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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
(State or other jurisdiction of
incorporation or organization)
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20-1796526
(I.R.S. Employer
Identification Number)
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100 Manhattanville Road, Purchase, New York
(Address of principal executive office)
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10577-2135
(Zip Code)
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(914) 251-9000
(Registrant's telephone number including area code)
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Large Accelerated Filer
ý
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Accelerated Filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Page No.
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March 31,
2016 |
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December 31,
2015 |
||||
ASSETS:
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|
||||
Leasing equipment, net of accumulated depreciation and allowances of $1,249,506 and $1,218,826
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$
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3,899,376
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$
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3,908,292
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Net investment in finance leases, net of allowances of $710 and $805
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169,241
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177,737
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|
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Equipment held for sale
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84,971
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74,899
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|
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Revenue earning assets
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4,153,588
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4,160,928
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Unrestricted cash and cash equivalents
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73,680
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58,907
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Restricted cash
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28,987
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30,302
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Accounts receivable, net of allowances of $1,062 and $1,314
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91,228
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95,709
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Goodwill
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74,523
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74,523
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Other assets
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19,513
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13,620
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Fair value of derivative instruments
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—
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87
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|
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Total assets
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$
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4,441,519
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$
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4,434,076
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LIABILITIES AND STOCKHOLDERS' EQUITY:
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||||
Equipment purchases payable
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$
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40,210
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$
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20,009
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Fair value of derivative instruments
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52,921
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20,348
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|
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Accounts payable and other accrued expenses
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53,006
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56,096
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|
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Net deferred income tax liability
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450,176
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456,123
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|
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Debt, net of unamortized deferred financing costs of $24,437 and $25,245
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3,208,409
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3,216,488
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Total liabilities
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3,804,722
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3,769,064
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Stockholders' equity:
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Preferred stock, $0.001 par value, 500,000 shares authorized, none issued
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—
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—
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Common stock, $0.001 par value, 100,000,000 shares authorized, 37,307,134 and 37,167,134 shares issued respectively
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37
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37
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Treasury stock, at cost, 3,911,843 shares
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(75,310
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)
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(75,310
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)
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Additional paid-in capital
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512,052
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511,297
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Accumulated earnings
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239,594
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248,183
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Accumulated other comprehensive (loss)
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(39,576
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)
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(19,195
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)
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Total stockholders' equity
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636,797
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665,012
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Total liabilities and stockholders' equity
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$
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4,441,519
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$
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4,434,076
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Three Months Ended
March 31, |
||||||
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2016
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2015
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Leasing revenues:
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Operating leases
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$
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144,898
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$
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144,568
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Finance leases
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3,107
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4,024
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Other revenues
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1,218
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383
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Total leasing revenues
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149,223
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148,975
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Equipment trading revenues
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11,292
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16,845
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Equipment trading expenses
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(11,265
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)
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(15,431
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)
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Trading margin
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27
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1,414
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Net (loss) on sale of leasing equipment
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(13,930
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)
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(1,449
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)
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Operating expenses:
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Depreciation and amortization
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63,226
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58,384
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Direct operating expenses
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17,959
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8,822
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Administrative expenses
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12,952
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11,982
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(Reversal) for doubtful accounts
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(309
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)
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(23
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)
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Total operating expenses
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93,828
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79,165
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Operating income
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41,492
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69,775
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Other expenses:
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Interest and debt expense
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29,151
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29,243
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Write-off of deferred financing costs
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363
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—
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Net loss on interest rate swaps
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813
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716
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Total other expenses
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30,327
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29,959
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Income before income taxes
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11,165
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39,816
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Income tax expense
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4,743
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14,059
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Net income
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$
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6,422
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$
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25,757
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Net income per common share—Basic
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$
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0.19
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$
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0.78
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Net income per common share—Diluted
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$
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0.19
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$
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0.78
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Cash dividends paid per common share
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$
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0.45
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$
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0.72
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Weighted average number of common shares outstanding—Basic
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32,987
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32,861
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Dilutive stock options and restricted stock
|
22
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149
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Weighted average number of common shares outstanding—Diluted
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33,009
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33,010
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Three Months Ended
March 31, |
||||||
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2016
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2015
|
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Net income
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$
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6,422
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$
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25,757
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Other comprehensive income (loss):
|
|
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|
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Change in fair value of derivative instruments designated as cash flow hedges (net of income tax effect of $(12,984) and $(8,611))
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(23,040
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)
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(15,838
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)
|
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Reclassification of realized loss on interest rate swap agreements designated as cash flow hedges (net of income tax effect of $1,775 and $1,719)
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2,403
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|
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3,152
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Amortization of net loss on terminated derivative instruments designated as cash flow hedges (net of income tax effect of $206 and $242)
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379
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|
445
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|
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Foreign currency translation adjustment
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(123
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)
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(157
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)
|
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Other comprehensive (loss), net of tax
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(20,381
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)
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(12,398
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)
|
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Comprehensive (loss) income
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$
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(13,959
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)
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$
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13,359
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Three Months Ended
March 31, |
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2016
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2015
|
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Cash flows from operating activities:
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|
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|
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Net income
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$
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6,422
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$
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25,757
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Adjustments to reconcile net income to net cash provided by operating activities:
|
|
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|
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Depreciation and amortization
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63,226
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58,384
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|
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Amortization of deferred financing costs
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1,709
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|
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1,979
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|
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Amortization of net loss on terminated derivative instruments designated as cash flow hedges
|
585
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|
687
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|
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Amortization of lease intangibles
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1,567
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|
|
240
|
|
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Net loss on sale of leasing equipment
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13,930
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1,449
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|
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Net loss on interest rate swaps
|
813
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|
|
716
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|
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Write-off of deferred financing costs
|
363
|
|
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—
|
|
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Deferred income taxes
|
4,743
|
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|
14,059
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|
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Stock compensation charge
|
1,067
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|
|
2,002
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|
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Changes in operating assets and liabilities:
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|
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|
||||
Net equipment sold (purchased) for resale activity
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597
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(10,554
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)
|
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Other changes in operating assets and liabilities
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514
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(3,471
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)
|
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Net cash provided by operating activities
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95,536
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91,248
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|
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Cash flows from investing activities:
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|
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Purchases of leasing equipment and investments in finance leases
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(97,141
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)
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(258,552
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)
|
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Proceeds from sale of equipment, net of selling costs
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29,686
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37,661
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|
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Cash collections on finance lease receivables, net of income earned
|
10,463
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|
10,474
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|
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Other
|
(73
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)
|
|
(74
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)
|
||
Net cash (used in) investing activities
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(57,065
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)
|
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(210,491
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)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Purchases of treasury stock
|
—
|
|
|
(4,446
|
)
|
||
Financing fees paid under debt facilities
|
(1,264
|
)
|
|
(624
|
)
|
||
Borrowings under debt facilities
|
140,000
|
|
|
230,000
|
|
||
Payments under debt facilities and capital lease obligations
|
(148,905
|
)
|
|
(90,061
|
)
|
||
Decrease in restricted cash
|
1,315
|
|
|
607
|
|
||
Common stock dividends paid
|
(14,844
|
)
|
|
(23,656
|
)
|
||
Net cash (used in) provided by financing activities
|
(23,698
|
)
|
|
111,820
|
|
||
Net increase (decrease) in unrestricted cash and cash equivalents
|
$
|
14,773
|
|
|
$
|
(7,423
|
)
|
Unrestricted cash and cash equivalents, beginning of period
|
58,907
|
|
|
79,132
|
|
||
Unrestricted cash and cash equivalents, end of period
|
$
|
73,680
|
|
|
$
|
71,709
|
|
Supplemental non-cash investing activities:
|
|
|
|
||||
Equipment purchases payable
|
$
|
40,210
|
|
|
$
|
67,380
|
|
•
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Level 1—Financial assets and liabilities whose values are based on observable inputs such as quoted prices for identical instruments in active markets (unadjusted).
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•
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Level 2—Financial assets and liabilities whose values are based on observable inputs such as (i) quoted prices for similar instruments in active markets; (ii) quoted prices for identical or similar instruments in markets that are not active; or (iii) model-derived valuations in which all significant inputs are observable in active markets.
|
•
|
Level 3—Financial assets and liabilities whose values are derived from valuation techniques based on one or more significant unobservable inputs.
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Assets
|
|
|
|
||||
Net investment in finance leases, net of allowances - carrying value
|
$
|
169,241
|
|
|
$
|
177,737
|
|
Net investment in finance leases, net of allowances - estimated fair value
|
$
|
173,472
|
|
|
$
|
180,565
|
|
Liabilities
|
|
|
|
||||
Total debt(1) - carrying value
|
$
|
3,232,846
|
|
|
$
|
3,241,733
|
|
Total debt(1) - estimated fair value
|
$
|
3,135,417
|
|
|
$
|
3,210,722
|
|
Record Date
|
Payment
Date
|
|
Aggregate
Payment
|
|
Per Share
Payment
|
March 10, 2016
|
March 24, 2016
|
|
$14.8 Million
|
|
$0.45
|
March 3, 2015
|
March 24, 2015
|
|
$23.7 Million
|
|
$0.72
|
|
Cash Flow
Hedges
|
|
Foreign
Currency
Translation
|
|
Accumulated Other Comprehensive (Loss) Income
|
||||||
Balance as of December 31, 2015
|
$
|
(17,898
|
)
|
|
$
|
(1,297
|
)
|
|
$
|
(19,195
|
)
|
Change in fair value of derivative instruments designated as cash flow hedges
|
(23,040
|
)
|
|
—
|
|
|
(23,040
|
)
|
|||
Reclassification of realized loss on interest rate swap agreements designated as cash flow hedges
|
2,403
|
|
|
—
|
|
|
2,403
|
|
|||
Amortization of net loss on derivative instruments previously designated as cash flow hedges
|
379
|
|
|
—
|
|
|
379
|
|
|||
Foreign currency translation adjustment
|
—
|
|
|
(123
|
)
|
|
(123
|
)
|
|||
Other comprehensive (loss)
|
(20,258
|
)
|
|
(123
|
)
|
|
(20,381
|
)
|
|||
Balance as of March 31, 2016
|
$
|
(38,156
|
)
|
|
$
|
(1,420
|
)
|
|
$
|
(39,576
|
)
|
|
Cash Flow
Hedges |
|
Foreign
Currency Translation |
|
Accumulated Other Comprehensive (Loss) Income
|
||||||
Balance as of December 31, 2014
|
$
|
(12,145
|
)
|
|
$
|
(1,104
|
)
|
|
$
|
(13,249
|
)
|
Change in fair value of derivative instruments designated as cash flow hedges
|
(15,838
|
)
|
|
—
|
|
|
(15,838
|
)
|
|||
Reclassification of realized loss on interest rate swap agreements designated as cash flow hedges
|
3,152
|
|
|
—
|
|
|
3,152
|
|
|||
Amortization of net loss on derivative instruments previously designated as cash flow hedges
|
445
|
|
|
—
|
|
|
445
|
|
|||
Foreign currency translation adjustment
|
—
|
|
|
(157
|
)
|
|
(157
|
)
|
|||
Other comprehensive (loss)
|
(12,241
|
)
|
|
(157
|
)
|
|
(12,398
|
)
|
|||
Balance as of March 31, 2015
|
$
|
(24,386
|
)
|
|
$
|
(1,261
|
)
|
|
$
|
(25,647
|
)
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Gross finance lease receivables
|
$
|
200,302
|
|
|
$
|
211,530
|
|
Allowance on gross finance lease receivables
|
(710
|
)
|
|
(805
|
)
|
||
Gross finance lease receivables, net of allowance
|
199,592
|
|
|
210,725
|
|
||
Unearned income
|
(30,351
|
)
|
|
(32,988
|
)
|
||
Net investment in finance leases
|
$
|
169,241
|
|
|
$
|
177,737
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Tier 1
|
$
|
169,167
|
|
|
$
|
179,909
|
|
Tier 2
|
31,135
|
|
|
31,621
|
|
||
Tier 3
|
—
|
|
|
—
|
|
||
Gross finance lease receivables
|
$
|
200,302
|
|
|
$
|
211,530
|
|
|
Beginning
Balance
|
|
Additions/
(Reversals)
|
|
Ending
Balance
|
||||||
Finance Lease—Allowance for doubtful accounts:
|
|
|
|
|
|
||||||
For the three months ended
|
|
|
|
|
|
||||||
March 31, 2016
|
$
|
805
|
|
|
$
|
(95
|
)
|
|
$
|
710
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Asset backed securitization (ABS) term notes
|
$
|
1,038,891
|
|
|
$
|
1,151,497
|
|
Term loan facilities
|
1,071,718
|
|
|
973,130
|
|
||
Asset backed warehouse facility
|
620,000
|
|
|
610,000
|
|
||
Revolving credit facilities
|
445,000
|
|
|
445,000
|
|
||
Capital lease obligations
|
57,237
|
|
|
62,106
|
|
||
Total Debt
|
$
|
3,232,846
|
|
|
$
|
3,241,733
|
|
Deferred financing costs
|
(24,437
|
)
|
|
(25,245
|
)
|
||
Debt, net of unamortized deferred financing costs
|
$
|
3,208,409
|
|
|
$
|
3,216,488
|
|
Notional
Amount
|
|
Weighted Average
Fixed Leg (Pay) Interest Rate
|
|
Weighted Average
Remaining Term |
$1,123 Million
|
|
2.00%
|
|
6.4 years
|
|
Three Months Ended March 31, 2016
|
||
Loss on derivative instruments designated as cash flow hedges
|
|
($15.0
|
)
|
Net loss on terminated derivative instruments designated as cash flow hedges
|
|
($2.1
|
)
|
|
|
Fair Value of Derivative Instruments
(In Millions)
|
||||||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||
|
|
March 31, 2016
|
|
December 31, 2015
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||
Derivative Instrument
|
Balance Sheet Location
|
Fair
Value
|
|
Fair
Value
|
|
Fair
Value
|
|
Fair
Value
|
||||||||
Interest rate swap contracts, designated as cash flow hedges
|
Fair value of derivative instruments
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
51.0
|
|
|
$
|
19.2
|
|
Interest rate swap contracts, not designated
|
Fair value of derivative instruments
|
—
|
|
|
—
|
|
|
1.9
|
|
|
1.1
|
|
||||
Total derivatives
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
52.9
|
|
|
$
|
20.3
|
|
|
|
Effect of Derivative Instruments on Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
(In Millions) |
||||||
|
|
Three Months Ended
March 31, |
||||||
|
Location of Loss (Gain) on
Derivative Instruments |
|||||||
|
2016
|
|
2015
|
|||||
Realized loss on interest rate swap agreements
|
Interest and debt expense
|
$
|
4.4
|
|
|
$
|
5.2
|
|
Amortization of realized net loss on terminated derivative instruments, designated as cash flow hedges
|
Interest and debt expense
|
0.6
|
|
|
0.7
|
|
||
Change in fair value of derivatives, designated as cash flow hedges
|
Other comprehensive income
|
36.0
|
|
|
24.4
|
|
||
Net loss on interest rate swaps, not designated
|
Net loss on interest rate swaps
|
0.8
|
|
|
0.7
|
|
•
|
Equipment leasing—the Company owns, leases and ultimately disposes of containers and chassis from its lease fleet, as well as manages leasing activities for containers owned by third parties.
|
•
|
Equipment trading—the Company purchases containers from shipping line customers, and other sellers of containers, and resells these containers to container retailers and users of containers for storage or one-way shipment. Included in the Equipment trading segment revenues are leasing revenues from equipment purchased for resale that is currently on lease until the containers are dropped off.
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||
|
Equipment
Leasing |
|
Equipment
Trading |
|
Totals
|
|
Equipment
Leasing |
|
Equipment
Trading |
|
Totals
|
||||||||||||
Total leasing revenues
|
$
|
147,269
|
|
|
$
|
1,954
|
|
|
$
|
149,223
|
|
|
$
|
146,553
|
|
|
$
|
2,422
|
|
|
$
|
148,975
|
|
Trading margin
|
—
|
|
|
27
|
|
|
27
|
|
|
—
|
|
|
1,414
|
|
|
1,414
|
|
||||||
Net (loss) on sale of leasing equipment
|
(13,930
|
)
|
|
—
|
|
|
(13,930
|
)
|
|
(1,449
|
)
|
|
—
|
|
|
(1,449
|
)
|
||||||
Depreciation and amortization expense
|
62,856
|
|
|
370
|
|
|
63,226
|
|
|
58,157
|
|
|
227
|
|
|
58,384
|
|
||||||
Interest and debt expense
|
28,718
|
|
|
433
|
|
|
29,151
|
|
|
28,690
|
|
|
553
|
|
|
29,243
|
|
||||||
Income before income taxes(1)
|
11,408
|
|
|
933
|
|
|
12,341
|
|
|
37,807
|
|
|
2,725
|
|
|
40,532
|
|
||||||
Equipment held for sale at March 31
|
64,848
|
|
|
20,123
|
|
|
84,971
|
|
|
30,316
|
|
|
27,879
|
|
|
58,195
|
|
||||||
Goodwill at March 31
|
73,523
|
|
|
1,000
|
|
|
74,523
|
|
|
73,523
|
|
|
1,000
|
|
|
74,523
|
|
||||||
Total assets at March 31
|
4,392,625
|
|
|
48,894
|
|
|
4,441,519
|
|
|
4,303,132
|
|
|
67,496
|
|
|
4,370,628
|
|
||||||
Purchases of leasing equipment and investments in finance leases(2)
|
97,141
|
|
|
—
|
|
|
97,141
|
|
|
250,968
|
|
|
7,584
|
|
|
258,552
|
|
(1)
|
Segment income before income taxes excludes net losses on interest rate swaps of
$0.8 million
and
$0.7 million
for the
three
months ended
March 31, 2016
and
2015
, respectively, and the write-off of deferred financing costs of
$0.4 million
for the
three
months ended
March 31, 2016
. There was
no
write-off of deferred financing costs for the
three
months ended March 31,
2015
.
|
(2)
|
Represents cash disbursements for purchases of leasing equipment and investments in finance lease as reflected in the consolidated statements of cash flows for the periods indicated, but excludes cash flows associated with the purchase of equipment held for resale.
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Total leasing revenues:
|
|
|
|
||||
United States of America
|
$
|
10,889
|
|
|
$
|
10,455
|
|
Asia
|
68,715
|
|
|
68,848
|
|
||
Europe
|
66,160
|
|
|
65,866
|
|
||
Other International
|
3,459
|
|
|
3,806
|
|
||
Total
|
$
|
149,223
|
|
|
$
|
148,975
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Total equipment trading revenues:
|
|
|
|
||||
United States of America
|
$
|
1,410
|
|
|
$
|
2,514
|
|
Asia
|
4,264
|
|
|
6,555
|
|
||
Europe
|
4,679
|
|
|
6,803
|
|
||
Other International
|
939
|
|
|
973
|
|
||
Total
|
$
|
11,292
|
|
|
$
|
16,845
|
|
•
|
Equipment leasing—we own, lease and ultimately dispose of containers and chassis from our lease fleet, as well as manage containers owned by third parties.
|
•
|
Equipment trading—we purchase containers from shipping line customers, and other sellers of containers, and resell these containers to container retailers and users of containers for storage or one-way shipment.
|
|
Equipment Fleet in Units(1)
|
|
Equipment Fleet in TEU(1)
|
||||||||||||||
|
March 31, 2016
|
|
December 31, 2015
|
|
March 31, 2015
|
|
March 31, 2016
|
|
December 31, 2015
|
|
March 31, 2015
|
||||||
Dry
|
1,382,101
|
|
|
1,351,170
|
|
|
1,259,633
|
|
|
2,248,374
|
|
|
2,190,940
|
|
|
2,045,480
|
|
Refrigerated
|
71,521
|
|
|
70,505
|
|
|
66,078
|
|
|
136,240
|
|
|
134,204
|
|
|
125,489
|
|
Special
|
55,457
|
|
|
56,118
|
|
|
57,544
|
|
|
100,853
|
|
|
102,081
|
|
|
104,931
|
|
Tank
|
11,422
|
|
|
11,243
|
|
|
9,555
|
|
|
11,422
|
|
|
11,243
|
|
|
9,555
|
|
Chassis
|
21,806
|
|
|
21,216
|
|
|
19,885
|
|
|
39,395
|
|
|
38,210
|
|
|
35,443
|
|
Equipment leasing fleet
|
1,542,307
|
|
|
1,510,252
|
|
|
1,412,695
|
|
|
2,536,284
|
|
|
2,476,678
|
|
|
2,320,898
|
|
Equipment trading fleet
|
19,874
|
|
|
21,135
|
|
|
31,264
|
|
|
33,423
|
|
|
35,989
|
|
|
50,865
|
|
Total
|
1,562,181
|
|
|
1,531,387
|
|
|
1,443,959
|
|
|
2,569,707
|
|
|
2,512,667
|
|
|
2,371,763
|
|
|
Equipment Fleet in CEU(1)
|
|||||||
|
March 31, 2016
|
|
December 31, 2015
|
|
March 31, 2015
|
|||
Operating leases
|
2,864,482
|
|
|
2,801,607
|
|
|
2,598,409
|
|
Finance leases
|
197,156
|
|
|
197,225
|
|
|
197,739
|
|
Equipment trading fleet
|
98,041
|
|
|
107,079
|
|
|
114,614
|
|
Total
|
3,159,679
|
|
|
3,105,911
|
|
|
2,910,762
|
|
Equipment Type
|
Percent of
total fleet in units |
|
Percent of total
fleet in CEU
|
|
Percent of
leasing revenues |
|||
Dry
|
88.5
|
%
|
|
62.0
|
%
|
|
64.4
|
%
|
Refrigerated
|
4.6
|
|
|
22.0
|
|
|
20.7
|
|
Special
|
3.5
|
|
|
4.3
|
|
|
6.6
|
|
Tank
|
0.7
|
|
|
5.8
|
|
|
3.6
|
|
Chassis
|
1.4
|
|
|
2.8
|
|
|
3.4
|
|
Equipment leasing fleet
|
98.7
|
|
|
96.9
|
|
|
98.7
|
|
Equipment trading fleet
|
1.3
|
|
|
3.1
|
|
|
1.3
|
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Lease Portfolio
|
March 31,
2016 |
|
December 31,
2015 |
|
March 31,
2015 |
|||
Long-term leases
|
68.7
|
%
|
|
68.7
|
%
|
|
67.8
|
%
|
Finance leases
|
7.7
|
|
|
7.7
|
|
|
7.8
|
|
Service leases
|
15.2
|
|
|
15.7
|
|
|
18.0
|
|
Expired long-term leases (units on-hire)
|
8.4
|
|
|
7.9
|
|
|
6.4
|
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Quarter Ended
|
|||||||||||||
|
March 31,
2016 |
|
December 31,
2015 |
|
September 30,
2015 |
|
June 30,
2015 |
|
March 31,
2015 |
|||||
Average Utilization
|
92.2
|
%
|
|
93.7
|
%
|
|
95.8
|
%
|
|
97.1
|
%
|
|
97.9
|
%
|
|
March 31,
2016 |
|
December 31,
2015 |
|
September 30,
2015 |
|
June 30,
2015 |
|
March 31,
2015 |
|||||
Ending Utilization
|
91.4
|
%
|
|
93.0
|
%
|
|
94.7
|
%
|
|
96.6
|
%
|
|
97.7
|
%
|
(1)
|
Utilization is computed by dividing our total units on lease (in CEU) by the total units in our fleet (in CEU) excluding new units not yet leased and off-hire units designated for sale.
|
Record Date
|
Payment Date
|
|
Aggregate
Payment
|
|
Per Share
Payment
|
March 10, 2016
|
March 24, 2016
|
|
$14.8 Million
|
|
$0.45
|
March 3, 2015
|
March 24, 2015
|
|
$23.7 Million
|
|
$0.72
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Leasing revenues:
|
|
|
|
||||
Operating leases
|
$
|
144,898
|
|
|
$
|
144,568
|
|
Finance leases
|
3,107
|
|
|
4,024
|
|
||
Other revenues
|
1,218
|
|
|
383
|
|
||
Total leasing revenues
|
149,223
|
|
|
148,975
|
|
||
|
|
|
|
||||
Equipment trading revenues
|
11,292
|
|
|
16,845
|
|
||
Equipment trading expenses
|
(11,265
|
)
|
|
(15,431
|
)
|
||
Trading margin
|
27
|
|
|
1,414
|
|
||
|
|
|
|
||||
Net (loss) on sale of leasing equipment
|
(13,930
|
)
|
|
(1,449
|
)
|
||
|
|
|
|
||||
Operating expenses:
|
|
|
|
||||
Depreciation and amortization
|
63,226
|
|
|
58,384
|
|
||
Direct operating expenses
|
17,959
|
|
|
8,822
|
|
||
Administrative expenses
|
12,952
|
|
|
11,982
|
|
||
(Reversal) for doubtful accounts
|
(309
|
)
|
|
(23
|
)
|
||
Total operating expenses
|
93,828
|
|
|
79,165
|
|
||
Operating income
|
41,492
|
|
|
69,775
|
|
||
Other expenses:
|
|
|
|
||||
Interest and debt expense
|
29,151
|
|
|
29,243
|
|
||
Write-off of deferred financing costs
|
363
|
|
|
—
|
|
||
Net loss on interest rate swaps
|
813
|
|
|
716
|
|
||
Total other expenses
|
30,327
|
|
|
29,959
|
|
||
Income before income taxes
|
11,165
|
|
|
39,816
|
|
||
Income tax expense
|
4,743
|
|
|
14,059
|
|
||
Net income
|
$
|
6,422
|
|
|
$
|
25,757
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(in thousands)
|
||||||
Leasing revenues:
|
|
|
|
||||
Operating lease revenues:
|
|
|
|
||||
Per diem revenue
|
$
|
131,999
|
|
|
$
|
137,208
|
|
Fee and ancillary lease revenue
|
12,899
|
|
|
7,360
|
|
||
Total operating lease revenue
|
144,898
|
|
|
144,568
|
|
||
Finance lease revenue
|
3,107
|
|
|
4,024
|
|
||
Other revenues
|
1,218
|
|
|
383
|
|
||
Total leasing revenues
|
$
|
149,223
|
|
|
$
|
148,975
|
|
•
|
$8.6 million
decrease
due to
lower
average per diem rates; partially offset by a
|
•
|
$3.4 million
increase
due to
an increase
of approximately
66,000
CEU in the average number of containers on-hire under operating leases.
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(in thousands)
|
||||||
Equipment trading revenues
|
$
|
11,292
|
|
|
$
|
16,845
|
|
Equipment trading expenses
|
(11,265
|
)
|
|
(15,431
|
)
|
||
Equipment trading margin
|
$
|
27
|
|
|
$
|
1,414
|
|
|
Three Months Ended
March 31, |
|||||||||
|
2016
|
|
2015
|
|
% Change
|
|||||
|
(in thousands)
|
|
|
|||||||
Income before income taxes(1)
|
|
|
|
|
|
|||||
Equipment leasing segment
|
$
|
11,408
|
|
|
$
|
37,807
|
|
|
(69.8
|
)%
|
Equipment trading segment
|
$
|
933
|
|
|
$
|
2,725
|
|
|
(65.8
|
)%
|
(1)
|
In the
three
months ended
March 31, 2016
and
2015
, income before income taxes excludes net losses on interest rate swaps of
$0.8 million
and
$0.7 million
, respectively, and the write-off of deferred financing costs of
$0.4 million
for the
three
months ended
March 31, 2016
. There was
no
write-off of deferred financing costs for the
three
months ended March 31,
2015
.
|
|
Current
Amount
Outstanding
|
|
Maximum
Borrowing
Commitment
|
||||
Asset backed securitization (ABS) term notes
|
$
|
1,038.9
|
|
|
$
|
1,038.9
|
|
Term loan facilities
|
1,071.7
|
|
|
1,155.8
|
|
||
Asset backed warehouse facility
|
620.0
|
|
|
750.0
|
|
||
Revolving credit facilities
|
445.0
|
|
|
550.0
|
|
||
Capital lease obligations
|
57.2
|
|
|
57.2
|
|
||
Total Debt
|
$
|
3,232.8
|
|
|
$
|
3,551.9
|
|
Deferred financing costs
|
(24.4
|
)
|
|
—
|
|
||
Debt, net of unamortized deferred financing costs
|
$
|
3,208.4
|
|
|
$
|
3,551.9
|
|
•
|
Minimum Earnings Before Interest and Taxes ("Covenant EBIT") to Cash Interest Expense;
|
•
|
Minimum Tangible Net Worth ("TNW"); and
|
•
|
Maximum Indebtedness to TNW.
|
Entity/Issuer
|
Minimum
Covenant EBIT to
Cash Interest
Expense Ratio
|
|
Actual
Covenant EBIT to
Cash Interest
Expense Ratio
|
Consolidated
|
1.10
|
|
2.09
|
TAL Advantage III, LLC
|
1.30
|
|
2.23
|
TAL Advantage V, LLC
|
1.10
|
|
2.35*
|
Entity/Issuer
|
Maximum
Indebtedness
to TNW Ratio
|
|
Actual
Indebtedness
to TNW Ratio
|
Consolidated
|
4.75
|
|
3.22
|
TAL Advantage III, LLC
|
4.75
|
|
3.02
|
TAL Advantage V, LLC
|
4.75
|
|
3.02
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Net cash provided by operating activities
|
$
|
95,536
|
|
|
$
|
91,248
|
|
Cash flows from investing activities:
|
|
|
|
||||
Purchases of leasing equipment and investments in finance leases
|
$
|
(97,141
|
)
|
|
$
|
(258,552
|
)
|
Proceeds from sale of equipment, net of selling costs
|
29,686
|
|
|
37,661
|
|
||
Cash collections on finance lease receivables, net of income earned
|
10,463
|
|
|
10,474
|
|
||
Other
|
(73
|
)
|
|
(74
|
)
|
||
Net cash (used in) investing activities
|
$
|
(57,065
|
)
|
|
$
|
(210,491
|
)
|
Net cash (used in) provided by financing activities
|
$
|
(23,698
|
)
|
|
$
|
111,820
|
|
|
Contractual Obligations by Period
|
||||||||||||||||||||||
Contractual Obligations:
|
Total
|
|
Remaining 2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020 and thereafter
|
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||
Principal debt obligations
|
$
|
3,175.9
|
|
|
$
|
203.3
|
|
|
$
|
301.2
|
|
|
$
|
771.0
|
|
|
$
|
603.1
|
|
|
$
|
1,297.3
|
|
Interest on debt obligations(1)
|
462.6
|
|
|
77.0
|
|
|
96.0
|
|
|
82.2
|
|
|
64.6
|
|
|
142.8
|
|
||||||
Capital lease obligations(2)
|
60.5
|
|
|
23.9
|
|
|
18.8
|
|
|
17.8
|
|
|
—
|
|
|
—
|
|
||||||
Operating leases (mainly facilities)
|
6.0
|
|
|
1.4
|
|
|
1.4
|
|
|
1.2
|
|
|
2.0
|
|
|
—
|
|
||||||
Purchase obligations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equipment purchases payable
|
40.2
|
|
|
40.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Equipment purchase commitments
|
25.4
|
|
|
25.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total contractual obligations
|
$
|
3,770.6
|
|
|
$
|
371.2
|
|
|
$
|
417.4
|
|
|
$
|
872.2
|
|
|
$
|
669.7
|
|
|
$
|
1,440.1
|
|
(1)
|
Amounts include actual for fixed interest debt and estimated interest for floating rate debt based on
March 31, 2016
rates and the net effect of our interest rate swaps.
|
(2)
|
Amounts include interest.
|
Notional
Amount
|
|
Weighted Average
Fixed (Pay) Leg Interest Rate
|
|
Weighted Average
Remaining Term
|
$1,123 Million
|
|
2.00%
|
|
6.4 years
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Net loss on interest rate swaps
|
$
|
0.8
|
|
|
$
|
0.7
|
|
Exhibit
Number
|
|
Exhibit Description
|
4.59*
|
|
First Amendment to the Term Loan Agreement dated as of April 26, 2016 by and between TAL International Container Corporation, as Borrower, the Lenders from time to time party thereto, as Lenders, Suntrust Bank, as Administrative Agent for itself and other Lenders.
|
31.1*
|
|
Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
|
31.2*
|
|
Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
|
32.1*
|
|
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350
|
32.2*
|
|
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Instance Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
*
|
Filed herewith.
|
|
TAL International Group, Inc.
|
|
|
|
|
May 10, 2016
|
By:
|
/s/ JOHN BURNS
|
|
|
John Burns
|
|
|
Senior Vice President and Chief Financial Officer (Principal Financial Officer)
|
(i)
|
a reduction in full or in part or cancellation of any such liability;
|
(ii)
|
a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Term Loan Agreement or any other Loan Document; or
|
(iii)
|
the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of TAL International Group, Inc.;
|
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 officer 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)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15(d)-15(f) for the registrant and 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)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
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
|
(d)
|
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 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 officer 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 the registrant’s board of directors (or persons performing the equivalent functions):
|
(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.
|
|
/s/ BRIAN M. SONDEY
Brian M. Sondey
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of TAL International Group, Inc.;
|
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 officer 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)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15(d)-15(f) for the registrant and 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)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
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
|
(d)
|
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 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 officer 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 the registrant’s board of directors (or persons performing the equivalent functions):
|
(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.
|
|
/s/ JOHN BURNS
John Burns
Senior Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 10, 2016
|
/s/ BRIAN M. SONDEY
Brian M. Sondey
President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 10, 2016
|
/s/ JOHN BURNS
John Burns
Senior Vice President and Chief Financial Officer
|