<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
COMMISSION FILE NUMBER 0-25946
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(Exact name of Registrant as specified in its charter)
CALIFORNIA 93-1122553
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
650 CALIFORNIA STREET, 16TH FLOOR
SAN FRANCISCO, CALIFORNIA 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> 2
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED JUNE 30, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS.
Balance Sheets - June 30, 1996 (unaudited) and December 31, 1995 . . . . . . . . . . . . . 3
Statements of Earnings for the six and three months
ended June 30, 1996 and 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Partners' Capital for the six months
ended June 30, 1996 and 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statements of Cash Flows for the six months
ended June 30, 1996 and 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
2
<PAGE> 3
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Amounts in thousands)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Container rental equipment, net of accumulated
depreciation of $6,774 (1995: $4,488) $ 72,809 65,926
Cash and cash equivalents (note 1) 2,039 1,372
Accounts receivable, net of allowance
for doubtful accounts of $208 (1995: $151) 2,788 3,043
Due from affiliates (note 3) 62 -
Organization costs, net of accumulated amortization
$96 (1995: $70) 166 192
Prepaid expenses 8 25
----------- -----------
$ 77,872 70,558
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable $ 322 226
Accrued liabilities 197 294
Accrued damage protection plan costs (note 7) 316 232
Due to affiliates (note 3) 351 629
Equipment purchases payable 1,291 1,168
Note payable to bank (note 5) - 10,000
----------- -----------
Total liabilities 2,477 12,549
----------- -----------
Partners' capital:
General partners $ 2 2
Limited partners 75,393 58,007
----------- -----------
Total partners' capital 75,395 58,009
----------- -----------
Commitments (note 6)
$ 77,872 70,558
=========== ===========
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 4
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF EARNINGS
For the six and three months ended June 30, 1996 and 1995
(Dollar amounts in thousands except for per unit amounts)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS THREE MONTHS SIX MONTHS THREE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 1996 JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Rental Income $ 6,687 3,317 3,830 2,209
------------- ------------- ------------- -------------
Costs and expenses:
Direct container expenses 1,199 596 566 336
Bad debt expense 63 22 36 22
Depreciation and amortization 2,326 1,197 1,060 606
Professional fees 31 15 37 16
Management fees to affiliates (note 3) 635 324 326 189
General administrative costs 468 225 285 173
to affiliates (note 3)
Other general and administrative costs 26 13 24 12
------------- ------------- ------------- -------------
4,748 2,392 2,334 1,354
------------- ------------- ------------- -------------
Income from operations 1,939 925 1,496 855
------------- ------------- ------------- -------------
Other income (expense):
Interest income - - 108 108
Interest expense (155) (13) (498) (226)
Gain (loss) on sales of containers 56 19 4 (6)
------------- ------------- ------------- -------------
(99) 6 (386) (124)
------------- ------------- ------------- -------------
Net earnings $ 1,840 931 1,110 731
============= ============= ============= =============
Allocation of net earnings (note 3):
General Partners $ 39 23 12 7
Limited Partners 1,801 908 1,098 724
------------- ------------- ------------- -------------
$ 1,840 931 1,110 731
------------- ------------- ------------- -------------
Limited partners' per unit share $0.45 $0.20 $0.79 $0.41
of net earnings
============= ============= ============= =============
Limited partners' per unit share $0.93 $0.46 $0.84 $0.41
of distributions
============= ============= ============= =============
Weighted average number of limited
partnership units outstanding 3,984,542 4,463,915 1,391,367 1,784,057
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements
4
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TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
For the six months ended June 30, 1996 and 1995
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PARTNERS' CAPITAL
---------------------------------------
GENERAL LIMITED TOTAL
-------- ----------- ----------
<S> <C> <C> <C>
Balances at January 1, 1995 $ 2 16,062 16,064
Proceeds from sale of limited partnership
units - 22,628 22,628
Syndication and offering costs - (3,253) (3,253)
Distributions (12) (1,169) (1,181)
Net earnings 12 1,098 1,110
-------- ----------- ----------
Balances at June 30, 1995 $ 2 35,366 35,368
======== =========== ==========
Balances at January 1, 1996 $ 2 58,007 58,009
Proceeds from sale of limited partnership
units - 21,848 21,848
Syndication and offering costs - (2,553) (2,553)
Distributions (39) (3,710) (3,749)
Net earnings 39 1,801 1,840
-------- ----------- ----------
Balances at June 30, 1996 $ 2 75,393 75,395
======== =========== ==========
</TABLE>
See accompanying notes to financial statements
5
<PAGE> 6
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1996 and 1995
(Amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C>
Cash flows from operating activities:
Net earnings $ 1,840 1,110
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 2,300 1,034
Provision for doubtful accounts 57 36
Gain on sales of container rental equipment (56) (4)
Amortization of organization costs 26 26
Changes in assets and liabilities:
Increase in accounts receivable (38) (682)
Decrease in prepaid expenses 17 10
Organizational costs - (43)
Decrease in accounts payable and accrued
liabilities (45) (69)
Increase in accrued damage protection plan costs 84 77
Decrease in due to affiliates, net (476) (121)
----------- -----------
Net cash provided by operating activities 3,709 1,374
----------- -----------
Cash flows from investing activities:
Proceeds from sales of container rental equipment 250 93
Equipment purchases (9,365) (13,110)
Cash collateral deposit - 2,690
----------- -----------
Net cash used in investing activities (9,115) (10,327)
----------- -----------
Cash flows from financing activities:
Proceeds from sales of limited partnership units 22,084 22,628
Syndication and offering costs (2,644) (3,171)
Distributions to partners (3,367) (1,112)
Repayments under revolving credit line (10,000) (5,000)
----------- -----------
Net cash provided by financing activities 6,073 13,345
----------- -----------
Net increase in cash 667 4,392
Cash and cash equivalents at beginning of period 1,372 3,766
----------- -----------
Cash and cash equivalents at end of period $ 2,039 8,158
=========== ===========
Interest paid during the period $ 282 674
=========== ===========
</TABLE>
See accompanying notes to financial statements
6
<PAGE> 7
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS -- CONTINUED
For the six months ended June 30, 1996 and 1995
(Amounts in thousands)
(unaudited)
SUPPLEMENTAL DISCLOSURES:
Supplemental schedule of non-cash investing and financing activities:
The following table summarizes the amounts of Equipment purchases,
organizational costs, distributions to partners, proceeds from sale of limited
partnership units, syndication and offering costs and proceeds from sale of
Equipment which had not been paid or received by the Partnership as of June 30,
1996 and December 31, 1995, resulting in differences in amounts recorded and
amounts paid or received by the Partnership, as shown in the Statements of Cash
Flows for the six-month period ended June 30, 1996 and 1995.
<TABLE>
<CAPTION>
June 30, Dec. 31, June 30, Dec. 31,
1996 1995 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Equipment purchases included in:
Due to affiliates . . . . . . . . . . . . . . $ 306 454 171 145
Equipment purchases payable . . . . . . . . . 1,291 1,168 15,817 245
Organizational costs included in:
Due to affiliates . . . . . . . . . . . . . . - - - 43
Distributions to partners included in:
Due to affiliates . . . . . . . . . . . . . . 342 4 2 13
Accounts payable and accrued liabilities . . . 124 80 95 15
Proceeds from sale of limited partnership units
included in:
Accounts receivable . . . . . . . . . . . . . - 236 - -
Syndication and offering costs included in:
Due to affiliates . . . . . . . . . . . . . . - 91 119 37
Proceeds from sale of Equipment included in:
Due from affiliates . . . . . . . . . . . . . 16 53 48 17
</TABLE>
See accompanying notes to financial statements
7
<PAGE> 8
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS -- CONTINUED
For the six months ended June 30, 1996 and 1995
(Amounts in thousands)
(unaudited)
The following table summarizes the amounts of Equipment purchases,
organizational costs, distributions to partners, sale of limited partnership
units, syndication and offering costs and proceeds from sale of Equipment
recorded by the Partnership and the amounts paid or received as shown in the
Statements of Cash Flows for the six-month period ended June 30, 1996 and 1995.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Equipment purchases recorded . . . . . . . . . . . . . . . . . . . . . . $ 9,340 28,708
Equipment purchases paid . . . . . . . . . . . . . . . . . . . . . . . . 9,365 13,110
Organizational Costs Recorded . . . . . . . . . . . . . . . . . . . . . . - -
Organizational Costs Paid . . . . . . . . . . . . . . . . . . . . . . . . - 43
Distributions to Partners Declared . . . . . . . . . . . . . . . . . . . 3,749 1,181
Distributions to Partners Paid . . . . . . . . . . . . . . . . . . . . . 3,367 1,112
Proceeds from sale of limited partnership units recorded . . . . . . . . 21,848 22,628
Proceeds from sale of limited partnership units received . . . . . . . . 22,084 22,628
Syndication and offering costs recorded . . . . . . . . . . . . . . . . . 2,553 3,253
Syndication and offering costs paid . . . . . . . . . . . . . . . . . . . 2,644 3,171
Proceeds from sale of Equipment recorded . . . . . . . . . . . . . . . . 213 124
Proceeds from sale of Equipment received . . . . . . . . . . . . . . . . 250 93
</TABLE>
See accompanying notes to financial statements
8
<PAGE> 9
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
June 30 , 1996
(Dollar amounts in thousands except for per unit amounts)
(unaudited)
NOTE 1. GENERAL
Textainer Equipment Income Fund V (the Partnership) is a California
Limited Partnership formed in 1993. The Partnership owns and leases a
fleet of intermodal marine cargo container equipment (the Equipment) to
international shipping lines.
The accompanying interim comparative financial statements have not been
audited by an independent public accountant. However, all adjustments
(which were only normal and recurring adjustments), which are, in the
opinion of management, necessary to fairly present the financial
position of Partnership as of June 30, 1996 and December 31, 1995, and
the results of its operations, changes in partners' capital, and cash
flows for the six-month periods ended June 30, 1996 and 1995, have been
made.
The financial information presented herein should be read in conjunction
with the audited financial statements and the accompanying Notes
included in the Partnership's audited financial statements as of
December 31, 1995.
For purposes of the Statements of Cash Flows, the Partnership considers
all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash equivalents.
Certain reclassifications of prior year amounts have been made in order
to conform with the 1996 financial statement presentation.
NOTE 2. ACQUISITION OF EQUIPMENT
During the six-month periods ended June 30, 1996 and 1995, the
Partnership purchased Equipment with a cost of $9,340 and $28,708,
respectively.
NOTE 3. TRANSACTIONS WITH AFFILIATES
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. The General Partners manage and control the
affairs of the Partnership. The General Partners also act in this
capacity for other limited partnerships. 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.
In accordance with the Partnership Agreement, the net earnings or losses
and partnership distributions are allocated 99% to the limited partners
and 1% to the General Partners with the exception of gross income as
defined in the Partnership Agreement. Gross income is allocated to the
General Partners to the extent that their partners' capital accounts
show a deficit.
9
<PAGE> 10
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS CONTINUED
As part of the operation of the Partnership, the Partnership is to pay
to the General Partners or TAS an incentive management fee, an
acquisition fee, an equipment management fee and an equipment
liquidation fee, as well as reimburse 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 capitalized $440 and $626 of equipment acquisition fees
as part of Equipment costs during the six-month periods ended June 30,
1996 and 1995, respectively. The Partnership incurred $167 and $92 of
incentive management fees during the six- and three-month periods ended
June 30, 1996, respectively, and $58 and $35 for the comparable periods
ended June 30, 1995. No equipment liquidation fees were incurred during
either period.
The Equipment of the Partnership is managed by TEM. TEM has authority
to acquire, hold, manage, lease, sell and dispose of the Equipment.
Additionally, TEM holds, for the payment of direct operating expenses, a
reserve of cash that has been collected from Equipment leasing
operations; such cash is included in the amount due from affiliates at
June 30, 1996.
. 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.
For the six- and three-month periods ended June 30, 1996, these fees
totaled $468 and $232, respectively, and $268 and $154 for the
comparable periods ended June 30, 1995. The Equipment is leased by TEM
to third party lessees on operating master leases, spot leases and term
leases. The majority are operating leases with limited terms and no
purchase option.
Certain indirect general and administrative costs incurred in performing
administrative services necessary to the operation of the Partnership
are borne by TEM and allocated to the Partnership based on the ratio of
the Partnership's interest in managed Equipment to the total equipment
managed by TEM for the period. Indirect general and administrative
costs allocated to the Partnership were $407 and $208 for the six- and
three-month periods ended June 30, 1996, respectively, and $241 and $146
for the comparable periods ended June 30, 1995.
TCC, in its capacity as managing general partner, also incurred general
and administrative costs of $61 and $17 for the six- and three-month
periods ended June 30, 1996, respectively, and $44 and $27 for the
comparable periods ended June 30, 1995, which were reimbursed by the
Partnership.
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. In addition,
the General Partners, or TAS, are entitled to an acquisition fee for any
Equipment resold to the Partnership.
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. Additionally, the General
Partners and TSC are entitled to be reimbursed by the Partnership for
certain organizational and offering costs, incurred in connection with
the organization of the Partnership, up to a maximum of 6% of gross
proceeds raised as allowed by the Partnership Agreement.
10
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TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS CONTINUED
As of June 30, 1996 and December 31, 1995, due to affiliates are
comprised of:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Due from affiliates:
Due from TEM . . . . . . . . . . . . . . . . . $ 62 -
===== ====
Due to affiliates:
Due to TEM . . . . . . . . . . . . . . . . . . $ - 142
Due to TSC . . . . . . . . . . . . . . . . . . - 41
Due to TAS . . . . . . . . . . . . . . . . . . 271 392
Due to TL . . . . . . . . . . . . . . . . . . 47 15
Due to TCC . . . . . . . . . . . . . . . . . . 33 39
----- ----
$ 351 629
===== ====
</TABLE>
These amounts 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 payment of expenses and fees
described above or the accrual and collection of net rental revenues by
TEM.
It is the policy of the Partnership and the General Partners to charge
interest on intercompany balances which were outstanding for more than
one month to the extent such balances relate to loans for Equipment
purchases. Interest is charged to the Partnership at the Prime Rate plus
certain margins based on TGH's leverage ratio. There was no
intercompany interest incurred for the six- and three-month period ended
June 30, 1996 or the equivalent period in 1995.
NOTE 4. RENTALS UNDER OPERATING LEASES
The following is a schedule by year of minimum future rentals receivable
on noncancelable operating leases as of June 30, 1996:
<TABLE>
<CAPTION>
Year ended June 30:
<S> <C>
1997 . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,346
1998 . . . . . . . . . . . . . . . . . . . . . . . . . 166
1999 . . . . . . . . . . . . . . . . . . . . . . . . . 107
2000 . . . . . . . . . . . . . . . . . . . . . . . . . 50
-------
Total minimum future rentals receivable . . . . . . . $ 1,669
=======
</TABLE>
NOTE 5. REVOLVING CREDIT LINE
The Partnership had a short-term revolving credit line with an available
limit of $15,000 which was used for Equipment purchases. Balances
borrowed under this credit facility bore interest at either the Prime
plus .25% or the London Interbank Offered Rate (LIBOR) plus 2.00%, and
the Partnership paid a commitment fee of 1/2% on the unused portion of
the credit facility. This credit line was paid in full on April 8, 1996
and expired on May 31, 1996.
11
<PAGE> 12
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 6. COMMITMENTS
At June 30, 1996, the Partnership has committed to purchase 200
containers at an approximate total purchase price of $698 which includes
acquisition fees of $33. These commitments were made to TAS, which, as
the contracting party, has in turn committed to purchase this Equipment
on behalf of the Partnership.
NOTE 7. 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
revenue when earned and to provide a reserve sufficient to cover the
Partnership's obligation for estimated repair costs. At June 30, 1996
and December 31, 1995, this reserve was equal to $316 and $232,
respectively.
12
<PAGE> 13
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Dollar amounts in thousands except for per unit amounts)
The Financial Statements contain information which will assist in evaluating
the financial condition of the Partnership for the six and three- month periods
ended June 30, 1996 and 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 1, 1994. The Partnership received its minimum subscription
amount of $5,000 on August 23, 1994 and closed its offering on April 29, 1996
at $89,305.
The Partnership invests working capital and cash flow from operations prior to
its distribution to the Partners in short-term, liquid investments. It is the
policy of the Partnership to maintain minimum working capital reserves in an
amount which is the lesser of (i) 1% of capital contributions, or (ii) $100.
At June 30, 1996, the Partnership's cash of $2,039 was primarily invested in
money market accounts.
During the six-month period ended June 30, 1996, the Partnership declared cash
distributions to limited partners pertaining to the period from December 1995
through May 1996 in the amount of $3,710. These distributions represent a
return of 10% of original capital (measured on an annualized basis) on each
unit. On a GAAP basis $1,909 was a return of capital and the balance was from
net earnings. On a cash basis all of these distributions were from operations.
For the six-month period ended June 30, 1996, the Partnership had net cash
provided by operating activities of $3,709 compared to $1,374 for the same
period in 1995. This increase was primarily attributable to an increase in
income from operations as the Equipment fleet grew, as well as lower interest
expense due to the repayment of the credit facility.
While it is expected that net cash from operating activities will continue to
improve during the initial purchase and lease-up phase of the Partnership, such
improvement may be tempered by the fact that the Partnership's principal
lessees, shipping lines, are currently experiencing over-capacity, in part due
to the delivery of new ships. This over-capacity has, in some instances,
caused shipping lines to reduce freight rates, which could affect the
profitability of their business, resulting in the possibility of delays in the
remittance of rental payments, pressure on Equipment rental rates, and, in
extreme cases, bankruptcy of some shipping lines. As discussed more fully
below under "Results of Operations", utilization rates have reflected a lower
demand for Equipment, and this over-capacity could further affect these rates.
Net cash used in investing activities (the purchase and sale of Equipment) for
the six-month period ended June 30, 1996 was $9,115 compared with $10,327 for
the same period in 1995. The Partnership purchased more Equipment in the
six-month period ended June 30, 1995 than in the comparable period in 1996,
using more funds in 1996 to repay its credit facility. Net cash used in
investing activities for the period ended June 30, 1995 included the return of
restricted funds previously held as collateral for the revolving credit
facility, which offset Equipment purchases.
The Partnership had a short-term revolving credit line with an available limit
of $15,000 which was used for Equipment purchases. On April 8, 1996, this
credit line was paid in full by the Partnership.
At June 30, 1996, the Partnership had committed to purchase 200 containers at
an approximate total price of $698 which includes acquisition fees of $33. At
June 30, 1996, the Partnership had cash on hand of $2,039
13
<PAGE> 14
to meet these commitments. In the event the Partnership decides not to
purchase the Equipment, one of the General Partners or its affiliates will
retain the Equipment for its own account.
RESULTS OF OPERATIONS
Because the Partnership has only recently been formed, the results of its
operations for the six-month periods ended June 30, 1996 and 1995 are not
representative of the expected results after the completion of the purchase of
the initial portfolio of Equipment. The Partnership generated net earnings of
$1,840 and $1,110 for the six months ended June 30, 1996 and 1995,
respectively. The increase in total rental income of $2,857, or 75%, between
periods was primarily attributable to income from Equipment rentals, the major
component of total rental income, which increased by $2,905, or 87%, from 1995
to 1996. These financial results include non-cash depreciation expenses of
$2,300 and $1,034 for the respective periods.
The Partnership's income from operations, which consists of rental income,
Equipment depreciation, direct operating expenses, management fees, and
reimbursement of administrative expenses, was $1,939 and $1,496, respectively,
for the six-month periods ended June 30, 1996 and 1995. Rental income for the
same periods was $6,687 and $3,830, respectively. These increases were
directly related to the size of the Equipment fleet. The following is a
summary of the size of the Equipment fleet (in units) available for lease
during the six-month periods ended June 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Opening inventory . . . . . . 21,345 8,797
Closing inventory . . . . . . 24,033 16,356
Average . . . . . . . . . . . 22,689 12,577
</TABLE>
Rental income and direct operating expenses are also affected by the lease
utilization percentages for the Equipment which were 82% and 88%, on average,
during the six months ended June 30, 1996 and 1995, respectively.
For Textainer's equipment fleet, utilization rates rose during the first three
quarters of 1995, but began to decrease during the last quarter of 1995 and has
continued to decline for all Equipment types owned by the Partnership in the
first and second quarters of 1996. The General Partners believe that this
softening in demand has been due, in part, to a slow-down in activity in the
Asia-North America trade route as well as to seasonal factors. The General
Partners have seen recent evidence of some stabilization in utilization rates
for certain Equipment types; however, there can be no assurance regarding the
trend for utilization in the future. Rental rates have also been restrained by
quantity rate discounts granted to the Partnership's larger Equipment lessees.
Additionally, as previously discussed, shipping lines, which will be the
principal lessees of the Equipment, are currently experiencing over-capacity,
which may adversely affect rental payments and/or rates and utilization.
Substantially all of the Partnership's rental income was generated from the
leasing of Equipment under short-term operating leases.
The balance of rental income consists of other lease-related items, primarily
income from charges to the lessees for pick-up of Equipment from prime
locations less credits granted to lessees for leasing Equipment for less
desirable locations (location income), income for handling and returning
Equipment and income from charges to lessees for a damage protection plan. For
the six-month periods ended June 30, 1996, the total of these other revenue
items was $501, a decrease of $48 over the equivalent period in 1995. The
primary component of this net decrease was a decline in location income of
$189. This decline is mainly due to an
14
<PAGE> 15
increase in credits given to lessees for pick-up of Equipment from less
desirable locations, which is largely driven by decreased demand.
Direct operating expenses (excluding bad debt expense), which increased from
$566 during the six months ended June 30, 1995 to $1,199 for the six months
ended June 30, 1996, increased as a percentage of gross revenue from 15% to 18%
during the respective periods. The relative increase in these costs as a
percentage of gross revenue was attributable to the decrease in utilization.
As a percentage of gross revenue, bad debt expense of $63 for the six months
ended June 30, 1996 and $36 for the comparable period in 1995 was consistent at
.9% for both periods.
Depreciation and amortization expense increased by $1,266 from the six-month
period ended June 30, 1995 to the same period in 1996, and was consistent with
the increase in fleet size between the two periods.
Management fees to affiliates were 9.5% of gross revenue in the six-month
period ended June 30, 1996 and 8.5% of gross revenue for the equivalent period
in 1995. Incentive management fees, which are based on the Partnership's
limited and general partner distribution percentage and capital raised, were
2.5% of gross revenue in the six months ended June 30, 1996 and 1.5% of gross
revenue in the comparative period in 1995. The increased percentage between
periods reflects the increase in capital subject to distributions. Equipment
management fees were 7% of gross revenue for both periods.
General and administrative costs to affiliates increased by $183 from the
six-month period ended June 30, 1995 compared to the same period in 1996.
These costs, which are primarily overhead costs allocated by TEM, are allocated
based on fleet size which has increased in the respective periods.
Other expense, net, decreased from $386 for the six-month period ended June 30,
1995 to $99 for the comparable period in 1996. This change was made up of a
decrease in net interest expense of $235 net of an increase in the gain on
sales of Equipment of $52. Interest expense decreased due to the repayment of
the credit facility in April of 1996.
Net earnings per limited partnership unit decreased from $0.79 for the
six-month period ended June 30, 1995 to $0.45 for the same period in 1996.
Despite the growth in net earnings, which increased from $1,110 during the
six-month period ended June 30, 1995 to $1,840 in the same period of 1996, the
average outstanding units increased at a greater rate, resulting in a decrease
in earnings on a per unit basis.
The following is a comparative analysis of the results of operations for the
three-month periods ended June 30, 1996 and 1995.
The Partnership generated net earnings of $931 and $731 for the three months
ended June 30, 1996 and 1995, respectively. These financial results include
non-cash depreciation expenses of $1,183 and $593 for the respective periods.
The Partnership's income from operations was $925 and $855, respectively, for
the three-month periods ended June 30, 1996 and 1995. Rental income for the
same periods was $3,317 and $2,209, respectively. The increase in total rental
income of $1,109, or 50%, between periods was primarily attributable to income
from Equipment rentals, the major component of total rental income, which
increased by $1,187, or 63%, from 1995 to 1996. These increases were directly
related to the size of the Equipment fleet.
Rental income and direct operating expenses are also affected by the lease
utilization percentages for the Equipment which were 80% on average during the
three months ended June 30, 1996 and 86% during the three months ended June 30,
1995.
15
<PAGE> 16
The balance for rental income for the three months ended June 30, 1996 was $231
compared to $309 for the same period in 1995, a decrease of $78, or 25%. The
primary component of this net decrease was a decrease in location income of
$116 from the three-month period ended June 30, 1995 to the same period in
1996, The decrease in location income was due to an increase in credits given
to lessees for pick-up of Equipment from less desirable locations in the
six-month period ended June 30, 1996, which was largely driven by decreased
demand.
Direct operating expenses (excluding bad debt expense), which increased from
$336 during the three months ended June 30, 1995 to $596 for the same period in
1996, increased as a percentage of gross revenue from 15% to 18% during the
respective periods. The relative increase in these costs as a percentage of
gross revenue was attributable to the decrease in utilization.
Bad debt expense was $22 during both the three-month period ended June 30, 1996
and the same period in 1995. As a percentage of gross revenue, bad debt
expense decreased from 1.0% to .7% for the respective periods.
Depreciation and amortization expense increased by $590 from the three-month
period ended June 30, 1995 to the same period in 1996. This is consistent with
the increase in fleet size between the two periods.
Management fees to affiliates were 9.8% of gross revenue in the three-month
period ended June 30, 1996 and 8.6% of gross revenue for the equivalent period
in 1995. Incentive management fees were 2.8% and 1.6% of gross revenue in the
respective periods, reflecting the increase in capital subject to
distributions. Equipment management fees were 7% of gross revenue for both
periods.
General and administrative costs to affiliates increased by $52 from the
three-month period ended June 30, 1995 compared to the same period in 1996.
These costs are allocated based on fleet size which increased in the respective
periods.
Other income (expense), net, decreased from an expense of $124 for the
three-month period ended June 30, 1995 to income of $6 for the comparable
period in 1996. This change was comprised of a decrease in net interest
expense of $105 and by an increase in the gain on sales of Equipment of $25.
Interest expense decreased due to the repayment of the credit facility in April
of 1996.
Net earnings per limited partnership unit decreased from $0.41 for the
three-month period ended June 30, 1995 to $0.20 for the same period in 1996.
Despite the growth in net earnings, which increased from $731 during the
three-month period ended June 30, 1995 to $931 in the same period of 1996, the
average outstanding units increased at a greater rate, resulting in a decrease
in earnings on a per unit basis.
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 June 30, 1996 which would result in such risk
materializing.
16
<PAGE> 17
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 and/or general business and
economic cycles on the Partnership's operations.
17
<PAGE> 18
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 V, L.P.
(A California Limited Partnership)
By Textainer Capital Corporation
The Managing General Partner
By
------------------------------------------
John R. Rhodes
Executive Vice President
Date: August 12, 1996
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>
President (Principal Executive August 12, 1996
- -------------------------- Officer) and Director
James E. Hoelter
Executive Vice President, August 12, 1996
- -------------------------- (Principal Financial and
John R. Rhodes Accounting Officer)
Secretary and Treasurer
</TABLE>
18
<PAGE> 19
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 V, 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: August 12, 1996
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/James E. Hoelter President (Principal Executive August 12, 1996
- ----------------------- Officer) and Director
James E. Hoelter
/s/John R. Rhodes Executive Vice President, August 12, 1996
- ------------------------- (Principal Financial and
John R. Rhodes Accounting Officer)
Secretary and Treasurer
</TABLE>
19
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,039
<SECURITIES> 0
<RECEIVABLES> 3,058
<ALLOWANCES> 208
<INVENTORY> 0
<CURRENT-ASSETS> 174
<PP&E> 79,583
<DEPRECIATION> 6,774
<TOTAL-ASSETS> 77,872
<CURRENT-LIABILITIES> 2,477
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 75,395
<TOTAL-LIABILITY-AND-EQUITY> 77,872
<SALES> 0
<TOTAL-REVENUES> 6,687
<CGS> 0
<TOTAL-COSTS> 4,748
<OTHER-EXPENSES> 99
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,840
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,840
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
