TEXTAINER CAPITAL CORPORATION
650 California Street, 16th Floor
San Francisco, CA 94108
May 14, 1998
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 "Company") the Company's Quarterly Report on Form 10-Q for the first
quarter ended March 31, 1998.
This filing is being effected by direct transmission to the Commission's EDGAR
System.
Sincerely,
Nadine Forsman
Controller
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
Commission file number 0-25946
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(Exact name of Registrant as specified in its charter)
California 93-1122553
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
650 California Street, 16th Floor
San Francisco, California 94108
(Address of Principal Executive Offices) (ZIP Code)
(415) 434-0551
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Quarterly Report on Form 10Q for the
Quarter Ended March 31, 1998
Table of Contents
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Page
Item 1. Financial Statements
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Balance Sheets - March 31, 1998 (unaudited) and December 31, 1997................................ 3
Statements of Earnings for the three months
ended March 31, 1998 and 1997 (unaudited)........................................................ 4
Statements of Partners' Capital for the three months
ended March 31, 1998 and 1997 (unaudited)........................................................ 5
Statements of Cash Flows for the three months
ended March 31, 1998 and 1997 (unaudited)........................................................ 6
Notes to Financial Statements (unaudited)........................................................ 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................................................ 12
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Balance Sheets
March 31, 1998 and December 31, 1997
(Amounts in thousands)
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<CAPTION>
1998 1997
-------------- ------------
(unaudited)
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Assets
Container rental equipment, net of accumulated
depreciation of $15,016 (1997: $13,833) $ 64,804 $ 66,066
Cash 459 108
Accounts receivable, net of allowance
for doubtful accounts of $478 (1997: $387) 2,602 3,220
Due from affiliates, net (note 5) 141 -
Organization costs, net of accumulated
amortization of $188 (1997: $175) 74 87
Prepaid expenses 132 128
-------------- ------------
$ 68,212 $ 69,609
============== ============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 355 $ 274
Accrued liabilities 132 90
Accrued recovery costs (note 2) 39 89
Accrued damage protection plan costs (note 3) 362 340
Due to affiliates, net (note 5) - 412
Deferred quarterly distribution 114 114
-------------- ------------
Total liabilities 1,002 1,319
-------------- ------------
Partners' capital:
General partners 48 48
Limited partners 67,162 68,242
-------------- ------------
Total partners' capital 67,210 68,290
-------------- ------------
$ 68,212 $ 69,609
============== ============
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Statements of Earnings
For three months ended March 31, 1998 and 1997 (Amounts
in thousands except for unit and per unit amounts)
(unaudited)
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1998 1997
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Rental income $ 3,719 $ 3,392
-------------- -------------
Costs and expenses:
Direct container expenses 850 700
Bad debt expense 110 15
Depreciation and amortization 1,211 1,207
Professional fees 8 9
Management fees to affiliates (note 5) 343 329
General administrative costs to affiliates (note 5) 231 234
Other general and administrative costs 37 36
-------------- -------------
2,790 2,530
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Income from operations 929 862
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Other income:
Interest income, net 3 11
Gain on sale of containers 14 52
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17 63
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Net earnings $ 946 $ 925
============== =============
Allocation of net earnings (note 5):
General partners $ 21 $ 24
Limited partners 925 901
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$ 946 $ 925
============== =============
Limited partners' per unit share of net earnings $ 0.21 $ 0.20
============== =============
Limited partners' per unit share of distributions $ 0.45 $ 0.50
============== =============
Weighted average number of limited
partnership units outstanding 4,454,893 4,454,893
============== =============
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Statements of Partners' Capital
For the three months ended March 31, 1998 and 1997
(Amounts in thousands)
(unaudited)
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Partners' Capital
--------------------------------------------------------
General Limited Total
----------- -------------- -------------
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Balances at January 1, 1997 $ 2 $ 72,730 $ 72,732
Distributions (24) (2,227) (2,251)
Net earnings 24 901 925
----------- -------------- -------------
Balances at March 31, 1997 $ 2 $ 71,404 $ 71,406
=========== ============== =============
Balances at January 1, 1998 $ 48 $ 68,242 $ 68,290
Distributions (21) (2,005) (2,026)
Net earnings 21 925 946
----------- -------------- -------------
Balances at March 31, 1998 $ 48 $ 67,162 $ 67,210
=========== ============== =============
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Statements of Cash Flows
For the three months ended March 31, 1998 and 1997
(Amounts in thousands)
(unaudited)
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1998 1997
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Cash flows from operating activities:
Net earnings $ 946 $ 925
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 1,198 1,194
Increase (decrease) in allowance for doubtful accounts 91 (12)
Amortization of organization costs 13 13
Gain on sale of containers (14) (52)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 527 (346)
Increase in due from affiliates, net (227) (6)
(Increase) decrease in prepaid expenses (4) 8
Increase in accounts payable and accrued liabilities 123 14
(Decrease) increase in accrued recovery costs (50) 7
Increase (decrease) in accrued damage protection plan costs 22 (11)
---------------- ----------------
Net cash provided by operating activities 2,625 1,734
---------------- ----------------
Cash flows from investing activities:
Proceeds from sale of containers 60 82
Container purchases (12) (257)
---------------- ----------------
Net cash provided by (used in) investing activities 48 (175)
---------------- ----------------
Cash flows from financing activities:
Repayment of borrowings from affiliates (318) -
Distributions to partners (2,004) (2,281)
---------------- ----------------
Net cash used in financing activities (2,322) (2,281)
---------------- ----------------
Net increase (decrease) in cash 351 (722)
Cash at beginning of period 108 943
---------------- ----------------
Cash at end of period $ 459 $ 221
================ ================
Interest paid during the period $ 10 $ -
================ ================
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A California Limited Partnership)
Statements of Cash Flows--Continued
For the three months ended March 31, 1998 and 1997
(Amounts in thousands)
(unaudited)
Supplemental Disclosures:
Supplemental schedule of non-cash investing and financing activities:
The following table summarizes the amounts of container purchases, distributions
to partners and proceeds from sale of containers which had not been paid or
received by the Partnership as of March 31, 1998 and 1997, and December 31, 1997
and 1996, resulting in differences in amounts recorded and amounts of cash
disbursed or received by the Partnership, as shown in the Statements of Cash
Flows for the three-month periods ended March 31, 1998 and 1997.
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Mar. 31 Dec. 31 Mar. 31 Dec. 31
1998 1997 1997 1996
------- ------- ------- -------
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Container purchases included in:
Due to (from) affiliates............................ $ 28 40 $ (7) $ 4
Container purchases payable......................... - - - 169
Distributions to partners included in:
Due to affiliates................................... 42 20 - 32
Deferred quarterly distribution..................... 114 114 126 124
Proceeds from sale of containers included in:
Due from affiliates................................. 70 51 201 58
The following table summarizes the amounts of container purchases, distributions
to partners and proceeds from the sale of containers recorded by the Partnership
and the amounts paid or received as shown in the Statements of Cash Flows for
the three-month periods ended March 31, 1998 and 1997.
1998 1997
---- ----
Container purchases recorded......................................................... $ - $ 77
Container purchases paid............................................................. 12 257
Distributions to partners declared................................................... 2,026 2,251
Distributions to partners paid....................................................... 2,004 2,281
Proceeds from sale of containers recorded............................................ 79 225
Proceeds from sale of containers received............................................ 60 82
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A California Limited Partnership)
Notes to Financial Statements
March 31, 1998
(Amounts in thousands except for per unit amounts)
(unaudited)
Note 1. General
Textainer Equipment Income Fund V, L.P. (the Partnership), a California
Limited Partnership with a maximum life of 20 years, was formed in 1993.
The Partnership owns and leases a fleet of intermodal marine cargo
containers which are leased to international shipping lines.
The accompanying interim comparative financial statements have not been
audited by an independent public accountant. However, all adjustments
(which were only normal and recurring adjustments), which are, in the
opinion of management, necessary to fairly present the financial
position of the Partnership as of March 31, 1998 and December 31, 1997,
and the results of its operations, changes in partners' capital, and
cash flows for the three-month periods ended March 31, 1998 and 1997,
have been made.
The financial information presented herein should be read in conjunction
with the audited financial statements and the accompanying Notes
included in the Partnership's audited financial statements as of
December 31, 1997 in the Annual Report filed on Form 10K.
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.
Note 2. Recovery Costs
The Partnership accrues an estimate for recovery costs as a result of
defaults under its leases that it expects to incur, which are in excess
of estimated insurance proceeds. At March 31, 1998 and December 31,
1997, the amount accrued was $39 and $89, respectively.
Note 3. Damage Protection Plan
The Partnership offers a Damage Protection Plan (DPP) to lessees of its
containers. Under the terms of DPP, 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. DPP expenses are included
in direct container expenses in the Statements of Earnings, and the
related reserve at March 31, 1998 and December 31, 1997, was $362 and
$340, respectively.
Note 4. Acquisition of Containers
The Partnership did not purchase containers during the three-month
period ended March 31, 1998. During the three-month period ended March
31, 1997, the Partnership purchased containers with a cost of $77.
Note 5. Transactions with Affiliates
Textainer Capital Corporation (TCC) is the managing general partner, and
Textainer Equipment Management Limited (TEM) and Textainer Limited (TL)
are the associate general partners of the Partnership. The managing
general partner and associate general partners are collectively referred
to as the General Partners. The General Partners 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 containers outside the United
States on behalf of the Partnership. TCC, TEM, TL and TAS are
subsidiaries of Textainer Group Holdings Limited (TGH). The General
Partners manage and control the affairs of the Partnership.
In accordance with the Partnership Agreement, and subject to the special
allocations described therein, net earnings or losses and distributions
are generally 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.
As part of the operation of the Partnership, the Partnership is to pay
to the General Partners, or TAS, an incentive management fee, an
acquisition fee, an equipment management fee and an equipment
liquidation fee, as well as reimburse the General Partners for certain
administrative costs. These fees are for various services provided in
connection with the administration and management of the Partnership.
The Partnership incurred $84 and $94 of incentive management fees during
the three-month periods ended March 31, 1998 and 1997, respectively. The
Partnership did not incur equipment acquisition fees during the
three-month period ended March 31, 1998. The Partnership capitalized $13
of equipment acquisition fees as part of container rental equipment
costs during the three-month period ended March 31, 1997. No equipment
liquidation fees were incurred in either period.
The container fleet of the Partnership is managed by TEM. TEM has
authority to acquire, hold, manage, lease, sell and dispose of the
Partnership's containers. TEM holds, for the payment of direct operating
expenses, a reserve of cash that has been collected from container
leasing operations; such cash is included in the amount due from
affiliates, net at March 31, 1998 and due to affiliates, net at December
31, 1997.
Subject to certain reductions, TEM receives a monthly equipment
management fee equal to 7% of gross lease revenues attributable to
operating leases and 2% of gross lease revenues attributable to full
payout net leases. These fees totaled $259 and $235 for the three-month
periods ended March 31, 1998 and 1997, respectively. The Partnership's
container fleet is leased by TEM to third-party lessees on operating
master leases, spot leases and term leases. The majority are operating
leases with limited terms and no purchase option.
Certain indirect general and administrative costs such as salaries,
employee benefits, taxes and insurance are incurred in performing
administrative services necessary to the operation of the Partnership.
These costs are incurred and paid by TCC and TEM. Total general and
administrative costs allocated to the Partnership were $231 and $234 for
the three-month periods ended March 31, 1998 and 1997, respectively, of
which $111 and $120 were for salaries.
TEM allocates these general and administrative costs based on the ratio
of the Partnership's interest in the managed containers to the total
container fleet managed by TEM during the period. TCC allocates these
costs based on the ratio of the Partnership's containers to the total
container fleet of all limited partnerships managed by TCC. General and
administrative costs allocated to the Partnership by TEM were $210 and
$206 for the three-month periods ended March 31, 1998 and 1997,
respectively. TCC allocated $21 and $28 of general and administrative
costs to the Partnership during the same periods.
The General Partners or TAS may acquire containers in their own name and
hold title on a temporary basis for the purpose of facilitating the
acquisition of such containers for the Partnership. The containers may
then be resold to the Partnership on an all-cash basis at a price equal
to the actual cost as defined in the Partnership Agreement. In addition,
the General Partners or TAS are entitled to an acquisition fee for any
containers resold to the Partnership.
As of March 31, 1998 and December 31, 1997, due from and due to
affiliates, net was comprised of:
1998 1997
---- ----
Due from affiliates:
Due from TEM............................ $ 284 $ 14
----- -----
Due to affiliates:
Due to TAS.............................. 28 39
Due to TCC.............................. 81 49
Due to TL............................... 34 338
----- -----
143 426
----- -----
Due from (to) affiliates, net........... $ 141 $ (412)
===== =====
Included in the amounts due to TL at December 31, 1997 is $318 in loans
used to facilitate container purchases. This loan was repaid in full on
March 31, 1998. There were no borrowings from affiliates outstanding at
March 31, 1998. All other amounts receivable from and payable to
affiliates were incurred in the ordinary course of business between the
Partnership and its affiliates and represent timing differences in the
accrual and payment of expenses and fees described above or the accrual
and remittance of net rental revenues by TEM.
It is the policy of the Partnership and the General Partners to charge
interest on amounts due to the General Partners which are outstanding
for more than one month, to the extent such balances relate to loans for
container purchases. Interest is charged at a rate not greater than the
General Partners' or affiliates' own cost of funds. The Partnership
incurred $7 of interest expense on amounts due to the General Partners
for the three-month period ended March 31, 1998. There was no interest
expense incurred on amounts due to General Partners for the three-month
period ended March 31, 1997.
Note 6. Rentals under Operating Leases
The following are the future minimum rent receivables under cancelable
long-term operating leases at March 31, 1998. Although the leases are
generally cancelable at the end of each twelve-month period with a
penalty, the following schedule assumes that the leases will not be
terminated.
Year ended March 31:
1999....................................................... $ 913
2000....................................................... 93
2001....................................................... 10
---
Total minimum future rentals receivable.................... $ 1,016
=====
Note 7. Redemptions
No redemption offerings were consummated during the three-month period
ended March 31, 1998 or 1997. The total number of units redeemed since
inception of the redemption program is 8,451, at a total cost of $152,
representing an average redemption price of $17.97 per unit. The
redemption price is fixed by formula.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Amounts in thousands except for unit and per unit amounts)
The Financial Statements contain information which will assist in evaluating the
financial condition of the Partnership for the three-month periods ended March
31, 1998 and 1997. Please refer to the Financial Statements and Notes thereto in
connection with the following discussion.
Liquidity and Capital Resources
From May 1, 1994 until April 29, 1996, the Partnership offered limited
partnership interests to the public. The Partnership received its minimum
subscription amount of $5,000 on August 23, 1994 and on April 29, 1996, the
Partnership's offering of limited partnership interests was closed at $89,305.
From time to time, the Partnership redeems units from limited partners for a
specified redemption value which is set by formula. Up to 2% of the
Partnership's outstanding units may be redeemed each year, although the 2% limit
may be exceeded at the managing general partner's discretion. All redemptions
are subject to the managing general partner's good faith determination that
payment for the redeemed units will not (i) cause the Partnership to be taxed as
a corporation, (ii) impair the capital or operations of the Partnership, or
(iii) impair the ability of the Partnership to pay distributions in accordance
with its distribution policy. During the three-month period ended March 31,
1998, the Partnership did not redeem any units.
The Partnership invests working capital and cash flow from operations prior to
its distribution to the partners in short-term, liquid investments. The
Partnership's cash is affected by cash provided by or used in operating,
investing and financing activities. These activities are discussed in detail
below.
During the three-month period ended March 31, 1998, the Partnership declared
cash distributions to limited partners pertaining to the period from December
1997 through February 1998 in the amount of $2,005. These distributions
represent a return of 9% on 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, $1,080 of these distributions were a return of capital and the
balance was from net earnings.
Net cash provided by operating activities for the three-month periods ending
March 31, 1998 and 1997, was $2,625 and $1,734, respectively. The increase of
$891, or 51%, is primarily attributable to a decrease in accounts receivable.
Accounts receivable decreased primarily due to a decrease in the average
collection period of accounts receivable.
For the three-month period ending March 31, 1998, cash provided by investing
activities (the purchase and sale of containers) was $48, compared with cash
used in investing activities of $175 for the same period in 1997. The difference
of $223 is primarily due to the Partnership having purchased more containers
during the three months ended March 31, 1997 than in the comparable period in
1998. The General Partners believe that these differences reflect normal
fluctuations in container sales and purchases. However, recent container
purchases (reinvestment) are currently lower than anticipated due to the adverse
effect of market conditions on cash available for reinvestment. Market
conditions are discussed more fully below under "Results of Operations".
Consistent with its investment objectives and the General Partners'
determination that containers can be profitably sold or bought at any time, the
Partnership intends to reinvest all or a significant amount of proceeds from
future container sales in additional containers. The Partnership sells
containers at the end of their estimated useful life however, additional
containers purchased may not equal the number of containers sold.
At March 31, 1998, the Partnership had no commitments to purchase containers.
During 1997, the Partnership borrowed $318 from a general partner which was used
to purchase containers. It is the policy of the Partnership and the General
Partners to charge interest on borrowings from affiliates arising from the
Partnership's acquisition of containers which are outstanding for more than one
month. Interest is charged to the Partnership at a rate not greater than the
General Partners' own cost of funds. The Partnership paid $10 of interest
expense during the three month period ended March 31, 1998. The interest rate in
effect at March 31, 1998 was 8.5%. The Partnership repaid the loan on March 31,
1998 with cash provided by operations.
Results of Operations
The Partnership's income from operations, which consists primarily of rental
income, container depreciation, direct container expenses, management fees to
affiliates, and reimbursement of administrative expenses was directly related to
the size of the container fleet during the three-month periods ended March 31,
1998 and 1997, as well as certain other factors as discussed below. The
following is a summary of the size of the container fleet (in units) available
for lease during those periods:
1998 1997
---- ----
Opening container fleet............. 24,288 23,952
Closing container fleet............. 24,261 23,886
Average container fleet............. 24,275 23,919
Rental income and direct container expenses are also affected by the utilization
of the container fleet which was 85% and 80% on average during the three-month
periods ended March 31, 1998 and 1997, respectively. In addition, rental income
is affected by daily rental rates and leasing incentives.
The following is a comparative analysis of the results of operations for the
three-month periods ended March 31, 1998 and 1997.
The Partnership's income from operations for the three-month periods ending
March 31, 1998 and 1997 was $929 and $862, respectively, on rental income of
$3,719 and $3,392, respectively. The increase in rental income of $327, or 10%,
from the three-month period ended March 31, 1997 to the comparable period in
1998 was primarily attributable to the increase in other rental income which is
discussed below. Income from container rentals, the major component of total
revenue, remained fairly constant, increasing $45, or 1%, from the three-month
period ending March 31, 1997 to the same period in 1998. This increase was
primarily due to the increase in the average container fleet of 1%, the increase
in average utilization of 6%, and the decrease in average lease incentives of
17%, offset by the decrease in average rental rates of 6%
Container utilization and rental rates declined during 1996 and 1997 primarily
due to decreased demand for leased containers and increased competition. The
decrease in demand for leased containers resulted from changes in the business
of shipping line customers consisting primarily of (i) over-capacity resulting
from the 1995 and 1996 additions of new, larger ships to the existing container
ship fleet at a rate in excess of the growth rate in containerized cargo trade;
(ii) shipping line alliances and other operational consolidations that have
allowed shipping lines to operate with fewer containers; and (iii) shipping
lines reducing their ratio of leased versus owned containers by purchasing
containers. This decreased demand, along with the entry of new leasing company
competitors offering low container rental rates to shipping lines, resulted in
downward pressure on rental rates. Rental rates were also adversely affected by
a drop in the purchase price of new containers which resulted in additional
downward pressure on rental rates.
Utilization increased during the second and third quarters of 1997 and began
declining again during the fourth quarter of 1997 and into the first quarter of
1998. Despite these declines, utilization for the first quarter of 1998 was
greater than the average first quarter 1997 utilization and greater than the
average utilization for the year ended December 31, 1997. Rental rates
stabilized during the later half of the first quarter of 1998 and, overall, were
comparable to fourth quarter 1997 rental rates. Leasing incentives reached a
high in mid-1997, began declining during the second half of 1997 and have
stabilized during the first quarter of 1998. The improvement in utilization and
the stabilization of rental rates and leasing incentives are primarily due to
increased demand in Asia. The weakening of many Asian currencies resulted in a
significant increase in exports which created strong demand for containers in
Asia. The General Partners believe that market conditions have stabilized and
may be slowly improving; however, for the near term, the General Partners do not
foresee any material changes in existing market conditions and caution that both
utilization and lease rates could decline again, 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 other rental income consists of other lease-related items,
primarily income from charges to lessees for picking up containers from surplus
locations less credits granted to lessees for leasing containers from less
desirable locations (location income), income for handling and returning
containers and income from charges to lessees for a Damage Protection Plan
(DPP). For the three-month period ending March 31, 1998, the total of these
other rental income items was $550, an increase of $282 from the equivalent
period in 1997. The primary component of this increase was an increase in
location income of $297. Location income increased primarily due to the
inclusion of certain credits received during 1997 and 1998 which had previously
been applied against repositioning expense and also due to an increase in the
average drop-off charge per container and decrease in credits given to lessees
to pick up containers from certain locations.
Direct container expenses increased $150, or 21%, for the three-month period
ending March 31, 1998 compared to the equivalent period in 1997. The increase in
direct container expenses was primarily due to increases in costs incurred for
repositioning and DPP expenses of $177 and $41, respectively, offset by a
decrease in storage expense of $91. Repositioning costs increased due to the
removal of certain credits from repositioning costs to other rental income as
discussed above and due to an increase in the number of containers transported
from surplus locations to demand locations. DPP expense increased due to a
greater number of containers requiring repair, offset by a lower average repair
cost per container. Storage expense decreased as a result of the increase in
utilization from 80% to 85% for the three months ending March 31, 1997 to the
same period in 1998.
Bad debt expense increased $95 from the three-month period ended March 31, 1997
to the comparable period in 1998 primarily due to the 1997 adjustment reducing
the reserve requirement for one lessee.
Depreciation expense remained fairly constant between the three-month periods
ending March 31, 1998 and 1997 and was $1,198 and $1,194, respectively.
Management fees to affiliates increased $14, or 4%, from the three-month period
ended March 31, 1997 to the comparable period in 1998. This increase was due to
an increase in equipment management fees of $24, or 10%, offset by a decrease in
incentive management fees of $10, or 11%. Subject to certain reductions,
equipment management fees are based on gross revenue and were approximately 7%
of revenue for both periods. Incentive management fees which are based primarily
on the Partnership's limited and general partner distributions decreased due to
the decrease in the limited partner distribution rate from 10% to 9% in April
1997.
General and administrative costs to affiliates decreased $3, or 1%, from the
three-month period ending March 31, 1997 to the comparable period ending in
1998, primarily due to a decrease in overhead costs allocated by TCC.
Other income provided $17 of additional income for the three-month period ending
March 31, 1998, a decrease of $46 compared to the equivalent period in 1997. The
decrease was due to decreases in gain on sale of containers and interest income,
net of $38 and $8, respectively.
For the three-month periods ending March 31, 1997 and 1998, net earnings per
limited partnership unit increased from $0.20 to $0.21, respectively, reflecting
the increase in net earnings allocated to limited partners from $901 to $925 for
the same periods.
Many computer systems may experience difficulty processing dates beyond the year
1999 and, as such, some computer hardware and software will need to be modified
prior to the year 2000 to remain functional. Certain of the Partnership's and
General Partner's core internal systems that have recently been implemented are
year 2000 compliant. The remaining core internal systems are scheduled to be
revised to be year 2000 compliant by the end of 1998. Based on its initial
evaluation, the Partnership and the General Partners do not believe that the
cost of remedial actions relating to these systems will have a material adverse
effect on the Partnership's results of operations and financial condition.
Additionally, the Partnership and the General Partners are also completing a
preliminary assessment of year 2000 issues not related to its core systems,
including issues surrounding systems that interface with external third parties.
Although substantially all of the Partnership's income from operations is
derived from assets employed in foreign operations, virtually all of this income
is denominated in United States dollars. The Partnership's customers are
international shipping lines which transport goods on international trade
routes. The domicile of the lessee is not indicative of where the lessee is
transporting the containers. The Partnership's business risk in its foreign
operations lies with the creditworthiness of the lessees, and the Partnership's
ability to keep the containers under lease, rather than the geographic location
of the containers or the domicile of the lessees. The containers are generally
operated on the international high seas rather than on domestic waterways. The
containers are subject to the risk of war or other political, economic or social
occurrence where the containers are used, which may result in the loss of
containers, which, in turn, may have a material impact on the Partnership's
results of operations and financial condition. The General Partners are not
aware of any conditions as of March 31, 1998 which would result in such a risk
materializing.
Other risks of the Partnership's leasing operations include competition, the
cost of repositioning containers after they come off-lease, the risk of an
uninsured loss, increases in maintenance expenses or other costs of operating
the containers, and the effect of world trade, industry trends and/or general
business and economic cycles on the Partnership's operations. See "Risk Factors"
in the Partnership's Prospectus, as supplemented, for additional information on
risks of Partnership's business.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(A California Limited Partnership)
By Textainer Capital Corporation
The Managing General Partner
By _______________________________
John R. Rhodes
Executive Vice President
Date: May 14, 1998
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, May 14, 1998
John R. Rhodes (Principal Financial and
Accounting Officer) and
Secretary
_______________________________ President(Principal Executive May 14, 1998
Philip K. Brewer Officer)
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TEXTAINER EQUIPMENT INCOME FUND 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: May 14, 1998
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, May 14, 1998
_______________________________ (Principal Financial and
John R. Rhodes Accounting Officer) and
Secretary
/s/Philip K. Brewer President (Principal Executive May 14, 1998
_______________________________ Officer)
Philip K. Brewer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Textainer Equipment Income Fund V, L.P. 10Q
</LEGEND>
<CIK> 0000915194
<NAME> Textainer Equipment Income Fund V, L.P.
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 459
<SECURITIES> 0
<RECEIVABLES> 3,221
<ALLOWANCES> 478
<INVENTORY> 0
<CURRENT-ASSETS> 206
<PP&E> 79,820
<DEPRECIATION> 15,016
<TOTAL-ASSETS> 68,212
<CURRENT-LIABILITIES> 1,002
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 67,210
<TOTAL-LIABILITY-AND-EQUITY> 68,212
<SALES> 0
<TOTAL-REVENUES> 3,719
<CGS> 0
<TOTAL-COSTS> 2,790
<OTHER-EXPENSES> (17)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 946
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 946
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
