<PAGE> 1
================================================================================
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, 1999 2-54754
---------------------
GENERAL AMERICAN TRANSPORTATION CORPORATION
INCORPORATED IN THE IRS EMPLOYER IDENTIFICATION NO.
STATE OF NEW YORK 36-2827991
500 WEST MONROE STREET
CHICAGO, IL 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, 1999.
================================================================================
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------------- --------------------------------
1999 1998 1999 1998
--------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
GROSS INCOME $ 222.0 $ 215.0 $ $ 652.0 $ $ 632.4
COSTS AND EXPENSES
Operating expenses 95.2 94.5 283.3 280.6
Provision for depreciation and amortization 35.7 29.4 107.3 86.6
Interest 27.8 34.9 81.3 105.6
Selling, general and administrative 21.5 19.2 60.4 57.2
--------------- -------------- --------------- ---------------
180.2 178.0 532.3 530.0
--------------- -------------- --------------- ---------------
INCOME BEFORE INCOME TAXES AND
SHARE OF AFFILIATES' EARNINGS 41.8 37.0 119.7 102.4
INCOME TAXES 16.7 14.9 47.8 39.8
--------------- -------------- --------------- ---------------
INCOME BEFORE SHARE OF
AFFILIATES' EARNINGS 25.1 22.1 71.9 62.6
SHARE OF AFFILIATES' EARNINGS 4.2 3.5 13.6 11.1
--------------- -------------- --------------- ---------------
NET INCOME $ 29.3 $ 25.6 $ 85.5 $ 73.7
=============== ============== =============== ===============
</TABLE>
Note - The consolidated balance sheet at December 31, 1998 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, 1999 are not
necessarily indicative of the results that may be achieved for the entire year
ending December 31, 1999. Certain amounts in 1998 have been reclassified to
conform to the current presentation.
1
<PAGE> 3
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1999 1998
------------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS $ 98.5 $ 21.2
TRADE RECEIVABLES - NET 82.9 59.8
OPERATING LEASE ASSETS AND FACILITIES
Railcars and service facilities 2,615.9 2,567.1
Tank storage terminals and pipelines 1,208.1 1,168.2
------------------- -----------------
3,824.0 3,735.3
Less - Allowance for depreciation (1,745.3) (1,669.3)
------------------- -----------------
2,078.7 2,066.0
DUE FROM GATX CORPORATION 409.4 389.1
INVESTMENTS IN AFFILIATED COMPANIES 279.3 212.3
OTHER ASSETS 131.9 148.7
=================== =================
$ 3,080.7 $ 2,897.1
=================== =================
LIABILITIES, DEFERRED ITEMS AND SHAREHOLDER'S EQUITY
ACCOUNTS PAYABLE $ 125.4 $ 146.7
ACCRUED EXPENSES 59.1 49.6
DEBT
Short-term debt 241.1 145.7
Long-term debt:
Recourse 1,133.9 1,093.5
Nonrecourse 66.2 70.5
Capital lease obligations 82.0 91.3
------------------- -----------------
1,523.2 1,401.0
DEFERRED INCOME TAXES 366.0 347.9
OTHER DEFERRED ITEMS 249.9 249.0
------------------- -----------------
TOTAL LIABILITIES AND DEFERRED ITEMS 2,323.6 2,194.2
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 447.8 400.1
Accumulated other comprehensive loss (25.7) (32.2)
------------------- -----------------
TOTAL SHAREHOLDER'S EQUITY 757.1 702.9
=================== =================
$ 3,080.7 $ 2,897.1
=================== =================
</TABLE>
2
<PAGE> 4
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- ----------------------------
1999 1998 1999 1998
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 29.3 $ 25.6 $ 85.5 $ 73.7
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for depreciation and amortization 35.7 34.9 107.3 105.6
Deferred income taxes 7.3 7.9 21.9 20.8
Other, including working capital (20.5) (10.3) (57.8) (22.6)
------------- ------------ ------------- ------------
Net cash provided by operating activities 51.8 58.1 156.9 177.5
INVESTING ACTIVITIES
Additions to operating lease assets and facilities:
Railcars and service facilities (83.1) (98.4) (274.9) (298.2)
Tank storage terminals and pipelines (16.7) (16.7) (32.8) (43.0)
Investments in affiliated companies (11.3) - (37.9) -
------------- ------------ ------------- ------------
Capital additions (111.1) (115.1) (345.6) (341.2)
Proceeds from other asset sales 199.8 215.3 249.0 230.5
------------- ------------ ------------- ------------
Net cash provided by (used in) investing activities 88.7 100.2 (96.6) (110.7)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt - 36.0 120.0 36.0
Repayment of long-term debt and other (24.9) (25.2) (126.6) (52.2)
Net (decrease) increase in short-term debt (74.3) (157.1) 95.4 2.0
Other receipts (advances) 36.0 - (7.9) -
Repayment of capital lease obligations - (3.1) (5.8) (8.4)
Cash dividends paid to GATX Corporation (13.1) (13.4) (37.8) (38.2)
Net increase (decrease) in amount due from GATX
Corporation 6.2 6.5 (20.3) .3
------------- ------------ ------------- ------------
Net cash provided by (used in) financing activities 70.1 (156.3) 17.0 (60.5)
------------- ------------ ------------- ------------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 70.4 $ 2.0 $ 77.3 $ 6.3
============= ============ ============= ============
</TABLE>
3
<PAGE> 5
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
---------------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net income $ 29.3 $ 25.6 $ 85.5 $ 73.7
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment 4.3 (6.1) 6.5 (15.1)
------------- ------------ ------------ -------------
COMPREHENSIVE INCOME $ 33.6 $ 19.5 $ 92.0 $ 58.6
============= ============ ============ =============
</TABLE>
4
<PAGE> 6
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
FINANCIAL DATA OF BUSINESS SEGMENTS (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
RAILCAR TERMINALS
LEASING AND AND
THREE MONTHS ENDED SEPTEMBER 30, 1999 MANAGEMENT PIPELINES OTHER TOTAL
- ------------------------------------- ---------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
PROFITABILITY
Gross income $ 148.2 $ 67.2 $ 6.6 $ 222.0
Interest expense (14.0) (12.5) (1.3) (27.8)
Depreciation and amortization (24.6) (11.1) - (35.7)
Income before taxes and share of
affiliates' earnings 32.2 4.7 4.9 41.8
Share of affiliates' earnings .6 3.6 - 4.2
Net income 20.0 6.0 3.3 29.3
CASH FLOW
Net cash provided by operating activities 20.1 22.7 9.0 51.8
Capital additions 94.4 16.7 - 111.1
FINANCIAL POSITION
Identifiable assets 1,670.0 992.1 418.6 3,080.7
THREE MONTHS ENDED SEPTEMBER 30, 1998
PROFITABILITY
Gross income $ 134.3 $ 74.0 $ 6.7 $ 215.0
Interest expense (14.6) (13.6) (1.2) (29.4)
Depreciation and amortization (23.9) (11.0) - (34.9)
Income before taxes and
share of affiliates' earnings 27.2 4.6 5.2 37.0
Share of affiliates' earnings .7 2.8 - 3.5
Net income 17.0 5.2 3.4 25.6
CASH FLOW
Net cash provided by operating
activities 35.5 11.8 10.8 58.1
Capital additions 98.4 16.7 - 115.1
FINANCIAL POSITION AT DECEMBER 31, 1998
Identifiable assets 1,539.9 958.4 398.8 2,897.1
</TABLE>
5
<PAGE> 7
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
FINANCIAL DATA OF BUSINESS SEGMENTS (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
RAILCAR TERMINALS
LEASING AND AND
NINE MONTHS ENDED SEPTEMBER 30, 1999 MANAGEMENT PIPELINES OTHER TOTAL
- ------------------------------------ ---------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
PROFITABILITY
Gross income $ 426.9 $ 205.5 $ 19.6 $ 652.0
Interest expense (39.5) (37.9) (3.9) (81.3)
Depreciation and amortization (73.9) (33.4) - (107.3)
Income before taxes and share of
affiliates' earnings 86.2 18.3 15.2 119.7
Share of affiliates' earnings 2.3 11.3 - 13.6
Net income 55.0 20.6 9.9 85.5
CASH FLOW
Net cash provided by operating activities 107.5 32.1 17.3 156.9
Capital additions 297.9 47.7 - 345.6
FINANCIAL POSITION
Identifiable assets 1,670.0 992.1 418.6 3,080.7
NINE MONTHS ENDED SEPTEMBER 30, 1998
PROFITABILITY
Gross income $ 396.4 $ 215.4 $ 20.6 $ 632.4
Interest expense (41.3) (40.8) (4.5) (86.6)
Depreciation and amortization (72.4) (33.2) - (105.6)
Income before taxes and
share of affiliates' earnings 78.2 8.6 15.6 102.4
Share of affiliates' earnings 1.8 9.3 - 11.1
Net income 49.7 13.8 10.2 73.7
CASH FLOW
Net cash provided by operating
activities 120.6 35.5 21.4 177.5
Capital additions 298.2 43.0 - 341.2
FINANCIAL POSITION AT DECEMBER 31, 1998
Identifiable assets 1,539.9 958.4 398.8 2,897.1
</TABLE>
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
COMPARISON OF FIRST NINE MONTHS OF 1999
TO FIRST NINE MONTHS OF 1998
General American Transportation Corporation's (GATC) net income for the first
nine months of 1999 was $85.5 million compared to $73.7 million for the first
nine months of 1998. Gross income of $652.0 million increased by $19.6 million
from the prior year, while net income was $11.8 million higher. General American
benefited from more railcars on lease and a gain from the sale of 1,700
non-strategic grain cars. Improved market conditions and an increase in
contribution from affiliates increased results at Terminals. Partially
offsetting this increase was nonrecurring 1998 revenue at Terminals related to
sold and closed facilities.
Net cash provided by operating activities for the first nine months of 1999 was
$156.9 million, a $20.6 million decrease from last year's period, due to the
timing of working capital requirements.
Capital additions for the first nine months of 1999 totaled $345.6 million were
comparable to the prior year period. General American invested $297.9 million,
comparable to the nine-month period of 1998, in its railcar fleet, facilities,
and international affiliates. Terminals' investment of $47.7 million increased
$4.7 million over the prior year primarily due to investments in joint ventures.
Full year capital additions are expected to be approximately $425 million. These
projections may change significantly depending on market conditions and
opportunities to acquire desirable railcar fleets . Internally generated cash
flow and GATC's external recourse and nonrecourse financing sources will fund
capital additions.
GATC had unused committed lines of credit of $204.9 million at September 30,
1999. GATC issued $120 million of 10-year term notes during the first nine
months of 1999. Additional financing needs were met by cash flow from operations
and short-term debt. GATC has a $650 million shelf registration for pass-through
certificates and debt securities of which $220 million of notes and $106 million
of pass-through certificates have been issued through September 30, 1999. Other
advances/receipts in the statement of cash flows represents funds contractually
reimbursable from insurers placed in escrow pending final settlement of claims.
In September 1999, GATC completed a sale-leaseback of $143 million of railcars.
The lease obligations for this transaction are nonrecourse in nature in that
they rely on the underlying cash flows of the railcars.
YEAR 2000 READINESS DISCLOSURE
GATC continues to address what is commonly referred to as the Year 2000 problem.
Efforts have been underway for about two years in both modifying and replacing
in-house developed software as well as upgrading vendor-supported software so
that its computer systems will function properly with respect to dates in the
year 2000 and thereafter. At this juncture, GATC has substantially completed the
major remediation projects and systems replacements of its critical systems
which were believed to have Year 2000 problems. Additionally, other less
critical information systems
7
<PAGE> 9
have been reviewed and corrective action taken where indicated.
GATC also has reviewed its operating assets to determine any exposure to
time-sensitive controls which may be embedded in the equipment. These situations
are being assessed on an ongoing basis and replacement or remediation is largely
completed where there was indicated need.
GATC has inquired of both customers and vendors where the company's information
systems interface directly with third parties to ensure that the interfaces and
the third party systems are or will be Year 2000 compliant. Where considered
appropriate, the company has worked directly with such third parties to test or
remediate such systems. The company also interacts electronically with certain
external entities but has no means of ensuring that they will be Year 2000
ready. Additionally, GATC has been inquiring of key vendors in an effort to
establish the ability of the provider to deliver product or services on a timely
basis in the year 2000.
GATC believes it has an effective program in place to resolve the Year 2000
issue in a timely manner and to minimize the company's exposure. If these steps
were not taken, or were not completed timely, the Year 2000 issue could have a
significant impact on the operations of the company. The project is estimated to
be completed during 1999, which is prior to any anticipated impact on its
operating systems. Based on the progress and results of its Year 2000 project
thus far, GATC believes that the Year 2000 issue should not pose significant
operational problems. However, in the event that the company's efforts have not
addressed all potential systems problems, contingency plans are being developed
to enable business operations to continue. The total Year 2000 project cost is
estimated to not exceed $7 million. These costs have not and are not expected to
have a material adverse impact on the company's financial position, results of
operations or cash flows.
OTHER MATTERS
The Financial Accounting Standards Board issued Statement No. 133, Accounting
for Derivative Instruments and Hedging Activities ("SFAS No. 133"). This new
accounting standard will require that all derivatives be recorded on the balance
sheet at fair value. If the derivative is a hedge, depending on the nature of
the hedge, changes in the fair value of derivatives will either be offset
against the change in the fair value of the hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
GATC utilizes fundamental derivatives to hedge changes in interest rates and
foreign currencies. In July 1999, Statement No. 137 was issued which deferred
the effective date of SFAS No. 133 for one year. SFAS No. 133 is now required to
be adopted in years beginning after June 15, 2000. Management is currently
assessing the impact that the adoption of SFAS No. 133 will have on the
company's financial position, results of operations, and cash flows. GATC
expects to adopt SFAS No. 133 effective January 1, 2001.
Management's discussion includes statements that may constitute forward-looking
statements made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. This information may involve risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements. Although GATC believes that the expectations
reflected in
8
<PAGE> 10
such forward-looking statements are based on reasonable assumptions, such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. These risks and uncertainties
include, but are not limited to, unanticipated changes in the markets served by
GATC such as the petroleum, chemical and rail industries.
RESULTS OF OPERATIONS
Following is a discussion of the operating results of GATC's business segments:
RAILCAR LEASING AND MANAGEMENT (GENERAL AMERICAN)
- --------------------------------------------------------------------------------
General American's gross income for the first nine months of 1999 increased 7.6%
from the comparable prior year period due to a larger active fleet, higher
average rental rates and a pre-tax gain from the sale of 1,700 non-strategic
grain cars. Approximately 82,000 tank and freight cars were on lease throughout
North America at September 30, 1999, compared to 81,000 railcars a year ago.
With a total North American fleet of 86,600 railcars, utilization at the end of
the period was 95%, down from 96% in the prior year period. Rail congestion
problems and strong car demand in the chemical markets contributed to
historically high utilization rates in 1998.
Net income increased $5.3 million from the prior year period to $55.0 million.
Results for the period include several unusual events including the gain related
to the grain car sale as well as incremental increases in operating expenses.
Net of these items, net income increased 4.4% from the prior year primarily due
to the larger fleet. Fleet repair costs and asset ownership costs (depreciation,
interest, and lease expenses) as a percentage of revenue were in line with the
prior year. SG&A costs were slightly higher than the prior year period.
TERMINALS AND PIPELINES (TERMINALS)
- --------------------------------------------------------------------------------
Terminals' gross income of $205.5 million decreased $9.9 million from the prior
year period. Comparisons between periods are affected by locations sold or
closed after the first quarter of 1998. Gross income from ongoing operations
increased 9.2% over the prior year. Terminals benefited in 1999 from an
increased demand for services, an improved marketing environment, and a
nonrecurring gain on the sale of rights it owned along the Central Florida
Pipeline that will be used to increase fiber optic capacity. Throughput of
petroleum and chemical products was 398 million barrels for ongoing operations
during the first nine months of 1999, up slightly from 394 million barrels for
the same period last year. Capacity utilization of 95% at the end of the third
quarter was slightly higher than the prior year period.
On June 10, 1999, a pipeline rupture and explosion occurred on the pipeline
owned by Olympic Pipeline Company (Olympic) killing three people and causing
property damage as well as damage to the environment. Several complaints for
wrongful death have been filed against Olympic as a result of the fatalities.
The cause of the incident is being investigated by a number of state and federal
agencies. Terminals owns 25.1% of the common shares of Olympic. Management is
presently unable to determine the ultimate impact, if any, of this incident on
GATC.
As part of its 1997 strategic realignment, Terminals divested certain domestic
and foreign terminal locations in the first quarter of 1999 and has closed
others. Also in the first quarter of 1999, Terminals invested in a joint venture
distillate blending and distribution business, which positively
9
<PAGE> 11
contributed to share of affiliates' earnings in the period.
Terminals' net income of $20.6 million was $6.8 million higher than last year
primarily due to increased revenues and benefits from the 1997 strategic
realignment and an increase in the contribution from share of affiliates'
earnings.
OTHER
- --------------------------------------------------------------------------------
All financing activities considered non-operational to General American have
been isolated in the Other segment. Net income of $9.9 million is comparable to
the prior year period.
COMPARISON OF THIRD QUARTER 1999
TO THIRD QUARTER 1998
For the third quarter of 1999 net income was $29.3 million as compared to $25.6
million for the third quarter of 1998.
Increases and decreases in gross income and net income between third quarter
1999 and third quarter 1998 for all segments were principally due to the same
reasons as discussed previously in relation to the nine-month period.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
General American Transportation Corporation ("GATC") and GATX Terminals
Corporation ("Terminals"), each a subsidiary of GATX Corporation, together with
three other defendants have entered into a preliminary settlement agreement with
the Plaintiffs Management Committee with respect to the matter of in re New
Orleans Train Car Leakage Fire Litigation (No. 87-16374), Civil District for the
Parish of Orleans, a class action lawsuit arising out of a September 1987 tank
car fire in the City of New Orleans. The Preliminary Settlement Agreement sets
forth the terms, conditions and provisions of a settlement of all actual and
potential claims by members of the class against the compromising defendants,
subject to preliminary approval by the trial court and final approval by the
trial court following a fairness hearing as required by the Louisiana Code of
Civil Procedure. A sixth defendant has entered into a separate preliminary
settlement agreement.
A trial of the claims of twenty of the plaintiffs (Phase I) had
resulted in a jury verdict in September 1997 which awarded the twenty plaintiffs
approximately $1.9 million in compensatory damages plus interest from the date
of the accident. In addition, the jury had awarded punitive damages (Phase II)
totaling $3.4 billion against five of the nine defendants, including $190
million as to Terminals. In July of 1999, a trial of the claims of a second
group of twenty plaintiffs (Phase III) resulted in a jury verdict which awarded
the second group of plaintiffs $344,300 in compensatory damages. It is
anticipated that trials of the claims of additional groups of plaintiffs against
those defendants who have not settled will be scheduled later this year.
GATC believes that should the Preliminary Settlement Agreement be
approved, the amounts required to be paid by it are not likely to be material to
its consolidated financial position or results
10
<PAGE> 12
of operations. The incident resulted in no deaths or significant injuries, and
only minor property damage, but did result in the overnight evacuation of a
number of residents from the surrounding area. If the proposed settlement is not
approved, GATC and Terminals will aggressively defend any future trials and
pursue post-judgment review of the compensatory and punitive awards and, if
necessary, appeal of any final judgment.
GATC and its subsidiaries are engaged in various matters of litigation
including, but not limited to, the matter described above, and have a number of
unresolved claims pending, including proceedings under laws and regulations
related to environmental matters. While the amounts claimed are substantial and
the ultimate liability with respect to such litigation and claims cannot be
determined at this time, it is the opinion of management that damages, if any,
required to be paid by GATC and its subsidiaries in the discharge of such
liability are not likely to be material to GATC's consolidated financial
position or results of operations.
11
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K PAGE
----
(a) 12 Statement regarding computation of earnings to fixed
charges. 14
27 Financial Data Schedule for GATC for the quarter ended
September 30, 1999. 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) No reports on Form 8-K were filed during the reporting period.
12
<PAGE> 14
SIGNATURE
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/ Donald J. Schaffer
--------------------------------
Donald J. Schaffer
Vice President, Finance
and Chief Financial Officer
(Duly Authorized Officer)
Date: November 8, 1999
13
<PAGE> 1
EXHIBIT 12
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES (UNAUDITED)
(IN MILLIONS, EXCEPT FOR RATIOS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
----------------------------------- ----------------------------------
1999 1998 1999 1998
--------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
Earnings available for fixed charges:
Net income $ 29.3 $ 25.6 $ 85.5 $ 73.7
Add (deduct):
Income taxes 16.7 14.9 47.8 39.8
Share of affiliates' earnings, net of
distributions received (1.4) (2.8) (9.6) (9.4)
Interest on indebtedness and
amortization of debt discount
and expense 27.8 29.4 81.3 86.6
Amortization of capitalized interest .3 .3 1.0 .9
Portion of rents representative of interest
factor (deemed to be one-third) 9.2 7.8 27.7 23.3
--------------- ---------------- -------------- ---------------
Total earnings available for fixed charges $ 81.9 $ 75.2 $ 233.7 $ 214.9
=============== ================ ============== ===============
Fixed Charges:
Interest on indebtedness and
amortization of debt discount
and expense $ 27.8 $ 29.4 $ 81.3 $ 86.6
Capitalized interest .2 .3 .6 .8
Portion of rents representative of interest
factor (deemed to be one-third) 9.2 7.8 27.7 23.3
--------------- ---------------- -------------- ---------------
Total fixed charges $ 37.2 $ 37.5 $ 109.6 $ 110.7
=============== ================ ============== ===============
Ratio of earnings to fixed charges (a) 2.20x 2.01x 2.13x 1.94x
</TABLE>
(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 share
of affiliates' earnings, net of distributions received.
14
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 99
<SECURITIES> 0
<RECEIVABLES> 88
<ALLOWANCES> 5
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 3,824
<DEPRECIATION> 1,745
<TOTAL-ASSETS> 3,081
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1,282<F2>
0
0
<COMMON> 0
<OTHER-SE> 757
<TOTAL-LIABILITY-AND-EQUITY> 3,081
<SALES> 0
<TOTAL-REVENUES> 652
<CGS> 0
<TOTAL-COSTS> 283<F3>
<OTHER-EXPENSES> 107<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81
<INCOME-PRETAX> 120<F5>
<INCOME-TAX> 48
<INCOME-CONTINUING> 86
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 86
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>Not applicable because GATC has an unclassified balance sheet.
<F2>This value consists of three components: Recourse Long-term debt of 1,134
million, Nonrecourse Long-term Debt of 66 million, and Capital Lease
Obligations of 82 million. Short-term Debt is not included in this calculation.
<F3>This value represents Operating Expenses on the Consolidated Statements of
Income.
<F4>This value consists of the Provision for Depreciation and Amortization on the
Consolidated Statements of Income.
<F5>This value represents Income Before Income Taxes and Share of Affiliates'
Earnings.
</FN>
</TABLE>
