<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
[X] OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
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 1-5666
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UNION TANK CAR COMPANY
(Exact name of registrant as specified in its charter)
Delaware 36-3104688
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
225 West Washington Street, Chicago, Illinois 60606
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(Address of principal executive offices)
Registrant's telephone number, including area code: (312) 372-9500
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
--- ---
There is no voting stock held by non-affiliates of the registrant. This report
is being filed by the registrant as a result of undertakings made pursuant to
Section 15(d) of the Securities Exchange Act of 1934 with respect to certain
long-term debt of the registrant.
Included in this filing are 10 pages, sequentially numbered in the bottom center
of each page.
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<PAGE>
UNION TANK CAR COMPANY AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
Part I. Financial Information
Item 1.
Condensed consolidated statement of income -
three months ended March 31, 1997 and 1996 3
Condensed consolidated balance sheet -
March 31, 1997 and December 31, 1996 4
Condensed consolidated statement of cash flows -
three months ended March 31, 1997 and 1996 5
Notes to condensed consolidated financial statements 6 - 7
Item 2.
Management's Discussion and Analysis
of Financial Condition and Results of Operations 8
Part II. Other Information
Item 1.
Legal Proceedings 9
Item 6.
Exhibits and Reports on Form 8-K 9
Signatures 10
</TABLE>
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNION TANK CAR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1997 1996
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<S> <C> <C>
Revenues
Services (leasing and other) $136,333 $125,820
Net Sales 49,583 22,867
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185,916 148,687
Other income 4,632 4,327
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190,548 153,014
Costs and expenses
Cost of services 77,210 68,855
Cost of sales 42,975 16,372
General and administrative 13,965 13,254
Interest 19,045 18,600
-------- --------
153,195 117,081
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Income before income taxes 37,353 35,933
Provision for income taxes
Current 10,978 12,024
Deferred 2,745 1,266
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13,723 13,290
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Net income $ 23,630 $ 22,643
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
UNION TANK CAR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- ------------
<S> <C> <C>
Assets
- ------
Cash and cash equivalents $ 72,520 $ 71,915
Accounts receivable, primarily due
within one year 74,284 74,667
Inventories 68,725 65,756
Prepaid expenses and deferred charges 11,252 13,665
Advances to parent company,
principally at LIBOR plus 1% 229,781 111,169
Railcar lease fleet, net 1,468,714 1,459,800
Fixed assets, net 151,903 147,887
Investment in aircraft direct financing
lease 36,829 37,347
Other assets 24,231 24,614
---------- ----------
Total assets $2,138,239 $2,006,820
========== ==========
Liabilities, Deferred Items and Stockholder's Equity
- ----------------------------------------------------
Accounts payable $ 22,242 $ 30,036
Accrued liabilities 172,864 180,865
Borrowed debt, including $209,317 due
within one year ($210,288 at
December 31, 1996) 876,225 738,632
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1,071,331 949,533
Deferred income taxes and investment
tax credits 495,528 493,537
Stockholder's equity
Common stock and additional capital 113,035 113,035
Retained earnings 458,345 450,715
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Total stockholder's equity 571,380 563,750
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Total liabilities, deferred items
and stockholder's equity $2,138,239 $2,006,820
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
UNION TANK CAR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 23,630 $ 22,643
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 27,325 26,324
Deferred taxes 2,745 1,266
Gain on disposition of railcars and other fixed assets (350) (1,585)
Other non-cash income and expenses 714 435
Changes in assets and liabilities:
Accounts receivable (256) (3,681)
Inventories (3,219) (2,081)
Prepaid expenses and deferred charges 2,399 (2,415)
Accounts payable and accrued expenses (15,174) 4,127
--------- ---------
Net cash provided by operating activities 37,814 45,033
Cash flows from investing activities:
(Increase) decrease in advance to parent (115,988) 63,679
Construction and purchase of railcars and other fixed assets (44,262) (86,383)
Proceeds from disposals of railcars and other fixed assets 1,516 4,738
(Increase) decrease in other assets (235) 372
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Net cash used in investing activities (158,969) (17,594)
Cash flows from financing activities:
Proceeds from issuance of borrowed debt 150,000 -
Principal payments of borrowed debt (11,472) (9,528)
Cash dividends (16,000) (15,000)
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Net cash provided by (used in) financing activities 122,528 (24,528)
Effect of exchange rates on cash and cash equivalents (768) 113
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Net increase in cash and cash equivalents 605 3,024
Cash and cash equivalents at beginning of year 71,915 28,781
--------- ---------
Cash and cash equivalents at end of period $ 72,520 $ 31,805
========= =========
Cash paid during the period for:
Interest (net of amount capitalized) $ 10,801 $ 10,408
Income taxes 15,508 13,526
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)
1. UNION TANK CAR COMPANY (the "Company") is a wholly-owned subsidiary of
Marmon Industrial Corporation ("Marmon Industrial"). Marmon Industrial is a
wholly-owned subsidiary of Marmon Holdings, Inc. ("Marmon Holdings"),
substantially all of the stock of which is owned, directly or indirectly, by
trusts for the benefit of certain members of the Pritzker family. As used
herein, "Pritzker family" refers to the lineal descendants of Nicholas J.
Pritzker, deceased.
2. The accompanying unaudited condensed consolidated financial statements
include all adjustments, consisting of normal recurring accruals, which the
Company considers necessary for a fair presentation. These interim financial
statements do not include all disclosures normally provided in annual
financial statements. Accordingly, they should be read in conjunction with
the consolidated financial statements and notes thereto in the Company's
1996 Annual Report on Form 10-K.
The 1997 interim results presented herein are not necessarily indicative of
the results of operations for the full year 1997.
Certain prior year amounts have been reclassified to conform to the current
year's presentation.
3. As more fully described in the Company's 1996 Annual Report on Form 10-K,
under an arrangement with Marmon Industrial, the Company is included in the
consolidated federal income tax return of Marmon Holdings. As a member of a
consolidated federal income tax group, the Company is contingently liable
for the federal income taxes of the other members of the group.
4. The Company and its subsidiaries have been named as defendants in a number
of lawsuits, and certain claims are pending. The Company has accrued what it
reasonably expects to pay in resolution of these matters and, in the opinion
of management, their ultimate resolution will not have a material effect on
the Company's consolidated financial position or results of operations.
5. Foreign currency translation adjustments and transaction gains and losses
are assumed by the Company's parent. For the three months ended March 31,
1997 and 1996, Marmon Industrial absorbed a loss of $19 and a gain $36,
respectively.
6. The Company's Canadian subsidiaries periodically enter into foreign currency
forward contracts to hedge against U.S. dollar exposures. No foreign
currency forward contracts were outstanding as of March 31, 1997, and
December 31, 1996.
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<PAGE>
7. Summarized Financial Information of Procor Limited
Summarized consolidated financial information for the Company's wholly-owned
subsidiary, Procor Limited, is as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
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<S> <C> <C>
Balance Sheet:
Railcar lease fleet, net $207,430 $213,644
All other assets 184,988 188,175
Borrowed debt 133,175 134,861
All other liabilities 144,320 153,872
Three Months Ended
March 31,
-----------------------
1997 1996
--------- ------------
Statement of Income:
Services and net sales $ 22,878 $ 34,881
Gross profit 8,548 10,663
Net income 3,128 3,893
</TABLE>
8. In January 1997, the Company issued $150,000 in unsecured notes due February
1, 2007. The notes bear interest at the rate of 7 1/8% per annum, payable
semi-annually on February 1 and August 1, commencing on August 1, 1997. The
notes are non-redeemable and not subject to a sinking fund. Proceeds from
the notes are being used for general corporate purposes. These notes were
issued pursuant to a registration statement filed by the Company with the
Securities and Exchange Commission covering an aggregate of $400,000 of debt
securities and pass through certificates which may be issued from time to
time.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
1st Quarter 1997 versus 1996
Service revenues increased $10.5 million primarily due to the effect of railcars
added to the lease fleet.
Sales revenues increased $26.7 million primarily due to increased railcar sales.
Financial Condition
1997 versus 1996
Operating activities provided $37.8 million of cash. These funds, along with the
issuance of borrowed debt, were used to provide financing for railcar additions,
service borrowed debt obligations, advance funds to parent and pay a dividend to
the Company's stockholder.
Management expects future cash to be provided from operating activities, long-
term railcar financings and collection of funds previously advanced to parent
will be adequate to provide for the continued expansion of the Company's
business and enable it to meet its debt service obligations.
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<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to "Business - Environmental Matters" in the
Company's Annual Report on Form 10-K for the year ended December 31,
1996 for a description of certain environmental matters.
Item 6. Exhibits and Reports on Form 8-K
b. Report on Form 8-K
On January 30, 1997, the Company filed a report on Form 8-K disclosing
that on January 22, 1997, the Company had entered into an Underwriting
Agreement with Salomon Brothers Inc and Morgan Stanley & Co.
Incorporated relating to the issuance and sale by the Company of
$150,000,000 principal amount 7 1/8% Notes Due 2007.
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<PAGE>
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.
UNION TANK CAR COMPANY
REGISTRANT
Dated: May 5, 1997 /s/ R.C. Gluth
-------------------------------------
R.C. Gluth
Executive Vice President and Director
(principal financial officer and
principal accounting officer)
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the March 31, 1997 condensed consolidated balance sheet, condensed consolidated
statement of income for the three months ended March 31, 1997, and the notes
thereto, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 72,520
<SECURITIES> 0
<RECEIVABLES> 78,338
<ALLOWANCES> 4,054
<INVENTORY> 68,725
<CURRENT-ASSETS> 0<F1>
<PP&E> 2,890,509
<DEPRECIATION> 1,269,892
<TOTAL-ASSETS> 2,138,239
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 876,225
0
0
<COMMON> 106,689
<OTHER-SE> 464,691
<TOTAL-LIABILITY-AND-EQUITY> 2,138,239
<SALES> 49,583
<TOTAL-REVENUES> 190,548<F2>
<CGS> 42,975
<TOTAL-COSTS> 120,185
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,045
<INCOME-PRETAX> 37,353
<INCOME-TAX> 13,723
<INCOME-CONTINUING> 23,630
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,630
<EPS-PRIMARY> 0<F3>
<EPS-DILUTED> 0
<FN>
<F1> The Company issues financial statements utilizing a non-classified balance
sheet.
<F2> The Company's revenues are derived primarily from railcar leasing.
<F3> The Company is a wholly-owned subsidiary.
</FN>
</TABLE>
