Cronos Global Income Fund Xvi 10-Q 2001 Q3 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
OR
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________

Commission file number 0-27496

CRONOS GLOBAL INCOME FUND XVI, L.P.
(Exact name of registrant as specified in its charter)

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

One Front Street, 15th Floor, San Francisco, California	94111
(Address of principal executive offices)	(Zip Code)

(415) 677-8990
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes       ü      . No               .

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

CRONOS GLOBAL INCOME FUND XVI, L.P.

Report on Form 10-Q for the Quarterly Period
Ended September 30, 2001

TABLE OF CONTENTS

		PAGE
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements
	Balance Sheets — September 30, 2001 and December 31, 2000 (unaudited)	4
	Statements of Operations for the three and nine months ended September 30, 2001 and 2000 (unaudited)	5
	Statements of Cash Flows for the nine months ended September 30, 2001 and 2000 (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	14
PART II — OTHER INFORMATION
Item 6.	Exhibits and Reports on Form 8-K	15

2

PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements
	Presented herein are the Registrant’s balance sheets as of September 30, 2001 and December 31, 2000, statements of operations for the three and nine months ended September 30, 2001 and 2000, and statements of cash flows for the nine months ended September 30, 2001 and 2000.

3

CRONOS GLOBAL INCOME FUND XVI, L.P.

Balance Sheets

(Unaudited)

					September 30,			December 31,
					2001			2000
				Assets
Current assets:
	Cash and cash equivalents, includes $1,112,928 at September 30, 2001 and $1,132,938 at December 31, 2000 in interest-bearing accounts				$	1,127,928		$	1,379,619
	Net lease receivables due from Leasing Company (notes 1 and 2)					249,525			262,463
			Total current assets			1,377,453			1,642,082
Container rental equipment, at cost						31,767,695			31,851,392
	Less accumulated depreciation					8,732,124			7,337,421
		Net container rental equipment				23,035,571			24,513,971
Other assets						847,317			868,082
			Total assets		$	25,260,341		$	27,024,135
				Liabilities and partners’ capital
Current liabilities:
	Interest payable				$	17,662		$	35,000
	Current portion of equipment debt					840,600			840,600
			Total current liabilities			858,262			875,600
Equipment debt less current portion						3,152,250			3,782,700
			Total liabilities			4,010,512			4,658,300
Partners’ capital (deficit):
	General partner					(30,818	)		(25,351	)
	Limited partners					21,280,647			22,391,186
			Total partners’ capital			21,249,829			22,365,835
			Total liabilities and partners’ capital		$	25,260,341		$	27,024,135

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

4

CRONOS GLOBAL INCOME FUND XVI, L.P.

Statements of Operations

(Unaudited)

			Three Months Ended						Nine Months Ended
			September 30,			September 30,			September 30,			September 30,
			2001			2000			2001			2000
Net lease revenue (notes 1 and 3)			$	703,834		$	829,493		$	2,182,778		$	2,618,985
Other operating expenses:
	Depreciation			488,179			467,221			1,438,208			1,343,915
	Other general and administrative expenses			17,955			15,236			73,377			59,574
				506,134			482,457			1,511,585			1,403,489
		Income from operations		197,700			347,036			671,193			1,215,496
Other income (loss):
	Interest income			10,346			17,724			41,689			59,125
	Interest expense			(58,422	)		(108,460	)		(220,938	)		(196,929	)
	Net gain (loss) on disposal of equipment			3,278			(3,985	)		5,751			(4,473	)
				(44,798	)		(94,721	)		(173,498	)		(142,277	)
		Net income	$	152,902		$	252,315		$	497,695		$	1,073,219
Allocation of net income:
	General partner		$	19,929		$	29,504		$	75,218		$	91,601
	Limited partners			132,973			222,811			422,477			981,618
			$	152,902		$	252,315		$	497,695		$	1,073,219
Limited partners’ per unit share of net income			$	0.08		$	0.14		$	0.26		$	0.61

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

5

CRONOS GLOBAL INCOME FUND XVI, L.P.

Statements of Cash Flows

(Unaudited)

		Nine Months Ended
		September 30,			September 30,
		2001			2000
Net cash provided by operating activities		$	1,926,758		$	1,915,533
Cash flows provided by (used in) investing activities:
	Proceeds from disposal of equipment		65,702			46,119
	Purchase of container rental equipment		—			(5,101,900	)
	Acquisition fees paid to general partner		—			(2,915	)
Net cash provided by (used in) investing activities			65,702			(5,058,696	)
Cash flows (used in) provided by financing activities:
	Proceeds from the issuance of term debt		—			5,043,600
	Repayment of term debt		(630,450	)		(210,150	)
	Distribution to partners		(1,613,701	)		(2,020,632	)
Net cash (used in) provided by financing activities			(2,244,151	)		2,812,818
Net decrease in cash and cash equivalents			(251,691	)		(330,345	)
Cash and cash equivalents at January 1			1,379,619			1,987,885
Cash and cash equivalents at September 30		$	1,127,928		$	1,657,540

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

6

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 the general partner. 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
	The Partnership has entered into a Leasing Agent Agreement 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)

7

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)	Depreciation of Rental Equipment
	Effective June 1, 2001, the estimated depreciable life has been changed from a twelve-year life to a fifteen-year life and the estimated salvage value has been changed from 30% to 10% of the original equipment cost. The effect of these changes is an increase to depreciation expense of approximately $25,600 from June 1 to September 30, 2001.
(e)	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 financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) 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 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)

8

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. Net lease receivables at September 30, 2001 and December 31, 2000 were as follows:

	September 30,		December 31,
	2001		2000
Gross lease receivables	$	853,225	$	879,378
Less:
Direct operating payables and accrued expenses		379,029		307,566
Damage protection reserve		57,107		99,909
Base management fees payable		105,188		119,286
Reimbursed administrative expenses		22,867		49,538
Allowance for doubtful accounts		39,509		40,616
Net lease receivables	$	249,525	$	262,463

(3)

Net Lease Revenue

Net lease revenue is determined by deducting direct operating expenses, base management fees and reimbursed administrative expenses to CCC and its affiliates from the rental revenue earned by the Leasing Company under operating leases to ocean carriers for the containers owned by the Partnership. Net lease revenue for the three and nine-month periods ended September 30, 2001 and 2000 was as follows:

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2001		2000		2001		2000
Rental revenue (note 4)	$	1,068,741	$	1,241,240	$	3,230,222	$	3,596,416
Less:
Rental equipment operating expenses		242,034		281,781		676,308		572,712
Base management fees		73,949		85,261		223,858		240,216
Reimbursed administrative expenses		48,924		44,705		147,278		164,503
	$	703,834	$	829,493	$	2,182,778	$	2,618,985

(Continued)

9

CRONOS GLOBAL INCOME FUND XVI, L.P.

Notes to Unaudited Financial Statements

(4)	Operating Segment
	The Financial Accounting Standards Board has issued SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” which changes the way public business enterprises report financial and descriptive information about reportable operating segments. 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, after considering the requirements of SFAS No. 131, that as such it has a single reportable operating segment.
	The Partnership derives its revenues from leasing marine cargo containers. As of September 30, 2001, the Partnership operated 4,478 twenty-foot, 1,487 forty-foot and 1,745 forty-foot high-cube marine dry cargo containers, 89 twenty-foot and 298 forty-foot refrigerated cargo containers, and 52 twenty-four thousand-liter tanks. A summary of gross lease revenue, by product, for the three and nine-month periods ended September 30, 2001 and 2000 follows:

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2001		2000		2001		2000
Dry cargo containers	$	679,893	$	843,285	$	2,077,851	$	2,417,154
Refrigerated containers		346,923		362,374		1,037,869		1,062,605
Tank containers		41,925		35,581		114,502		116,657
Total	$	1,068,741	$	1,241,240	$	3,230,222	$	3,596,416

	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 required by SFAS No. 131.
(5)	Equipment Debt
	As of September 30, 2001, the Partnership’s existing term loan debt was $3,992,850 plus estimated accrued interest of $17,662. 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 19 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 5.75% to 8.58%. The loan is secured by containers owned by the Partnership, as well as any income generated in connection with the containers including lease revenue and sales proceeds. A restricted deposit of $750,000 is held in an account with the lender as additional collateral.
	As of September 30, 2001, the estimated fair value of the term loan debt was $3,966,237. The fair value of the term loan has been calculated using the market rates prevailing at October 31, 2001.

(Continued)

10

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. During October 2001, the Financial Accounting Standards Board issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, which is effective for all fiscal years beginning after December 15, 2001. SFAS No. 144 supersedes SFAS No. 121, but retains its fundamental provisions relating to the recognition and measurement of the impairment of long-lived assets to be held and used, and the measurement of long lived assets to be disposed of by sale. The Registrant has not yet determined the effect of adoption of either SFAS 143 or SFAS 144 on its financial position and results of operations.

******

11

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

The Registrant has entered into a Leasing Agent Agreement 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.

The demand for dry cargo containers has continued to be adversely affected by the slowdown in the global economy and the resulting excess supply of containers. The terrorist attacks of September 11, 2001 resulted in further disruptions of global business activities and raised further questions as to the short-term direction of the global economy. Transpacific trade, a large proportion of which consists of technology-related goods, has been largely affected by the slowdown of the US economy. For the first time in many years, the aggregate GDP growth rates of the United States, Europe, and Japan have decelerated, contributing to lower utilization rates and higher container inventories throughout the world. Container imbalances for all trade routes involving Asia are expected to continue throughout the remainder of the year and through the first half of 2002. As a result of the increasing container inventories worldwide, the production of new containers has declined. Although a slowdown in new container production could have positive short and long-term effects for the container leasing industry, a reduction in new containers will not have a significant impact without an easing of current market constraints and a strengthening of the world’s economies. In response to the foregoing, the Leasing Company continues to implement a number of marketing initiatives which are designed to target identified leasing opportunities and enhance inventory management of the Registrant’s fleet.

The Registrant’s average fleet size and utilization rates for the three and nine-month periods ended September 30, 2001 and September 30, 2000 were as follows:

		Three Months Ended						Nine Months Ended
		September 30,			September 30,			September 30,			September 30,
		2001			2000			2001			2000
Average fleet size (measured in twenty-foot equivalent units (TEU))
	Dry cargo containers		10,945			10,837			10,956			8,797
	Refrigerated containers		686			687			687			687
	Tank containers		52			52			52			52
Average Utilization
	Dry cargo containers		74	%		86	%		75	%		84	%
	Refrigerated containers		98	%		98	%		97	%		98	%
	Tank containers		83	%		66	%		76	%		72	%

Dry cargo container average per-diem rental rates for the three and nine-month periods ended September 30, 2001 declined approximately 10% and 5%, respectively, when compared to the same periods in the prior year. Refrigerated container average per-diem rental rates for the three and nine-month periods ended September 30, 2001 declined approximately 3% and 1%, respectively, when compared to the same periods in the prior year. Tank container average per-diem rental rates for the three and nine-month periods ended September 30, 2001 declined approximately 3% and 4%, respectively, when compared to the same periods of the prior year.

(continued)

12

Three Months Ended September 30, 2001 Compared to the Three Months Ended September 30, 2000

Income from operationsfor the three months ended September 30, 2001 was $197,700, as compared to $347,036 during the corresponding period of 2000. The decrease was primarily due to the impact of current market constraints on utilization and per-diem rental rates, and their cumulative effect on net lease revenue.

Net lease revenueof $703,834 for the three months ended September 30, 2001 was $125,659 lower than in the corresponding period of 2000. The decrease was due to a $172,499 decline in gross rental revenue (a component of net lease revenue) from the same period in 2000. Gross rental revenue was impacted by the Registrant’s lower per-diem rental rates and a decrease in the fleet’s aggregate utilization rate. Other components of net lease revenue, including management fees and reimbursed administrative expenses, were lower by a combined $7,093 when compared to the corresponding period in 2000, and partially offset the decline in gross lease revenue. Direct operating expenses decreased by $39,747 when compared to the corresponding period in 2000. Contributing to the decrease in direct operating expenses were decreases in repair and maintenance expenses.

Depreciation expenseof $488,179 for the three months ended September 30, 2001 was $20,958 higher than the same period in 2000. 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 $19,400 for the three months ended September 30, 2001.

Other general and administrative expensesincreased to $17,955 in the third quarter of 2001, from $15,236 in the corresponding period of 2000, representing an increase of $2,719 from the same period in 2000. Contributing to this increase were costs related to investor communications.

Net gain on disposal of equipmentwas a result of the Registrant disposing of 5 containers during the three-month period ended September 30, 2001. Similarly, seven containers were disposed of during the same period in 2000. These disposals resulted in a gain of $3,278 for the three-month period ended September 30, 2001, as compared to a loss of $3,985 for the three-month period ended September 30, 2000. The Registrant believes that the net gain on container disposals in the three-month period ended September 30, 2001 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. As a result of current world events and market conditions, the Registrant is re-evaluating its asset impairment criteria.

Nine Months Ended September 30, 2001 Compared to the Nine Months Ended September 30, 2000

Income from operationsfor the nine-month period ended September 30, 2001 was $671,193, as compared to $1,215,496 during the corresponding period of 2000. The decrease was primarily due to a $94,293 increase in depreciation expense and a decline in net lease revenue.

Net lease revenueof $2,182,778 for the nine-month period ended September 30, 2001 was $436,207 lower than in the corresponding period of 2000. The decrease was due to a $366,194 decline in gross rental revenue (a component of net lease revenue) from the same period in 2000. Gross rental revenue was impacted by the Registrant’s lower per-diem rental rates and a decrease in the fleet’s aggregate utilization rate. Other components of net lease revenue, including management fees and reimbursed administrative expenses were lower by a combined $33,583, when compared to the corresponding period in 2000, and partially offset the decline in gross lease revenue. Direct operating expenses increased $103,596 when compared to the corresponding period in 2000. Contributing to the increase in direct operating expenses were increases in storage and repositioning.

(continued)

13

Depreciation expenseof $1,438,208 for the nine-month period ended September 30, 2001, was $94,293 higher than the same period in 2000. 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 depreciation changes was an increase in depreciation expense of approximately $25,600 from June 1 to September 30, 2001.

Other general and administrative expensesincreased to $73,377 during the nine-month period ended September 30, 2001, from $59,574 in the corresponding period of 2000, representing an increase of $13,803 from the same period in 2000. Contributing to this increase were costs related to investor communications, partially offset by a decrease in professional fees.

Net gain (loss) on disposal of equipmentwas a result of the Registrant disposing of 22 containers during the first nine months of 2001 as compared to 7 containers during the first nine months of 2000. These disposals resulted in a gain of $5,751 for the nine-month period ended September 30, 2001, as compared to a loss of $4,473 for the nine-month period ended September 30, 2000.

Liquidity and Capital Resources

Cash from Operating Activities:Net cash provided by operating activities was $1,926,758 and $1,915,533 during the first nine months of 2001 and 2000, respectively. The net cash generated in 2001 included earnings from operations, and $15,875 in net lease receivable due from the leasing company. The net cash generated in 2000 reflected earnings from operations.

Cash from Investing Activities:Net cash provided by investing activities was $65,702 in the first nine months of 2001. This amount represented sales proceeds generated from the sale of container equipment. Net cash used in investing activities was $5,058,696 in the first nine months of 2000. This amount was comprised of $5,101,900 used to purchase container rental equipment, combined with sales proceeds generated from the sale of container equipment.

Cash from Financing Activities:Net cash used in financing activities was $2,244,151 during the first nine months of 2001. This amount was comprised of distributions to the Registrant’s general and limited partners totaling $1,613,701, and the repayment of the Registrant’s term debt in the amount of $630,450. In comparison, financing activities provided cash of $2,812,818 during the first nine months of 2000. This change was a result of $5,043,600 in proceeds from the issuance of term debt, offset by distributions of $2,020,632 to the Registrant’s general and limited partners and repayment of term debt of $210,150. The Registrant’s fleet size, as well as current market conditions, may produce lower operating results and, consequently, lower distributions to its partners in subsequent periods. Sales proceeds distributed to its partners may fluctuate in subsequent periods, reflecting the level of container disposals. Additionally, the Registrant’s term debt is secured by the containers owned by Registrant, as well as any income generated in connection with the containers including, lease revenue and sales proceeds. The provider of the debt is subrogated to all of the Registrant’s interest, rights and remedies in respect to this collateral, which could further impact distributions to the general and limited partners should market conditions continue to deteriorate.

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.

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. From time to time, the Leasing Company hedges 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 Company, there can be no assurance that such fluctuations will not adversely effect its results of operations and financial condition.

14

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	***

(b)	Reports on Form 8-K
	No reports on Form 8-K were filed by the Registrant during the quarter ended September 30, 2001.

*	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)

15

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. TietzDennis J. Tietz President and Director of Cronos Capital Corp. (“CCC”) Principal Executive Officer of CCC
By	/s/ John KallasJohn Kallas Chief Financial Officer and Director of Cronos Capital Corp. (“CCC”) Principal Financial and Accounting Officer of CCC

Date: November 14, 2001

16

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	***

*	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)