##### 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 1934
 For the quarterly period ended September 30, 2008
 OR
 o
    
    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 0-27496
 CRONOS
GLOBAL INCOME FUND XVI, L.P.
  California
    
    94-3230380(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 
 
 þ o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)Smaller reporting company 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, 2008
 TABLE OF CONTENTS
 PAGEPART I  FINANCIAL INFORMATION
    
    
    1Item 1.
    
    Financial Statements
    
    
    1Unaudited Condensed Balance Sheets  September 30, 2008 and December 31, 2007
    
    
    2Unaudited Condensed Statements of Income for the three and nine months ended September 30, 2008 and 2007
    
    
    3Unaudited Condensed Statements of Cash Flows for the nine months ended September 30, 2008 and 2007
    
    
    4Unaudited Notes to the Condensed Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    17Item 4.
    
    Controls and Procedures
    
    
    17Item 4T.
    
    Controls and Procedures
    
    
    17PART II  OTHER INFORMATION
    
    
    18Item 1.
    
    Legal Proceedings
    
    
    18Item 1A.
    
    Risk Factors
    
    
    18Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3.
    
    Defaults Upon Senior Securities
    
    
    18Item 4.
    
    Submissions of Matters to a Vote of Security Holders
    
    
    18Item 5.
    
    Other Information
    
    
    18Item 6.
    
    Exhibits
    
    
    18EX-31.1EX-31.2EX-32




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PART I  FINANCIAL INFORMATION
 
 Financial Statements
   1




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Condensed Balance Sheets
 (Unaudited)
 September 30,
    
    
    December 31,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents, includes $908,268 at September 30, 2008
and $816,160 at December 31, 2007 in interest-bearing accounts
    
    $
    923,268
    
    
    $
    831,160Net lease receivables due from Leasing Agent
    
    
    373,284
    
    
    
    390,560Direct finance lease receivables, due from Leasing Agent within one year, net
    
    
    19,441
    
    
    
    Total current assets
    
    
    1,315,993
    
    
    
    1,221,720Direct finance lease receivables, due from Leasing Agent after one year, net
    
    
    21,566
    
    
    
    Container rental equipment, at cost
    
    
    19,207,324
    
    
    
    22,530,005Less accumulated depreciation
    
    
    (13,118,633
    )
    
    
    (14,533,680
    )Net container rental equipment
    
    
    6,088,691
    
    
    
    7,996,325Total assets
    
    $
    7,426,250
    
    
    $
    9,218,045Partners capitalPartners capital (deficit):General partner
    
    $
    486
    
    
    $
    (24,596
    )Limited partners
    
    
    7,425,764
    
    
    
    9,242,641Total partners capital
    
    $
    7,426,250
    
    
    $
    9,218,045
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Condensed Statements of Income
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net lease revenue from Leasing Agent
    
    $
    397,201
    
    
    $
    445,352
    
    
    $
    1,211,404
    
    
    $
    1,331,530Other operating income (expenses):Depreciation
    
    
    (321,888
    )
    
    
    (353,312
    )
    
    
    (995,975
    )
    
    
    (1,123,484
    )Other general and administrative expenses
    
    
    (38,614
    )
    
    
    (24,739
    )
    
    
    (115,780
    )
    
    
    (86,509
    )Net gain (loss) on disposal of equipment
    
    
    50,682
    
    
    
    (3,405
    )
    
    
    92,527
    
    
    
    30,227(309,820
    )
    
    
    (381,456
    )
    
    
    (1,019,228
    )
    
    
    (1,179,766
    )Income from operations
    
    
    87,381
    
    
    
    63,896
    
    
    
    192,176
    
    
    
    151,764Other income:Interest income
    
    
    1,059
    
    
    
    8,691
    
    
    
    5,196
    
    
    
    32,624Net income
    
    $
    88,440
    
    
    $
    72,587
    
    
    $
    197,372
    
    
    $
    184,388Allocation of net income:General partner
    
    $
    23,815
    
    
    $
    14,581
    
    
    $
    94,649
    
    
    $
    89,836Limited partners
    
    
    64,625
    
    
    
    58,006
    
    
    
    102,723
    
    
    
    94,552$
    88,440
    
    
    $
    72,587
    
    
    $
    197,372
    
    
    $
    184,388Limited partners per unit share of net income
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.06
    
    
    $
    0.06
  3




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Condensed Statements of Cash Flows
 (Unaudited)
 Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007Net cash provided by operating activities
    
    $
    1,159,128
    
    
    $
    1,276,086Cash flows from investing activities:Proceeds from sale of container rental equipment
    
    
    922,147
    
    
    
    771,116Cash flows from financing activities:Distributions to general partner
    
    
    (69,567
    )
    
    
    (83,349
    )Distributions to limited partners
    
    
    (1,919,600
    )
    
    
    (2,386,170
    )Net cash used in financing activities
    
    
    (1,989,167
    )
    
    
    (2,469,519
    )Net increase (decrease) in cash and cash equivalents
    
    
    92,108
    
    
    
    (422,317
    )Cash and cash equivalents at the beginning of the period
    
    
    831,160
    
    
    
    1,203,374Cash and cash equivalents at the end of the period
    
    $
    923,268
    
    
    $
    781,057
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 (1)
    
    Summary of Significant Accounting Policies
 (a)
    
    Nature of OperationsCronos Global Income Fund XVI, L.P. (the Partnership) is a limited partnership that was
organized under the laws of the State of California on September 1, 1995, for the purpose
of owning and leasing dry and specialized marine cargo containers to ocean carriers. The
Partnership commenced operations on March 29, 1996, when the minimum subscription proceeds
of $2,000,000 were received from over 100 subscribers (excluding from such count,
Pennsylvania residents, Cronos Capital Corp. (CCC), and all affiliates of CCC). On
February 3, 1997, CCC suspended the offer and sale of units in the Partnership. The
offering terminated on December 27, 1997, at which time 1,599,667 limited partnership
units had been sold.CCC, the general partner, and its affiliate, Cronos Containers Limited (the Leasing
Agent), manage the business of the Partnership. CCC and the Leasing Agent also manage
the container leasing business for other partnerships affiliated with CCC.In April 2008, the Partnership commenced its 13th year of operations and continued its
liquidation phase, wherein CCC focuses its attention on the retirement of the remaining
equipment in the Partnerships container fleet. At September 30, 2008, approximately 69%
of the original equipment remained in the Partnerships fleet. CCC will take several
factors into consideration when examining options for the timing of the disposal of the
containers. These factors include the impact of a diminishing fleet size and current
market conditions on the level of gross lease revenue generated, and the level of
operating costs relative to this revenue. CCC will also consider the impact of a
projected increase in expenses associated with the introduction of the additional
reporting and compliance requirements of Section 404 of the Sarbanes Oxley Act of 2002.
These additional costs, depending on their materiality, may reduce the Partnerships
results from operations and therefore negatively affect future distributions to the
Limited Partners. The Partnership is required to be in compliance with Section 404 for
the year ending December 31, 2008, however, the SEC requirement for auditor attestation
compliance only applies to the fiscal year ending December 31, 2009.The Partnerships operations are subject to the fluctuations of world economic and
political conditions. The Partnership believes that the profitability of, and risks
associated with, leases to foreign customers is generally the same as those of domestic
customers. The Partnerships leases generally require all payments to be made in United
States dollars.(b)
    
    Leasing AgentThe Partnership and the Leasing Agent have entered into an agreement (the Leasing Agent
Agreement) whereby the Leasing Agent manages the leasing operations for all equipment
owned by the Partnership. In addition to responsibility for leasing and re-leasing the
equipment to ocean carriers, the Leasing Agent disposes of the containers at the end of
their useful economic life 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
Agent to use the containers owned by the Partnership, together with other containers owned
or managed by the Leasing Agent and its affiliates, as part of a single fleet operated
without regard to ownership. The Leasing Agent Agreement generally provides that the
Leasing Agent will make payments to the Partnership based upon rentals collected from
ocean carriers after deducting direct operating expenses and management fees due both to
CCC and the Leasing Agent.
  
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 (1)
    
    Summary of Significant Accounting Policies (continued)
 (b)
    
    Leasing Agent and Leasing Agent Agreement (continued)The Leasing Agent leases containers to ocean carriers, generally under operating leases
which are either master leases or term leases (mostly one to five years) and periodically
under direct finance leases.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 charged and recognized based upon the number
of containers used and the applicable per-diem rate, and accordingly, rentals under master
leases are variable and contingent upon the number of containers used.Term leases are for a fixed quantity of containers for a fixed period of time, typically
varying from three to five years. In most cases, containers cannot be returned prior to
the expiration of the lease. Term lease agreements may contain early termination penalties
that apply in the event of early redelivery. Term leases provide greater revenue stability
to the lessor, usually at lower lease rates than master leases. Ocean carriers use term
leases to lower their operating costs when they have a need for an identified number of
containers for a specified term. Rentals under term leases are charged and recognized
based upon the number of containers leased, the applicable per diem rate and the length of
the lease, irrespective of the number of days which the customer actually uses the
containers.Direct finance leases are long-term in nature, usually ranging from three to seven years,
and require relatively low levels of customer service. They ordinarily require fixed
payments over a defined period and provide customers with an option to purchase the subject
containers at the end of the lease term. Per-diem rates include an element of repayment of
capital and therefore are usually higher than rates charged under either term or master
leases.(c)
    
    Basis of PresentationThe accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America
for interim financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of America for
annual financial statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have been included.
Operating results for the interim period are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2008. For further
information, refer to the financial statements and footnotes thereto included in the
Partnerships Annual Report on Form 10-K for the year ended December 31, 2007.(d)
    
    Use of Estimates in interim financial statementsThe preparation of interim financial statements, in conformity with US GAAP and SEC
regulations for interim reporting, 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. The most significant
estimates relate to the carrying value of equipment including estimates relating to
depreciable lives, residual values and asset impairments. Actual results could differ from
those estimates.
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 (1)
    
    Summary of Significant Accounting Policies (continued)
 (e)
    
    Container Rental EquipmentContainer rental equipment is depreciated over a 15-year life using the straight-line basis
to its residual value of 10% of original equipment cost. Depreciation policies are also
evaluated to determine whether subsequent events and circumstances warrant revised
estimates of useful lives. Residual values are only revised downwards.In accordance with Statement of Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, container rental
equipment is considered to be impaired if the carrying value of the asset exceeds the
expected future cash flows from related operations (undiscounted and without interest
charges). If impairment is deemed to exist, the assets are written down to fair value. An
analysis of projected future cash flows from container rental equipment operations is
prepared annually, or upon material changes in market conditions. The primary variables
utilized in the analysis are current and projected utilization rates, per-diem rental
rates, direct operating expenses, fleet size, container disposal proceeds and the timing of
container disposals. Additionally, the Partnership evaluates future cash flows and
potential impairment for its entire container fleet rather than for each container type or
individual container, and as a result, future losses could result for individual container
dispositions due to various factors, including age, condition, suitability for continued
leasing, as well as the geographical location of containers when disposed. There were no
impairment charges recorded against the carrying value of container rental equipment for
the nine-month periods ended September 30, 2008 and 2007.(f)
    
    Allocation of Net Income or Loss, Partnership Distributions and Partners CapitalNet income or loss has been allocated between the general and limited partners in
accordance with the Partnership Agreement. The Partnership Agreement generally provides
that CCC shall at all times maintain at least a 1% interest in each item of income or loss,
including the gain arising from the sale of containers. The Partnership Agreement further
provides that the gain arising from the sale of containers be allocated first to the
partners with capital account deficit balances in an amount sufficient to eliminate any
deficit capital account balance. Thereafter, the Partnerships gains arising from the sale
of containers are allocated to the partners in accordance with their share of sale proceeds
distributed. The Partnership Agreement also provides for income (excluding the gain
arising from the sale of containers) for any period, be allocated to CCC in an amount equal
to that portion of CCCs distributions in excess of 1% of the total distributions made to
both CCC and the limited partners of the Partnership for such period, as well as other
allocation adjustments.Actual cash distributions differ from the allocations of net income or loss between the
general and limited partners as presented in these financial statements. Partnership
distributions are paid to its partners (general and limited) from distributable cash from
operations, allocated 95% to the limited partners and 5% to CCC. Distributions of sales
proceeds are allocated 99% to the limited partners and 1% to CCC. The allocations remain
in effect until such time as the limited partners have received from the Partnership
aggregate distributions in an amount equal to their capital contributions plus an 8%
cumulative, compounded (daily), annual return on their adjusted capital contributions.
Thereafter, all Partnership distributions will be allocated 85% to the limited partners and
15% to CCC. Cash distributions from operations to CCC in excess of 5% of distributable
cash will be considered an incentive fee and will be recorded as compensation to CCC, with
the remaining distributions from operations charged to partners capital.
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 (1)
    
    Summary of Significant Accounting Policies (continued)
 (f)
    
    Allocation of Net Income or Loss, Partnership Distributions and Partners Capital
(continued)Upon dissolution, the assets of the Partnership will be sold and the proceeds thereof
distributed as follows: (i) all of the Partnerships debts and liabilities to persons other
than CCC or the limited partners shall be paid and discharged; (ii) all of the
Partnerships debts and liabilities to CCC and the limited partners shall be paid and
discharged; and (iii) the balance of such proceeds shall be distributed to CCC and the
limited partners in accordance with the positive balances of CCC and the limited partners
capital accounts. CCC shall contribute to the Partnership an amount equal to the lesser of
the deficit balance in its capital account at the time of such liquidation, or 1.01% of the
excess of the Limited Partners capital contribution to the Partnership over the capital
contributions previously made to the Partnership by CCC, after giving effect to the
allocation of income or loss arising from the liquidation of the Partnerships assets.(g)
    
    Accounting pronouncements adopted during the periodOn February 15, 2007 the Financial Accounting Standards Board (FASB) issued SFAS No. 159,
The Fair Value Option for Financial Assets and Financial Liabilities  Including an
Amendment of FASB Statement No. 115 (SFAS 159). This standard permits an entity to
choose to measure many financial instruments and certain other items at fair value. The
unrealized gains and losses on items for which the fair value option has been elected will
be reported in earnings at each subsequent reporting date. The fair value option: (a) may
be applied instrument by instrument, with a few exceptions, such as investments otherwise
accounted for by the equity method; (b) is irrevocable (unless a new election date occurs);
and (c) is applied only to entire instruments and not to portions of instruments. On
January 1, 2008 the Partnership adopted SFAS 159, however, the Partnership has elected not
to use the fair value option for any of its existing financial assets and liabilities and
consequently, its adoption has had no impact.In September 2006 the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157),
which provides a single definition of fair value, establishes a framework for the
measurement of fair value and expands disclosure about the use of fair value to measure
assets and liabilities. SFAS 157 is effective for fiscal years beginning after November 15,
2007, and for interim periods within those fiscal years. In February 2008, the FASB issued
FSP 157-2, Effective Date of FASB Statement No. 157, which permits a one-year deferral
for the implementation of SFAS 157 with regard to non-financial assets and liabilities that
are not recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). The Partnership elected to defer adoption of SFAS 157 for such
items and does not currently anticipate that adoption for non-financial assets and
liabilities in 2009 will have a material impact to the financial statements. The
Partnership adopted the effective provisions of SFAS 157 as of January 1, 2008. At
September 30, 2008, the Partnership did not have any financial assets or liabilities that
were subject to the expanded disclosures regarding fair value measurements; consequently
its adoption has had no disclosure impact.
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 (1)
    
    Summary of Significant Accounting Policies (continued)
 (h)
    
    Accounting pronouncements not yet adoptedIn May 2008 the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting
Principles (SFAS 162). SFAS 162 identifies the sources of accounting principles and the
framework for selecting the principles to be used in the preparation of financial
statements of nongovernmental entities that are presented in conformity with generally
accepted accounting principles. SFAS 162 is effective 60 days following the SECs approval
of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning
of Present Fairly in Conformity With Generally Accepted Accounting Principles. The
Partnership does not believe adoption of SFAS 162 will have an impact on the financial
statements.
 (2)
    
    Net Lease Receivables Due from Leasing AgentNet lease receivables due from Leasing Agent at September 30, 2008 and December 31, 2007
comprised:
 September 30,
    
    
    December 31,2008
    
    
    2007Gross lease receivables
    
    $
    583,987
    
    
    $
    599,208Less:Direct operating payables and accrued expenses
    
    
    115,183
    
    
    
    115,694Base management fees payable
    
    
    31,087
    
    
    
    35,913Reimbursed administrative expenses
    
    
    6,994
    
    
    
    9,622Allowance for doubtful accounts
    
    
    57,439
    
    
    
    47,419210,703
    
    
    
    208,648Net lease receivables due from Leasing Agent
    
    $
    373,284
    
    
    $
    390,560
 Included within the amount of gross lease receivables are $82,039 and $9,427 in respect of
amounts owed by the Leasing Agent in relation to the disposal of containers for the nine months
ended September 30, 2008 and the year ended December 31, 2007, respectively.
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 (3)
    
    Net Lease RevenueNet lease revenue for the three and nine-month periods ended September 30, 2008 and 2007
comprised:
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Gross lease revenue
    
    $
    541,226
    
    
    $
    656,466
    
    
    $
    1,670,217
    
    
    $
    2,020,913Less:Direct operating expenses
    
    
    84,573
    
    
    
    134,914
    
    
    
    264,560
    
    
    
    450,355Base management fees
    
    
    37,407
    
    
    
    44,764
    
    
    
    115,089
    
    
    
    139,718Reimbursed administrative expensesSalaries
    
    
    16,696
    
    
    
    23,285
    
    
    
    59,971
    
    
    
    69,281Other payroll related expenses
    
    
    1,410
    
    
    
    2,322
    
    
    
    6,163
    
    
    
    10,104General and administrative expenses
    
    
    3,939
    
    
    
    5,829
    
    
    
    13,030
    
    
    
    19,925Total reimbursed administrative
expenses
    
    
    22,045
    
    
    
    31,436
    
    
    
    79,164
    
    
    
    99,310144,025
    
    
    
    211,114
    
    
    
    458,813
    
    
    
    689,383Net lease revenue
    
    $
    397,201
    
    
    $
    445,352
    
    
    $
    1,211,404
    
    
    $
    1,331,530
 (4)
    
    Operating SegmentAn operating segment is a component of an enterprise that engages in business activities from
which it may earn revenues and incur expenses, whose operating results are regularly reviewed
by the enterprises chief operating decision maker to make decisions about resources to be
allocated to the segment and assess its performance, and about which separate financial
information is available. Management operates the Partnerships container fleet as a
homogenous unit and has determined that as such, it has a single reportable operating segment.A summary of gross lease revenue earned by each Partnership container type for the three and
nine-month periods ended September 30, 2008 and 2007 follows:
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Dry cargo containers
    
    $
    418,447
    
    
    $
    475,589
    
    
    $
    1,265,887
    
    
    $
    1,465,225Refrigerated containers
    
    
    82,867
    
    
    
    141,718
    
    
    
    277,846
    
    
    
    437,989Tank containers
    
    
    39,912
    
    
    
    39,159
    
    
    
    126,484
    
    
    
    117,699Total
    
    $
    541,226
    
    
    $
    656,466
    
    
    $
    1,670,217
    
    
    $
    2,020,913
 Due to the Partnerships lack of information regarding the physical location of its fleet
of containers when on lease in the global shipping trade, the Partnership believes that it does
not possess discernible geographic reporting segments as defined in SFAS No. 131 Disclosures
about Segments of an Enterprise and Related Information (SFAS 131).
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 (5)
    
    Limited Partners CapitalCash distributions made to the limited partners for the nine-month periods ended September 30,
2008 and 2007 were as follows:
 Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007Cash Distribution from Operations
    
    $
    1,179,753
    
    
    $
    1,393,044Cash Distribution from Sales Proceeds
    
    
    739,847
    
    
    
    993,126Total Cash Distributions
    
    $
    1,919,600
    
    
    $
    2,386,170
 These distributions are used in determining Adjusted Capital Contributions as defined by the
Partnership Agreement.The limited partners per unit share of capital at September 30, 2008 and December 31, 2007 was
$4.64 and $5.78, respectively. This is calculated by dividing the limited partners capital at
the end of September 30, 2008 and December 31, 2007 by 1,599,667, the total number of
outstanding limited partnership units.
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Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Results of Operations
 Overview
    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
    
    
    2,039
    
    
    
    688
    
    
    
    1,148
    
    
    
    23
    
    
    
    54
    
    
    
    22Term leaseShort term1
    
    
    301
    
    
    
    71
    
    
    
    72
    
    
    
    5
    
    
    
    5
    
    
    
    15Long term2
    
    
    480
    
    
    
    161
    
    
    
    247
    
    
    
    1
    
    
    
    29
    
    
    
    12781
    
    
    
    232
    
    
    
    319
    
    
    
    6
    
    
    
    34
    
    
    
    27Subtotal
    
    
    2,820
    
    
    
    920
    
    
    
    1,467
    
    
    
    29
    
    
    
    88
    
    
    
    49Containers off lease
    
    
    109
    
    
    
    44
    
    
    
    99
    
    
    
    4
    
    
    
    23
    
    
    
    2Total container fleet
    
    
    2,929
    
    
    
    964
    
    
    
    1,566
    
    
    
    33
    
    
    
    111
    
    
    
    51
 
 1.
    
    Short term leases represent term leases that are either scheduled for renegotiation or that
may expire on or before September 2009.2.
    
    Long term leases represent term leases, the majority of which will expire between October
2009 and December 2019.  Dry Cargo
    
    Refrigerated
    
    TankContainers
    
    Containers
    
    Containers40-Foot
    
    
    
    
    
    
    
    
    
    40-Foot20-Foot
    
    40-Foot
    
    High-Cube
    
    20-Foot
    
    High-Cube
    
    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
    
    
    1,624
    
    
    
    36
    %
    
    
    536
    
    
    
    36
    %
    
    
    184
    
    
    
    11
    %
    
    
    57
    
    
    
    63
    %
    
    
    189
    
    
    
    63
    %
    
    
    1
    
    
    
    2
    %Remaining fleet at 

September 30, 2008
    
    
    2,929
    
    
    
    64
    %
    
    
    964
    
    
    
    64
    %
    
    
    1,566
    
    
    
    89
    %
    
    
    33
    
    
    
    37
    %
    
    
    111
    
    
    
    37
    %
    
    
    51
    
    
    
    98
    %
 12




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##### Table of Contents




    
    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 and the frequency and
size of repositioning moves undertaken; and
    
    Legal and other expenses, including legal costs related to the recovery of
containers and doubtful accounts, insurance and provisions for doubtful accounts.
  
    
    The Leasing Agent extended certain expiring leases at lower rental rates;
    
    Off hire containers were placed on leases at rates that, although they resulted in a
reduction in the average per-diem rental rates, also significantly lowered inventory
levels; and
    
    The overall lease market for the Partnerships older containers continues to be very
competitive and, therefore, subject to significant pricing pressures.
   Nine Months EndedSeptember 30,
    
    September 30,2008
    
    2007Fleet size (measured in twenty-foot equivalent units (TEU))Dry cargo containers
    
    
    8,278
    
    
    
    9,034Refrigerated containers
    
    
    333
    
    
    
    437Tank containers
    
    
    51
    
    
    
    51Average utilization ratesDry cargo containers
    
    
    97
    %
    
    
    90
    %Refrigerated containers
    
    
    81
    %
    
    
    80
    %Tank containers
    
    
    93
    %
    
    
    96
    %
  13




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##### Table of Contents



Three Months Ended September 30, 2008 Compared to the Three Months Ended September 30, 2007
 Overview
 Net income
 Analysis and discussion
 Net lease revenue
 
    
    a $50,341 reduction in direct operating expenses (a component of net lease revenue)
as both activity-related and inventory-related expenses decreased in line with the
decline in inventories of off-hire containers; and
    
    a $9,391 reduction in reimbursed administrative expenses (a component of net lease
revenue) as a result of smaller fleet size and a decrease in expenses incurred by CCC
and its affiliates. Reimbursed administrative expenses are costs expended by CCC and
its affiliates for services necessary for the prudent operation of the Partnership
pursuant to the Limited Partnership Agreement.
 Depreciation expense
 Other general and administrative expenses
 Net gains on disposal of equipment
  Nine Months Ended September 30, 2008 Compared to the Nine Months Ended September 30, 2007
 Overview
 Net income
 14




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##### Table of Contents



Analysis and discussion
 Net lease revenue
 
    
    a $185,795 reduction in direct operating expenses (a component of net lease revenue)
as both activity-related and inventory-related expenses decreased in line with the
decline in inventories of off-hire containers; and
    
    a $20,146 reduction in reimbursed administrative expenses (a component of net lease
revenue) as a result of smaller fleet size and a decrease in expenses incurred by CCC
and its affiliates. Reimbursed administrative expenses are costs expended by CCC and
its affiliates for services necessary for the prudent operation of the Partnership
pursuant to the Limited Partnership Agreement.
 Depreciation expense
 Other general and administrative expenses
 Net gains on disposal of equipment
 Liquidity and Capital Resources
  th
  15




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##### Table of Contents



Cash from Operating Activities:
 Cash from Investing Activities:
 Cash from Financing Activities
 Critical Accounting Policies
  
    
    Container equipment  depreciable lives and residual values.
    
    Container equipment  recoverability and valuation in accordance with SFAS 144
Accounting for the Impairment or Disposal of Long Lived Assets.
    
    Allowance for doubtful accounts.
  16




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##### Table of Contents



Inflation
  
 Quantitative and Qualitative Disclosures About Market Risk
 Exchange rate risk
 
 Controls and Procedures
  
 Controls and Procedures
  17




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Legal Proceedings
  
 Risk Factors
  
 Unregistered Sales of Equity Securities and Use of Proceeds
  
 Defaults Upon Senior Securities
  
 Submissions of Matters to a Vote of Security 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. 18




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##### Table of Contents



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/ Frank P. VaughanFrank P. VaughanChief Financial Officer and
Director of Cronos Capital Corp. (CCC)
Principal Financial and Accounting Officer of CCC  19




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##### Table of Contents



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.