<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
June 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 July 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
GATX CAPITAL CORPORATION AND SUBSIDIARIES
<TABLE> CONSOLIDATED BALANCE SHEETS
(in Thousands)
<CAPTION> June 30, December 31, June 30,
1994 1993 1993
----------- ------------ ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 13,941 $ 12,950 $ 12,894
Investments:
Direct financing leases 252,629 275,605 269,785
Leveraged leases 258,602 224,953 235,417
Operating lease equipment -
net of depreciation 302,676 254,651 346,509
Secured loans 249,711 226,073 225,254
Investment in joint ventures 190,407 197,720 196,189
Assets held for sale or lease 42,970 56,777 90,451
Other investments 22,791 24,298 61,861
Investment in future residuals 13,604 14,071 16,923
Less:
Allowance for possible losses (91,045) (88,193) (108,731)
----------- ----------- ----------
Total investments 1,242,345 1,185,955 1,333,658
Due from GATX Corporation 43,226 42,638 37,847
Intangible assets 3,928 4,027 4,272
Other assets 11,633 11,028 19,726
----------- ----------- -----------
TOTAL ASSETS $1,315,073 $1,256,598 $1,408,397
=========== =========== ===========
</TABLE>
<PAGE>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
<TABLE> CONSOLIDATED BALANCE SHEETS
(in Thousands)
<CAPTION> June 30, December 31, June 30,
1994 1993 1993
----------- ------------ ----------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued interest and
other payables $ 108,203 $ 58,126 $ 57,262
Debt financing:
Commercial paper and
bankers' acceptances 165,520 104,164 206,805
Notes payable 13,777 17,771 32,688
Obligations under capital leases 20,569 22,442 29,145
Senior term notes 623,600 624,850 619,696
---------- ---------- ----------
Total debt financing 823,466 769,227 888,334
---------- ---------- ----------
Nonrecourse obligations 72,533 68,058 104,044
Deferred income 9,002 62,965 67,317
Deferred income taxes 9,106 11,053 3,598
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 139,725 133,570 134,584
Equity adjustment from foreign
currency translation (922) (361) (702)
---------- ---------- ----------
Total stockholder's equity 292,763 287,169 287,842
---------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $1,315,073 $1,256,598 $1,408,397
========== ========== ==========
</TABLE>
<PAGE> GATX CAPITAL CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME AND REINVESTED EARNINGS
(in Thousands)
<CAPTION> Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Earned income:
Leases $ 36,940 $ 28,420 $ 73,253 $ 57,322
Gain on disposition
of equipment 2,805 26,234 6,797 34,971
Interest 6,167 4,684 11,434 10,126
Investment in joint
ventures 1,981 1,467 3,192 3,932
Fees 1,203 1,632 4,941 2,602
Other 871 1,702 1,713 1,889
-------- -------- -------- --------
49,967 64,139 101,330 110,842
-------- -------- -------- --------
Expenses:
Interest 15,637 16,616 30,744 33,472
Operating leases 11,557 8,006 23,178 13,525
Selling, general and
administrative 9,233 9,665 17,749 18,486
Provision for possible
losses 4,000 12,000 10,000 16,000
Other 243 630 401 1,383
-------- -------- -------- --------
40,670 46,917 82,072 82,866
-------- -------- -------- --------
INCOME BEFORE
INCOME TAXES 9,297 17,222 19,258 27,976
-------- -------- -------- --------
Income taxes:
Current income tax
expense 4,213 11,287 8,466 12,120
Deferred income tax
benefit (447) (3,703) (666) (395)
-------- -------- -------- --------
3,766 7,584 7,800 11,725
-------- -------- -------- --------
NET INCOME 5,531 9,638 11,458 16,251
Reinvested earnings at
beginning of period 136,845 127,853 133,570 123,771
Advances on dividends paid
to stockholder (2,651) (2,907) (5,303) (5,438)
-------- -------- -------- --------
REINVESTED EARNINGS
AT END OF PERIOD $139,725 $134,584 $139,725 $134,584
======== ======== ======== ========
</TABLE>
<PAGE>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
<TABLE> STATEMENTS OF CONSOLIDATED CASH FLOWS
(In Thousands)
<CAPTION> Six Months
Ended June 30,
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 11,458 $ 16,251
Adjustments to reconcile net income to
net cash from operating activities:
Provision for possible losses 10,000 16,000
Depreciation expense 14,898 11,215
Provision for deferred income
tax benefit (666) (395)
Gain on disposition of equipment (6,797) (34,971)
Joint venture investment income (3,192) (3,932)
Non-cash changes in assets and liabilities:
Due from GATX Corporation (588) (2,193)
Accrued interest and other payables 50,077 1,571
Deferred income (47,933) (204)
Other-net (1,575) (5,569)
--------- ---------
Net cash flows provided by (used in)
operating activities 25,682 (2,227)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in leased equipment, net of
nonrecourse borrowings for leveraged leases (105,531) (148,119)
Loans extended to borrowers (45,759) (15,705)
Other investments (790) (34,042)
--------- ---------
Total investments (152,080) (197,866)
--------- ---------
Lease rents received, net of earned income and
leveraged lease nonrecourse debt service 7,883 14,700
Loan principal received 18,824 31,041
Proceeds from disposition of equipment 35,434 64,239
Proceeds from disposition of real estate 7,012 19,734
Joint venture cash distributions 11,352 13,401
--------- ---------
Recovery of investments 80,505 143,115
--------- ---------
Net cash flows used in
investing activities $(71,575) $(54,751)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in short term borrowings $ 57,362 $ 41,402
Proceeds from issuance of long term debt 55,000 103,000
Proceeds from nonrecourse debt borrowings - 2,800
Repayment of long term debt (56,250) (79,502)
Repayment of capital lease obligations (1,873) (2,218)
Repayment of nonrecourse obligations (2,052) (2,999)
Dividends paid to stockholder (5,303) (5,438)
--------- ---------
Net cash flows provided by
financing activities 46,884 57,045
--------- ---------
Net increase in cash and
cash equivalents 991 67
Cash and cash equivalents
at the beginning of the period 12,950 12,827
--------- ---------
Cash and cash equivalents
at the end of the period $ 13,941 $ 12,894
========= =========
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 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 six months ended June 30, 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.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Comparison of the Six Months Ended June 30, 1994 to the Six
Months Ended June 30, 1993
GATX Capital Corporation's net income for the six months ended
June 30, 1994, was $11.5 million compared to $16.3 million in the
comparable period of 1993.
Total earned income was down $9.5 million for the first six
months of 1994 compared to the same period in 1993 principally
due to the decrease in disposition gains. 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 $16.2 million gain from an
insurance settlement related to marine equipment.
Partially offsetting the decline in disposition gains were
increases in lease, interest, and fee income. The increase in
lease income was principally 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 late in the second quarter of 1993. The remaining
increase corresponds to the increase in lease investments on the
balance sheet. Interest income increased between years as a
result of higher interest rates and new loan volume. Fee income
was higher during the first six months of 1994 mainly due to a
large residual remarketing fee recorded in 1994.
Total expenses decreased slightly between periods. Decreases in
interest expense, provision for possible losses, and other
expense were offset by an increase in operating lease expense.
Interest expense declined between periods principally due to the
sale of half of the Company's investment in a cogeneration
facility during the fourth quarter of 1993. During the first
half of 1993, interest expense was recognized 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. Other expense also decreased
as a result of this sale. 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.
The Company provided $10.0 million for possible losses during the
first six months of 1994 to bring the allowance for possible
losses to $91.0 million, or 6.8% of total investments.
The increase in accrued interest and other payables 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 35.4% of
the Company's capital structure at June 30, 1994. These
borrowings support leases and loans tied to the "prime" or
similar rates and certain other owned assets. At June 30, 1994,
the Company had $58.6 million more floating rate debt than
floating rate assets.
The Company's backlog at June 30, 1994 was $138.7 million. At
June 30, 1994, the Company had a $300 million shelf registration
for Series C medium term notes, of which $55.0 million had been
issued. The Company also had unused capacity under its credit
agreements of $114.5 million at June 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
June 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/ 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
August 12, 1994
