<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report: June 20, 1995
XTRA Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-7654 06-0954158
- --------------------------------------------------------------------------------
State of incorporation (Commission (IRS Employer
of organization File Number) Identification No.)
60 State Street, Boston, MA 02109
- --------------------------------------------------------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number including area code: (617) 367-5000
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Exhibit index appears on numbered page 28.
This document is comprised of 29 pages.
<PAGE> 2
Item 2. Acquisition of Assets
---------------------
On May 2, 1995, XTRA Corporation ("the Company") announced that it
reached an agreement in principle to acquire from Alexander & Baldwin, Inc.,
certain assets and assume certain liabilities of its wholly-owned subsidiary,
Matson Leasing Company, Inc. ("Matson"). The total consideration, all cash,
will amount to approximately $350 million, subject to certain adjustments. The
acquisition, which is expected to close by June 30, 1995, is subject to the
completion of satisfactory due diligence, negotiation of a definitive purchase
agreement and other conditions typical in such transactions, including certain
regulatory approvals. No assurance can be given that the acquisition will be
consummated.
Matson is a major lessor of marine containers. Matson's assets at March 31,
1995 consist primarily of a fleet of approximately 165,000 twenty-foot
equivalent units and revenues for the twelve months ended December 31, 1994
were approximately $64 million.
The Company's intention is to initially fund the acquisition with financing
provided by the Company's existing bank group, supplemented by several
additional banks. The Company expects the financing will consist of an
expansion of its existing revolving credit agreements as well as a new five
year term loan at a floating interest rate.
2.
<PAGE> 3
Item 7. Financial Statements
--------------------
(a) Financial statements of the business acquired prepared pursuant
to Regulation S-X:
<TABLE>
Financial Statements of Matson Leasing Company, Inc. (Audited)
<CAPTION>
Page
---
<S> <C>
Independent auditors' report 6
Consolidated balance sheets as of December 31, 1994 7
and 1993
Consolidated statements of income for the years ended 8
December 31, 1994 and 1993
Consolidated statements of stockholder's equity for 9
the years ended December 31, 1994 and 1993
Consolidated statements of cash flows for the years 10
ended December 31, 1994 and 1993
Notes to consolidated financial statements 11-17
Financial Statements of Matson Leasing Company, Inc. (Unaudited)
Condensed consolidated balance sheets as of March 31, 1995 18
and December 31, 1994
Condensed consolidated statements of income for the three 19
months ended March 31, 1995 and 1994
Condensed consolidated statements of cash flows for the three 20
months ended March 31, 1995 and 1994
Notes to condensed consolidated financial statements 21
</TABLE>
3.
<PAGE> 4
(b) Unaudited pro forma financial information required pursuant to
Article 11 of Regulation S-X:
<TABLE>
Unaudited pro forma condensed financial statements of XTRA Corporation
<CAPTION>
Page
----
<S> <C>
Notes to unaudited pro forma condensed 22-23
financial statements
Unaudited pro forma condensed balance sheet 24
as of March 31, 1995
Unaudited pro forma condensed income statement 25
for the year ended September 30, 1994
Unaudited pro forma condensed income statement 26
for the six months ended March 31, 1995
(c) Signatures 27
(d) Exhibit Index 28
23.1 Independent auditors' consent 29
</TABLE>
4.
<PAGE> 5
________________________________________________________________________________
MATSON LEASING COMPANY, INC.
AND SUBSIDIARIES
(WHOLLY-OWNED SUBSIDIARY OF
MATSON NAVIGATION COMPANY, INC.)
--------------------------------
CONSOLIDATED FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1994 AND DECEMBER 31, 1993
AND FOR THE YEARS THEN ENDED AND
INDEPENDENT AUDITORS' REPORT.
________________________________________________________________________________
5.
<PAGE> 6
INDEPENDENT AUDITORS' REPORT
The Stockholder and Board of Directors of
Matson Leasing Company, Inc.:
We have audited the accompanying consolidated balance sheets of Matson Leasing
Company, Inc. and subsidiaries, a wholly owned subsidiary of Matson
Navigation Company, Inc., as of December 31, 1994 and 1993, and the related
consolidated statements of income, stockholder's equity, and cash flows for the
years then ended. 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Matson Leasing Company, Inc. and
subsidiaries at December 31, 1994 and 1993, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
January 27, 1995, except for Note 12,
as to which the date is June 15, 1995
6.
<PAGE> 7
MATSON LEASING COMPANY, INC. AND SUBSIDIARIES
(Wholly-Owned Subsidiary of Matson Navigation Company, Inc.)
<TABLE>
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1994 and 1993
- -------------------------------------------------------
<CAPTION>
ASSETS 1994 1993
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 570 $ 396
Accounts Receivable, net 15,414 9,509
Due from Parent Company 6,622 5,803
Deferred income taxes 1,678 1,475
Prepaid expenses and other 1,494 1,258
-------- --------
Total 25,778 18,441
-------- --------
PROPERTY:
Containers 367,973 336,701
Equipment and leasehold improvements 5,466 3,929
-------- --------
Total 373,439 340,630
Accumulated depreciation (67,565) (46,677)
-------- --------
Property - net 305,874 293,953
-------- --------
OTHER ASSETS 156 -
-------- --------
TOTAL $331,808 $312,394
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 12,500 $ -
Accounts payable and accrued expenses 4,420 4,545
Accrued maintenance and repairs 300 134
-------- --------
Total 17,220 4,679
-------- --------
LONG-TERM LIABILITIES:
Long-term debt 180,231 192,963
Reserve for maintenance and repairs 4,113 3,969
Accrued damage protection costs 1,100 1,251
Other 922 908
-------- --------
Total 186,366 199,091
-------- --------
DEFERRED INCOME TAXES 61,535 39,566
-------- --------
STOCKHOLDER'S EQUITY:
Capital stock and additional capital 34,301 47,301
Retained earnings 32,386 21,757
-------- --------
Total 66,687 69,058
-------- --------
TOTAL $331,808 $312,394
======== ========
</TABLE>
See notes to consolidated financial statements.
Dollars in thousands
7.
<PAGE> 8
MATSON LEASING COMPANY, INC. AND SUBSIDIARIES
(Wholly-Owned Subsidiary of Matson Navigation Company, Inc.)
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
- ----------------------------------------------
<CAPTION>
1994 1993
---------- ---------
<S> <C> <C>
REVENUES:
Lease revenue $ 64,526 $ 56,708
Interest and other income 1,379 240
---------- ---------
Total 65,905 56,948
---------- ---------
EXPENSES:
Operating 6,987 5,151
Depreciation 21,113 19,432
Administrative, general and selling 8,240 6,888
Interest 12,961 12,294
Other - 136
---------- ---------
Total 49,301 43,901
---------- ---------
INCOME BEFORE INCOME TAXES 16,604 13,047
PROVISION FOR INCOME TAXES 5,975 4,794
---------- ---------
NET INCOME $ 10,629 $ 8,253
========== =========
</TABLE>
See notes to consolidated financial statements.
Dollars in thousands
8.
<PAGE> 9
MATSON LEASING COMPANY, INC. AND SUBSIDIARIES
(Wholly-Owned Subsidiary of Matson Navigation Company, Inc.)
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
- ----------------------------------------------
<CAPTION>
CAPITAL ADDITIONAL RETAINED
STOCK CAPITAL EARNINGS TOTAL
------- --------- -------- --------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1993 $ 1 $ 57,300 $13,504 $ 70,805
NET INCOME 8,253 8,253
CAPITAL DISTRIBUTION (note 7 ) (10,000) (10,000)
------- -------- ------- --------
BALANCE, DECEMBER 31, 1993 1 47,300 21,757 69,058
------- -------- ------- --------
NET INCOME 10,629 10,629
CAPITAL DISTRIBUTION (note 7 ) (13,000) (13,000)
------- -------- ------- --------
BALANCE, DECEMBER 31, 1994 $ 1 $ 34,300 $32,386 $ 66,687
======= ======== ======= ========
</TABLE>
See notes to consolidated financial statements.
Dollars in thousands
9.
<PAGE> 10
MATSON LEASING COMPANY, INC. AND SUBSIDIARIES
(Wholly-Owned Subsidiary of Matson Navigation Company, Inc.)
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
- ----------------------------------------------
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 10,629 $ 8,253
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 21,113 19,432
Gain on disposal of equipment (147) (118)
Changes in assets and liabilities:
Accounts receivable (6,667) (3,576)
Prepaid expenses and other assets (392) (60)
Accounts payable (93) (783)
Deferred income taxes 21,766 16,076
Other liabilities (148) 421
-------- --------
Net cash provided by operating activities 46,061 39,645
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (33,932) (30,274)
Receipts from disposal of equipment 1,045 734
-------- --------
Net cash used in investing activities (32,887) (29,540)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital distribution (13,000) (10,000)
-------- --------
Net cash used in financing activities (13,000) (10,000)
-------- --------
NET INCREASE IN CASH BALANCE 174 105
-------- --------
CASH, BEGINNING BALANCE 396 291
-------- --------
CASH, ENDING BALANCE $ 570 $ 396
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid: $ 13,100 $ 12,503
Income taxes paid - foreign: 120 45
</TABLE>
See notes to consolidated financial statements.
Dollars in thousands
10.
<PAGE> 11
MATSON LEASING COMPANY, INC. AND SUBSIDIARIES
(WHOLLY-OWNED SUBSIDIARY OF MATSON NAVIGATION COMPANY, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization and Operations - Matson Leasing Company, Inc. and its
subsidiaries (the Company) are wholly-owned by Matson Navigation Company,
Inc. (the Parent), which is wholly-owned by Alexander & Baldwin, Inc. (A&B).
The Company owns and leases cargo containers primarily in the
international marketplace. Matson Leasing Company, Inc. is a Hawaii
corporation and at December 31, 1994, has 598 shares of $1 par value common
stock authorized, issued, and outstanding (see note 7).
Basis of Consolidation - The consolidated financial statements include the
business of Matson Leasing Company, Inc. and its subsidiaries. All
intercompany balances and transactions are eliminated.
Foreign Currency Translation - Financial statements of the foreign
subsidiaries are translated into U.S. dollars in accordance with the
provisions of Statement of Financial Accounting Standards No. 52. The
United States dollar is the Company's functional currency. Translation
adjustments are included in net income for the period.
Operating Lease Revenue - Rental revenue on container lease contracts is
generally recorded ratably over the lease term.
Containers - Containers are reported at cost plus acquisition expenses and
depreciated on a straight-line basis over 15 years to a residual
representing the estimated salvage value.
Equipment and Leasehold Improvements - Equipment, consisting primarily of
furniture and computer equipment, and leasehold improvements are reported
at cost. Equipment is depreciated on a straight-line basis over the
estimated useful lives of the assets, ranging from 3 to 10 years.
Depreciation expense includes amortization of leasehold improvements on a
straight-line basis over the lease terms.
Maintenance and Repairs - Regular maintenance and repair of the containers
is performed periodically as the containers are redelivered at the end of
their lease terms. The accrual for maintenance and repairs includes
estimates for costs incurred as normal wear and deterioration to the
containers over their estimated useful lives. Costs in excess of
normal wear and deterioration are charged to the lessee. The Company has a
Damage Protection Plan whereby a customer may choose to purchase insurance
to cover damage to containers in excess of normal wear and deterioration.
Management has based these accruals on the Company's operating history since
inception in 1989.
Income Taxes - The provision for federal income taxes has generally been
computed on the basis of the inclusion of the Company in the consolidated
federal income tax return of A&B. The allocation of the provision is based
on an agreement with the Parent. The Consolidated Statement of Income
includes provisions for deferred income taxes for transactions that are
reported in one period for financial accounting purposes and another period
for income tax purposes.
11.
<PAGE> 12
Earnings per Share - Earnings per share is computed using the weighted
average number of common shares outstanding.
<TABLE>
2. ACCOUNTS RECEIVABLE
Accounts Receivable include the following (in thousands):
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Trade $ 18,024 $ 12,248
Other 1,074 342
Allowance for doubtful accounts (3,684) (3,081)
-------- --------
Net Accounts Receivable $ 15,414 $ 9,509
======== ========
</TABLE>
The Company enters into lease agreements with customers located throughout
the world. The Company performs ongoing credit evaluations of its
customers and generally does not require collateral. Allowances are
maintained for potential credit losses.
3. TRANSACTIONS WITH RELATED PARTIES
Certain domestic expenses, principally payroll, office rent, commercial
paper interest, utilities, certain insurance premiums, and expenses of
employee retirement and incentive plans are paid on behalf of and charged to
the Company, at cost, by the Parent. In addition, the Company uses certain
resources and administrative staff of the Parent, including certain
insurance, finance, data processing, legal, human resources, and office
services which are not charged to the Company. The Parent does not allocate
or quantify the above services provided to the Company, which are not
charged to the Company; however, management believes these expenses are not
significant.
The Company leases a minor portion of its total container fleet to its
Parent under various lease agreements.
The Company participates in the Parent's cash management program. Under
this program, the Company's cash and investments are commingled with the
cash and investments of the Parent. The Company's operating cash needs
are provided by the Parent. Interest is charged or earned on amounts
advanced by or to the Parent.
<TABLE>
Amounts charged to (or by) the Parent are included in the accompanying
consolidated financial statements at December 31, 1994 and 1993 as follows
(in thousands):
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Lease revenues $ 1,466 $ 1,164
Operating costs (119)
Interest income 307 118
Interest expense (commercial paper) (3,218) (2,604)
Administrative and general expense (2,134) (1,569)
Other (393)
</TABLE>
12.
<PAGE> 13
The receivable from Parent includes tax benefits receivable as defined by a
tax sharing agreement, net of cash advances from the Parent and expenses
charged by the parent. At December 31, 1994 and 1993, the net balance due
from the Parent is $6,622,000 and $5,803,000, respectively.
<TABLE>
4. OPERATING LEASES
The Company leases containers under contract terms ranging in duration from
a few weeks to seven years. These leases are classified as operating leases
for financial reporting purposes. The following amounts are invested in
containers at December 31, 1994 and 1993 (in thousands):
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Containers $ 367,973 $ 336,701
Less accumulated depreciation (65,226) (45,181)
--------- ---------
Net investment $ 302,747 $ 291,520
========= =========
</TABLE>
<TABLE>
Minimum future rentals on long term leases as of December 31, 1994 for each
of the next five years and in the aggregate are as follows (in thousands):
<S> <C>
1995 $19,078
1996 14,200
1997 9,200
1998 4,200
1999 2,200
Thereafter 650
-------
Total $49,528
=======
</TABLE>
During 1991 and 1990, the Company entered into transactions whereby it
provided to foreign investors certain tax benefits for containers under
operating leases. The Company retained its United States tax basis in
these containers. The original cost of the equipment subject to these
operating leases was approximately $68,200,000.
<TABLE>
5. LONG-TERM DEBT, CREDIT AGREEMENTS
At December 31, 1994 and 1993, long-term debt included the following (in
thousands):
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Commercial paper, 5.75%-6.10% $ 82,731 $ 82,963
Notes payable, unsecured:
9.00%, payable 1995-1999 40,000 50,000
8.00%, payable 1995-2000 47,500 50,000
7.65%, payable 2000-2001 10,000 10,000
-------- --------
Total long-term debt $180,231 $192,963
======== ========
</TABLE>
13.
<PAGE> 14
The Company has a commercial paper program guaranteed by the Parent. The
proceeds for the borrowings under this program are used to finance the
acquisition of containers. At December 31, 1994, commercial paper notes
were outstanding under this program with maturities ranging from 4 to 37
days. The commercial paper borrowings outstanding under this program are
classified as long-term since it is the Company's intent to continue this
program on a long-term basis and it has established the necessary credit
facilities to do so. At December 31, 1994, a long-term revolving credit
facility of $100,000,000 was available to support these outstanding notes.
Unsecured notes payable are guaranteed by the Parent and are for the
purchase of containers. Interest on the unpaid principal balances is
payable in quarterly installments under the terms of all Agreements.
<TABLE>
At December 31, 1994, total maturities of long-term debt during the next
five years were as follows (in thousands):
<S> <C>
1995 $12,500
1996 20,000
1997 20,000
1998 20,000
1999 20,000
</TABLE>
The carrying value of the Company's long-term debt instruments at December
31, 1994 approximates their fair value. Fair value was determined by
management using estimated interest rates that would be currently available
to the Company for debt with similar terms and repayment schedules.
<TABLE>
6. INCOME TAXES
The provision for income taxes consists of the following (in thousands):
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Current:
Federal $(14,607) $(10,619)
State and foreign (1,184) (663)
-------- --------
Total (15,791) (11,282)
-------- --------
Deferred 21,766 16,076
-------- --------
Provision for income taxes $ 5,975 $ 4,794
======== ========
</TABLE>
14.
<PAGE> 15
<TABLE>
The differences between the provision for income taxes and the amount of
income taxes resulting from the application of the 35% statutory
federal rate for the years ended December 31, are set forth as follows (in
thousands):
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Computed income tax expense $ 5,811 $ 4,566
Increase (decrease) resulting from:
State income taxes net of federal tax 210 (582)
Federal tax rate increase 778
Other net (46) 32
------- -------
Provision for income taxes $ 5,975 $ 4,794
======= =======
Effective income tax rate 35.99% 36.74%
======= =======
</TABLE>
<TABLE>
The tax effects of temporary differences that give rise to significant
portions of the net deferred income taxes at December 31, 1994 and 1993
were as follows:
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Accumulated depreciation $64,651 $49,543
Doubtful accounts (1,627) (1,399)
Repair and maintenance reserves (791) (718)
AMT (1,477) (6,444)
Other, net (899) (2,891)
------- -------
Total $59,857 $38,091
======= =======
</TABLE>
7. CAPITAL DISTRIBUTION
In 1994 and 1993, the Company's Board of Directors authorized distributions
of $13,000,000 and $10,000,000, respectively, out of contributed capital.
To effect this distribution, the Company purchased and retired 227 and 175
shares of its common stock in 1994 and 1993, respectively.
8. PENSION PLAN AND EMPLOYEE PROFIT-SHARING PLAN
The Company's United States employees are eligible to participate in A&B's
defined benefit pension plan. Contributions to the plan on behalf of the
Company's U.S. employees and the related pension expense are determined by
A&B and allocated to the Company by the Parent in proportion of the
Company's payroll cost to the total payroll costs of the Parent. The
contribution to the plan and pension plan expense allocated to the Company
for 1994 and 1993 was approximately $83,000 and $91,000. The actuarial
present value of accumulated benefit obligations, the projected benefit
obligation and plan assets related to the employees of the Company have not
been separately determined.
15.
<PAGE> 16
All of the Company's employees are also eligible to participate in A&B's
employee profit-sharing plan. The contribution made to the plan each year
is determined by A&B's Board of Directors and is based upon the
profitability of A&B's consolidated operations each year. For the years
ended December 31, 1994 and 1993, the estimated contributions for the
Company were approximately $181,000 and $190,000, respectively.
9. POSTRETIREMENT BENEFITS
The Company provides certain retiree health and life insurance benefits to
all of its United States employees under plans of A&B. Employees are
generally eligible for such benefits upon retirement and completion of a
specified number of years of credited service. The Company does not
pre-fund these benefits and has the right to modify or terminate certain of
these plans in the future. The current expense for future benefits and the
accrued benefit obligation are determined by A&B and based on the proportion
of the Company's payroll to the total payroll costs of A&B. In 1994
and 1993, the expenses for postretirement benefits were $55,000 and $35,000
and the accrued benefit obligations were approximately $368,000, and
$313,000 respectively.
<TABLE>
10. FOREIGN REVENUES
Lease agreements are marketed internationally by the Company and its agents.
The table below presents a summary of lease revenues by significant
geographic region (in thousands).
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
North America $ 9,607 $ 8,247
Southeast Asia 24,808 21,230
Europe 30,111 27,231
------- -------
Total Lease Revenues: $64,526 $56,708
======= =======
</TABLE>
<TABLE>
11. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
The Company leases office space under operating leases with its Parent (see
note 3) and various third parties for varying periods. Rent expense was
$871,000 in 1994 and $696,000 in 1993. Future minimum payments under all
lease agreements as of December 31, 1994 were as follows:
<S> <C>
1995 $ 726,000
1996 522,000
1997 439,000
1998 337,000
1999 333,000
Subsequent years 1,205,000
----------
Total $3,562,000
==========
</TABLE>
The Company has authorized capital expenditures of $37,742,000 for the
acquisition of containers and computer technology in 1995. At December 31,
1994, firm purchase
16.
<PAGE> 17
commitments had been made for only a portion of the container and purchases
authorized by the A&B's Board of Directors.
Bank letters of credit have been issued on behalf of the Company in favor of
certain container manufacturers. At December 31, 1994, $1,585,000 was
outstanding under these letters of credit.
12. SUBSEQUENT EVENT
On May 2, 1995, the Parent, announced that it had signed a letter of intent
that outlines terms of an agreement under which XTRA Corporation would
acquire the containers and certain other assets and liabilities of the
Company for $350 million, subject to certain adjustments. The proposed
transaction, which is expected to close by June 30, 1995, requires the
completion of satisfactory due diligence, preparation of a definitive
purchase agreement and other conditions, including regulatory approvals.
17.
<PAGE> 18
MATSON LEASING COMPANY, INC. AND SUBSIDIARIES
(Wholly-Owned Subsidiary of Matson Navigation Company, Inc.)
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Dollars in thousands)
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1995 1994
-------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 322 $ 570
Accounts Receivable, net 14,171 15,414
Due from Parent Company 18,224 6,622
Deferred income taxes 1,675 1,678
Prepaid expenses and other 2,347 1,494
-------- --------
Total 36,739 25,778
-------- --------
PROPERTY:
Containers 385,383 367,973
Equipment and Leasehold improvements 5,898 5,466
-------- -------
Total 391,281 373,439
Accumulated depreciation (73,011) (67,565)
-------- -------
Property - net 318,270 305,874
-------- -------
OTHER ASSETS 156 156
-------- -------
TOTAL $355,165 $331,808
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 15,000 $ 12,500
Accounts payable and accrued liabilities 9,334 4,420
Accrued maintenance and repairs 305 300
-------- --------
Total 24,473 17,220
-------- --------
LONG-TERM LIABILITIES:
Long-term debt 185,187 180,231
Reserve for maintenance and repairs 4,113 4,113
Accrued damage protection costs 1,100 1,100
Other 940 922
-------- --------
Total 191,340 186,366
-------- --------
DEFERRED INCOME TAXES 69,892 61,535
-------- --------
STOCKHOLDER'S EQUITY:
Capital stock and additional capital 34,301 34,301
Retained earnings 34,993 32,386
-------- --------
Total 69,294 66,687
-------- --------
TOTAL $355,165 331,808
======== ========
</TABLE>
18.
<PAGE> 19
MATSON LEASING COMPANY, INC. AND SUBSIDIARIES
(Wholly-owned Subsidiary of Matson Navigation Company, Inc.)
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1995 1994
-------- ---------
<S> <C> <C>
REVENUES:
Lease revenue $ 17,455 $ 14,870
Interest and other income 195 120
-------- ---------
Total 17,650 14,990
-------- ---------
EXPENSES:
Operating 1,597 1,984
Depreciation 5,549 5,125
Administrative, general and selling 2,852 1,756
Interest 3,467 3,012
-------- ---------
Total 13,465 11,877
-------- ---------
INCOME BEFORE INCOME TAXES 4,185 3,113
PROVISION FOR INCOME TAXES 1,578 1,172
-------- ---------
NET INCOME $ 2,607 $ 1,941
========= =========
</TABLE>
19.
<PAGE> 20
MATSON LEASING COMPANY, INC. AND SUBSIDIARIES
(Wholly-owned Subsidiary of Matson Navigation Company, Inc.)
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1995 1994
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,607 $ 1,941
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 5,549 5,125
Gain on disposal of equipment (72) (37)
Changes in assets and liabilities:
Accounts receivable (10,359) (3,150)
Prepaid expenses and other assets (12) 54
Accounts payable 4,907 (388)
Deferred income taxes 7,595 3,354
Other liabilities (90) (196)
-------- -------
Net cash provided by operating activities 10,125 6,703
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (18,269) (3,690)
Proceeds from disposal of equipment 396 238
-------- -------
Net cash used in investing activities (17,873) (3,452)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt (2,500) (111)
Proceeds from long-term borrowing 10,000
Capital distribution (3,250)
-------- -------
Net cash provided/(used) in financing activities 7,500 (3,361)
-------- -------
NET DECREASE IN CASH BALANCE (248) (110)
-------- -------
CASH, BEGINNING BALANCE 570 396
-------- -------
CASH, ENDING BALANCE $ 322 $ 286
======== =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid: $ 3,623 $ 3,096
Income taxes paid - foreign: 19 15
</TABLE>
20.
<PAGE> 21
MATSON LEASING COMPANY, INC. AND SUBSIDIARIES
(Wholly-owned Subsidiary of Matson Navigation Company, Inc.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
THE ACCOMPANYING UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS HAVE
BEEN PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
FOR INTERIM FINANCIAL STATEMENTS AND INCLUDE ALL ADJUSTMENTS (CONSISTING
ONLY OF NORMAL RECURRING ADJUSTMENTS) WHICH MATSON LEASING COMPANY, INC AND
SUBSIDIARIES (THE COMPANY) CONSIDERS NECESSARY FOR A FAIR PRESENTATION OF
THE FINANCIAL POSITION, OPERATING RESULTS AND CASH FLOWS FOR THOSE PERIODS.
RESULTS FOR THE INTERIM PERIODS ARE NOT NECESSARILY INDICATIVE OF THE
RESULTS FOR THE ENTIRE YEAR. THESE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS, AND NOTES THERETO, SHOULD BE READ IN CONJUNCTION WITH THE
AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER
31, 1994.
2. SUBSEQUENT EVENT
ON MAY 2, 1995, MATSON NAVIGATION COMPANY, INC. ANNOUNCED THAT IT HAD
SIGNED A LETTER OF INTENT THAT OUTLINES TERMS OF AN AGREEMENT UNDER
WHICH XTRA CORPORATION WOULD ACQUIRE THE CONTAINERS AND CERTAIN
OTHER ASSETS AND LIABILITIES OF THE COMPANY FOR $350 MILLION, SUBJECT
TO CERTAIN ADJUSTMENTS. PROPOSED TRANSACTION, WHICH IS EXPECTED TO
CLOSE BY JUNE 30, 1995 REQUIRES THE COMPLETION OF SATISFACTORY DUE
DILIGENCE, PREPARATION OF A DEFINITIVE PURCHASE AGREEMENT AND OTHER
CONDITIONS, INCLUDING REGULATORY APPROVALS.
21.
<PAGE> 22
XTRA CORPORATION
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma condensed financial statements give effect to
the consummation of the acquisition of certain assets and the assumption of
certain liabilities ("Net Assets") of Matson Leasing Company, Inc. ("Matson")
by XTRA Corporation ("the Company"). The total consideration for the Net
Assets will amount to approximately $350 million, subject to final adjustments.
The Company's intention is to initially fund the acquisition with financing
provided by the Company's existing bank group, supplemented by several
additional banks. The Company expects the financing will consist of an
expansion of its existing revolving credit agreements as well as a new five
year term loan at a floating interest rate.
The following unaudited pro forma condensed balance sheet at March 31, 1995
(page 24) gives effect to the acquisition of the Net Assets assuming that the
purchase had been consummated as of March 31, 1995. It is not practicable at
this time to determine the fair market value of the Net Assets to be acquired.
Accordingly, for purposes of presenting pro forma information, the excess of
the purchase price over the Net Assets, as reflected in Matson's historical
financial statements, to be acquired is shown as "unallocated purchase price"
on the accompanying pro forma balance sheet. The effects resulting from any
differences in the final allocation of the purchase price are not expected to
have a material effect on the financial statements.
The following unaudited pro forma condensed income statements for the fiscal
year ended September 30, 1994 (page 25) and the six months ended March 31, 1995
(page 26) give effect to the acquisition of the Net Assets of Matson assuming
that the purchase had been consummated as of October 1, 1993.
Matson's fiscal year end differs from the Company's fiscal year end. The
Company's fiscal year end is September 30 and Matson's fiscal year end is
December 31. The unaudited pro forma condensed income statement for the fiscal
year ended September 30, 1994 includes XTRA Corporation's results of operations
for the twelve months ended September 30, 1994 and Matson's results of
operations for the twelve months ended December 31, 1994. However, the pro
forma condensed results of operations for the six months ended March 31, 1995
are combined using the same periods for both XTRA and Matson. Accordingly,
the pro forma results of operations for both the fiscal year ended
September 30, 1994 and the six months ended March 31, 1995 include the results
of operations for Matson for the three months ended December 31, 1994.
Matson's revenues and net income for the three months ended December 31, 1994
were approximately $17.8 million and $3.2 million, respectively.
The unaudited pro forma condensed financial statements are not necessarily
indicative of the actual financial position or results of operations that would
have occurred had the acquisition been consummated as of the dates or for the
periods presented, or of future financial positions or results of operations of
the combined companies.
The Net Assets as of March 31, 1995 include a marine container fleet of
approximately 165,000
22.
<PAGE> 23
twenty-foot-equivalent units (TEU's). As of October 1, 1993 and 1994, the
fleet consisted of approximately 142,000 and 156,000 TEU's, respectively.
Revenues are a function of lease rates and working units. The working units
depends on fleet size and equipment utilization. Matson's results of
operations included in the pro forma condensed income statements for the fiscal
year ended September 30, 1994 and the six months ended March 31, 1995 reflect
the smaller average fleet size that existed during those periods as compared to
the fleet size as of March 31, 1995.
Interest expense in the pro forma condensed income statements is computed using
a floating interest rate of 6.1%. A one-eighth percentage change in the
floating interest rate would result in a $.3 million change in net income. The
Company expects to replace substantially all of the $350 million of floating
rate debt with fixed rate debt during the next twelve months. The interest
rate currently available to the Company on seven year fixed rate debt is
approximately 7.0%.
23.
<PAGE> 24
<TABLE>
XTRA CORPORATION AND SUBSIDARIES
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
MARCH 31, 1995
(Millions of dollars)
<CAPTION>
-----------------------
PRO FORMA
ADJUSTMENTS
Assets XTRA (1) MATSON (2) (3) (4) PRO FORMA
- ------ -------- ---------- ----------------------- ----------
<S> <C> <C> <C> <C> <C>
Cash $ 3.8 $ 0.3 $ $ $ 4.1
Trade receivables, net 43.9 14.2 58.1
Other receivables, net 19.9 (19.9) 0.0
Lease contracts receivable 36.1 36.1
Property and equipment, at cost
Revenue equipment 1,289.9 385.4 (70.5) 1,604.8
Land, buildings and other 60.2 5.9 (2.5) 63.6
-------- ------ ------- ------ --------
1,350.1 391.3 (73.0) 1,668.4
Less - Accumulated depreciation (449.0) (73.0) 73.0 (449.0)
-------- ------ ------- ------ --------
Net property and equipment 901.1 318.3 0.0 1,219.4
-------- ------ ------- ------ --------
Other assets 21.8 2.5 (1.9) 1.0 (b) 23.4
Unallocated purchase price 34.3 (a) 34.3
-------- ------ ------- ------ --------
$1,006.7 $355.2 $ (21.8) $ 35.3 $1,375.4
======== ====== ======= ====== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Liabilities
Accounts payable $ 18.7 $ 9.3 $ $ $ 28.0
Other accrued expenses 53.5 6.5 (0.1) 59.9
Debt 400.3 200.2 (200.2) 353.0 (c) 753.3
Deferred income taxes 180.5 69.9 (69.9) 180.5
-------- ------ ------- ------ --------
Total Liabilities 653.0 285.9 (270.2) 353.0 1,021.7
-------- ------ ------- ------ --------
Stockholders' equity
Common stock 8.5 8.5
Capital in excess of par value 125.6 34.3 (34.3) 125.6
Retained earnings 224.3 35.0 (35.0) 224.3
Cumulative translation adjustment (4.7) (4.7)
-------- ------ ------- ------ --------
Total stockholders' equity 353.7 69.3 (69.3) 353.7
-------- ------ ------- ------ --------
$1,006.7 $355.2 $(339.5) $353.0 $1,375.4
======== ====== ======= ====== ========
<FN>
NOTES TO PRO FORMA CONDENSED BALANCE SHEET
(1) As reported in XTRA Corporation's March 31, 1995 Form 10-Q.
(2) As reported in Matson Leasing Company, Inc.'s quarterly financial statements (unaudited) dated March 31, 1995.
Certain reclassifications have been made to present Matson on a basis consistent with XTRA.
(3) To eliminate certain assets and liabilities from Matson's March 31, 1995 balance sheet (unaudited) which are not included in
the Net Assets acquired and to net accumulated depreciation against the cost of property and equipment.
(4) The following pro forma adjustments relate to the Net Assets acquired:
(a) Represents the excess of the purchase price over the Net Assets, as reflected in Matson's historical financial
statements. It is not practicable at this time to determine the fair market value of the Net Assets.
(b) To record estimated deferred financing costs.
(c) To record issuance of debt to finance the acquisition.
</TABLE>
24.
<PAGE> 25
<TABLE>
XTRA CORPORATION AND SUBSIDARIES
UNAUDITED PRO FORMA CONDENSED INCOME STATEMENT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994
(Millions of dollars, except per share data)
<CAPTION>
-----------------------
PRO FORMA
ADJUSTMENTS
XTRA (1) MATSON (2) (3) (4) PRO FORMA
-------- ---------- ----------------------- ----------
<S> <C> <C> <C> <C> <C>
REVENUES $ 355.3 $65.9 $ $ $ 421.2
OPERATING EXPENSES
Depreciation on rental equipment 97.5 21.1 2.9 (a) 121.5
Rental equipment lease financing 7.0 7.0
Rental equipment operating expense 87.4 7.0 4.3 (a) 98.7
Selling and administrative expense 31.1 8.2 (4.3) (a) 35.0
------- ----- ------- ------- -------
223.0 36.3 0.0 2.9 262.2
------- ----- ------- ------- -------
Operating income 132.3 29.6 0.0 (2.9) 159.0
INTEREST EXPENSE 33.9 13.0 (13.0) (b) 21.7 (b) 55.6
------- ----- ------- ------- -------
Income before provision for income taxes 98.4 16.6 13.0 (24.6) 103.4
PROVISION FOR INCOME TAXES 40.8 6.0 (6.0) (b) 1.1 (c) 41.9
------- ----- ------- ------- -------
Net income $ 57.6 $10.6 $ 19.0 $(25.7) $ 61.5
======= ===== ====== ======= =======
Net income per share of common stock -
primary and fully diluted $ 3.38 $ 3.61
Weighted average number of fully diluted common
shares outstanding (in thousands) 17,027 17,027
<FN>
NOTES TO PRO FORMA CONDENSED INCOME STATEMENT
(1) Represents the twelve months ended September 30, 1994 as reported in XTRA Corporation's Form 10-K.
(2) Represents the twelve months ended December 31, 1994 as reported by Matson Leasing Company, Inc.
(3) The following entries represent adjustments to Matson's December 31, 1994 income statement:
(a) To reclassify expenses to present Matson on a basis consistent with XTRA Corporation.
(b) To eliminate expenses incurred by Matson not applicable to the pro forma condensed income statement.
(4) The following entries represent adjustments to the pro forma condensed income statement:
(a) To record amortization related to the unallocated purchase price based on the average lives of the long-lived assets
(12 years).
(b) To record interest expense for borrowings incurred in connection with the acquisition.
(c) To adjust to the pro forma effective tax rate of 40.5%.
</TABLE>
25.
<PAGE> 26
<TABLE>
XTRA CORPORATION AND SUBSIDARIES
UNAUDITED PRO FORMA CONDENSED INCOME STATEMENT
FOR THE SIX MONTHS ENDED MARCH 31, 1995
(Millions of dollars, except per share data)
<CAPTION>
-----------------------
PRO FORMA
ADJUSTMENTS
XTRA (1) MATSON (2) (3) (4) PRO FORMA
-------- ---------- ----------------------- ----------
<S> <C> <C> <C> <C> <C>
REVENUES $ 183.4 $35.4 $ $ $ 218.8
OPERATING EXPENSES
Depreciation on rental equipment 52.3 11.0 1.4 (a) 64.7
Rental equipment lease financing 1.0 1.0
Rental equipment operating expense 41.4 3.3 2.7 (a) 47.4
Selling and administrative expense 16.2 5.3 (2.7) (a) 18.8
------- ----- ------- ------- -------
110.9 19.6 0.0 1.4 131.9
------- ----- ------- ------- -------
Operating income 72.5 15.8 0.0 (1.4) 86.9
INTEREST EXPENSE 16.5 6.9 (6.9) (b) 10.9 (b) 27.4
------- ----- ------- ------- -------
Income before provision for income taxes 56.0 8.9 6.9 (12.3) 59.5
PROVISION FOR INCOME TAXES 23.2 3.1 (3.1) (b) 0.9 (c) 24.1
------- ----- ------- ------- -------
Net income $ 32.8 $ 5.8 $10.0 $(13.2) $ 35.4
======= ===== ===== ====== =======
Net income per share of common stock -
primary and fully diluted $ 1.92 $ 2.08
Weighted average number of fully diluted common
shares outstanding (in thousands) 17,040 17,040
<FN>
NOTES TO PRO FORMA CONDENSED INCOME STATEMENT
(1) Represents the six months ended March 31, 1995 as reported in XTRA Corporation's Form 10-Q.
(2) Represents the six months ended March 31, 1995 for Matson Leasing Company, Inc.
(3) The following entries represent adjustments to Matson's March 31, 1995 income statement (unaudited):
(a) To reclassify expenses to present Matson on a basis consistent with XTRA Corporation.
(b) To eliminate expenses incurred by Matson not applicable to the pro forma condensed income statement.
(4) The following entries represent adjustments to the pro forma condensed income statement:
(a) To record amortization related to the unallocated purchase price based on the average lives of the long-lived assets
(12 years).
(b) To record interest expense for borrowings incurred in connection with the acquisition.
(c) To adjust to the pro forma effective tax rate of 40.5%.
</TABLE>
26.
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
XTRA Corporation
-------------------------------
(Registrant)
Date: June 20, 1995 /s/ Michael J. Soja
-------------------------------
Michael J. Soja
Vice President and
Chief Financial Officer
27.
<PAGE> 28
Exhibit Index
-------------
Exhibit No. Description
- ----------- -----------
23.1 Independent auditors' consent
28.
<PAGE> 1
DRAFT
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
33-43481 and 33-54747 of XTRA Corporation on Forms S-3 and Registration
Statements Nos. 33-41360, 33-45564, 33-57607 and 33-57609 of XTRA Corporation
on Forms S-8 of our report dated January 27, 1995 except for Note 12, as to
which the date is June 15, 1995, on the consolidated financial statements of
Matson Leasing Company, Inc. for the years ended December 31, 1994 and 1993,
appearing in this Current Report on Form 8-K dated June 20, 1995 of XTRA
Corporation.
/S/ Deloitte & Touche LLP
June 20, 1995
San Francisco, California
29.
