The Cronos Group (Nasdaq:CRNS) today reported results for the
quarter and twelve months ended December 31, 2005. Net income for
the year ended December 31, 2005 was $7.8 million, or $0.98 per
diluted share, compared with net income of $8.9 million, or $1.14
per diluted share, for 2004. Net income in 2005 was reduced by $4.9
million, or $0.63 per diluted share, by the impact of the following
non-operating items: -- A charge of $4.1 million was recorded for
the estimated cost of resolving the pending TOEMT litigation
against the Company; -- Legal expenses of $2.4 million were
incurred relating primarily to the TOEMT litigation; -- Charges of
$0.9 million were incurred for one-time termination benefits
relating to employee terminations pursuant to a reorganization of
the Group's marketing and lease operations; -- Income of $1.3
million was recognized on the recovery of amounts owed by a former
chairman and CEO to the Group and the related recovery of $0.8
million payable to a private container program; and -- Income of
$0.4 million was recognized as a result of the reversal of a
deferred tax provision. Total revenues for 2005 were $148.3 million
compared with $140.5 million for 2004. Gross lease revenue for 2005
was $139 million, an increase of $6.9 million, or 5%, when compared
with 2004. This reflected an increase in the size of the Company's
container fleet and strong utilization. Total expenses for 2005
were $143.9 million compared with $133.5 million for 2004. Payments
to Managed Container Programs increased by $9 million compared to
the prior year due to the improved operating performance and
overall increase in the size of the managed container programs.
Direct operating expenses declined by $2.5 million in 2005 due
primarily to a reduction in inventory-related costs. The Company
recorded a net loss of $1.5 million, or $0.19 per diluted share,
for the fourth quarter of 2005. Fourth quarter results included the
impact of $4.6 million, or $0.57 per diluted share, of
non-operating charges. Net income for the fourth quarter of 2004 of
$4 million, or $0.51 per diluted share, also included non-operating
income of $1.3 million, or $0.16 per diluted share, relating to the
recovery of an amount due under a loan with a former chairman and
CEO. Dennis J. Tietz, Chairman and CEO of Cronos, stated, "We are
pleased with our performance in 2005. We added $154 million of new
container equipment to our fleet and experienced strong demand for
our refrigerated, tank and dry freight special products.
Utilization of the Company's combined container fleet averaged
92.4% in 2005 compared to 91.8% in 2004. "We are also pleased that
we are now in a position to bring an end to the TOEMT litigation
against Cronos. Although the legal claims are without merit, their
defense was costly and required a significant amount of
management's time." Cronos also announced that, subject to
shareholder approval at the 2006 annual meeting of shareholders,
its Board of Directors has declared a dividend of $0.07 per common
share for the second quarter of 2006, payable on July 13, 2006 to
shareholders of record as of the close of business on June 23,
2006. Cronos is one of the world's leading lessors of intermodal
containers, owning and managing a fleet of over 446,000 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 450 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. 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. For further discussion of the risk
factors attendant to an investment in the Company's common shares,
see the Introductory Note in the Company's Annual Report on Form
10-K that was filed with the SEC on March 30, 2006. This press
release and other information concerning Cronos can be viewed on
Cronos' website at www.cronos.com. -0- *T The Cronos Group
Consolidated statements of income For the years ended December 31,
2005, 2004 and 2003 (US dollar amounts in thousands, except per
share amounts) 2005 2004 2003 Gross lease revenue $139,024 $132,096
$117,501 Equipment trading revenue 2,210 4,698 4,991 Commissions,
fees and other operating income: - Related parties 802 953 1,116 -
Unrelated parties 4,577 2,641 2,525 - Gain on settlement of
litigation 1,333 - - Interest income 344 120 130 ----------
---------- ---------- Total revenues 148,290 140,508 126,263
---------- ---------- ---------- Direct operating expenses 18,091
20,563 25,508 Payments to Managed Container Programs: - Related
parties 40,826 31,638 23,159 - Unrelated parties 36,177 36,323
32,571 Equipment trading expenses 1,978 4,018 4,600 Amortization of
intangible assets 188 188 188 Depreciation 15,141 17,993 17,495
Selling, general and administrative expenses 21,909 18,834 15,791
Interest expense 6,186 5,178 5,754 Recovery of amount payable to
Managed Container Program (703) - - Recovery of related party loan
note - (1,280) - Provision against legal claims 4,100 - -
---------- ---------- ---------- Total expenses 143,893 133,455
125,066 ---------- ---------- ---------- Income before income taxes
and equity in earnings of affiliate 4,397 7,053 1,197 Income taxes
(provision) benefit (864) (1,071) 1,494 Equity in earnings of
unconsolidated affiliate 4,269 2,883 1,499 ---------- ----------
---------- Net income 7,802 8,865 4,190 ========== ==========
========== Basic net income per common share $ 1.06 $ 1.22 $ 0.57
========== ========== ========== Diluted net income per common
share $ 0.98 $ 1.14 $ 0.55 ========== ========== ========== The
Cronos Group Consolidated balance sheets December 31, 2005 and 2004
(US dollar amounts in thousands, except per share amounts) 2005
2004 Assets Cash and cash equivalents $ 15,829 $ 17,579 Restricted
cash 4,200 1,489 Amounts due from lessees, net 28,540 25,136
Amounts receivable from Managed Container Programs 3,391 3,386 New
container equipment for resale 38,142 17,116 Net investment in
direct financing leases 12,678 7,382 Investment in unconsolidated
affiliates 31,358 15,364 Container equipment, net 121,988 166,584
Other equipment, net 1,130 963 Goodwill 11,038 11,038 Other
intangible assets, net 345 533 Related party loan receivable -
1,280 Other assets 3,093 3,899 ---------- ---------- Total assets
$271,732 $271,749 ========== ========== Liabilities and
shareholders' equity Amounts payable to Managed Container Programs
$ 25,462 $ 22,034 Amounts payable to container manufacturers 52,790
27,838 Direct operating expense payables and accruals 5,432 5,592
Other amounts payable and accrued expenses 11,873 8,810 Debt and
capital lease obligations 87,780 127,953 Income taxes 209 155
Deferred income taxes 2,965 3,083 Deferred income and deferred
acquisition fees 7,684 5,925 ---------- ---------- Total
liabilities 194,195 201,390 ---------- ---------- Shareholders'
equity Common shares 15,040 14,763 Additional paid-in capital
43,807 45,358 Common shares held in treasury (297) (297)
Accumulated other comprehensive income 880 230 Restricted retained
earnings 1,832 1,832 Unrestricted retained earnings 16,275 8,473
---------- ---------- Total shareholders' equity 77,537 70,359
---------- ---------- Total liabilities and shareholders' equity
$271,732 $271,749 ========== ========== *T
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