TEXTAINER FINANCIAL SERVICES CORPORATION
650 California Street, 16th Floor
San Francisco, CA 94108
March 27, 1997
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
Pursuant to the requirements of the Securities Exchange Act of 1934, we are
submitting herewith for filing on behalf of Textainer Equipment Income Fund VI,
L.P. (the "Partnership") the Partnership's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
The financial statements included in the enclosed Annual Report on Form 10K do
not reflect a change from the preceding year in any accounting principles or
practices, or in the method of applying any such principles or practices.
This filing is being effected by direct transmission to the Commission's EDGAR
System.
Sincerely,
Nadine Forsman
Controller
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file number 33-99534
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(Exact name of Registrant as specified in its charter)
California 94-3220152
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
650 California Street, 16th Floor, San Francisco, CA 94108
(Address of Principal Executive Offices) (ZIP Code)
Registrant's telephone number, including area code:
(415) 434-0551
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
NONE
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.
[ X ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
[ ]
State the aggregate market value of the voting stock held by nonaffiliates of
the Registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and ask prices of such
stock, as of a specified date within 60 days prior to the date of the filing.
Not Applicable.
Documents Incorporated by Reference
The Registrant's Prospectus as contained in Pre-Effective Amendment No. 4 to the
Registrant's Registration Statement, as filed with the Commission on May 10,
1996 and supplemented by Supplement No. 1, as filed with the Commission under
Rule 424(b) of the Securities Exchange Act of 1933 on March 24, 1997.
<PAGE>
PART I
ITEM 1 DESCRIPTION OF BUSINESS
For more detailed information about the Registrant's business, see "Business of
the Partnership" in the Prospectus as supplemented.
(a) General Development of Business
(Dollar amounts in thousands)
The Registrant is a California limited partnership formed on February
1, 1995 (Inception Date) to purchase, own, operate, lease, and sell
equipment (the Equipment) used in the containerized cargo shipping
industry. The Registrant commenced offering units representing limited
partnership interests (Units) to the public on May 10, 1996 in
accordance with its Registration Statement. As of December 31, 1996,
the Registrant had raised a total of $25,133 from the offering. The use
of those proceeds is summarized as follows:
<TABLE>
<CAPTION>
AMOUNT %
<S> <C> <C>
Gross Proceeds $ 25,133 100%
====== ====
Public Offering Expenses:
Commissions $ 2,262 9%
Purchases of Equipment 22,620 90%
Initial Working Capital Reserve 251 1%
-------- ----
$ 25,133 100%
====== ====
</TABLE>
The Managing General Partner has decided to terminate the Partnership's
offering effective April 30, 1997. The primary reason for this decision
is the current decrease in demand for containers and the associated
decline in lease rates and utilization, which is discussed more fully
under "Management's Discussion and Analysis of Financial Condition and
Results of Operations". Funds raised in the public offering (less
commissions and reserves) have been, and will continue to be, invested
in containers.
See Item 10 herein for a description of the Registrant's General
Partners.
(b) Financial Information About Industry Segments
Inapplicable.
(c) Narrative Description of Business
(c)(1)(i) A container leasing company generally, and the Registrant
specifically, is an operating business comparable to a
rental car business. A customer can lease a car from a bank
leasing department for a monthly charge which represents the
cost of the car, plus interest, amortized over the term of the
lease; or the customer can rent the same car from a rental car
company at a much higher daily lease rate. The customer is
willing to pay the higher daily rate for the convenience and
value-added features provided by the rental car company, the
most important of which is the ability to pick up the car
where it is most convenient, use it for the desired period
of time, and then drop it off at a location convenient to
the customer. Rental car companies compete with one another
on the basis of lease rates, availability of cars, and the
provision of additional services. They generate revenues by
maintaining the highest lease rates and the highest
utilization factors that market conditions will allow, and
by augmenting this income with proceeds from sales of
insurance, drop-off fees, and other special charges. A large
percentage of lease revenues earned by car rental companies
are generated under corporate rate agreements wherein, for a
stated period of time, employees of a participating
corporation can rent cars at specific terms, conditions and
rental rates. Buying the cars at fleet prices and selling them
in the secondary market are also key elements to the
successful operation of a rental car business.
Container leasing companies and the Registrant operate in a
similar manner by owning and leasing a worldwide fleet of new
and used transportation containers to international shipping
companies hauling various types of goods among numerous trade
routes. In addition to paying a daily rental rate, all lessees
must either provide physical damage and liability insurance or
purchase a damage waiver from the Registrant, in which case
the Registrant agrees to pay the cost of repairing any
physical damage to containers caused by lessees, special
handling fees and/or drop-off charges may also be charged in
certain markets. Container leasing companies compete with one
another on the basis of lease rates, availability of equipment
and services provided. Revenues and profits are generated by
maintaining the highest lease rates and the highest equipment
utilization factors allowed by market conditions. Rental
revenues from containers result primarily under master leases
which are comparable to the corporate rate agreements used by
rental car companies. The master leases provide that container
leasing customers, for a specified period of time, may rent
containers at specific terms, conditions and rental rates.
Although the terms of the master lease governing each
container do not vary, the number of containers in use can
vary from time to time within the term of the master lease.
The terms and conditions of the master lease provide that the
lessee pays a daily rental rate for the entire time the
container is in his possession (whether or not he is actively
using it), is responsible for any damage, and must insure the
container against liabilities. For a more detailed discussion
of the leases for the Partnership's Equipment, see "Leasing
Policy" under "Business of the Partnership" in the
Registrant's Prospectus, as supplemented. Rental car companies
usually purchase only new cars, but since containers are
completely standardized, a used container in serviceable
condition usually rents for the same rate as a new one
although the purchase price is lower. The Registrant also
sells containers in the course of its business if
opportunities arise or at the end of the container's useful
life. See "Business of the Partnership" in the Registrant's
Prospectus, as supplemented.
(c)(1)(ii) Inapplicable.
(c)(1)(iii) Inapplicable.
(c)(1)(iv) Inapplicable.
(c)(1)(v) Inapplicable.
(c)(1)(vi) Inapplicable.
(c)(1)(vii) Two lessees had rental billing for the year ended December 31,
1996 of 19.44% and 15.19% of the total rental billing of the
Registrant. No other single lessee had 10% or more of the
total rental billing of the Registrant. The Partnership has
insurance that would cover loss of revenue as a result of
default under all its leases and for the recovery cost or
replacement value of all the containers including those of
these lessees. The insurance covers loss of lease revenues
for a specified period of time, and not necessarily for the
term of the lease. The insurance is renewable annually, and
the General Partners believe that it is probable that the
Partnership would be able to recover insurance proceeds in the
event of a loss. Because of this insurance and because the
Partnership would likely be able, over a period of time, to
re-lease any Equipment that was returned to the Partnership,
the General Partners believe that the loss of these lessees
would not have material adverse impact on the Partnership's
operating results. Because these are forward looking
statements, there can be no assurance that events will occur
as the General Partners have predicted and these statements
could be affected by material adverse events in the future,
such as the Partnership's loss of insurance or the
Partnership's inability to re-lease Equipment that is returned
to the Partnership by the lessee.
(c)(1)(viii) Inapplicable.
(c)(1)(ix) Inapplicable.
(c)(1)(x) There are approximately 80 container leasing companies of
which the top ten control approximately 93% of the total
equipment held by all container leasing companies. The top two
container leasing companies control approximately 28% each
of the total equipment held by all container leasing
companies. Textainer Equipment Management Limited, an
Associate General Partner of the Registrant and the manager of
its marine container equipment, is the third largest
container leasing company and controls approximately 9% of
the equipment held by all container leasing companies. The
Registrant alone is not a material participant in the
worldwide container leasing market. The principal methods
of competition are price and the provision of worldwide
service to the international shipping community. Additionally,
shipping alliances and other operational consolidations among
shipping lines have recently allowed shipping lines to
operate with fewer containers, thereby decreasing the demand
for leased containers. Competition among lessors, such as the
Registrant, has therefore increased.
(c)(1)(xi) Inapplicable.
(c)(1)(xii) Inapplicable.
(c)(1)(xiii) The Registrant has no employees. Textainer Capital Corporation
(TCC), the managing General Partner of the Registrant, is
responsible for the overall management of the business of the
Registrant and has 26 employees. Textainer Equipment
Management Limited (TEM), an Associate General Partner, is
responsible for the management of the leasing operations of
the Registrant and has a total of 138 employees.
(d) Financial Information about Foreign and Domestic Operations and Export
Sales.
The Registrant is involved in the leasing of shipping containers to
international shipping companies for use in world trade and
approximately 7.32% of the Registrant's rental revenue during the year
ended December 31, 1996 was derived from operations sourced or
terminated domestically and all rental revenue for the period from
February 1, 1995 (inception) to December 31, 1995 was derived from
operations sourced or terminated internationally. This percentage does
not reflect the proportion of the Partnership's income from operations
generated in domestic waterways. Substantially all of the Partnership's
income from operations is derived from assets employed in foreign
operations. See "Business of the Partnership" and for a discussion of
the risks of leasing containers for use in world trade, "Risk Factors"
in the Registrant's Prospectus, as supplemented.
<PAGE>
ITEM 2 - PROPERTIES
As of December 31, 1996, the Registrant owned the following types and quantities
of equipment:
<TABLE>
<CAPTION>
<S> <C> <C>
20-foot standard dry freight containers......................................... 3,423
40-foot standard dry freight containers......................................... 4,452
40-foot high cube dry freight containers........................................ 1,224
-----
9,099
=====
</TABLE>
During December 1996, approximately 84% of these shipping containers were on
lease to international shipping companies and the balance was being stored at
shipping container manufacturers' locations and at a large number of storage
depots located worldwide.
During the period from June 17, 1996, when the Registrant had raised its minimum
subscription amount, to December 31, 1996, the Registrant was in the process of
purchasing its initial portfolio of Equipment.
For information about the Registrant's property, see "Business of the
Partnership" in the Registrant's Prospectus, as supplemented.
ITEM 3 - LEGAL PROCEEDINGS
The Registrant is not subject to any legal proceedings.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Inapplicable.
<PAGE>
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) Market Information.
(a)(1)(i) The units of limited partnership in the Registrant are not
publicly traded and there is no established trading market for
such Units. The Registrant has a program whereby Limited
Partners may redeem Units for a specified redemption price.
(a)(1)(ii) Inapplicable
(a)(1)(iii) Inapplicable.
(a)(1)(iv) Inapplicable.
(a)(1)(v) Inapplicable.
(a)(2) Inapplicable.
(b) Holders.
(b)(1) As of January 1, 1997, there were 1,354 holders of record of
limited partnership interests in the Registrant.
(b)(2) Inapplicable.
(c) Dividends.
Inapplicable.
For details of the distributions which are made monthly by the Registrant to its
limited partners, see Item 6 "Selected Financial Data".
ITEM 6 - SELECTED FINANCIAL DATA
(Dollar amounts in thousands except for per unit amounts)
<TABLE>
<CAPTION>
Year Ended Period from Feb. 1,
December 31, 1995 (inception) to
December 31,
1996 1995
<S> <C> <C>
Rental Income.......................................................... $ 3,815 732
Net Loss............................................................... $ (580) (400)
Net Loss per Unit of Limited Partnership Interest...................... $ (1.33) N/A
Distributions Per Unit of Limited Partnership Interest................. $ 1.05 N/A
Distributions Per Unit of Limited Partnership Interest
representing a return of capital................................... $ 1.05 N/A
Total Assets........................................................... $ 30,528 24,239
Outstanding Balance on Revolving Credit Line........................... $ 8,780 21,282
</TABLE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Dollar amounts in thousands except for unit and per unit amounts)
The Financial Statements contain information which will assist in evaluating the
financial condition of the Partnership for the year ended December 31, 1996 and
for the period from February 1, 1995 (inception) through December 31, 1995 .
Please refer to the Financial Statements and Notes thereto in connection with
the following discussion.
Liquidity and Capital Resources
The Partnership began its offering of limited partnership interests to the
public on May 10, 1996. The Partnership received its minimum subscription amount
of $1,100 on June 17, 1996. The cumulative proceeds of the offering at the end
of each subsequent quarter was as follows:
<TABLE>
<CAPTION>
<S> <C>
June 30, 1996................... $ 2,371
September 30, 1996.............. 13,686
December 31, 1996............... 25,133
</TABLE>
The Managing General Partner has decided to terminate the Partnership's Offering
effective April 30, 1997. The primary reason for this decision is the current
decrease in demand for leased containers and the associated decline in lease
rates and utilization. Utilization for the Partnership's containers was 77% on
average for the year ended December 31, 1996, which means that, on average, 77%
of the Partnership's containers were on lease at any given time. For comparison,
the fleet of containers managed by the General Partners and their Affiliates had
an average utilization of 90% for the year ended December 31, 1995. The decline
in demand for leased containers, the Partnership's principal business, is
described more fully below under "Results of Operations".
The decline in demand for leased containers has been accompanied by a drop in
the purchase price of new containers. Due to this drop in container prices, the
Managing General Partner believes that some additional investment in containers
is warranted. Therefore, the Partnership intends to invest any currently
available offering proceeds as well as any funds raised through April 30, 1997
in containers.
The aggregate purchase price of the Units sold as of March 14, 1997, less all
underwriting commissions, and amounts set aside for cash reserves, or the
proceeds available to the Partnership for acquisition of Equipment is $30,035.
As of March 14, 1997, $29,583 had been used to pay for Equipment and $1,453 had
not yet been spent. The Partnership owned approximately $23,856 of Equipment at
May 10, 1996, which had been purchased with the Partnership's revolving credit
Facility (the Facility). The proceeds of the Offering have been used to repay
that Facility and to purchase additional Equipment. Additional Equipment
purchases have been made both with the proceeds of the Offering and with
additional borrowings under the Facility. Current borrowings under the Facility
are $1 million, which is less than the current amount of Offering proceeds still
available for Equipment purchases.
The Partnership's policy is to maintain minimum working capital reserves in an
amount equal to 1% of aggregate offering proceeds during the Offering Period and
until proceeds received in the Offering (less reserves) are invested in
Equipment. Thereafter, working capital reserves may be established at such
levels as the Managing General Partner deems necessary to serve the best
interest of the Partnership, but in no event less than the lesser of (i) 1% of
aggregate offering proceeds; or (ii) $100. (See "Business of the Partnership:
Reserves" in the Prospectus.) The Partnership invests working capital and cash
flow from operations prior to its distribution to the partners in short-term,
liquid investments. At December 31, 1996, the Partnership's cash of $1,051 was
invested in money market accounts.
During the year ended December 31, 1996, the Partnership declared cash
distributions to limited partners pertaining to the period from July 1996
through November 1996 in the amount of $416. These distributions represent an
annualized return of 10.00% of original capital (measured on an annualized
basis) on each unit. On a GAAP basis all of these distributions were a return of
capital. On a cash basis all of these distributions were from operations.
Beginning with the cash distribution to Limited Partners for the month of
April 1997, the Partnership will make distributions on an annualized rate of
9% on each Unit. This reduction in the Partnership's distribution rate is a
result of the decline in market conditions described below.
For the year ended December 31, 1996, the Partnership had net cash provided by
operating activities of $1,922. For the period from February 1, 1995 (inception)
through December 31, 1995 net cash used in operating activities totaled $1,610.
The increase was primarily attributable to an increase in rental income as the
container fleet grew and utilization improved.
Net cash used in investing activities for the year ended December 31, 1996 and
the period from February 1, 1995 (inception) through December 31, 1995 was
$8,364 and $21,989, respectively, which primarily reflects the amounts the
Partnership has invested in Equipment during these periods due to available cash
resulting from on-going fund-raising activity and borrowings under the Facility.
Net cash provided by financing activities for the year ended December 31, 1996
and the period from February 1, 1995 (inception) through December 31, 1995 was
$7,416 and $23,676, respectively. The decrease in net cash provided by financing
activities was primarily due to repayments of both the Facility and borrowings
from affiliates, offset by the receipt of proceeds from the sales of limited
partnership units.
The Partnership's Facility has an available limit of $25,000, expires June 30,
1997, and is available for Equipment purchases. Balances borrowed under the
Facility bear interest at either the Prime Rate (8.25% at December 31, 1996)
plus .25%, or LIBOR (5.375% at December 30, 1996) plus 1.75%, and are secured by
all assets of the Partnership. The Partnership pays a commitment fee of 1/2% per
annum on the unused portion of the Facility. This fee, as well as the interest
on any amounts borrowed, is payable quarterly in arrears. Should the Facility
not be renewed upon its expiration, it may, at the Partnership's option, be
converted to a four-year term loan, with interest at either the Prime Rate plus
2.25%, or LIBOR plus 3.25% The Partnership can borrow an amount up to the sum of
60% of the net book value of Equipment plus the amount of the cash collateral.
On or before termination of its offering of limited partnership interests to the
public, the Partnership intends to use available offering proceeds to repay the
outstanding balance under the Facility. The Partnership has the right, under
certain circumstances, to ask one of the General Partners or an Affiliate to
repay a portion of the line of credit borrowings. The Partnership does not
currently expect circumstances will require it to request that the General
Partners either repay a portion of the Partnership's credit line or purchase any
of the Partnership's Equipment.
At December 31, 1996, the Partnership had borrowed $8,780 under this Facility to
finance Equipment purchases and maintained restricted cash collateral deposits
of $991. The cash collateral is held in a market-rate (4.40% at December 31,
1996), interest-bearing checking account. The account is restricted in use and
pledged as collateral for the Facility. Subsequent to year end, the Partnership
paid down $7,780 on the Facility.
Commitment fees on the line of credit have totaled $22 for the year ended
December 31, 1996. Interest on the borrowed funds has been paid out of operating
revenues generated by the Partnership. Substantially all of the Partnership's
borrowings are currently bearing interest based on the Prime Rate plus .25%. The
applicable Prime Rate as of March 14, 1997 was 8.25%.
Amounts payable to TL at December 31, 1995 include $2,393 which was used to
facilitate Equipment purchases and make cash collateral deposits required under
the revolving credit facility. At September 30, 1996 this amount had been paid
and no amounts were owed to TL for Equipment purchases or cash collateral
deposits at December 31, 1996.
At December 31, 1996, the Partnership had no commitments to purchase containers.
The net cumulative cost of equipment at the end of each quarter after
commencement of operations was as follows:
<TABLE>
<CAPTION>
<S> <C>
September 30, 1995............ $ 13,387
December 31, 1995............. 21,708
March 31, 1996................ 23,856
June 30, 1996................. 24,933
September 30, 1996............ 26,546
December 31, 1996............. 29,402
</TABLE>
Results of Operations
Because the Partnership has only recently been formed, the results of its
operations for the year ended December 31, 1996 and for the period from February
1, 1995 (inception) through December 31, 1995 are not representative of the
results expected after the discontinuation of the Offering and the completion of
the purchase of the initial portfolio of equipment. The Partnership sustained
net losses of $580 and $400 during the year ended December 31, 1996 and the
period from February 1, 1995 (inception) through December 31, 1995,
respectively. These financial results include non-cash depreciation expenses of
$1,561 and $429 for the respective periods.
The Partnership's income (loss) from operations, which consist of rental
revenue, Equipment depreciation, direct operating expenses, management fees,
interest, and reimbursement of administrative expenses were directly related to
the size of the Equipment fleet during the year ended December 31, 1996 and the
period from February 1, 1995 (inception) to December 31, 1995. The following is
a summary of the size of the Equipment fleet (in units) at the end of each
quarter during the period from February 1, 1995 (inception) through December 31,
1996.
<TABLE>
<CAPTION>
<S> <C>
June 30, 1995................. 198
September 30, 1995............ 3,995
December 31, 1995............. 6,614
March 31, 1996................ 7,239
June 30, 1996................. 7,596
September 30, 1996............ 8,143
December 31, 1996............. 9,099
</TABLE>
Rental income and direct operating expenses are also affected by the lease
utilization percentages for the Equipment which were 77% and 57% on average
during the year ended December 31, 1996 and the period from June 1995 to
December 1995, respectively.
The Partnership's income (loss) from operations for the year ended December 31,
1996 and the period from February 1, 1995 (inception) to December 31, 1995 was
$926 and ($61), respectively, on rental income of $3,815 and $732, respectively.
The increase in rental income was due to the growth of the Partnership's
container fleet. The increases in direct container expenses, depreciation
expense, management fee expense and administrative expenses from the period from
February 1, 1995 (inception) to December 31, 1995 to the year ended December 31,
1996 related directly to the increase in fleet size.
For the year ended December 31, 1996, revenue from two lessees each accounted
for more than 10% of the Partnership's revenues, with revenues of $741 and $580.
For the period from February 1, 1995 (inception) through December 31, 1995,
three lessees each accounted for more than 10% of the Partnership's revenues,
with revenues of $185, $94 and $84. See "Narrative Description of Business"
above.
Container utilization began to decline in late 1995 and that decline has
persisted throughout 1996 and into 1997. The General Partners believe that this
decrease in demand for leased containers is the result of recent adverse changes
in the business of its shipping line customers. These changes consist
principally of: (i) a general slowdown in the growth of world containerized
cargo trade, particularly in the Asia-North America and Asia-Europe trade
routes; (ii) over-capacity resulting from the 1996 and 1997 additions of new,
larger ships to the existing container ship fleet at a rate in excess of the
growth rate in containerized cargo trade; and (iii) shipping line alliances and
other operational consolidations that have allowed shipping lines to operate
with fewer containers, thereby decreasing the demand for leased containers. The
container ship over-capacity in particular led to lower shipping rates,
resulting in shipping lines' need to reduce operating costs. The drive to reduce
costs, coupled with the availability of inexpensive financing and lower
container prices, encouraged shipping lines to purchase, rather than lease, a
greater number of new containers in 1996 than in previous years. All of these
factors have led to downward pressure on container lease rates, a decline in
utilization of leased containers, and an increase in leasing incentives and
other discounts being granted to shipping lines by container lessors, further
eroding Partnership profitability. For the near term, the General Partners do
not foresee any changes in this outlook and caution that both utilization and
lease rates could continue to decline, adversely affecting the Partnership's
operating results.
Although substantially all of the Partnership's income from operations is
derived from assets employed in foreign operations, virtually all of this income
is denominated in United States dollars. The Partnership's customers are
international shipping lines which transport goods on international trade
routes. The domicile of the lessee is not indicative of where the lessee is
transporting the Equipment. The Partnership's business risk in its foreign
operations lies with the creditworthiness of the lessees, and the Partnership's
ability to keep the Equipment under lease, rather than the geographic location
of the Equipment or the domicile of the lessees. The Equipment is generally
operated on the international high seas rather than on the domestic waterways.
The Equipment is subject to the risk of war or other political, economic or
social occurrence where the Equipment is used, which may result in the loss of
Equipment, which, in turn, may have a material impact on the Partnership's
results of operations and financial condition. The General Partners are not
aware of any conditions as of December 31, 1996 which would result in such risk
materializing.
Other risks of the Partnership's leasing operations include competition, the
cost of repositioning Equipment after it comes off-lease, the risk of an
uninsured loss, increases in maintenance expenses or other costs of operating
the Equipment, and the effect of world trade, industry trends and/or general
business and economic cycles on the Partnership's operations. See "Risk Factors"
in the Partnership's Prospectus, as supplemented, for additional information on
risks of the Partnership's business.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Attached pages 11 to 23.
<PAGE>
Independent Auditors' Report
The Partners
Textainer Equipment Income Fund VI, L.P.:
We have audited the accompanying balance sheets of Textainer Equipment Income
Fund VI, L.P. (a California limited partnership) as of December 31, 1996 and
1995 and the related statements of operations, partners' capital (deficit) and
cash flows for the year ended December 31, 1995 and the period from February 1,
1995 (inception) to December 31, 1995. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Textainer Equipment Income Fund
VI, L.P. as of December 31, 1996 and 1995 and the results of its operations, its
partners' capital (deficit) and its cash flows for the years ended December 31,
1996 and the period from February 1, 1995 (inception) to December 31, 1995, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
San Francisco, California
February 17, 1997
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(a California limited partnership)
Balance Sheets
December 31, 1996 and 1995
(Amounts in thousands)
<TABLE>
<CAPTION>
1996 1995
---------------- ---------------
<S> <C> <C>
Assets
Container rental equipment, net of accumulated
depreciation of $1,988 (1995: $429) $ 27,414 21,279
Cash 1,051 77
Cash collateral deposit (note 4) 991 2,306
Accounts receivable, net of allowance
for doubtful accounts of $38 (1995: $16) 1,033 525
Prepaid expenses 39 52
---------------- ---------------
$ 30,528 24,239
================ ===============
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable $ 111 65
Accrued liabilities 145 275
Due to affiliates, net (note 2) 37 1,081
Equipment purchases payable 24 1,935
Note payable to bank (note 4) 8,780 21,282
---------------- ---------------
Total liabilities 9,097 24,638
---------------- ---------------
Partners' capital (deficit):
General partners (499) (399)
Limited partners 21,930 -
---------------- ---------------
Total partners' capital (deficit) 21,431 (399)
---------------- ---------------
$ 30,528 24,239
================ ===============
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(a California limited partnership)
Statements of Operations
Year ended December 31, 1996 and for the period from
February 1, 1995 (inception)through December 31, 1995
(Dollar amounts in thousands except for unit and per unit amounts)
<TABLE>
<CAPTION>
1996 1995
----------------- ------------------
<S> <C> <C>
Rental Income $ 3,815 732
----------------- ------------------
Costs and expenses:
Direct container expenses 626 181
Bad debt expense 16 16
Depreciation 1,561 429
Professional fees 62 7
Management fees to affiliates (note 2) 293 51
General administrative costs to affiliates (note 2) 289 94
Other general and administrative costs 42 15
----------------- ------------------
2,889 793
----------------- ------------------
Income (loss) from operations 926 (61)
----------------- ------------------
Other income (expense):
Interest expense, net (1,514) (347)
Gain on sale of equipment 8 8
----------------- ------------------
(1,506) (339)
----------------- ------------------
Net loss $ (580) (400)
================= ==================
Allocation of net loss (note 1):
General Partners $ (55) (400)
Limited Partners (525) -
----------------- ------------------
$ (580) (400)
================= ==================
Limited partners' per unit share of
net loss $ (1.33) -
================= ==================
Limited partners' per unit share
of distributions $ 1.05 -
================= ==================
Weighted average number of limited
partnership units outstanding 395,685 5
================= ==================
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(a California limited partnership)
Statements of Partners' Capital (Deficit)
Year ended December 31, 1996 and for the period from
February 1, 1995 (inception) through December 31, 1995
(Amounts in thousands)
<TABLE>
<CAPTION>
Partners' Capital (Deficit)
-------------------------------------------------------
General Limited Total
----------- ---------------- --------------
<S> <C> <C> <C>
Proceeds from general partners' capital contribution $ 1 - 1
Net loss (400) - (400)
----------- ---------------- --------------
Balances at December 31, 1995 (399) - (399)
----------- ---------------- --------------
Proceeds from sale of limited partnership units - 25,133 25,133
Syndication and offering costs - (2,262) (2,262)
Distributions (45) (416) (461)
Net loss (55) (525) (580)
----------- ---------------- --------------
Balances at December 31, 1996 $ (499) 21,930 21,431
=========== ================ ==============
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(a California limited partnership)
Statements of Cash Flows
Year ended December 31, 1996 and for the period from
February 1, 1995 (inception) through December 31, 1995
(Amounts in thousands)
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (580) (400)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation 1,561 429
Increase in allowance for doubtful accounts 22 16
Gain on sale of equipment (8) (8)
Changes in assets and liabilities:
Increase in accounts receivable (393) (541)
Decrease (increase) in prepaid expenses 13 (52)
(Decrease) increase in accounts payable and
accrued liabilities (106) 341
Increase (decrease) in due to affiliates, net 1,413 (1,395)
--------------- ---------------
Net cash provided by (used in) operating activities 1,922 (1,610)
--------------- ---------------
Cash flows from investing activities:
Proceeds from sale of equipment 94 -
Container purchases (9,773) (19,683)
Cash collateral deposit 1,315 (2,306)
--------------- ---------------
Net cash used in investing activities (8,364) (21,989)
--------------- ---------------
Cash flows from financing activities:
Proceeds from sales of limited partnership units 24,996 -
General partners' capital contribution - 1
Distributions to partners (423) -
Syndication and offering costs (2,262) -
(Repayments) borrowings under revolving credit line (12,502) 21,282
(Repayments to) borrowings from affiliates (2,393) 2,393
--------------- ---------------
Net cash provided by financing activities 7,416 23,676
--------------- ---------------
Net increase in cash 974 77
Cash at beginning of period 77 -
--------------- ---------------
Cash at end of period $ 1,051 77
=============== ===============
Interest paid during the period $ 1,816 133
=============== ===============
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A California limited partnership)
Statements of Cash Flows--Continued
Year ended December 31, 1996 and the period from
February 1,1995 (inception) through December 31, 1995
(Amounts in thousands)
Supplemental Disclosures:
Supplemental schedule of non-cash investing and financing activities:
The following table summarizes the amounts of Equipment purchases, proceeds from
sale of limited partnership units, proceeds from sale of Equipment and
distributions to partners which had not been paid or received by the Partnership
as of December 31, 1996 and 1995, resulting in differences in amounts recorded
and amounts of cash disbursed or received by the Partnership, as shown in the
Statements of Cash Flows.
<TABLE>
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
Equipment purchases included in:
Due to affiliates.......................................................... $ 2 109
Equipment purchases payable................................................ 24 1,935
Proceeds from sale of limited partnership units included in:
Accounts receivable........................................................ 137 -
Proceeds from sale of Equipment included in:
Due from affiliates........................................................ 1 28
Distributions to partners included in:
Due to affiliates.......................................................... 16 -
Accounts payable and accrued liabilities................................... 22 -
</TABLE>
The following table summarizes the amounts of Equipment purchases, sale of
limited partnership units, proceeds from sale of Equipment and distributions to
partners recorded by the Partnership and the amounts paid or received as shown
in the Statements of Cash Flows for the year ended December 31, 1996 and the
period from February 1, 1995 (inception) to December 31, 1995.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Equipment purchases recorded......................................................... $ 7,755 21,727
Equipment purchases paid............................................................. 9,773 19,683
Proceeds from sale of limited partnership units recorded............................. 25,133 -
Proceeds from sale of limited partnership units received............................. 24,996 -
Proceeds from sale of Equipment recorded............................................. 67 28
Proceeds from sale of Equipment received............................................. 94 -
Distributions to partners declared................................................... 461 -
Distributions to partners paid....................................................... 423 -
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A California limited partnership)
Notes to Financial Statements
Year ended December 31, 1996 and the period from
February 1, 1995 (inception) to December 31, 1995
(Dollar amounts in thousands except for unit and per unit amounts)
Note 1. Summary of Significant Accounting Policies
(a) Nature of Operations
Textainer Equipment Income Fund VI, L.P. (TEIF VI or the Partnership), a
California limited partnership, was formed on February 1, 1995 to engage
in the business of owning, leasing and selling both new and used equipment
related to the international containerized cargo shipping industry,
including, but not limited to, containers, trailers and other container
related equipment (the Equipment). On May 10, 1996, TEIF VI began offering
units representing limited partnership interests (Units) to the public.
The purchase price of such Units is $19 to $20 per Unit, based upon the
volume of Units purchased by each investor. The General Partners may,
however, waive the managing sales agent fee and the selected sales agent
fee with respect to the sale of Units to employees (and members of their
families) and affiliates of the selected sales agent and the General
Partners. If such fees are waived, the purchase price for such employees
(and members of their families) will be $18.20 (or more if only the
selected sales agent fee is waived). At December 31, 1996 there have been
no units purchased by employees. A maximum of 7,500,000 Units will be
offered in the Partnership. At December 31, 1996, 1,257,666 limited
partnership units had been purchased totaling $25,133. Limited partners
with capital contributions representing recorded capital of the
Partnership of $3,561 at December 31, 1996 were admitted as limited
partners on January 1, 1997. See Note 6 for additional discussion
regarding the status of the Offering.
Textainer Capital Corporation (TCC) is the Managing General Partner, and
Textainer Equipment Management Limited (TEM) and Textainer Limited (TL)
are the Associate General Partners of the Partnership (the managing
general partner and associate general partners are collectively referred
to as the General Partners). Textainer Acquisition Services Limited (TAS)
is an affiliate of the General Partners which performs services relative
to the acquisition of Equipment outside the United States on behalf of the
Partnership. TCC, TEM, TL, and TAS are subsidiaries of Textainer Group
Holdings Limited (TGH). TCC Securities Corporation (TSC), a licensed
broker and dealer in securities and an affiliate of the General Partners,
is the Managing Sales Agent for the offering of Units for sale. The
General Partners manage and control the affairs of the Partnership.
The General Partners' interest in the Partnership is 9.5%, and the General
Partners will be responsible for paying, out of their own corporate funds,
all organizational and certain offering expenses incurred in connection
with the offering and all acquisition costs incurred related to container
purchases.
(b) Basis of Accounting
The Partnership utilizes the accrual method of accounting. Revenue is
recorded when earned according to the terms of the Equipment rental
contracts. These contracts are typically for a one-year term and are
classified as operating leases. Certain estimates and assumptions were
made by the Partnership's management that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
(c) Equipment
The Equipment is carried at the lower of cost of the assets purchased, or
the estimated recoverable value of such assets. Depreciation of new
equipment is computed using the straight-line method over its estimated
useful life of 12 years to a 28% salvage value. Used equipment is
depreciated based upon its estimated remaining useful life at the date of
acquisition (from 2 to 11 years). When assets are retired or otherwise
disposed of, the cost and related accumulated depreciation are removed
from the accounts and any resulting gain or loss is recognized in income
for the period.
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of" (SFAS 121). The Company adopted SFAS
121 during 1995. In accordance with SFAS 121, the Company periodically
compares the carrying value of the Equipment to expected future market
conditions for the purpose of assessing the recoverability of the recorded
amounts. There were no reductions to the carrying value of the Equipment
made during the year ended 1996 or the period from February 1, 1995
(inception) through December 31, 1995.
(d) Nature of Income from Operations
Although substantially all of the Partnership's income from operations is
derived from assets employed in foreign operations, virtually all of this
income is denominated in United States dollars. The Partnership's
customers are international shipping lines that transport goods on
international trade routes. Once the Equipment is on-hire with a lessee,
the Partnership has no way of knowing its location. The domicile of the
lessee is not indicative of where the lessee is transporting the
Equipment. The Partnership's business risk in its foreign operations lies
with the creditworthiness of the lessees rather than the geographic
location of the Equipment or the domicile of the lessees.
For the year ended December 31, 1996, revenue from two lessees each
accounted for more than 10% of the Partnership's revenues, with revenues
of $741 and $580. For the period from February 1, 1995 (inception) through
December 31, 1995, three lessees each accounted for more than 10% of the
Partnership's revenues, with revenues of $185, $94 and $84.
(e) Allocation of Net Earnings and Partnership Distributions
In accordance with the Partnership Agreement, net earnings or losses and
partnership distributions are allocated 9.5% to the General Partners and
90.5% to the Limited Partners. Items of income and gain are specially
allocated to the General Partners to the extent their capital accounts'
show a deficit.
For purposes of determining the General Partners' capital accounts,
currently deductible organization costs are specially allocated to the
General Partners in the year incurred and capitalized offering and
syndication costs are allocated to the General Partners in the year
following the date the last limited partnership unit is sold or the
offering of units for sale terminates (Determination Date).
With respect to the Limited Partner units, in the year following the
Determination Date, any net loss for the taxable year (and in future years
to the extent necessary) shall be specially allocated amongst the Limited
Partner units such that each unit receives an equal and proportionate
share of the allocated Limited Partner losses calculated from October 1,
1996 to the Determination Date.
Actual cash distributions to the Limited Partners differ from the
allocated net earnings as presented in these financial statements because
cash distributions are based on cash available for distribution. Cash
distributions are paid to the general and limited partners on a monthly
basis in accordance with the provisions of the Partnership Agreement. Some
limited partners have elected to have their distributions paid quarterly.
The Partnership has recorded these distributions as an accrued liability
at December 31, 1996.
(f) Income Taxes
The Partnership is not subject to income taxes. Accordingly, no provision
for income taxes has been made. The Partnership files federal and state
information returns only. Taxable income or loss is reportable by the
individual partners.
(g) Damage Protection Plan
The Partnership offers a Damage Protection Plan (the Plan) to lessees of
its equipment. Under the terms of the Plan, the Partnership earns
additional revenues on a daily basis and, as a result, has agreed to bear
certain repair costs. It is the Partnership's policy to recognize these
revenues when earned and provide a reserve sufficient to cover the
Partnership's obligation for estimated future repair costs. Plan expenses
are included in direct container expenses on the Statements of Operations
and the related reserve is included in accrued liabilities. At December
31, 1996 and 1995, this reserve was equal to $77 and $20, respectively.
(h) Limited Partners' Per Unit Share of Net Earnings and Distributions
Limited partners' per unit share of both net earnings or losses and
distributions were computed using the weighted average number of units
outstanding during the year ended December 31, 1996 which was 395,685.
(i) Fair Value of Financial Instruments
To meet the reporting requirements of Financial Accounting Standards Board
Statement No. 107, "Disclosures about Fair Value of Financial
Instruments," the Partnership calculates the fair value of financial
instruments and includes this additional information in the notes to the
financial statements when the fair value is different than the book value
of those financial instruments. At December 31, 1996 and 1995, the fair
value of the Partnership's financial instruments approximate the related
book value of such instruments.
Note 2. Transactions with Affiliates
The Partnership pays a managing sales agent fee to TSC of up to 9% of the
gross proceeds from the sale of limited partnership units, from which TSC
pays commissions to independent participating broker/dealers who
participate in the offering. The amount of the managing sales agent fee
and the broker/dealers' commissions are determined by the volume of Units
sold to each investor by the broker/dealers. These amounts, which totaled
$2,262 during 1996, were deducted as syndication and offering costs in the
determination of net limited partnership contributions. The General
Partners or TSC will pay, out of their own corporate funds, all other
organization, offering and Unit sales costs incurred by the General
Partners or TSC.
As part of the operation of the Partnership, the Partnership is to pay to
the General Partners an incentive management fee, an equipment management
fee and an equipment liquidation fee, as well as reimbursing the General
Partners for certain administrative costs. These fees are for various
services provided in connection with the administration and management of
the Partnership. The Partnership incurred $26 of incentive management fees
during the year ended December 31, 1996. There were no incentive
management fees incurred during the period from February 1, 1995
(inception) through December 31, 1995. No equipment liquidation fees were
incurred during the year ended December 31, 1996 or the period from
February 1, 1995 (inception) to December 31, 1995.
The Equipment of the Partnership is managed by TEM, an Associate General
Partner. TEM has authority to acquire, hold, manage, lease, sell and
dispose of the Partnership's Equipment. Additionally, TEM holds, for the
payment of direct operating expenses, a reserve of cash that has been
collected from container leasing operations; such cash is netted in
determining the amount due to affiliates at December 31, 1996. At December
31, 1996 and 1995 no cash balances were held by TEM. Subject to certain
reductions, TEM receives a monthly equipment management fee equal to 7% of
gross lease revenues attributable to operating leases and 2% of gross
lease revenues attributable to full payout net leases. For the year ended
December 31, 1996 and the period from February 1, 1995 (inception) through
December 31, 1995, these fees totaled $267 and $51. The Partnership's
Equipment is leased by TEM to third party lessees on operating master
leases, spot leases, full payout net leases and term leases. The majority
of the Partnership's leases are operating leases with limited terms and no
purchase option.
Certain indirect general and administrative costs such as salaries,
employee benefits, taxes and insurance, are incurred in performing
administrative services necessary to the operation of the Partnership.
These costs are borne by TCC, and TEM. During 1996 and the period from
February 1, 1995 (inception) through December 31, 1995 costs allocated to
the Partnership for salaries were $155 and $48, respectively and other
general and administrative costs were $134 and $46, respectively.
TEM allocates these costs based on the ratio of the Partnership's interest
in managed Equipment to the total Equipment managed by TEM during the
period. Indirect general and administrative costs allocated to the
Partnership were $248 for the year ended December 31, 1996 and $77 for the
period from February 1, 1995 (inception) through December 31, 1995.
TCC allocates indirect general and administrative costs to the Partnership
based on the ratio of the Partnership's Equipment to the total Equipment
of all limited partnerships managed by TCC. TCC allocated $41 and $17 of
these indirect costs to the Partnership during 1996 and for the period
from February 1, 1995 (inception) through December 31, 1995, respectively.
The General Partners, or TAS, may acquire Equipment in their own name and
hold title on a temporary basis for the purpose of facilitating the
acquisition of such Equipment for the Partnership. The Equipment may then
be resold to the Partnership on an all-cash basis at a price equal to the
actual cost, as defined in the Partnership Agreement.
At December 31, 1996 and 1995, amounts due to affiliates, net, is
comprised of:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Due from affiliates:
Due from TSC........................................ $ 158 -
----- -----
Due to affiliates:
Due to TL........................................... 16 890
Due to TCC.......................................... 7 20
Due to TEM.......................................... 172 171
----- ------
195 1,081
----- -----
Net due to affiliates $ 37 1,081
====== =====
</TABLE>
The amounts receivable and payable to TSC, TEM and TCC were incurred in
the ordinary course of business between the Partnership, TEM, TSC and TCC
and represent timing differences in the accrual and payment of expenses
and fees described above or in the accrual and remittance of net rental
revenues from TEM. For the period from February 1, 1995 (inception) to
December 31, 1995, the amounts payable to TL include $2,393 which was used
to facilitate equipment purchases and make cash collateral deposits
required under the revolving line of credit (note 4).
It is the policy of the Partnership and the General Partners to charge
interest on intercompany balances arising from the Partnership's
acquisition of Equipment which are outstanding for more than one month.
Interest is charged to the Partnership at a rate not greater than the
General Partners' or affiliates' own cost of funds. During the year ended
December 31, 1996 and the period from February 1, 1995 (inception) to
December 31, 1995, the Partnership incurred $81 and $31, respectively, in
interest charged by the General Partners.
Note 3. Rentals under Operating Leases
The following is a schedule by year of minimum future rentals receivable
on noncancelable operating leases as of December 31, 1996:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C> <C>
1997............................................................. $ 836
1998............................................................. 45
1999............................................................. 17
----
Total minimum future rentals receivable.......................... $ 898
===
</TABLE>
Note 4. Note Payable
The Partnership has a short-term revolving credit facility (the Facility)
with an available limit of $25,000, expiring June 30, 1997, which is
available for Equipment purchases. Balances borrowed under the Facility
bear interest at either the Prime Rate (8.25% at December 31, 1996) plus
.25%, or LIBOR plus 1.75%, and are secured by all assets of the
Partnership. The Partnership pays a commitment fee of 1/2% per annum on
the unused portion of the Facility. This fee, as well as the interest on
any amounts borrowed, is payable quarterly in arrears. Should the Facility
not be renewed upon its expiration, it may, at the Partnership's option,
be converted to a four-year term loan, with interest at either the Prime
Rate plus 2.25%, or LIBOR plus 3.25% The Partnership can borrow an amount
up to the sum of 60% of the net book value of Equipment plus the amount of
the cash collateral.
On or before termination of its offering of limited partnership interest
to the public, the Partnership intends to use available offering proceeds
to repay the outstanding balance under the Facility. In the event that the
Partnership cannot repay the Facility upon the offering termination, TL or
an affiliate will, at the Partnership's request, repay part of the
outstanding balance and, in exchange, the Partnership will sell a portion
of its Equipment to TL or its affiliate (or to a third party located by
TL). The original purchase price of the Equipment sold will be equal to
the amount of the Facility repaid by TL or its affiliate. The net sale
price for this Equipment will be the Partnership's original purchase price
for such Equipment reduced by any net revenues (that is, the Equipment's
pro-rata share of revenues and expenses, including management fees and
interest) realized by the Partnership with respect to such Equipment.
At December 31, 1996, the Partnership had borrowed $8,780 under this
Facility to finance Equipment purchases and maintained restricted cash
collateral deposits of $991. The cash collateral is held in a market-rate
(4.40% at December 31, 1996), interest-bearing checking account. The
account is restricted in use and pledged as collateral for the Facility.
Subsequent to December 31, 1996, an additional amount of $7,780 was repaid
under the Facility.
Substantially all of the Partnership's borrowings are currently bearing
interest based on the Prime Rate plus .25%. The applicable Prime Rate as
of March 14, 1997 was 8.25%.
Note 5. Income Taxes
During the year ended December 31, 1996 and the period from February 1,
1995 (inception) through December 31, 1995, there were temporary
differences of $3,807 and $1,193 between the financial statement carrying
value of certain assets and liabilities and the federal income tax basis
of such assets and liabilities. The reconciliation of net loss for
financial statement purposes to net loss for federal income tax purposes
for the year ended December 31, 1996 and the period from February 1, 1995
(inception) through December 31, 1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net loss per financial statements............................ $ (580) (400)
Increase in provision for bad debt........................... 22 16
Depreciation for income tax purposes in excess
of depreciation for financial statement purposes (2,701) (1,229)
Gain on sale of fixed assets for financial statement
purposes in excess of gain recognized for
federal income tax purposes............................... 5 -
Increase in damage protection plan reserve................... 30 20
Other........................................................ - 1
-------- -------
Net loss for federal income tax purposes..................... $(3,224) (1,592)
===== =====
</TABLE>
Note 6. Subsequent Event
In March 1997, the Managing General Partner decided to terminate the
Partnership offering effective April 30, 1997, due to the decrease in
demand for containers and the associated decline in lease rental rates
and utilization.
<PAGE>
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been none.
<PAGE>
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Registrant has no officers or directors.
Textainer Capital Corporation (TCC), as the Managing General Partner, is
responsible for managing the administration and operation of the Registrant, and
for the formulation and administration of investment policies.
Textainer Equipment Management Limited (TEM), an Associate General Partner,
manages all aspects of the operation of the Registrant's Equipment. (Prior to
being redomiciled on December 20, 1994, TEM was known as Textainer Equipment
Management N.V.)
Textainer Limited (TL), an Associate General Partner, owns a fleet of container
rental equipment which is managed by TEM. TL provides advice to the Partnership
regarding negotiations with financial institutions, manufacturers of equipment
and equipment owners, and regarding the terms upon which particular items of
Equipment are acquired.
Textainer Acquisition Services Limited (TAS) is an affiliate of the General
Partners which performs services relative to the acquisition of Equipment
outside the United States on behalf of the Partnership.
TCC Securities Corporation (TSC), a licensed broker and dealer in securities and
an affiliate of the General Partners, is the managing sales agent for the
offering of Units for sale.
Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Partnership's General Partners, policy-making officials and persons who
beneficially own more than ten percent of the Units to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Copies of these reports must also be furnished to the
Partnership.
Based solely on a review of the copies of such forms furnished to the
Partnership or on written representations that no forms were required to
be filed, the Partnership believes that with respect to its most recent
fiscal year ended December 31, 1996, all Section 16(a) filing requirements
were complied with, except that Philip K. Brewer filed his initial
statement of beneficial interest on Form 3 late. No director, officer, or
beneficial owner owned more than 10 percent of any interest in the
Partnership. None of the foregoing own any interest in the Partnership and
none have failed to file or filed late any reports of transactions in the
Units.
The directors and executive officers of the General Partners are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Neil I. Jowell 63 Director and Chairman of TGH, TEM, TL, and TCC
James E. Hoelter 57 President and CEO of TGH, TL, and TCC, Director of TGH, TEM, TL, TCC and TSC
John A. Maccarone 52 President and CEO of TEM, Vice President of TGH, Director of TGH, TEM, TL,
TCC and TSC
Cara D. Smith 34 President and CEO of TSC and Director of TCC
John R. Rhodes 47 Executive Vice President, CFO, and Secretary of TGH, TEM, TL, TFS and TCC,
and Director of TEM and TCC
Alex M. Brown 58 Director of TGH, TEM, TL, TCC and TSC
Harold J. Samson 75 Director of TGH, TL and TSC
Philip K. Brewer 40 Senior Vice President - Capital Markets for TGH and TL
Robert D. Pedersen 38 Senior Vice President - Marketing for TEM
Anthony C. Sowry 44 Vice President - Operations and Acquisitions for TEM
Jens W. Palludan 46 Vice President - Americas/Africa/Australia for TEM
Robert S.A. Goodall 39 Vice President - Europe/Middle East/India for TEM
Wing Sing Mak 39 Vice President - South Asia for TEM
Masanori Sagara 41 Vice President - North Asia for TEM
Stefan Mackula 44 Vice President - Equipment Resale for TEM
Ernest J. Furtado 41 Vice President, Finance and Assistant Secretary of TGH, TEM and TL
Richard G. Murphy 44 Vice President - Risk Management for TEM
Janet S. Ruggero 48 Vice President - Administration and Marketing Services for TEM
Adnan Z. Abou Ayyash 52 Director of TGH and TL
Isam K. Kabbani 62 Director of TGH and TL
S. Arthur Morris 63 Director of TGH, TEM and TL
Dudley R. Cottingham 45 Assistant Secretary, Vice President and Director of TGH, TEM and TL
James S. McCaffrey 41 Executive Vice President, Chief Operating Officer, Assistant Secretary and
Director for TCC
Jeanene K. Gomes 43 Assistant Secretary of TCC, Secretary and Compliance Officer of TSC
</TABLE>
Neil I. Jowell is Director and Chairman of TGH, TEM, TL, and TCC and a
member of the Investment Advisory Committee and Equipment Investment Committee
(see "Committees" below). He has served on the Board of Trencor Ltd. since 1966
and as Chairman since 1973. He is also a director of Mobile Industries, Ltd.
(1969 to present), an Affiliate of Trencor, and a non-executive director of
Forward Corporation Ltd. (1993 to present). Trencor is a publicly traded
diversified industrial group listed on the Johannesburg Stock Exchange. Its
business is the leasing, owning, managing and financing of marine cargo
containers worldwide and the manufacture and export of containers for
international markets. In South Africa, it is engaged in manufacturing,
transport, trading and exports of general commodities. Trencor also has an
interest in Forward Corporation Ltd., a publicly traded holding company listed
on the Johannesburg Stock Exchange. It has interests in industrial and consumer
businesses operating in South Africa and abroad. Mr. Jowell became affiliated
with the General Partners and its affiliates when Trencor became, through its
beneficial ownership in two controlled companies, a major shareholder of the
Textainer Group in 1992. Mr. Jowell has over 36 years' experience in the
transportation industry. He holds an M.B.A. degree from Columbia University and
a B.Com.L.L.B. from the University of Cape Town.
James E. Hoelter is President and Chief Executive Officer of TGH, TL,
and TCC and a director of TGH, TEM, TL, TCC and TSC. As President and Chief
Executive Officer of TGH, Mr. Hoelter is responsible for overseeing the
management of, and coordinating the activities of, TEM, TL and TCC. He is also
responsible for overseeing TEM's equipment management operations. In addition,
Mr. Hoelter is Chairman of the Credit Committee, the Investment Advisory
Committee and the Equipment Investment Committee (see "Committees", below).
Prior to joining the Textainer Group in 1987, Mr. Hoelter was president of
Intermodal Equipment Associates ("IEA") in San Francisco, California, from the
company's inception in 1979 until 1987. Mr. Hoelter co-founded IEA and directed
its sponsorship of ten public and private investment programs, which provided
more than $100 million of equity from 10,000 investors. From 1976 to 1978, Mr.
Hoelter was Vice President - North America for Trans Ocean Ltd., San Francisco,
a marine container leasing company, where he was responsible for all leasing
operations in that area. From 1971 to 1976, he was associated with Itel
Corporation, San Francisco, where he held a number of positions, the most recent
of which was director of financial leasing for Itel's Container Division. Mr.
Hoelter received his B.B.A. in business administration from the University of
Wisconsin, where he currently serves as a member of its Business School's Dean's
Advisory Board, and his M.B.A. from the Harvard Graduate School of Business
Administration.
John A. Maccarone is President and CEO of TEM, Vice President of TGH
and a director of TGH, TEM, TL, TCC and TSC. In this capacity he is responsible
for the performance of TEM's worldwide fleet of marine cargo containers.
Additionally, he is a member of the Equipment Investment Committee, the Credit
Committee and the Investment Advisory Committee (see "Committees", below). Mr.
Maccarone was instrumental in co-founding IEA with Mr. Hoelter and held a
variety of executive positions with IEA from 1979 until 1987, when he joined the
Textainer Group. Mr. Maccarone was previously a Director of Marketing for Trans
Ocean Leasing Corporation in Hong Kong with responsibility for all leasing
activities in Southeast Asia. From 1969 to 1977, Mr. Maccarone was a marketing
representative for IBM Corporation. He holds a B.S. degree in Engineering
Management from Boston University and an M.B.A. from Loyola University of
Chicago.
Cara D. Smith is President and Chief Executive Officer of TSC, a
director of TCC and a member of the Investment Advisory Committee (see
"Committees", below). In this capacity Ms. Smith is responsible for the
organization, marketing and after-market support of investment programs. Ms.
Smith joined Textainer in 1992, and prior to 1996, was Vice President of
Marketing. Ms. Smith has worked in the securities industry for the past 13
years. Ms. Smith's extensive experience ranges from compliance and investor
relations to administration and marketing of equipment leasing, multi-family
housing and tax credit investment programs. She holds five securities licenses
and is a registered principal. Ms. Smith is also a member of the International
Association of Financial Planners.
John R. Rhodes is Executive Vice President, Chief Financial Officer
and Secretary of TGH, TEM, TL and TCC and a director of TEM and TCC. In this
capacity he is responsible for all accounting, financial management, and
reporting functions for the Textainer Group. He is also a member of the Credit
Committee, the Equipment Investment Committee and Investment Advisory Committee
(see "Committees", below). Prior to joining Textainer in November 1987, Mr.
Rhodes was Vice President of Finance for Greenbrier Capital Corporation in San
Francisco, a trailer leasing and management company, from 1986 to 1987; from
1981 to 1985, he was employed by Gelco Rail Services, an intermodal refrigerated
trailer company in San Francisco, first in the capacity of Vice President and
Controller and then as Senior Vice President and General Manager. Mr. Rhodes'
earlier business affiliations include serving as Vice President and General
Manger of Itel Capital Corporation and as senior accountant with Arthur Andersen
& Co., both in San Francisco. He is a Certified Public Accountant and holds a
B.A. in economics from Stanford University and an M.B.A. in accounting from
Golden Gate University.
Alex M. Brown is a director of TGH, TEM, TL, TCC and TSC.
Additionally, he is a member of the Equipment Investment Committee and the
Investment Advisory Committee (see "Committees", below). Mr. Brown became
affiliated with the Textainer Group in April 1986. From August 4, 1987 until
October 1993, he was President and Chief Executive Officer of Textainer, Inc.
and the Chairman of the Textainer Group. From June 1993 to present, Mr. Brown
has been Chief Executive Officer of AAF, a company affiliated with Trencor Ltd.
AAF is a publicly listed company on the London Stock Exchange and is involved in
manufacturing and leasing modular buildings and construction scaffolding. Mr.
Brown is Chairman of WACO International Corporation, which is based in
Cleveland, Ohio. WACO manufactures, rents and erects scaffolding and other
associated construction products throughout the USA. Mr. Brown was the managing
director of Cross County Leasing in England from 1984 until it was acquired by
Textainer in 1986.
Harold J. Samson is a director of TGH, TL and TSC and is a member of
the Investment Advisory Committee (see "Committees", below). Mr. Samson
served as a consultant to various securities firms since 1981 to 1989. From
1974 to 1981 he was Executive Vice President of Foster & Marshall, Inc., a New
York Stock Exchange member firm based in Seattle. Mr. Samson was a director
of IEA from 1979 to 1981. From 1957 to 1984 he served as Chief Financial Officer
in several New York Stock Exchange member firms. Mr. Samson holds a B.S.
in Business Administration from the University of California, Berkeley and is a
California Certified Public Accountant.
Philip K. Brewer is Senior Vice President - Capital Markets for TGH
and TL. Mr. Brewer is responsible for optimizing the capital structure of and
identifying new sources of finance for Textainer. Prior to joining Textainer
in 1996, Mr. Brewer worked at Bankers Trust from 1990 to 1996, starting
as a Vice President in Corporate Finance and ending as Managing Director and
Country Manager for Indonesia; from 1989 to 1990, he was Vice President in
Corporate Finance at Jarding Fleming; from 1987 to 1989, he was Capital Markets
Advisor to the United States Agency for International Development; and from
1984 to 1987 he was an Associate with Drexel Burnham Lambert in New York. Mr.
Brewer holds an M.B.A. in Finance from the Graduate School of Business at
Columbia University, and a B.A. in Economics and Political Science from Colgate
University.
Robert D. Pedersen is based in San Francisco and is Senior Vice
President - Marketing for TEM, responsible for worldwide sales and marketing
related activities. Mr. Pedersen is a member of the Credit Committee (see
"Committees" below). He joined TEM in 1991 as Regional Vice President for the
Americas Region. Mr. Pedersen has extensive experience in the industry having
held a variety of positions with Maersk Line, a container shipping line (from
1978 to 1984), XTRA, a container lessor (1985 to 1988) and Klinge Cool, a
manufacturer of refrigerated container cooling units (1989 to 1991), where he
was worldwide sales and marketing director. Mr. Pedersen is a graduate of the
A.P. Moller shipping and transportation program and Merkonom Business School in
Copenhagen, majoring in Company Organization.
Anthony C. Sowry is Vice President - Operations and Acquisitions for
TEM. Mr. Sowry supervises all international container operations and maintenance
and technical functions for the fleets under management. In addition, he is
responsible for the acquisition of all new and used containers for the Textainer
Group. He began his affiliation with TEM in 1988 and previously served as Fleet
Quality Control Manager for Textainer Inc. from 1982 through March 1988. He is
also a member of the Credit Committee and the Equipment Investment Committee
(see "Committees", below). From 1980 to 1982, he was operations manager for
Trans Container Services in London; and from 1978 to 1982, he was a technical
representative for Trans Ocean Leasing, also in London. He received his B.A.
degree in business management from the London School of Business. Mr. Sowry is a
member of the Technical Committee of the International Institute of Container
Lessors and a certified container inspector.
Jens W. Palludan is based in New York and is Vice President -
Americas/Africa/Australia for TEM, responsible for coordinating all leasing
activities in North and South America, Africa and Australia/New Zealand. Mr.
Palludan spent his career from 1969 through 1992 with Maersk Line of Copenhagen,
Denmark in a variety of key management positions in both Denmark and overseas.
Prior to joining TEM in 1993 Mr. Palludan was General Manager, Equipment and
Terminals, where he was responsible for a fleet of over 200,000 TEUs. Mr.
Palludan holds an M.B.A. from the Centre European D'Education Permanente,
Fontainebleau, France.
Robert S.A. Goodall is based in London and is Vice President - Europe/
Middle East/India for TEM, in which capacity he is responsible for coordinating
all leasing activities in these three areas of operation. Mr. Goodall joined
TEM in September 1994. Previously, Mr. Goodall spent his career from July 1990
until August 1994 with Tiphook Container Rental, during which time he held
numerous senior marketing positions within the company. He was responsible for
setting up their green field operation in North America, which he successfully
ran from inception for three years. Mr. Goodall also spearheaded a quality
program within the company which received ISO accreditation for the Tank
Container operation and associated business areas. Mr. Goodall has spent
nearly sixteen years in the container leasing and transport industry. Mr.
Goodall graduated from Bloxham College, Oxfordshire and Business Studies at
West London College.
Wing Sing Mak is based in Singapore and is the Regional Vice President
- - South Asia. Mr. Mak is responsible for container leasing activities in
North/Central People's Republic of China (PRC), Hong Kong and South China (PRC),
and Southeast Asia. Mr. Mak most recently was the Regional Manager, Southeast
Asia, for Trans Ocean Leasing, working there from 1994 to 1996. From 1987 to
1994, Mr. Mak worked with Tiphook as their Regional General Manager, and with
OOCL from 1976 to 1987 in a variety of positions, most recently as their
Logistics Operations Manager.
Masanori Sagara is the Regional Vice President - North Asia of TEM.
Mr. Sagara is responsible for Textainer's marketing activities in Japan, Korea,
and Taiwan. Mr. Sagara joined Textainer in 1990 and was the company's Marketing
Director in Japan through 1996. From 1987 to 1990, he was the Marketing Manager
with IEA. Mr. Sagara's other experience in the container leasing business
includes marketing management at Genstar from 1984 to 1987 and various
container operations positions with Thoresen & Company from 1979 to 1984. Mr.
Sagara holds a Bachelor of Science degree in Economics from Aoyama Bakuin
University.
Stefan Mackula is Vice President - Equipment Resale for TEM, in which
capacity he coordinates the worldwide sale of equipment into secondary markets.
Mr. Mackula also served as Vice President - Marketing for TEM, in which capacity
he was responsible for coordinating all leasing activities in Europe, Africa,
and the Middle East. He joined TEM in 1983 as Leasing Manager for the United
Kingdom. Prior to joining TEM, Mr. Mackula held, beginning in 1972, a variety of
positions in the international container shipping industry.
Ernest J. Furtado is Vice President, Finance and Assistant Secretary
of TGH, TEM and TL, in which capacity he is responsible for all accounting,
financial management, and reporting functions for TGH, TEM and TL. Prior to
joining Textainer in May 1991, Mr. Furtado was Controller for Itel Instant Space
and manager of accounting for Itel Containers International Corporation, both in
San Francisco, from 1984 to 1991. Mr. Furtado's earlier business affiliations
include serving as audit manager for Wells Fargo Bank and as senior accountant
with John F. Forbes & Co., both in San Francisco. He is a Certified Public
Accountant and holds a B.S. in business administration from the University of
California at Berkeley and an M.B.A. in information systems from Golden Gate
University.
Richard G. Murphy is Vice President, Risk Management for TEM. Mr.
Murphy is responsible for all credit and risk management functions for TEM and
supervises the administrative aspects of equipment acquisitions. He is a member
of and acts as secretary to the Credit and Equipment Investment Committees (see
"Committees", below). He previously served as Director of Credit and Risk
Management from 1989 to 1991 and as Controller from 1988 to 1989. Prior to the
takeover of the management of the Interocean Leasing Ltd. fleet by TEM in 1988,
Mr. Murphy held various positions in the accounting and financial areas with
that company from 1980, acting as Chief Financial Officer from 1984 to 1988.
Prior to 1980, he held various positions with firms of public accountants in the
U.K. Mr. Murphy is an Associate of the Institute of Chartered Accountants in
England and Wales and holds a Bachelor of Commerce degree from the National
University of Ireland.
Janet S. Ruggero is Vice President, Administration and Marketing
Services for TEM. Ms. Ruggero is responsible for the tracking and billing of
fleets under TEM management, including direct responsibility for ensuring that
all data is input in an accurate and timely fashion. She assists the marketing
and operations departments by providing statistical reports and analyses and
serves on the Credit Committee (see "Committees", below). Prior to joining
Textainer in 1986, Ms. Ruggero held various positions with Gelco CTI over the
course of 15 years, the last one as Director of Marketing and Administration for
the North American Regional office in New York City. She has a B.A. in education
from Cumberland College.
Dr. Adnan Z. Abou Ayyash is a director of TGH and TL. Since 1974 he
has been General Manager and Chief Executive Officer of one of the largest
firms of consulting engineers in Saudi Arabia, Rashid Engineering. Dr. Adnan
Abou Ayyash holds a B.S. degree in Civil Engineering from the American
University of Beirut, as well as M.S. and Ph.D. degrees in Civil Engineering
from the University of Texas.
Sheikh Isam K. Kabbani is a director of TGH and TL. He is Chairman and
principal stockholder of the IKK Group, Jeddah, Saudi Arabia, a manufacturing
and trading group which is active both in Saudi Arabia and internationally. In
1959 Sheikh Isam Kabbani joined the Saudi Arabian Ministry of Foreign Affairs,
and in 1960 moved to the Ministry of Petroleum for a period of ten years. During
this time he was seconded to the Organization of Petroleum Exporting Countries
(OPEC). After a period as Chief Economist of OPEC, in 1967 he became the Saudi
Arabian member of OPEC's Board of Governors. In 1970 he left the ministry of
Petroleum to establish his own business, the National Marketing Group, which has
been his principal business activity for the past 17 years. Sheikh Kabbani holds
a B.A. degree from Swarthmore College, Pennsylvania, and an M.A. degree in
Economics and International Relations from Columbia University.
S. Arthur Morris is a director of TGH, TEM and TL. He is a founding
partner in the firm of Morris and Kempe, Chartered Accountants (1962-1977) and
currently functions as a correspondent member of a number of international
accounting firms through his firm Arthur Morris and Company (1978 to date). He
is also President and director of Continental Management Limited (1977 to date).
Continental Management Limited is a Bermuda corporation that provides corporate
representation, administration and management services and corporate and
individual trust administration services. Mr. Morris has over 30 years
experience in public accounting and serves on numerous business and charitable
organizations in the Cayman Islands and Turks and Caicos Islands. Mr.
Morris became a director of TL and TGH in 1993 and TEM in 1994.
Dudley R. Cottingham is Assistant Secretary, Vice President and a
director of TGH, TEM and TL. He is a partner with Arthur Morris and Company
(1977 to date) and a Vice President and director of Continental Management
Limited (1978 to date), both in the Cayman Islands and Turks and Caicos Islands.
Continental Management Limited is a Bermuda corporation that provides corporate
representation, administration and management services and corporate and
individual trust administration services. Mr. Cottingham has over 20 years
experience in public accounting with responsibility for a variety of
international and local clients. Mr. Cottingham became a director of TL and TGH
in 1993 and TEM in 1994.
James S. McCaffrey is Executive Vice President, Chief Operating
Officer, Assistant Secretary and a director of and TCC. In this capacity he is
responsible for all accounting, financial management, and reporting functions
for TCC. He is a member of and acts as secretary to the Investment Advisory
Committee and serves on the Equipment Investment Committee (see "Committees"
below). Prior to joining Textainer in July 1993, Mr. McCaffrey was Vice
President of Finance for Meridian Point Properties, a real estate syndication
and management company, from 1985 to 1993; from 1983 to 1985 he was employed by
Trans-west Capital as Controller and Chief Financial Officer. Mr. McCaffrey's
earlier business affiliations include serving as manager of financial reporting
for Fox and Carskadon Financial Corporation and as a senior accountant with
Arthur Andersen & Co. Mr. McCaffrey is a Certified Public Accountant and holds a
B.S. in business administration and mathematics from Southern Oregon State
College and two securities licenses.
Jeanene K. Gomes is Assistant Secretary of TCC and Secretary and
Compliance Officer of TSC. Ms. Gomes is responsible for administering the public
partnerships sponsored by the Textainer Group. She is responsible for ensuring
that all data relating to investor accounts is input, monitored, and stored in a
timely manner and in accordance with the limited partnership agreement for each
of the partnerships as well as state and federal securities regulations. Ms.
Gomes oversees all communications with the limited partners and as such directly
supervises all personnel in performing this function. As compliance officer for
TSC, Ms. Gomes is responsible for ensuring compliance with all securities
regulations. Ms. Gomes also serves on the Investment Advisory Committee (see
"Committees" below). Ms. Gomes holds five securities licenses and was, prior to
joining Textainer in 1989, the compliance officer for CIS Investment
Corporation, a broker-dealer.
Committees
The Managing General Partner has established the following three
committees to facilitate decisions involving credit and organizational matters,
negotiations, documentation, management and final disposition of Equipment for
the Partnership and for other programs organized by the Textainer Group:
Equipment Investment Committee. The Equipment Investment Committee
will review the equipment leasing programs of the Partnership on a regular basis
with emphasis on matters involving equipment purchases, the equipment mix
in the Partnership's portfolio, equipment remarketing issues, and decisions
regarding ultimate disposition of equipment. The members of the committee are
James E. Hoelter (Chairman), John A. Maccarone, John R. Rhodes, Anthony C.
Sowry, James S. McCaffrey, Richard G. Murphy (Secretary), Alex M. Brown and Neil
I. Jowell.
Credit Committee. The Credit Committee will establish credit limits
for every lessee and potential lessee of Equipment and periodically review
these limits. In setting such limits, the Credit Committee will consider such
factors as customer trade routes, country, political risk, operational history,
credit references, credit agency analyses, financial statements, and other
information. The members of the Credit Committee are James E. Hoelter(Chairman),
John A. Maccarone, Richard G. Murphy (Secretary), Janet S. Ruggero, John R.
Rhodes, Anthony C. Sowry and Robert D. Pedersen.
Investment Advisory Committee. The Investment Advisory Committee
will review investor program operations on at least a quarterly basis,
emphasizing matters related to cash distributions to investors, cash flow
management, portfolio management, and liquidation. The Investment Advisory
Committee is organized with a view to applying an interdisciplinary approach,
involving management, financial, legal and marketing expertise, to the analysis
of investor program operations. The members of the Investment Advisory Committee
are James E. Hoelter (Chairman), John A. Maccarone, Cara D. Smith, James S.
McCaffrey (Secretary), John R. Rhodes, Jeanene K. Gomes, Harold J. Samson, Alex
M. Brown and Neil I. Jowell.
ITEM 11 - EXECUTIVE COMPENSATION
The Registrant has no executive officers and does not reimburse TCC, TEM or TL
for the remuneration payable to their executive officers.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
a) Security ownership of certain beneficial owners
There is no person or "Group" who is known to the registrant to be the
beneficial owner of more than five percent of the outstanding units of
limited partnership interest in the Registrant.
b) Security Ownership of Management
(Dollar amounts in thousands)
As of December 31, 1996, the Partnership had raised total gross
proceeds of $25,133, or 1,256,666 units of limited partnership
interest. No Units were owned by any executive officers or directors.
c) Changes in control.
Inapplicable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with Management and Others.
(Dollar amounts in thousands)
At December 31, 1996 and 1995, amounts due to affiliates, net, is
comprised of:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Due from affiliates:
Due from TSC........................................ $ 158 -
----- -----
Due to affiliates:
Due to TL........................................... 16 890
Due to TCC.......................................... 7 20
Due to TEM.......................................... 172 171
----- ------
195 1,081
----- -----
Net due to affiliates $ 37 1,081
====== =====
</TABLE>
The amounts receivable and payable to TSC, TEM and TCC were incurred in
the ordinary course of business between the Partnership, TEM, TSC and
TCC and represent timing differences in the accrual and payment of
expenses and fees described above or in the accrual and remittance of
net rental revenues from TEM. For the period from February 1, 1995
(inception) to December 31, 1995, the amounts payable to TL include
$2,393 which was used to facilitate equipment purchases and make cash
collateral deposits required under the revolving line of credit.
In addition, the Registrant paid or will pay the following amounts to
the General Partners.
Management fees in connection with the operations of the Registrant:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
TEM.................. $ 293 51
=== ==
Reimbursement for administrative costs in respect of the operations of
the Registrant:
1996 1995
---- ----
TCC.................. $ 41 17
TEM.................. 248 77
--- --
Total................ $ 289 94
=== ==
Advances (reimbursements) in connection with the purchase of Equipment:
1996 1995
---- ----
TL................... $ (2,393) 2,393
========== =====
</TABLE>
(b) Certain Business Relationships.
Inapplicable.
(c) Indebtedness of Management
Inapplicable.
(d) Transactions with Promoters
Inapplicable.
See the "Compensation of Affiliates" section of the Registrant's Prospectus, as
supplemented, and the Notes to the Financial Statements in Item 8.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Audited financial statements of the Registrant for the year
ended December 31, 1996 are contained in Item 8 of this Report
2. Financial Statement Schedules.
(i) Independent Auditors' Report on Supplementary
Financial Schedule.
(ii) Schedule II - Valuation and Qualifying Accounts.
3. Exhibits Incorporated by reference.
(i) The Registrant's Prospectus as contained in Pre-
Effective Effective No. 4 to the Registrant's
Registration Statement (No. 33-99534), as filed with
the Commission on May 10, 1996, and supplemented by
Supplement No. 1, as filed with the Commission under
Rule 424(b) of the Securities Exchange Act of 1933 on
March 24, 1997.
(ii) The Registrant's limited partnership agreement,
Exhibit A to the Prospectus.
(b) During the year ended 1996, no reports on Form 8-K have been filed by
the Registrant.
<PAGE>
Independent Auditors' Report on Supplementary Schedule
The Partners
Textainer Equipment Income Fund VI, L.P.:
Under the date of February 17, 1997, we reported on the balance sheets of
Textainer Equipment Income Fund VI, L.P. (the Partnership) as of December 31,
1996 and 1995, and the related statements of operations, partners' capital
(deficit) and cash flows for the years ended December 31, 1996 and the period
from February 1, 1995 (inception) to December 31, 1995. In connection with our
audits of the aforementioned financial statements, we also audited the related
financial statement schedule as listed in Item 14. This financial statement
schedule is the responsibility of the Partnership's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
KPMG Peat Marwick LLP
San Francisco, California
February 17, 1997
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A California limited partnership)
Schedule II - Valuation and Qualifying Accounts
(Amounts in thousands)
<TABLE>
<CAPTION>
Charged Balance
Balance at to Costs Charged at End
Beginning and to Other of
of Period Expenses Accounts Deduction Period
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1996:
Allowance for doubtful accounts $ 16 16 6 - 38
-- -- ---- ------ ---
Damage protection plan reserve $ 20 60 - (3) 77
-- -- ------ --- --
For the year ended December 31, 1995:
Allowance for doubtful accounts $ - 16 - - 16
------ -- ------ ------ ---
Damage protection plan reserve $ - 20 - - 20
------ -- ------ ------ --
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
A California Limited Partnership
By Textainer Capital Corporation
The Managing General Partner
By
John R. Rhodes
Executive Vice President
Date: March 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer Capital
Corporation, the Managing General Partner of the Registrant, in the capacities
and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Executive Vice President March 27, 1997
John R. Rhodes (Principal Financial and
Accounting Officer) and
Secretary
President (Principal Executive March 27, 1997
James E. Hoelter Officer) and Director
Executive Vice President, Chief March 27, 1997
James S. McCaffrey Operating Officer and Director
Director March 27, 1997
John A. Maccarone
Director March 27, 1997
Cara D. Smith
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TEXTAINER EQUIPMENT MANAGEMENT FUND VI, L.P.
A California Limited Partnership
By Textainer Capital Corporation
The Managing General Partner
By /s/John R. Rhodes
John R. Rhodes
Executive Vice President
Date: March 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer Capital
Corporation, the Managing General Partner of the Registrant, in the capacities
and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/John R. Rhodes Executive Vice President March 27, 1997
- ------------------------------------------------
John R. Rhodes (Principal Financial and
Accounting Officer) and
Secretary
/s/James E. Hoelter President (Principal Executive March 27, 1997
- ------------------------------------------------
James E. Hoelter Officer) and Director
/s/James S. McCaffrey Executive Vice President, Chief March 27, 1997
- ----------------------------------------------
James S. McCaffrey Operating Officer and Director
/s/John A. Maccarone Director March 27, 1997
- ------------------------------------------------
John A. Maccarone
/s/Cara D. Smith Director March 27, 1997
- ------------------------------------------------
Cara D. Smith
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
1996 Form 10K
</LEGEND>
<CIK> 0001003638
<NAME> Textainer Equipment Income Fund VI, L.P.
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 2,042
<SECURITIES> 0
<RECEIVABLES> 1,071
<ALLOWANCES> 38
<INVENTORY> 0
<CURRENT-ASSETS> 39
<PP&E> 29,402
<DEPRECIATION> 1,988
<TOTAL-ASSETS> 30,528
<CURRENT-LIABILITIES> 9,097
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 21,431
<TOTAL-LIABILITY-AND-EQUITY> 30,528
<SALES> 0
<TOTAL-REVENUES> 3,815
<CGS> 0
<TOTAL-COSTS> 2,889
<OTHER-EXPENSES> 1,506
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (580)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (580)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
