##### Table of Contents



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, 2002

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 0-27496

CRONOS GLOBAL INCOME FUND XVI, L.P.

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|California                                                     |  | 94-3230380                          
|                                                              
|                                                              
|                                                              
|                                                              
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

One Front 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  [  ].





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TABLE OF CONTENTS



|                               |                                                                                               |                                         |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | --------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1. Financial Statements                                                                 
|                               |                                                                                               | Statements of Operations               
|                               |                                                                                               | Statements of Cash Flows               
|                               |                                                                                               | Notes to Unaudited Financial Statements
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                               | Item 4. Controls and Procedures                                                              
|PART II  OTHER INFORMATION   
|                               | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                    
|EXHIBIT INDEX                 
|Exhibit 99.1                  
|Exhibit 99.2                  



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##### Table of Contents



CRONOS GLOBAL INCOME FUND XVI, L.P.



| |                                                                      
| | ---------------------------------------------------------------------
| | Report on Form 10-Q for the Quarterly Period
Ended September 30, 2002

TABLE OF CONTENTS

|                               |  |                                                                                                      |  |     
|------------------------------ |  | ---------------------------------------------------------------------------------------------------- |  | ----
|                               |  |                                                                                                      |  | PAGE
|PART I  FINANCIAL INFORMATION |  |                                                                                                     
|                              
|                              
|                              
|                              
|Item 1.                        |  | Financial Statements                                                                                 |  |     
|                              
|                              
|                              
|                              
|                               |  | Balance Sheets  September 30, 2002 and December 31, 2001 (unaudited)                                |  | 4   
|                              
|                              
|                              
|                              
|                               |  | Statements of Operations for the three and nine months ended September 30, 2002 and 2001 (unaudited) |  | 5   
|                              
|                              
|                              
|                              
|                               |  | Statements of Cash Flows for the nine months ended September 30, 2002 and 2001 (unaudited)           |  | 6   
|                              
|                              
|                              
|                              
|                               |  | Notes to Financial Statements (unaudited)                                                            |  | 7   
|                              
|                              
|                              
|                              
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                |  | 12  
|                              
|                              
|                              
|                              
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                           |  | 16  
|                              
|                              
|                              
|                              
|Item 4.                        |  | Controls and Procedures                                                                              |  | 16  
|                              
|                              
|                              
|                              
|PART II  OTHER INFORMATION    |  |                                                                                                     
|                              
|                              
|                              
|                              
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                                     |  | 17  

2



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1. Financial Statements



| |  | Presented herein are the Registrants balance sheets as of September 30,
2002 and December 31, 2001, statements of operations for the three and
nine months ended September 30, 2002 and 2001, and statements of cash
flows for the nine months ended September 30, 2002 and 2001.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3



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##### Table of Contents



CRONOS GLOBAL INCOME FUND XVI, L.P.

Balance Sheets

(Unaudited)

|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |              |            |            |  | 
|----------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | --------------------------------------- | --------------------------------- | ---------- | ------------- | ---------- | ------------ | ---------- | ---------- |  | 
|                                    |                                                                                                                                       |                                |                                         |                                   |            | September 30, |            | December 31,
|                                    |                                                                                                                                       |                                |                                         |                                   |            | 2002          |            | 2001        
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|                                    |                                                                                                                                       |                                |                                         | Assets                            |            |               |            |              |            |            |  | 
|                                   
|                                   
|                                   
|                                   
|Current assets:                     |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|                                   
|                                   
|                                   
|                                   
|                                    | Cash and cash equivalents, includes $1,376,503 at September 30, 2002
and $1,280,929 at December 31, 2001 in interest-bearing accounts |                                | $                                       | 1,576,709                         |            |               | $          | 1,295,929    |           
|                                   
|                                   
|                                   
|                                   
|                                    | Net lease receivables due from Leasing Company
(notes 1 and 2)                                                                        |                                |                                         | 174,076                           |            |               |            | 222,804      |           
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|                                    |                                                                                                                                       |                                | Total current assets                    |                                   |            | 1,750,785     |            |              |            | 1,518,733  | 
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|Container rental equipment, at cost |                                                                                                                                       |                                | 31,673,096                              |                                   |            |               | 31,734,297 |             
|                                   
|                                   
|                                   
|                                   
|                                    | Less accumulated depreciation                                                                                                         |                                |                                         | 10,623,322                        |            |               |            | 9,205,547    |           
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|                                    |                                                                                                                                       | Net container rental equipment |                                         |                                   | 21,049,774 |               |            |              | 22,528,750 |           
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|Other assets                        |                                                                                                                                       |                                | 826,084                                 |                                   |            |               | 842,007    |             
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|                                    |                                                                                                                                       |                                | Total assets                            |                                   | $          | 23,626,643    |            |              | $          | 24,889,490 | 
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |              |           
|                                    |                                                                                                                                       |                                |                                         | Liabilities and partners capital |            |               |            |              |            |            |  | 
|                                   
|                                   
|                                   
|                                   
|Current liabilities:                |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|                                   
|                                   
|                                   
|                                   
|                                    | Interest payable                                                                                                                      |                                | $                                       | 10,341                            |            |               | $          | 12,136       |           
|                                   
|                                   
|                                   
|                                   
|                                    | Current portion of equipment debt                                                                                                     |                                |                                         | 840,600                           |            |               |            | 840,600      |           
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|                                    |                                                                                                                                       |                                | Total current liabilities               |                                   |            | 850,941       |            |              |            | 852,736    | 
|                                   
|                                   
|                                   
|                                   
|Equipment debt less current portion |                                                                                                                                       |                                | 2,311,650                               |                                   |            |               | 2,942,100  |             
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|                                    |                                                                                                                                       |                                | Total liabilities                       |                                   |            | 3,162,591     |            |              |            | 3,794,836  | 
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|Partners capital (deficit):        |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|                                   
|                                   
|                                   
|                                   
|                                    | General partner                                                                                                                       |                                |                                         | (24,303                           | )          |               |            | (27,315      | )         
|                                   
|                                   
|                                   
|                                   
|                                    | Limited partners                                                                                                                      |                                |                                         | 20,488,355                        |            |               |            | 21,121,969   |           
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|                                    |                                                                                                                                       |                                | Total partners capital                 |                                   |            | 20,464,052    |            |              |            | 21,094,654 | 
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |             
|                                    |                                                                                                                                       |                                | Total liabilities and partners capital |                                   | $          | 23,626,643    |            |              | $          | 24,889,490 | 
|                                    |                                                                                                                                       |                                |                                         |                                   |            |               |            |              |           

The accompanying notes are an integral part of these financial statements.

4



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CRONOS GLOBAL INCOME FUND XVI, L.P.

Statements of Operations

(Unaudited)

|                                               |                                           |                        |         |                    |         |                   |         |               |         |               |           |           |         |   |           |           |         | 
|---------------------------------------------- | ----------------------------------------- | ---------------------- | ------- | ------------------ | ------- | ----------------- | ------- | ------------- | ------- | ------------- | --------- | --------- | ------- | - | --------- | --------- | ------- | 
|                                               |                                           |                        |         | Three Months Ended |         | Nine Months Ended
|                                               |                                           |                        |         |                    |         |                  
|                                               |                                           |                        |         | September 30,      |         | September 30,     |         | September 30, |         | September 30,
|                                               |                                           |                        |         | 2002               |         | 2001              |         | 2002          |         | 2001         
|                                               |                                           |                        |         |                    |         |                   |         |               |         |              
|Net lease revenue (notes 1 and 3)              |                                           | $                      | 714,675 |                    |         | $                 | 703,834 |               |         | $             | 2,008,234 |           |         | $ | 2,182,778 |          
|                                              
|                                              
|                                              
|                                              
|Other operating expenses:                      |                                           |                        |         |                    |         |                   |         |               |         |               |           |           |         |   |           |          
|                                              
|                                              
|                                              
|                                              
|                                               | Depreciation                              |                        |         | 486,653            |         |                   |         | 488,179       |         |               |           | 1,462,685 |         |   |           | 1,438,208 |        
|                                              
|                                              
|                                              
|                                              
|                                               | Other general and administrative expenses |                        |         | 17,039             |         |                   |         | 17,955        |         |               |           | 54,595    |         |   |           | 73,377    |        
|                                              
|                                              
|                                              
|                                              
|                                               | Net loss (gain) on disposal of equipment  |                        |         | 259                |         |                   |         | (3,278        | )       |               |           | (9,411    | )       |   |           | (5,751    | )      
|                                               |                                           |                        |         |                    |         |                   |         |               |         |               |           |           |         |   |           |          
|                                               |                                           | Income from operations |         |                    | 210,724 |                   |         |               | 200,978 |               |           |           | 500,365 |   |           |           | 676,944 | 
|                                              
|                                              
|                                              
|                                              
|Other (expense) income:                        |                                           |                        |         |                    |         |                   |         |               |         |               |           |           |         |   |           |          
|                                              
|                                              
|                                              
|                                              
|                                               | Interest income                           |                        |         | 5,428              |         |                   |         | 10,346        |         |               |           | 16,295    |         |   |           | 41,689    |        
|                                              
|                                              
|                                              
|                                              
|                                               | Interest expense                          |                        |         | (30,909            | )       |                   |         | (58,422       | )       |               |           | (97,682   | )       |   |           | (220,938  | )      
|                                               |                                           |                        |         |                    |         |                   |         |               |         |               |           |           |         |   |           |          
|                                               |                                           |                        | (25,481 | )                  |         |                   | (48,076 | )             |         |               | (81,387   | )         |         |   | (179,249  | )        
|                                               |                                           |                        |         |                    |         |                   |         |               |         |               |           |           |         |   |           |          
|                                               |                                           | Net income             |         | $                  | 185,243 |                   |         | $             | 152,902 |               |           | $         | 418,978 |   |           | $         | 497,695 | 
|                                               |                                           |                        |         |                    |         |                   |         |               |         |               |           |           |         |   |           |          
|Allocation of net income:                      |                                           |                        |         |                    |         |                   |         |               |         |               |           |           |         |   |           |          
|                                              
|                                              
|                                              
|                                              
|                                               | General partner                           |                        | $       | 14,788             |         |                   | $       | 19,929        |         |               | $         | 52,799    |         |   | $         | 75,218    |        
|                                              
|                                              
|                                              
|                                              
|                                               | Limited partners                          |                        |         | 170,455            |         |                   |         | 132,973       |         |               |           | 366,179   |         |   |           | 422,477   |        
|                                               |                                           |                        |         |                    |         |                   |         |               |         |               |           |           |         |   |           |          
|                                               |                                           | $                      | 185,243 |                    |         | $                 | 152,902 |               |         | $             | 418,978   |           |         | $ | 497,695   |          
|                                               |                                           |                        |         |                    |         |                   |         |               |         |               |           |           |         |   |           |          
|Limited partners per unit share of net income |                                           | $                      | 0.11    |                    |         | $                 | 0.08    |               |         | $             | 0.23      |           |         | $ | 0.26      |          
|                                               |                                           |                        |         |                    |         |                   |         |               |         |               |           |           |         |   |           |          

The accompanying notes are an integral part of these financial statements.

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CRONOS GLOBAL INCOME FUND XVI, L.P.

Statements of Cash Flows

(Unaudited)

|                                                     |                                     |   |                   |            |               |   |            |            |  
|---------------------------------------------------- | ----------------------------------- | - | ----------------- | ---------- | ------------- | - | ---------- | ---------- | -
|                                                     |                                     |   | Nine Months Ended
|                                                     |                                     |   |                  
|                                                     |                                     |   | September 30,     |            | September 30,
|                                                     |                                     |   | 2002              |            | 2001         
|                                                     |                                     |   |                   |            |              
|Net cash provided by operating activities            |                                     | $ | 1,885,028         |            |               | $ | 1,926,758  |           
|                                                    
|                                                    
|                                                    
|                                                    
|Cash flows provided by investing activities:         |                                     |   |                   |            |               |   |            |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from disposal of equipment |   |                   | 75,782     |               |   |            | 65,702     |  
|                                                    
|                                                    
|                                                    
|                                                    
|Cash flows used in financing activities:             |                                     |   |                   |            |               |   |            |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Repayment of term debt              |   |                   | (630,450   | )             |   |            | (630,450   | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Distribution to partners            |   |                   | (1,049,580 | )             |   |            | (1,613,701 | )
|                                                     |                                     |   |                   |            |               |   |            |           
|Net cash used in financing activities                |                                     |   | (1,680,030        | )          |               |   | (2,244,151 | )         
|                                                     |                                     |   |                   |            |               |   |            |           
|Net increase (decrease) in cash and cash equivalents |                                     |   | 280,780           |            |               |   | (251,691   | )         
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents at January 1               |                                     |   | 1,295,929         |            |               |   | 1,379,619  |           
|                                                     |                                     |   |                   |            |               |   |            |           
|Cash and cash equivalents at September 30            |                                     | $ | 1,576,709         |            |               | $ | 1,127,928  |           
|                                                     |                                     |   |                   |            |               |   |            |           

The accompanying notes are an integral part of these financial statements.

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CRONOS GLOBAL INCOME FUND XVI, L.P.

Notes to Unaudited Financial Statements



|(1) |  | Summary of Significant Accounting Policies
|--- |  | ------------------------------------------



| | (a) |  | Nature of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Cronos Global Income Fund XVI, L.P. (the Partnership) is a limited
partnership organized under the laws of the State of California on
September 1, 1995, for the purpose of owning and leasing marine cargo
containers, special purpose containers and container related equipment
worldwide to ocean carriers. To this extent, the Partnerships
operations are subject to the fluctuations of world economic and
political conditions. Such factors may affect the pattern and levels of
world trade. The Partnership believes that the profitability of, and
risks associated with, leases to foreign customers is generally the same
as those of leases to domestic customers. The Partnerships leases
generally require all payments to be made in United States currency.                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | Cronos Capital Corp. (CCC) is the general partner and, with its
affiliate Cronos Containers Limited (the Leasing Company), manages the
business of the Partnership. CCC and the Leasing Company also manage the
container leasing business for other partnerships affiliated with CCC.
The Partnership shall continue until December 31, 2015, unless sooner
terminated upon the occurrence of certain events.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | 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, the
general partner, and all affiliates of the general partner). 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (b) |  | Leasing Company and Leasing Agent Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     |  | A Leasing Agent Agreement exists between the Partnership and the
Leasing Company, 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 one 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, and
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.

(Continued)

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CRONOS GLOBAL INCOME FUND XVI, L.P.

Notes to Unaudited Financial Statements



| | (c) |  | Basis of Accounting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Partnership utilizes the accrual method of accounting. Net
lease revenue is recorded by the Partnership in each period based upon
its leasing agent agreement with the Leasing Company. Net lease revenue
is generally dependent upon operating lease rentals from operating lease
agreements between the Leasing Company and its various lessees, less
direct operating expenses and management fees due in respect of the
containers specified in each operating lease agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (d) |  | Container Rental Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |  | SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, was adopted by the Partnership effective January 1, 2002,
without a significant impact on its financial statements. In accordance
with SFAS No. 144, 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 is prepared each quarter projecting future
cash flows from container rental equipment operations. Current and
projected utilization rates, per-diem rental rates, direct operating
expenses, fleet size and container disposals are the primary variables
utilized by the analysis. Additionally, the Partnership evaluates
future cash flows and potential impairment by container type rather than
for each 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 to the carrying value of container rental equipment
for the three and nine-month periods ended September 30, 2002 and 2001.
|
| |     |  | Depreciation policies are also evaluated to determine whether subsequent
events and circumstances warrant revised estimates of useful lives.
Container rental equipment is depreciated using the straight-line basis.
Effective June 1, 2001, the estimated depreciable life was changed from a
twelve-year life to a fifteen-year life and the estimated salvage value
was changed from 30% to 10% of the original equipment cost. The effect
of these changes is an increase to depreciation expense of approximately
$33,000 and $26,000 for the nine-month periods ended September 30, 2002
and 2001, respectively. The change in depreciation expense was
approximately $19,000 for the three-month period ended September 30,
2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (e) |  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |     |  | The financial statements are prepared in conformity with accounting
principles generally accepted in the United States of America (GAAP),
which 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. Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | The most significant estimates included within the financial
statements are the container rental equipment estimated useful lives and
residual values, and the estimate of future cash flows from container
rental equipment operations, used to determine the adequacy of the
carrying value of container rental equipment in accordance with SFAS No.
144. Considerable judgement is required in estimating future cash flows
from container rental equipment operations. Accordingly, the estimates
may not be indicative of the amounts that may be realized in future
periods. As additional information becomes available in subsequent
periods, reserves for the impairment of the container rental equipment
carrying values may be necessary based upon changes in market and
economic conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

(Continued)

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CRONOS GLOBAL INCOME FUND XVI, L.P.

Notes to Unaudited Financial Statements



| | (f) |  | 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 accounting principles
generally accepted in the United States of America (GAAP) 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 results of
operations for such interim periods are not necessarily indicative of the
results to be expected for the full year.                                                            



|(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 earned by the Leasing Company under
operating leases to ocean carriers for the containers owned by the
Partnership, as well as proceeds earned from container disposals. Net lease
receivables at September 30, 2002 and December 31, 2001 were as follows:

|                                               |  |               |         |              |  |   |         | 
|---------------------------------------------- |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                               |  | September 30, |         | December 31,
|                                               |  | 2002          |         | 2001        
|                                               |  |               |         |             
|Gross lease receivables                        |  | $             | 724,126 |              |  | $ | 793,868 | 
|                                              
|                                              
|                                              
|                                              
|Less:                                          |  |               |         |              |  |   |         | 
|                                              
|                                              
|                                              
|                                              
|Direct operating payables and accrued expenses |  |               | 349,136 |              |  |   | 365,435 | 
|                                              
|                                              
|                                              
|                                              
|Damage protection reserve                      |  |               | 45,548  |              |  |   | 47,883  | 
|                                              
|                                              
|                                              
|                                              
|Base management fees payable                   |  |               | 103,961 |              |  |   | 102,576 | 
|                                              
|                                              
|                                              
|                                              
|Reimbursed administrative expenses             |  |               | 14,490  |              |  |   | 16,328  | 
|                                              
|                                              
|                                              
|                                              
|Allowance for doubtful accounts                |  |               | 36,915  |              |  |   | 38,842  | 
|                                               |  |               |         |              |  |   |         | 
|Net lease receivables                          |  | $             | 174,076 |              |  | $ | 222,804 | 
|                                               |  |               |         |              |  |   |         | 

(Continued)

9



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##### Table of Contents



CRONOS GLOBAL INCOME FUND XVI, L.P.

Notes to Unaudited Financial Statements



|(3) |  | Net Lease Revenue                                                                                                                                                                                                                                                                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Net lease revenue is determined by deducting direct operating expenses,
base management fees and reimbursed administrative expenses to CCC and its
affiliates from the rental revenue earned 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, 2002 and 2001 was as follows:

|                                    |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 
|----------------------------------- |  | ------------------ | --------- | ----------------- |  | ------------- | --------- | ------------- |  | - | --------- |  |  | - | --------- | 
|                                    |  | Three Months Ended |           | Nine Months Ended
|                                    |  |                    |           |                  
|                                    |  | September 30,      |           | September 30,     |  | September 30, |           | September 30,
|                                    |  | 2002               |           | 2001              |  | 2002          |           | 2001         
|                                    |  |                    |           |                   |  |               |           |              
|Rental revenue (note 4)             |  | $                  | 1,028,369 |                   |  | $             | 1,068,741 |               |  | $ | 3,039,074 |  |  | $ | 3,230,222 | 
|                                   
|                                   
|                                   
|                                   
|Less:                               |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 
|                                   
|                                   
|                                   
|                                   
|Rental equipment operating expenses |  |                    | 195,075   |                   |  |               | 242,034   |               |  |   | 678,626   |  |  |   | 676,308   | 
|                                   
|                                   
|                                   
|                                   
|Base management fees                |  |                    | 71,506    |                   |  |               | 73,949    |               |  |   | 210,189   |  |  |   | 223,858   | 
|                                   
|                                   
|                                   
|                                   
|Reimbursed administrative expenses  |  |                    | 47,113    |                   |  |               | 48,924    |               |  |   | 142,025   |  |  |   | 147,278   | 
|                                    |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 
|Net lease revenue                   |  | $                  | 714,675   |                   |  | $             | 703,834   |               |  | $ | 2,008,234 |  |  | $ | 2,182,778 | 
|                                    |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 



|(4) |  | Operating Segment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | An 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.
|   
|    |  | The Partnership derives its revenues from leasing marine cargo containers.
As of September 30, 2002, the Partnership operated 4,459 twenty-foot, 1,483
forty-foot and 1,741 forty-foot high-cube marine dry cargo containers, 88
twenty-foot and 298 forty-foot high-cube refrigerated cargo containers, and
52 twenty-four thousand-liter tanks. A summary of gross lease revenue, by
product, for the three and nine-month periods ended September 30, 2002 and
2001 follows:                                                                                   

|                        |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 
|----------------------- |  | ------------------ | --------- | ----------------- |  | ------------- | --------- | ------------- |  | - | --------- |  |  | - | --------- | 
|                        |  | Three Months Ended |           | Nine Months Ended
|                        |  |                    |           |                  
|                        |  | September 30,      |           | September 30,     |  | September 30, |           | September 30,
|                        |  | 2002               |           | 2001              |  | 2002          |           | 2001         
|                        |  |                    |           |                   |  |               |           |              
|Dry cargo containers    |  | $                  | 677,961   |                   |  | $             | 679,893   |               |  | $ | 1,991,582 |  |  | $ | 2,077,851 | 
|                       
|                       
|                       
|                       
|Refrigerated containers |  |                    | 317,256   |                   |  |               | 346,923   |               |  |   | 945,637   |  |  |   | 1,037,869 | 
|                       
|                       
|                       
|                       
|Tank containers         |  |                    | 33,152    |                   |  |               | 41,925    |               |  |   | 101,855   |  |  |   | 114,502   | 
|                        |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 
|Total                   |  | $                  | 1,028,369 |                   |  | $             | 1,068,741 |               |  | $ | 3,039,074 |  |  | $ | 3,230,222 | 
|                        |  |                    |           |                   |  |               |           |               |  |   |           |  |  |   |           | 



| |  | 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, it is impracticable to provide geographic area information.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(Continued)

10



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##### Table of Contents



CRONOS GLOBAL INCOME FUND XVI, L.P.

Notes to Unaudited Financial Statements



|(5) |  | Equipment Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | As of September 30, 2002, the Partnerships existing term loan debt was
$3,152,250, plus estimated accrued interest of $10,341. On March 30, 2000,
the Partnership borrowed $5,043,600 under a term loan for the purpose of
acquiring additional equipment. The loan will be repaid in 15 remaining
equal quarterly installments plus interest, through May 31, 2006. Interest
accrues at the rate of 1.75% above the LIBOR rate which is calculated on the
first day of each quarterly interest period. Over the life of the loan, the
interest rates have ranged from 3.65% to 8.58%. The loan is secured by
containers owned by the Partnership, as well as any income generated in
connection with the containers including lease revenue and sales proceeds.
A restricted deposit of $750,000 is held in an account with the lender as
additional collateral.                                                                                   
|   
|    |  | As of September 30, 2002, the estimated fair value of the term loan
debt was $3,135,013. The fair value of the term loan has been calculated
using the market rates prevailing at May 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(6) |  | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | In August 2001, the Financial Accounting Standards Board issued SFAS No.
143, Accounting for Asset Retirement Obligations, which is effective for
all fiscal years beginning after June 15, 2002. This standard requires a
company to record the fair value of a liability for an asset retirement
obligation in the period in which it is incurred, and a corresponding
increase in the carrying value of the related long-lived asset. The
Partnership is currently evaluating the impact that SFAS No. 143 will have
on its financial statements.                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | In June 2002, the Financial Accounting Standards Board issued SFAS 146,
Accounting for Costs Associated with Exit or Disposal Activities, which
addresses accounting for restructuring and similar costs. SFAS 146
supersedes previous accounting guidance, principally Emerging Issues Task
Force Issue No. 94-3. SFAS 146 requires that the liability for costs
associated with an exit or disposal activity be recognized when the
liability is incurred. Under Issue 94-3, a liability for an exit cost was
recognized at the date of the Partnerships commitment to an exit plan. SFAS
146 also establishes that the liability should initially be measured and
recorded at fair value. Accordingly, SFAS 146 may affect the timing of
recognizing future restructuring costs as well as the amounts recognized.
The Registrant believes that SFAS 146 will not have a significant impact on
its financial position or results of operations.

******

11



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##### Table of Contents






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.

General

A Leasing Agent Agreement (Agreement) exists between the Registrant and the
Leasing Company, whereby the Leasing Company has the responsibility to manage
the leasing operations of all equipment owned by the Registrant. Pursuant to
the Agreement, the Leasing Company is responsible for leasing, managing and
re-leasing the Registrant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 Registrant, 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. At September 30, 2002, 99% of the
original equipment remained in the Registrants fleet, unchanged from December
31, 2001. The following chart summarizes the composition of the Registrants
fleet (based on container type) at September 30, 2002.

|                       |  |            |       |              |  |            |       |         |  |           |       |              |  |  |    |         |  |  |     |  |  |  |    | 
|---------------------- |  | ---------- | ----- | ------------ |  | ---------- | ----- | ------- |  | --------- | ----- | ------------ |  |  | -- | ------- |  |  | --- |  |  |  | -- | 
|                       |  | Dry Cargo  |       | Refrigerated |  | Tank      
|                       |  | Containers |       | Containers   |  | Containers
|                       |  |            |       |              |  |           
|                       |  |            |       |              |  |            |       |         |  | 40-Foot   |       |              |  |  |    | 40-Foot |  |  |     | 
|                       |  | 20-Foot    |       | 40-Foot      |  | High-Cube  |       | 20-Foot |  | High-Cube |       | 24,000-Liter
|                       |  |            |       |              |  |            |       |         |  |           |       |             
|Containers on lease:   |  |            |       |              |  |            |       |         |  |           |       |              |  |  |    |         |  |  |     |  |  |  |    | 
|                      
|                      
|                      
|                      
|Master lease           |  |            | 2,329 |              |  |            | 587   |         |  |           | 745   |              |  |  | 28 |         |  |  | 79  |  |  |  | 12 | 
|                      
|                      
|                      
|                      
|Term lease (1-5
years) |  |            | 1,410 |              |  |            | 653   |         |  |           | 864   |              |  |  | 53 |         |  |  | 212 |  |  |  | 25 | 
|                       |  |            |       |              |  |            |       |         |  |           |       |              |  |  |    |         |  |  |     |  |  |  |    | 
|Subtotal               |  |            | 3,739 |              |  |            | 1,240 |         |  |           | 1,609 |              |  |  | 81 |         |  |  | 291 |  |  |  | 37 | 
|                      
|                      
|                      
|                      
|Containers off lease   |  |            | 720   |              |  |            | 243   |         |  |           | 132   |              |  |  | 7  |         |  |  | 7   |  |  |  | 15 | 
|                       |  |            |       |              |  |            |       |         |  |           |       |              |  |  |    |         |  |  |     |  |  |  |    | 
|Total container fleet  |  |            | 4,459 |              |  |            | 1,483 |         |  |           | 1,741 |              |  |  | 88 |         |  |  | 298 |  |  |  | 52 | 
|                       |  |            |       |              |  |            |       |         |  |           |       |              |  |  |    |         |  |  |     |  |  |  |    | 

|                                      |                |  |            |    |              |  |            |   |         |  |         |    |              |  |       |   |   |  |         |   |   |  |       |   |   |  |    |   |  |  |     |   |   |  |     |   |  |  |     |   |   |  |    |   |  |  |     |   |  
|------------------------------------- | -------------- |  | ---------- | -- | ------------ |  | ---------- | - | ------- |  | ------- | -- | ------------ |  | ----- | - | - |  | ------- | - | - |  | ----- | - | - |  | -- | - |  |  | --- | - | - |  | --- | - |  |  | --- | - | - |  | -- | - |  |  | --- | - | -
|                                      |                |  | Dry Cargo  |    | Refrigerated |  | Tank      
|                                      |                |  | Containers |    | Containers   |  | Containers
|                                      |                |  |            |    |              |  |           
|                                      |                |  |            |    |              |  |            |   |         |  |         |    |              |  |       |   |   |  | 40-Foot |   |   |  |       |   |   |  |    |   |  |  |     |   |   |  |     |   |  |  |     |   |   |  |   
|                                      |                |  | 20-Foot    |    | 40-Foot      |  | High-Cube  |   | 20-Foot |  | 40-Foot |    | 24,000-Liter
|                                      |                |  |            |    |              |  |            |   |         |  |         |    |             
|                                      |                |  | Units      |    | %            |  | Units      |   | %       |  | Units   |    | %            |  | Units |   | % |  | Units   |   | % |  | Units |   | %
|                                      |                |  |            |    |              |  |            |   |         |  |         |    |              |  |       |   |   |  |         |   |   |  |       |   |  
|Total purchases                       |                |  | 4,553      |    |              |  | 100        | % |         |  | 1,500   |    |              |  | 100   | % |   |  | 1,750   |   |   |  | 100   | % |   |  | 90 |   |  |  | 100 | % |   |  | 300 |   |  |  | 100 | % |   |  | 52 |   |  |  | 100 | %
|                                     
|                                     
|                                     
|                                     
|                                      | Less disposals |  |            | 94 |              |  |            | 2 | %       |  |         | 17 |              |  |       | 1 | % |  |         | 9 |   |  |       | 1 | % |  |    | 2 |  |  |     | 2 | % |  |     | 2 |  |  |     | 1 | % |  |    | 0 |  |  |     | 0 | %
|                                      |                |  |            |    |              |  |            |   |         |  |         |    |              |  |       |   |   |  |         |   |   |  |       |   |   |  |    |   |  |  |     |   |   |  |     |   |  |  |     |   |   |  |    |   |  |  |     |  
|Remaining fleet at
September 30, 2002 |                |  | 4,459      |    |              |  | 98         | % |         |  | 1,483   |    |              |  | 99    | % |   |  | 1,741   |   |   |  | 99    | % |   |  | 88 |   |  |  | 98  | % |   |  | 298 |   |  |  | 99  | % |   |  | 52 |   |  |  | 100 | %
|                                      |                |  |            |    |              |  |            |   |         |  |         |    |              |  |       |   |   |  |         |   |   |  |       |   |   |  |    |   |  |  |     |   |   |  |     |   |  |  |     |   |   |  |    |   |  |  |     |  

Over the past two years, the slowdown and uneven recovery in the global economy
has led to reduced levels of capital available for new container investment and
a corresponding increase in demand for existing dry cargo containers. During
2002, the surge in demand for existing containers has contributed to reducing
off-hire inventories primarily in Asia, and to a lesser extent Europe and North
America. Many Asian locations are now experiencing container shortfalls as
limited new container production is unable to meet current market demands. To
exploit this demand, the Leasing Company has repositioned off-hire equipment to
locations of greatest demand and pursued leasing opportunities through its
global network of marketing services. As a result, average utilization of the
Registrants dry cargo fleet increased from 75% during the month of December
2001 to 86% during the month of September 2002. However, lease per-diem rates,
which are influenced by new container prices and borrowing rates, continued to
remain depressed. An improvement in lease per-diem rates is not expected until
new container prices increase to much higher levels. The demand for cargo
containers has continued into the fourth quarter of 2002 and is expected to
continue into early 2003. However, wide-ranging concerns remain about waning
consumer confidence within the worlds economies, a rise in oil prices, weak
global stock markets, the uncertain impact of a possible war in Iraq, as well
as an increase in new container production, which may temper the current demand
for leased containers.

Despite recent improvements in container leasing market conditions, the effect
of the sporadic global economic recovery on the container leasing industrys
customers, the shipping lines, coupled with their acquisition of new, larger
containerships, has created a condition of excess shipping capacity. The
uncertainty over the financial strength of the shipping industry appears
to favor the larger more established shipping lines. The Registrant, CCC and
the Leasing Company continue to remain

(Continued)

12



---



##### Table of Contents



cautious, as some shipping lines have reported operating losses during 2002.
The financial impact of such losses on the shipping lines may eventually
influence the demand for leased containers as some shipping lines may
experience additional financial difficulties, consolidate or become insolvent.
Although the ultimate outcome, as well as its impact on the container leasing
industry and the Registrants results of operations, is unknown, CCC, on behalf
of the Registrant, will work closely with the Leasing Company to monitor
outstanding receivables, collections, and credit exposure to various existing
and new customers.

On October 8, 2002, the Pacific Maritime Associations 10-day lock-out of the
International Longshore and Warehouse Union ended. During this 10-day period,
the flow of world trade, particularly in Pacific trade routes was disrupted,
creating some interesting short-term benefits to the container leasing industry
as shipping lines were unable to off-hire containers during the 10-day lock
out, and ships were delayed at congested ports, exacerbating the shortage of
container inventories throughout Asia. While these conditions served to create
further short-term demand for existing cargo containers, the long-term impact
of this lock-out will not be known until the labor issues associated with the
lock-out are ultimately resolved, shipping lines assess their losses, and
containers and ships are redeployed into areas of demand.

The Registrants average fleet size and utilization rates for the three and
nine-month periods ended September 30, 2002 and 2001 were as follows:

|                                                                    |                         |  |                    |        |                   |  |               |        |               |  |  |        |   |  |  |        |  
|------------------------------------------------------------------- | ----------------------- |  | ------------------ | ------ | ----------------- |  | ------------- | ------ | ------------- |  |  | ------ | - |  |  | ------ | -
|                                                                    |                         |  | Three Months Ended |        | Nine Months Ended
|                                                                    |                         |  |                    |        |                  
|                                                                    |                         |  | September 30,      |        | September 30,     |  | September 30, |        | September 30,
|                                                                    |                         |  | 2002               |        | 2001              |  | 2002          |        | 2001         
|                                                                    |                         |  |                    |        |                   |  |               |        |              
|Average fleet size (measured in
twenty-foot equivalent
units (TEU)) |                         |  |                    |        |                   |  |               |        |               |  |  |        |   |  |  |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Dry cargo containers    |  |                    | 10,910 |                   |  |               | 10,945 |               |  |  | 10,916 |   |  |  | 10,956 |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Refrigerated containers |  |                    | 684    |                   |  |               | 686    |               |  |  | 685    |   |  |  | 687    |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Tank containers         |  |                    | 52     |                   |  |               | 52     |               |  |  | 52     |   |  |  | 52     |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Average Utilization                                                 |                         |  |                    |        |                   |  |               |        |               |  |  |        |   |  |  |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Dry cargo containers    |  |                    | 85     | %                 |  |               | 74     | %             |  |  | 80     | % |  |  | 75     | %
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Refrigerated containers |  |                    | 98     | %                 |  |               | 98     | %             |  |  | 97     | % |  |  | 97     | %
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Tank containers         |  |                    | 72     | %                 |  |               | 83     | %             |  |  | 72     | % |  |  | 76     | %

Although dry cargo container utilization levels have increased since December
31, 2001, many older dry cargo containers, including those of the Registrant,
were leased under term leases that command lower per-diem rates. These term
leases, combined with the markets impact on short-term, master lease per-diem
rates for dry cargo containers, contributed to an overall decline in the
Registrants per-diem rates. Dry cargo container average per-diem rental rates
for the three and nine-month periods ended September 30, 2002 declined
approximately 14% and 15% when compared to the same periods in the prior year.
Refrigerated and tank per-diem rental rates continue to be impacted by lower
new container prices and interest rates. Accordingly, average refrigerated
container per-diem rental rates for the three and nine-month periods ended
September 30, 2002 declined approximately 9% and 8%, when compared to the same
periods in the prior year. Average tank container per-diem rental rates for
the three and nine-month periods ended September 30, 2002 declined
approximately 7% and 9%, when compared to the same periods of the prior year.

The primary component of the Registrants results of operations is net lease
revenue. Net lease revenue is determined by deducting direct operating
expenses, management fees and reimbursed administrative expenses, from rental
revenues billed by the Leasing Company from the leasing of the Registrants
containers. Net lease revenue is directly related to the size, utilization and
per-diem rental rates of the Registrants fleet.

Three Months Ended September 30, 2002 Compared to the Three Months Ended
September 30, 2001

Income from operationsfor the three months ended September 30, 2002 was
$210,724, as compared to $200,978 during the corresponding period of 2001. The
increase was primarily due to an increase in net lease revenue, as compared to
the same period in the prior year.

(Continued)

13



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##### Table of Contents



Net lease revenueof $714,675 for the three months ended September 30, 2002 was
$10,841 higher than in the corresponding period of 2001. The increase was due
to a decline in rental equipment operating expenses of $47,018 when compared to
the corresponding period in 2001, offset by a reduction of $40,372 in gross
rental revenue (a component of net lease revenue) from the same period in 2001.
Gross rental revenue was primarily impacted by the Registrants lower per-diem
rental rates. Rental equipment operating expenses declined as a result of
higher combined utilization rates and its impact on activity related expenses
such as storage. Other components of net lease revenue, including management
fees and reimbursed administrative expenses, were lower by a combined $4,254
when compared to the corresponding period in 2001, partially offsetting the
decline in gross lease revenue.

Depreciation expenseof $486,653 for the three months ended September 30, 2002
was $1,526 lower than the same period in 2001.

Other general and administrative expenseswere $17,039 in the third quarter of
2002, compared to $17,955 in the corresponding period of 2001, representing a
decrease of $916 or 1%. Contributing to this decline were reductions in
professional fees and investor communication costs, partially offset by an
increase in net exchange rate losses.

Net loss (gain) on disposal of equipmentwas a result of the Registrant
disposing of four containers during the three-month period ended September 30,
2002. Similarly, five containers were disposed of during the same period in
2001. These disposals resulted in a net loss of $259 and a gain of $3,278 for
the three-month periods ended September 30, 2002 and 2001, respectively. The
Registrant believes that the net gain on container disposals in the three-month
period ended September 30, 2002 was a result of various factors including the
age, condition, suitability for continued leasing, as well as the geographical
location of the containers when disposed. These factors will continue to
influence the decision to repair or dispose of a container when it is returned
by a lessee, as well as the amount of sales proceeds received and the related
gain or loss on container disposals. The level of the Registrants container
disposals in subsequent periods will also contribute to fluctuations in the net
gain or loss on disposals. There were no reductions to the carrying value of
container rental equipment during the three-month periods ended September 30,
2002 and 2001.

Nine Months Ended September 30, 2002 Compared to the Nine Months Ended
September 30, 2001

Income from operationsfor the nine months ended September 30, 2002 was
$500,365, as compared to $676,944 during the corresponding period of 2001. The
decrease was primarily due to a decline in net lease revenue.

Net lease revenueof $2,008,234 for the nine months ended September 30, 2002
was $174,544 lower than in the corresponding period of 2001. The decrease was
due to a $191,148 decline in gross rental revenue (a component of net lease
revenue) from the same period in 2001. Gross rental revenue was primarily
impacted by the Registrants lower per-diem rental rates. Other components of
net lease revenue, including management fees and reimbursed administrative
expenses, were lower by a combined $18,922 when compared to the corresponding
period in 2001, partially offsetting the decline in gross lease revenue.
Rental equipment operating expenses increased by $2,318 when compared to the
corresponding period in 2001.

Depreciation expenseof $1,462,685 for the nine months ended September 30, 2002
was $24,477 higher than the same period in 2001. Effective June 1, 2001, the
Registrant changed the estimated life of its rental container equipment from an
estimated 12-year life to a 15-year life and its estimated salvage value from
30% to 10% of original equipment cost. The effect of these changes was an
increase in depreciation expense of approximately $33,000 for the nine-month
period ended September 30, 2002.

Other general and administrative expenseswere $54,595 in the first nine months
of 2002, compared to $73,377 in the corresponding period of 2001, representing
a decrease of $18,782 or 26%. Contributing to this decline were reductions in
professional fees, investor communication costs, and a reduction in net
exchange rate losses.

Net gain on disposal of equipmentwas a result of the Registrant disposing of
16 containers during the nine-month period ended September 30, 2002 as compared
to 22 containers disposed of during the same period in 2001. These disposals
resulted in a net gain of $9,411 and $5,751 for the nine-month periods ended
September 30, 2002 and 2001, respectively. There were no reductions to the
carrying value of container rental equipment during the nine-month periods
ended September 30, 2002 and 2001.

(Continued)

14



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##### Table of Contents



Liquidity and Capital Resources

Cash from Operating Activities:Net cash provided by operating activities was
$1,885,028 and $1,926,758 during the first nine months of 2002 and 2001,
respectively, primarily generated from the billing and collections of net lease
revenue.

Cash from Investing Activities:Net cash provided by investing activities
during the nine-month periods ended September 30, 2002 and 2001 included sales
proceeds generated from the sale of rental equipment of $75,782 and $65,702,
respectively.

Cash from Financing Activities:Net cash used in financing activities was
$1,680,030 during the first nine months of 2002. This amount was comprised of
distributions to the Registrants general and limited partners totaling
$1,049,580, and the repayment of the Registrants term debt in the amount of
$630,450. In comparison, during the first nine months of 2001, net cash used
in financing activities was $2,244,151. This amount was comprised of
distributions to the Registrants general and limited partners totaling
$1,613,701 and the repayment of term debt totaling $630,450. The loan, due to
expire in the year 2006, is scheduled to be repaid in 15 remaining quarterly
installments from the Registrants cash generated from operations.

Capital Resources

Aside from the initial working capital reserve retained from the gross
subscription proceeds (equal to approximately 1% of such proceeds), the
Registrant relied primarily on container rental receipts to service its term
debt, make distributions to its general and limited partners, and finance
current operating needs. No credit lines are maintained to finance working
capital.

New Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board issued SFAS No. 143,
Accounting for Asset Retirement Obligations, which is effective for all
fiscal years beginning after June 15, 2002. This standard requires a company
to record the fair value of a liability for an asset retirement obligation in
the period in which it is incurred, and a corresponding increase in the
carrying value of the related long-lived asset. The Registrant is currently
evaluating the impact that SFAS No. 143 will have on its financial statements.

In June 2002, the Financial Accounting Standards Board issued SFAS 146,
Accounting for Costs Associated with Exit or Disposal Activities, which
addresses accounting for restructuring and similar costs. SFAS 146 supersedes
previous accounting guidance, principally Emerging Issues Task Force Issue No.
94-3. SFAS 146 requires that the liability for costs associated with an exit
or disposal activity be recognized when the liability is incurred. Under Issue
94-3, a liability for an exit cost was recognized at the date of the
Registrants commitment to an exit plan. SFAS 146 also establishes that the
liability should initially be measured and recorded at fair value. Accordingly,
SFAS 146 may affect the timing of recognizing future restructuring costs as
well as the amounts recognized. The Registrant believes that SFAS 146 will not
have a significant impact on its financial position or results of operations.

Inflation

The Registrant believes inflation has not had a material adverse effect on the
results of its operations.

(Continued)

15



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##### Table of Contents






Item 3. Quantitative and Qualitative Disclosures About Market Risk

Exchange rate risk:Substantially all of the Registrants revenues are billed
and paid in US dollars and a significant portion of costs are billed and paid
in US dollars. Of the remaining costs, the majority are individually small,
unpredictable and incurred in various denominations and thus are not suitable
for cost effective hedging.

The Leasing Company may hedge a portion of the expenses that are predictable
and are principally in UK pounds sterling. As exchange rates are outside of
the control of the Registrant and Leasing Company, there can be no assurance
that such fluctuations will not adversely affect its results of operations and
financial condition.

Interest rate risk: Outstanding borrowings are subject to interest rate risk.
At September 30, 2002, 100% of total borrowings had floating interest rates.
The Registrant conducted an analysis of variable interest rate borrowing to
determine its sensitivity to interest rate changes. In this analysis, the same
change was applied to the current balance outstanding, leaving all other
factors constant. It was found that if a 10% increase were applied to market
rates, the expected effect would not significantly reduce annual cash flows of
the Registrant.




Item 4. Controls and Procedures

The principal executive and principal financial officers of CCC have evaluated
the disclosure controls and procedures of the Registrant within 90 days prior
to the filing of this quarterly report. As used herein, the term disclosure
controls and procedures has the meaning given to the term by Rule 13a-14
under the Securities Exchange Act of 1934, as amended (Exchange Act), and
includes the controls and other procedures of the Registrant that are designed
to ensure that information required to be disclosed by the Registrant in the
reports that it files with the SEC under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
SECs rules and forms. Based upon their evaluation, the principal executive and principal
financial officers of CCC have concluded that the Registrants disclosure
controls and procedures provide reasonable assurance that the information
required to be disclosed by the Registrant in this report is recorded,
processed, summarized and reported within the time periods specified in the
SECs rules and forms applicable to the preparation of this report.

There have been no significant changes in the Registrants internal controls or
in other factors that could significantly affect the Registrants internal
controls subsequent to the evaluation described above conducted by CCCs
principal executive and financial officers.

16



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##### Table of Contents






PART II  OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K



|(a) |  | Exhibits
|--- |  | --------

|        |  |                                                                                                                   |  |                              
|------- |  | ----------------------------------------------------------------------------------------------------------------- |  | -----------------------------
|Exhibit |  |                                                                                                                   |  |                              
|No.     |  | Description                                                                                                       |  | Method of Filing             
|        |  |                                                                                                                   |  |                              
|3(a)    |  | Limited Partnership Agreement of the Registrant,
amended and restated as of December 28, 1995                     |  | *                            
|       
|       
|       
|       
|3(b)    |  | Certificate of Limited Partnership of the Registrant                                                              |  | **                           
|       
|       
|       
|       
|10      |  | Form of Leasing Agent Agreement with Cronos
Containers Limited                                                    |  | ***                          
|       
|       
|       
|       
|99.1    |  | Certification pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |  | Filed with this document
****
|       
|       
|       
|       
|99.2    |  | Certification pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |  | Filed with this document
****



|(b) |  | Reports on Form 8-K                                                                             
|--- |  | ------------------------------------------------------------------------------------------------
|   
|    |  | No reports on Form 8-K were filed by the Registrant during the quarter ended
September 30, 2002.



---

|*    |  | Incorporated by reference to Exhibit A to the Prospectus of the
Registrant 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)                                                                                                                                                                                                                                                        
|    
|    
|    
|    
|**** |  | These two certifications, required by Section 906 of the Sarbanes-Oxley
Act of 2002, other than as required by Section 906, are 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.

17



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##### Table of Contents






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 XVI, L.P.
|                        
|                        
|                        
|                        
|                         |  |                                     |  |                                                                                                                                   
|                        
|                        
|                        
|                        
|                         |  | By                                  |  | Cronos Capital Corp.
The General Partner                                                                                          
|                        
|                        
|                        
|                        
|                         |  |                                     |  |                                                                                                                                   
|                        
|                        
|                        
|                        
|                         |  | By                                  |  | /s/ Dennis J. Tietz                                                                                                               
|                         |  |                                     |  |                                                                                                                                   
|                         |  |                                     |  | Dennis J. Tietz
President and Director of Cronos Capital Corp. (CCC)
Principal Executive Officer of CCC                         
|                        
|                        
|                        
|                        
|                         |  |                                     |  |                                                                                                                                   
|                        
|                        
|                        
|                        
|                         |  | By                                  |  | /s/ John Kallas                                                                                                                   
|                         |  |                                     |  |                                                                                                                                   
|                         |  |                                     |  | John Kallas
Chief Financial Officer and
Director of Cronos Capital Corp. (CCC)
Principal Financial and Accounting Officer of CCC
|                        
|                        
|                        
|                        
|                         |  |                                     |  |                                                                                                                                   
|                        
|                        
|                        
|                        
|Date:  November 14, 2002 |  |                                     |  |                                                                                                                                   

18



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##### Table of Contents



Cronos Global Income Fund XVI, L.P.

CERTIFICATIONS
(Exchange Act Rule 13a-14)

I, Dennis J. Tietz, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Cronos Global
Income Fund XVI, L.P. (the Registrant);

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

4.     The other certifying officer of Cronos Capital Corp. (CCC), the
General Partner of the Registrant, and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the Registrant and we have:

(a)  designed such disclosure controls and procedures to ensure that
material information relating to the Registrant is made known to us by others
within CCC, particularly during the period in which this quarterly
report is being prepared;

(b)  evaluated the effectiveness of the Registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

(c)  presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     CCCs other certifying officer and I have disclosed, based on our most
recent evaluation, to the Registrants auditors and the Board of Directors of
CCC:

(a)  all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrants ability to record,
process, summarize and report financial data and have identified for the
Registrants auditors any material weaknesses in internal controls; and

(b)  any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrants internal controls;
and

6.     CCCs other certifying officer of CCC and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002

/s/ DENNIS J TIETZ

---





---



##### Table of Contents



Cronos Global Income Fund XVI, L.P.

CERTIFICATIONS
(Exchange Act Rule 13a-14)

I, John Kallas, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Cronos Global
Income Fund XVI, L.P. (the Registrant);

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

4.     The other certifying officer of Cronos Capital Corp. (CCC), the
General Partner of the Registrant, and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the Registrant and we have:

(a)  designed such disclosure controls and procedures to ensure that
material information relating to the Registrant is made known to us by others
within CCC, particularly during the period in which this quarterly
report is being prepared;

(b)  evaluated the effectiveness of the Registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

(c)  presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     CCCs other certifying officer and I have disclosed, based on our most
recent evaluation, to the Registrants auditors and the Board of Directors of
CCC:

(a)  all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrants ability to record,
process, summarize and report financial data and have identified for the
Registrants auditors any material weaknesses in internal controls; and

(b)  any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrants internal controls;
and

6.     CCCs other certifying officer of CCC and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002

/s/ JOHN KALLAS

John Kallas
Vice President and
Chief Financial Officer of CCC





---



##### Table of Contents






EXHIBIT INDEX

|        |  |                                                                                                                   |  |                              
|------- |  | ----------------------------------------------------------------------------------------------------------------- |  | -----------------------------
|Exhibit |  |                                                                                                                   |  |                              
|No.     |  | Description                                                                                                       |  | Method of Filing             
|        |  |                                                                                                                   |  |                              
|3(a)    |  | Limited Partnership Agreement of the Registrant,
amended and restated as of December 28, 1995                     |  | *                            
|       
|       
|       
|       
|3(b)    |  | Certificate of Limited Partnership of the Registrant                                                              |  | **                           
|       
|       
|       
|       
|10      |  | Form of Leasing Agent Agreement with Cronos
Containers Limited                                                    |  | ***                          
|       
|       
|       
|       
|99.1    |  | Certification pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |  | Filed with this document
****
|       
|       
|       
|       
|99.2    |  | Certification pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |  | Filed with this document
****



---

|*    |  | Incorporated by reference to Exhibit A to the Prospectus of the
Registrant 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)                                                                                                                                                                                                                                                        
|    
|    
|    
|    
|**** |  | These two certifications, required by Section 906 of the Sarbanes-Oxley
Act of 2002, other than as required by Section 906, are 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.