<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, 2000
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.
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. Financial Statements
Condensed consolidated statement of income -
three months ended March 31, 2000 and 1999 3
Condensed consolidated balance sheet -
March 31, 2000 and December 31, 1999 4
Condensed consolidated statement of cash flows -
three months ended March 31, 2000 and 1999 5
Notes to condensed consolidated financial statements 6 - 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 9
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,
-------------------------------------------
2000 1999
------------------ --------------------
<S> <C> <C>
Revenues
Services (leasing and other) $161,176 $153,319
Net sales 67,174 73,187
--------- ---------
228,350 226,506
Other income 7,877 5,281
--------- ---------
236,227 231,787
Costs and expenses
Cost of services 94,896 88,162
Cost of sales 55,994 61,960
General and administrative 16,662 17,554
Interest 18,221 17,045
--------- ---------
185,773 184,721
--------- ---------
Income before income taxes 50,454 47,066
Provision for income taxes
Current 10,697 13,316
Deferred 9,213 5,299
--------- ---------
19,910 18,615
--------- ---------
Net income $ 30,544 $ 28,451
========= =========
</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)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------------- -------------------
(Unaudited)
<S> <C> <C>
Assets
- ------
Cash and cash equivalents $ 55,721 $ 50,607
Accounts receivable, primarily due within one year 95,744 76,160
Inventories 90,413 85,165
Prepaid expenses and deferred charges 11,569 9,635
Advances to parent company,
principally at LIBOR plus 1% 221,568 246,168
Railcar lease fleet, net 1,673,820 1,653,495
Fixed assets, net 190,587 189,803
Investment in aircraft direct financing lease 33,360 34,012
Other assets 47,178 52,274
---------- ----------
Total assets $2,419,960 $2,397,319
========== ==========
Liabilities, Deferred Items and Stockholder's Equity
- ----------------------------------------------------
Accounts payable $ 23,898 $ 24,361
Accrued liabilities 233,179 255,459
Borrowed debt, including $42,867 due within
one year ($42,516 at December 31, 1999) 974,348 984,067
---------- ----------
1,231,425 1,263,887
Deferred income taxes and investment tax credits 474,758 465,793
Stockholder's equity
Common stock and additional capital 149,629 113,035
Retained earnings 564,148 554,604
---------- ----------
Total stockholder's equity 713,777 667,639
---------- ----------
Total liabilities, deferred items and
stockholder's equity $2,419,960 $2,397,319
========== ==========
</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,
---------------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 30,544 $ 28,451
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 32,750 32,113
Deferred taxes 9,213 5,299
Gain on disposition of railcars and other fixed assets (1,562) (946)
Other non-cash income and expenses 630 449
Changes in assets and liabilities:
Accounts receivable (15,835) (10,152)
Inventories (5,882) 3,387
Prepaid expenses and deferred charges (1,943) 1,016
Accounts payable and accrued expenses (22,153) (24,577)
-------- --------
Net cash provided by operating activities 25,762 35,040
Cash flows from investing activities:
Construction and purchase of railcars and other fixed assets (55,160) (65,801)
Decrease in advance to parent 61,469 7,720
Increase in other assets (162) (8,722)
Proceeds from disposals of railcars and other fixed assets 3,926 2,549
-------- --------
Net cash provided by (used in) investing activities 10,073 (64,254)
Cash flows from financing activities:
Proceeds from issuance of borrowed debt 542 45,000
Proceeds from sale-leaseback transaction - 13,200
Principal payments of borrowed debt (10,122) (9,248)
Cash dividend (21,000) (20,000)
-------- --------
Net cash (used in) provided by financing activities (30,580) 28,952
Effect of exchange rates on cash and cash equivalents (141) 769
-------- --------
Net increase in cash and cash equivalents 5,114 507
Cash and cash equivalents at beginning of year 50,607 58,423
-------- --------
Cash and cash equivalents at end of period $ 55,721 $ 58,930
======== ========
Cash paid during the period for:
Interest (net of amount capitalized) $ 21,399 $ 19,958
Income taxes 9,863 17,955
</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 LLC ("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 1999 Annual Report on Form 10-K.
Certain prior year amounts have been reclassified to conform to the current
year presentation.
The 2000 interim results presented herein are not necessarily indicative of
the results of operations for the full year 2000.
3. As more fully described in the Company's 1999 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,
2000 and 1999, Marmon Industrial absorbed losses of $20 and $252,
respectively.
6. The Company's foreign subsidiaries periodically enter into foreign currency
forward contracts to hedge against U.S. dollar exposures. Foreign currency
forward contracts, all with initial maturities of less than one year,
amounted to $8,630 at March 31, 2000 and $9,100 at December 31, 1999.
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<PAGE>
7. Segment Information
<TABLE>
<CAPTION>
Consolidated
Railcar All Other Totals
------------- -------------- ----------------
(Dollars in Millions)
<S> <C> <C> <C>
Three months ended March 31, 2000
---------------------------------
Revenues from external customers $178.2 $50.2 $228.4
Income before income taxes 59.7 (9.2) 50.5
Three months ended March 31, 1999
---------------------------------
Revenues from external customers $177.7 $48.8 $226.5
Income before income taxes 56.1 (9.0) 47.1
</TABLE>
8. Summarized Financial Information of Procor Limited
Summarized consolidated financial information for the Company's wholly-
owned subsidiary, Procor Limited, in thousands of U.S. dollars, is as
follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ ---------------
<S> <C> <C>
Balance Sheet:
Railcar lease fleet, net $156,457 $160,781
All other assets 182,740 183,684
Borrowed debt 71,073 72,738
All other liabilities 123,480 117,849
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Statement of Income:
Services and net sales $30,710 $29,913
Gross profit 10,331 8,400
Net income 5,711 3,303
</TABLE>
9. In March 2000, the Company received a capital contribution from its parent
of $36,594, consisting of the stock of two wholly-owned subsidiaries whose
primary assets are receivables from Marmon Industrial. The capital
contribution was recorded at the fair market value of these subsidiaries.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
1st Quarter 2000 versus 1999
- ----------------------------
Service revenues increased $7.9 million primarily due to the effect of railcars
added to the lease fleet and the intermodal tank containers operations acquired
in the second quarter of 1999.
Sales revenues decreased $6.0 million primarily due to decreased sales of
railcars.
Financial Condition
- -------------------
2000 versus 1999
- ----------------
Operating activities provided $25.8 million of cash in the first quarter of
2000. These funds, along with the collection of funds advanced to parent, were
used to provide financing for railcar additions, pay dividends to the Company's
stockholder, and service borrowed debt obligations.
Management expects future cash to be provided from operating activities, long-
term 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>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At March 31, 2000, there has been no significant change to the Company's
exposure to market risk since December 31, 1999.
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,
1999 for a description of certain environmental matters.
ITEM 6. Exhibits and Reports on Form 8-K
b. No report on Form 8-K was filed during the quarter ended March 31,
2000.
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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, 2000 /s/ R.C. Gluth
---------------------------
R.C. Gluth
Executive Vice President,
Director and Treasurer
(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, 2000 CONDENSED CONSOLIDATED BALANCE SHEET, CONDENSED CONSOLIDATED STATEMENT
OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000, 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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 55,721
<SECURITIES> 0
<RECEIVABLES> 99,788
<ALLOWANCES> 4,044
<INVENTORY> 90,413
<CURRENT-ASSETS> 0<F1>
<PP&E> 3,406,480
<DEPRECIATION> 1,542,073
<TOTAL-ASSETS> 2,419,960
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 974,348
0
0
<COMMON> 106,689
<OTHER-SE> 607,088
<TOTAL-LIABILITY-AND-EQUITY> 2,419,960
<SALES> 67,174
<TOTAL-REVENUES> 236,227<F2>
<CGS> 55,994
<TOTAL-COSTS> 150,890
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,221
<INCOME-PRETAX> 50,454
<INCOME-TAX> 19,910
<INCOME-CONTINUING> 30,544
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,544
<EPS-BASIC> 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>
