TEXTAINER FINANCIAL SERVICES CORPORATION
650 California Street, 16th Floor
San Francisco, CA 94108
March 27, 1997
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
Pursuant to the requirements of the Securities Exchange Act of 1934, we are
submitting herewith for filing on behalf of Textainer Equipment Income Fund V,
L.P. (the "Partnership") the Partnership's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
The financial statements included in the enclosed Annual Report on Form 10K do
not reflect a change from the preceding year in any accounting principles or
practices, or in the method of applying any such principles or practices.
This filing is being effected by direct transmission to the Commission's EDGAR
System.
Sincerely,
Nadine Forsman
Controller
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file number 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, CA 94108
(Address of Principal Executive Offices) (ZIP Code)
Registrant's telephone number, including area code:
(415) 434-0551
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS (THE "UNITS")
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[ X ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
[ ]
State the aggregate market value of the voting stock held by nonaffiliates of
the Registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and ask prices of such
stock, as of a specified date within 60 days prior to the date of the filing.
Not Applicable.
Documents Incorporated by Reference
The Registrant's Prospectus as contained in Pre-Effective Amendment No. 3 to the
Registrant's Registration Statement, as filed with the Commission on April 8,
1994, as supplemented by Post-Effective Amendment No. 2 as filed under Section
8(c) of the Securities Exchange Act of 1933 on May 5, 1995 and as supplemented
by Supplement No. 5 as filed under Rule 424(b) of the Securities Exchange Act of
1993 on March 18, 1996.
<PAGE>
PART I
ITEM 1 DESCRIPTION OF BUSINESS
For more detailed information about the Registrant's business, see "Business of
the Partnership" in the Registrant's Prospectus as supplemented.
(a) General Development of Business
(Dollar amounts in thousands)
The Registrant is a California Limited Partnership formed on July 15,
1993 to purchase, own, operate, lease, and sell equipment (the
Equipment) used in the containerized cargo shipping industry. The
Registrant commenced offering units representing limited partnership
interests (Units) to the public on May 1, 1994 in accordance with its
Registration Statement and ceased to offer such Units as of April 29,
1996. As of December 31, 1996, the Registrant had raised a total of
$89,305 from the offering, and the use of those proceeds is summarized
as follows:
<TABLE>
<CAPTION>
AMOUNT %
<S> <C> <C>
Gross Proceeds $ 89,305 100%
====== ====
Public Offering Expenses:
Commissions $ 8,038 9%
Organizational & Offering Costs 3,736 4%
Purchases of Equipment 72,822 82%
Acquisition Fees Earned
by the General Partners 3,816 4%
Initial Working Capital Reserve 893 1%
-------- --
$ 89,305 100%
====== ====
</TABLE>
See Item 10 herein for a description of the Registrant's General
Partners.
(b) Financial Information About Industry Segments
Inapplicable.
(c) Narrative Description of Business
(c)(1)(i) A container leasing company generally, and the Registrant
specifically, is an operating business comparable to a
rental car business. A customer can lease a car from a bank
leasing department for a monthly charge which represents the
cost of the car, plus interest, amortized over the term of the
lease; or the customer can rent the same car from a rental
car company at a much higher daily lease rate. The customer
is willing to pay the higher daily rate for the convenience
and value-added features provided by the rental car company,
the most important of which is the ability to pick up the car
where it is most convenient, use it for the desired period
of time, and then drop it off at a location convenient to the
customer. Rental car companies compete with one another on
the basis of lease rates, availability of cars, and the
provision of additional services. They generate revenues by
maintaining the highest lease rates and the highest
utilization factors that market conditions will allow, and
by augmenting this income with proceeds from sales of
insurance, drop-off fees, and other special charges. A large
percentage of lease revenues earned by car rental companies
are generated under corporate rate agreements wherein, for a
stated period of time, employees of a participating
corporation can rent cars at specific terms, conditions and
rental rates. Buying the cars at fleet prices and selling them
in the secondary market are also key elements to the
successful operation of a rental car business.
Container leasing companies and the Registrant operate in a
similar manner by owning and leasing a worldwide fleet of new
and used transportation containers to international shipping
companies hauling various types of goods among numerous trade
routes. In addition to paying a daily rental rate, all lessees
must either provide physical damage and liability insurance or
purchase a damage waiver from the Registrant, in which case
the Registrant agrees to pay the cost of repairing any
physical damage to containers caused by lessees, special
handling fees and/or drop-off charges may also be charged in
certain markets. Container leasing companies compete with one
another on the basis of lease rates, availability of equipment
and services provided. Revenues and profits are generated by
maintaining the highest lease rates and the highest equipment
utilization factors allowed by market conditions. Rental
revenues from containers result primarily under master leases
which are comparable to the corporate rate agreements used by
rental car companies. The master leases provide that container
leasing customers, for a specified period of time, may rent
containers at specific terms, conditions and rental rates.
Although the terms of the master lease governing each
container do not vary, the number of containers in use can
vary from time to time within the term of the master lease.
The terms and conditions of the master lease provide that the
lessee pays a daily rental rate for the entire time the
container is in his possession (whether or not he is actively
using it), is responsible for any damage, and must insure the
container against liabilities. For a more detailed discussion
of the leases for the Partnership's Equipment, see "Leasing
Policy" under "Business of the Partnership" in the
Registrant's Prospectus as supplemented. Rental car companies
usually purchase only new cars, but since containers are
completely standardized, a used container in serviceable
condition usually rents for the same rate as a new one
although the purchase price is lower. The Registrant also
sells containers in the course of its business if
opportunities arise or at the end of the container's useful
life. See "Business of the Partnership" in the Registrant's
Prospectus, as supplemented.
(c)(1)(ii) Inapplicable.
(c)(1)(iii) Inapplicable.
(c)(1)(iv) Inapplicable.
(c)(1)(v) Inapplicable.
(c)(1)(vi) Inapplicable.
(c)(1)(vii) One lessee had rental billing for the year ended December
31, 1996 of 10.11% of the total rental billing of the
Registrant. No other single lessee had rental billing for the
year ended December 31, 1996 which was 10% or more of the
total rental billing of the Registrant. The Partnership
has insurance that would cover loss of revenue as a result of
default under all the leases and for the recovery cost or
replacement value of all containers including those of this
lessee. The insurance covers loss of lease revenues for a
specified period of time, and not necessarily for the term
of the lease. The insurance is renewable annually, and the
General Partners believe that it is probable that the
Partnership would be able to recover insurance proceeds in
the event of a loss. Because of this insurance and because
the Partnership would likely be able over a period of time,
to re-lease any Equipment that was returned to the
Partnership, the General Partners believe that the loss
of this lessee would not have a material adverse impact
on the Partnership's operating results. Because these are
forward looking statements, there can be no assurance that
events will occur as the General Partners have predicted and
these statements could be affected by material adverse events
in the future, such as the Partnership's loss of insurance
or the Partnership's inability to re-lease Equipment that
is returned to the Partnership by the lessee.
(c)(1)(viii) Inapplicable.
(c)(1)(ix) Inapplicable.
(c)(1)(x) There are approximately 80 container leasing companies
of which the top ten control approximately 93% of the total
equipment held by all container leasing companies. The top
two container leasing companies control approximately 28%
each of the total equipment held by all container leasing
companies. Textainer Equipment Management Limited, an
Associate General Partner of the Registrant and the manager
of its marine container equipment, is the third largest
container leasing company and controls approximately 9% of
the equipment held by all container leasing companies. The
Registrant alone is not a material participant in the
worldwide container leasing market. The principal methods
of competition are price and the provision of worldwide
service to the international shipping community. Additionally,
shipping alliances and other operational consolidations among
shipping lines have recently allowed shipping lines to operate
with fewer containers, thereby decreasing the demand for
leased containers. Competition among lessors such as the
Registrant has, therefore, increased.
(c)(1)(xi) Inapplicable.
(c)(1)(xii) Inapplicable.
(c)(1)(xiii) The Registrant has no employees. Textainer Capital Corporation
(TCC), the managing General Partner of the Registrant, is
responsible for the overall management of the business of the
Registrant and has 26 employees. Textainer Equipment
Management Limited (TEM), an Associate General Partner, is
responsible for the management of the leasing operations of
the Registrant and has a total of 138 employees.
(d) Financial Information about Foreign and Domestic Operations and Export
Sales.
The Registrant is involved in the leasing of shipping containers to
international shipping companies for use in world trade and
approximately 10.63%, 3.6% and 3.7% of the Registrant's rental revenue
during the years ended December 31, 1996, 1995 and 1994, respectively,
was derived from operations sourced or terminated domestically. This
percentage does not reflect the proportion of the Partnership's income
from operations generated in domestic waterways. Substantially all of
the Partnership's income from operations is derived from assets
employed in foreign operations. See "Business of the Partnership" and
for discussion of the risks of leasing containers for use in world
trade, "Risk Factors" in the Registrant's Prospectus, as supplemented.
ITEM 2 - PROPERTIES
As of December 31, 1996, the Registrant owned the following types and quantities
of equipment:
<TABLE>
<CAPTION>
<S> <C> <C>
20-foot standard dry freight containers......................................... 10,007
40-foot standard dry freight containers......................................... 10,327
40-foot high cube dry freight containers........................................ 3,618
--------
23,952
</TABLE>
During December 1996, approximately 82% of these shipping containers were on
lease to international shipping companies and the balance were being stored at
shipping container manufacturers' locations and at a large number of storage
depots located worldwide.
For information about the Registrant's property, see "Business of the
Partnership" in the Registrant's Prospectus, as supplemented.
ITEM 3 - LEGAL PROCEEDINGS
The Registrant is not subject to any legal proceedings.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Inapplicable.
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) Market Information.
(a)(1)(i) The units of limited partnership in the Registrant are not
publicly traded and there is no established trading market for
such Units. The Registrant has a program whereby Limited
Partners may redeem Units for a specified redemption price.
(a)(1)(ii) Inapplicable
(a)(1)(iii) Inapplicable.
(a)(1)(iv) Inapplicable.
(a)(1)(v) Inapplicable.
(a)(2) Inapplicable.
(b) Holders.
(b)(1) As of January 1, 1997, there were 4,813 holders of record of
limited partnership interests in the Registrant.
(b)(2) Inapplicable.
(c) Dividends.
Inapplicable.
For details of the distributions which are made monthly by the Registrant to its
limited partners, see Item 6 "Selected Financial Data".
ITEM 6 - SELECTED FINANCIAL DATA
(Dollar amounts in thousands except for per unit amounts)
<TABLE>
<CAPTION>
Period from July
15, 1993
Year Ended December 31, (inception) to
December 31,
1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Rental Income.......................................................$ 13,588 10,467 3,783 318
Net Earnings (Loss)................................................ $ 3,834 3,116 367 (136)
Net Earnings per Unit of Limited Partnership Interest.............. $ 0.93 1.71 1.44 N/A
Distributions Per Unit of Limited Partnership Interest............. $ 2.02 1.97 0.81 N/A
Distributions Per Unit of Limited Partnership Interest
representing a return of capital............................... $ 1.09 0.26 N/A N/A
Total Assets....................................................... $ 73,927 70,558 32,265 9,830
Outstanding Balance on Revolving Credit Line........................$ - 10,000 15,000 6,465
</TABLE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Dollar amounts in thousands except for unit and per unit amounts)
The Financial Statements contain information which will assist in evaluating the
financial condition of the Partnership for the years ended December 31, 1996,
1995 and 1994. Please refer to the Financial Statements and Notes thereto in
connection with the following discussion.
Liquidity and Capital Resources
The Partnership offered limited partnership interests to the public from May 1,
1994 through April 29, 1996. The Partnership received its minimum subscription
amount of $5,000 on August 23, 1994. The cumulative proceeds of the offering at
the end of each subsequent quarter was as follows (exclusive of the initial
Units purchased by the Partnership's initial limited partner):
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, 1994................... $ 1,819
September 30, 1994.............. 9,661
December 31, 1994............... 18,589
March 31, 1995.................. 29,442
June 30, 1995................... 41,218
September 30, 1995.............. 53,460
December 31, 1995............... 67,396
March 31, 1996.................. 83,240
</TABLE>
As of April 29, 1996 the Partnership had received a total subscription amount of
$89,305.
The Partnership has set up a program whereby limited partners may redeem units
for a specified redemption value. The redemption price is set by formula and
varies depending on length of time the units are outstanding. 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. The Partnership redeemed 8,451 units for a total
dollar amount of $152 during the year ended December 31, 1996, representing an
average redemption price of $17.97 per unit. The Partnership has used cash flow
from operations to pay for the redeemed units.
The Partnership invests working capital and cash flow from operations prior to
its distribution to the Partners or reinvestment in additional Equipment 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 December 31, 1996, the Partnership's
cash of $943 was invested in money market accounts.
During the year ended December 31, 1996, the Partnership declared cash
distributions to limited partners pertaining to the period from December 1995
through November 1996 in the amount of $8,168. These distributions represent 10%
of original capital (measured on an annualized basis) on each unit. On a cash
basis, all of these distributions were from operations. On a GAAP basis, $4,420
of these distributions were a return of capital and the balance was from net
earnings. Beginning with the cash distribution to limited partners for the month
of April 1997, payable May 1997, the Partnership will make distributions at an
annualized rate of 9% on each Unit. This reduction in the Partnership's
distribution rate is a result of a decline in demand for leasing of the
Partnership's container rental fleet, which is discussed in detail below.
The Partnership made its first equipment purchases on an all cash basis during
September 1993 and completed the purchase of its inital portfolio of container
equipment in February 1996. The net cumulative cost of Equipment at the end of
each quarter after commencement of operations is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, 1993............ $ 6,699
December 31, 1993............. 8,147
March 31, 1994................ 13,490
June 30, 1994................. 18,547
September 30, 1994............ 26,525
December 31, 1994............. 25,520
March 31, 1995................ 32,460
June 30, 1995................. 54,101
September 30, 1995............ 65,612
December 31, 1995............. 70,414
March 31, 1996................ 75,302
June 30, 1996................. 79,582
September 30, 1996............ 79,542
December 31, 1996............. 79,103
</TABLE>
The Partnership had a short-term revolving credit line with an available limit
of $15,000 which was used for Equipment purchases. The credit line was paid in
full on April 8, 1996, and expired on May 31, 1996.
For the year ended December 31, 1996, the Partnership had net cash provided by
operating activities of $8,533 compared with net cash provided by operating
activities of $4,870 for the year ended December 31, 1995. This increase was
primarily attributable to increases in net earnings, non-cash depreciation
expense and improved accounts receivable collections. Net earnings increased by
23% in 1996 from 1995 primarily due to an increase in rental revenues and a
decrease in interest expense offset by an increase in direct container expenses.
Rental revenues and depreciation expense increased by 35% and 47%, respectively
between periods primarily due to an increase in the Equipment fleet.
Certain factors have adversely affected and may continue to adversely affect the
Partnership's operations. Shipping lines, which are the Partnership's principal
lessees, continue to experience over-capacity which is directly related to: (i)
the delivery of new and much larger ships and, (ii) a general slow-down in the
growth of world containerized cargo trade. This over-capacity has led to lower
shipping rates, resulting in shipping lines' need to reduce operating costs. The
drive to reduce costs, coupled with the availability of inexpensive financing
and lower container prices, encouraged shipping lines to purchase, rather than
lease, a greater number of new containers in 1996 than in previous years. All of
these factors have led to: (i) a downward pressure on container lease rates;
(ii) an increase in leasing incentives and other discounts being granted to
shipping lines by container lessors; and (iii) a decline in utilization of
leased containers. Declining container utilization is discussed more fully below
under "Results of Operations".
Net cash used in investing activities (the purchase and sale of rental
equipment) for the year ended December 31, 1996 was $10,068 compared with
$40,939 for the same period in 1995. The Partnership purchased more Equipment in
the year ended December 31, 1995 than in the comparable period in 1996, due to
raising less funds from its public offering, which came to a close in April of
1996, as well as utilizing available cash for the repayment of the credit
facility. Net cash used in investing activities for the period ended December
31, 1995, included the return of restricted funds previously held as collateral
for the revolving credit facility. Consistent with its investment objectives and
the General Partners' determination that Equipment can be profitably sold or
bought at any time, the Partnership intends to reinvest all or a significant
amount of proceeds from future Equipment sales in additional Equipment.
Results of Operations
Because the Partnership was in the process of acquiring and placing in service
its initial portfolio of Equipment during the year ended December 31, 1996 and
offering units of limited partnership interest to the public during the period
from May 1, 1994 to April 29, 1996, the results of its operations for the years
December 31, 1996, 1995 and 1994 are not completely comparable. The Partnership
generated net earnings of $3,834, $3,116, and $367 for the years ended December
31, 1996, 1995 and 1994, respectively. These financial results include non-cash
depreciation expenses of $4,663, $3,165 and $1,178 for the respective periods.
The Partnership's income from operations, which consists of rental income,
container depreciation, direct container expenses, management fees, and
reimbursement of administrative expenses were directly related to the size of
the container fleet ("inventory") during the years ended December 31, 1996, 1995
and 1994. The following is a summary of the container fleet (in units) available
for lease during those periods:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Opening inventory................... 21,345 8,797 2,660
Closing inventory................... 23,952 21,345 8,797
Average............................. 22,649 15,071 5,729
</TABLE>
The growth in average container fleet between 1995 and 1996, and 1994 and 1995,
is due to the buildup of the Partnership's portfolio as the initial gross
proceeds raised were invested in Equipment.
Rental income and direct operating expenses are also affected by the lease
utilization percentages for the Equipment which were 82%, 87% and 80%, on
average, during the years ended December 31, 1996, 1995 and 1994, respectively.
In addition, rental income is affected by daily rental rates.
The following is a comparative analysis of the results of operations for the
years ended December 31, 1996, 1995 and 1994.
The Partnership's income from operations was $3,826 and $3,944 for the years
ended December 31, 1996 and 1995, respectively. Income from operations decreased
from the year ended December 31, 1996 to the same period in 1995 due to lower
utilization and daily rental rates. Rental income for the same periods was
$13,588 and $10,467. Income from container rentals is largely dependent upon
three factors: equipment available for lease (average inventory), average
on-hire (utilization) percentages, and average daily rental rates. The increase
in rental revenue was directly related to the increase in the size of the
equipment fleet but was offset by by lower utilization and lower daily rental
rates. Average inventory increased by 50% from December 31, 1995 to the same
period in 1996. Utilization decreased by 6% and average daily rental rates
decreased by 4% between periods.
The Partnership's income from operations was $3,944 and $1,255 for the years
ended December 31, 1995 and 1994, respectively. Rental income for the same
periods was $10,467 and $3,783. These increases were directly related to the
size of the container fleet. Average inventory increased by 163% from December
31, 1994 to the same period in 1995. Average utilization increased by 9% and
average daily rental rates increased by 2% between periods.
Container utilization began to decline in late 1995 and that decline has
persisted throughout 1996 and into 1997. The General Partners believe that this
decrease in demand for leased containers is the result of recent adverse changes
in the business of its shipping line customers. These changes consist
principally of: (i) a general slowdown in the growth of world containerized
cargo trade, particularly in the Asia-North America and Asia-Europe trade
routes; (ii) over-capacity resulting from the 1996 and 1997 additions of new,
larger ships to the existing container ship fleet at a rate in excess of the
growth rate in containerized cargo trade; (iii) shipping line alliances and
other operational consolidations that have allowed shipping lines to operate
with fewer containers thereby decreasing the demand for leased containers; and
(iv) as noted above, shipping lines' purchased, rather than leased a greater
number of containers. All of these factors have led to lower utilization of
leased containers, which in turn has led to downward pressure on container
rental rates and higher leasing incentives and other discounts for leased
containers, further eroding Partnership profitability. For the near term, the
General Partners do not foresee any changes in this outlook and caution that
both utilization and lease rates could continue to decline, adversely affecting
the Partnership's operating results.
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 containers from prime
locations less credits granted to lessees for leasing containers from less
desirable locations (location income), income from charges to the lessees under
a damage protection plan (DPP) and income for handling and returning containers.
For the year ended December 31, 1996, the total of these other rental income
items was $985, a decrease of $152 from the equivalent period in 1995. The
primary component of this net decrease in other rental revenues was due to a
decrease in location income of $375, partly offset by an increase in DPP of
$146. The decrease in location income is largely due to lower demand, which
drove drop-off charges to lessees down and increased credits to lessees for
picking up units at less desirable locations. The increase in DPP is primarily
due to the increase in the number of lessees under the plan.
For the year ended December 31, 1995, the total of these other revenue items was
$1,137, an increase of $658 from the equivalent period in 1994. The primary
components of this net increase in other rental revenues was due to increases in
handling, location and DPP income of $284, $219 and $155, respectively. These
increases are directly related to the increase in average fleet size.
Direct container expenses (excluding bad debt expense), which increased from
$1,433 during the year ended December 31, 1995, to $2,561 for the year ended
December 31, 1996, increased as a percentage of rental income from 14% to 19%
during the respective periods. The relative increase in these costs as a
percentage of rental income was attributable to the decrease in utilization and
daily rental rates.
Direct container expenses (excluding bad debt expense), which increased from
$642 during the year ended December 31, 1994, to $1,433 for the year ended
December 31, 1995, decreased as a percentage of rental income from 17% to 14%
during the respective periods. The relative decrease in these costs as a
percentage of rental income was attributable to the increase in utilization and
average daily rental rates.
Bad debt expense increased by $17 and $76 from the years ended December 31, 1995
to 1996 and December 31, 1994 to 1995, respectively. As a percentage of gross
revenue, bad debt expense was consistent at 1% for these years.
Depreciation and amortization expenses increased by $1,498 and $2,021 from the
year ended December 31, 1995 to 1996 and from the year ended December 31, 1994,
to 1995, respectively. These increases are directly related to the increases in
fleet size during the periods.
Management fees to affiliates as a percentage of gross revenue were 9.6% and
8.6% for the years ended December 31, 1996 and 1995, respectively. Incentive
management fees, which are based on the Partnership's distributions to the
limited and general partners, were 2.6% and 1.6% of gross revenue in the years
ended December 31, 1996 and 1995, respectively. Equipment management fees were
7% of gross revenue for both years.
Management fees to affiliates were 8.6% of gross revenue in the year ended
December 31, 1995 and 7.4% of total gross revenue for the same period in 1994.
Incentive management fees were 1.6% for the year ended December 31, 1995 and
0.4% for the same period in 1994. The increased percentage between periods
reflects the increase in distribution rate to the limited partners from 9% to
10% and 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 $105 from the year
ended December 31, 1995, compared to the same period in 1996, and increased by
$476 from the year ended December 31, 1995, compared to the same period in 1994.
These costs, which are primarily overhead costs allocated by TEM, are allocated
based on fleet size, which increased in each of the respective periods.
Other income (expense), net, decreased from an expense of $828 for the year
ended December 31, 1995, to income of $8 for the comparable period in 1996. This
change was comprised of a decrease in interest expense of $895 and a decrease in
interest income of $94, offset by an increase in the gain on sale of equipment
of $35. Interest expense decreased due to the repayment of the credit facility
in April, 1996. Interest income decreased due to a lower amount of cash
available for short-term investment in 1996 compared to 1995.
Other (expense), net, decreased from $888 for the period ended December 31,
1994, to $828 for the year ended December 31, 1995. This change was comprised of
an increase in interest expense of $49, offset by an increase in interest income
of $55 and an increase in gain on sale of equipment of $54. Interest expense
increased due to higher interest rates during the first half of 1995, compared
to the same period in 1994, as well as a higher average balance outstanding
under the credit facility. Interest income increased due to a higher amount of
cash available for short-term investment in 1995 over 1994.
Net earnings per limited partnership unit decreased from $1.71 to $0.93 per unit
from the year ended December 31, 1995, to the same period in 1996. Despite the
growth in net earnings, which increased from $3,116 for the year ended December
31, 1995, to $3,834 for the same period in 1996, the average outstanding units
increased at a greater rate, resulting in a decrease in earnings on a per unit
basis.
Net earnings per limited partnership unit increased from $1.44 to $1.71 per unit
from the year ended December 31, 1995, to the year ended December 31, 1996,
reflecting the increase in net earnings from $367 to $3,116 for the respective
period. These increases were directly attributable to the growth in fleet size
and increases in utilization between the periods.
Although substantially all of the Partnership's income from operations is
derived from assets employed in foreign operations, virtually all of this income
is denominated in United States dollars. The Partnership's customers are
international shipping lines which transport goods on international trade
routes. The domicile of the lessee is not indicative of where the lessee is
transporting the Equipment. The Partnership's business risk in its foreign
operations lies with the creditworthiness of the lessees, and the Partnership's
ability to keep the Equipment under lease, rather than the geographic location
of the Equipment or the domicile of the lessees. The Equipment is generally
operated on the international high seas rather than on the domestic waterways.
The Equipment is subject to the risk of war or other political, economic or
social occurrence where the Equipment is used, which may result in the loss of
Equipment, which, in turn, may have a material impact on the Partnership's
results of operations and financial condition. The General Partners are not
aware of any conditions as of December 31, 1996 which would result in such risk
materializing.
Other risks of the Partnership's leasing operations include competition, the
cost of repositioning Equipment after it comes off-lease, the risk of an
uninsured loss, increases in maintenance expenses or other costs of operating
the Equipment, and the effect of world trade, industry trends and/or general
business and economic cycles on the Partnership's operations. See "Risk Factors"
in the Partnership's Prospectus, as supplemented, for additional information on
risks of Partnership's business.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Attached pages 12 to 23.
<PAGE>
Independent Auditors' Report
The Partners
Textainer Equipment Income Fund V, L.P.:
We have audited the accompanying balance sheets of Textainer Equipment Income
Fund V, L.P. (a California limited partnership) as of December 31, 1996 and
1995, and the related statements of operations, partners' capital and cash flows
for the year ended December 31, 1996, 1995 and 1994. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Textainer Equipment Income Fund
V, L.P. as of December 31, 1996 and 1995, and the results of its operations, its
partners' capital and its cash flows for the years ended December 31, 1996, 1995
and 1994, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
San Francisco, California
February 17, 1997
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California limited partnership)
Balance Sheets
December 31, 1996 and 1995
(Amounts in thousands)
<TABLE>
<CAPTION>
1996 1995
--------------- ----------------
<S> <C> <C>
Assets
Container rental equipment, net of accumulated
depreciation of $9,118 (1995: $4,488) $ 69,985 65,926
Cash 943 1,372
Accounts receivable, net of allowance
for doubtful accounts of $269 (1995: $151) 2,829 3,043
Organization costs, net of accumulated
amortization of $122 (1995: $70) 140 192
Prepaid expenses 30 25
--------------- ----------------
$ 73,927 70,558
=============== ================
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 356 226
Accrued liabilities 31 214
Accrued damage protection plan costs (note 1) 361 232
Due to affiliates (note 2) 154 629
Deferred quarterly distribution (note 1) 124 80
Equipment purchases payable 169 1,168
Note payable to bank (note 4) - 10,000
--------------- ----------------
Total liabilities 1,195 12,549
--------------- ----------------
Partners' capital:
General partners 2 2
Limited partners 72,730 58,007
--------------- ----------------
Total partners' capital 72,732 58,009
--------------- ----------------
$ 73,927 70,558
=============== ================
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California limited partnership)
Statements of Earnings
Years ended December 31, 1996, 1995 and 1994
(Dollar amounts in thousands except for unit and per unit amounts)
<TABLE>
<CAPTION>
1996 1995 1994
--------------- --------------- --------------
<S> <C> <C> <C>
Rental Income $ 13,588 10,467 3,783
--------------- --------------- --------------
Costs and expenses:
Direct container expenses 2,561 1,433 642
Bad debt expense 128 111 35
Depreciation and amortization 4,715 3,217 1,196
Professional fees 50 57 28
Management fees to affiliates (note 2) 1,305 899 279
General administrative costs to affiliates (note 2) 862 757 281
Other general and administrative costs 141 49 67
--------------- --------------- --------------
9,762 6,523 2,528
--------------- --------------- --------------
Income from operations 3,826 3,944 1,255
--------------- --------------- --------------
Other income (expense):
Interest expense, net (99) (900) (906)
Gain on sale of containers 107 72 18
--------------- --------------- --------------
8 (828) (888)
--------------- --------------- --------------
Net earnings $ 3,834 3,116 367
=============== =============== ==============
Allocation of net earnings (note 1):
General Partners $ 86 38 4
Limited Partners 3,748 3,078 363
--------------- --------------- --------------
$ 3,834 3,116 367
=============== =============== ==============
Limited partners' per unit share of net earnings $ 0.93 1.71 1.44
=============== =============== ==============
Limited partners' per unit share of distributions $ 2.02 1.97 0.81
=============== =============== ==============
Weighted average number of limited
partnership units outstanding 4,041,267 1,796,771 251,824
=============== =============== ==============
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California limited partnership)
Statements of Partners' Capital
Years ended December 31, 1996, 1995 and 1994
(Amounts in thousands)
<TABLE>
<CAPTION>
Partners' Capital
-------------------------------------------------------
General Limited Total
----------- ---------------- --------------
<S> <C> <C> <C>
Balances at December 31, 1993 $ - (135) (135)
Proceeds from sale of limited partnership units - 18,589 18,589
Syndication and offering costs - (2,552) (2,552)
Distributions (2) (203) (205)
Net earnings 4 363 367
----------- ---------------- --------------
Balances at December 31, 1994 2 16,062 16,064
----------- ---------------- --------------
Proceeds from sale of limited partnership units - 48,807 48,807
Syndication and offering costs - (6,407) (6,407)
Distributions (38) (3,533) (3,571)
Net earnings 38 3,078 3,116
----------- ---------------- --------------
Balances at December 31, 1995 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 (86) (8,168) (8,254)
Redemptions (Note 1) - (152) (152)
Net earnings 86 3,748 3,834
----------- ---------------- --------------
Balances at December 31, 1996 $ 2 72,730 72,732
=========== ================ ==============
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California limited partnership)
Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
(Amounts in thousands)
<TABLE>
<CAPTION>
1996 1995 1994
------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,834 3,116 367
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation 4,663 3,165 1,178
Provision for doubtful accounts 118 108 36
Amortization of organization costs 52 52 18
Gain on sale of container rental equipment (107) (72) (18)
Changes in assets and liabilities:
Increase in accounts receivable (140) (1,561) (1,128)
Increase (decrease) in due to affiliates, net 42 (112) 77
(Decrease) increase in accounts payable and accrued
liabilities (53) 60 243
Increase in accrued damage protection plan costs 129 124 100
(Increase) decrease in prepaid expense (5) (10) 22
Organizational costs - - (262)
------------- -------------- --------------
Net cash provided by operating activities 8,533 4,870 633
------------- -------------- --------------
Cash flows from investing activities:
Equipment purchases (10,486) (43,946) (18,631)
Proceeds from sale of equipment 418 307 33
Cash collateral deposit - 2,700 (1,336)
------------- -------------- --------------
Net cash used in investing activities (10,068) (40,939) (19,934)
------------- -------------- --------------
Cash flows from financing activities:
Proceeds from sales of limited partnership units 22,084 48,571 18,589
Syndication and offering costs (2,644) (6,396) (2,472)
Distributions to partners (8,182) (3,501) (191)
Redemptions of limited partnership units (152) - -
(Repayments) borrowings under revolving credit line (10,000) (5,000) 8,536
Decrease in borrowings from affiliates - - (1,397)
------------- -------------- --------------
Net cash provided by financing activities 1,106 33,674 23,065
------------- -------------- --------------
Net (decrease) increase in cash (429) (2,395) 3,764
Cash at beginning of period 1,372 3,767 3
------------- -------------- --------------
Cash at end of period $ 943 1,372 3,767
============= ============== ==============
Interest paid during the period $ 280 1,187 814
============= ============== ==============
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A California limited partnership)
Statements of Cash Flows--Continued
Years ended December 31, 1996, 1995 and 1994
(Amounts in thousands)
Supplemental Disclosures:
Supplemental schedule of non-cash investing and financing activities:
The following table summarizes the amounts of Equipment purchases, distributions
to partners, syndication and offering costs, proceeds from sale of Equipment,
proceeds from sale of limited partnership units and organizational costs which
had not been paid or received by the Partnership as of December 31, 1996, 1995,
1994 and 1993, resulting in differences in amounts recorded and amounts paid or
received by the Partnership, as shown in the Statements of Cash Flows.
<TABLE>
<CAPTION>
1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Equipment purchases included in:
Due to affiliates.............................................. $ 4 453 145 327
Equipment purchases payable.................................... 169 1,168 245 1,288
Distributions to partners included in:
Due to affiliates.............................................. 32 4 - -
Deferred quarterly distribution................................ 124 80 14 -
Syndication and offering costs included in:
Due to affiliates.............................................. - 91 80 -
Proceeds from sale of Equipment included in:
Due from affiliates............................................ 58 53 17 -
Proceeds from sale of limited partnership units included in:
Accounts receivable............................................ - 236 - -
Organizational costs included in:
Due to affiliates.............................................. - - - 175
</TABLE>
The following table summarizes the amounts of Equipment purchases, distributions
to partners, syndication and offering costs, proceeds from sale of Equipment,
proceeds from the sale of limited partnership units and organizational costs
recorded by the Partnership and the amounts paid or received as shown on the
Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994.
<TABLE>
<S> <C> <C> <C>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Equipment purchases recorded........................................... $ 9,038 45,177 17,406
Equipment purchases paid............................................... 10,486 43,946 18,631
Distributions to partners declared..................................... 8,254 3,571 205
Distributions to partners paid......................................... 8,182 3,501 191
Syndication and offering costs recorded................................ 2,553 6,407 2,552
Syndication and offering costs paid.................................... 2,644 6,396 2,472
Proceeds from sale of Equipment recorded............................... 423 343 50
Proceeds from sale of Equipment received............................... 418 307 33
Proceeds from sales of limited partnership units recorded.............. 21,848 48,807 18,589
Proceeds from sales of limited partnership units received.............. 22,084 48,571 18,589
Organizational costs recorded.......................................... - - 87
Organizational costs paid.............................................. - - 262
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A California limited partnership)
Notes to Fianancial Statements
Years ended December 31, 1996, 1995 and 1994
(Dollar amounts in thousands except for unit and per unit amounts)
Note 1. Summary of Significant Accounting Policies
(a) Nature of Operations
Textainer Equipment Income Fund V, L.P. (TEIF V or the Partnership), a
California Limited Partnership, was formed on July 15, 1993 to engage in
the business of owning, leasing and selling both new and used equipment
related to the international containerized cargo shipping industry,
including, but not limited to, containers, marine vessels, trailers and
other container related equipment (the Equipment). TEIF V offered units
representing limited partnership interests (Units) to the public until
April 29, 1996, the close of the offering period, when a total of
4,465,263 Units had been purchased for a total of $89,305. At December 31,
1995 and 1994, 3,369,810 and 929,461 limited partnership units had been
purchased totaling $67,396 and $18,589, respectively. Limited partners
with capital contributions representing recorded capital of the
Partnership of $4,738 and $3,614 at December 31, 1995 and 1994,
respectively, were admitted as limited partners on January 1, 1996 and
1995, respectively. The purchase price of such Units was $20 per Unit.
Textainer Capital Corporation (TCC) (formerly Textainer (Delaware) Inc.)
is the Managing General Partner of the Partnership. Textainer Equipment
Management Limited (TEM) (prior to being redomiciled on December 20, 1994,
TEM was known as Textainer Equipment Management N.V.) 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 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, was the managing sales agent for the offering of Units
for sale. The General Partners manage and control the affairs of the
Partnership.
(b) Basis of Accounting
The Partnership utilizes the accrual method of accounting. Revenue is
recorded when earned according to the terms of the container rental
contracts. These contracts are typically for a one-year term and are
classified as operating leases. Certain estimates and assumptions were
made by the Partnership's management that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
(c) Equipment
The Equipment is carried at the lower of cost of the assets purchased,
which includes acquisition fees, or the estimated recoverable value of
such assets. Depreciation of new equipment is computed using the
straight-line method over its estimated useful life of 12 years to a 28%
salvage value. Used equipment is depreciated based upon its estimated
remaining useful life at the date of acquisition (from 2 to 11 years).
When assets are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts and any resulting
gain or loss is recognized in income for the period.
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of" (SFAS 121). The Partnership adopted
SFAS 121 during 1995. In accordance with SFAS 121, the Partnership
periodically compares the carrying value of the Equipment to expected
future market conditions for the purpose of assessing the recoverability
of the recorded amounts. There were no reductions to the carrying value of
the Equipment made during 1996 or 1995.
(d) Nature of Income from Operations
Although substantially all of the Partnership's income from operations is
derived from assets employed in foreign operations, virtually all of this
income is denominated in United States dollars. The Partnership's
customers are international shipping lines that transport goods on
international trade routes. Once the Equipment is on-hire with a lessee,
the Partnership has no way of knowing its location. The domicile of the
lessee is not indicative of where the lessee is transporting the
Equipment. The Partnership's business risk in its foreign operations lies
with the creditworthiness of the lessees rather than the geographic
location of the Equipment or the domicile of the lessees.
For the year ended December 31, 1996, revenue from one lessee accounted
for 10.11% of the Partnership's revenues. No other single lessee accounted
for more than 10% of the Partnership's revenues.
(e) Allocation of Net Earnings and Partnership Distributions
In accordance with the Partnership Agreement, net earnings or losses and
distributions are allocated 1% to the general partners and 99% to the
limited partners. Gross income is specially allocated to the General
Partners to the extent that their partners' capital accounts' deficits
exceed the portion of syndication and offering costs allocated to them.
Notwithstanding the above, the special allocation of gross income and
restoration of deficit general partner capital accounts was deferred by
Partnership Agreement amendment until the partnership's complete
syndication which occurred during the year ended December 31, 1996. On
termination of the Partnership, the General Partners shall be allocated
gross income equal to their allocations of syndication and offering costs.
Actual cash distributions to the Limited Partners differ from the
allocated net earnings as presented in these financial statements because
cash distributions are based on cash available for distribution. Cash
distributions are paid to the general and limited partners on a monthly
basis in accordance with the provisions of the Partnership Agreement. Some
limited partners have elected to have their distributions paid quarterly.
The Partnership has recorded these distributions as an accrued liability
at December 31, 1996 and 1995.
(f) Income Taxes
The Partnership is not subject to income taxes. Accordingly, no provision
for income taxes has been made. The Partnership files federal and state
information returns only. Taxable income or loss is reportable by the
individual partners.
(g) Organization Costs
Organization costs are being amortized on a straight-line basis over five
years.
(h) Acquisition Fees
In accordance with the Partnership Agreement, acquisition fees are paid to
the General Partners or TAS equal to 5% of Equipment purchase price (note
2). These fees are capitalized as part of the cost of the Equipment.
(i) 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 revenues
when earned and provide a reserve sufficient to cover the Partnership's
obligation for estimated future repair costs. At December 31, 1996 and
1995, this reserve was equal to $361 and $232 respectively.
(j) Limited Partners' Per Unit Share of Net Earnings and Distributions
Limited partners' per unit share of both net earnings and distributions
were computed using the weighted average number of units outstanding
during the year ended December 31, 1996, 1995 and 1994 which was
4,041,267, 1,796,771 and 251,824, respectively.
(k) Redemptions
The following redemption offerings were consummated by the Partnership
during the year ended December 31, 1996:
<TABLE>
<CAPTION>
Average
Units Redeemed Redemption Price Amount Paid
<S> <C> <C> <C>
Year ended December 31, 1996:
3rd quarter............. 5,576 $18.18 $ 102
4th quarter............. 2,875 $17.57 50
----- -----
Balance at December 31, 1996 8,451 $17.97 $ 152
===== ====
Partnership to date......... 8,451 $17.97 $ 152
===== ====
</TABLE>
There were no redemptions prior to 1996. The redemption price is fixed by
formula and varies depending on the length of time the units have been
outstanding.
(l) Fair Value of Financial Instruments
To meet the reporting requirements of Financial Accounting Standards Board
Statement No. 107, "Disclosures about Fair Value of Financial
Instruments," the Partnership calculates the fair value of financial
instruments and includes this additional information in the notes to the
financial statements when the fair value is different than the book value
of those financial instruments. At December 31, 1996 and 1995, the fair
value of the Partnership's financial instruments approximate the related
book value of such instruments.
(m) Reclassifications
Certain reclassifications, not affecting net earnings, have been made to
prior year amounts in order to conform with the 1996 financial statement
presentation.
Note 2. Transactions with Affiliates
During the offering period, the Partnership paid 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 paid commissions to independent
participating broker/dealers who participated 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. These amounts, which totaled $2,553 and $6,407, respectively,
during 1996 and 1995, were deducted as syndication and offering costs in
the determination of net limited partnership contributions.
The Partnership reimbursed the Managing General Partner for organization
expenses totaling $262. These costs, which resulted from the formation of
the Partnership, were capitalized as organization costs in 1994.
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. These
fees are for various services provided in connection with the
administration and management of the Partnership. The Partnership
capitalized $478, $2,107 and $884 of equipment acquisition fees as part of
Equipment costs during the years ended December 31, 1996, 1995 and 1994,
respectively, and incurred $355, $166 and $14 of incentive management fees
in the years ended December 31, 1996, 1995 and 1994. No equipment
liquidation fees were incurred in 1996, 1995 or 1994.
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 as an offset to the amount due to affiliates at
December 31, 1996, and 1995.
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 years
ended December 31, 1996, 1995 and 1994, these fees totaled $950, $733 and
$265, respectively. The Equipment is leased by TEM to third party lessees
on operating master leases, spot leases, term leases and full payout net
leases. The majority are operating leases with limited terms and no
purchase option.
Certain indirect general and administrative costs such as salaries,
employee benefits, taxes and insurance, are incurred in performing
administrative services necessary to the operation of the Partnership.
These costs are borne by TCC and TEM. During 1996, 1995, and 1994, costs
allocated to the Partnership for salaries were $463, $363 and $151,
respectively and other general and administrative costs were $399, $394
and $130, respectively.
TEM allocates these costs based on the ratio of the Partnership's interest
in managed Equipment to the total Equipment managed by TEM during the
period. Indirect general and administrative costs allocated to the
Partnership by TEM were $744, $640 and $237 during 1996, 1995 and 1994,
respectively.
TCC allocates indirect general and administrative costs to the Partnership
based on the ratio of the Partnership's Equipment to the total Equipment
of all limited partnerships managed by TCC. TCC allocated $118, $117 and
$44 of these indirect costs to the Partnership during 1996, 1995 and 1994,
respectively.
The General Partners or TAS may acquire Equipment in their own name and
hold title on a temporary basis for the purpose of facilitating the
acquisition of such Equipment for the Partnership. The Equipment may then
be resold to the Partnership on an all-cash basis at a price equal to the
actual cost as defined in the Partnership Agreement. In addition, the
General Partners or TAS are entitled to an acquisition fee for any
Equipment resold to the Partnership.
At December 31, 1996 and 1995, due to affiliates are comprised of:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Due to TEM............................................. $ 125 142
Due to TCC............................................. 28 39
Due to TSC............................................. - 41
Due to TL.............................................. - 15
Due to TAS............................................. 1 392
----- ----
$ 154 629
=== ===
</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 in the accrual and remittance of net rental revenues by
TEM.
Prior to July 1994, it was the policy of the Partnership and the General
Partners to charge interest on intercompany balances outstanding for more
than one month. Interest was charged at the prime rate plus 2%. As of July
1994, this policy was changed so that the Partnership is not charged
interest on intercompany balances except for loans on equipment purchases.
Interest is charged at a rate not greater than the General Partners' or
affiliates' own cost of funds. The Partnership incurred interest expense
of $123 on intercompany balances payable to TCC, TAS and TEM for the year
ended December 31, 1994. There was no interest charged on intercompany
balances for 1996 or 1995.
Note 3. Rentals under Operating Leases
The following is a schedule by year of minimum future rentals receivable
on noncancelable operating leases as of December 31, 1996:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C> <C>
1997............................................................. $1,186
1998............................................................. 226
1999............................................................. 87
2000............................................................. 3
--------
Total minimum future rentals receivable.......................... $1,502
=====
</TABLE>
Note 4. Note Payable
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 Rate plus
.25% (8.5% at March 31, 1996) 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. The credit line was paid in full on
April 8, 1996 and expired on May 31, 1996.
Note 5. Income Taxes
During 1996, 1995 and 1994, there were temporary differences of $13,741,
$6,240 and $1,696, respectively, between the financial statement carrying
value of certain assets and liabilities and the federal income tax basis
of such assets and liabilities. The reconciliation of net income for
financial statement purposes to net loss for federal income tax purposes
for the years ended December 31, 1996, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net income per financial statements.......................... $ 3,834 3,116 367
Increase in provision for bad debt........................... 118 108 36
Depreciation for income tax purposes in excess
of depreciation for financial statement purposes (7,799) (4,831) (1,629)
Gain on sale of fixed assets for financial statement
purposes in excess of gain recognized for
federal income tax purposes............................... 54 165 3
Increase in damage protection plan reserve................... 129 124 100
Amortization of organization costs........................... - - (31)
------------ -------- --------
Net loss for federal income tax purposes..................... $ (3,664) (1,319) (1,156)
========= ======= =======
</TABLE>
<PAGE>
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been none.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Registrant has no officers or directors.
Textainer Capital Corporation (TCC), as the Managing General Partner, is
responsible for managing the administration and operation of the Registrant, and
for the formulation and administration of investment policies.
Textainer Equipment Management Limited (TEM), an Associate General Partner,
manages all aspects of the operation of the Registrant's Equipment. (Prior to
being redomiciled on December 20, 1994, TEM was known as Textainer Equipment
Management N.V.)
Textainer Limited (TL), an Associate General Partner, owns a fleet of container
rental equipment which is managed by TEM. TL provides advice to the Partnership
regarding negotiations with financial institutions, manufacturers of equipment
and equipment owners, and regarding the terms upon which particular items of
Equipment are acquired.
Textainer Acquisition Services Limited (TAS) is an affiliate of the General
Partners which performs services relative to the acquisition of Equipment
outside the United States on behalf of the Partnership. TCC Securities
Corporation (TSC), a licensed broker and dealer in securities and an affiliate
of the General Partners, is the managing sales agent for the offering of Units
for sale.
Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Partnership's General Partners, policy-making officials and persons who
beneficially own more than ten percent of the Units to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Copies of these reports must also be furnished to the
Partnership.
Based solely on a review of the copies of such forms furnished to the
Partnership or on written representations that no forms were required to
be filed, the Partnership believes that with respect to its most recent
fiscal year ended December 31, 1996, all Section 16(a) filing requirements
were complied with, except that Philip K. Brewer filed his initial
statement of beneficial interest on Form 3 late. No director, officer, or
beneficial owner owned more than 10 percent of any interest in the
Partnership. None of the foregoing failed to file or filed late any
reports of transactions in the Units.
The directors and executive officers of the General Partners are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Neil I. Jowell 63 Director and Chairman of TGH, TEM, TL, and TCC
James E. Hoelter 57 President and CEO of TGH, TL, and TCC, Director of TGH, TEM, TL, TCC and TSC
John A. Maccarone 52 President and CEO of TEM, Vice President of TGH, Director of TGH, TEM, TL,
TCC and TSC
Cara D. Smith 34 President and CEO of TSC and Director of TCC
John R. Rhodes 47 Executive Vice President, CFO, and Secretary of TGH, TEM, TL, TFS and TCC
and Director of TEM, and TCC
Alex M. Brown 58 Director of TGH, TEM, TL, TCC and TSC
Harold J. Samson 75 Director of TGH, TL and TSC
Philip K. Brewer 40 Senior Vice President - Capital Markets for TGH and TL
Robert D. Pedersen 38 Senior Vice President - Marketing for TEM
Anthony C. Sowry 44 Vice President - Operations and Acquisitions for TEM
Jens W. Palludan 46 Vice President - Americas/Africa/Australia for TEM
Robert S.A. Goodall 39 Vice President - Europe/Middle East/India for TEM
Wing Sing Mak 39 Vice President - South Asia for TEM
Masanori Sagara 41 Vice President - North Asia for TEM
Stefan Mackula 44 Vice President - Equipment Resale for TEM
Ernest J. Furtado 41 Vice President, Finance and Assistant Secretary of TGH, TEM and TL
Richard G. Murphy 44 Vice President - Risk Management for TEM
Janet S. Ruggero 48 Vice President - Administration and Marketing Services for TEM
Adnan Z. Abou Ayyash 52 Director of TGH and TL
Isam K. Kabbani 62 Director of TGH and TL
S. Arthur Morris 63 Director of TGH, TEM and TL
Dudley R. Cottingham 45 Assistant Secretary, Vice President and Director of TGH, TEM and TL
James S. McCaffrey 41 Executive Vice President, Chief Operating Officer, Assistant Secretary and
Director for TCC
Jeanene K. Gomes 43 Assistant Secretary of TCC, Secretary and Compliance Officer of TSC
</TABLE>
Neil I. Jowell is Director and Chairman of TGH, TEM, TL, and TCC and a
member of the Investment Advisory Committee and Equipment Investment Committee
(see "Committees" below). He has served on the Board of Trencor Ltd. since 1966
and as Chairman since 1973. He is also a director of Mobile Industries, Ltd.
(1969 to present), an Affiliate of Trencor, and a non-executive director of
Forward Corporation Ltd. (1993 to present). Trencor is a publicly traded
diversified industrial group listed on the Johannesburg Stock Exchange. Its
business is the leasing, owning, managing and financing of marine cargo
containers worldwide and the manufacture and export of containers for
international markets. In South Africa, it is engaged in manufacturing,
transport, trading and exports of general commodities. Trencor also has an
interest in Forward Corporation Ltd., a publicly traded holding company listed
on the Johannesburg Stock Exchange. It has interests in industrial and consumer
businesses operating in South Africa and abroad. Mr. Jowell became affiliated
with the General Partners and its affiliates when Trencor became, through its
beneficial ownership in two controlled companies, a major shareholder of the
Textainer Group in 1992. Mr. Jowell has over 36 years' experience in the
transportation industry. He holds an M.B.A. degree from Columbia University and
a B.Com.L.L.B. from the University of Cape Town.
James E. Hoelter is President and Chief Executive Officer of TGH, TL,
and TCC and a director of TGH, TEM, TL, TCC and TSC. As President and Chief
Executive Officer of TGH, Mr. Hoelter is responsible for overseeing the
management of, and coordinating the activities of, TEM, TL and TCC. He is also
responsible for overseeing TEM's equipment management operations. In addition,
Mr. Hoelter is Chairman of the Credit Committee, the Investment Advisory
Committee and the Equipment Investment Committee (see "Committees", below).
Prior to joining the Textainer Group in 1987, Mr. Hoelter was president of
Intermodal Equipment Associates ("IEA") in San Francisco, California, from the
company's inception in 1979 until 1987. Mr. Hoelter co-founded IEA and directed
its sponsorship of ten public and private investment programs, which provided
more than $100 million of equity from 10,000 investors. From 1976 to 1978, Mr.
Hoelter was Vice President - North America for Trans Ocean Ltd., San Francisco,
a marine container leasing company, where he was responsible for all leasing
operations in that area. From 1971 to 1976, he was associated with Itel
Corporation, San Francisco, where he held a number of positions, the most recent
of which was director of financial leasing for Itel's Container Division. Mr.
Hoelter received his B.B.A. in business administration from the University of
Wisconsin, where he currently serves as a member of its Business School's Dean's
Advisory Board, and his M.B.A. from the Harvard Graduate School of Business
Administration.
John A. Maccarone is President and CEO of TEM, Vice President of TGH
and a director of TGH, TEM, TL, TCC and TSC. In this capacity he is responsible
for the performance of TEM's worldwide fleet of marine cargo containers.
Additionally, he is a member of the Equipment Investment Committee, the Credit
Committee and the Investment Advisory Committee (see "Committees", below). Mr.
Maccarone was instrumental in co-founding IEA with Mr. Hoelter and held a
variety of executive positions with IEA from 1979 until 1987, when he joined the
Textainer Group. Mr. Maccarone was previously a Director of Marketing for Trans
Ocean Leasing Corporation in Hong Kong with responsibility for all leasing
activities in Southeast Asia. From 1969 to 1977, Mr. Maccarone was a marketing
representative for IBM Corporation. He holds a B.S. degree in Engineering
Management from Boston University and an M.B.A. from Loyola University of
Chicago.
Cara D. Smith is President and Chief Executive Officer of TSC, a
director of TCC and a member of the Investment Advisory Committee (see
"Committees", below). In this capacity Ms. Smith is responsible for the
organization, marketing and after-market support of TSC's investment programs.
Ms. Smith joined Textainer in 1992, and prior to 1996, was Vice President of
Marketing. Ms. Smith has worked in the securities industry for the past 13
years. Ms. Smith's extensive experience ranges from compliance and investor
relations to administration and marketing of equipment leasing, multi-family
housing and tax credit investment programs. She holds five securities licenses
and is a registered principal. Ms. Smith is also a member of the International
Association of Financial Planners.
John R. Rhodes is Executive Vice President, Chief Financial Officer
and Secretary of TGH, TEM, TL and TCC and a director of TEM and TCC. In this
capacity he is responsible for all accounting, financial management, and
reporting functions for the Textainer Group. He is also a member of the Credit
Committee, the Equipment Investment Committee and Investment Advisory Committee
(see "Committees", below). Prior to joining Textainer in November 1987, Mr.
Rhodes was Vice President of Finance for Greenbrier Capital Corporation in San
Francisco, a trailer leasing and management company, from 1986 to 1987; from
1981 to 1985, he was employed by Gelco Rail Services, an intermodal refrigerated
trailer company in San Francisco, first in the capacity of Vice President and
Controller and then as Senior Vice President and General Manager. Mr. Rhodes'
earlier business affiliations include serving as Vice President and General
Manager of Itel Capital Corporation and as senior accountant with Arthur
Andersen & Co., both in San Francisco. He is a Certified Public Accountant and
holds a B.A. in economics from Stanford University and an M.B.A. in accounting
from Golden Gate University.
Alex M. Brown is a director of TGH, TEM, TL, TCC and TSC.
Additionally, he is a member of the Equipment Investment Committee and the
Investment Advisory Committee (see "Committees", below). Mr. Brown became
affiliated with the Textainer Group in April 1986. From August 4, 1987 until
October 1993, he was President and Chief Executive Officer of Textainer, Inc.
and the Chairman of the Textainer Group. From June 1993 to present, Mr. Brown
has been Chief Executive Officer of AAF, a company affiliated with Trencor Ltd.
AAF is a publicly listed company on the London Stock Exchange and is involved in
manufacturing and leasing modular buildings and construction scaffolding. Mr.
Brown is Chairman of WACO International Corporation, which is based in
Cleveland, Ohio. WACO manufactures, rents and erects scaffolding and other
associated construction products throughout the USA. Mr. Brown was the managing
director of Cross County Leasing in England from 1984 until it was acquired by
Textainer in 1986.
Harold J. Samson is a director of TGH, TL and TSC and is a member of
the Investment Advisory Committee (see "Committees", below). Mr. Samson
served as a consultant to various securities firms since 1981 to 1989. From
1974 to 1981 he was Executive Vice President of Foster & Marshall, Inc., a New
York Stock Exchange member firm based in Seattle. Mr. Samson was a director
of IEA from 1979 to 1981. From 1957 to 1984 he served as Chief Financial Officer
in several New York Stock Exchange member firms. Mr. Samson holds a B.S.
in Business Administration from the University of California, Berkeley and is a
California Certified Public Accountant.
Philip K. Brewer is Senior Vice President - Capital Markets for TGH
and TL. Mr. Brewer is responsible for optimizing the capital structure of and
identifying new sources of finance for Textainer. Prior to joining Textainer
in 1996, Mr. Brewer worked at Bankers Trust from 1990 to 1996, starting as
a Vice President in Corporate Finance and ending as Managing Director and
Country Manager for Indonesia; from 1989 to 1990, he was Vice President in
Corporate Finance at Jarding Fleming; from 1987 to 1989, he was Capital Markets
Advisor to the United States Agency for International Development; and from 1984
to 1987 he was an Associate with Drexel Burnham Lambert in New York. Mr. Brewer
holds an M.B.A. in Finance from the Graduate School of Business at Columbia
University, and a B.A. in Economics and Political Science from Colgate
University.
Robert D. Pedersen is based in San Francisco and is Senior Vice
President - Marketing for TEM, responsible for worldwide sales and marketing
related activities. Mr. Pedersen is a member of the Credit Committee (see
"Committees" below). He joined TEM in 1991 as Regional Vice President for the
Americas Region. Mr. Pedersen has extensive experience in the industry having
held a variety of positions with Maersk Line, a container shipping line (from
1978 to 1984), XTRA, a container lessor (1985 to 1988) and Klinge Cool, a
manufacturer of refrigerated container cooling units (1989 to 1991), where he
was worldwide sales and marketing director. Mr. Pedersen is a graduate of the
A.P. Moller shipping and transportation program and Merkonom Business School in
Copenhagen, majoring in Company Organization.
Anthony C. Sowry is Vice President - Operations and Acquisitions for
TEM. Mr. Sowry supervises all international container operations and maintenance
and technical functions for the fleets under management. In addition, he is
responsible for the acquisition of all new and used containers for the Textainer
Group. He began his affiliation with TEM in 1988 and previously served as Fleet
Quality Control Manager for Textainer Inc. from 1982 through March 1988. He is
also a member of the Credit Committee and the Equipment Investment Committee
(see "Committees", below). From 1980 to 1982, he was operations manager for
Trans Container Services in London; and from 1978 to 1982, he was a technical
representative for Trans Ocean Leasing, also in London. He received his B.A.
degree in business management from the London School of Business. Mr. Sowry is a
member of the Technical Committee of the International Institute of Container
Lessors and a certified container inspector.
Jens W. Palludan is based in New York and is Vice President -
Americas/Africa/Australia for TEM, responsible for coordinating all leasing
activities in North and South America, Africa and Australia/New Zealand.
Mr. Palludan spent his career from 1969 through 1992 with Maersk Line of
Copenhagen, Denmark in a variety of key management positions in both Denmark
and overseas. Prior to joining TEM in 1993 Mr. Palludan was General Manager,
Equipment and Terminals, where he was responsible for a fleet of over 200,000
TEUs. Mr. Palludan holds an M.B.A. from the Centre European D'Education
Permanente, Fontainebleau, France.
Robert S.A. Goodall is based in London and is Vice President -
Europe/Middle East/India for TEM, in which capacity he is responsible for
coordinating all leasing activities in these three areas of operation. Mr.
Goodall joined TEM in September 1994. Previously, Mr. Goodall spent his career
from July 1990 until August 1994 with Tiphook Container Rental, during which
time he held numerous senior marketing positions within the company. He was
responsible for setting up their green field operation in North America, which
he successfully ran from inception for three years. Mr. Goodall also
spearheaded a quality program within the company which received ISO
accreditation for the Tank Container operation and associated business areas.
Mr. Goodall has spent nearly sixteen years in the container leasing and
transport industry. Mr. Goodall graduated from Bloxham College, Oxfordshire
and Business Studies at West London College.
Wing Sing Mak is based in Singapore and is the Regional Vice
President - South Asia. Mr. Mak is responsible for container leasing activities
in North/Central People's Republic of China (PRC), Hong Kong and South China
(PRC), and Southeast Asia. Mr. Mak most recently was the Regional Manager,
Southeast Asia, for Trans Ocean Leasing, working there from 1994 to 1996. From
1987 to 1994, Mr. Mak worked with Tiphook as their Regional General Manager, and
with OOCL from 1976 to 1987 in a variety of positions, most recently as their
Logistics Operations Manager.
Masanori Sagara is the Regional Vice President - North Asia of TEM.
Mr. Sagara is responsible for Textainer's marketing activities in Japan, Korea,
and Taiwan. Mr. Sagara joined Textainer in 1990 and was the company's
Marketing Director in Japan through 1996. From 1987 to 1990, he was the
Marketing Manager with IEA. Mr. Sagara's other experience in the container
leasing business includes marketing management at Genstar from 1984 to 1987
and various container operations positions with Thoresen & Company from 1979
to 1984. Mr. Sagara holds a Bachelor of Science degree in Economics from Aoyama
Bakuin University.
Stefan Mackula is Vice President - Equipment Resale for TEM, in which
capacity he coordinates the worldwide sale of equipment into secondary markets.
Mr. Mackula also served as Vice President - Marketing for TEM, in which capacity
he was responsible for coordinating all leasing activities in Europe, Africa,
and the Middle East. He joined TEM in 1983 as Leasing Manager for the United
Kingdom. Prior to joining TEM, Mr. Mackula held, beginning in 1972, a variety of
positions in the international container shipping industry.
Ernest J. Furtado is Vice President, Finance and Assistant Secretary
of TGH, TEM and TL, in which capacity he is responsible for all accounting,
financial management, and reporting functions for TGH, TEM and TL. Prior to
joining Textainer in May 1991, Mr. Furtado was Controller for Itel Instant Space
and manager of accounting for Itel Containers International Corporation, both in
San Francisco, from 1984 to 1991. Mr. Furtado's earlier business affiliations
include serving as audit manager for Wells Fargo Bank and as senior accountant
with John F. Forbes & Co., both in San Francisco. He is a Certified Public
Accountant and holds a B.S. in business administration from the University of
California at Berkeley and an M.B.A. in information systems from Golden Gate
University.
Richard G. Murphy is Vice President, Risk Management for TEM. Mr.
Murphy is responsible for all credit and risk management functions for TEM and
supervises the administrative aspects of equipment acquisitions. He is a member
of and acts as secretary to the Credit and Equipment Investment Committees (see
"Committees", below). He previously served as Director of Credit and Risk
Management from 1989 to 1991 and as Controller from 1988 to 1989. Prior to the
takeover of the management of the Interocean Leasing Ltd. fleet by TEM in 1988,
Mr. Murphy held various positions in the accounting and financial areas with
that company from 1980, acting as Chief Financial Officer from 1984 to 1988.
Prior to 1980, he held various positions with firms of public accountants in the
U.K. Mr. Murphy is an Associate of the Institute of Chartered Accountants in
England and Wales and holds a Bachelor of Commerce degree from the National
University of Ireland.
Janet S. Ruggero is Vice President, Administration and Marketing
Services for TEM. Ms. Ruggero is responsible for the tracking and billing of
fleets under TEM management, including direct responsibility for ensuring that
all data is input in an accurate and timely fashion. She assists the marketing
and operations departments by providing statistical reports and analyses and
serves on the Credit Committee (see "Committees", below). Prior to joining
Textainer in 1986, Ms. Ruggero held various positions with Gelco CTI over the
course of 15 years, the last one as Director of Marketing and Administration for
the North American Regional office in New York City. She has a B.A. in education
from Cumberland College.
Dr. Adnan Z. Abou Ayyash is a director of TGH and TL. Since 1974 he
has been General Manager and Chief Executive Officer of one of the largest firms
of consulting engineers in Saudi Arabia, Rashid Engineering. Dr. Adnan Abou
Ayyash holds a B.S. degree in Civil Engineering from the American University
of Beirut, as well as M.S. and Ph.D. degrees in Civil Engineering from the
University of Texas.
Sheikh Isam K. Kabbani is a director of TGH and TL. He is Chairman and
principal stockholder of the IKK Group, Jeddah, Saudi Arabia, a manufacturing
and trading group which is active both in Saudi Arabia and internationally. In
1959 Sheikh Isam Kabbani joined the Saudi Arabian Ministry of Foreign Affairs,
and in 1960 moved to the Ministry of Petroleum for a period of ten years. During
this time he was seconded to the Organization of Petroleum Exporting Countries
(OPEC). After a period as Chief Economist of OPEC, in 1967 he became the Saudi
Arabian member of OPEC's Board of Governors. In 1970 he left the ministry of
Petroleum to establish his own business, the National Marketing Group, which has
been his principal business activity for the past 17 years. Sheikh Kabbani holds
a B.A. degree from Swarthmore College, Pennsylvania, and an M.A. degree in
Economics and International Relations from Columbia University.
S. Arthur Morris is a director of TGH, TEM and TL. He is a founding
partner in the firm of Morris and Kempe, Chartered Accountants (1962-1977) and
currently functions as a correspondent member of a number of international
accounting firms through his firm Arthur Morris and Company (1978 to date). He
is also President and director of Continental Management Limited (1977 to date).
Continental Management Limited is a Bermuda corporation that provides corporate
representation, administration and management services and corporate and
individual trust administration services. Mr. Morris has over 30 years
experience in public accounting and serves on numerous business and charitable
organizations in the Cayman Islands and Turks and Caicos Islands. Mr. Morris
became a director of TL and TGH in 1993, and TEM in 1994.
Dudley R. Cottingham is Assistant Secretary, Vice President and a
director of TGH, TEM and TL. He is a partner with Arthur Morris and Company
(1977 to date) and a Vice President and director of Continental Management
Limited (1978 to date), both in the Cayman Islands and Turks and Caicos Islands.
Continental Management Limited is a Bermuda corporation that provides corporate
representation, administration and management services and corporate and
individual trust administration services. Mr. Cottingham has over 20 years
experience in public accounting with responsibility for a variety of
international and local clients. Mr. Cottingham became a director of TL and TGH
in 1993, and TEM in 1994.
James S. McCaffrey is Executive Vice President, Chief Operating
Officer, Assistant Secretary and a director of and TCC. In this capacity he is
responsible for all accounting, financial management, and reporting functions
for TCC. He is a member of and acts as secretary to the Investment Advisory
Committee and serves on the Equipment Investment Committee (see "Committees"
below). Prior to joining Textainer in July 1993, Mr. McCaffrey was Vice
President of Finance for Meridian Point Properties, a real estate syndication
and management company, from 1985 to 1993; from 1983 to 1985 he was employed by
Trans-west Capital as Controller and Chief Financial Officer. Mr. McCaffrey's
earlier business affiliations include serving as manager of financial reporting
for Fox and Carskadon Financial Corporation and as a senior accountant with
Arthur Andersen & Co. Mr. McCaffrey is a Certified Public Accountant and holds a
B.S. in business administration and mathematics from Southern Oregon State
College and two securities licenses.
Jeanene K. Gomes is Assistant Secretary of TCC and Secretary and
Compliance Officer of TSC. Ms. Gomes is responsible for administering the public
partnerships sponsored by the Textainer Group. She is responsible for ensuring
that all data relating to investor accounts is input, monitored, and stored in a
timely manner and in accordance with the limited partnership agreement for each
of the partnerships as well as state and federal securities regulations. Ms.
Gomes oversees all communications with the limited partners and as such directly
supervises all personnel in performing this function. As compliance officer for
TSC, Ms. Gomes is responsible for ensuring compliance with all securities
regulations. Ms. Gomes also serves on the Investment Advisory Committee (see
"Committees" below). Ms. Gomes holds five securities licenses and was, prior to
joining Textainer in 1989, the compliance officer for CIS Investment
Corporation, a broker-dealer.
Committees
The Managing General Partner has established the following three
committees to facilitate decisions involving credit and organizational matters,
negotiations, documentation, management and final disposition of Equipment for
the Partnership and for other programs organized by the Textainer Group:
Equipment Investment Committee. The Equipment Investment Committee
will review the equipment leasing programs of the Partnership on a regular
basis with emphasis on matters involving equipment purchases, the equipment
mix in the Partnership's portfolio, equipment remarketing issues, and
decisions regarding ultimate disposition of equipment. The members of the
committee are James E. Hoelter (Chairman), John A. Maccarone, John R. Rhodes,
Anthony C. Sowry, James S. McCaffrey, Richard G. Murphy (Secretary), Alex M.
Brown and Neil I. Jowell.
Credit Committee. The Credit Committee will establish credit limits
for every lessee and potential lessee of Equipment and periodically review these
limits. In setting such limits, the Credit Committee will consider such factors
as customer trade routes, country, political risk, operational history, credit
references, credit agency analyses, financial statements, and other information.
The members of the Credit Committee are James E. Hoelter (Chairman), John A.
Maccarone, Richard G. Murphy (Secretary), Janet S. Ruggero, John R. Rhodes,
Anthony C. Sowry and Robert D. Pedersen.
Investment Advisory Committee. The Investment Advisory Committee
will review investor program operations on at least a quarterly basis,
emphasizing matters related to cash distributions to investors, cash flow
management, portfolio management, and liquidation. The Investment Advisory
Committee is organized with a view to applying an interdisciplinary approach,
involving management, financial, legal and marketing expertise, to the analysis
of investor program operations. The members of the Investment Advisory
Committee are James E. Hoelter (Chairman), John A. Maccarone, Cara D. Smith,
James S. McCaffrey (Secretary), John R. Rhodes, Jeanene K. Gomes, Harold J.
Samson, Alex M. Brown and Neil I. Jowell.
ITEM 11 - EXECUTIVE COMPENSATION
The Registrant has no executive officers and does not reimburse TCC, TEM or TL
for the remuneration payable to their executive officers.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
a) Security ownership of certain beneficial owners
There is no person or "Group" who is known to the registrant to be the
beneficial owner of more than five percent of the outstanding units of
limited partnership interest in the Registrant.
b) Security Ownership of Management
<TABLE>
<CAPTION>
Number
Name of Beneficial Owner Of Units % All Units
<S> <C> <C>
James E. Hoelter 1,370 .0339%
Ernest J. Furtado 600 .0148%
----- -----
Officers and Management as a Group 1,970 .0487%
===== =====
</TABLE>
c) Changes in control.
Inapplicable.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(Dollar amounts in thousands)
(a) Transactions with Management and Others.
At December 31, 1996 and 1995 due to affiliates are comprised of:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Due to TEM........................................ $ 125 142
Due to TCC........................................ 28 39
Due to TSC........................................ - 41
Due to TL......................................... - 15
Due to TAS........................................ 1 392
-------- ---
$ 154 629
===== ===
</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 in the accrual and collection of net rental
revenues from TEM.
In addition, the Registrant paid or will pay the following amounts to
the General Partners and to TSC, which was the managing sales agent for
the offering of Units for sale and is a licensed broker and dealer in
securities and an affiliate of TCC, TEM and TL:
Syndication fees and organization and offering expense reimbursements:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
TCC................... $ 272 1,309 661
TSC................... 2,281 5,098 1,978
----- ----- -----
Total................. $ 2,553 6,407 2,639
===== ===== =====
</TABLE>
Acquisition Fees in connection with the purchase of equipment on behalf
of the Registrant:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
TAS.................. $ 478 2,107 884
=== ===== ===
Management fees in connection with the operations of the Registrant:
1996 1995 1994
---- ---- ----
TEM.................. $ 1,305 899 279
===== === ===
Reimbursement for administrative costs in respect of the operations of
the Registrant:
1996 1995 1994
---- ---- ----
TCC.................. $ 118 117 44
TEM.................. 744 640 237
--- --- ---
Total................ $ 862 757 281
=== === ===
Reimbursements in connection with the purchase of Equipment:
1996 1995 1994
---- ---- ----
TCC.................. $ - - 170
TL................... - - 798
TAS.................. - - 430
----------- -------- ------
Total................ $ - - 1,398
=========== =========== =====
</TABLE>
(b) Certain Business Relationships.
Inapplicable.
(c) Indebtedness of Management
Inapplicable.
(d) Transactions with Promoters
Inapplicable.
See the "Compensation of Affiliates" section of the Registrant's Prospectus, as
supplemented, and the Notes to the Financial Statements in Item 8.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Audited financial statements of the Registrant for the year
ended December 31, 1996 are contained in Item 8 of this
Report.
2. Financial Statement Schedules.
(i) Independent Auditors' Report on Supplementary
Financial Schedule.
(ii) Schedule II - Valuation and Qualifying Accounts.
3. Exhibits Incorporated by reference.
(i) The Registrant's Prospectus as contained in Pre-
Effective Effective No. 3 to the Registrant's
Registration Statement (No. 33-71944), as filed
with the Commission on April 8, 1994, as supplemented
by Post Effective Amendment No. 2 as filed under
Section 8(c) of the Securities Exchange Act of 1933
on May 5, 1995 and Supplement No. 5 as filed under
Rule 424(b) of the Securities Exchange Act of 1993 on
March 18, 1996.
(ii) The Registrant's limited partnership agreement,
Exhibit A to the Prospectus.
(b) During the year ended 1996, no reports on Form 8-K have been filed by
the Registrant.
<PAGE>
Independent Auditors' Report on Supplementary Schedule
The Partners
Textainer Equipment Income Fund V, L.P.:
Under the date of February 17, 1997, we reported on the balance sheets of
Textainer Equipment Income Fund V, L.P. (the Partnership) as of December 31,
1996 and 1995, and the related statements of earnings, partners' capital and
cash flows for the years ended December 31, 1996, 1995 and 1994. In connection
with our audits of the aforementioned financial statements, we also audited the
related financial statement schedule as listed in Item 14. This financial
statement schedule is the responsibility of the Partnership's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
KPMG Peat Marwick LLP
San Francisco, California
February 17, 1997
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A California limited partnership)
Schedule II - Valuation and Qualifying Accounts
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Charged Balance
Balance at to Costs Charged at End
Beginning and to Other of
of Period Expenses Accounts Deduction Period
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1996:
Allowance for doubtful accounts $ 151 128 - (10) 269
----- ----- -------- ------ -----
Damage protection plan reserve $ 232 384 - (255) 361
----- ----- -------- ----- -----
For the year ended December 31, 1995:
Allowance for doubtful accounts $ 43 111 - (3) 151
------ ----- -------- ------- -----
Damage protection plan reserve $ 108 239 - (115) 232
----- ----- -------- ----- -----
For the year ended December 31, 1994:
Allowance for doubtful accounts $ 8 35 - - 43
------- ------ -------- -------- ------
Damage protection plan reserve $ 9 131 - (32) 108
------- ----- -------- ------ -----
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
A California Limited Partnership
By Textainer Capital Corporation
The Managing General Partner
By
John R. Rhodes
Executive Vice President
Date: March 26, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer Capital
Corporation, the Managing General Partner of the Registrant, in the capacities
and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Executive Vice President March 27, 1997
John R. Rhodes (Principal Financial and
Accounting Officer) and
Secretary
President (Principal Executive March 27, 1997
James E. Hoelter Officer) and Director
Executive Vice President, March 27, 1997
James S. McCaffrey Chief Operating Officer and Director
Director March 27, 1997
John A. Maccarone
Director March 27, 1997
Cara D. Smith
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TEXTAINER EQUIPMENT 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: March 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer Capital
Corporation, the Managing General Partner of the Registrant, in the capacities
and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/John R. Rhodes Executive Vice President March 27, 1997
- ------------------------------------------------ (Principal Financial and
John R. Rhodes Accounting Officer) and
Secretary
/s/James E. Hoelter President (Principal Executive March 27, 1997
- ------------------------------------------------ Officer) and Director
James E. Hoelter
/s/James S. McCaffrey Executive Vice President, Chief March 27, 1997
- ---------------------------------------------- Operating Officer and Director
James S. McCaffrey
/s/John A. Maccarone Director March 27, 1997
- ----------------------------------------------
John A. Maccarone
/s/Cara D. Smith Director March 27, 1997
- ------------------------------------------------
Cara D. Smith
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
1996 FORM 10K
</LEGEND>
<CIK> 0000915194
<NAME> TEXTAINER EQUIPMENT INCOME FUND V, L.P.
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 943
<SECURITIES> 0
<RECEIVABLES> 3,098
<ALLOWANCES> 269
<INVENTORY> 0
<CURRENT-ASSETS> 170
<PP&E> 79,103
<DEPRECIATION> 9,118
<TOTAL-ASSETS> 73,927
<CURRENT-LIABILITIES> 1,195
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 72,732
<TOTAL-LIABILITY-AND-EQUITY> 73,927
<SALES> 0
<TOTAL-REVENUES> 13,588
<CGS> 0
<TOTAL-COSTS> 9,762
<OTHER-EXPENSES> (8)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,834
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,834
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
