Fitch Ratings Affirms XTRA At 'BBB+/F1+'; Rating Outlook Revised to Positive.

Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 11, 2003

Fitch Ratings has affirmed XTRA Inc.'s (XTRA) 'BBB+' senior unsecured debt rating and 'F1+' commercial paper rating. The Rating Outlook is revised to Positive from Stable. Approximately $480 million of outstanding debt securities are impacted by Fitch's action.

The commercial paper rating reflects an unconditional guarantee by Berkshire Hathaway Inc. (BH) (long-term rated 'AAA' by Fitch), XTRA's parent and 100% owner. The guarantee also extends to XTRA's $165 million 5-year revolving credit facility expiring in November 2005. However, XTRA's $399 million senior unsecured notes outstanding are not subject to the guarantee and have maturities extending beyond the expiration of the revolving credit facility. As a result, the unsecured notes are rated on a stand-alone basis, although BH's financial strength is noted.

The Positive Outlook reflects XTRA's performance through a significant down cycle in the company's core lines of business. Over this period, management was largely successful at reducing XTRA's excess equipment inventory and leverage. Between Sept. 30, 1999 and Sept. 30, 2003, XTRA's leverage, defined as on-balance sheet debt plus off-balance sheet operating leases divided by equity, declined from 2.66 times (x) to 1.49x. This demonstrates XTRA's ability to generate significant cash flow even in periods of weak utilization. As of Sept. 30, 2003, XTRA's trailing 12-month cash flows from operations before equipment purchases exceeded the company's debt maturities in each single future fiscal year by 2.0x or more. Additionally, over the past four quarters, XTRA's utilization rates for most equipment classes have returned to historic utilization ranges.

Fitch also notes XTRA's continued exit from the marine container leasing business. While XTRA's utilization rates in the marine container business have improved and the broader marine container leasing industry is experiencing improved market conditions, XTRA continues to selectively sell its container inventory. Although XTRA is successful at leasing marine containers in strong periods, it does not have sufficient economies of scale to compete in down cycles. This is in contrast to XTRA's leading market position in over-the-road (OTR) trailers, where its 'street corner' strategy has led to a presence at approximately 95 depots nationwide.

XTRA's other strengths include its good risk-adjusted capitalization and low leverage (defined as debt divided by equity). XTRA's low leverage stems from a lack of significant equipment acquisition activity over the last 18-24 months. In addition, XTRA's operating performance has historically been good.

Rating concerns focus on the lack of pricing power in the current market for interposal equipment and OTR trailer lessons. While utilization rates have improved, they are still not at levels where lessons have the capability to raise prices, which have seen meaningful erosion over the last 24 months. Other concerns relate to XTRA's significantly larger competitors; although this is less of a concern due to the Berkshire Hathaway ownership.

Additionally, although XTRA's funding profile is adequate for its business profile, it is not as diverse as other company's rated in the 'A' category. These concerns are partially offset both by the company's low leverage, unsecured funding profile as well as financial flexibility inherent in the ownership by Berkshire Hathaway.

Based in Westport, CT, XTRA, Inc. is the principal operating subsidiary of XTRA Corp., a transportation equipment holding company. XTRA leases a diverse fleet of more than 200,000 units constituting a net investment of over $1 billion, consisting of over-the-road trailers and interposal equipment including chassis, interposal trailers and domestic containers; and marine containers.

Based in Omaha, NE, Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. The most important of these is the property and casualty insurance business conducted on both a direct and reinsurance basis through a number of subsidiaries.