<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K*
ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-7654
FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1995
XTRA Corporation (Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 06-0954158
(State or other jurisdiction (I.R.S. Employer Identification number)
of incorporation or organization)
60 STATE STREET (617) 367-5000
BOSTON, MASSACHUSETTS 02109 (Registrant's telephone number)
(Address of principal executive
offices)
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<S> <C>
Title of each class Name of exchange on which registered
Common Stock, Par Value $.50
per Share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: none
Shares Outstanding of the Registrant's Common Stock at November 16, 1995: 16,324,701
Aggregate market value of voting stock held by non-affiliates of the registrant at November
16, 1995: $699,377,340
</TABLE>
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 twelve
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 ninety days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K [ ].
Portions of the Registrant's Annual Report to Stockholders for
the fiscal year ended September 30, 1995, of which this Form 10-K
is a part, are incorporated by reference in Parts I, II and IV.
Portions of the Registrant's definitive Proxy Statement for use
at the 1996 Annual Meeting of Stockholders are incorporated by
reference in Part III.
*Exhibits to Form 10-K and Parent Company Financial Statements and
Schedules have been included only in copies of the Form 10-K
filed with the Securities and Exchange Commission.
A copy of this Form 10-K, including a list of exhibits and the
Parent Company Financial Statements and Schedules, is available
free of charge to stockholders upon written request to: Vice
President and Chief Financial Officer, XTRA Corporation, 60 State
Street, Boston, Massachusetts 02109. In addition, upon similar
request, copies of individual exhibits will be furnished upon
payment of a reasonable fee.
1
<PAGE> 2
PART I.
Item 1. Business
XTRA Corporation (the "Company" or "XTRA") leases, primarily on
an operating basis, freight transportation equipment including
over-the-road trailers, marine containers, intermodal trailers,
chassis, domestic containers and older trailers for mobile
storage use. XTRA leases equipment in North America,
predominantly within the United States, to private fleet owners,
contract and common carriers and railroads, as well as to steam-
ship lines worldwide in order to cover cyclical, seasonal and
geographical shortages and as a substitute for purchasing
equipment. The choice of equipment used, whether that choice is
made by shipper, transportation company or shipping agent, is
primarily influenced by lease rates, terms, availability,
condition and size of equipment, as well as other factors
related to the freight transportation industry.
XTRA's equipment utilization and lease rates, and hence
profitability, are directly impacted by the level of economic
activity in North America, world trade activity, the supply of
and demand for available equipment, the actions of its
competitors and other factors in the freight transportation
industry. The Company's equipment utilization and hence its
profitability is usually seasonally lower in its second and third
fiscal quarters than in its first and fourth fiscal quarters. In
general, the Company's receivable collection experience has been
good. However, industry downturns tend to lengthen the collection
period of certain receivables.
On June 30, 1995, the Company acquired certain net assets,
primarily a marine container fleet of approximately 170,000
twenty-foot equivalent units (TEUs) from Matson Leasing Company,
Inc., an indirect wholly-owned subsidiary of Alexander & Baldwin,
Inc., for total consideration of approximately $360 million.
Lease Types and Rates
The Company leases its equipment on a per diem and a term basis.
Per diem leases are signed for an initial period of one year or
less and allow the customer to return the equipment without
notice, although some per diem leases limit the amount and
locations of equipment termination. Term leases provide for an
initial period of one year or greater; generally one to five
years. Lease rates depend upon the type of lease, length of term,
maintenance provided and the type and age of the equipment.
Generally, customers are responsible for damage to the equipment
except for ordinary maintenance, although full-service leases are
available on some equipment types.
Leasing Fleet
The Company's leasing fleet has grown through acquisitions of
competitors and through purchases of new equipment. The new
equipment, supplied by a number of manufacturers, is built to the
Company's specifications and reflects industry standards and
customers needs. The Company's leasing fleet consisted of the
following units at the end of its last five fiscal years:
<TABLE>
<CAPTION>
Approximate
Net Investment
at 9/30/95
Units (in thousands) (millions
----------------------------------------------
Equipment (1) 1991 1992 1993 1994 1995 of dollars)
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Over-the-road trailers 24 24 52 56 62 $ 613
Marine containers -- -- -- -- 126 373
Intermodal trailers 38 33 33 34 29 237
Chassis 7 7 15 16 21 107
Domestic containers 8 8 8 8 8 42
Storage trailers 7 6 13 13 11 15
-- -- --- --- --- ------
Total 84 78 121 127 257 $1,387
== == === === === ======
</TABLE>
(1) The Company's fleet size and approximate net investment
includes equipment owned by the Company, equipment leased-in
from third parties under operating and capital leases and
equipment leased to third parties under finance leases. For
purposes of this presentation, the net investment in
equipment leased to the Company on an operating basis
represents the present value of the remaining lease
payments. The net investment in revenue equipment leased to
customers under finance leases as well as equipment owned by
the Company or leased to the
2
<PAGE> 3
Company under capital leases represents the net carrying
value of this equipment. The significant increases in fleet
size in 1993 and 1995 were primarily due to acquisitions.
See Note 2 of the Notes to Consolidated Financial Statements
for information relating to these acquisitions.
For information regarding business information by geographic
area, see Note 8 of the Notes to Consolidated Financial
Statements. For additional information, including financing,
capital expenditures and equipment utilization of the Company's
leasing fleet, see Management's Discussion and Analysis of
Financial Condition and Results of Operations. Such information
is incorporated herein by reference.
Over-the-Road Trailers
XTRA's over-the-road fleet of 62,000 units, mostly dry cargo
vans, consists primarily of units 48' and 53' long by 102" wide.
This equipment is leased to private fleet owners, contract
carriers and common carriers. Approximately 43% of the trailer
fleet was leased on a term basis at the end of fiscal 1995 with
the balance available for lease on a per diem basis.
Marine Containers
The Company's marine containers are standard, dry cargo 20' and
40' steel containers, which are the predominant types of
containers used worldwide for transporting freight on ships.
XTRA's marine container fleet consists of 126,000 units.
Expressed in twenty-foot equivalent units (TEUs), an industry
measure of fleet size, the fleet size is 178,000 TEUs.
Approximately 32% of XTRA's marine container fleet was leased on
a term basis at the end of fiscal 1995 with the remainder of the
fleet available for lease on a per diem basis.
Intermodal Trailers
Intermodal trailers are designed to be carried on rail flatcars,
pulled by tractor over the highway and, to a lesser extent,
transported by water carriers on ships and barges. The Company's
intermodal trailer fleet of 29,000 units consists primarily of
units 45' and 48' long by 102" wide. The Company's intermodal
trailers are leased primarily to North American railroads and
water carriers. Approximately 32% of the intermodal trailer fleet
was leased on a term basis at the end of fiscal 1995 with the
remainder of the fleet available for lease on a per diem basis.
Chassis
Domestic chassis are wheeled rectangular steel frames generally
48' to 53' in length and handle domestic containers. Marine
chassis are generally 20' or 40' in length to accommodate marine
containers. XTRA's marine and domestic chassis are used as
transport vehicles for marine and domestic containers which are
loaded or unloaded at shipyards, rail terminals or consignees.
The Company's chassis fleet of 21,000 units consists primarily of
marine chassis and are leased to steamship lines, railroads and
motor carriers. Approximately 80% of the chassis fleet was leased
on a term basis at the end of fiscal 1995 with the balance
available for lease on a per diem basis.
Domestic Containers
Domestic containerization is the transportation of freight
throughout North America in containers through a combination of
rail and over-the-road on chassis. These containers are a
substitute for intermodal and over-the-road trailers,
particularly on long-haul, heavy volume routes. XTRA's fleet of
approximately 8,000 units consists primarily of 48' long by 102"
wide steel-constructed units. The Company's domestic containers
are leased to North American railroads and domestic
transportation segments of shipping lines. Approximately 70% of
the Company's domestic container fleet was leased on a term lease
basis at the end of fiscal 1995 with the balance available for
lease on a per diem basis.
Storage Trailers
XTRA's storage fleet of 11,000 units consists of older former
over-the-road and intermodal trailers. Approximately 18% of the
storage fleet was leased on a term basis at the end of fiscal
1995 with the balance available for lease on a per diem basis.
3
<PAGE> 4
Competition
Leasing transportation equipment is a highly competitive business
and is affected by factors related to the freight transportation
market. Lease terms and lease rates, as well as availability,
condition and size of equipment are all important factors to the
lessee. In addition, various types of transportation equipment
compete for business. Over-the-road trailers, intermodal
trailers, marine and domestic containers, and railroad rolling
stock are all potential vehicles for the movement of freight.
XTRA believes it is the second largest North American lessor
of over-the-road trailers with its principal competitor having a
slightly larger fleet. Recent estimates place the number of
over-the-road trailers available for lease in North America in
excess of 260,000.
The world's dry cargo marine container fleet has grown in
excess of 7% per year since 1990, in response to world trade
growth. At the end of fiscal 1995, the world's marine container
fleet is estimated at 9 million TEUs, of which approximately
one-half is owned by leasing companies. In the marine container
market, XTRA believes it is one of the ten largest container
lessors in the world. The two largest lessors account for
approximately 50% of the leasing market.
The Company believes that the North American intermodal
trailer fleet has decreased from approximately 115,000 trailers
at the end of 1990 to approximately 105,000 trailers at the end
of fiscal 1995. Demand was strong in fiscal 1994 and in the first
quarter of fiscal 1995 resulting from an overall improved
economy, better service provided by the railroads and increased
use of intermodal transportation by long-haul truckers. Beginning
in the second quarter of fiscal 1995, as a result of decreased
levels of domestic freight, truckers began competing more
aggressively, thus diverting some intermodal freight to
over-the-road. The Company is unable to predict what demand for
intermodal trailers will be in the future although some industry
analysts believe that demand will continue to decrease. The
Company monitors the size of the North American fleet relative to
current and expected future demand and bases its trailer
acquisition and disposition decisions, in part, on these factors.
XTRAbelieves it is the second largest North American lessor of
intermodal trailers with its principal trailer competitor having
a slightly larger fleet. The balance of the North American fleet
is owned by other leasing companies and railroads.
The use of domestic containers and chassis is a growing part
of the intermodal business. The Company believes it is the third
largest lessor of domestic containers and its fleet represents
approximately 14% of the national fleet. Marine containers also
compete for the intermodal movement of domestic freight.
Some portion of the North American marine chassis fleet of
approximately 450,000 units is used to handle domestic containers
and hence competes with domestic chassis. XTRA believes its fleet
of domestic and marine chassis represents 5% of the chassis
fleet.
Locations and Operations
XTRA's domestic equipment is leased from equipment pools operated
by Company employees at 92 locations in North America. The marine
container operations are managed by 12 Company offices and 10
agency locations, which utilize 106 independent depot locations
worldwide to store and maintain equipment.
Employees
The Company had 883 employees at September 30, 1995.
Corporate Organization
The Company was organized in 1957. XTRA's management subsidiary
X-L-CO, INC. is located at 60 State Street, Boston, Massachusetts
02109 (telephone number (617) 367-5000).
XTRA Inc., a subsidiary of XTRA Corporation, owns
substantially all of the Company's transportation equipment and
conducts the Company's leasing business through certain of its
subsidiaries pursuant to management service agreements. For
disclosure on significant subsidiaries, see Note 13 of the Notes
to Consolidated Financial Statements.
4
<PAGE> 5
Item 2. Properties
The Company maintains 92 facilities for the storage and
distribution of its over-the-road and intermodal equipment
throughout North America, occupying 664 acres, of which 381 are
owned. Except for locations in Chicago and the St. Louis area,
consisting of 35 and 148 acres, respectively, these facilities
are generally 2 to 16 acres. The marine container business is
managed through 12 offices worldwide.
Item 3. Legal Proceedings
There are no material pending legal proceedings in which the
Company is named as a defendant.
A subsidiary of the Company has joined a group of other
parties working with the Wisconsin Department of Natural
Resources ("WDNR") on the remediation of environmental problems
at the Edgerton Sand and Gravel Landfill site in Edgerton,
Wisconsin and provision of an alternative water supply to
affected residences in the area of the site. The subsidiary has
also joined another group of parties working with the WDNR with
regard to an adjacent manufacturing facility owned by the
subsidiary prior to 1978. The Company is unable at this time to
predict with any certainty the ultimate remediation costs
associated with these sites or with provision of an alternative
water supply, or the Company's share of any such costs. Based on
preliminary estimates received from technical consultants for the
Company and other similarly situated parties, the Company
believes that its share of any future costs for remediation of
both sites and provision of an alternative water supply will not
be material to the results of operations, the financial condition
or the liquidity of the Company, without consideration of any
potential insurance recoveries or recoveries from the prior owner
of the manufacturing facility or the owner/operator of the
Edgerton Sand and Gravel Landfill site.
5
<PAGE> 6
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to stockholders of the Company during the
fourth quarter of 1995.
Item 4A. Executive Officers of the Registrant
The executive officers of the Company, the age of each, and the
period during which each has served in his present office are as
follows:
Lewis Rubin (57) - President and Chief Executive Officer. Mr.
Rubin was President and Chief Executive Officer of Flexi-Van
Corporation, a Company engaged in the leasing of intermodal
transportation equipment, from 1981 to 1983. He served as
President and Chief Executive Officer of Gelco CTI Container
Services, a subsidiary of Gelco Corporation, and as an Executive
Vice President of Gelco Corporation from 1984 to 1988. Mr. Rubin
was elected President and Chief Operating Officer of the Company
in 1990. He was elected to his present position in 1990.
Robert B. Blakeley (35) - Controller and Chief Accounting
Officer. Mr. Blakeley joined the Company in 1984, was promoted to
Assistant Controller in 1987 and was elected to his present
position in 1991.
Jeffrey R. Blum (43) - Vice President, Human Resources. Mr. Blum
joined the Company and was elected to his current position in
1995. Prior to 1995, Mr. Blum served in similar capacities at
Signal Capital Corporation and First Winthrop Corporation.
Michael K. Fox (49) - Vice President, XTRA Intermodal. Mr. Fox
joined the Company in 1981 and has held several managerial
positions. He was elected Divisional Executive Vice President,
XTRA Intermodal in 1993. He was elected to his present position
in 1994.
William H. Franz (44) - Vice President, XTRA Lease. Mr. Franz was
previously employed by two large over-the-road lessors, Transport
International Pool and Strick Lease. He joined the Company in
1992 and held the position of Divisional Executive Vice
President, XTRALease in 1993. He was elected to his present
position in 1993.
Frederick M. Gutterson (53) - Vice President, XTRA International.
Mr. Gutterson was President and Chief Executive Officer of Matson
Leasing Company, Inc. since its inception in 1989. He was elected
to his present position in 1995 following the Matson acquisition.
Christopher P. Joyce (34) - Treasurer. Mr. Joyce joined the
Company in 1985. He was promoted to Assistant Treasurer in 1991
and was elected to his present position in 1993.
James R. Lajoie (55) - Vice President, General Counsel and
Secretary. Mr. Lajoie joined the Company as General Counsel in
1981. He was elected Vice President and General Counsel in 1987
and was elected to his present position in 1990.
Michael J. Soja (46) - Vice President and Chief Financial
Officer. Mr. Soja joined the Company as Assistant Controller in
1974, was elected Controller in 1978, and elected Vice President
in 1979. He was elected Vice President, Finance and
Administration in 1981 and was elected Vice President, Finance
and Treasurer in 1990. Mr. Soja was elected to his present
position in 1990.
Charles D. Willmott (43) - Vice President, Marketing and
Planning. Mr. Willmott was President of Distribution
International Corporation, the holding company for the Strick
Companies, prior to joining the Company in 1992. Mr. Willmott was
elected to his present position in 1993, following the Strick
Lease acquisition.
All terms of office expire as of the date of the Board of
Directors' meeting following the next Annual Meeting of
Stockholders and until their respective successors are elected
and qualified.
6
<PAGE> 7
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Company's Common Stock is listed on the New York Stock
Exchange and trades under the symbol "XTR". The approximate
number of record holders as of November 16, 1995 was 966. The
following table sets forth the range of high and low sale prices
of the Company's Common Stock on the New York Stock Exchange
Composite Tape and dividends declared during fiscal years ended
September 30, 1994 and 1995.
<TABLE>
<CAPTION>
Dividends
High Low Declared
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994: First Quarter $ 53 $ 40 3/4 $ .12
Second Quarter 50 7/8 40 7/8 .14
Third Quarter 53 1/4 40 .14
Fourth Quarter 52 1/4 46 5/8 .14
1995: First Quarter 51 7/8 40 .14
Second Quarter 52 1/2 44 1/8 .16
Third Quarter 51 1/8 44 3/8 .16
Fourth Quarter 49 1/4 42 3/4 .16
</TABLE>
The Company has paid quarterly cash dividends on its Common
Stock since January 1977. Future dividends will be determined by
the Board of Directors and will be dependent upon the earnings,
financial condition and cash requirements of the Company and
other relevant factors existing at the time.
The Company's source of funds for the payment of dividends on
its capital stock is advances and dividends from its direct and
indirect wholly-owned subsidiaries, including XTRA Missouri, Inc.
and XTRA, Inc. The primary sources of funds for XTRA, Inc. are
cash flows from operations, advances from its subsidiaries and
external financing. Several of the Company's loan agreements
contain covenants that restrict the payment of dividends by the
Company. In addition certain loan agreements contain covenants
that restrict advances to and payment of dividends to the Company
by its subsidiaries, including XTRA Missouri, Inc and XTRA Inc.
Under the most restrictive provisions of the Company's loan
agreements, the amount of cash dividends which could be paid on
the Company's capital stock was limited to $82 million at
September 30, 1995.
Item 6. Selected Financial Data
This information is set forth in the table appearing on page 1 of
the Company's 1995 Annual Report, which table is incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by this item appears in the Company's
1995 Annual Report beginning at page 32 and is incorporated
herein by reference.
Item 8. Financial Statements and Supplementary Data
The following Financial Statements and Supplementary Data for
XTRA Corporation and its subsidiaries appear in the Company's
1995 Annual Report to Stockholders at the pages indicated below
and are incorporated herein by reference.
<TABLE>
<CAPTION>
Financial Statements Page
<S> <C> <C>
Consolidated balance sheets - September 30, 1994 and 1995 37
Consolidated income statements for the three years ended September 30, 1995 38
Consolidated statements of cash flows for the three years ended September 30, 1995 39
Management's discussion and analysis of financial condition and results of operations
for the three years ended September 30, 1995 32
Unaudited quarterly condensed consolidated income statements for the years
ended September 30, 1994 and 1995 40
Consolidated statements of stockholders' equity for the three years ended September 30, 1995 41
Notes to consolidated financial statements 42
Report of independent public accountants 53
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable
7
<PAGE> 8
PART III.
Item 10. Directors and Executive Officers of the Registrant
(a)Directors - Information with respect to all directors may be
found in the Company's definitive Proxy Statement for the 1996
Annual Meeting of Stockholders (the "1996 Proxy Statement")
under the caption "Information with Respect to Director
Nominees," which the 1996 Proxy Statement is to be filed with
the Securities and Exchange Commission. Such information is
incorporated herein by reference.
(b)Executive Officers - Information with respect to executive
officers of the registrant appears in Item 4A of this Report
on Form 10-K.
(c)Information with respect to directors and executive officers
who failed to timely file reports required by Section 16(a) of
the Securities Exchange Act of 1934 (the "Exchange Act") may
be found in the 1996 Proxy Statement under the caption "Stock
Ownership by Directors and Executive Officers." Such
information is incorporated herein by reference.
Item 11. Executive Compensation
This information is contained in the 1996 Proxy Statement under
the captions "Executive Compensation Tables" and "Compensation of
Directors," which is to be filed with the Securities and Exchange
Commission. Such information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
This information is contained in the 1996 Proxy Statement under
the captions "Stock Ownership by Directors and Executive
Officers" and "Beneficial Ownership of More Than Five Percent of
Voting Securities." Such information is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
This information is contained in the 1996 Proxy Statement under
the captions "Information with Respect to Director Nominees" and
"Certain Transactions." Such information is incorporated herein
by reference.
8
<PAGE> 9
Part IV.
Item 14. Financial Statements, Financial Statement Schedule, Exhibits and
Reports on Form 8-K.
<TABLE>
<CAPTION>
<C> <S>
(a) 1. Financial Statements - A list of Financial Statements for
XTRA Corporation and its Subsidiaries appears at Item 8 on
page 7 of this Annual Report on Form 10-K.
2. Financial Statement Schedule - The Following Schedule
appear in the Company's 1995 Annual Report to Stockholders
at the pages indicated below and is incorporated by
reference:
Schedule for the three years ended September 30, 1995:
Schedule I - Parent company financial Statements appear at
pages 10 to 14 of this Annual Report on Form 10-K.
The supplementary income statement information required to be
submitted in Schedule X has been included in the Financial
Statements or the related notes. Other schedules are omitted
as they are not applicable or required under the rules of
Regulation S-X.
3. Exhibits - A list of Exhibits filed or incorporated by
reference appears following page 16 of this Annual Report
on Form 10-K, which information is incorporated by
reference.
(b) The Company filed a Current Report on Form 8-K, dated July 14,
1995, which reported the completed acquisition of certain net
assets of Matson Leasing Company, Inc. including as exhibits,
the Asset Purchase Agreement, the Credit Agreement, the
Guarantee by XTRA Corporation, and the Guarantee by XTRA
Missouri Inc.
</TABLE>
9
<PAGE> 10
XTRA CORPORATION SCHEDULE I
(PARENT COMPANY ONLY)
BALANCE SHEETS
SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1995
In Millions except per share amounts
<TABLE>
<CAPTION>
1994 1995
------ ------
<S> <C> <C>
ASSETS
Investment in Subsidiary 329.1 355.9
Advances to Subsidiaries 1.4 3.5
------ ------
$330.5 $359.4
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Committments and Contingencies
Stockholders' Equity
Preferred Stock, without par value; total authorized: 3,000,000 shares
Common Stock, par value $.50 per share; authorized 30,000,000 shares; issues
and outstanding 16,939,616 at September 30, 1994 and
16,568,801 at September 30, 1995 8.5 8.3
Capital in excess of par value 125.4 107.6
Retained earnings 196.6 243.5
------ ------
Total Stockholders' Equity 330.5 359.4
------ ------
$330.5 $359.4
====== ======
</TABLE>
The accompanying Notes A, B, and C and the Notes to Consolidated Financial
Statements are an integral part of these financial statements.
10
<PAGE> 11
SCHEDULE I
XTRA CORPORATION
(PARENT COMPANY ONLY)
INCOME STATEMENTS
FOR THE THREE YEARS ENDED
SEPTEMBER 30, 1995
In Millions
<TABLE>
<CAPTION>
1993 1994 1995
------ ----- -----
<S> <C> <C> <C>
Equity in earnings of subsidiaries $ 37.8 $57.6 $57.3
------ ----- -----
$ 37.8 $57.6 $57.3
====== ===== =====
</TABLE>
The accompanying Notes A, B, and C and the Notes to Consolidated Financial
Statements are an integral part of these financial statements.
11
<PAGE> 12
XTRA CORPORATION SCHEDULE I
(PARENT COMPANY ONLY)
STATEMENT OF CASH FLOWS
FOR THE THREE YEARS ENDED
SEPTEMBER 30, 1995
In Millions
<TABLE>
<CAPTION>
1993 1994 1995
------ ------ -------
<S> <C> <C> <C>
Cash flows from operations:
Income from operations $ 37.8 $ 57.6 $ 57.3
Deduct non-cash income and expense items:
Equity in earnings of subsidiaries (37.8) (57.6) (57.3)
Add other cash items:
Dividends received from subsidiary 11.3 9.1 10.5
Repurchase of common stock -- -- 20.0
Net change in receivables, miscellaneous assets,
payables and accrued expenses 0.9 0.5 (2.0)
------ ------ ------
Total cash provided from operations 12.2 9.6 28.5
Cash flows from financing activities
Net proceeds from issuance of common stock 63.1 -- --
Net proceeds from issuance of Series C Preferred
Stock (See Note B) 28.3 -- --
Capital contribution to subsidiary (92.3) -- --
Net change in advances to subsidiaries (0.8) (0.5) 2.0
Dividends paid (10.5) (9.1) (10.5)
Repurchase of Common Stock -- -- (20.0)
------ ------ ------
Total cash used for financing activities (12.2) (9.6) (28.5)
Net change in cash 0.0 0.0 0.0
Cash at beginning of year 0.0 0.0 0.0
------ ------ ------
Cash at end of year $ 0.0 $ 0.0 $ 0.0
====== ====== ======
</TABLE>
The accompanying Notes A, B, and C and the Notes to Consolidated Financial
Statements are an integral part of these financial statements.
12
<PAGE> 13
XTRA CORPORATION
NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS
(A) Summary of Significant Accounting Policies
Accounting for Investment in Subsidiary
XTRA Corporation, the Parent company, records its investment in its
subsidiary, XTRA Missouri, Inc. at cost plus its equity in the
undistributed earnings of this subsidiary. All administrative and interest
expenses incurred by the Parent Company are allocated to its direct and
indirect wholly-owned subsidiaries.
(B) Capital Stock
Dividends
XTRA Corporation declared cash dividends of $.46, $.54 and $.62 per share
in the years ended September 30, 1993, 1994 and 1995, respectively. XTRA
Corporation paid out cash dividends to stockholders totaling $10.5 million,
$9.1 million and $10.5 million during fiscal 1993, 1994 and 1995,
respectively. The principal source of dividends for the Parent Company are
funds advanced from its direct and indirect wholly-owned subsidiaries,
including XTRA, Inc.
Issuance of Common Stock
During fiscal 1993, the company issued 1,495,000 shares of common stock at
$44.75 per share. The net proceeds to the Company were approximately $63
million.
Repurchase of Common Stock
In January 1995, the Company authorized the repurchase of up to $100
million of its common stock. The timing of the repurchases, which could
occur over an extended period of time, will depend on price, market
conditions and other factors. As of November 15, 1995, the Company had
repurchased approximately $31 million of common stock.
Series C Cumulative Redeemable Exchangeable Preferred Stock
In connection with the acquisition of the Strick Lease business the Company
issued 300 shares of Series C Cumulative Redeemable Exchangeable Preferred
Stock with a $30 million redemption value, a dividend rate of 10% and a
final maturity date of five years. On October 1, 1993, the Company elected
to exercise its option to exchange the outstanding shares for subordinated
debt with a coupon of 10%. This subordinated debt which was recorded by
its subsidiary, XTRA, Inc., was redeemed September 30, 1994.
(C) Debt and Transfers to Subsidiaries
The Parent Company has guaranteed certain debt of its indirect
wholly-owned subsidiary, including the Revolving Credit Agreement, Series
Notes and Term Loans. (See Note 4 of the Parent Company's consolidated
1995 Annual Report.)
13
<PAGE> 14
<PAGE> 15
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of XTRA Corporation:
We have audited in accordance with generally accepted auditing standards, the
financial statements included in XTRA Corporation's Annual Report to
Stockholders incorporated by reference in the Company's Annual Report on Form
10-K for the year ended September 30, 1995, and have issued our report thereon
dated November 15, 1995. Our audit was made for the purpose of forming an
opinion on those statements taken as a whole. The schedule listed in the index
to financial statements and incorporated by reference in the Company's Annual
Report on Form 10-K for the year ended September 30, 1995, is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 15, 1995
14
<PAGE> 16
Signatures
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
XTRA Corporation
(Registrant)
By /s/ Lewis Rubin
-------------------------------------
President and Chief Executive Officer
November 16, 1995
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Robert B. Goergen Chairman of the November 16, 1995
Board of Directors
/s/ Robert M. Gintel Vice Chairman of the November 16, 1995
Board of Directors
/s/ Lewis Rubin President, Chief Executive November 16, 1995
Officer and Director
/s/ Michael J. Soja Vice President November 16, 1995
and Chief Financial Officer
/s/ Robert B. Blakeley Controller and November 16, 1995
Chief Accounting Officer
/s/ Gilbert Butler Director November 16, 1995
/s/ J. Russell Duncan Director November 16, 1995
/s/ Herbert C. Knortz Director November 16, 1995
/s/ John J. Lee Director November 16, 1995
/s/ Francis J. Palamara Director November 16, 1995
/s/ Martin L. Solomon Director November 16, 1995
</TABLE>
15
<PAGE> 17
EXHIBIT INDEX
XTRA Corporation Form 10-K
(for fiscal year ended 9-30-95)
<TABLE>
<CAPTION>
Exhibit Item
<S> <C>
3.1 Restated Certificate of Incorporation of XTRA Corporation
(filed with the Securities and Exchange Commission as Exhibit 3.1
to Registrant's Annual Report on Form 10-K for the year ended
September 30, 1989, and incorporated herein by reference).
3.1.1 Certificate of Elimination of Designation, Preference and Rights
of Series A Participating Preferred Stock (filed with the Securities
and Exchange Commission as Exhibit 3.1 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1991, and
incorporated herein by reference).
3.1.2 Certificate of Elimination of Designation, Preference and Rights of
$1.9375 Series B Cumulative Convertible Preferred Stock (filed
with the Securities and Exchange Commission on March 5, 1993 as
Exhibit 4.5 to Registrant's Registration Statement on Form S-3
(file No. 33-59132), and incorporated herein by reference).
3.1.3 Certificate of Amendment of Restated Certificate of Incorporation
(filed with the Securities and Exchange Commission on March 5, 1993
as Exhibit 4.4 to Registrant's Registration Statement on Form S-3
(file No. 33-59132), and incorporated herein by reference).
3.1.4 Certificate of Elimination of Designation, Preference and Rights
of the Series C Cumulative Redeemable Exchangeable Preferred Stock
(filed with the Securities and Exchange Commission on July 26, 1994
as Exhibit 4.5 to Registrant's Registration Statement on Form S-3
(file No. 33-54747), and incorporated herein by reference).
3.2 Amended and Restated By-Laws of XTRA Corporation, as amended through
March 20, 1990 (filed with Securities and Exchange Commission as
Exhibit 3(b) to Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1990, and incorporated herein by reference).
4.1 Indenture, dated as of February 1, 1989, between XTRA, Inc., XTRA
Corporation and Chemical Bank, and First Supplemental Indenture,
dated as of February 1, 1989, between XTRA, Inc., XTRA Corporation
and Chemical Bank (filed with the Securities and Exchange Commission
as Exhibits 4.1 and 4.2, respectively, to Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1988, and
incorporated herein by reference).
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
<S> <C>
4.1.1 Second Supplemental Indenture, dated as of December 10, 1991, to the
Indenture identified in Exhibit 4.1 above, between XTRA, Inc., XTRA
Corporation and Chemical Bank (filed with the Securities and
Exchange Commission as Exhibit 4.4.1 to Registrant's Annual Report
on Form 10-K for the year ended September 30, 1991, and incorporated
herein by reference).
4.1.2 Third Supplemental Indenture, dated as of November 1, 1992, to the
Indenture identified in Exhibit 4.1 above, between XTRA, Inc.,
XTRA Corporation and Chemical Bank (filed with the Securities and
Exchange Commission as Exhibit 4.2 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1992, and
incorporated herein by reference).
4.1.3 Fourth Supplmental Indenture, dated as of September 30, 1994, to
the Indenture identified in Exhibit 4.1 above, between XTRA, Inc,
XTRA Corporation and Chemical Bank (filed with the Securities and
Exchange Commission as Exhibit 4.1.3 to Registrant's Annual Report
on Form 10-K for the year ended September 30, 1994, and incorporated
herein by reference).
4.2 Indenture, dated as of August 15, 1994, between XTRA, Inc., XTRA
Corporation and the First National Bank of Boston (filed with
the Securities and Exchange Commission as Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated August 15, 1994, and
incorporated herein by reference).
4.2.1 First Supplemental Indenture, dated as of September 30, 1994, to
the Indenture identified in Exhibit 4.2 above, between XTRA Inc.,
XTRA Corporation and The First National Bank of Boston (filed with
the Securities and Exchange Commission as Exhibit 4.2.1 to
Registrant's Annual Report on Form 10-K for the year ended
September 30, 1994, and incorporated herein by reference).
4.2.2 Form of fixed-rate Series C Medium-Term Note (filed with the Securities
and Exchange Commission as Exhibit 4.2.2 to Registrant's Annual Report
on Form 10-K for the year ended September 30, 1994, and incorporated
herein by reference).
4.2.3 Form of floating-rate Series C Medium-Term Note (filed with the
Securities and Exchange Commission as Exhibit 4.2.3 to Registrant's
Annual Report on Form 10-K for the year ended September 30, 1994, and
incorporated herein by reference).
Note: Registrant agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of any other instrument with
respect to long-term debt of the Registrant and its sibsidiaries.
Such other instruments are not filed herewith because no
such instrument relates to outstanding debt in amount greater
than 10% of the total assets of the Registrant and its subsidiaries
on a consolidated basis.
4.3 Credit Agreement, dated as of June 30, 1995, among XTRA, Inc., Bank
of America Illinois and Each of the Other Financial Institutions
From Time To Time Parties Thereto, with Bank of America National
Trust and Savings Association as Administrative Agent and The
First National Bank of Boston as Documentation Agent (filed with the
Securities and Exchange Commission as Exhibit 2.2 to Registrant's
Current Report on Form 8-K dated July 14, 1995, and incorporated
herein by reference).
4.3.1 Guaranty, dated June 30, 1995 by XTRA Corporation (filed with the
Securities and Exchange Commission as Exhibit 2.3 to Registrant's
Current Report on Form 8-K dated July 14, 1995, and incorporated
herein by reference).
4.3.2 Guaranty, dated June 30, 1995 by XTRA Missouri, Inc. (filed with the
Securities and Exchange Commission as Exhibit 2.4 to Registrant's
Current Report on Form 8-K dated July 14, 1995, and incorporated
herein by reference).
10.1 Agreement and Plan of Reorganization, dated as of July 26, 1992,
among Registrant, ST Trailer Corp., Distribution International
Corporation ("DI"), Strick Corporation and certain individuals
owning approximately 70% of the captial stock of DI (filed with the
Securities and Exchange Commission as Exhibit 2.1 to Registrant's
Current Report on Form 8-K dated August 4, 1992, and incorporated
herein by reference).
10.2 U.S. Fleet Finance Services Agreement dated as of October 1, 1994
between XTRA, Inc., and XTRA Intermodal, Inc. (filed with the
Securities and Exchange Commission as Exhibit 10.2 to Registrant's
Annual Report on Form 10-K for the year ended September 30, 1994, and
incorporated herein by reference).
10.3 U.S. Fleet Finance Services Agreement dated as of October 1, 1994
between XTRA, Inc., and XTRA Lease Inc. (filed with the
Securities and Exchange Commission as Exhibit 10.3 to Registrant's
Annual Report on Form 10-K for the year ended September 30, 1994, and
incorporated herein by reference).
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
EXECUTIVE COMPENSATION PLANS
<C> <S>
10.4 Fleet Finance Services Agreement dated as of July 1, 1995 between XTRA,
Inc. and XTRA International Ltd., filed herewith.
10.5 1991 Stock Option Plan for Non-Employee Directors (filed with the
Securities and Exchange Commission as Exhibit 10.3 to Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1991, and
incorporated herein by reference).
10.5.1 First Amendment to the 1991 Stock Option Plan for Non-Employee
Directors identified in Exhibit 10.5 above (filed with the Securities
and Exchange Commission as Exhibit 10.3.1 to Registrant's Annual Report
on Form 10-K for the year ended September 30, 1993, and incorporated
herein by reference).
10.6 1987 Stock Incentive Plan (filed with the Securities and Exchange
Commission as Exhibit 10.3 to Registrant's Annual Report on Form
10-K for the year ended September 30, 1989, and incorporated herein
by reference).
10.6.1 Amendment No. 1 to the 1987 Stock Incentive Plan identified in Exhibit
10.6 above (filed with the Securities and Exchange Commission as
Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1994, and incorporated herein by
reference).
10.7 Deferred Director Fee Option Plan (filed with the Securities and
Exchange Commission as Exhibit 10.5 to Registrant's Annual Report
on Form 10-K for the year ended September 30, 1993, and incorporated
herein by reference).
10.8 Deferred Compensation Plan for Non-Employee Directors, effective
January 1, 1994 (filed with the Securities and Exchange Commission as
Exhibit 10.6 to Registrant's Annual Report on Form 10-K for the year
ended September 30, 1993, and incorporated herein by reference).
10.9 Deferred Compensation Plan for Senior Executives, effective January 1,
1994 (filed with the Securities and Exchange Commission as Exhibit 10.7
to Registrant's Annual Report on Form 10-K for the year ended
September 30, 1993, and incorporated herein by reference).
10.10 Annual Incentive Plan (filed with the Securities and Exchange
Commission as Exhibit 10.2 to Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1991, and incorporated herein by
reference).
</TABLE>
18
<PAGE> 20
<TABLE>
<C> <S>
10.11 Form of Indemnification Agreement entered into between the
Registrant and certain former Directors and certain former and
current officers of the Registrant and its subsidiaries (filed with the
Securities and Exchange Commission on June 11, 1987 as Exhibit 10 to
Registrant's Registration Statement on Form S-3 (file No. 33-14996),
and incorporated herein by reference).
10.12 Employment and Stock Option Agreement, dated as of July 12, 1990,
between XTRA Corporation and Lewis Rubin (filed with the
Securities and Exchange Commission as Exhibit 10.9 to Registrant's
Annual Report on Form 10-K for the year ended September 30, 1990, and
incorporated herein by reference).
</TABLE>
19
<PAGE> 21
<TABLE>
<C> <S>
10.12.1 Amendment No. 1, dated as of May 7, 1991, to the Employment and Stock
Option Agreement identified in Exhibit 10.12 above, between XTRA
Corporation and Lewis Rubin (filed with the Securities and Exchange
Commission as Exhibit 10.1 to Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1991, and incorporated herein
by reference).
10.12.2 Amendment No. 2, dated as of May 5, 1992, to the Employment and
Stock Option Agreement identified in Exhibit 10.12 above, between
XTRA Corporation and Lewis Rubin (filed with the Securities and
Exchange Commission as Exhibit 10.11.2 to Registrant's Annual Report
on Form 10-K for the year ended September 30, 1992, and
incorporated herein by reference).
10.12.3 Amendment No. 3, dated as of September 1, 1993, to the Employment and
Stock Option Agreement identified in Exhibit 10.12 above, between
XTRA Corporation and Lewis Rubin (filed with the Securities and
Exchange Commission as Exhibit 10.13.3 to Registrant's Annual Report
on Form 10-K for the year ended September 30, 1993, and
incorporated herein by reference).
10.12.4 Amendment No. 4, dated as of November 17, 1994, to the Employment and
Stock Option Agreement identified in Exhibit 10.12 above, between
XTRA Corporation and Lewis Rubin (filed with the Securities and
Exchange Commission as Exhibit 10.1 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1994, and incorporated
herein by reference).
10.13 Individual Pension Agreement, dated as of July 1, 1994, between XTRA
Corporation and Lewis Rubin (filed with the Securities and Exchange
Commission as Exhibit 10.1 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994, and incorporated
herein by reference).
10.14 Asset Purchase Agreement, dated June 30, 1995, among XTRA, Inc.,
and Matson Navigation Company, Inc. and Matson Leasing Company, Inc.
(filed with the Securities and Exchange Commission as Exhibit 2.1 to
Registrant's Current Report on Form 8-K dated July 14, 1995, and
incorporated herein by reference).
11.1 Statement re computation of per share earnings.
11.2 Statement re Calculation of Weighted Average Shares Outstanding.
12.1 Statement re computation of ratios (XTRA Corporation).
12.2 Statement re computation of ratios (XTRA, Inc.).
13.1 Five Year Selected Financial Data.
13.2 Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Three Years Ended September 30, 1995
(not covered by the Report of Independent Public Accountants).
13.3 XTRA Corporation and Subsidiaries Consolidated Financial Statements.
21 Subsidiaries of Registrant.
23 Consent of Independent Public Accountants.
27 Financial Data Schedule.
</TABLE>
20
<PAGE> 1
Exhibit 10.4
Re: XTRA, Inc. and XTRA International Ltd./Marine Container Fleet
FLEET FINANCE SERVICES AGREEMENT
----------------------------------
This Fleet Finance Services Agreement (the "Agreement") made as of the
first day of July, 1995,
B E T W E E N:
XTRA, INC., a Maine corporation, ("XTRA"),
- and -
XTRA INTERNATIONAL LTD., a Delaware corporation, ("XTRA International"),
WHEREAS XTRA and XTRA International are members of an affiliated group
of corporations (the "Affiliated Group") controlled by XTRA Corporation, a
Delaware corporation, ("Parent Corporation");
AND WHEREAS XTRA is engaged in providing financing services for the
Affiliated Group and owns transportation equipment consisting of marine
containers (hereinafter referred to as XTRA's Container Fleet );
AND WHEREAS XTRA International is engaged in the business of providing
international transportation leasing services, on an operating basis, of marine
containers (hereinafter referred to as XTRA International's Leasing
Business );
AND WHEREAS XTRA International wishes to engage XTRA to provide it with
fleet finance services in the U.S. in connection with XTRA International's
Leasing Business as more particularly described herein;
AND WHEREAS XTRA wishes to provide such fleet finance services and make
available XTRA's Container Fleet to XTRA International for use in connection
with XTRA International's Leasing Business as more particularly described
herein;
21
<PAGE> 2
AND WHEREAS the parties wish to enter into this Agreement to define the
terms upon which XTRA will provide such fleet finance services and XTRA's
Container Fleet to XTRA International;
NOW THEREFORE in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency whereof
each of the parties hereto hereby acknowledges, the parties hereto covenant and
agree as follows:
I. CONTAINER FLEET MANAGEMENT:
1. SERVICES. XTRA International for a period of ten (10) years from
July 1, 1995, subject to earlier termination as hereinafter set forth, shall be
entitled to operate XTRA's Container Fleet in XTRA International s Leasing
Business in accordance with the terms and conditions of this Agreement,.
2. FUNCTIONS. In connection with the operation of XTRA's Container
Fleet, XTRA International shall:
(a) lease the equipment, as lessor, in a manner consistent with XTRA
International's Leasing Business;
(b) employ and be responsible for the activities of all personnel
required for the daily operation of XTRA's Container Fleet;
(c) supervise customer relations and arrange for advertising, sales,
and solicitations;
(d) pay and be responsible for all operating expenses associated with
the operation of XTRA International's Leasing Business, including
XTRA's Container Fleet; and
(e) take such further action as deemed necessary for the efficient and
economical functioning of XTRA's Container Fleet including the repair
and maintenance of XTRA s Container Fleet.
XTRA shall not solicit business for XTRA International from its
customers or prospective customers or enter into contracts of sale or lease (or
comparable arrangements) with any customers on behalf of XTRA International.
3. REVENUES. All receipts, income and revenues derived from XTRA's
Container Fleet by XTRA International shall be the sole and exclusive property
of XTRA International.
22
<PAGE> 3
4. In no event will XTRA International incur any indebtedness for
money borrowed or subject XTRA's Container Fleet to any lien, security interest
or encumbrance, except for third party leases in the ordinary course of XTRA
International's Leasing Business.
II. ANNUAL COMPENSATION:
In return for the right to operate XTRA's Container Fleet and receive
fleet financing services XTRA International shall pay to XTRA compensation for
the use of XTRA's Container Fleet an amount equal to equipment depreciation
expense calculated each fiscal year in accordance with the Internal Revenue
Code of 1986 on equipment additions to XTRA's Container Fleet, plus allocated
interest expense and other associated financing costs related to XTRA s
Container Fleet. Such amounts shall be paid by the last day of the month
following the end of each fiscal quarter which ends on the last day of
December, March, June, and September.
III. AUTHORITY:
XTRA International shall have full right and authority, in its own name
and on its own behalf, to sign and enter into lease contracts with respect to
XTRA's Container Fleet in connection with XTRA International's Leasing
Business.
IV. RECORDS AND ACCOUNTING:
XTRA International shall keep and maintain full and complete books,
records, and accounts in a manner consistent with Generally Accepted Accounting
Principles. XTRA International shall render to XTRA upon its request complete
quarterly and annual operating and financial statements, with such information
with respect to XTRA's Container Fleet as XTRA shall request and such other
reports pertaining to XTRA International's Leasing Business as XTRA may from
time to time reasonably request and in the form so requested.
V. INSURANCE:
To the extent not otherwise provided XTRA shall maintain in force all
necessary insurance.
23
<PAGE> 4
VI. TERMINATION:
Either party may terminate this Agreement immediately upon thirty (30)
days written notice to the other party.
VII. ASSIGNMENT OF LEASES:
XTRA International hereby assigns to XTRA all of XTRA International's
right, title, and interest in all leases entered into by XTRA International
relating to XTRA's Container Fleet; provided however, that prior to the
termination of this Agreement pursuant to the terms of Section VI above, XTRA
International shall have the right to collect and retain all amounts payable
under such leases as they become due and payable. Upon termination of this
Agreement for any reason, XTRA shall be entitled to operate the XTRA s
Container Fleet and collect all amounts due under the Leases, including those
past due.
VIII. GENERAL CLAUSES:
1. ASSIGNMENT. The parties hereto agree that this Agreement
shall not be assignable by either party without the prior written consent of
the other party hereto.
2. AMENDMENT. This Agreement may be amended at any time by mutual
consent of the parties.
3. NOTICE. Any demand, notice or other communication (hereinafter
referred to as a "Communication") to be given in connection with this Agreement
shall be given in writing and shall be given by personal delivery, by
registered mail or by transmittal by telex or telecopier or other form of
recorded Communication addressed to the recipient as follows:
To XTRA:
Pierce, Atwood, Scribner, Allen, Smith & Lancaster
One Monument Square
Portland, Maine 04101
24
<PAGE> 5
To XTRA International:
333 Market Street
San Francisco, CA 94105
Attn: Frederick M. Gutterson
or to such other address, telex or telecopier number or individual as may be
designated by notice given by either party to the other. Any Communication
given by personal delivery shall be conclusively deemed to have been given on
the day of actual delivery thereof and, if given by registered mail, on the
fifth business day following the deposit thereof in the mail and, if given
by telex or other form of recorded Communication, shall be deemed given and
received on the date of such transmission if received during the normal
business hours of the recipient and on the next business day if it is received
after the end of such normal business hours on the date of its transmission.
If the party given the Communication knows or ought reasonably to know of any
difficulties with the postal system which might affect the delivery of mail,
any such Communication shall not be mailed but shall be given by personal
delivery or by telex or telecopier transmittal.
4. TIME OF THE ESSENCE. Time shall be of the essence hereof.
5. FURTHER ASSURANCES. The parties agree to sign or execute all
such other documents and such other things as may be necessary or desirable for
more completely and effectually carrying out the terms and intentions of this
Agreement. Furthermore, the parties shall act, and shall use their best
efforts to cause their nominees to act, to carry out the terms and spirit and
purpose of this Agreement.
6. WAIVER. The failure of any party to enforce any rights or
obligations under this Agreement shall not constitute a waiver of that or any
other right or obligation hereunder.
7. SEVERABILITY. Any provision or provisions of this Agreement
which contravene any applicable law or which are found to be unenforceable
shall, to the extent of such contravention or unenforceability, be deemed
severable and shall not cause this Agreement to be held invalid or
unenforceable or affect any other provision or provisions of this Agreement.
25
<PAGE> 6
8. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties and there are no representations, warranties,
conditions, or collateral agreements relating to the subject matter hereof,
except as herein contained or as may be consented to as provided herein.
9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by an officer, as of the date set forth above, each pursuant to
due corporate authority.
XTRA, Inc.
By /s/ James R. Lajoie
---------------------------------------
James R. Lajoie, Vice President,
General Counsel and
Asst. Clerk
XTRA International Ltd.
By /s/ Frederick M. Gutterson
---------------------------------------
Frederick M. Gutterson, President
26
<PAGE> 1
XTRA Corporation Exhibit 11.1
Earnings Per Share Calculations
For the Four Quarters
Ended September 30,
1995 and 1994
(Millions
of dollars except per
share amounts)
<TABLE>
<CAPTION>
Quarter Ended:
1995
12/31/94 3/31/95 6/30/95 9/30/95 YTD 1995
-------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net Income $ 19.1 $ 13.6 $ 11.8 $ 12.8 $ 57.3
======= ======= ======= ======= =======
Primary EPS:
Primary Shares Outstanding (in thousands): 17,034 17,041 16,860 16,766 16,925
Primary Earnings Per Share: $ 1.12 $ 0.80 $ 0.70 $ 0.76 $ 3.39
======= ======= ======= ======= =======
Fully Diluted EPS:
Fully Diluted Shares Outstanding (in thousands): 17,034 17,041 16,860 16,766 16,925
Fully Diluted Earnings Per Share: $ 1.12 $ 0.80 $ 0.70 $ 0.76 $ 3.39
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended:
1994
12/31/93 3/31/94 6/30/94 9/30/94 YTD 1994
-------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net Income $ 15.7 $ 12.3 $ 14.6 $ 15.0 $ 57.6
======= ======= ======= ======= =======
Primary EPS
Primary Shares Outstanding (in thousands): 17,009 17,015 17,023 17,037 17,021
Primary Earnings Per Share: $ 0.93 $ 0.72 $ 0.86 $ 0.88 $ 3.38
======= ======= ======= ======= =======
Fully Diluted EPS
Fully Diluted Shares Outstanding (in thousands): 17,013 17,015 17,024 17,041 17,027
Fully Diluted Earnings Per Share: $ 0.93 $ 0.72 $ 0.86 $ 0.88 $ 3.38
======= ======= ======= ======= =======
</TABLE>
27
<PAGE> 1
XTRA Corporation Exhibit 11.2
Calculation of Weighted Average Shares Outstanding
For the Four Quarters Ended September 30, 1995 and 1994
(Thousands of shares)
<TABLE>
<CAPTION>
Quarter Ended:
1995 12/31/94 3/31/95 6/30/95 9/30/95 YTD 1995
-------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Computation of Primary Shares Outstanding
Weighted average common shares outstanding 16,942 16,952 16,776 16,729 16,849
Common stock equivalents for primary EPS:
Stock options outstanding 92 89 84 37 76
------ ------ ------ ------ ------
Weighted average number of common
shares outstanding (primary) 17,034 17,041 16,860 16,766 16,925
====== ====== ====== ====== ======
Computation of Fully Diluted Shares Outstanding
Weighted average common shares outstanding 16,942 16,952 16,776 16,729 16,849
Common stock equivalents for fully diluted EPS:
Stock options outstanding 92 89 84 37 76
------ ------ ------ ------ ------
Weighted average number of common
shares outstanding (fully diluted) 17,034 17,041 16,860 16,766 16,925
====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended:
1994 12/31/93 3/31/94 6/30/94 9/30/94 YTD
-------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Computation of Primary Shares Outstanding
Weighted average common shares outstanding 16,876 16,881 16,914 16,936 16,902
Common stock equivalents for primary EPS:
Stock options outstanding 133 134 109 101 119
------ ------ ------ ------ ------
Weighted average number of common
shares outstanding (primary) 17,009 17,015 17,023 17,037 17,021
====== ====== ====== ====== ======
Computation of Fully Diluted Shares Outstanding
Weighted average common shares outstanding 16,876 16,881 16,914 16,936 16,902
Common stock equivalents for fully diluted EPS:
Stock options outstanding 137 134 110 105 125
------ ------ ------ ------ ------
Weighted average number of common
shares outstanding (fully diluted) 17,013 17,015 17,024 17,041 17,027
====== ====== ====== ====== ======
</TABLE>
28
<PAGE> 1
Exhibit 12.1
XTRA CORPORATION
STATEMENT OF THE CALCULATION OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Twelve Months
Ended
September 30
1995
(millions)
-------------
<S> <C>
EARNINGS
Income from operations before provision for income taxes 98.0
Add: Fixed charges (below) 41.8
-----
139.8
=====
FIXED CHARGES
Interest expense 41.4
Interest portion of
rent expense 0.4
-----
41.8
=====
Ratio of Earnings to
Fixed Charges 3.3
=====
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, "earnings"
represents income from operations before taxes plus fixed charges. "Fixed
charges" for operations consist of interest on indebtedness and the portion of
rental expense which represents interest.
29
<PAGE> 1
Exhibit 12.2
XTRA INC.
STATEMENT OF THE CALCULATION OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Twelve Months
Ended
September 30,
1995
(millions)
--------------
<S> <C>
EARNINGS
Income from operations before provision for income taxes 97.9
Add: Fixed charges (below) 41.8
-----
139.7
=====
FIXED CHARGES
Interest expense 41.4
Interest portion of
rent expense 0.4
-----
41.8
=====
Ratio of Earnings to
Fixed Charges 3.3
=====
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, "earnings"
represents income from operations before taxes plus fixed charges. "Fixed
charges" for operations consist of interest on indebtedness and the portion of
rental expense which represents interest.
30
<PAGE> 1
Exhibit 13.1
Five Year Selected Financial Data
<TABLE>
<CAPTION>
Year ended September 30
(Millions of dollars except
per share amounts) 1991 1992 1993 1994 1995
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 208.9 $ 202.6 $ 329.2 $ 355.3 $ 377.7
Cash provided from operations 102.8 127.4 196.4 233.4 237.5
Income before income taxes 28.1 44.3 72.4 98.4 98.0
Net income 17.1 27.0 37.8(2) 57.6 57.3
Per Share Information
Fully diluted earnings per common share $ 1.00 $ 1.75 $ 2.09(2) $ 3.38 $ 3.39
Dividends declared per common share $ .36 $ .39 $ .46 $ .54 $ .62
Financial Position
Capital expenditures (including value of
equipment acquired under operating leases)(1) $ 6.3 $ 37.1 $ 409.6 $ 235.9 $ 698.9
Total assets 581.4 535.2 858.0 1,004.9 1,523.0
Total debt and redeemable preferred stock 321.8 241.4 388.3 443.8 897.5
Total stockholders' equity 172.8 190.7 280.3 330.5 358.8
</TABLE>
(1) Includes capital expenditures purchased as a result of
acquisitions. See Note 2 of the Notes to Consolidated Financial
Statements.
(2) Includes the effect of the Revenue Reconciliation Bill of 1993.
See Note 5 of the Notes to Consolidated Financial Statements.
31
<PAGE> 1
Exhibit 13.2
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the Three Years Ended September 30, 1995
(Not covered by Report of Independent Public Accountants)
XTRA Corporation leases, primarily on an operating basis, freight
transportation equipment including over-the-road trailers, marine
containers, intermodal trailers, chassis, domestic containers and
older trailers for mobile storage use. XTRA's equipment
utilization and lease rates, and hence profitability, are
directly impacted by the level of economic activity in North
America, world trade activity, the supply of and demand for
available equipment, the actions of its competitors and other
factors in the freight transportation industry. The discussion
and data below are presented on a consolidated basis.
The Company's pretax profits have been cyclical, principally
due to the variability of the Company's revenues and the high
percentage of fixed costs. To moderate this cyclicality, the
Company maintains a balance between the amount of equipment
leased on a per diem and term basis and maintains an appropriate
mix of various types of freight transportation equipment
available for lease. The June 1995 acquisition of marine
containers from Matson Leasing Company, Inc. (Matson), in
addition to providing a further diversification of its customer
base, has reduced XTRA's dependence on levels of transportation
activity within North America. Although the marine container
business is international, substantially all transactions are
denominated in U.S. dollars. This discussion includes the marine
container operating results for the three months ended September
30, 1995 and accordingly, the results for the year ended
September 30, 1995 may not be comparable to the year ended
September 30, 1994 and the results described may not be
indicative of future results.
The Company also maintains a high proportion of its debt at
fixed rates to reduce the impact of fluctuations in interest
rates. The Matson acquisition, initially financed with floating
rate debt, resulted in a slightly higher than target percentage
of floating rate debt at September 30, 1995 of 37%, as compared
to 14% at September 30, 1994.
Revenues
Revenues are a function of lease rates and working units; the
latter depends on fleet size and equipment utilization. Revenues
increased by 8% from $329 million in 1993 to $355 million in
1994, due mainly to increased overall equipment utilization as a
result of improving economic conditions. The increase in working
units was partially attributable to several non-recurring events
in 1994 including the Teamster's strike against major
less-than-truckload carriers in April 1994 and severe winter
weather conditions. These conditions resulted in the dislocations
of freight transportation equipment and increased demand for
leased equipment.
Revenues increased by 6% or $22 million in 1995 primarily due
to the acquisition of the marine container business as well as an
increase in over-the-road working units as a result of a larger
fleet size and an increase in average lease rates. Partially
offsetting the increase in fiscal 1995 revenues was a decrease in
revenues derived from intermodal trailers due to reduced demand
attributable to the softening domestic economy, an increased
supply of equipment, and shifting traffic trends in the industry.
Beginning in the second quarter of fiscal 1995, as a result of
decreased levels of domestic freight, truckers began competing
more aggressively, thus diverting some intermodal freight to
over-the-road. In addition, the peso devaluation which began in
December 1994, has caused a severe reduction in the southbound
traffic into Mexico. Responding to the decreased demand for
intermodal equipment, the Company has accelerated the disposition
of older intermodal equipment, resulting in increased gains on
sales in 1995.
The following table sets forth, for the Company, average
utilization (dollar weighted by investment in each type of
equipment) and average fleet size in units (including units
leased in under operating leases) during the last three years.
<TABLE>
<CAPTION>
Year ended September 30 1993 1994 1995
---------------------------------------------------------------
<S> <C> <C> <C>
Utilization 89% 92% 86%
Units (in thousands) 125 123 160
</TABLE>
Utilization, which is the ratio of revenue-earning units to
the total fleet, is derived from billing information, usage
reports and other information from customers, assumptions based
on historical experience and equipment inventories taken at
Company depots, and is an approximation. Equipment utilization is
directly affected by the supply of available equipment, the
volume of domestic freight shipments (particularly in the
automotive and construction industries), and the volume of
international freight shipments.
32
<PAGE> 2
Operating Expenses
In 1994, depreciation expense increased 4% or $3 million
primarily due to an increase in the owned fleet partially
resulting from the purchase of previously leased-in equipment. In
1995, depreciation expense increased 18% or $18 million due to an
increase in average fleet size which included the effect of the
Matson acquisition in the fourth quarter.
Rental equipment lease financing decreased 52% or $8 million
in 1994 and 76% or $5 million in 1995 primarily due to the
purchase of equipment previously leased-in.
Rental equipment operating expense increased 12% or $10
million in 1994 primarily due to higher repair and maintenance,
tire and facility costs related to higher equipment utilization
as well as a larger working fleet. In 1995, lower operating
expenses for over-the-road trailer and intermodal related rental
equipment were mostly offset by operating expenses related to the
addition of the marine container business.
Selling and administrative expenses decreased 2% or $1 million
in 1994 primarily due to cost savings realized from completing
the integration of the Strick Lease business which was acquired
in 1993 (see Note 2 of the Notes to Consolidated Financial
Statements). In 1995, selling and administrative expenses
increased 14% or $4 million principally due to the marine
container business and increased costs related to the development
and implementation of management information systems.
Interest Expense
Interest expense is a function of the amount of average net debt
outstanding (long-term debt less cash) and average interest
rates. The following table shows total average net debt
outstanding and interest expense as a percentage of total average
net debt outstanding.
<TABLE>
<CAPTION>
Year ended September 30 1993 1994 1995
----------------------------------------------------------------
<S> <C> <C> <C>
Average net debt outstanding (millions of dollars) $443 $375 $518
Interest expense as a percentage of average net debt outstanding 8.8% 9.1% 8.0%
</TABLE>
Interest expense decreased by 13% or $5 million in 1994
primarily due to a decrease in average net debt outstanding. In
1995, interest expense increased 22% or $8 million due to an
increase in average net debt outstanding partially offset by a
decrease in the average effective interest rate.
Income Before Provision for Income Taxes
Pretax earnings increased 36% or $26 million in 1994 due
primarily to higher equipment utilization as well as reduced
interest expense. In 1995, pretax earnings remained relatively
unchanged despite lower utilization. Increased profitability
resulting from the marine containers operations acquired late in
the year as well as a larger working fleet of over-the-road
trailers was offset by decreased demand for intermodal trailers
and increased operating expenses.
Provision for Income Taxes
The Company's effective income tax rate was approximately 48% in
fiscal 1993. In August, 1993, the Revenue Reconciliation Bill of
1993 raised the corporate tax rate from 34% to 35% effective
January 1, 1993. Statement of Financial Accounting Standards No.
109 ("SFAS 109") requires adjusting deferred tax liabilities and
assets to reflect the higher rate. Accordingly, the Company
recorded, in 1993, an additional tax expense of approximately $5
million or $.31 per share, related to prior year's accumulated
deferred income tax assets and liabilities. Absent the required
adjustment for prior years, the effective income tax rate for
1993 would have been approximately 41%. The Company's effective
income tax rate was approximately 42% in fiscal years 1994 and
1995.
For additional information regarding the provision for income
taxes, see Notes 1 and 5 of the Notes to Consolidated Financial
Statements.
33
<PAGE> 3
FINANCIAL LIQUIDITY AND CAPITAL RESOURCES
Significant capital investment is required by the Company's
leasing operations, not only for growth but also for replacement
of units retired from service. However, during periods of slower
economic growth, capital expenditures may be curtailed until
demand for transportation equipment increases.
The following table sets forth capital expenditures by
equipment type, including units acquired by acquisition, units
purchased and units leased-in from third parties under operating
leases. The Company's committed capital expenditures for 1996 are
estimated as of November 15, 1995.
<TABLE>
<CAPTION>
(Millions of dollars) 1993 1994 1995 1996
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Over-the-road trailers $294 $151 $204 $ 55
Marine containers - - 379 36
Intermodal trailers 59 70 50 -
Chassis 34 8 46 24
Domestic containers 3 - - -
Other 20 7 20 -
---- ---- ---- ----
Total $410 $236 $699 $115
==== ==== ==== ====
</TABLE>
The Company recognizes the importance of managing capital
spending as essential to maintaining the quality of its fleet.
The Company grows its fleet by acquiring other leasing companies
and by purchasing new and used equipment. Capital expenditures
for 1993 were $410 million, reflecting primarily equipment
acquired in the Strick Lease acquisition. In 1994, capital
expenditures were $236 million, including $46 million of
equipment acquired in three separate acquisitions. Responding to
the strong demand for its products in 1994 and continuing into
mid-1995, expenditures in 1995 increased to $699 million,
including $360 million paid to acquire the marine container
fleet.
As of November 15, 1995, XTRA's committed capital expenditures
for 1996 amounted to $115 million. The Company may increase
capital spending in 1996 as conditions warrant. Given current
conditions, it is unlikely that spending for new equipment will
approach the 1995 levels for new equipment.
Although some level of future capital spending can be financed
internally, the ability to fund expenditures above that level
will depend upon the availability of external financing.
During the three years ended September 30, 1995, the Company
generated $667 million of cash flow from operations and raised
$63 million from the sale of common stock. During this same
period, XTRA invested $1.3 billion in property and equipment
including acquisitions, paid dividends of $30 million,
repurchased $20 million of common stock and increased net debt
(debt less cash) outstanding by $659 million.
In addition to cash flow from operations, XTRA generally has
available to it a variety of external means to finance future
growth of its leasing equipment fleet. The Company's external
financing options include a combination of a revolving credit
agreement, medium-term and long-term borrowings in the public
debt market, intermediate term bank loans, long-term financing
from banks, institutional investors and lease financing. The
Company has registered with the Securities and Exchange
Commission $500 million of securities consisting of Preferred
Stock and Common Stock of the Company and Senior and Subordinated
Debt Securities of its subsidiary XTRA, Inc., fully and
unconditionally guaranteed by XTRA Corporation and XTRA Missouri,
Inc. (see Note 4 of Notes to Consolidated Financial Statements).
As of November 15, 1995, XTRA Inc. has $165 million available for
future issuance under its Shelf Registration. The Company's
access to external financing will depend upon prevailing market
conditions and the Company's credit ratings. There can be no
assurance that the Company will be able to borrow funds in those
markets at attractive rates or with covenants that are not more
restrictive than the Company's current debt covenants. The
Company also has potential access to external funds through the
issuance of capital stock. XTRA deems its sources of financing
adequate to meet projected needs.
In connection with the acquisition of Matson in June 1995, the
Company's two revolving credit agreements were replaced with a
$590 million term loan and revolving credit agreement with an
expanded bank group. The Company used approximately $160 million
of the new revolver commitments to replace the borrowings
committed under the previous revolving credit agreement and
approximately $360 million to finance the acquisition. As of
November 16, 1995 the Company had $88 million of unused credit
available under its $300 million Revolving Credit Agreement.
34
<PAGE> 4
The Company's source of funds for the payment of dividends on
its capital stock are advances and dividends from its direct and
indirect wholly-owned subsidiaries, including XTRA Missouri, Inc.
and XTRA, Inc. The primary sources of funds for XTRA, Inc. are
cash flows from operations, advances from its subsidiaries and
external financing. Several of the Company's loan agreements
contain covenants that restrict the payment of dividends by the
Company. In addition, certain loan agreements contain covenants
that restrict advances to and the payment of dividends to the
Company by its subsidiaries, including XTRA Missouri, Inc. and
XTRA, Inc. Under the most restrictive provisions of the Company's
loan agreements, the amount of cash dividends which could be paid
on the Company's capital stock was limited to $82 million at
September 30, 1995. For additional information regarding
long-term debt, see Note 4 of the Notes to Consolidated Financial
Statements.
In January 1995, the Company authorized the repurchase of up
to $100 million of XTRA's common stock. The timing of the
repurchases, which could occur over an extended period of time,
will depend on price, market conditions and other factors. As of
November 15, 1995, the Company had repurchased $31 million of
common stock under this authorization.
35
<PAGE> 1
<TABLE>
Exhibit 13.3
Index to Financial Statements
(Information required by Part II, Items 7 and 8 and Part IV, Item 14 of Form
10-K)
XTRA Corporation and Subsidiaries Consolidated Financial Statements
----------------------------------------------
<CAPTION>
Financial Statements Page
<S> <C>
Consolidated balance sheets - September 30, 1994 and 1995 37
Consolidated income statements for the three years ended September 30, 1995 38
Consolidated statements of cash flows for the three years ended September 30, 1995 39
Unaudited quarterly condensed consolidated income statements for the years
ended September 30, 1994 and 1995 40
Consolidated statements of stockholders' equity for the three years ended September 30, 1995 41
Notes to consolidated financial statements 42
Report of independent public accountants 53
</TABLE>
36
<PAGE> 2
Consolidated XTRA Corporation
Balance Sheets and Subsidiaries
<TABLE>
<CAPTION>
September 30, 1994 and 1995
(Millions of dollars except per share and share amounts) 1994 1995
----------------------------------------------------------------
<S> <C> <C>
Assets
Cash $ 43.2 $ 6.3
Trade receivables, net 54.0 62.3
Lease contracts receivable 41.3 35.3
Property and equipment at cost
Revenue equipment 1,223.2 1,812.1
Land, buildings and other 50.5 66.5
-------- --------
1,273.7 1,878.6
Less-Accumulated depreciation (428.0) (480.3)
-------- --------
Net property and equipment 845.7 1,398.3
-------- --------
Other assets 20.7 20.8
-------- --------
$1,004.9 $1,523.0
======== ========
Liabilities and Stockholders' Equity
Liabilities
Accounts payable $ 5.4 $ 7.5
Accrued interest expense 5.6 11.1
Other accrued expenses 53.9 54.4
Long-term debt, including current portion 443.8 897.5
Deferred income taxes 165.7 193.7
-------- --------
Total liabilities 674.4 1,164.2
Commitments and contingencies (Note 6)
Stockholders' equity
Preferred Stock, without par value; total authorized: 3,000,000
shares Common Stock, par value $.50 per share; authorized:
30,000,000 shares; issued and outstanding:
16,939,616 shares at September 30, 1994;
16,568,801 shares at September 30, 1995 8.4 8.3
Capital in excess of par value 125.4 107.6
Retained earnings 196.6 243.4
Cumulative translation adjustment .1 (.5)
-------- --------
Total stockholders' equity 330.5 358.8
-------- --------
$1,004.9 $1,523.0
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
37
<PAGE> 3
Consolidated XTRA Corporation
Income Statements and Subsidiaries
<TABLE>
<CAPTION>
For the three years ended September 30, 1995
(Millions of dollars except per share amounts) 1993 1994 1995
-------------------------------------------------------------
<S> <C> <C> <C>
Revenues $329.2 $355.3 $377.7
Operating expenses
Depreciation on rental equipment 94.1 97.6 115.4
Rental equipment lease financing 14.5 7.0 1.7
Rental equipment operating expense 77.6 87.3 85.9
Selling and administrative expense 31.8 31.1 35.3
------ ------- ------
218.0 223.0 238.3
Operating income 111.2 132.3 139.4
Interest expense 38.8 33.9 41.4
------ ------- ------
Income before provision for income taxes 72.4 98.4 98.0
Provision for income taxes 34.6 40.8 40.7
------ ------- ------
Net income 37.8 57.6 57.3
Dividends on and accretion of issuance costs of Series C
Cumulative Redeemable Exchangeable Preferred Stock
and dividends on Series B Preferred Stock (4.7) -- --
------ ------- ------
Net income available to common stockholders $ 33.1 $ 57.6 $ 57.3
====== ======= ======
Earnings per common share:
Primary $ 2.16 $ 3.38 $ 3.39
Fully diluted $ 2.09 $ 3.38 $ 3.39
Weighted average number of common and common equivalent shares
outstanding (in thousands):
Primary 15,329 17,021 16,925
Fully diluted 16,242 17,027 16,925
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
38
<PAGE> 4
Consolidated Statements of XTRA Corporation
Cash Flows and Subsidiaries
<TABLE>
<CAPTION>
For the three years ended September 30, 1995
(Millions of dollars) 1993 1994 1995
-----------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operations
Net income $ 37.8 $ 57.6 $ 57.3
Add non-cash income and expense items:
Depreciation and amortization, net 93.9 99.2 110.6
Deferred income taxes, net 18.3 20.6 30.3
Bad debt expense 5.0 4.2 4.2
Add other cash items:
Net change in receivables, other assets,
payables and accrued expenses 1.4 11.8 (12.2)
Cash receipts on lease contracts receivable 25.6 18.5 19.2
Recovery of property and equipment net book value 14.4 21.5 28.1
------ ------ ------
Total cash provided from operations 196.4 233.4 237.5
------ ------ ------
Cash used for investment activities
Additions to property and equipment (50.5) (245.0)(2) (339.2)
Purchase of Strick Lease (110.5)(1) -- --
Acquisition of certain net assets of Matson Leasing Co., Inc. -- -- (357.5)
------ ------ ------
Total cash used for investment activities (161.0) (245.0) (696.7)
------ ------ ------
Cash flows from financing activities
Borrowings of long-term debt 164.3 131.8(3) 492.2
Payments of long-term debt (281.4) (76.9) (41.5)
Net proceeds from issuance of Common Stock 63.1 -- --
Net proceeds from issuance of Series C Preferred Stock 28.3 -- --
Net proceeds from exercise of stock options -- -- 2.1
Repurchase of Common Stock -- -- (20.0)
Dividends paid (10.5) (9.1) (10.5)
------ ------ ------
Total cash (used for)/provided by for financing activities (36.2) 45.8 422.3
------ ------ ------
Net increase (decrease) in cash (.8) 34.2 (36.9)
Cash at beginning of year 9.8 9.0 43.2
------ ------ ------
Cash at end of year $ 9.0 $ 43.2 $ 6.3
====== ====== ======
Total interest paid $ 34.5 $ 31.6 $ 34.8
Total income taxes paid (net of refunds) $ 15.0 $ 15.6 $ 16.8
<FN>
(1)Does not include $235.9 million of Strick Lease debt assumed.
(2)Includes certain acquisitions completed in 1994. See Note 2 of
the Notes to Consolidated Financial Statements.
(3)See Note 4 of the Notes to Consolidated Financial Statements.
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
39
<PAGE> 5
Unaudited Quarterly XTRA Corporation
Condensed Consolidated and Subsidiaries
Income Statements
<TABLE>
<CAPTION>
For the four quarters ended September 30, 1994 and 1995 First Second Third Fourth
(Millions of dollars except per share amounts) Quarter Quarter Quarter Quarter
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Revenues $88.5 $82.8 $90.0 $ 94.0
Expenses(1) 61.6 61.8 65.1 68.4
----- ----- ----- ------
Income before income taxes 26.9 21.0 24.9 25.6
Provision for income taxes 11.2 8.7 10.3 10.6
----- ----- ----- ------
Net income $15.7 $12.3 $14.6 $ 15.0
===== ===== ===== ======
Earnings per common share (primary and fully diluted) $ .93 $ .72 $ .86 $ .88
Weighted average number of fully diluted common
shares outstanding (in thousands) 17,013 17,015 17,024 17,041
1995
Revenues $96.3 $87.1 $86.2 $108.1
Expenses(1) 63.6 63.8 66.1 86.2
----- ----- ----- ------
Income before income taxes 32.7 23.3 20.1 21.9
Provision for income taxes 13.6 9.7 8.3 9.1
----- ----- ----- ------
Net income $19.1 $13.6 $11.8 $ 12.8
===== ===== ===== ======
Earnings per common share (primary and fully diluted) $1.12 $ .80 $ .70 $ .76
Weighted average number of fully diluted common
shares outstanding (in thousands) 17,034 17,041 16,860 16,766
<FN>
(1) Includes operating and interest expenses.
</TABLE>
40
<PAGE> 6
Consolidated Statements of XTRA Corporation
Stockholders' Equity and Subsidiaries
<TABLE>
<CAPTION>
Cumulative Common Capital in
Convertible Stock Excess Retained Cumulative
For the three years ended September 30, 1995 Preferred $.50 Par of Par Earnings Translation
(Millions of dollars) Stock Value Value (Note 4) Adjustment
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1992 $ 62.5 $5.9 $ .2 $122.1 $ --
Net income -- -- -- 37.8 --
Common Stock cash dividends declared at
$.46 per share -- -- -- (7.1) --
Series B Preferred Stock cash dividends
accrued at $.32 per share -- -- -- (.8) --
Conversion of Series B Preferred Stock (62.5) 1.8 60.7 -- --
Issuance of Common Stock -- .7 62.4 -- --
Dividends accrued on and accretion of
issuance costs of Series C Cumulative
Redeemable Exchangeable Preferred Stock -- -- -- (3.9) --
Options exercised and related tax benefits,
net of shares forfeited under
restricted stock plan -- -- .9 -- --
Cumulative translation adjustment -- -- -- -- (.5)
------ ---- ------ ------ ----
Balance at September 30, 1993 -- 8.4 124.2 148.1 (.5)
Net income -- -- -- 57.6 --
Common Stock cash dividends declared at
$.54 per share -- -- -- (9.1) --
Options exercised and related tax benefits,
net of shares forfeited under
restricted stock plan -- -- 1.2 -- --
Cumulative translation adjustment -- -- -- -- .6
------ ---- ------ ------ ----
Balance at September 30, 1994 -- 8.4 125.4 196.6 .1
Net income -- -- -- 57.3 --
Common Stock cash dividends declared at
$.62 per share -- -- -- (10.5) --
Options exercised and related tax benefits -- .1 2.0 -- --
Repurchase of Common Stock -- (.2) (19.8) -- --
Cumulative translation adjustment -- -- -- -- (.6)
------ ---- ------ ------ ----
Balance at September 30, 1995 $ -- $8.3 $107.6 $243.4 $(.5)
====== ==== ====== ====== ====
<FN>
Note: Share and per share data has been adjusted to give retroactive effect for the two-for-one stock split
in May 1993.
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
41
<PAGE> 7
Notes to Consolidated XTRA Corporation
Financial Statements and Subsidiaries
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of
XTRA Corporation and its wholly-owned subsidiaries ("the
Company"). All material intercompany accounts and transactions
have been eliminated. Certain amounts in the prior year financial
statements have been reclassified to be consistent with the
current year's presentation.
Income Taxes
Provisions for income taxes recognize the tax effect of all
revenue and expense transactions as well as any change during the
period in deferred tax assets and liabilities. The effects of
changes in tax rates and laws on deferred tax assets and
liabilities are reflected in net income in the period in which
such changes are enacted (see Note 5).
Leases
The Company records the majority of its leases using the
operating method of accounting. Full-payout or near full-payout
leases are accounted for under the finance method.
Depreciation
The Company provides for depreciation by using the straight-line
method to amortize the cost of property and equipment to its
estimated residual value over its estimated useful life. Revenue
equipment is depreciated using estimated useful lives of 10 to 20
years. In addition, the Company reviews the condition and types
of its revenue equipment to determine if any permanent impairment
has occurred.
When equipment is sold or retired, its cost and accumulated
depreciation are removed from the balance sheet, and any gain or
loss is included in revenues. Revenue equipment with an original
cost of approximately $54 million, which has reached the end of
its estimated useful life, remains in service and is included in
Revenue Equipment at September 30, 1995.
Repair and Maintenance
Repair and maintenance expenses are charged to operating expenses
when incurred and amounted to $23 million, $27 million and $26
million in 1993, 1994 and 1995, respectively.
Earnings per Share
The computation of primary earnings per common share is based on
net income after deduction of $1.9375 Series B Preferred Stock
dividends and dividends on and accretion of issuance costs of
Series C Cumulative Redeemable Exchangeable Preferred Stock,
divided by the weighted average number of outstanding common
shares plus common share equivalents. Fully diluted earnings per
share also assumes the conversion of the $1.9375 Series B
Cumulative Convertible Preferred Stock at the beginning of the
period. Earnings per share have been calculated giving
retroactive effect to the 1993 two-for-one stock split (see Note
9).
Foreign Currency Translation
The Company translates the assets and liabilities of its foreign
operations at the exchange rates in effect at year-end. Revenues
and expenses are translated using average exchange rates in
effect during the year. Gains and losses from foreign currency
translation are credited or charged to cumulative translation
adjustment included in stockholders' equity in the accompanying
Consolidated Balance Sheets. Gains and losses from foreign
currency transactions are included in selling and administrative
expense.
42
<PAGE> 8
(2) Acquisitions
In October, 1992, the Company acquired Distribution International
Corporation ("D.I.") and certain subsidiaries, primarily Strick
Lease, a major lessor of transportation equipment, which operated
a rental fleet of approximately 50,000 units of transportation
equipment, primarily over-the-road trailers and chassis. Total
consideration for the assets acquired approximated $350 million
consisting of approximately $114 million in cash (excluding cash
assumed), and the assumption of approximately $236 million in
debt. The cash payment included $12 million to key Strick Lease
personnel for covenants not to compete. The transaction, which
was accounted for as a purchase, was partially financed through
the issuance of $30 million of Series C Cumulative Redeemable
Exchangeable Preferred Stock (see Note 10). The balance was
funded by Revolving Credit Agreement borrowings.
In fiscal 1994, the Company acquired the assets of Dykes
Trailer Rentals, Inc., Caravan Trailer Rental Co., Ltd., and
Integrated Transportation Services, Ltd., for approximately $46
million. The total rental fleets acquired in these three
transactions amounted to approximately 6,000 units of
transportation equipment, primarily over-the-road trailers.
On June 30, 1995, the Company acquired certain net assets of
Matson Leasing Company, Inc., a major lessor of marine container
equipment which at that time operated a rental fleet of
approximately 170,000 twenty-foot equivalent units. Total
consideration for the assets approximated $360 million in cash
and included approximately $10 million for recently purchased
containers. The transaction was accounted for as a purchase and
therefore, includes the marine container operating results for
the three months ended September 30, 1995. While the Company has
not yet finalized the purchase price allocation, substantially
all of the purchase price has been allocated to property and
equipment.
The unaudited pro forma condensed consolidated income
statement of the Company, as if Matson Leasing Company, Inc. had
been acquired on October 1, 1993 is as follows:
<TABLE>
<CAPTION>
For the twelve months ended September 30,
(Millions of dollars except per share data) 1994 1995
------------------------------------------------------------------
<S> <C> <C>
Revenues $421.2 $431.6
Net income 60.9 60.7
Earnings per fully diluted common share $ 3.58 $ 3.59
</TABLE>
(3) Equipment Leases
The Company uses the operating method of accounting for the
majority of its equipment leases. Under this method, revenue is
recognized in the month earned based on the terms of the lease
contract, and the equipment is depreciated to its estimated
residual value over its estimated useful life.
The finance method of accounting is used for revenue equipment
leased to customers on a full-payout or near full-payout basis at
lease inception. Under this method, finance lease income, the
difference between the total lease receivable and the net book
value less the residual value of the related equipment, is
deferred and amortized as revenue over the lease term using the
interest method, which provides a level rate of return on the net
investment in the lease.
The following schedule summarizes the future minimum rental
receipts on operating and finance leases by year as of September
30, 1995:
<TABLE>
<CAPTION>
Operating Finance
(Millions of dollars) Leases Leases
----------------------------------------------------------------
<S> <C> <C>
1996 $117.2 $12.6
1997 59.1 9.5
1998 33.1 6.4
1999 16.3 4.7
2000 5.5 4.0
2001 and thereafter 4.0 3.5
------ -----
Total $235.2 $40.7
====== =====
</TABLE>
43
<PAGE> 9
The components of the net investment in finance leases as of
September 30, 1994 and 1995 were as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1995
------------------------------------------------------------------
<S> <C> <C>
Minimum lease payments receivable $43.8 $40.7
Add: estimated unguaranteed residual values 13.1 8.4
----- -----
56.9 49.1
Less: deferred finance lease income (16.4) (13.8)
----- -----
Lease contracts receivable, net $40.5 $35.3
===== =====
Current portion of lease contracts receivable, net $ 7.5 $ 9.3
Long-term portion of lease contracts receivable, net 33.0 26.0
----- -----
Lease contracts receivable, net $40.5 $35.3
===== =====
</TABLE>
(4) Debt
Long-term debt as of September 30, 1994 and 1995 consisted of
the following:
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1995
------------------------------------------------------------------
<S> <C> <C>
Unsecured financing
Revolving Credit Agreement $135.0 $185.2
Term loan - 190.0
Medium-term Notes 163.5 418.5
------ ------
Total unsecured financing 298.5 793.7
------ ------
Secured financing
Capital lease obligations 105.9 79.7
Term loans 39.4 24.1
------ ------
Total secured financing 145.3 103.8
------ ------
Total debt 443.8 897.5
Less: current portion (39.8) (56.4)
------ ------
Long-term debt less current portion $404.0 $841.1
====== ======
</TABLE>
The Company's Revolving Credit Agreement has bank commitments
of $300 million at September 30, 1995, a revolving period
maturity date of June 30, 1997 and pricing dependent on the
Company's credit ratings; currently pricing is .38% over the
London Interbank Offered Rate (LIBOR). The Company currently pays
.15% on any unused commitment in the facility.
Unless the Company requests and the banks approve a renewal or
extension of the agreement, borrowings outstanding on the
revolving period maturity date will be converted to a five year
term loan payable in 20 equal quarterly installments. If
converted, the facility has a final term maturity of June 30,
2002. Given the Company's current credit ratings, the Company
would borrow at .45% over LIBOR during the first three years of
the term loan period and .60% over LIBOR during the final years
of the facility.
The Company borrows on a short-term basis by issuing
commercial paper and using several uncommitted lines of credit.
These short-term borrowing options are back stopped by the unused
borrowing capacity under the Revolving Credit Agreement, and
hence have been classified as Revolving Credit Agreement
borrowings. All borrowings classified as Revolving Credit
Agreement borrowings at September 30, 1994 and September 30, 1995
were comprised of such uncommitted lines and commercial paper.
Such borrowings have a weighted average interest rate of 6.0%. At
September 30, 1995, approximately $115 million of unused capacity
was available. The weighted average interest rates incurred under
the Revolving Credit Agreement, consisting primarily of
short-term borrowings, were 3.9%, 4.1% and 6.0% during 1993, 1994
and 1995, respectively.
The Company's unsecured term loan has a weighted average
interest rate of 6.3% and is payable in quarterly installments
through June 30, 2000. Its pricing is dependent on the Company's
credit ratings currently pricing is .38% over the LIBOR. The
weighted average interest rate incurred during 1995 was 6.3%.
44
<PAGE> 10
The $419 million of Medium-term Notes outstanding under shelf
registrations filed with the Securities and Exchange Commission,
have a weighted average interest rate of 7.4% and maturities from
1997 to 2007. At September 30, 1995, under the present shelf
registration, $192 million remained available for future debt
issuance. The weighted average interest rates incurred were 8.2%,
7.9% and 7.6% during 1993, 1994 and 1995, respectively.
Capital lease obligations have a weighted average interest
rate of 8.6% and are payable in installments through 2001. The
weighted average interest rates incurred under capital lease
obligations were 8.5%, 8.3%and 8.5%, during 1993, 1994 and 1995
respectively.
Secured term loans have a weighted average interest rate of
11.3% and are payable in installments through 2000. The weighted
average interest rates incurred under secured term loans during
1993, 1994 and 1995 were 10.1%, 11.7% and 11.6%, respectively.
Revenue equipment recorded on the consolidated balance sheets
related to capital leases and secured debt was as follows at
September 30, 1994 and 1995:
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1995
----------------------------------------------------------------------
<S> <C> <C>
Revenue equipment $227.8 $179.0
Accumulated depreciation (84.9) (72.5)
------ ------
Net secured equipment $142.9 $106.5
====== ======
</TABLE>
On October 1, 1993, the Company exchanged the Series C
Cumulative Redeemable Exchangeable Preferred Stock with a $30
million redemption value for subordinated debt with a coupon of
10%. This subordinated debt was redeemed on September 30, 1994.
Assuming the Company were to convert the Revolving Credit
Agreement to a term loan on its respective revolving period
maturity date, the amount of minimum maturities of all long-term
debt during each of the next five fiscal years and thereafter
would be as follows:
<TABLE>
<CAPTION>
Net Present
Capital Value of Future Maturities
Lease Minimum Capital Other than Total Long-
(Millions of dollars) Payments Interest Lease Payments Capital Leases Term Debt
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 $29.3 $ 6.0 $23.3 $ 33.1 $ 56.4
1997 22.5 4.2 18.4 82.8 101.2
1998 19.5 2.7 16.8 121.0 137.8
1999 14.0 1.4 12.6 118.2 130.8
2000 7.5 .3 7.2 119.4 126.6
2001 and thereafter 1.5 - 1.4 343.3 344.7
----- ----- ----- ------ ------
Total payments and maturities $94.3 $14.6 $79.7 $817.8 $897.5
===== ===== ===== ====== ======
</TABLE>
As of September 30, 1993, 1994 and 1995, 1%, 14% and 37%,
respectively, of the Company's debt was at floating interest
rates. The Company has two interest rate swaps with nominal
amounts totalling $40 million which have been entered into to
effectively fix the interest rate on that amount of floating rate
debt. Floating rate debt which has been fixed through interest
rate swaps is treated as fixed rate debt. The agreements provide
for the Company to exchange floating rate interest payments based
on LIBOR for a fixed rate of 7.5% on $14 million through October
1995, and for 8.5% on $25 million through July 1996. The net
interest settlements are recorded as an adjustment to interest
expense. Exposure to market risk exists in the event of
nonperformance by the counterparties as the Company is required
to continue making payments. Nonperformance by the counterparties
is not anticipated nor would it have a material adverse effect on
the results of operations or the financial position of the
Company.
The Company's several loan agreements contain minimum debt
service tests and various restrictive covenants including,
without limitation, restrictions on incurring debt in relation to
revenue equipment and stockholders' equity and limitations on
secured borrowings. Several of the Company's loan agreements
contain covenants that restrict the payment of dividends by the
Company. In addition, certain loan agreements contain covenants
that restrict advances to and the payment of dividends to the
Company by its subsidiaries, including XTRA Missouri, Inc. and
XTRA, Inc. Under the most restrictive provisions of the Company's
loan agreements, the amount of cash dividends which could be paid
on the Company's capital stock was limited to $82 million at
September 30, 1995.
45
<PAGE> 11
(5) Income Taxes
The components of the provision for income taxes for 1993, 1994
and 1995 were as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1993 1994 1995
--------------------------------------------------------------------
<S> <C> <C> <C>
Current tax provision
Federal $13.0 $16.2 $ 7.6
State 2.5 4.0 2.8
Foreign .7 -- --
----- ----- -----
Current tax provision 16.2 20.2 10.4
----- ----- -----
Deferred tax provision
Federal 10.4 15.8 23.2
State 2.9 4.0 6.4
Foreign .1 .8 .7
Adjustment of deferred taxes for rate change 5.0 -- --
----- ----- -----
Deferred tax provision 18.4 20.6 30.3
----- ----- -----
Provision for income taxes $34.6 $40.8 $40.7
===== ===== =====
</TABLE>
The provision differs from income taxes currently payable
because certain items of income and expense are recognized in
different periods for financial statement purposes than for tax
return purposes.
The reasons for the difference between the statutory U.S.
Federal income tax rates and the Company's effective income tax
rates for 1993, 1994 and 1995 are as follows:
<TABLE>
<CAPTION>
Percent of Pretax Income 1993 1994 1995
--------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 34.8% 35.0% 35.0%
Increase in taxes resulting from:
State taxes 4.8 5.3 6.1
Foreign .6 .2 .2
Other, net .7 1.0 .2
Adjustment of deferred taxes for rate change 6.9 -- --
---- ---- ----
Effective income tax rate 47.8% 41.5% 41.5%
==== ==== ====
</TABLE>
The higher effective income tax rate in 1993 was primarily due
to the enactment, in August, 1993, of the Revenue Reconciliation
Bill of 1993 which raised the corporate tax rate from 34% to 35%
effective January 1, 1993. The statutory federal tax rate in
fiscal 1993 was 34.8%. Statement of Financial Accounting
Standards No. 109 ("SFAS 109") requires restating deferred tax
liabilities and assets to reflect the higher rate. Accordingly in
fiscal 1993, the Company recorded additional tax expense of
approximately $5.0 million. Absent the required adjustment for
prior years, the effective income tax rate for 1993 would have
been approximately 41%.
46
<PAGE> 12
<TABLE>
The components of the net deferred tax liability as of September 30, 1994 and 1995 are as follows:
<CAPTION>
(Millions of dollars) 1994 1995
----------------------------------------------------------------------
Assets
<S> <C> <C>
Capital lease obligations $ 39.7 $ 31.1
Investment tax credits 4.1 2.6
Alternative minimum tax credits 1.3 9.6
Other 15.1 20.4
------ ------
Total deferred tax assets $ 60.2 $ 63.7
====== ======
Liabilities
Revenue equipment $214.1 $231.4
Other 11.8 26.0
------ ------
Total deferred tax liabilities 225.9 257.4
------ ------
Net deferred tax liability $165.7 $193.7
====== ======
</TABLE>
The Company estimates that after filing its fiscal 1995 tax
return, it will have $3 million of investment tax credit
carryforwards and $10 million of alternative minimum tax credit
carryforwards available to reduce future federal income tax
liabilities. The investment tax credit carryforwards expire
beginning in 2000. The benefit of both tax credit carryforwards
has been recorded in the Company's financial statements. The
Company has not recognized a valuation allowance for deferred tax
assets.
(6) Commitments and Contingencies
The Company's offices and certain facilities are occupied under
leases expiring at various dates. In addition, the Company has
leased revenue equipment with an original cost of $56 million
under operating leases.
At September 30, 1995, the Company's rental commitments under
the non-cancelable portion of these leases for the next five
years and in total thereafter were as follows:
<TABLE>
<CAPTION>
Rental Office Facilities Total Lease
(Millions of dollars) Equipment Net of Subleases Commitments
----------------------------------------------------------------------
<S> <C> <C> <C>
1996 $ 3.5 $ 5.1 $ 8.6
1997 .8 3.9 4.7
1998 .9 2.9 3.8
1999 -- 1.8 1.8
2000 -- 1.4 1.4
2001 and thereafter -- .3 .3
------ ----- -----
$ 5.2 $15.4 $20.6
====== ===== =====
</TABLE>
Rental equipment lease financing expense amounted to $15
million, $7 million and $2 million in 1993, 1994 and 1995,
respectively. Other rental expense amounted to $4 million in
1993, 1994 and 1995
As of November 15, 1995, the Company had committed capital
expenditures of $115 million, principally for revenue equipment
in fiscal 1996.
A subsidiary of the Company has joined a group of other
parties working with the Wisconsin Department of Natural
Resources ("WDNR") on the remediation of environmental problems
at the Edgerton Sand and Gravel Landfill site in Edgerton,
Wisconsin and provision of an alternative water supply to
affected residences in the area of the site. The subsidiary has
also joined another group of parties working with the WDNR with
regard to an adjacent manufacturing facility owned by the
subsidiary prior to 1978. The Company is unable at this time to
predict with any certainty the ultimate remediation costs
associated with these sites or with provision of an alternative
water supply, or the Company's share of any such costs. Based on
preliminary estimates received from technical consultants for the
Company and other similarly situated parties, the Company
believes that its share of any future costs for remediation of
both sites and provision of an alternative water supply will not
be material to the results of operations, the financial condition
or the liquidity of the Company, without consideration of any
potential insurance recoveries or recoveries from the prior owner
of the manufacturing facility or the owner/operator of the
Edgerton Sand and Gravel Landfill site.
47
<PAGE> 13
(7) Retirement Plans
The Company provides retirement benefits to substantially all of
its employees through a qualified and funded defined contribution
retirement plan. The Company's yearly profit sharing cash
contributions are discretionary and the retirement trust fund's
assets are administered by a trustee. The Company's contributions
include an employee-matching contribution to a 401(k) plan and a
profit sharing contribution and are based on a specified
percentage of employee qualified compensation. Participants are
entitled to their vested portion of the retirement assets upon
termination of employment. The Company recorded defined
contribution pension expense of approximately $2 million in each
of 1993, 1994 and 1995.
(8) Business Information
The Company leases domestic and international transportation
equipment. XTRA's over-the-road and intermodal equipment is
leased throughout North America and its marine containers are
moved between countries in international commerce over many trade
routes. Information about the business of the Company by
geographic area for 1995 is presented in the table below. Prior
to 1995, all of the Company's business was conducted throughout
North America.
<TABLE>
<CAPTION>
(Millions of dollars) 1995
--------------------------------------------------------------------
Revenues:
<S> <C>
North America $ 358.1
International 19.6
---------
$ 377.7
=========
Operating Income:
North America $ 131.2
International 8.2
---------
$ 139.4
=========
Identifiable Assets:
North America $1,132.7
International 390.3
---------
$1,523.0
========
</TABLE>
(9) Common Stock
Stock Split
In May 1993, the Company effected a two-for-one common stock
split in the form of a 100% stock dividend. All references to the
number of shares and per common share amounts have been restated
to reflect the split.
Issuance of Common Stock
During fiscal 1993, the Company issued 1,495,000 shares of common
stock at $44.75 per share. The net proceeds to the Company were
approximately $63 million.
Repurchase of Common Stock
In January 1995, the Company authorized the repurchase of up to
$100 million of its common stock. The timing of the repurchases,
which could occur over an extended period of time, will depend on
price, market conditions and other factors. As of November 15,
1995, the Company had repurchased approximately $31 million of
common stock.
48
<PAGE> 14
1987 Stock Incentive Plan
In fiscal 1988, the stockholders approved the 1987 Stock
Incentive Plan, authorizing the issuance of 500,000 shares of
common stock under the plan. In January 1995, the stockholders
approved an increase in the number of shares reserved for
issuance under the Plan by 650,000 to 1,150,000. The plan enables
the Company to grant awards to key employees including restricted
stock awards, stock options and stock appreciation rights,
subject primarily to the requirement of continuing employment.
The awards under this plan are available for grant over a period
of ten years from the date on which the plan was adopted, but
grants may vest beyond the ten year period. Stock options issued
by the Company are exercisable at a future time as specified by
the Company and generally expire from five to ten years from the
date of grant. The exercise price of stock options may not be
less than the fair market value of the common stock at the date
of grant.
1990 Stock Option Agreement
In fiscal 1990, the Company granted one employee two options to
purchase an aggregate of 80,000 shares of common stock with
exercise prices of $10.89 to $16.00. In fiscal 1991, one of the
options was amended to change the option price from $16.00 to
$11.50. In fiscal 1994, options to purchase 30,000 shares were
exercised at an option price of $11.50 per share. In fiscal 1995,
options to purchase the remaining 50,000 shares at $10.89 per
share were exercised.
1991 Stock Option Plan for Non-Employee Directors
In fiscal 1992, stockholders approved the 1991 Stock Option Plan
for Non-Employee Directors, authorizing the granting of options
for a maximum of 50,000 shares. The option price per share is
equal to the fair market value of the common stock on the date of
grant. The term of each option is five years, and options become
exercisable one year after the date of grant.
The XTRA Corporation Deferred Director Fee Option Plan
In fiscal 1994, stockholders approved the Deferred Director Fee
Option Plan. Under the terms of the Plan, a non-employee director
may elect to receive, in lieu of his annual retainer fee and/or
board and committee meeting fees (the "fees"), a non-qualified
stock option covering a specified amount of shares. The option
exercise price is 50% of the fair market value of the shares at
the time the options are awarded and the amount of shares is
determined by dividing the directors' fees by the exercise price.
At September 30, 1995 there were outstanding options to purchase
4,002 shares of common stock option prices ranging from $22.81 to
$25.31.
49
<PAGE> 15
The following table summarizes the transactions pursuant to the
Company's Stock Option Plans for the three-year period ended
September 30, 1995:
<TABLE>
<CAPTION>
Option Price
Shares Per Share ($)
--------------------------------------------------------------------
<S> <C> <C>
Options outstanding at September 30, 1992: 211,198 9.75 to 15.69
Granted 70,100 36.13 to 43.75
Exercised (44,184) 10.82
Forfeited (10,064) 10.82 to 36.13
-------
Options outstanding at September 30, 1993: 227,050 9.75 to 43.75
Granted 79,484 24.25 to 50.50
Exercised (54,424) 10.82 to 36.13
Forfeited (3,200) 36.13 to 50.50
-------
Options outstanding at September 30, 1994: 248,910 9.75 to 50.50
Granted 500,618 22.81 to 50.63
Exercised (77,662) 9.75 to 36.13
Forfeited (6,200) 36.13 to 50.50
-------
Options outstanding at September 30, 1995: 665,666 10.82 to 50.63
=======
Exercisable options at September 30, 1995: 609,744 10.82 to 50.63
Options available for grant at September 30, 1995 242,880
</TABLE>
(10) Preferred Stock
$1.9375 Series B Cumulative Convertible Preferred Stock
On December 29, 1992, the Company issued 3,604,150 shares of its
Common Stock $.50 par value per share, upon conversion of
2,494,222 shares of its $1.9375 Series B Cumulative Convertible
Preferred Stock. A total of 3,778 shares of Series B Cumulative
Convertible Preferred Stock were not converted and were redeemed.
Also, 5,458 shares of Common Stock, which would have been issued
had these 3,778 shares of Series B Cumulative Convertible
Preferred Stock been converted, were sold to a standby
underwriter. As a result of the above transactions, a total of
3,609,608 new shares of Common Stock were issued pursuant to the
Company's call for redemption which expired on December 28, 1992.
Series C Cumulative Redeemable Exchangeable Preferred Stock
In connection with the acquisition of the Strick Lease business
(see Note 2), the Company issued 300 shares of Series C
Cumulative Redeemable Exchangeable Preferred Stock with a $30
million redemption value, a dividend rate of 10% and a final
maturity date of five years. In October 1993, the Company
exchanged the outstanding shares for subordinated debt with a
coupon of 10% and redeemed the debt in September 1994. (see Note
4)
50
<PAGE> 16
(11) Disclosures about Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the
fair value of each class of financial instrument:
Cash and Short-term Investments
The carrying amount approximates fair value because of the short
maturity of those instruments.
Long-term Debt
The fair value of the Company's fixed rate long-term debt is
estimated based on the quoted market prices for the same or
similar issues or on the current rates offered to the Company for
debt of the same remaining maturities. The fair value of the
Company's floating rate debt is its carrying amount.
Interest Rate Swap Agreements
The fair value of interest rate swaps (used for hedging purposes)
is the estimated amount that the Company would pay to terminate
the swap agreements taking into account interest rates and the
credit-worthiness of the swap counterparties.
The carrying amounts and estimated fair values of the
Company's financial instruments are as follows:
<TABLE>
<CAPTION>
For the two years ended September 30, 1995 Carrying Fair
(Millions of dollars) Amount Value
------------------------------------------------------------------
<S> <C> <C>
1994
Cash and short-term investments $ 44.4 $ 44.4
Long-term debt (443.8) (442.8)
Interest rate swaps -- (1.5)
1995
Cash and short-term investments $ 7.0 $ 7.0
Long-term debt (897.5) (905.1)
Interest rate swaps -- (.7)
</TABLE>
(12) Allowance for Doubtful Accounts
Allowance for doubtful accounts as of September 30, 1993, 1994
and 1995 consist of the following:
<TABLE>
<CAPTION>
For the year ended September 30, 1995
(Millions of dollars) 1993 1994 1995
------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year $5.0 $ 9.6 $10.9
Additions charged to operating expenses 4.9 4.2 4.2
Additions charged to revenues .5 .2 .4
Deductions(1) 3.8 3.1 3.0
Other(2) 3.0 -- 3.4
---- ----- -----
Balance at end of year $9.6 $10.9 $15.9
==== ===== =====
</TABLE>
(1) Amounts charged against reserves, net of recoveries.
(2) Includes principally the addition of reserves for accounts
receivable related to acquisitions.
51
<PAGE> 17
(13) Selected Financial Data of Significant Subsidiaries
XTRA Corporation's wholly-owned subsidiary, XTRA Missouri, Inc.,
is a holding company which owns the stock of XTRA, Inc. and also
manages the Company's office space. Both XTRA Corporation's and
XTRA Missouri, Inc.'s assets consist substantially of the
aggregate assets, liabilities, earnings and equity of XTRA, Inc.
Therefore, the Company's management has determined that separate
financial statement disclosure of XTRA Missouri, Inc. is not
material to investors. In addition, both XTRA Corporation and
XTRA Missouri, Inc. are jointly and severally liable on the
guarantee of the debt of XTRA, Inc.
The condensed consolidated data for XTRA Inc., a wholly-owned
subsidiary of XTRA Missouri, Inc., included in the consolidated
financial information of the Company, is summarized below:
XTRA, Inc.
and Subsidiaries
<TABLE>
<CAPTION>
For the three years ended September 30, 1995
(Millions of dollars) 1993 1994 1995
-----------------------------------------------------------------
Income Statement Data
<S> <C> <C> <C>
Revenues $329.2 $ 355.3 $ 377.7
Income before provision for income taxes 72.4 98.4 97.9
Net income 37.8 57.6 57.2
Selected Balance Sheet Data
Receivables, net $ 83.7 $ 95.3 $ 97.7
Net property and equipment 741.7 842.8 1,395.5
Other assets 32.9 64.0 27.0
------ -------- --------
Total assets $858.3 $1,002.1 $1,520.2
====== ======== ========
Debt $359.1 $ 443.8 $ 897.5
Deferred income taxes 142.0 165.7 193.7
Other liabilities 47.9 66.3 76.5
------ -------- --------
Total liabilities 549.0 675.8 1,167.7
------ -------- --------
Stockholders' equity 309.3 326.3 352.5
------ -------- --------
Total liabilities and stockholders' equity $858.3 $1,002.1 $1,520.2
====== ======== ========
</TABLE>
52
<PAGE> 18
Report of Independent Public Accountants
To the Stockholders of XTRA Corporation:
We have audited the accompanying consolidated balance sheets of
XTRA Corporation (a Delaware corporation) and subsidiaries as of
September 30, 1994 and 1995, and the related consolidated
statements of income, stockholders' equity and cash flows for
each of the three years in the period ended September 30, 1995.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of XTRA Corporation and subsidiaries as of September 30, 1994 and
1995, and the results of their operations and their cash flows
for each of the three years in the period ending September 30,
1995, in conformity with generally accepted accounting
principles.
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 15, 1995
53
<PAGE> 1
Exhibit 21
Parent and Subsidiaries*
<TABLE>
<CAPTION>
Name State or Province of Incorporation
-----------------------------------------------------------------------------------
<S> <C>
XTRA Corporation Delaware
Subsidiary of XTRA Corporation
XTRA Missouri, Inc. Delaware
Subsidiary of XTRA Missouri, Inc.
XTRA, Inc. Maine
Subsidiaries of XTRA, Inc.
XTRA Intermodal, Inc. Delaware
X-L-CO., INC. Delaware
XLI, Inc. Delaware
XTRA International Ltd. Delaware
Subsidiaries of XLI, Inc.
Distribution International Corporation Delaware
Subsidiaries of Distribution International Corporation
Strick Canada Limited Ontario
XTRA Lease, Inc. Delaware
</TABLE>
*Certain inactive subsidiaries have been omitted.
54
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report, incorporated by reference in this Form 10-K, into the Company's
previously filed Registration Statements on Form S-8 (No. 33-41360,
No. 33-57609, No. 33-25519, No. 33-57607, and No. 33-45564) and on Form S-3
(No. 33-54747).
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
December 14, 1995
55
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of XTRA Corporation for the period ended
September 30, 1995 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S DOLLAR
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 6,300,000
<SECURITIES> 700,000
<RECEIVABLES> 78,200,000
<ALLOWANCES> 15,900,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,878,600,000
<DEPRECIATION> 480,300,000
<TOTAL-ASSETS> 1,523,000,000
<CURRENT-LIABILITIES> 0
<BONDS> 897,500,000
<COMMON> 8,300,000
0
0
<OTHER-SE> 350,500,000
<TOTAL-LIABILITY-AND-EQUITY> 1,523,000,000
<SALES> 0
<TOTAL-REVENUES> 377,700,000
<CGS> 0
<TOTAL-COSTS> 238,300,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,200,000
<INTEREST-EXPENSE> 41,400,000
<INCOME-PRETAX> 98,000,000
<INCOME-TAX> 40,700,000
<INCOME-CONTINUING> 57,300,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,300,000
<EPS-PRIMARY> 3.39
<EPS-DILUTED> 3.39
</TABLE>
