Cronos (NASDAQ:CRNS)
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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.
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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
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