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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
March 31, 1996 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 April 30, 1996.
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<PAGE>
<TABLE>
<CAPTION>
PART I--FINANCIAL INFORMATION
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
In Millions
Three Months Ended
March 31
------------------------
1996 1995
-------- ------
<S> <C> <C>
Gross income............................................. $ 179.3 $ 175.2
Costs and expenses
Operating expenses...................................... 81.8 76.8
Interest................................................ 26.1 23.4
Provision for depreciation and amortization........ 31.3 30.0
Selling, general and administrative..................... 14.3 13.2
--------- --------
153.5 143.4
-------- --------
Income before income taxes and equity in net
earnings of affiliated companies........................ 25.8 31.8
Income taxes................................................ 9.7 13.6
---------- --------
Income before equity in net earnings of
affiliated companies..................................... 16.1 18.2
Equity in net earnings of affiliated
companies............................................... 4.3 5.0
---------- ---------
Net income.................................................. $ 20.4 $ 23.2
========= =========
<FN>
Note - The consolidated balance sheet at December 31, 1995 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 three months ended March 31, 1996 are not
necessarily indicative of the results that may be achieved for the entire year
ending December 31, 1996.
</FN>
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In Millions
ASSETS
March 31 December 31
1996 1995
(Unaudited)
------------- ----------
<S> <C> <C>
Cash and cash equivalents.............................$ 10.6 $ 13.4
Trade receivables - net............................... 60.2 64.8
Property, plant and equipment
Railcars and support facilities................... 2,022.6 1,945.1
Tank storage terminals and pipelines............ 1,277.8 1,242.3
-------- ---------
3,300.4 3,187.4
Less - Allowance for depreciation................. (1,359.0) (1,332.3)
--------- ----------
1,941.4 1,855.1
Due from GATX Corporation.......................... 383.7 373.9
Investments in affiliated companies.................. 224.9 221.2
Other assets.......................................... 101.6 102.6
-------- ---------
TOTAL ASSETS $ 2,722.4 $ 2,631.0
========== =========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
LIABILITIES, DEFERRED ITEMS AND SHAREHOLDER'S EQUITY
March 31 December 31
1996 1995
(Unaudited)
----------- -----------
<S> <C> <C>
Accounts payable......................................... $ 73.2 $ 89.9
Accrued expenses........................................ 42.7 36.4
Debt
Short-term debt....................................... 143.7 144.8
Long-term debt........................................ 1,068.4 972.9
Capital lease obligations........................... 111.4 115.1
-------- ----------
1,323.5 1,232.8
Deferred income taxes................................. 285.9 281.1
Other deferred items.................................... 249.0 250.0
--------- ---------
Total liabilities and deferred items 1,974.3 1,890.2
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.................................. 401.2 392.7
Cumulative unrealized equity adjustments.............. 11.9 13.1
--------- -------
Total shareholder's equity 748.1 740.8
--------- --------
TOTAL LIABILITIES, DEFERRED ITEMS
AND SHAREHOLDER'S EQUITY $ 2,722.4 $ 2,631.0
========= =========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
In Millions
Three Months Ended
March 31
---------------------
1996 1995
--------- ------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 20.4 $ 23.2
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for depreciation and amortization 31.3 30.0
Deferred income taxes 4.8 7.3
Other (includes working capital) (9.8) (22.8)
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 46.7 37.7
INVESTING ACTIVITIES
Additions to property, plant and equipment:
Railcars and support facilities (81.3) (96.8)
Tank storage terminals and pipelines (36.7) (20.3)
Investments in affiliated companies (.9) (.2)
---------- ---------
Capital additions (118.9) (117.3)
Proceeds from other asset dispositions .9 14.4
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (118.0) (102.9)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 100.0 50.0
Repayment of long-term debt (5.1) (5.3)
Net (decrease) increase in short-term debt (1.0) 38.5
Repayment of capital lease obligations (3.7) (3.9)
Cash dividends paid to GATX Corporation (11.8) (12.4)
Net increase in amount due from GATX Corporation (9.9) (11.3)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 68.5 55.6
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS $ (2.8) $ (9.6)
======== =======
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION OF OPERATIONS
COMPARISON OF FIRST THREE MONTHS OF 1996
TO FIRST THREE MONTHS OF 1995
GENERAL
General American Transportation Corporation's (GATC's) net income for the first
quarter of 1996 was $20 million compared to net income of $23 million for the
first quarter of 1995. First quarter gross income increased 2% as the result of
the additional number of railcars on lease at Transportation, partially offset
by lower revenues at Terminals. Net income decreased 12% because of utilization
and pricing pressures at certain of the terminal locations.
Cash provided by operating activities increased $9 million, from $38 million in
the first three months of 1995 to $47 million in the first three months of 1996.
The increase is principally due to changes in working capital.
Capital additions for the quarter totaled $119 million, up $2 million from the
1995 first quarter. Transportation invested $80 million in its domestic railcar
fleet and facilities versus $87 million in last year's first quarter; in
addition, $3 million was invested in operations in Mexico and Europe this
quarter versus $10 million a year ago. Terminals' capital spending of $37
million, including $20 million attributable to the Central Florida Pipeline
expansion project, exceeded the 1995 first quarter by $16 million. Full year
1996 capital spending for GATC is forecasted to be approximately $500 million
compared to the $541 million expended in 1995. A portion of the 1996
expenditures may not be made 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 $211
million at March 31, 1996. GATC effected a $650 million shelf registration for
pass through trust certificates and debt securities in December 1995; $100
million of notes were issued under this shelf in the first quarter of 1996.
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<PAGE>
RESULTS OF OPERATIONS
Following is a discussion of the operating results of GATC's business segments:
RAILCAR LEASING AND MANAGEMENT (TRANSPORTATION)
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Three Months Ended
(In Millions) March 31
1996 1995 Change
-------- --------- ------------------
Gross Income $ 97.2 $ 85.5 $ 11.7 14%
Net Income $ 15.7 $ 14.8 $ .9 6%
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Transportation's gross income for the first quarter of 1996 increased 14% from
the comparable prior year period due to more than 5,000 additional railcars on
lease compared to a year ago and slightly higher lease rates. Approximately
62,900 railcars were on lease at quarter end, including 800 in Mexico, compared
to 57,800 a year ago. Domestic fleet utilization at March 31, 1996, was 94.4% on
a fleet size of 65,800 compared to 94.6% on a fleet size of 61,200 a year ago.
Net income increased 6% from the first quarter of 1995 as higher revenues were
partially offset by increased fleet repair costs and ownership costs. Operating
margins decreased slightly as the revenue growth rate was slightly less than the
rate of increase in operating expenses which included additional provisions to
the legal and insurance reserves. Fleet repair costs were 10% greater than the
1995 quarter due to the increased fleet size and lower capitalized costs.
Average throughput days during the quarter for railcars in GATC repair
facilities decreased to 34, down from 47 days in the comparable 1995 quarter,
reflecting the improved productivity at Transportation's upgraded service
centers. Ownership costs, consisting of rental expense, depreciation, and
interest, increased 20% due to the increased fleet size.
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<PAGE>
TERMINALS AND PIPELINES
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Three Months Ended
(In Millions) March 31
1995 1994 Change
-------- --------- -------------------
Gross Income $ 72.8 $ 81.3 $ (8.5) (10)%
Net Income $ 4.7 $ 8.4 $ (3.7) (44)%
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Terminals' 1996 gross income decreased 10% principally attributable to overall
pricing pressures in the petroleum markets due to increased competition, lower
inventories, and lower refinery margins. The current decrease in inventory
levels has created a surplus of competitive tankage which in turn has
substantially weakened the petroleum bulk liquid storage market. Also, tanks
were out of service on the West Coast and New York Harbor. Pipeline operations
and chemical storage markets remained strong. Throughput of 168 million barrels
was 10% greater than first quarter 1995, primarily as a result of the colder
winter in the Northeast. Capacity utilization at Terminals' wholly-owned
facilities was 85% compared to 91% at the end of last year's first quarter.
Lower demand for petroleum tanks and tanks out of service for repair contributed
to the reduction from 1995.
Terminals' net income decreased 44% from 1995, reflecting weakness in the
domestic and international petroleum markets. Operating margins increased
slightly principally due to strong pipeline results and reduced operating costs
as a result of both lower maintenance costs and insurance recoveries. Interest
expense increased $1 million over 1995 as total debt grew to finance the capital
additions. Equity in net earnings of affiliated companies of $3 million
decreased $1 million principally due to lower results at the Singapore and
Belgium terminals as a result of reduced petroleum activity, partially offset by
increased earnings at the Kobe, Japan, terminal which has been completely
restored after last year's earthquake.
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<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Other than as previously reported, neither the registrant nor any of its
subsidiaries is currently a party to any material pending legal proceeding,
other than ordinary routine litigation incidental to the business, and to the
belief of the registrant, no such proceeding is contemplated.
Item 6. Exhibits and Reports on Form 8-K. Page
(a) 12 Statement regarding computation of ratios of earnings
to fixed charges. 10
27 Financial Data Schedule for GATC for the quarter ended March 31,
1996 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) (1) GATC filed a Current Report on Form 8-K dated January 26, 1996,
with respect to the Medium Term Notes, Series F. Copies of the forms
of the underlying documents entered into by GATC as part of this
transaction were filed as part of the Form 8-K Report.
(2) GATC filed a Current Report on Form 8-K dated March 4, 1996 with
respect to the offering of $100 million principal amount of 6-3/4%
Notes due March 1, 2006. A copy of the Note entered into by GATC as
part of this transaction was filed as part of the Form 8-K Report.
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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.
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: May 14, 1996
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<PAGE>
<TABLE>
<CAPTION>
Exhibit 12
GENERAL AMERICAN TRANSPORTATION CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
In Millions, Except For Ratios
Three Months Year Ended
Ended March 31 December 31
------------------ -------------
1996 1995 1995
------- -------- -------------
(Unaudited)
<S> <C> <C> <C>
Earnings available for fixed charges:
Net income...................................................... $ 20.4 $ 23.2 $ 93.9
Add (deduct):
Income taxes................................................ 9.7 13.6 47.2
Equity in net earnings of affiliated
companies, net of distributions received.............. (3.0) (4.2) (12.8)
Interest on indebtedness and amortization
of debt discount and expense............................ 26.1 23.4 99.4
Amortization of capitalized interest....................... .3 .3 1.1
Portion of rents representative of interest
factor (deemed to be one-third)........................ 5.8 4.4 21.7
------ ------ -------
Total earnings available for fixed charges...................... $ 59.3 $ 60.7 $ 250.5
====== ======= ========
Fixed Charges:
Interest on indebtedness and amortization
of debt discount and expense.................................. $ 26.1 $ 23.4 $ 99.4
Capitalized interest............................................ 1.3 1.5 4.6
Portion of rents representative of interest
factor (deemed to be one-third)............................. 5.8 4.4 21.7
------- -------- --------
Total fixed charges.............................................. $ 33.2 $ 29.3 $ 125.7
====== ======= =======
Ratio of earnings to fixed charges(A)........................... 1.79x 2.07x 1.99x
<FN>
(A) The ratio 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>
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<PAGE>
EXHIBITS FILED WITH DOCUMENT
(a) 12 Statement regarding computation of ratios of earnings
to fixed charges.
27 Financial Data Schedule for GATC for the quarter ended March 31,
1996 submitted to the SEC along with the electronic submission of
this Quarterly Report on Form 10-Q.
Exhibit 12
<TABLE>
<CAPTION>
GENERAL AMERICAN TRANSPORTATION CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
In Millions, Except For Ratios
Three Months Year Ended
Ended March 31 December 31
------------------ -------------
1996 1995 1995
------- -------- -------------
(Unaudited)
<S> <C> <C> <C>
Earnings available for fixed charges:
Net income...................................................... $ 20.4 $ 23.2 $ 93.9
Add (deduct):
Income taxes................................................ 9.7 13.6 47.2
Equity in net earnings of affiliated
companies, net of distributions received.............. (3.0) (4.2) (12.8)
Interest on indebtedness and amortization
of debt discount and expense............................ 26.1 23.4 99.4
Amortization of capitalized interest....................... .3 .3 1.1
Portion of rents representative of interest
factor (deemed to be one-third)........................ 5.8 4.4 21.7
------ ------ -------
Total earnings available for fixed charges...................... $ 59.3 $ 60.7 $ 250.5
====== ======= ========
Fixed Charges:
Interest on indebtedness and amortization
of debt discount and expense.................................. $ 26.1 $ 23.4 $ 99.4
Capitalized interest............................................ 1.3 1.5 4.6
Portion of rents representative of interest
factor (deemed to be one-third)............................. 5.8 4.4 21.7
------- -------- --------
Total fixed charges.............................................. $ 33.2 $ 29.3 $ 125.7
====== ======= =======
Ratio of earnings to fixed charges(A)........................... 1.79x 2.07x 1.99x
<FN>
(A) The ratio 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>
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet and Consolidated Income Statement of GATC and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 11
<SECURITIES> 0
<RECEIVABLES> 65
<ALLOWANCES> 5
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 3300
<DEPRECIATION> 1359
<TOTAL-ASSETS> 2722
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 1180 <F2>
0
0
<COMMON> 0
<OTHER-SE> 748
<TOTAL-LIABILITY-AND-EQUITY> 2722
<SALES> 0
<TOTAL-REVENUES> 179
<CGS> 0
<TOTAL-COSTS> 82 <F3>
<OTHER-EXPENSES> 31 <F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26
<INCOME-PRETAX> 26 <F5>
<INCOME-TAX> 10
<INCOME-CONTINUING> 20
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20
<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 1,069 million and
Capital Lease Obligations of 111 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 Affiliates.
</FN>
</TABLE>
