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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended March 31, 2015

Or

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from                      to                    

Commission file number 333-188177

TRAC Intermodal LLC

(Exact name of registrant as specified in the charter)

(609) 452-8900

(Registrant’s telephone number including area code)

Indicate by check üwhether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days.  Yes  x No  o

Indicate by check  ü whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such file).  Yes  xNo  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerate filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o No  x

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TRAC Intermodal LLC and Subsidiaries

Form 10-Q

Index

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Forward-looking statements

This report contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements include, without limitation, statements concerning plans, objectives, goals, projections, strategies, future events or performance, and underlying assumptions and other statements, which are not statements of historical facts. Forward looking statements may be identified by the use of words like “expect,” “anticipate,” “intend,” “forecast,” “outlook,” “will,” “may,” “might,” “potential,” “likely,” “target,” “plan,” “contemplate,” “seek,” “attempt,” “should,” “could,” “would” or expressions of similar meaning. Forward-looking statements reflect management’s good faith evaluation of information currently available and are based on its current expectations and assumptions regarding its business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Specific factors that may impact performance or other predictions of future actions have, in many but not all cases, been identified in connection with specific forward-looking statements. TRAC Intermodal LLC’s (the “Company,” “we” or “TRAC”) actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. We caution you therefore against relying on any of these forward-looking statements.

Important factors that could cause actual results to differ materially from those in the forward-looking statements include economic, business, competitive, market and regulatory conditions and the following:

·                                          the volume of world trade due to economic, political, or other factors;

·                                          the demand for chassis;

·                                          operating costs, including the cost of maintaining and repairing chassis, the cost of labor rates and the cost of parts and materials;

·                                          increased regulatory costs;

·                                          defaults by customers, which would decrease revenues and increase storage, collection, and recovery expenses and require payment to lenders sooner than anticipated;

·                                          the inability of one or more customers to meet their obligations or decreased customer creditworthiness;

·                                          the ability to mitigate any risk associated with efforts to enable shipping line customers to transition to the motor carrier model;

·                                          the Company’s ability to be profitable;

·                                          expansion of the Company’s business to provide logistics services and service centers;

·                                          the decision by potential and existing customers to buy rather than lease chassis;

·                                          the effect of the Company’s customers’ decision to shift to short-term leasing and transition to the motor carrier model on long-term leasing and direct finance leasing products;

·                                          the impact of consolidation within the container shipping industry;

·                                          the Company’s ability to compete successfully in the chassis leasing industry;

·                                          the impact on the Company’s business of losing exclusive rights to operate domestic chassis pools at certain railroad ramps;

·                                          the impact of the credit markets on the worldwide demand for goods and, in turn, on the demand for chassis;

·                                          the Company’s substantial amount of indebtedness;

·                                          the Company’s ability to incur additional debt;

·                                          the limitation on flexibility in operating the business arising from restrictions from debt agreements;

·                                          the Company’s ability to service its debt or to obtain additional financing;

·                                          the Company’s ability to re-lease chassis after their initial long-term lease;

·                                          the impact of liens on equipment;

·                                          changes in market price, availability, or transportation costs of equipment manufactured in China or Mexico;

·                                          the Company’s ability to integrate acquisitions and to realize the anticipated benefits of any such potential future acquisitions;

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Forward-looking statements (continued)

·                                          a decrease in the availability of storage space for chassis and a resulting increase in depot costs;

·                                          the Company’s ability to maintain qualified personnel;

·                                          strikes or work stoppages by draymen, truckers, longshoremen, and railroad workers;

·                                          the Company’s ability to maintain its relationship with employees, and thereby avoid unionization efforts, labor shortages, disruptions or stoppages;

·                                          the Company’s ability or the ability of the Company’s lessees to maintain sufficient insurance to cover losses that may occur to chassis;

·                                          the Company’s ability to estimate and maintain sufficient self-insurance for employee health care benefits;

·                                          the extent of any payments under the Company’s indemnification agreements;

·                                          the impact of accidents or incidents or mismanagement of its fleet on the Company’s reputation and financial results;

·                                          the impact of recalls and other investigations;

·                                          the impact of federal roadability rules and regulations for intermodal equipment providers (“IEP”);

·                                          the impact of environmental liability;

·                                          the failure or operational interruption of information technology systems required to conduct its business;

·                                          the failure to adequately protect the Company’s intellectual property rights;

·                                          the willingness and ability of manufacturers or remanufacturers of the Company’s equipment to honor warranties covering defects;

·                                          the impact of inherent, potential, or perceived conflicts of interest created by relationships and transactions with members of management, shareholders, and their respective affiliates;

·                                          risks inherent in international operations, including uncertainty about the jurisdictions in which enforcement might be sought and the political, environmental, and economic stability of particular countries or regions;

·                                          the impact on the Company’s earnings of increases in prevailing interest rates;

·                                          counterparty risk arising in the Company’s hedging strategies;

·                                          the impact of a new standard for lease accounting;

·                                          adverse changes in U.S. tax rules;

·                                          terrorist attacks, wars, uprisings, or hostilities; and

·                                          other risks described in the “Risk factors” section of this report.

Please also refer to Item 1A. Risk Factors to Part II of this report.  All of the above factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond the Company’s control. New factors emerge from time to time and it is not possible for management to predict all such factors or to assess the effect of each such new factor on its business. Except to fulfill the Company’s obligations under the U.S. securities laws, we undertake no obligation to update any such statement to reflect events or circumstances after the date on which it is made.

Although the Company believes that assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore any of these statements included herein may prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the results or conditions described in such statements or objectives and plans will be achieved.

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PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

TRAC Intermodal LLC and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(Dollars in Thousands)

See accompanying notes.

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TRAC Intermodal LLC and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

(Dollars in Thousands)

See accompanying notes.

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TRAC Intermodal LLC and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

(Dollars in Thousands)

See accompanying notes.

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TRAC Intermodal LLC and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in Thousands)

See accompanying notes

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TRAC Intermodal LLC and Subsidiaries

Notes to Consolidated Financial Statements — Unaudited (continued)

For the Three Months Ended March 31, 2015 and 2014

(Dollars in Thousands, Except for Share Amounts)

1.              Description of the Business and Basis of Presentation

The accompanying Consolidated Financial Statements of TRAC Intermodal LLC (the “Company,” “we,” “our” or “TRAC”) are unaudited and have been prepared pursuant to U.S. generally accepted accounting principles (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting and, in our opinion, reflect all adjustments, including normal recurring items, which are necessary to present fairly the results for interim periods.  Operating results for the periods presented are not necessarily indicative of the results that may be expected for the entire year.  Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC; however, we believe that the disclosures are adequate to make information presented not misleading.   These interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014 and with the information contained in other publicly-available filings with the SEC.

TRAC is an intermodal chassis solutions provider for domestic and international transportation companies in North America.  Its principal business is providing marine and domestic chassis on both long and short-term leases or rental agreements to a diversified customer base including the world’s leading shipping lines, Class I railroads, major U.S. intermodal transportation companies and motor carriers. The Company and its subsidiaries conduct business principally in one industry, the leasing of intermodal transportation equipment. The Company has two reportable segments, the Marine Market segment and the Domestic Market segment. The Company purchases equipment directly from manufacturers and shipping lines as well as through lease agreements, some of which qualify as capital leases. Primarily all of the Company’s revenues and long-lived assets are attributable to the United States.

TRAC is a Delaware limited liability company that was formed on July 12, 2012 to facilitate the issuance of $300,000 aggregate principal amount of  11% Senior Secured Notes (the “Notes”).  The Company conducts its business through its 100% owned subsidiary, Interpool, Inc. (“Interpool”) and its consolidated subsidiaries.   TRAC is ultimately owned by Seacastle Inc. (“Seacastle”). Seacastle is owned by private equity funds that are managed by an affiliate of Fortress Investment Group LLC (“Fortress”) and by employees of affiliates of Seacastle. Interpool was founded in 1968 as an operating lessor servicing the intermodal transportation equipment industry. Interpool was listed on The New York Stock Exchange as a public company in 1993 and was acquired and taken private by Seacastle in July 2007.

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TRAC Intermodal LLC and Subsidiaries

Notes to Consolidated Financial Statements — Unaudited (continued)

For the Three Months Ended March 31, 2015 and 2014

(Dollars in Thousands, Except for Share Amounts)

1.                                      Description of the Business and Basis of Presentation (continued)

New Accounting Standards

Pending Adoption

In April 2015, the FASB issued authoritative guidance on accounting for Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). This update requires that debt issuance cost related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts, without changing existing recognition and measurement guidance for debt issuance costs.  The new guidance is required to be applied on a retrospective basis and to be accounted for as a change in an accounting principle. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years and early adoption of the amendments in this update is permitted.  The Company will adopt this standard in the first quarter of 2016 on a retrospective basis.  The implementation of this standard will result in the reclassification of certain debt issuance costs from Other assets to a reduction in the carrying amount of the related debt liability within the Consolidated Balance Sheets.

In February 2015, the FASB issued authoritative guidance on accounting for Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”).  The amendments address stakeholders concerns that current U.S. GAAP might require a reporting entity to consolidate another legal entity in situations in which the reporting entity’s contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entity’s voting rights, or the reporting entity is not exposed to a majority of the legal entity’s economic benefits or obligations.  This update changes the analysis that a reporting entity performs to determine whether it should consolidate certain types of legal entities. This update is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015 and early adoption is permitted.  The Company is currently evaluating the impact of this standard on its Consolidated Financial Statements.

In January 2015, the FASB issued authoritative guidance on accounting for Income Statement-Extraordinary and Unusual Items (Topic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). The update eliminates from U.S. GAAP the concept of extraordinary items. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 and early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company will adopt this standard in the first quarter of 2016.  The implementation of this standard is not expected to have any impact on the Company’s Consolidated Financial Statements.

No other new accounting pronouncements issued or effective during 2015 had or are expected to have a material impact on the Company’s Consolidated Financial Statements.

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TRAC Intermodal LLC and Subsidiaries

Notes to Consolidated Financial Statements — Unaudited (continued)

For the Three Months Ended March 31, 2015 and 2014

(Dollars in Thousands, Except for Share Amounts)

2. Leasing Activity

Equipment Leasing Revenue

The Company has non-cancelable operating leases for certain of its leasing equipment. At March 31, 2015, future minimum lease revenue under these agreements is estimated as follows:

Finance Revenue

At March 31, 2015, receivables under direct finance leases are collectible through 2022 as follows:

As of December 31, 2014, the Company had total lease receivables, unearned lease income and net lease receivables of $19,271, $3,056 and $16,215, respectively.  As of March 31, 2015 and December 31, 2014, the Company had guaranteed and unguaranteed residual values for leasing equipment on direct finance leases of $8,776 and $8,778, respectively.  The unguaranteed residual values are reflected in “Total Lease Receivables” above.

Historically, the Company has not experienced losses related to direct finance leases and does not project future uncollectible amounts related to the principal balances receivable. If customers were to default, the Company would seek to recover the equipment securing the lease, often at fair market values in excess of the remaining receivable, and present certain claims to its insurers of default losses.

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TRAC Intermodal LLC and Subsidiaries

Notes to Consolidated Financial Statements — Unaudited (continued)

For the Three Months Ended March 31, 2015 and 2014

(Dollars in Thousands, Except for Share Amounts)

3. Leasing Equipment

The following is a summary of leasing equipment recorded on the Consolidated Balance Sheets:

Leasing equipment includes assets recorded under capital leases of $149,143 and $182,688 with accumulated depreciation of $46,529 and $53,016 at March 31, 2015 and December 31, 2014, respectively.

4. Impairment of Leasing Equipment

Impairment of leasing equipment amounted to $1,433 and $1,126 for the three months ended March 31, 2015 and 2014, respectively.  The increase in impairment charges reflected during 2015 was primarily due to an increase in write-downs associated with axle sets anticipated to be unsuitable for remanufacturing.  The above impairment charges are recorded in Impairment of leasing equipment in the Consolidated Statements of Operations.

5. Capitalized Software Development Costs

In 2014, the Company’s Investment Committee approved the proposal to replace its principle operating and financial reporting systems, named “Project Helix” to provide more functional capabilities necessitated by new business requirements emerging from the industry shift to the motor carrier model.  In conjunction with application development efforts during the quarter ended March 31, 2015, the Company capitalized $2,742 of eligible costs in accordance with ASC 350-40, Internal-Use Software.  These costs are included in Other assets in the Consolidated Balance Sheet.  Once the software is substantially complete and ready for its intended use, capitalization will cease.  Capitalized software costs will be amortized on a straight-line basis over seven years, the estimated useful life of the software.

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TRAC Intermodal LLC and Subsidiaries

Notes to Consolidated Financial Statements — Unaudited (continued)

For the Three Months Ended March 31, 2015 and 2014

(Dollars in Thousands, Except for Share Amounts)

6. Borrowings

The following is a summary of the Company’s borrowings:

The Company’s debt consisted of notes, loans and capital lease obligations payable in varying amounts through 2021, with a weighted-average interest rate of 5.78% for the year ended December 31, 2014.  For the three months ended March 31, 2015 and 2014, the weighted-average interest rate was 5.72% and 6.05%, respectively.  The weighted-average interest rates disclosed are calculated as “all-in” rates which include cash interest expense and amortization of agents’ fees and deferred financing fees.

On February 28, 2015, the Company exercised a purchase option from a maturing capital lease for an aggregate price of $11,806.

7. Derivatives and Hedging Activities

In the normal course of business, the Company utilizes interest rate derivatives to manage its exposure to interest rate risks. Through the utilization of interest rate derivatives, the Company receives floating rate payments in exchange for fixed rate payments, effectively converting its floating rate debt to a fixed rate.  If certain conditions are met, an interest rate derivative may be specifically designated as a cash flow hedge. The Company’s interest rate derivative qualifies and has been designated as a cash flow hedge.  For the effective portion of the derivative gain or loss, changes in fair value are recorded in Accumulated other comprehensive income and subsequently reclassified into earnings when the interest payments on the debt are recorded in earnings.  The ineffective portion of the derivative gain or loss is recorded in Interest expense in the Consolidated Statements of Operations.

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TRAC Intermodal LLC and Subsidiaries

Notes to Consolidated Financial Statements — Unaudited (continued)

For the Three Months Ended March 31, 2015 and 2014

(Dollars in Thousands, Except for Share Amounts)

7. Derivatives and Hedging Activities (continued)

On January 10, 2013, the Company entered into an interest rate swap transaction with Deutsche Bank AG effectively converting $300,000 of variable rate debt based upon LIBOR into a fixed rate instrument.  The Company receives one month LIBOR with interest payable at a rate of 0.756% on the notional amount.  At March 31, 2015, one month LIBOR was 0.176%.  The agreement terminates on August 9, 2017, in line with the termination date of the ABL Facility.

The Company’s interest rate derivative involves counterparty credit risk.  As of March 31, 2015, the Company does not anticipate its counterparty will fail to meet its obligation.  As of March 31, 2015, there are no credit risk related contingent features in the Company’s derivative agreement.   For additional disclosures related to derivative instruments, see Notes 10 and 14 to the Consolidated Financial Statements.

The Company held the following interest rate derivative as of March 31, 2015:

(a)         This interest rate derivative is recorded in Other Assets in the Consolidated Balance Sheets.

At the dates indicated, the Company had in place total interest rate derivatives to fix floating interest rates on a portion of the borrowings under its debt facilities as summarized below:

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TRAC Intermodal LLC and Subsidiaries

Notes to Consolidated Financial Statements — Unaudited (continued)

For the Three Months Ended March 31, 2015 and 2014

(Dollars in Thousands, Except for Share Amounts)

7.  Derivative and Hedging Activities (continued)

The following table sets forth the net of tax effect of the Company’s cash flow hedge derivative instruments on the Consolidated Financial Statements for the periods indicated:

(a)                                 This represents the change in the fair market value of the Company’s interest rate derivatives, net of tax, offset by the amount of actual cash paid related to the net settlements of the interest rate derivatives, net of tax.

(b)                                 This represents the amount of actual cash paid, net of tax, related to the net settlements of the interest rate derivatives plus any effective amortization of deferred losses on the Company’s terminated derivative, net of tax.

(c)                                  Amount impacting income not related to AOCI reclassification.

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TRAC Intermodal LLC and Subsidiaries

Notes to Consolidated Financial Statements — Unaudited (continued)

For the Three Months Ended March 31, 2015 and 2014

(Dollars in Thousands, Except for Share Amounts)

7. Derivatives and Hedging Activities (continued)

The following table summarizes the deferred (gains) and losses for the terminated interest rate derivatives and the related amortization into interest expense for the three months ended March 31, 2015 and 2014:

(a)                                  This hedged item is referred to as Chassis Funding II Floating Rate Asset-Backed Notes, Series 2007-1

(b)                                 This hedged item is referred to as Chassis Funding Floating Rate Asset-Backed Notes, Series 2007-1

(c)                                  This hedged item is referred to as Chassis Financing Program, Term Loan Agreement—Portfolio C

(d)                                 This hedged item is referred to as Chassis Financing Program, Portfolio A

The amount of loss expected to be reclassified from AOCI into interest expense over the next 12 months consists of net interest settlements on active interest rate derivatives in the amount of $800 (which is net of tax of $517) and amortization of deferred losses on the Company’s terminated derivatives of $11,637 (which is net of tax of $7,525).

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TRAC Intermodal LLC and Subsidiaries

Notes to Consolidated Financial Statements — Unaudited (continued)

For the Three Months Ended March 31, 2015 and 2014

(Dollars in Thousands, Except for Share Amounts)

8. Commitments and Contingencies

Purchase Commitments

Our chassis purchase commitments are related to commitments to refurbish and remanufacture chassis during 2015.  At March 31, 2015, the Company had commitments totaling approximately $8,332, all of which was committed for 2015.

Lease Commitments

The Company is party to various operating leases relating to office facilities and certain other equipment with various expiration dates through 2025. All leasing arrangements contain normal leasing terms without unusual purchase options or escalation clauses.  As of March 31, 2015, the aggregate minimum rental commitment under operating leases having initial or remaining non-cancelable lease terms in excess of one year was $35,101.

9.  Income Taxes

The consolidated income tax provision for the three months ended March, 31, 2015 and 2014 was determined based upon estimates of the Company’s consolidated forecasted effective income tax rates for the years ended December 31, 2015 and 2014, respectively.  For the three months ended March 31, 2015, the Company recorded a tax provision of $7,380, reflecting a 37.8% effective tax rate.  This compares to a tax provision of $3,856, reflecting a 41.3% effective tax rate for the three months ended March 31, 2014.   The Company’s effective tax rate differs from the U.S. federal tax rate of 35% primarily due to Canadian and Mexican tax provisions.

10. Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss (“AOCI”) includes the changes in the fair value of derivative instruments, reclassification into earnings of amounts previously deferred relating to derivative instruments and foreign currency translation gains and losses primarily relating to the Company’s Canadian operation.

For the three months ended March 31, 2015, the components of AOCI, net of tax, are as follows:

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TRAC Intermodal LLC and Subsidiaries

Notes to Consolidated Financial Statements — Unaudited (continued)

For the Three Months Ended March 31, 2015 and 2014

(Dollars in Thousands, Except for Share Amounts)

10. Accumulated Other Comprehensive Loss (continued)

The following table presents the effects of reclassifications out of AOCI and into the Consolidated Statement of Operations for the periods indicated:

11. Share-Based Payment

A summary of the restricted shares of SCT Chassis, Inc. under the Company’s share-based compensation plan is as follows.  All amounts are in thousands except share and per share amounts.

On January 1, 2015, 14,702 restricted shares of SCT Chassis, Inc. were granted to two key employees at a fair value of $11.08 per share or a total fair value of $163.  These shares vested immediately.

The Company recorded share-based compensation expense for the three months ended March 31, 2015 and 2014 of $247 and $218, respectively. Compensation expense is recorded as a component of Selling, general and administrative expense in the Company’s Consolidated Statements of Operations and is recognized on a straight-line basis with the compensation expense recognized as of any date being at least equal to the portion of the grant-date fair value that is vested at that date. Total unrecognized compensation expense was approximately $346 at March 31, 2015, which is expected to be recognized over the remaining weighted-average vesting period of 1.2 years.

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TRAC Intermodal LLC and Subsidiaries

Notes to Consolidated Financial Statements — Unaudited (continued)

For the Three Months Ended March 31, 2015 and 2014

(Dollars in Thousands, Except for Share Amounts)

11. Share-Based Payment (continued)

The Management Shareholder Agreements also provide for additional grants of 1,096,954 restricted shares upon the achievement of certain performance conditions or a certain market condition following a liquidity event.  No compensation expense has been recorded related to these shares since achievement of these conditions is not considered probable.

Share Repurchases

There were no share repurchases for the quarter ended March 31, 2015.

12. Segment and Geographic Information

The Company’s principal business is providing marine and domestic chassis on both long and short-term leases or rental agreements to a diversified customer base including the world’s leading shipping lines, Class I railroads, major U.S. intermodal transportation companies and motor carriers. The Company provides such services to its customers through two operating and reportable segments, the Marine Market segment and the Domestic Market segment. The reportable segments are based on the chassis markets that are served by the Company.

The Company evaluates segment performance and allocates resources to them primarily based upon Adjusted EBITDA. The Company defines Adjusted EBITDA as income (loss) before income taxes, interest expense, depreciation and amortization expense, impairment of assets and leasing equipment, loss on modification and extinguishment of debt and capital lease obligations, other expense (income), interest income, non-cash share-based compensation and principal collections on direct finance leases. Adjusted EBITDA is not a measure recognized under U.S. GAAP and does not have a standardized meaning prescribed by U.S. GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. Adjusted EBITDA helps management identify controllable expenses and make decisions designed to help the Company meet its current financial goals and optimize its financial performance. Accordingly, the Company believes this metric measures its financial performance based on operational factors that management can impact in the short-term, namely the cost structure and expenses of the organization.

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TRAC Intermodal LLC and Subsidiaries

Notes to Consolidated Financial Statements — Unaudited (continued)

For the Three Months Ended March 31, 2015 and 2014

(Dollars in Thousands, Except for Share Amounts)

12. Segment and Geographic Information (continued)

The following tables show segment information for the three months ended March 31, 2015 and 2014.