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
September 30, 1995 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 31, 1995.
<PAGE>
PART I -- FINANCIAL INFORMATION
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
In Millions
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
------ ------ ------ -----
<S> <C> <C> <C> <C>
Gross income. . . . . . . . . . . . $177.0 $161.5 $530.1 $472.1
Costs and expenses
Operating expenses. . . . . . . 78.5 73.5 231.2 215.0
Interest. . . . . . . . . . . . 25.1 20.2 75.4 58.0
Provision for depreciation and
amortization. . . . . . . . . 29.9 27.6 90.4 82.1
Selling, general and
administrative. . . . . . . . 13.8 11.6 40.4 34.6
------- ----- ------ ------
147.3 132.9 437.4 389.7
------- ----- ------ ------
Income before income taxes
and equity in net earnings of
affiliated companies. . . . . . . 29.7 28.6 92.7 82.4
Income taxes. . . . . . . . . . . . 11.3 10.7 36.7 31.1
------- ----- ------ -----
Income before equity in net
earnings of affiliated companies 18.4 17.9 56.0 51.3
Equity in net earnings of
affiliated companies. . . . . . . 5.4 4.3 15.4 12.7
------- ------ ------ -----
Net income. . . . . . . . . . . . . $ 23.8 $ 22.2 $ 71.4 $ 64.0
====== ======= ====== =======
<FN>
Note - The consolidated balance sheet at December 31, 1994 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, 1995 are not necessarily indicative of the results that may be achieved for the
entire year ending December 31, 1995.
</FN>
</TABLE>
-1-
<PAGE>
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
In Millions
ASSETS
September 30 December 31
1995 1994
(Unaudited)
------------ -----------
<S> <C> <C>
Cash and cash equivalents . . . . . . $ 13.2 $ 14.5
Trade receivables - net . . . . . . . 54.8 52.3
Property, plant and equipment
Railcars and support facilities . . 1,895.6 1,857.4
Tank storage terminals and pipelines 1,222.0 1,171.8
----------- -----------
3,117.6 3,029.2
Less - Allowances for depreciation (1,331.3) (1,274.3)
----------- -----------
1,786.3 1,754.9
Due from GATX Corporation 366.5 362.4
Investments in affiliated companies 211.2 182.1
Other assets 97.6 100.4
----------- -----------
TOTAL ASSETS $ 2,529.6 $ 2,466.6
=========== ==========
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES, DEFERRED ITEMS AND SHAREHOLDER'S EQUITY
September 30 December 31
1995 1994
(Unaudited)
------------- -----------
<S> <C> <C>
Accounts payable. . . . . . . . . . $ 94.2 $ 106.4
Accrued expenses. . . . . . . . . . 40.7 35.7
Debt
Short-term debt . . . . . . . . 85.5 129.4
Long-term debt. . . . . . . . . 951.7 864.1
Capital lease obligations . . . 115.2 121.8
----------- ---------
1,152.4 1,115.3
Deferred income taxes 280.6 271.3
Other deferred items 231.4 234.5
---------- --------
Total liabilities and deferred
items 1,799.3 1,763.2
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 380.9 346.9
Cumulative foreign currency
translation adjustment 14.4 21.5
--------- ---------
Total shareholder's equity 730.3 703.4
TOTAL LIABILITIES, DEFERRED ITEMS
AND SHAREHOLDER'S EQUITY $ 2,529.6 $ 2,466.6
=========== =========
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
In Millions
Three Months Ended Nine Months Ended
September 30 September 30
------------------- -----------------
1995 1994 1995 1994
-------- ------- ------- -------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 23.8 $ 22.2 $ 71.4 $ 64.0
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for depreciation and amortization 29.9 27.6 90.4 82.1
Deferred income taxes 4.5 2.2 17.5 9.4
Other (includes working capital) 4.6 (.1) (22.4) (6.1)
-------- ------- -------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 62.8 51.9 156.9 149.4
INVESTING ACTIVITIES
Additions to property, plant and equipment:
Railcars and support facilities (147.6) (80.1) (312.8) (191.3)
Tank storage terminals and pipelines (35.2) (28.4) (84.3) (80.0)
Investments in affiliated companies (25.2) - (25.8) -
-------- ------ -------- --------
Capital additions (208.0) (108.5) (422.9) (271.3)
Proceeds from other asset dispositions 251.4 131.4 269.1 135.6
-------- ------- -------- -------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 43.4 22.9 (153.8) (135.7)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt - 25.0 115.9 82.7
Repayment of long-term debt (17.6) (12.0) (28.5) (30.7)
Net decrease in short-term debt (81.6) (64.4) (43.9) (14.2)
Repayment of capital lease obligations (2.6) (2.8) (6.5) (4.9)
Cash dividends paid to GATX Corporation (12.6) (11.7) (37.4) (34.9)
Net increase (decrease) in amount due from GATX
Corporation 7.3 (6.5) (4.0) (14.7)
-------- ------- -------- -------
NET CASH USED IN FINANCING ACTIVITIES (107.1) (72.4) (4.4) (16.7)
-------- ------- -------- -------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS $ (.9) $ 2.4 $ (1.3) $ (3.0)
========= ======== ======== ========
</TABLE>
-4-
<PAGE>
MANAGEMENT'S DISCUSSION OF OPERATIONS
COMPARISON OF FIRST NINE MONTHS OF 1995
TO FIRST NINE MONTHS OF 1994
GENERAL
General American Transportation Corporation's (GATC's) net income for the
first nine months of 1995 was $71 million compared to $64 million in the
equivalent 1994 period. Gross income and net income each increased 12% as a
result of strong performance at both of GATC's subsidiaries. GATC's railcar
leasing and management subsidiary (Transportation) continued to operate at
high utilization rates while adding significant numbers of railcars to its
fleet. GATC's terminal and pipeline subsidiary (Terminals) reported strong
pipeline results, incremental contributions from recently acquired terminals
and increased income from international joint ventures; these operating
improvements were offset by increased expenses on infrastructure upgrades and
by a decline in overall petroleum inventory levels.
Cash provided by operating activities of $157 million increased $8 million
from the first nine months of 1994. Net income adjusted for non-cash items
generated $179 million of cash, up $24 million from the comparable 1994
period.
Capital additions of $423 million in the first nine months of 1995 increased
$152 million from the first nine months of 1994. Transportation invested $307
million in the railcar fleet compared to $179 million in 1994; approximately
$12 million was expended on the upgrade to the repair facilities each year.
Terminals' capital spending of $104 million increased $24 million from the
comparable period of 1994 which is primarily the result of the acquisition of
an interest in a pipeline in the Northwest and the expansion of an existing
pipeline in Central Florida. Full year 1995 capital spending is forecasted to
exceed $500 million, although a portion of the 1995 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.
Net cash proceeds from other asset dispositions in both 1995 and 1994
primarily consisted of the proceeds received from the sale leaseback of
railcars at Transportation.
GATC had available unused committed lines of credit totaling $193 million at
September 30, 1995. GATC has a $650 million shelf registration for pass
through trust certificates and debt securities, under which $275 million of
notes and $270 million of pass through trust certificates have been issued.
During the quarter, GATC completed two sale leasebacks of GATC railcars
totaling $250 million, $177 million of which was the debt portion.
-5-
<PAGE>
RESULTS OF OPERATIONS
Following is a discussion of the operating results of GATC's business
segments:
<TABLE>
<CAPTION>
RAILCAR LEASING AND MANAGEMENT (TRANSPORTATION)
- ---------------------------------------------------------------
Nine Months Ended
(In Millions) September 30
1995 1994 Change
----- ------ --------------
<S> <C> <C> <C> <C>
Gross Income $266.4 $238.8 $ 27.6 12%
Net Income $ 46.5 $ 40.7 $ 5.8 14%
- ----------------------------------------------------------------
</TABLE>
Transportation's gross income increased 12% from the comparable
prior year period due to 6,400 additional railcars on lease as a
result of the high level of railcar additions and increased
utilization. In addition, lease rates were slightly higher. At
quarter end, 60,900 railcars were on lease compared to 54,500
railcars a year ago. Domestic fleet utilization at September 30,
1995 was 95% compared to 93% a year ago.
Net income increased 14% from the first nine months of 1994
reflecting the higher revenues. In addition, higher income was
generated from invested funds and a gain was recorded on the sale
of a parcel of land in Mexico. Operating margins increased
slightly as the growth in revenues exceeded the increase in fleet
repair costs. Fleet repair costs increased 10% due to the
increased fleet size and increased number of cars repaired,
primarily at Transportation's service centers. Ownership costs,
consisting of rental expense, depreciation and interest,
increased 21% due to the increased fleet size and higher interest
rates. SG&A increased 18% primarily as a result of increased
compensation costs and expenses related to new operations in
Mexico.
-6-
<PAGE>
<TABLE>
<CAPTION>
TERMINALS AND PIPELINES
- ----------------------------------------------------------------
Nine Months Ended
(In Millions) September 30
1995 1994 Change
------ ------ ----------------
<S> <C> <C> <C. <C>
Gross Income $237.1 $220.3 $ 16.8 8%
Net Income $ 24.9 $ 23.3 $ 1.6 7%
- ----------------------------------------------------------------
</TABLE>
Terminals' gross income increased 8% from the first nine months
of 1994 reflecting incremental revenues from newly-acquired
terminals and strong petroleum activity in the first half of
1995, especially in the Los Angeles market. Higher revenues at
Terminals' two domestic pipelines were offset by the absence of
revenues at the Wyco pipeline following its sale early this year.
Capacity utilization at Terminals' wholly-owned facilities was
87% at the end of the third quarter compared to 94% a year ago,
reflecting the effects of lower industry-wide petroleum inventory
levels and tanks out of service for repairs and upgrades.
Throughput for the nine months was 484 million barrels compared
to 513 million barrels a year ago. The additional throughput at
newly-acquired terminals was offset by the absence of throughput
at Wyco; lower overall throughput reflects the mild winter,
lower blending activity, refinery turnarounds, tanks out of
service, and contract terminations with a large customer.
Net income of $25 million increased 7% from the first nine months
of 1994. Higher revenues were partially offset by additional
operating expenses incurred due to improvements in information
systems, asset upgrades and personnel training. Interest expense
grew from financing recent acquisitions. Operating margins were
slightly higher than last year. Earnings at the foreign
affiliates of $11 million increased $2 million due to strong
demand at the Spanish and Singapore terminals.
-7-
<PAGE>
COMPARISON OF THIRD QUARTER 1995 TO
THIRD QUARTER 1994
<TABLE>
<CAPTION>
GROSS INCOME
- --------------------------------------------------------------
(In Millions) Three Months Ended
September 30
Business Segment 1995 1994 Change
------------------------ ------ ----- ---------------
<S> <C> <C> <C> <C>
Railcar Leasing and
Management $ 90.8 $ 80.8 $ 10.0 12%
Terminals and Pipelines 77.7 76.4 1.3 2%
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NET INCOME
- ---------------------------------------------------------------
(In Millions) Three Months Ended
September 30
Business Segment 1995 1994 Change
- ----------------------- ------ ------ ---------------
<S> <C> <C> <C> <C>
Railcar Leasing and
Management $ 15.6 $ 14.0 $ 1.6 11%
Terminals and Pipelines 8.2 8.2 - -
- -----------------------------------------------------------------
</TABLE>
Increases and decreases 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 nine-month
periods.
-8-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
GATC previously reported a decision in the matter of General
American Transportation Corporation v. Cryo-Trans, Incorporated,
permanently enjoining GATC from infringement of a patent in the
construction and use of GATC's Arcticar [TM] cryogenically cooled
railcar, and entering a judgment against GATC in the amount of
$9.7 million. The judgment has been reduced to approximately $9
million and GATC has filed an appeal of the decision with the
Federal Circuit Court of Appeals. Any additional costs which may
result from the injunction are not considered to be material.
The provisional settlement previously reported with respect to
the claims against GATC arising out of the July 1991 derailment
near Dunsmuir, California, has been concluded.
Terminals has entered into an agreement with the United States
Environmental Protection Agency to pay $150,000 in civil
penalties for its alleged failure to comply with state and
federal statutes related to hazardous waste management associated
with two rainwater collection ponds at its Taft, Florida,
terminal.
-9-
<PAGE>
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 for the quarter ended
September 30, 1995. Submitted to the SEC along
with the electronic submission of this Quarterly
Report on Form 10-Q.
Any instrument defining the rights of security
holders with respect to nonregistered long-term
debt not being filed on the basis that the amount
of securities authorized does not exceed 10 percent
of the total assets of the company and subsidiaries
on a consolidated basis will be furnished to the
Commission upon request.
(b) GATC filed a Current Report on Form 8-K dated
September 13, 1995, with respect to the offering
of Pass Through Trust Certificates in connection
with the sale leaseback of 1,668 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-
<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/Donald J. Schaffer
--------------------------
Donald J. Schaffer
Vice President, Finance and
Chief Financial Officer
Date: November 10, 1995
-11-
<PAGE> Exhibit 12
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(In Millions, Except For Ratios)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
------ ------ ------- ------
<S> <C> <C> <C> <C>
Earnings available for fixed charges:
Net income $ 23.8 $ 22.2 $ 71.4 $ 64.0
Add (deduct):
Income taxes 11.3 10.7 36.7 31.1
Equity in net earnings of affiliated
companies, net of distributions
received (4.1) (3.4) (9.0) (10.4)
Interest on indebtedness and
amortization of debt discount and
expense 25.1 20.2 75.4 58.0
Amortization of capitalized interest .3 .3 .9 .9
Portion of rents representative of
interest factor (deemed to be
one-third) 5.2 3.5 14.0 10.4
--------- ------ ------- -----
Total earnings available for
fixed charges $ 61.6 $ 53.5 $189.4 $154.0
======== ======= ======= ======
Fixed charges:
Interest on indebtedness and
amortization of debt discount
and expense $ 25.1 $ 20.2 $ 75.4 $ 58.0
Capitalized interest .8 .5 3.4 1.9
Portion of rents representative
of interest factor (deemed to be
one-third) 5.2 3.5 14.0 10.4
------- ------- ------ -------
Total fixed charges $ 31.1 $ 24.2 $ 92.8 $ 70.3
======== ======= ======= ======
Ratio of earnings to fixed
charges (A) 1.98x 2.21x 2.04x 2.19x
<FN>
(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.
</FN>
</TABLE>
-12-
<PAGE>
Exhibit 12
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(In Millions, Except For Ratios)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
------ ------ ------- ------
<S> <C> <C> <C> <C>
Earnings available for fixed charges:
Net income $ 23.8 $ 22.2 $ 71.4 $ 64.0
Add (deduct):
Income taxes 11.3 10.7 36.7 31.1
Equity in net earnings of affiliated
companies, net of distributions
received (4.1) (3.4) (9.0) (10.4)
Interest on indebtedness and
amortization of debt discount and
expense 25.1 20.2 75.4 58.0
Amortization of capitalized interest .3 .3 .9 .9
Portion of rents representative of
interest factor (deemed to be
one-third) 5.2 3.5 14.0 10.4
-------- ---- ------- -----
Total earnings available for
fixed charges $ 61.6 $ 53.5 $ 189.4 $ 154.0
======== ======= ======= ======
Fixed charges:
Interest on indebtedness and
amortization of debt discount
and expense $ 25.1 $ 20.2 $ 75.4 $ 58.0
Capitalized interest .8 .5 3.4 1.9
Portion of rents representative
of interest factor (deemed to be
one-third) 5.2 3.5 14.0 10.4
Total fixed charges $ 31.1 $ 24.2 $ 92.8 $ 70.3
======== ======= ====== ======
Ratio of earnings to fixed
charges (A) 1.98x 2.21x 2.04x 2.19x
<FN>
(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.
</FN>
</TABLE>
-12-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 13
<SECURITIES> 0
<RECEIVABLES> 60
<ALLOWANCES> 5
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 3118
<DEPRECIATION> 1331
<TOTAL-ASSETS> 2530
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1067<F2>
<COMMON> 0
0
0
<OTHER-SE> 730
<TOTAL-LIABILITY-AND-EQUITY> 2530
<SALES> 0
<TOTAL-REVENUES> 530
<CGS> 0
<TOTAL-COSTS> 231<F3>
<OTHER-EXPENSES> 90<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75
<INCOME-PRETAX> 93<F5>
<INCOME-TAX> 37
<INCOME-CONTINUING> 71
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Not applicable because GATC has an unclassified balance sheet.
<F2>This value consists of two components: Long-term debt of 952 million and
Capital Lease Obligations of 115 million. Short-term debt is not
included in this calculation.
<F3>This value represents Operating Expenses on the Consolidated Income
Statement.
<F4>This value consists of the Provision for Depreciation and Amortization
on the Consolidated Income Statement.
<F5>This value represents Income Before Income Taxes and Equity in Net
Earnings of Affiliated Companies.
</FN>
</TABLE>
