TEXTAINER FINANCIAL SERVICES CORPORATION
650 California Street, 16th Floor
San Francisco, CA 94108
August 13, 1999
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 IV,
L.P. (the "Company") the Company's Quarterly Report on Form 10-Q for the Second
Quarter ended June 30, 1999.
This filing is being effected by direct transmission to the Commission's EDGAR
System.
Sincerely,
Nadine Forsman
Controller
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
Commission file number 0-21228
TEXTAINER EQUIPMENT INCOME FUND IV, L.P.
A California Limited Partnership
(Exact name of Registrant as specified in its charter)
California 94-3147432
(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)
(415) 434-0551
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
<PAGE>
<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND IV, L.P.
(a California Limited Partnership)
Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1999
Table of Contents
- -------------------------------------------------------------------------------------------------------------------
Page
<S> <C>
Item 1. Financial Statements
Balance Sheets - June 30, 1999 (unaudited)
and December 31, 1998............................................................................. 3
Statements of Operations for the three and six months
ended June 30, 1999 and 1998 (unaudited).......................................................... 4
Statements of Partners' Capital for the six months
ended June 30, 1999 and 1998 (unaudited).......................................................... 5
Statements of Cash Flows for the six months
ended June 30, 1999 and 1998 (unaudited).......................................................... 6
Notes to Financial Statements (unaudited)......................................................... 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................................................... 12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND IV, L.P.
(a California Limited Partnership)
Balance Sheets
June 30, 1999 and December 31, 1998
(Amounts in thousands)
- -------------------------------------------------------------------------------------------------------------------
1999 1998
---------------- ----------------
(unaudited)
<S> <C> <C>
Assets
Container rental equipment, net of accumulated
depreciation of $43,996 (1998: $41,760) (note 4) $ 74,595 $ 79,251
Cash 1,797 2,488
Accounts receivable, net of allowance for doubtful
accounts of $657 (1998: $426) 3,883 4,597
Due from affiliates, net (note 2) 566 1,144
Prepaid expenses 10 28
---------------- ----------------
$ 80,851 $ 87,508
================ ================
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 724 $ 544
Accrued liabilities 137 150
Accrued recovery costs 161 128
Accrued damage protection plan costs 520 374
Warranty claims 445 476
Deferred quarterly distribution 169 175
---------------- ----------------
Total liabilities 2,156 1,847
---------------- ----------------
Partners' capital:
General partners - -
Limited partners 78,695 85,661
---------------- ----------------
Total partners' capital 78,695 85,661
---------------- ----------------
$ 80,851 $ 87,508
================ ================
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND IV, L.P.
(a California Limited Partnership)
Statements of Operations
For the three and six months ended June 30, 1999 and 1998
(Amounts in thousands except for unit and per unit amounts)
(unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Three months Three months Six months Six months
Ended Ended Ended Ended
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Rental income $ 4,060 $ 5,369 $ 8,372 $ 10,886
--------------- --------------- --------------- --------------
Costs and expenses:
Direct container expenses 1,863 1,136 3,086 2,290
Bad debt expense (benefit) 54 (145) 243 (131)
Depreciation 1,785 1,870 3,576 3,744
Write-down of containers (note 4) 62 - 311 -
Professional fees 11 12 20 19
Management fees to affiliates (note 2) 412 505 843 992
General and administrative costs to affiliates (note 2) 246 307 542 658
Other general and administrative costs 44 38 87 95
--------------- --------------- --------------- --------------
4,477 3,723 8,708 7,667
--------------- --------------- --------------- --------------
(Loss) income from operations (417) 1,646 (336) 3,219
--------------- --------------- --------------- --------------
Other (expense) income:
Interest income, net 37 22 74 27
(Loss) gain on sale of containers (note 4) (412) 9 (491) 242
--------------- --------------- --------------- --------------
(375) 31 (417) 269
--------------- --------------- --------------- --------------
Net (loss) earnings $ (792) $ 1,677 $ (753) $ 3,488
=============== =============== =============== ==============
Allocation of net (loss) earnings (note 2):
General partners $ 32 $ 32 $ 64 $ 65
Limited partners (824) 1,645 (817) 3,423
--------------- --------------- --------------- --------------
$ (792) $ 1,677 $ (753) $ 3,488
=============== =============== =============== ==============
Limited partners' per unit share
of net (loss) earnings $ (0.12) $ 0.24 $ (0.12) $ 0.50
=============== =============== =============== ==============
Limited partners' per unit share
of distributions $ 0.45 $ 0.45 $ 0.90 $ 0.91
=============== =============== =============== ==============
Weighted average number of limited
partnership units outstanding 6,793,790 6,827,168 6,793,790 6,827,168
=============== =============== =============== ==============
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND IV, L.P.
(a California Limited Partnership)
Statements of Partners' Capital
For the six months ended June 30, 1999 and 1998
(Amounts in thousands)
(unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
Partners' Capital
-------------------------------------------------------
General Limited Total
-------------- ---------------- ----------------
<S> <C> <C> <C>
Balances at January 1, 1998 $ - $ 93,444 $ 93,444
Distributions (65) (6,201) (6,266)
Net earnings 65 3,423 3,488
-------------- ---------------- ----------------
Balances at June 30, 1998 $ - $ 90,666 $ 90,666
============== ================ ================
Balances at January 1, 1999 $ - $ 85,661 $ 85,661
Distributions (64) (6,115) (6,179)
Redemptions (note 5) - (34) (34)
Net loss 64 (817) (753)
-------------- ---------------- ----------------
Balances at June 30, 1999 $ - $ 78,695 $ 78,695
============== ================ ================
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND IV, L.P.
(a California Limited Partnership)
Statements of Cash Flows
For the six months ended June 30, 1999 and 1998
(Amounts in thousands)
(unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) earnings $ (753) $ 3,488
Adjustments to reconcile net (loss) earnings to
net cash provided by operating activities:
Depreciation 3,576 3,744
Write-down of containers (note 4) 311 -
Increase (decrease) in allowance for doubtful accounts, excluding
write-off (note 6) 231 (216)
Loss (gain) on sale of containers 491 (242)
(Increase) decrease in assets:
Accounts receivable, excluding write-off (note 6) 502 563
Due from affiliates, net 280 (333)
Prepaid expenses 18 58
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 167 61
Accrued recovery costs 33 (57)
Accrued damage protection plan costs 146 (9)
Warranty claims (31) (30)
---------------- ----------------
Net cash provided by operating activities 4,971 7,027
---------------- ----------------
Cash flows from investing activities:
Proceeds from sale of containers 2,045 1,188
Container purchases (1,488) (181)
---------------- ----------------
Net cash provided by investing activities 557 1,007
---------------- ----------------
Cash flows from financing activities:
Repayment of borrowings from affiliates - (826)
Redemptions of limited partnership units (34) -
Distributions to partners (6,185) (6,274)
---------------- ----------------
Net cash used in financing activities (6,219) (7,100)
---------------- ----------------
Net (decrease) increase in cash (691) 934
Cash at beginning of period 2,488 664
---------------- ----------------
Cash at end of period $ 1,797 $ 1,598
================ ================
Interest paid during the period $ - $ 16
================ ================
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND IV, L.P.
(a California Limited Partnership)
Statements Of Cash Flows--Continued
For the six months ended June 30, 1999 and 1998
(Amounts in thousands)
(unaudited)
- -------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures:
Supplemental schedule of non-cash investing and financing activities:
The following table summarizes the amounts of container purchases, distributions
to partners, and proceeds from sale of containers which had not been paid or
received as of June 30, 1999 and 1998, and December 31, 1998 and 1997, resulting
in differences in amounts recorded and amounts of cash disbursed or received by
the Partnership, as shown in the Statements of Cash Flows for the six-month
periods ended June 30, 1999 and 1998.
June 30 Dec. 31 June 30 Dec. 31
1999 1998 1998 1997
----------- ----------- ------------- ----------
<S> <C> <C> <C> <C>
Container purchases included in:
Due to affiliates.............................. $ 13 $ 16 $ 8 $ 2
Distributions to partners included in:
Due to affiliates.............................. 10 10 10 11
Deferred quarterly distributions............... 169 175 195 202
Proceeds from sale of containers included in:
Due from affiliates............................ 491 792 306 286
The following table summarizes the amounts of container purchases, distributions
to partners and proceeds from sale of containers recorded by the Partnership and
the amounts paid or received as shown in the Statements of Cash Flows for the
six-month periods ended June 30, 1999 and 1998.
1999 1998
---- ----
Container purchases recorded...................................................... $1,485 $ 187
Container purchases paid.......................................................... 1,488 181
Distributions to partners declared................................................ 6,179 6,266
Distributions to partners paid.................................................... 6,185 6,274
Proceeds from sale of containers recorded......................................... 1,744 1,208
Proceeds from sale of containers received......................................... 2,045 1,188
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND IV, L.P.
(a California Limited Partnership)
Notes To Financial Statements
For the three and six months ended June 30, 1999 and 1998
(Amounts in thousands except for unit and per unit amounts)
(unaudited)
- --------------------------------------------------------------------------------
Note 1. General
Textainer Equipment Income Fund IV, L.P. (the Partnership), a California
limited partnership with a maximum life of 20 years, was formed in 1991.
The Partnership owns a fleet of intermodal marine cargo containers, which
are leased to international shipping lines.
All adjustments (which were only normal and recurring adjustments) which
are, in the opinion of management, necessary to fairly present the
financial position of the Partnership as of June 30, 1999 and December 31,
1998, and the results of its operations, changes in partners' capital and
cash flows for the six-month periods ended June 30, 1999 and 1998, have
been made.
The financial information presented herein should be read in conjunction
with the audited financial statements and other accompanying notes
included in the Partnership's annual audited financial statements as of
December 31, 1998, in the Annual Report filed on Form 10-K.
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.
Certain reclassifications, not affecting net earnings, have been made to
prior year amounts in order to conform to the 1999 financial statement
presentation.
Note 2. Transactions with Affiliates
Textainer Financial Services Corporation (TFS) is the managing general
partner of the Partnership. TFS is a wholly-owned subsidiary of Textainer
Capital Corporation (TCC). Textainer Equipment Management Limited (TEM)
and Textainer Limited (TL) are associate general partners of the
Partnership. The managing general partner and the associate general
partners are collectively referred to as the General Partners and are
commonly owned by Textainer Group Holdings Limited (TGH). The General
Partners also act in this capacity for other limited partnerships. Prior
to its liquidation in October 1998, Textainer Acquisition Services Limited
(TAS), a former affiliate of the General Partners, performed services
related to the acquisition of containers outside the United States on
behalf of the Partnership. Effective November 1998, these services are
being performed by TEM. The General Partners manage and control the
affairs of the Partnership.
In accordance with the Partnership Agreement, sections 3.10 through 3.12,
net earnings or losses and distributions are generally allocated 1% to the
General Partners and 99% to the Limited Partners. If the allocation of
distributions exceeds the allocation of net earnings and creates a deficit
in a General Partner's capital account, the Partnership Agreement provides
for a special allocation of gross income equal to the amount of the
deficit.
As part of the operation of the Partnership, the Partnership is to pay to
the General Partners, or TAS, prior to its liquidation, an acquisition
fee, an equipment management fee, an incentive management fee, and an
equipment liquidation fee. These fees are for various services provided in
connection with the administration and management of the Partnership. The
Partnership capitalized $71 and $9 of container acquisition fees as a
component of container costs during the six-month periods ended June 30,
1999 and 1998, respectively. The Partnership incurred $129 and $258 of
incentive management fees during the three and six-month periods ended
June 30, 1999 and $129 and $259 for the comparable periods in 1998. No
equipment liquidation fees were incurred during these periods.
The Partnership's container fleet is managed by TEM. In its role as
manager, TEM has authority to acquire, hold, manage, lease, sell and
dispose of the Partnership's containers. TEM holds, for the payment of
direct operating expenses, a reserve of cash that has been collected from
leasing operations; such cash is included in due from affiliates, net at
June 30, 1999 and December 31, 1998.
Subject to certain reductions, TEM receives a monthly equipment management
fee equal to 7% of gross revenues attributable to operating leases and 2%
of gross revenues attributable to full payout net leases. These fees
totaled $283 and $585 for the three and six-month periods ended June 30,
1999 and $376 and $733 for the comparable periods in 1998. The
Partnership's container fleet is leased by TEM to third party lessees on
operating master leases, spot leases, term leases and direct finance
leases. The majority of the container fleet is leased under operating
master 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 incurred and paid by TFS and TEM. General and
administrative costs allocated to the Partnership for the three and
six-month periods ended June 30, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
--------------- ---------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Salaries $132 $159 $289 $328
Other 114 148 253 330
---- ---- ---- ----
Total general and
administrative costs $246 $307 $542 $658
==== ==== ==== ====
TEM allocates these general and administrative costs based on the ratio of
the Partnership's interest in the managed containers to the total
container fleet managed by TEM during the period. TFS allocates these
costs based on the ratio of the Partnership's containers to the total
container fleet of all limited partnerships managed by TFS. The General
Partners allocated the following general and administrative costs to the
Partnership for the three and six-month periods ended June 30, 1999 and
1998:
Three months Six months
ended June 30, ended June 30,
--------------- ---------------
1999 1998 1999 1998
---- ---- ---- ----
TEM $220 277 $485 $596
TFS 26 30 57 62
---- ---- ---- ----
Total general and
administrative costs $246 $307 $542 $658
==== ==== ==== ====
</TABLE>
The General Partners may acquire containers in their own name and hold
title on a temporary basis for the purpose of facilitating the acquisition
of such containers for the Partnership. The containers 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. In addition, the General
Partners are entitled to an acquisition fee for any containers resold to
the Partnership.
At June 30, 1999 and December 31, 1998, due from affiliates, net was
comprised of:
1999 1998
----- -----
Due from affiliates:
Due from TEM................................... $623 $1,197
----- -----
Due to affiliates:
Due to TFS..................................... 50 44
Due to TCC..................................... 6 8
Due to TL...................................... 1 1
----- -----
57 53
----- -----
Due from affiliates, net $566 $1,144
===== =====
These amounts receivable from and payable to affiliates were incurred in
the ordinary course of business between the Partnership and its affiliates
and represent timing differences in the accrual and remittance of expenses
and fees described above and in the accrual and remittance of net rental
revenues and sales proceeds from TEM.
It is the policy of the Partnership and the General Partners to charge
interest on amounts due to the General Partners which are outstanding for
more than one month, to the extent such balances relate to loans for
container purchases. Interest is charged at a rate not greater than the
General Partners' or affiliates' own cost of funds. On March 31, 1998, the
Partnership repaid its loan of $826 from TL, which was used to facilitate
container purchases. The Partnership incurred $16 of interest expense on
amounts due to the General Partners for the six-month period ended June
30, 1998. There was no interest expense incurred on amounts due to the
General Partners for the three-month period ended June 30, 1998 or for the
three and six-month periods ended June 30, 1999.
Note 3. Rentals Under Long-Term Operating Leases
The following are the future minimum rent receivables under cancelable
long-term operating leases at June 30, 1999. Although the leases are
generally cancelable with a penalty at the end of each twelve-month
period, the following schedule assumes that the leases will not be
terminated.
Year ending June 30:
2000............................................. $457
2001............................................. 108
2002............................................. 64
2003............................................. 17
2004............................................. 10
----
Total minimum future rentals receivable.......... $656
====
Note 4. Container Rental Equipment Write-Down
New container prices have been declining since 1995, and the cost of new
containers at year-end 1998 and during the first half of 1999 was
significantly less than the cost of containers purchased in prior years.
The Partnership evaluated the recoverability of the recorded amount of
container rental equipment at June 30, 1999 and December 31, 1998, and
determined that a reduction to the carrying value of the containers held
for continued use was not required, but that a write-down in value of
certain containers identified for sale was required. During the year ended
December 31, 1998 and the six-month period ended June 30, 1999, the
Partnership wrote-down the value of these containers to their estimated
fair value, which was based on recent sales prices.
At December 31, 1998, the Partnership recorded additional depreciation
expense of $457 to write down the value of 844 containers identified for
sale in low demand locations. During the six-month period ended June 30,
1999, the Partnership sold 312 of these previously written down containers
for a loss of $68 and recorded an additional depreciation expense of $311
to write down the value of 426 additional containers subsequently
identified for sale in these locations. The Partnership incurred losses on
the sale of containers previously written down as the actual sales prices
received during 1999 were lower than the estimates used for the
write-downs recorded in 1998, due to unexpected declines in container
sales prices.
If more containers in these or other low-demand locations are subsequently
identified as available for sale or if container sales prices continue to
decline, the Partnership may incur additional write-downs on containers
and/or may incur losses on the sale of containers.
Note 5. Redemptions
The following redemptions were consummated by the Partnership during the
six-month period ended June 30, 1999:
<TABLE>
<CAPTION>
Units Average
Redeemed Redemption Price Amount Paid
-------- ---------------- -----------
<S> <C> <C> <C>
Inception through December 31, 1998........ 48,825 $12.27 $ 599
Quarter ended:
March 31, 1999....................... 3,288 $10.35 34
------ ----
Partnership to date........................ 52,113 $12.14 $ 633
====== ====
</TABLE>
There were no redemptions during the six-month period ended June 30, 1998.
The redemption price is fixed by formula.
Note 6. Accounts Receivable Write-Off
During March 1998, the Partnership wrote-off $561 of delinquent
receivables from two lessees against which reserves were recorded in 1994
and 1995.
Note 7. Readiness for Year 2000
Many computer systems may experience difficulty processing dates beyond
the year 1999; as a consequence, some computer hardware and software at
many companies will need to be modified or replaced prior to the year 2000
in order to remain functional. The Partnership relies on the financial and
operating systems provided by the General Partners; these systems include
both information technology systems as well as non-information technology
systems. There can be no assurance that issues related to the Year 2000
will not have a material impact on the financial condition, results of
operations or cash flows of the Partnership.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(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 as of and for the three and six-month
periods ended June 30, 1999 and 1998. Please refer to the Financial Statements
and Notes thereto in connection with the following discussion.
Liquidity and Capital Resources
From May 1, 1992 until April 30, 1994, the Partnership offered limited
partnership interests to the public. The Partnership received its minimum
subscription amount of $5,000 on June 11, 1992 and on April 30, 1994 the
Partnership had received a total subscription amount of $136,918.
From time to time, the Partnership redeems units from limited partners for a
specified redemption value, which is set by formula. Up to 2% of the
Partnership's outstanding units may be redeemed each year, although the 2% limit
may be exceeded at the managing general partner's discretion. All redemptions
are subject to the managing general partner's good faith determination that
payment for the redeemed units will not (i) cause the Partnership to be taxed as
a corporation, (ii) impair the capital or operations of the Partnership, or
(iii) impair the ability of the Partnership to pay distributions in accordance
with its distribution policy. During the six-month period ended June 30, 1999,
the Partnership redeemed 3,288 units for a total dollar amount of $34. The
Partnership used excess cash to pay for the redeemed units.
The Partnership invests working capital and cash flow from operations prior to
its distribution to the partners in short-term, liquid investments. The
Partnership's cash is affected by cash provided by or used in operating,
investing and financing activities. These activities are discussed in detail
below.
Limited Partners are currently receiving monthly cash distributions in an
annualized amount equal to 9% of their original investment. During the six-month
period ended June 30, 1999, the Partnership declared cash distributions to
limited partners pertaining to the period from December 1998 through May 1999,
in the amount of $6,115. On a cash basis, $4,971 of these distributions was from
operating activities and the remainder was from excess cash. On a GAAP basis,
the entire distribution was a return of capital. Beginning with cash
distributions to limited partners for the month of July 1999, payable August
1999, the Partnership will make distributions at an annualized rate of 8% on
each unit. This reduction is the result of current market conditions which are
discussed in detail below.
At June 30, 1999, the Partnership had no commitments to purchase containers.
Net cash provided by operating activities for the six-month periods ended June
30, 1999 and 1998, was $4,971 and $7,027, respectively. The decrease of $2,056
was primarily attributable to the decline in net earnings adjusted for non-cash
transactions, offset by fluctuations in due from affiliates, net. Net earnings
adjusted for non-cash transactions decreased primarily due to the decline in
rental income, which is discussed more fully in "Results of Operations". The
fluctuations in due from affiliates, net resulted from timing differences in the
payment of expenses and fees and the remittance of net rental revenues.
For the six-month periods ended June 30, 1999 and 1998, net cash provided by
investing activities (the purchase and sale of containers) was $557 and $1,007,
respectively. The decrease of $450, or 45%, was primarily due to the Partnership
having purchased more containers during the six-month period ended June 30, 1999
than during the comparable period in 1998; however, the Partnership both sold
and purchased more containers during 1999 compared to 1998. The increase in
container sales during 1999 was primarily due to the Partnership having sold
containers located in low demand locations as discussed below in "Results of
Operations". The Partnership also sells containers when (i) a container reaches
the end of its useful life and (ii) an analysis indicates that the sale is
warranted due to existing market conditions and the container's age, location
and condition. Until market conditions improve, the Partnership plans to
continue to sell certain containers in low demand locations and proceeds from
container sales will fluctuate based on the number of containers sold and the
actual price received on the sale of these and other containers.
Consistent with its investment objectives, the Partnership intends to continue
to reinvest available cash from operations and all or a significant amount of
the proceeds from container sales in additional containers. However, the number
of additional containers purchased may not equal the number of containers sold,
as new container prices are likely to be greater than proceeds from container
sales. Market conditions have also had an adverse effect on the average amount
of sales proceeds recently realized from container sales. Additionally, these
market conditions are expected to continue to have an adverse effect on the
amount of cash provided by operations that is available for additional container
purchases, which has resulted in lower than anticipated reinvestment in
containers. Market conditions are discussed more fully under "Results of
Operations".
Results of Operations
The Partnership's income (loss) from operations, which consists primarily of
rental income, container depreciation, direct container expenses, management
fees, and reimbursement of administrative expenses was directly related to the
size of the container fleet during the six-month periods ended June 30, 1999 and
1998, as well as certain other factors as discussed below. The following is a
summary of the container fleet (in units) available for lease during those
periods:
1999 1998
---- ----
Beginning container fleet............... 34,661 36,409
Ending container fleet.................. 34,101 35,803
Average container fleet................. 34,381 36,106
The decline in the average container fleet of 5% from the six-month period ended
June 30, 1998 to the comparable period in 1999 was due to the Partnership having
sold more containers than it purchased since June 30, 1998. Although some of the
sales proceeds were used to purchase additional containers, fewer containers
were bought than sold, resulting in a net decrease in the size of the container
fleet. As noted above, when containers are sold in the future, sales proceeds
are not likely to be sufficient to replace all of the containers sold. This
trend, which is expected to continue, has contributed to a slower rate of
reinvestment than had been expected by the General Partners. Other factors
related to this trend are discussed above in "Liquidity and Capital Resources."
Rental income and direct container expenses are also affected by the utilization
of the container fleet, which was 69% and 81% on average during the six months
ended June 30, 1999 and 1998, respectively. This decline in average utilization,
caused by lower demand, had a significant adverse effect on rental income as
discussed below. In addition, rental income is affected by daily rental rates
and leasing incentives.
The following is a comparative analysis of the results of operations for the
six-month periods ended June 30, 1999 and 1998.
The Partnership's loss from operations for the six-month period ended June 30,
1999 was $336 on rental income of $8,372, compared to income from operations of
$3,219 on rental income of $10,886 for the comparable period in 1998. The
decrease in rental income of $2,514, or 23%, from the six-month period ended
June 30, 1998 to the comparable period in 1999 was attributable to decreases in
container rental income and other rental income. Income from container rentals,
the major component of total revenue, decreased $2,047, or 21%, primarily due to
decreases in average on-hire utilization of 15%, average container fleet of 5%
and average rental rates of 3%. Rental income was also adversely affected by the
increase in leasing incentives; however, the decline in utilization, which is
discussed below, had the most significant adverse effect on rental income.
The decline in average utilization from the six-month period ended June 30, 1998
to the equivalent period in 1999 was primarily due to lower demand for leased
containers. Demand decreased primarily due to (i) shipping lines continuing to
purchase rather than lease containers as a result of historically low new
container prices and low interest rates and (ii) the growth of the trade
imbalance in Asia. Rental rates have also declined as shipping lines continued
to negotiate lower rates as a result of this lower demand and the historically
low container prices.
The trade imbalance has resulted in the continuing build-up of containers in
lower demand locations. The General Partners have continued their efforts to
reposition newer containers to higher demand locations in an effort to improve
utilization and alleviate container build-up. The Partnership continued to incur
increased direct container expenses in 1999 as a result of this repositioning.
For the near-term, the General Partners plan to monitor market conditions to
determine whether additional repositioning efforts are required. However,
currently there are no significant repositioning efforts planned.
The Partnership also plans to continue to sell certain containers located in
lower demand locations. The decision to sell these containers is based on the
current expectation that the economic benefit of selling these containers and
using the related sales proceeds to purchase new containers in high demand
locations is greater than the economic benefit of continuing to own these
containers. The majority of the containers sold during 1998 and 1999 were older
containers as the expected economic benefit of continuing to own these
containers was significantly less than that of newer containers primarily due to
their shorter remaining marine life and shipping lines' preference for leasing
newer containers.
Because of the decision to sell certain containers during 1998 and 1999, the
Partnership wrote down the value of these specifically identified containers to
their estimated fair value, which was based on recent sales prices. Due to
unanticipated declines in container sales prices, the actual sales prices
received on these containers during 1999 were lower than the estimates used for
the write-down recorded in 1998 and the first quarter of 1999, resulting in the
Partnership incurring losses upon the sale of these containers. The Partnership
recorded additional write-downs during the second quarter of 1999 on certain
containers, which were identified as meeting the same criteria for sale. Until
market conditions improve, the Partnership may incur further write-downs and/or
losses on the sale of such containers. Should the decline in economic value of
continuing to own such containers turn out to be permanent, the Partnership may
be required to increase its depreciation rate for or write-down the value of
container rental equipment.
For the near term, the General Partners do not foresee material changes in
existing market conditions and caution that both utilization and lease rates
could further decline, adversely affecting the Partnership's operating results.
Substantially all of the Partnership's rental income was generated from the
leasing of the Partnership's containers under short-term operating leases.
The balance of other rental income consists of other lease-related items,
primarily income from charges to lessees for dropping off containers in surplus
locations less credits granted to lessees for leasing containers from surplus
locations (location income), income from charges to lessees for handling related
to leasing and returning containers (handling income) and income from charges to
lessees for a Damage Protection Plan (DPP). For the six months ended June 30,
1999, the total of these other rental income items was $827, a decrease of $467
from the equivalent period in 1998. This decrease was primarily due to decreases
in location and handling income of $321 and $124, respectively. Location income
decreased primarily due to an increase in credits given to lessees for picking
up containers from certain locations and a decrease in charges to lessees for
dropping off containers in certain locations. Handling income decreased due to
decreases in the average handling price charged per container and container
movement.
Direct container expenses increased $796, or 35%, from the six-month period
ending June 30, 1998 to the equivalent period in 1999. The increase was
primarily due to increases in storage, repositioning and DPP expenses of $423,
$249 and $243, respectively. Storage expense increased due to the decrease in
average utilization noted above and due to an increase in the average storage
cost per container. The repositioning expense increase resulted from more
containers being repositioned at a higher average repositioning cost per
container. The increase in repositioning is partly a result of the current trade
imbalance which has created areas with lower demand for leased containers. DPP
expense increased primarily due to increases in the average DPP cost per
container and in the number of containers covered by DPP in the six-month period
ended June 30, 1999 compared to the same period in 1998.
Bad debt expense increased from a benefit of $131 for the six-month period ended
June 30, 1998 to an expense of $243 in the comparable period in 1999. The
write-off of certain receivables that had reserves in excess of the receivable
due to insurance proceeds received and the resolution of payment issues with one
lessee during 1998 were primarily responsible for lower cost in 1998 and,
therefore, the fluctuation in bad debt expense between the periods.
Depreciation expense decreased $168, or 4%, from the six-month period ended June
30, 1998 to the comparable period in 1999 primarily due to the decrease in fleet
size.
New container prices have been declining since 1995, and the cost of new
containers at year-end 1998 and during the first half of 1999, was significantly
less than the cost of containers purchased in prior years. The Partnership
evaluated the recoverability of the recorded amount of container rental
equipment at June 30, 1999 and December 31, 1998, and determined that a
reduction to the carrying value of the containers held for continued use was not
required, but that a write-down in value of certain containers identified for
sale was required. During the year ended December 31, 1998 and the six-month
period ended June 30, 1999, the Partnership wrote-down the value of these
containers to their estimated fair value, which was based on recent sales
prices.
At December 31, 1998, the Partnership recorded additional depreciation expense
of $457 to write down the value of 844 containers identified for sale in low
demand locations. During the six-month period ended June 30, 1999, the
Partnership sold 312 of these previously written down containers for a loss of
$68 and recorded an additional depreciation expense of $311 to write down the
value of 426 additional containers subsequently identified for sale in these
locations. The Partnership incurred losses on the sale of containers previously
written down as the actual sales prices received during 1999 were lower than the
estimates used for the write-down recorded in 1998, due to unexpected declines
in container sales prices.
If more containers in these or other low demand locations are subsequently
identified as available for sale or if container sales prices continue to
decline, the Partnership may incur additional write-downs on containers and/or
may incur losses on the sale of containers.
Management fees to affiliates decreased $149, or 15%, from the six-month period
ended June 30, 1998 to the comparable period in 1999 due to the decrease in
equipment management fees. The decrease in equipment management fees resulted
primarily from the decrease in rental income, upon which the management fee is
primarily based. For the six-month period ended June 30, 1999, these fees were
approximately 7% of rental income. Equipment management fees for the six-month
period ended June 30, 1998 were only 6% of rental income due to the effect of an
adjustment resulting from the write-off of receivables for two lessees.
Incentive management fees, which are based on the Partnership's limited and
general partner distributions and partners' capital, were comparable at $258 and
$259 for the periods ended June 30, 1999 and 1998, respectively.
General and administrative costs to affiliates decreased $116, or 18%, from the
six-month period ended June 30, 1998 to the comparable period in 1999 primarily
due to a decrease in the allocation of overhead costs from TEM as the
Partnership represented a smaller portion of the total fleet managed by TEM.
Other income decreased from income of $269 for the six-month period ended June
30, 1998 to an expense of $417 for the equivalent period in 1999. The decrease
was primarily due to the fluctuation of gain/loss on sale of containers from a
gain of $242 for the six-month period ended June 30, 1998 to a loss of $491 for
the equivalent period in 1999. The loss on sale of containers recorded in 1999
was due to the Partnership having sold containers with higher book values at
lower average sales prices per container compared to 1998 and due to the loss
recorded on the sale of containers previously written down as discussed above.
Net earnings per limited partnership unit decreased from earnings of $0.50 for
the six-month period ended June 30, 1998 to a loss of $0.12 for the same period
in 1999, reflecting the decrease in net earnings allocated to limited partners
from earnings of $3,423 to a loss of $817, respectively. The allocation of net
earnings (loss) included a special allocation of gross income to the General
Partners in accordance with the Partnership Agreement.
The following is a comparative analysis of the results of operations for the
three-month periods ended June 30, 1999 and 1998.
The Partnership's loss from operations for the three-month period ending June
30, 1999 was $417 on rental income of $4,060, compared to income from operations
of $1,646 on rental income of $5,369 for the comparable period in 1998. The
decrease in rental income of $1,309, or 24%, from the three-month period ended
June 30, 1998 to the comparable period in 1999 was attributable to decreases in
container rental income and other rental income. Income from container rentals
decreased $1,098, or 23%, due to decreases in average on-hire utilization of
15%, average container fleet of 4%, and average rental rates of 2%. Leasing
incentives also increased; however, the decline in utilization had the most
significant adverse effect on rental income.
For the three-month period ended June 30, 1999, other rental income was $359, a
decrease of $211 from the equivalent period in 1998. Other income decreased
primarily due to decreases in location and handling income of $165 and $45,
respectively. Location income decreased due to an increase in credits given to
lessees for picking up containers from certain locations. Handling income
decreased primarily due to a decrease in the average handling price charged per
container, offset by an increase in container movement during the three-month
period ended June 30, 1999 compared to the equivalent period in 1998.
Direct container expenses increased $727, or 64% from the three-month period
ending June 30, 1998 to the equivalent period in 1999, primarily due to the
increases in repositioning, DPP and storage expenses of $287, $235 and $205,
respectively. The repositioning expense increase resulted from more containers
being repositioned at a higher average repositioning cost per container. DPP
expense increased primarily due to a higher average DPP cost per container and
an increase in the number of containers covered by DPP during the three-month
period ended June 30, 1999 compared to the same period in 1998. Storage expense
increased due to the decrease in average utilization noted above and due to an
increase in the average storage cost per container.
Bad debt expense increased from a benefit of $145 for the three-month period
ended June 30, 1998 to an expense of $54 for the comparable period in 1999. The
resolution of payment issues with one lessee during 1998 and lower 1998 reserve
requirements were primarily responsible for the lower cost in 1998 and,
therefore, the fluctuation in bad debt expense between the periods.
Depreciation expense decreased $85, or 5%, from the three-month period ended
June 30, 1998 to the comparable period in 1999 primarily due to the decrease in
fleet size.
During the three-month period ended June 30, 1999, the Partnership sold 147
previously written down containers for a loss of $35 and recorded an additional
depreciation expense of $201 to write down the value of 144 additional
containers subsequently identified for sale in certain low demand locations.
Management fees to affiliates decreased $93, or 18%, from the three-month period
ended June 30, 1998 to the comparable period in 1999, due to a decrease in
equipment management fees. These fees were approximately 7% of rental income and
decreased primarily due to the decrease in rental income.
General and administrative costs to affiliates decreased $61, or 20%, from the
three-month period ended June 30, 1998 to the comparable period in 1999
primarily due to a decrease in the allocation of overhead costs from TEM.
Other income decreased from income of $31 for the three-month period ended June
30, 1998 to an expense of $375 for the comparable period in 1999. The decrease
was primarily due to the increase of $421 in loss on sale of containers
resulting primarily from the Partnership having sold containers with higher book
values at lower average sales prices.
Net earnings per limited partnership unit decreased from earnings of $0.24 for
the three-month period ended June 30, 1998 to a loss of $0.12 for the same
period in 1999, reflecting the decrease in net earnings allocated to limited
partners from earnings of $1,645 to a loss of $824, respectively. The allocation
of net earnings (loss) included a special allocation of gross income to the
General Partners in accordance with the Partnership Agreement.
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 containers. The Partnership's business risk in its foreign
operations lies with the creditworthiness of the lessees, and the Partnership's
ability to keep its containers under lease, rather than the geographic location
of the containers or the domicile of the lessees. The containers are generally
operated on the international high seas rather than on domestic waterways. The
containers are subject to the risk of war or other political, economic or social
occurrence where the containers are used, which may result in the loss of
containers, 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 June 30, 1999, which would result in such a risk
materializing.
Other risks of the Partnership's leasing operations include competition, the
cost of repositioning containers after they come off-lease, the risk of an
uninsured loss, increases in maintenance expenses or other costs of operating
the containers, 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.
Readiness for Year 2000
Many computer systems may experience difficulty processing dates beyond the year
1999; as a consequence, some computer hardware and software at many companies
will need to be modified or replaced prior to the year 2000 in order to remain
functional. The Partnership relies on the financial and operating systems
provided by the General Partners; these systems include both information
technology (IT) systems as well as non-information technology (non-IT) systems.
For IT and non-IT systems developed by independent third parties
(externally-developed) the General Partners have obtained representations from
their vendors and suppliers that these systems are Year 2000 compliant and have
internally tested mission critical systems as operational. The General Partners
have reviewed all internally-developed IT and non-IT systems for Year 2000
issues and identified certain of these systems which required revision. The
General Partners have completed the revision and testing of these identified
systems, and these revised systems are now operational.
The cost of the revisions and testing relating to these systems was incurred by
TEM and a portion of the cost was allocated to the Partnership as part of
general and administrative costs allocated from TEM in 1998. While Year 2000
remediation costs were not specifically identified, it is estimated that total
Year 2000 related expenses included in allocated overhead from TEM were less
than $30. The Partnership and the General Partners do not anticipate incurring
significant additional remediation costs related to the Year 2000 issue in 1999.
There has been no material effect on the Partnership's financial condition and
results of operations as a result of TEM's delay in routine systems projects as
a result of Year 2000 remediation.
As noted above, Year 2000 compliance testing was undertaken by the General
Partners on both externally- and internally-developed systems. Standard
transactions were processed under simulated operating conditions for dates
crossing over January 1, 2000 as well as for other critical dates such as
February 29, 2000. In the standard business scenarios tested, the identified
systems appeared to function correctly. Under nonstandard conditions or
unforeseen scenarios, the results may be different. Therefore, these tests,
regardless of how carefully they were conducted, cannot guarantee that the
General Partners' systems will function without error in the Year 2000 and
beyond. If these systems are not operational in the Year 2000, the General
Partners have determined that they can operate manually for approximately two to
three months while correcting the system problems before experiencing material
adverse effects on the Partnership's and the General Partners' business and
results of operations. However, shifting portions of the daily operations to
manual processes may result in time delays and increased processing costs.
Additionally, the Partnership and General Partners may not be able to provide
lessees with timely and pertinent information, which may negatively affect
customer relations and lead to the potential loss of lessees, even though the
immediate monetary consequences of this would be limited by the standard
Partnership lease agreements between the lessees and the Partnership.
The Partnership and the General Partners are also continuing their assessment of
Year 2000 issues with third parties, comprised of lessees, manufacturers,
depots, and other vendors and suppliers, with whom the Partnership and the
General Partners have a material business relationship (Third Parties).
Non-compliance by other Third Parties is not expected to have a material effect
on the Partnership's results of operations and financial condition. The General
Partners have sent letters to the Partnership's lessees and other Third Parties
requesting representations on their Year 2000 readiness. The General Partners
have received responses to 90% of these letters with all but seven respondents
representing that they are or will be Year 2000 compliant. The General Partners
are continuing to follow up with non-respondents and will continue to identify
additional Third Parties whose Year 2000 readiness should be assessed.
Non-compliance by these seven respondents and by the remaining non-respondents
is not expected to have a material adverse effect on the Partnership's
operations or financial condition.
Nevertheless, the Partnership and the General Partners believe that they are
likely to encounter Year 2000 problems with certain Third Parties, particularly
those with significant operations within countries that are not actively
promoting correction of Year 2000 issues. Possible consequences of Year 2000
non-compliance among Third Parties include, but are not limited to, (i) TEM's
inability to provide service to certain areas of the world, (ii) delays in
container movement, (iii) payment and collection difficulties, and (iv)
invoicing errors due to late reporting of transactions. These types of problems
could result in additional operating costs and loss of lessee business. As
discussed above, the General Partners are prepared to shift portions of their
daily operations to manual processes in the event of Third Party non-compliance.
With respect to manufacturers, vendors and other suppliers, the General Partners
would also attempt to find alternate sources for goods and services. With
respect to depots and agents who handle, inspect or repair containers, if the
majority of the computer systems and networks of TEM are operational, the
General Partners believe that they will be able to compensate manually for these
Third Parties' failures (e.g., one field office performing data entry for
another, communication with depots conducted without computers), by using
temporary personnel at additional cost. Although costs will be incurred to pay
for the temporary personnel, the Partnership and the General Partners do not
expect these costs to be material to the Partnership. With respect to lessees'
non-compliance, the General Partners would compensate for communications
failures manually. If a lessee's noncompliance is broad enough to disrupt
significantly the operations of its shipping business, the resulting loss of
revenue could result in the lessee renting fewer containers. The Partnership and
the General Partners are unable to estimate the financial impact of these
problems, but to the extent that lessee's problems result in weakening demand
for containers, the Partnership's results of operations would likely be
adversely affected. If Year 2000 problems result in delays in collections,
either because of the additional time required to communicate with lessees or
because of lessees' loss of revenues, the Partnership's cash flow could be
affected and distributions to general and limited partners could be reduced. The
Partnership and the General Partners believe that these risks are inherent in
the industry and are not specific to the Partnership or General Partners.
Forward Looking Statements and Other Risk Factors Relating to the Year 2000
The foregoing analysis of Year 2000 issues includes forward-looking statements
and predictions about possible or future events, results of operations and
financial condition. As such, this analysis may prove to be inaccurate, because
of the assumptions made by the Partnership and the General Partners or the
actual development of future events. No assurance can be given that any of these
forward-looking statements and predictions will ultimately prove to be correct
or even substantially correct. Some of the risks relating to Year 2000
compliance are described above. In addition, in analyzing Year 2000 issues, the
Partnership and the General Partners have assumed that the infrastructure of the
United States and most other countries, including ports and customs, remains
intact. If the infrastructure of one or more countries were to fail, the
resulting business disruption would likely have an adverse effect on the
Partnership and the General Partners. The Partnership and General Partners are
unable to determine a reasonably likely worst case scenario in the event of an
infrastructure failure or failures.
Various other risks and uncertainties could also affect the Partnership and
could affect the Year 2000 analysis, causing the effect on the Partnership to be
more severe than discussed above. These risks and uncertainties include, but are
not limited to, the following. The Partnerships' and the General Partners' Year
2000 compliance testing cannot guarantee that all computer systems will function
without error beyond the Year 2000. Tests were only conducted of normal business
scenarios, and no independent verification or testing was used. Risks also exist
with respect to Year 2000 compliance by Third Parties, such as the risk that an
external party, who may have no relationship to the Partnership or General
Partners, but who has a significant relationship with one or more Third Parties,
may have a system failure that adversely affects the Partnership's ability to
conduct its business. While the Partnership and the General Partners are
attempting to identify such external parties, no assurance can be given that
they will be able to do so. Furthermore, Third Parties with direct relationships
with the Partnership, whose systems have been identified as likely to be Year
2000 compliant, may suffer a breakdown due to unforeseen circumstances. It is
also possible that the representations and warranties collected in good faith by
the General Partners from these Third Parties regarding their compliance with
Year 2000 issues may be incorrect, as the information collected was not be
independently verified by the General Partners. Finally, it should be noted that
the foregoing discussion of Year 2000 issues assumes that to the extent the
General Partners' systems fail, either because of unforeseen complications or
because of Third Parties' failure, switching to manual operations will allow the
Partnership to continue to conduct its business. While the Partnership and the
General Partners believe this assumption to be reasonable, if it is incorrect,
the Partnership's results of operations would likely be adversely affected.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TEXTAINER EQUIPMENT INCOME FUND IV, L.P.
A California Limited Partnership
By Textainer Financial Services Corporation
The Managing General Partner
By _______________________________
John R. Rhodes
Executive Vice President
Date: August 13, 1999
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 Financial
Services 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, August 13, 1999
John R. Rhodes (Principal Financial and
Accounting Officer) and
Secretary
________________________ President (Principal Executive August 13, 1999
John A. Maccarone Officer)
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TEXTAINER EQUIPMENT INCOME FUND IV, L.P.
A California Limited Partnership
By Textainer Financial Services Corporation
The Managing General Partner
By /s/John R. Rhodes
______________________________
John R. Rhodes
Executive Vice President
Date: August 13, 1999
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 Financial
Services 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, August 13, 1999
________________________ (Principal Financial and
John R. Rhodes Accounting Officer) and
Secretary
/s/John A. Maccarone President (Principal Executive August 13, 1999
________________________ Officer)
John A. Maccarone
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
2nd Quarter 1999 10Q
</LEGEND>
<CIK> 0000882288
<NAME> Textainer Equipment Income Fund IV
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 1,797
<SECURITIES> 0
<RECEIVABLES> 5,106
<ALLOWANCES> 657
<INVENTORY> 0
<CURRENT-ASSETS> 10
<PP&E> 118,591
<DEPRECIATION> 43,996
<TOTAL-ASSETS> 80,851
<CURRENT-LIABILITIES> 2,156
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 78,695
<TOTAL-LIABILITY-AND-EQUITY> 80,851
<SALES> 0
<TOTAL-REVENUES> 8,372
<CGS> 0
<TOTAL-COSTS> 8,708
<OTHER-EXPENSES> 417
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (753)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (753)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>