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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[X] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
THE CRONOS GROUP
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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Company Press Release
THE CRONOS GROUP REPORTS IMPROVED RESULTS FOR THE THIRD QUARTER OF 1999 AND
RECENT PROGRESS
San Francisco--November 18, 1999--The Cronos Group (Nasdaq: CRNS) announced
today a return to profitability and highlighted recent corporate achievements.
The Company posted a net profit of $1.3 million, or $0.14 per share, for the
third quarter of 1999 compared to a net loss of $2 million, or $0.22 per share,
for the same period of 1998. Net profit for the quarter ended September 30, 1999
included $1 million, or $0.11 per share, of income from non-operating
activities. Total revenues were $35.5 million for the third quarter of 1999
compared to $41.3 million for the same period in 1998.
Net profit for the nine months ended September 30, 1999 was $1.1 million, or
$0.12 per share, compared to a net loss of $4.2 million, or $0.47 per share, for
the same nine-month period in 1998. Total revenues for the first nine months of
1999 were $105.6 million, compared to $125.1 million for the same period in
1998.
Dennis J. Tietz, Chairman and CEO of Cronos, commented, "Eight months ago, we
devoted a great deal of time and effort to implementing strategies that would
enhance shareholder value. These included strategies for improving operating
efficiencies, reducing expenses, and strengthening utilization of the container
fleet. We are pleased with the progress we have made in transitioning the
Company to profitability and remain committed to our previously-announced
business plan. At the same time, we recognize the competitiveness of the
industry and are concentrating our efforts on our core business."
Following the resignation of the former Chairman of the Board of Cronos and one
non-executive director on March 30, 1999, the Company's management team has
made solid progress in turning the Company around. Recent achievements include:
- - The Company addressed the issue of corporate governance by naming two
independent, non-executive directors to its Board.
- - The Company implemented a re-organization plan and reduced the number of
employees to 100 from 128 worldwide, producing a more streamlined and
effective organization.
- - During the first nine months of 1999, Cronos reduced its selling, general
and administrative expenses by approximately $4.4 million when compared to
the same nine-month period in 1998.
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- - In August, Cronos successfully completed a $50 million refinancing
transaction, the proceeds of which were used to refinance all short-term
debt due under the Company's primary bank facility.
- - Cronos negotiated over $21 million in new financing, which was used to
purchase containers on behalf of its managed container owners. This will
result in the addition of approximately 16,000 TEU (twenty-foot equivalent
units) to the Company's managed fleet.
- - Deloitte & Touche LLP was retained as the Company's new auditors, subject to
shareholder approval.
- - Fleet utilization improved to 77% in September 1999 compared to 72.6% in
March 1999.
- - Cronos is in the process of selling the building housing its operational
headquarters in the United Kingdom.
Cronos is one of the world's leading lessors of intermodal containers, owning
and managing a fleet of over 365,000 TEU (twenty-foot equivalent units). The
diversified Cronos fleet of dry cargo, refrigerated and other specialized
containers is leased to a customer base of approximately 400 ocean carriers and
transport operators around the world. Cronos provides container-leasing services
through an integrated network of offices through state-of-the-art information
technology.
Safe Harbor Statement
This release discusses certain forward-looking matters that involve risks and
uncertainties that could cause actual results to vary materially from estimates.
Risks and uncertainties include, among other things, changes in international
operations, exchange rate risks, changes in market conditions for the company's
container lease operations and the company's ability to provide innovative and
cost-effective solutions.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
The Cronos Group ("Cronos") and the following persons named below
may be deemed to be "participants" in the solicitation of proxies from the
shareholders of Cronos in connection with the 1999 annual meeting of
shareholders and any adjournment or continuation thereof: the current directors
of Cronos (Dennis J. Tietz (Chairman of the Board and Chief Executive Officer of
Cronos), Maurice Taylor, Charles Tharp, and S. Nicholas Walker); the following
nominees for election as directors at the 1999 annual meeting of shareholders:
Peter J. Younger (Chief Financial Officer of Cronos), and Robert M. Melzer; and
Elinor A. Wexler, Vice President, Corporate Communications of Cronos. The Board
has retained director-nominee Melzer as an advisor to assist the Board in
considering the strategic alternatives currently available to Cronos.
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Dennis J. Tietz is the Chairman of the Board and Chief Executive
Officer of Cronos and holds options to acquire 321,600 shares of Common Stock of
Cronos; Peter J. Younger is the Chief Financial Officer of Cronos and holds
options to acquire 10,800 shares of Common Stock of Cronos and 200,000 stock
appreciation rights of Cronos; Robert M. Melzer owns 10,000 shares of Common
Stock of Cronos; and Elinor A. Wexler is Vice President, Corporate
Communications of Cronos and holds options to acquire 5,400 shares of Common
Stock of Cronos.
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This press release and other information concerning Cronos can be viewed at
Cronos' website at www.cronos.com.
Contact:
Cronos Investor Relations
Elinor A. Wexler (415) 677-8990
[email protected]
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THE CRONOS GROUP
CONSOLIDATED STATEMENTS OF OPERATIONS
(US dollar amounts in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
TOTAL REVENUES $ 35,506 $ 41,311 $ 105,626 $ 125,066
----------- ----------- ----------- -----------
Direct operating expenses 7,365 9,836 23,228 27,051
Payments to container owners 16,428 18,578 48,201 57,659
Depreciation and amortization 3,991 4,576 12,376 14,028
Selling, general and administrative expenses 4,175 5,515 12,314 16,741
Financing and recomposition expenses -- 571 -- 1,055
Interest expense 2,288 4,132 8,444 12,422
----------- ----------- ----------- -----------
TOTAL EXPENSES 34,247 43,208 104,563 128,956
----------- ----------- ----------- -----------
PROFIT (LOSS) BEFORE INCOME TAXES 1,259 (1,897) 1,063 (3,890)
Income taxes -- 67 -- 302
----------- ----------- ----------- -----------
NET PROFIT (LOSS) $ 1,259 $ (1,964) $ 1,063 $ (4,192)
=========== =========== =========== ===========
EARNINGS (LOSS) PER COMMON SHARE - (BASIC AND $ 0.14 $ (0.22) $ 0.12 $ (0.47)
DILUTED)
=========== =========== =========== ===========
BASIC AND DILUTED SHARES OUTSTANDING 9,058,378 8,858,378 8,925,045 8,858,378
</TABLE>
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THE CRONOS GROUP
CONSOLIDATED BALANCE SHEETS
(US dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 8,169 $ 9,281
Total receivables 37,445 43,480
Container equipment (net) 149,650 168,558
Property and investments 29,364 32,323
Other 20,610 26,337
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TOTAL ASSETS $245,238 $279,979
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LIABILITIES AND SHAREHOLDERS' EQUITY
Amounts payable to container owners $ 26,261 $ 31,314
Amounts payable to container manufacturers 10,119 101
Other liabilities 17,965 23,159
Debt and capital lease obligations 113,891 148,466
Current and deferred income taxes 7,467 8,085
Deferred income and unamortized acquisition fees 10,864 12,767
-------- --------
Total liabilities 186,567 223,892
Shareholders' equity 58,671 56,087
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $245,238 $279,979
======== ========
</TABLE>
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THE CRONOS GROUP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US dollar amounts in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 8,566 $ 10,466
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NET CASH PROVIDED (USED) FOR INVESTING ACTIVITIES 25,836 (921)
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NET CASH USED BY FINANCING ACTIVITIES (35,514) (13,720)
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NET DECREASE IN CASH AND CASH EQUIVALENTS (1,112) (4,175)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,281 14,455
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,169 $ 10,280
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</TABLE>
