10-Q 1 f4_3q03.txt TEXTAINER FINANCIAL SERVICES CORPORATION 650 California Street, 16th Floor San Francisco, CA 94108 November 12, 2003 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 IV, L.P. (the "Partnership") the Partnership's Quarterly Report on Form 10-Q for the Third Quarter ended September 30, 2003. 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, 2003 Commission file number 0-21228 TEXTAINER EQUIPMENT INCOME FUND IV, L.P. A California Limited Partnership (Exact name of Registrant as specified in its charter) California 94-3147432 (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]

TEXTAINER EQUIPMENT INCOME FUND IV, L.P. (a California Limited Partnership) Notes To Financial Statements For the three and nine months ended September 30, 2003 and 2002 (Amounts in thousands except for unit and per unit amounts) (unaudited) -------------------------------------------------------------------------------- Note 1. General Textainer Equipment Income Fund IV, L.P. (the Partnership), a California limited partnership with a maximum life of 20 years, was formed in 1991. The Partnership owns a fleet of intermodal marine cargo containers, which are leased to international shipping lines. The accompanying interim comparative financial statements have not been audited by an independent public accountant. However, all adjustments (which were only normal and recurring adjustments) which are, in the opinion of management, necessary to fairly present the financial position of the Partnership as of September 30, 2003 and December 31, 2002 and the results of its operations for the three and nine-month periods ended September 30, 2003 and 2002 and changes in partners' capital and cash flows for the nine-month periods ended September 30, 2003 and 2002, 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, 2002, 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 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 Partnership adopted SFAS No. 146 on January 1, 2003 and there was no material impact on the Partnership's financial condition, operating results or cash flow. Note 2. Transactions with Affiliates Textainer Financial Services Corporation (TFS) is the managing general partner of the Partnership. TFS 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 3.12, 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 $129 and $75 of container acquisition fees as a component of container costs during the nine-month periods ended September 30, 2003 and 2002, respectively. The Partnership incurred $69 and $203 of incentive management fees during the three and nine-month periods ended September 30, 2003, respectively, and $20 and $162, respectively, for the comparable periods in 2002. 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, 2003 and December 31, 2002. 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 $229 and $698 for the three and nine-month periods ended September 30, 2003, respectively, and $215 and $586, respectively, for the comparable periods in 2002. 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 TFS and TEM. General and administrative costs allocated to the Partnership during the three and nine-month periods ended September 30, 2003 and 2002 were as follows: Three months Nine months ended Sept. 30, ended Sept. 30, --------------- --------------- 2003 2002 2003 2002 ---- ---- ---- ---- Salaries $ 80 $100 $255 $318 Other 74 49 216 171 --- --- --- --- Total general and administrative costs $154 $149 $471 $489 === === === === 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 either based on the ratio of 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 and nine-month periods ended September 30, 2003 and 2002: Three months Nine months ended Sept. 30, ended Sept. 30, --------------- --------------- 2003 2002 2003 2002 ---- ---- ---- ---- TEM $131 $131 $407 $420 TFS 23 18 64 69 --- --- --- --- Total general and administrative costs $154 $149 $471 $489 === === === === 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, 2003 and December 31, 2002, due from affiliates, net was comprised of: 2003 2002 ---- ---- Due from affiliates: Due from TEM..................... $324 $174 --- --- Due to affiliates: Due to TFS....................... 67 71 Due to TCC....................... 9 18 Due to TL........................ 1 1 --- --- 77 90 --- --- Due from affiliates, net $247 $ 84 === === 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, 2003 and 2002: 2003 2002 ---- ---- On-lease under master leases 14,482 15,844 On-lease under long-term leases 8,123 6,773 ------ ------ Total on-lease containers 22,605 22,617 ====== ====== 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 of the containers to the Partnership at any time, subject to certain restrictions in the lease agreement. Under long-term lease agreements, containers are usually leased from the Partnership for periods of between three to five years. Such leases are generally cancelable with a penalty at the end of each twelve-month period. Under direct finance leases, the containers are usually leased from the Partnership for the remainder of the container's useful life with a purchase option at the end of the lease term. The remaining containers are off-lease and are being stored primarily at a large number of storage depots. At September 30, 2003 and 2002, the Partnership's off lease containers were in the following locations: 2003 2002 ---- ---- Americas 1,919 2,675 Europe 696 1,408 Asia 1,948 1,804 Other 137 131 ----- ----- Total off-lease containers 4,700 6,018 ===== ===== At September 30, 2003 approximately 5% of the Partnership's off-lease containers had been specifically identified as for sale. 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 both the three and nine-month periods ended September 30, 2002 was an increase to depreciation expense of $515. 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 and have remained low through 2003. As a result, the cost of new containers purchased in recent years is significantly less than the average cost of containers purchased in prior years. The Partnership evaluated the recoverability of the recorded amount of container rental equipment at September 30, 2003 and 2002 for containers to be held for continued use and determined that a reduction to the carrying value of these containers was not required. The Partnership also evaluated the recoverability of the recorded amount of containers identified for sale in the ordinary course of business and determined that a reduction to the carrying value of 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. During the nine-month periods ended September 30, 2003 and 2002, the Partnership recorded write-down expenses of $281 and $1,646, respectively, on 568 and 2,015 containers identified for sale and requiring a reserve. During the three-month periods ended September 30, 2003 and 2002, the Partnership recorded write-down expenses of $62 and $345, respectively, on 228 and 396 containers identified for sale and requiring a reserve. Additionally, during the nine-month periods ended September 30, 2003 and 2002, the Partnership reclassified 30 and 226 containers from containers identified for sale to containers held for continued use due to the improvement in demand for leased containers in Asia. At September 30, 2003 and 2002, the net book value of the 254 and 626 containers identified for sale was $230 and $543, respectively. The Partnership sold 541 previously written down containers for a loss of $49 during the nine-month period ended September 30, 2003 and sold 2,005 previously written down containers for a loss of $96 during the same period in 2002. During the three-month period ended September 30, 2003, the Partnership sold 173 previously written down containers for a loss of $9 and sold 570 previously written down containers for a loss of $24 during the same period in 2002. The Partnership incurred losses on the sale of some containers previously written down as the actual sales prices received on these containers were lower than the estimates used for the write-downs. The Partnership also sold containers that had not been written down and recorded losses of $382 and $969 during the nine-month periods ended September 30, 2003 and 2002, respectively. During the three-month periods ended September 30, 2003 and 2002 the Partnership recorded losses of $339 and $242, respectively, on the sale of containers that had not been written down. As more containers are subsequently identified for sale or if container sales prices decline, the Partnership may incur additional write-downs on containers and/or may incur losses on the sale of containers. The Partnership will continue to evaluate the recoverability of the recorded amounts of container rental equipment.

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, 2003 and 2002. Please refer to the Financial Statements and Notes thereto in connection with the following discussion. Textainer Financial Services Corporation (TFS) is the Managing General Partner of the Partnership and is a wholly-owned subsidiary of Textainer Capital Corporation (TCC). Textainer Equipment Management Limited (TEM) and Textainer Limited (TL) are Associate General Partners of the Partnership. The General Partners manage and control the affairs of the Partnership. Liquidity and Capital Resources From May 1, 1992 until April 30, 1994, the Partnership offered limited partnership interests to the public. The Partnership received its minimum subscription amount of $5,000 on June 11, 1992 and on April 30, 1994 the Partnership had received a total subscription amount of $136,918. The Partnership invests working capital, cash flow from operating activities 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 is affected by market conditions for leased containers. 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, 2003, the Partnership declared cash distributions to limited partners pertaining to the period from December 2002 through August 2003 in the amount of $4,887. On a cash basis, as reflected on the Statements of Cash Flows, after paying redemptions and general partner distributions, all of these distributions were from current year operating activities. On an accrual basis, as reflected on the Statements of Partners' Capital, 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, 2003, the Partnership redeemed 44,502 units for a total dollar amount of $238. The Partnership used cash flow from operating activities to pay for the redeemed units. Net cash provided by operating activities for the nine-month periods ended September 30, 2003 and 2002 was $6,245 and $3,549, respectively. The increase of $2,696, or 76%, was primarily attributable to the fluctuations in net loss, adjusted for non-cash transactions, in due from affiliates, net and accrued damage protection plan costs. Net loss, adjusted for non-cash transactions, decreased primarily due to the increase in rental income and decrease in direct container expenses. These items are discussed more fully in "Results of Operations." The fluctuations in due from affiliates, net, resulted from timing differences in the payment of expenses, fees and distributions and the remittance of net rental revenues and container sales proceeds, as well as fluctuations in these amounts. The increase in accrued damage protection plan costs during the nine month period ended September 30, 2003 was primarily due to an increase in the number of containers covered under the plan. At September 30, 2003, the Partnership had no commitments to purchase containers. For the nine-month period ended September 30, 2003, net cash used in investing activities (the purchase and sale of containers) was $142 compared to net cash provided by investing activities of $1,626 for the comparable period in 2002. The decrease of $1,768 was due to decreases in proceeds from container sales. Cash used for container purchases was comparable between the periods, primarily due to timing differences in the accrual and payment of these purchases. Proceeds from container sales decreased primarily due to the Partnership selling fewer containers during the nine-month period ended September 30, 2003 than in the same period in 2002. Some containers were sold in low demand locations. 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 rather than incurring the expense of repositioning them. The number of containers sold, both in low demand locations and elsewhere, as well as the average sales price, 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. Reinvestment is expected to continue until the Partnership begins its liquidation phase, which is estimated to begin in 2004. 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. Although the Partnership had cash from operations available to reinvest in additional containers during the nine-month period ended September 30, 2003, there was no cash from operations available to reinvest in additional containers during the years ended December 31, 2002 and 2001. Sales proceeds, rather than cash from operations available for reinvestment, have been the primary source of funds for reinvestment in additional containers. 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 in recent years. 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 has affected 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, 2003 and 2002, 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: 2003 2002 ---- ---- Beginning container fleet............... 28,024 31,411 Ending container fleet.................. 27,305 28,635 Average container fleet................. 27,665 30,023 The average container fleet decreased 8% from the nine-month period ended September 30, 2002 to the comparable period in 2003, primarily due to sales of containers. As noted, above, when containers are sold, sales proceeds are not likely to be sufficient to replace all of the containers sold, resulting in the continuing decline in the average container fleet. This trend is expected to continue. Other factors related to this trend are discussed above in "Liquidity and Capital Resources." The Partnership's primary source of funds for container purchases is these sales proceeds. The rate of decline in average fleet size may fluctuate due to timing differences in the purchase and sale of containers and fluctuations in container sale and purchase prices during each period. Rental income and direct container expenses are also affected by the utilization of the container fleet, which was 81% and 59% on average during the nine-month periods ended September 30, 2003 and 2002, respectively. The remaining container fleet is off-lease and is being stored primarily at a large number of storage depots. At September 30, 2003 and 2002, utilization was 83% and 79%, respectively, and the Partnership's off-lease containers (in units) were located in the following locations: 2003 2002 ---- ---- Americas 1,919 2,675 Europe 696 1,408 Asia 1,948 1,804 Other 137 131 ----- ----- Total off-lease containers 4,700 6,018 ===== ===== At September 30, 2003 approximately 5% of the Partnership's off-lease containers had been specifically identified as for sale. In addition to utilization, rental income is affected by daily rental rates. The average daily rental rate for the Partnership's containers decreased 8% between the periods. Average rental rates declined primarily due to the decline in long term lease rates. The decline in average rental rates under master leases between the periods was minor. The majority of the Partnership's rental income was generated from leasing of the Partnership's containers under master operating leases, but in the past several years an increasing percentage of the Partnership's containers have been on lease under long term leases. At September 30, 2003 and 2002, 36% and 30%, respectively, of the Partnership's on-lease containers were on lease under long term leases. 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, 2003 and 2002. The Partnership's loss from operations for the nine-month periods ended September 30, 2003 and 2002 was $401 and $4,090, respectively, on rental income of $9,947 and $8,362, respectively. The increase in rental income of $1,585, or 19%, from the nine-month period ended September 30, 2002 to the comparable period in 2003 was attributable to increases in container rental income and other rental income, which is discussed below. Income from container rentals, the major component of total revenue, increased $1,414, or 20%, primarily due to an increase in the average on-hire utilization of 37%, offset by the decreases in average rental rates of 8% and average fleet size of 8%. Beginning in March 2002, utilization began to improve and improved steadily through the end of 2002. Utilization declined slightly in the first quarter of 2003, which is traditionally a slow period for container demand, improved during the second quarter and was stable in the third quarter of 2003. Utilization has remained relatively strong due to a large volume of export cargo out of Asia, a larger percentage of containers under long term lease and efforts by the General Partners to reduce the quantities of containers that can be redelivered in low demand locations. However, rental rates continued to slowly decline primarily due to low new container prices, low interest rates and low rates offered by competitors. The General Partners are cautiously optimistic that current utilization levels can be maintained during the next several months. However, the General Partners caution that market conditions could deteriorate again due to global economic and political 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. Although demand for leased containers has improved, the trade imbalance between Asia and the Americas continues. As a result, a large portion of the Partnership's off-lease containers are located in low demand locations in the Americas as detailed in the above chart. For these and other off-lease containers, the Partnership determines whether these containers should be sold or held for continued use. The decision to sell containers is based on the current expectation that the economic benefit of selling these containers is greater than the estimated economic benefit of continuing to own these containers. The majority of the containers sold are older containers. The expected economic benefit of continuing to own these older containers is significantly less than that of newer containers. This is due to their shorter remaining marine life, the cost to reposition them, and the shipping lines' preference for leasing newer containers when they have a choice. Once the decision is made to sell containers, the Partnership writes down the value of these specifically identified containers when the carrying value is greater than the container's estimated net realizable value, which is based on recent sales prices less cost of sales. Container sales prices appear to have stabilized as the average sales price for containers sold by TEM on behalf of the Partnership as well as other container owners was comparable for the nine-month periods ended September 30, 2003 and 2002. Fluctuations in average sales prices between the periods are primarily due to the type of container sold as well as the location of the container. 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, 2003, other rental income was $1,494, an increase of $171 from the equivalent period in 2002. The increase was primarily due to increases in DPP and location income of $221 and $72, offset by the decrease in handling income of $147. DPP income increased primarily due to an increase in the number of containers covered under DPP. Location income increased primarily due to the increase in charges to one lessee who required containers to be delivered to specific locations. Handling income decreased primarily due to the decline in container movement. Direct container expenses decreased $738, or 23% from the nine-month period ended September 30, 2002, to the same period in 2003. The decrease was primarily due to decreases in storage and handling expenses of $1,170 and $105, respectively, offset by increases in repositioning and DPP expenses of $381 and $132, respectively. Storage expense decreased primarily due to the increase in utilization noted above and the decrease in the average storage cost per container. The decline in handling expense was primarily due to the decline in container movement. Repositioning expense increased due to an increase in the average repositioning cost due to (i) expensive repositioning moves related to one lessee who required containers to be delivered to certain locations as discussed above and (ii) longer average repositioning moves. The increase in DPP expense was primarily due to an increase in the number of containers covered under DPP. Bad debt expense was $84 and $17 for the nine-month periods ended September 30, 2003 and 2002, respectively. Fluctuations in bad debt expense reflect the adjustments to the bad debt reserve, after deductions have been taken against the reserve, and are based on management's then current estimates of the portion of accounts receivable that may not be collected, and which will not be covered by insurance. These estimates are based primarily on management's current assessment of the financial condition of the Partnership's lessees and their ability to make their required payments. The expenses recorded during the nine-month periods ended September 30, 2003 and 2002 reflect higher reserve estimates, after deductions had been taken against the reserve, from December 31, 2002 and 2001. Depreciation expense increased $570, or 11% from the nine-month period ended September 30, 2002 to the comparable period in 2003. The increase was primarily due to an increase in the depreciation rate as a result of the Partnership revising its estimate for container salvage value from a percentage of equipment cost to an estimated dollar residual value effective July 1, 2002. 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 and have remained low through 2003. As a result, the cost of new containers purchased in recent years is significantly less than the average cost of containers purchased in prior years. The Partnership evaluated the recoverability of the recorded amount of container rental equipment at September 30, 2003 and 2002 for containers to be held for continued use and determined that a reduction to the carrying value of these containers was not required. The Partnership also evaluated the recoverability of the recorded amount of containers identified for sale in the ordinary course of business and determined that a reduction to the carrying value of 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. During the nine-month periods ended September 30, 2003 and 2002, the Partnership recorded write-down expenses of $281 and $1,646, respectively, on 568 and 2,015 containers identified for sale and requiring a reserve. Additionally, during the nine-month periods ended September 30, 2003 and 2002, the Partnership reclassified 30 and 226 containers from containers identified for sale to containers held for continued use due to the improvement in demand for leased containers in Asia. At September 30, 2003 and 2002, the net book value of the 254 and 626 containers identified for sale was $230 and $543, respectively. The Partnership sold 541 previously written down containers for a loss of $49 during the nine-month period ended September 30, 2003 and sold 2,005 previously written down containers for a loss of $96 during the same period in 2002. The Partnership incurred losses on the sale of some containers previously written down as the actual sales prices received on these containers were lower than the estimates used for the write-downs. The Partnership also sold containers that had not been written down and recorded losses of $382 and $969 during the nine-month periods ended September 30, 2003 and 2002, respectively. As more containers are subsequently identified for sale or if container sales prices decline, the Partnership may incur additional write-downs on containers and/or may incur losses on the sale of containers. The Partnership will continue to evaluate the recoverability of the recorded amounts of container rental equipment. Management fees to affiliates increased $153, or 20%, from the nine-month period ended September 30, 2002 to the comparable period in 2003 due to increases in both equipment and incentive management fees. Equipment management fees increased due to the increase in rental income, upon which these 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, increased primarily due to the increase in these distributions. General and administrative costs to affiliates decreased $18, or 4%, from the nine-month period ended September 30, 2002 to the same period in 2003. The decrease was primarily due to the decrease in the allocation of overhead costs from TEM, which decreased 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. Other general and administrative costs decreased $124 from the nine-month period ended September 30, 2002 to the same period in 2003. The decrease was primarily due to decreases in other service fees between the periods. Loss on sale of containers decreased $634 from the nine-month period ended September 30, 2002 to the same period in 2003. The decrease was due to the decrease in the number of containers sold and a decrease in the average loss per container. Net loss per limited partnership unit decreased from $0.62 to $0.07 from the nine-month period ended September 30, 2002 to the equivalent period in 2003, respectively, reflecting the decrease in net loss allocated to limited partners from $4,117 to $435, respectively. The allocation of net loss for the nine-month periods ended September 30, 2003 and 2002, included a special allocation of gross income to the General Partners of $55 and $94, 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, 2003 and 2002. The Partnership's loss from operations for the three-month periods ended September 30, 2003 and 2002 was $410 and $990, respectively, on rental income of $3,236 and $3,088, respectively. The increase in rental income of $148, or 5%, from the three-month period ended September 30, 2002 to the comparable period in 2003 was attributable to increases in container rental income and other rental income. Income from container rentals increased $144, or 6%, primarily due to an increase in average on-hire utilization of 17%, partially offset by the decreases in average rental rates of 6% and average container fleet of 6% between the periods. Other rental income was $492 for the three-month period ended September 30, 2003, an increase of $4 from the equivalent period in 2002. The increase was primarily due to an increase in DPP income of $102, offset by the decrease in handling income of $94. DPP income increased primarily due to an increase in the number of containers covered under DPP while handling income decreased primarily due to the decline in container movement. Direct container expenses decreased $98, or 10%, from the three-month period ended September 30, 2002, to the same period in 2003. The decrease was primarily due to decreases in storage and handling expenses of $229 and $62, respectively, offset by increases in repositioning and DPP expenses of $148 and $53, respectively. Storage expense decreased due to the increase in utilization noted above and the decrease in the average storage costs per container. The decline in handling expense was primarily due to the decline in container movement. Repositioning expense increased due to an increase in the average repositioning costs due to longer average repositioning moves and an increase in the number of containers repositioned. The increase in DPP expense was primarily due to an increase in the number of containers covered under DPP. Bad debt expense was $18 and $23 for the three-month periods ended September 30, 2003 and 2002, respectively. The expenses recorded during the three-month periods ended September 30, 2003 and 2002, reflect higher reserve estimates, after deductions had been taken against the reserve, from June 30, 2003 and 2002. Depreciation expense decreased $150, or 8%, from the three-month period ended September 30, 2002 to the comparable period in 2003 primarily due to decline in average fleet size between the periods. During the three-month periods ended September 30, 2003 and 2002, the Partnership recorded write-down expenses of $62 and $345, respectively, on 228 and 396 containers identified for sale and requiring a reserve. During the three-month period ended September 30, 2003, the Partnership sold 173 previously written down containers for a loss of $9 and sold 570 previously written down containers for a loss of $24 during the same period in 2002. During the three-month periods ended September 30, 2003 and 2002, the Partnership also sold containers that had not been written down and recorded losses of $339 and $242, respectively. Management fees to affiliates increased $63, or 27%, from the three-month period ended September 30, 2002 to the comparable period in 2003, due to increases in both incentive and equipment management fees. Incentive management fees, which are based on the Partnership's limited and general partner distributions made from cash from operations and partners' capital, increased primarily due to the increase in these distributions. Equipment management fees increased due to the increase in rental income and were 7% of rental income for both periods. General and administrative costs to affiliates were comparable at $154 and $149 for the three-month periods ended September 30, 2003 and 2002, respectively. Other general and administrative costs decreased $40 from the three-month period ended September 30, 2002 to the same period in 2003. The decrease was primarily due to decreases in other service fees between the periods. Loss on sale of containers increased $82 from the three-month period ended September 30, 2002 to the same period in 2003. Although the Partnership sold fewer containers during the three-month period ended September 30, 2003, the average loss incurred on these sales increased, resulting in the increase in loss on container sales between the periods. Net loss per limited partnership unit decreased from $0.15 to $0.07 from the three-month period ended September 30, 2002 to the equivalent period in 2003, respectively, reflecting the decrease in net loss allocated to limited partners from $1,002 to $422, respectively. The allocation of loss for the three-month periods ended September 30, 2003 and 2002, included a special allocation of gross income to the General Partners 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. 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 for them, 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-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 most recent fiscal quarter, and which has materially affected, or is reasonably likely materially to affect, the Partnership's internal control over financial reporting.

EXHIBIT 31.1 CERTIFICATIONS I, John A. Maccarone, certify that: 1. I have reviewed this quarterly report on form 10-Q of Textainer Equipment Income Fund IV, L.P.; 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. November 12, 2003 /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 Textainer Equipment Income Fund IV, L.P.; 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. November 12, 2003 /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 Textainer Equipment Income Fund IV, L.P., (the "Registrant") on Form 10-Q for the quarterly period ended September 30, 2003, as filed on November 12, 2003 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. November 12, 2003 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 Textainer Equipment Income Fund IV, L.P., (the "Registrant") on Form 10-Q for the quarterly period ended September 30, 2003, as filed on November 12, 2003 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. November 12, 2003 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.

TEXTAINER EQUIPMENT INCOME FUND IV L P 10-Q