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 Quarter Ended Commission File Number
March 31, 1994 I-8319
GATX CAPITAL CORPORATION
Incorporated in the IRS Employer Identification Number
State of Delaware 94-1661392
Four Embarcadero Center
San Francisco, CA 94111
(415) 955-3200
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 and (2) has been subject to
such filing requirements for the past 90 days.
Yes X NO
--- ---
All Common Stock of Registrant is held by GATX Financial Services, Inc.
(a wholly-owned subsidiary of GATX Corporation).
As of April 29, 1994, Registrant has outstanding 1,031,250 shares of $1 par
value Common Stock.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a)
AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in Thousands)
<CAPTION>
March 31, December 31, March 31,
1994 1993 1993
----------- ------------ ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 5,350 $ 12,950 $ 12,974
Investments:
Direct financing leases 264,589 275,605 259,678
Leveraged leases 248,979 224,953 256,182
Operating lease equipment -
net of depreciation 313,039 254,651 191,415
Secured loans 257,702 226,073 239,498
Investment in joint ventures 192,911 197,720 185,744
Assets held for sale or lease 60,072 56,777 157,027
Other investments 22,698 24,298 62,926
Investment in future residuals 13,794 14,071 16,500
Less:
Allowance for possible losses (93,773) (88,193) (100,684)
----------- ----------- ----------
Total investments 1,280,011 1,185,955 1,268,286
Due from GATX Corporation 39,493 42,638 43,413
Intangible assets 3,962 4,027 4,127
Other assets 10,926 11,028 17,291
----------- ----------- ----------
TOTAL ASSETS $1,339,742 $1,256,598 $1,346,091
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued interest and other payables $ 49,343 $ 58,126 $ 49,916
Debt financing:
Commercial paper and
bankers' acceptances 200,140 104,164 180,651
Notes payable 20,438 17,771 49,975
Obligations under capital lease 21,591 22,442 30,064
Senior term notes 615,600 624,850 572,375
---------- ---------- ----------
Total debt financing 857,769 769,227 833,065
---------- ---------- ----------
Nonrecourse obligations 73,273 68,058 103,839
Deferred income 59,855 62,965 70,472
Deferred income taxes 9,631 11,053 7,626
Stockholder's equity:
Convertible preferred stock 1,027 1,027 1,027
Common stock 1,031 1,031 1,031
Additional-paid in capital 151,902 151,902 151,902
Reinvested earnings 136,845 133,570 127,853
Equity adjustment from foreign
currency translation (934) (361) (640)
---------- ---------- ----------
Total stockholder's equity 289,871 287,169 281,173
---------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $1,339,742 $1,256,598 $1,346,091
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND REINVESTED EARNINGS
(in Thousands)
<CAPTION>
Three Months Ended
March 31,
1994 1993
-------- --------
<S> <C> <C>
Earned income:
Leases $ 36,313 $ 28,902
Gain on disposition of equipment 3,992 8,737
Interest 5,267 5,442
Investment in joint ventures 1,211 2,465
Fees 3,738 970
Other 842 187
--------- ---------
51,363 46,703
--------- ---------
Expenses:
Interest 15,107 16,856
Operating leases 11,621 5,519
Selling, general and administrative 8,516 8,821
Provision for possible losses 6,000 4,000
Other 158 753
--------- ---------
41,402 35,949
--------- ---------
INCOME BEFORE INCOME TAXES 9,961 10,754
--------- ---------
Income taxes:
Current income tax expense 4,253 833
Deferred income tax (benefit)/expense (219) 3,308
--------- ---------
4,034 4,141
--------- ---------
NET INCOME 5,927 6,613
Reinvested earnings at
beginning of period 133,570 123,771
Advances on dividends paid
to stockholder (2,652) (2,531)
--------- ---------
REINVESTED EARNINGS AT END
OF PERIOD $136,845 $127,853
======== ========
</TABLE>
<PAGE>
[CAPTION]
<TABLE>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In Thousands)
<CAPTION>
Three Months Ended March 31,
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 5,927 $ 6,613
Adjustments to reconcile net income to
net cash from operating activities:
Provision for possible losses 6,000 4,000
Depreciation expense 7,576 4,476
Provision for deferred income
tax (benefit)/expense (219) 3,308
Gain on disposition of equipment (3,992) (8,737)
Joint venture investment income (1,211) (2,465)
Non-cash changes in assets and liabilities:
Due from GATX Corporation 3,145 (7,759)
Accrued interest and other payables (8,783) (5,336)
Deferred income (95) (64)
Other-net (897) (2,730)
--------- ---------
Net cash flows provided by (used in)
operating activities 7,451 (8,694)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in leased equipment, net of
nonrecourse borrowings for leveraged
leases (91,079) (15,064)
Loans extended to borrowers (39,583) (13,024)
Other investments (427) (13,294)
--------- ---------
Total investments (131,089) (41,382)
--------- ---------
Lease rents received, net of earned income and
leveraged lease nonrecourse debt service 4,311 14,397
Loan principal received 7,441 16,004
Proceeds from disposition of equipment 13,239 12,996
Joint venture cash distributions 6,469 2,856
--------- --------
Recovery of investments 31,460 46,253
--------- ---------
Net cash flows (used in) provided
by investing activities (99,629) 4,871
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in short term borrowings 98,643 32,535
Proceeds from issuance of long term debt 20,000 45,000
Repayment of long term debt (29,250) (68,823)
Repayment of capital lease obligations (851) (1,300)
Repayment of nonrecourse obligations (1,312) (911)
Dividends paid to stockholder (2,652) (2,531)
--------- ---------
Net cash flows provided by
financing activities 84,578 3,970
--------- ---------
Net (decrease) increase in cash and
cash equivalents (7,600) 147
Cash and cash equivalents
at the beginning of the period 12,950 12,827
--------- ---------
Cash and cash equivalents
at the end of the period $ 5,350 $ 12,974
========= =========
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994 and 1993
1. General
The consolidated balance sheet at December 31, 1993 was derived from
the audited financial statements at that date. All other consolidated
financial statements are unaudited and 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 and as of the end of the
indicated periods. Operating results for the three months ended
March 31, 1994 are not necessarily indicative of the results that may
be achieved for the entire year.
2. Reclassifications and restatement
Certain amounts in the financial statements presented have been
reclassified to conform prior years' data to the current presentation.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Comparison of Three Months Ended March 31, 1994 to Three Months Ended
- - ---------------------------------------------------------------------
March 31, 1993
- - --------------
GATX Capital Corporation's net income for the three months ended March 31,
1994, was $5.9 million compared to $6.6 million in the comparable period of
1993.
Total earned income was up $4.7 million for the first three months of 1994
compared to the same period in 1993 principally due to increases in lease and
fee income, offset by declines in disposition gains and joint venture income.
The increase in lease income was the result of new investment volume.
Approximately one half of the increase was related to an off-balance sheet
sale leaseback transaction of rail equipment acquired during the second quarter
of 1993. The remaining increase corresponds to the increase in lease invest-
ments on the balance sheet. Fee income was higher during the first quarter
of 1994 due to the small number of fees generated during
Disposition gains were generated primarily from the sale of rail and marine
equipment. These gains occur unevenly throughout the year as well as from
period to period. Joint venture income was lower in 1994 due primarily to
the revised residual estimates at one of the Company's technology finance
joint ventures. These revised estimates resulted in the reversal of $1.0
million of income in the second quarter of 1993 which had been recognized in
the first quarter of 1993. No further income has been recorded for that
joint venture.
Total expenses increased $5.5 million between periods primarily due to an
increase in operating lease expense, partially offset by decreases in
interest and other expenses. The increase in operating lease expense is
principally due to increased depreciation and rent expense on operating
leases. The increase in depreciation is due to the overall increase
in the operating lease portfolio. The increase in rent expense resulted
primarily from the sale leaseback transaction discussed above.
Interest expense declined between periods due principally to the sale of
half of the Company's investment in a cogeneration facility during the fourth
quarter of 1993. In the first quarter of 1993, interest was accrued on the
debt related to this facility. The remaining investment is currently
accounted for using the equity method and, therefore, interest expense is
not separately recorded.
The Company provided $6.0 million for possible losses during the first
quarter of 1994 to bring the allowance for possible losses to $93.8 million,
or 6.8% of total investments.
Floating rate debt financing represented approximately 35.5% of the Company's
capital structure at March 31, 1994. These borrowings support leases and
loans tied to the "prime" or similar rates and certain other owned assets.
At March 31, 1994, the Company had $71.9 million more floating rate debt than
floating rate assets.
The Company's backlog at March 31, 1994 was $120.5 million. At March 31,
1994, the Company had a $300 million shelf registration for Series C medium
term notes, of which $20.0 million had been issued. The Company also had
unused capacity under its credit agreements of $85.8 million at March 31,
1994.
<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
The Company was not required to report any events pursuant to the
instructions for Form 8-K for any of the three months ended March 31, 1994.
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.
GATX CAPITAL CORPORATION
/s/ Ronald H. Zech
-------------------------
Ronald H. Zech
President, Director, and
Chief Executive Officer
/s/ Curt F. Glenn
--------------------------
Curt F. Glenn
Principal Accounting Officer and
Vice President & Controller
May 11, 1994
