Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 4, 2008

 

 

CAI International, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   001-33388   94-3298884
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (IRS Employer
Identification No.)

 

One Embarcadero Center, Suite 2101

San Francisco, California

  94111
(Address of principal executive office)   (Zip Code)

Registrant’s telephone number, including area code: (415) 788-0100

 

 

 

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On March 4, 2008 the Registrant issued a press release to announce its earnings for the fourth quarter and year ended December 31, 2007. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

Exhibit 99.1.    Press release dated March 4, 2008.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

        CAI International, Inc.  
        (Registrant)  
March 5, 2008         /s/ VICTOR GARCIA  
(Date)         Victor Garcia  
        Senior Vice President and Chief Financial Officer  

 

 

 

 

Press release

EXHIBIT 99.1

CAI International, Inc. Reports Fourth Quarter of 2007 and Full Year Results

SAN FRANCISCO, Mar 4, 2008 (PrimeNewswire via COMTEX News Network) — CAI International, Inc. (CAI) (NYSE:CAP) reported that net income in the fourth quarter of 2007 increased $0.9 million, or 16.9%, to $6.1 million, compared with net income of $5.2 million in the fourth quarter of 2006. Fully diluted earnings per share in the fourth quarter of 2007 was unchanged at $0.36 with 17.1 million average shares outstanding, compared to 16.3 million average shares outstanding in the fourth quarter of 2006.

In the fourth quarter of 2007, CAI’s revenue was $18.9 million, an increase of $0.3 million, or 1.4%, compared to the fourth quarter of 2006. Container rental revenue increased $2.4 million, or 26.2%, to $11.8 million from $9.4 million in the fourth quarter of 2006. Management fee revenue was $2.8 million, a decrease of $0.8 million, or 22.0%, from the management fee revenue reported in the fourth quarter of 2006. Gain on sale of container portfolios decreased $1.5 million, or 27.5%, to $3.9 million from $5.4 million in the fourth quarter of 2006. Finance lease income in the fourth quarter of 2007 was $0.3 million, unchanged from finance lease income reported in the fourth quarter of 2006.

Total revenue for the year ended December 31, 2007 increased by $4.2 million, or 6.9%, to $64.9 million compared to $60.7 million for the year ended December 31, 2006. Net income for the year ended December 31, 2007 increased by $3.6 million, or 23.3%, to $19.2 million, compared to $15.6 million for the year ended December 31, 2006. The fully diluted earnings per share for the year ended December 31, 2007 was $0.85 with 16.7 million average shares outstanding.

Comments from the CEO

Masaaki (John) Nishibori, Chief Executive Officer of CAI, commented, “CAI had excellent financial performance in 2007 and we finished the year with added momentum. Utilization and fleet growth have been the drivers of our results. Our average utilization was 96.0% in the fourth quarter and has remained strong to date in 2008. In 2007 we purchased $220 million worth of containers, exceeding our target of $150 million to $200 million. For the year, overall fleet size in TEUs increased 12.8%.

“Our overall revenue in the fourth quarter of 2007 was largely unchanged due to our selling fewer containers to container investors than in the fourth quarter of 2006. There continues to be interest from container investors in new container investments, however, in the fourth quarter of 2007 we decided to retain some investment in our owned fleet. As in the third quarter of 2007, our management fee income is lower than the year ago quarter due to lower fees on the disposition of older managed equipment.”

He continued, “We have not seen a decline in demand for our services as a result of the U.S. economic slowdown. Trading lanes to Europe and within Asia remain strong, and exports out of the U.S. have diminished the number of units off-lease in some of our traditionally low demand areas. We are optimistic that our utilization will remain strong this year. Price quotes from container manufacturers on new container production have increased by 20 to 30% as a result of increased commodity prices and other costs. As a result, we think that our customers will turn to leasing more this year, and will hold onto existing equipment as a more cost effective alternative to buying new equipment.”

Guidance for 2008

CAI believes that year over year revenue growth will accelerate as a result of the growth in the owned fleet in 2007, expected future investment and high utilization in 2008. Overall, CAI estimates 2008 earnings per share to be $1.30 to $1.35 on a fully diluted share count of 17.1 million.

CAI’s conference call to discuss financial results for the fourth quarter of 2007 will be held on Tuesday, March 4, 2008 at 5:00 p.m. EST. The dial-in number for the teleconference is 1-877-604-9672; outside U.S., call 1-719-325-4927. The call may be accessed live over the internet (listen only) under the “Investors” tab of CAI’s website, www.caiintl.com, by selecting “Q4 2007 Earnings Conference Call.” A webcast replay will be available for 30 days on the Investors section of our website.

About CAI International, Inc.

CAI is one of the world’s leading managers and lessors of intermodal freight containers. As of December 31, 2007, the company operated a worldwide fleet of 754,000 TEU of containers through 10 offices located in 8 countries.


The CAI International logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3968

This press release contains forward-looking statements regarding future events and the future performance of CAI International, Inc. These statements are forward looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 and involve risks and uncertainties that could cause actual results to differ materially from current expectations including, but not limited to, economic conditions, customer demand, increased competition and others. CAI refers you to the documents that it has filed with the Securities and Exchange Commission, including its registration statement on Form S-1 and its Form 10-Q for the second and third quarters of 2007. These documents contain additional important factors that could cause actual results to differ from current expectations and from forward-looking statements contained in this press release. Furthermore, CAI is under no obligation to (and expressly disclaims any such obligation to) update or alter any of the forward-looking statements contained in this press release whether as a result of new information, future events or otherwise, unless required by law.

CAI International, Inc.

Consolidated Balance Sheets

(In thousands, except share information)

 

     Dec. 31,
2007
   Dec. 31,
2006
 
ASSETS      

Cash

   $ 8,433    $ 20,359  

Accounts receivable (owned fleet), net of allowance for doubtful accounts of $530 and $1,045 at December 31, 2007 and 2006, respectively

     12,995      7,731  

Accounts receivable (managed fleet)

     22,238      24,061  

Related party receivables

     —        128  

Current portion of direct finance leases

     4,610      2,248  

Deposits, prepayments and other assets

     3,375      4,077  

Deferred tax assets

     2,087      915  
               

Total current assets

     53,738      59,519  

Container rental equipment, net of accumulated depreciation of $86,946 and $93,633 at December 31, 2007 and 2006, respectively

     242,606      161,353  

Net investment in direct finance leases

     6,356      4,329  

Furniture, fixtures and equipment, net of accumulated depreciation of $325 and $290 at December 31, 2007 and 2006 , respectively

     468      459  

Intangible assets, net of accumulated amortization of $1,548 and $307 December 31, 2007 and 2006, respectively

     5,994      7,093  

Goodwill

     50,247      50,247  
               

Total assets

   $ 359,409    $ 283,000  
               

LIABILITIES, CUMULATIVE REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

     

Accounts payable

   $ 3,060    $ 3,585  

Accrued expenses and other current liabilities

     3,275      15,276  

Due to container investors

     21,075      21,650  

Unearned revenue

     3,744      740  

Current portion of long-term debt

     —        5,000  

Current portion of capital lease obligation

     31      525  

Rental equipment payable

     25,446      30,788  
               

Total current liabilities

     56,631      77,564  

Revolving credit facility

     147,600      97,000  

Term loan

     —        13,750  

Subordinated convertible note payable

     —        37,500  

Deferred income tax liability

     24,030      24,500  

Capital lease obligation

     —        31  
               

Total liabilities

     228,261      250,345  
               

Cumulative redeemable convertible preferred stock:

     

Series A 10.5% cumulative redeemable convertible preferred stock, no par value. Aggregate liquidation value of zero and $1,531 at December 31, 2007 and 2006, respectively. Authorized 1,113,840 shares; issued and outstanding, zero and 724,920 shares at December 31, 2007 and 2006, respectively

     —        6,072  

Note receivable on preferred stock

     —        (1,172 )
               

Total cumulative redeemable convertible preferred stock

     —        4,900  
               

Stockholders’ equity:

     

Common stock, no par value; authorized 84,000,000 shares; issued and outstanding, zero and 10,584,000 shares at December 31, 2007 and 2006, respectively

     —        1,260  

Common stock, par value $.0001 per share; authorized 84,000,000 shares; issued and outstanding, 17,144,977 shares and zero at December 31, 2007 and 2006, respectively

     2      —    

Additional paid-in capital

     90,988      —    

Accumulated other comprehensive income

     101      95  

Retained earnings

     40,057      26,400  
               

Total stockholders’ equity

     131,148      27,755  
               

Total liabilities and stockholders’ equity

   $ 359,409    $ 283,000  
               


CAI International, Inc.

Consolidated Statements of Income

(In thousands, except per share data)

 

     Three Months Ended
December 31,
 
     2007     2006  

Revenue:

    

Container rental revenue

   $ 11,840     $ 9,383  

Management fee revenue

     2,783       3,569  

Gain on sale of container portfolios

     3,909       5,392  

Finance lease income

     338       267  
                

Total revenue

     18,870       18,611  
                

Operating expenses:

    

Depreciation of container rental equipment

     3,039       2,360  

Amortization of intangible assets

     313       307  

Impairment of container rental equipment

     75       81  

Gain on disposition of used container equipment

     (1,075 )     (747 )

Gain on settlement of lease obligation

     (86 )     —    

Equipment rental expense

     66       395  

Storage, handling and other expenses

     790       779  

Marketing, general and administrative expense

     3,959       3,389  
                

Total operating expenses

     7,081       6,564  
                

Operating income

     11,789       12,047  
                

Interest expense

     2,384       3,715  

Gain on extinguishment of debt

     —         —    

Interest income

     (100 )     (20 )
                

Net interest expense

     2,284       3,695  
                

Income before income taxes

     9,505       8,352  

Income tax expense

     3,395       3,119  
                

Net income

     6,110       5,233  

(Accretion)/decretion of preferred stock

     —         (6 )
                

Net income available to common shareholders

   $ 6,110     $ 5,227  
                

Net income per share:

    

Basic

   $ 0.36     $ 0.49  

Diluted

   $ 0.36     $ 0.36  

Weighted average shares outstanding :

    

Basic

     17,109       10,584  

Diluted

     17,109       16,270  

 


CAI International, Inc.

Consolidated Statements of Income

(In thousands, except per share data)

 

     Successor     Predecessor  
     Year
Ended
Dec. 31,
2007
    Three
Months
Ended
Dec. 31,
2006
    Nine
Months
Ended
Sept. 30,
2006
 

Revenue:

      

Container rental revenue

   $ 38,148     $ 9,383     $ 24,228  

Management fee revenue

     12,663       3,569       8,530  

Gain on sale of container portfolios

     12,855       5,392       8,365  

Finance lease income

     1,206       267       927  
                        

Total revenue

     64,872       18,611       42,050  
                        

Operating expenses:

      

Depreciation of container rental equipment

     8,805       2,360       9,653  

Amortization of intangible assets

     1,241       307       —    

Impairment of container rental equipment

     365       81       270  

Gain on disposition of used container equipment

     (4,400 )     (747 )     (804 )

Gain on settlement of lease obligation

     (780 )     —         —    

Equipment rental expense

     961       395       1,187  

Storage, handling and other expenses

     3,077       779       2,411  

Marketing, general and administrative expense

     15,668       3,389       8,967  
                        

Total operating expenses

     24,937       6,564       21,684  
                        

Operating income

     39,935       12,047       20,366  
                        

Interest expense

     10,406       3,715       4,183  

Gain on extinguishment of debt

     (681 )     —         —    

Interest income

     (126 )     (20 )     (37 )
                        

Net interest expense

     9,599       3,695       4,146  
                        

Income before income taxes

     30,336       8,352       16,220  

Income tax expense

     11,102       3,119       5,856  
                        

Net income

     19,234       5,233       10,364  

(Accretion)/decretion of preferred stock

     (5,577 )     (6 )     1,464  
                        

Net income available to common shareholders

   $ 13,657     $ 5,227     $ 11,828  
                        

Net income per share:

      

Basic

   $ 0.93     $ 0.49     $ 0.56  

Diluted

   $ 0.85     $ 0.36     $ 0.48  

Weighted average shares outstanding :

      

Basic

     14,713       10,584       21,168  

Diluted

     16,682       16,270       21,735  
           As of
Dec. 31,
2007
    As of
Dec. 31,
2006
 
           (unaudited)  

Managed fleet in TEUs

       500,433       483,333  

Owned fleet in TEUs

       253,910       185,645  
                  

Total

       754,343       668,978  
                  

Percentage of on-lease fleet on long-term leases

       70.9 %     65.3 %

Percentage of on-lease fleet on short-term leases

       26.8       32.8  

Percentage of on-lease fleet on finance leases

       2.3       1.9  
                  

Total

       100.0 %     100.0 %
                  
           Three
Months
Ended
Dec. 31,
2007
    Three
Months
Ended
Dec. 31,
2006
 
           (unaudited)  

Average fleet utilization rate for the period

       96.0 %     92.5 %

This news release was distributed by PrimeNewswire, www.primenewswire.com

SOURCE: CAI International

CAI International, Inc.

Victor Garcia, Chief Financial Officer

(415) 788-0100

vgarcia@caiintl.com

(C) Copyright 2008 PrimeNewswire, Inc. All rights reserved.

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