SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10Q
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, 1995 1-8319
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 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 10Q 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 Six Months Ended
June 30, June 30,
1995 1994 1995 1994
______ ______ ______ ______
<S> (Unaudited) (Unaudited)
Earned income: <C> <C> <C> <C>
Leases $32,740 $ 36,940 $ 67,111 $ 73,253
Gain on sale of assets 14,199 2,805 24,088 6,797
Fees 2,819 1,203 10,153 4,941
Interest 6,420 6,167 12,349 11,434
Investment in joint ventures 4,073 1,981 7,185 3,192
Other 881 871 1,339 1,713
-------- -------- -------- -------
61,132 49,967 122,225 101,330
-------- -------- -------- -------
Expenses:
Interest 16,623 15,637 33,068 30,744
Operating leases 11,309 11,557 23,283 23,178
Selling, general and
administrative 10,713 9,233 20,313 17,749
Provision for losses on
investments 3,000 4,000 9,000 10,000
Other 150 243 314 401
-------- -------- -------- -------
41,795 40,670 85,978 82,072
-------- -------- -------- -------
INCOME BEFORE INCOME TAXES 19,337 9,297 36,247 19,258
-------- -------- -------- -------
Income taxes:
Current income tax expense 7,145 4,213 13,437 8,466
Deferred income tax
expense (benefit) 686 (447) 1,243 (666)
-------- -------- -------- -------
7,831 3,766 14,680 7,800
-------- -------- -------- -------
NET INCOME 11,506 5,531 21,567 11,458
Reinvested earnings at
beginning of period 152,321 136,845 146,036 133,570
Dividends paid to
stockholder (3,776) (2,651) (7,552) (5,303)
-------- -------- -------- -------
REINVESTED EARNINGS
AT END OF PERIOD $160,051 $139,725 $160,051 $139,725
======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in Thousands)
June 30, December 31,
1995 1994
-------- ------------
(Unaudited)
<S>
ASSETS <C> <C>
Cash and cash equivalents $ 19,739 $ 9,407
Investments:
Direct financing leases 255,596 245,441
Leveraged leases 239,613 252,651
Operating lease equipment -
net of depreciation 269,545 295,273
Secured loans 231,769 231,225
Investment in joint ventures 207,009 202,367
Assets held for sale or lease 29,065 24,320
Other investments 43,270 20,373
Investment in future residuals 13,826 13,157
Less:
Allowance for losses on
investments (90,258) (82,206)
---------- ---------
Total investments 1,199,435 1,202,601
Due from GATX Corporation 39,241 42,515
Other assets 13,860 15,067
---------- ----------
TOTAL ASSETS $1,272,275 $1,269,590
========== ==========
</TABLE>
<PAGE>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
--------- -----------
(Unaudited)
<S>
LIABILITIES AND STOCKHOLDER'S
EQUITY <C> <C>
Accrued interest $ 14,849 $ 14,987
Accounts payable and other liabilities 54,448 108,635
Debt financing:
Commercial paper and bankers'
acceptances 149,850 124,834
Notes payable 14,695 14,021
Obligations under capital leases 17,020 19,431
Senior term notes 630,600 613,600
-------- --------
Total debt financing 812,165 771,886
-------- --------
Nonrecourse obligations 54,744 55,270
Deferred income 4,234 4,185
Deferred income taxes 16,583 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 160,051 146,036
Equity adjustment from foreign
currency translation 1,241 (759)
-------- --------
Total stockholder's equity 315,252 299,237
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $1,272,275 $1,269,590
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(in Thousands)
Six Months Ended
June 30,
1995 1994
------ ------
<S> (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES <C> <C>
Net income $ 21,567 $11,458
Reconciliation to net cash from
operating activities:
Provision for possible losses 9,000 10,000
Depreciation expense 13,820 14,898
Provision for deferred income
taxes (benefits) 1,243 (666)
Gain on sale of assets (24,088) (6,797)
Joint venture investment income (7,185) (3,192)
Changes in assets and liabilities:
Due from GATX Corporation 3,274 (588)
Accrued interest and other payables (54,325) 50,077
Deferred income 49 (47,933)
Other - net 2,638 (1,575)
-------- --------
Net cash flows (used in) provided by
operating activities (34,007) 25,682
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in leased equipment, net of
nonrecourse borrowings for leveraged leases (124,027) (105,531)
Loans extended to borrowers (45,557) (45,759)
Other investments (17,398) (790)
-------- --------
Total investments (186,982) (152,080)
-------- --------
Lease rents received, net of earned income and
leveraged lease nonrecourse debt service 33,783 7,883
Loan principal received 34,093 18,824
Proceeds from disposition of equipment 112,795 35,434
Proceeds from disposition of real estate 1,727 7,012
Joint venture investment recovery 10,273 11,352
-------- -------
Recovery of investments 192,671 80,505
-------- -------
Net cash flows provided by (used in)
investing activities 5,689 (71,575)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in short term borrowings 25,690 57,362
Proceeds from issuance of long-term debt 80,000 55,000
Repayment of long term debt (63,000) (56,250)
Dividends paid to stockholder (7,552) (5,303)
Other financing activities 3,512 (3,925)
-------- -------
Net cash flows provided by
financing activities 38,650 46,884
-------- -------
Net increase in cash and cash equivalents 10,332 991
Cash and cash equivalents
at the beginning of the period 9,407 12,950
-------- -------
Cash and cash equivalents
at the end of the period $ 19,739 $ 13,941
========= =========
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements, continued
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995 and 1994
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 six-month period ended June
30, 1995 are not necessarily indicative of the results that may be
achieved for the entire year.
Item 2. Management's Discussion and Analysis
Comparison of the Six Months Ended June 30, 1995 to the Six Months Ended
June 30,1994
GATX Capital Corporation's net income for the six months ended June 30,
1995, was $10.1 million higher than for the comparable 1994 period.
The increase in earned income of $20.9 million, compared to the 1994
period, is largely the result of the remarketing of assets. These gains,
which are realized both at lease end and in response to market
opportunities, do not occur evenly between periods and are not expected
to be at as high a level in the second half of 1995. Also contributing
to the overall change in earned income from 1994 to 1995 was higher fee
income, primarily from the remarketing of managed assets. Income from
joint ventures increased significantly as well, mainly due to higher
interest rates on variable rate leases in an international aircraft joint
venture.
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 and have not yet been re-leased. The Company
also sold interests in certain other aircraft, further reducing its 1995
lease income.
Expenses grew by $3.9 million, or 5%, between periods. The growth in
interest expense was due to higher interest rates, partially offset by
lower levels of debt financing. Spending in support of continued
business growth resulted in increased selling, general and administrative
expenses between periods, particularly in such areas as human resources
and information systems.
The decrease in accounts payable and other liabilities since the end of
1994 included 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 32.9% of the Company's capital
structure at June 30, 1995. These borrowings support leases and loans
tied to LIBOR or similar rates. At June 30, 1995, the Company had $30.0
million more floating rate debt than floating rate assets.
At June 30, 1995, the Company had $258.0 million of transactions which
had been approved but not yet funded. Of this amount, the Company expects
to fund approximately $100 million during 1995 and the remainder, beyond.
The Company generates cash from operations and from portfolio proceeds
and has certain facilities for borrowing. At June 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 $100.1 million as of June 30,
1995.
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
The Company filed no reports on Form 8-K during the three months ended June 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
--------------------------------
Vice President &
Chief Financial Officer
/s/ Curt F. Glenn
---------------------------------
Principal Accounting Officer and
Vice President & Controller
August 14, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 19739
<SECURITIES> 0
<RECEIVABLES> 726978<F1>
<ALLOWANCES> 90258
<INVENTORY> 29065<F2>
<CURRENT-ASSETS> 0<F4>
<PP&E> 269545<F3>
<DEPRECIATION> 0<F3>
<TOTAL-ASSETS> 1272275
<CURRENT-LIABILITIES> 0<F4>
<BONDS> 702364<F5>
<COMMON> 1031<F6>
0
1027<F6>
<OTHER-SE> 313194<F7>
<TOTAL-LIABILITY-AND-EQUITY> 1272275
<SALES> 0
<TOTAL-REVENUES> 122225
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 43910<F8>
<LOSS-PROVISION> 9000
<INTEREST-EXPENSE> 33068
<INCOME-PRETAX> 36247
<INCOME-TAX> 14680
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21567
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>CONSISTS OF DIRECT FINANCE LEASE RECEIVABLES OF 255596, LEVERAGED LEASE
RECEIVABLES OF 239613, AND SECURED LOANS OF 231769.
<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 630600, OBLIGATIONS UNDER
CAPITAL LEASES OF 17020, AND NONRECOURSE OBLIGATIONS OF 54744.
<F6>PAR VALUE ONLY.
<F7>CONSISTS OF RETAINED EARNINGS OF 160051, ADDITIONAL PAID-IN CAPITAL OF
151902 AND TRANSLATION ADJUSTMENT OF 1241.
<F8>CONSISTS OF OPERATING LEASE EXPENSE OF 23283, SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES OF 20313, AND OTHER EXPENSES OF 314.
</FN>
</TABLE>
