10-Q 1 f1firstqtr05.txt TEXTAINER FINANCIAL SERVICES CORPORATION 650 California Street, 16th Floor San Francisco, CA 94108 May 16, 2005 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 TCC Equipment Income Fund (the "Partnership") the Partnership's Quarterly Report on Form 10-Q for the First Quarter ended March 31, 2005. 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 March 31, 2005 Commission file number 0-17688 TCC EQUIPMENT INCOME FUND A California Limited Partnership (Exact name of Registrant as specified in its charter) California 94-3045888 (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 [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

TCC EQUIPMENT INCOME FUND (a California Limited Partnership) Quarterly Report on Form 10-Q for the Quarter Ended ~~September~~March 3031, ~~2003~~2005 Table of Contents ------------------------------------------------------------------------------------------------------------------- Page Part I Financial Information Item 1. Financial Statements (unaudited) Balance Sheets - ~~September~~March 3031, ~~2003~~2005 and December 31, ~~2002~~2004............................................................................. 3 Statements of Operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2003~~2005 and ~~2002~~2004..................................................................... 4 Statements of Partners' Capital for the ~~nine~~three months ended ~~September~~March 3031, ~~2003~~2005 and ~~2002~~2004..................................................................... 5 Statements of Cash Flows for the ~~nine~~three months ended ~~September~~March 3031, ~~2003~~2005 and ~~2002~~2004..................................................................... 6 Notes to Financial Statements..................................................................... 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................................................... 1413 Item 34. ~~Quantitative~~Controls and ~~Qualitative Disclosures about Market Risk~~Procedures...................................................................... 2217 Part II Other Information Item 41. ~~Controls~~Legal ~~and Procedures~~Proceedings............................................................................ 2217 ~~Part II Other Information~~ Item 6. Exhibits ~~and Reports on Form 8-K~~.................................................................................... 2317

TCC EQUIPMENT INCOME FUND (a California Limited Partnership) Balance Sheets ~~September~~March 3031, ~~2003~~2005 and December 31, ~~2002~~2004 (Amounts in thousands) (unaudited) --------------------------------------------------------------------------------------------------------- ~~2003~~2005 ~~2002~~2004 ------------- ------------- Assets Container rental equipment held for sale, net of accumulated depreciation of $51,~~948,~~282 (~~2002~~2004: $~~6,154~~-) (~~note~~notes 4 & 6) $ 52,~~015~~926 $ 5- Container rental equipment,~~832~~ net of accumulated depreciation of $- (2004: $1,047) (note 4) - 3,327 Cash ~~477~~397 ~~513~~545 Accounts receivable, net of allowance for doubtful accounts of $~~27,~~39 (~~2002~~2004: $2440) ~~369~~338 ~~410~~314 Due from affiliates, net (note 2) 22101 2942 Prepaid expenses -4 175 ------------- ------------- $ 53,~~883~~766 $ 64,~~801~~233 ============= ============= Liabilities and Partners' Capital Liabilities: Accounts payable $ 7718 $ ~~128~~17 Accrued liabilities 5624 2722 Accrued ~~recovery~~damage protection plan costs 1874 1871 Accrued ~~damage~~professional ~~protection~~fees ~~plan~~36 ~~costs~~37 54Accrued 43service provider fees 20 24 Deferred damage protection plan revenue 21 22 ------------- ------------- Total liabilities ~~226~~193 ~~238~~193 ------------- ------------- Partners' capital: General partners - - Limited partners 53,~~657~~573 64,~~563~~040 ------------- ------------- Total partners' capital 53,~~657~~573 64,~~563~~040 ------------- ------------- $ 53,~~883~~766 $ 64,~~801~~233 ============= ============ ~~See accompanying notes to financial statements~~=

See accompanying notes to financial statements

TCC EQUIPMENT INCOME FUND (a California Limited Partnership) Statements of Operations For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2003~~2005 and ~~2002~~2004 (Amounts in thousands except for unit and per unit amounts) (unaudited) ---------------------------------------------------------------------------------------------------------------~~--------------------~~ ~~Three~~2005 ~~months~~2004 ~~Three months Nine months Nine months Ended Ended Ended Ended Sept. 30, 2003 Sept. 30, 2002 Sept. 30, 2003 Sept. 30, 2002~~ ----------------- ----------------- ~~----------------- ----------------~~ Rental income $ ~~400~~378 $ ~~428~~386 ~~$ 1,247 $ 1,227~~ ----------------- ----------------- ~~----------------- ----------------~~ Costs and expenses: Direct container expenses ~~115~~55 ~~119~~108 ~~339 397~~ Bad debt ~~(benefit)~~ expense ~~(1)~~- (3) ~~7 (2)~~ Depreciation (note 4) ~~168~~74 ~~363~~171 ~~513 673~~ Write-down of containers (note 4) 247 2 ~~36 12 113~~ Professional fees 1137 1214 ~~30 38~~ Management fees to affiliates (note 2) 3826 3835 ~~114 110~~ General and administrative costs to affiliates (note 2) 1930 1918 ~~59 65~~ Other general and administrative costs 527 184 15(Gain) 55loss ~~Loss~~ on sale of containers, ~~(note~~net 4(36) 193 ~~14 57 24~~ ----------------- ----------------- ~~-----------------~~460 ~~----------------~~358 ~~376 616 1,146 1,473~~ ----------------- ----------------- ~~----------------- ---------------- Income~~ (~~loss~~Loss) income from operations 24 (~~188~~82) ~~101~~28 ~~(246)~~ ----------------- ----------------- ~~----------------- ----------------~~ Interest income 12 1 ~~2 5~~ ----------------- ----------------- ~~----------------- ----------------~~ Net ~~earnings~~ (loss) $earnings 25 $ (~~187~~80) $ ~~103~~29 ~~$ (241)~~ ================= ================= ~~================= ================~~ Allocation of net ~~earnings~~ (loss) earnings (note 2): General partners $ 45 $ 34 ~~$ 13 $ 14~~ Limited partners 21 (~~190~~85) 9025 ~~(255)~~ ----------------- ----------------- ~~----------------- ----------------~~ $ ~~25 $~~ (~~187~~80) $ ~~103~~29 ~~$ (241)~~ ================= ================= ~~================= ================~~ Limited partners' per unit share of net ~~earnings~~ (loss) $earnings ~~0.01~~ $ (0.1306) $ 0.0602 ~~$ (0.18)~~ ================= ================= ~~================= ================~~ Limited partners' per unit share of distributions $ 0.2027 $ 0.1820 ~~$ 0.68 $ 0.73~~ ================= ================= ~~================= ================~~ Weighted average number of limited partnership units outstanding 1,~~404~~390,~~149~~649 1,~~421~~390,~~714~~649 ~~1,409,516 1,426,547~~ ================= ================= ~~================= ================~~ See accompanying notes to financial statements

TCC EQUIPMENT INCOME FUND (a California Limited Partnership) Statements of Partners' Capital For the ~~nine~~three months ended ~~September~~March 3031, ~~2003~~2005 and ~~2002~~2004 (Amounts in thousands) (unaudited) ------------------------------------------------------------------------------------------------------------------ Partners' Capital ---------------------------------------------------------- General Limited Total ---------------- ---------------- --------------- Balances at January 1, ~~2002~~2004 $ - $ 85,~~043~~398 $ 85,~~043~~398 Distributions (144) (~~1,037~~279) (~~1,051~~283) Redemptions (note 5) - (5013) (5013) Net earnings ~~(loss)~~4 1425 ~~(255)~~29 ~~(241)~~ ---------------- ---------------- --------------- Balances at ~~September~~March 3031, ~~2002~~2004 $ - $ 65,~~701~~131 $ 65,~~701~~131 ================ ================ =============== Balances at January 1, ~~2003~~2005 $ - $ 64,~~563~~040 $ 64,~~563~~040 Distributions (135) (~~954~~382) (~~967~~387) ~~Redemptions~~Net earnings (~~note~~loss) 5) - (4285) (4280) ~~Net earnings 13 90 103~~ ---------------- ---------------- --------------- Balances at ~~September~~March 3031, ~~2003~~2005 $ - $ 53,~~657~~573 $ 53,~~657~~573 ================ ================ ===============

See accompanying notes to financial statements

TCC EQUIPMENT INCOME FUND (a California Limited Partnership) Statements of Cash Flows For the ~~nine~~three months ended ~~September~~March 3031, ~~2003~~2005 and ~~2002~~2004 (Amounts in thousands) (unaudited) ----------------------------------------------------------------------------------------------------------------- ~~2003~~2005 ~~2002~~2004 ------------ ------------ Cash flows from operating activities: Net ~~earnings~~ (loss) $earnings ~~103~~ $ (~~241~~80) $ 29 Adjustments to reconcile net ~~earnings~~ (loss) earnings to net cash provided by operating activities: Depreciation (note 4) ~~513~~74 ~~673~~171 Write-down of containers (note 4) 12247 ~~113~~2 ~~Increase~~ (~~decrease~~Decrease) increase in allowance for doubtful accounts 3(1) 2 (11Gain) ~~Loss~~loss on sale of containers 57(36) 243 (Increase) decrease in assets: Accounts receivable 39(15) 6825 Due from affiliates, net 3 (4259) 6 Prepaid expenses 171 42 Increase (decrease) in liabilities: Accounts payable and accrued liabilities ~~(22)~~3 ~~17 Accrued recovery costs -~~ (175) Damage protection plan costs 113 2 Deferred damage protection plan revenue (1) - Accrued professional fees (1) (16) Accrued service provider fees (4) (5) ------------ ------------ Net cash provided by operating activities ~~735~~131 ~~591~~216 ------------ ------------ Cash flows from investing activities: Proceeds from sale of containers ~~238~~105 ~~449~~63 ------------ ------------ Net cash provided by investing activities ~~238~~105 ~~449~~63 ------------ ------------ Cash flows from financing activities: Redemptions of limited partnership units ~~(42)~~- (5013) Distributions to partners (~~967~~384) (~~1,052~~283) ------------ ------------ Net cash used in financing activities (~~1,009~~384) (~~1,102~~296) ------------ ------------ Net decrease in cash (36148) (6217) Cash at beginning of period ~~513~~545 ~~533~~467 ------------ ------------ Cash at end of period $ ~~477~~397 $ ~~471~~450 ============ ============ See accompanying notes to financial statements

TCC EQUIPMENT INCOME FUND (a California Limited Partnership) Statements Ofof Cash Flows--Continued For the ~~nine~~three months ended ~~September~~March 3031, ~~2003~~2005 and ~~2002~~2004 (Amounts in thousands) (unaudited) -------------------------------------------------------------------------------- Supplemental Disclosures: Supplemental schedule of non-cash investing and financing activities: The following table summarizes the amounts of distributions to partners and proceeds from sale of containers which had not been paid or received as of ~~September~~March 3031, ~~2003~~2005 and ~~2002~~2004, and December 31, ~~2002~~2004 and ~~2001~~2003, 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~~three-month periods ended ~~September~~March 3031, ~~2003~~2005 and ~~2002~~2004. ~~Sept~~Mar. 3031 Dec. 31 ~~Sept~~Mar. 3031 Dec. 31 ~~2003~~2005 ~~2002~~2004 ~~2002~~2004 ~~2001~~2003 ----------- ----------- ----------- ----------- Distributions to partners included in: Due to affiliates.............................. $ 14 $ 1 $ 1 $ 21 Proceeds from sale of containers included in: Due from affiliates............................ 5549 5946 7347 ~~110~~48 The following table summarizes the amounts of 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~~three-month periods ended ~~September~~March 3031, ~~2003~~2005 and ~~2002~~2004. ~~2003~~2005 ~~2002~~2004 ---- ---- Distributions to partners declared.............................................. $~~967~~387 $~~1,051~~283 Distributions to partners paid.................................................. ~~967~~384 ~~1,052~~283 Proceeds from sale of containers recorded....................................... ~~234~~108 ~~412~~62 Proceeds from sale of containers received....................................... ~~238~~105 ~~449~~63 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~~three-month periods ended ~~September~~March 3031, ~~2003~~2005 and ~~2002~~2004 was $18 and $43, respectively. See accompanying notes to financial statements

TCC EQUIPMENT INCOME FUND (a California Limited Partnership) Notes To Financial Statements For the three months ended March 31, 2005 and 2004 (Amounts in thousands except for unit and per unit amounts) (unaudited) -------------------------------------------------------------------------------- Note 1. General TCC Equipment Income Fund (the Partnership), a California limited partnership with a maximum life of 20 years, was formed in 1987. The Partnership owns a fleet of intermodal marine cargo containers, which are leased to international shipping lines. In January 1998, the Partnership ceased purchasing containers and in October 1998, the Partnership began its liquidation phase. At a Special Meeting of Limited Partners, held on March 21, 2005, a proposal to sell substantially all the Partnership's assets to RFH Limited ("RFH") and terminate and dissolve the Partnership was approved. The asset sale did not close on March 31, 2005 in accordance with the Asset Sale Agreement, as RFH requested, and the Partnership granted, an extension to April 15, 2005 to close the Asset Sale. See Note 6. The accompanying interim comparative financial statements have not been audited by an independent public accountant. However, all adjustments (which were only normal and recurring adjustments) which are, in the opinion of management, necessary to fairly present the financial position of the Partnership as of March 31, 2005 and December 31, 2004 and the results of its operations, changes in partners' capital and cash flows for the three-month periods ended March 31, 2005 and 2004, 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 annual audited financial statements as of and for the year ended December 31, 2004, 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 following critical accounting policies are 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. The Partnership depreciates its container rental equipment based on certain estimates related to the container's useful life and salvage value. Additionally, the Partnership writes down the value of its containers if an evaluation indicates that the recorded amounts of containers are not recoverable based on estimated future undiscounted cash flows and sales prices. These estimates are based upon historical useful lives of containers and container sales prices as well as assumptions about future demand for leased containers and estimated sales prices. Certain reclassifications, not affecting net (loss) earnings, have been made to prior year amounts in order to conform to the 2005 financial statement presentation. Note 2. Transactions with Affiliates 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. In accordance with the Partnership Agreement, Sections 3.08 through 3.11, net earnings and distributions are generally allocated 1% to the General Partners and 99% to the Limited Partners. Effective October 1998, the allocation of distributions to the General Partners was increased to 1.3% in accordance with Section 2.05 of the Partnership Agreement. In addition, if the allocation of distributions exceeds the allocation of net earnings (loss) 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. As part of the operation of the Partnership, the Partnership is to pay to the General Partners 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 incurred $- and $8 of incentive management fees during the three-month periods ended March 31, 2005 and 2004, respectively. There were no equipment liquidation fees incurred during the three-month periods ended March 31, 2005 and 2004. 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 March 31, 2005 and December 31, 2004. Subject to certain reductions, TEM receives a monthly equipment management fee equal to 7% of gross lease revenues attributable to operating leases and 2% of gross lease revenues attributable to full payout net leases. These fees totaled $26 and $27 for the three-month periods ended March 31, 2005 and 2004, 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 during the three-month periods ended March 31, 2005 and 2004 were as follows: 2005 2004 ---- ---- Salaries $20 $11 Other 10 7 -- -- Total general and administrative costs $30 $18 == == 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 interest in the managed containers to the total container fleet managed by TFS during the period, or the Partnership's investors to the total number of investors of all limited partnerships managed by TFS or equally among all the limited partnerships managed by TFS. The General Partners allocated the following general and administrative costs to the Partnership during the three-month periods ended March 31, 2005 and 2004: 2005 2004 ---- ---- TEM $14 $15 TFS 16 3 -- -- Total general and administrative costs $30 $18 == == At March 31, 2005 and December 31, 2004, due from affiliates, net is comprised of: 2005 2004 ---- ---- Due from affiliates: Due from TEM....................... $132 $62 --- -- Due to affiliates: Due to TCC......................... 21 8 Due to TFS......................... 10 12 --- -- 31 20 --- -- Due from affiliates, net $101 $42 === == 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 March 31, 2005 and 2004: 2005 2004 ---- ---- On-lease under master leases 1,790 1,900 On-lease under long-term leases 1,094 1,059 ----- ----- Total on-lease containers 2,884 2,959 ===== ===== 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 number of storage depots. Note 4. Container Rental Equipment and Container Rental Equipment Held for Sale At March 31, 2005, all of the Partnership's containers had been identified as held for sale. At June 30, 2004, the Partnership had written down the value of containers that had carrying values greater than the sales prices in the letter of intent from RFH for the sale of the container fleet. At March 31, 2005, the Partnership evaluated the recoverability of the recorded amount of the container fleet, now identified as held for sale, taking into consideration (i) the prices in the Asset Sale Agreement and (ii) RFH's rights, under the Asset Sale Agreement, to the estimated results of operations from the container fleet from January 1, 2005 to the date of the Asset Sale. This comparison resulted in the Partnership recording a write down of $247. See Note 6 for details on the completion of the Asset Sale. The Partnership evaluated the recoverability of the recorded amount of container rental equipment at March 31, 2004 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 at March 31, 2004 and determined that a reduction to the carrying value of some of these containers was required. The Partnership wrote down the value of these containers to their estimated net realizable value, which was based on recent sales prices less cost to sell. These containers are included in container rental equipment in the balance sheets. During the three-month period ended March 31, 2004 the Partnership recorded a write-down expense of $2 on 16 containers identified as held for sale and requiring a reserve. At March 31, 2004 the net book value of the 14 containers identified as held for sale was $11. During the three-month period ended March 31, 2004, the Partnership sold 18 of these previously written down containers for a gain of $-. The Partnership also sold containers that had not been written down and recorded a loss of $3 during the three-month period ended March 31, 2004.

Note 5. Redemptions The following redemptions were consummated by the Partnership during the ~~nine~~three-month ~~periods~~period ended ~~September~~March 3031, ~~2003 and 2002~~2004: Units Average Redeemed Redemption Price Amount Paid -------- ---------------- ----------- Total Partnership redemptions as of December 31, ~~2001~~2003....................... 4079,~~966~~655 $65.3605 $~~260~~402 ~~Nine~~Three-month period ended: ~~September~~March 3031, ~~2002~~2004......................... 114,~~874~~250 $43.2006 5013 ------ --- Total Partnership redemptions as of ~~September~~83,905 30$4.95 $415 March 31, ~~2002~~2004...................... ~~52,840 $5~~.87.. ~~$310~~ ====== === ~~Total~~The Partnership ~~redemptions~~did asnot ofredeem ~~December~~any ~~31,~~units ~~2002.......................~~during ~~58,115~~the ~~$5.68 $330 Nine~~three-month period ended ~~September~~March 3031, ~~2003~~2005.~~.....................~~ ~~12,290 $3.42 42 ------ --- Total Partnership redemptions as of September 30, 2003...................... 70,405 $5.30 $372 ====== ===~~ The redemption price is fixed by formula in accordance with the Partnership Agreement.

Note 6. Subsequent Events On April 14, 2005, RFH requested a short postponement of the closing date of the Asset Sale due to a lawsuit filed on April 11, 2005, in the Superior Court of California against the Partnership, RFH and other parties related to the sale. (This lawsuit was described in a report on Form 8-K filed on April 15, 2005.) The Partnership agreed to postpone the closing date for the sale until April 19, 2005. The Partnership completed the sale of substantially all of its assets to RFH on April 18, 2005. The total price paid by RFH on April 18, 2005 was $3,296, which consisted of $3,270 for substantially all of the Partnership's assets and $26 in interest. The Partnership received $3,131, or 95%, of the total price and the remaining $165, or 5%, was paid to an escrow account. On August 1, 2005, any remaining balance in the escrow account is scheduled to be paid to the Partnership, unless a claim for indemnification under the Asset Sale Agreement is made by RFH, in which case the amount of such claim will remain in the escrow account. In April 2005, the lawsuit filed with the United States District Court for the Northern District of California against the Partnership, RFH and other parties related to the sale was consolidated with another suit filed against other Textainer partnerships, RFH and other parties related to the sale. In May 2005, the Partnership declared $3,215 as a liquidating distribution. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Amounts in thousands except for unit and per unit amounts) -------------------------------------------------------------------------------- The Financial Statements contain information which will assist in evaluating the financial condition of the Partnership for the three-month periods ended March 31, 2005 and 2004. 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. Overview of Partnership's Current Status As of the date this report is being prepared, the Partnership has sold substantially all of its assets (the "Asset Sale") and anticipates paying to partners a majority of the proceeds of this sale in May 2005. The Partnership will then be in the final stages of liquidation and will begin to wind up its affairs. The Asset Sale was completed on April 18, 2005, which meant that the Partnership recorded revenues and expenses related to its container fleet through that date. However, under the Asset Sale Agreement, RFH was entitled to the results of operations from the container fleet from January 1, 2005 to the date of the Asset Sale. See "Write Down of Containers" below. Sale of Partnership's Assets In November 2004, the Partnership and five other limited partnerships managed by the General Partners and their affiliates entered into Asset Sale Agreements with RFH ("the Buyer") to sell substantially all of their assets. At a Special Meeting of Limited Partners, held on March 21, 2005, the limited partners of the Partnership approved the Asset Sale. On April 18, 2005, the Asset Sale was completed. The Partnership received $3,131, or 95%, of the total price and the remaining $165, or 5%, was paid to an escrow account. On August 1, 2005, any remaining balance in the escrow account is scheduled to be paid to the Partnership, unless a claim for indemnification under the Asset Sale Agreement is made by RFH, in which case the amount of such claim will remain in the escrow account. In May 2005, the Partnership plans to pay the first of two planned final liquidating distributions. This distribution will consist of the proceeds received from the Asset Sale plus cash held by the Partnership at March 31, 2005, less the estimated total remaining expenses of the Partnership. A second distribution is planned after the funds in the escrow account are released, which is currently scheduled to be August 1, 2005. The second distribution will be substantially smaller than the first, since the first distribution is expected to represent a majority of the proceeds realized from the Asset Sale. This second distribution is expected to be the Partnership's final distribution. There can be no guarantee about the timing or amount of the final distribution, since this distribution is still subject to conditions and future events, including the absence of any claim by the Buyer against the funds in the escrow account or any other legal restriction that could interfere with payment. Liquidity and Capital Resources Historical From October 1987 until October 1989, the Partnership offered limited partnership interests to the public. The Partnership received its minimum subscription amount of $1 on April 8, 1988, and on October 26, 1989, the Partnership's offering of limited partnership interests was closed at $29,491. General The Partnership has been in its liquidation phase since October 1998, which means that from that time forward, the Partnership no longer sought to replenish its container fleet by buying new containers, and considered the possibility of selling containers, either in one or more groups, or individually when the containers came off lease. During this phase, the Partnership's policy has generally been that all excess cash, after redemptions and working capital reserves, will be distributed to the general and limited partners on a quarterly basis. These distributions have consisted of cash from operations and/or cash from sales proceeds. In April 2005, the Partnership sold substantially all its assets. The Partnership plans to distribute its remaining cash during 2005 and terminate its existence. Sources of Cash On April 18, 2005, the Partnership sold its container fleet for cash to RFH. The Partnership plans to distribute a majority of the proceeds from the Asset Sale in May 2005 and to retain some cash to pay its anticipated remaining expenses. Additional sources of cash are expected to consist only of (i) the 5% of the sale proceeds currently being held in an escrow account; (ii) accounts receivable not included in the Asset Sale; and (iii) interest earned on these cash balances. Uses of Cash Distributions to partners are the Partnership's primary use of cash. The amount of distributions paid to partners has been dependent on cash received from operations and the sale of containers, less amounts used to pay redemptions or held as working capital. From time to time, the Partnership redeemed 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 were subject to the Managing General Partner's good faith determination that payment for the redeemed units would 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. These activities are discussed in detail below. Distributions: During the three-month period ended March 31, 2005, the Partnership declared cash distributions to limited partners pertaining to the fourth quarter of 2004 in the amount of $382, which represented $0.27 per unit. On a cash basis, as reflected in the Statements of Cash Flows, after paying general partner distributions, $126 of these distributions were from operating activities and the balance of $256 was a return of capital. On an accrual basis, as reflected on the Statements of Partners' Capital, all of these distributions were a return of capital. In May 2005, the Partnership declared the first of two final liquidating cash distributions to limited partners in the amount of $2.28 per unit, or 11% of the original per unit cost of $20.00. This distribution consists of sales proceeds received by the Partnership on April 18, 2005, plus cash balances at March 31, 2005, less the estimated total remaining expenses of the Partnership. The Partnership plans to pay a second and final liquidating distribution during the third quarter of 2005. Payment of the second liquidating distribution is currently expected to be contingent on the release of funds from the escrow account, in which 5% of the proceeds from the Asset Sale are currently held. The funds are scheduled to be released on August 1, 2005, unless a claim for indemnification is made by the Buyer under the agreement governing the Asset Sale, in which case the amount of the claim would continue to be held in the escrow account. Payment of this second liquidating distribution could also be delayed or otherwise affected by legal restrictions imposed on the Partnership as a result of certain lawsuits filed with respect to the Asset Sale, and which have been previously described in the Partnership's report on Form 10-K filed on March 30, 2005 and in the Partnership's report on Form 8-K filed on April 15, 2005. In addition to the funds released from the escrow account, this second distribution may include cash received after March 31, 2005 related to accounts receivable which were not sold to RFH and interest. The amount of the second distribution may also be adjusted to reflect the then-anticipated final amounts of the Partnership's expenses. The amount of the second distribution is expected to be substantially lower than the first distribution, since the first distribution consists of almost all the proceeds from the sale of the Partnership's fleet and any cash held on March 31, 2005, less amounts held back for the Partnership's remaining expenses. Capital Commitments: Redemptions: There were no units redeemed during the three-month period ended March 31, 2005 and the Partnership does not anticipate redeeming units prior to its termination. The Partnership invests working capital and cash flow from operations and investing activities prior to its distribution to the partners in short-term, liquid investments. Results of Operations As noted above, under the Asset Sale Agreement, RFH was entitled to the results of operations from the container fleet from January 1, 2005 to the date of the Asset Sale. As a result, the Partnership determined that certain containers were impaired and recorded a write-down expense as described below in "Critical Accounting Policies and Estimates." These items are discussed below, as well as direct container and depreciation expenses, gain and loss on sale of containers, and professional fees and general and administrative costs. Write Down of Containers Write-down expense increased $245 from the three-month period ended March 31, 2004 to the same period in 2005. The increase was primarily due to the Partnership recording a write-down of $247 in March 2005. The write-down occurred because, under the Asset Sale Agreement, RFH was entitled to the results of operations from the container fleet from January 1, 2005 to the date of the Asset Sale. See "Critical Accounting Policies and Estimates" below. This write-down did not affect the cash paid by RFH under the Asset Sale Agreement, since the Agreement had contemplated that RFH would be entitled to these results of operations, and RFH paid the sales price originally agreed to in November, plus interest. Direct Container Expenses Direct container expenses decreased $53, or 49%, from the three-month period ended March 31, 2004 to the equivalent period in 2005. The decrease in expense was primarily due to declines in repositioning and storage expenses of $27 and $17, respectively. Repositioning expense declined due to the decline in the number of containers repositioned between the periods. Storage expense decreased not only due to the decrease in average fleet size, but also due to the increase in utilization. The decrease was partially offset by higher average storage costs per container. Depreciation Expense Depreciation expense decreased $97, or 57%, from the three-month period ended March 31, 2004 to the comparable period in 2005 primarily due to (i) the write-down recorded in June, 2004, which reduced the carrying value of certain containers and resulted in a lower depreciation expense during the first quarter of 2005; (ii) the declines in the average fleet size between the periods; and (iii) the Partnership recording depreciation expense only through March 21, 2005, the date the limited partners approved the Asset Sale and the containers were reclassified as held for sale. Gain (Loss) on Sale of Containers The following details the gain (loss) on the sale of containers for the three-month periods ended March 31, 2005 and 2004: 2005 2004 ---- ---- Gain (loss) on sale of containers $36 $(3) == == The gain in the table above for the first quarter of 2005 is for containers sold prior to the sale of the entire fleet, which occurred after the end of the first quarter, on April 18, 2005. The amount of gain or loss recorded on the sale of containers has fluctuated due to the specific conditions of the containers sold, the type of containers sold, the location where the containers were sold and their net book value. The gain recorded during the three-month period ended March 31, 2005 was primarily due to the significant reduction in net book value as a result of the previous write-downs and the container sales prices received during the first quarter of 2005. Professional Fees and General and Administrative Costs Professional fees increased $23 from the three-month period ended March 31, 2004 to 2005. The increase was primarily due to the increase in legal fees between the periods. Legal fees increased primarily due to additional fees incurred related to the proxy statement. General and administrative costs to affiliates increased $12 from the three-month period ended March 31, 2004 to 2005, primarily due to an increase in overhead costs allocated from TFS. Other general and administrative costs were $27, an increase of $23 from the three-month period ended March 31, 2004 to 2005. The increase was primarily due to solicitation, printing and mailing costs associated with the proxy statement materials mailed in January 2005. Critical Accounting Policies and Estimates Certain estimates and assumptions were made by the Partnership's management that affect its financial statements. These estimates are based on historical experience and on assumptions believed to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying value of assets and liabilities. Actual results could differ. 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. Allowance for Doubtful Accounts: The allowance for doubtful accounts is 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 General Partners have established a Credit Committee, which actively manages and monitors the collection of receivables on at least a monthly basis. This committee establishes credit limits for every lessee and potential lessee of equipment, monitors compliance with these limits, monitors collection activities, follows up on the collection of outstanding accounts, determines which accounts should be written-off and estimates allowances for doubtful accounts. As a result of actively managing these areas, the Partnership's allowance for bad debt as a percentage of accounts receivable has ranged from 6% to 12% and has averaged approximately 9% over the last 5 years. These allowances have historically covered all of the Partnership's bad debts. Container Impairment Estimates: Write-downs of containers were made when it was determined that the recorded value of the containers exceeded their estimated fair value. On March 21, 2005, the limited partners approved the Asset Sale at the Special Meeting of Limited Partners, and the Partnership's entire container fleet was reclassified as held for sale. The Partnership compared the recorded amount of containers identified as for sale to the sales prices detailed in the Asset Sale Agreement with RFH, less the amount equal to the estimated results of operations from the container fleet from January 1, 2005 through April 18, 2005. Once these amounts were compared to the recorded values, the recorded values of some of the containers were found to be higher. The Partnership, therefore, recorded an impairment. Risk Factors and Forward Looking Statements The Partnership sold substantially all of its assets in April, 2005 and has described above plans to pay final liquidating distributions in 2005 and terminate. No assurance can be given that these events will occur. The risks and uncertainties associated with these events include, but are not limited to, the following: the timely release of the remaining sales proceeds from the escrow account; the absence of any legal restrictions that would interfere with the payment of the final liquidating distributions; and any other events that may arise as a result of future developments in certain lawsuits filed regarding the Asset Sale. The Partnership does not undertake any obligation to update any of its forward-looking statements. Item 4. Controls and Procedures. Based on an evaluation of the Partnership's disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934), the managing general partner's principal executive officer and principal financial officer have found those controls and procedures to be effective as of the end of the period covered by the report. There has been no change in the Partnership's internal control over financial reporting that occurred during the Partnership's last fiscal quarter, and which has materially affected, or is reasonably likely materially to affect, the Partnership's internal control over financial reporting. Part II. OTHER INFORMATION Item 1. Legal Proceedings Two lawsuits regarding the Asset Sale, one of which named the Partnership as a defendant and both of which named RFH and other parties related to the sale as defendants, were previously described in the Partnership's report on Form 10-K filed March 30, 2005. These two lawsuits (Gordon v. Textainer Financial Services, et al., Case No. C 05-01146 CRB, and Lewis, et al. v. Textainer Financial Services, et al., Case No. C 05-0969 MMC) were both filed in the United States District Court for the Northern District of California and have now been consolidated into Civil Action No. C 05-00969 MMC, captioned "In re Textainer Partnership Securities Litigation." There have been no material developments in the lawsuit filed in the Superior Court of California, San Francisco County, Case No. CGC-05-440303 (Labow v. Textainer Financial Services, et al.) and described in the Partnership's report on Form 8-K filed on April 15, 2005. Item 6. Exhibits (a) Exhibits 31.1 and 31.2 Certifications pursuant to Rules 13a-14 or 15d-14 of the Securities and Exchange Act of 1934. Exhibits 32.1 and 32.2 Certifications pursuant to 18 U.S.C. Section 1350, as adopted, and regarding Section 906 of the Sarbanes-Oxley Act of 2002.

Part II Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 31.1 and 31.2 Certifications pursuant to Rules 13a-14 or 15d-14 of the Securities and Exchange Act of 1934. Exhibits 32.1 and 32.2 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. TCC EQUIPMENT INCOME FUND A California Limited Partnership By Textainer Financial Services Corporation The Managing General Partner By _______________________________ Ernest J. Furtado Chief Financial Officer Date: ~~November~~May 1216, ~~2003~~2005 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 ________________________ Chief Financial Officer, Senior ~~November~~May 1216, ~~2003~~2005 Ernest J. Furtado Vice President and Secretary ________________________ President ~~November~~May 1216, ~~2003~~2005 John A. Maccarone

Part II Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 31.1 and 31.2 Certifications pursuant to Rules 13a-14 or 15d-14 of the Securities and Exchange Act of 1934. Exhibits 32.1 and 32.2 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. TCC EQUIPMENT INCOME FUND A California Limited Partnership By Textainer Financial Services Corporation The Managing General Partner By /s/Ernest J. Furtado ~~___________________________________~~________________________________ Ernest J. Furtado Chief Financial Officer Date: ~~November~~May 1216, ~~2003~~2005 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 ~~November~~________________________________ ~~12, 2003 _______________________________~~ Chief Financial Officer, Senior May 16, 2005 Vice President and Secretary Ernest J. Furtado /s/John A. Maccarone ~~November~~________________________________ ~~12,~~President ~~2003~~May ~~_______________________________~~16, ~~President~~2005 John A. Maccarone

EXHIBIT 31.1 CERTIFICATIONS I, John A. Maccarone, certify that: 1. I have reviewed this quarterly report on form 10-Q of TCC Equipment Income Fund; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) for the registrant and we have: a.) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; b.) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c.) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b.) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. May 16, 2005 /s/ John A. Maccarone ______________________________ John A. Maccarone President and Director of TFS EXHIBIT 31.2 CERTIFICATIONS I, Ernest J. Furtado, certify that: 1. I have reviewed this quarterly report on form 10-Q of TCC Equipment Income Fund; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) for the registrant and we have: a.) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; b.) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c.) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b.) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. May 16, 2005 /s/ Ernest J. Furtado _______________________________________________ Ernest J. Furtado Chief Financial Officer, Senior Vice President, Secretary and Director of TFS EXHIBIT 32.1 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 TCC Equipment Income Fund, (the "Registrant") on Form 10-Q for the quarterly period ended March 31, 2005, as filed on May 16, 2005 with the Securities and Exchange Commission (the "Report"), I, John A. Maccarone, the President and Director of Textainer Financial Services Corporation ("TFS") and Principal Executive Officer of TFS, 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. May 16, 2005 By /s/ John A. Maccarone ________________________________________ John A. Maccarone President and Director of TFS A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. EXHIBIT 32.2 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 TCC Equipment Income Fund, (the "Registrant") on Form 10-Q for the quarterly period ended March 31, 2005, as filed on May 16, 2005 with the Securities and Exchange Commission (the "Report"), I, Ernest J. Furtado, Chief Financial Officer, Senior Vice President, Secretary and Director of Textainer Financial Services Corporation ("TFS") and Principal Financial and Accounting Officer of TFS, 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. May 16, 2005 By /s/ Ernest J. Furtado _______________________________________________ Ernest J. Furtado Chief Financial Officer, Senior Vice President, Secretary and Director of TFS A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

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