CRNS Cronos Grp. S A (MM)

The Cronos Group (Nasdaq:CRNS) today reported net income of $2.6 million, or $0.32 per diluted share, for the quarter ended March 31, 2006, compared to $3.6 million, or $0.46 per diluted share, for the quarter ended March 31, 2005. Results for the first quarter of 2005 included the impact of the following items that had the net effect of increasing net income by $1.6 million, or $0.22 per diluted share: a gain of $1.3 million that was recorded on the receipt of amounts owed by a former chairman and CEO of the Company; $0.8 million that was recognized on the recovery of an amount payable to a managed container program; and, $0.5 million of legal expenses relating to the foregoing and other actions. Total revenues for the first quarter of 2006 were $38.2 million compared with $36.5 million for the comparable quarter in 2005. Gross lease revenue for the first quarter of 2006 was $1.3 million higher than in the corresponding period of 2005 reflecting strong demand for leased containers and the growth of the Company's Joint Venture Program. Utilization of the combined container fleet was 90% at March 31, 2006. Cronos purchased $53 million of new container equipment for its owned and managed fleets in the first quarter of 2006. Specialized equipment, comprising refrigerated, tank and dry freight special containers, accounted for 88% of total additions and reflected the strong demand experienced by Cronos for each of these products. Cronos is one of the world's leading lessors of intermodal containers, owning and managing a fleet of over 442,000 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 Condensed Unaudited Consolidated Statements of Income and Comprehensive Income (US dollar amounts in thousands, except per share amounts) Three Months Ended March 31, 2006 2005 -------- -------- Gross lease revenue $35,264 $34,004 Equipment trading revenue 1,726 135 Commissions, fees and other income: - Related parties 203 187 - Unrelated parties 987 875 Gain on settlement of litigation - 1,333 -------- -------- Total revenues 38,180 36,534 -------- -------- Direct operating expenses 5,107 4,552 Payments to Managed Container Programs: - Related parties 12,459 8,188 - Unrelated parties 7,799 9,069 Equipment trading expenses 1,572 127 Depreciation and amortization 2,950 4,592 Selling, general and administrative expenses 5,134 5,793 Interest expense 1,644 1,521 Recovery of amount payable to Managed Container Program - (703) -------- -------- Total expenses 36,665 33,139 -------- -------- Income before income taxes and equity in earnings of unconsolidated affiliate 1,515 3,395 Income taxes (227) (509) Equity in earnings of unconsolidated affiliate 1,271 743 -------- -------- Net income 2,559 3,629 ======== ======== Basic net income per common share $ 0.34 $ 0.50 ======== ======== Diluted net income per common share $ 0.32 $ 0.46 ======== ======== Condensed Unaudited Consolidated Balance Sheets (US dollar amounts in thousands, except per share amounts) March 31, December 31, ========= ============ 2006 2005 --------- --------- Assets Cash and cash equivalents $ 15,816 $ 15,829 Restricted cash 685 4,200 Amounts due from lessees 28,123 28,540 Amounts receivable from Managed Container Programs 5,072 3,391 New container equipment for resale 35,420 38,142 Net investment in direct financing leases 11,063 12,678 Investments in unconsolidated affiliates 35,151 31,358 Container equipment, net 124,678 121,988 Other equipment, net 1,087 1,130 Goodwill 11,038 11,038 Other intangible assets, net 299 345 Other assets 4,655 3,093 --------- --------- Total assets $273,087 $271,732 ========= ========= Liabilities and shareholders' equity Amounts payable to Managed Container Programs $ 23,879 $ 25,462 Amounts payable to container manufacturers 42,664 52,790 Direct operating expense payables and accruals 5,847 5,432 Other amounts payable and accrued expenses 5,835 11,873 Debt and capital lease obligations 102,574 87,780 Current and deferred income taxes 3,098 3,174 Deferred income and unamortized acquisition fees 7,994 7,684 --------- --------- Total liabilities 191,891 194,195 --------- --------- Shareholders' equity Common shares issued 15,267 15,040 Additional paid-in capital 44,164 43,807 Common shares held in treasury (297) (297) Accumulated other comprehensive income 1,396 880 Restricted retained earnings 1,832 1,832 Retained earnings 18,834 16,275 --------- --------- Total shareholders' equity 81,196 77,537 --------- --------- Total liabilities and shareholders' equity $273,087 $271,732 ========= ========= *T