TEXTAINER CAPITAL CORPORATION
650 California Street, 16th Floor
San Francisco, CA 94108
November 19, 2002
Securities and Exchange Commission
Washington, DC 20549
Ladies and Gentlemen:
Pursuant to the requirements of the Securities Exchange Act of 1934, we are
submitting herewith for filing on behalf of Textainer Equipment Income Fund V,
L.P. (the "Partnership") the Partnership's Quarterly Report on Form 10-Q for the
Third Quarter ended September 30, 2002.
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-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
Commission file number 0-25946
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
A California Limited Partnership
(Exact name of Registrant as specified in its charter)
California 93-1122553
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
650 California Street, 16th Floor
San Francisco, CA 94108
(Address of Principal Executive Offices) (ZIP Code)
(415) 434-0551
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 2002
Table of Contents
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Page
Item 1. Financial Statements (unaudited)
Balance Sheets - September 30, 2002 and
December 31, 2001.................................................................. 3
Statements of Operations for the three and nine months
ended September 30, 2002 and 2001.................................................. 4
Statements of Partners' Capital for the nine months
ended September 30, 2002 and 2001.................................................. 5
Statements of Cash Flows for the nine months
ended September 30, 2002 and 2001.................................................. 6
Notes to Financial Statements...................................................... 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................................... 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk......................... 22
Item 4. Controls and Procedures............................................................ 22
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Balance Sheets
September 30, 2002 and December 31, 2001
(Amounts in thousands)
(unaudited)
- ----------------------------------------------------------------------------------------------------------------
2002 2001
-------------- -------------
Assets
Container rental equipment, net of accumulated
depreciation of $35,140 (2001: $31,700) (note 4) $ 44,625 $ 48,576
Cash 428 1,038
Accounts receivable, net of allowance
for doubtful accounts of $155, (2001: $154) 2,111 1,939
Due from affiliates, net (note 2) 153 156
Prepaid expenses - 12
-------------- -------------
$ 47,317 $ 51,721
============== =============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 381 $ 506
Accrued liabilities 251 172
Accrued recovery costs 193 222
Accrued damage protection plan costs 226 203
Deferred damage protection plan revenue 176 183
Deferred quarterly distributions 56 54
-------------- -------------
Total liabilities 1,283 1,340
-------------- -------------
Partners' capital:
General partners 24 29
Limited partners 46,010 50,352
-------------- -------------
Total partners' capital 46,034 50,381
-------------- -------------
$ 47,317 $ 51,721
============== =============
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Statements of Operations
For the three and nine months ended September 30, 2002 and 2001
(Amounts in thousands except for unit and per unit amounts)
(unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
Three months Three months Nine months Nine months
Ended Ended Ended Ended
Sept. 30, 2002 Sept. 30, 2001 Sept. 30, 2002 Sept. 30, 2001
---------------- ---------------- ---------------- ----------------
Rental income $ 2,548 $ 2,545 $ 6,769 $ 7,884
---------------- ---------------- ---------------- ----------------
Costs and expenses:
Direct container expenses 846 964 2,728 2,944
Bad debt expense (benefit) 25 21 21 (3)
Depreciation (note 4) 1,349 1,194 3,748 3,591
Professional fees 13 6 41 25
Management fees to affiliates (note 2) 216 225 577 730
General and administrative costs to affiliates (note 2) 124 127 397 416
Other general and administrative costs 48 23 146 71
Loss on sale of containers, net 24 16 24 4
---------------- ---------------- ---------------- ----------------
2,645 2,576 7,682 7,778
---------------- ---------------- ---------------- ----------------
(Loss) income from operations (97) (31) (913) 106
---------------- ---------------- ---------------- ----------------
Interest income 3 14 11 63
---------------- ---------------- ---------------- ----------------
Net (loss) earnings $ (94) $ (17) $ (902) $ 169
================ ================ ================ ================
Allocation of net (loss) earnings (note 2):
General partners $ 10 $ 11 $ 30 $ 41
Limited partners (104) (28) (932) 128
---------------- ---------------- ---------------- ----------------
$ (94) $ (17) $ (902) $ 169
================ ================ ================ ================
Limited partners' per unit share
of net (loss) earnings $ (0.02) $ (0.01) $ (0.21) $ 0.03
================ ================ ================ ================
Limited partners' per unit share
of distributions $ 0.25 $ 0.28 $ 0.75 $ 0.98
================ ================ ================ ================
Weighted average number of limited
partnership units outstanding 4,440,418 4,449,393 4,444,485 4,453,060
================ ================ ================ ================
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Statements of Partners' Capital
For the nine months ended September 30, 2002 and 2001
(Amounts in thousands)
(unaudited)
- -------------------------------------------------------------------------------------------------------------------------
Partners' Capital
---------------------------------------------------------
General Limited Total
------------ -------------- --------------
Balances at January 1, 2001 $ 35 $ 55,843 $ 55,878
Distributions (46) (4,380) (4,426)
Redemptions (note 5) - (55) (55)
Net earnings 41 128 169
------------ -------------- --------------
Balances at September 30, 2001 $ 30 $ 51,536 $ 51,566
============ ============== ==============
Balances at January 1, 2002 $ 29 $ 50,352 $ 50,381
Distributions (35) (3,334) (3,369)
Redemptions (note 5) - (76) (76)
Net earnings (loss) 30 (932) (902)
------------ -------------- --------------
Balances at September 30, 2002 $ 24 $ 46,010 $ 46,034
============ ============== ==============
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Statements of Cash Flows
For the nine months ended September 30, 2002 and 2001
(Amounts in thousands)
(unaudited)
- --------------------------------------------------------------------------------------------------------------------------
2002 2001
---------------- ----------------
Cash flows from operating activities:
Net (loss) earnings $ (902) $ 169
Adjustments to reconcile net (loss) earnings to
net cash provided by operating activities:
Depreciation 3,748 3,591
Increase (decrease) in allowance for doubtful accounts 1 (23)
Loss on sale of containers, net 24 4
(Increase) decrease in assets:
Accounts receivable (144) 661
Due from affiliates, net (8) 236
Prepaid expenses 12 11
(Decrease) increase in liabilities:
Accounts payable and accrued liabilities (46) (73)
Accrued recovery costs (29) 24
Accrued damage protection plan costs 23 (132)
Deferred damage protection plan revenue (7) 191
---------------- ----------------
Net cash provided by operating activities 2,672 4,659
---------------- ----------------
Cash flows from investing activities:
Proceeds from sale of containers 349 373
Container purchases (186) (953)
---------------- ----------------
Net cash provided by (used in) investing activities 163 (580)
---------------- ----------------
Cash flows from financing activities:
Redemptions of limited partnership units (76) (55)
Distributions to partners (3,369) (4,453)
---------------- ----------------
Net cash used in financing activities (3,445) (4,508)
---------------- ----------------
Net decrease in cash (610) (429)
Cash at beginning of period 1,038 1,962
---------------- ----------------
Cash at end of period $ 428 $ 1,533
================ ================
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Statements Of Cash Flows--Continued
For the nine months ended September 30, 2002 and 2001
(Amounts in thousands)
(unaudited)
- --------------------------------------------------------------------------------
Supplemental Disclosures:
Supplemental schedule of non-cash investing and financing activities:
The following table summarizes the amounts of container purchases, distributions
to partners and proceeds from sale of containers which had not been paid or
received as of September 30, 2002 and 2001, and December 31, 2001 and 2000,
resulting in differences in amounts recorded and amounts of cash disbursed or
received by the Partnership, as shown in the Statements of Cash Flows for the
nine-month periods ended September 30, 2002 and 2001.
Sept. 30 Dec. 31 Sept. 30 Dec. 31
2002 2001 2001 2000
---------- ---------- ---------- ----------
Container purchases included in:
Due to affiliates.............................. $ - $24 $ - $ -
Container purchases payable.................... - - 242 363
Distributions to partners included in:
Due to affiliates.............................. 3 5 4 6
Deferred quarterly distributions............... 56 54 55 80
Proceeds from sale of containers included in:
Due from affiliates............................ 44 81 108 103
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
nine-month periods ended September 30, 2002 and 2001.
2002 2001
---- ----
Container purchases recorded...................................................... $ 162 $ 832
Container purchases paid.......................................................... 186 953
Distributions to partners declared................................................ 3,369 4,426
Distributions to partners paid.................................................... 3,369 4,453
Proceeds from sale of containers recorded......................................... 312 378
Proceeds from sale of containers received......................................... 349 373
The Partnership has entered into direct finance leases, resulting in the
transfer of containers from container rental equipment to accounts receivable.
The carrying value of containers transferred during the nine-month periods ended
September 30, 2002 and 2001 was $29 and $25, respectively.
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Notes To Financial Statements
For the three and nine months ended September 30, 2002 and 2001
(Amounts in thousands except for unit and per unit amounts)
(unaudited)
- --------------------------------------------------------------------------------
Note 1. General
Textainer Equipment Income Fund V, L.P. (the Partnership), a California
limited partnership with a maximum life of 20 years, was formed in 1993.
The Partnership owns a fleet of intermodal marine cargo containers which
are leased to international shipping lines.
The accompanying interim financial statements have not been audited by an
independent public accountant. However, all adjustments (which were only
normal and recurring adjustments), which are, in the opinion of management,
necessary to fairly present the financial position of the Partnership as of
September 30, 2002 and December 31, 2001 and the results of its operations
for the three and nine-month periods ended September 30, 2002 and 2001 and
changes in partners' capital, and cash flows for the nine-month periods
ended September 30, 2002 and 2001, have been made.
The financial information presented herein should be read in conjunction
with the audited financial statements and other accompanying notes included
in the Partnership's audited financial statements as of and for the year
ended December 31, 2001, in the Annual Report filed on Form 10-K.
Certain estimates and assumptions were made by the Partnership's management
that affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. 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. The Partnership will evaluate the estimated residual values
and remaining estimated useful lives on an on-going basis and will revise
its estimates as needed. As a result, depreciation expense may fluctuate in
future periods based on fluctuations in these estimates.
Additionally, the recoverability of the recorded amounts of containers to
be held for continued use and identified for sale in the ordinary course of
business are evaluated to ensure that containers held for continued use are
not impaired and that containers identified for sale are recorded at
amounts that do not exceed the estimated fair value of the containers.
Containers to be held for continued use are considered impaired and are
written down to estimated fair value when the estimated future undiscounted
cash flows are less than the recorded values. Containers identified for
sale are written down to estimated fair value when the recorded value
exceeds the estimated fair value. In determining the estimated future
undiscounted cash flows and fair value of containers, assumptions are made
regarding future demand and market conditions for leased 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
and/or losses may be realized.
In August 2001, the Financial Accounting Standards Board ("FASB") 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 Partnership adopted SFAS No. 144 on
January 1, 2002 and there was no material impact on the Partnership's
financial condition, operating results or cash flow.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statement
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." SFAS No. 145 rescinds FASB Statement No. 4, "Reporting Gains
and Losses of Debt Extinguishments" and an amendment of that Statement,
FASB Statement No. 64. SFAS No. 145 also rescinds FASB Statement No. 44,
"Accounting for Intangible Assets of Motor Carriers." FASB 145 also amends
FASB Statement No. 13, "Accounting for Leases", to eliminate an
inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease modifications
that have economic effects similar to sale-leaseback transactions. These
rescissions and amendment are not anticipated to have a material impact on
the financial statements of the Partnership.
In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated
With Exit or Disposal Activities". SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3
"Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." This Statement requires that a liability for a cost
associated with an exit or disposal activity be recognized when the
liability is incurred. The provisions of this Statement are effective for
exit or disposal activities that are initiated after December 31, 2002,
with early application encouraged. The Partnership anticipates that the
adoption of SFAS No. 146 will not have a material impact on its financial
statements.
Certain reclassifications, not affecting net earnings (loss), have been
made to prior year amounts in order to conform to the 2002 financial
statement presentation.
Note 2. Transactions with Affiliates
Textainer Capital Corporation (TCC) is the managing general partner of the
Partnership. Textainer Equipment Management Limited (TEM) and Textainer
Limited (TL) are the 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.
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 a General Partner's 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.
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. The Partnership capitalized $8 and $39 of
container acquisition fees as a component of container costs during the
nine-month periods ended September 30, 2002 and 2001, respectively. The
Partnership incurred $39 and $104 of incentive management fees during the
three and nine-month periods ended September 30, 2002, respectively, and
$47 and $178, respectively, for the comparable periods in 2001. There were
no equipment liquidation fees incurred during these periods.
The Partnership's container fleet is managed by TEM. In its role as
manager, TEM has authority to acquire, hold, manage, lease, sell and
dispose of the Partnership's containers. TEM holds, for the payment of
direct operating expenses, a reserve of cash that has been collected from
leasing operations; such cash is included in due from affiliates, net at
September 30, 2002 and December 31, 2001.
Subject to certain reductions, TEM receives a monthly equipment management
fee equal to 7% of gross revenues attributable to operating leases and 2%
of gross revenues attributable to full payout net leases. These fees
totaled $177 and $473 for the three and nine-month periods ended September
30, 2002, respectively, and $178 and $552, respectively, for the comparable
periods in 2001.
Certain indirect general and administrative costs such as salaries,
employee benefits, taxes and insurance are incurred in performing
administrative services necessary to the operation of the Partnership.
These costs are incurred and paid by TCC and TEM. General and
administrative costs allocated to the Partnership during the three and
nine-month periods ended September 30, 2002 and 2001 were as follows:
Three months Nine months
ended Sept. 30, ended Sept. 30,
--------------- ---------------
2002 2001 2002 2001
---- ---- ---- ----
Salaries $ 83 $ 81 $257 $246
Other 41 46 140 170
--- --- --- ---
Total general and
administrative costs $124 $127 $397 $416
=== === === ===
TEM allocates these general and administrative costs based on the ratio of
the Partnership's interest in the managed containers to the total container
fleet managed by TEM during the period. TCC allocates these costs based on
the ratio of the Partnership's containers to the total container fleet of
all limited partnerships managed by TCC. The General Partners allocated the
following general and administrative costs to the Partnership during the
three and nine-month periods ended September 30, 2002 and 2001:
Three months Nine months
ended Sept. 30, ended Sept. 30,
--------------- ---------------
2002 2001 2002 2001
---- ---- ---- ----
TEM $109 $110 $341 $361
TCC 15 17 56 55
--- --- --- ---
Total general and
administrative costs $124 $127 $397 $416
=== === === ===
The General Partners may acquire containers in their own name and hold
title on a temporary basis for the purpose of facilitating the acquisition
of such containers for the Partnership. The containers may then be resold
to the Partnership on an all-cash basis at a price equal to the actual
cost, as defined in the Partnership Agreement. One or more General Partners
may also arrange for the purchase of containers in its or their names, and
the Partnership may then take title to the containers by paying the seller
directly. In addition, the General Partners are entitled to an acquisition
fee for containers acquired by the Partnership under any of these
arrangements.
At September 30, 2002 and December 31, 2001, due from affiliates, net is
comprised of:
2002 2001
---- ----
Due from affiliates:
Due from TEM................. $172 $179
--- ---
Due to affiliates:
Due to TCC................... 16 20
Due to TL.................... 3 3
--- ---
19 23
--- ---
Due from affiliates, net $153 $156
=== ===
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
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 September 30, 2002 and 2001:
2002 2001
---- ----
On-lease under master leases 12,707 9,924
On-lease under long-term leases 7,065 5,168
------ -----
Total on-lease containers 19,772 15,092
====== ======
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 located primarily at a large
number of storage depots. At September 30, 2002 the Partnership's off-lease
containers were in the following locations:
Americas 2,009
Europe 1,380
Asia 1,389
Other 199
-----
Total off-lease containers 4,977
=====
Note 4. Container Rental Equipment
Effective July 1, 2002, the Partnership revised its estimate for container
salvage value from a percentage of equipment cost to an estimated dollar
residual value. The effect of this change for the three and nine-month
periods ended September 30, 2002 was an increase to depreciation expense of
$150. The Partnership will evaluate the estimated residual values and
remaining estimated useful lives on an on-going basis and will revise its
estimates as needed. As a result, depreciation expense may fluctuate in
future periods based on fluctuations in these estimates.
New container prices steadily declined from 1995 through 1999. Although
container prices increased in 2000, these prices declined again in 2001 and
have remained low during 2002. 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 for
containers to be held for continued use as well as for containers
identified for sale in the ordinary course of business. Based on this
evaluation, the Partnership determined that reductions to the carrying
value of these containers were not required during the nine-month periods
ended September 30, 2002 and 2001.
The Partnership will continue to evaluate the recoverability of recorded
amounts of container rental equipment and cautions that a write-down of
container rental equipment may be required in future periods for some of
its container rental equipment.
Note 5. Redemptions
The following redemptions were consummated by the Partnership during the
nine-month period ended September 30, 2002:
Units Average
Redeemed Redemption Price Amount Paid
---------- ----------------- -------------
Total Partnership redemptions as of
December 31, 2000........................ 8,451 $18.02 $152
Nine-month period ended
September 30, 2001....................... 5,500 $10.12 55
------ ---
Total Partnership redemptions as of
September 30, 2001....................... 13,951 $14.87 $207
====== ===
Total Partnership redemptions as of
December 31, 2001........................ 13,951 $14.87 $207
Nine-month period ended
September 30, 2002....................... 8,975 $ 8.47 76
------ ---
Total Partnership redemptions as of
September 30, 2002....................... 22,926 $12.34 $283
====== ===
The redemption price is fixed by formula.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Amounts in thousands except for unit and per unit amounts)
- --------------------------------------------------------------------------------
The Financial Statements contain information which will assist in evaluating the
financial condition of the Partnership for the three and nine-month periods
ended September 30, 2002 and 2001. Please refer to the Financial Statements and
Notes thereto in connection with the following discussion.
Textainer Capital Corporation (TCC) is the Managing General Partner of the
Partnership. 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 May 1, 1994 until April 29, 1996, the Partnership offered limited
partnership interests to the public. The Partnership received its minimum
subscription amount of $5,000 on August 23, 1994 and on April 29, 1996 the
Partnership's offering of limited partnership interests was closed at $89,305.
The Partnership invests working capital, cash flow from operations prior to its
distribution to the partners and proceeds from container sales that have not
been used to purchase containers 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.
Limited partners are currently receiving monthly distributions in an annualized
amount equal to 5% of their original investment. During the nine-month period
ended September 30, 2002, the Partnership declared cash distributions to limited
partners pertaining to the period from December 2001 through August 2002, in the
amount of $3,334. On a cash basis, $2,561 of these distributions were from
current year operating activities and the balance was a return of capital. On a
financial statement basis, all of these distributions were 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 nine-month period ended September 30,
2002, the Partnership redeemed 8,975 units for a total dollar amount of $76. The
Partnership used cash flow from operations to pay for the redeemed units.
Net cash provided by operating activities for the nine-month periods ended
September 30, 2002 and 2001 was $2,672 and $4,659 respectively. The decrease of
$1,987, or 43%, was primarily attributable to the decrease in net earnings,
adjusted for non-cash transactions, and fluctuations in gross accounts
receivable and due from affiliates, net. Net earnings, adjusted for non-cash
transactions, decreased primarily due to the decrease in rental income, which is
discussed more fully in "Results of Operations." Gross accounts receivable
increased $144 during the nine-month period ended September 30, 2002, primarily
due to an increase in the average collection period of accounts receivable,
offset by the decrease in rental income. The decrease in accounts receivable of
$661 during the nine-month period ended September 30, 2001, was primarily due to
a decrease in rental income and a decrease in the average collection period of
accounts receivable. 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 container sales proceeds, as well as in
fluctuations in these amounts.
At September 30, 2002, the Partnership had no commitments to purchase
containers.
For the nine-month period ended September 30, 2002, net cash provided by
investing activities (the purchase and sale of containers) was $163 compared to
net cash used in investing activities of $580 for the same period in 2001. The
fluctuation of $743 was primarily due to the decrease in cash used for container
purchases. The decrease in cash used for container purchases was primarily due
to the Partnership purchasing fewer containers during the nine-month period
ended September 30, 2002 than in the same period in 2001, as well as due to
timing differences in the accrual and payment of these purchases. The number of
containers sold during the periods was comparable, however, the average sales
price received on container sales decreased between the periods. Proceeds from
container sales remained comparable between the periods primarily due to timing
differences in the accrual and receipt of sales proceeds. 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. Until
demand for containers improves in certain low demand locations, the Partnership
plans to continue selling some of its containers that are off-lease in these
locations. The number of containers sold, both in low demand locations and
elsewhere, as well as the average sales prices, will affect how much the
Partnership can reinvest in new containers.
Consistent with its investment objectives and subject to its distribution
policy, the Partnership intends to continue to reinvest both cash from
operations available for reinvestment and all, or a significant amount of, the
proceeds from container sales in additional containers. Cash from operations
available for reinvestment is generally equal to cash provided by operating
activities, less distributions and redemptions paid, which are subject to the
General Partners' authority to set these amounts (and modify reserves and
working capital), as provided in the Partnership Agreement. The amount of sales
proceeds will fluctuate based on the number of containers sold and the sales
price received. The Partnership sells containers when (i) a container reaches
the end of its useful life or (ii) an analysis indicates that the sale is
warranted based on existing market conditions and the container's age, location
and condition.
Both cash from operations available for reinvestment and sales proceeds have
been adversely affected by market conditions. These market conditions have
resulted in a slower than anticipated rate of reinvestment. Market conditions
are discussed more fully under "Results of Operations." A slower rate of
reinvestment will, over time, affect the size of the Partnership's container
fleet. Furthermore, even with reinvestment, the Partnership is not likely to be
able to replace all the containers it sells, since new container prices are
usually higher than the average sales price for a used container, and the
majority of cash available for reinvestment is from sales proceeds.
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
nine-month periods ended September 30, 2002 and 2001, 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:
2002 2001
---- ----
Beginning container fleet............... 24,885 24,532
Ending container fleet.................. 24,749 24,762
Average container fleet................. 24,817 24,647
As noted above, when containers are sold in the future, sales proceeds are not
likely to be sufficient to replace all of the containers sold, which is likely
to result in a trend toward a smaller average container fleet. Other factors
related to this trend are discussed above in "Liquidity and Capital Resources".
Rental income and direct container expenses are also affected by the average
utilization of the container fleet, which was 63% and 67% during the nine-month
periods ended September 30, 2002 and 2001, respectively. The remaining container
fleet is off-lease and is located primarily at a large number of storage depots.
At September 30, 2002, the Partnership's off-lease containers (in units) were in
the following locations:
Americas 2,009
Europe 1,380
Asia 1,389
Other 199
-----
Total off-lease containers 4,977
=====
In addition to utilization, rental income is affected by daily rental rates. The
average daily rental rate decreased 11% between the periods. The decrease in the
average rental rate was due to declines in both master and long term lease
rates, which are the two principal types of leases for the Partnership's
containers. The majority of the Partnership's rental income was generated from
leasing of the Partnership's containers under master operating leases, but an
increasing percentage of the Partnership's containers are on lease under long
term leases, 36% as of September 30, 2002 versus 34% as of September 30, 2001.
Long term leases generally have lower rental rates than master leases because
the lessees have contracted to lease the containers for several years and cannot
return the containers prior to the termination date without a penalty.
Fluctuations in rental rates under either type of lease generally will affect
the Partnership's operating results.
The following is a comparative analysis of the results of operations for the
nine-month periods ended September 30, 2002 and 2001.
The Partnership's (loss) income from operations for the nine-month periods ended
September 30, 2002 and 2001 was ($913) and $106, respectively, on rental income
of $6,769 and $7,884, respectively. The decrease in rental income of $1,115, or
14%, from the nine-month period ended September 30, 2001 to the comparable
period in 2002 was attributable to a decrease in container rental income, offset
by an increase in other rental income, which is discussed below. Income from
container rentals, the major component of total revenue, decreased $1,184, or
17%, primarily due to the decreases in average rental rates of 11% and average
on-hire utilization of 6% between the periods.
In the fourth quarter of 2000, utilization began to decline and continued to
decline during 2001 and the beginning of 2002. This decline was due to lower
overall demand by shipping lines for leased containers, which was primarily a
result of the worldwide economic slowdown. Two other factors reduced the demand
for leased containers. Shipping lines added larger vessels to their fleets,
which combined with lower cargo volume growth, 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.
Utilization has improved steadily since March 2002 due to:
o An increase in export cargo out of Asia
o Prior repositioning of containers to Asia which placed large quantities
of containers in areas of high demand
o Disposal of older containers and fewer purchases of new containers by
both container lessors and shipping lines in 2001 and 2002, resulting in
an overall better-balanced supply of containers
o The labor disagreement that is currently affecting U.S. West Coast ports
is having a short-term positive effect on demand for containers as
shipping lines are not able to reposition enough containers to Asia and
must lease more containers to meet their customers' demands
This utilization improvement has continued into the fourth quarter of 2002 but
the General Partners caution that market conditions could deteriorate again due
to global economic conditions. Demand for leased containers could therefore
weaken again and result in a decrease in utilization and further declines in
lease rates and container sale prices, adversely affecting the Partnership's
operating results.
Despite the improvement in utilization, the Partnership continues to sell
(rather than reposition) some older containers located in low demand locations,
but primarily only those containers that were damaged. For the number of
off-lease containers located in the lower demand locations in the Americas and
Europe, see chart above. 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.
Current market conditions continue to cause a decline in the economic value of
used containers. The average sales price for containers sold by the Partnership
as well as other Partnerships managed by the General Partners has decreased.
Additionally, other Partnerships managed by the General Partners have recorded
write-downs and losses on certain older containers. Many of these containers
have been located in low demand locations. There have been no such losses or
write-downs recorded by the Partnership primarily due to the young age of the
Partnership's container fleet. Sales by the Partnership in these low demand
locations have been generally limited to damaged containers. However, as the
container fleet ages, the Partnership may incur losses and/or write-downs on the
sale of its older containers located in low demand locations, if existing market
conditions continue. Should the decline in economic value of continuing to own
such containers turn out to be permanent, the Partnership may be required to
write-down the value of some of its container rental equipment.
New container prices steadily declined from 1995 through 1999. Although
container prices increased in 2000, these prices declined again in 2001 and have
remained low during 2002. 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 for containers to be held for continued use
as well as for containers identified for sale in the ordinary course of
business. Based on this evaluation, the Partnership determined that reductions
to the carrying value of these containers were not required during the
nine-month periods ended September 30, 2002 and 2001.
The Partnership will continue to evaluate the recoverability of 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.
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 nine-month period ended September 30,
2002, the total of these other rental income items was $995, an increase of $69
from the equivalent period in 2001. The increase in other rental income was
primarily due to the increase in handling income of $128, offset by decreases in
DPP and location income of $32 and $27, respectively. The increase in handling
income was due to the increase in container movement and the increase in the
average handling charge per container. DPP income declined due to a decrease in
the average DPP price charged per container, offset by an increase in the number
of containers covered under DPP. Location income decreased primarily due to the
decline in charges to lessees for dropping off containers in surplus location,
offset by a decrease in credits granted to lessees for picking up container from
surplus locations.
Direct container expenses decreased $216, or 7%, from the nine-month period
ended September 30, 2001 to the equivalent period in 2002. The decrease was
primarily due to the decrease in repositioning expense of $337, offset by
increases in storage and handling expenses of $128 and $56. Repositioning
expense decreased due to the decrease in the average cost of repositioning
containers, offset by the increase in the number of containers repositioned.
Storage expense increased primarily due to the decrease in average utilization
noted above. Handling expense increased primarily due to the increase in
container movement.
Bad debt expense (benefit) was $21 and ($3) for the nine-month periods ended
September 30, 2002 and 2001, respectively. Fluctuations in bad debt expense
(benefit) reflect the adjustment to the bad debt allowance 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 expense recorded for the nine-month period ended
September 30, 2002 reflects a higher reserve estimate from December 31, 2001.
The benefit recorded for the comparable period in 2001 reflects a lower reserve
estimate from December 31, 2000.
Depreciation expense increased $157, or 4%, from the nine-month period ended
September 30, 2001, to the same period in 2002, primarily due to an increase in
the depreciation rate as a result of changes in estimated salvage values as
discussed below.
Effective July 1, 2002, the Partnership revised its estimate for container
salvage value from a percentage of equipment cost to an estimated dollar
residual value. The effect of this change for the three and nine-month periods
ended September 30, 2002 was an increase to depreciation expense of $150. The
Partnership will evaluate the estimated residual values and remaining estimated
useful lives on an on-going basis and will revise its estimates as needed. As a
result, depreciation expense may fluctuate in future periods based on
fluctuations in these estimates. If the estimates regarding residual value and
remaining useful life of the containers were to decline, depreciation expense
would increase, adversely affecting the Partnership's operating results.
Management fees to affiliates decreased $153, or 21%, from the nine-month period
ended September 30, 2001 to the comparable period in 2002, due to decreases in
both equipment and incentive management fees. Equipment management fees
decreased due to the decline in rental income, upon which equipment management
fees are primarily based. These fees were approximately 7% of rental income for
both periods. Incentive management fees, which are based on the Partnership's
limited and general partner distributions made from cash from operations and
partners' capital decreased primarily due to the decrease in the amount of
distributions paid from cash from operations between the two periods.
General and administrative costs to affiliates decreased $19, or 5%, from the
nine-month period ended September 30, 2001 to the comparable period in 2002,
primarily due to the decrease in the allocation of overhead costs from 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 on sale of containers was $24 and $4 during the nine-month periods ended
September 30, 2002 and 2001, respectively.
Net earnings (loss) per limited partnership unit fluctuated from $0.03 to
($0.21) from the nine-month period ended September 30, 2001 to the same period
in 2002, respectively, reflecting the fluctuation in net earnings (loss)
allocated to limited partners from $128 to ($932), respectively. The allocation
of net earnings (loss) for the nine-month periods ended September 30, 2002 and
2001 included a special allocation of gross income to the General Partners of
$39 and $40, respectively, in accordance with the Partnership Agreement.
The following is a comparative analysis of the results of operations for the
three-month periods ended September 30, 2002 and 2001.
The Partnership's loss from operations for the three-month periods ending
September 30, 2002 and 2001 was $97 and $31, on rental income of $2,548 and
$2,545, respectively. Rental income was comparable between the periods as the
increase in container rental income was offset by the decrease in other rental
income. Income from container rentals increased $40, or 2%, primarily due to an
increase in average on-hire utilization of 18%, offset by a decrease of the
average on-hire rental rates of 13%.
Other rental income was $389 for the three-month period ended September 30,
2002, a decrease of $37 from the equivalent period in 2001. The decrease was
primarily due to a decrease in location income of $118, offset by an increase in
handling income of $82. Location income decreased due to the decline in charges
to lessees for dropping off containers in surplus locations and the increase in
credits granted to lessees for picking up containers from surplus locations.
Handling income increased primarily due to the increase in container movement.
Direct container expenses decreased $118, or 12%, from the three-month period
ending September 30, 2001 to the equivalent period in 2002, primarily due to
decreases in storage and DPP expenses of $137 and $19, respectively, offset by
an increase in handling expense of $59. Storage expense decreased primarily due
to the increase in average utilization noted above. DPP expense decreased
primarily due to a decrease in the average DPP repair cost per container.
Handling expense increased due to the increase in container movement and the
increase in the average handling charge per container.
Bad debt expense increased from $21 for the three-month period ended September
30, 2001 to $25 for the comparable period in 2002. The increase was due to a
greater adjustment to bad debt estimate during the three-month period ended
September 30, 2002 compared to the same period in 2001.
Depreciation expense increased $155, or 13%, from the three-month period ended
September 30, 2001 to the same period in 2002, primarily due to the change in
estimated salvage values used to calculate depreciation expense as noted above.
Management fees to affiliates decreased $9, or 4%, from the three-month period
ended September 30, 2001 to the comparable period in 2002, primarily due to the
decrease in incentive management fees, which decreased primarily due to the
decrease in the amount of distributions paid from cash from operations between
the two periods. Equipment management fees were comparable between the periods
and were approximately 7% of rental income for both periods.
General and administrative costs to affiliates were comparable at $124 and $127
during the three-months periods ended September 30, 2002, and 2001,
respectively.
Gain on sale of containers increased from $16 for the three-month period ended
September 30, 2001 to $24 for the equivalent period in 2002.
Net loss per limited partnership unit increased from $0.01 to $0.02 from the
three-month period ended September 30, 2001 to the same period in 2002,
respectively, reflecting the increase in net loss allocated to limited partners
from $28 to $104, respectively. The allocation of net loss included a special
allocation of gross income to the General Partners made 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.
Effective July 1, 2002, the Partnership revised its estimate for container
salvage value from a percentage of equipment cost to an estimated dollar
residual value. The Partnership will evaluate the estimated residual values and
remaining estimated useful lives on an on-going basis and will revise its
estimates as needed. As a result, depreciation expense may fluctuate in future
periods based on fluctuations in these estimates. If the estimates regarding
residual value and remaining useful life of the containers were to decline,
depreciation expense would increase, adversely affecting the Partnership's
operating results.
Additionally, the recoverability of the recorded amounts of containers to be
held for continued use and identified for sale in the ordinary course of
business are evaluated to ensure that containers held for continued use are not
impaired and that containers identified for sale are recorded at amounts that do
not exceed the estimated fair value of the containers. Containers to be held for
continued use are considered impaired and are written down to estimated fair
value when the estimated future undiscounted cash flows are less than the
recorded values. Containers identified for sale are written down to estimated
fair value when the recorded value exceeds the estimated fair value. In
determining the estimated future undiscounted cash flows and fair value of
containers, assumptions are made regarding future demand and market conditions
for leased 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 and/or losses may be realized. Any additional write-downs or losses
would adversely affect the Partnership's operating results.
Accounting Pronouncement
In August 2001, the Financial Accounting Standards Board ("FASB") 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 Partnership adopted SFAS No. 144 on January 1, 2002
and there was no material impact on the Partnership's financial condition,
operating results or cash flow.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statement No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
SFAS No. 145 rescinds FASB Statement No. 4, "Reporting Gains and Losses of Debt
Extinguishments" and an amendment of that Statement, FASB Statement No. 64. SFAS
No. 145 also rescinds FASB Statement No. 44, "Accounting for Intangible Assets
of Motor Carriers." FASB 145 also amends FASB Statement No. 13, "Accounting for
Leases", to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects similar to sale-leaseback transactions.
These rescissions and amendment are not anticipated to have a material impact on
the financial statements of the Partnership.
In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated With
Exit or Disposal Activities". SFAS No. 146 addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3 "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." This Statement requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. The provisions of this Statement are
effective for exit or disposal activities that are initiated after December 31,
2002, with early application encouraged. The Partnership anticipates that the
adoption of SFAS No. 146 will not have a material impact on its financial
statements.
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 therefore,
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 3. Quantitative and Qualitative Disclosures about Market Risk.
Inapplicable.
Item 4. Controls and Procedures
Based on an evaluation of the Partnership's disclosure controls and procedures
(as defined in Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934)
conducted within ninety days of the filing date of this report, the managing
general partner's principal executive officer and principal financial officer
have found those controls and procedures to be effective. There have been no
significant changes in the Partnership's internal controls or in other factors
that could significantly affect these controls subsequent to the date of their
evaluation including any corrective actions with regard to significant
deficiencies and material weaknesses.
Part II
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits 99.1 and 99.2 Certifications pursuant to 18 U.S.C. Section
1350, as adopted, and regarding Section 906 of the Sarbanes-Oxley Act
of 2002.
(b) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
A California Limited Partnership
By Textainer Capital Corporation
The Managing General Partner
By _______________________________
Ernest J. Furtado
Chief Financial Officer
Date: November 19, 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 Capital
Corporation, the Managing General Partner of the Registrant, in the capacities
and on the dates indicated:
Signature Title Date
_____________________________ Chief Financial Officer, Senior November 19, 2002
Ernest J. Furtado Vice President and Secretary
_____________________________ President November 19, 2002
John A. Maccarone
Part II
Item 6. Exhibits and Reports on Form 8-K.
(c) Exhibits 99.1 and 99.2 Certifications pursuant to 18 U.S.C. Section
1350, as adopted, and regarding Section 906 of the Sarbanes-Oxley
Act of 2002.
(d) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
A California Limited Partnership
By Textainer Capital Corporation
The Managing General Partner
By /s/Ernest J. Furtado
_________________________________
Ernest J. Furtado
Chief Financial Officer
Date: November 19, 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 Capital
Corporation, the Managing General Partner of the Registrant, in the capacities
and on the dates indicated:
Signature Title Date
/s/Ernest J. Furtado
_______________________________ Chief Financial Officer, Senior November 19, 2002
Ernest J. Furtado Vice President and Secretary
/s/John A. Maccarone
_______________________________ President November 19, 2002
John A. Maccarone
CERTIFICATIONS
I, John A. Maccarone, certify that:
1. I have reviewed this quarterly report on form 10-Q of Textainer Equipment
Income Fund V, L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a.) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;
b.) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report ( the "Evaluation Date"); and
c.) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a.) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls ; and
b.) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
November 19, 2002
/s/ John A. Maccarone
_______________________________________
John A. Maccarone
President and Director of TCC
CERTIFICATIONS
I, Ernest J. Furtado, certify that:
1. I have reviewed this quarterly report on form 10-Q of Textainer Equipment
Income Fund V, L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a.) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;
b.) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report ( the "Evaluation Date"); and
c.) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a.) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls ; and
b.) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
November 19, 2002
/s/ Ernest J. Furtado
_______________________________________________
Ernest J. Furtado
Chief Financial Officer, Senior Vice President,
Secretary and Director of TCC
EXHIBIT 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. ss. 1350,
AS ADOPTED, REGARDING SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Textainer Equipment Income Fund V,
L.P., (the "Registrant") on Form 10-Q for the quarterly period ended September
30, 2002, as filed on November 19, 2002 with the Securities and Exchange
Commission (the "Report"), I, John A. Maccarone, the President and Director of
Textainer Capital Corporation ("TCC") and Principal Executive Officer of TCC,
the Managing General Partner of the Registrant, certify, pursuant to 18 U.S.C.
ss. 1350, as adopted, regarding Section 906 of the Sarbanes-Oxley Act of 2002,
that:
(i) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(ii) The information contained in the Report fairly presents, in all material
respects, the financial condition, results of operations and cash flows of
the Registrant.
November 19, 2002
By /s/ John A. Maccarone
_____________________________________
John A. Maccarone
President and Director of TCC
EXHIBIT 99.2
CERTIFICATION PURSUANT TO
18 U.S.C. ss. 1350,
AS ADOPTED, REGARDING SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Textainer Equipment Income Fund V,
L.P. (the "Registrant") on Form 10-Q for the quarterly period ended September
30, 2002, as filed on November 19, 2002 with the Securities and Exchange
Commission (the "Report"), I, Ernest J. Furtado, Chief Financial Officer, Senior
Vice President, Secretary and Director of Textainer Capital Corporation ("TCC")
and Principal Financial and Accounting Officer of TCC, the Managing General
Partner of the Registrant, certify, pursuant to 18 U.S.C. ss. 1350, as adopted,
regarding Section 906 of the Sarbanes-Oxley Act of 2002, that:
(i) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(ii) The information contained in the Report fairly presents, in all material
respects, the financial condition, results of operations and cash flows of
the Registrant.
November 19, 2002
By /s/ Ernest J. Furtado
_______________________________________________
Ernest J. Furtado
Chief Financial Officer, Senior Vice President,
Secretary and Director of TCC