-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, iA5QpCLBoKNKG8n2TLQC31IfzKknfmjKA5ZyStPZ1ymjtOsuF372uGXo0/c5rYfN OoGeJTxzf1Jv/QMfdo5uqQ== 0000276478-94-000017.txt : 19941111 0000276478-94-000017.hdr.sgml : 19941111 ACCESSION NUMBER: 0000276478-94-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL AMERICAN TRANSPORTATION CORP /NY/ CENTRAL INDEX KEY: 0000276478 STANDARD INDUSTRIAL CLASSIFICATION: 4700 IRS NUMBER: 362827991 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-54754 FILM NUMBER: 94558559 BUSINESS ADDRESS: STREET 1: 500 WEST MONROE CITY: CHICAGO STATE: IL ZIP: 60661-3676 BUSINESS PHONE: 312-621-6200 MAIL ADDRESS: STREET 1: 120 S RIVERSIDE PLAZA 20TH FL CITY: CHICAGO STATE: IL ZIP: 60606 10-Q 1 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 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended Commission File September 30, 1994 Number 2-54754 GENERAL AMERICAN TRANSPORTATION CORPORATION Incorporated in the IRS Employer Identification No. State of New York 36-2827991 500 West Monroe Street Chicago, Illinois 60661-3676 (312) 621-6200 Indicate by check mark whether 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 requirements for the past 90 days. Yes X No ----- ----- Registrant had 1,000 shares of common stock outstanding (all owned by GATX Corporation) as of October 28, 1994. PART I--FINANCIAL INFORMATION GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS (UNAUDITED) IN MILLIONS
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1994 1993 1994 1993 ---- ----- ---- ----- Gross income.......................... $ 161.5 $ 150.7 $ 472.1 $ 445.4 Costs and expenses Operating expenses.................. 73.5 68.9 215.0 198.2 Interest............................ 20.2 18.9 58.0 59.9 Provision for depreciation and amortization.................. 27.6 25.8 82.1 78.7 Selling, general and administrative. 11.6 10.7 34.6 30.6 ------- ------ --------- ------ 132.9 124.3 389.7 367.4 ------- ------ --------- ------ Income before income taxes and equity in net earnings of affiliated companies .......................... 28.6 26.4 82.4 78.0 Income taxes.......................... 10.7 16.6 31.1 35.5 ------ ------ ------- ------ Income before equity in net earnings of affiliated companies ............ 17.9 9.8 51.3 42.5 Equity in net earnings of affiliated companies............. 4.3 4.2 12.7 11.2 ------- ------- -------- ------ Net income............................ $ 22.2 $ 14.0 $ 64.0 $ 53.7 ======= ======= ======== ======== Note - The consolidated balance sheet at December 31, 1993 has been derived from the audited financial statements at that date. All other consolidated financial statements are unaudited but include all adjustments, consisting only of normal recurring items, which management considers necessary for a fair statement of the consolidated results of operations and financial position for the respective periods. Operating results for the nine months ended September 30, 1994 are not necessarily indicative of the results that may be achieved for the entire year ending December 31, 1994. Certain amounts in the 1993 financial statements have been reclassified to conform to the 1994 presentation.
-1- GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS IN MILLIONS
ASSETS SEPTEMBER 30 DECEMBER 31 1994 1993 (UNAUDITED) Cash and cash equivalents...................... $ 8.7 $ 11.7 Trade receivables - net........................ 45.5 45.3 Property, plant and equipment Railcars and support facilities.............. 1,773.3 1,735.8 Tank storage terminals and pipelines......... 1,099.6 1,014.8 --------- --------- 2,872.9 2,750.6 Less - Allowances for depreciation........... (1,255.3) (1,193.3) --------- --------- 1,617.6 1,557.3 Due from GATX Corporation...................... 376.2 361.5 Investments in affiliated companies............ 169.9 148.2 Other assets................................... 91.8 91.6 --------- --------- TOTAL ASSETS $ 2,309.7 $ 2,215.6 ========= =========
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LIABILITIES, DEFERRED ITEMS AND SHAREHOLDER'S EQUITY SEPTEMBER 30 DECEMBER 31 1994 1993 (UNAUDITED) Accounts payable............................... $ 95.2 $ 98.4 Accrued expenses............................... 43.1 36.0 Debt Short-term debt.............................. 90.0 104.2 Long-term debt............................... 783.9 731.9 Capital lease obligations.................... 121.8 126.8 --------- -------- 995.7 962.9 Deferred income taxes.......................... 274.3 265.6 Other deferred items........................... 210.9 208.8 --------- -------- Total liabilities and deferred items 1,619.2 1,571.7 Shareholder's equity Common Stock - par value $1 per share; 1,000 shares authorized, issued and outstanding (owned by GATX Corporation)..... - - Additional capital........................... 335.0 335.0 Reinvested earnings.......................... 335.6 306.5 Cumulative foreign currency translation adjustment.................................. 19.9 2.4 --------- ------- Total shareholder's equity 690.5 643.9 --------- ------- TOTAL LIABILITIES, DEFERRED ITEMS AND SHAREHOLDER'S EQUITY $ 2,309.7 $ 2,215.6 ========= =========
-3- GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED) IN MILLIONS
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1994 1993 1994 1993 OPERATING ACTIVITIES Net income $ 22.2 $ 14.0 $ 64.0 $ 53.7 Adjustments to reconcile net income to net cash provided by operating activities: Provision for depreciation and amortization 27.6 25.8 82.1 78.7 Deferred income taxes 2.2 8.4 9.4 11.1 Other (includes working capital) (.1) 4.2 (6.1) 15.2 ------- ------ ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 51.9 52.4 149.4 158.7 INVESTING ACTIVITIES Additions to property, plant and equipment: Railcars and support facilities (80.1) (66.7) (191.3) (160.4) Tank storage terminals and pipelines (28.4) (20.3) (80.0) (49.0) Investments in affiliated companies - - - (1.9) ------- ------- ------- ------- Capital additions (108.5) (87.0) (271.3) (211.3) Proceeds from other asset dispositions 131.4 147.7 135.6 149.4 ------- ------- ------- ------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 22.9 60.7 (135.7) (61.9) FINANCING ACTIVITIES Proceeds from issuance of long-term debt 25.0 - 82.7 63.3 Repayment of long-term debt (12.0) - (30.7) (13.7) Net decrease in short-term debt (64.4) (82.2) (14.2) (88.8) Repayment of capital lease obligations (2.8) (6.2) (4.9) (8.1) Cash dividends paid to GATX Corporation (11.7) (10.7) (34.9) (31.9) Net increase in amount due from GATX Corporation (6.5) (2.8) (14.7) (9.2) ------- ------- ------- ------- NET CASH USED IN FINANCING ACTIVITIES (72.4) (101.9) (16.7) (88.4) ------- ------- ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 2.4 $ 11.2 $ (3.0) $ 8.4 ======= ======= ======= =======
-4- MANAGEMENT'S DISCUSSION OF OPERATIONS COMPARISON OF FIRST NINE MONTHS OF 1994 TO FIRST NINE MONTHS OF 1993 GENERAL General American Transportation Corporation's (GATC's) net income for the first nine months of 1994 was $64 million compared to net income of $54 million for the first nine months of 1993. As a result of the federal tax legislation enacted in the third quarter of 1993 which increased the federal income tax rate from 34% to 35% retroactively to January 1, 1993, net income for 1993 included an increase in income tax expense of $7 million for the cumulative increase in deferred income taxes. Improved operating performance at Transportation due to 3,000 more railcars on lease and at Terminals due to increased utilization and throughput resulted in higher net income. Cash provided by operating activities in the first nine months of 1994 decreased $9 million from the comparable 1993 period. The decrease is principally due to changes in working capital, partially offset by increased net income. Capital additions in the first nine months of 1994 totaled $271 million compared to $211 million in the comparable 1993 period. Capital additions at Transportation included $179 million for railcars and railcar improvements compared to $142 million in 1993; approximately $12 million was expended on the upgrade to the repair facilities in 1994 compared to $18 million in 1993. Terminals invested $80 million in tank construction, other modifications and improvements, and the acquisition of two additional terminal facilities in 1994; $51 million was expended in the 1993 period. GATC's full year 1994 capital spending is forecasted to be approximately $440 million compared to $273 million in 1993. A portion of the 1994 expenditures may not be effected depending on market conditions. It is anticipated that capital expenditures will be funded by both internally generated funds and GATC's available financing sources. Cash proceeds from other asset dispositions in 1994 and 1993 included $130 million and $138 million, respectively, of proceeds received from the sale leaseback of railcars at Transportation. GATC had available unused committed lines of credit totaling $220 million at September 30, 1994. GATC has a $650 million shelf registration for debt securities and pass through trust certificates, under which $75 million of medium-term notes and $93 million of pass through trust certificates have been issued. During the quarter, GATC issued $25 million of medium-term notes and completed a sale leaseback of railcars for $130 million, $93 million of which was the debt portion. -5- RESULTS OF OPERATIONS Following is a discussion of the operating results of GATC's business segments: RAILCAR LEASING AND MANAGEMENT (TRANSPORTATION)
Nine Months Ended (In Millions) September 30 1994 1993 Change Gross Income $ 238.8 $ 224.7 $14.1 6% Net Income $ 40.7 $ 34.8 $ 5.9 17%
Transportation's gross income of $239 million for the first nine months of 1994 increased 6% from the comparable prior year period. The improvement resulted from 3,000 additional railcars on lease and slightly higher overall lease rates. At quarter end, the active fleet totaled 54,500 railcars compared to 51,500 railcars on lease a year ago. Fleet utilization at September 30, 1994 was 93% compared to 92% a year ago. Net income of $41 million increased $6 million from the first nine months of 1993 which included a $4 million increase in the deferred tax provision as a result of the increase in the federal income tax rate. Income before the tax rate change was $39 million in 1993; on this more comparable basis, earnings increased 4% over 1993. Increased rental income was partially offset by increased fleet repair costs, ownership costs and lower investment earnings. Operating margins decreased slightly due to the impact of increased fleet repair costs. -6- TERMINALS AND PIPELINES (TERMINALS)
Nine Months Ended (In Millions) September 30 1994 1993 Change Gross Income $ 220.3 $ 206.9 $13.4 6% Net Income $ 23.3 $ 18.8 $ 4.5 24%
Terminals' gross income increased 6% from the first nine months of 1993 reflecting continuing strong demand at the pipeline operations, increased chemical tanks and services at several terminals, and strong activity at domestic petroleum terminals. Capacity utilization at Terminals' wholly- owned facilities was 94 percent at the end of the third quarter compared to 92 percent a year ago. Throughput for the nine months was 513 million barrels compared to 461 million barrels a year ago reflecting the overall improvement in the U.S. economy. Net income of $23 million increased $4 million from the first nine months of 1993; $2 million of this increase was due to a higher provision for deferred taxes in 1993 as a result of the increase in the tax rate. Income in 1993 before the tax rate change was $21 million; on this more comparable basis, earnings increased 10% over 1993. A slightly improved operating margin was partially offset by higher selling, general and administrative costs primarily attributable to higher compensation, training and information system costs. Equity in net earnings of the foreign affiliates increased $1.5 million due to strong demand at the Belgium and Singapore terminals; the Singapore terminals also benefitted from infrastructure growth. -7- FEDERAL TAX RATE CHANGE IN 1993 Following is a table showing the effect of the federal tax legislation which increased the federal income tax rate from 34% to 35% retroactively affecting all of 1993.
Income Before Tax Net Tax Rate Rate Net Income Change Change(A) Income In Millions, Nine Months Ended Sept. 30 -----1994----- ----------1993----------- - ------------------------------------------------------------------------------------------- Railcar Leasing and Management $ 40.7 $ 39.1 $ (4.3) $ 34.8 Terminals and Pipelines 23.3 21.2 (2.4) 18.8 Other - .1 - .1 Total Consolidated Amounts $ 64.0 $ 60.4 (6.7) $ 53.7 ====== ===== ===== ====== (A) Effect of tax rate change on pre-1993 deferred taxes.
-8- COMPARISON OF THIRD QUARTER 1994 TO THIRD QUARTER 1993 GENERAL For the third quarter of 1994, net income was $22 million compared to $14 million for the third quarter of 1993. GROSS INCOME
- ----------------------------------------------------------------------------------- (In Millions) Three Months Ended September 30 Business Segment 1994 1993 Change Railcar Leasing and Management $ 80.8 $ 76.2 $4.6 6% Terminals and Pipelines 76.4 69.8 6.6 9 - ----------------------------------------------------------------------------------
NET INCOME - ----------------------------------------------------------------------------------
(In Millions) Three Months Ended September 30 Business Segment 1994 1993 Change Railcar Leasing and Management $ 14.0 $ 9.1 $4.9 54% Terminals and Pipelines 8.2 4.8 3.4 71 - -----------------------------------------------------------------------------------
Increases and decreases in gross income and net income between these quarters for all segments were principally due to the same reasons as previously discussed in relation to the nine-month periods. As a result of the 1993 federal tax legislation, net income for the third quarter of 1993 includes a $7 million charge for the increase in deferred income taxes resulting from the change in the tax rate. -9- PART II - OTHER INFORMATION Item 1. Legal Proceedings. GATC has previously reported various lawsuits seeking damages arising out of the May 1989 explosion in San Bernardino, California. Of those suits, Goldie, et al, v. Southern Pacific, et al, filed May 1990 in the County of San Bernardino was settled in July 1994. Based upon information known to management, it remains management's opinion that if damages are assessed and taking into consideration probable insurance recovery, the ultimate resolution of the lawsuits arising out of the May 1989 explosion will not have a material effect on GATC's consolidated financial position or results of operations. Item 6. Exhibits and Reports on Form 8-K. Page (a) 12 Statement regarding computation of ratio of earnings to fixed charges. 12 27 Financial Data Schedule for General American Transportation Corporation submitted to the SEC along with the electronic submission of this Quarterly Report on Form 10-Q. (b) GATC filed a Current Report on Form 8-K dated August 12, 1994, with respect to the offering of Pass Through Trust Certificates in connection with the sale leaseback of 2,312 railcars. Copies of the forms of the underlying documents entered into by GATC as part of this transaction and the related trust indentures were filed as part of the 8-K Report. -10- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GENERAL AMERICAN TRANSPORTATION CORPORATION (Registrant) /s/D. Ward Fuller -------------------------------------------- D. Ward Fuller President, Chief Executive Officer and Director (Duly Authorized Officer) /s/Donald J. Schaffer ------------------------------------------- Donald J. Schaffer Vice President, Finance (Chief Financial Officer) Date: November 10, 1994 -11- EX-12 2 EXHIBIT 12 GENERAL AMERICAN TRANSPORTATION CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED) IN MILLIONS, EXCEPT FOR RATIOS
Three Months Ended Nine Months Ended September 30 September 30 1994 1993 1994 1993 Earnings available for fixed charges: Net income................................... $ 22.2 $ 14.0 $ 64.0 $ 53.7 Add (deduct): Income taxes............................... 10.7 16.6 31.1 35.5 Equity in net earnings of affiliated companies, net of dividends received..... (3.4) (3.4) (10.4) (8.5) Interest on indebtedness and amortization of debt discount and expense............. 20.2 18.9 58.0 59.9 Amortization of capitalized interest....... .3 .3 .9 .9 Portion of rents representative of interest factor (deemed to be one-third).......... 3.5 3.4 10.4 8.4 ------ ------ ------ ------ Total earnings available for fixed charges... $ 53.5 $ 49.8 $154.0 $149.9 ====== ====== ====== ====== Fixed charges: Interest on indebtedness and amortization of debt discount and expense............... $ 20.2 $ 18.9 $ 58.0 $ 59.9 Capitalized interest......................... .5 .7 1.9 2.1 Portion of rents representative of interest factor (deemed to be one-third)............ 3.5 3.4 10.4 8.4 ------ ------ ------ ------ Total fixed charges.......................... $ 24.2 $ 23.0 $ 70.3 $ 70.4 ====== ====== ====== ====== Ratio of earnings to fixed charges(A).......... 2.21x 2.17x 2.19x 2.13x (A) The ratios of earnings to fixed charges represent the number of times "fixed charges" are covered by "earnings." "Fixed charges" consist of interest on outstanding debt and capitalized interest, one-third (the proportion deemed representative of the interest factor) of rentals, and amortization of debt discount and expense. "Earnings" consist of consolidated net income before income taxes and fixed charges, less equity in net earnings of affiliated companies net of distributions received.
-12- EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 9-MOS DEC-31-1994 JAN-01-1994 SEP-30-1994 9 0 51 6 0 0 2873 1255 2310 0 906 0 0 0 691 2310 0 472 0 215 82 0 58 83 31 64 0 0 0 64 0 0 THIS VALUE CONSISTS OF TWO COMPONENTS; LONG-TERM DEBT OF 784 MILLION AND CAPITAL LEASE OBLIGATIONS OF 122 MILLION; SHORT-TERM DEBT IS NOT INCLUDED IN THIS VALUE. THIS VALUE REPRESENTS OPERATING EXPENSES ON THE CONSOLIDATED INCOME STATEMENT. THIS VALUE CONSISTS OF PROVISION FOR DEPRECIATION ADN AMORTIZATION ON THE CONSOLIDATED INCOME STATEMENT. THIS VALUE REPRESENTS INCOME BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF AFFILIATED COMPANIES.
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