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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K*
ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED
COMMISSION FILE NUMBER 1-7654
SEPTEMBER 30, 2000
XTRA CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 06-0954158
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
200 NYALA FARMS ROAD (203) 221-1005
WESTPORT, CONNECTICUT 06880 (Registrant's telephone
number)
(Address of principal executive offices)(Zip Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of exchange
Common Stock, Par Value $.50 per Share on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: none
Shares Outstanding of the Registrant's Common Stock at
November 5, 2000: 11,825,173
Aggregate market value of voting and non-voting common
Equity held by non-affiliates of the Registrant at
November 5, 2000: $540,000,000
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K X.
---
Portions of the Registrant's Annual Report to Stockholders for the fiscal year
ended September 30, 2000, of which this Form 10-K is a part, are incorporated by
reference in Parts I, II and IV. Portions of the Registrant's definitive Proxy
Statement for use at the 2001 Annual Meeting of Stockholders are incorporated by
reference in Part III.
* Exhibits to Form 10-K and Parent Company Financial Statements and Schedules
have been included only in copies of the Form 10-K filed with the Securities and
Exchange Commission.
A copy of this Form 10-K, including a list of exhibits and the Parent Company
Financial Statements and Schedules, is available free of charge to stockholders
upon written request to: Vice President and Chief Financial Officer, XTRA
Corporation, 200 Nyala Farms Road, Westport, CT 06880. In addition, upon similar
request, copies of individual exhibits will be furnished upon payment of a
reasonable fee.
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FORM 10-K TABLE OF CONTENTS
XTRA Corporation and Subsidiaries
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ITEM PAGE
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Part I
1. Business 3
2. Properties 7
3. Legal proceedings 8
4. Submission of matters to a vote of security holders 8
4A. Executive officers of the registrant 8
Part II
5. Market for the registrant's common equity and related shareholder matters 9
6. Selected financial data 9
7. Management's discussion and analysis of financial condition and results of operations 9
7A. Quantitative and qualitative disclosures about market risk 9
8. Financial statements and supplementary data 10
9. Changes in and disagreements with accountants on accounting and financial disclosure 10
Part III
10. Directors and executive officers of the registrant 11
11. Executive compensation 11
12. Security ownership of certain beneficial owners and management 11
13. Certain relationships and related transactions 11
Part IV
14. Exhibits, financial statement schedules, and reports on Form 8-K 12
Signatures 18
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PART I.
ITEM 1. BUSINESS
The discussion below contains certain forward-looking statements including
estimates of economic and industry conditions. 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 Reform Act of 1995" contained below.
XTRA Corporation (the "Company" or "XTRA") is a leading global transportation
equipment lessor with operations in the North American over-the-road, domestic
intermodal and marine container markets. The Company manages a diverse fleet of
approximately 275,000 units, constituting a net investment of approximately $1.5
billion, consisting of over-the-road ("OTR") trailers; intermodal equipment,
including chassis, intermodal (or "piggyback") trailers, and domestic
containers; and marine containers.
Transportation equipment customers lease equipment to cover cyclical, seasonal
and geographic needs and as a substitute for purchasing. In addition, capital
and capacity-constrained transportation providers often use leasing to maximize
their asset utilization and reduce capital expenditures. By maintaining large
and diversified fleets, leasing companies are able to provide customers with a
broad selection of equipment and quick response times, which reduce equipment
shortfalls and lost opportunities.
Lease Types and Rates
Transportation equipment is generally leased through operating or finance
leases. XTRA primarily participates in the operating lease segment, placing less
emphasis on finance leases because it believes the value-added component of such
leases is low. Operating leases can be either daily ("per diem") leases or term
leases. Per diem leases are for an initial period of less than one year,
generally with the option to return the equipment without prior notice. Term
leases are for an initial period of one year or more, with most being for an
original term of three to five years. Term lease agreements may have early
termination penalties that apply in the event of early redelivery, although in
most cases, equipment is not returned prior to the expiration of the lease.
Operating lessors generally offer certain customer services, which may include
roadside assistance, insurance, repair and maintenance and regulatory
compliance. Operating lessors enter into term leases due to the greater revenue
stability of longer-term leases even though long-term lease rates are typically
lower than per diem lease rates. The percentage of equipment on term leases
versus per diem leases varies widely among leasing companies, depending upon
each company's desire to have predictable revenues and cash flows. The Company's
relatively high percentage of equipment on term leases reflects a desire for
fairly consistent cash flows.
Many of XTRA's OTR per diem and term leases provide for additional fees if the
equipment is returned to a location other than the originating location. XTRA's
marine container and intermodal trailer leases allow the customers to return
equipment to a different location. Returns of marine containers are subject to
quantity and location limitations, additional drop-off fees are charged for
certain return locations, and incentives are provided to return marine
containers to more desired locations.
Lease rates depend on several factors including the type of lease, length of
term, maintenance provided, type and age of the equipment and market conditions.
In addition, in the OTR trailer business, the Company charges its customers a
fee based on the number of miles the trailer has been moved or charges actual
tire and brake wear incurred. The Company offers additional value-added services
for specified fees, including roadside assistance, various insurance
alternatives and trailer repair and maintenance.
Over the last several years, healthy market demand has allowed XTRA to maintain
a strong overall term lease portfolio. At September 30, 2000 approximately 38%
of the total fleet was leased to customers under term leases.
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Utilization
An important indicator of the Company's performance is the portion of its fleet
that is on lease at any given time. This measure, called the utilization rate,
is defined as the number of units on lease divided by the total number of units
in the fleet. The Company leases equipment both on a term and a per diem basis
in order to effectively utilize the fleet and maintain a balance between the
greater stability of revenue associated with term leases and the higher
profitability potential of per diem lease pricing. The Company actively manages
the distribution of its units and keeps a large, diversified and well-maintained
fleet of mostly standardized equipment in order to operate at high utilization
rates.
Equipment Fleet
The Company's equipment fleet has increased over time through purchases of new
equipment and through fleet acquisitions of other leasing companies. The
Company's fleet size and net investment includes equipment owned by the Company,
equipment leased-in from third parties under operating and capital leases, and
equipment leased to third parties under finance leases.
The Company's fleet and net investment consisted of the following units and net
investment at the end of the last five fiscal years:
Equipment Fleet Number of Units
---------------
At September 30,
(Units in thousands) 2000 1999 1998 1997 1996
----------------------------------------------------
Over-the-road trailers 90 85 79 78 75
Chassis 25 26 24 23 24
Intermodal trailers 18 20 22 23 24
Domestic containers 7 8 9 10 8
Marine containers 135 148 165 162 152
----------------------------------------------------
Total 275 287 299 296 283
====================================================
Equipment Fleet Net Investment/(1)/
-------------------
At September 30,
(Millions of dollars) 2000 1999 1998 1997 1996
------------------------------------------------------
Over-the-road trailers $ 999 $ 902 $ 770 $ 718 $ 632
Chassis 109 116 107 112 119
Intermodal trailers 100 126 153 168 197
Domestic containers 18 23 31 41 36
Marine containers 263 313 388 414 419
------------------------------------------------------
Total $1,489 $1,480 $1,449 $1,453 $1,403
======================================================
/(1)/ For purposes of this presentation, the net investment in equipment leased
to the Company on an operating basis represents the present value of the
remaining lease payments. The net investment in revenue equipment leased
to customers under finance leases as well as equipment owned by the
Company or leased to the Company under capital leases represents the net
carrying value of this equipment.
For information regarding business information by operating segment and
geographic area, see Note 7 of the Notes to Consolidated Financial Statements.
For additional information, including financing and capital expenditures, see
Management's Discussion and Analysis of Financial Condition and Results of
Operations. Such information is incorporated herein by reference.
Description of Operating Divisions
The Company conducts its leasing operations through three divisions: XTRA Lease,
XTRA Intermodal and XTRA International.
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XTRA Lease: General
XTRA Lease, the Company's OTR trailer business operation, leases trailers to
contract and common motor carriers and to private fleet owners throughout North
America. XTRA Lease's fleet includes approximately 87,000 trailers, primarily of
dry cargo vans 48' and 53' long by 102" wide. For the fiscal year ended
September 30, 2000, the average equipment utilization rate for the OTR business
was 86%. Approximately 38% of the XTRA Lease units were leased on a term basis
as of September 30, 2000, with the balance of units available for lease on a per
diem basis.
XTRA Lease: Competitive Environment
XTRA estimates the leasing segment of the North American OTR trailer fleet (OTR
trailers owned by leasing companies) to be approximately 365,000 units. XTRA
enjoys a strong competitive position in the OTR trailer segment and believes its
fleet of approximately 90,000 units, or 25% of the leased fleet, is exceeded by
only one competitor who has an estimated 31% share. The remainder of the
industry is fragmented and primarily spread among many smaller, regional
equipment providers with smaller fleets.
XTRA Lease: Market Trends
Management believes that the demand for leased OTR trailers will continue due to
a number of factors. The trend of private fleet owners outsourcing
transportation fleets continues to be strong as companies move towards a
variable cost approach to operating their businesses. In addition, as more
private owners seek to provide their services with fewer owned units to reduce
costs and capital commitments, they typically look to truckload carriers and
logistics companies to handle their transportation needs. Truckload carriers and
logistics companies represent a significant portion of XTRA Lease's customer
base.
An increasing number of trailers are left empty at loading docks as drivers
employ a drop-off rather than a wait-and-unload strategy to improve efficiencies
and driver and truck utilization. The result is an increasing ratio of trailers
to trucks in the freight transportation market. The Company believes that
leasing companies will increasingly be relied upon to handle these growing
trailer needs. Due to its national operating network and its strong reputation,
XTRA believes it is well positioned to capitalize on the trends favoring the use
of leasing companies.
XTRA lntermodal: General
Intermodal traffic refers to the shipment of goods in standardized equipment
through two or more modes of transportation, usually rail, truck or ship. On
certain routings, shipping goods over two or more modes of transportation is
more cost efficient. For example, over long distance, high density freight
lanes, intermodal transportation can be more cost efficient than trucking.
Chassis are wheeled rectangular frames used to transport containers over the
highway. XTRA's chassis are used as transport vehicles for marine and domestic
containers, which are loaded or unloaded at shipyards, rail terminals or
consignee locations. A container loaded on a chassis is the functional
equivalent of a trailer. Marine chassis are generally 20' or 40' in length to
accommodate marine containers, while domestic chassis are generally 48' or 53'
in length and handle domestic containers. The Company's fleet of 25,000 units
consists primarily of marine chassis leased to steamship lines, and domestic
chassis leased to railroads and motor carriers make up the remainder of the
chassis fleet. Approximately 52% of the chassis fleet was leased on a term basis
as of September 30, 2000, with the balance available for lease on a per diem
basis.
Intermodal (piggyback) trailers are designed to be carried on rail flatcars,
pulled by tractor over the highway and, to a lesser extent, transported over
water by ships and barges. The Company's intermodal trailer fleet of 18,000
units consists primarily of units 48' and 45' long by 102" wide. Approximately
26% of the intermodal
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trailer fleet was leased on a term basis as of September 30, 2000, with the
remainder of the fleet available for lease on a per diem basis.
Domestic containers are designed to transport freight over rail or on chassis
over highway within North America. XTRA's fleet of 7,000 units consists
primarily of 48' long by 102" wide units leased to North American railroads and
other domestic freight carriers. Approximately 88% of the domestic container
fleet was leased on a term basis as of September 30, 2000, with the remainder of
the fleet available for lease on a per diem basis.
XTRA Intermodal: Competitive Environment
In the leased segment of the chassis market (chassis owned by leasing
companies), the Company believes that it is the fourth largest lessor in North
America with 8% of the market; its largest competitor has an estimated 46%
market share. XTRA believes that it is the third largest intermodal trailer
lessor in North America, with 23% of all intermodal trailers, compared to an
estimated 36% for its largest competitor. In the leased segment of the domestic
container market, the Company believes that it is the third largest lessor in
the United States with a 10% market share.
XTRA Intermodal: Market Trends
Over the last decade, there has been a gradual shift in intermodal traffic from
the use of intermodal trailers to domestic containers, reflecting the railroads'
lower cost of transporting containers versus intermodal trailers. The demand for
leased chassis in North America has been growing significantly due primarily to
the growth in the use of international and domestic containers, which are placed
on chassis to transport the container to the next destination. As the use of
containerized trade continues to increase, so will the market for chassis. In
addition, the railroads and shipping lines have focused on reducing their
capital expenditures on ancillary assets in favor of more core assets such as
railcars or ships. To take advantage of this trend, the Company has established
several chassis pools at key rail interchange locations and ports in the United
States.
XTRA International: General
The Company's marine containers are standard, dry cargo 20' and 40' rectangular
steel boxes leased primarily to steamship lines for transporting freight on
ships worldwide. Container usage has exceeded world gross domestic product
growth primarily as a result of the logistical advantages and efficiencies
resulting from containerization.
During fiscal year 2000, the average utilization rate for the Company's marine
containers was 82%. Approximately 35% of XTRA's marine container fleet was
leased on a term basis at September 30, 2000, with the remainder of the fleet
available for lease on a per diem basis.
XTRA International: Competitive Environment
XTRA has outsourced the management of its international container leasing
business to Textainer Equipment Management Limited since fiscal 1999. The
Company believes that Textainer's fleet (both owned and managed units) is
approximately 900,000 twenty-foot equivalent units, making it among the world's
four largest container fleets each of whom has a market share of approximately
15% of the leasing segment of the industry.
XTRA International: Market Trends
Demand for leased containers is influenced primarily by the volume of
international and domestic trade. In recent years, container supply has exceeded
demand as a result of aggressive industry spending for new, lower cost
containers. With growth in demand and less supply growth, supply and demand were
in better balance in fiscal 2000 than the prior few years.
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Environmental Matters
Although the nature of the Company's operations at its owned and leased
facilities is such that it is not a heavily regulated entity pursuant to Federal
and state environmental laws and regulations, the Company is required to comply
with such laws and regulations, including laws and regulations related to the
generation, handling, storage, transportation, treatment and disposal of
hazardous and solid wastes. In addition, under various Federal, state and local
environmental laws, ordinances and regulations, a current or previous owner or
operator of real property may become liable for the costs of removal or
remediation of hazardous or toxic substances, typically without regard to fault.
The Illinois Environmental Protection Agency and the United States Environmental
Protection Agency have notified the Company of alleged environmental
contamination of its Fairmont City, Illinois property that resulted from the
prior owners' zinc smelting operations. As a result, the Company has taken
certain actions to suppress dust that have significantly reduced the level of
airborne contaminants at the site. Although the Company is not yet able to
accurately determine the nature and/or cost of any proposed remediation action
at the site, based on the Company's current understanding of the nature of the
contamination at the site, the Company does not believe that the ultimate
resolution of this matter will have a material adverse effect on the Company's
results of financial position, operations or cash flows.
The Company believes that the remainder of its facilities are in compliance in
all material respects with all applicable United States Federal, state and local
environmental laws, ordinances and regulations, as well as comparable laws and
regulations outside the United States.
Regulation
The Company's over-the-road and intermodal equipment is subject to various
federal and state licensing and operating regulations as well as to various
industry standards. The Federal Highway Administration (the "FHWA") published a
rule, effective June 1, 1999 requiring motor carriers engaged in interstate
commerce to install retroreflective tape or reflex reflectors on the sides and
rear of all trailers that (i) were manufactured prior to December 1, 1993, (ii)
have an overall width of 80 inches or more and (iii) have a gross vehicle weight
rating of 10,000 lbs. or more. The FHWA has mandated the installation be
completed by June 1, 2001. The Company currently estimates that as of September
30, 2000 remaining expenditures for the Company to comply with the regulation
will amount to approximately $3 million. Costs to install the reflective tape
have been and will continue to be capitalized and depreciated over the remaining
life of the specific trailers.
Employees
The Company had 722 employees at September 30, 2000.
Corporate Organization
The Company was organized in 1957. XTRA's corporate management offices are
located at 200 Nyala Farms Road, Westport, CT 06880 (telephone number 203-221-
1005).
XTRA, Inc., a wholly-owned direct subsidiary of XTRA Corporation, owns
substantially all of the Company's transportation equipment and conducts the
Company's leasing business through certain of its subsidiaries and /or branch
offices pursuant to management service agreements.
ITEM 2. PROPERTIES
The Company maintains 85 facilities for the storage and distribution of its OTR
and intermodal equipment throughout North America, occupying 682 acres, of which
388 acres are owned. These facilities occupy 2 to 148 acres. The Company also
maintains 8 chassis pools at various customer locations.
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ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company is involved in various claims and legal actions
arising out of the normal course of its business. Currently, there are no
pending claims or actions that management believes will have a material adverse
effect on the Company's financial position, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to stockholders of the Company during the fourth quarter
of 2000.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company, the age of each, and the period during
which each has served in his/her present office are as follows:
Lewis Rubin (62) - President and Chief Executive Officer. Mr. Rubin was
President and Chief Executive Officer of Flexi-Van Corporation, a company
engaged in the leasing of intermodal transportation equipment, from 1981 to
1983. He served as President and Chief Executive Officer of Gelco CTI Container
Services, a subsidiary of Gelco Corporation, and as an Executive Vice President
of Gelco Corporation from 1984 to 1988. Mr. Rubin was elected President and
Chief Operating Officer of the Company in 1990. He was elected to his present
position in 1990.
Jordan L. Ayers (41) - Vice President, XTRA Intermodal. Mr. Ayers joined the
Company in 1994 as Vice President, Sales, XTRA Intermodal and was promoted to
Vice President, Sales and Marketing, XTRA Intermodal in 1997. He was elected
Divisional Executive Vice President, XTRA Intermodal in 1999. He was elected to
his present position in 1999. Mr. Ayers was previously employed by Transamerica
Leasing, a major intermodal equipment lessor.
Jeffrey R. Blum (48) - Vice President, Planning and Development. Mr. Blum joined
the Company in 1995 as Vice President of Human Resources and became Vice
President, Administration and Human Resources in 1996. He was elected to his
current position in 1999. Prior to 1995, Mr. Blum served in similar capacities
at First Winthrop Corporation from 1993 to 1995 and Signal Capital Corporation
prior to 1993.
William H. Franz (49) - Vice President, XTRA Lease. Mr. Franz was previously
employed by two large over-the-road lessors, Transport International Pool and
Strick Lease. He joined the Company in 1992 and was elected Divisional Executive
Vice President, XTRA Lease in 1993. He was elected to his present position in
1993.
Stephanie L. Johnson (36) - Vice President and Treasurer. Ms. Johnson joined the
Company in January 2000 as Vice President and Treasurer. Previously she was
Director of Finance for Cullman Ventures, Inc., a calendar manufacturer, from
1998 to 1999. Ms. Johnson served in various corporate finance positions at
General Signal Corporation from 1992 to 1997 and Fortune Brands, Inc. prior to
1992.
A. Scott Mansolillo (37) - Vice President, General Counsel and Secretary. Mr.
Mansolillo joined the Company in January 2000 as Vice President, General Counsel
and Secretary. Prior to joining the Company, Mr. Mansolillo was previously
employed by The Hartford Financial Services Group as Assistant Vice President,
Capital Planning and Development from 1998 to 2000, and as Senior Corporate
Counsel, Law Department from 1992 to 1998.
Michael J. Soja (51) - Vice President and Chief Financial Officer. Mr. Soja
joined the Company as Assistant Controller in 1974, was elected Controller in
1978 and Vice President in 1979. He was elected Vice President, Finance and
Administration in 1981 and Vice President, Finance and Treasurer in 1990. Mr.
Soja was elected to his present position in 1990.
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All terms of office expire as of the date of the Board of Directors' meeting
following the next Annual Meeting of Stockholders and until their respective
successors are elected and qualified.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is listed on the New York Stock Exchange and trades
under the symbol "XTR". The approximate number of stockholders of record as of
November 5, 2000 was 605. The following table sets forth the range of high and
low sale prices of the Company's common stock on the New York Stock Exchange
Composite Tape during the fiscal years ended September 30, 1999 and 2000.
High Low
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1999: First Quarter $49.2500 $37.5000
Second Quarter 43.5000 37.5000
Third Quarter 46.2500 37.7500
Fourth Quarter 47.8125 39.7500
2000: First Quarter 42.8750 39.5625
Second Quarter 46.7500 36.3750
Third Quarter 47.5000 38.2500
Fourth Quarter 45.2500 38.7500
The Company does not currently pay cash dividends on its common stock, and has
no plans to do so. Future dividend policy will be determined by the Board of
Directors and will depend on the earnings, financial condition, and cash
requirements of the Company and other relevant factors existing at the time.
The Company's sources of funds for the payment of dividends on its common stock
are advances and dividends from its direct and indirect wholly owned
subsidiaries, including XTRA, Inc. The primary sources of funds for XTRA, Inc.
are cash flows from operations, advances from its subsidiaries, and external
financing. The Company's loan agreements contain covenants that restrict the
payment of dividends or repurchases of common stock by the Company and certain
loan agreements contain covenants that restrict advances to and payment of
dividends to the Company by its subsidiaries, including XTRA, Inc. Under the
most restrictive provisions of the Company's loan agreements, the combined
amount of repurchases of common stock and cash dividends that could be paid on
the Company's common stock was limited to $114 million at September 30, 2000.
ITEM 6. SELECTED FINANCIAL DATA
This information is set forth in the table appearing on page 1 of the Company's
2000 Annual Report, which table is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item appears in the Company's 2000 Annual
Report beginning at page 20 and is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company finances its operations principally with long-term financing. The
Company borrows on a short-term basis primarily by issuing commercial paper,
which is backstopped by unused borrowing capacity under a
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$270 million Revolving Credit Agreement (see Note 3 of the Notes to Consolidated
Financial Statements). Such short-term borrowings, backstopped by the Revolving
Credit Agreement, are classified as long-term debt, and constituted
approximately 10% of debt at September 30, 2000. The balance of debt represented
longer-term borrowings, primarily at a fixed rate. The Company estimates that
the fair value of its long-term debt at September 30, 2000 was $779 million (see
Note 9 of the Notes to Consolidated Financial Statements). A 10% increase in
interest rates (from 7% to 7.7%, for example) would result in an $18 million
decrease in the fair value of the debt.
The Company's earnings are affected by fluctuations in the exchange rate of the
U.S. dollar as compared to the Mexican peso and Canadian dollar. These earnings
fluctuations are driven primarily by the Company's investments in, and financing
of, its foreign operations, rather than by those operations' operating results.
Historically, the fluctuations in foreign exchange rates have not had a material
impact on the Company's financial position, results of operations or cash flows.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
For the Financial Statements and Supplementary Data for XTRA Corporation and its
subsidiaries, see Index to Financial Statements on page 19 of the Company's 2000
Annual Report, which Financial Statements and Supplementary Data are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
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PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Directors - Information with respect to all directors may be found in the
Company's definitive Proxy Statement for the 2001 Annual Meeting of
Stockholders (the "2001 Proxy Statement") under the caption "Information
with Respect to Director Nominees", which is to be filed with the
Securities and Exchange Commission. Such information is incorporated herein
by reference.
(b) Executive Officers - Information with respect to executive officers of the
registrant appears in Item 4A of this Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
This information is contained in the 2001 Proxy Statement under the captions
"Executive Compensation" and "Compensation of Directors". Such information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is contained in the 2001 Proxy Statement under the captions
"Stock Ownership by Directors and Executive Officers" and "Beneficial Ownership
of more than Five Percent of Voting Securities". Such information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is contained in the 2001 Proxy Statement under the captions
"Information with Respect to Director Nominees" and "Certain Transactions".
Such information is incorporated herein by reference.
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PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) Required exhibits are included only in the Form 10-K filed with the
Securities and Exchange Commission.
(b) The Company filed a Current Report on Form 8-K, dated November 7, 2000,
which disclosed certain financial information for the fiscal fourth quarter
ended September 30, 2000.
(c) For Financial Statements and Schedule, see Index to Financial Statements on
page 19 of the Company's 2000 Annual Report, which Financial Statements and
Schedule are incorporated herein by reference.
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SCHEDULE 1
XTRA CORPORATION
(PARENT COMPANY ONLY)
BALANCE SHEETS
SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
-----------------------------------------
(Millions of dollars, except per share amounts)
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2000 1999
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Assets
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Investment in subsidiary $ 355 $ 335
Advances to subsidiaries 4 7
Property and equipment, net 9 4
----- -----
$ 368 $ 346
===== =====
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Accrued expenses $ 7 $ 9
----- -----
Total liabilities 7 9
Stockholders' equity:
Preferred stock, without par value;
total authorized: 3,000,000 shares
Common stock, par value $.50 per share; authorized:
30,000,000 shares; issued and outstanding;
11,880,172 shares at September 30, 2000
and 12,812,400 at September 30, 1999 6 6
Capital in excess of par value 1 -
Retained earnings 365 341
Unearned compensation - restricted stock (2) (3)
Accumulated other comprehensive income (9) (7)
----- -----
Total stockholders' equity 361 337
----- -----
$ 368 $ 346
===== =====
</TABLE>
The accompanying Notes A, B, and C and the Notes to Consolidated Financial
Statements are an integral part of these consolidated financial statements.
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SCHEDULE 1
XTRA CORPORATION
(PARENT COMPANY ONLY)
INCOME STATEMENTS
FOR THE THREE YEARS ENDED
SEPTEMBER 30, 2000
------------------
(Millions of dollars, except per share amounts)
<TABLE>
<CAPTION>
2000 1999 1998
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Equity in earnings of subsidiaries $ 61 $ 38 $ 59
----- ----- -----
61 38 59
Other (income) expense (2) 3 (1)
----- ----- -----
Net income $ 63 $ 35 $ 60
===== ===== =====
</TABLE>
The accompanying Notes A, B, and C and the Notes to Consolidated Financial
Statements are an integral part of these consolidated financial statements.
14
<PAGE>
SCHEDULE 1
XTRA CORPORATION
(PARENT COMPANY ONLY)
STATEMENT OF CASH FLOWS
FOR THE THREE YEARS ENDED
SEPTEMBER 30, 2000
(Millions of dollars)
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Cash flows from operations:
Net income $ 63 $ 35 $ 60
Add (deduct) non-cash income and expense items:
Equity in earnings of subsidiaries (61) (38) (59)
Depreciation and amortization, net 2 - -
Add (deduct) other cash items:
Dividends received from subsidiary 40 114 5
Net change in receivables, other assets, accounts
payable and accrued expenses (1) 4 (1)
------ ------ ------
Total cash provided from operations 43 115 5
------ ------ ------
Cash used for investment activities:
Additions to property and equipment (7) (4) -
------ ------ ------
Total cash used for investment activities (7) (4) -
------ ------ ------
Cash flows from financing activities:
Proceeds from exercise of stock options 3 - 5
Repurchase of common stock, net (39) (111) -
Dividends paid - - (10)
------ ------ ------
Total cash used for financing activities (36) (111) (5)
------ ------ ------
Net increase (decrease) in cash - - -
Cash at beginning of period - - -
------ ------ ------
Cash at end of period $ - $ - $ -
====== ====== ======
</TABLE>
15
<PAGE>
XTRA CORPORATION
NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS
(A) Summary of Significant Accounting Policies
------------------------------------------
Accounting for Investment in Subsidiary
XTRA Corporation, the Parent Company, recorded its investment in its
subsidiary, XTRA, Inc., at cost plus its equity in the undistributed
earnings of this subsidiary.
Operating Expenses
Primarily all administrative and interest expenses incurred by the Parent
Company are charged to its direct and indirect wholly-owned subsidiaries.
The reimbursements are presented net in other income and expense and amount
to $(2) million, $3 million and $(1) million in 2000, 1999 and 1998,
respectively.
(B) Capital Stock
-------------
Dividends
XTRA Corporation declared cash dividends of $.64 per share in the year
ended September 30, 1998. XTRA Corporation paid out cash dividends to
stockholders totaling $10 million during fiscal 1998. The principal source
of dividends for the Parent Company are funds advanced from its direct and
indirect wholly-owned subsidiaries, including XTRA, Inc.
Repurchase of Common Stock
The Parent Company's Board of Directors had authorized the repurchase of up
to $100 million of its common stock in 1999. As of November 5, 2000, the
Parent Company had repurchased $31 million of common stock under the $100
million authorization.
(C) Debt and Transfers to Subsidiaries
----------------------------------
The Parent Company has fully and unconditionally guaranteed all publicly-
issued debt of its indirect wholly-owned subsidiary, including the
Revolving Credit Agreement, Series Notes and Term Loans. (See Note 3 of
the Parent Company's consolidated 2000 Annual Report.)
16
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of XTRA Corporation:
We have audited in accordance with auditing standards generally accepted in the
United States, the financial statements included in XTRA Corporation's Annual
Report to stockholders incorporated by reference in the Company's Annual Report
on Form 10-K for the year ended September 30, 2000, and have issued our report
thereon dated November 5, 2000. Our audit was made for the purpose of forming
an opinion on those statements taken as a whole. The schedule listed in the
index to financial statements and incorporated by reference in the Company's
Annual Report on Form 10-K for the year ended September 30, 2000, is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
St. Louis, Missouri
November 5, 2000
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
XTRA Corporation
(Registrant)
By /s/ Lewis Rubin
President and Chief Executive Officer
November 5, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
______________________________________
/s/ Robert B. Goergen Chairman of the November 5, 2000
Board of Directors
______________________________________
/s/ Lewis Rubin President, Chief Executive November 5, 2000
Officer and Director
______________________________________
/s/ Michael J. Soja Vice President November 5, 2000
and Chief Financial Officer
______________________________________
/s/ Michael D. Bills Director November 5, 2000
______________________________________
/s/ H. William Brown Director November 5, 2000
______________________________________
/s/ Michael N. Christodolou Director November 5, 2000
______________________________________
/s/ Martin L. Solomon Director November 5, 2000
</TABLE>
18
<PAGE>
EXHIBIT INDEX
XTRA Corporation Form 10-K
(for fiscal year ended 9/30/00)
Exhibit Item
3.1 Restated Certificate of Incorporation of the Registrant (filed with the
Securities and Exchange Commission as Exhibit 3.1 to Registrant's Annual
Report on Form 10-K for the year ended September 30, 1989, and
incorporated herein by reference).
3.1.1 Certificate of Elimination of Designation, Preference and Rights of
Series A Participating Preferred Stock (filed with the Securities and
Exchange Commission as Exhibit 3.1 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1991, and incorporated herein
by reference).
3.1.2 Certificate of Elimination of Designation, Preference and Rights of
$1.9375 Series B Cumulative Convertible Preferred Stock (filed with the
Securities and Exchange Commission on March 5, 1993 as Exhibit 4.5 to
Registrant's Registration Statement on Form S-3 (file No. 33-59132), and
incorporated herein by reference).
3.1.3 Certificate of Amendment of Restated Certificate of Incorporation (filed
with the Securities and Exchange Commission on March 5, 1993 as Exhibit
4.4 to Registrant's Registration Statement on Form S-3 (file No. 33-
59132), and incorporated herein by reference).
3.1.4 Certificate of Elimination of Designation, Preference and Rights of the
Series C Cumulative Redeemable Exchangeable Preferred Stock (filed with
the Securities and Exchange Commission on July 26, 1994 as Exhibit 4.5
to Registrant's Registration Statement on Form S-3 (file No. 33-54747),
and incorporated herein by reference).
3.2 Amended and Restated By Laws of the Registrant, as amended through
January 24, 1996 (filed with the Securities and Exchange Commission as
Exhibit 3(b) to Registrant's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1995, and incorporated herein by reference).
4.1 Indenture, dated as of February 1, 1989, between XTRA, Inc., the
Registrant and Chemical Bank, and First Supplemental Indenture, dated as
of February 1, 1989, between XTRA, Inc., XTRA Corporation and Chemical
Bank (filed with the Securities and Exchange Commission as Exhibits 4.1
and 4.2, respectively, to Registrant's Quarterly Report on Form 10-Q for
the quarter ended December 31, 1988, and incorporated herein by
reference).
4.1.1 Second Supplemental Indenture, dated as of December 10, 1991, to the
Indenture identified in Exhibit 4.1 above, between XTRA, Inc., the
Registrant and Chemical Bank (filed with the Securities and Exchange
Commission as Exhibit 4.4.1 to Registrant's Annual Report on Form 10-K
for the year ended September 30, 1991, and incorporated herein by
reference).
4.1.2 Third Supplemental Indenture, dated as of November 1, 1992, to the
Indenture identified in Exhibit 4.1 above, between XTRA, Inc., the
Registrant and Chemical Bank (filed with the Securities and Exchange
Commission as Exhibit 4.2 to Registrant's Quarterly Report on Form 10-Q
for the Quarter ended December 31, 1992, and incorporated herein by
reference).
4.1.3 Fourth Supplemental Indenture, dated as of September 30, 1994, to the
Indenture identified in Exhibit 4.1 above, between XTRA, Inc., the
Registrant and Chemical Bank (filed with the Securities and
19
<PAGE>
Exchange Commission as Exhibit 4.1.3 to Registrant's Annual Report on
Form 10-K for the year ended September 30, 1994, and incorporated herein
by reference).
4.2 Indenture, dated as of August 15, 1994, between XTRA, Inc., the
Registrant and the First National Bank of Boston (filed with the
Securities and Exchange Commission as Exhibits 4.1 to Registrant's
Current Report on Form 8-K dated August 15, 1994, and incorporated
herein by reference).
4.2.1 First Supplemental Indenture, dated as of September 30, 1994, to the
Indenture identified in Exhibit 4.2 above, between XTRA, Inc., the
Registrant and the First National Bank of Boston (filed with the
Securities and Exchange Commission as Exhibit 4.2.1 to Registrant's
Annual Report on Form 10-K for the year ended September 30, 1994, and
incorporated herein by reference).
4.2.2 Second Supplemental Indenture, dated as of May 16, 1997, to the
Indenture identified in Exhibit 4.2 above, between XTRA, Inc., the
Registrant and State Street Bank and Trust Company (filed with the
Securities and Exchange Commission as Exhibit 4.2.2 to Registrant's
Annual Report on Form 10-K for the year ended September 30, 1997, and
incorporated herein by reference).
4.2.3 Form of fixed-rate Series C Medium-Term Note (filed with the Securities
and Exchange Commission as Exhibit 4.9 to Registrant's Post-Effective
Amendment No. 1 to Registration Statement on Form S-3 (file No. 33-
65293), and incorporated herein by reference).
4.2.4 Form of floating-rate Series C Medium-Term Note (filed with the
Securities and Exchange Commission as Exhibit 4.10 to Registrant's Post-
Effective Amendment No. 1 to Registration Statement on Form S-3 (file
No. 33-65293), and incorporated herein by reference).
4.3 Credit Agreement, dated as of June 30, 1995, among XTRA, Inc., Bank of
America Illinois and Each of the Other Financial Institutions From Time
To Time Parties Thereto, with Bank of America National Trust and Savings
Association as Administrative Agent and The First National Bank of
Boston as Documentation Agent (filed with the Securities and Exchange
Commission as Exhibit 2.2 to Registrant's Current Report on Form 8-K
dated July 14, 1995, and incorporated herein by reference).
4.3.1 Guaranty, dated June 30, 1995 by the Registrant (filed with the
Securities and Exchange Commission as Exhibit 2.3 to Registrant's
Current Report on Form 8-K dated July 14, 1995, and incorporated herein
by reference).
4.3.2 First Amendment, dated as of June 28, 1996, to the Credit Agreement
identified in Exhibit 4.3 above, among Bank of America Illinois and Each
of the Other Financial Institutions From Time To Time Parties Thereto,
with Bank of America National Trust and Savings Association as
Administrative Agent and The First National Bank of Boston as
Documentation Agent (filed with the Securities and Exchange Commission
as Exhibit 4.3.2 to Registrant's Annual Report on Form 10-K for the year
ended September 30, 1996, and incorporated herein by reference).
4.3.3 Second Amendment, dated as of June 19, 1997, to the Credit Agreement
identified in Exhibit 4.3 above, among Bank of America Illinois and Each
of the Other Financial Institutions From Time to Time Parties Thereto,
with Bank of America National Trust and Savings Association as
Administrative Agent and BankBoston, N.A. as Documentation Agent (filed
with the Securities and Exchange Commission as Exhibit 4 to Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, and
incorporated herein by reference).
4.3.4 Amended and Restated Credit Agreement, dated as of June 30, 1999, to the
Credit Agreement identified in Exhibit 4.3 above, among XTRA, Inc. Bank
of America National Trust and Savings Association and Each of the Other
Financial Institutions From Time to Time Parties Hereto, as Banks with
Bank of
20
<PAGE>
America National Trust and Savings Association as Administrative Agent
and BankBoston, N.A., as Syndication Agent, and The First National Bank
of Chicago, as Documentation Agent (filed with the Securities and
Exchange Commission as Exhibit 4.1 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999, and incorporated herein
by reference).
Note: Registrant agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of any other instrument with respect to
long-term debt of the registrant and its subsidiaries. Such other
instruments are not filed herewith because no such instrument relates to
outstanding debt in amount greater than 10% of the total assets of the
Registrant and its subsidiaries on a consolidated basis.
10.1 Agreement and Plan of Reorganization, dated as of July 26, 1992, among
Registrant, ST Trailer Corp., Distribution International Corporation
("DI"), Strick Corporation and certain individuals owning approximately
70% of the capital of stock of DI (filed with the Securities and
Exchange Commission as Exhibit 2.1 to Registrant's Current Report on
Form 8-K dated August 4, 1992, and incorporated herein by reference).
10.2 U.S. Fleet Finance Services Agreement dated as of October 1, 1994
between XTRA, Inc., and XTRA Intermodal, Inc. (filed with the Securities
and Exchange Commission as Exhibit 10.2 to Registrant's Annual Report on
Form 10-K for the year ended September 30, 1994, and incorporated herein
by reference).
10.3 U.S. Fleet Finance Services Agreement dated as of October 1, 1994
between XTRA, Inc., and XTRA Lease Inc. (filed with the Securities and
Exchange Commission as Exhibit 10.3 to Registrant's Annual Report on
Form 10-K for the year ended September 30, 1994, and incorporated herein
by reference).
10.4 Fleet Finance Services Agreement dated as of July 1, 1995 between XTRA,
Inc., and XTRA International Ltd. (filed with the Securities and
Exchange Commission as Exhibit 10.4 to Registrant's Annual Report on
Form 10-K for the year ended September 30, 1994, and incorporated herein
by reference).
10.5 Equipment Management Services Agreement, dated as of April 1, 1999
between XTRA International, Ltd. And Textainer Equipment Management
Limited (filed with the Securities and Exchange Commission as Exhibit 10
to Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999, and incorporated herein by reference).
10.6 364-day Credit Agreement, dated as of September 28, 2000, among XTRA,
Inc., Bank of America, N.A. and Each of the Other Financial Institutions
From Time to Time Parties Thereto, with Bank of America, N.A. as
Administrative Agent filed herewith.
10.7 Five-Year Credit Agreement, dated as of September 28, 2000, among XTRA,
Inc., Bank of America, N.A. and Each of the Other Financial Institutions
From Time to Time Parties Thereto, with Bank of America, N.A. as
Administrative Agent filed herewith.
10.8* Strategic Business Agreement, dated September 11, 2000, between Terion,
Inc. and XTRA Lease, Inc. filed herewith.
* Confidential treatment requested for portions of this exhibit. An unredacted
version of this exhibit has been filed separately with the Commission.
21
<PAGE>
EXECUTIVE COMPENSATION PLANS
10.9 1991 Stock Option Plan for Non-Employee Directors, as amended through
November 14, 1996 (filed with the Securities and Exchange Commission as
Exhibit 10.3 to Registrant's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1996, and incorporated herein by reference).
10.10 1987 Stock Incentive Plan, as amended through November 16, 1995 (filed
with the Securities and Exchange Commission as Exhibit 10.1 to
Registrant's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1995, and incorporated herein by reference).
10.11 Deferred Director Fee Option Plan (filed with the Securities and
Exchange Commission as Exhibit 10.5 to Registrant's Annual Report on
Form 10-K for the year ended September 30, 1993, and incorporated herein
by reference).
10.12 Deferred Compensation Plan for Non-Employee Directors, effective January
1, 1994 (filed with the Securities and Exchange Commission as Exhibit
10.6 to Registrant's Annual Report on Form 10-K for the year ended
September 30, 1993, and incorporated herein by reference).
10.13 Deferred Compensation Plan for Senior Executives, effective January 1,
1994 (filed with the Securities and Exchange Commission as Exhibit 10.7
to Registrant's Annual Report on Form 10-K for the year ended September
30, 1993, and incorporated herein by reference).
10.14 Form of Indemnification Agreement entered into between the Registrant
and certain former Directors and certain former and current officers of
the Registrant and its subsidiaries (filed with the Securities and
Exchange Commission on June 11, 1987 as Exhibit 10 to Registrant's
Registration Statement on Form S-3 (file No. 33-14996), and incorporated
herein by reference).
10.15 Individual Pension Agreement, dated as of July 1, 1994, between the
Registrant and Lewis Rubin (filed with the Securities and Exchange
Commission as Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1994, and incorporated herein by
reference).
10.16 Economic Profit Incentive Plan (filed with the Securities and Exchange
Commission as Exhibit 10.13 to Registrant's Annual Report on Form 10-K
for the year ended September 30, 1997, and incorporated herein by
reference).
10.17 Amended and Restated Severance Agreement, dated as of June 18, 1999,
between the Registrant and Lewis Rubin (filed with the Securities and
Exchange Commission as Exhibit 10.15 to Registrant's Annual Report on
Form 10-K for the year ended September 30, 1999, and incorporated herein
by reference).
10.18 Amended and Restated Severance Agreement, dated as of June 18, 1999,
between the Registrant and William H. Franz (filed with the Securities
and Exchange Commission as Exhibit 10.16 to Registrant's Annual Report
on Form 10-K for the year ended September 30, 1999, and incorporated
herein by reference).
10.19 Amended and Restated Severance Agreement, dated as of June 18, 1999,
between the Registrant and Michael J. Soja (filed with the Securities
and Exchange Commission as Exhibit 10.17 to Registrant's Annual Report
on Form 10-K for the year ended September 30, 1999, and incorporated
herein by reference).
10.20 Amended and Restated Severance Agreement, dated as of June 18, 1999,
between the Registrant and Jeffrey R. Blum (filed with the Securities
and Exchange Commission as Exhibit 10.18 to Registrant's Annual Report
on Form 10-K for the year ended September 30, 1999, and incorporated
herein by reference).
22
<PAGE>
10.21 1997 Stock Incentive Plan, as amended (filed with the Securities and
Exchange Commission on March 15, 2000 and incorporated herein by
reference).
10.22 1998 General Stock Incentive Plan filed herewith.
12.1 Statement re: computation of ratios (XTRA Corporation).
13.1 Five Year Selected Financial Data.
13.2 Management's Discussion and Analysis of Financial Condition and Results
of Operations for the Three Years Ended September 30, 2000 (not covered
by the Report of Independent Public Accountants).
13.3 XTRA Corporation and Subsidiaries Consolidated Financial Statements.
21 Subsidiaries of Registrant.
23 Consent of Independent Public Accountants.
27 Financial Data Schedule.
23
