total
    
    $
    972,640
    
    
    $
    1,046,190
    
    
    $
    2,959,458
    
    
    $
    3,055,154
  11




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Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Market Overview
      12




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Results of Operations
   
    
    Activity-related expenses including agent and depot costs
such as repairs, maintenance and handling.
    
    Inventory-related expenses for off-hire containers,
comprising storage and repositioning costs. These costs are sensitive to the quantity
of off-hire containers as well as the frequency at which containers are re-delivered.
    
    Legal and other expenses including legal costs related to
the recovery of containers and doubtful accounts, insurance and provisions for doubtful
accounts.
 13




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Dry Cargo
    
    Refrigerated
    
    TankContainers
    
    Containers
    
    Containers40-Foot
    
    
    
    
    
    40-Foot20-Foot
    
    40-Foot
    
    High-Cube
    
    20-Foot
    
    High-Cube
    
    24,000-LiterContainers on
lease:Master
lease
    
    
    2,778
    
    
    
    645
    
    
    
    840
    
    
    
    54
    
    
    
    123
    
    
    
    27Term leaseShort term1
    
    
    480
    
    
    
    335
    
    
    
    668
    
    
    
    12
    
    
    
    115
    
    
    
    12Long
term2
    
    
    545
    
    
    
    175
    
    
    
    93
    
    
    
    
    
    
    
    34
    
    
    
    10Subtotal
    
    
    3,803
    
    
    
    1,155
    
    
    
    1,601
    
    
    
    66
    
    
    
    272
    
    
    
    49Containers off lease
    
    
    281
    
    
    
    221
    
    
    
    100
    
    
    
    21
    
    
    
    21
    
    
    
    3Total container
fleet
    
    
    4,084
    
    
    
    1,376
    
    
    
    1,701
    
    
    
    87
    
    
    
    293
    
    
    
    52
 Dry Cargo
    
    Refrigerated
    
    TankContainers
    
    Containers
    
    Containers40-Foot20-Foot
    
    40-Foot
    
    High-Cube
    
    20-Foot
    
    40-Foot
    
    24,000-LiterUnits
    
    %
    
    Units
    
    %
    
    Units
    
    %
    
    Units
    
    %
    
    Units
    
    %
    
    Units
    
    %Total purchases
    
    
    4,553
    
    
    
    100
    %
    
    
    1,500
    
    
    
    100
    %
    
    
    1,750
    
    
    
    100
    %
    
    
    90
    
    
    
    100
    %
    
    
    300
    
    
    
    100
    %
    
    
    52
    
    
    
    100
    %Less disposals
    
    
    469
    
    
    
    10
    %
    
    
    124
    
    
    
    8
    %
    
    
    49
    
    
    
    3
    %
    
    
    3
    
    
    
    3
    %
    
    
    7
    
    
    
    2
    %
    
    
    
    
    
    
    
    %Remaining fleet at
September 30, 2005
    
    
    4,084
    
    
    
    90
    %
    
    
    1,376
    
    
    
    92
    %
    
    
    1,701
    
    
    
    97
    %
    
    
    87
    
    
    
    97
    %
    
    
    293
    
    
    
    98
    %
    
    
    52
    
    
    
    100
    %
 
 1.
    
    Short term leases represent term leases that are either scheduled for
renegotiation or that may expire on or before September 30, 2006.2.
    
    Long term leases represent term leases, the majority of which will expire between
October 2006 and December 2010. Three Months Ended September 30, 2005 Compared to the Three Months Ended September 30, 2004
 Net lease revenue
 Three Months EndedSeptember 30,
    
    September 30,2005
    
    2004Fleet size (measured in twenty-foot equivalent units (TEU))Dry cargo containers
    
    
    10,275
    
    
    
    10,770Refrigerated containers
    
    
    675
    
    
    
    681Tank containers
    
    
    52
    
    
    
    52Average utilization ratesDry cargo containers
    
    
    93
    %
    
    
    95
    %Refrigerated containers
    
    
    89
    %
    
    
    89
    %Tank containers
    
    
    94
    %
    
    
    89
    %
 14




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Depreciation expense
 Other general and administrative expenses
 Asset impairment loss
 Assets to be disposed of:
  Net gain on disposal of equipment
 Nine Months Ended September 30, 2005 Compared to the Nine Months Ended September 30, 2004
 Net lease revenue
  15




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Nine Months EndedSeptember 30,
    
    September 30,2005
    
    2004Fleet size (measured in twenty-foot equivalent units (TEU))Dry cargo containers
    
    
    10,483
    
    
    
    10,789Refrigerated containers
    
    
    677
    
    
    
    681Tank containers
    
    
    52
    
    
    
    52Average utilization ratesDry cargo containers
    
    
    93
    %
    
    
    92
    %Refrigerated containers
    
    
    88
    %
    
    
    90
    %Tank containers
    
    
    91
    %
    
    
    91
    %
 Depreciation expense
 Other general and administrative expenses
 Impairment charges
  Net gain on disposal of equipment
   16




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Liquidity and Capital Resources
    Cash from Operating Activities
 Cash from Investing Activities
 Cash from Financing Activities
 17




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Critical Accounting Policies
  
    
    Container equipment  depreciable lives
    
    Container equipment  valuation
    
    Allowance for doubtful accounts
  Inflation
  
 Quantitative and Qualitative Disclosures About Market Risk
 Exchange rate risk:
 
    18




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PART II  OTHER INFORMATION
 
 Legal Proceedings
  
 Unregistered Sales of Equity Securities and Use of Proceeds
  
 Defaults Upon Senior Securities
  
 Submissions of Matters to a Vote of Securities Holders
  
 Other Information
  
 Exhibits
  ExhibitNo.
    
    Description
    
    Method of Filing3(a)
    
    Limited Partnership Agreement, amended
and restated as of December 28, 1995
    
    *3(b)
    
    Certificate of Limited Partnership
    
    **10
    
    Form of Leasing Agent Agreement with
Cronos Containers Limited
    
    ***31.1
    
    Rule 13a-14 Certification
    
    Filed with this document31.2
    
    Rule 13a-14 Certification
    
    Filed with this document32
    
    Section 1350 Certification
    
    Filed with this document ****
 
 *
    
    Incorporated by reference to Exhibit A to the Prospectus of the Partnership dated December
28, 1995, included as part of Registration Statement on Form S-1 (No. 33-98290)**
    
    Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No.
33-98290)***
    
    Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No.
33-98290)****
    
    This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as
required by Section 906, is not to be deemed filed with the Commission or subject to the
rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934,
as amended, or to the liabilities of Section 18 of said Act. 19




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SIGNATURES
  CRONOS GLOBAL INCOME FUND XVI, L.P.By
    
    Cronos Capital Corp.The General PartnerBy
    
    /s/ Dennis J. TietzDennis J. TietzPresident and Director of Cronos Capital Corp. (CCC)Principal Executive Officer of CCCBy
    
    /s/ John KallasJohn KallasChief Financial Officer andDirector of Cronos Capital Corp. (CCC)Principal Financial and Accounting Officer of CCC
  20




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EXHIBIT INDEX
 ExhibitNo.
    
    Description
    
    Method of Filing3(a)
    
    Limited Partnership Agreement, amended
and restated as of December 28, 1995
    
    *3(b)
    
    Certificate of Limited Partnership
    
    **10
    
    Form of Leasing Agent Agreement with
Cronos Containers Limited
    
    ***31.1
    
    Rule 13a-14 Certification
    
    Filed with this document31.2
    
    Rule 13a-14 Certification
    
    Filed with this document32
    
    Section 1350 Certification
    
    Filed with this document ****
 
 *
    
    Incorporated by reference to Exhibit A to the Prospectus of the Partnership dated December
28, 1995, included as part of Registration Statement on Form S-1 (No. 33-98290)**
    
    Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (No.
33-98290)***
    
    Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (No.
33-98290)****
    
    This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as
required by Section 906, is not deemed to be filed with the Commission or subject to the
rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934,
as amended, or to the liabilities of Section 18 of said Act.