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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 THE QUARTERLY PERIOD ENDED MARCH 31, 1997
Commission file number 1-11862
INTERPOOL, INC.
(Exact name of registrant as specified in the charter)
DELAWARE 13-3467669
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
211 COLLEGE ROAD EAST, PRINCETON, NEW JERSEY 08540
(Address of principal executive office) (Zip Code)
(609) 452-8900
(Registrant's telephone number including area code)
As of May 12, 1997, 27,551,728 shares of common stock, $.001 par value were
outstanding.
Indicate by check (check) 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 for the past 90 days Yes check No
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INTERPOOL, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
PART I - FINANCIAL INFORMATION:
Introduction to Financial Statements ........................ 3
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996 ...................... 4
Consolidated Statements of Income
For the Three Months ended March 31, 1997 and 1996 ........ 5
Consolidated Statements of Cash Flows
For the Three Months ended March 31, 1997 and 1996 ........ 6
Consolidated Statements of Stockholders' Equity
For the Three Months ended March 31, 1997 ................. 7
Notes to Consolidated Financial Statements .................. 8 - 9
Management's Discussion and Analysis of
Financial Condition and Results of Operations ............. 10 - 12
PART II - OTHER INFORMATION:
Item 5: Other Information ................................ 13
Item 6: Exhibits and Reports on Form 8-K ................. 14
Signatures................................................... 15
Exhibits .................................................... 16
</TABLE>
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PART I - FINANCIAL INFORMATION
INTERPOOL, INC. AND SUBSIDIARIES
FINANCIAL STATEMENTS
The condensed financial statements of Interpool, Inc. and Subsidiaries
(the "Company") included herein have been prepared by the registrant, 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, although the Registrant believes that the disclosures are adequate
to make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's latest Annual Report
on Form 10-K. These condensed financial statements reflect, in the opinion of
management, all adjustments (consisting only of 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 for the full year.
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INTERPOOL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
CASH AND SHORT-TERM INVESTMENTS ........................................... $ 52,697 $ 45,333
MARKETABLE SECURITIES ..................................................... 11,027 24,722
ACCOUNTS AND NOTES RECEIVABLE, less allowance of
$2,499 and $2,506 ......................................................... 32,396 28,818
NET INVESTMENT IN DIRECT FINANCING LEASES ................................. 278,575 264,955
OTHER RECEIVABLES ......................................................... 15,884 14,721
LEASING EQUIPMENT, at cost ................................................ 645,658 650,734
Less--accumulated depreciation and amortization ........................... (114,231) (109,363)
--------- ---------
LEASING EQUIPMENT, net .................................................... 531,427 541,371
OTHER ASSETS .............................................................. 20,968 19,498
--------- ---------
TOTAL ASSETS .......................................................... $ 942,974 $ 939,418
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
ACCOUNTS PAYABLE AND ACCRUED EXPENSES ..................................... $ 18,015 $ 38,338
INCOME TAXES
Current ............................................................... 1,000 978
Deferred .............................................................. 14,446 14,353
--------- ---------
15,446 15,331
DEFERRED INCOME ........................................................... 1,800 1,970
DEBT AND CAPITAL LEASE OBLIGATIONS:
Due within one year ................................................... 73,084 80,831
Due after one year .................................................... 524,688 521,873
--------- ---------
597,772 602,704
COMPANY-OBLIGATED MANDATORY REDEEMABLE
PREFERRED SECURITIES IN GRANTOR TRUSTS
(75,000 shares 9 7/8% Capital Securities outstanding, liquidation
preference $75,000 at March 31, 1997) ................................. 75,000 --
MINORITY INTEREST IN EQUITY OF SUBSIDIARIES ............................... 542 529
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.001 per share; 1,000,000 authorized,
none issued at March 31, 1997 ......................................... -- --
5 3/4% Cumulative Convertible Preferred stock, par value $.001 per share;
760,054 shares authorized, 758,694 outstanding, liquidation
preference $75,869 at December 31, 1996, none at March 31, 1997 .... -- 1
Common stock, par value $.001 per share; 100,000,000 shares
authorized, 27,551,728 outstanding at March 31, 1997 and
25,953,345 at December 31, 1996 ..................................... 28 26
Additional paid-in capital ............................................. 124,046 170,172
Retained earnings ...................................................... 109,860 109,837
Net unrealized gain on marketable securities ........................... 465 510
--------- ---------
Total stockholders' equity .......................................... 234,399 280,546
--------- ---------
Total liabilities and stockholders' equity ....................... $ 942,974 $ 939,418
========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets
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INTERPOOL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
---- ----
<S> <C> <C>
REVENUES ........................................................................ $38,176 $35,179
COSTS AND EXPENSES:
Lease operating and administrative expenses ..................................... 8,343 7,562
Depreciation and amortization of leasing equipment .............................. 8,531 7,937
Gain on sale of leasing equipment ............................................... (329) (271)
Interest expense, net ........................................................... 11,062 9,853
Non-recurring charge ............................................................ -- 2,392
------- -------
27,607 27,473
------- -------
Income before provision for income taxes and extraordinary loss ................. 10,569 7,706
Provision for income taxes ...................................................... 1,475 1,650
------- -------
Income before extraordinary loss ................................................ 9,094 6,056
Extraordinary item - loss on early retirement of debt, net of tax benefit of $225 328 --
------- -------
NET INCOME ...................................................................... $ 8,766 $ 6,056
======= =======
Income per share before extraordinary loss and premium paid on redemption
of preferred stock:
Primary ...................................................................... $ 0.30 $ 0.28
Fully diluted ................................................................ NA $ 0.27
Loss per share on extraordinary item:
Primary ...................................................................... $ (0.01) NA
Fully diluted ................................................................ NA NA
Premium paid on redemption of preferred stock:
Primary ...................................................................... $ (0.24) NA
Fully diluted ................................................................ NA NA
NET INCOME PER SHARE;
Primary ...................................................................... $ 0.04 $ 0.28
Fully diluted ................................................................ NA $ 0.27
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (in Thousands):
Primary ...................................................................... 27,491 26,342
Fully diluted ................................................................ NA 30,884
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
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INTERPOOL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................................ $ 8,766 $ 6,056
Adjustments to reconcile net income to net cash provided by
Operating activities:
Non-recurring charge ............................................ -- 2,392
Depreciation and amortization ................................... 8,984 8,119
Gain on sale of leasing equipment ............................... (329) (271)
Collections on direct financing leases .......................... 22,503 18,080
Income recognized on direct financing leases .................... (8,308) (6,964)
Provision for uncollectible accounts ............................ 379 212
Changes in assets and liabilities:
Accounts and notes receivable ................................. (3,830) (529)
Other receivables ............................................. (1,163) (954)
Other assets .................................................. (266) (748)
Accounts payable and accrued expenses ......................... 1,041 (424)
Income taxes payable .......................................... 189 (156)
Deferred income ............................................... (170) 477
Minority interest in equity of subsidiaries ................... 13 21
-------- --------
Net cash provided by operating activities ................... 27,809 25,311
-------- --------
Cash flows from investing activities:
Acquisition of leasing equipment .................................. (1,711) (20,351)
Proceeds from dispositions of leasing equipment ................... 1,782 1,893
Investment in direct financing leases ............................. (26,228) (36,554)
Proceeds from (purchase of) marketable securities and other
investing activities ............................................ (7,956) 273
-------- --------
Net cash used for investing activities ...................... (34,113) (54,739)
Cash flows from financing activities:
Proceeds from issuance of debt .................................... 40,013 28,553
Payments of debt and capital lease obligations .................... (44,915) (8,912)
Proceeds from issuance of capital securities ...................... 73,300 --
Redemption of preferred stock ..................................... (52,871) --
Cash dividends paid ............................................... (1,859) (969)
-------- --------
Net cash provided by financing activities ................... 13,668 18,672
-------- --------
Net decrease in cash and short-term investments ............. 7,364 (10,756)
Cash and short-term investments, beginning of period ................ 45,333 40,208
-------- --------
Cash and short-term investments, end of period ...................... $ 52,697 $ 29,452
======== ========
Supplemental schedule of non-cash financing activities:
Acquisition of subsidiary common and preferred stock in exchange for
Company's 5 3/4% Cumulative Convertible Preferred Stock ........... -- $ 6,892
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
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INTERPOOL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(Dollars and shares in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Net
Unrealized
Shares of Shares of Gain (Loss) on
Preferred Par Capital Par Paid-In Retained Marketable
Stock Value Stock Value Capital Earnings Securities
--------- ----- --------- ----- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 ......... 759 $ 1 25,953 $26 $170,172 $109,837 $510
Net income ..................... 8,766
Net unrealized loss on
Marketable Securities ...... (45)
Redemption of preferred stock .. (510) (1) (46,154) (6,716)
Conversion of preferred stock .. (249) 1,597 2 (2)
Conversion of subordinated notes 2 30
Cash Dividends declared:
Preferred stock ............ (994)
Common stock ............... (1,033)
---- --- ------ --- -------- -------- ----
Balance, March 31, 1997 ............ -- -- 27,552 $28 $124,046 $109,860 $465
==== === ====== === ======== ======== ====
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
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INTERPOOL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
NOTE 1 -- NATURE OF OPERATIONS AND BASIS OF CONSOLIDATION:
A. NATURE OF OPERATIONS:
The Company and its subsidiaries conduct business principally in a single
industry segment, the leasing of intermodal dry freight standard containers,
chassis and other transportation related equipment. The Company leases its
containers principally to international container shipping lines located
throughout the world. The customers for the Company's chassis are a large number
of domestic companies, many of which are domestic subsidiaries or branches of
international shipping lines. Equipment is purchased directly or acquired
through conditional sales contracts and lease agreements, many of which qualify
as capital leases.
The Company's accounting records are maintained in United States dollars and the
consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States.
B. BASIS OF CONSOLIDATION:
The consolidated financial statements include the accounts of the Company
and subsidiaries more than 50% owned. All significant intercompany transactions
have been eliminated.
C. NET INCOME PER SHARE:
Primary income per share before extraordinary loss and premium paid on
redemption of preferred stock is computed by deducting preferred dividends (and
in 1996, adding the non-recurring charge for cumulative dividends) from income
to arrive at income attributable to common stockholders before extraordinary
loss and premium paid on redemption of preferred stock. This amount is then
divided by the weighted average number of shares outstanding during the period
adjusted for the dilutive effect of stock options. In 1997, the extraordinary
loss on early retirement of debt, net of tax, and the premium paid on redemption
of the 5 3/4% Cumulative Convertible Preferred Stock have been deducted to
arrive at primary net income per share. Shares issuable upon the conversion of
the 5 3/4% Cumulative Convertible Preferred Stock and the 5 1/4% Convertible
Exchangeable Subordinated Notes have been added to the weighted shares
outstanding and interest expense net of tax effect on the notes has been added
to net income in the fully diluted earnings per share computation for 1996.
These items do not have a significant dilutive effect for 1997. Per share
amounts and common shares outstanding have been restated to give effect to the
three-for-two stock split effected March 27, 1997 described in Note 4.
NOTE 2 -- CASH FLOW INFORMATION:
For the three months ended March 31, 1997 and 1996, cash paid for interest
was approximately $11,313 and $10,672, respectively. Cash paid for income taxes
was approximately $1,066 and $198, respectively.
NOTE 3 -- OTHER CONTINGENCIES AND COMMITMENTS:
At March 31, 1997, the Company had outstanding purchase commitments for
equipment of approximately $40,000.
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Under certain of the Company's leasing agreements, the Company, as lessee,
may be obligated to indemnify the lessor for loss, recapture or disallowance of
certain tax benefits arising from the lessor's ownership of the equipment.
The Company is engaged in various legal proceedings from time to time
incidental to the conduct of its business. In the opinion of management, the
Company is adequately insured against the claims relating to such proceedings,
and any ultimate liability arising out of such proceedings will not have a
material adverse effect on the financial condition or results of operations of
the Company.
NOTE 4 -- SIGNIFICANT EVENTS:
On January 27, 1997, Interpool Capital Trust, a Delaware business trust
and special purpose entity (the "Trust"), issued in a private placement 75,000
shares of 9 7/8% Company-Obligated Mandatory Redeemable Capital Securities with
an aggregate liquidation preference of $75,000 (the "Capital Securities") for
proceeds of $75,000. Costs associated with the transaction amounted to
approximately $1,700 and were borne by the Company. Interpool owns all the
common securities of the Trust. The proceeds received by the trust from the sale
of the Capital Securities were used by the Trust to acquire $75,000 of 9 7/8%
Junior Subordinated Debentures due February 15, 2027 of the Company (the
"Debentures"). The Debentures are the sole assets of the Trust. The Capital
Securities represent preferred beneficial interests in the Trust's assets.
Distributions on the Capital Securities are cumulative and payable at the annual
rate of 9 7/8% of the liquidation amount, quarterly in arrears, commencing
February 15, 1997. The Company has the option to defer payment of distributions
for an extension period of up to five years if it is in compliance with the
terms of the Capital Securities. Interest at 9 7/8% will accrue on such deferred
distributions throughout the extension period. The Capital Securities will be
subject to mandatory redemption upon repayment of the Debentures to the Trust.
The redemption price decreases from 104.975% of the liquidation preference in
2007 to 100% in 2017 and thereafter. Under certain limited circumstances, the
Company may, at its option, prepay the Debentures and redeem the Capital
Securities prior to 2007 at a prepayment price specified in the governing
instruments.
The Company used $52,871 of net proceeds from the sale of the Debentures
to the Trust to redeem 509,964 shares of the Company's 5 3/4% Cumulative
Convertible Preferred Stock (the "Preferred Stock") on March 10, 1997 at a
redemption price of 103.675% per share of the liquidation value.
On March 10, 1997 a total of 248,730 shares, or $24,873 in aggregate
liquidation value of the Company's 5 3/4% Cumulative Convertible Preferred Stock
(representing 32.78% of the outstanding shares of Preferred Stock) were
converted into a total of 1,596,446 shares (after stock split basis) of Common
Stock.
As a result of the redemption of shares of Preferred Stock, the Company
recorded a one-time charge to retained earnings of $6,716 or 24 cents per share
on a primary basis.
On March 12, 1997 the Company's Board of Directors announced a
three-for-two stock split, which was effective on March 27, 1997. No fractional
shares were issued in connection with the stock split. Instead, under the terms
of the stock split, the Company rounded any fractional shares to which any
stockholder was entitled as a result of the stock split up to the nearest whole
share.
On March 27, 1997, options for the purchase of 1,498,500 shares of common
stock were granted under the Stock Option Plan at an exercise price of $15.58
per share (the fair value of the Company's common stock on the date of the
grant). These options vest six months from the date of the grant and expire in
ten years from the date of the grant.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company generates revenues through leasing transportation equipment,
primarily dry cargo containers and container chassis. Most of the Company's
revenues are derived from payments under operating leases and income earned
under finance leases, under which the lessee has the right to purchase the
equipment at the end of the lease term. In the three months ended March 31, 1997
and 1996 revenues from direct financing leases were $8.3 million (22% of
revenues) and $7.0 million (20% of revenues), respectively.
In March 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" which is effective for fiscal 1997. This statement
establishes accounting standards for computing and presenting earnings per share
(EPS). It replaces the presentation of primary EPS with a presentation of basic
EPS. It also requires dual presentation of basic EPS and diluted EPS for
companies with complex capital structures. For the three months ended March 31,
1997, on a pro forma basis, under the new standard basic income per share before
extraordinary loss and premium paid on redemption of preferred stock would have
been $0.31 and diluted income per share before extraordinary loss and premium
paid on redemption of preferred stock would have been $0.29. On a pro forma
basis, under the new standard basic net income per share would have been $0.05
and $0.28, and diluted net income per share would have been $0.05 and $0.27 for
the three months ended March 31, 1997 and 1996, respectively.
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
REVENUES
The Company's revenues increased to $38.2 million for the three months
ended March 31, 1997 from $35.2 million in the three months ended March 31,
1996, an increase of $3.0 million or 9%. The increase is primarily due to
increased leasing revenues generated by an expanded container and chassis fleet
size. Revenues for the three months ended March 31, 1997 were $20.8 million for
the Interpool Limited international container division and $17.4 million for the
domestic intermodal division. This compared to $18.9 million for the Interpool
Limited international container division and $16.3 million for the domestic
intermodal division for the three months ended March 31, 1996.
LEASE OPERATING AND ADMINISTRATIVE EXPENSES
The Company's lease operating and administrative expenses increased to
$8.3 million for the three months ended March 31, 1997 from $7.6 million in the
three months ended March 31, 1996, an increase of $.7 million. The increase was
primarily due to higher operating costs of $.6 million resulting from expanded
operations generating increased positioning, commission and insurance expenses.
Also an increase of $.1 million in administrative costs resulting from inflation
contributed to the increase.
DEPRECIATION AND AMORTIZATION OF LEASING EQUIPMENT
The Company's depreciation and amortization expenses increased to $8.5
million in the three months ended March 31, 1997 from $7.9 million in the three
months ended March 31, 1996, an increase of $.6 million. The increase was due to
an increased fleet size.
GAIN ON SALE OF LEASING EQUIPMENT
The Company's gain on sale of leasing equipment remained essentially the
same in both the three months ended March 31, 1997 and March 31, 1996.
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INTEREST EXPENSE, NET
The Company's net interest expense increased to $11.1 million in the three
months ended March 31, 1997 from $9.9 million in the three months ended March
31, 1996, an increase of $1.2 million. The issuance of additional debt and lease
financing necessary to fund capital expenditures contributed $.6 million to the
increased interest expense. The issuance of capital securities increased
interest expense by $1.2 million. Partially offsetting the increased expenses
was higher interest income of $.6 million resulting from higher cash balances in
1997.
NON-RECURRING CHARGE
During the first quarter of 1996, Interpool, Inc. acquired the minority
interest in the common stock of its subsidiary, Trac Lease, Inc., and the
outstanding shares of preferred stock of Trac Lease, in exchange for preferred
stock of Interpool. Interpool now owns 100% of the equity of Trac Lease. The
acquisition of Trac Lease preferred stock and its related accrued, cumulative
dividends resulted in a non-recurring, non-cash charge in the amount of $2.4
million. Such charge has no impact on net income per share because the effect of
unpaid dividends was included in the computation of net income per share in
prior periods.
PROVISION FOR INCOME TAXES
The Company's provision for income taxes decreased to $1.5 million from
$1.7 million due to a lower effective tax rate resulting from the deductible
interest expense on subordinated debentures in 1997. Also, the effective tax
rate increased in the first quarter of 1996 due to the non-recurring charge in
1996 which is not deductible for tax purposes.
NET INCOME
As a result of the factors described above, the Company's net income
increased to $8.8 million in the three months ended March 31, 1997 from $6.1
million in the three months ended March 31, 1996. For the three months ended
March 31, 1997 the Interpool Limited international container division
contributed $7.5 million to net income while the domestic intermodal division
contributed $1.3 million. This compares to the three months ended March 31, 1996
where the Interpool Limited international container division contributed $6.6
million to net income while the domestic intermodal division contributed $1.9
million excluding the non-recurring charge of $2.4 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company uses funds from various sources to finance the acquisition of
equipment for lease to customers. The primary funding sources are cash provided
by operations, borrowings, generally from banks, the issuance of capital lease
obligations and the sale of debt securities. In addition, the Company generates
cash from the sale of equipment being retired from the Company's fleet. In
general, the Company seeks to meet debt service requirements from the leasing
revenue generated by its equipment.
The Company generated cash flow from operations of $27.8 million and $25.3
million in the first three months of 1997 and 1996, respectively, and net cash
provided by financing activities was $13.7 million and $18.7 million for the
first three months of 1997 and 1996, respectively. The Company has purchased the
following amounts of equipment: $27.9 million for the three months ended March
31, 1997 and $56.9 million for the three months ended March 31, 1996.
The Company has a $150.0 million revolving credit facility with a group of
commercial banks; on March 31, 1997, $40.0 million was outstanding. The term of
this facility extends until May 31, 1998 (unless the lender elects to renew the
facility) at which time a maximum of 10% of the amount then outstanding becomes
due, with the remainder becoming payable in equal monthly installments over a
five year period. In addition, as of March 31, 1997, the Company had available
lines of credit of $63.0 million under various facilities, under which $14.8
million was outstanding. Interest rates under these facilities ranged from 6.4%
to 6.8%. At March 31, 1997, the Company had total debt outstanding of $597.8
million. Subsequent to March 31, 1997 the Company has continued to incur and
repay debt obligations in connection with financing its equipment leasing
activities.
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As of March 31, 1997, commitments for capital expenditures totaled
approximately $40.0 million. The Company expects to fund such capital
expenditures from the Company's operations, borrowings under its available
credit facilities and additional funds raised through the sale of its debt
securities in the private and/or public markets.
The Company believes that cash generated by continuing operations,
together with amounts available to be borrowed under existing credit facilities
and the issuance of debt securities in the appropriate markets will be
sufficient to finance the Company's working capital needs for its existing
business, planned capital expenditures and expected debt repayments over the
next twelve months. The Company anticipates that long-term financing will
continue to be available for the purchase of equipment to expand its business in
the future. In addition, from time to time, the Company explores new sources of
capital both at the parent and subsidiary levels.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
On March 10, 1997 a total of 248,730 shares, or $24,873 in aggregate
liquidation value of the Company's 5 3/4% Cumulative Convertible
Preferred Stock (the "5 3/4% Preferred Stock") (representing 32.78% of
the outstanding shares of Preferred Stock) were converted into a total
of 1,064,297 shares of Common Stock. All remaining 509,964 shares of the
5 3/4% Preferred Stock were redeemed by the Company at a redemption
price of 103.675% per share of the liquidation value.
On March 26, 1997 a Certificate of Elimination was filed with the
Secretary of State of Delaware such that the 5 3/4% Preferred Stock is
no longer authorized.
On March 27, 1997 the Company effected a three-for-two stock split
payable to stockholders of record on March 21, 1997. No fractional
shares were issued in connection with the stock split. Instead, under
the terms of the stock split, the Company rounded any fractional shares
up to the nearest whole share. As a result of the stock split,
27,551,728 shares of the Company's Common Stock are currently
outstanding.
On April 3, 1997, a Certificate of Elimination was filed with the
Secretary of State of Delaware such that the series of previously
designated but unissued 5 1/4% Cumulative Convertible Preferred Stock is
no longer authorized.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
On January 27, 1997, Interpool Capital Trust, a Delaware business trust
and special purpose entity (the "Trust"), issued in a private placement
75,000 shares of 9 7/8% Company-Obligated Mandatory Redeemable Capital
Securities with an aggregate liquidation preference of $75,000 (the
"Capital Securities") for proceeds of $75,000. The Company owns all the
common securities of the Trust. The proceeds received by the trust from
the sale of the Capital Securities were used by the Trust to acquire
$75,000 of 9 7/8% Junior Subordinated Debentures due February 15, 2027
of the Company (the "Debentures"). The Debentures are the sole assets of
the Trust. The Capital Securities represent preferred beneficial
interests in the Trust's assets. Distributions on the Capital Securities
are cumulative and payable at the annual rate of 9 7/8% of the
liquidation amount, quarterly in arrears, commencing February 15, 1997.
The Company has the option to defer payment of distributions for an
extension period of up to five years if it is in compliance with the
terms of the Capital Securities. Interest at 9 7/8%
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<PAGE> 14
will accrue on such deferred distributions throughout the extension
period. The Capital Securities will be subject to mandatory redemption
upon repayment of the Debentures to the Trust. The redemption price
decreases from 104.975% of the liquidation preference in 2007 to 100% in
2017 and thereafter. Under certain limited circumstances, the Company
may, at its option, prepay the Debentures and redeem the Capital
Securities prior to 2007 at a prepayment price specified in the
governing instruments. The Company used $52,871 of net proceeds from the
sale of the Debentures to the Trust to redeem 509,964 shares of the
Company's 5 3/4% Cumulative Convertible Preferred Stock (the "Preferred
Stock") on March 10, 1997 at a redemption price of 103.675% per share of
the liquidation value.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 99: (1) Press Release dated March 31, 1997
(2) Press Release dated April 14, 1997
(3) Press Release dated May 1, 1997
(b) Reports on Form 8-K: None
- 14 -
<PAGE> 15
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.
INTERPOOL, INC.
Dated: May 13, 1997 /s/ Martin Tuchman
---------------------------
Martin Tuchman
Chief Executive Officer
Dated: May 13, 1997 /s/ William Geoghan
---------------------------
William Geoghan
Controller
- 15 -
<PAGE> 16
INDEX TO EXHIBIT
FILED WITH INTERPOOL, INC.
REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
EXHIBIT NO.
99 1) Press Release dated March 31, 1997
2) Press Release dated April 14, 1997
3) Press Release dated May 1, 1997
- 16 -
<PAGE> 1
[INTERPOOL, INC. LETTERHEAD]
CONTACT: Raoul J. Witteveen
(212) 916-3261
FOR IMMEDIATE RELEASE
INTERPOOL TO PAY CASH DIVIDEND ON COMMON STOCK
PRINCETON, NJ, March 31, 1997 - - Interpool, Inc. (NYSE: IPX) announced
that it will pay a cash dividend of 3.75 cents per share for the first quarter
of 1997. The dividend will be payable on April 15, 1997 to shareholders of
record on April 7, 1997. The aggregate amount of the dividend is expected to be
approximately $1,033,000.00.
The amount of the quarterly dividend is based on a 1997 annualized
dividend rate of 15 cents per share. This dividend reflects the previously
announced 12.5% increase from the 1996 dividend rate after giving effect to the
March 27, 1997 three-for-two stock split.
Martin Tuchman, Chairman and Chief Executive Officer, commented that
Interpool was "very pleased to be able to offer the increased dividend to its
shareholders as a direct result of the company's strong profitability."
Interpool, originally founded in 1968, is one of the world's leading
lessors of cargo containers used in international trade and is the second
largest lessor of intermodal container chassis in the United States. Interpool
leases its containers and chassis to over 200 customers, including nearly all of
the world's 20 largest international container shipping lines.
# # #
<PAGE> 1
[INTERPOOL, INC. LETTERHEAD]
CONTACT: Raoul J. Witteveen
(212) 916-3261
FOR IMMEDIATE RELEASE
INTERPOOL ANNOUNCES AWARD OF GRAND ALLIANCE CONTRACT
PRINCETON, NJ, April 14, 1997 - Interpool, Inc. (NYSE: IPX) announced
today that its wholly-owned subsidiary, Trac Lease, Inc., has been awarded a
contract by the Grand Alliance Chassis Pool to administer a fleet of up to
42,000 marine shipping container chassis. Trac will also administer over 30 pool
locations throughout the United States where the chassis are based. The 42,000
Grand Alliance chassis will make Trac one of the largest administrators of
chassis in the world.
Martin Tuchman, Chairman of Interpool, said that Trac will employ the
"Poolstat" copyrighted computer software program which it licenses from its
shipping container affiliate, Interpool Limited, to administer the chassis and
the pools. The "Poolstat" advanced chassis computer software program permits
Trac to report to the steamship lines daily on the movement and condition of the
chassis and assist the lines in maintaining efficient inventory levels at the
chassis pools.
Trac Lease owns or operates for Interpool approximately 57,000 chassis
which it leases primarily to steamship lines engaged in the international
intermodal transportation business. It has also operated chassis pools for the
past eleven years for state-run Port Authorities, railroads and terminal
operators throughout the United States.
Interpool, originally founded in 1968, is one of the world's leading
lessors of cargo containers used in international trade and is the second
largest lessor of intermodal container chassis in the United States. Interpool
leases its containers and chassis to over 200 customers, including nearly all of
the world's 20 largest international container shipping lines.
# # #
<PAGE> 1
[INTERPOOL, INC. LETTERHEAD]
Contact: Raoul J. Witteveen
(212) 916-3261
NEWS FOR IMMEDIATE RELEASE
INTERPOOL, INC. REPORTS PRO FORMA 1ST QUARTER INCOME PER SHARE BEFORE
EXTRAORDINARY AND NON-RECURRING ITEMS INCREASED 15%;
PRINCETON, NJ, MAY 1, 1997 -- Interpool, Inc. (NYSE: IPX) reported today that
its 1997 first quarter pro forma income per share, before extraordinary and
non-recurring items, rose 15% to 31 cents per share, versus 27 cents per share
on a comparable basis for the same period in 1996. Revenues during the first
quarter of 1997 were $38,176,000, up 9% from $35,179,000 in 1996.
The first quarter of 1997 included interest expense related to the company's
9 7/8% Capital Securities from January 27, 1997, as well as dividends related to
the company's 5 3/4% Convertible Preferred Stock until the
redemption/conversion date of March 10, 1997. Accordingly, pro forma adjustments
were made in both the 1996 and 1997 periods as if the Capital Securities had
been issued on December 31, 1995, and the 5 3/4% Convertible Preferred Stock
had been redeemed/converted on the same date.
Martin Tuchman, Chairman and Chief Executive Officer commented that the
company's income per share before extraordinary and non-recurring items was a
record for a first quarterly period, and is the direct result of the continued
expansion of Interpool's container and chassis fleets during 1996 and 1997. The
company added approximately 11,000 TEUs (twenty-foot-equivalent units) to its
container fleet during the first quarter, bringing the total container fleet to
approximately 312,000 container TEUs, in addition to the chassis fleet of
approximately 57,000 units, while maintaining equipment utilization of 97%.
<PAGE> 2
Interpool 1Q97 5/1/97 Page 2
The company conducts its international container leasing business through its
subsidiary Interpool Limited, while the domestic intermodal equipment leasing
business is conducted by Interpool, Inc. and its other subsidiaries. During the
first quarter of 1997, the Interpool Limited international container division's
contribution to consolidated income before extraordinary and non-recurring items
rose to $7,461,000 from $6,580,000 in 1996, while the domestic intermodal
division's pro forma contribution increased to $1,385,000 from $918,000 (after
deducting pro forma interest expense related to the 9 7/8% Capital Securities in
both periods). Revenues for the first quarter of 1997 from the Interpool Limited
international container division increased to $20,742,000 from $18,886,000 in
1996, while revenues from the domestic intermodal division rose to $17,434,000
from $16,293,000.
Mr. Tuchman noted that the company's wholly-owned subsidiary, Trac Lease, Inc.
had recently been awarded a contract by the Grand Alliance Chassis Pool to
administer a fleet of up to 42,000 marine shipping container chassis. Trac will
also administer over 30 pool locations throughout the United States where the
chassis are based. The 42,000 Grand Alliance chassis will make Trac one of the
largest administrators of chassis in the world.
Notable events in the first quarter included the issuance of $75 million of
9 7/8% Capital Securities and the redemption/conversion of the 5 3/4% Cumulative
Convertible Preferred Stock having an aggregate liquidation value of $75.9
million. Members of senior management converted all of their holdings of
preferred stock, which amounted to approximately $10 million, into shares of
Common Stock.
Also, during the first quarter the company split its Common Stock on a
three-for-two basis, resulting in 50% more shares available for trading and
announced a 12.5% dividend increase from the 1996 dividend rate, after giving
effect to the stock split. The new dividend rate is 15 cents per share on an
annualized basis.
Interpool, originally founded in 1968, is one of the world's leading lessors of
intermodal dry cargo containers and is the second largest lessor of intermodal
container chassis in the United States. Interpool leases its containers and
chassis to over 200 customers, including nearly all of the world's 20 largest
international container shipping lines.
***TABLE FOLLOWS***
<PAGE> 3
INTERPOOL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except amounts per share)
(Unaudited)
<TABLE>
<CAPTION>
ACTUAL PRO FORMA (1)
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES $38,176 $35,179 $38,176 $35,179
LEASE OPERATING AND ADMINISTRATIVE EXPENSES 8,343 7,562 8,348 7,577
DEPRECIATION AND AMORTIZATION OF
LEASING EQUIPMENT 8,531 7,937 8,531 7,937
GAIN ON SALE OF LEASING EQUIPMENT (329) (271) (329) (271)
------- ------- ------- -------
EARNINGS BEFORE INTEREST AND TAXES 21,631 19,951 21,626 19,936
INTEREST EXPENSE, NET 11,062 9,853 11,487 11,453
------- ------- ------- -------
INCOME BEFORE TAXES, EXTRAORDINARY LOSS 10,569 10,098 10,139 8,483
AND NON-RECURRING CHARGE
PROVISION FOR INCOME TAXES 1,475 1,650 1,293 985
------- ------- ------- -------
INCOME BEFORE EXTRAORDINARY LOSS
AND NON-RECURRING CHARGE 9,094 8,448 8,846 7,498
EXTRAORDINARY LOSS ON RETIREMENT OF DEBT,
NET OF APPLICABLE TAXES OF $225 328 -- -- --
NON-RECURRING CHARGE ACQUISITION OF
PREFERRED STOCK OF SUBSIDIARY (2) 2,392 2,392
------- ------- ------- -------
NET INCOME $ 8,766 $ 6,056 $ 8,846 $ 5,106
======= ======= ======= =======
INCOME PER SHARE BEFORE EXTRAORDINARY
LOSS AND NON-RECURRING CHARGE:
PRIMARY $ 0.30 $ 0.28 $ 0.31 $ 0.27
FULLY DILUTED NA $ 0.27 NA NA
EXTRAORDINARY LOSS ON RETIREMENT OF DEBT
PRIMARY $ (0.01) NA -- --
FULLY DILUTED NA NA -- --
PREMIUM PAID ON REDEMPTION OF PREFERRED STOCK (3)
PRIMARY $ (0.24) NA -- --
FULLY DILUTED NA NA -- --
NET INCOME PER SHARE:
PRIMARY $ 0.04 $ 0.28 -- --
FULLY DILUTED NA $ 0.27 -- --
WEIGHTED AVERAGE SHARES OUTSTANDING:
PRIMARY 27,491 26,342 28,718 27,942
FULLY DILUTED NA 30,884 NA NA
</TABLE>
(1) Pro forma as if the 9 7/8% Capital Securities had been issued on December
31, 1995 and the 5 3/4% Cumulative Convertible Prefer had been redeemed or
converted on that date.
(2) Represents a non-cash and non-recurring charge for accumulated dividends of
its subsidiary, Trac Lease, Inc., which resulted fro the acquisition of the
outstanding preferred stock of Trac Lease, Inc. through the issuance of
Interpool, Inc. preferred stock charge has no impact on net income per
share because unpaid dividends were included in the computation of net
income per share
(3) Represents a non-recurring charge of $6,716 to retained earnings for the
excess of the redemption price of 5 3/4% Cumulative Convertible Preferred
Stock over the carrying amount expressed as an amount per share.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 52,697
<SECURITIES> 11,027
<RECEIVABLES> 34,895
<ALLOWANCES> 2,499
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 645,658
<DEPRECIATION> 114,231
<TOTAL-ASSETS> 942,974
<CURRENT-LIABILITIES> 93,899
<BONDS> 599,688
0
0
<COMMON> 28
<OTHER-SE> 234,371
<TOTAL-LIABILITY-AND-EQUITY> 942,974
<SALES> 38,176
<TOTAL-REVENUES> 38,176
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,545
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,062
<INCOME-PRETAX> 10,569
<INCOME-TAX> 1,475
<INCOME-CONTINUING> 9,094
<DISCONTINUED> 0
<EXTRAORDINARY> 328
<CHANGES> 0
<NET-INCOME> 8,766
<EPS-PRIMARY> .04
<EPS-DILUTED> 0
</TABLE>
