XTRA: Earnings News Release FOR IMMEDIATE RELEASE For Information Contact: August 5, 1998 XTRA Corporation Michael J. Soja Vice President and Chief Financial Officer Tel: (617) 367-7810 PRESS RELEASE Diluted earnings per share up 43% over last year's third quarter results; the fifth consecutive quarter in which diluted earnings per share exceeded the comparable quarter of the prior year. XTRA Corporation (NYSE: XTR) achieved strong earnings for the fiscal third quarter ended June 30, 1998, with a significant increase in earnings per share over last year's third quarter results. XTRA's President and Chief Executive Officer, Lewis Rubin, stated, "We continue to benefit from the strength of the business cycle. The fiscal 1998 third quarter results represent a 43% increase in earnings per share over last year's third quarter results. In addition, the third quarter of fiscal 1998 is the seventh consecutive quarter where overall utilization has equaled or exceeded the comparable quarter of the prior year. Overall, the business environment and demand for freight transportation are favorable. XTRA is well-positioned to benefit from these conditions." Specific highlights include: Fiscal third quarter ended June 30, 1998 net income of $12 million or $.80 diluted earnings per share compared to $9 million or $.56 in the year earlier period, an increase of 43% in diluted earnings per share. This was achieved on revenues of $112 million in the 1998 quarter compared to revenues of $105 million in the comparable prior year period, an increase of 7%. For the nine months ended June 30, 1998, the Company reported net income of $41 million or $2.68 diluted earnings per share. This compared to $29 million or $1.90 diluted earnings per share in the year earlier period, a gain of 41%. These results were achieved on revenues of $342 million in 1998 compared to $318 million in the earlier period, a gain of 8%. Overall equipment utilization for the third quarter of fiscal year 1998 averaged 84%, compared to 83% for the third quarter of fiscal year 1997. Historically, the second and third fiscal quarters reflect the seasonality of the transportation business and represent a period of lower utilization and hence profitability. On June 18, 1998, XTRA entered into an Agreement and Plan of Merger and Recapitalization with Wheels MergerCo LLC. Wheels MergerCo LLC is a newly organized Delaware limited liability company formed by Apollo Management IV, L.P. and Atlas Capital Partners LLC, an affiliate of Interpool, Inc. Under the terms of the agreement, at the effective time of the merger, approximately 97% of the diluted shares of XTRA Common Stock will be converted into the right to receive $65.00 in cash. Pursuant to an election process, 500,000 shares of common stock of XTRA (representing approximately 10% of the ownership in the recapitalized company) will be retained by existing holders. XTRA currently anticipates that the transaction will close sometime this autumn. Further details regarding the Merger may be found in XTRA's report on Form 8-K filed on June 26, 1998. Business Summary For eight consecutive quarters, XTRA's North American businesses' equipment utilization has improved over the same period in the prior year. North American utilization for the third quarter of 1998 averaged 86%, as compared to 84% in the comparable 1997 quarter. Strong levels of domestic freight are expected to continue, partly as a result of ongoing moderate economic growth. XTRA's International marine container utilization averaged 82% in the third quarter of fiscal 1998, compared to 79% in the third quarter of fiscal 1997. This represents the fifth consecutive quarter in which XTRA's International marine container comparable quarterly utilization has improved. "While the increases in utilization are a positive indicator that the marine container leasing environment has improved," said Mr. Rubin, "we continue to experience competitive lease rates. Although economic difficulties in Asia have created some uncertainty, we believe that the marine container business will continue to see modest improvement during the remainder of fiscal 1998, as compared to the prior year." "It is anticipated that fiscal year 1998 capital spending for new equipment will be lower than 1997 levels," Mr. Rubin stated. XTRA currently has $204 million committed for fiscal year 1998 capital expenditures. Any additional capital expenditures for the remainder of fiscal year 1998 will likely be modest. XTRA has also committed capital spending for fiscal year 1999 amounting to $41 million, reflecting expected continued strong demand for over-the-road trailers. XTRA leases, primarily on an operating basis, over-the-road trailers, marine containers, and intermodal equipment, including intermodal trailers, chassis, and domestic containers. This press release contains, in addition to historical information, certain forward-looking statements that involve risks and uncertainties. These include statements relating to such factors as expected demand and utilization, business conditions, and capital expenditures. Such statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that may cause such a difference include, but are not limited to, the variability of the Company's revenues and its fixed operating expenses; the impact of the North American and International economies on revenues, lease rates and utilization; and fluctuations in interest rates and foreign exchange rates. These risks are discussed under the caption "Cautionary Statements for Purposes of the 'Safe Harbor' Provisions of the Private Securities Litigation Reform Act of 1995" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1997 on file with the SEC. XTRA CORPORATION AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS (Millions of dollars except per share and share amounts) (Unaudited) Three Months Ended Nine Months Ended June 30, June 30, 1998 1997 1998 1997 Revenues $ 112 $ 105 $ 342 $ 318 Operating expenses Depreciation on rental equipment 38 37 113 110 Rental equipment operating expense 29 27 83 80 Selling and administrative expense 11 11 33 32 78 75 229 222 Operating income 34 30 113 96 Interest expense 14 16 44 47 Income before provision for income taxes 20 14 69 49 Provision for income taxes 8 5 28 20 Net income $ 12 $ 9 $ 41 $ 29 Basic earnings per share $0.80 $0.56 $2.69 $1.90 Weighted average basic shares outstanding (in millions) 15.3 15.3 15.3 15.3 Diluted earnings per share $0.80 $0.56 $2.68 $1.90 Weighted average diluted shares outstanding (in millions) 15.4 15.3 15.4 15.3 XTRA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Millions of dollars) June 30, 1998 September 30, (Unaudited) 1997 Assets Property and Equipment, net $ 1,431 $ 1,454 Receivables, net 104 108 Other Assets 23 23 Total Assets $ 1,558 $ 1,585 Liabilities and Stockholders' Equity Liabilities Debt $ 818 $ 892 Deferred Income Taxes 276 252 Other Liabilities 72 81 Stockholders' Equity 392 360 Total Liabilities & Stockholders' Equity $ 1,558 $ 1,585 Net Debt Outstanding $ 811 $ 888 XTRA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Millions of dollars) (Unaudited) Nine Months Ended June 30, 1998 1997 Cash Provided from Operations $ 211 $ 181 Cash Used for Investment Activities (129) (182) Cash Used for Financing Activities (5) (21) (Increase)/Decrease in Net Debt Outstanding (Debt - Cash) $ 77 $(22) Ends. (Increase)/Decrease in Net Debt Outstanding (Debt - Cash) $ 77 $(22) Ends.