UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
Commission File Number 001-33725
Textainer Group Holdings Limited
(Translation of Registrant’s name into English)
Century House
16 Par-La-Ville Road
Hamilton HM 08
Bermuda
(441) 296-2500
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☑ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes ☐ No ☑
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
1
This report contains the quarterly report of Textainer Group Holdings Limited for the three and six months ended June 30, 2018.
Exhibits
Exhibits
1. |
Quarterly Report of Textainer Group Holdings Limited for the Three and Six Months Ended June 30, 2018. |
2
TEXTAINER GROUP HOLDINGS LIMITED
Quarterly Report on Form 6-K for the Three and Six Months Ended June 30, 2018
Table of Contents
3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 6-K, including the section entitled Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contains forward-looking statements within the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not statements of historical facts and may relate to, but are not limited to, expectations or estimates of future operating results or financial performance, capital expenditures, regulatory compliance, plans for growth and future operations, as well as assumptions relating to the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “continue” or the negative of these terms or other similar terminology. The forward-looking statements contained in this Quarterly Report on Form 6-K include, but are not limited to, statements regarding (i) factors that are likely to continue to affect our performance and (ii) our belief that, assuming that our lenders remain solvent that our cash flow from operations, proceeds from the sale of containers and borrowing availability under our debt facilities are sufficient to meet our liquidity needs, including for the payment of dividends, for the next twelve months.
Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy, and actual results may differ materially from those we anticipated due to a number of uncertainties, many of which cannot be foreseen. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including, among others, the risks we face that are described in the section entitled Item 3, “Key Information -- Risk Factors” included in our Annual Report on Form 20-F for the fiscal year ended December 31, 2017 filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 14, 2018 (our “2017 Form 20-F”).
We believe that it is important to communicate our expectations about the future to potential investors, shareholders and other readers. However, there may be events in the future that we are not able to accurately predict or control and that may cause actual events or results to differ materially from the expectations expressed in or implied by our forward-looking statements. The risk factors listed in Item 3, “Key Information -- Risk Factors” included in our 2017 Form 20-F, as well as any cautionary language in this Quarterly Report on Form 6-K, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Before you decide to buy, hold or sell our common shares, you should be aware that the occurrence of the events described in Item 3, “Key Information -- Risk Factors” included in our 2017 Form 20-F and elsewhere in this Quarterly Report on Form 6-K could negatively impact our business, cash flows, results of operations, financial condition and share price. Potential investors, shareholders and other readers are cautioned not to place undue reliance on our forward-looking statements.
Forward-looking statements regarding our present plans or expectations for fleet size, management contracts, container purchases, sources and availability of financing, and growth involve risks and uncertainties relative to return expectations and related allocation of resources, and changing economic or competitive conditions, as well as the negotiation of agreements with container investors, which could cause actual results to differ from present plans or expectations, and such differences could be material. Similarly, forward-looking statements regarding our present expectations for operating results and cash flow involve risks and uncertainties related to factors such as utilization rates, per diem rates, container prices, demand for containers by container shipping lines, supply and other factors discussed under Item 3, “Key Information -- Risk Factors” included in our 2017 Form 20-F or elsewhere in this Quarterly Report on Form 6-K, which could also cause actual results to differ from present plans. Such differences could be material.
All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. New risks and uncertainties arise from time to time, and we cannot predict those events or how they may affect us. The forward-looking statements contained in this Quarterly Report on Form 6-K speak only as of, and are based on information available to us on, the date of the filing of this Quarterly Report on Form 6-K. We assume no obligation to, and do not plan to, update any forward-looking statements after the date of this Quarterly Report on Form 6-K as a result of new information, future events or developments, except as expressly required by U.S. federal securities laws. You should read this Quarterly Report on Form 6-K and the documents that we reference and have furnished as exhibits with the understanding that we cannot guarantee future results, levels of activity, performance or achievements and that actual results may differ materially from what we expect.
In this Quarterly Report on Form 6-K, unless otherwise specified, all monetary amounts are in U.S. dollars. To the extent that any monetary amounts are not denominated in U.S. dollars, they have been translated into U.S. dollars in accordance with our accounting policies as described in Item 18, “Financial Statements” included in our 2017 Form 20-F.
4
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
Three and Six Months Ended June 30, 2018 and 2017
(Unaudited)
(All currency expressed in United States dollars in thousands, except per share amounts)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease rental income |
|
|
|
|
$ |
121,583 |
|
|
|
|
|
$ |
108,779 |
|
|
|
|
|
$ |
241,805 |
|
|
|
|
|
$ |
216,396 |
|
Management fees |
|
|
|
|
|
4,559 |
|
|
|
|
|
|
3,534 |
|
|
|
|
|
|
8,547 |
|
|
|
|
|
|
6,756 |
|
Trading container sales proceeds |
|
|
|
|
|
3,157 |
|
|
|
|
|
|
1,052 |
|
|
|
|
|
|
5,558 |
|
|
|
|
|
|
2,852 |
|
Gain on sale of containers, net |
|
|
|
|
|
11,403 |
|
|
|
|
|
|
5,882 |
|
|
|
|
|
|
18,030 |
|
|
|
|
|
|
9,930 |
|
Total revenues |
|
|
|
|
|
140,702 |
|
|
|
|
|
|
119,247 |
|
|
|
|
|
|
273,940 |
|
|
|
|
|
|
235,934 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct container expense |
|
|
|
|
|
13,454 |
|
|
|
|
|
|
14,889 |
|
|
|
|
|
|
27,150 |
|
|
|
|
|
|
34,548 |
|
Cost of trading containers sold |
|
|
|
|
|
3,111 |
|
|
|
|
|
|
716 |
|
|
|
|
|
|
5,216 |
|
|
|
|
|
|
2,005 |
|
Depreciation expense |
|
|
|
|
|
57,793 |
|
|
|
|
|
|
59,644 |
|
|
|
|
|
|
114,127 |
|
|
|
|
|
|
120,252 |
|
Container impairment |
|
|
|
|
|
938 |
|
|
|
|
|
|
714 |
|
|
|
|
|
|
1,770 |
|
|
|
|
|
|
4,525 |
|
Amortization expense |
|
|
|
|
|
958 |
|
|
|
|
|
|
948 |
|
|
|
|
|
|
2,780 |
|
|
|
|
|
|
1,896 |
|
General and administrative expense |
|
|
|
|
|
8,615 |
|
|
|
|
|
|
7,309 |
|
|
|
|
|
|
16,719 |
|
|
|
|
|
|
14,654 |
|
Short-term incentive compensation expense |
|
|
|
|
|
789 |
|
|
|
|
|
|
2 |
|
|
|
|
|
|
1,727 |
|
|
|
|
|
|
1,362 |
|
Long-term incentive compensation expense |
|
|
|
|
|
1,374 |
|
|
|
|
|
|
1,405 |
|
|
|
|
|
|
2,732 |
|
|
|
|
|
|
2,781 |
|
Bad debt expense, net |
|
|
|
|
|
1,390 |
|
|
|
|
|
|
108 |
|
|
|
|
|
|
783 |
|
|
|
|
|
|
360 |
|
Total operating expenses |
|
|
|
|
|
88,422 |
|
|
|
|
|
|
85,735 |
|
|
|
|
|
|
173,004 |
|
|
|
|
|
|
182,383 |
|
Income from operations |
|
|
|
|
|
52,280 |
|
|
|
|
|
|
33,512 |
|
|
|
|
|
|
100,936 |
|
|
|
|
|
|
53,551 |
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
(34,513 |
) |
|
|
|
|
|
(29,404 |
) |
|
|
|
|
|
(66,132 |
) |
|
|
|
|
|
(58,317 |
) |
Write-off of unamortized deferred debt issuance costs and bond discounts |
|
|
|
|
|
— |
|
|
|
|
|
|
(7,228 |
) |
|
|
|
|
|
— |
|
|
|
|
|
|
(7,228 |
) |
Interest income |
|
|
|
|
|
404 |
|
|
|
|
|
|
89 |
|
|
|
|
|
|
707 |
|
|
|
|
|
|
217 |
|
Realized gains (losses) on interest rate swaps, collars and caps, net |
|
|
|
|
|
1,499 |
|
|
|
|
|
|
(479 |
) |
|
|
|
|
|
2,683 |
|
|
|
|
|
|
(1,641 |
) |
Unrealized (losses) gains on interest rate swaps, collars and caps, net |
|
|
|
|
|
(37 |
) |
|
|
|
|
|
(1,232 |
) |
|
|
|
|
|
2,226 |
|
|
|
|
|
|
1,062 |
|
Other, net |
|
|
|
|
|
(2 |
) |
|
|
|
|
|
17 |
|
|
|
|
|
|
— |
|
|
|
|
|
|
3 |
|
Net other expense |
|
|
|
|
|
(32,649 |
) |
|
|
|
|
|
(38,237 |
) |
|
|
|
|
|
(60,516 |
) |
|
|
|
|
|
(65,904 |
) |
Income (loss) before income tax and noncontrolling interests |
|
|
|
|
|
19,631 |
|
|
|
|
|
|
(4,725 |
) |
|
|
|
|
|
40,420 |
|
|
|
|
|
|
(12,353 |
) |
Income tax expense |
|
|
|
|
|
(926 |
) |
|
|
|
|
|
(4,767 |
) |
|
|
|
|
|
(1,486 |
) |
|
|
|
|
|
(5,214 |
) |
Net income (loss) |
|
|
|
|
|
18,705 |
|
|
|
|
|
|
(9,492 |
) |
|
|
|
|
|
38,934 |
|
|
|
|
|
|
(17,567 |
) |
Less: Net (income) loss attributable to the noncontrolling interests |
|
|
(1,199 |
) |
|
|
|
|
|
139 |
|
|
|
|
|
|
(2,710 |
) |
|
|
|
|
|
1,240 |
|
|
|
|
Net income (loss) attributable to Textainer Group Holdings Limited common shareholders |
|
$ |
17,506 |
|
|
|
|
|
$ |
(9,353 |
) |
|
|
|
|
$ |
36,224 |
|
|
|
|
|
$ |
(16,327 |
) |
|
|
|
Net income (loss) attributable to Textainer Group Holdings Limited common shareholders per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.31 |
|
|
|
|
|
$ |
(0.16 |
) |
|
|
|
|
$ |
0.63 |
|
|
|
|
|
$ |
(0.29 |
) |
|
|
|
Diluted |
|
$ |
0.30 |
|
|
|
|
|
$ |
(0.16 |
) |
|
|
|
|
$ |
0.63 |
|
|
|
|
|
$ |
(0.29 |
) |
|
|
|
Weighted average shares outstanding (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
57,121 |
|
|
|
|
|
|
56,803 |
|
|
|
|
|
|
57,110 |
|
|
|
|
|
|
56,797 |
|
|
|
|
Diluted |
|
|
57,441 |
|
|
|
|
|
|
56,803 |
|
|
|
|
|
|
57,487 |
|
|
|
|
|
|
56,797 |
|
|
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
|
|
|
(95 |
) |
|
|
|
|
|
64 |
|
|
|
|
|
|
11 |
|
|
|
|
|
|
96 |
|
Comprehensive income (loss) |
|
|
|
|
|
18,610 |
|
|
|
|
|
|
(9,428 |
) |
|
|
|
|
|
38,945 |
|
|
|
|
|
|
(17,471 |
) |
Comprehensive (income) loss income attributable to the noncontrolling interests |
|
|
|
|
|
(1,199 |
) |
|
|
|
|
|
139 |
|
|
|
|
|
|
(2,710 |
) |
|
|
|
|
|
1,240 |
|
Comprehensive income (loss) attributable to Textainer Group Holdings Limited common shareholders |
|
|
|
|
$ |
17,411 |
|
|
|
|
|
$ |
(9,289 |
) |
|
|
|
|
$ |
36,235 |
|
|
|
|
|
$ |
(16,231 |
) |
See accompanying notes to condensed consolidated financial statements.
5
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30, 2018 and December 31, 2017
(Unaudited)
(All currency expressed in United States dollars in thousands)
|
|
2018 |
|
|
2017 |
|
||
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
153,139 |
|
|
$ |
137,894 |
|
Accounts receivable, net of allowance for doubtful accounts of $6,055 and $5,775, respectively |
|
|
95,313 |
|
|
|
78,312 |
|
Net investment in direct financing and sales-type leases |
|
|
56,811 |
|
|
|
56,959 |
|
Trading containers |
|
|
13,070 |
|
|
|
10,752 |
|
Containers held for sale |
|
|
20,193 |
|
|
|
22,089 |
|
Prepaid expenses and other current assets |
|
|
15,133 |
|
|
|
12,243 |
|
Insurance receivable |
|
|
1,062 |
|
|
|
15,909 |
|
Due from affiliates, net |
|
|
3,776 |
|
|
|
1,134 |
|
Total current assets |
|
|
358,497 |
|
|
|
335,292 |
|
Restricted cash |
|
|
95,237 |
|
|
|
99,675 |
|
Containers, net of accumulated depreciation of $1,250,675 and $1,172,355, respectively |
|
|
3,992,255 |
|
|
|
3,791,610 |
|
Net investment in direct financing and sales-type leases |
|
|
127,303 |
|
|
|
125,665 |
|
Fixed assets, net of accumulated depreciation of $11,195 and $10,788, respectively |
|
|
2,016 |
|
|
|
2,151 |
|
Intangible assets, net of accumulated amortization of $42,325 and $44,279, respectively |
|
|
8,325 |
|
|
|
11,105 |
|
Interest rate swaps, collars and caps |
|
|
10,006 |
|
|
|
7,787 |
|
Deferred taxes |
|
|
1,563 |
|
|
|
1,563 |
|
Other assets |
|
|
4,670 |
|
|
|
5,494 |
|
Total assets |
|
$ |
4,599,872 |
|
|
$ |
4,380,342 |
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
9,786 |
|
|
$ |
6,867 |
|
Accrued expenses |
|
|
11,926 |
|
|
|
13,365 |
|
Container contracts payable |
|
|
67,172 |
|
|
|
131,087 |
|
Other liabilities |
|
|
222 |
|
|
|
235 |
|
Due to owners, net |
|
|
6,043 |
|
|
|
11,131 |
|
Debt, net of unamortized deferred financing costs of $6,026 and $3,989, respectively |
|
|
529,023 |
|
|
|
233,681 |
|
Total current liabilities |
|
|
624,172 |
|
|
|
396,366 |
|
Debt, net of unamortized deferred financing costs of $16,734 and $20,045, respectively |
|
|
2,707,051 |
|
|
|
2,756,627 |
|
Interest rate swaps, collars and caps |
|
|
74 |
|
|
|
81 |
|
Income tax payable |
|
|
9,321 |
|
|
|
9,081 |
|
Deferred taxes |
|
|
7,055 |
|
|
|
5,881 |
|
Other liabilities |
|
|
1,919 |
|
|
|
2,024 |
|
Total liabilities |
|
|
3,349,592 |
|
|
|
3,170,060 |
|
Equity: |
|
|
|
|
|
|
|
|
Textainer Group Holdings Limited shareholders' equity: |
|
|
|
|
|
|
|
|
Common shares, $0.01 par value. Authorized 140,000,000 shares; 57,775,890 shares issued and 57,145,890 shares outstanding at 2018; 57,727,220 shares issued and 57,097,220 shares outstanding at 2017 |
|
|
578 |
|
|
|
578 |
|
Additional paid-in capital |
|
|
400,870 |
|
|
|
397,821 |
|
Treasury shares, at cost, 630,000 shares |
|
|
(9,149 |
) |
|
|
(9,149 |
) |
Accumulated other comprehensive loss |
|
|
(298 |
) |
|
|
(309 |
) |
Retained earnings |
|
|
799,825 |
|
|
|
763,601 |
|
Total Textainer Group Holdings Limited shareholders’ equity |
|
|
1,191,826 |
|
|
|
1,152,542 |
|
Noncontrolling interests |
|
|
58,454 |
|
|
|
57,740 |
|
Total equity |
|
|
1,250,280 |
|
|
|
1,210,282 |
|
Total liabilities and equity |
|
$ |
4,599,872 |
|
|
$ |
4,380,342 |
|
See accompanying notes to condensed consolidated financial statements.
6
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2018 and 2017
(Unaudited)
(All currency expressed in United States dollars in thousands)
|
|
Six Months Ended June 30, |
|
|||||
|
|
2018 |
|
|
2017 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
38,934 |
|
|
$ |
(17,567 |
) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
114,127 |
|
|
|
120,252 |
|
Container impairment |
|
|
1,770 |
|
|
|
4,525 |
|
Bad debt expense, net |
|
|
783 |
|
|
|
360 |
|
Unrealized gains on interest rate swaps, collars and caps, net |
|
|
(2,226 |
) |
|
|
(1,062 |
) |
Amortization and write-off of unamortized deferred debt issuance costs and accretion of bond discounts |
|
|
4,381 |
|
|
|
14,970 |
|
Amortization of intangible assets |
|
|
2,780 |
|
|
|
1,896 |
|
Gain on sale of containers, net |
|
|
(18,030 |
) |
|
|
(9,930 |
) |
Share-based compensation expense |
|
|
3,024 |
|
|
|
3,084 |
|
Changes in operating assets and liabilities |
|
|
(14,690 |
) |
|
|
1,008 |
|
Total adjustments |
|
|
91,919 |
|
|
|
135,103 |
|
Net cash provided by operating activities |
|
|
130,853 |
|
|
|
117,536 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchase of containers and fixed assets |
|
|
(459,970 |
) |
|
|
(24,994 |
) |
Proceeds from sale of containers and fixed assets |
|
|
73,452 |
|
|
|
66,049 |
|
Receipt of payments on direct financing and sales-type leases, net of income earned |
|
|
27,023 |
|
|
|
32,999 |
|
Insurance proceeds received for unrecoverable containers |
|
|
— |
|
|
|
13,801 |
|
Net cash (used in) provided by investing activities |
|
|
(359,495 |
) |
|
|
87,855 |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from debt |
|
|
870,750 |
|
|
|
1,356,000 |
|
Principal payments on debt |
|
|
(626,331 |
) |
|
|
(1,458,201 |
) |
Debt issuance costs |
|
|
(3,010 |
) |
|
|
(20,268 |
) |
Dividends paid to noncontrolling interest |
|
|
(1,996 |
) |
|
|
— |
|
Issuance of common shares upon exercise of share options |
|
|
25 |
|
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
239,438 |
|
|
|
(122,469 |
) |
Effect of exchange rate changes |
|
|
11 |
|
|
|
96 |
|
Net increase in cash, cash equivalents and restricted cash |
|
|
10,807 |
|
|
|
83,018 |
|
Cash, cash equivalents and restricted cash, beginning of the year |
|
|
237,569 |
|
|
|
142,123 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
248,376 |
|
|
$ |
225,141 |
|
See accompanying notes to condensed consolidated financial statements.
7
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2018 and 2017
(Unaudited)
(All currency expressed in United States dollars in thousands)
|
|
Six Months Ended June 30, |
|
|||||
|
|
2018 |
|
|
2017 |
|
||
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Interest expense and realized losses on interest rate swaps, collars and caps, net |
|
$ |
58,588 |
|
|
$ |
51,356 |
|
Net income taxes paid |
|
$ |
417 |
|
|
$ |
518 |
|
Supplemental disclosures of noncash investing activities: |
|
|
|
|
|
|
|
|
Decrease in container contracts payable |
|
$ |
(63,915 |
) |
|
$ |
(6,558 |
) |
Containers placed in direct financing and sales-type leases |
|
$ |
27,492 |
|
|
$ |
4,115 |
|
Decrease in insurance receivable due to a decrease in estimated unrecoverable containers |
|
$ |
1,750 |
|
|
$ |
6,361 |
|
See accompanying notes to condensed consolidated financial statements.
8
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(All currency expressed in United States dollars in thousands, except per share amounts)
(1) |
Nature of Business |
Textainer Group Holdings Limited (“TGH”) is incorporated in Bermuda. TGH is the holding company of a group of companies, consisting of TGH and its subsidiaries (collectively, the “Company”), involved in the purchase, management, leasing and resale of a fleet of marine cargo containers. The Company manages and provides administrative support to the affiliated and unaffiliated owners (the “Owners”) of the containers and structures and manages container leasing investment programs.
The Company conducts its business activities in three main areas: Container Ownership, Container Management and Container Resale (see Note 8 “Segment Information”).
(2) Accounting Policies and Recent Accounting Pronouncements
|
(a) |
Basis of Accounting |
Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2017 filed with the Securities and Exchange Commission on March 14, 2018.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal and recurring adjustments) necessary to present fairly the Company’s condensed consolidated financial position as of June 30, 2018, and the Company’s condensed consolidated results of operations for the three and six months ended June 30, 2018 and 2017 and condensed consolidated cash flows for the six months ended June 30, 2018 and 2017. These condensed consolidated financial statements are not necessarily indicative of the results of operations or cash flows that may be reported for the remainder of the fiscal year ending December 31, 2018.
The condensed consolidated financial statements of the Company include TGH and all of its subsidiaries. All material intercompany balances have been eliminated in consolidation.
|
(b) |
Principles of Consolidation and Variable Interest Entity |
The condensed consolidated financial statements of the Company include TGH and all of its subsidiaries in which the Company has a controlling financial interest. All significant intercompany accounts and balances have been eliminated in consolidation.
TAP Funding Ltd. (“TAP Funding”) (a Bermuda company) is a joint venture between the Company’s wholly-owned subsidiary, Textainer Limited (“TL”) (a Bermuda company) and TAP Ltd. (“TAP”) in which TL owns 50.1%, TAP owns 49.9% of the common shares of TAP Funding, and TAP Funding is a voting interest entity (“VME”). The Company consolidates TAP Funding as the Company has a controlling financial interest in TAP Funding.
The Company has determined that it has a variable interest in TW Container Leasing, Ltd. (“TW”) (a Bermuda company), a joint venture between the Company’s wholly-owned subsidiary, TL, and Wells Fargo Container Corp (“WFC”) in which TL owns 25% and WFC owns 75% of the common shares of TW, and that TW is a variable interest entity (“VIE”). The Company has determined that it is the primary beneficiary of TW by its equity ownership in the entity and by virtue of its role as manager, namely that the Company has the power to direct the activities of TW that most significantly impact TW’s economic performance.
The equity owned by TAP and WFC in TAP Funding and TW, respectively, is shown as noncontrolling interests on the Company’s condensed consolidated balance sheets and the net income (loss) attributable to the noncontrolling interests’ operations is shown as net (income) loss attributable to the noncontrolling interests on the Company’s condensed consolidated statements of comprehensive income (loss).
|
(c) |
Cash and Cash Equivalents and Restricted Cash |
Cash and cash equivalents are comprised of interest-bearing deposits and money market securities with original maturities of three months or less. The Company maintains cash and cash equivalents and restricted cash (see Note 9 “Commitments and Contingencies—Restricted Cash”) with various financial institutions. Restricted cash is excluded from cash and cash equivalents and is included in long-term assets.
9
TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(All currency expressed in United States dollars in thousands, except per share amounts)
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the condensed consolidated balance sheets that sum to the amounts shown in the condensed consolidated statements of cash flows:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2018 |
|
|
2017 |
|
||
Cash and cash equivalents |
|
$ |
153,139 |
|
|
$ |
137,894 |
|
Restricted cash included in long-term assets |
|
|
95,237 |
|
|
|
99,675 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
248,376 |
|
|
$ |
237,569 |
|
|
(d) |
Containers |
Capitalized container costs include the container cost payable to the manufacturer and the associated transportation costs incurred in moving the containers from the manufacturer to the containers’ first destined port. Containers are depreciated using the straight-line method over their estimated useful lives to an estimated dollar residual value. Used containers are depreciated based upon their remaining useful lives at the date of acquisition to an estimated dollar residual value.
The cost, accumulated depreciation and net book value of the Company’s container leasing equipment by equipment type as of June 30, 2018 and December 31, 2017 were as follows:
|
|
June 30, 2018 |
|
|
December 31, 2017 |
|
||||||||||||||||||
|
|
Cost |
|
|
Accumulated Depreciation |
|
|
Net Book Value |
|
|
Cost |
|
|
Accumulated Depreciation |
|
|
Net Book Value |
|
||||||
Dry containers other than folding flat rack and open top containers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20' standard |
|
$ |
1,613,145 |
|
|
$ |
(364,943 |
) |
|
$ |
1,248,202 |
|
|
$ |
1,497,557 |
|
|
$ |
(347,910 |
) |
|
$ |
1,149,647 |
|
40' standard |
|
|
206,016 |
|
|
|
(72,156 |
) |
|
|
133,860 |
|
|
|
223,916 |
|
|
|
(75,610 |
) |
|
|
148,306 |
|
40' high cube |
|
|
2,197,421 |
|
|
|
(507,776 |
) |
|
|
1,689,645 |
|
|
|
2,043,253 |
|
|
|
(476,238 |
) |
|
|
1,567,015 |
|
45' high cube dry van |
|
|
28,560 |
|
|
|
(9,288 |
) |
|
|
19,272 |
|
|
|
29,010 |
|
|
|
(8,494 |
) |
|
|
20,516 |
|
Refrigerated containers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20' standard |
|
|
23,073 |
|
|
|
(6,007 |
) |
|
|
17,066 |
|
|
|
24,062 |
|
|
|
(5,394 |
) |
|
|
18,668 |
|
20' high cube |
|
|
5,144 |
|
|
|
(2,519 |
) |
|
|
2,625 |
|
|
|
5,139 |
|
|
|
(2,327 |
) |
|
|
2,812 |
|
40' high cube |
|
|
1,014,039 |
|
|
|
(258,708 |
) |
|
|
755,331 |
|
|
|
1,002,843 |
|
|
|
(229,465 |
) |
|
|
773,378 |
|
Floating flat rack and open top containers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20' folding flat rack |
|
|
16,905 |
|
|
|
(3,775 |
) |
|
|
13,130 |
|
|
|
16,595 |
|
|
|
(3,525 |
) |
|
|
13,070 |
|
40' folding flat rack |
|
|
47,153 |
|
|
|
(15,212 |
) |
|
|
31,941 |
|
|
|
43,334 |
|
|
|
(14,394 |
) |
|
|
28,940 |
|
20' open top |
|
|
11,307 |
|
|
|
(1,330 |
) |
|
|
9,977 |
|
|
|
10,837 |
|
|
|
(1,237 |
) |
|
|
9,600 |
|
40' open top |
|
|
27,343 |
|
|