SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 2, 2000 (October 24, 2000)
Date of Report (Date of earliest event reported)
INTERPOOL, INC
(Exact Name of Registrant as Specified in Charter)
Delaware 1-11862 13-3467669
(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
211 College Road East, Princeton, New Jersey 08540
(Address of Principal Executive Offices) (Zip Code)
(609) 452-8900
Registrant's telephone number, including area code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets.
On October 24, 2000, Interpool, Inc. (the "Registrant") consummated the
transactions contemplated by an Asset Purchase Agreement, dated as of July 27,
2000, between the Registrant and Transamerica Leasing, Inc. (the "Seller"), a
subsidiary of Transamerica Finance Corporation and AEGON N.V, as amended on
October 24, 2000 (the "Asset Purchase Agreement"). Pursuant to the Asset
Purchase Agreement, the Registrant acquired substantially all of the domestic
containers, chassis and trailers of Seller's North American intermodal division
("Transamerica N.A. Intermodal") and related assets and assumed certain
liabilities related to the assets and Seller's business for an aggregate
purchase price of approximately $681 million in cash, subject to post-closing
adjustments. The Registrant currently plans to use the assets it acquired
pursuant to the Asset Purchase Agreement in its own intermodal business. The
Registrant funded the acquisition through a combination of cash on-hand and
proceeds from (i) committed secured financing facilities arranged by First Union
Securities, Inc. in an amount equal to approximately $101 million and (ii) a
syndicated secured loan arranged by Citicorp USA, Inc. in an amount equal to
approximately $300 million. In connection with the transactions contemplated by
the Asset Purchase Agreement, the Registrant and Seller entered into a
Transition Services Agreement under which the Seller has agreed to provide
certain information and transition services to the Registrant to enable the
Registrant to continue operating the assets it acquired from the Seller. The
foregoing description of the Asset Purchase Agreement is qualified in its
entirety by the terms and conditions of the Asset Purchase Agreement which is
incorporated herein by reference to the Form 8K filed on November 2, 2000. On
October 24, 2000, the Registrant issued a press release announcing the
consummation of the transactions contemplated by the Asset Purchase Agreement. A
copy of the press release is attached hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Public Accountants 4
Balance Sheets as of September 30, 2000 and December 31, 1999 5
Statements of Income for the nine month period ended September 30, 6
2000, and the years ended December 31, 1999 and 1998
Statements of Changes in Divisional Equity for the nine month period ended
September 30, 2000 and the years ended December 31,
1999 and 1998 7
Statements of Cash Flows for the nine month period ended
September 30, 2000 and the years ended December 31, 1999 and 1998 8
Notes to Financial Statements 9
Unaudited Pro Forma Combined Condensed Consolidated Financial
Statements 18
Report of Independent Public Accountants
To the Board of Directors of Interpool Inc.:
We have audited the accompanying balance sheets of Transamerica N.A. Intermodal
(the "Company") as of September 30, 2000 and December 31, 1999, and the related
statements of income, changes in divisional equity, and cash flows for the nine
month period ended September 30, 2000 and the years ended December 31, 1999 and
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Transamerica N.A. Intermodal as
of September 30, 2000 and December 31 1999, and the results of its operations
and its cash flows for the nine month period ended September 30, 2000, and the
years ended December 31, 1999 and 1998 in conformity with accounting principles
generally accepted in the United States.
ARTHUR ANDERSEN LLP
New York, New York
July 27, 2001
TRANSAMERICA N.A. INTERMODAL
BALANCE SHEETS
(dollars in thousands)
9/30/00 12/31/99
-------- --------
Assets:
Cash and Marketable Securities $ -- $ 15
Revenue Earning Equipment 930,446 868,929
Accumulated Depreciation 354,438 328,076
-------- --------
Net Revenue Earning Equipment 576,008 540,853
Accounts Receivable, net of allowance for doubtful
accounts of $1,292 and 1,263 in 2000 and 1999
respectively 30,895 35,920
Other Assets 10,117 9,616
-------- --------
Total Assets $617,020 $586,404
======== ========
Liabilities and Divisional Equity:
Accounts Payable and Accrued Expenses $ 22,769 $ 9,687
Deferred Tax Liabilities 166,011 156,654
Advances from TAL 371,131 364,055
-------- --------
Total Liabilities 559,911 530,396
Commitments and Contingencies
Divisional Equity 57,109 56,008
-------- --------
Total Liabilities and Divisional Equity $617,020 $586,404
======== ========
The accompanying notes are an integral part of these balance sheets.
TRANSAMERICA N.A. INTERMODAL
STATEMENTS OF INCOME
(dollars in thousands)
9 Months Ended Year Ended Year Ended
9/30/00 12/31/99 12/31/98
REVENUES:
------------------------------------
Leasing Revenues $ 122,917 $ 165,885 $ 164,353
------------------------------------
COST AND EXPENSES:
Lease operating expenses 33,696 36,707 40,906
Administrative expenses 10,055 12,402 18,394
Depreciation and amortization of leasing equipment 39,458 50,387 49,836
Other (income)/expense, net (2,062) (2,336) (3,917)
Interest expense, net of interest earnings from TAL 18,107 22,546 23,679
------------------------------------
99,254 119,706 128,898
------------------------------------
Income before provision for income taxes 23,663 46,179 35,455
PROVISION FOR INCOME TAXES 9,357 18,102 14,088
------------------------------------
NET INCOME $ 14,306 $ 28,077 $ 21,367
====================================
The accompanying notes are an integral part of these statements.
TRANSAMERICA N.A. INTERMODAL
STATEMENTS OF CHANGES IN DIVISIONAL EQUITY
(dollars in thousands)
Balance, December 31, 1997 $ 58,682
Net Income 21,367
Dividends Paid (24,263)
--------
Balance, December 31, 1998 55,786
Net Income 28,077
Dividends Paid (27,855)
--------
Balance, December 31, 1999 56,008
Net income 14,306
Dividends Paid (13,205)
--------
Balance, September 30, 2000 $ 57,109
========
The accompanying notes are an integral part of these statements.
TRANSAMERICA N.A. INTERMODAL
STATEMENTS OF CASH FLOWS
(dollars in thousands)
9 Months Year Ended Year Ended
Ended 9/30/00 12/31/99 12/31/98
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 14,306 $ 28,077 $ 21,367
Depreciation and amortization 39,458 50,387 49,836
Gain on sale of leasing equipment (1,090) (1,511) (3,550)
Accounts and notes receivable 5,025 (11,296) 144
(Increase) decrease in other assets (501) (662) (4)
Increase in accounts payable and accrued expenses 13,082 (447) (1,365)
Deferred Tax Provision 9,357 18,102 14,088
----------- ----------- -----------
Net cash provided by operating activities 79,637 82,650 80,516
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of leasing equipment (77,286) (64,568) (49,498)
Proceeds from dispositions of leasing equipment 3,763 8,342 12,070
----------- ----------- -----------
Net cash used for investing activities (73,523) (56,226) (37,428)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net advances from (reimbursements to) TAL 7,076 1,446 (18,825)
Dividends paid (13,205) (27,855) (24,263)
----------- ----------- -----------
Net cash provided by financing activities (6,129) (26,409) (43,088)
----------- ----------- -----------
Net increase (decrease) in cash and short-term investments (15) 15 --
15 -- --
----------- ----------- -----------
CASH AND SHORT-TERM INVESTMENTS, BEG. OF PERIOD $ -- $ 15 $ --
=========== =========== ===========
The accompanying notes are an integral part of these statements
TRANSAMERICA N.A. INTERMODAL
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 (IN THOUSANDS)
(1) Nature of operations and significant accounting policies:
Nature of operations -
Transamerica N.A. Intermodal (the "Company"), is a division of Transamerica
Leasing Inc. ("TAL") itself a wholly owned subsidiary of Transamerica Finance
Corp. ("TFC"), Transamerica and AEGON, NV. Separate accounting records were
maintained for the Company, however financial statements prepared in accordance
with accounting principles generally accepted in the United States had not been
historically prepared; all assets, liabilities, revenues and expenses
attributable to the Company being part of the financial results of TAL. As such,
the Company was economically dependent upon TAL.
The Company conducts business principally in three industry segments. These are
the leasing of (i) domestic intermodal chassis, (ii) rail trailers and (iii)
domestic containers. The customers for this equipment are a significant number
of domestic companies, some of which are domestic subsidiaries or branches of
international shipping lines. Equipment is principally purchased directly or
acquired through lease agreements.
In October 2000, the Company was acquired by Interpool Inc. Under the terms of
the agreement, substantially all of the domestic containers, chassis, and
trailers along with related assets and liabilities were sold to Interpool Inc.
Basis of Presentation--
The accompanying financial statements present the operations of the Company.
Financial statement balances have been derived from the financial records of
TAL, which contained businesses other than the domestic intermodal chassis, rail
trailer, and domestic container businesses. These financial statements are
presented as if the Company had existed as an entity separate from TAL during
the periods presented, and includes financial information directly related to
the Company's operations and allocated costs from TFC and TAL for services
provided to the Company by these entities. Divisional equity at January 1, 1998
represents the net assets of the Company at that point in time and does not
reflect cumulative income statement activity from the Company's inception. These
statements do not purport to reflect the financial position, or results of
operations or cash flows, that would have resulted if the Company had operated
as a separate entity. Management believes the financial statements of the
Company to be a fair representation of Company's financial position, results of
operations and cash flows within the framework of TAL's business.
The assets of the Company were determined by specific identification of the
assets used in, or relating to, the Company's business.
Revenue Recognition -
Equipment leasing revenues include revenue generated from operating leases,
which are recognized over the term of the respective lease agreements.
Expense Recognition --
The statements of income of the Company include all costs directly attributable
to the Company and also include
allocated expenses for services provided by TFC and TAL. All lease operating
expenses, depreciation, and other income and expenses are directly attributable
to the Company . Certain administrative expenses including employee benefits,
occupancy, information technology services and technology usage that relate to
the Company have been allocated. In 2000 and 1999, expense allocations have been
based on specific identification or headcount equivalents. During 1998, expense
allocations were based on fleet size. Management believes that these allocations
are reasonable and represent their best estimate. These allocations are not
necessarily indicative of the costs and expenses that would have resulted if the
Company had been operated as a separate entity.
Cash --
The Company maintains only a notional cash balance. TAL provides the Company
with all of its liquidity needs.
Accounts Receivable --
Accounts receivable represent amounts due from lessors for the rental of the
Company's equipment. The Company's policy is to establish an allowance for
possible losses for at least 50% of an account balance when an account is 120
past due and to write-off the account when it becomes 365 days past due.
Management believes the allowance for doubtful accounts of $1,292 and $1,263 at
September 30, 2000 and December 31, 1999, respectively, provide adequate
reserves for potentially uncollectable accounts.
Other Assets -
Other assets include land and buildings, furniture and equipment, capitalized
software costs, and prepaid licensing expenses. Buildings are being depreciated
over 20 years using the straight-line method. Furniture and equipment are being
depreciated over 10 years using the straight -line method. Capitalized software
costs are being depreciated over 5 years using the straight-line method.
Depreciation expense during the nine months ended September 30, 2000, and the
years ended December 31, 1999 and 1998 totaled $626, $321 and $169 respectively.
Prepaid licensing costs are depreciated using the straight-line method over the
life of the related license.
Income Taxes -
The Company's operations and those of TAL and TFC are included in the Federal
and state income tax returns of Transamerica under the terms of a tax sharing
agreement. Pursuant to the tax sharing agreement, Transamerica utilizes net
operating loss carryforwards generated by the Company and TAL. The Company
records a deferred tax asset equal to the amount of the net operating losses
utilized and earns interest income on these balances from TAL. This interest
income is recorded net of interest expense on the accompanying statements of
income and totaled $1,173, $2,488, and $2,954 for the nine month period ended
September 30, 2000 and the years ended December 31, 1999 and 1998.
Leasing Equipment -
Depreciation and amortization of leasing equipment, both equipment currently
on-lease to customers and available for hire, are provided under the
straight-line method based on the following useful lives:
Rail Trailers 13-1/2 years
Domestic Containers 12 years
Chassis 15 to 20 years
Gains or losses derived from the disposition of leasing equipment are recorded
in the year of disposition.
The residual value of leasing equipment is estimated based on the projections
for the economic value and market value of the respective intermodal equipment
as well as the experience in leasing and selling similarly aged equipment. Such
projected values are reviewed and updated when market and/or economic conditions
change.
Concentration of credit risk -
The Division extends credit to its customers after extensive credit evaluation.
At September 30, 2000 and December 31, 1999 less than 1% of accounts receivable
for operating leases were from customers outside of the United States.
In 2000, 1999 and 1998 the Company's top 20 customers represented approximately
84%, 87% and 88% respectively, of its consolidated divisional revenues.
Prospective accounting pronouncements -
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities. In June 1999, the FASB issued Statement No.
137, Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement No. 133. In June 2000, the FASB issued
Statement 138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities, an amendment of FASB Statement No. 133. Statement 133, as amended,
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. The Statement requires that changes in the
derivative instrument's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. Special accounting for qualifying
hedges allows a derivative instrument's gains and losses to offset related
results on the hedged item in the income statement, to the extent effective, and
requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting.
Statement 133, as amended, is effective for fiscal years beginning after June
15, 2000. A company may also implement the Statement as of the beginning of any
fiscal quarter after issuance (that is, fiscal quarters beginning June 16, 1998,
and thereafter). Statement 133 cannot be applied retroactively. Statement 133
must be applied to (a) derivative instruments and (b) certain derivative
instruments embedded in hybrid instruments. With respect to hybrid instruments,
a company may elect to apply Statement 133, as amended, to (1) all hybrid
instruments, (2) only those hybrid instruments that were issued, acquired, or
substantively modified after December 31, 1997, or (3) only those hybrid
instruments that were issued, acquired, or substantively modified after December
31, 1998. The Company has determined that it did not hold any derivative or
hybrid instruments as defined by Statement 133.
Use of estimates -
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect amounts reported in the financial statements and the accompanying
disclosures. The more significant estimates that impact these statements include
such items as allocations of costs and expenses from TAL and TFC to the Company.
In the opinion of management, the allocation of costs and expenses are
reasonable; however, they are not necessarily indicative of costs and expenses
that would have been incurred had the Company been operated as an unaffiliated
entity. Although management believes these estimates to be reasonable, actual
results could differ from those estimates.
(2) Leasing Activities:
As lessee -
As of September 30, 2000, the aggregate annual minimum rental commitments under
operating leases having initial or remaining noncancellable terms in excess of
one year are as follows:
2001 $3,629
2002 $2,075
The Company leases office space under rental agreements expiring at various
dates into 2002. The remaining aggregate minimum commitments are as follows:
2001 $205
2002 $ 17
As Lessor -
As of September 30, 2000 the Company had noncancellable operating leases, under
which it will receive future minimum rental payments as follows:
2001 $24,456
2002 $19,179
2003 $ 8,942
2004 $ 8,286
2005 $ 5,584
(3) Allowance for doubtful accounts:
The following summarizes the activity in the allowance for doubtful accounts:
2000 1999 1998
------- ------- -------
Balance, beginning of period $ 1,263 $ 949 $ 1,528
Provision charged to expense 3,494 530 --
Write-offs, net of recoveries (3,465) (216) (579)
------- ------- -------
Balance, end of period $ 1,292 $ 1,263 $ 949
======= ======= =======
The allowance for doubtful accounts includes the Company's estimate of
allowances necessary for receivables. As of September 30, 2000 and December 31,
1999, included in accounts receivable are non-performing receivables of $371 and
$569, respectively.
(4) Advances from TAL and Divisional Equity:
The Company was dependent upon TAL for all financing of business operations.
Historically, TAL has managed the leverage of the Company to a ratio of 6.5:1.
As a result, advances from TAL and divisional equity on the accompanying balance
sheets represent amounts calculated based on these established leverage ratios.
Shareholders equity is increased by earnings of the Company and reduced by
dividends to arrive at the 6.5:1 leverage ratio. Interest expense incurred on
the advances from TAL totaled $19,280, $25,034, and $26,633 for the nine month
period ended September 30, 2000, and the years ended December 31, 1999 and 1998,
respectively, and is recorded net of interest income earned from Transamerica
under the terms of the tax sharing agreement on the accompanying income
statements. The effective interest rates charged by TAL to the Company on these
advances (which are based on TAL's average cost of funds) were 7.1%, 6.8%, and
6.9% for the nine month period ended September 30, 2000, and the years ended
December 31, 1999 and 1998, respectively.
(5) Commitments and Contingencies:
At September 30, 2000, the Division had outstanding purchase commitments for
equipment of approximately $14,958.
The Company is engaged in various legal proceedings from time to time incidental
to the conduct of its business. In the opinion of management, the Company is
adequately insured against the claims relating to such proceedings, and the
ultimate liability arising out of such proceedings will not have a material
adverse effect on the financial condition or results of operations of the
Company.
(6) Cash Flow Information:
For the periods ended September 30, 2000, December 31, 1999 and 1998, cash paid
for interest expense (net of interest earned from TAL in accordance with the tax
sharing agreement) was approximately $18,107, $22,546 and $23,679, respectively.
No cash was paid for Federal or state income taxes during the periods ended
September 30, 2000, December 31, 1999, and December 31, 1998.
(7) Income Taxes:
Significant components of deferred tax assets and liabilities were as follows:
9/30/00 12/31/99
-------- --------
Deferred tax assets:
Loss carry forwards $ 13,804 $ 23,984
Deferred tax liabilities:
Operating property, net $179,815 $180,638
-------- --------
Net deferred tax liability $166,011 $156,654
======== ========
A reconciliation of the U.S. statutory tax rate to the actual tax rate follows:
2000 1999 1998
------ ------ ------
U.S. statutory rate 35.0% 35.0% 35.0%
State taxes 4.5% 4.2% 4.7%
Actual tax rate 39.5% 39.2% 39.7%
The provision for income taxes reflected in the accompanying statements of
income is as follows:
9 Months Ended Year Ended Year Ended
9/30/00 12/31/99 12/31/98
----------- ----------- -----------
U.S. Federal $ 7,596 $ 15,727 $ 12,156
State 1,761 2,375 1,932
----------- ----------- -----------
$ 9,357 $ 18,102 $ 14,088
=========== =========== ===========
Current $ -- $ -- $ --
Deferred 9,357 18,102 14,088
----------- ----------- -----------
$ 9,357 $ 18,102 $ 14,088
=========== =========== ===========
(8) Employee Benefit Plans:
Transamerica had a savings plan for eligible employees. Under the employee
savings plan, Transamerica contributed an amount equal to 75% of employee
contributions up to a maximum of 6% of each employee's salary, or $10,500 each
year. Contributions are directed by the employees into investment funds
maintained in accordance with the employee savings plan. Transamerica
contributions charged to the Company's operations related to the Company's
employees amounted to $150 and $160, and $108 in 2000,and 1999, and 1998
respectively. The company also maintains a supplemental retirement plan program
for all full-time eligible employees. Due to the over funded status of the
Transamerica plan, no contributions were required by the Transamerica in 2000,
and 1999, and 1998 respectively.
In addition, the Company maintained a bonus/incentive plan program for
substantially all full-time employees. Transamerica expenses charged to
operations associated with this program were $641 and $537, and $323 in 2000,
1999, and 1998 respectively.
(9) Segment and geographic data:
9 Months ended September 30, 2000
Domestic
Chassis Rail Containers Consolidated
------- ---- ---------- ------------
($000's)
Revenues from external customers $ 57,357 $ 48,151 $ 17,409 $122,917
Lease operating & administrative expenses 21,573 21,589 589 43,751
Depreciation & amortization 13,689 16,878 8,891 39,458
Other income/(expense), net 1,172 1,058 (168) 2,062
Interest expense 8,382 7,361 2,364 18,107
Income before taxes 14,885 3,381 5,397 23,663
Leasing Equipment, net 302,100 166,901 107,007 576,008
Equipment purchases 38,672 15,886 22,728 77,286
Total segment assets $ 323,443 $181,329 $ 112,248 $617,020
1999
Domestic
Chassis Rail Containers Consolidated
------- ---- ---------- ------------
($000's)
Revenues from external customers $ 67,231 $ 76,713 $ 21,941 $ 165,885
Lease operating & administrative expenses 19,023 27,166 2,920 49,109
Depreciation & amortization 16,495 22,988 10,904 50,387
Other income/(expense), net 1,414 882 40 2,336
Interest expense 10,284 9,272 2,990 22,546
Income before taxes 22,843 18,169 5,167 46,179
Leasing Equipment, net 277,883 169,343 93,627 540,853
Equipment purchases 54,653 -- 9,915 64,568
Total segment assets $ 299,217 $ 190,075 $ 97,112 $ 586,404
1998
Domestic
Chassis Rail Containers Consolidated
------- ---- ---------- ------------
($000's)
Revenues from external customers $ 60,453 $ 82,288 $ 21,612 $ 164,353
Lease operating & administrative expenses 19,869 33,823 5,608 59,300
Depreciation & amortization 15,437 24,064 10,335 49,836
Other income/(expense), net 1,119 2,629 169 3,917
Interest expense 9,743 10,430 3,506 23,679
Income before taxes 16,523 16,600 2,332 35,455
Leasing Equipment, net 242,613 195,114 95,776 533,503
Equipment purchases 27,527 6,117 15,855 49,449
Total segment assets $ 257,058 $ 214,128 $ 95,895 $ 567,081
(10) Quarterly financial data (unaudited):
($000's) 1st 2nd 3rd 4th
------- ------- ------- --------
2000
Revenues $40,588 $41,118 $41,211 N/A
Net Income $ 5,718 $ 5,240 $ 3,348 N/A
1999
Revenues $39,774 $40,090 $41,259 $44,762
Net Income $ 6,293 $ 6,120 $ 6,759 $ 8,905
1998
Revenues $38,731 $39,442 $41,082 $45,098
Net Income $ 3,105 $ 4,753 $ 5,473 $ 8,036
(11) Subsequent Events:
In October 2000, Interpool Inc. completed its acquisition of the Company. Under
the terms of the agreement, Interpool Inc. acquired substantially all of the
domestic containers, chassis, and rail trailers of the Company and related
assets and assumed certain of the liabilities of the business. Interpool Inc.
paid approximately $681,000 in cash for the acquisition, which includes $8,400
in fees and other costs for advisors, of which $1,650 is payable to a director
of Interpool Inc. for consultation services rendered. The acquisition was
financed through a combination of cash on hand, proceeds obtained from a
committed secured financing facility in the amount of approximately $300,000, as
well as approximately $101,000 of proceeds obtained from a chassis
securitization facility established in July 2000.
In the acquisition, Interpool Inc. acquired approximately 70,000 chassis, 23,000
rail trailers, and 18,000 domestic containers. The acquisition was effective
October 1, 2000 in a transaction accounted for under the purchase method of
accounting, accordingly the acquired assets and liabilities have been recorded
at the estimated fair values at the date of acquisition on the financial
statements of Interpool Inc.
UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
In the schedules below, we attempt to illustrate the financial results that
might have occurred if Interpool's acquisition of Transamerica N.A. Intermodal
had been completed previously. Presented are Unaudited Pro Forma Combined
Condensed Consolidated Statements of Income for nine month period ended
September 30, 2000 and year ended December 31,1999 as if the acquisition had
been consummated at the beginning of the each period presented. Also presented
is the Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet as of
September 30, 2000 as if the acquisition had been consummated on the balance
sheet date. These unaudited pro forma combined condensed consolidated financial
statements should be read in conjunction with the historical consolidated
financial statements of Interpool and related notes and "Management's Discussion
and Analysis of Results of Operations and Financial Condition" contained
therein, with respect to Interpool, in the Interpool's December 31, 2000 Annual
Report on Form 10-K, as amended, and the Quarterly Report on Form 10-Q for the
nine months ended September 30, 2000
It is important to remember that this information is hypothetical, and does not
necessarily reflect the financial performance that would have actually resulted
if the acquisition had been completed on the dates discussed. It is also
important to remember that this information does not necessarily reflect future
financial performance.
INTERPOOL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
(dollars in thousands)
Nine Month Period Ended September 30, 2000
-----------------------------------------------------------------------
Transamerica
N.A. Less: Interpool/T.A.
Interpool Intermodal Assets Held Pro Forma Pro Forma
Historical Historical For Sale(1) Adjustments Combined
---------- ---------- ---------- ---------- --------------
REVENUES:
---------- ---------- ---------- ---------- ----------
Leasing Revenues $ 196,348 $ 122,917 $ 65,560 $ -- $ 253,705
---------- ---------- ---------- ---------- ----------
COST AND EXPENSES:
Lease operating expenses 27,075 31,396 18,348 40,123
Administrative expenses 36,612 10,055 3,830 42,837
Depreciation and amortization of leasing equipment 48,625 39,458 25,769 (1,836)(2) 60,478
Other (income)/expense, net 1,344 238 (890) 2,472
Interest expense, net 46,842 18,107 (18,107)(3) 62,850
7,850(3)
8,158(4)
---------- ---------- ---------- ---------- ----------
160,498 99,254 47,057 (3,935) 208,760
---------- ---------- ---------- ---------- ----------
Income before provision for income taxes and
extraordinary items 35,850 23,663 18,503 3,935 44,945
PROVISION FOR INCOME TAXES 5,350 9,357 7,401 1,574(5) 8,880
---------- ---------- ---------- ---------- ----------
Income before change in accounting principle and
extraordinary item 30,500 14,306 11,102 2,361 36,065
Cumulative effect of change in accounting principle,
net of applicable taxes of $440 660 -- -- -- 660
Extraordinary gain on debt retirement, net of
Applicable taxes of $560 840 -- -- -- 840
---------- ---------- ---------- ---------- ----------
NET INCOME $ 32,000 $ 14,306 $ 11,102 $ 2,361 $ 37,565
========== ========== ========== ========== ==========
NET INCOME PER SHARE (BASIC) $ 1.17 N/A N/A N/A $ 1.37
========== ========== ========== ========== ==========
NET INCOME PER SHARE (DILUTED) $ 1.16 N/A N/A N/A $ 1.36
========== ========== ========== ========== ==========
INTERPOOL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
(dollars in thousands)
Year Ended December 31, 1999
--------------------------------------------------------------------------------
Transamerica Less: Interpool/T.A.
Interpool N.A. Intermodal Assets Held Pro Forma Pro Forma
Historical Historical For Sale (1) Adjustments Combined
------------ ------------ ------------ ------------ ------------
REVENUES:
------------ ------------ ------------ ------------ ------------
Leasing Revenues $ 217,840 $ 165,885 $ 98,654 $ -- $ 285,071
------------ ------------ ------------ ------------ ------------
COST AND EXPENSES:
Lease operating expenses 44,798 36,707 25,362 56,143
Administrative expenses 29,050 12,402 4,724 36,728
Depreciation and amortization of leasing equipment 61,736 50,387 33,892 (1,964)(2) 76,267
Other (income)/expense, net 2,628 (2,336) (922) -- 1,214
Interest expense, net 54,357 22,546 (22,546)(3) 71,307
10,257(3)
6,693(4)
------------ ------------ ------------ ------------ ------------
192,569 119,706 63,056 (7,560) 241,659
------------ ------------ ------------ ------------ ------------
Income before provision for income taxes
and extraordinary items 25,271 46,179 35,598 7,560 43,412
PROVISION FOR INCOME TAXES 3,400 18,102 14,239 3,024(5) 10,287
------------ ------------ ------------ ------------ ------------
Income before change in accounting principle
and extraordinary item 21,871 28,077 21,359 4,536 33,125
Extraordinary gain on debt retirement, net of
applicable taxes of $494 740 -- -- -- 740
------------ ------------ ------------ ------------ ------------
NET INCOME $ 22,611 $ 28,077 $ 21,359 $ 4,536 $ 33,865
============ ============ ============ ============ ============
NET INCOME PER SHARE (BASIC) $ .82 N/A N/A N/A $ 1.23
============ ============ ============ ============ ============
NET INCOME PER SHARE (DILUTED) $ .80 N/A N/A N/A $ 1.20
============ ============ ============ ============ ============
INTERPOOL, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
FOR THE PERIOD ENDED SEPTEMBER 30, 2000
(dollars in thousands)
Transamerica Interpool/TA
Interpool N.A. Intermodal Pro Forma Pro Forma
Historical Historical Adjustments Combined
----------- ----------- ----------- -----------
Assets:
Cash and Marketable Securities $ 352,164 $ -- ($ 280,000)(1) $ 72,164
Revenue Earning Equipment, Net 948,451 576,008 66,500(2) 1,311,473
(279,186)(3)
Net Accounts Receivable 36,613 30,895 (5,900)(3) 61,608
Assets Held for Sale -- -- 16,284(2) 299,500
285,086(3)
Other Receivables, net 84,154 -- -- 84,154
Investment in Direct Financing Leases 185,815 -- -- 185,815
Other Investment Securities, at fair value 32,305 -- -- 32,305
Other Assets 86,900 10,117 (1,883)(2) 95,134
----------- ----------- ----------- -----------
Total Assets $ 1,726,402 $ 617,020 ($ 199,099) $ 2,142,453
=========== =========== =========== ===========
Liabilities And Stockholders' Equity:
Accounts Payable and Accrued Expenses $ 71,712 $ 22,769 ($ 5,848)(2) $ 88,633
Deferred Tax Liabilities 23,632 166,011 (166,011)(2) 23,632
Deferred Income 550 -- -- 550
Debt and Capital Lease Obligations 1,222,775 371,131 (371,131)(4) 1,623,775
401,000(4)
Company Obligated Redeemable Preferred Securities
75,000 -- -- 75,000
Minority Interest in Equity of Subsidiaries 1,858 -- -- 1,858
----------- ----------- ----------- -----------
Total Liabilities 1,395,527 559,911 (141,990) 1,813,448
----------- ----------- ----------- -----------
Stockholders' Equity:
Common Stock 28 -- -- 28
Additional Paid-in Capital 124,184 -- -- 124,184
Treasury Stock (1,170) -- -- (1,170)
Retained Earnings 206,527 57,109 (57,109) 206,527
Accumulated Other Comprehensive Income 1,306 -- -- 1,306
----------- ----------- ----------- -----------
Total Stockholders' Equity 330,875 57,109 (57,109) 330,875
----------- ----------- ----------- -----------
Total Liabilities And Stockholders' Equity 1,726,402 617,020 ($ 199,099) 2,144,323
=========== =========== =========== ===========
Notes to Pro Forma Combined Condensed Consolidated
Financial Statements
(unaudited)
The Unaudited Pro Forma Combined Condensed Consolidated Statements of Operations
have been prepared to reflect the acquisition as if the acquisition occurred at
the beginning of the period presented. The acquisition has been accounted for
under the purchase method of accounting.
The following is a summary of the adjustment reflected in the Unaudited Pro
Forma Combined Consolidated Statements of Income:
1. At the date of acquisition, it was the Intent of Interpool Inc. to
sell the rail trailers and domestic containers acquired from
Transamerica N.A. Intermodal. In January 2001, Interpool and TIP
Intermodal Services (TIP) announced a definitive agreement for the
sale of 50,000 rail trailers and domestic containers including all
41,000 rail trailers and domestic containers owned by Transamerica
N.A. Intermodal prior at the time of acquisition. This sale was
consummated on March 30, 2001. As such, Interpool accounted for these
assets during the holding period as assets held for sale. Accordingly,
the revenues and expenses related to the operations of the assets
acquired from Transamerica N.A. Intermodal are eliminated from the
operating results of Interpool Inc. and are added to the carrying
value of the assets held for sale.
2. Represents adjustment to depreciation expense associated with the step
up in basis of the assets acquired to fair value based upon the
remaining useful life of the related equipment.
3. Represents the reversal of interest expense, net incurred by
Transamerica N.A. Intermodal of $18,107 and $22,546 for the nine month
period ended September 30, 2000 and the year ended December 31, 1999,
respectively, and the addition of interest expense of $26,016 and
$33,964 on debt incurred by Interpool Inc. related to the acquisition,
less interest expense of $18,166 and $23,707 associated with the
Transamerica N.A. Intermodal assets to be sold, which was capitalized
to assets held for sale for the nine month period ended September 30,
2000 and the year ended December 31, 1999, respectively.
4. Represents the adjustment to reflect interest earnings on Interpool
cash and cash equivalents which would have been foregone had the
transaction been consummated at the beginning of the period presented.
5. Represents the adjustment to the tax provision based on the above
adjustments to the statements of income based on the statutory rate of
40%.
The Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet was
prepared to reflect the Acquisition as of September 30, 2000.
The following is a summary of the adjustments reflected in the Unaudited Pro
Forma Combined Consolidated Balance Sheet:
In October 2000, Interpool Inc. completed its acquisition of Transamerica N.A.
Intermodal. Under the terms of the agreement, Interpool Inc. acquired
substantially all of the domestic containers, chassis, and rail trailers of
Transamerica N.A. Intermodal and related assets assumed certain of the
liabilities of the business. Interpool Inc. paid approximately $681 million in
cash for the acquisition, which includes $8.4 million in fees and other costs
for advisors, of which $1.65 million is payable to a director of Interpool Inc.
for consultation services rendered. The acquisition was financed through a
combination of cash on hand, proceeds obtained from a committed secured
financing facility in the amount of approximately $300 million as well as
approximately $101 million of proceeds obtained from a chassis securitization
facility established in July 2000.
1. Represents the cash on hand used by Interpool, Inc. to acquire
Transamerica N.A. Intermodal.
2. Represents the adjustment of the assets and liabilities acquired by
Interpool Inc. to their fair values, which includes the write up of
revenue earning equipment by $66.5 million, the write down of other
assets of Transamerica N.A. Intermodal of $1.8 million (primarily
capitalized software costs), and the elimination of accrued
liabilities and deferred tax liabilities maintained by Transamerica
N.A. Intermodal, not assumed by Interpool of $5.8 million and $166
million, respectively.
3. At the date of acquisition, it was the Intent of Interpool Inc. to
sell the rail trailers and domestic containers acquired from
Transamerica N.A. Intermodal. In January 2001, Interpool and TIP
Intermodal Services (TIP) announced a definitive agreement for the
sale of 50,000 rail trailers and domestic containers including all
41,000 rail trailers and domestic containers owned by Transamerica
N.A. Intermodal prior to the acquisition. The amounts shown in the
above pro forma balance sheet represent the reclassification of assets
at their fair value (anticipated sale price) (comprised of the rail
trailers and domestic containers at $279.2 million and $5.9 million of
related accounts receivable). In addition, an additional $16.3 million
of the purchase price was capitalized to assets held for sale which
represents the estimated net results of operations of the Transamerica
N.A. Intermodal rail trailers and domestic containers to be sold, from
October 1, 2000 through March 31, 2001 (the estimated date of sale of
the equipment).
4. Represents the elimination of $372.7 million of advances from TAL to
Transamerica N.A. Intermodal not assumed by Interpool Inc. and the
debt of $401 million incurred by Interpool Inc. in financing the
acquisition.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: April 3, 2001
INTERPOOL, INC.
By:
----------------------------
Name: Mitchell Gordon
Title: Chief Financial Officer
EXHIBIT INDEX
2.1 Asset Purchase Agreement, dated as of July 27, 2000, by and between
Interpool, Inc. and Transamerica Leasing Inc.(incorporated herein by
reference to the Form 8K filed on November 2, 2000)
2.2 Amendment No.1 to the Asset Purchase Agreement, dated as of October 24,
2000, by and between Interpool, Inc. and Transamerica Leasing Inc.
(incorporated herein by reference to the Form 8K filed on November 2, 2000)
99.1 Press Release issued by the Interpool, Inc., dated October 24, 2000.