##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 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.)
 
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 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, 2010
 TABLE OF CONTENTS
 PAGEPART I  FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Unaudited Condensed Balance Sheets as of June 30, 2010 and December 31, 2009
    
    
    2Unaudited Condensed Statements of Operations for the three and six months ended June 30, 2010 and 2009
    
    
    3Unaudited Condensed Statements of Cash Flows for the six months ended June 30, 2010 and 2009
    
    
    4Unaudited Notes to the Condensed Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    16Item 4. Controls and Procedures
    
    
    16Item 4T. Controls and Procedures
    
    
    16PART II  OTHER INFORMATION
    
    
    17Item 1. Legal Proceedings
    
    
    17Item 1A. Risk Factors
    
    
    17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17Item 3. Defaults Upon Senior Securities
    
    
    17Item 4. [Removed and Reserved]
    
    
    17Item 5. Other Information
    
    
    17Item 6. Exhibits
    
    
    17EX-31.1EX-31.2EX-32




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PART I  FINANCIAL INFORMATION
 
 Financial Statements




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 
 Condensed Balance Sheets
 (Unaudited)
 June 30,
    
    
    December 31,2010
    
    
    2009AssetsCurrent assets:Cash
    
    $
    480,297
    
    
    $
    650,666Net lease receivables due from Leasing Agent
    
    
    281,116
    
    
    
    182,324Direct finance lease receivable, due from Leasing Agent within one year, net
    
    
    25,181
    
    
    
    26,485Total current assets
    
    
    786,594
    
    
    
    859,475Direct finance lease receivable, due from Leasing Agent after one year, net
    
    
    57,203
    
    
    
    67,711Container rental equipment, at cost
    
    
    12,147,398
    
    
    
    13,976,467Less accumulated depreciation
    
    
    (9,246,415
    )
    
    
    (10,330,153
    )Net container rental equipment
    
    
    2,900,983
    
    
    
    3,646,314Total assets
    
    $
    3,744,780
    
    
    $
    4,573,500Partners CapitalPartners capital:General partner
    
    
    1,766
    
    
    
    1,697Limited partners
    
    
    3,743,014
    
    
    
    4,571,803Total partners capital
    
    $
    3,744,780
    
    
    $
    4,573,500
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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 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net lease revenue from Leasing Agent
    
    $
    220,097
    
    
    $
    228,620
    
    
    $
    393,377
    
    
    $
    523,384Other operating (expenses) income:Depreciation
    
    
    (186,571
    )
    
    
    (247,771
    )
    
    
    (383,774
    )
    
    
    (505,485
    )Other general and administrative expenses
    
    
    (34,601
    )
    
    
    (27,467
    )
    
    
    (74,095
    )
    
    
    (53,309
    )Net gain on disposal of equipment
    
    
    90,681
    
    
    
    38,136
    
    
    
    198,109
    
    
    
    87,636(130,491
    )
    
    
    (237,102
    )
    
    
    (259,760
    )
    
    
    (471,158
    )Net income (loss)
    
    $
    89,606
    
    
    $
    (8,482
    )
    
    $
    133,617
    
    
    $
    52,226Allocation of net income (loss):General partner
    
    $
    10,638
    
    
    $
    19,454
    
    
    $
    22,603
    
    
    $
    41,080Limited partners
    
    
    78,968
    
    
    
    (27,936
    )
    
    
    111,014
    
    
    
    11,146$
    89,606
    
    
    $
    (8,482
    )
    
    $
    133,617
    
    
    $
    52,226Limited partners per unit share of net
income (loss)
    
    $
    0.05
    
    
    $
    (0.02
    )
    
    $
    0.07
    
    
    $
    0.01
  3




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CRONOS GLOBAL INCOME FUND XVI, L.P.
 
 Condensed Statements of Cash Flows
 (Unaudited)
 Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009Net cash provided by operating activities
    
    $
    283,822
    
    
    $
    528,935Cash flows from investing activities:Proceeds from sale of container rental equipment
    
    
    508,146
    
    
    
    621,135Cash flows from financing activities:Distributions to general partner
    
    
    (22,534
    )
    
    
    (41,220
    )Distributions to limited partners
    
    
    (939,803
    )
    
    
    (1,246,407
    )Net cash used in financing activities
    
    
    (962,337
    )
    
    
    (1,287,627
    )Net decrease in cash
    
    
    (170,369
    )
    
    
    (137,557
    )Cash at the beginning of the period
    
    
    650,666
    
    
    
    886,181Cash at the end of the period
    
    $
    480,297
    
    
    $
    748,624
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 
 Notes to Unaudited Condensed Financial Statements
 (1)
    
    Summary of Significant Accounting Policies
 (a)
    
    Nature of OperationsCronos Global Income Fund XVI, L.P. (the Partnership) is a limited partnership that was
organized under the laws of the State of California on September 1, 1995, for the purpose
of owning and leasing dry and specialized marine cargo containers to ocean carriers. The
Partnership commenced operations on March 29, 1996, when the minimum subscription proceeds
of $2,000,000 were received from over 100 subscribers (excluding from such count,
Pennsylvania residents, Cronos Capital Corp. (CCC), the general partner, and all
affiliates of CCC). On February 3, 1997, CCC suspended the offer and sale of units in the
Partnership. The offering terminated on December 27, 1997, at which time 1,599,667 limited
partnership units had been sold.CCC and its affiliate, Cronos Containers Limited (the Leasing Agent), manage the business
of the Partnership. CCC and the Leasing Agent also manage the container leasing business
for other partnerships affiliated with CCC.In April 2010, the Partnership commenced its 15th year of operations and continued its
liquidation phase, wherein CCC focuses its attention on the retirement of the remaining
equipment in the Partnerships container fleet. At June 30, 2010, approximately 52% of the
original equipment remained in the Partnerships fleet. CCC will take several factors into
consideration when examining options for the timing of the disposal of the containers.
These factors include the level of gross lease revenue generated by the diminishing fleet,
the level of costs relative to this revenue, projected disposal proceeds on the disposition
of the Partnerships containers, overall market conditions and any foreseeable changes in
other general and administrative expenses.The Partnerships operations are subject to economic, political and business risks inherent
in a business environment. The Partnership believes that the profitability of, and risks
associated with, leases to foreign customers is generally the same as those to domestic
customers. The Partnerships leases generally require all payments to be made in United
States dollars.(b)
    
    Leasing AgentThe Partnership and the Leasing Agent have entered into an agreement (the Leasing Agent
Agreement) whereby the Leasing Agent manages the leasing operations for all equipment
owned by the Partnership. In addition to responsibility for leasing and re-leasing the
equipment to ocean carriers, the Leasing Agent disposes of the containers at the end of
their useful economic life and has full discretion over which ocean carriers and suppliers
of goods and services it may deal with. The Leasing Agent Agreement permits the Leasing
Agent to use the containers owned by the Partnership, together with other containers owned
or managed by the Leasing Agent and its affiliates, as part of a single fleet operated
without regard to ownership. The Leasing Agent Agreement generally provides that the
Leasing Agent will make payments to the Partnership based upon rentals collected from ocean
carriers after deducting direct operating expenses and management fees due both to CCC and
the Leasing Agent.The Leasing Agent leases containers to ocean carriers, generally under operating leases
which are either master leases or term leases (mostly one to five years) and periodically
under direct finance leases.
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 Master leases do not specify the exact number of containers to be leased or the term
that each container will remain on hire but allow the ocean carrier to pick up and drop off
containers at various locations. Rentals are charged and recognized based upon the number
of containers used and the applicable per-diem rate. Accordingly, rentals under master
leases are variable and contingent upon the number of containers used.Term leases are for a fixed quantity of containers for a fixed period of time, typically
varying from three to five years. In most cases, containers cannot be returned prior to
the expiration of the lease. Term lease agreements may contain early termination penalties
that apply in the event of early redelivery. Term leases provide greater revenue stability
to the lessor, usually at lower lease rates than master leases. Ocean carriers use term
leases to lower their operating costs when they have a need for an identified number of
containers for a specified term. Rentals under term leases are charged and recognized
based upon the number of containers leased, the applicable per-diem rate and the length of
the lease, irrespective of the number of days which the customer actually uses the
containers.Direct finance leases are long-term in nature, usually ranging from three to seven years,
and require relatively low levels of customer service. They ordinarily require fixed
payments over a defined period and provide customers with an option to purchase the subject
containers at the end of the lease term. Per-diem rates include an element of repayment of
capital and therefore are usually higher than rates charged under either term or master
leases.
 (c)
    
    Basis of PresentationThe accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America
(US GAAP) for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by US GAAP for annual financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the interim period are
not necessarily indicative of the results that may be expected for the fiscal year ending
December 31, 2010. For further information, refer to the financial statements and
footnotes thereto included in the Partnerships Annual Report on Form 10-K for the year
ended December 31, 2009 filed with the Securities and Exchange Commission (SEC).(d)
    
    Use of Estimates in Interim Financial StatementsThe preparation of interim financial statements, in conformity with US GAAP and SEC
regulations for interim reporting, requires the Partnership to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reported period. The most significant
estimates are those relating to the carrying value of equipment, including estimates
relating to depreciable lives and residual values, and those relating to the allowance for
doubtful accounts. Actual results could differ from those estimates.
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 (e)
    
    Container Rental EquipmentContainer rental equipment is depreciated over a 15-year life using the straight-line basis
to its residual value of 10% of original equipment cost. The Partnership and CCC evaluates
the period of depreciation and residual values to determine whether subsequent events and
circumstances warrant revised estimates of useful lives.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 projecting future cash flows from container rental equipment operations
is prepared when indicators, such as material changes in market conditions, are present.
Indicators of a potential impairment include a sustained decrease in utilization or
operating profitability, or indications of technological obsolescence. The primary
variables utilized by the analysis are current and projected utilization rates, per-diem
rental rates, direct operating expenses, fleet size, container disposal proceeds and the
timing of container disposals. Additionally, the Partnership evaluates future cash flows
and potential impairment for its entire fleet rather than for each container type or
individual container. As a result, future losses could result for individual container
dispositions due to various factors, including age, condition, suitability for continued
leasing, as well as the geographical location of containers when disposed. There were no
impairment charges recorded against the carrying value of container rental equipment for
the three or six-month periods ended June 30, 2010 and 2009.(f)
    
    Allocation of Net Income or Loss, Partnership Distributions and Partners CapitalNet income or loss has been allocated between the general and limited partners in
accordance with the Partnership Agreement. The Partnership Agreement generally provides
that CCC shall at all times maintain at least a 1% interest in each item of income or loss,
including the gain arising from the sale of containers. The Partnership Agreement further
provides that the gain arising from the sale of containers be allocated first to the
partners with capital account deficit balances in an amount sufficient to eliminate any
deficit capital account balance. Thereafter, the Partnerships gains arising from the sale
of containers are allocated to the partners in accordance with their share of sale proceeds
distributed. The Partnership Agreement also provides for income (excluding the gain
arising from the sale of containers) for any period, be allocated to CCC in an amount equal
to that portion of CCCs distributions in excess of 1% of the total distributions made to
both CCC and the limited partners of the Partnership for such period, as well as other
allocation adjustments.Actual cash distributions differ from the allocations of net income or loss between the
general and limited partners as presented in these financial statements. Partnership
distributions are paid to the partners (general and limited) from distributable cash from
operations, allocated 95% to the limited partners and 5% to CCC. Distributions of sales
proceeds are allocated 99% to the limited partners and 1% to CCC. The allocations remain
in effect until such time as the limited partners have received from the Partnership
aggregate distributions in an amount equal to their capital contributions plus an 8%
cumulative, compounded (daily), annual return on their adjusted capital contributions.
Thereafter, all Partnership distributions will be allocated 85% to the limited partners and
15% to CCC. Cash distributions from operations to CCC in excess of 5% of distributable
cash will be considered an incentive fee and will be recorded as compensation to CCC, with
the remaining distributions from operations charged to partners capital.
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 Upon dissolution, the assets of the Partnership will be sold and the proceeds thereof
distributed as follows: (i) all of the Partnerships debts and liabilities to persons other
than CCC or the limited partners shall be paid and discharged; (ii) all of the
Partnerships debts and liabilities to CCC and the limited partners shall be paid and
discharged; and (iii) the balance of such proceeds shall be distributed to CCC and the
limited partners in accordance with the positive balances of CCC and the limited partners
capital accounts. CCC shall contribute to the Partnership, if necessary, an amount equal
to the lesser of the deficit balance in its capital account at the time of such
liquidation, or 1.01% of the excess of the Limited Partners capital contributions to the
Partnership over the capital contributions previously made to the Partnership by CCC, after
giving effect to the allocation of income or loss arising from the liquidation of the
Partnerships assets.
 (2)
    
    Net Lease Receivables Due from Leasing Agent
 Net lease receivables due from Leasing Agent at June 30, 2010 and December 31, 2009
comprised:
 June 30,
    
    
    December 31,2010
    
    
    2009Gross lease receivables
    
    $
    439,270
    
    
    $
    391,120Less:Direct operating expenses payable
    
    
    104,962
    
    
    
    155,879Base management fees payable
    
    
    18,344
    
    
    
    18,860Reimbursed administrative expenses payable
    
    
    5,135
    
    
    
    6,873Allowance for doubtful accounts
    
    
    29,713
    
    
    
    27,184Net lease receivables due from Leasing Agent
    
    $
    281,116
    
    
    $
    182,324
 Included within the amount of gross lease receivables at June 30, 2010 is $49,433 in respect of
amounts owed by the Leasing Agent in relation to disposal related invoices.At June 30, 2010 and December 31, 2009, respectively, amounts of $3,040 and $1,761 were
recorded as doubtful debt expense. In addition, $309 was written-off in the three months ended
June 30, 2010; no write-offs were recorded in the three months ended June 30, 2009. In the six
months ended June 30, 2010 and 2009, respectively, $511 and $10,115 were written-off.
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 (3)
    
    Net Lease Revenue
 Net lease revenue for the three and six-month periods ended June 30, 2010 and 2009
comprised:
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Gross lease revenue
    
    $
    303,874
    
    
    $
    378,207
    
    
    $
    611,552
    
    
    $
    833,494Interest income from direct finance lease
    
    
    8,541
    
    
    
    2,705
    
    
    
    17,298
    
    
    
    5,182Less:Direct operating expenses
    
    
    55,029
    
    
    
    105,079
    
    
    
    157,289
    
    
    
    216,642Base management fees
    
    
    21,783
    
    
    
    26,472
    
    
    
    43,035
    
    
    
    57,616Reimbursed administrative expensesSalaries
    
    
    11,911
    
    
    
    15,899
    
    
    
    26,361
    
    
    
    30,785Other payroll related expenses
    
    
    902
    
    
    
    1,310
    
    
    
    2,816
    
    
    
    3,065General and administrative expenses
    
    
    2,693
    
    
    
    3,532
    
    
    
    5,972
    
    
    
    7,18492,318
    
    
    
    152,292
    
    
    
    235,473
    
    
    
    315,292Net lease revenue
    
    $
    220,097
    
    
    $
    228,620
    
    
    $
    393,377
    
    
    $
    523,384
 (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 to assess its performance, and about which separate financial
information is available. CCC and the Leasing Agent operate the Partnerships container fleet
as a homogenous unit and have determined that as such, it has a single reportable operating
segment.A summary of gross lease revenue earned by each Partnership container type for the periods
ended June 30, 2010 and 2009 follows:
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Dry cargo containers
    
    $
    245,725
    
    
    $
    288,667
    
    
    $
    484,415
    
    
    $
    643,271Refrigerated containers
    
    
    22,936
    
    
    
    51,518
    
    
    
    52,839
    
    
    
    113,483Tank containers
    
    
    35,213
    
    
    
    38,022
    
    
    
    74,298
    
    
    
    76,740Total
    
    $
    303,874
    
    
    $
    378,207
    
    
    $
    611,552
    
    
    $
    833,494
 Due to the Partnerships lack of information regarding the physical location of its fleet
of containers when on lease in the global shipping trade, the Partnership believes that it does
not possess discernible geographic reporting segments.
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CRONOS GLOBAL INCOME FUND XVI, L.P.
 Notes to Unaudited Condensed Financial Statements
 (5)
    
    Limited Partners Capital
 Cash distributions made to the limited partners for the six-month periods ended June 30, 2010
and 2009 were as follows:
 Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009Cash distributions from operations
    
    $
    306,601
    
    
    $
    673,192Cash distributions from sales proceeds
    
    
    633,202
    
    
    
    573,215Total cash distributions
    
    $
    939,803
    
    
    $
    1,246,407
 These distributions are used in determining Adjusted Capital Contributions as defined by the
Partnership Agreement.The limited partners per unit share of capital at June 30, 2010 and December 31, 2009, was
$2.34 and $2.86, respectively. This is calculated by dividing the limited partners capital at
the end of June 30, 2010, and December 31, 2009, by 1,599,667, the total number of outstanding
limited partnership units.
 (6)
    
    Cronos Ltd.
 Cronos Ltd. (Cronos), a Bermuda exempted company, is the parent of CCC, the general partner
of the Partnership. On July 28, 2010, Cronos consummated several transactions with investment
funds affiliated with Kelso & Company, L.P. (Kelso), a private equity firm based in New York.
Pursuant to the transactions, affiliated investment funds of Kelso acquired a majority
interest in Cronos through a newly-organized holding company, Cronos Holding Company Ltd., a
Bermuda exempted company.In connection with the transactions with Kelso, Dennis J. Tietz has retired as a director of
CCC. Messrs. Younger, Vaughan, and Kallas remain as directors of CCC, and CCC remains a
wholly-owned subsidiary of Cronos.
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Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Results of Operations
 Partnership Overview
   
    
    Activity-related expenses, including agent costs and depot costs such as repairs,
maintenance and handling;
    
    Inventory-related expenses for off-hire containers, comprising storage and
repositioning costs. These costs are sensitive to the quantity of off-hire containers
as well as the frequency at which containers are re-delivered and the frequency and size
of repositioning moves undertaken; and
    
    Legal and other expenses, including legal costs related to the recovery of containers
and doubtful accounts, insurance and provisions for doubtful accounts.
  Dry Cargo
    
    
    RefrigeratedContainers
    
    
    Containers
    
    
    Tank Containers
    
    
    TotalContainer on lease:Master lease
    
    
    4,307
    
    
    
    37
    
    
    
    22
    
    
    
    4,366Term leaseShort term1
    
    
    307
    
    
    
    3
    
    
    
    14
    
    
    
    324Long term2
    
    
    1,200
    
    
    
    21
    
    
    
    8
    
    
    
    1,2291,507
    
    
    
    24
    
    
    
    22
    
    
    
    1,553Subtotal
    
    
    5,814
    
    
    
    61
    
    
    
    44
    
    
    
    5,919Containers off-hire
    
    
    180
    
    
    
    8
    
    
    
    5
    
    
    
    193Total container fleet
    
    
    5,994
    
    
    
    69
    
    
    
    49
    
    
    
    6,112
 
 1.
    
    Short term leases represent term leases that are either scheduled for renegotiation or
that may expire on or before June 2011.2.
    
    Long term leases represent term leases that will expire after June 2011. 11




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Dry Cargo Containers
    
    
    Refrigerated Containers
    
    
    Tank Containers
    
    
    TotalTEU
    
    
    %
    
    
    TEU
    
    
    %
    
    
    TEU
    
    
    %
    
    
    TEU
    
    
    %Total purchases
    
    
    11,053
    
    
    
    100
    %
    
    
    690
    
    
    
    100
    %
    
    
    52
    
    
    
    100
    %
    
    
    11,795
    
    
    
    100
    %Less disposals
    
    
    5,059
    
    
    
    46
    %
    
    
    621
    
    
    
    90
    %
    
    
    3
    
    
    
    6
    %
    
    
    5,683
    
    
    
    48
    %Remaining fleet at June 30, 2010
    
    
    5,994
    
    
    
    54
    %
    
    
    69
    
    
    
    10
    %
    
    
    49
    
    
    
    94
    %
    
    
    6,112
    
    
    
    52
    %
 Market & Industry Overview
     Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009Average fleet size (measured in TEUs)Dry cargo containers
    
    
    6,195
    
    
    
    7,484Refrigerated containers
    
    
    86
    
    
    
    187Tank containers
    
    
    50
    
    
    
    51Utilization rates for combined fleetAverage for the period
    
    
    87
    %
    
    
    84
    %At end of period
    
    
    97
    %
    
    
    80
    %
 12




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Three Months Ended June 30, 2010 Compared to the Three Months Ended June 30, 2009
 Overview
 Net income
 
    
    The Partnership experienced stronger market conditions for leased containers;
    
    Depreciation expense was lower than in the prior year, as the Partnership continued
to sell equipment that had reached the end of its useful economic life for maritime
leasing; and,
    
    The level of gains recorded on equipment disposals increased.
 Analysis and discussion
 Net lease revenue
 
    
    a $74,333 reduction in gross lease revenue (a component of net lease revenue), that
was attributable to the reduction in the size of the Partnerships fleet size. This
was offset to some extent by the increase in gross lease revenue generated by the
increased volume of on-lease containers; and,
    
    a $50,050 decline in direct operating expenses as a result of the increase in
utilization and corresponding reduction in inventories of off-hire equipment, which
resulted in the reduction of both activity-related and inventory-related expenses.
 Depreciation expense
 Other general and administrative expenses
 Net gain on disposal of equipment
 Six Months Ended June 30, 2010 Compared to the Six Months Ended June 30, 2009
 Overview
 Net income
 
    
    The Partnership experienced stronger market conditions for leased containers;
 13




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##### Table of Contents




    
    Depreciation expense was lower than in the prior year, as the Partnership continued
to sell equipment that had reached the end of its useful economic life for maritime
leasing; and,
    
    The level of gains recorded on equipment disposals increased.
 Analysis and discussion
 Net lease revenue
 
    
    a $221,942 decrease in gross lease revenue (a component of net lease revenue), which
was attributable to the reduction in the size of the Partnerships fleet size. This was
offset to some extent by the increase in gross lease revenue generated by the increased
volume of on-lease containers; and,
    
    a $59,353 decline in direct operating expenses as a result of the increase in
utilization and corresponding reduction in inventories of off-hire equipment, which
resulted in the reduction of both activity-related and inventory-related expenses.
 Depreciation expense
 Other general and administrative expenses
 Net gain on disposal of equipment
 Liquidity and Capital Resources
   14




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##### Table of Contents



Cash from Operating Activities:
 Cash from Investing Activities:
 Cash from Financing Activities
 Critical Accounting Policies
  
    
    Container equipment  depreciable lives and residual values.
    
    Container equipment  recoverability and valuation.
    
    Allowance for doubtful accounts.
  Inflation
  15




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##### Table of Contents



Quantitative and Qualitative Disclosures About Market Risk
 Exchange rate risk
 Credit risk:
 
 Controls and Procedures
  
 Controls and Procedures
   16




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Legal Proceedings
  
 Risk Factors
  
 Unregistered Sales of Equity Securities and Use of Proceeds
  
 Defaults Upon Senior Securities
  
 [Removed and Reserved]
 
 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. 17




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##### Table of Contents



SIGNATURES
  CRONOS GLOBAL INCOME FUND XVI, L.P.By
    Cronos Capital Corp.The General PartnerBy
    /s/ Peter J. YoungerPeter J. YoungerPresident and Chief Executive Officer of Cronos
Capital Corp. (CCC)
Principal Executive Officer of CCCBy
    /s/ Frank P. VaughanFrank P. VaughanChief Financial Officer and
Director of Cronos Capital Corp. (CCC)
Principal Financial and Accounting Officer of CCC  18




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##### Table of Contents



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