Form 6-K

 

 

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

November 4, 2011

Commission File Number 001-33725

 

 

Textainer Group Holdings Limited

(Exact Name of Registrant as Specified in its Charter)

 

 

Not Applicable

(Translation of registrant’s name into English)

 

 

Century House 16 Par-La-Ville Road

Hamilton HM 08 Bermuda

(441) 296-2500

(Address and telephone number, including area code, of principal executive offices)

 

 

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  x             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):  ¨

 

 

 


This report contains a copy of the press release entitled “Textainer Group Holdings Limited Reports Third Quarter and Nine Months 2011 Results and Declares Quarterly Dividend,” dated November 4, 2011.

 

Exhibit

     
1.    Press Release dated November 4, 2011

 

2


Exhibit A

Textainer Group Holdings Limited Reports Third Quarter and Nine Months

2011 Results and Declares Quarterly Dividend

Raises Dividend by 6.1% to $0.35 per Common Share, Representing Seventh Consecutive Increase to Quarterly Payout

Third Quarter and Year-to-Date 2011 Highlights

 

   

Recorded net income attributable to Textainer Group Holdings Limited common shareholders of $45.8 million, or $0.92 per diluted common share, for the third quarter and $134.7 million, or $2.70 per diluted common share, for the nine months ended September 30, 2011;

 

   

Recorded net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to noncontrolling interest (“NCI”)(1) of $49.3 million, or $0.99 per diluted common share, for the third quarter, and $125.2 million, or $2.51 per diluted common share, for the nine months ended September 30, 2011;

 

   

Increased average fleet utilization to 98.6% for the third quarter of 2011 from 98.0% for the third quarter of 2010;

 

   

Utilized balance sheet strength to order 177,000 Twenty-Foot Equivalent Units (“TEU”) of new standard dry-freight containers and 16,000 TEU of new refrigerated containers, both for delivery through December 2011, and purchased 212,000 TEU of used containers, including those we previously managed and additional containers from purchase-leaseback transactions, for a total of 405,000 TEU, representing $787 million of capital expenditures year-to-date, a new record;

 

   

Completed a capital restructuring of our primary asset-owning subsidiary, Textainer Marine Containers Limited (“TMCL”), effective June 30, 2011, whereby our wholly-owned subsidiary, Textainer Limited (“TL”), now owns 100% of TMCL. The restructuring resulted in a $19.8 million gain on sale of containers to the prior noncontrolling interest holder for the nine months ended September 30, 2011. The gain was the result of recognizing the fair value of containers and direct finance leases in excess of their book value exchanged for TMCL’s common shares at the time of the transaction. This was a noncash transaction;

 

   

Paid a $0.33 per common share dividend on August 26, 2011 to all shareholders of record as of August 19, 2011; and

 

   

Declared a dividend increase of 6.1% to $0.35 per common share, payable on November 28, 2011 to all shareholders of record as of November 14, 2011.


HAMILTON, Bermuda, November 4, 2011 (BUSINESS WIRE) — Textainer Group Holdings Limited (NYSE:TGH) (“Textainer”, the “Company”, “we” and “our”), the world’s largest lessor of intermodal containers based on fleet size, today reported results for the third quarter and nine months ended September 30, 2011.

Total revenue for the third quarter 2011 was $109.5 million, which was an increase of $33.9 million, or 45%, compared to $75.6 million for the prior year comparable quarter. For the nine months ended September 30, 2011, total revenue was $306.4 million, which was an increase of $86.5 million, or 39% compared to $219.9 million for the prior year comparable period. EBITDA(1 — see GAAP to non-GAAP reconciliations) for the third quarter 2011 was $86.6 million, which was an increase of $30.2 million, or 54%, compared to $56.4 million for the prior year comparable quarter. The increase in EBITDA(1) for the third quarter 2011 compared to the prior year comparable quarter was primarily due to a 32.8% increase in the Company’s owned fleet size, a 5.5% increase in per diem rental rates and a 0.6 percentage point improvement in utilization. EBITDA(1) for the nine months ended September 30, 2011 was $243.0 million, which was an increase of $89.3 million, or 58%, compared to $153.7 million for the prior year comparable period. The increase in EBITDA(1) for the nine months ended September 30, 2011 compared to the prior year comparable period was primarily due to a 30.1% increase in the Company’s owned fleet size, a 9.4% increase in per diem rental rates and a 4.0 percentage point improvement in utilization.

Net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI(1) for the third quarter 2011 was $49.3 million, which was an increase of $16.0 million, or 48%, compared to $33.3 million for the prior year comparable quarter. Net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI(1) for the third quarter 2011 was positively affected by the increases in the Company’s owned fleet size and per diem rental rates and the improvement in utilization. In addition, Textainer has experienced a significant increase in container resale prices over the last two years as a result of the shortage of older containers available for sale and the increased cost of new containers. Based on this extended period of higher realized container resale prices and Textainer’s expectation that new equipment prices will remain near recent levels, Textainer increased the estimated future residual values of its containers used in the calculation of depreciation expense during the third quarter of 2011, which resulted in $4.8 million less depreciation expense than would have been recorded using the prior residual values during the current quarter. Net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI(1) for the third quarter 2011 was $0.99 per share, which was an increase of $0.32 per share, or 48%, compared to $0.67 per share for the prior year comparable quarter.

Net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI(1) for the nine months ended September 30, 2011 was $125.2 million, which was an increase of $37.4 million, or 43%, compared to $87.8 million for the prior year comparable period. Net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI(1) for the nine months ended September 30, 2011 was positively affected by the increases in the Company’s owned fleet size and per diem rental rates, the improvement in utilization and the $4.8 million decrease in depreciation expense resulting from Textainer increasing the estimated future residual values of its containers during the current quarter. Net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI(1) for the nine months ended September 30, 2011 was $2.51 per share, which was an increase of $0.72 per share, or 40%, compared to $1.79 per share for the prior year comparable period.

Net income attributable to Textainer Group Holdings Limited common shareholders for the third quarter 2011 was $45.8 million, which was an increase of $15.1 million, or 49%, compared to $30.7 million for the prior year comparable quarter. The increase in net income attributable to Textainer Group Holdings Limited common shareholders for the third quarter 2011 was primarily due to the increases in the Company’s owned fleet size and per diem rental rates, the improvement in utilization and the $4.8 million decrease in

 

4


depreciation expense resulting from the increase in Textainer’s estimated future residual values of its containers. Net income attributable to Textainer Group Holdings Limited common shareholders for the nine months ended September 30, 2011 was $134.7 million, which was an increase of $54.7 million, or 68%, compared to $80.0 million for the prior year comparable period. The increase in net income attributable to Textainer Group Holdings Limited common shareholders for the nine months ended September 30, 2011 was primarily due to the $19.8 million gain on sale of containers to NCI, the increases in the Company’s owned fleet size and per diem rental rates, the improvement in utilization and the $4.8 million decrease in depreciation expense resulting from the increase in Textainer’s estimated future residual values of its containers.

Net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share for the third quarter 2011 was $0.92, which was an increase of $0.30 per share, or 48%, from the $0.62 per share for the prior year comparable quarter. Net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share for the nine months ended September 30, 2011 was $2.70, which was an increase of $1.07 per share, or 66%, from the $1.63 per share for the prior year comparable period.

Philip K. Brewer, President and Chief Executive Officer of Textainer, commented, “Textainer achieved solid results for the third quarter of 2011 aided by a total of $787 million of capital expenditures year-to-date, a new record. Continued high utilization and historically high sales prices for our older containers being retired from marine service also contributed to our results. With 78% of our fleet committed to long-term and direct financing leases, we have a sizeable contracted revenue stream which we expect will continue to provide our shareholders with attractive returns. Also, as a result of our previously announced restructuring of TMCL, TL now owns 100% of TMCL. We acquired the related noncontrolling equity interest which benefited our shareholders.”

Mr. Brewer continued, “Textainer’s Board declared a dividend increase for the seventh consecutive quarter. Our third quarter 2011 dividend represents an increase of 6.1% from our previous quarterly payout and continues our record of providing stable or increasing dividends since going public in 2007.”

Mr. Brewer added, “John Maccarone retired in October after 24 years of service to Textainer. Under his guidance, Textainer grew from a small leasing company with a fleet of 38,000 TEU to become the world’s largest lessor with more than 2.4 million TEU and a leader in the industry. We join the shareholders in thanking him for his outstanding leadership and commitment to excellence. We are grateful that we will continue to benefit from his experience as he will remain on our Board of Directors.”

Outlook

Industry

2011 has been a record year by several measures. Capital expenditures for new standard dry-freight and refrigerated containers is the highest in our history, in-fleet container utilization continues to remain at or near historic highs and demand for depot equipment remains strong. Demand for new standard dry-freight containers began to slow during the second quarter. We don’t expect to order many more through year end because we believe we already have a sufficient supply of new containers available. The demand for refrigerated containers remains strong. We have already ordered more than twice as many refrigerated containers for delivery through December 2011 than in any year in our history.

At this point, we expect that high in-fleet utilization will continue through at least the remainder of 2011.

Resale prices appear to have peaked, and even begun to decline slightly in some locations. Nonetheless, relative to the last ten years, current price levels remain very high.

 

5


Strategic Focus

TMCL’s issuance of $400 million in fixed rate asset backed notes in June represented one of the largest container securitizations in history and again demonstrated Textainer’s ability to attract strong investor support in the debt markets. With a debt-to-equity ratio of 2.3:1, we are in a strong position to continue purchasing both new and used containers to meet market demand and maintain our industry leading position.

Dividend

On November 2, 2011, Textainer’s board of directors approved and declared a quarterly cash dividend of $0.35 per share on Textainer’s issued and outstanding common shares, payable on November 28, 2011 to shareholders of record as of November 14, 2011. This dividend is an increase of $0.02 per share from the prior quarter and will continue Textainer’s history of paying constant or higher dividends every quarter since our October 2007 initial public offering. Combined, these dividends have averaged 44% of net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI(1) during this period. The current dividend represents 35% of net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI(1) for the third quarter.

Investors’ Webcast

Textainer will hold a conference call and a Webcast with an accompanying slide presentation at 11:00 am EDT on Friday, November 4, 2011 to discuss Textainer’s third quarter results 2011. An archive of the Webcast will be available one hour after the live call through November 4, 2012. For callers in the U.S. the dial-in number for the conference call is 877-303-9078; for callers outside the U.S. the dial-in number for the conference call is 970-315-0455. To access the live Webcast or archive, please visit Textainer’s website at http://www.textainer.com.

About Textainer Group Holdings Limited

Textainer has operated since 1979 and is the world’s largest lessor of intermodal containers based on fleet size. We have a total of more than 1.6 million containers, representing more than 2.4 million TEU, in our owned and managed fleet. We lease containers to approximately 400 shipping lines and other lessees. We lease dry freight containers, which are by far the most common of the three principal types of intermodal containers, as well as specialized and refrigerated containers. We have also been one of the largest purchasers of new containers among container lessors over the last 10 years. We are one of the largest sellers of used containers, having sold more than 77,000 containers during the last calendar year to more than 1,100 customers. We provide our services worldwide via a network of regional and area offices and independent depots.

Important Cautionary Information Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of U.S. securities laws. Forward-looking statements include statements that are not statements of historical facts and include, without limitation, statements regarding: (i) Textainer’s expectation that its sizeable contracted revenue stream will continue to provide its shareholders with attractive returns; (ii) Textainer’s expectation that Textainer will not order many more new standard dry freight containers through year end because it believes it already has a sufficient supply of new containers available from orders during the first half of the year; (iii) Textainer’s belief that, at this point, it expects that high in-fleet utilization will continue through at least the remainder of 2011; (iv) Textainer’s belief that resale prices have peaked; and (v) Textainer’s belief that it is in a strong position to continue purchasing both new and used containers to meet market demand and maintain its industry leading position. Readers are cautioned that these forward-looking statements involve risks and uncertainties, are only predictions and may differ materially from actual future events or results. These risks and uncertainties include, without limitation, the following: any deceleration

 

6


or reversal of the current domestic and global economic recoveries may materially and negatively impact our business, results of operations, cash flows, financial condition and future prospects; lease rates may decrease, which could harm our business, results of operations and financial condition and lessee defaults may harm our business, results of operations and financial condition by decreasing revenue and increasing storage, repositioning, collection and recovery expenses; we own a large and growing number of containers in our fleet and are subject to significant ownership risk; further consolidation of container manufacturers or the disruption of manufacturing for the major manufacturers could result in higher new container prices and/or decreased supply of new containers and any increase in the cost or reduction in the supply of new containers could harm our business, results of operations and financial condition; the demand for leased containers depends on many political and economic factors beyond Textainer’s control; the demand for leased containers is partially tied to international trade and if this demand were to decrease due to increased barriers to trade, or for any other reason, it could reduce demand for intermodal container leasing, which would harm our business, results of operations and financial condition; as we increase the number of containers in our owned fleet, we will have significant capital at risk and may need to incur more debt, which could result in financial instability; Textainer faces extensive competition in the container leasing industry; the international nature of the container shipping industry exposes Textainer to numerous risks; gains and losses associated with the disposition of used equipment may fluctuate and adversely affect our business, results of operations and financial condition; our indebtedness reduces our financial flexibility and could impede our ability to operate; and other risks and uncertainties, including those set forth in Textainer’s filings with the Securities and Exchange Commission. For a discussion of some of these risks and uncertainties, see Item 4 “Risk Factors” in Textainer’s Quarterly Report on Form 6-K and Item 3 “Key Information — Risk Factors” in Textainer’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on August 12, 2011 and March 18, 2011, respectively.

Textainer’s views, estimates, plans and outlook as described within this document may change subsequent to the release of this press release. Textainer is under no obligation to modify or update any or all of the statements it has made herein despite any subsequent changes Textainer may make in its views, estimates, plans or outlook for the future.

Contact:

Textainer Group Holdings Limited

Mr. Tom Gallo, 415-658-8227

Investor Relations Director

ir@textainer.com

 

7


TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

September 30, 2011 and December 31, 2010

(Unaudited)

(All currency expressed in United States dollars in thousands)

 

     2011      2010  
Assets      

Current assets:

     

Cash and cash equivalents

   $ 73,349       $ 57,081   

Accounts receivable, net of allowance for doubtful accounts of $7,061 and $8,653 in 2011 and 2010, respectively

     78,984         63,511   

Net investment in direct financing and sales-type leases

     23,618         19,117   

Trading containers

     13,139         404   

Containers held for sale

     3,914         2,883   

Prepaid expenses

     9,961         8,603   

Deferred taxes

     1,890         1,895   

Due from affiliates, net

     9         —     
  

 

 

    

 

 

 

Total current assets

     204,864         153,494   

Restricted cash

     42,065         15,034   

Containers, net of accumulated depreciation of $398,576 and $361,791 at 2011 and 2010, respectively

     1,888,515         1,437,259   

Net investment in direct financing and sales-type leases

     78,591         72,224   

Fixed assets, net of accumulated depreciation of $9,355 and $8,820 at 2011 and 2010, respectively

     1,870         1,804   

Intangible assets, net of accumulated amortization of $32,063 and $27,441 at 2011 and 2010, respectively

     48,054         60,122   

Interest rate swaps

     —           1,320   

Other assets

     7,653         5,950   
  

 

 

    

 

 

 

Total assets

   $ 2,271,612       $ 1,747,207   
  

 

 

    

 

 

 
Liabilities and Equity      

Current liabilities:

     

Accounts payable

   $ 6,974       $ 6,296   

Accrued expenses

     13,898         11,988   

Container contracts payable

     19,499         98,731   

Deferred revenue

     8,301         6,855   

Due to owners, net

     18,962         17,545   

Secured debt facility

     19,893         —     

Bonds payable

     91,500         51,500   
  

 

 

    

 

 

 

Total current liabilities

     179,027         192,915   

Revolving credit facility

     136,000         104,000   

Secured debt facility

     775,503         558,127   

Bonds payable

     487,066         175,570   

Deferred revenue

     1,962         2,994   

Interest rate swaps

     18,019         13,581   

Income tax payable

     21,982         20,821   

Deferred taxes

     7,278         8,632   
  

 

 

    

 

 

 

Total liabilities

     1,626,837         1,076,640   
  

 

 

    

 

 

 

Equity:

     

Textainer Group Holdings Limited shareholders’ equity:

     

Common shares, $0.01 par value. Authorized 140,000,000 shares; issued and outstanding 48,936,405 and 48,318,058 at 2011 and 2010, respectively

     489         483   

Additional paid-in capital

     152,580         181,602   

Accumulated other comprehensive income (loss)

     137         (52

Retained earnings

     491,115         401,849   
  

 

 

    

 

 

 

Total Textainer Group Holdings Limited shareholders’ equity

     644,321         583,882   

Noncontrolling interest

     454         86,685   
  

 

 

    

 

 

 

Total equity

     644,775         670,567   
  

 

 

    

 

 

 

Total liabilities and equity

   $ 2,271,612       $ 1,747,207   
  

 

 

    

 

 

 

 

8


TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Income

Three and Nine Months Ended September 30, 2011 and 2010

(Unaudited)

(All currency expressed in United States dollars in thousands, except per share amounts)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2011     2010     2011     2010  

Revenues:

        

Lease rental income

   $ 85,147      $ 61,268      $ 240,555      $ 167,590   

Management fees

     7,397        7,760        22,696        21,065   

Trading container sales proceeds

     9,024        2,211        19,444        9,846   

Gains on sale of containers, net

     7,913        4,389        23,724        21,379   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     109,481        75,628        306,419        219,880   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses (income):

        

Direct container expense

     4,480        4,107        12,753        21,448   

Cost of trading containers sold

     8,047        1,819        17,237        7,900   

Depreciation expense

     18,809        14,891        61,676        40,922   

Amortization expense

     1,443        1,636        4,775        4,788   

General and administrative expense

     5,801        5,146        18,042        16,095   

Short-term incentive compensation expense

     1,259        1,347        3,712        3,463   

Long-term incentive compensation expense

     1,356        1,062        4,464        4,200   

Bad debt expense (recovery), net

     1,681        227        2,225        (254

Gain on sale of containers to noncontrolling interest

     —          —          (19,773     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses, net

     42,876        30,235        105,111        98,562   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     66,605        45,393        201,308        121,318   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense):

        

Interest expense

     (13,708     (6,058     (30,242     (11,493

Interest income

     6        8        20        14   

Realized losses on interest rate swaps and caps, net

     (2,763     (2,292     (8,170     (7,399

Unrealized losses on interest rate swaps, net

     (3,516     (3,188     (5,758     (9,516

Other, net

     12        (492     (118     (829
  

 

 

   

 

 

   

 

 

   

 

 

 

Other expense, net

     (19,969     (12,022     (44,268     (29,223
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax and noncontrolling interest

     46,636        33,371        157,040        92,095   

Income tax (expense) benefit

     (1,131     49        (7,511     (3,219
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     45,505        33,420        149,529        88,876   

Net loss (income) attributable to the noncontrolling interest

     295        (2,752     (14,842     (8,892
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Textainer Group Holdings Limited common shareholders

   $ 45,800      $ 30,668      $ 134,687      $ 79,984   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Textainer Group Holdings Limited common shareholders per share:

        

Basic

   $ 0.94      $ 0.64      $ 2.76      $ 1.67   

Diluted

   $ 0.92      $ 0.62      $ 2.70      $ 1.63   

Weighted average shares outstanding (in thousands):

        

Basic

     48,916        48,171        48,832        47,907   

Diluted

     49,692        49,441        49,809        49,039   

 

9


TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

Nine months Ended September 30, 2011 and 2010

(Unaudited)

(All currency expressed in United States dollars in thousands)

 

     Nine Months Ended September 30,  
     2011     2010  

Cash flows from operating activities:

    

Net income

   $ 149,529      $ 88,876   
  

 

 

   

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation expense

     61,676        40,922   

Bad debt expense (recovery), net

     2,225        (254

Unrealized losses on interest rate swaps, net

     5,758        9,516   

Amortization of debt issuance costs

     5,878        2,711   

Amortization of intangible assets

     4,775        4,788   

Amortization of acquired net (below) above-market leases

     (353     170   

Amortization of deferred revenue

     (6,425     (5,345

Amortization of unearned income on direct financing and sales-type leases

     (6,798     (6,044

Gains on sale of containers, net

     (23,724     (21,379

Gain on sale of containers to noncontrolling interest

     (19,773     —     

Share-based compensation expense

     4,663        4,316   

Changes in operating assets and liabilities

     (18,433     539   
  

 

 

   

 

 

 

Total adjustments

     9,469        29,940   
  

 

 

   

 

 

 

Net cash provided by operating activities

     158,998        118,816   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchase of containers and fixed assets

     (761,191     (164,035

Payment for Textainer Marine Containers Ltd. capital restructuring, net of cash acquired

     (11,783     —     

Proceeds from sale of containers and fixed assets

     57,308        44,342   

Receipt of principal payments on direct financing and sales-type leases

     22,858        34,393   
  

 

 

   

 

 

 

Net cash used in investing activities

     (692,808     (85,300
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from revolving credit facility

     166,000        51,000   

Principal payments on revolving credit facility

     (134,000     (29,000

Proceeds from secured debt facility

     591,000        109,000   

Principal payments on secured debt facility

     (353,802     (70,000

Proceeds from bonds payable

     400,000        —     

Principal payments on bonds payable

     (48,625     (38,625

Increase in restricted cash

     (27,031     (7,262

Debt issuance costs

     (8,312     (11,669

Issuance of common shares upon exercise of share options

     5,840        3,787   

Excess tax benefit from share-based payment awards

     3,491        —     

Capital contributions from noncontrolling interest

     749        —     

Dividends paid

     (45,421     (34,606
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     549,889        (27,375
  

 

 

   

 

 

 

Effect of exchange rate changes

     189        12   
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     16,268        6,153   

Cash and cash equivalents, beginning of the year

     57,081        56,819   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 73,349      $ 62,972   
  

 

 

   

 

 

 

Cash paid during the period for:

    

Interest

   $ 24,506      $ 29,176   

Income taxes

   $ 541      $ 929   

Supplemental disclosures of noncash investing activities:

    

Increase (decrease) in accrued container purchases

   $ 11,072      $ (26,329

Containers placed in direct financing and sales-type leases

   $ 18,023      $ 48,783   

See accompanying notes to condensed consolidated financial statements.

 

10


TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Reconciliation of GAAP financial measures to non-GAAP financial measures

Three and Nine Months Ended September 30, 2011 and 2010

(Unaudited)

(All currency expressed in United States dollars in thousands, except per share amounts)

 

(1) The following is a reconciliation of certain GAAP measures to non-GAAP financial measures (such items listed in (a) to (d) below and defined as “Non-GAAP Measures”) for the three and nine months ended September 30, 2011 and 2010, including:

 

  (a) net income attributable to Textainer Group Holdings Limited common shareholders to EBITDA (EBITDA defined as net income attributable to Textainer Group Holdings Limited common shareholders before interest income and interest expense, realized and unrealized losses on interest rate swaps and caps, net, income tax expense, net income attributable to the noncontrolling interest (“NCI”), depreciation and amortization expense, gain on sale of containers to NCI and the related impact of reconciling items on net income attributable to the NCI);

 

  (b) net cash provided by operating activities to EBITDA (for the nine months ended September 30, 2011 and 2010 only);

 

  (c) net income attributable to Textainer Group Holdings Limited common shareholders to net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI (defined as net income attributable to Textainer Group Holdings Limited common shareholders before unrealized losses on interest rate swaps, net, gain on sale of containers to NCI and the related impact of reconciling items on net income attributable to the NCI); and

 

  (d) net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share to net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI (defined as net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share before unrealized losses on interest rate swaps, net, gain on sale of containers to NCI and the related impact of reconciling items on net income attributable to the NCI).

Non-GAAP Measures are not financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”) and should not be considered as an alternative to net income, income from operations or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity. Non-GAAP Measures are presented solely as supplemental disclosures. Management believes that EBITDA may be a useful performance measure that is widely used within our industry and net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI may be a useful performance measure because Textainer intends to hold its interest rate swaps until maturity and over the life of an interest rate swap held to maturity the unrealized (gains) losses will net to zero. EBITDA is not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure for comparison.

 

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Management also believes that net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI and net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI are useful in evaluating our operating performance because unrealized losses on interest rate swaps, net and gain on sale of containers to NCI are both noncash items and unrealized losses on interest rate swaps is a non-operating item. We believe Non-GAAP Measures provide useful information on our earnings from ongoing operations. We believe that EBITDA provides useful information on our ability to service our long-term debt and other fixed obligations and on our ability to fund our expected growth with internally generated funds. Non-GAAP Measures have limitations as analytical tools, and you should not consider either of them in isolation, or as a substitute for analysis of our operating results or cash flows as reported under GAAP. Some of these limitations are:

 

   

They do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

 

   

They do not reflect changes in, or cash requirements for, our working capital needs;

 

   

EBITDA does not reflect interest expense or cash requirements necessary to service interest or principal payments on our debt;

 

   

Although depreciation is a noncash charge, the assets being depreciated may be replaced in the future, and neither EBITDA, net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI or net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share excluding unrealized losses on interest rate swaps, net and gain on sale of containers to NCI reflects any cash requirements for such replacements;

 

   

They are not adjusted for all noncash income or expense items that are reflected in our statements of cash flows; and

 

   

Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.

 

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     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2011     2010     2011     2010  
     (Dollars in thousands)     (Dollars in thousands)  
     (Unaudited)     (Unaudited)  

Reconciliation of EBITDA:

        

Net income attributable to Textainer Group Holdings Limited common shareholders

   $ 45,800      $ 30,668      $ 134,687      $ 79,984   

Adjustments:

        

Interest income

     (6     (8     (20     (14

Interest expense

     13,708        6,058        30,242        11,493   

Realized losses on interest rate swaps and caps, net

     2,763        2,292        8,170        7,399   

Unrealized losses on interest rate swaps, net

     3,516        3,188        5,758        9,516   

Income tax expense (benefit)

     1,131        (49     7,511        3,219   

Net (loss) income attributable to the noncontrolling interest

     (295     2,752        14,842        8,892   

Depreciation expense

     18,809        14,891        61,676        40,922   

Amortization expense

     1,443        1,636        4,775        4,788   

Gain on sale of containers to noncontrolling interest

     —          —          (19,773     —     

Impact of reconciling items on net income attributable to the noncontrolling interest

     (257     (5,023     (4,869     (12,504
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 86,612      $ 56,405      $ 242,999      $ 153,695   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

       $ 158,998      $ 118,816   

Adjustments:

        

Bad debt (expense) recovery, net

         (2,225     254   

Amortization of debt issuance costs

         (5,878     (2,711

Amortization of acquired below (above)-market leases

         353        (170

Amortization of deferred revenue

         6,425        5,345   

Amortization of unearned income on direct financing and sales-type leases

         6,798        6,044   

Gains on sale of containers, net

         23,724        21,379   

Share-based compensation expense

         (4,663     (4,316

Interest income

         (20     (14

Interest expense

         30,242        11,493   

Realized losses on interest rate swaps and caps, net

         8,170        7,399   

Income tax expense

         7,511        3,219   

Changes in operating assets and liabilities

         18,433        (539

Impact of reconciling items on net income attributable to the noncontrolling interest

         (4,869     (12,504
      

 

 

   

 

 

 

EBITDA

       $ 242,999      $ 153,695   
      

 

 

   

 

 

 

 

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     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2011      2010     2011     2010  
     (Dollars in thousands)     (Dollars in thousands)  
     (Unaudited)     (Unaudited)  

Reconciliation of net income attributable to Textainer Group Holdings Limited common shareholders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to noncontrolling interest:

         

Net income attributable to Textainer Group Holdings Limited common

shareholders

   $ 45,800       $ 30,668      $ 134,687      $ 79,984   

Adjustments:

         

Unrealized losses on interest rate swaps, net

     3,516         3,188        5,758        9,516   

Gain on sale of containers to noncontrolling interest

        —          (19,773     —     

Impact of reconciling items on net income attributable to noncontrolling interest

     —           (580     4,519        (1,750
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income attributable to Textainer Group Holdings Limited common share holders excluding unrealized losses on interest rate swaps, net and gain on sale of containers to noncontrolling interest

   $ 49,316       $ 33,276      $ 125,191      $ 87,750   
  

 

 

    

 

 

   

 

 

   

 

 

 

Reconciliation of net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share excluding unrealized losses on interest rate swaps, net and gain on sale of containers to noncontrolling interest:

         

Net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share

   $ 0.92       $ 0.62      $ 2.70      $ 1.63   

Adjustments:

         

Unrealized losses on interest rate swaps, net

     0.07         0.06        0.12        0.20   

Gain on sale of containers to noncontrolling interest

     —           —          (0.40     —     

Impact of reconciling items on net income attributable to noncontrolling interest

     —           (0.01     0.09        (0.04
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share excluding unrealized losses on interest rate swaps, net and gain on sale of containers to noncontrolling interest

   $ 0.99       $ 0.67      $ 2.51      $ 1.79   
  

 

 

    

 

 

   

 

 

   

 

 

 

 

14


SIGNATURE

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.

Date: November 4, 2011

 

Textainer Group Holdings Limited

/s/ PHILIP K. BREWER

Philip K. Brewer
President and Chief Executive Officer

 

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