Adjusted net income (3), excluding gains and losses on interest rate swaps, was $31.0 million in the first quarter of 2012 compared to $27.4 million in the first quarter of 2011. Adjusted net income per fully diluted common share was $0.92 in the first quarter of 2012 compared to $0.89 in the first quarter of 2011.
Reported net income for the first quarter of 2012 was $32.9 million compared to net income of $32.6 million in the first quarter of 2011. Net income per fully diluted common share was $0.98 in the first quarter of 2012 compared to $1.05 in the first quarter of 2011. The difference between Adjusted net income and reported net income in the first quarter of 2012 was due to gains on interest rate swaps. TAL uses interest rate swaps to synthetically fix the interest rates for most of its floating rate debt so that the duration of the fixed interest rates match the expected duration of TAL’s lease portfolio. TAL does not use hedge accounting for the majority of its swaps, so most of the change in the market value of TAL’s interest rate swap portfolio is reflected in reported net income. During the first quarter of 2012, long-term interest rates increased, resulting in a $3.0 million increase in the market value of TAL’s swap contracts.
“TAL’s results in the first quarter of 2012 provide a strong start to what we expect will be another outstanding year,” commented Brian M. Sondey, President and CEO of TAL International. “Our adjusted pretax income increased over 13% from the first quarter of 2011, though our income per share increased less due to our higher share count following our stock offering last April. We continue to show strong top-line growth. Our leasing revenue in the first quarter increased almost 25% from the first quarter last year, and we are off to a great start with our 2012 investment program. Through April 26, 2012, we have ordered over $450 million of new and sale-leaseback containers for delivery this year, which puts us slightly ahead of where we were at this point in 2010 and 2011. Most of these containers are already committed to leases and we expect customer pick-ups to accelerate in the second quarter as we head toward the summer peak season for dry containers.”