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
For the Quarter Ended September 30, 1995
Commission File Number 1-8319
GATX CAPITAL CORPORATION
Incorporated in the State of Delaware
IRS Employer Identification Number 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, 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
Item 1. Financial Statements
<TABLE>
<CAPTION>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND REINVESTED EARNINGS
(in Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
EARNED INCOME:
Leases $ 32,601 $ 36,415 $ 99,712 $109,668
Gain on sale of assets 5,112 4,368 29,200 11,165
Fees 4,414 2,063 14,567 7,004
Interest 5,348 8,103 17,697 19,537
Investment in joint ventures 7,728 3,340 14,913 6,532
Other 682 1,381 2,021 3,094
--------- --------- --------- ---------
55,885 55,670 178,110 157,000
--------- --------- --------- ---------
EXPENSES:
Interest 16,920 15,907 49,988 46,651
Operating leases 11,529 13,233 34,812 36,411
Selling, general and administrative 9,676 10,209 29,989 27,958
Provision for losses on investments 3,000 5,000 12,000 15,000
Other 191 193 505 594
--------- ---------- ---------- ----------
41,316 44,542 127,294 126,614
--------- ---------- ---------- ----------
Income before income taxes 14,569 11,128 50,816 30,386
--------- ---------- ---------- ----------
INCOME TAXES:
Current income tax expense 2,769 (716) 16,206 7,750
(benefit)
Deferred income tax expense 4,158 5,232 5,401 4,566
--------- ---------- ---------- ----------
6,927 4,516 21,607 12,316
--------- ---------- ---------- ----------
NET INCOME 7,642 6,612 29,209 18,070
Reinvested earnings at beginning
of period 160,051 139,725 146,036 133,570
Dividends paid to stockholder (4,099) (3,156) (11,651) (8,459)
--------- ---------- ---------- ----------
REINVESTED EARNINGS AT END OF
PERIOD $163,594 $ 143,181 $163,594 $ 143,181
========= ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in Thousands)
September 30, December 31,
1995 1994
---- ----
(Unaudited)
<S>
ASSETS: <C> <C>
Cash and cash equivalents $ 6,111 $ 9,407
Investments:
Direct financing leases 263,503 245,441
Leveraged leases 231,138 252,651
Operating lease equipment-
net of depreciation 334,886 295,273
Secured loans 231,407 231,225
Investment in joint ventures 218,459 202,367
Assets held for sale or lease 24,373 24,320
Other investments 42,317 20,373
Investment in future residuals 13,898 13,157
Less: Allowance for losses on investments (94,906) (82,206)
------------ ------------
Total investments 1,265,075 1,202,601
Due from GATX Corporation 41,320 42,515
Other assets 16,162 15,067
------------ ------------
TOTAL ASSETS $ 1,328,668 $ 1,269,590
============ ============
</TABLE>
<PAGE>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
---- ----
(Unaudited)
<S>
LIABILITIES AND STOCKHOLDER'S EQUITY: <C> <C>
Accrued interest $ 12,036 $ 14,987
Accounts payable and other liabilities 60,692 108,635
Debt financing:
Commercial paper and bankers' acceptances 212,907 124,834
Notes payable 13,600 14,021
Obligations under capital leases 16,033 19,431
Senior term notes 615,600 613,600
------------ ------------
Total debt financing 858,140 771,886
Nonrecourse obligations 53,780 55,270
Deferred income 4,116 4,185
Deferred income taxes 20,742 15,390
Stockholder's equity:
Convertible preferred stock 1,027 1,027
Common stock 1,031 1,031
Additional paid in capital 151,902 151,902
Reinvested earnings 163,594 146,036
Equity adjustment from foreign
currency translation 1,608 (759)
------------ ------------
Total stockholder's equity 319,162 299,237
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 1,328,668 $ 1,269,590
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(in Thousands)
Nine Months Ended
September 30,
1995 1994
---- ----
(unaudited)
<S>
CASH FLOWS FROM OPERATING ACTIVITIES: <C> <C>
Net income $ 29,209 $ 18,070
Reconciliation to net cash from operating
activities:
Provision for losses on investments 12,000 15,000
Depreciation expense 20,655 23,791
Provision for deferred income taxes 5,401 4,566
Gain on sale of assets (29,200) (11,165)
Joint venture income (14,913) (6,532)
Changes in assets and liabilities:
Accrued interest and other payables (56,377) 45,827
Due from GATX Corporation 1,195 (2,922)
Deferred income (69) (47,934)
Other - net (7,355) 154
---------- ----------
Net cash flows (used in) provided
by operating activities (39,454) 38,855
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in leased equipment, net of
nonrecourse borrowings for leveraged leases (179,506) (128,972)
Loans extended to borrowers (58,244) (55,293)
Other investments (32,649) (1,103)
---------- ----------
Total investments (270,399) (185,368)
---------- ----------
Lease rents received, net of earned income and
leveraged lease nonrecourse debt service 40,640 17,214
Loan principal received 41,857 58,413
Proceeds from sale of equipment 123,323 52,947
Proceeds from sale of real estate 1,727 8,160
Joint venture investment recovery 18,887 16,275
---------- ----------
Recovery of investments 226,434 153,009
---------- ----------
Net cash flows used in investing
activities (43,965) (32,359)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in short-term borrowings 87,652 17,746
Proceeds from issuance of long-term debt 80,000 55,000
Repayment of long-term debt (78,000) (56,250)
Dividends paid to stockholder (11,651) (8,459)
Other financing activities 2,122 (5,494)
---------- ----------
Net cash flows provided by financing activities 80,123 2,543
---------- ----------
Net (decrease) increase in cash
and cash equivalents (3,296) 9,039
Cash and cash equivalents at
beginning of the period 9,407 12,950
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,111 $ 21,989
========== ==========
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements, continued
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995 and 1994
1. The consolidated balance sheet of GATX Capital Corporation (the "Company")
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 nine months ended
September 30, 1995 are not necessarily indicative of the results that may
be achieved for the entire year.
2. Certain prior year amounts have been reclassified to conform to the
current presentation.
<PAGE>
PART I. FINANCIAL INFORMATION, continued
Item 2. Management's Discussion and Analysis
GATX Capital Corporation's net income for the nine months ended September 30,
1995, was $11.1 million higher than for the comparable 1994 period.
The $21.1 million increase in earned income compared to 1994 is mainly the
result of the remarketing of assets. Gains on sale of assets, which are
realized both at lease end and in response to market opportunities, do not
occur evenly between periods and are expected to be lower in the fourth
quarter of 1995. Higher fees, primarily related to managed-asset
remarketing, also contributed to the total change in earned income. Income
from joint ventures increased significantly as well, largely due to higher
interest rates on variable rate leases in an international aircraft joint
venture and a gain on the sale of a real estate investment in the third
quarter of 1995.
Lower income from leases partially offset the growth described above. Lease
income in 1994 included rentals on four DC-10 aircraft which were returned in
January 1995, three of which have not been re-leased as of September 30, 1995.
The Company sold the fourth aircraft in September 1995. During 1995, the
Company also sold interests in certain other aircraft and reduced its residual
estimates on an older aircraft subject to a leveraged lease, resulting in
lower lease income compared to 1994.
Higher interest rates resulted in increased interest expense in 1995 compared
to 1994. Selling, general and administrative expense also rose over this
period, due mainly to higher spending in such business-growth support areas as
human resources and information systems, partially offset by increased
capitalization of initial direct cost for new leases.
The provision for losses on investments and expenses relating to operating
leases declined from 1994 to 1995. The decrease in operating lease expense
reflects the sale of certain aircraft in 1995, as noted above.
Income tax expense for the three months ended September 30, 1995 included
certain rate adjustments. The Company projects an effective tax rate of
approximately 42% for the twelve months ended December 31, 1995.
The decrease in accounts payable and other liabilities since the end of 1994
was due mainly to a $48.0 million refund of a deposit, in the first quarter
of 1995, as the result of a lessee's exercise of an option to return four
DC-10 aircraft.
Floating rate debt financing represented 35.4% of the Company's capital
structure as of September 30, 1995. These borrowings support leases and loans
tied to LIBOR or similar rates. Fluctuations in interest rates may impact
earnings, either negatively or positively, depending on the Company's net
floating rate postion. At September 30, 1995, the Company had $46.3 million
more floating rate debt than floating rate assets.
As of September 30, 1995, the Company had $277.1 million of transactions which
had been approved but not yet funded. Of this amount, the Company expects to
fund approximately $94 million during 1995 and the remainder, beyond. The
Company generates cash from operations and from portfolio proceeds and has
certain facilities for borrowing. As of September 30, 1995, the Company had
a $300.0 million shelf registration for Series C medium term notes, of which
$135.0 million had been issued. The Company also had unused capacity under
its credit agreements of $37.1 million as of September 30, 1995.
<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27. Financial Data Schedule
(b) The Company filed no reports on Form 8-K during the three months ended
September 30, 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 E. Cromar
-----------------------
Michael E. Cromar
Vice President &
Chief Financial Officer
/s/ Curt F. Glenn
-------------------------------
Curt F. Glenn
Principal Accounting Officer and
Vice President & Controller
November 10, 1995
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED FINANCIAL STATEMENTS OF INCOME AND THE CONSOLIDATED BALANCE
SHEETS AND IS QUALIFIED IN ITS ENTIRETY TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 6111
<SECURITIES> 0
<RECEIVABLES> 726048<F1>
<ALLOWANCES> 94906
<INVENTORY> 24373<F2>
<CURRENT-ASSETS> 0<F4>
<PP&E> 334886<F3>
<DEPRECIATION> 0<F3>
<TOTAL-ASSETS> 1328668
<CURRENT-LIABILITIES> 0<F4>
<BONDS> 685413<F5>
<COMMON> 1031<F6>
0
1027<F6>
<OTHER-SE> 317104<F7>
<TOTAL-LIABILITY-AND-EQUITY> 1328668
<SALES> 0
<TOTAL-REVENUES> 178110
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 65306<F8>
<LOSS-PROVISION> 12000
<INTEREST-EXPENSE> 49988
<INCOME-PRETAX> 50816
<INCOME-TAX> 21607
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29209
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>CONSISTS OF DIRECT FINANCE LEASE RECEIVABLES OF 263503, LEVERAGE LEASE
RECEIVABLES OF 231138, AND SECURED LOANS OF 231407.
<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 615600, OBLIGATIONS UNDER
CAPITAL LEASES OF 16033, AND NONRECOURSE OBLIGATIONS OF 53780.
<F6>PAR VALUE ONLY.
<F7>CONSISTS OF RETAINED EARNINGS OF 163594, ADDITIONAL PAID-IN CAPITAL OF
151902 AND TRANSLATION ADJUSTMENT OF 1608.
<F8>CONSISTS OF OPERATING LEASE EXPENSE OF 34812, SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES OF 29989, AND OTHER EXPENSES OF 505.
</FN>
</TABLE>
