TAL International Group, Inc. Reports Third Quarter 2006 Results and Increases Quarterly Dividend.PURCHASE, N.Y. -- TAL TAL - Transaction Application Language International Group, Inc. (NYSE NYSE See: New York Stock Exchange : TAL), one of the world's largest lessors of intermodal in·ter·mod·al adj. Relating to transportation by more than one means of conveyance, as by truck and rail: intermodal transport. freight containers and chassis Pronounced "chah-see," it is a physical structure that holds everything or that everything is attached to. A computer's cabinet is often called the chassis. , reported results for the third quarter and nine months ended September 30, 2006 and announced an increase in its quarterly dividend. Pre-tax income for the third quarter of 2006 was $6.9 million compared to a loss of $(8.8) million in the prior year quarter. Adjusted pre-tax income (1) for the quarter, excluding unrealized losses Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. (gains) on interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. and other non-operating items, was $19.1 million compared to $9.2 million in the third quarter of 2005. Please see page 8 for a detailed reconciliation of adjusted pre-tax income. The company focuses on pre-tax results as it does not expect to pay any significant income taxes for a number of years due to the availability of accelerated tax depreciation on the existing container and chassis fleet and planned future equipment purchases. Total revenues for the third quarter of 2006 were $76.7 million compared to $81.1 million in the third quarter of 2005. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (3) was $45.2 million for the quarter versus $66.1 million in the prior year period. Adjusted EBITDA (3) was $57.3 million for the quarter versus $59.9 million in last year's third quarter. Please see page 8 for a detailed reconciliation of EBITDA and adjusted EBITDA. Net income for the third quarter of 2006 was $4.5 million, or $0.13 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common share, versus a loss of $(5.8) million in the prior year quarter. Adjusted net income (2) for the quarter, excluding unrealized losses (gains) on interest rate swaps and other non-operational items was $12.3 million, or $0.37 per fully diluted common share, compared to $6.0 million in the third quarter of 2005. Please see page 8 for a detailed reconciliation of adjusted net income. "Our results for the third quarter were largely in-line with our expectations as adjusted earnings per fully diluted share for the third quarter of 2006 increased slightly from the prior quarter," commented Brian M. Sondey, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of TAL. "We experienced continued good demand for dry and special containers with our overall utilization increasing by 1.6% to 92.5% at the end of the quarter. These benefits were partially offset by the revenue impact of the lease extension transactions that were concluded during the second and third quarters along with the effect of continued slow demand for refrigerated re·frig·er·ate tr.v. re·frig·er·at·ed, re·frig·er·at·ing, re·frig·er·ates 1. To cool or chill (a substance). 2. To preserve (food) by chilling. containers that has existed throughout 2006." Mr. Sondey continued, "While the performance of our refrigerated container product line does not greatly influence our aggregate utilization, our revenues are disproportionately dis·pro·por·tion·ate adj. Out of proportion, as in size, shape, or amount. dis  pro·por impacted due
to the higher unit cost and lease rates associated with this equipment.
We are hopeful that our refrigerated container utilization will improve
during the fourth quarter, which is traditionally the peak demand season
for this container type."Pre-tax income for the first nine months of 2006 was $42.4 million compared to $12.5 million for the same period last year. Adjusted pre-tax income (1) for the first nine months of 2006 was $53.4 million compared to $32.5 million in the comparable period of 2005. Total revenues for the nine months ended September 30, 2006 were $225.3 million as compared to $239.1 million in the first nine months of 2005. EBITDA (3) for the nine month period ended September 30, 2006 was $157.8 million versus $188.8 million for the same period of 2005. Adjusted EBITDA (3) for the first nine months of 2006 was $166.4 million compared to $184.4 million for the same period last year. Net income for the first nine months of 2006 was $27.3 million, or $0.82 per fully diluted common share, as compared to net income of $7.9 million for the comparable prior year period. Adjusted net income (2) for the period ended September 30, 2006 was $34.3 million, or $1.03 per fully diluted common share, compared to $20.6 million in the prior year period. Mr. Sondey commented: "Year-to-date, we have been able to achieve 10% growth in revenue earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin , which together with increasing utilization of our dry and special containers is driving our quarter on quarter profitability improvement. However, the slow start of the year continues to weigh down To overbalance. To oppress with weight; to overburden; to depress. - Milton. to sink by its own weight. See also: Weigh Weigh Weigh our nine-month results and decreasing average rental rates and soft refrigerated container demand have limited the size of our profitability growth over the course of the year. The lower rental rates we have experienced in 2006 are largely a result of placing a significant portion of our new containers on leases with average durations well in excess of five years and negotiating lease extensions for existing equipment already on-hire. While these transactions have reduced near-term profitability, we believe they increase the long-term value of our fleet." Outlook Mr. Sondey added, "We expect that our major operating drivers will hold fairly steady through the end of the year, which would allow us to finish 2006 in a stronger position than we finished last year. Our dry container utilization will face some pressure due to the end of the summer peak season, but improved refrigerated container performance should offset much of this impact. In addition, our earnings will benefit from reduced depreciation of about $0.4 million per month beginning in November when another vintage year vintage year n. 1. The year in which a vintage wine is produced. 2. A year of outstanding achievement or success. vintage year n it's been a vintage year for plays → of our containers reaches the end of its depreciable depreciable Of, relating to, or being a long-term tangible asset that is subject to depreciation. life." Dividend and Share Repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. TAL's board of directors has approved and declared a $0.25 per share quarterly cash dividend on its issued and outstanding common stock, payable on December 8, 2006 to shareholders of record at the close of business on November 21, 2006. Based on the information available today, we believe the dividend will qualify as a return of capital rather than a taxable dividend for our shareholders. Investors should consult with a tax advisor A tax advisor is a financial expert especially trained in tax law. Some countries require tax advisors to verify the balance sheets of companies above a certain size. Individuals usually require tax advisors to minimize taxation, to avoid learning the details of tax law in to determine the proper tax treatment of this distribution. Mr. Sondey commented, "We are pleased to increase the size of the quarterly shareholder dividend. We continue to generate strong cash flow, and estimate that, prior to the payment of dividends and share repurchases, we have been generating excess cash in the range of $5 million per month beyond the amount required to support the growth of our revenue earning assets. As we have now built a liquidity cushion Liquidity Cushion A reserve fund for a company or person containing money market and highly liquid investments. Notes: This is a cushion used by large and small investors. of roughly $50 million, we feel it is appropriate to expand the dividend. We will continue to evaluate the size of the dividend relative to our liquidity cushion on a quarterly basis to ensure that we are returning an appropriate level of the cash generated by the company to our investors." The Company repurchased 136,250 shares of its outstanding common stock in the open market during the quarter ended September 30, 2006 at a total cost of approximately $2.9 million in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with its previously announced stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program. Investors' Webcast TAL will hold a Webcast at 9 a.m. (New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of time) on Wednesday, November 8th to discuss its fiscal third quarter and nine month results. An archive of the Webcast will be available one hour after the live call through Friday, December 1, 2006. To access the live Webcast or archive, please visit the Company's Web site at http://www.talinternational.com. About TAL International Group, Inc. TAL is one of the world's largest lessors of intermodal freight containers and chassis with 20 offices in 12 countries and approximately 190 third party container depot facilities in 41 countries. The Company's global operations Global Operations is a first-person shooter computer game developed by Barking Dog Studios and published by both Crave Entertainment and Electronic Arts. It was released in March of 2002, following its public multiplayer beta version which contained only the Quebec map. include the acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers. TAL's fleet consists of approximately 646,000 containers and related equipment representing approximately 1,044,000 twenty-foot equivalent units (TEU TEU Twenty-Foot Equivalent Units (intermodal shipping container) TEU Technical Escort Unit TEU Technical Escort Unit (Army) TEU Tactical Enforcement Unit TEU Treaty of European Union ). This places TAL among the world's largest independent lessors of intermodal containers and chassis as measured by fleet size. Important Cautionary Information Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements in this press release regarding TAL International Group, Inc.'s business that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Readers are cautioned that these statements involve risks and uncertainties, are only predictions and may differ materially from actual future events or results. For a discussion of such risks and uncertainties, see "Risk Factors" in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , filed with the Securities and Exchange Commission on March 20, 2006. The Company's views, estimates, plans and outlook as described within this document may change subsequent to the release of this statement. The Company is under no obligation to modify or update any or all of the statements it has made herein despite any subsequent changes the Company may make in its views, estimates, plans or outlook for the future. (1) Adjusted pre-tax income is a non-GAAP measurement we believe is useful in evaluating our operating performance. The Company's definition and calculation of adjusted pre-tax income is outlined in the attached schedules. (2) Adjusted net income is a non-GAAP measurement we believe is useful in evaluating our operating performance. The Company's definition and calculation of adjusted net income is outlined in the attached schedules. (3) EBITDA and Adjusted EBITDA are non-GAAP measurements we believe are useful in evaluating our operating and liquidity performance. The Company's definitions and calculations of EBITDA and Adjusted EBITDA are outlined in the attached schedules. [TABLE OMITTED] [TABLE OMITTED] Non-GAAP Financial Measures We use the terms "Adjusted Pre-tax Income", "Adjusted Net Income", "EBITDA", and "Adjusted EBITDA", throughout this press release. Adjusted Pre-tax Income is defined as income (loss) before income taxes as further adjusted for certain items which are described in more detail below, which management believes are not representative of our operating performance. Adjusted Pre-tax Income excludes the unrealized loss (gain) on interest rate swaps, write-off of deferred financing costs and management fees. Adjusted Net Income is defined as net income further adjusted for the items discussed above, net of tax. EBITDA is defined as net income (loss) before interest and debt expense, write-off of deferred financing costs, income tax expense (benefit) and depreciation and amortization. Adjusted EBITDA is defined as EBITDA as further adjusted for certain items which are described in more detail below, which management believes are not representative of our operating performance. Adjusted EBITDA excludes unrealized losses (gains) on interest rate swaps and management fees. Adjusted Pre-tax Income, Adjusted Net Income, EBITDA, and Adjusted EBITDA are not presentations made in accordance with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , and should not be considered as alternatives to, or more meaningful than, amounts determined in accordance with GAAP, including net income (loss) or net cash from operating activities. We believe that Adjusted Pre-tax Income, Adjusted Net Income, EBITDA, and Adjusted EBITDA are useful to an investor in evaluating our operating performance because: [TABLE OMITTED] We have provided reconciliations of income (loss) before income taxes and net income (loss), the most directly comparable GAAP measures, to Adjusted Pre-tax Income and Adjusted Net Income in the tables below for the three and nine months ended September 30, 2006 and 2005. Additionally, we have provided reconciliations of net income (loss), the most directly comparable GAAP measure, to EBITDA and EBITDA to Adjusted EBITDA in the tables below for the three and nine months ended September 30, 2006 and 2005. [TABLE OMITTED] [TABLE OMITTED] |
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