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, 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 July 31, 1995.
<PAGE>
PART I--FINANCIAL INFORMATION
<TABLE>
<CAPTION>
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
In Millions
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Gross income................... $177.9 $156.0 $353.1 $310.6
Costs and expenses
Operating expenses........... 75.9 70.9 152.7 141.5
Interest..................... 26.9 19.6 50.3 37.8
Provision for depreciation
and amortization........... 30.5 27.6 60.5 54.5
Selling, general and
administrative............. 13.4 11.7 26.6 23.0
------ ------ ------ ------
146.7 129.8 290.1 256.8
------ ------ ------ ------
Income before income taxes
and equity in net earnings
of affiliated companies...... 31.2 26.2 63.0 53.8
Income taxes................... 11.8 9.8 25.4 20.4
------ ------ ------ ------
Income before equity in net
earnings of affiliated
companies and cumulative
effect of accounting changes. 19.4 16.4 37.6 33.4
Equity in net earnings
of affiliated companies...... 5.0 4.7 10.0 8.4
------ ------ ------ ------
Net income ................... $ 24.4 $ 21.1 $ 47.6 $ 41.8
======= ====== ====== ======
<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 six months ended June 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>
<TABLE>
<CAPTION>
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In Millions
ASSETS
June 30 December 31
1995 1994
(Unaudited)
---------- ----------
<S> <C> <C>
Cash and cash equivalents .............. $ 14.1 $ 14.5
Trade receivables - net ................. 48.4 52.3
Property, plant and equipment
Railcars and support facilities...... 2,011.5 1,857.4
Tank storage terminals and pipelines 1,194.5 1,171.8
--------- --------
3,206.0 3,029.2
Less - Allowances for depreciation... (1,319.5) (1,274.3)
-------- --------
1,886.5 1,754.9
Due from GATX Corporation............. 373.8 362.4
Investments in affiliated companies... 188.8 182.1
Other assets.......................... 98.3 100.4
-------- --------
TOTAL ASSETS $2,609.9 $2,466.6
======== ========
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES, DEFERRED ITEMS AND SHAREHOLDER'S EQUITY
June 30 December 31
1995 1994
(Unaudited)
---------- ----------
<S> <C> <C>
Accounts payable ....................... $ 89.9 $ 106.4
Accrued expenses ....................... 37.7 35.7
Debt
Short-term debt...................... 167.1 129.4
Long-term debt....................... 969.3 864.1
Capital lease obligations............ 117.9 121.8
-------- -------
1,254.3 1,115.3
Deferred income taxes ................ 276.1 271.3
Other deferred items ................. 227.4 234.5
-------- -------
Total liabilities and deferred items 1,885.4 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.................. 369.7 346.9
Cumulative foreign currency
translation adjustment............ 19.8 21.5
-------- -------
Total shareholder's equity 724.5 703.4
-------- -------
TOTAL LIABILITIES, DEFERRED ITEMS
AND SHAREHOLDER'S EQUITY $2,609.9 $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 Six Months Ended
June 30 June 30
1995 1994 1995 1994
----- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 24.4 $ 21.1 $ 47.6 $ 41.8
Adjustments to reconcile
net income to net cash provided
by operating activities:
Provision for depreciation
and amortization 30.5 27.6 60.5 54.5
Deferred income taxes 5.7 3.5 13.0 7.2
Other (includes working capital) (4.2) (5.8) (27.0) (6.0)
-------- ------ ----- -----
NET CASH PROVIDED BY OPERATING
ACTIVITIES 56.4 46.4 94.1 97.5
INVESTING ACTIVITIES
Additions to property, plant
and equipment:
Railcars and support
facilities (68.4) (51.2) (165.2) (111.2)
Tank storage terminals and
pipelines (28.8) (24.6) (49.1) (51.6)
Investments in affiliated companies (.4) - (.6) -
------- ------ ------ ------
Capital additions (97.6) (75.8) (214.9) (162.8)
Proceeds from other asset
dispositions 3.3 1.6 17.7 4.2
-------- ------ ------ -------
NET CASH USED IN INVESTING
ACTIVITIES (94.3) (74.2) (197.2) (158.6)
FINANCING ACTIVITIES
Proceeds from issuance of
long-term debt 65.9 57.7 115.9 57.7
Repayment of long-term debt (5.6) (15.4) (10.9) (18.7)
Net (decrease) increase in
short-term debt (.8) .4 37.7 50.2
Payment of capital lease
obligations - - (3.9) (2.1)
Cash dividends paid to GATX
Corporation (12.4) (11.7) (24.8) (23.2)
Net increase in amount due from
GATX Corporation - (3.4) (11.3) (8.2)
------ ----- ------ ------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 47.1 27.6 102.7 55.7
------ ----- ------ -----
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 9.2 $ (.2) $ (.4) $ (5.4)
====== ======= ======= =======
</TABLE>
-4-
<PAGE>
MANAGEMENT'S DISCUSSION OF OPERATIONS
COMPARISON OF FIRST SIX MONTHS OF 1995 TO FIRST SIX MONTHS OF 1994
GENERAL
General American Transportation Corporation's (GATC's) net income
for the first six months of 1995 was $48 million compared to net
income of $42 million for the first half of 1994. GATC's railcar
leasing and management subsidiary (Transportation) continued to
operate at high utilization rates while adding significant
numbers of railcars to its fleet. Results at GATC's terminal and
pipeline subsidiary (Terminals) improved due to very strong
demand at many of its domestic terminals and international joint
ventures; in addition, terminal facilities acquired in late 1994
contributed to the increase in net income.
Cash provided by operating activities of $94 million decreased
$3 million from the first six months of 1994. The decrease was
due to changes in working capital.
Capital additions of $215 million for the first six months of
1995 increased $52 million from the comparable 1994 period.
Transportation invested $158 million in the railcar fleet versus
$103 million for the first six months of last year; in addition,
$8 million was expended on the upgrade to the repair facilities
each year. Terminals' capital spending of $49 million decreased
$2 million from the comparable period of 1994, which included the
acquisition of a terminal facility in the United Kingdom. Full
year 1995 capital spending is forecasted to exceed the $440
million expended in 1994. 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 external
financing sources.
GATC had available unused committed lines of credit in the amount
of $170 million at June 30, 1995. GATC has a $650 million shelf registration
for pass through trust certificates and debt securities, under which
$275 million of notes and $93 million of pass through trust
certificates have been issued as of quarter end. GATC issued $50
million of ten-year medium-term notes during the quarter.
-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)
- -----------------------------------------------------------------
Six Months Ended
(In Millions) June 30
1995 1994 Change
---------------- -------------
<S> <C> <C> <C> <C>
Gross Income $175.6 $158.0 $ 17.6 11%
Net Income $ 30.9 $ 26.7 $ 4.2 16%
- -----------------------------------------------------------------
</TABLE>
Transportation's gross income for the first half of 1995
increased 11% from the comparable prior year period due to more
than 5,100 additional railcars on lease as a result of the high
level of railcar additions and increased utilization. Also,
lease rates were slightly higher and a parcel of land in Mexico
was sold. Domestic fleet utilization at June 30, 1995 was 95% on
a fleet size of 61,700 compared to 94% on a fleet size of 57,000
a year ago. At quarter end, the active fleet totaled 58,600
railcars compared to 53,450 cars on lease a year ago.
Net income increased 16% from the first half of 1994 reflecting
the higher revenues. In addition, higher income was generated
from invested funds. Operating margins increased slightly as the
growth in revenues exceeded the increase in fleet repair costs.
Fleet repair costs increased 9% due to the increased fleet size
and increased number of cars repaired, primarily at GATX 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 13%
primarily as a result of increased compensation costs and
expenses related to new operations in Mexico.
-6-
<PAGE>
<TABLE>
<CAPTION>
TERMINALS AND PIPELINES
- -----------------------------------------------------------------
Six Months Ended
(In Millions) June 30
1995 1994 Change
---------------- -------------------
<S> <C> <C> <C> <C>
Gross Income $159.4 $143.9 $ 15.5 11%
Net Income $ 16.7 $ 15.1 $ 1.6 11%
- -----------------------------------------------------------------
</TABLE>
Terminals' 1995 gross income increased 11% from the first six
months of 1994 reflecting incremental revenues from newly-
acquired terminals and high chemical demand and strong petroleum
activity, 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. Throughput for the first six months of 1995 was 316
million barrels, 26 million barrels less than in 1994.
Throughput at the Pasadena terminal was down 17 million barrels,
reflecting the mild winter, lower blending activity, refinery
turnarounds and tanks out of service. Capacity utilization at
Terminals' wholly-owned facilities was 88% at the end of the
second quarter of 1995, down two percent from a year ago.
Terminals' net income increased 11% over 1994. Higher revenues
were partially offset by additional operating expenses incurred.
Further, SG&A increased due to management restructuring, salary
progression and the addition of personnel; interest expense grew
from financing last year's acquisitions. Operating margins were
in line with last year. Earnings at the foreign affiliates of $7
million increased $1 million due to strong demand at the European
and Singapore terminals.
-7-
<PAGE>
<TABLE>
<CAPTION>
COMPARISON OF SECOND QUARTER 1995 TO
SECOND QUARTER 1994
GROSS INCOME
- -----------------------------------------------------------------
(In Millions) Three Months Ended
June 30
Business Segment 1995 1994 Change
- ---------------- ------------------ --------------
<S> <C> <C> <C> <C>
Railcar Leasing and
Management $ 90.1 $ 80.0 $ 10.1 13%
Terminals and Pipelines 78.1 71.6 6.5 9
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NET INCOME
- -----------------------------------------------------------------
(In Millions) Three Months Ended
June 30
Business Segment 1995 1994 Change
- ---------------- ------ ------ ---------------
<S> <C> <C> <C> <C>
Railcar Leasing and
Management $ 16.1 $ 13.5 $ 2.6 19%
Terminals and Pipelines 8.3 7.6 .7 9
- -----------------------------------------------------------------
<FN>
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 six-month
periods.
</FN>
</TABLE>
-8-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
- ---------------------------
On July 14, 1995, a judgment in the amount of $9.7 million was
entered against General American Transportation Corporation by
the U.S. District Court for the Northern District of Illinois in
the matter of General American Transportation Corporation v.
Cryo-Trans, Incorporated (Case No. 91 C 1305), a case involving
an alleged patent infringement by General American Transportation
in the construction and use of its Arcticar cryogenically cooled
railcar.
General American Transportation was also permanently enjoined
from any further infringement of the patent as of August 1, 1995,
subsequently extended to September 1, 1995. Of General American
Transportation's 61,000 railcar fleet, the injunction affects
only 180 railcars, 80 of which are currently on lease and 100 on
order. General American Transportation intends promptly to
appeal the Decision of the District Court and has requested the
District Court to reduce substantially the judgment as entered to
correct an apparent error in the calculation of damages. Even in
the event of an adverse decision on appeal, GATC does not believe
the costs associated with the disposition of the affected cars
will have a material adverse effect on GATC.
General American Transportation brought this action against Cryo-
Trans in 1991 requesting that Cryo-Trans' patent be declared
invalid and General American Transportation's construction of the
Arcticar railcar non-infringing. A trial before a magistrate
was held in 1991 and a ruling in favor of General American
Transportation was issued in 1994. The District Court originally
accepted the magistrate's ruling. The court's decision reverses
the earlier ruling.
-9-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K. Page
- ------------------------------------------ ----
(a) 4 General American Transportation Corporation
Notices 15 through 20 dated May 11, 1995,
amended May 24, 1995, defining the rights of
the holders of GATC's Medium-Term Notes Series
E issued during that period, incorporated herein
by reference to the Form 424(b)(5) filed
May 11, 1995, amended May 25, 1995, file
number 2-54754.
12 Statement regarding computation of ratios of
earnings to fixed charges. 12
27 Financial Data Schedule for General American
Transportation Corporation for the quarter ended
June 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
July 19, 1995, with respect to the offering of Pass
Through Trust Certificates in connection with the sale
leaseback of 2,606 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: August 11, 1995
-11-
<PAGE>
<TABLE>
<CAPTION>
Exhibit 12
GENERAL AMERICAN TRANSPORTATION CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Unaudited)
(In Millions, Except for Ratios)
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
------ ----- ----- -----
<S> <C> <C> <C> <C>
Earnings available for fixed charges:
Net income........................... $ 24.4 $ 21.1 $ 47.6 $ 41.8
Add (deduct):
Income taxes ....................... 11.8 9.8 25.4 20.4
Equity in net earnings of affiliated
companies, net of distributions
received........................ (.7) (4.1) (4.9) (7.0)
Interest on indebtedness and
amortization of debt discount and
expense......................... 26.9 19.6 50.3 37.8
Amortization of capitalized
interest........................ .3 .3 .6 .6
Portion of rents representative of
interest factor (deemed to be
one-third)...................... 4.4 3.5 8.8 6.9
------ ------- ------ ------
Total earnings available for
fixed charges.................... $ 67.1 $ 50.2 $127.8 $100.5
====== ======= ====== ======
Fixed Charges:
Interest on indebtedness and
amortization of debt discount and
expense .......................... $ 26.9 $ 19.6 $ 50.3 $ 37.8
Capitalized interest............... 1.1 .6 2.6 1.4
Portion of rents representative of
interest factor (deemed to be
one-third)....................... 4.4 3.5 8.8 6.9
------ ------- ------ ------
Total fixed charges................ $ 32.4 $ 23.7 $ 61.7 $ 46.1
====== ======= ====== ======
Ratio of earnings to fixed charges(A). 2.07x 2.12x 2.07x 2.18x
<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>
-12-
<PAGE>
Exhibit 12
<TABLE>
<CAPTION>
GENERAL AMERICAN TRANSPORTATION CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Unaudited)
(In Millions, Except for Ratios)
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
------ ----- ----- -----
<S> <C> <C> <C> <C>
Earnings available for fixed charges:
Net income........................ $ 24.4 $ 21.1 $ 47.6 $ 41.8
Add (deduct):
Income taxes....................... 11.8 9.8 25.4 20.4
Equity in net earnings of affiliated
companies, net of distributions
received........................ (.7) (4.1) (4.9) (7.0)
Interest on indebtedness and
amortization of debt discount and
expense......................... 26.9 19.6 50.3 37.8
Amortization of capitalized
interest........................ .3 .3 .6 .6
Portion of rents representative of
interest factor (deemed to be
one-third)...................... 4.4 3.5 8.8 6.9
------ ------ ----- ------
Total earnings available for
fixed charges...................... $ 67.1 $ 50.2 $127.8 $100.5
====== ====== ====== ======
Fixed Charges:
Interest on indebtedness and
amortization of debt discount and
expense.......................... $ 26.9 $ 19.6 $ 50.3 $ 37.8
Capitalized interest ............. 1.1 .6 2.6 1.4
Portion of rents representative of
interest factor (deemed to be
one-third)....................... 4.4 3.5 8.8 6.9
------ ------ ----- ------
Total fixed charges............... $ 32.4 $ 23.7 $ 61.7 $ 46.1
====== ======= ====== =======
Ratio of earnings to fixed charges(A) 2.07x 2.12x 2.07x 2.18x
<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>
-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 to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 14
<SECURITIES> 0
<RECEIVABLES> 54
<ALLOWANCES> 5
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 3206
<DEPRECIATION> 1319
<TOTAL-ASSETS> 2610
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1087<F2>
<COMMON> 0
0
0
<OTHER-SE> 724
<TOTAL-LIABILITY-AND-EQUITY> 2610
<SALES> 0
<TOTAL-REVENUES> 353
<CGS> 0
<TOTAL-COSTS> 153<F3>
<OTHER-EXPENSES> 61<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50
<INCOME-PRETAX> 63<F5>
<INCOME-TAX> 25
<INCOME-CONTINUING> 48
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48
<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 969 million and
capital lease obligations of 118 million. Short-term debt is not included in
this calculation.
<F3>This value rperesents 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>
