TEXTAINER FINANCIAL SERVICES CORPORATION
650 California Street, 16th Floor
San Francisco, CA 94108
March 28, 2002
Securities and Exchange Commission
Washington, DC 20549
Ladies & 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 II,
L.P. (the "Partnership") the Partnership's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001.
The financial statements included in the enclosed Annual Report on Form 10-K 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
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
Commission file number 0-19145
TEXTAINER EQUIPMENT INCOME FUND II, L.P.
----------------------------------------
(Exact name of Registrant as specified in its charter)
California 94-3097644
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
650 California Street, 16th Floor, San Francisco, CA 94108
(Address of Principal Executive Offices) (ZIP Code)
(415) 434-0551
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP DEPOSITARY UNITS
(TITLE OF CLASS)
LIMITED PARTNERSHIP INTERESTS (UNDERLYING 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.
[X]
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. 2 to the
Registrant's Registration Statement, as filed with the Commission on November 3,
1989 as supplemented by Post-Effective Amendment No. 2 filed with the Commission
under Section 8(c) of the Securities Act of 1933 on December 11, 1990.
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
The Registrant is a California Limited Partnership formed on July
11, 1989 to purchase, own, operate, lease, and sell equipment
used in the containerized cargo shipping industry. The Registrant
commenced offering units representing limited partnership
interests (Units) to the public on November 8, 1989 in accordance
with its Registration Statement and ceased to offer such Units as
of January 15, 1991. The Registrant raised a total of $75,000,000
from the offering and invested a substantial portion of the money
raised in equipment. The Registrant has since engaged in leasing
this and other equipment in the international shipping industry.
In July 2001, the Registrant entered into its liquidation phase.
During this phase, the Registrant will no longer add to its
container fleet but will instead sell its containers (i) in one
or more large transactions or (ii) gradually, either as they
reach the end of their useful marine lives or when an analysis
indicates that their sale is warranted based on existing market
conditions and the container's age, location and condition. To
date, the Partnership has sold containers only gradually rather
than in large transactions. Sales proceeds, after reserves for
working capital, will generally be distributed to the Partners.
The Registrant will be terminated and dissolved on the earlier of
December 31, 2009 or the sale of all or substantially all of its
equipment.
See Item 10 herein for a description of the Registrant's General
Partners. See Item 7 herein for a description of current market
conditions affecting the Registrant's business.
(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.
Container leasing companies and the Registrant operate in a
similar manner by owning a worldwide fleet of new and used
transportation containers and leasing these containers to
international shipping companies hauling various types of goods
among numerous trade routes. All lessees pay a daily rental rate
and in certain markets may pay special handling fees and/or
drop-off charges. In addition to these fees and charges, a lessee
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 certain physical
damage to containers. Container leasing companies compete with
one another on the basis of lease rates, fees charged, services
provided and availability of equipment. To ensure the
availability of equipment to its customers, container leasing
companies and the Registrant may pay to reposition containers
from low demand locations to higher demand locations. By
maintaining the highest lease rates and the highest equipment
utilization factors allowed by market conditions, the Registrant
attempts to generate revenue and profit.
The majority of the Registrant's equipment is leased under master
leases, which are comparable to the corporate rate agreements
used by rental car companies. The master leases provide that the
lessee, 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 under lease 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. Some of the
Partnership's equipment is leased under long-term lease
agreements. Unlike master lease agreements, long-term lease
agreements provide for containers to be leased for periods of
between three to five years. Such leases are generally cancelable
with a penalty at the end of each twelve-month period. Under
direct finance leases, the containers are usually leased from the
Partnership for the remainder of the container's useful life with
a purchase option at the end of the lease term. Direct finance
leases currently cover a minority of the Partnership's equipment.
For a more detailed discussion of the leases for the Registrant's
equipment, see "Leasing Policy" under "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) No single lessee generated lease revenue for the years ended
December 31, 2001, 2000 and 1999 which was 10% or more of
the total revenue of the Registrant.
(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 88% of the total
equipment held by all container leasing companies. The top two
container leasing companies combined control approximately 31% 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
manages approximately 13% of the equipment held by all container
leasing companies. The customers for leased containers are
primarily international shipping lines. The Registrant alone is
not a material participant in the worldwide container leasing
market. The principal methods of competition are price,
availability and the provision of worldwide service to the
international shipping community. Competition in the container
leasing market has increased over the past few years. Since 1996,
shipping alliances and other operational consolidations among
shipping lines have allowed shipping lines to begin operating
with fewer containers, thereby decreasing the demand for leased
containers and allowing lessees to gain concessions from lessors
about price, special charges or credits and, in certain markets,
the age specification of the containers rented. Furthermore,
primarily as a result of lower new container prices and low
interest rates, shipping lines now own, rather than lease, a
higher percentage of containers. The decrease in demand from
shipping lines, along with the entry of new leasing company
competitors offering low container rental rates, has increased
competition among container lessors such as the Registrant.
(c)(1)(xi) Inapplicable.
(c)(1)(xii) Inapplicable.
(c)(1)(xiii) The Registrant has no employees. Textainer Financial Services
Corporation (TFS), a wholly owned subsidiary of Textainer
Capital Corporation (TCC), the Managing General Partner
of the Registrant, is responsible for the overall management of
the business of the Registrant and at December 31, 2001 had 4
employees. Textainer Equipment Management Limited (TEM), an
Associate General Partner, is responsible for the management of
the leasing operations of the Registrant and at December 31, 2001
had a total of 157 employees.
(d) Financial Information About Foreign and Domestic Operations
and Export Sales.
The Registrant is involved in leasing containers to international
shipping companies for use in world trade. Approximately 16%, 16%
and 14% of the Registrant's rental revenue during the years ended
December 31, 2001, 2000, and 1999, respectively, was derived from
operations sourced or terminated domestically. These percentages
do not reflect the proportion of the Partnership's income from
operations generated domestically or 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" in the Registrant's prospectus, as
supplemented, and for a discussion of the risks of leasing
containers for use in world trade see "Risk Factors and
Forward-Looking Statements" in Item 7 herein.
ITEM 2. PROPERTIES
As of December 31, 2001, the Registrant owned the following types and quantities
of equipment:
20-foot standard dry freight containers 2,463
40-foot standard dry freight containers 4,444
40-foot high cube dry freight containers 4,083
------
10,990
======
During December 2001, approximately 65% of these containers were on lease to
international shipping companies, and the balance were being stored primarily at
a large number of storage depots located worldwide. At December 31, 2001
approximately 11% of the Partnership's off-lease equipment had been identified
as for sale. Generally, the Partnership sells containers (i) that have reached
the end of their useful lives or (ii) that an analysis indicates that their sale
is otherwise warranted. The Partnership expects more containers to be identified
as for sale for these reasons and as the Partnership continues its liquidation
plans.
For information about the Registrant's property, see "Business of the
Partnership" in the Registrant's Prospectus, as supplemented. See also Item 7,
"Results of Operations" regarding current and possible future write-downs of
some of the Registrant's property.
ITEM 3. LEGAL PROCEEDINGS
The Registrant is not subject to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Inapplicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
ITEM 201:
(a) Market Information.
(a)(1)(i) The Registrant's limited partnership Units 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. The
program operates only when the Managing General Partner
determines, among other matters, that the payment for
redeemed units will not impair the capital or operations of
the Registrant.
(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, 2002, there were 4,543 holders of
record of limited partnership interests in the Registrant.
(b)(2) Inapplicable.
(c) Dividends.
Inapplicable.
From January 1, 2001 through June 30, 2001, the Registrant was paying monthly
distributions to its limited partners at an annualized rate equal to 8% of a
Unit's initial cost, or $1.60 per Unit. Effective July, 2001, when the
Registrant began its liquidation phase, the Registrant made monthly
distributions to its limited partners in an amount equal to the Registrant's
excess cash, after redemptions and working capital reserves. From the beginning
of the liquidation phase, through December 31, 2001, the Registrant paid
distributions at an annualized rate equal to 11.7% of a Unit's initial cost or
$2.34 per Unit per year. For information about the amount of distributions paid
during the five most recent fiscal years, see Item 6, "Selected Financial Data."
ITEM 701: Inapplicable.
ITEM 6. SELECTED FINANCIAL DATA
(Amounts in thousands except for per unit amounts)
Years Ended December 31,
---------------------------------------------------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Rental income....................... $ 6,053 $ 7,772 $ 8,133 $ 10,031 $ 10,433
Income from operations.............. $ 459 $ 2,436 $ 857 $ 2,393 $ 2,640
Net earnings........................ $ 515 $ 2,566 $ 957 $ 2,492 $ 2,715
Net earnings per unit
of limited partner
interest.......................... $ 0.12 $ 0.68 $ 0.24 $ 0.63 $ 0.71
Distributions per unit of
limited partner
interest.......................... $ 1.97 $ 1.60 $ 1.60 $ 1.60 $ 1.60
Distributions per unit of
limited partner
interest representing
a return of capital............... $ 1.85 $ 0.92 $ 1.36 $ 0.97 $ 0.89
Total assets........................ $ 22,671 $ 29,763 $33,676 $ 38,644 $ 42,865
ITEM 7. 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 years ended December 31, 2001,
2000 and 1999. Please refer to the Financial Statements and Notes thereto in
connection with the following discussion.
Textainer Financial Services Corporation (TFS) is the Managing General Partner
of the Partnership and is a wholly-owned subsidiary of Textainer Capital
Corporation (TCC). Textainer Equipment Management Limited (TEM) and Textainer
Limited (TL) are Associate General Partners of the Partnership. The General
Partners manage and control the affairs of the Partnership.
Liquidity and Capital Resources
From November 8, 1989 until January 15, 1991, the Partnership offered limited
partnership interests to the public. The Partnership received its minimum
subscription amount of $1,000 on December 19, 1989, and on January 15, 1991, the
Partnership had received its maximum subscription amount of $75,000.
In July 2001, the Partnership entered its liquidation phase, which may last from
two to six or more years depending on whether the containers are sold (i) in one
or more large transactions or (ii) gradually, either as they reach the end of
their useful marine lives or when an analysis indicates that their sale is
warranted based on existing market conditions and the container's age, location
and condition. The Partnership anticipates that all excess cash, after
redemptions and working capital reserves, will be distributed to the general and
limited partners on a monthly basis. These distributions will consist of cash
from operations and/or cash from sales proceeds. Additionally, the first
distribution paid during the liquidation period included cash from reserves, as
the General Partners decided to decrease the Partnership's working capital
reserves since the Partnership had begun its liquidation phase. Subsequent
distributions did not include such amounts and were significantly lower as a
result.
As the Partnership's container fleet decreases, cash from operations is expected
to decrease, while cash from sales proceeds is expected to fluctuate based on
the number of containers sold and the actual sales price per container received.
Consequently, the Partnership anticipates that a large portion of all future
distributions will be a return of capital.
To date, the Partnership has sold containers only gradually, rather than in
large transactions.
The final termination and winding up of the Partnership, as well as payment of
liquidating and/or final distributions, will occur at the end of the liquidation
phase when all or substantially all of the Partnership's containers have been
sold and the Partnership begins its dissolution.
The Partnership invests working capital, cash flow from operating and investing
activities prior to its distribution to the partners in short-term, liquid
investments. Rental income is the Partnership's principal source of liquidity
and provides a major source of funds for distributions. Rental income has been
adversely affected by current market conditions for leased containers, and these
market conditions may continue or worsen. Market conditions are discussed more
fully in "Results of Operations." 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 year ended December 31, 2001, the Partnership declared cash
distributions to limited partners pertaining to the period from December 2000
through November 2001 in the amount of $7,257. Distributions from January
through June of 2001 represented 8% of original capital (measured on an
annualized basis). Distributions made after June 2001 are liquidating
distributions, and were equal to an annualized rate of 11.7% of the limited
partners original investment. On a financial statement basis, after paying
redemptions, $6,923 of these distributions was a return of capital and the
balance was from net earnings. On a cash basis, $3,948 of these distributions
was from current year operating activities, $831 was from cash provided by
previous years' operations that had not been distributed or used to purchase
containers or redeem units and the remainder was a return of capital.
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 year ended December 31, 2001, the
Partnership redeemed 17,521 units for a total dollar amount of $106. The
Partnership used cash flow from operations to pay for the redeemed units.
Net cash provided by operating activities for the years ended December 31, 2001
and 2000, was $4,129 and $5,847, respectively. The decrease of $1,718, or 29%,
was primarily attributed to the decrease in net earnings, adjusted for non-cash
transactions, offset by the fluctuations in due from affiliates, net. Net
earnings, adjusted for non-cash transactions, decreased primarily due to the
decrease in rental income and the increase in direct container expenses. These
fluctuations are discussed more fully in "Results of Operations". The
fluctuations in due from affiliates, net, resulted from timing differences in
payment of expenses, fees, and distributions, and the remittance of net rental
revenues and sales proceeds, as well as in fluctuations in these amounts.
For the year ended December 31, 2001 net cash provided by investing activities
(the purchase and sale of containers) was $1,932 compared to net cash used in
investing activities of $107 for the same period in 2000. The fluctuation of
$2,039 was due to the decrease in cash used for container purchases of $2,184,
offset by the decrease in proceeds from container sales of $145. Cash used for
container purchases decreased as the Partnership did not purchase containers
during the year ended December 31, 2001. The Partnership sold more containers in
low demand locations during the year ended December 31, 2001 than in the same
period in 2000, but a decrease in the average sales price resulted in a decrease
in total proceeds from container sales during the year ended December 31, 2001
as compared to the same period in 2000. The sales price received on container
sales continued to decrease as a result of current market conditions, which have
adversely affected the value of used containers. Additionally, some of the
containers sold during the year ended December 31, 2001 were driven by the
Partnership's liquidation plans discussed above, as well as by adverse market
conditions in low demand locations. The sale of containers in these locations,
the decline in value of used containers, and the related market conditions are
discussed more fully under "Results of Operations".
Due, in part, to these market conditions and their effect on demand for used
containers, the Partnership has been primarily selling containers only if the
containers are at the end of their useful lives or if they are located in these
low demand locations. Therefore, and as noted above, the Partnership has
implemented its liquidation phase to date by selling containers gradually. The
Partnership will continue to evaluate its options for selling containers in the
context of both these market conditions and the Partnership's liquidation plans.
The number of containers sold both in low demand locations and elsewhere, as
well as the amount of sales proceeds, will affect how much the Partnership will
pay in future distributions to Partners.
Results of Operations
The Partnership's income from operations, which consists primarily of rental
income less costs and expenses (including container depreciation, direct
container expenses, management fees and reimbursement of administrative
expenses) was directly related to the size of the container fleet during the
years ended December 31, 2001, 2000 and 1999, as well as certain other factors
as discussed below. The following is a summary of the container fleet (in units)
available for lease during those periods:
2001 2000 1999
---- ---- ----
Beginning container fleet............ 13,243 14,269 16,281
Ending container fleet............... 10,990 13,243 14,269
Average container fleet.............. 12,117 13,756 15,275
The average container fleet decreased 12% and 10% from the years ended December
31, 2000 to 2001 and from December 31, 1999 to 2000, respectively, primarily due
to continuing sales of containers (i) that had reached the end of their useful
lives or (ii) that an analysis had indicated their sale was otherwise warranted.
Included in this second group were containers located in low demand locations.
The Partnership expects that the size of its containers fleet will further
decline as additional containers are sold for these reasons and as the
Partnership continues its liquidation plans. The declines in the container fleet
have contributed to overall declines in rental income from the years ended
December 31, 2000 to 2001 and December 31, 1999 to 2000. These declines are
expected to continue in future years, as the size of the Partnership's container
fleet continues to decrease.
Rental income and direct container expenses are also affected by the average
utilization of the container fleet, which was 70%, 81% and 73% during the years
ended December 31, 2001, 2000 and 1999, respectively. The remaining container
fleet is off-lease and is being stored primarily at a large number of storage
depots. At December 31, 2001, the Partnership's off-lease containers (in units)
were located in the following locations:
America 1,105
Europe 403
Asia 2,250
-----
Total off-lease containers 3,758
=====
At December 31, 2001 approximately 11% of the Partnership's off-lease containers
had been specifically identified as for sale.
In addition to utilization, rental income is affected by daily rental rates,
which have decreased slightly between the periods, as described below.
The following is a comparative analysis of the results of operations for the
years ended December 31, 2001, 2000 and 1999.
The Partnership's income from operations for the years ended December 31, 2001
and 2000 was $459 and $2,436, respectively, on rental income of $6,053 and
$7,772, respectively. The decrease in rental income of $1,719, or 22%, from the
year ended December 31, 2000 to the comparable period in 2001 was attributable
to the decrease in container rental income, offset by the increase in other
rental income, which is discussed below. Income from container rentals, the
major component of total revenue, decreased $1,781, or 25%, primarily due to
decreases in the average on-hire utilization of 14%, the average container fleet
of 12% and average rental rates of 3% between the periods. The majority of the
Partnership's rental income was generated from the leasing of the Partnership's
containers under master operating leases. The Partnership also leases containers
under direct finance leases and at December 31, 2001, 2000 and 1999, there were
99, 231 and 246 containers under direct finance leases, respectively. Rental
income from direct finance leases was $9, $33 and $79 during the years ended
December 31, 2001, 2000 and 1999, respectively.
The Partnership's income from operations for the years ended December 31, 2000
and 1999 was $2,436 and $857, respectively, on rental income of $7,772 and
$8,133, respectively. The decrease in rental income of $361, or 4%, from the
year ended December 31, 1999 to the year ended December 31, 2000 was primarily
attributable to a decrease in other rental income. Income from container rentals
was comparable for both periods as the effect of the decreases in the average
container fleet of 10% and average rental rates of 4% were offset by the
increase in average utilization of 11%.
In the fourth quarter of 2000, utilization began to decline and continued to
decline during 2001 and into the beginning of 2002. This decline was due to
lower overall demand by shipping lines for leased containers, which is primarily
a result of the worldwide economic slowdown. Two other factors are currently
reducing the demand for leased containers. Shipping lines have added larger
vessels to their fleets, which combined with lower cargo volume growth, has made
it easier for them to use otherwise empty vessel space to reposition their own
containers back to high demand locations. Additionally, in anticipation of the
delivery of these new, larger vessels, many shipping lines placed large orders
for new containers in 2000 and 2001, thus temporarily reducing their need to
lease containers. These orders for additional containers are part of a general
increase in vessel capacity for the shipping lines. This increase in vessel
capacity amounted to 12% in 2001. An additional increase in vessel capacity of
approximately 12% is expected in 2002, because the shipping lines placed orders
for additional ships before recognizing the slowdown in world trade. To the
extent that this increased vessel capacity remains underutilized, shipping lines
may seek to cut costs in order to sustain profits or reduce losses, which may
put further downward pressure on demand for containers.
As a result of the lower demand, the trade imbalance between Asia and North
America and Asia and Europe has eased slightly. Combined with the excess vessel
capacity, these factors have made it easier, although not necessarily less
expensive, to reposition containers. During the year ended December 31, 2001,
the Partnership was able to reposition newer containers from low demand
locations in North America and Europe to historically higher demand locations in
Asia. As a consequence, the build-up of containers in North America and Europe,
which persisted over the past several years, has eased slightly. For the number
of off-lease containers located in the lower demand locations of America and
Europe, see chart above.
Nevertheless, the Partnership continues to sell (rather than reposition) some
containers located in low demand locations. The decision to sell containers is
based on the current expectation that the economic benefit of selling these
containers is greater than the estimated economic benefit of continuing to own
these containers. The majority of the containers sold during the year ended
December 31, 2001 and 2000 were older containers. The expected economic benefit
of continuing to own these containers was significantly less than that of newer
containers. This was due to their shorter remaining marine life, the cost to
reposition them and the shipping lines' preference for leasing newer containers
when they have a choice.
Once the decision had been made to sell containers, the Partnership wrote down
the value of these specifically identified containers to their estimated fair
value, which was based on recent sales prices less cost of sales. Due to
unanticipated declines in container sales prices, the actual sales prices
received on some containers were lower than the estimates used for the
write-down, resulting in the Partnership incurring losses upon the sale of some
of these containers. Until market conditions improve, the Partnership may incur
further write-downs and/or losses on the sale of such containers. Should the
decline in economic value of continuing to own such containers turn out to be
permanent, the Partnership may be required to increase its depreciation rate or
write-down the value of some or all of its container rental equipment.
Despite the decline in demand for leased containers discussed above and the
decline in new container purchase prices, rental rates were comparable during
these periods. Until such time as the worldwide economies improve, particularly
those of the United States and Europe, and cargo volumes increase to the point
where this year's 12% increase in worldwide vessel capacity is absorbed, there
may be no significant improvements in utilization or rental rates.
The General Partners do not foresee material changes in existing market
conditions for the near term. Should there be a worldwide recession, demand for
leased containers could decline further and result in a decline in lease rates
and further declines in utilization and container sale prices, adversely
affecting the Partnership's operating results.
Other rental income consists of other lease-related items, primarily income from
charges to lessees for dropping off containers in surplus locations less credits
granted to lessees for leasing containers from surplus locations (location
income), income from charges to lessees for handling related to leasing and
returning containers (handling income) and income from charges to lessees for a
Damage Protection Plan (DPP). For the year ended December 31, 2001, other rental
income was $778, an increase of $62 from the equivalent period in 2000. The
increase in other rental income was primarily due to the increase in location
income of $122, partially offset by the decrease in handling income of $67.
Location income increased, despite the decrease in average fleet size, due to
(i) the increase in charges to lessees for dropping off containers in certain
locations; and (ii) the decrease in credits granted to lessees for picking up
containers from surplus locations as there were fewer lease-out opportunities
for which credits could be offered. Handling income declined due to the decrease
in container movement, offset by the increase in the average handling price
charged per container during the year ended December 31, 2001 compared to the
same period in 2000.
For the year ended December 31, 2000, the total of these other rental income
items was $716, a decrease of $358 from the equivalent period in 1999. The
decrease was primarily due to the decline in fleet size and additional decreases
in DPP and location income of $173 and $129, respectively. The decline in DPP
income was due to decreases in the average DPP price charged per container and
in the number of containers covered under DPP. The further decline in location
income was primarily due to a decrease in charges to lessees for dropping off
containers in certain locations.
Direct container expenses increased $406, or 32%, from the year ended December
31, 2000 to the equivalent period in 2001, despite the decrease in average fleet
size. The increase was primarily due to increases in storage and maintenance
expenses of $283 and $103, respectively. Storage expense increased due to the
decrease in average utilization noted above and an increase in the average
storage cost per container. Maintenance expense increased primarily as the
amortization of the reserves for warranty claims, which reduced maintenance
expense, were fully amortized during 2000.
Direct container expenses decreased $758, or 37%, from the year ended December
31, 1999 to the same period in 2000. The decrease was primarily due to declines
in storage, DPP and handling expenses of $336, $275 and $99, respectively. The
decreases in these expenses, as well as other direct container expenses, was
partially due to the overall decrease in the average container fleet. Storage
expense further declined due to the improvement in utilization noted above and a
lower average storage cost per container. DPP expense declined due to decreases
in the average repair cost per DPP container and in the number of containers
covered under DPP. Handling expense decreased due to the decrease in container
movement and a lower average handling cost per container.
Bad debt (benefit) expense was ($21), ($44) and $124 for the years ended
December 31, 2001, 2000 and 1999, respectively. The fluctuations in bad debt
benefit/expense reflect the required adjustment to the bad debt reserve and are
based on management's then current estimates of the portion of accounts
receivable that may not be collected, and which will not be covered by
insurance. These estimates are based primarily on management's current
assessment of the financial condition of the Partnership's lessees and their
ability to make their required payments. The benefits recorded during the years
ended December 31, 2001 and 2000 reflect lower reserve requirements from the
previous year and the expense recorded during the year ended December 31, 1999
reflects a greater reserve requirement from the previous year.
Depreciation expense decreased $297, or 11%, and $403, or 13%, from the years
ended December 31, 2000 to 2001 and December 31, 1999 to 2000, respectively.
These decreases were primarily due to the smaller average fleet size and certain
containers, acquired used, which have been fully depreciated.
New container prices steadily declined from 1995 through 1999. Although
container prices increased in 2000, these prices declined again in 2001. As a
result, the cost of new containers purchased in recent years is significantly
less than the average cost of containers purchased in prior years. The
Partnership evaluated the recoverability of the recorded amount of container
rental equipment at December 31, 2001 and 2000 for containers to be held for
continued use and determined that a reduction to the carrying value of these
containers was not required. The Partnership also evaluated the recoverability
of the recorded amount of containers identified for sale in the ordinary course
of business and determined that a reduction to the carrying value of these
containers was required. The Partnership wrote down the value of these
containers to their estimated fair value, which was based on recent sales prices
less cost to sell. During the years ended December 31, 2001, 2000 and 1999 the
Partnership recorded write-down expenses of $399, $255 and $376, respectively on
1,023, 631 and 1,040 containers identified as for sale and requiring a reserve.
At December 31, 2001 and 2000, the net book value of the 415 and 168 containers
identified as for sale was $493 and $201, respectively.
The Partnership sold 816 of these previously written down containers for a loss
of $27 during the year ended December 31, 2001 and sold 716 previously written
down containers for a loss of $21 during the same period in 2000. During the
year ended December 31, 1999 the Partnership sold 1,790 previously written down
containers for a loss of $98. The Partnership incurred losses on the sale of
some containers previously written down as the actual sales prices received on
these containers were lower than the estimates used for the write-downs,
primarily due to unexpected declines in container sale prices.
The Partnership also sold containers that had not been written down and recorded
(gains)/losses of $108, ($130) and $189 during the years ended December 31,
2001, 2000 and 1999, respectively.
As more containers are subsequently identified as for sale or if container sales
prices continue to decline, the Partnership may incur additional write-downs on
containers and/or may incur losses on the sale of containers. The Partnership
will continue to evaluate the recoverability of the recorded amount of container
rental equipment and cautions that a write-down of container rental equipment
and/or an increase in its depreciation rate may be required in future periods
for some or all of its container rental equipment.
Management fees to affiliates decreased $177 or 22% from the year ended December
31, 2000 to 2001. The decrease was primarily due to decreases in both equipment
and incentive management fees. Equipment management fees, which are based
primarily on gross revenue, decreased as a result of the decrease in rental
income and were approximately 7% of rental income for both the years ended
December 31, 2001 and 2000. Incentive management fees, which are based on the
Partnership's limited and general partner distributions made from cash from
operations and partners' capital decreased $56 primarily due to the decrease in
the amount of distributions paid from cash from operations between the two
periods.
Management fees to affiliates decreased $31 or 4% from the year ended December
31, 1999 to 2000. The decrease was due to the decrease in equipment management
fees, which decreased as a result of the decrease in rental income. These fees
were approximately 7% of rental income for both periods. Incentive management
fees were comparable at $250 for both the years ended December 31, 2000 and
1999.
General and administrative costs to affiliates decreased $87 or 23%, and $38 or
9%, from the years ended December 31, 2000 to 2001 and December 31, 1999 to
2000, respectively. These decreases were primarily due to the decrease in
overhead costs allocated by TEM, as the Partnership represented a smaller
portion of the total fleet managed by TEM.
The Partnership Agreement provides for the ongoing payment to the General
Partners of the management fees and the reimbursement of the expenses discussed
above. Since these fees and expenses are established by the Agreement, they
cannot be considered the result of arms' length negotiations with third parties.
The Partnership Agreement was formulated at the Partnership's inception and was
part of the terms upon which the Partnership solicited investments from its
limited partners. The business purpose of paying the General Partners these fees
is to compensate the General Partners for the services they render to the
Partnership. Reimbursement for expenses is made to offset some of the costs
incurred by the General Partners in managing the Partnership and its container
fleet. More details about these fees and expenses are included in footnote 2 to
the Financial Statements.
Gain/loss on sale of containers fluctuated from a gain of $109 during the year
ended December 31, 2000 to a loss of $135 during the comparable period in 2001.
The fluctuation in gain/loss on sale of containers was primarily due to the
Partnership selling more containers at a lower average sale price during the
year ended December 31, 2001 compared to the same period in 2000, which resulted
in the Partnership selling containers at a loss during the year ended December
31, 2001.
Gain/loss on sale of containers fluctuated from a loss of $287 during the year
ended December 31, 1999 to a gain of $109 during the comparable period in 2000.
The fluctuation was primarily due to the Partnership selling fewer containers at
a slightly higher average sales price during the year ended December 31, 2000
than in the same period in 1999. The decline in the number of container sold was
primarily due to there being fewer lower demand locations and fewer containers
in these locations, the latter resulting primarily from previous sales efforts.
Net earnings per limited partnership unit decreased from $0.68 to $0.12 from the
year ended December 31, 2000 to 2001, respectively, reflecting the decrease in
net earnings allocated to limited partners from $2,504 to $440, respectively.
Net earnings per limited partnership unit increased from $0.24 to $0.68 from the
year ended December 31, 1999 to 2000, respectively, reflecting the increase in
net earnings allocated to limited partners from $894 to $2,504, respectively.
The allocation of net earnings for the years ended December 31, 2001, 2000 and
1999 included a special allocation to General Partners of $70, $36 and $53,
respectively, in accordance with the Partnership Agreement.
Critical Accounting Policies and Estimates
The Partnership's discussion and analysis of its financial condition and results
of operations are based upon the Partnership's financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. 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. The Partnership's management evaluates its estimates on an
on-going basis, including those related to the container rental equipment,
accounts receivable, and accruals.
These estimates are based on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments regarding the carrying
values of assets and liabilities. Actual results could differ from those
estimates under different assumptions or conditions.
The Partnership's management believes the following critical accounting policies
affect its more significant judgments and estimates used in the preparation of
its financial statements.
The Partnership maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its lessees to make required payments. These
allowances are based on management's current assessment of the financial
condition of the Partnership's lessees and their ability to make their required
payments. If the financial condition of the Partnership's lessees were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required, which would adversely affect the
Partnership's operating results.
The Partnership depreciates its container rental equipment based on certain
estimates related to the container's useful life and salvage value. These
estimates are based upon assumptions about future demand for leased containers
and the estimated sales price at the end of the container's useful life. If
these estimates were subsequently revised based on permanent changes in the
container leasing market, the Partnership would revise its depreciation policy,
which could adversely affect the Partnership's operating results.
Additionally, the recoverability of the recorded amounts of containers is
evaluated to ensure that the recorded amount does not exceed the estimated fair
value of the containers. If it is determined that the recorded amount exceeds
the estimated fair value, the Partnership writes down the value of those
containers. In determining the estimated fair value, assumptions are made
regarding future demand and market conditions for leased containers as well as
for used containers and the sales prices for used containers. If actual market
conditions are less favorable than those projected or if actual sales prices are
lower than those estimated by the Partnership, additional write-downs may be
required. Any additional write-downs would adversely affect the Partnership's
operating results.
Accounting Pronouncement
In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 144, "Accounting for Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 supercedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets to be Disposed of", and
elements of Accounting Principles Board Opinion 30, "Reporting the Results of
Operations - Reporting the Effects on Disposal of a Segment of a Business and
Extraordinary, Unusual or Infrequently Occurring Events and Transactions."
SFAS No. 144 establishes a single-accounting model for long-lived assets to be
disposed of while maintaining many of the provisions relating to impairment
testing and valuation. The Statement will be effective on January 1, 2002 and
the Partnership is currently assessing the impact adoption will have on the
financial condition and operating results of the Partnership.
Risk Factors and Forward Looking Statements
Although substantially all of the Partnership's income from operations is
derived from assets employed in foreign operations, virtually all of this income
is denominated in United States dollars. The Partnership's customers are
international shipping lines, which transport goods on international trade
routes. The domicile of the lessee is not indicative of where the lessee is
transporting the containers. The Partnership's business risk in its foreign
operations lies with the creditworthiness of the lessees, and the Partnership's
ability to keep its containers under lease, rather than the geographic location
of the containers or the domicile of the lessees. The containers are generally
operated on the international high seas rather than on domestic waterways. The
containers are subject to the risk of war or other political, economic or social
occurrence where the containers are used, which may result in the loss of
containers, which, in turn, may have a material impact on the Partnership's
results of operations and financial condition.
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, including bad debts, increases in maintenance expenses or other
costs of operating the containers, and the effect of world trade, industry
trends and/or general business and economic cycles on the Partnership's
operations. See "Risk Factors" in the Partnership's Prospectus, as supplemented,
for additional information on risks of the Partnership's business. See "Critical
Accounting Policies and Estimates" above for information on the Partnership's
critical accounting policies and how changes in those estimates could adversely
affect the Partnership's results of operations
The foregoing includes forward-looking statements and predictions about possible
or future events, results of operations and financial condition. These
statements and predictions may prove to be inaccurate, because of the
assumptions made by the Partnership or the General Partners or the actual
development of future events. No assurance can be given that any of these
forward-looking statements or predictions will ultimately prove to be correct or
even substantially correct. The risks and uncertainties in these forward-looking
statements include, but are not limited to, changes in demand for leased
containers, changes in global business conditions and their effect on world
trade, future modifications in the way in which the Partnership's lessees
conduct their business or of the profitability of their business, increases or
decreases in new container prices or the availability of financing therefor,
alterations in the costs of maintaining and repairing used containers, increases
in competition, changes in the Partnership's ability to maintain insurance for
its containers and its operations, the effects of political conditions on
worldwide shipping and demand for global trade or of other general business and
economic cycles on the Partnership, as well as other risks detailed herein and
from time to time in the Partnership's filings with the Securities and Exchange
Commission. The Partnership does not undertake any obligation to update
forward-looking statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Inapplicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
Attached pages 16 to 30.
Independent Auditors' Report
----------------------------
The Partners
Textainer Equipment Income Fund II, L.P.:
We have audited the accompanying balance sheets of Textainer Equipment Income
Fund II, L.P. (a California limited partnership) as of December 31, 2001 and
2000, and the related statements of earnings, partners' capital and cash flows
for each of the years in the three-year period ended December 31, 2001. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit 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
II, L.P. as of December 31, 2001 and 2000, and the results of its operations,
its partners' capital, and its cash flows for each of the years in the
three-year period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America.
/s/ KPMG LLP
San Francisco, California
February 11, 2002
TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)
Balance Sheets
December 31, 2001 and 2000
(Amounts in thousands)
- ------------------------------------------------------------------------------------------------------------
2001 2000
--------------- --------------
Assets
Container rental equipment, net of accumulated
depreciation of $16,028 (2000: $18,108) $ 21,072 $ 25,980
Cash 266 1,652
Net investment in direct finance leases (note 4) 99 123
Accounts receivable, net of allowance
for doubtful accounts of $114 (2000: $219) 1,069 1,514
Due from affiliates, net (note 2) 155 484
Prepaid expenses 10 10
--------------- --------------
$ 22,671 $ 29,763
=============== ==============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 200 $ 198
Accrued liabilities 166 205
Accrued damage protection plan costs (note 1(j)) 107 151
Accrued recovery costs (note 1(l)) 93 88
Deferred quarterly distributions (note 1(g)) 61 66
Container purchases payable - 88
--------------- --------------
Total liabilities 627 796
--------------- --------------
Partners' capital:
General partners - -
Limited partners 22,044 28,967
--------------- --------------
Total partners' capital 22,044 28,967
--------------- --------------
$ 22,671 $ 29,763
=============== ==============
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)
Statements of Earnings
Years ended December 31, 2001, 2000, and 1999
(Amounts in thousands except for unit and per unit amounts)
- ------------------------------------------------------------------------------------------------------------------------------------
2001 2000 1999
----------------- ------------------ -----------------
Rental income $ 6,053 $ 7,772 $ 8,133
----------------- ------------------ -----------------
Costs and expenses:
Direct container expenses 1,673 1,267 2,025
Bad debt (benefit) expense (21) (44) 124
Depreciation (note 1(e)) 2,360 2,657 3,060
Write-down of containers (note 1(e)) 399 255 376
Professional fees 30 60 76
Management fees to affiliates (note 2) 613 790 821
General and administrative costs to affiliates (note 2) 284 371 409
Other general and administrative costs 121 89 98
Loss (gain) on sale of containers 135 (109) 287
----------------- ------------------ -----------------
5,594 5,336 7,276
----------------- ------------------ -----------------
Income from operations 459 2,436 857
----------------- ------------------ -----------------
Other income:
Interest income 56 130 100
----------------- ------------------ -----------------
56 130 100
----------------- ------------------ -----------------
Net earnings $ 515 $ 2,566 $ 957
================= ================== =================
Allocation of net earnings (note 1(g)):
General partners $ 75 $ 62 $ 63
Limited partners 440 2,504 894
----------------- ------------------ -----------------
$ 515 $ 2,566 $ 957
================= ================== =================
Limited partners' per unit share
of net earnings $ 0.12 $ 0.68 $ 0.24
================= ================== =================
Limited partners' per unit share
of distributions $ 1.97 $ 1.60 $ 1.60
================= ================== =================
Weighted average number of limited
partnership units outstanding (note 1(m)) 3,688,232 3,704,302 3,712,428
================= ================== =================
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)
Statements of Partners' Capital
Years ended December 31, 2001, 2000, and 1999
(Amounts in thousands)
- --------------------------------------------------------------------------------------------------------------
Partners' Capital
----------------------------------------------------------
General Limited Total
--------------- -------------- ---------------
Balances at December 31, 1998 $ - $ 37,568 $ 37,568
Distributions (63) (5,940) (6,003)
Redemptions (note 1(n)) - (18) (18)
Net earnings 63 894 957
--------------- -------------- ---------------
Balances at December 31, 1999 - 32,504 32,504
--------------- -------------- ---------------
Distributions (62) (5,929) (5,991)
Redemptions (note 1(n)) - (112) (112)
Net earnings 62 2,504 2,566
--------------- -------------- ---------------
Balances at December 31, 2000 - 28,967 28,967
--------------- -------------- ---------------
Distributions (75) (7,257) (7,332)
Redemptions (note 1(n)) - (106) (106)
Net earnings 75 440 515
--------------- -------------- ---------------
Balances at December 31, 2001 $ - $ 22,044 $ 22,044
=============== ============== ===============
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)
Statements of Cash Flows
Years ended December 31, 2001, 2000, and 1999
(Amounts in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
2001 2000 1999
--------------- -------------- --------------
Cash flows from operating activities:
Net earnings $ 515 $ 2,566 $ 957
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and container write-down 2,759 2,912 3,436
(Decrease) increase in allowance for doubtful accounts (105) (179) 83
Loss (gain) on sale of containers 135 (109) 287
Decrease (increase) in assets:
Net investment in direct finance leases 53 244 248
Accounts receivable 550 703 70
Due from affiliates, net 298 (73) (54)
Prepaid expenses - 1 5
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities (37) 61 (11)
Accrued damage protection plan costs (44) (121) 50
Warranty claims - (172) (213)
Accrued recovery costs 5 14 26
--------------- -------------- --------------
Net cash provided by operating activities 4,129 5,847 4,884
--------------- -------------- --------------
Cash flows from investing activities:
Proceeds from sale of containers 2,031 2,176 3,295
Container purchases (99) (2,283) (1,893)
--------------- -------------- --------------
Net cash provided by (used in) investing activities 1,932 (107) 1,402
--------------- -------------- --------------
Cash flows from financing activities:
Redemptions of limited partnership units (106) (112) (18)
Distributions to partners (7,341) (5,994) (6,002)
--------------- -------------- --------------
Net cash used in financing activities (7,447) (6,106) (6,020)
--------------- -------------- --------------
Net (decrease) increase in cash (1,386) (366) 266
Cash at beginning of period 1,652 2,018 1,752
--------------- -------------- --------------
Cash at end of period $ 266 $ 1,652 $ 2,018
=============== ============== ==============
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)
Statements of Cash Flows--Continued
Years ended December 31, 2001, 2000 and 1999
(Amounts in thousands)
- --------------------------------------------------------------------------------
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 December 31, 2001, 2000, 1999 and 1998,
resulting in differences in amounts recorded and amounts of cash disbursed or
received by the Partnership, as shown in the Statements of Cash Flows.
2001 2000 1999 1998
---- ---- ---- ----
Container purchases included in:
Due to affiliates........................................ $ - $ - $ - $ 34
Container purchases payable.............................. - 88 243 -
Distributions to partners included in:
Due to affiliates........................................ 2 6 6 6
Deferred quarterly distributions......................... 61 66 69 68
Proceeds from sale of containers
Due from affiliates...................................... 244 279 367 489
The following table summarizes the amounts of container purchases, distributions
to partners, and proceeds from sale of containers recorded by the Partnership
and the amounts paid or received as shown in the Statements of Cash Flows for
the years ended December 31, 2001, 2000, and 1999.
2001 2000 1999
---- ---- ----
Container purchases recorded.............................................. $ 11 $2,128 $2,102
Container purchases paid.................................................. 99 2,283 1,893
Distributions to partners declared........................................ 7,332 5,991 6,003
Distributions to partners paid............................................ 7,341 5,994 6,002
Proceeds from sale of containers recorded................................. 1,996 2,088 3,173
Proceeds from sale of containers received................................. 2,031 2,176 3,295
The Partnership has entered into direct finance leases, resulting in the
transfer of containers from container rental equipment to net investment in
direct finance leases. The carrying values of containers transferred during the
years ended December 31, 2001, 2000 and 1999 were $29, $52 and $96,
respectively.
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)
Notes to Financial Statements
Years ended December 31, 2001, 2000 and 1999
(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 II, L.P. (TEIF II or the Partnership),
a California limited partnership with a maximum life of 20 years, was
formed on July 11, 1989. The Partnership was formed to engage in the
business of owning, leasing and selling both new and used containers
related to the international containerized cargo shipping industry,
including, but not limited to, containers, trailers, and other
container-related equipment. TEIF II offered units representing
limited partnership interests (Units) to the public until January 15,
1991, the close of the offering period, when a total of 3,750,000
Units had been purchased for a total of $75,000.
In July 2001, the Partnership began its liquidation phase. This phase
may last from two to six or more years depending on whether the
containers are sold (i) in one or more large transactions or (ii)
gradually, either as they reach the end of their marine useful lives
or when an analysis indicates that their sale is warranted based on
existing market conditions and the container's age, location and
condition. The Partnership anticipates that all excess cash, after
redemptions and working capital reserves, will be distributed to the
limited and general partners on a monthly basis.
The final termination and winding up of the Partnership, as well as
payment of liquidating and/or final distributions, will occur at the
end of the liquidation phase when all or substantially all of the
Partnership's containers have been sold and the Partnership begins its
dissolution.
Textainer Financial Services Corporation (TFS) is the managing general
partner of the Partnership and is a wholly-owned subsidiary of
Textainer Capital Corporation (TCC). Textainer Equipment Management
Limited (TEM) and Textainer Limited (TL) are associate general
partners of the Partnership. The managing general partner and the
associate general partners are collectively referred to as the General
Partners and are commonly owned by Textainer Group Holdings Limited
(TGH). The General Partners also act in this capacity for other
limited partnerships. 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 equipment rental
contracts. These contracts are classified as operating leases or
direct finance leases if they so qualify under Statement of Financial
Accounting Standards No. 13: "Accounting for Leases".
(c) Critical Accounting Policies and Estimates
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. The Partnership's management
evaluates its estimates on an on-going basis, including those related
to the container rental equipment, accounts receivable and accruals.
These estimates are based on historical experience and on various
other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making
judgments regarding the carrying values of assets and liabilities.
Actual results could differ from those estimates under different
assumptions or conditions.
The Partnership's management believes the following critical
accounting policies affect its more significant judgments and
estimates used in the preparation of its financial statements.
The Partnership maintains allowances for doubtful accounts for
estimated losses resulting from the inability of its lessees to make
required payments. These allowances are based on management's current
assessment of the financial condition of the Partnership's lessees and
their ability to make their required payments. If the financial
condition of the Partnership's lessees were to deteriorate, resulting
in an impairment of their ability to make payments, additional
allowances may be required.
The Partnership depreciates its container rental equipment based on
certain estimates related to the container's useful life and salvage
value. These estimates are based upon assumptions about future demand
for leased containers and the estimated sales price at the end of the
container's useful life. If these estimates were subsequently revised
based on permanent changes in the container leasing market, the
Partnership would revise its depreciation policy.
Additionally, the recoverability of the recorded amounts of containers
is evaluated to ensure that the recorded amount does not exceed the
estimated fair value of the containers. If it is determined that the
recorded amount exceeds the estimated fair value, the Partnership
writes down the value of those containers. In determining the
estimated fair value, assumptions are made regarding future demand and
market conditions for leased containers as well as for used containers
and the sales prices for used containers. If actual market conditions
are less favorable than those projected or if actual sales prices are
lower than those estimated by the Partnership, additional write-downs
may be required.
(d) Fair Value of Financial Instruments
In accordance with Statement of Financial Accounting Standards 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, 2001 and 2000, the fair
value of the Partnership's financial instruments (cash, accounts
receivable and current liabilities) approximates the related book
value of such instruments.
(e) Container Rental Equipment
Container rental equipment is recorded at the cost of the assets
purchased, which includes acquisition fees, less accumulated
depreciation charged. Depreciation of new containers is computed using
the straight-line method over an estimated useful life of 12 years to
a 28% salvage value. Used containers are depreciated based upon their
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 equipment
accounts and any resulting gain or loss is recognized in income for
the period.
In accordance with Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed Of" (SFAS 121), the Partnership
periodically compares the carrying value of the containers to expected
future cash flows for the purpose of assessing the recoverability of
the recorded amounts. If the carrying value exceeds expected future
cash flows, the assets are written down to estimated fair value. In
addition, containers identified for disposal are recorded at the lower
of carrying amount or fair value less cost to sell.
New container prices steadily declined from 1995 through 1999.
Although container prices increased in 2000, these prices declined
again in 2001. As a result, the cost of new containers purchased in
recent years is significantly less than the average cost of containers
purchased in prior years. The Partnership evaluated the recoverability
of the recorded amount of container rental equipment at December 31,
2001, and 2000 for containers to be held for continued use and
determined that a reduction to the carrying value of these containers
was not required. The Partnership also evaluated the recoverability of
the recorded amount of containers identified for sale in the ordinary
course of business and determined that a reduction to the carrying
value of these containers was required. The Partnership wrote down the
value of these containers to their estimated fair value, which was
based on recent sales prices less cost of sales. During the years
ended December 31, 2001, 2000 and 1999 the Partnership recorded
write-down expenses of $399, $255 and $376, respectively on 1,023, 631
and 1,040 containers identified as for sale and requiring a reserve.
At December 31, 2001 and 2000, the net book value of the 415 and 168
containers identified as for sale was $493 and $201, respectively.
The Partnership sold 816 of these previously written down containers
for a loss of $27 during the year ended December 31, 2001 and sold 716
previously written down containers for a loss of $21 during the same
period in 2000. During the year ended December 31, 1999 the
Partnership sold 1,790 previously written down containers for a loss
of $98. The Partnership incurred losses on the sale of some containers
previously written down as the actual sales prices received on these
containers were lower than the estimates used for the write-downs,
primarily due to unexpected declines in container sale prices.
The Partnership also sold containers that had not been written down
and recorded losses/(gains) of $108, ($130) and $189 during the years
ended December 31, 2001, 2000 and 1999, respectively.
As more containers are subsequently identified for sale or if
container sales prices continue to decline, the Partnership may incur
additional write-downs on containers and/or may incur losses on the
sale of containers. The Partnership will continue to evaluate the
recoverability of the recorded amounts of container rental equipment
and cautions that a write-down of container rental equipment and/or an
increase in its depreciation rate may be required in future periods
for some or all of its container rental equipment.
In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for Impairment or Disposal of Long-Lived Assets". SFAS No.
144 supercedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets to be Disposed of", and elements of Accounting
Principles Board Opinion 30, "Reporting the Results of Operations -
Reporting the Effects on Disposal of a Segment of a Business and
Extraordinary, Unusual or Infrequently Occurring Events and
Transactions."
SFAS No. 144 establishes a single-accounting model for long-lived
assets to be disposed of while maintaining many of the provisions
relating to impairment testing and valuation. The Statement will be
effective on January 1, 2002 and the Partnership is currently
assessing the impact adoption will have on the financial condition and
operating results of the Partnership.
(f) 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. 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 rather than the
geographic location of the containers or the domicile of the lessees.
For the years ended December 31, 2001, 2000 and 1999, no single lessee
accounted for more than 10% of the Partnership's revenues.
(g) Allocation of Net Earnings and Partnership Distributions
In accordance with the Partnership Agreement, sections 3.08 through
3.12, net earnings or losses and distributions are generally allocated
1% to the General Partners and 99% to the Limited Partners. If the
allocation of distributions exceeds the allocation of net earnings and
creates a deficit in the General Partners' aggregate capital account,
the Partnership Agreement provides for a special allocation of gross
income equal to the amount of the deficit to be made to the General
Partners.
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
deferred distributions of $61 and $66 at December 31, 2001 and 2000,
respectively.
(h) 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.
(i) Acquisition Fees
In accordance with the Partnership Agreement, acquisition fees equal
to 5% of the container purchase price were paid to TEM. These fees
were capitalized as part of the cost of the containers.
(j) 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, in return, has agreed to
bear certain repair costs. It is the Partnership's policy to recognize
revenue when earned and to provide a reserve sufficient to cover the
estimated future repair costs. DPP expenses are included in direct
container expenses in the Statements of Earnings and the related
reserve at December 31, 2001 and 2000, was $107 and $151,
respectively.
(k) Warranty Claims
During 1992, 1993 and 1995, the Partnership settled warranty claims
against a container manufacturer. The Partnership was amortizing the
settlement amounts over the remaining estimated useful life of the
applicable containers (between six and seven years), reducing
maintenance and repair costs over that time. During the year ended
December 31, 2000 these amounts were fully amortized.
(l) 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 December 31, 2001 and 2000,
the amounts accrued were $93 and $88, respectively.
(m) 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 years ended December 31, 2001, 2000 and 1999,
which were 3,688,232, 3,704,302, and 3,712,428, respectively.
(n) Redemptions
The following redemption offerings were consummated by the Partnership
during the years ended December 31, 2001, 2000 and 1999:
Units Average
Redeemed Redemption Price Amount Paid
-------- ---------------- -----------
Total Partnership redemptions as of
December 31, 1998...................... 35,472 $10.85 $385
------ ----
Year ended December 31, 1999:
1st quarter...................... 2,000 $ 8.50 17
3rd quarter...................... 200 $ 6.39 1
------ ----
2,200 $ 8.18 18
------ ----
Year ended December 31, 2000:
1st quarter...................... 1,000 $ 7.00 7
3rd quarter...................... 12,579 $ 6.75 85
4th quarter...................... 2,943 $ 6.79 20
------ ----
16,522 $ 6.77 112
------ ----
Year ended December 31, 2001:
1st quarter...................... 2,843 $ 7.09 20
3rd quarter...................... 4,245 $ 6.25 27
4th quarter...................... 10,433 $ 5.66 59
------ ----
17,521 $ 6.05 106
------ ----
Total Partnership redemptions as of
December 31, 2001...................... 71,715 $ 8.66 $621
====== ====
The redemption price is fixed by formula.
Note 2. Transactions with Affiliates
As part of the operation of the Partnership, the Partnership is to pay
to the General Partners an acquisition fee, an equipment management
fee, an incentive management fee and an equipment liquidation fee.
These fees are for various services provided in connection with the
administration and management of the Partnership. No acquisition fees
were incurred during the year ended December 31, 2001. The Partnership
capitalized $101 and $100 of equipment acquisition fees as part of
container rental equipment costs during the years ended December 31,
2000 and 1999, respectively. The Partnership incurred $194, $250 and
$250 of incentive management fees during each of the three years ended
December 31, 2001, 2000 and 1999, respectively. No equipment
liquidation fees were incurred during these periods.
The Partnership's containers are managed by TEM. In its role as
manager, TEM has authority to acquire, hold, manage, lease, sell and
dispose of the containers. TEM holds, for the payment of direct
operating expenses, a reserve of cash that has been collected from
leasing operations; such cash is included in due from affiliates, net,
at December 31, 2001 and 2000.
Subject to certain reductions, TEM receives a monthly equipment
management fee equal to 7% of gross lease revenues attributable to
master operating leases and 2% of gross lease revenues attributable to
full payout net leases. For the years ended December 31, 2001, 2000
and 1999, equipment management fees totaled $419, $540, and $571,
respectively.
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 TEM and TFS. Total general and
administrative costs allocated to the Partnership were as follows:
2001 2000 1999
---- ---- ----
Salaries $171 $192 $227
Other 113 179 182
--- --- ---
Total general and
administrative costs $284 $371 $409
=== === ===
TEM allocates these general and administrative costs based on the
ratio of the Partnership's interest in the managed containers to the
total container fleet managed by TEM during the period. TFS allocates
these costs based on the ratio of the Partnership's containers to the
total container fleet of all limited partnerships managed by TFS. The
General Partners allocated the following general and administrative
costs to the Partnership:
2001 2000 1999
---- ---- ----
TEM $248 $323 $364
TFS 36 48 45
--- --- ---
Total general and
administrative costs $284 $371 $409
=== === ===
The General Partners were entitled to acquire containers in their own
name and held title on a temporary basis for the purpose of
facilitating the acquisition of such containers for the Partnership.
The containers could 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. One or more General Partners could have also
arranged for the purchase of containers in its or their names, and the
Partnership could then have taken title to the containers by paying
the seller directly. In addition, the General Partners were entitled
to an acquisition fee for containers acquired by the Partnership under
any of these arrangements.
At December 31, 2001 and 2000, due from affiliates, net, is comprised
of:
2001 2000
---- ----
Due from affiliates:
Due from TEM...................... $192 $516
--- ---
Due to affiliates:
Due to TL......................... - 1
Due to TCC........................ 14 7
Due to TFS........................ 23 24
--- ---
37 32
--- ---
Due from affiliates, net $155 $484
=== ===
These amounts receivable from and payable to affiliates were incurred
in the ordinary course of business between the Partnership and its
affiliates and represent timing differences in the accrual and
remittance of expenses, fees and distributions described above and in
the accrual and remittance of net rental revenues and container sales
proceeds from TEM.
Note 3. Lease Rental Income (unaudited)
Leasing income arises principally from the renting of containers to
various international shipping lines. Revenue is recorded when earned
according to the terms of the container rental contracts. These
contracts are typically for terms of five years or less. The following
is the lease mix of the on-lease containers (in units) at December 31,
2001 and 2000:
2001 2000
---- ----
On-lease under master leases 4,581 7,684
On-lease under long-term leases 2,651 2,892
----- ------
Total on-lease containers 7,232 10,576
===== ======
Under master lease agreements, the lessee is not committed to lease a
minimum number of containers from the Partnership during the lease
term and may generally return any portion or all the containers to the
Partnership at any time, subject to certain restrictions in the lease
agreement. Under long-term lease agreements, containers are usually
leased from the Partnership for periods of between three to five
years. Such leases are generally cancelable with a penalty at the end
of each twelve-month period. Under direct finance leases, the
containers are usually leased from the Partnership for the remainder
of the container's useful life with a purchase option at the end of
the lease term.
The remaining containers are off-lease and are being stored primarily
at a large number of storage depots in the following locations:
America 1,105
Europe 403
Asia 2,250
-----
Total off-lease containers 3,758
=====
At December 31, 2001 approximately 11% of the Partnership's off-lease
containers had been specifically identified as for sale.
Note 4. Direct Finance Leases
The Partnership has leased containers under direct finance leases with
terms ranging from two to five years. The components of the net
investment in direct finance leases at December 31, 2001 and 2000 are
as follows:
2001 2000
---- ----
Future minimum lease payments receivable..... $ 109 $ 137
Residual value............................... 2 3
Less: unearned income........................ (12) (17)
---- ----
Net investment in direct finance leases...... $ 99 $ 123
==== ====
The following is a schedule by year of minimum lease payments
receivable under the direct finance leases at December 31, 2001:
Year ending December 31:
2002...................................... $ 54
2003...................................... 41
2004...................................... 13
2005...................................... 1
---
Total minimum lease payments receivable... $ 109
===
Rental income for the years ended December 31, 2001, 2000, and 1999
includes $9, $33, and $79, respectively, of income from direct finance
leases.
Note 5. Income Taxes
At December 31, 2001, 2000 and 1999, there were temporary differences
of $15,276, $16,845, and $17,558, 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
income for federal income tax purposes for the years ended December
31, 2001, 2000 and 1999 is as follows:
2001 2000 1999
---- ---- ----
Net income per financial statements.................... $ 515 $2,566 $ 957
(Decrease) increase in provision for bad debt.......... (105) (179) 83
Depreciation for federal income tax purposes
in excess of depreciation for financial
statement purposes ................................... (373) (700) (99)
Gain on sale of fixed assets for federal income
tax purposes in excess of gain/loss recognized for
financial statement purposes.......................... 2,091 1,885 3,379
(Decrease) increase in damage protection
plan costs............................................ (44) (121) 50
Warranty reserve income for tax purposes in
excess of financial statement purposes................ - (172) (213)
----- ----- -----
Net income for
federal income tax purposes........................... $2,084 $3,279 $4,157
===== ===== =====
TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)
Selected Quarterly Financial Data
- -----------------------------------------------------------------------------------------------------------------------
The following is a summary of selected quarterly financial data for the years ended
December 31, 2001, 2000 and 1999:
(Amounts in thousands)
2001 Quarters Ended
----------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31
----------------------------------------------------------------
Rental income $1,708 $1,541 $1,485 $1,319
Income (loss) from operations $ 257 $ (24) $ 152 $ 74
Net earnings (loss) $ 282 $ (5) $ 161 $ 77
Limited partners' share of net earnings (loss) $ 266 $ (20) $ 131 $ 63
Limited partners' share of distributions $1,478 $1,477 $2,676 $1,626
2000 Quarters Ended
----------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31
----------------------------------------------------------------
Rental income $1,968 $2,025 $1,882 $1,897
Income from operations $ 502 $ 739 $ 642 $ 553
Net earnings $ 534 $ 776 $ 673 $ 583
Limited partners' share of net earnings $ 518 $ 761 $ 657 $ 568
Limited partners' share of distributions $1,485 $1,484 $1,481 $1,479
1999 Quarters Ended
----------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31
----------------------------------------------------------------
Rental income $2,103 $1,961 $2,015 $2,054
Income (loss) from operations $ 245 $ (144) $ 275 $ 481
Net earnings (loss) $ 269 $ (117) $ 298 $ 507
Limited partners' share of net earnings (loss) $ 253 $ (132) $ 282 $ 491
Limited partners' share of distributions $1,485 $1,485 $1,485 $1,485
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.
As described in the Prospectus, the Registrant's three original general partners
were TCC, TEM and Textainer Inc. (TI), which comprised the original Textainer
Group. Effective October 1, 1993, the Textainer Group restructured its
organization by forming a new holding company, Textainer Group Holdings Limited
(TGH), and the shareholders of the underlying companies which include the
General Partners accepted shares in TGH in exchange for their shares in the
individual companies. Textainer Financial Services Corporation (TFS) is the
Managing General Partner of the Partnership (prior to its name change on April
4, 1994, TFS was known as Textainer Capital Corporation). TFS is a wholly-owned
subsidiary of Textainer Capital Corporation (TCC) (prior to its name change on
April 4, 1994, TCC was known as Textainer (Delaware) Inc.). Textainer Equipment
Management Limited (TEM) is an Associate General Partner of the Partnership. TI
was an Associate General Partner of the Partnership through September 30, 1993
when it was replaced in that capacity by Textainer Limited (TL), pursuant to the
corporate restructuring effective October 1, 1993, which caused TFS, TEM and TL
to fall under the common ownership of TGH. Pursuant to this restructuring, TI
transferred substantially all of its assets including all of its rights and
duties as Associate General Partner to TL. This transfer was effective from
October 1, 1993. The end result was that TFS now serves as Managing General
Partner and TEM and TL now serve as Associate General Partners. The Managing
General Partner and Associate General Partners are collectively referred to as
the General Partners and are wholly-owned subsidiaries of TGH. The General
Partners also act in this capacity for other limited partnerships.
TFS, 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.
TEM, an Associate General Partner, manages all aspects of the operation of the
Registrant's equipment.
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 and equipment owners,
and regarding the terms upon which particular items of equipment were acquired.
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, 2001, all Section 16(a) filing requirements were complied
with. No member of management, or beneficial owner owned more than 10 percent of
any interest in the Partnership. None of the individuals subject to Section
16(a) 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:
Name Age Position
- ---- --- --------
Neil I. Jowell 68 Director and Chairman of TGH, TEM, TL, TCC and TFS
John A. Maccarone 57 President, CEO and Director of TGH, TEM, TL, TCC and TFS
James E. Hoelter 62 Director of TGH, TEM, TL, TCC and TFS
Alex M. Brown 63 Director of TGH, TEM, TL, TCC and TFS
Harold J. Samson 80 Director of TGH and TL
Philip K. Brewer 45 Senior Vice President - Asset Management Group and Director of TEM and TL
Robert D. Pedersen 42 Senior Vice President - Leasing Group, Director of TEM
Ernest J. Furtado 46 Senior Vice President , CFO and Secretary of TGH, TEM, TL, TCC and TFS,
Director of TEM, TCC and TFS
Gregory W. Coan 38 Vice President and Chief Information Officer of TEM
Wolfgang Geyer 48 Regional Vice President - Europe
Mak Wing Sing 44 Regional Vice President - South Asia
Masanori Sagara 46 Regional Vice President - North Asia
Stefan Mackula 49 Vice President - Equipment Resale
Anthony C. Sowry 49 Vice President - Corporate Operations and Acquisitions
Richard G. Murphy 49 Vice President - Risk Management
Janet S. Ruggero 53 Vice President - Administration and Marketing Services
Jens W. Palludan 51 Regional Vice President - Americas and Logistics
Isam K. Kabbani 67 Director of TGH and TL
James A. C. Owens 62 Director of TGH and TL
S. Arthur Morris 68 Director of TGH, TEM and TL
Dudley R. Cottingham 50 Assistant Secretary, Vice President and Director of TGH, TEM and TL
Nadine Forsman 34 Controller of TCC and TFS
Neil I. Jowell is Director and Chairman of TGH, TEM, TL, TCC and TFS and a
member of the Investment Advisory 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, 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 Bachelor of Commerce and L.L.B. degrees from the
University of Cape Town.
John A. Maccarone is President, CEO and Director of TGH, TEM, TL, TCC and
TFS. In this capacity he is responsible for overseeing the management of and
coordinating the activities of Textainer's worldwide fleet of marine cargo
containers and the activities of all of these corporations. Additionally, he is
Chairman of the Equipment Investment Committee, the Credit Committee and the
Investment Advisory Committee (see "Committees", below). Mr. Maccarone was
instrumental in co-founding Intermodal Equipment Associates (IEA), a marine
container leasing company based in San Francisco, 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 Bachelor of Science degree in
Engineering Management from Boston University and an M.B.A. from Loyola
University of Chicago.
James E. Hoelter is a director of TGH, TEM, TL, TCC and TFS. In addition,
Mr. Hoelter is a member of the Equipment Investment Committee and the Investment
Advisory Committee (see "Committees", below). Mr. Hoelter was the President and
Chief Executive Officer of TGH and TL from 1993 to 1998 and currently serves as
a consultant to Trencor (1999 to present). Prior to joining the Textainer Group
in 1987, Mr. Hoelter was president of IEA. Mr. Hoelter co-founded IEA in 1978
with Mr. Maccarone and was president from inception until 1987. From 1976 to
1978, Mr. Hoelter was vice president for Trans Ocean Ltd., San Francisco, a
marine container leasing company, where he was responsible for North America.
From 1971 to 1976, he worked for Itel Corporation, San Francisco, where he was
director of financial leasing for the container division. Mr. Hoelter received
his B.B.A. in finance from the University of Wisconsin, where he is an emeritus
member of its Business School's Dean's Advisory Board, and his M.B.A. from the
Harvard Graduate School of Business Administration.
Alex M. Brown is a director of TGH, TEM, TL, TCC and TFS. Additionally, he
is a member of the Equipment Investment Committee and the Investment Advisory
Committee (see "Committees", below). Among other directorships, Mr. Brown is a
director of Trencor Ltd. (1996 to present). Mr. Brown became affiliated with the
Textainer Group in April 1986. From 1987 until 1993, he was President and Chief
Executive Officer of Textainer, Inc. and the Chairman of the Textainer Group.
Mr. Brown was the managing director of Cross County Leasing in England from 1984
until it was acquired by Textainer in 1986. From 1993 to 1997, Mr. Brown was
Chief Executive Officer of AAF, a company affiliated with Trencor Ltd. Mr. Brown
was also Chairman of WACO International Corporation, based in Cleveland, Ohio
until 1997.
Harold J. Samson is a director of TGH and TL and has served as such since
the Textainer Group's reorganization and formation of these companies in 1993.
He is also a member of the Investment Advisory Committee (see "Committees",
below). Mr. Samson served as a consultant to various securities firms from 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 - Asset Management Group and
director of TEM and TL. He was President of TCC and TFS from January 1, 1998 to
December 31, 1998 until his appointment as Senior Vice President - Asset
Management Group. As President of TCC, Mr. Brewer was responsible for overseeing
the management of, and coordinating the activities of TCC and TFS. As Senior
Vice President, he is responsible for optimizing the capital structure of and
identifying new sources of finance for Textainer, as well as overseeing the
management of and coordinating the activities of Textainer's risk management,
logistics and the resale divisions. Mr. Brewer is a member of the Equipment
Investment Committee, the Credit Committee and was a member of the Investment
Advisory Committee through December 31, 1998 (see "Committees" below). Prior to
joining Textainer in 1996, as Senior Vice President - Capital Markets for TGH
and TL, 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 Senior Vice-President - Leasing Group and a Director
of TEM, responsible for worldwide sales and marketing related activities and
operations. Mr. Pedersen is a member of the Equipment Investment Committee and
the Credit Committee (see "Committees" below). He joined Textainer 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 Klinge Cool,
a manufacturer of refrigerated container cooling units (from 1989 to 1991),
where he was worldwide sales and marketing director, XTRA, a container lessor
(from 1985 to 1988) and Maersk Line, a container shipping line (from 1978 to
1984). Mr. Pedersen is a graduate of the A.P. Moller shipping and transportation
program and the Merkonom Business School in Copenhagen, majoring in Company
Organization.
Ernest J. Furtado is Senior Vice President, CFO and Secretary of TGH, TEM,
TL, TCC and TFS and a Director of TEM, TCC and TFS, in which capacity he is
responsible for all accounting, financial management, and reporting functions
for TGH, TEM, TL, TCC and TFS. Additionally, he is a member of the Investment
Advisory Committee for which he serves as Secretary, the Equipment Investment
Committee and the Credit Committee (see "Committees", below). Prior to these
positions, he held a number of accounting and financial management positions at
Textainer, of increasing responsibility. 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.
Gregory W. Coan is Vice President and Chief Information Officer of TEM. In
this capacity, Mr. Coan is responsible for the worldwide information systems of
Textainer and serves on the Credit Committee (see "Committees", below). Prior to
these positions, Mr. Coan was the Director of Communications and Network
Services from 1995 to 1999, where he was responsible for Textainer's network and
hardware infrastructure. Mr. Coan holds a Bachelor of Arts degree in political
science from the University of California at Berkeley and an M.B.A. with an
emphasis in telecommunications from Golden Gate University.
Wolfgang Geyer is based in Hamburg, Germany and is Regional Vice President
- - Europe, responsible for coordinating all leasing activities in Europe, Africa
and the Middle East/Persian Gulf. Mr. Geyer joined Textainer in 1993 and was the
Marketing Director in Hamburg through July 1997. From 1991 to 1993, Mr. Geyer
most recently was the Senior Vice President for Clou Container Leasing,
responsible for its worldwide leasing activities. Mr. Geyer spent the remainder
of his leasing career, 1975 through 1991, with Itel Container, during which time
he held numerous positions in both operations and marketing within the company.
Mak Wing Sing is based in Singapore and is the Regional Vice President -
South Asia, responsible for container leasing activities in North/Central
People's Republic of China, Hong Kong, South China (PRC), Southeast Asia and
Australia/New Zealand. 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 based in Yokohama, Japan and is the Regional Vice
President - North Asia, responsible for container leasing 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 at 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, responsible for
coordinating the worldwide sale of equipment into secondary markets. Mr. Mackula
also served as Vice President - Marketing from 1989 to 1991 where he was
responsible for coordinating all leasing activities in Europe, Africa, and the
Middle East. Mr. Mackula joined Textainer in 1983 as Leasing Manager for the
United Kingdom. Prior to joining Textainer, Mr. Mackula held, beginning in 1972,
a variety of positions in the international container shipping industry.
Anthony C. Sowry is Vice President - Corporate Operations and Acquisitions.
He is also a member of the Equipment Investment Committee and the Credit
Committee (see "Committees", below). Mr. Sowry supervises all international
container operations and maintenance and technical functions for the fleets
under Textainer's management. In addition, he is responsible for the acquisition
of all new and used containers for the Textainer Group. He began his affiliation
with Textainer in 1982, when he served as Fleet Quality Control Manager for
Textainer Inc. until 1988. 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.
Richard G. Murphy is Vice President - Risk Management, responsible for all
credit and risk management functions. He also supervises the administrative
aspects of equipment acquisitions. He is a member of and acts as secretary to
the Equipment Investment and Credit Committees (see "Committees", below). He
previously served as TEM's 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.
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.
Jens W. Palludan is based in Hackensack, New Jersey and is the Regional
Vice President - Americas and Logistics, responsible for container leasing
activities in North/South America and for coordinating container logistics. He
joined Textainer in 1993 as Regional Vice President - Americas/Africa/Australia,
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. Mr. Palludan's most recent
position at Maersk was that of General Manager, Equipment and Terminals, where
he was responsible for the entire managed fleet. Mr. Palludan holds an M.B.A.
from the Centre European D'Education Permanente, Fontainebleau, France.
Sheikh Isam K. Kabbani is a director of TGH and TL. He has served as such
since the Textainer Group's reorganization and formation of these companies in
1993. 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 since been his principal business activity. Sheikh
Kabbani holds a B.A. degree from Swarthmore College, Pennsylvania, and an M.A.
degree in Economics and International Relations from Columbia University.
James A. C. Owens is a director of TGH and TL. Mr. Owens has been
associated with the Textainer Group since 1980. In 1983 he was appointed to the
Board of Textainer Inc., and served as President of Textainer Inc. from 1984 to
1987. From 1987 to 1998, Mr. Owens served as an alternate director on the Boards
of TI, TGH and TL and has served as director of TGH and TL since 1998. Apart
from his association with the Textainer Group, Mr. Owens has been involved in
insurance and financial brokerage companies and captive insurance companies. He
is a member of a number of Boards of Directors. Mr. Owens holds a Bachelor of
Commerce degree from the University of South Africa.
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 (1977 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.
Nadine Forsman is the Controller of TCC and TFS. Additionally, she is a
member of the Investment Advisory Committee and Equipment Investment Committee
(See "Committees" below). As controller of TCC and TFS, she is responsible for
accounting, financial management and reporting functions for TCC and TFS as well
as overseeing all communications with the Limited Partners and as such,
supervises personnel in performing these functions. Prior to joining Textainer
in August 1996, Ms. Forsman was employed by KPMG LLP, holding various positions,
the most recent of which was manager, from 1990 to 1996. Ms. Forsman is a
Certified Public Accountant and holds a B.S. in Accounting and Finance from San
Francisco State University.
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 reviews
the equipment leasing operations of the Partnership on a regular basis with
emphasis on matters involving equipment purchases, equipment remarketing issues,
and decisions regarding ultimate disposition of equipment. The members of the
committee are John A. Maccarone (Chairman), James E. Hoelter, Anthony C. Sowry,
Richard G. Murphy (Secretary), Alex M. Brown, Philip K. Brewer, Robert D.
Pedersen, Ernest J. Furtado and Nadine Forsman.
Credit Committee. The Credit Committee establishes credit limits for every
lessee and potential lessee of equipment and periodically reviews these limits.
In setting such limits, the Credit Committee considers 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 John A. Maccarone (Chairman), Richard G. Murphy
(Secretary), Janet S. Ruggero, Anthony C. Sowry, Philip K. Brewer, Ernest J.
Furtado, Robert D. Pedersen and Gregory W. Coan.
Investment Advisory Committee. The Investment Advisory Committee reviews
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 John A.
Maccarone (Chairman), James E. Hoelter, Ernest J. Furtado (Secretary), Nadine
Forsman, Harold J. Samson, Alex M. Brown and Neil I. Jowell.
ITEM 11. EXECUTIVE COMPENSATION
The Registrant has no executive officers and does not reimburse TFS, TEM or TL
for the remuneration payable to their executive officers. For information
regarding reimbursements made by the Registrant to the General Partners, see
note 2 of the Financial Statements in Item 8.
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 investment of the Registrant.
(b) Security Ownership of Management.
As of January 1, 2002:
Number
Name of Beneficial Owner Of Units % All Units
----------------------- -------- -----------
James E. Hoelter 438 0.012%
John A. Maccarone 500 0.014%
Harold J. Samson 2,500 0.068%
----- ------
Officers and Management as a Group 3,438 0.094%
===== ======
(c) Changes in Control.
Inapplicable.
ITEM 201 (d) Securities Under Equity Compensation Plans.
Inapplicable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(Amounts in thousands)
(a) Transactions with Management and Others.
At December 31, 2001 and 2000, due from affiliates, net, is comprised
of:
2001 2000
---- ----
Due from affiliates:
Due from TEM.......................... $192 $516
--- ---
Due to affiliates:
Due to TL............................. - 1
Due to TCC............................ 14 7
Due to TFS............................ 23 24
--- ---
37 32
--- ---
Due from affiliates, net $155 $484
=== ===
These amounts receivable from and payable to affiliates were incurred
in the ordinary course of business between the Partnership and its
affiliates and represent timing differences in the accrual and
remittance of expenses, fees and distributions and in the accrual and
remittance of net rental revenues and container sales proceeds from
TEM.
In addition, the Registrant paid or will pay the following amounts to
the General Partners:
Acquisition fees in connection with the purchase of containers on
behalf of the Registrant:
2001 2000 1999
---- ---- ----
TEM..................... $ - $101 $100
--- --- ---
Management fees in connection with the operations of the Registrant:
2001 2000 1999
---- ---- ----
TEM..................... $462 $595 $626
TFS..................... 151 195 195
--- --- ---
Total................... $613 $790 $821
=== === ===
Reimbursement for administrative costs in connection with the
operations of the Registrant:
2001 2000 1999
---- ---- ----
TEM..................... $248 $323 $364
TFS..................... 36 48 45
--- --- ---
Total................... $284 $371 $409
=== === ===
(b) Certain Business Relationships.
Inapplicable.
(c) Indebtedness of Management
Inapplicable.
(d) Transactions with Promoters
Inapplicable.
See the "Management" and "Compensation of General Partners and Affiliates"
sections of the Registrant's Prospectus, as supplemented, and the Notes to
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, 2001 are contained in Item 8 of this Report.
2. Financial Statement Schedules.
(i) Independent Auditors' Report on Supplementary Schedule.
(ii) Schedule II - Valuation and Qualifying Accounts.
3. Exhibits Incorporated by reference
(i) The Registrant's Prospectus as contained in Pre-Effective
Amendment No. 2 to the Registrant's Registration Statement (No.
33-29990), filed with the Commission on November 3, 1989 as
supplemented by Post-Effective Amendment No. 2 filed with the
Commission under Section 8(c) of the Securities Act of 1933 on
December 11, 1990.
(ii) The Registrant's limited partnership agreement, Exhibit A to the
Prospectus.
(b) During the year ended 2001, no reports on Form 8-K have been filed by the
Registrant.
Independent Auditors' Report on Supplementary Schedule
------------------------------------------------------
The Partners
Textainer Equipment Income Fund II, L.P.:
Under the date of February 11, 2002, we reported on the balance sheets of
Textainer Equipment Income Fund II, L.P. (the Partnership) as of December 31,
2001 and 2000, and the related statements of earnings, partners' capital and
cash flows for each of the years in the three-year period ended December 31,
2001, which are included in the 2001 annual report on Form 10-K. In connection
with our audit 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.
/s/ KPMG LLP
San Francisco, California
February 11, 2002
TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)
Schedule II - Valuation and Qualifying Accounts
(Amounts in thousands)
- --------------------------------------------------------------------------------------------------------------------
Charged Balance
Balance at to Costs Charged at End
Beginning And to Other of
of Period Expenses Accounts Deduction Period
---------- -------- -------- --------- -------
For the year ended December 31, 2001:
Allowance for
doubtful accounts $ 219 $ (21) $ - $ (84) $ 114
------- ------- -------- ------- ------
Recovery cost reserve $ 88 $ 43 $ - $ (38) $ 93
------- ------- -------- ------- ------
Damage protection
plan reserve $ 151 $ 157 $ - $ (201) $ 107
------- ------- -------- ------- ------
For the year ended December 31, 2000:
Allowance for
doubtful accounts $ 398 $ (44) $ - $ (135) $ 219
------- ------- -------- ------- ------
Recovery cost reserve $ 74 $ 60 $ - $ (46) $ 88
------- ------- -------- ------- ------
Damage protection
plan reserve $ 272 $ 129 $ - $ (250) $ 151
------- ------- -------- ------- ------
For the year ended December 31, 1999:
Allowance for
doubtful accounts $ 315 $ 124 $ - $ (41) $ 398
------- ------- -------- ------- ------
Recovery cost reserve $ 48 $ 76 $ - $ (50) $ 74
------- ------- -------- ------- ------
Damage protection
plan reserve $ 222 $ 404 $ - $ (354) $ 272
------- ------- -------- ------- ------
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 II, L.P.
A California Limited Partnership
By Textainer Financial Services Corporation
The Managing General Partner
By
-------------------------------------------
Ernest J. Furtado
Senior Vice President
Date: March 28, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer Financial
Services Corporation, the managing general partner of the Registrant, in the
capacities and on the dates indicated:
Signature Title Date
__________________________________
Ernest J. Furtado Senior Vice President, CFO March 28, 2002
(Principal Financial and
Accounting Officer),
Secretary and Director
__________________________________
John A. Maccarone President (Principal Executive March 28, 2002
Officer), and Director
Chairman of the Board and Director March 28, 2002
__________________________________
Neil I. Jowell
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 II, L.P.
A California Limited Partnership
By Textainer Financial Services Corporation
The Managing General Partner
By /s/Ernest J. Furtado
___________________________
Ernest J. Furtado
Senior Vice President
Date: March 28, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer Financial
Services Corporation, the managing general partner of the Registrant, in the
capacities and on the dates indicated:
Signature Title Date
/s/ Ernest J. Furtado
____________________________________ Senior Vice President, CFO March 28, 2002
Ernest J. Furtado (Principal Financial and
Accounting Officer),
Secretary and Director
/s/ John A. Maccarone
____________________________________ President (Principal Executive March 28, 2002
John A. Maccarone Officer), and Director
/s/ Neil I. Jowell
____________________________________ Chairman of the Board and Director March 28, 2002
Neil I. Jowell