##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED JUNE 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION PERIOD FROM TO
 Commission file number 0-27496
 CRONOS GLOBAL INCOME FUND XVI, L.P.
  California
(State or other jurisdiction of
incorporation or organization)
    
    94-3230380
(I.R.S. Employer
Identification No.)
 One Front Street, Suite 925, San Francisco, California
(Address of principal executive offices)
    
    94111
(Zip Code)
 
 þ o
 o þ




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




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##### 



PART I  FINANCIAL INFORMATION
 
 Financial Statements
   3




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##### 



CRONOS GLOBAL INCOME FUND XVI, L.P.
 
 Condensed Balance Sheets
 (Unaudited)
 June 30,
    
    December 31,2005
    
    2004AssetsCurrent assets:Cash and cash equivalents, includes $558,972 at June 30, 2005 and
$433,066 at December 31, 2004 in interest-bearing accounts
    
    $
    573,971
    
    
    $
    448,065Net lease receivables due from Leasing Company
(notes 1 and 2)
    
    
    488,785
    
    
    
    321,212Container rental equipment held for resale (note 1)
    
    
    135,800
    
    
    
    Total current assets
    
    
    1,198,556
    
    
    
    769,277Container rental equipment, at cost
    
    
    30,232,033
    
    
    
    31,152,445Less accumulated depreciation
    
    
    (15,183,954
    )
    
    
    (14,708,265
    )Net container rental equipment (note 1)
    
    
    15,048,079
    
    
    
    16,444,180Total assets
    
    $
    16,246,635
    
    
    $
    17,213,457Partners capitalPartners capital (deficit):General partner
    
    $
    (36,542
    )
    
    $
    (40,565
    )Limited partners
    
    
    16,283,177
    
    
    
    17,254,022Total partners capital
    
    $
    16,246,635
    
    
    $
    17,213,457
  4




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##### 



CRONOS GLOBAL INCOME FUND XVI, L.P.
 
 Condensed Statements of Operations
 (Unaudited)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net lease revenue (notes 1 and 3)
    
    $
    680,868
    
    
    $
    753,969
    
    
    $
    1,412,594
    
    
    $
    1,387,451Other operating income (expenses):Depreciation
    
    
    (464,775
    )
    
    
    (482,541
    )
    
    
    (936,629
    )
    
    
    (964,940
    )Other general and administrative expenses
    
    
    (22,626
    )
    
    
    (19,491
    )
    
    
    (41,254
    )
    
    
    (38,670
    )Asset impairment loss
    
    
    (37,972
    )
    
    
    
    
    
    
    (37,972
    )
    
    
    Net (loss) gain on disposal of equipment
    
    
    (3,829
    )
    
    
    5,547
    
    
    
    14,328
    
    
    
    5,819Income from operations
    
    
    151,666
    
    
    
    257,484
    
    
    
    411,067
    
    
    
    389,660Other income (expense):Interest income
    
    
    3,217
    
    
    
    1,573
    
    
    
    5,058
    
    
    
    3,225Interest expense
    
    
    
    
    
    
    (13,817
    )
    
    
    
    
    
    
    (28,882
    )3,217
    
    
    
    (12,244
    )
    
    
    5,058
    
    
    
    (25,657
    )Net income
    
    $
    154,883
    
    
    $
    245,240
    
    
    $
    416,125
    
    
    $
    364,003Allocation of net income:General partner
    
    $
    21,653
    
    
    $
    31,283
    
    
    $
    67,246
    
    
    $
    56,079Limited partners
    
    
    133,230
    
    
    
    213,957
    
    
    
    348,879
    
    
    
    307,924$
    154,883
    
    
    $
    245,240
    
    
    $
    416,125
    
    
    $
    364,003Limited partners per unit share of net income
    
    $
    0.08
    
    
    $
    0.13
    
    
    $
    0.22
    
    
    $
    0.19
  5




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 
 Condensed Statements of Cash Flows
 (Unaudited)
 Six Months EndedJune 30,
    
    June 30,2005
    
    2004Net cash provided by operating activities
    
    $
    1,231,274
    
    
    $
    1,281,522Cash flows provided by investing activities:Proceeds from disposal of equipment
    
    
    277,579
    
    
    
    70,893Cash flows used in financing activities:Distributions to general partner
    
    
    (63,223
    )
    
    
    (59,677
    )Distributions to limited partners
    
    
    (1,319,724
    )
    
    
    (1,193,085
    )Total distribution to partners
    
    
    (1,382,947
    )
    
    
    (1,252,762
    )Repayment of term debt
    
    
    
    
    
    
    (420,300
    )Net cash used in financing activities
    
    
    (1,382,947
    )
    
    
    (1,673,062
    )Net increase (decrease) in cash and cash equivalents
    
    
    125,906
    
    
    
    (320,647
    )Cash and cash equivalents at the beginning of the period
    
    
    448,065
    
    
    
    1,276,250Cash and cash equivalents at the end of the period
    
    $
    573,971
    
    
    $
    955,603
  6




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 
 Notes to Unaudited Condensed Financial Statements
 (1)
    
    Summary of Significant Accounting Policies
 (a)
    
    Nature of Operations
     (b)
    
    Leasing Company and Leasing Agent Agreement
   7




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##### 



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




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




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 (f)
    
    Partners Capital Accounts
  (g)
    
    Financial Statement Presentation
   (2)
    
    Net Lease Receivables Due from Leasing Company
  June 30,
    
    December 31,2005
    
    2004Gross lease receivables
    
    $
    917,013
    
    
    $
    726,979Less:Direct operating payables and accrued expenses
    
    
    284,084
    
    
    
    276,571Damage protection reserve
    
    
    54,781
    
    
    
    47,725Base management fees payable
    
    
    7,250
    
    
    
    15,418Reimbursed administrative expenses
    
    
    16,162
    
    
    
    17,415Allowance for doubtful accounts
    
    
    65,951
    
    
    
    48,638428,228
    
    
    
    405,767Net lease receivables
    
    $
    488,785
    
    
    $
    321,212
  10




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 (3)
    
    Net Lease Revenue
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Rental revenue (note 4)
    
    $
    977,876
    
    
    $
    1,027,325
    
    
    $
    1,986,818
    
    
    $
    2,008,964Less:Rental equipment operating expenses
    
    
    176,065
    
    
    
    149,794
    
    
    
    328,343
    
    
    
    377,437Base management fees
    
    
    66,852
    
    
    
    70,609
    
    
    
    136,528
    
    
    
    139,327Reimbursed administrative expensesSalaries
    
    
    39,980
    
    
    
    36,968
    
    
    
    77,934
    
    
    
    74,097Other payroll related expenses
    
    
    4,580
    
    
    
    4,205
    
    
    
    11,998
    
    
    
    7,508General and administrative expenses
    
    
    9,531
    
    
    
    11,780
    
    
    
    19,421
    
    
    
    23,144297,008
    
    
    
    273,356
    
    
    
    574,224
    
    
    
    621,513Net lease revenue
    
    $
    680,868
    
    
    $
    753,969
    
    
    $
    1,412,594
    
    
    $
    1,387,451
 (4)
    
    Operating Segment
   Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Dry cargo containers
    
    $
    672,984
    
    
    $
    685,236
    
    
    $
    1,357,799
    
    
    $
    1,340,536Refrigerated containers
    
    
    262,399
    
    
    
    304,043
    
    
    
    547,635
    
    
    
    590,952Tank containers
    
    
    42,493
    
    
    
    38,046
    
    
    
    81,384
    
    
    
    77,476Total
    
    $
    977,876
    
    
    $
    1,027,325
    
    
    $
    1,986,818
    
    
    $
    2,008,964
  11




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




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




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Dry Cargo
    
    
    
    
    
    Refrigerated
    
    TankContainers
    
    Containers
    
    Containers40-Foot
    
    
    
    
    
    40-Foot20-Foot
    
    40-Foot
    
    High-Cube
    
    20-Foot
    
    High-Cube
    
    24,000-LiterContainers on lease:Master lease
    
    
    2,828
    
    
    
    674
    
    
    
    856
    
    
    
    62
    
    
    
    110
    
    
    
    25Term leaseShort
term1
    
    
    492
    
    
    
    365
    
    
    
    681
    
    
    
    10
    
    
    
    119
    
    
    
    12Long
term2
    
    
    608
    
    
    
    179
    
    
    
    85
    
    
    
    
    
    
    
    32
    
    
    
    10Subtotal
    

    
    3,928
    
    
    
    1,218
    
    
    
    1,622
    
    
    
    72
    
    
    
    261
    
    
    
    47Containers off lease
    
    
    247
    
    
    
    206
    
    
    
    89
    
    
    
    15
    
    
    
    33
    
    
    
    5Total container fleet
    
    
    4,175
    
    
    
    1,424
    
    
    
    1,711
    
    
    
    87
    
    
    
    294
    
    
    
    52
 Dry Cargo
    
    Refrigerated
    
    TankContainers
    
    Containers
    
    Containers40-Foot20-Foot
    
    40-Foot
    
    High-Cube
    
    20-Foot
    
    40-Foot
    
    24,000-LiterUnits
    
    %
    
    Units
    
    %
    
    Units
    
    %
    
    Units
    
    %
    
    Units
    
    %
    
    Units
    
    %Total purchases
    
    
    4,553
    
    
    
    100
    %
    
    
    1,500
    
    
    
    100
    %
    
    
    1,750
    
    
    
    100
    %
    
    
    90
    
    
    
    100
    %
    
    
    300
    
    
    
    100
    %
    
    
    52
    
    
    
    100
    %Less disposals
    
    
    378
    
    
    
    8
    %
    
    
    76
    
    
    
    5
    %
    
    
    39
    
    
    
    2
    %
    
    
    3
    
    
    
    3
    %
    
    
    6
    
    
    
    2
    %
    
    
    
    
    
    
    
    %Remaining fleet at
June 30, 2005
    
    
    4,175
    
    
    
    92
    %
    
    
    1,424
    
    
    
    95
    %
    
    
    1,711
    
    
    
    98
    %
    
    
    87
    
    
    
    97
    %
    
    
    294
    
    
    
    98
    %
    
    
    52
    
    
    
    100
    %
 
 1.
    
    Short term leases represent term leases that are either scheduled for renegotiation or that
may expire on or before June 30, 2006.2.
    
    Long term leases represent term leases, the majority of which will expire between July 2006 and
December 2009. Three Months Ended June 30, 2005 Compared to the Three Months Ended June 30, 2004
 Net lease revenue
 Three Months EndedJune 30, 2005
    
    June 30, 2004Fleet size (measured in twenty-foot equivalent units (TEU))
Dry cargo containers
    
    
    10,541
    
    
    
    10,789Refrigerated containers
    
    
    676
    
    
    
    681Tank containers
    
    
    52
    
    
    
    52Average utilization ratesDry cargo containers
    
    
    93
    %
    
    
    93
    %Refrigerated containers
    
    
    88
    %
    
    
    93
    %Tank containers
    
    
    91
    %
    
    
    92
    %
 14




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Depreciation expense
 Other general and administrative expenses
 Impairment asset loss
 Assets to be disposed of:
  Net loss on disposal of equipment
 Interest expense
 15




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Six Months Ended June 30, 2005 Compared to the Six Months Ended June 30, 2004
 Net lease revenue
   Six Months EndedJune 30, 2005
    
    June 30, 2004Fleet size (measured in twenty-foot equivalent units (TEU))Dry cargo containers
    
    
    10,597
    
    
    
    10,799Refrigerated containers
    
    
    678
    
    
    
    681Tank containers
    
    
    52
    
    
    
    52Average utilization ratesDry cargo containers
    
    
    93
    %
    
    
    91
    %Refrigerated containers
    
    
    87
    %
    
    
    90
    %Tank containers
    
    
    90
    %
    
    
    92
    %
 Depreciation expense
 Other general and administrative expenses
 Impairment charges
  Net gain on disposal of equipment
 16




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




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




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




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




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##### 

\

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