<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended December 31, 1997
-----------------------------------------------------
Commission File Number 1-7654
----------------------------------------------------------
XTRA CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 06-0954158
- ---------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 State Street, Boston, Massachusetts 02109
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(617) 367-5000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at January 31, 1998
- -------------------------------- ---------------------------------
Common Stock, Par Value 15,296,484
$.50 Per Share
<PAGE>
XTRA CORPORATION AND SUBSIDIARIES
---------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information
---------------------
Management Representation................................... 3
Consolidated Balance Sheets
December 31, 1997 and September 30, 1996................... 4
Consolidated Income Statements
For the Three Months Ended
December 31, 1997 and 1996................................. 5
Consolidated Statements of Cash Flows
For the Three Months Ended
December 31, 1997 and 1996................................. 6
Consolidated Statements of Stockholders' Equity
For the Period September 30, 1996
Through December 31, 1997.................................. 7
Notes to Consolidated Financial Statements.................. 8 - 9
Management's Discussion and Analysis of
Financial Condition and Results of Operations.............. 10 - 13
Part II. Other Information
-----------------
Item 4. Submission of Matter to a Vote of Security Holders.. 14
Item 5. Other Matters....................................... 15 - 17
Item 6. Exhibits and Reports on Form 8-K.................... 18
Signatures.................................................. 19
Exhibit Index............................................... 20
</TABLE>
2
<PAGE>
PART 1 - FINANCIAL INFORMATION
------------------------------
XTRA CORPORATION AND SUBSIDIARIES
---------------------------------
MANAGEMENT REPRESENTATION
-------------------------
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. The Company believes, however, that the disclosures are adequate
to make the information presented not misleading.
The Board of Directors carries out its responsibility for the financial
statements included herein through its Audit Committee, composed of non-employee
Directors. During the year, the Committee meets periodically with both
management and the independent public accountants to ensure that each is
carrying out its responsibilities. The independent public accountants have full
and free access to the Audit Committee and meet with its members, with and
without management being present, to discuss auditing and financial reporting
matters.
These financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's latest Annual Report
on Form 10-K.
This financial information reflects, in the opinion of management, all
adjustments consisting of only normal recurring adjustments necessary to present
fairly the results for the interim periods. The results of operations for such
interim periods are not necessarily indicative of the results to be expected for
the full year.
3
<PAGE>
XTRA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
(Millions of dollars, except per share amounts)
<TABLE>
<CAPTION>
December 31,
1997 September 30,
(unaudited) 1997/(1)/
----------- ------------
<S> <C> <C>
Assets
- ------
Revenue equipment and other $ 2,107 $ 2,112
Accumulated depreciation (685) (658)
----------- ------------
Net property and equipment 1,422 1,454
Lease contracts receivable 44 43
Trade receivables, net 68 65
Cash 4 4
Other assets 16 19
----------- ------------
$ 1,554 $ 1,585
=========== ============
Liabilities and Stockholders' Equity
- ------------------------------------
Liabilities:
Debt $ 853 $ 892
Deferred income taxes 261 252
Accounts payable and accrued expenses 68 81
----------- ------------
Total liabilities 1,182 1,225
----------- ------------
Commitments and contingencies:
Stockholders' equity:
Common stock, par value $.50 per share;
authorized; 30,000,000 shares; issued
outstanding; 15,285,200 shares at
December 31, 1997 and 15,276,600 at
September 30, 1997 8 8
Capital in excess of par value 52 52
Retained earnings 319 304
Cumulative translation adjustment (7) (4)
----------- ------------
Total stockholders' equity 372 360
----------- ------------
$ 1,554 $ 1,585
=========== ============
</TABLE>
/(1)/ Derived from XTRA Corporation's audited September 30, 1997 financial
statements.
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
XTRA CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
------------------------------
(Millions of dollars, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------
1997 1996
-------- --------
<S> <C> <C>
Revenues $ 121 $ 111
Operating expenses
Depreciation on rental equipment 38 36
Rental equipment operating expenses 27 26
Selling and administrative expense 11 11
-------- --------
76 73
-------- --------
Operating income 45 38
Interest expense 15 16
-------- --------
Income from operations before
provision for income taxes 30 22
Provision for income taxes 12 9
-------- --------
Net income $ 18 $ 13
======== ========
Basic earnings per common share $ 1.18 $ 0.85
Basic common shares outstanding (in millions) 15.3 15.3
Diluted earnings per common share $ 1.17 $ 0.85
Diluted common shares outstanding (in millions) 15.4 15.3
Cash dividends declared per share $ 0.20 $ 0.18
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
XTRA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(Millions of dollars, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operations:
Net income $ 18 $ 13
Add non-cash income and expense items:
Depreciation and amortization, net 38 37
Deferred income taxes 10 8
Bad debt expense 1 1
Add other cash items:
Net change in receivables, other assets,
payable and accrued expenses (18) (19)
Cash receipts from lease contracts receivable 6 5
Recovery of property and equipment net book value 6 6
-------- --------
Total cash provided from operations 61 51
-------- --------
Cash used for investment activities:
Additions to property and equipment (19) (20)
-------- --------
Total cash used for investing activities (19) (20)
-------- --------
Cash flows from financing activities:
Borrowings of long-term debt - -
Payments of long-term debt (39) (17)
Repurchase of common stock, net - (13)
Dividends paid (3) (3)
-------- --------
Total cash provided by financing activities (42) (33)
-------- --------
Net increase (decrease) in cash - (2)
Cash at beginning of period 4 8
-------- --------
Cash at end of period $ 4 $ 6
======== ========
Total interest paid $ 25 $ 27
Total net income taxes paid (refunded) $ 1 $ (1)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
XTRA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------
(Millions of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Common
Stock Capital in Cumulative
$0.50 Excess of Retained Translation
Par Value Par Value Earnings Adjustment
--------- ---------- -------- -----------
<S> <C> <C> <C> <C>
Balance at September 30, 1996 $ 8 $ 64 $ 273 $ (3)
Net income - - 43 -
Common stock cash dividends
declared at $.78 per share - - (12) -
Options exercised and related tax benefits - 1 - -
Common stock repurchased - (13) - -
Translation adjustment - - - (1)
--------- ---------- -------- -----------
Balance at September 30, 1997 8 52 304 (4)
Net income - - 18 -
Common stock cash dividends
declared at $.20 per share - - (3) -
Translation adjustment - - - (3)
--------- ---------- -------- -----------
Balance at December 31, 1997 $ 8 $ 52 $ 319 $ (7)
========= ========== ======== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
XTRA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(1) 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 prior period financial statements have been reclassified
to be consistent with the current period's presentation.
(2) The effective income tax rates used in the interim financial statements are
estimates of the fiscal years' rates. The effective income tax rate for
fiscal 1997 was 40%. For the three months ended December 31, 1997, the
Company recorded a provision for income taxes using an estimated effective
income tax rate of 40%. The Company's effective income tax rate for fiscal
1997 and its estimated effective income tax rate for fiscal 1998 are higher
than the statutory U.S. Federal income tax rate due primarily to state
income taxes.
(3) The Company's long-term debt includes a current portion of $53 million at
December 31, 1997 and $57 million at September 30, 1997.
(4) XTRA Corporation's assets consist substantially of the aggregate assets,
liabilities, earnings and equity of XTRA, Inc., a wholly-owned direct
subsidiary. In addition, XTRA Corporation generally guarantees the debt of
XTRA, Inc.
The condensed consolidated financial data for XTRA, Inc. included in the
consolidated financial information of the Company is summarized below:
Selected Income Statement Data:
-------------------------------
(Millions of dollars)
<TABLE>
<CAPTION>
For the three months ended December 31, 1997 1996
-------- --------
<S> <C> <C>
Revenues $121 $111
Income before provision for income taxes 30 22
Net Income 18 13
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Selected Balance Sheet Data:
---------------------------- December 31, September 30,
(Millions of dollars) 1997 1997
------------ -------------
<S> <C> <C>
Net property and equipment $1,422 $1,454
Receivables, net 112 108
Other assets 19 23
------ ------
Total assets $1,553 $1,585
====== ======
Debt $ 853 $ 892
Deferred income taxes 261 252
Other liabilities 71 86
------ ------
Total liabilities 1,185 1,230
------ ------
Stockholders' equity 368 355
------ ------
Total liabilities and stockholders' equity $1,553 $1,585
====== ======
</TABLE>
(5) In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share," which is effective for financial statements
issued for periods ending after December 15, 1997. SFAS 128 supersedes
Accounting Principles Board Opinion No. 15 (APB 15) and establishes new
standards for the presentation of earnings per share. Under SFAS 128,
"Basic Earnings Per Share" excludes dilution and is computed by dividing
income available to common stockholders by weighted average shares
outstanding. "Diluted Earnings Per Share" reflects the effect of all other
dilutive outstanding common stock equivalents and is computed similarly to
primary diluted earnings per share according to APB 15. The following table
provides a reconciliation of the numerators and denominators of the basic
and diluted earnings per share computations, as required by SFAS 128:
<TABLE>
<CAPTION>
For the period ended December 31, 1997
--------------------------------------
Income Shares
(in millions) (in thousands) Per-share
(Numerator) (Denominator) Amount
------------- -------------- ---------
<S> <C> <C> <C>
Basic EPS
---------
Income available to common
stockholders $18 15,283 $ 1.18
Effect of dilutive securities
-----------------------------
Stock options -- 84 (0.01)
--- ------ ------
Diluted EPS
-----------
Income available to common
stockholders, including assumed
conversions $18 15,367 $ 1.17
=== ====== ======
</TABLE>
9
<PAGE>
XTRA CORPORATION AND SUBSIDIARIES
---------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
The discussion below contains certain forward-looking statements, including
estimates of economic and industry conditions, equipment utilization, and
capital expenditures. Actual results may vary from those contained in such
forward-looking statements. See "Cautionary Statements for Purposes of the
`Safe Harbor' Provisions of the Private Securities Litigation Act of 1995"
contained in Part II, Item 5.
The Three Months Ended December 31, 1997
- ----------------------------------------
Versus the Three Months Ended December 31, 1996:
- ------------------------------------------------
Revenues and Changes in Business Conditions
- -------------------------------------------
Revenues are generated by leasing domestic and international transportation
equipment. The Company's over-the-road and intermodal equipment is used
throughout North America and marine containers are moved between countries in
international commerce. Revenues are primarily a function of lease rates and
working units; the latter depend on fleet size and equipment utilization.
The following table sets forth the Company's average equipment utilization
(dollar-weighted by net investment in equipment), average fleet size in units,
and average net investment in revenue equipment for the three months ended
December 31, 1997 and 1996. The Company's fleet size and average net investment
include 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.
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------------
1997 1996
---------- ----------
<S> <C> <C>
North America:
- --------------
Utilization 91% 88%
Units 132,000 130,000
Net investment in equipment (in millions) $ 1,024 $ 971
International:
- --------------
Utilization 84% 78%
Units 163,000 154,000
Net investment in equipment (in millions) $ 413 $ 419
Consolidated:
- -------------
Utilization 90% 85%
Units 295,000 284,000
Net investment in equipment (in millions) $ 1,437 $ 1,390
</TABLE>
10
<PAGE>
Revenues increased by 9% or $10 million for the three months ended December
31, 1997 over the same period a year ago. The Company's average equipment
utilization improved from 85% in the first quarter of fiscal year 1997 to 90% in
the first quarter of fiscal 1998. Average net investment in equipment increased
by $47 million from the same quarter of the prior year due primarily to an
increase in the net investment in over-the-road trailers, which was partially
offset by a decline in the net investment in intermodal trailers. For the full
fiscal year 1998, average equipment utilization is expected to be higher than
the 1997 average of 84%.
The Company's North American revenues increased $9 million from the same
quarter a year ago due to strong levels of domestic freight leading to more
working units, as well as an improvement in lease rates. The Company's North
American utilization averaged 91% in the first quarter of fiscal 1998, as
compared to 88% in the comparable prior year period. Increasing demand for
equipment was reflected in improved intermodal trailer and container loadings
and increased truck tonnage, both of which are indicators of domestic freight
levels in the U.S.
The Company's North American over-the-road trailer fleet averaged 76,000
units, or 49% of average net investment in equipment in the first quarter of
fiscal year 1998, compared to 75,000 units, or 45% of average net investment in
equipment, in the comparable prior year period. The Company continues to
downsize its North American intermodal trailer fleet as the railroads shift
toward more domestic container usage. XTRA's intermodal trailer fleet averaged
23,000 units, or 12% of average net investment in equipment in the first quarter
of 1998, versus 24,000 units, or 14% of average net investment in equipment, in
the comparable prior year period.
International revenues increased $1 million from the same quarter of the
prior year. An increase in revenues attributable to more working units was
partially offset by lower average effective lease rates. Equipment utilization
improved to 84% from 78% in the comparable prior year period. In 1996,
substantial industry-wide purchases increased the supply of marine containers.
Beginning in fiscal year 1997 and continuing into fiscal 1998, industry
container purchases were down considerably. However, over-capacity of leased
containers and the low purchase price of new containers continue to exert
pressure on container lease rates. In 1997, more balanced worldwide trade
resulted in more efficient use of equipment by shippers and hence lower usage of
leased containers. In 1998, trade flows of container freight into and out of the
United States appear to be returning to the historical norm of strong excesses
of imports, which should benefit the marine container leasing industry. The
Company's average international fleet size increased to 163,000 units in the
first quarter of fiscal 1998 from 154,000 units in the comparable prior year
period.
Operating Expenses
- ------------------
Total operating expenses increased by 4% or $3 million for the three months
ended December 31, 1997 from the same period of fiscal 1997. Depreciation
expense increased by 6% or $2 million due to a larger fleet investment. Rental
equipment operating expense increased by 4% or $1 million with no one factor
contributing significantly to the increase. Selling and administrative expenses
remained unchanged from the comparable prior year period.
11
<PAGE>
Interest Expense
- ----------------
Interest expense decreased by 6% or $1 million for the three months ended
December 31, 1997 from the same period of fiscal 1997, due primarily to a
decline in the average effective interest rate.
Income Before Provision for Income Taxes
- ----------------------------------------
Pretax earnings increased 36% or $8 million for the three months ended
December 31, 1997 over the same period a year ago primarily due to an increase
in working units on higher overall utilization.
Provision for Income Taxes
- --------------------------
The effective income tax rates used in the interim financial statements are
estimates of the fiscal years' rates. The effective income tax rate for fiscal
1997 was 40%. For the three months ended December 31, 1997, the Company has
recorded a provision for income taxes using an estimated effective income tax
rate of 40%. The Company's effective income tax rate for fiscal 1997 and its
estimated effective income tax rate for fiscal 1998 are higher than the
statutory U.S. Federal income tax rate due primarily to state income taxes.
Liquidity and Capital Resources
- -------------------------------
During the three months ended December 31, 1997, the Company generated cash
flows from operations of $61 million. During the same period, XTRA invested $19
million in property and equipment and paid dividends of $3 million. Net debt
outstanding (debt less cash) decreased $39 million.
As of January 31, 1998, committed capital expenditures for fiscal 1998
amounted to approximately $102 million. XTRA is currently in the process of
committing to additional capital spending for over-the-road trailers but at this
time, the Company does not expect capital expenditures to exceed $200 million in
1998.
On January 29, 1998, XTRA's Board of Directors declared a quarterly cash
dividend of $.22 per share, payable on February 27, 1998, to stockholders of
record on February 13, 1998.
As of January 31, 1998, XTRA Inc. had $532 million available for future
issuance under its $604 million Shelf Registration. As of January 31, 1998, the
Company had $187 million of unused credit available under its $300 million
Revolving Credit Agreement.
Year 2000
- ---------
The Company does not expect to incur significant costs during the next two
to three years to address the impact of the "Year 2000 problem" on its
information systems. The "Year 2000 problem," which is common to most
corporations, concerns the inability of information systems,
12
<PAGE>
primarily computer software programs, to properly recognize and process date
sensitive information as the year 2000 approaches. The Company has completed an
assessment of the majority of its systems and is in the process of developing a
specific workplan to address this issue. The Company currently believes it will
be able to modify or replace its affected systems in time to minimize any
detrimental effects on operations. The Company expects that the costs it will
incur to ensure its systems are Year 2000 compliant will not be material to the
Company's results of operations, liquidity, or consolidated financial position.
13
<PAGE>
Part II - OTHER INFORMATION
-----------------------------
Item 4 - Submission of Matter to a Vote of Security Holders
- ------------------------------------------------------------
At the 1998 Annual Meeting of Stockholders held on January 29, 1998, at
which a quorum was present, the stockholders re-elected eight of the incumbent
Directors and approved the following proposals by the number of shares of common
stock as noted:
(1) Nominees for the office of Director:
<TABLE>
<CAPTION>
Number of Shares
-------------------------
Voted For Withheld
----------- -----------
<S> <C> <C>
Michael D. Bills 13,343,771 46,324
H. William Brown 13,345,704 44,391
Robert M. Gintel 13,351,225 38,869
Robert B. Goergen 13,350,904 39,191
Herbert C. Knortz 13,320,163 69,932
Francis J. Palamara 13,322,531 67,564
Lewis Rubin 13,350,796 39,299
Martin L. Solomon 13,350,434 39,660
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Voted
---------------------------------------
For Against Abstain
----------- ----------- ----------
<S> <C> <C> <C>
(2) To approve the adoption of XTRA 10,998,060 2,340,092 51,942
Corporation's 1997 Stock Incentive Plan.
</TABLE>
14
<PAGE>
Item 5 - Other Matters
- ----------------------
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
- -------------------------------------------------------------------------
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
- ------------------------------------------------
The foregoing Management's Discussion and Analysis of Financial Condition
and Results of Operations contains certain forward-looking statements, including
estimates of economic and industry conditions, equipment utilization, and
capital expenditures. In addition, the Company may occasionally make forward-
looking statements and estimates such as forecasts and projections of the
Company's future performance or statements of management's plans and objectives.
These forward-looking statements may be contained in, among other things, SEC
filings and press releases made by the Company and in oral statements made by
the officers of the Company. Actual results could differ materially from those
contained in such forward-looking statements. Therefore, no assurances can be
given that the results in such forward-looking statements will be achieved.
Important factors that could cause the Company's actual results to differ from
those contained in such forward-looking statements include, among others, the
factors mentioned below. An additional risk factor is the Company's ability to
address the "Year 2000 problem" in a timely and efficient manner.
VARIABLE REVENUES AND FIXED OPERATING EXPENSES
- ----------------------------------------------
The Company's revenues, which are based on lease rates, utilization, and supply
of and demand for equipment, are variable due to their dependence on the level
of domestic and international economic activity, as well as changing industry
levels of equipment supply. In addition, the Company has a high percentage of
fixed operating expenses, which include depreciation, a portion of rental
equipment operating expenses, and selling and administrative expenses. As a
result, the Company's pretax profits are cyclical. If domestic or global
economic activity remains slow or if an oversupply of industry equipment exists,
operating margins may be adversely affected. See below for further discussion.
Lease Rates
- -----------
Lease rates depend on the type of lease, length of term, maintenance provided,
and the type and age of the equipment. Future lease rates may increase or
decrease depending on competition, economic conditions, and other factors.
Utilization
- ------------
Utilization is the ratio of revenue earning units to the total fleet.
Utilization is 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 competitors, and other factors in the freight transportation
industry.
Supply of Equipment
- -------------------
New equipment, supplied by a number of manufacturers, is built to the Company's
specifications and reflects industry standards and customer needs. There is
often a considerable amount of time
15
<PAGE>
between when an order is placed and when the equipment is delivered. In
addition, it is difficult to accurately predict demand for the Company's
equipment in future periods. As a result, the Company's performance in a given
period may be adversely affected either because of its inability to quickly
increase fleet size because of extended back orders, to take advantage of
unexpectedly strong demand, or to quickly reduce fleet size to react to reduced
demand.
Demand
- ------
Demand for equipment is affected by economic factors, equipment supply, and
shifting traffic trends in the industry. A softening domestic or international
economy may result in lower levels of freight shipments. Shifting traffic trends
in the industry, such as truckers competing more aggressively, may divert some
intermodal freight to over-the-road. Other items affecting demand which may
impact leasing needs can include severe adverse weather conditions such as
floods or snow storms or strikes by transportation unions.
Operating Expenses
- ------------------
The Company's operating expenses consist of a high percentage of fixed costs and
thus profitability can change as revenues fluctuate due to increases and
decreases in utilization and/or lease rates. The fixed costs include
depreciation, a portion of rental equipment operating expenses, and selling and
administrative expenses. As a result, income from operations can be cyclical. If
revenues decline in any period, operating margins may change from those reported
in prior periods due to the fixed nature of a significant portion of the
Company's expenses.
CAPITAL NEEDS
- -------------
The acquisition of new equipment, both for growth as well as replacement of
older equipment, requires significant capital. In addition, in the past, the
Company has grown its fleet through acquisitions of other companies, requiring
additional capital. While the Company generally has had available a variety of
sources to finance such expenditures and acquisitions at favorable rates or
terms, the availability of such capital depends heavily upon prevailing market
conditions, the Company's capital structure, and its credit ratings. No
assurances can be given that financing will continue to be available at
attractive rates or with covenants that are not more restrictive than the
Company's current debt covenants.
INTEREST RATES
- --------------
Over the past several years, interest rates have remained at relatively low
levels. Due to the Company's heavy dependence upon external financing to fund
its capital needs and acquisitions, the level of interest rates directly affects
the Company's profitability. The Company attempts to moderate the effect of
changing interest rates by maintaining a high percentage of its debt with fixed
rates. An increase in interest rates or a downgrade in the Company's debt
ratings would adversely impact the cost of new borrowings, thereby adversely
affecting its profitability.
16
<PAGE>
FOREIGN EXCHANGE RATES
- ----------------------
A portion of the Company's business is transacted in local currencies. As a
result, the Company's financial results are subject to foreign exchange rate
fluctuations.
ACQUISITIONS
- ------------
Over the past years, the Company has used acquisitions of fleets operated by
other companies to help grow its business. In order for the Company to take
advantage of favorable acquisition opportunities as they occur, it may be
necessary for the Company to significantly increase its debt leverage ratio
which could adversely affect its credit ratings. Also, the ability of the
Company to take advantage of acquisition opportunities will depend on the
availability of capital. See liquidity and capital resources in Management's
Discussion and Analysis of Financial Condition and Results of Operations above
for discussion.
CONSOLIDATIONS OF THE COMPANY'S CUSTOMER BASE
- ---------------------------------------------
Consolidations through mergers or acquisitions of the Company's customer base,
including railroad or steamship lines, may result in reduced demand for leased
equipment.
17
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
- --- --------
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
10 XTRA Corporation 1997 Stock Incentive Plan
11 Statement of the calculation of earnings per share for the three months ended
December 31, 1997 and 1996
12.1 Statement of the calculation of earnings to fixed charges for the three months ended
December 31, 1997 and 1996 for XTRA Corporation
12.2 Statement of the calculation of earnings to fixed charges for the three months ended
December 31, 1997 and 1996 for XTRA, Inc.
27 Financial Data Schedule
(b) Reports on Form 8-K
--- -------------------
</TABLE>
On February 3, 1998, a Current Report on Form 8-K was filed by the Company
to disclose certain financial information for the fiscal first quarter ended
December 31, 1997.
18
<PAGE>
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: February 6, 1998 /s/ Michael J. Soja
---------------- ----------------------------------------------
Michael J. Soja
Vice President and Chief Financial Officer
Date: February 6, 1998 /s/ Robert B. Blakeley
----------------- ----------------------------------------------
Robert B. Blakeley
Vice President and Controller
19
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<C> <S> <C>
10 XTRA Corporation 1997 Stock Incentive Plan 21
11 Statement of the calculation of earnings per
share for the three months ended December 31,
1997 and 1996 30
12.1 Statement of the calculation of earnings to
fixed charges for the three months ended December 31,
1997 and 1996 for XTRA Corporation 31
12.2 Statement of the calculation of earnings to fixed
charges for the three months ended December 31, 1997
and 1996 for XTRA, Inc. 32
27 Financial Data Schedule 33
</TABLE>
<PAGE>
Exhibit 10
XTRA CORPORATION
1997 STOCK INCENTIVE PLAN
1. PURPOSE
-------
The purpose of this 1997 Stock Incentive Plan (the "Plan") is to advance the
interests of XTRA Corporation (the "Company") by enhancing the ability of the
Company (a) to attract and retain employees who are in a position to make
significant contributions to the success of the Company; (b) to reward employees
for such contributions; and (c) to encourage employees to take into account the
long-term interests of the Company through ownership of shares of, and other
interests in, the Company's common stock ("Common Stock").
The Plan is intended to accomplish these goals by enabling the Company to
grant awards ("Awards") to eligible employees. Awards may be in the form of
Stock Options (as described in Section 6), Stock Appreciation Rights (as
described in Section 7) and Restricted Stock Awards (as described in Section 8).
2. ADMINISTRATION
--------------
The Plan will be administered by the Compensation Committee of the Board of
Directors of the Company, excluding any member who would not be an "outside
director" for purposes of Section 162(m) of the Internal Revenue Code of 1986,
as amended, and the regulations, including proposed regulations, thereunder (the
"Committee"). The Committee will have authority, not inconsistent with the
express provisions of the Plan, (a) to grant Awards to such eligible employees
as the Committee may select ("Participants"); (b) to determine the type of
Awards to be granted and the times of grants; (c) to determine the number of
shares of Common Stock to be covered by any Award; (d) to determine the terms
and conditions of any Award, which terms and conditions may differ among
individual Awards and Participants; (e) to prescribe the form or forms of
instruments evidencing Awards and any other instruments required under the Plan
and to change such forms from time to time; (f) to adopt, amend and rescind
rules and regulations for the administration of the Plan; (g) to interpret the
Plan and to decide any questions and settle all controversies and disputes that
may arise in connection with the Plan; and (h) to waive compliance by a
Participant with any obligation to be performed by him under an Award, except
that the Committee may not, in the case of an incentive stock option (as
described in Section 6), take any action without consent of the Participant
which would cause such option to lose its status as an "incentive stock option"
("ISO") within the meaning of section 422 of the Internal Revenue Code of 1986
(the "Code"). Such determinations and actions of the Committee shall be
conclusive and shall bind all parties.
A majority of the members of the Committee will constitute a quorum, and
all determinations of the Committee shall be made by a majority of its members.
Any determination
<PAGE>
of the Committee under the Plan may be made without notice or meeting of the
Committee by a writing signed by a majority of the Committee members. All
members of the Committee shall be non-employee directors within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934.
3. EFFECTIVE DATE AND TERM OF PLAN
-------------------------------
The Plan will become effective on the date on which it is approved by the
stockholders of the Company. Grants of Awards under the Plan may be made prior
to that date (but after adoption of the Plan by the Board of Directors), subject
to approval of the Plan by stockholders.
No Award may be granted under the Plan after the completion of ten years
from the date on which the Plan was adopted by the Board of Directors, but
Awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
--------------------------
(a) Number of Shares. Subject to adjustment as provided in Section 10,
----------------
the aggregate number of shares of Common Stock that may be delivered under the
Plan is 500,000. Shares of Common Stock may be issued up to this maximum
pursuant to any type or types of Award, including ISOs. For purposes of this
limitation, Awards and shares of Common Stock which are forfeited or reacquired
by the Company, and Awards which are satisfied without the issuance of shares of
Common Stock, will not be counted. Such limitation will apply only to shares of
Common Stock which have become free of any restrictions under the Plan.
(b) Special Limitations Applicable to Certain Awards. The Committee shall
------------------------------------------------
have the discretion under the Plan to award Options and SARs that are intended
to satisfy certain performance-based compensation arrangements intended to be
exempt from the deduction limitations of Section 162(m) of the Code (the
"Section 162(m) requirements") ("exempt Options and SARs") as well as Options
and SARs that not intended to satisfy those requirements ("non-exempt Options
and SARs"). Subject to adjustment as provided in Section 10, to the extent such
adjustment is consistent with the continued satisfaction by exempt Options and
SARs of the requirements of Section 162(m)(4)(C) of the Code, the maximum number
of shares of Common Stock for which Options or SARs may be awarded under the
Plan to any Participant in any calendar year is in each case 100,000 shares.
For purposes of the preceding sentence, the regrant of a canceled Option or SAR,
or the repricing of an Option or SAR, shall be treated as a separate Award to
the extent required under Section 162(m)(4)(C) of the Code.
(c) Shares to be Delivered. Shares delivered under the Plan will be
----------------------
authorized but unissued shares of Common Stock or, if the Committee so decides
in its sole discretion, previously issued Common Stock acquired by the Company
and held in treasury. No fractional shares of Common Stock will be delivered
under the Plan.
<PAGE>
5. ELIGIBILITY
-----------
Employees eligible to become Participants shall be those key employees of
the Company and its subsidiaries who, in the opinion of the Committee, are in a
position to make a significant contribution to the success of the Company or its
subsidiaries. A subsidiary for purposes of the Plan is a corporation in which
the Company owns, directly or indirectly, stock possessing 50% or more of the
total combined voting power of all classes of stock. Members of the Committee
will not be eligible to become Participants.
6. STOCK OPTIONS
-------------
Stock Options granted under the Plan ("Options") may be either ISOs or non-
qualified stock options ("NSOs"). Except to the extent expressly designated as
an ISO, each Option will be an NSO.
No term of this Plan relating to ISOs will be interpreted, amended or
altered, nor will any discretion or authority granted to the Committee under the
Plan be exercised, so as to disqualify the Plan or, without the consent of the
optionee, any ISO, under section 422 of the Code. The documents evidencing ISOs
will contain such provisions as are required of ISOs under the applicable
provisions of the Code.
Options granted under the Plan will be subject to the following terms and
conditions and will contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee deems desirable:
(a) Exercise Price. The exercise price of each Option will be determined
--------------
by the Committee but may not be less than 100% (110%, in the case of an ISO
granted to a ten-percent stockholder) of the fair market value per share of
Common Stock at the time the Option is granted. For this purpose, "ten-percent
stockholder" means any employee who at the time of grant owns directly, or is
deemed to own by reason of the attribution rules in section 424(d) of the Code,
Common Stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of any of its parent or subsidiary
corporations. Also for this purpose, "fair market value" on any given date
means the highest closing sale price on the date immediately preceding the date
in question as reflected in the New York Stock Exchange Composite Index.
(b) Duration of Options. An Option will be exercisable during such period
-------------------
or periods as the Committee may specify. The latest date on which an Option may
be exercised will be the date which is ten years (five years, in the case of an
ISO granted to a ten-percent stockholder) from the date the Option was granted
or such earlier date as may be specified by the Committee at the time the Option
is granted.
<PAGE>
(c) Exercise of Options.
--------------------
(1) Options will be exercisable at such future time or times, whether or
not in installments, as determined by the Committee at or after the
grant date. The Committee may at any time accelerate the exercisability
of all or any portion of any Option.
(2) Any exercise of an Option must be by written notice to the Company,
accompanied by (i) the document evidencing the Option (the "Option
Certificate") and any other documents required by the Committee and
(ii) payment in accordance with Section 6(d) below for the number of
shares of Common Stock for which the Option is exercised.
(d) Payment for and Delivery of Common Stock. Common Stock purchased on
----------------------------------------
exercise of an Option shall be paid for as follows: (1) in cash or by certified
check, bank draft or money order payable to the order of the Company or (2) if
so permitted by the Option Certificate, (i) through the delivery of shares of
Common Stock (held for at least six months, or such other period as the
Committee may specify) having a fair market value on the last business day
preceding the date of exercise equal to the purchase price or (ii) by a
combination of cash and Common Stock as provided in clauses (1) and (2)(i) above
or (iii) by delivery of a promissory note of the Participant to the Company,
payable on such terms as are specified in the Option Certificate (except that
the Option Certificate may provide that the rate of interest on the note will be
the lowest rate which is sufficient, at the time the note is given, to avoid
imputation of interest under the applicable provisions of the Code), or by a
combination of cash (or cash and Common Stock) and the Participant's promissory
note; provided, that if the Common Stock delivered upon exercise of the Option
--------
is an original issue of authorized Common Stock, at least so much of the
exercise price as represents the par value of such Common Stock must be paid in
cash if the Committee determines that cash payment is required by law.
(e) Nontransferability of Options. Except as may otherwise be determined
-----------------------------
by the Committee, no Option may be transferred other than by will or by the laws
of descent and distribution, and during a Participant's lifetime an Option may
be exercised only by the Participant.
(f) Death or Disability. If a Participant's employment with the Company
-------------------
and its subsidiaries terminates by reason of death or total and permanent
disability, each Option held by the Participant will become fully exercisable
and will remain exercisable after the date of such termination for a period of
two years in the case of death and one year in the case of disability (but in no
event later than the date the option would have expired in all events under
Section 6(b)). In the case of a deceased Participant, such Option may be
exercised within such time limits by the executor or administrator of the
deceased Participant's estate, or by the person or persons to whom the Option is
transferred by will or the applicable laws of descent and distribution.
(g) Other Termination of Employment. If a Participant's employment with
-------------------------------
the Company and its subsidiaries terminates for any reason other than death or
total and permanent disability,
<PAGE>
all Options held by the Participant that are not then exercisable shall
terminate. Options that are exercisable on the date of termination will continue
to be exercisable for a period of three months (but in no event later than the
date the option would have expired in all events under Section 6(b)) unless the
employee has confessed to, or been convicted of, any act of fraud, theft or
dishonesty arising in the course of, or in connection with, his employment with
the Company, in which case the Option will terminate immediately and in full.
After completion of that three-month (or shorter) period such Options shall
terminate to the extent not previously exercised, expired or terminated.
7. STOCK APPRECIATION RIGHTS
-------------------------
(a) Nature of Stock Appreciation Right. A Stock Appreciation Right ("SAR")
----------------------------------
is an Award entitling the recipient to receive an amount in cash or shares of
Common Stock or a combination thereof having a value equal to the excess of the
fair market value of a share of Common Stock on the date of exercise over the
fair market value of a share of Common Stock on the date of grant (or over the
Option exercise price, if the SAR was granted in tandem with an Option)
multiplied by the number of shares with respect to which the SAR has been
exercised, with the Committee having the right to determine the form of payment.
(b) Grant of SARs. SARs may be granted in tandem with, or independently
-------------
of, Options granted under the Plan. In the case of an SAR granted in tandem
with an NSO, such SAR may be granted either at or after the time of the grant of
such Option. In the case of an SAR granted in tandem with an ISO, such SAR may
be granted only at the time of the grant of the Option. SARs will be evidenced
by such written agreement as is deemed appropriate by the Committee.
An SAR or applicable portion thereof granted in tandem with an Option will
terminate and no longer be exercisable upon the termination or exercise of such
Option, except that an SAR granted with respect to less than the full number of
shares covered by an Option will not be reduced until the exercise or
termination of the related Option exceeds the number of shares not covered by
the SAR.
(c) Terms and Conditions of SARs. SARs will be subject to such terms and
----------------------------
conditions as are determined from time to time by the Committee, subject, in the
case of SARs granted in tandem with Options, to the following:
(1) SARs will be exercisable only at such time or times and to the extent
that the related Option is exercisable.
(2) Upon the exercise of an SAR, the applicable portion of any related
Option must be surrendered.
(3) SARs will be transferable only with the related Option. All SARs will
be exercisable during the Participant's lifetime only by the
Participant or his legal representative.
<PAGE>
(4) An SAR granted in tandem with an Option may be exercised only when the
market price of the Common Stock subject to the Option exceeds the
exercise price of such Option.
The provisions of Sections 6(f) and 6(g) relating to the exercisability and
termination of Options shall also apply to SARs, whether or not granted in
tandem with Options.
Any exercise of an SAR must be by written notice to the Company, accompanied
by the document evidencing the SAR and any other documents required by the
Committee.
8. RESTRICTED STOCK
----------------
(a) Nature of Restricted Stock Award. A Restricted Stock Award is an
--------------------------------
Award entitling the recipient to acquire shares of Common Stock ("Restricted
Stock") for a purchase price (which may be zero) not to exceed par value,
subject to such conditions, including the restrictions specified in Section 8(d)
below, as the Committee may impose at the time of grant.
(b) Award Agreement. A Participant who is granted a Restricted Stock
---------------
Award will have no rights with respect to such Award unless the Participant
accepts the Award within 60 days (or such other period as the Committee may
specify) following the Award date by making payment to the Company by certified
or bank check or other instrument acceptable to the Committee in an amount equal
to the specified purchase price, if any, of the shares covered by the Award and
by executing and delivering to the Company an agreement (an "Award Agreement")
in such form as the Committee determines.
(c) Rights as a Stockholder. Upon complying with Section 8(b) above, a
-----------------------
Participant will have all the rights of a stockholder with respect to the
Restricted Stock awarded to him including voting and dividend rights, subject to
the restrictions described in this Section 8 and subject to any other conditions
contained in the Award Agreement. Unless the Committee otherwise determines,
certificates evidencing shares of Restricted Stock will remain in the possession
of the Company until such shares are free of any restrictions under the Plan.
(d) Restriction. Shares of Restricted Stock may not be sold, assigned,
-----------
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. If a Participant ceases for any reason to be
employed by the Company or its subsidiaries, shares of Restricted Stock held by
such Participant shall be resold to the Company at their purchase price, or
forfeited to the Company if the purchase price was zero, except as specifically
set forth herein. Shares of Restricted Stock resold to the Company shall have
the status of authorized but unissued shares of Common Stock.
(1) The Committee will specify in the Award Agreement the date or dates
(which may depend upon or be related to the attainment of performance
goals or other conditions) on which the nontransferability of the
Restricted Stock and the obligation of the Participant to resell such
Stock to the Company will lapse. The Committee may at any time
accelerate such date or dates.
<PAGE>
(2) If the Participant's employment terminates because of death or total
and permanent disability, all restrictions on Restricted Stock held by
the Participant will lapse.
(e) Notice of Election. Any Participant making an election under section
------------------
83(b) of the Code with respect to a Restricted Stock Award must provide a copy
thereof to the Company within 30 days of the filing of such election with the
Internal Revenue Service.
9. CASH AWARDS
-----------
In connection with any Award hereunder the Committee may, in its sole
discretion, at the time such Award is made or at a later date, provide for and
grant a cash award to the Participant not to exceed an amount equal to (a) the
amount of any federal, state and local income tax on ordinary income for which
the Participant will be liable with respect to the Award, plus (b) an additional
amount on a grossed-up basis necessary to make him whole after tax, discharging
all his income tax liabilities arising from all payments under this Section 9.
Any payments under this Section 9 will be made at the time the Participant
incurs federal income tax liability with respect to the Award.
10. CHANGES IN COMPANY; SUBSTITUTE AWARDS
-------------------------------------
(a) Changes in Stock. In the event of a stock dividend, stock split or
----------------
combination of shares, recapitalization or other change in the Company's capital
stock, the number and kind of shares of stock or securities of the Company
subject to Awards then outstanding or subsequently granted under the Plan, the
maximum number of shares of stock or securities that may be delivered under the
Plan, the purchase price, and other relevant provisions will be appropriately
adjusted by the Committee, whose determination shall be binding on all persons.
The Committee may also adjust the number of shares subject to outstanding
Awards, the exercise price of outstanding Options and the terms of outstanding
Awards, to take into consideration material changes in accounting practices or
principles, consolidations or mergers (except those described in Section 10(b)
below), acquisitions or dispositions of stock or property or any other event if
it is determined by the Committee that such adjustment is appropriate to avoid
distortion in the operation of the Plan.
(b) Merger, Etc. In the event of a dissolution or liquidation of the
-----------
Company or a merger or consolidation in which the Company is not the surviving
corporation or its outstanding shares are converted into securities of another
corporation or exchanged for other consideration, all Options and SARs granted
hereunder will terminate, but at least 20 days prior to the effective date of
any such dissolution or liquidation (or 20 days prior to any earlier related
sale of substantially all the assets of the Company) or of any such merger or
consolidation, the Committee may arrange that the successor or surviving
corporation, if any, grant replacement or substitute replacement Options and/or
SARs.
(c) Substitute Awards. The Company may grant Awards under the Plan in
-----------------
substitution for stock and stock based awards held by employees of another
corporation who concurrently become
<PAGE>
employees of the Company or a subsidiary as the result of a merger or
consolidation of the employing corporation with the Company or a subsidiary or
the acquisition by the Company or a subsidiary of property or stock of the
employing corporation. The Committee may direct that the substitute Awards be
granted on such terms and conditions as the Committee considers appropriate.
11. GENERAL PROVISIONS
------------------
(a) No Distribution; Compliance with Legal Requirements, Etc. The
--------------------------------------------------------
Committee may require each person acquiring Common Stock pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the Common Stock without a view to distribution thereof.
The Company will not be obligated to deliver any shares of Common Stock
pursuant to an Award (1) until, in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been complied with, and
(2) if the outstanding Common Stock is at the time listed on any stock exchange,
until the shares to be delivered have been listed or authorized to be listed on
such exchange upon official notice of issuance, and (3) until all other legal
matters in connection with the issuance and delivery of such shares have been
approved by the Company's counsel. If the sale of Common Stock has not been
registered under the Securities Act of 1933, as amended, the Company may require
such representations or agreements as counsel for the Company may consider
appropriate to avoid violation of such Act and may require that the certificates
evidencing such Common Stock bear an appropriate legend restricting transfer.
Notwithstanding any provision of the Plan, the Company will be under no
obligation to deliver shares of Common Stock to an estate of a deceased
Participant, or to the person or persons to whom the Award has been transferred
by the Participant's will or the applicable laws of descent and distribution,
until the Company is satisfied as to the authority of such person or persons.
(b) Tax Withholding, Etc. Each Participant will, no later than the date
--------------------
as of which the value of an Award or of any Common Stock or other amounts
received hereunder first becomes includable in gross income for federal income
tax purposes, pay to the Company, or make arrangements satisfactory to the
Committee regarding payment of, all federal, state and local taxes required by
law to be withheld with respect to such income. The Company and its
subsidiaries will, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Participant.
The Committee may provide, in respect of any transfer of Common Stock under
an Award, that if and to the extent withholding of any federal, state or local
tax is required, the Participant may elect in such manner as the Committee
prescribes, to have the Company hold back from the transfer Common Stock having
a value calculated to satisfy such withholding obligation, or to deliver to the
Company previously owned shares of equal value. Notwithstanding the foregoing,
in the case of a Participant subject to the restrictions of Section 16(b) of the
Securities Exchange Act of 1934 no such election shall be effective unless made
in compliance with any applicable requirements of Rule 16b-3(e) or any successor
rule under such Act.
<PAGE>
(c) Continuance of Employment. For purposes of the Plan, employment of a
-------------------------
Participant will not be considered terminated (1) in the case of sick leave or
other bona fide leave of absence approved for purposes of the Plan by the
Committee, so long as the Participant's right to reemployment is guaranteed
either by statute or by contract, or (2) in the case of a transfer to the
employment of a corporation (or a parent or subsidiary corporation of such
corporation) issuing or assuming an option in a transaction to which section
424(a) of the Code would apply.
(d) Fair Market Value. Except as set forth herein, for purposes of the
-----------------
Plan, in general, "fair market value" of a share of Common Stock on any date
means the closing price on such date as reflected in the New York Stock Exchange
Composite Index. If, however, the Committee determines that a different meaning
is in any circumstance necessary in order to comply with applicable law, such
different meaning will apply in that circumstance.
(e) Employment Rights. Neither the adoption of the Plan nor the grant of
-----------------
Awards will confer upon any employee any right to continued employment with the
Company or any subsidiary or affect in any way the right of the Company or
subsidiary to terminate the employment of an employee at any time. Except as
specifically provided by the Committee in any particular case, the loss of
existing or potential profit in Awards granted under this Plan shall not
constitute an element of damages in the event of termination of the employment
of an employee even if the termination is in violation of an obligation of the
Company to the employee by contract or otherwise.
12. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION.
---------------------------------------------------------------
Neither adoption of the Plan nor the grant of Awards to a Participant shall
affect the Company's right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Common Stock as a bonus or
otherwise, or to adopt other plans or arrangements under which Common Stock may
be issued to employees.
The Committee may at any time discontinue granting Awards under the Plan.
With the consent of the Participant, the Committee may at any time cancel an
existing Award in whole or in part and grant the Participant another Award for
such number of shares of Common Stock as the Committee specifies, subject to
Section 4(b). The Committee may at any time or times amend the Plan or any
outstanding Award for the purpose of satisfying the requirements of any changes
in applicable laws or regulations or for any other purpose which may at the time
be permitted by law; or may at any time terminate the Plan as to any further
grants of Awards, provided that no such amendment shall, without the approval of
the stockholders of the Company effect a change to the Plan for which
stockholder approval would at the time be required to maintain qualification or
exemption of the Plan under Section 422 or Section 162(m)(4) of the Code.
As adopted by the Board of Directors: November 13, 1997
[As approved by the Stockholders: January 29, 1998]
<PAGE>
EXHIBIT 11
XTRA CORPORATION
STATEMENT OF THE CALCULATION OF EARNINGS PER SHARE
--------------------------------------------------
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------------------
1997 1996
----------- ----------
<S> <C> <C>
Net income (numerator) $ 18 $ 13
=========== ==========
Computation of Basic Shares Outstanding
- ---------------------------------------
(in thousands, except per share amounts)
- ----------------------------------------
Weighted average number of basic common
shares outstanding (denominator) 15,283 15,299
=========== ==========
Earnings per basic common share $ 1.18 $ 0.85
=========== ==========
Computation of Diluted Shares
- -----------------------------
Outstanding (in thousands, except per
- -------------------------------------
share amounts)
- --------------
Weighted average common shares
outstanding 15,283 15,299
Common stock equivalents for diluted EPS: 84 17
----------- ----------
Weighted average number of diluted
common shares outstanding (denominator) 15,367 15,316
=========== ==========
Earnings per diluted common share $ 1.17 $ 0.85
=========== ==========
</TABLE>
<PAGE>
EXHIBIT 12.1
XTRA CORPORATION
STATEMENT OF THE CALCULATION OF EARNINGS TO FIXED CHARGES
For the three months ended December 31, 1997 and 1996
(Millions of dollars)
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
EARNINGS
Income for operations before provision for income taxes $ 30 $ 22
Add: Fixed charges (below) 15 16
----- -----
$ 45 $ 38
===== =====
FIXED CHARGES $ 15 $ 16
===== =====
Ratio of Earnings to Fixed Charges 2.9 2.4
===== =====
</TABLE>
Note: For purposes of computing the ratio of earnings to fixed charges,
earnings represent 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.
<PAGE>
EXHIBIT 12.2
XTRA, INC.
STATEMENT OF THE CALCULATION OF EARNINGS TO FIXED CHARGES
For the three months ended December 31, 1997 and 1996
(Millions of dollars)
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
EARNINGS
Income from operations before provision for income taxes $ 30 $ 22
Add: Fixed charges (below) 15 16
---- ----
$ 45 $ 38
==== ====
FIXED CHARGES $ 15 $ 16
==== ====
Ratio of Earnings to Fixed Charges 2.9 2.4
==== ====
</TABLE>
Note: For purposes of computing the ratio of earnings to fixed charges,
earnings represent 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.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF XTRA CORPORATION FOR THE PERIOD
ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,000,000
<SECURITIES> 0
<RECEIVABLES> 82,000,000
<ALLOWANCES> 14,000,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,107,000,000
<DEPRECIATION> 685,000,000
<TOTAL-ASSETS> 1,554,000,000
<CURRENT-LIABILITIES> 0
<BONDS> 853,000,000
0
0
<COMMON> 8,000,000
<OTHER-SE> 364,000,000
<TOTAL-LIABILITY-AND-EQUITY> 1,554,000,000
<SALES> 0
<TOTAL-REVENUES> 121,000,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,000,000
<INCOME-PRETAX> 30,000,000
<INCOME-TAX> 12,000,000
<INCOME-CONTINUING> 18,000,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,000,000
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.17
</TABLE>
