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 Number
June 30, 1994 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 July 29, 1994.
<PAGE>
PART I--FINANCIAL INFORMATION
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
--------------------
<TABLE>
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
IN MILLIONS
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
----------------------- ---------------------
1994 1993 1994 1993
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Gross income.......................... $156.0 $147.4 $310.6 $294.7
Costs and expenses
Operating expenses.................. 70.9 64.8 141.5 129.3
Interest............................ 19.6 19.6 37.8 41.0
Provision for depreciation
and amortization.................. 27.6 26.5 54.5 52.9
Selling, general and administrative. 11.7 10.3 23.0 19.9
------ ------ ------ ------
129.8 121.2 256.8 243.1
------ ------ ------ ------
Income before income taxes and equity
in net earnings of affiliated
companies........................... 26.2 26.2 53.8 51.6
Income taxes.......................... 9.8 9.5 20.4 18.9
------ ------ ------ ------
Income before equity in net earnings
of affiliated companies............. 16.4 16.7 33.4 32.7
Equity in net earnings
of affiliated companies............. 4.7 3.6 8.4 7.0
------ ------ ------ ------
Net income............................ $ 21.1 $ 20.3 $ 41.8 $ 39.7
====== ====== ====== ======
- ----------------
<FN>
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 six months ended June 30, 1994 are not
necessarily indicative of the results that may be achieved for the entire year
ending December 31, 1994.
</FN>
</TABLE>
-1-
<PAGE>
<TABLE>
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
---------------
CONSOLIDATED BALANCE SHEETS
IN MILLIONS
<CAPTION>
ASSETS
JUNE 30 DECEMBER 31
1994 1993
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash and cash equivalents...................... $ 6.3 $ 11.7
Trade receivables - net........................ 44.9 45.3
Property, plant and equipment
Railcars and support facilities.............. 1,830.0 1,735.8
Tank storage terminals and pipelines......... 1,070.2 1,014.8
--------- ---------
2,900.2 2,750.6
Less - Allowances for depreciation........... (1,233.6) (1,193.3)
--------- ----------
1,666.6 1,557.3
Due from GATX Corporation...................... 369.7 361.5
Investments in affiliated companies............ 165.6 148.2
Other assets................................... 89.9 91.6
--------- ----------
TOTAL ASSETS $ 2,343.0 $ 2,215.6
========== ==========
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES, DEFERRED ITEMS AND SHAREHOLDER'S EQUITY
JUNE 30 DECEMBER 31
1994 1993
---------- ----------
(UNAUDITED)
<S> <C> <C>
Accounts payable............................... $ 99.5 $ 98.4
Accrued expenses............................... 32.4 36.0
Debt
Short-term debt.............................. 154.4 104.2
Long-term debt............................... 771.0 731.9
Capital lease obligations.................... 124.7 126.8
---------- ----------
1,050.1 962.9
Deferred income taxes.......................... 272.2 265.6
Other deferred items........................... 212.3 208.8
---------- ----------
Total liabilities and deferred items 1,666.5 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.......................... 325.1 306.5
Cumulative foreign currency translation
adjustment.................................. 16.4 2.4
---------- ----------
Total shareholder's equity 676.5 643.9
---------- ----------
TOTAL LIABILITIES, DEFERRED ITEMS
AND SHAREHOLDER'S EQUITY $ 2,343.0 $ 2,215.6
========= =========
</TABLE>
-3-
<PAGE>
<TABLE>
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
------------------
STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
IN MILLIONS
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
- --------------------
Net income $ 21.1 $ 20.3 $ 41.8 $ 39.7
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for depreciation and amortization 27.6 26.5 54.5 52.9
Deferred income taxes 3.5 1.3 7.2 2.7
Other (includes working capital) (5.8) 2.4 (6.0) 11.0
------ ------ ------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 46.4 50.5 97.5 106.3
INVESTING ACTIVITIES
- --------------------
Additions to property, plant and equipment:
Railcars and support facilities (51.2) (47.7) (111.2) (93.7)
Tank storage terminals and pipelines (24.6) (17.6) (51.6) (28.7)
Investments in affiliated companies - (1.1) - (1.9)
------ ------ ------ ------
Capital additions (75.8) (66.4) (162.8) (124.3)
Proceeds from other asset dispositions 1.6 1.1 4.2 1.7
------ ------ ------ ------
NET CASH USED IN INVESTING ACTIVITIES (74.2) (65.3) (158.6) (122.6)
FINANCING ACTIVITIES
- --------------------
Proceeds from issuance of long-term debt 57.7 50.0 57.7 63.3
Repayment of long-term debt (15.4) (.1) (18.7) (13.7)
Net increase (decrease) in short-term debt .4 (23.4) 50.2 (6.6)
Repayment of capital lease obligations - - (2.1) (1.9)
Cash dividends paid to GATX Corporation (11.7) (10.8) (23.2) (21.2)
Net increase in amount due from
GATX Corporation (3.4) (.7) (8.2) (6.4)
------ ------ ------ ------
NET CASH PROVIDED BY FINANCING ACTIVITIES 27.6 15.0 55.7 13.5
------ ------ ------ ------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS $ (.2) $ .2 $ (5.4) $ (2.8)
======= ====== ======= =======
</TABLE>
-4-
<PAGE>
MANAGEMENT'S DISCUSSION OF OPERATIONS
COMPARISON OF FIRST SIX MONTHS OF 1994 TO FIRST SIX MONTHS OF 1993
GENERAL
- -------
General American Transportation Corporation's (GATC's) net income for the first
six months of 1994 was $42 million compared to net income of $40 million for the
first half of 1993. Transportation's and Terminals' operating performance
improved in 1994 which resulted in higher net income due to increased railcar
and terminal rental income, partially offset by higher maintenance expenses at
Transportation and increased selling, general and administrative costs.
Cash provided by operating activities decreased $9 million, from $106 million in
the first six months of 1993 to $97 million in the first six months of 1994.
The decrease is primarily due to changes in working capital.
Capital additions of $163 million for the first six months of 1994 increased $38
million from the comparable 1993 period. Capital additions at Transportation
included $103 million for railcars and railcar improvements compared to $82
million in 1993; approximately $8 million was expended on the repair facilities
in 1994 compared to $12 million in 1993. Terminals invested $52 million in tank
construction, other modifications and improvements, and the acquisition of two
additional terminal facilities compared to $31 million in 1993. Full year 1994
capital spending is forecasted to be approximately $425 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 external
financing sources.
GATC had available unused committed lines of credit totaling $203 million at
June 30, 1994. In addition, GATC has a $650 million shelf registration for pass
through trust certificates and debt securities, under which $50 million of
medium-term notes have been issued. These notes were issued during the second
quarter to repay long-term debt and fund capital additions.
-5-
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Following is a discussion of the operating results of GATC's business segments:
<TABLE>
RAILCAR LEASING AND MANAGEMENT (TRANSPORTATION)
- -----------------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended
(In Millions) June 30
---------------------
1994 1993 Change
------- ------- ------------------------
<S> <C> <C> <C> <C>
Gross Income $ 158.0 $ 148.5 $ 9.5 6 %
Net Income $ 26.7 $ 25.7 $ 1.0 4 %
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Transportation's gross income of $158 million for the first half of 1994
increased 6% from the comparable prior year period. The improvement resulted
from 3,200 additional cars on lease and slightly higher lease rates. At quarter
end, the active fleet totaled 53,450 railcars compared to 50,250 cars on lease a
year ago. Fleet utilization at June 30, 1994 was 94% on a total fleet size of
57,000 compared to 91% on a fleet size of 55,200 a year ago.
Net income increased 4% from the first half of 1993 reflecting the higher
revenues. Operating margins decreased slightly as the higher revenues were
somewhat offset by increased maintenance expenses. Ownership costs, consisting
of rental expense, depreciation and interest, increased at a lower rate than the
increase in revenues.
-6-
<PAGE>
<TABLE>
TERMINALS AND PIPELINES
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended
(In Millions) June 30
--------------------
1994 1993 Change
-------- ------- ----------------------
<S> <C> <C> <C> <C>
Gross Income $ 143.9 $ 137.1 $ 6.8 5 %
Net Income $ 15.1 $ 14.0 $ 1.1 8 %
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Terminals' gross income increased 5% from the first six months of 1993. Overall
strong demand for storage tankage as well as increased throughput volumes at
GATX's pipeline systems and large terminals were the primary reasons for the
improvement. Throughput for the first six months of 1994 was 342 million
barrels compared to 305 million barrels a year ago. Capacity utilization at
Terminals' wholly-owned facilities was 90% at the end of the second quarter of
1994, down one percent from a year ago.
Terminals' net income of $15 million increased 8% 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 systems costs. Earnings at 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-
<PAGE>
COMPARISON OF SECOND QUARTER 1994 TO
SECOND QUARTER 1993
<TABLE>
GROSS INCOME
- ------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------
(In Millions) Three Months Ended
June 30
--------------------
Business Segment 1994 1993 Change
- -------------------------- -------- ------- ------------------
<S> <C> <C> <C> <C>
Railcar Leasing and
Management $ 80.0 $ 75.0 $ 5.0 7 %
Terminals and Pipelines 71.6 67.9 3.7 5
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
NET INCOME
- ----------
<CAPTION>
- ------------------------------------------------------------------------------------------------------
(In Millions) Three Months Ended
June 30
---------------------
Business Segment 1994 1993 Change
- -------------------------- -------- ------- --------------------
<S> <C> <C> <C> <C>
Railcar Leasing and
Management $ 13.5 $ 13.3 $ .2 2 %
Terminals and Pipelines 7.6 7.0 .6 9
- ------------------------------------------------------------------------------------------------------
</TABLE>
Increases in gross income and net income between these quarters for both
segments were principally due to the same reasons discussed previously in
relation to the six-month periods.
-8-
<PAGE>
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, the following
have now been settled: Stewart, et al, v. Southern Pacific Railroad Co., et al,
filed May 1990 (No. 256464) and settled May 1994; Reese, et al, v. Southern
Pacific, et al, filed May 1990 (No. 256434) and settled April 1994; and Nancy
Washington, et al, v. Southern Pacific, et al, filed May 1990 (No. 256435) and
settled March 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) 4 General American Transportation Corporation Notices 1 and 2
dated June 8, 1994 and Notices 3 through 6 dated June 17, 1994
defining the rights of the holders of GATC's Medium-Term Notes
Series E issued during that period. These exhibits have been
filed with the SEC but are not being made available
in this document.
12 Statement regarding computation of ratios of earnings to
fixed charges. 11
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) No reports on Form 8-K were filed during the reporting period.
-9-
<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.
GENERAL AMERICAN TRANSPORTATION CORPORATION
(Registrant)
/s/D. Ward Fuller
------------------------------------------
D. Ward Fuller
President, Chief Executive Officer
and Director
(Duly Authorized Officer)
/s/Melvin D. Kusta
-------------------------------------------
Melvin D. Kusta
Controller and Principal
Accounting Officer
Date: August 11, 1994
-10-
EXHIBIT 12
<TABLE>
GENERAL AMERICAN TRANSPORTATION CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(IN MILLIONS, EXCEPT FOR RATIOS)
<CAPTION>
Three
Months Ended Six Months Ended
June 30 June 30
-------------------- ---------------------
1994 1993 1994 1993
------- ------- ------- --------
<S> <C> <C> <C> <C>
Earnings available for fixed charges:
Net income................................... $ 21.1 $ 20.3 $ 41.8 $ 39.7
Add (deduct):
Income taxes............................... 9.8 9.5 20.4 18.9
Equity in net earnings of affiliated
companies, net of distributions received. (4.1) (2.7) (7.0) (5.1)
Interest on indebtedness and amortization
of debt discount and expense............. 19.6 19.6 37.8 41.0
Amortization of capitalized interest....... .3 .3 .6 .6
Portion of rents representative of interest
factor (deemed to be one-third).......... 3.5 2.5 6.9 5.0
------ ------ ------ ------
Total earnings available for fixed charges... $ 50.2 $ 49.5 $100.5 $100.1
====== ====== ====== ======
Fixed Charges:
Interest on indebtedness and amortization
of debt discount and expense............... $ 19.6 $ 19.6 $ 37.8 $ 41.0
Capitalized interest......................... .6 .7 1.4 1.4
Portion of rents representative of interest
factor (deemed to be one-third)............ 3.5 2.5 6.9 5.0
------ ------ ------ ------
Total fixed charges.......................... $ 23.7 $ 22.8 $ 46.1 $ 47.4
====== ====== ====== ======
Ratio of earnings to fixed charges(A).......... 2.12x 2.17x 2.18x 2.11x
<FN>
(A) The ratios of earnings to fixed charges represents 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.
</FN>
</TABLE>
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> JUN-30-1994
<CASH> 6
<SECURITIES> 0
<RECEIVABLES> 45<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2900
<DEPRECIATION> 1234
<TOTAL-ASSETS> 2343
<CURRENT-LIABILITIES> 0
<BONDS> 896<F2>
<COMMON> 0
0
0
<OTHER-SE> 677
<TOTAL-LIABILITY-AND-EQUITY> 2343
<SALES> 0
<TOTAL-REVENUES> 311
<CGS> 0
<TOTAL-COSTS> 142<F3>
<OTHER-EXPENSES> 55<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38
<INCOME-PRETAX> 54<F5>
<INCOME-TAX> 20
<INCOME-CONTINUING> 42
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>This value represents net receivables
<F2>This value is comprised of two components: Long-Term Debt of 771 million and
Capital Lease Obligation of 125 million.
<F3>This value represents Operating Expenses stated on the Consolidated Income
Statement.
<F4>This value represents Provision for Depreciation and Amortization stated on the
Consolidated Income Statement.
<F5>This value represents Income Before Income Taxes and Equity in Net Earnings of
Affiliated Companies.
</FN>
</TABLE>
