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, 1995 1-8319
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 28, 1995, 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>
<CAPTION>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND REINVESTED EARNINGS
(in Thousands)
Three Months Ended
March 31,
1995 1994
-------- --------
(Unaudited)
<S> <C> <C>
Earned income:
Leases $ 34,371 $ 36,313
Gain on disposition of equipment 9,889 3,992
Fees 7,334 3,738
Interest 5,929 5,267
Investment in joint ventures 3,112 1,211
Other 458 842
-------- --------
61,093 51,363
-------- --------
Expenses:
Interest 16,445 15,107
Operating leases 11,974 11,621
Selling, general and administrative 9,600 8,561
Provision for possible losses 6,000 6,000
Other 164 158
-------- --------
44,183 41,402
-------- --------
INCOME BEFORE INCOME TAXES 16,910 9,961
-------- --------
Income taxes:
Current income tax expense 6,292 4,253
Deferred income tax expense/(benefit) 557 (219)
-------- --------
6,849 4,034
-------- --------
NET INCOME 10,061 5,927
Reinvested earnings at beginning of period 146,036 133,570
Advances on dividends paid to stockholder (3,776) (2,652)
-------- --------
REINVESTED EARNINGS AT END OF PERIOD $152,321 $136,845
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in Thousands)
March 31, December 31, March 31,
1995 1994 1994
--------- ----------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 5,230 $ 9,407 $ 5,350
Investments:
Direct financing leases 243,142 245,441 264,589
Leveraged leases 219,833 252,651 248,979
Operating lease equipment -
net of depreciation 288,382 295,273 313,039
Secured loans 218,118 231,225 257,702
Investment in joint ventures 204,868 202,367 192,911
Assets held for sale or lease 30,767 24,320 60,072
Other investments 20,029 20,373 22,698
Investment in future residuals 12,648 13,157 13,794
Less:
Allowance for possible losses (88,169) (82,206) (93,773)
----------- ----------- ----------
Total investments 1,149,618 1,202,601 1,280,011
Due from GATX Corporation 36,589 42,515 39,493
Other assets 14,385 15,067 14,888
----------- ----------- -----------
TOTAL ASSETS $1,205,822 $1,269,590 $1,339,742
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued interest $ 12,022 $ 14,987 $ 13,137
Accounts payable and other
liabilities 45,629 108,635 36,206
Debt financing:
Commercial paper and
bankers' acceptances 169,374 124,834 200,140
Notes payable 12,582 14,021 20,438
Obligations under capital leases 18,492 19,431 21,591
Senior term notes 565,463 613,600 615,600
---------- ---------- ----------
Total debt financing 765,911 771,886 857,769
---------- ---------- ----------
Nonrecourse obligations 54,241 55,270 73,273
Deferred income 4,081 4,185 59,855
Deferred income taxes 15,889 15,390 9,631
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 152,321 146,036 136,845
Equity adjustment from foreign
currency translation (3,776) (759) (934)
---------- ---------- ----------
Total stockholder's equity 308,049 299,237 289,871
---------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $1,205,822 $1,269,590 $1,339,742
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(in Thousands)
Three Months Ended
March 31,
1995 1994
-------- --------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 10,061 $ 5,927
Adjustments to reconcile net income to
net cash from operating activities:
Provision for possible losses 6,000 6,000
Depreciation expense 7,138 7,576
Provision for deferred income
tax expense/(benefit) 557 (219)
Gain on disposition of equipment (9,889) (3,992)
Joint venture investment income (3,112) (1,211)
Non-cash changes in assets and liabilities:
Due from GATX Corporation 5,926 3,145
Accrued interest and other payables (65,971) (8,783)
Deferred income (104) (95)
Other-net 3,832 (897)
--------- ---------
Net cash flows (used in) provided by
operating activities (45,562) 7,451
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in leased equipment, net of
nonrecourse borrowings for leveraged leases (41,225) (91,079)
Loans extended to borrowers (4,547) (39,583)
Other investments (1,736) (427)
--------- ---------
Total investments (47,508) (131,089)
--------- ---------
Lease rents received, net of earned income and
leveraged lease nonrecourse debt service 6,948 4,311
Loan principal received 18,323 7,441
Proceeds from disposition of equipment 69,468 13,239
Joint venture cash distributions 4,774 6,469
--------- ---------
Recovery of investments 99,513 31,460
--------- ---------
Net cash flows provided by (used in)
investing activities 52,005 (99,629)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in short term borrowings 43,101 98,643
Proceeds from issuance of long term debt - 20,000
Repayment of long term debt (48,000) (29,250)
Dividends paid to stockholder (3,776) (2,652)
Other financing activities (1,945) (2,163)
--------- ---------
Net cash flows (used in)provided by
financing activities (10,620) 84,578
--------- ---------
Net decrease in cash and cash equivalents (4,177) (7,600)
Cash and cash equivalents
at the beginning of the period 9,407 12,950
--------- ---------
Cash and cash equivalents
at the end of the period $ 5,230 $ 5,350
========= =========
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995 and 1994
1. General
The consolidated balance sheet at December 31, 1994 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, 1995 are not necessarily indicative of the results that
may be achieved for the entire year.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Comparison of the Three Months Ended March 31, 1995 to Three Months Ended
March 31, 1994
GATX Capital Corporation's net income for the three months ended March 31,
1995, was $4.1 million higher than the comparable period of 1994.
Combining asset management opportunities with market opportunities, the
Company increased total earned income by $9.7 million between periods. A very
strong market for leases on rail equipment during the first quarter resulted
in increased gains on disposition and fee income. Income from these
activities does not occur evenly period to period due to the timing of
transactions and because market conditions change. Higher joint venture
income and interest income also contributed to the increase in earned
income, and were slightly offset by the decrease in lease income. Lease
income in 1994 included rental income on four DC-10 aircraft which were
returned in January of 1995 and have not yet been re-leased, resulting in a
decrease of operating lease income. Higher interest rates between years
resulted in more lease income on variable rate leases in an aircraft leasing
joint venture and more interest income on floating rate loans in the Company's
portfolio.
Total expenses increased $2.8 million between periods. Higher interest rates
on floating rate short-term and long-term debt, slightly offset by the impact
of lower average outstanding debt balances between periods, resulted in an
increase in interest expense.
The Company provided $6.0 million for possible losses during the first three
months of 1995 to bring the allowance for possible losses to $88.2 million, or
7.1% of total investments.
The decrease in accounts payable and other liabilities during the first
quarter of 1995 included a $48.0 million refund of a deposit as the result of
the lessee's exercise of an option to return four DC-10 aircraft.
Floating rate debt financing represented 36.6% of the Company's capital
structure at March 31, 1995. These borrowings support leases and loans tied
to LIBOR or similar rates. At March 31, 1995, the Company had $49.6 million
more floating rate debt than floating rate assets.
At March 31, 1995, the Company had $223.1 million of transactions which had
been approved but had not yet been funded. Of this amount, the Company
expects to fund approximately $122.0 million in the next twelve months and the
remainder beyond. The Company generates cash from operations and from
portfolio proceeds and has certain facilities for borrowing. At March 31,
1995, the Company had a $300.0 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 $80.6 million at March 31,
1995.
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, 1995.
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/ Michael Cromar
------------------
Michael Cromar
Vice President &
Chief Financial Officer
/s/ Curt F. Glenn
-----------------
Curt F. Glenn
Principal Accounting Officer and
Vice President & Controller
May 12, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 5230
<SECURITIES> 0
<RECEIVABLES> 681093<F1>
<ALLOWANCES> 88169
<INVENTORY> 30767<F2>
<CURRENT-ASSETS> 0<F4>
<PP&E> 288382<F3>
<DEPRECIATION> 0<F3>
<TOTAL-ASSETS> 1205822
<CURRENT-LIABILITIES> 0<F4>
<BONDS> 638196<F5>
<COMMON> 1031<F6>
0
1027<F6>
<OTHER-SE> 300447<F7>
<TOTAL-LIABILITY-AND-EQUITY> 1205822
<SALES> 0
<TOTAL-REVENUES> 61093
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 21738<F8>
<LOSS-PROVISION> 6000
<INTEREST-EXPENSE> 16445
<INCOME-PRETAX> 16910
<INCOME-TAX> 6849
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10061
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>CONSISTS OF DIRECT FINANCE LEASE RECEIVABLES OF $243,142, LEVERAGE LEASE
RECEIVABLES OF $219,833, AND SECURED LOANS OF $218,118.
<F2>CONSISTS OF ASSETS HELD FOR SALE OR LEASE.
<F3>CONSISTS OF COST OF EQUIPMENT LEASED TO OTHERS UNDER OPERATING LEASES, NET OF
DEPRECIATION.
<F4>GATX CAPITAL CORPORATION HAS AN UNCLASSIFIED BALANCE SHEET.
<F5>CONSISTS OF SENIOR TERM NOTES OF $565,463, OBLIGATIONS UNDER
CAPITAL LEASES OF $18,492, AND NONRECOURSE OBLIGATIONS OF $54,241.
<F6>PAR VALUE ONLY.
<F7>CONSISTS OF RETAINED EARNINGS OF $152,321, ADDITIONAL PAID-IN CAPITAL OF
$151,902 AND TRANSLATION ADJUSTMENT OF $(3,776).
<F8>CONSISTS OF OPERATING LEASE EXPENSE OF $11,974, SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES OF $9,600, AND OTHER EXPENSES OF $164.
</FN>
</TABLE>
