<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
<TABLE>
<S> <C>
[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
</TABLE>
<TABLE>
<S> <C>
FOR THE QUARTERLY PERIOD ENDED COMMISSION FILE NUMBER
JUNE 30, 1999 2-54754
</TABLE>
------------------------
GENERAL AMERICAN TRANSPORTATION CORPORATION
<TABLE>
<S> <C>
INCORPORATED IN THE IRS EMPLOYER IDENTIFICATION NO.
STATE OF NEW YORK 36-2827991
500 WEST MONROE STREET
CHICAGO, IL 60661-3676
(312) 621-6200
</TABLE>
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, 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 SIX MONTHS ENDED
JUNE 30 JUNE 30
--------------------------------- --------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
GROSS INCOME $ 214.1 $ 210.0 $ 430.0 $ 417.4
COSTS AND EXPENSES
Operating expenses 93.4 92.6 188.1 186.1
Provision for depreciation and amortization 36.0 35.5 71.6 70.7
Interest 27.2 28.9 53.5 57.2
Selling, general and administrative 20.9 19.2 38.9 38.0
--------------- --------------- --------------- ---------------
177.5 176.2 352.1 352.0
--------------- --------------- --------------- ---------------
INCOME BEFORE INCOME TAXES AND
SHARE OF AFFILIATES' EARNINGS 36.6 33.8 77.9 65.4
INCOME TAXES 14.5 13.0 31.1 24.9
--------------- --------------- --------------- ---------------
INCOME BEFORE SHARE OF
AFFILIATES' EARNINGS 22.1 20.8 46.8 40.5
SHARE OF AFFILIATES' EARNINGS 4.8 3.6 9.4 7.6
--------------- --------------- --------------- ---------------
NET INCOME $ 26.9 $ 24.4 $ 56.2 $ 48.1
=============== =============== =============== ===============
</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 six months ended June 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>
JUNE 30 DECEMBER 31
1999 1998
------------------- -----------------
ASSETS (Unaudited)
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 28.1 $ 21.2
TRADE RECEIVABLES - NET 67.5 59.8
OPERATING LEASE ASSETS AND FACILITIES
Railcars and service facilities 2,739.6 2,567.1
Tank storage terminals and pipelines 1,193.3 1,168.2
------------------- -----------------
3,932.9 3,735.3
Less - Allowance for depreciation (1,730.9) (1,669.3)
------------------- -----------------
2,202.0 2,066.0
DUE FROM GATX CORPORATION 415.6 389.1
INVESTMENTS IN AFFILIATED COMPANIES 261.9 212.3
OTHER ASSETS 136.2 148.7
------------------- -----------------
$ 3,111.3 $ 2,897.1
=================== =================
LIABILITIES, DEFERRED ITEMS AND SHAREHOLDER'S EQUITY
ACCOUNTS PAYABLE $ 112.3 $ 146.7
ACCRUED EXPENSES 60.1 49.6
DEBT
Short-term debt 315.4 145.7
Long-term debt:
Recourse 1,151.0 1,093.5
Nonrecourse 71.3 70.5
Capital lease obligations 85.1 91.3
------------------- -----------------
1,622.8 1,401.0
DEFERRED INCOME TAXES 358.7 347.9
OTHER DEFERRED ITEMS 220.7 249.0
------------------- -----------------
TOTAL LIABILITIES AND DEFERRED ITEMS 2,374.6 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 431.7 400.1
Accumulated other comprehensive loss (30.0) (32.2)
------------------- -----------------
TOTAL SHAREHOLDER'S EQUITY 736.7 702.9
------------------- -----------------
$ 3,111.3 $ 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 SIX MONTHS ENDED
JUNE 30 JUNE 30
--------------------------- ----------------------------
1999 1998 1999 1998
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 26.9 $ 24.4 $ 56.2 $ 48.1
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for depreciation and amortization 36.0 35.5 71.6 70.7
Deferred income taxes 5.8 6.6 14.6 12.9
Other, including working capital (13.4) (3.1) (37.3) (12.3)
------------- ------------ ------------- ------------
Net cash provided by operating activities 55.3 63.4 105.1 119.4
INVESTING ACTIVITIES
Additions to operating lease assets and facilities:
Railcars and service facilities (101.3) (99.7) (191.8) (199.8)
Tank storage terminals and pipelines (9.7) (18.0) (16.1) (26.3)
Investments in affiliated companies - - (26.6) -
------------- ------------ ------------- ------------
Capital additions (111.0) (117.7) (234.5) (226.1)
Proceeds from other asset sales 5.6 10.2 49.2 15.2
------------- ------------ ------------- ------------
Net cash used in investing activities (105.4) (107.5) (185.3) (210.9)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 120.0 - 120.0 -
Repayment of long-term debt and other (41.0) (8.0) (101.7) (27.0)
Net increase in short-term debt 49.8 68.1 169.7 159.1
Other advances (43.9) - (43.9) -
Repayment of capital lease obligations - - (5.8) (5.3)
Cash dividends paid to GATX Corporation (12.0) (12.5) (24.7) (24.8)
Net increase in amount due from GATX Corporation (18.1) (2.6) (26.5) (6.2)
------------- ------------ ------------- ------------
Net cash provided by financing activities 54.8 45.0 87.1 95.8
------------- ------------ ------------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS
$ 4.7 $ 0.9 $ 6.9 $ 4.3
============= ============ ============= ============
</TABLE>
3
<PAGE> 5
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
---------------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net income $ 26.9 $ 24.4 $ 56.2 $ 48.1
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment 3.9 (8.6) 2.2 (9.0)
------------- ------------ ------------ -------------
COMPREHENSIVE INCOME $ 30.8 $ 15.8 $ 58.4 $ 39.1
============= ============ ============ =============
</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 JUNE 30, 1999 MANAGEMENT PIPELINES OTHER TOTAL
- -------------------------------- ---------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
PROFITABILITY
Gross income $ 141.1 $ 66.5 $ 6.5 $ 214.1
Interest expense (13.1) (12.7) (1.4) (27.2)
Depreciation and amortization (24.9) (11.1) - (36.0)
Income before taxes and share
of affiliates' earnings 27.0 4.4 5.2 36.6
Share of affiliates' earnings .9 3.9 - 4.8
Net income 17.5 6.1 3.3 26.9
CASH FLOW
Net cash provided by operating
activities 45.3 9.7 0.3 55.3
Capital additions 101.3 9.7 - 111.0
FINANCIAL POSITION
Identifiable assets 1,702.8 985.4 423.1 3,111.3
THREE MONTHS ENDED JUNE 30, 1998
PROFITABILITY
Gross income $ 131.6 $ 71.4 $ 7.0 $ 210.0
Interest expense (13.2) (13.9) (1.8) (28.9)
Depreciation and amortization (24.4) (11.1) - (35.5)
Income before taxes and share
of affiliates' earnings 26.2 2.7 4.9 33.8
Share of affiliates' earnings .6 3.0 - 3.6
Net income 16.8 4.3 3.3 24.4
CASH FLOW
Net cash provided by operating
activities 44.8 18.1 0.5 63.4
Capital additions 99.7 18.0 117.7
-
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
SIX MONTHS ENDED JUNE 30, 1999 MANAGEMENT PIPELINES OTHER TOTAL
- ------------------------------ ---------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
PROFITABILITY
Gross income $ 278.7 $ 138.3 $ 13.0 $ 430.0
Interest expense (25.5) (25.4) (2.6) (53.5)
Depreciation and amortization (49.3) (22.3) - (71.6)
Income before taxes and share
of affiliates' earnings 54.0 13.6 10.3 77.9
Share of affiliates' earnings 1.7 7.7 - 9.4
Net income 35.0 14.6 6.6 56.2
CASH FLOW
Net cash provided by operating
activities 87.4 9.4 8.3 105.1
Capital additions 203.5 31.0 - 234.5
FINANCIAL POSITION
Identifiable assets 1,702.8 985.4 423.1 3,111.3
SIX MONTHS ENDED JUNE 30, 1998
PROFITABILITY
Gross income $ 262.1 $ 141.4 $ 13.9 $ 417.4
Interest expense (26.7) (27.2) (3.3) (57.2)
Depreciation and amortization (48.5) (22.2) - (70.7)
Income before taxes and share
of affiliates' earnings 51.0 4.0 10.4 65.4
Share of affiliates' earnings 1.1 6.5 - 7.6
Net income 32.7 8.6 6.8 48.1
CASH FLOW
Net cash provided by operating
activities 85.1 23.7 10.6 119.4
Capital additions 199.8 26.3 226.1
-
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 SIX MONTHS OF 1999
TO FIRST SIX MONTHS OF 1998
General American Transportation Corporation's (GATC) net income for the first
six months of 1999 was $56 million compared to $48 million for the first six
months of 1998. Gross income of $430 million increased by $13 million from the
prior year, while net income was $8 million higher. General American benefited
from more railcars on lease while improved market conditions and a nonrecurring
gain increased results at Terminals. Partially offsetting this increase was
nonrecurring 1998 revenue at Terminals related to sold facilities.
Net cash provided by operating activities for the first six months of 1999 was
$105 million, a $14 million decrease from last year's period, due to the timing
of working capital requirements.
Capital additions for the first six months of 1999 totaled $235 million, an
increase of $8 million from the first six months of 1998. General American
invested $204 million, comparable to the six-month period of 1998, in its
railcar fleet, facilities, and international affiliates. Terminals' investment
of $31 million increased $5 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 portfolios of desirable
assets. Internally generated cash flow and GATC's external recourse and
nonrecourse financing sources will fund capital additions and portfolio
investments.
GATC, through its subsidiaries, had unused committed lines of credit of $194
million at June 30, 1999. GATC issued $120 million of 10-year term notes during
the first six months of 1999. Additional financing needs were met by cash flow
from operations, portfolio proceeds 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 June 30, 1999. Other advances in the statement of cash flows
represents funds contractually reimbursable from insurers placed in escrow
pending final settlement of claims.
YEAR 2000 READINESS DISCLOSURE
GATC continues to address what is commonly referred to as the Year 2000 problem.
Efforts are well underway in both modifying and replacing its in-house developed
software as well as upgrading its vendor-supported software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter. Many remediation projects and systems replacements are already in
place, and efforts are continuing on others. Most projects are being completed
in mid-year 1999. Additionally, other less critical information systems have
been reviewed and corrective action is being taken where indicated.
7
<PAGE> 9
GATC also is reviewing 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 in
process where there is indicated need. GATC is inquiring 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 is working
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 are 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 the 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 the Company believes that the expectations
reflected in 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.
8
<PAGE> 10
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 six months of 1999 increased 6%
from the comparable prior year period due to a larger active fleet.
Approximately 82,300 tank and freight cars were on lease throughout North
America at June 30, 1999, compared to 79,700 railcars a year ago. With a total
North American fleet of 87,500 railcars, utilization at the end of the period
was 94%, down from 96% in the prior year period. The Union Pacific related rail
congestion problems and strong car demand in the chemical markets contributed to
historically high utilization rates in 1998.
Net income increased 7% from the prior year period primarily due to a larger
fleet offset by higher fleet repair costs and SG&A costs. Net income
approximated 12.5% of revenue and was comparable to the prior year. Asset
ownership costs (depreciation, interest, and lease expenses) as a percentage of
revenue were in line with the prior year.
TERMINALS AND PIPELINES (TERMINALS)
- --------------------------------------------------------------------------------
Terminals' gross income of $138 million decreased $3 million from the prior year
period. Comparisons between periods are affected by locations sold after the
first quarter of 1998. Gross income from ongoing operations increased 10% 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
260 million barrels for ongoing operations during the first six months of 1999,
down from 284 million barrels for the same period last year. Capacity
utilization of 94% at the end of the second quarter was comparable to the prior
year.
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. 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. Also in the first
quarter of 1999, Terminals invested in a joint venture distillate blending and
distribution business, which positively contributed to share of affiliates
earnings in the period.
Terminals' net income of $14.6 million was $6 million higher than last year
primarily due to increased revenues and benefits from the 1997 strategic
realignment.
OTHER
- --------------------------------------------------------------------------------
All financing activities considered non-operational to General American have
been isolated in the Other segment. Net income of $7 million is comparable to
the prior year period.
9
<PAGE> 11
COMPARISON OF SECOND QUARTER 1999
TO SECOND QUARTER 1998
For the second quarter of 1999 net income was $27 million as compared to $24
million for the second quarter of 1998.
Increases and decreases in gross income and net income between second quarter
1999 and second quarter 1998 for all segments were principally due to the same
reasons as discussed previously in relation to the six-month period.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
General American Transportation Corporation (GATC) and GATX Terminals
Corporation (Terminals), each subsidiaries of GATX Corporation, together with
three other defendants have reached agreement in principle 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 settlement is subject to final approval by the
trial court after a fairness hearing.
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 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 settlement be approved, the amounts required to be
paid by it, net of proceeds its insurers have committed to pay, would not be
material to GATC's consolidated financial position or results 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 following a fairness hearing 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 those matters described above, and have a number of
unresolved claims pending, including proceedings under governmental 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.
10
<PAGE> 12
<TABLE>
<CAPTION>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K PAGE
----
<S> <C> <C>
(a) 12 Statement regarding computation of earnings to fixed charges. 12
27 Financial Data Schedule for GATC for the quarter ended June 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.
</TABLE>
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 3, 1999
11
<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 SIX MONTHS ENDED
JUNE 30 JUNE 30
----------------------------------- ----------------------------------
1999 1998 1999 1998
--------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
Earnings available for fixed charges:
Net income $ 26.9 $ 24.4 $ 56.2 $ 48.1
Add (deduct):
Income taxes 14.5 13.0 31.1 24.9
Share of affiliates' earnings, net
of distributions received (3.6) (2.6) (8.2) (6.6)
Interest on indebtedness and
amortization of debt discount
and expense 27.2 28.9 53.5 57.2
Amortization of capitalized interest .3 .3 .7 .6
Portion of rents representative of interest
factor (deemed to be one-third) 9.2 7.8 18.5 15.5
--------------- ---------------- -------------- ---------------
Total earnings available for fixed charges $ 74.5 $ 71.8 $ 151.8 $ 139.7
=============== ================ ============== ===============
Fixed Charges:
Interest on indebtedness and
amortization of debt discount
and expense $ 27.2 $ 28.9 $ 53.5 $ 57.2
Capitalized interest .2 .2 .4 .5
Portion of rents representative of interest
factor (deemed to be one-third) 9.2 7.8 18.5 15.5
--------------- ---------------- -------------- ---------------
Total fixed charges $ 36.6 $ 36.9 $ 72.4 $ 73.2
=============== ================ ============== ===============
Ratio of earnings to fixed charges (a) 2.04x 1.95x 2.10x 1.91x
</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.
12
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 28
<SECURITIES> 0
<RECEIVABLES> 73
<ALLOWANCES> 5
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 3,933
<DEPRECIATION> 1,731
<TOTAL-ASSETS> 3,111
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1,307<F2>
0
0
<COMMON> 0
<OTHER-SE> 737
<TOTAL-LIABILITY-AND-EQUITY> 3,111
<SALES> 0
<TOTAL-REVENUES> 430
<CGS> 0
<TOTAL-COSTS> 188<F3>
<OTHER-EXPENSES> 72<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54
<INCOME-PRETAX> 78<F5>
<INCOME-TAX> 31
<INCOME-CONTINUING> 56
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56
<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 1,151
million, Nonrecourse Long-term Debt of 71 million, and Capital Lease
Obligations of 85 million. Short-term Debt is not include 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>
