##### 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 JUNE 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
(State or other jurisdiction of
incorporation or organization)                        |  | 94-3230380
(I.R.S. Employer
Identification No.)
|                                                                                                
|One Front Street, 15th Floor, San Francisco, California
(Address of principal executive offices) |  | 94111
(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                                                                 
|                                              |                                                                                               | Balance Sheets                         
|                                              |                                                                                               | 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                           
|PART II  OTHER INFORMATION                  
|                                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                   
|EXHIBIT INDEX                                
|Section 906 of the Sarbanes-Oxley Act of 2002
|Section 906 of the Sarbanes-Oxley Act of 2002



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##### Table of Contents



CRONOS GLOBAL INCOME FUND XVI, L.P.

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

TABLE OF CONTENTS

|                               |  |                                                                                                |  |     
|------------------------------ |  | ---------------------------------------------------------------------------------------------- |  | ----
|                               |  |                                                                                                |  | PAGE
|                               |  |                                                                                                |  |     
|PART I  FINANCIAL INFORMATION |  |                                                                                               
|Item 1.                        |  | Financial Statements                                                                           |  |     
|                               |  | Balance Sheets  June 30, 2002 and December 31, 2001 (unaudited)                               |  | 4   
|                               |  | Statements of Operations for the three and six months ended June 30, 2002 and 2001 (unaudited) |  | 5   
|                               |  | Statements of Cash Flows for the six months ended June 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  
|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 June 30, 2002
and December 31, 2001, statements of operations for the three and six
months ended June 30, 2002 and 2001, and statements of cash flows for the
six months ended June 30, 2002 and 2001.

3



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CRONOS GLOBAL INCOME FUND XVI, L.P.

Balance Sheets

(Unaudited)

|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |            |            |            | 
|----------------------------------- | -------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | --------------------------------------- | ---------- | ---------- | ---------- | ------------ | ---------- | ---------- | ---------- | 
|                                    |                                                                                                                                  |                                |                                         |            | June 30,   |            | December 31,
|                                    |                                                                                                                                  |                                |                                         |            | 2002       |            | 2001        
|                                    |                                                                                                                                  |                                |                                         |            |            |            |             
|Assets                              |                                                                                                                                  |                                |                                         |            |            |            |              |           
|Current assets:                     |                                                                                                                                  |                                |                                         |            |            |            |              |           
|                                    | Cash and cash equivalents, includes $1,224,593 at June 30, 2002
and $1,280,929 at December 31, 2001 in interest-bearing accounts |                                | $                                       | 1,347,519  |            |            | $            | 1,295,929  |           
|                                    | Net lease receivables due from Leasing Company
(notes 1 and 2)                                                                   |                                |                                         | 301,983    |            |            |              | 222,804    |           
|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |           
|                                    |                                                                                                                                  |                                | Total current assets                    |            |            | 1,649,502  |              |            |            | 1,518,733  | 
|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |           
|Container rental equipment, at cost |                                                                                                                                  |                                | 31,685,515                              |            |            |            | 31,734,297   |           
|                                    | Less accumulated depreciation                                                                                                    |                                |                                         | 10,144,595 |            |            |              | 9,205,547  |           
|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |           
|                                    |                                                                                                                                  | Net container rental equipment |                                         |            | 21,540,920 |            |              |            | 22,528,750 |           
|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |           
|Other assets                        |                                                                                                                                  |                                | 831,394                                 |            |            |            | 842,007      |           
|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |           
|                                    |                                                                                                                                  |                                | Total assets                            |            | $          | 24,021,816 |              |            | $          | 24,889,490 | 
|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |           
|Liabilities and partners capital   |                                                                                                                                  |                                |                                         |            |            |            |              |           
|Current liabilities:                |                                                                                                                                  |                                |                                         |            |            |            |              |           
|                                    | Interest payable                                                                                                                 |                                | $                                       | 10,454     |            |            | $            | 12,136     |           
|                                    | Current portion of equipment debt                                                                                                |                                |                                         | 840,600    |            |            |              | 840,600    |           
|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |           
|                                    |                                                                                                                                  |                                | Total current liabilities               |            |            | 851,054    |              |            |            | 852,736    | 
|Equipment debt less current portion |                                                                                                                                  |                                | 2,521,800                               |            |            |            | 2,942,100    |           
|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |           
|                                    |                                                                                                                                  |                                | Total liabilities                       |            |            | 3,372,854  |              |            |            | 3,794,836  | 
|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |           
|Partners capital (deficit):        |                                                                                                                                  |                                |                                         |            |            |            |              |           
|                                    | General partner                                                                                                                  |                                |                                         | (22,198    | )          |            |              | (27,315    | )         
|                                    | Limited partners                                                                                                                 |                                |                                         | 20,671,160 |            |            |              | 21,121,969 |           
|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |           
|                                    |                                                                                                                                  |                                | Total partners capital                 |            |            | 20,648,962 |              |            |            | 21,094,654 | 
|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |           
|                                    |                                                                                                                                  |                                | Total liabilities and partners capital |            | $          | 24,021,816 |              |            | $          | 24,889,490 | 
|                                    |                                                                                                                                  |                                |                                         |            |            |            |              |           

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

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CRONOS GLOBAL INCOME FUND XVI, L.P.

Statements of Operations

(Unaudited)

|                                               |                                           |                        |         |                    |         |                  |         |          |         |          |           |         |         |   |           |          |         | 
|---------------------------------------------- | ----------------------------------------- | ---------------------- | ------- | ------------------ | ------- | ---------------- | ------- | -------- | ------- | -------- | --------- | ------- | ------- | - | --------- | -------- | ------- | 
|                                               |                                           |                        |         | Three Months Ended |         | Six Months Ended
|                                               |                                           |                        |         |                    |         |                 
|                                               |                                           |                        |         | June 30,           |         | June 30,         |         | June 30, |         | June 30,
|                                               |                                           |                        |         | 2002               |         | 2001             |         | 2002     |         | 2001    
|                                               |                                           |                        |         |                    |         |                  |         |          |         |         
|Net lease revenue (notes 1 and 3)              |                                           | $                      | 638,645 |                    |         | $                | 686,951 |          |         | $        | 1,293,559 |         |         | $ | 1,478,944 |         
|Other operating expenses:                      |                                           |                        |         |                    |         |                  |         |          |         |          |           |         |         |   |           |         
|                                               | Depreciation                              |                        |         | 481,815            |         |                  |         | 479,740  |         |          |           | 976,031 |         |   |           | 950,029  |        
|                                               | Other general and administrative expenses |                        |         | 19,743             |         |                  |         | 24,780   |         |          |           | 37,559  |         |   |           | 55,422   |        
|                                               | Net gain on disposal of equipment         |                        |         | 7,012              |         |                  |         | 1,848    |         |          |           | 9,670   |         |   |           | 2,473    |        
|                                               |                                           |                        |         |                    |         |                  |         |          |         |          |           |         |         |   |           |         
|                                               |                                           | Income from operations |         |                    | 144,099 |                  |         |          | 184,279 |          |           |         | 289,639 |   |           |          | 475,966 | 
|Other (expense) income:                        |                                           |                        |         |                    |         |                  |         |          |         |          |           |         |         |   |           |         
|                                               | Interest income                           |                        |         | 5,038              |         |                  |         | 13,868   |         |          |           | 10,868  |         |   |           | 31,343   |        
|                                               | Interest expense                          |                        |         | (31,392            | )       |                  |         | (73,271  | )       |          |           | (66,772 | )       |   |           | (162,516 | )      
|                                               |                                           |                        |         |                    |         |                  |         |          |         |          |           |         |         |   |           |         
|                                               |                                           |                        | (26,354 | )                  |         |                  | (59,403 | )        |         |          | (55,904   | )       |         |   | (131,173  | )       
|                                               |                                           |                        |         |                    |         |                  |         |          |         |          |           |         |         |   |           |         
|                                               |                                           | Net income             |         | $                  | 117,745 |                  |         | $        | 124,876 |          |           | $       | 233,735 |   |           | $        | 344,793 | 
|                                               |                                           |                        |         |                    |         |                  |         |          |         |          |           |         |         |   |           |         
|Allocation of net income:                      |                                           |                        |         |                    |         |                  |         |          |         |          |           |         |         |   |           |         
|                                               | General partner                           |                        | $       | 21,029             |         |                  | $       | 25,530   |         |          | $         | 38,011  |         |   | $         | 55,290   |        
|                                               | Limited partners                          |                        |         | 96,716             |         |                  |         | 99,346   |         |          |           | 195,724 |         |   |           | 289,503  |        
|                                               |                                           |                        |         |                    |         |                  |         |          |         |          |           |         |         |   |           |         
|                                               |                                           | $                      | 117,745 |                    |         | $                | 124,876 |          |         | $        | 233,735   |         |         | $ | 344,793   |         
|                                               |                                           |                        |         |                    |         |                  |         |          |         |          |           |         |         |   |           |         
|Limited partners per unit share of net income |                                           | $                      | 0.06    |                    |         | $                | 0.06    |          |         | $        | 0.12      |         |         | $ | 0.18      |         
|                                               |                                           |                        |         |                    |         |                  |         |          |         |          |           |         |         |   |           |         

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)

|                                                     |                                     |   |                  |          |          |   |            |            |  
|---------------------------------------------------- | ----------------------------------- | - | ---------------- | -------- | -------- | - | ---------- | ---------- | -
|                                                     |                                     |   | Six Months Ended
|                                                     |                                     |   |                 
|                                                     |                                     |   | June 30,         |          | June 30,
|                                                     |                                     |   | 2002             |          | 2001    
|                                                     |                                     |   |                  |          |         
|Net cash provided by operating activities            |                                     | $ | 1,084,564        |          |          | $ | 1,276,412  |           
|Cash flows provided by investing activities:         |                                     |   |                  |          |          |   |            |           
|                                                     | Proceeds from disposal of equipment |   |                  | 66,753   |          |   |            | 33,546     |  
|Cash flows used in financing activities:             |                                     |   |                  |          |          |   |            |           
|                                                     | Repayment of term debt              |   |                  | (420,300 | )        |   |            | (420,300   | )
|                                                     | Distribution to partners            |   |                  | (679,427 | )        |   |            | (1,234,831 | )
|                                                     |                                     |   |                  |          |          |   |            |           
|Net cash used in financing activities                |                                     |   | (1,099,727       | )        |          |   | (1,655,131 | )         
|                                                     |                                     |   |                  |          |          |   |            |           
|Net increase (decrease) in cash and cash equivalents |                                     |   | 51,590           |          |          |   | (345,173   | )         
|Cash and cash equivalents at January 1               |                                     |   | 1,295,929        |          |          |   | 1,379,619  |           
|                                                     |                                     |   |                  |          |          |   |            |           
|Cash and cash equivalents at June 30                 |                                     | $ | 1,347,519        |          |          | $ | 1,034,446  |           
|                                                     |                                     |   |                  |          |          |   |            |           

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 six-month periods ended June 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
$12,600 and $33,300 for the respective three and six-month periods ended
June 30, 2002 and an increase of approximately $6,300 for the three and
six-month periods ended June 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (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 generally accepted
accounting procedures 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

(Continued)

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CRONOS GLOBAL INCOME FUND XVI, L.P.

Notes to Unaudited Financial Statements



|(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 June 30, 2002 and December 31, 2001 were as follows:

|                                               |  |          |         |              |  |   |         | 
|---------------------------------------------- |  | -------- | ------- | ------------ |  | - | ------- | 
|                                               |  | June 30, |         | December 31,
|                                               |  | 2002     |         | 2001        
|                                               |  |          |         |             
|Gross lease receivables                        |  | $        | 863,917 |              |  | $ | 793,868 | 
|Less:                                          |  |          |         |              |  |   |         | 
|Direct operating payables and accrued expenses |  |          | 361,957 |              |  |   | 365,435 | 
|Damage protection reserve                      |  |          | 44,169  |              |  |   | 47,883  | 
|Base management fees payable                   |  |          | 100,838 |              |  |   | 102,576 | 
|Reimbursed administrative expenses             |  |          | 14,752  |              |  |   | 16,328  | 
|Allowance for doubtful accounts                |  |          | 40,218  |              |  |   | 38,842  | 
|                                               |  |          |         |              |  |   |         | 
|Net lease receivables                          |  | $        | 301,983 |              |  | $ | 222,804 | 
|                                               |  |          |         |              |  |   |         | 



|(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 six-month periods ended
June 30, 2002 and 2001 was as follows:

|                                    |  |                    |           |                  |  |          |           |          |  |   |           |  |  |   |           | 
|----------------------------------- |  | ------------------ | --------- | ---------------- |  | -------- | --------- | -------- |  | - | --------- |  |  | - | --------- | 
|                                    |  | Three Months Ended |           | Six Months Ended
|                                    |  |                    |           |                 
|                                    |  | June 30,           |           | June 30,         |  | June 30, |           | June 30,
|                                    |  | 2002               |           | 2001             |  | 2002     |           | 2001    
|                                    |  |                    |           |                  |  |          |           |         
|Rental revenue (note 4)             |  | $                  | 1,007,241 |                  |  | $        | 1,055,743 |          |  | $ | 2,010,705 |  |  | $ | 2,161,481 | 
|Less:                               |  |                    |           |                  |  |          |           |          |  |   |           |  |  |   |           | 
|Rental equipment operating expenses |  |                    | 250,626   |                  |  |          | 247,964   |          |  |   | 483,552   |  |  |   | 434,274   | 
|Base management fees                |  |                    | 69,710    |                  |  |          | 73,240    |          |  |   | 138,682   |  |  |   | 149,909   | 
|Reimbursed administrative expenses  |  |                    | 48,260    |                  |  |          | 47,588    |          |  |   | 94,912    |  |  |   | 98,354    | 
|                                    |  |                    |           |                  |  |          |           |          |  |   |           |  |  |   |           | 
|Net lease revenue                   |  | $                  | 638,645   |                  |  | $        | 686,951   |          |  | $ | 1,293,559 |  |  | $ | 1,478,944 | 
|                                    |  |                    |           |                  |  |          |           |          |  |   |           |  |  |   |           | 

(Continued)

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CRONOS GLOBAL INCOME FUND XVI, L.P.

Notes to Unaudited Financial Statements



|(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 June 30, 2002, the Partnership operated 4,461 twenty-foot, 1,484
forty-foot and 1,742 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-month period ended June 30, 2002 and 2001 follows:                                                                                                       

|                        |  |                    |           |                  |  |          |           |          |  |   |           |  |  |   |           | 
|----------------------- |  | ------------------ | --------- | ---------------- |  | -------- | --------- | -------- |  | - | --------- |  |  | - | --------- | 
|                        |  | Three Months Ended |           | Six Months Ended
|                        |  |                    |           |                 
|                        |  | June 30,           |           | June 30,         |  | June 30, |           | June 30,
|                        |  | 2002               |           | 2001             |  | 2002     |           | 2001    
|                        |  |                    |           |                  |  |          |           |         
|Dry cargo containers    |  | $                  | 658,672   |                  |  | $        | 672,351   |          |  | $ | 1,313,621 |  |  | $ | 1,397,958 | 
|Refrigerated containers |  |                    | 316,689   |                  |  |          | 345,495   |          |  |   | 628,381   |  |  |   | 690,946   | 
|Tank containers         |  |                    | 31,880    |                  |  |          | 37,897    |          |  |   | 68,703    |  |  |   | 72,577    | 
|                        |  |                    |           |                  |  |          |           |          |  |   |           |  |  |   |           | 
|Total                   |  | $                  | 1,007,241 |                  |  | $        | 1,055,743 |          |  | $ | 2,010,705 |  |  | $ | 2,161,481 | 
|                        |  |                    |           |                  |  |          |           |          |  |   |           |  |  |   |           | 



|    |  | 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 the geographic area information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(5) |  | Equipment Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | As of June 30, 2002, the Partnerships existing term loan debt was
$3,362,400, plus estimated accrued interest of $10,454. 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 16 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 June 30, 2002, the estimated fair value of the term loan debt was
$3,344,151. The fair value of the term loan has been calculated using the
market rates prevailing at May 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

(Continued)

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CRONOS GLOBAL INCOME FUND XVI, L.P.

Notes to Unaudited Financial Statements



|(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
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 Company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.

******

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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 June 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 June 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           |  |            | 2,253 |              |  |            | 537   |         |  |           | 686   |              |  |  | 31 |         |  |  | 79  |  |  |  | 14 | 
|Term lease (1-5
years) |  |            | 1,409 |              |  |            | 651   |         |  |           | 864   |              |  |  | 54 |         |  |  | 216 |  |  |  | 22 | 
|                       |  |            |       |              |  |            |       |         |  |           |       |              |  |  |    |         |  |  |     |  |  |  |    | 
|Subtotal               |  |            | 3,662 |              |  |            | 1,188 |         |  |           | 1,550 |              |  |  | 85 |         |  |  | 295 |  |  |  | 36 | 
|Containers off lease   |  |            | 799   |              |  |            | 296   |         |  |           | 192   |              |  |  | 3  |         |  |  | 3   |  |  |  | 16 | 
|                       |  |            |       |              |  |            |       |         |  |           |       |              |  |  |    |         |  |  |     |  |  |  |    | 
|Total container fleet  |  |            | 4,461 |              |  |            | 1,484 |         |  |           | 1,742 |              |  |  | 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 |  |            | 92 |              |  |            | 2 | %       |  |         | 16 |              |  |       | 1 | % |  |         | 8 |   |  |       | 1 | % |  |    | 2 |  |  |     | 2 | % |  |     | 2 |  |  |     | 1 | % |  |    | 0 |  |  |     | 0 | %
|                                 |                |  |            |    |              |  |            |   |         |  |         |    |              |  |       |   |   |  |         |   |   |  |       |   |   |  |    |   |  |  |     |   |   |  |     |   |  |  |     |   |   |  |    |   |  |  |     |  
|Remaining fleet at
June 30, 2002 |                |  | 4,461      |    |              |  | 98         | % |         |  | 1,484   |    |              |  | 99    | % |   |  | 1,742   |   |   |  | 99    | % |   |  | 88 |   |  |  | 98  | % |   |  | 298 |   |  |  | 99  | % |   |  | 52 |   |  |  | 100 | %
|                                 |                |  |            |    |              |  |            |   |         |  |         |    |              |  |       |   |   |  |         |   |   |  |       |   |   |  |    |   |  |  |     |   |   |  |     |   |  |  |     |   |   |  |    |   |  |  |     |  

During 2001, demand for dry cargo containers was adversely affected by the
slowdown in the global economy resulting in an excess supply of containers in
many locations. As a result of increasing worldwide container inventories
during 2001, cautious forecasts for global economic recovery and a reduction in
the level of capital available for new production, the demand for new container
production declined. Accordingly, prices for new containers reached historic
lows, creating further downward pressure on lease per-diem rates and container
residual values.

At the end of 2001, the Registrant, CCC and the Leasing Company viewed this
slowdown in new container production as having positive short and long-term
affects for the container leasing industry. During the first six months of
2002, a general improvement in the worlds economic climate, combined with
reduced funding for new container production, contributed to container
shortfalls in many Asian locations and a corresponding increase in the demand
for existing, older containers. The surge in demand experienced during the
first six months of 2002 was a primary factor in reducing off-hire container
inventories primarily in Asia, and to a lesser extent Europe and North America.
During the first six months of 2002, the average monthly utilization of the
Registrants dry cargo fleet increased from 75% for December 2001 to 83% for
June 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 Registrant, CCC and the Leasing Company
expect the current level of demand for cargo containers to continue into the
third quarter of 2002; however, a moderate or slowly-developing economic
recovery in the US and other world economies, as well as an increase in new
container production, may temper the current demand for leased containers. The
Leasing Company, on behalf of the Registrant, will seek to exploit the current
demand for leased containers by repositioning off-hire

(Continued)

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equipment to locations of greatest demand and by pursuing leasing opportunities
through the Leasing Companys global marketing network.

Despite recent improvements in container leasing market conditions, the effect
of the slowdown in global economic conditions on the container leasing
industrys customers, the shipping lines, coupled with their acquisition of
new, larger container ships, have 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 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.

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

|                                                                    |                         |  |                    |        |                  |  |          |        |          |  |  |        |   |  |  |        |  
|------------------------------------------------------------------- | ----------------------- |  | ------------------ | ------ | ---------------- |  | -------- | ------ | -------- |  |  | ------ | - |  |  | ------ | -
|                                                                    |                         |  | Three Months Ended |        | Six Months Ended
|                                                                    |                         |  |                    |        |                 
|                                                                    |                         |  | June 30,           |        | June 30,         |  | June 30, |        | June 30,
|                                                                    |                         |  | 2002               |        | 2001             |  | 2002     |        | 2001    
|                                                                    |                         |  |                    |        |                  |  |          |        |         
|Average fleet size (measured in
twenty-foot equivalent units
(TEU)) |                         |  |                    |        |                  |  |          |        |          |  |  |        |   |  |  |       
|                                                                    | Dry cargo containers    |  |                    | 10,916 |                  |  |          | 10,956 |          |  |  | 10,919 |   |  |  | 10,961 |  
|                                                                    | Refrigerated containers |  |                    | 686    |                  |  |          | 687    |          |  |  | 686    |   |  |  | 687    |  
|                                                                    | Tank containers         |  |                    | 52     |                  |  |          | 52     |          |  |  | 52     |   |  |  | 52     |  
|Average Utilization                                                 |                         |  |                    |        |                  |  |          |        |          |  |  |        |   |  |  |       
|                                                                    | Dry cargo containers    |  |                    | 81     | %                |  |          | 74     | %        |  |  | 78     | % |  |  | 75     | %
|                                                                    | Refrigerated containers |  |                    | 98     | %                |  |          | 98     | %        |  |  | 96     | % |  |  | 97     | %
|                                                                    | Tank containers         |  |                    | 68     | %                |  |          | 79     | %        |  |  | 72     | % |  |  | 73     | %

Although dry cargo container utilization levels increased from December 31,
2001 levels, 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 six-month periods ended June 30, 2002
declined approximately 17% and 16% 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 borrowing rates. Accordingly,
average refrigerated container per-diem rental rates for the three and
six-month periods ended June 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 six-month periods ended June 30, 2002
declined approximately 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 June 30, 2002 Compared to the Three Months Ended June 30,
2001

Income from operationsfor the three months ended June 30, 2002 was $144,099,
as compared to $184,279 during the corresponding period of 2001. The decrease
was primarily due to lower average per-diem rental rates, as compared to the
same period in the prior year.

(Continued)

13



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##### Table of Contents



Net lease revenueof $638,645 for the three months ended June 30, 2002 was
$48,306 lower than in the corresponding period of 2001. The decrease was due
to a $48,502 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 $2,858 when compared to the corresponding period in 2001,
partially offsetting the decline in gross lease revenue. Rental equipment
operating expenses increased by $2,662 when compared to the corresponding
period in 2001. The increase in rental equipment operating expense was
attributable to increases in repositioning, handling and repair and maintenance
expenses.

Depreciation expenseof $481,815 for the three months ended June 30, 2002 was
$2,075 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 $12,600 for the three-month
period ended June 30, 2002.

Other general and administrative expenseswere $19,743 in the first quarter of
2002, compared to $24,780 in the corresponding period of 2001, representing a
decrease of $5,037 or 20.3%. Contributing to this decline were reductions in
professional fees and investor communication costs, partially offset by an
increase in net exchange rate losses.

Net gain on disposal of equipmentwas a result of the Registrant disposing of
eight containers during the three-month period ended June 30, 2002. Similarly,
12 containers were disposed of during the same period in 2001. These disposals
resulted in a net gain of $7,012 and $1,848 for the three-month periods ended
June 30, 2002 and 2001, respectively. The Registrant believes that the net
gain on container disposals in the three-month period ended June 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 June 30, 2002 and 2001.

Six Months Ended June 30, 2002 Compared to the Six Months Ended June 30, 2001

Income from operationsfor the six months ended June 30, 2002 was $289,639, as
compared to $475,966 during the corresponding period of 2001. The decrease was
primarily due to lower average per-diem rental rates, as compared to the same
period in the prior year.

Net lease revenueof $1,293,559 for the six months ended June 30, 2002 was
$185,385 lower than in the corresponding period of 2001. The decrease was due
to a $150,776 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 $14,669 when compared to the corresponding
period in 2001, partially offsetting the decline in gross lease revenue.
Rental equipment operating expenses increased by $49,278 when compared to the
corresponding period in 2001. The increase in rental equipment operating
expense was attributable to increases in repositioning, handling and repair and
maintenance expenses.

Depreciation expenseof $976,031 for the six months ended June 30, 2002 was
$26,002 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 $33,300 for the six-month
period ended June 30, 2002.

Other general and administrative expenseswere $37,559 in the first six months
of 2002, compared to $55,422 in the corresponding period of 2001, representing
a decrease of $17,863 or 32.2%. 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
12 containers during the six-month period ended June 30, 2002 as compared to 17
containers disposed of during the same period in 2001. These disposals
resulted in a net gain

(Continued)

14



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##### Table of Contents



of $9,670 and $2,473 for the six-month periods ended June 30, 2002 and 2001,
respectively. There were no reductions to the carrying value of container
rental equipment during the six-month periods ended June 30, 2002 and 2001.

Liquidity and Capital Resources

Cash from Operating Activities:Net cash provided by operating activities was
$1,084,564 and $1,276,412 during the first six 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 six-month periods ended June 30, 2002 and 2001 included sales
proceeds generated from the sale of rental equipment of $66,753 and $33,546,
respectively.

Cash from Financing Activities:Net cash used in financing activities was
$1,099,727 during the first six months of 2002. This amount was comprised of
distributions to the Registrants general and limited partners totaling
$679,427, and the repayment of the Registrants term debt in the amount of
$420,300. In comparison, during the first six months of 2001, net cash used in
financing activities was $1,655,131. This amount was comprised of
distributions to the Registrants general and limited partners totaling
$1,234,831 and the repayment of term debt totaling $420,300. The loan, due to
expire in the year 2006, is scheduled to be repaid in 16 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 Company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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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 June 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.

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
June 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)                                                                         

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: August 13, 2002

18



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##### 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)