<PAGE>
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
September 30, 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 October 31, 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
GATX CAPITAL CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
(in Thousands)
<CAPTION>
Sept. 30, December 31, Sept. 30,
1994 1993 1993
----------- ------------ ----------
ASSETS
<S> <C> <C> <C>
Cash and cash equivalents $ 21,989 $ 12,950 $ 7,469
Investments:
Direct financing leases 240,155 275,605 259,669
Leveraged leases 255,038 224,953 229,763
Operating lease equipment -
net of depreciation 293,915 254,651 252,270
Secured loans 219,098 226,073 218,408
Investment in joint ventures 189,107 197,720 198,319
Assets held for sale or lease 41,632 56,777 79,800
Other investments 22,316 24,298 60,047
Investment in future residuals 13,716 14,071 16,640
Less:
Allowance for possible losses (96,239) (88,193) (106,720)
----------- ----------- ----------
Total investments 1,178,738 1,185,955 1,208,196
Due from GATX Corporation 45,560 42,638 45,153
Intangible assets 3,818 4,027 4,162
Other assets 10,198 11,028 17,469
----------- ----------- -----------
TOTAL ASSETS $1,260,303 $1,256,598 $1,282,449
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued interest $ 13,514 $ 14,489 $ 14,860
Accounts payable and
other liabilities 90,439 43,637 37,649
Debt financing:
Commercial paper and
bankers' acceptances 125,600 104,164 89,152
Notes payable 14,081 17,771 18,290
Obligations under capital leases 19,675 22,442 27,775
Senior term notes 623,600 624,850 626,850
---------- ---------- ----------
Total debt financing 782,956 769,227 762,067
---------- ---------- ----------
Nonrecourse obligations 56,070 68,058 106,077
Deferred income 6,324 62,965 65,787
Deferred income taxes 14,474 11,053 8,666
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 143,181 133,570 134,430
Equity adjustment from foreign
currency translation (615) (361) (1,047)
---------- ---------- ----------
Total stockholder's equity 296,526 287,169 287,343
---------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $1,260,303 $1,256,598 $1,282,449
========== ========== ==========
</TABLE>
<PAGE>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME AND REINVESTED EARNINGS
<CAPTION>
(in Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Earned income:
Leases $ 36,415 $ 34,224 $109,668 $ 91,546
Gain on disposition
of equipment 4,368 6,731 11,165 41,702
Interest 8,103 4,416 19,537 14,542
Investment in joint
ventures 3,340 2,852 6,532 6,784
Fees 2,063 2,669 7,004 5,271
Other 1,381 2,879 3,094 4,768
-------- -------- -------- --------
55,670 53,771 157,000 164,613
-------- -------- -------- --------
Expenses:
Interest 15,907 16,869 46,651 50,340
Operating leases 13,233 10,986 36,411 24,510
Selling, general and
administrative 10,209 8,757 27,958 27,243
Provision for possible
losses 5,000 8,000 15,000 24,000
Other 193 578 594 1,962
-------- -------- -------- --------
44,542 45,190 126,614 128,055
-------- -------- -------- --------
INCOME BEFORE
INCOME TAXES 11,128 8,581 30,386 36,558
-------- -------- -------- --------
Income taxes:
Current income tax
expense (716) 417 7,750 12,539
Deferred income tax
benefit 5,232 5,111 4,566 4,715
-------- -------- -------- --------
4,516 5,528 12,316 17,254
-------- -------- -------- --------
NET INCOME 6,612 3,053 18,070 19,304
Reinvested earnings at
beginning of period 139,725 134,584 133,570 123,771
Advances on dividends paid
to stockholder (3,156) (3,207) (8,459) (8,645)
-------- -------- -------- --------
REINVESTED EARNINGS
AT END OF PERIOD $143,181 $134,430 $143,181 $134,430
======== ======== ======== ========
</TABLE>
<PAGE>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
<TABLE>
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In Thousands)
<CAPTION>
Nine Months Ended
September 30,
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 18,070 $ 19,304
Adjustments to reconcile net income to
net cash from operating activities:
Provision for possible losses 15,000 24,000
Depreciation expense 23,791 20,484
Provision for deferred income
tax benefit 4,566 4,715
Gain on disposition of equipment (11,165) (41,702)
Joint venture investment income (6,532) (6,784)
Non-cash changes in assets and liabilities:
Due from GATX Corporation (2,922) (9,499)
Accrued interest, accounts payable
and other liabilities 45,827 (1,644)
Deferred income (47,934) 1,281
Other-net 154 (4,564)
--------- ---------
Net cash flows provided by
operating activities 38,855 5,591
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in leased equipment, net of
nonrecourse borrowings for leveraged leases (128,972) (160,818)
Loans extended to borrowers (55,293) (24,005)
Other investments (1,103) (43,734)
--------- ---------
Total investments (185,368) (228,557)
--------- ---------
Lease rents received, net of earned income and
leveraged lease nonrecourse debt service 17,214 24,440
Loan principal received 58,413 45,652
Proceeds from disposition of equipment 52,947 80,168
Proceeds from disposition of real estate owned 8,160 27,551
Joint venture cash distributions 16,275 19,750
--------- ---------
Recovery of investments 153,009 197,561
--------- ---------
Proceeds from disposition of other assets - 90,604
--------- ---------
Net cash flows (used in) provided by
investing activities (32,359) 59,608
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in short term
borrowings 17,746 (90,649)
Proceeds from issuance of long term debt 55,000 120,000
Proceeds from nonrecourse debt borrowings - 7,011
Repayment of long term debt (56,250) (89,348)
Repayment of capital lease obligations (2,767) (3,589)
Repayment of nonrecourse obligations (2,727) (5,337)
Dividends paid to stockholder (8,459) (8,645)
--------- ---------
Net cash flows provided by (used in)
financing activities 2,543 (70,557)
--------- ---------
Net increase (decrease) in cash and
cash equivalents 9,039 (5,358)
Cash and cash equivalents
at the beginning of the period 12,950 12,827
--------- ---------
Cash and cash equivalents
at the end of the period $ 21,989 $ 7,469
========= =========
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 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 and nine months ended September 30, 1994
are not necessarily indicative of the results that may
be achieved for the entire year. The notes to the
financial statements contained in the annual report for
December 31, 1993 should be read in conjunction with
these financial statements.
2. Reclassifications and restatement
Certain amounts in the financial statements presented
have been reclassified to conform prior years' data to
the current presentation.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Comparison of the Nine Months Ended September 30, 1994 to the
Nine Months Ended September 30, 1993
GATX Capital Corporation's net income for the nine months ended
September 30, 1994, was $18.1 million compared to $19.3 million
in the same period of 1993.
Total earned income was down $7.6 million between years
principally due to the decrease in disposition gains, which was
partially offset by greater lease, interest and fee income.
Disposition gains do not fall evenly from period to period and
are generated primarily from the sale of equipment at scheduled
lease termination dates. However, the 1993 amount includes a
$16.6 million gain from an insurance settlement related to marine
equipment. The increase in lease income primarily resulted from
new investment volume in the operating lease portfolio, both on
and off the balance sheet, which generated an increase in
operating lease income. Interest income increased between years
as a result of higher interest rates and the early payoff of a
loan in the third quarter of 1994 which generated a $1.3 million
prepayment premium. Fee income was higher during the first nine
months of 1994 mainly due to a large residual remarketing fee
received in 1994.
Total expenses decreased slightly between periods. Decreases in
both interest expense and the provision for possible losses were
offset by an increase in operating lease expense. Interest
expense, other expense, and other income declined between periods
principally because of the sale of half of the Company's
investment in a cogeneration facility during the fourth quarter
of 1993. The remaining investment is currently accounted for
using the equity method and, therefore, the related interest
expense is not separately reported. The increase in operating
lease expense is principally due to increased depreciation and
rent expense on operating leases. Depreciation on certain older,
wide-body aircraft in the operating lease portfolio was
accelerated. Rent expense includes a sale leaseback transaction
of rail equipment completed during the fourth quarter of 1993.
The Company provided $15.0 million for possible losses during the
first nine months of 1994 to bring the allowance for possible
losses to $96.2 million, or 7.5% of total investments.
The increase in accounts payable and other liabilities results
primarily from the reclassification of $48.0 million from
deferred income. During the second quarter of 1994, American
Airlines exercised its option to return four DC-10 aircraft in
January, 1995. The $48.0 million was received in advance and was
deferred pending its recording as disposition proceeds upon
purchase by the customer or its repayment upon return of the
equipment at the customer's option.
Floating rate debt financing represented approximately 33.5% of
the Company's capital structure at September 30, 1994. These
borrowings support leases and loans tied to LIBOR or similar
rates. At September 30, 1994, the Company had $18.6 million
more floating rate debt than floating rate assets.
At September 30, 1994, the Company had $181.1 million of
transactions which had been approved but had not yet been funded.
Of this amount, the Company expects to fund approximately $100.0
million in the next 12 months and the remainder beyond. The
Company generates cash from operations and from portfolio proceeds
and has certain facilities for borrowing. The Company has a
$300.0 million shelf registration for Series C medium term notes,
of which $55.0 million had been issued as of September 30, 1994.
The Company also had unused capacity under its credit agreements
of $154.4 million at September 30, 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
September 30, 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/ Joseph C. Lane
------------------------
Joseph C. Lane
President, Director, and
Chief Executive Officer
/s/ Michael E. Cromar
------------------------
Michael E. Cromar
Vice President and
Chief Financial Officer
/s/ Curt F. Glenn
------------------------
Curt F. Glenn
Principal Accounting Officer and
Vice President & Controller
November 10, 1994
<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 BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 21,989
<SECURITIES> 0
<RECEIVABLES> 714,291<F1>
<ALLOWANCES> 96,239
<INVENTORY> 41,632<F2>
<CURRENT-ASSETS> 0
<PP&E> 293,915<F3>
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,260,303
<CURRENT-LIABILITIES> 0
<BONDS> 699,345<F4>
<COMMON> 1,031
0
1,027
<OTHER-SE> 294,468
<TOTAL-LIABILITY-AND-EQUITY> 1,260,303
<SALES> 0
<TOTAL-REVENUES> 157,000
<CGS> 0
<TOTAL-COSTS> 64,396<F5>
<OTHER-EXPENSES> 594
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 46,651
<INCOME-PRETAX> 30,386
<INCOME-TAX> 12,316
<INCOME-CONTINUING> 18,070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,070
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables consist of direct finance leases of 240,155, leveraged leases of
255,038 and secured loans of 219,098.
<F2>Inventory consists of assets held for sale or lease.
<F3>PP&E consists of operating lease equipment, net of depreciation.
<F4>Bonds consist of senior term notes of 623,600, capital leases of 19,675 and
nonrecourse obligations of 56,070.
<F5>Total costs consist of operating lease cost of 36,411 and SG&A of 27,958.
</FN>
</TABLE>
