TRAC Intermodal Reports Third Quarter 2014 Earnings

TRAC Intermodal LLC and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(Dollars in Thousands)

September 30,

December 31,

2014

2013

Assets

Cash and cash equivalents        

$              5,331

$            11,843

Accounts receivable, net of allowance of $16,715 and $12,475, respectively

136,471

113,138

Net investment in direct finance leases  

18,093

25,026

Leasing equipment, net of accumulated depreciation of $386,515 and $365,429, respectively

1,427,018

1,394,088

Goodwill          

251,907

251,907

Other assets     

42,995

45,908

Total assets   

$       1,881,815

$       1,841,910

Liabilities and member's interest

Liabilities

Accounts payable      

$            14,244

$            12,092

Accrued expenses and other liabilities 

68,275

42,692

Deferred income taxes, net    

96,447

99,331

Debt and capital lease obligations:

Due within one year           

35,644

34,029

Due after one year

1,146,182

1,130,108

Total debt and capital lease obligations   

1,181,826

1,164,137

Total liabilities  

1,360,792

1,318,252

Commitments and contingencies

—

—

Member's interest

Member's interest     

551,930

562,006

Accumulated other comprehensive loss          

(30,907)

(38,348)

Total member's interest

521,023

523,658

Total liabilities and member's interest         

$       1,881,815

$       1,841,910

TRAC Intermodal LLC and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

 (Dollars in Thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2014

2013

2014

2013

Revenues

Equipment leasing revenue     

$  158,844

$    125,488

$  429,928

$    345,002

Finance revenue        

495

746

1,651

2,564

Other revenue           

7,758

8,010

27,596

31,609

Total revenues          

167,097

134,244

459,175

379,175

Expenses

Direct operating expenses      

94,385

81,140

244,201

215,336

Selling, general and administrative expenses    

21,293

14,737

62,406

41,998

Depreciation expense

18,942

18,161

54,219

53,124

Provision for doubtful accounts          

3,579

3,727

10,696

8,434

Impairment of leasing equipment        

932

1,065

3,249

3,629

Early retirement of leasing equipment 

—

—

37,766

—

Loss on modification and extinguishment of debt and capital lease obligations

—

6

102

901

Interest expense        

21,079

22,926

64,670

68,336

Interest income         

(5)

(15)

(52)

(286)

Other (income) expense, net  

(166)

94

(683)

(1,896)

Total expenses          

160,039

141,841

476,574

389,576

Income (loss) before provision (benefit) for income taxes

7,058

(7,597)

(17,399)

(10,401)

Provision (benefit) for income taxes       

896

(1,273)

(7,290)

(2,409)

Net income (loss)

$       6,162

$      (6,324)

$  (10,109)

$      (7,992)

TRAC Intermodal LLC and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 (Dollars in Thousands)

Nine Months Ended 
September 30,

2014

2013

Cash flows from operating activities

Net loss  

$        (10,109)

$          (7,992)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization          

54,414

53,302

Provision for doubtful accounts        

10,696

8,434

Amortization of deferred financing fees            

5,014

4,609

Loss on modification and extinguishment of debt and capital lease obligations

102

901

Derivative loss reclassified into earnings           

13,068

15,180

Ineffective portion of cash flow hedges            

(63)

(60)

Impairment of leasing equipment      

3,249

3,629

Early retirement of leasing equipment

37,766

—

Share-based compensation

654

873

Deferred income taxes, net

(8,072)

(2,336)

Other, net          

(686)

(1,172)

Changes in assets and liabilities:

Accounts receivable      

(33,791)

(52,106)

Other assets  

(2,254)

(700)

Accounts payable         

2,152

4,969

Accrued expenses and other liabilities          

11,916

4,296

Net cash provided by operating activities         

84,056

31,827

Cash flows from investing activities

Proceeds from sale of leasing equipment               

7,594

5,961

Collections on net investment in direct finance leases, net of interest earned       

3,586

4,262

Purchase of leasing equipment               

(114,041)

(131,509)

Purchase of fixed assets         

(2,163)

(3,617)

Net cash used in investing activities 

(105,024)

(124,903)

Cash flows from financing activities

Proceeds from long-term debt

119,000

142,000

Repayments of long-term debt              

(101,529)

(63,506)

Cash paid for debt issuance fees            

(2,069)

(2,267)

Repurchase of indirect parent shares from employees          

(630)

(509)

Net cash provided by financing activities         

14,772

75,718

Effect of changes in exchange rates on cash and cash equivalents         

(316)

(265)

Net decrease in cash and cash equivalents             

(6,512)

(17,623)

Cash and cash equivalents, beginning of year        

11,843

26,556

Cash and cash equivalents, end of period        

$             5,331

$             8,933

Supplemental disclosures of cash flow information

Cash paid for interest            

$           54,665

$           57,784

Cash paid for taxes, net         

$                945

$                315