CRNS Cronos Grp. S A (MM)

The Cronos Group (Nasdaq:CRNS) today reported net income of $3.6 million, or $0.46 per diluted share, for the quarter ended March 31, 2005, compared to $789,000, or $0.10 per diluted share, for the corresponding period in 2004. Net income for the first quarter of 2005 included $2.1 million, or $0.27 per diluted share, of non-operating items comprising a gain of $1.3 million that was recorded on the receipt of amounts owed by a former chairman and CEO of the Company, and $0.8 million that was recognized on the recovery of an amount payable to a managed container program. Total revenues for the first quarter of 2005 were $36.5 million compared to $34.0 million for the same period in the prior year. Gross lease revenue for the first quarter of 2005 was $3.1 million higher than in the corresponding period of 2004 reflecting an 8% increase in the size of the Company's container fleet and strong utilization levels for all product types. Utilization of the Company's combined container fleet was 93% at March 31, 2005, compared to 90% at March 31, 2004. Total expenses for the first quarter of 2005 were $33.1 million, compared with $33.4 million for the comparable period in 2004. Direct operating expenses for the first quarter of 2005 declined by $2.5 million when compared to the same period in 2004 due primarily to reductions in off-hire container inventories. Payments to managed container programs increased by $2.8 million in the first quarter when compared to the same quarter in 2004, due to the improved performance of each of the managed segments. Cronos purchased $40 million of new container equipment for its owned and managed fleets in the first quarter of 2005. Cronos is one of the world's leading lessors of intermodal containers, owning and managing a fleet of over 447,000 TEU (twenty-foot equivalent units). The diversified Cronos fleet of dry cargo, refrigerated and other specialized containers is leased to a customer base of over 450 ocean carriers and transport operators around the world. Cronos provides container-leasing services through an integrated network of offices using 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 for the year ended December 31, 2004, which was filed with the SEC on March 22, 2005. This press release and other information concerning Cronos can be viewed on Cronos' website at www.cronos.com. -0- *T The Cronos Group Condensed Unaudited Consolidated Statements of Income Three Months Ended March 31, 2005 2004 --------- --------- Gross lease revenue $34,004 $30,903 Equipment trading revenue 135 2,576 Commissions, fees and other income: - Related parties 187 223 - Unrelated parties 875 334 Gain on settlement of litigation 1,333 - --------- --------- Total revenues 36,534 34,036 --------- --------- Direct operating expenses 4,552 7,008 Payments to Managed Container Programs: - Related parties 8,188 6,490 - Unrelated parties 9,069 7,952 Equipment trading expenses 127 2,296 Depreciation and amortization 4,592 4,294 Selling, general and administrative expenses 5,793 4,242 Interest expense 1,521 1,154 Recovery of amount payable to a Managed Container Program (703) - --------- --------- Total expenses 33,139 33,436 --------- --------- Income before income taxes and equity in earnings of affiliate 3,395 600 Income taxes (509) (343) Equity in earnings of unconsolidated affiliate 743 532 --------- --------- Net income 3,629 789 Other comprehensive income (loss): - change in fair value of forward exchange contracts, net of tax - 271 - change in fair value of derivatives held by affiliate, net of tax 619 (237) --------- --------- Comprehensive income $4,248 $823 ========= ========= Basic net income per common share $0.50 $0.11 ========= ========= Diluted net income per common share $0.46 $0.10 ========= ========= The Cronos Group Condensed Unaudited Consolidated Balance Sheets March 31, December 31, 2005 2004 Assets Cash and cash equivalents $11,340 $17,579 Restricted cash 1,073 1,489 Amounts due from lessees, net 25,712 25,136 Amounts receivable from Managed Container Programs 2,559 3,386 New container equipment for resale 26,339 17,116 Net investment in direct financing leases 8,293 7,382 Investments in unconsolidated affiliates 17,379 15,364 Container equipment, net 168,298 166,584 Other equipment, net 1,015 963 Goodwill, net 11,038 11,038 Other intangible assets, net 486 533 Related party loan receivable - 1,280 Other assets 3,386 3,899 ------------ ------------ Total assets 276,918 $271,749 ============ ============ Liabilities and shareholders' equity Amounts payable to Managed Container Programs $22,686 $22,034 Amounts payable to container manufacturers 37,286 27,838 Direct operating expense payables and accruals 4,076 5,592 Other amounts payable and accrued expenses 6,097 8,810 Debt and capital lease obligations 121,989 127,953 Current and deferred income taxes 3,417 3,238 Deferred income and unamortized acquisition fees 6,684 5,925 ------------ ------------ Total liabilities 202,235 201,390 ------------ ------------ Shareholders' equity Common shares issued (7,398,602; 7,381,349 shares) 14,797 14,763 Additional paid-in capital 45,400 45,358 Common shares held in treasury (112,000 shares) (297) (297) Accumulated other comprehensive income 849 230 Restricted retained earnings 1,832 1,832 Retained earnings 12,102 8,473 ------------ ------------ Total shareholders' equity 74,683 70,359 ------------ ------------ Total liabilities and shareholders' equity $276,918 $271,749 ============ ============ *T