UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
X ANNUAL 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 Year Ended Commission File Number
December 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 March 15, 1996, Registrant has outstanding 1,031,250 shares of $1 par
value Common Stock.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
J(1)(a) and (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE
REDUCED DISCLOSURE FORMAT.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Document Part of Form 10-K
- ------------ -----------------------
Registration Statement on Form S-1 Part IV Item 14(a)3
filed with the Commission on
December 23, 1981 (file No. 2-75467)
Amendment No. 1 to Form S-1 filed Part IV Item 14(a)3
with the Commission on
February 23, 1982
Amendment No. 2 to Form S-1 filed Part IV Item 14(a)3
with the Commission on March 2, 1982
Form 10-K for the Year Ended Part IV Item 14(a)3
December 31, 1982 filed with the
Commission on March 28, 1983
Form 10-K for the Year Ended Part IV Item 14(a)3
December 31, 1990 filed with the
Commission on March 30, 1991
Form 10-K for the Year Ended Part IV Item 14(a)3
December 31, 1992 filed with the
Commission on March 31, 1993
Form 10-K for the Year Ended Part IV Item 14(a)3
December 31, 1994 filed with the
Commission on March 27, 1995
<PAGE>
PART I
Item 1. Business
- ---------------------
The principal business of GATX Capital Corporation and subsidiaries
(the "Company") is to provide and arrange secured equipment and other
financing, usually in the form of leases and loans. The Company actively
manages its existing portfolio of investments as well as managing portfolios
owned by other institutional investors. GATX Capital Corporation is a
wholly-owned subsidiary of GATX Corporation.
Item 2. Properties
- ----------------------
The Company leases all of its office space and owns no materially important
physical properties other than those related directly to its investment
portfolio. The Company's principal offices are rented under a twelve year
lease expiring in 2003.
Item 3. Legal Proceedings
- ---------------------------------
There are no material legal proceedings pending to which the Company is a
party, other than routine litigation in the normal course of business of the
Company. The Company believes that the outcome of any lawsuit or claim which
is pending or threatened will not have a material adverse effect on its
financial condition or operations.
Item 4. Submission of Matters to a Vote of Security Holders
- -------------------------------------------------------------
Omitted under provisions of the reduced disclosure format.
PART II
Item 5. Market for the Registrant's Common Stock and Related
- -------------------------------------------------------------
Stockholder Matters
- -------------------
Not applicable. All common stock of the Registrant is held by GATX Financial
Services, Inc. (a wholly-owned subsidiary of GATX Corporation). Information
regarding dividends is shown on the consolidated statements of income and
reinvested earnings which are included in Item 8.
<PAGE>
Item 6. Selected Financial Data
- --------------------------------
Omitted under provisions of the reduced disclosure format.
Item 7. Management's Discussion and Analysis of Financial Condition
- --------------------------------------------------------------------
and Results of Operations
- -------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
(dollars in thousands)
ASSET CONCENTRATION
1995 1994
---- ----
Aircraft 39% 45%
Rail 18% 22%
Warehouse and Production 12% 7%
Information Technology 10% 3%
Marine 7% 7%
Golf 4% 5%
Other 10% 11%
OVERVIEW
GATX Capital Corporation and its subsidiaries (GATX Capital or the
Company) provide and arrange secured equipment and other financing, usually in
the form of leases and loans. GATX Capital actively manages its existing
portfolio of investments as well as managing portfolios owned by other
institutional investors.
In 1995, the commercial finance industry continued to be highly
competitive, resulting in lower yields for investors in new lease transactions.
The abundant supply of lessor financing also contributed to increased
competition in the secondary market (the purchase of existing leases or lease
portfolios) and in operating leasing, traditional areas of strength for GATX
Capital. Looking forward, GATX Capital continues to see a highly competitive
market for most new lease transactions. As in the recent past, GATX Capital
intends to focus on those niches of the market or individual transactions where
we have a competitive advantage.
In aircraft, GATX Capital is encouraged by the improved financial
performance of airlines worldwide. The airlines' restraint in placing orders
for new aircraft, combined with renewed growth in passenger traffic and the
retirement of older aircraft, should increase demand for leased aircraft. Lease
rates, particularly for newer, fuel-efficient, narrow-body aircraft are
beginning to trend upward. The Air Group will continue to maintain a worldwide
presence in aircraft finance, particularly in the operating leasing of
narrow-body aircraft. Our strategy for new investments will be, wherever
possible, to find institutional partners so as to reduce risk, and earn fees and
residual shares from managing our partners' investments.
Like other lessors of rail equipment over the last several years, GATX
Capital has benefited from very favorable market conditions. Railroads'
increased efficiency and corresponding increase in freight traffic, and the
tight supply of railcars and locomotives, has contributed to an attractive
supply-demand relationship for leased rail equipment. In 1995, the industry
experienced some isolated softness in demand and lease rates for certain
<PAGE>
railcar types. Nevertheless, the year-end utilization of GATX Capital's
operating lease fleet was approximately 94% for railcars and 96% for
locomotives, and the outlook for this segment of the business remains positive.
The Rail Group's primary focus will be North America, although it will continue
to pursue attractive opportunities in other parts of the world.
GATX Capital is looking to generate significant growth and opportunity
from the Technology Group. With the acquisition of Sun Financial Group, Inc.
(Sun Financial) in late 1995, and through its other affiliates in this area,
GATX Capital believes it is well positioned to provide financing and related
asset management services to the information technology market. This market is
the largest and fastest growing segment of the leasing industry and has evolved
into a core business of GATX Capital. We continue to foresee growing demand
for leased technology equipment, particularly in the client/server segment, as
businesses continue their evolution from mainframes to client/server
architecture. GATX Capital believes that successful lessors in this area will
be those who can best bundle equipment financing with value-added asset
management services.
RESULTS OF OPERATIONS
NET INCOME of $32.6 million in 1995 exceeded net income in 1994 by $7.7
million. The increase in earned income is primarily due to higher gains and
fees from asset remarketing, coupled with increased income from joint ventures.
These were partially offset by lower income from leases and loans. The increase
in total expenses results from higher interest expense and selling, general
and administrative costs. The acquisition of 80% of Sun Financial did not have
a material impact on the Company's net income in 1995.
The increase in net income between 1993 and 1994 was primarily due to
increased lease and interest income and a lower provision for losses, offset by
lower gains on sale of assets and higher operating lease expenses.
LEASE INCOME continues to reflect the results of increasing amounts
invested in equipment placed on operating leases, both on and off the balance
sheet, over the last few years. However, operating lease income in 1995 is
slightly lower than in 1994 because four older wide-body aircraft which had
been generating $8.0 million per year of operating lease income were returned
in early 1995. One of these aircraft was sold in 1995 and the remaining three
are currently held for sale or lease.
The operating lease portfolio generated $21.8 million more income in 1994
than in 1993. Approximately $7.2 million of this increase was due to an
acquisition of a large railcar portfolio which generated a full year's income
in 1994 but only six months of income in 1993.
GAINS from asset sales are primarily realized from the remarketing of
assets in response to market opportunities and at the end of a lease. The
amount of income from this activity fluctuates between periods.
FEE INCOME is generated from managing and remarketing assets on behalf of
others and from providing broker services. The Company's remarketing fees are
generally performance-based and can fluctuate significantly depending on market
conditions and the timing of lease maturities.
FEE INCOME (dollars in thousands)
1993 1994 1995
----- ----- -----
Service and Management $3,620 $3,748 $4,182
Remarketing 262 2,883 9,390
Broker 3,993 2,290 4,187
Other 805 1,190 1,267
<PAGE>
INTEREST INCOME primarily corresponds to the level of investment in
secured loans and movements in interest rates, but is also affected by other
infrequent or nonrecurring events. Income in 1994 is higher than 1995 due to
early loan repayments which generated $2.4 million of interest income from
prepayment premiums, and an additional $3.0 million of interest, which had not
been accrued due to its uncertain nature, was realized from a real estate loan
and an investment in purchased notes.
JOINT VENTURE income has been increasing, as the Company continues to
focus on partnering with other investors. The Company's aircraft leasing joint
venture generated more lease income in 1995 than in 1994, partly because
certain aircraft earned higher than normal rents for a short time during the
year, coupled with the impact of higher interest rates on variable rate leases.
In addition, joint venture income in 1995 included $3.1 million from the final
disposition of a real estate investment.
JOINT VENTURE INCOME
(dollars in thousands)
1993 1994 1995
----- ----- -----
Aircraft joint ventures $5,896 $7,502 $11,329
Technology joint ventures 3,000 2,330 3,216
Rail joint ventures - 204 1,172
Other joint ventures - - 2,877
INTEREST EXPENSE increased between 1994 and 1995 as a result of an overall
increase in the Company's average debt balance related to portfolio growth and
higher interest rates.
OPERATING LEASE EXPENSE in 1994 includes accelerated depreciation on
aircraft of $4.2 million; and during 1995 growth in off-balance sheet financing
resulted in an increase in operating lease rent expense. Operating lease rent
expense increased $6.5 million between 1993 and 1994 because of a large sale
leaseback of railcars in late 1993.
OPERATING LEASE EXPENSE (dollars in thousands)
1993 1994 1995
----- ----- -----
Depreciation $26,026 $33,262 $28,420
Rent expense 6,162 12,669 17,110
Other 3,088 4,692 4,894
SELLING, GENERAL AND ADMINISTRATIVE COSTS increased between 1994 and 1995
mainly due to higher human resource and other administrative costs resulting
from increased business activity.
THE PROVISION FOR LOSSES ON INVESTMENTS, which remained relatively constant
between 1994 and 1995, is based on the current estimate of reserve needs.
BALANCE SHEET
ACQUISITION. Late in 1995, the Company acquired 80% of the stock of
Sun Financial, a technology-focused finance company, for a $26.0 million note,
payable over four years. Assets with a book value of $134.2 million were
acquired and liabilities of $126.7 million were assumed in the transaction.
<PAGE>
THE ALLOWANCE FOR LOSSES ON INVESTMENTS in proportion to the level of
investments, including off-balance sheet assets and after deducting
nonleveraged lease nonrecourse debt, has remained relatively stable over the
last three years. The increase in the dollar balance corresponds to growth in
the portfolio.
ALLOWANCE FOR LOSSES
(dollars in thousands):
1993 1994 1995
----- ----- -----
Allowance for losses
as a percentage of total
investments 6.7% 6.2% 6.5%
Loss reserve balance
$88,200 $82,200 $92,500
CASH FLOW, LIQUIDITY AND CAPITAL RESOURCES
In 1995, the Company generated cash from operations and portfolio proceeds
of $288.8 million, had net borrowings of $76.9 million, and received $47.0
million from sale leasebacks. This cash was used to invest in $385.9 million of
leased equipment, loans and other, and to pay $16.2 million in dividends.
Historically, dividends have been paid on the Company's common stock at the
rate of 50% of net income.
CASH FROM OPERATING ACTIVITIES in 1995 decreased primarily as a result of
the $48.0 million payment made in early 1995 related to the return of four
older wide-body aircraft. Also, more cash was used to pay interest, selling
general and administrative costs, and operating lease rent expense, as
discussed in the results of operations section.
Cash from operating activities was higher in 1994 compared to the prior
year primarily due to the change in the Company's lease portfolio mix. Cash
from operating leases, net of lease rent expense, represented $15.3 million of
the increase in cash from operations. Cash from loan interest increased $7.4
million. The remaining $17.0 million increase between 1994 and 1993 is
primarily due to changes in certain assets and liabilities, which can vary
between periods depending on timing of fundings and payments made to GATX
Corporation.
CASH FROM INVESTING ACTIVITIES was relatively unchanged between 1994 and
1995. Cash from recovery of investments was higher, reflecting higher proceeds
from sales of assets. New investment volume was also higher as this cash was
reinvested in new leases, loans and other investments.
1995 INVESTMENT VOLUME
1995
----
Aircraft 32%
Rail 22%
Warehouse and Production 17%
Information Technology 9%
Golf 6%
Marine 3%
Other 11%
<PAGE>
The decrease in net cash from investing activities between 1993 and 1994 is
due to a higher level of investment in new transactions, net of sale leaseback
transactions, and less cash recovery of investments. Total 1993 investments
included the purchase of a significant rail operating lease fleet which was
subsequently sold and leased back from the purchaser, the proceeds of which are
shown as proceeds from sales of other assets. Recovery of investments decreased
between 1994 and 1993 as a result of lower proceeds from sales of assets,
including real estate, offset by higher principal repayments on loans. Loan
principal received in 1994 included prepayments of two golf loans with total
principal balances of $41.8 million.
LIQUIDITY AND CAPITAL RESOURCES. The Company has approved unfunded
transactions totaling $325.0 million as of December 31, 1995. Once approved for
funding, a transaction may not be completed for various reasons, or the
investment may be shared with partners or sold. Of the total approved at
year-end, the Company expects to fund $256.0 million; including $144.0 million
in 1996, and the remaining $112.0 million thereafter.
The Company expects to fund a portion of future growth through issuance of
medium-term notes, commercial paper, and bankers' acceptances. The commercial
paper and bankers' acceptances are backed by credit agreements from a syndicate
of domestic and international commercial banks. The Company had unused capacity
under these agreements of $137.6 million at December 31, 1995. In addition, the
Company has a $300.0 million shelf registration for Series C medium-term notes,
under which $225.0 million has been issued as of December 31, 1995, and has
registered the issuance of an additional $300.0 million of Series D medium-term
notes. The Company has no firm commitments for the purchase of notes that it
may issue from the unused portions of these shelf registration statements.
Certain lease transactions are financed by obtaining nonrecourse loans
equal to the present value of the rental stream. The interest rates used to
discount the rentals are based on the credit quality of the lessee and the size
and term of the lease. The Company uses a wide variety of nonrecourse lenders
to ensure adequate and reliable access to the credit markets.
The Company ensures a stable margin over its cost of funds by managing the
relationship of its fixed and floating rate lease and loan investments to its
fixed and floating rate borrowing. In order to meet this objective, derivative
financial instruments, primarily interest rate swaps, are used to modify the
interest characteristics of the Company's debt. The Company manages the credit
risk of counterparties by dealing only with institutions that it considers
financially sound and by avoiding concentrations of risk with a single
counterparty. Fluctuations in interest rates may impact earnings, either
negatively or positively, depending on the Company's net floating rate asset or
debt position. At December 31, 1995, the Company had $10.5 million more
floating rate assets than floating rate debt.
Total debt financing and stockholder's equity both increased to bring the
Company's debt to equity ratio from 2.58:1 in 1994 to 2.78:1 in 1995. GATX
Capital can borrow an additional $436.3 million and still meet the 4:1 leverage
ratio defined in its credit agreements.
<PAGE>
Item 8. Financial Statements and Supplementary Data
- ----------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
Board of Directors
GATX Capital Corporation
We have audited the consolidated financial statements of GATX Capital
Corporation (a wholly-owned subsidiary of GATX Corporation) and subsidiaries
listed in the accompanying index to financial statements (Item 14(a)). These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements listed in the accompanying index to
financial statements (Item 14(a)) present fairly, in all material respects,
the consolidated financial position of GATX Capital Corporation and
subsidiaries at December 31, 1995 and 1994 and the consolidated results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
San Francisco, California
January 23, 1996
<PAGE>
GATX CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND REINVESTED EARNINGS
Year ended December 31, (in thousands) 1995 1994 1993
- -------------------------------------- --------- --------- ---------
EARNED INCOME
Leases $139,712 $143,639 $125,457
Gain on sale of assets 33,123 21,444 44,434
Fees 19,026 10,111 8,680
Interest 23,179 27,085 19,666
Investment in joint ventures 18,594 9,242 8,383
Other 2,875 4,511 5,777
--------- --------- --------
236,509 216,032 212,397
--------- --------- ---------
EXPENSES
Interest 68,396 62,744 65,358
Operating leases 50,424 50,621 35,277
Selling, general & administrative 43,517 39,296 37,458
Provision for losses on investments 18,000 19,000 29,000
Other 828 735 2,418
--------- --------- ---------
181,165 172,396 169,511
--------- --------- ---------
Income before income taxes 55,344 43,636 42,886
Provision for income taxes 22,740 18,785 21,361
--------- --------- ---------
NET INCOME 32,604 24,851 21,525
--------- --------- ---------
Reinvested earnings at
beginning of year 146,036 133,570 123,771
Dividends paid to stockholder (16,240) (12,385) (11,726)
--------- --------- ---------
REINVESTED EARNINGS AT END OF YEAR $162,400 $146,036 $133,570
========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
As of December 31, (in thousands) 1995 1994
- ------------------------------------------- ----------- -----------
ASSETS
Cash and cash equivalents $ 19,905 $ 9,407
Investments:
Direct financing leases 406,950 245,441
Leveraged leases 220,407 252,651
Operating lease equipment-net of depreciation 315,707 295,273
Secured loans 239,873 231,225
Investment in joint ventures 205,292 202,367
Assets held for sale or lease 28,230 24,320
Other investments 77,604 20,373
Investment in future residuals 23,223 13,157
Allowance for losses on investments (92,489) (82,206)
----------- -----------
Total investments 1,424,797 1,202,601
Due from GATX Corporation 44,337 42,515
Other assets 29,344 15,067
----------- -----------
TOTAL ASSETS $1,518,383 $1,269,590
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued interest $ 15,053 $ 14,987
Accounts payable and other liabilities 80,045 108,635
Debt financing:
Commercial paper and bankers' acceptances 130,600 124,834
Notes payable 54,883 14,021
Obligations under capital leases 15,802 19,431
Senior term notes 679,600 613,600
----------- -----------
Total debt financing 880,885 771,886
Nonrecourse obligations 193,446 55,270
Deferred income 4,392 4,185
Deferred income taxes 27,562 15,390
Stockholder's equity:
Convertible preferred stock, par value $1.00 1,027 1,027
Authorized - 4,000,000 shares
Issued and outstanding -
1,027,050 shares in both years
Common stock, par value $1.00 1,031 1,031
Authorized - 2,000,000 shares
Issued and outstanding -
1,031,250 shares in both years
Additional paid-in capital
-convertible preferred stock 123,973 123,973
-common stock 27,929 27,929
Reinvested earnings 162,400 146,036
Foreign currency translation adjustment 640 (759)
----------- -----------
Total stockholder's equity 317,000 299,237
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $1,518,383 $1,269,590
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31, (in thousands) 1995 1994 1993
- -------------------------------------- --------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 32,604 $ 24,851 $ 21,525
Reconciliation to net cash
provided by operating
activities:
Provision for losses on
investments 18,000 19,000 29,000
Depreciation expense 27,360 33,341 29,052
Provision for deferred
income taxes 15,065 6,673 6,826
Gain on sale of assets (33,123) (21,444) (44,434)
Joint venture income (18,594) (9,242) (8,383)
Changes in assets and
liabilities:
Accrued interest, accounts
payable, and other
liabilities (40,219) 61,836 6,254
Due from GATX Corporation (1,822) 123 (6,984)
Deferred income (205) (48,072) 1,474
Other - net 8,220 (6) (6,994)
--------- --------- ---------
Net cash flows provided by
operating activities 7,286 67,060 27,336
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in leased equipment,
net of nonrecourse borrowings
for leveraged leases (256,137) (161,341) (215,974)
Loans extended to borrowers (84,050) (101,500) (39,390)
Other investments (45,751) (16,285) (46,199)
--------- --------- ---------
Total investments (385,938) (279,126) (301,563)
--------- --------- ---------
Lease rents received, net of
earned income and leveraged
lease nonrecourse debt service 51,960 24,234 33,893
Loan principal received 56,042 88,415 53,903
Proceeds from sale of assets 139,338 75,697 101,429
Proceeds from disposition of
real estate 2,020 10,475 31,963
Joint venture investment recovery 32,116 23,564 24,603
--------- --------- ---------
Recovery of investments 281,476 222,385 245,791
--------- --------- ---------
Proceeds from sales of other assets 46,975 - 90,604
--------- --------- ---------
Net cash flows (used in)
provided by investing
activities (57,487) (56,741) 34,832
--------- --------- ---------
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in
short-term borrowings 13,425 16,920 (76,156)
Proceeds from issuance of
long-term debt 170,000 55,000 120,000
Repayment of long-term debt (104,000) (66,250) (91,347)
Dividends paid to stockholder (16,240) (12,385) (11,726)
Other financing activities (2,486) (7,147) (2,816)
--------- --------- ---------
Net cash flows provided by
(used in) financing
activities 60,699 (13,862) (62,045)
Net increase (decrease) in cash
and cash equivalents 10,498 (3,543) 123
Cash and cash equivalents
at beginning of the year 9,407 12,950 12,827
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT DECEMBER 31 $ 19,905 $ 9,407 $ 12,950
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Income taxes paid to parent $ 13,473 $ 15,557 $ 25,707
Interest paid $ 68,645 $ 61,918 $ 65,861
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
GATX Capital Corporation and its subsidiaries (the "Company") provide and
arrange secured equipment and other financing, usually in the form of leases
and loans. The Company actively manages its existing portfolio of investments
as well as managing portfolios owned by other institutional investors. GATX
Capital Corporation is a wholly-owned subsidiary of GATX Corporation.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
after elimination of intercompany accounts and transactions. Investments in
minority-owned or non-controlled affiliated companies are accounted for using
the equity method.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
LEASE AND LOAN ORIGINATION COSTS
Initial direct costs for originated direct financing and leveraged leases
(collectively, financing leases) are capitalized and amortized as an adjustment
of yield over the term of the lease. For operating leases, initial direct costs
are deferred and amortized on a straight-line basis over the lease term. Loan
origination fees are netted with loan costs, and are deferred and recognized
over the term of the loan as an adjustment to interest income.
RESIDUAL VALUES
Residual values of leased equipment are estimated at the inception of the
lease. The Company reviews these values at least annually. Declines, which are
other than temporary, in estimated residual values for financing leases are
recognized as an immediate charge to income. Declines, which are other than
temporary, in estimated residual values for operating leases are recognized as
adjustments to depreciation expense over the shorter of the useful life of the
asset or the remaining term of the lease.
GOODWILL
The excess of cost over the fair value of the net assets of businesses
acquired is classified as goodwill and is included in other assets on the
balance sheet. Goodwill is amortized on a straight-line basis over periods
ranging from 10 to 25 years. The Company continually evaluates the existence of
goodwill impairment on the basis of the recoverability of goodwill from
projected undiscounted net cash flows of the related business.
DEFERRED INCOME
Deferred income primarily represents income related to operating leases, where
the Company is the lessee, for which the earnings process has not been
completed. The income is recognized on a straight-line basis over the terms of
the operating leases.
<PAGE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles necessarily requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements as well as revenues and
expenses during the reporting period. Actual results, when ultimately realized,
could differ from those estimates.
NEW ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF. This statement requires the recording of impairment
losses on long-lived assets used in operations when indicators of impairment
are present and when the undiscounted cash flows estimated to be generated by
those assets are less than the assets' carrying amounts. The statement also
requires that assets held for disposal be carried at the lower of the carrying
amount or fair value less cost to sell.
Depreciation on these assets is discontinued. For this purpose, management
must commit to a plan to sell or abandon the asset and it must be actively
marketed for sale in the near future. Generally, assets classified herein as
"held for sale or lease" are being marketed for re-lease, as well as sale, and
will not be considered as "assets to be disposed of" under the FAS 121 criteria.
Those instances where assets are "held for sale" are not material to these
financial statements. The Company will adopt Statement 121 in the first quarter
of 1996 and, based on current circumstances, does not believe the effect of
adoption will be material.
INVESTMENTS
DIRECT FINANCING LEASES
The Company's investment in direct financing leases includes lease contracts
receivable plus the estimated residual value of the equipment at the lease
termination date, less unearned income. Lease contracts receivable includes the
total rent to be received over the term of the lease reduced by rent already
collected. Initial unearned income is the amount by which the lease contract
receivable plus the estimated residual value exceeds the initial investment in
the leased equipment at lease inception. The remaining unearned income is
amortized to lease income over the lease term in a manner which produces a
constant rate of return on the net investment in the lease.
The components of the Company's investment in direct financing leases are
as follows:
At December 31, 1995 1994
- -------------------------- --------- ---------
Lease contracts receivable $451,489 $289,565
Estimated residual value 103,301 82,940
Unearned income (147,840) (127,064)
--------- ---------
Net investment $406,950 $245,441
========= =========
<PAGE>
LEVERAGED LEASES
Financing leases, which are financed principally with nonrecourse
borrowings at lease inception and which meet certain criteria, are accounted
for as leveraged leases. Leveraged lease contracts receivable are stated net of
the related nonrecourse debt service, which includes unpaid principal and
aggregate remaining interest on such debt. Unearned income represents the
excess of anticipated cash flows (including estimated residual values and after
taking into account the related debt service) over the Company's investment in
the lease.
The components of the Company's net investment in leveraged leases are as
follows:
At December 31, 1995 1994
- --------------------------------- --------- ---------
Lease contracts receivable $356,330 $547,961
Nonrecourse debt service (157,771) (301,259)
--------- ---------
Net receivable 198,559 246,702
Estimated residual value 130,391 157,736
Unearned income (108,543) (151,787)
--------- ---------
Investment in leveraged leases 220,407 252,651
Deferred taxes arising from leveraged leases (54,180) (63,610)
--------- ---------
Net investment $166,227 $189,041
========= =========
OPERATING LEASES
Leases that do not qualify as direct finance or leveraged leases are accounted
for as operating leases. Most rental income is reported on a straight-line
basis over the term of the lease. Rental income on certain leases is based on
equipment usage and is recognized when received. Usage rents in 1995 totaled
$3.1 million. Equipment subject to operating leases is stated at cost less
accumulated depreciation plus accrued rent and is generally depreciated using
the straight-line method. Aircraft and rail equipment are depreciated over
their useful lives, while other equipment is generally depreciated over the
term of the lease. Estimated useful lives are 25 to 30 years for aircraft, 37.5
years for railcars, and 27.5 years for locomotives. Depreciation expense of
$27.4 million, $33.3 million and $26.0 million is included in operating lease
expense for 1995, 1994 and 1993, respectively.
Major classes of equipment on operating leases are as follows:
At December 31, 1995 1994
- ------------------------ --------- ---------
Aircraft $217,065 $239,200
Rail equipment 92,448 69,933
Other 46,873 25,945
--------- ---------
Total cost 356,386 335,078
Accumulated depreciation (49,557) (47,791)
--------- ---------
Net book value 306,829 287,287
Accrued rent and other 8,878 7,986
--------- ---------
Net investment $315,707 $295,273
========= =========
<PAGE>
EARNED INCOME FROM LEASES
The sources of earned income from leases are as follows:
At December 31, 1995 1994 1993
- ----------------------- --------- --------- ---------
Direct financing leases $ 31,491 $ 28,612 $ 32,510
Leveraged leases 25,013 25,894 25,606
Operating leases 83,208 89,133 67,341
--------- --------- ---------
Total earned income $139,712 $143,639 $125,457
========= ========= =========
The tax expense related to leveraged lease income was $9.4 million, $9.3
million and $10.0 million in 1995, 1994 and 1993, respectively.
SECURED LOANS
Investments in secured loans are stated at the principal amount
outstanding plus accrued interest. The loans are collateralized by equipment,
golf courses, or real estate. A loan is classified as impaired when it is
probable, based on normal portfolio review procedures, that the Company will be
unable to collect all amounts due under the loan agreement. Most loans in the
portfolio are collateral dependent and, if impaired, are measured using the
fair value of the collateral. If the measure of the impaired loan is less than
the recorded investment in the loan, an adjustment to the allowance for losses
on investments is made.
Significant changes in the fair value of the collateral, subsequent to the
initial measure of impairment, are reflected as adjustments to the allowance
for losses on investments. The average balance of impaired loans was $14.3
million, $8.7 million and $24.3 million in 1995, 1994 and 1993, respectively.
The types of loans in the Company's portfolio are as follows:
At December 31, 1995 1994
- --------------- --------- ---------
Commercial $137,248 $105,550
Golf courses 73,835 71,924
Real estate 28,790 53,751
--------- ---------
Net investment $239,873 $231,225
========= =========
Impaired loans $ 23,800 $ 4,700
========= =========
<PAGE>
FUTURE LEASE AND LOAN RECEIVABLES
As of December 31, 1995, financing lease receivables (net of nonrecourse
debt service related to leveraged leases), minimum future rentals under
operating leases and secured loan principal by year due are as follows:
Financing Operating
Lease Lease Loan
Year Due Receivables Receivables Principal
- -------- ----------- ----------- ---------
1996 $152,546 $ 73,492 $ 39,847
1997 118,551 61,163 28,403
1998 85,985 54,267 23,159
1999 67,133 44,070 21,933
2000 59,838 29,529 7,474
After 2000 165,995 76,006 119,057
--------- --------- ---------
Total $650,048 $338,527 $239,873
========= ========= =========
INVESTMENT IN JOINT VENTURES
Investments in joint ventures include aircraft leasing, rail equipment
leasing, information technology sales, services and equipment leasing, and
asset residual guarantee ventures. These joint ventures are accounted for using
the equity method, as dictated by the Company's effective ownership interest
and/or level of management control. Original investments are recorded at cost
and are adjusted by the Company's share of undistributed earnings or losses
and reduced by cash distributions.
Unaudited combined and condensed information for affiliated companies,
which are accounted for using the equity method, is shown below on a 100%
basis. The Company makes certain adjustments to pre-tax income as reported by
some of the joint ventures prior to the Company's calculation of its share of
that pre-tax income in order to provide consistency with the Company's
accounting policies. The information shown below has been restated to reflect
these adjustments. Pre-tax income has been increased by $34.2 million, $27.3
million and $20.8 million in 1995, 1994 and 1993, respectively, to reverse
interest expense recognized on loans to a joint venture from its partners; the
Company records these loans as equity contributions. The partner loan balances
of $457.0 million, $472.2 million and $482.3 million at December 31, 1995, 1994
and 1993, respectively, have been reclassified from long-term liabilities to
partners' equity. This results in a difference between the carrying value of
the Company's investment in the joint venture and the Company's equity in the
underlying net assets as reported by the joint venture. Pre-tax income is
presented because the majority of the joint ventures are partnerships which do
not provide for income taxes on their separate financial statements. Consistent
with the Company's unclassified balance sheet, the joint venture balance sheets
are unclassified as to current and non-current assets.
Year ended December 31, 1995 1994 1993
- ----------------------- ----------- ----------- -----------
Revenues $ 292,989 $ 282,352 $ 224,179
Pre-tax income 51,517 41,510 17,241
Total assets 1,310,062 1,257,794 1,161,123
Long-term liabilities 442,514 441,625 382,207
Total liabilities 585,532 558,679 481,846
Equity 724,530 699,115 679,277
<PAGE>
ASSETS HELD FOR SALE OR LEASE
Assets held for sale or lease consist of equipment which has been
repossessed or returned by the lessee after normal lease maturity, and real
estate upon which the Company foreclosed when the debtors owning the property
were unable to discharge their obligations or which has been recorded as an
in-substance foreclosure. Upon foreclosure, properties are recorded at the lower
of their then carrying amount or fair market value. Generally, depreciation is
recorded on a straight-line basis for aircraft available for sale or lease
which are held for more than six months.
The major classes of assets held for sale or lease are as follows:
At December 31, 1995 1994
- --------------- -------- --------
Aircraft $22,552 $10,057
Rail 8,092 -
Real estate 4,687 16,945
Other 1,520 3,375
--------- ---------
Total cost 36,851 30,377
Accumulated depreciation (8,621) (6,057)
--------- ---------
Net investment $28,230 $24,320
========= =========
OTHER INVESTMENTS
Progress payments largely consist of payments made toward the construction
of steel production equipment. Interest capitalized on progress payments was
$1.6 million in 1995.
In a 1995 noncash transaction, the Company reacquired a majority interest
in a cogeneration facility which was formerly accounted for using the equity
method. The investment balance is fully consolidated at December 31, 1995. The
balance at December 31, 1995 is net of $9.2 million of accumulated
depreciation. The facility is financed by a nonrecourse obligation having a
balance of $37.7 million at December 31, 1995.
The components of other investments are as follows:
At December 31, 1995 1994
- --------------------------- --------- ---------
Progress payments and other $ 31,934 $ 3,750
Cogeneration facility 31,100 -
Real estate development 14,570 16,623
--------- ---------
Total investment $ 77,604 $ 20,373
========= =========
INVESTMENT IN FUTURE RESIDUALS
Investment in future residuals primarily consists of purchased interests
in the residual values of equipment leased by others. In general, purchased
residual interests are recorded at cost. The difference between initial cost
and realized value is recognized upon disposition.
ALLOWANCE FOR LOSSES ON INVESTMENTS
The Company maintains an allowance for losses on investments through
periodic provisions. The purpose of the allowance is to provide for credit and
collateral losses which are inherent in the investment portfolio. The allowance
is at a level deemed adequate by management considering an assessment of
overall risks and probable losses in the portfolio as a whole and a review of
<PAGE>
historical experience. It is the Company's policy to charge off amounts which,
in the opinion of management, are not recoverable from obligors or the
disposition of collateral. The Company reviews the recoverability of all
investments, both on and off the balance sheet, at least annually. Factors
considered include a customer's payment history and financial position, and the
value of the underlying collateral determined by reference to internal and
external equipment knowledge and resources.
Activity within the allowance for losses on investments is as follows:
Year ended December 31, 1995 1994 1993
- ----------------------- -------- -------- ---------
Beginning balance $82,206 $88,193 $101,323
Provision 18,000 19,000 29,000
Charges to allowance (11,734) (27,480) (44,180)
Recoveries and other 4,017 2,493 2,050
-------- -------- ---------
Balance at end of year $92,489 $82,206 $ 88,193
======== ======== =========
ACQUISITION
On November 9, 1995, the Company entered into an agreement to purchase the
stock of Sun Financial Group, Inc. (Sun Financial), a technology-focused
finance company, for a $26.0 million note, payable over four years. The
agreement calls for the exchange of 80% of Sun Financial's stock on November 9,
1995, with the remaining 20% of the shares to be exchanged on December 31,
1999. The Company may be required to make an additional payment in 1999,
contingent upon certain financial measures. The seller remains an executive
officer of the company. The acquisition, including any payment with respect to
the remaining 20% made in the future, is being accounted for using the purchase
method.
Assets with a book value of $134.2 million were acquired and liabilities
of $126.7 million were assumed in this noncash transaction. Sun Financial's
results of operations for the two months ended December 31, 1995 are fully
consolidated in the Company's financial statements. The minority interest is
not material and is included in other liabilities in the accompanying balance
sheet.
Unaudited pro forma consolidated earned income for the Company, including
Sun Financial, as if the acquisition of Sun Financial had occurred at the
beginning of 1995 and 1994 is $269.7 million and $248.1 million, respectively.
Pro forma consolidated net income including the results for Sun Financial is
not materially different from consolidated net income.
DEBT AND CAPITAL LEASE FINANCING
SHORT-TERM BORROWING
At December 31, 1995, the Company has commitments under its credit
agreements with a group of banks for revolving credit loans aggregating up to
$282.5 million. The credit agreements contain various covenants which include,
among other factors, minimum net worth, restrictions on dividends and
requirements to maintain certain financial ratios. At December 31, 1995, these
covenants limit the Company's ability to transfer net assets to its parent to
no more than $107.4 million. The revolving commitments are available for
borrowing, repaying and reborrowing at any time and contain various pricing
options. The Company pays a facility fee on one facility and a commitment fee
on the unused commitment of the other facility, but is not obligated to
maintain compensating balances. At December 31, 1995, $137.6 million of the
commitments in excess of amounts backing commercial paper and bankers'
acceptances are available and unused.
<PAGE>
The Company obtains short-term financing by issuance of commercial paper
and bankers' acceptances through its dealers in the United States and Canada,
and from notes payable to banks. At December 31, 1995 these borrowings, which
total $185.5 million, are backed by or are under the principal credit
agreements. The weighted average interest rate at the end of the period was
6.20% and 6.23% as of December 31, 1995 and 1994, respectively.
Notes payable include $26.0 million due to the seller of Sun Financial,
who remains an executive officer of the Company.
At December 31, 1995 1994
- ---------------------------------------------- ----------- -----------
VARIABLE RATE
Medium-Term Notes due 1996-1999 $ 40,000 $ 60,000
Senior Bank Note due 1995 - 10,000
----------- -----------
Subtotal - variable rate 40,000 70,000
----------- -----------
FIXED RATE
5.45% - 10.20% Medium-Term Notes due 1996-2005 539,600 443,600
9.375% Senior Notes due 1997 50,000 50,000
10% Senior Note due 1996 50,000 50,000
----------- -----------
Subtotal - fixed rate 639,600 543,600
----------- -----------
Total senior term notes $ 679,600 $ 613,600
=========== ===========
Interest on variable rate senior term notes is calculated using the LIBOR.
The Company has significant amounts of floating rate lease and loan
investments, giving rise to market risks from changes in interest rates.
Derivative financial instruments are used to reduce those risks. The Company
enters into interest rate swap agreements to modify the interest
characteristics of its outstanding debt from a fixed to a floating basis. These
agreements involve the receipt of fixed rate amounts in exchange for floating
rate interest payments over the life of the agreement without an exchange of
the underlying principal amount. The differential to be paid or received is
calculated based on the notional amounts and a widely used floating rate index
(LIBOR). It is accrued as interest rates change and is recognized as an
adjustment to interest expense related to the debt. As a result of interest
rate swaps, interest expense was higher by $0.9 million in 1995 and was reduced
by $2.2 million and $3.1 million in 1994 and 1993, respectively. The related
amount payable to or receivable from counterparties is included in accrued
interest.The fair values of the swap agreements are not recognized in the
financial statements. The total notional principal of all interest rate
swaps as of December 31, 1995 was $235.0 million, with termination dates
ranging from 1996 to 2005.
<PAGE>
NONRECOURSE OBLIGATIONS
Nonrecourse obligations consist primarily of debt collateralized by the
assignment of leases and a security interest in the underlying equipment, a
cogeneration facility, and real estate projects. The carrying amount of this
collateral at December 31, 1995 is $227.9 million. The nonrecourse obligation
associated with one aircraft will become recourse to the Company to the extent
of the then remaining debt balance in 2002 when a balloon payment of $7.3
million is due.
Nonrecourse obligations include the following:
At December 31, 1995 1994
- ------------------------------- --------- ---------
VARIABLE RATE
Notes due 2002 $ 43,066 $ 39,378
Notes due 2000 3,285 3,535
Other 6,282 5,908
--------- ---------
Subtotal - variable rate 52,633 48,821
--------- ---------
FIXED RATE
5.10%-11.08% Notes due 1996 - 2000 103,139 -
8.17% Note due 2013 37,674 -
8.25% Note due 1996 - 6,449
--------- ---------
Subtotal - fixed rate 140,813 6,449
--------- ---------
Total nonrecourse obligations $193,446 $ 55,270
========= =========
Interest on variable rate nonrecourse obligations is calculated using the Prime
rate or LIBOR.
MATURITIES
Maturities of debt financings, obligations under capital leases and
nonrecourse obligations are presented in the following table. Imputed interest
on capital leases totaled $4.5 million at December 31, 1995. This table assumes
that the commercial paper, notes payable and bankers' acceptances are retired
by the unused revolving commitments.
Converted Obligations Total
Revolving Senior Under Capital Debt Nonrecourse
Year Due Credit Loans Term Notes Leases Financing Obligations
- ---------- ------------ ---------- ------------- --------- -----------
1996 $ - $105,000 $ 3,627 $108,627 $ 47,814
1997 - 105,000 2,067 107,067 36,963
1998 185,483 85,000 1,378 271,861 24,198
1999 - 83,600 1,477 85,077 15,630
2000 - 79,000 1,660 80,660 12,653
After 2000 - 222,000 5,593 227,593 56,188
--------- --------- ---------- --------- ---------
Total $185,483 $679,600 $ 15,802 $880,885 $193,446
========= ========= ========== ========= =========
<PAGE>
OBLIGATIONS UNDER CAPITAL LEASES
Obligations under capital leases consist of equipment subject to capital
lease financing which has been subleased. Such subleases are classified as
direct financing leases having carrying values of $15.9 million and $18.9
million at December 31, 1995 and 1994, respectively. Minimum future lease
payments receivable under the subleases aggregate $20.7 million receivable over
a period ending in 2003. The obligations under capital leases and the related
subleases have the same term and call for fixed rental payments. The Company
has purchase and renewal options under the leases which allow it to
accommodate similar options exercisable by sublessees.
OPERATING LEASE OBLIGATIONS
The Company is a lessee under certain aircraft, rail equipment, and office
leases which are classified as operating leases. Total rental expense was $20.5
million, $16.1 million and $9.8 million in 1995, 1994 and 1993, respectively.
The aircraft and rail equipment under these leases have been subleased,
generating lease income of $23.8 million, $17.4 million and $12.8 million in
1995, 1994 and 1993, respectively.
During 1995, the Company entered into a transaction for the sale leaseback
of an aircraft. The net book value of the aircraft is not shown on the balance
sheet.
Future rentals payable by the Company through 2019 and sublease
receivables under noncancellable operating leases through 2008 are as
follows:
Obligations Operating
Year Due Under Sublease Lease Receivables
- ---------- -------------- -----------------
1996 $ 20,591 $ 22,263
1997 19,973 19,880
1998 20,079 18,108
1999 20,200 17,295
2000 23,175 10,948
After 2000 200,327 58,717
--------- ---------
Total $304,345 $147,211
========= =========
CAPITAL STOCK
As of December 31, 1995 and 1994, all issued common and preferred stock of
the Company was held by GATX Corporation. The preferred stock is convertible to
common stock on a one-for-one basis and is redeemable for $100 per share, at
the option of the issuer. Dividends on preferred stock are payable on a
share-for-share basis at the same rate per share as common stock when and as
declared by the board of directors.
INCOME TAXES
GATX Corporation files a consolidated federal income tax return which
includes the Company. Under an intercompany tax agreement, the parent
reimburses the Company to the extent the Company's operating losses and
investment tax credits are utilized in the consolidated federal return. Should
the Company generate taxable income, the agreement provides for payment by the
Company of any resulting additional federal tax liability incurred by GATX
Corporation.
<PAGE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The Company has recorded
these differences in its deferred tax accounts, intercompany accounts
receivable, and equity accounts. In exchange for cash payments, GATX
Corporation has assumed a portion of GATX Capital's deferred tax liability.
GATX Corporation recontributed these amounts through the purchase of
Convertible Preferred Stock, currently outstanding, over the period from 1975
to 1985. In addition, GATX Capital has an account receivable of $46.1 million
from GATX Corporation resulting from the reassumption of a portion of these
deferred taxes through December 31, 1994. Offsetting this receivable is $1.8
million due to GATX Corporation which consists of amounts owed for dividends,
overhead, and taxes pursuant to the intercompany tax agreement.
Significant components of the Company's deferred tax liabilities and assets
are as follows:
At December 31, 1995 1994
- ----------------------------------- --------- ---------
DEFERRED TAX LIABILITIES
Leveraged leases $ 50,762 $ 63,610
Other leases 79,360 51,158
Investment in joint ventures 22,684 15,505
Alternative minimum tax adjustment 2,839 1,318
Other 12,259 3,388
--------- ---------
Total deferred tax liabilities $167,904 $134,979
--------- ---------
DEFERRED TAX ASSETS
Allowance for losses on investments $ 36,279 $ 32,245
Loans 9,653 2,488
Other 15,469 5,915
--------- ---------
Total deferred tax assets 61,401 40,648
--------- ---------
Net deferred tax liabilities $106,503 $ 94,331
========= =========
TAX ACCOUNT BALANCES
Deferred income tax liabilities $ 27,562 $ 15,390
Preferred stock and related
additional paid-in capital 125,000 125,000
Due from GATX Corporation (46,059) (46,059)
--------- ---------
Net deferred tax liabilities $106,503 $ 94,331
========= =========
<PAGE>
The provision for income taxes consists of the following:
Year ended December 31, 1995 1994 1993
- ----------------------- -------- -------- --------
CURRENT
Federal $ 7,389 $11,436 $12,245
State and local 1,513 (44) 405
Foreign (1,227) 719 1,885
-------- -------- --------
Total current 7,675 12,111 14,535
-------- -------- --------
DEFERRED
Federal 10,515 2,684 4,579
State and local 2,175 2,778 2,176
Foreign 2,375 1,212 71
-------- -------- --------
Total deferred 15,065 6,674 6,826
-------- -------- --------
Total provision for income taxes $22,740 $18,785 $21,361
======== ======== ========
A reconciliation between the federal statutory tax rate and the Company's
effective tax rate is shown below:
Year ended December 31, 1995 1994 1993
- ----------------------------------- -------- -------- --------
Federal statutory income tax rate 35.0% 35.0% 35.0%
State tax provision, net of
federal tax benefit 4.1% 4.1% 3.9%
Impact of federal tax rate increase - - 3.7%
Sale of consolidated subsidiary - - 1.3%
Other 2.0% 3.9% 5.9%
-------- -------- --------
Effective tax rate 41.1% 43.0% 49.8%
======== ======== ========
Income before income taxes from foreign operations was $2.5 million, $1.8
million and $3.0 million in 1995, 1994 and 1993, respectively.
Federal income taxes have not been provided on the undistributed earnings
of foreign subsidiaries and affiliates which the Company intends to permanently
reinvest in these foreign operations. The cumulative amount of such earnings
was $14.3 million at December 31, 1995.
<PAGE>
FOREIGN OPERATIONS
The Company provides or arranges equipment financing for non-affiliated
entities both inside and outside the United States. In the following table,
export income pertains to revenue generated by domestic operations through
transactions with customers in foreign countries. Some of these transactions
are denominated in foreign currencies. Information designated as foreign in
the following table pertains to operations that are located outside of the
United States.
Year ended December 31, 1995 1994 1993
- ----------------------- ----------- ----------- -----------
EARNED INCOME
Domestic $ 191,343 $ 179,709 $ 171,047
Export 28,537 26,436 29,866
Foreign 17,591 10,505 11,851
Eliminations (962) (618) (367)
----------- ----------- -----------
$ 236,509 $ 216,032 $ 212,397
=========== =========== ===========
NET INCOME
United States $ 24,246 $ 20,596 $ 16,590
Foreign 8,306 4,192 4,929
Eliminations 52 63 6
----------- ----------- -----------
$ 32,604 $ 24,851 $ 21,525
=========== =========== ===========
TOTAL ASSETS
United States $1,318,020 $1,038,762 $1,050,117
Foreign 207,779 236,828 213,169
Eliminations (7,416) (6,000) (6,688)
----------- ----------- -----------
$1,518,383 $1,269,590 $1,256,598
=========== =========== ===========
The Company has entered into currency swap agreements to protect itself
from the risk that the eventual dollar net cash in-flow from foreign
denominated investments will be adversely affected by changes in exchange
rates. The currency swaps exchange U.S. borrowings of $31.2 million for
liabilities of $42.3 million Canadian dollars, with termination dates ranging
from 2001 to 2003.
RETIREMENT BENEFITS
The Company, exclusive of Sun Financial, participates in the GATX
Corporation Non-Contributory Pension Plan for Salaried Employees (the "Plan"),
a defined benefit pension plan with GATX Corporation covering substantially all
employees. Sun Financial employees participate in a 401(k) retirement plan.
Pension cost for each GATX subsidiary included in the Plan is determined by
independent actuaries. However, accumulated Plan obligation information, Plan
assets and the components of net periodic pension costs pertaining to each
subsidiary have not been separately determined. Contributions to the Plan made
by the Company through GATX Corporation and pension expense allocated to the
Company are not material to these financial statements.
<PAGE>
In addition to pension benefits, the Company provides other postretirement
benefits, including limited health care and life insurance benefits, for
certain retired employees who meet established criteria. Most domestic
employees, exclusive of Sun Financial employees, are eligible if they retire
from the Company with immediate pension benefits under the Plan. The net
periodic cost and accrued liability are not material to these financial
statements.
COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS OF CREDIT RISK
At December 31, 1995, the Company's investment portfolio consists of 39%
commercial jet aircraft, 18% rail equipment, 13% warehouse and production
equipment, 10% information technology equipment, 7% marine equipment, 4% golf
courses, and 9% other equipment. The portfolio is made up of approximately 800
financing contracts with 600 customers.
The Company's backlog was $325.0 million and $191.6 million, at December
31, 1995 and 1994, respectively.
The Company is a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit and
financial guarantees. Such instruments involve, to varying degrees, elements of
credit and market risk which are not recognized in the consolidated balance
sheets. The contractual amounts of the instruments are shown below:
At December 31, 1995 1994
- ------------------------- -------- -------
Guarantees $131,144 $99,094
Stand-by loan commitments $ - $ 5,800
Guarantees are commitments issued by the Company to guarantee the value of
an asset at the end of the lease, or to guarantee performance of an affiliate
to a third party. These commitments have fixed expiration dates ranging from
1996 to 2015. Since many of the assets on lease are expected to retain their
value, the total amount guaranteed does not necessarily represent future cash
requirements.
The Company uses essentially the same credit policies in making
commitments and conditional obligations as it does for funded transactions. All
investments are subject to normal credit policies, collateral requirements and
senior management review. For example, lease provisions require lessees to meet
certain standards for maintenance and return conditions, and provide for
repossession upon default. Loans are generally secured by equipment or real
estate, and may involve guarantees or other assets as collateral. All
commitments having off-balance sheet risk are reviewed at least annually for
potential exposure using the same criteria discussed in the Allowance for
Losses on Investments footnote, and the allowance is adjusted accordingly.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Generally accepted accounting principles require disclosure of the
estimated fair value of the Company's financial instruments, excluding lease
transactions accounted for under SFAS 13. Fair value is a subjective and
imprecise measurement that is based on assumptions and market data.
The use of different market assumptions and valuation methodologies may
have a material effect on the estimated fair value amounts. Accordingly,
management cannot provide assurance that the fair values presented are
indicative of the amounts that the Company could realize in a current market
exchange.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
<PAGE>
SHORT-TERM FINANCIAL INSTRUMENTS
The carrying amounts included on the balance sheet approximate fair value
because of the short maturity of these instruments. This approach applies to
cash and cash equivalents, accrued interest, accounts payable, commercial
paper, and bankers' acceptances.
SECURED LOANS
The fair values of the fixed rate loans are estimated using discounted
cash flow analysis, at interest rates currently offered for loans with similar
terms to borrowers of similar credit quality. The fair values of the variable
rate secured loans are assumed to be equal to their carrying values.
SENIOR NOTES AND NONRECOURSE OBLIGATIONS
The fair value of fixed rate senior notes and nonrecourse obligations was
estimated performing a discounted cash flow calculation using the note term and
market interest rate for each note based on the Company's current incremental
borrowing rates for similar borrowing arrangements. The fair values of variable
rate senior notes and nonrecourse obligations are assumed to be equal to their
carrying values.
INTEREST RATE AND CURRENCY SWAPS
The fair value of the interest rate and currency swaps is estimated by
discounting the fixed cash flows received under each swap using the rate at
which the Company could enter into new swaps of similar remaining maturities.
The carrying amount shown on the table below represents the amount of accrued
interest payable or receivable at the end of the period. The fair value
represents the accrued amount plus the amount that the Company would have to
pay or would receive in the current market to unwind the swaps.
OTHER OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
It is not practicable to estimate the fair value of the Company's other
off-balance sheet financial instruments because there are few active markets
for these transactions, and the Company is unable at this time to estimate
fair value without incurring excessive costs.
<PAGE>
SUMMARY OF FAIR VALUES
The following table presents the fair values of only those financial
instruments required to be presented by generally accepted accounting
principles. Proceeds from senior term notes are invested in a variety of
activities, including both financial instruments shown in this table, as well
as leases and joint venture investments, for which fair value disclosures are
not required.
Carrying Fair
At December 31, 1995 Amount Value
- ----------------------- --------- ---------
ASSETS
Secured Loans $239,873 $252,443
LIABILITIES
Senior term notes $679,600 $726,700
Nonrecourse obligations $193,446 $199,797
Interest rate swaps $ 103 $ (964)
Carrying Fair
At December 31, 1994 Amount Value
- ----------------------- --------- ---------
ASSETS
Secured Loans $231,225 $221,239
LIABILITIES
Senior term notes $613,600 $614,600
Nonrecourse obligations $ 55,270 $ 55,298
Interest rate swaps $ (76) $ 10,454
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------------------------------------------------------------------------
Financial Disclosure
- --------------------
None.
<PAGE>
PART III
Item 10(a). Directors of the Registrant
- ----------------------------------------
Name Office Held Since Age
- ------- -------------- -------- -----
James J. Glasser Chairman of the Board 1971 61
Joseph C. Lane President, Chief Executive
Officer and Director 1994 42
David B. Anderson Director 1996 54
Alan C. Coe Executive Vice President
and Director 1994 44
Jesse V. Crews Executive Vice President
Chief Investment Officer,
and Director 1994 43
David M. Edwards Director 1990 44
Frederick L. Hatton Executive Vice President
and Director 1984 53
Ronald H. Zech Director 1984 52
Item 10(b). Executive Officers of the Registrant
- -------------------------------------------------
Name Office Held Since Age
- ------- -------------- -------- -----
Joseph C. Lane President, Chief Executive
Officer and Director 1994 42
Alan C. Coe Executive Vice President
and Director 1994 44
Jesse V. Crews Executive Vice President,
Chief Investment Officer,
and Director 1994 43
Frederick L. Hatton Executive Vice President
and Director 1984 53
Cal C. Harling Senior Vice President and
Managing Director-
Technology Group 1994 47
Glenn L. Hickerson Senior Vice President and
President-Air Group 1995 58
Kathryn G. Jackson Senior Vice President and
Managing Director-Corporate
Finance 1995 40
Robert J. Sammis Senior Vice President-
Corporate Development 1993 49
Michael E. Cromar Vice President and Chief
Financial Officer 1994 48
Thomas C. Nord Vice President, General
Counsel, and Secretary 1980 55
Valerie C. Williams Vice President-Human Resources 1989 51
George R. Prince Vice President and Treasurer 1983 51
Curt F. Glenn Principal Accounting Officer,
Vice President,and Controller 1992 41
<PAGE>
JOSEPH C. LANE, President, Chief Executive Officer and Director since 1994.
Mr. Lane joined the Company in 1979 as a Financial Analyst and has served as
District Manager, Regional Manager, Vice President, Senior Vice President and
Executive Vice President. Mr. Lane was formerly Vice President-Corporate
Finance for Rotan Mosle Investment Bankers (two years) and a member of the
Yale University Development Faculty (three years). Mr. Lane currently serves
as a Director of the Equipment Leasing Association Board. He received a BA
from Yale University in 1975.
ALAN C. COE, Executive Vice President and Director since 1994. Mr. Coe
joined the Company in 1977 as a Financial Analyst and has held a variety of
positions both domestically and internationally. Prior to 1977, Mr. Coe
served as an officer in the United States Air Force (four years) and as Vice
President-Corporate Finance - with Rotan Mosle in Houston, Texas (three
years). Mr. Coe received a BA from Southern Methodist University in 1973 and
his MBA from Golden Gate University in 1976.
JESSE V. CREWS, Executive Vice President, Chief Investment Officer and
Director since 1995. Mr. Crews joined the Company in 1977 as a Financial
Analyst and had a variety of positions, including Regional Manager of the
Singapore (two years) and New Orleans/Houston (five years) offices before
returning to San Francisco in 1985. He has been broadly responsible for the
development of new business investment opportunities for the Company's own
portfolio since 1986 and as head of the Corporate Finance Group from 1990 to
1994. Mr. Crews received a BA from Yale and an MBA from the University of
Virginia.
FREDERICK L. HATTON, Executive Vice President and Director since 1984. Mr.
Hatton joined the Company in 1983 as Senior Vice President and President of
GATX Air. He is currently responsible for GATX Airlog. Prior to 1983, he
served as Vice President Marketing for two years, and Executive Vice
President for four years with International Air Service Company (IASCO).
Prior to IASCO, Mr. Hatton served in a number of managerial capacities for
Flying Tiger Lines. He received a BS from Yale University in 1964, an MS in
aerospace management from the University of Southern California in 1971, and
an MBA from the Wharton School in 1972. Mr. Hatton served as a U.S. Marine
Corps fighter pilot from 1964 to 1970 including a tour in Vietnam.
CAL C. HARLING, Senior Vice President-Technology Group since 1994. Mr.
Harling joined the Company in 1987 as Vice President, Technology Financing.
Prior to 1987 Mr.Harling was an independent consultant for two years. Mr.
Harling worked for Decimus Corporation, a subsidiary of BankAmerica
Corporation, for ten years starting in 1975. While at Decimus Mr. Harling
held various positions including Vice President of Vendor Operating Leasing,
Vice President of Portfolio Management, and other management positions in
systems development. Mr. Harling received a BS from California State
University, Sacramento in 1973.
<PAGE>
GLENN L. HICKERSON, Senior Vice President and Executive Vice President
Marketing of the Air Group 1990 through 1995. President-Air Group since 1995.
Prior to joining the Company, he was President/Managing Director of GPA Asia
Pacific (1989-1990) and Vice President-Commercial Marketing and Sales at
Douglas Aircraft Company (1983-1989). Mr. Hickerson served the Lockheed
California Company from 1976 through 1983, the last four years as Vice
President-Marketing and Sales-International. Prior to 1976 he served as
Group Vice President-Travel Division with Marriott Corporation (four years),
President, Universal Airlines (five years) and Secretary-Treasurer, Douglas
Finance Corporation (five years). Mr. Hickerson received a BS from Claremont
McKenna College and an MBA from New York University.
KATHRYN G. JACKSON, Senior Vice President and Managing Director-Corporate
Finance since 1995. She joined the Company in 1981 as Financial Analyst, and
transferred to the Chicago regional office in 1982 serving as District
Manager, Vice President and Managing Director. From 1987 to 1994, she was
employed by D'Accord Financial Services as a Managing Director, member of the
Executive Committee and ultimately served as President, Chairman and Chief
Executive Officer for one year. Ms. Jackson holds a BA from Stanford
University and an MBA from Northwestern University.
ROBERT J. SAMMIS, Senior Vice President-Corporate Development since 1993.
Mr. Sammis joined the Company in 1975 as Associate Counsel. He has served as
a Senior Vice President in charge of Equipment Management and as Managing
Director, International. Mr. Sammis is a Fulbright scholar and, in that
capacity, taught law at the University of Los Andes, Bogota, Columbia. Prior
to joining the Company, he was with Pillsbury, Madison & Sutro as Associate
Counsel. Mr. Sammis received a BA from the University of California and a JD
from the University of Michigan.
MICHAEL E. CROMAR, Vice President and Chief Financial Officer since October
1994. Prior to joining the Company, Mr. Cromar was Vice President, Treasurer
and Chief Financial Officer at The Harper Group, Inc., a San Francisco based
international logistics services company from December 1992 to October 1994.
From September 1988 through August 1992 he served S.A. Louis-Dreyfus & Cie.,
principally as Senior Vice President, Finance and Information, for Gearbulk
Ltd. an industrial bulk shipping joint venture in Bergen, Norway. From 1982
to 1988 he was corporate controller and a director of information technology
for American President Companies, Ltd. From 1975, he held a variety of
financial management positions with Natomas Co., an energy resources company.
Mr. Cromar began his career with Touche Ross & Co. where he was a Certified
Public Accountant. He received a BS degree in Business Administration in
1972 from the University of Utah and was an infantry officer in the U.S.
Army, including service in Vietnam.
THOMAS C. NORD, Vice President, General Counsel and Secretary since 1980.
Mr. Nord joined the Company as Associate Counsel in 1977 and became Assistant
General Counsel in 1978. Prior to 1977, Mr. Nord served as Counsel for
Charter New York Leasing, an affiliate of Irving Trust Company (three years),
and as an Associate in the New York law firm of Seward and Kissel (five
years). Mr. Nord received a BA from Northwestern University in 1962 and a JD
from the University of North Carolina in 1969.
<PAGE>
VALERIE C. WILLIAMS, Vice President-Human Resources since 1989. Prior to
joining the Company, Ms. Williams was President of VC Williams & Associates,
a human resources consulting firm; was Director, Corporate Compensation and
Incentives at Carson Pirie Scott & Co. and Senior Consultant, Compensation
with A.S. Hansen, Inc. Ms. Williams received her MBA from Lake Forest College
in 1980.
GEORGE R. PRINCE, Vice President and Treasurer since 1983. Mr. Prince joined
the Company in 1981 as Assistant Vice President-Corporate Development. In
1983, he was promoted to Vice President and Treasurer. Prior to 1981, Mr.
Prince was Vice President for Continental Bank. Mr. Prince received his BS
in 1966 from Cornell University and MBA in 1968 from Michigan State.
CURT F. GLENN, Principal Accounting Officer, Vice President & Controller
since 1992. Mr. Glenn joined the Company in 1980 as Assistant Tax Manager,
was appointed Tax Manager in 1985 and elected Vice President in 1989. Prior
to joining the Company, Mr. Glenn was a Senior Tax Analyst at GATX
Corporation (two years) and a Senior Tax Accountant with Trans Union
Corporation (four years). Mr. Glenn received a B.S. in Accounting from
DePaul University in 1977. Mr. Glenn is currently Chairman of the Federal
Tax Committee of the Equipment Leasing Association of America.
Items 11, 12 & 13
- ----------------------
Omitted under provisions of the reduced disclosure format.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- --------------------------------------------------------------------------
(a) 1. Financial statements
The following consolidated financial statements of GATX Capital Corporation
are included in Item 8.
Consolidated Statements of Income and Reinvested Earnings
Years Ended December 31, 1995, 1994 and 1993
Consolidated Balance Sheets
As of December 31, 1995 and 1994
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
2. Financial statement schedules
All financial statement schedules have been omitted because they are not
applicable or because required information is provided in the financial
statements, including the notes thereto, which are included in Item 8.
<PAGE>
3. Exhibits Required by Item 601 of Regulation S-K
Exhibit Number
--------------
3(a) Restated Certificate of Incorporation of the Company.(6)
3(b) By-laws of the Company.(1)
4(d) Term Loan Agreement between the Company and a Bank dated
December 26, 1990.(2)
10(a) Office Leases, Four Embarcadero Center, dated October 1, 1990 and
June 1, 1991, between the Company and Four Embarcadero Center
Venture.(2)
10(b) Tax Operating Agreement dated January 1, 1983 between GATX
Corporation and the Company.(3)
10(c) Credit Agreement among the Company, the Subsidiaries listed in
Schedule II thereto, the Banks listed on the signature pages
thereto, and Chase Manhattan Bank, as agent for the Banks, dated
December 14, 1992.(4)
10(d) Amendment No. 1, dated December 1, 1994, to Credit Agreement
referred to in 10(c). (5)
10(e) Credit Agreement among the Company, its two subsidiaries
operating in Canada, and the Bank of Montreal, dated
December 14, 1992.(4)
10(f) First Amendment, dated June 20, 1993 to Credit Agreement
referred to in 10(e).(5)
10(g) Second Amendment, dated June 14, 1994, to Credit Agreement
referred to in 10(e).(5)
10(h) Third Amendment, dated December 1, 1994, to Credit Agreement
referred to in 10(e).(5)
12 Ratio of Earnings to Fixed Charges (6)
23 Consent of Independent Auditors.(6)
27 Financial Data Schedule.(6)
99 Listing of Medium Term Notes.(6)
The Registrant agrees to furnish to the Commission upon request a copy of
each instrument with respect to issues of long-term debt of the Registrant
the authorized principal amount of which does not exceed 10% of the total
assets of Registrant.
(1) Incorporated by reference to Registration Statement on Form S-1, as
amended, (file number 2-75467) filed with the Commission on
December 23, 1981, page II-4.
(2) Incorporated by reference to Form 10-K filed with the Commission on
March 30, 1991.
(3) Incorporated by reference to Form 10-K filed with the Commission on
March 28, 1983.
(4) Incorporated by reference to Form 10-K filed with the Commission on
March 31, 1993.
(5) Incorporated by reference to Form 10-K filed with the Commission on
March 27, 1995.
(6) Submitted to the Securities and Exchange Commission with the
electronic filing of this document.
<PAGE>
Item 14(b). Reports on Form 8-K
- -----------------------------------------
Report on Form 8-K dated October 31, 1995 was filed December 7, 1995
reporting the Company's agreement, effective October 31, 1995, to acquire
over the next four years all of the outstanding stock of Sun Financial Group,
Inc., a technology-focused finance company based in Tampa, Florida.
Item 14(d). Separate Financial Statements of Subsidiaries not Consolidated
- --------------------------------------------------------------------------
and Fifty Percent or Less Owned Persons
- ----------------------------------------
GATX/CL Air Leasing
Cooperative Association
and GATX/CL Air N.V.
Combined Financial Statements
Years ended December 31, 1995, 1994 and 1993
CONTENTS
Report of Independent Auditors
Combined Financial Statements
Combined Balance Sheets
Combined Statements of Operations
Combined Statements of Stockholders' and Members' Equity
Combined Statements of Cash Flows
Notes to Combined Financial Statements
<PAGE>
Report of Independent Auditors
To Members of GATX/CL Air Leasing Cooperative Association and the Board of
Management and Stockholders of GATX/CL Air N.V.:
We have audited the accompanying combined balance sheets of GATX/CL Air Leasing
Cooperative Association and GATX/CL Air N.V. at December 31, 1995 and 1994, and
the related combined statements of operations, stockholders' and members'
equity(deficit), and cash flows for each of the three years for the period
ended December 31, 1995. These financial statements are the responsibility of
the companies' management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of GATX/CL
Air Leasing Cooperative Association and GATX/CL Air N.V. at December 31, 1995
and 1994, and the combined results of their operations and their cash flows for
each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.
Moret Ernst & Young Accountants
Curacao, March 19, 1996
<PAGE>
GATX/CL Air Leasing Cooperative Association
and GATX/CL Air N.V.
Combined Balance Sheet
(In Thousands)
December 31
1995 1994
----------- -----------
Assets
Cash and cash equivalents $ 31,803 $ 29,778
Accounts receivable - Manager 11,176 11,338
Investments:
Equipment on operating leases, net of accumulated
depreciation of $99,831 in 1995
and $71,025 in 1994 579,174 681,214
Direct financing leases 81,730 90,074
Assets held for lease 71,984 -
Aircraft delivery progress payments 18,414 16,062
----------- -----------
751,302 787,350
Other assets, net of accumulated amortization
of $2,796 in 1995 and $2,375 in 1994 4,745 5,165
----------- -----------
Total assets $ 799,026 $ 833,631
=========== ===========
Liabilities & equity
Liabilities:
Accounts payable and accrued liabilities $ 1,474 $ 1,186
Accrued interest 3,373 3,326
Lessee deposits 46,018 46,382
Capital lease obligation 49,232 54,002
Nonrecourse obligations 98,886 108,077
Loans from members 456,997 472,234
----------- -----------
Total liabilities 655,980 685,207
Equity(deficit):
Association 143,096 148,505
Air N.V. (36) (74)
Intercompany eliminations (14) (7)
----------- -----------
Total equity 143,046 148,424
----------- -----------
Total liabilities and equity $ 799,026 $ 833,631
=========== ===========
See accompanying notes.
<PAGE>
GATX/CL Air Leasing Cooperative Association
and GATX/CL Air N.V.
Combined Statement of Operations
(In Thousands)
Year ended December 31
1995 1994 1993
----------- ------------ ------------
Income
Lease $ 79,255 $ 65,363 $ 56,311
Interest 2,723 1,889 1,244
Other 3,681 8 234
----------- ------------ ------------
85,659 67,260 57,789
----------- ------------ ------------
Expenses
Interest 47,413 39,662 33,009
Depreciation 28,806 24,662 22,771
Management fee 2,360 1,903 1,746
Guarantee fees 1,032 1,095 (629)
Other 2,515 2,202 1,717
----------- ------------ ------------
82,126 69,524 58,614
----------- ------------ ------------
Net income(loss) $ 3,533 $ (2,264) $ (825)
=========== ============ ============
See accompanying notes.
<PAGE>
<TABLE>
GATX/CL Air Leasing Cooperative Association
and GATX/CL Air N.V.
Combined Statement of Stockholders' and Members' Equity
(In Thousands)
Air N.V. Association
------------------------------------------ ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity
adjustment
Accumulated from foreign
Share deficit/ currency Initial Additional Combined
Capital earnings translation Total Members Members Total Elim Total
------- ----------- ------------ ----- ------- ---------- -------- ---- --------
Balances at December 31, 1992 $ 44 (277) 9 (224) 78,143 53,258 131,401 - 131,177
Members' capital contributions:
Initial - - - - 19,118 12,746 31,864 - 31,864
Premium - - - - 797 796 1,593 - 1,593
Distributions to members - - - - (3,722) (2,482) (6,204) - (6,204)
Net loss - 10 - 10 (504) (334) (838) 3 (825)
------- ----------- ------------ ----- ------- ---------- -------- ---- --------
Balances at December 31, 1993 44 (267) 9 (214) 93,832 63,984 157,816 3 157,605
Distributions to members - - - - (4,151) (2,766) (6,917) - (6,917)
Net income (loss) - 140 - 140 (1,435) (959) (2,394) (10) (2,264)
------- ----------- ------------ ----- ------- ---------- -------- ---- --------
Balances at December 31, 1994 44 (127) 9 (74) 88,246 60,259 148,505 (7) 148,424
Distributions to members - - - - (5,347) (3,564) (8,911) - (8,911)
Net income - 38 - 38 2,101 1,401 3,502 (7) 3,533
------- ----------- ------------ ----- ------- ---------- -------- ---- --------
Balances at December 31, 1995 $ 44 (89) 9 (36) 85,000 58,096 143,096 (14) 143,046
======= =========== ============ ===== ======= ========== ======== ==== ========
</TABLE>
See accompanying notes.
<PAGE>
GATX/CL Air Leasing Cooperative Association
and GATX/CL Air N.V.
Combined Statement of Cash Flows
(In Thousands)
Year Ended December 31
1995 1994 1993
--------- --------- ---------
OPERATING ACTIVITIES
Net income(loss) $ 3,533 $ (2,264) $ (825)
Reconciliation to net cash provided by
operating activities:
Depreciation 28,806 24,662 22,771
Amortization 423 487 726
Interest expense added to member loans 703 1,935 1,258
Changes in operating assets and liabilities:
Receivables 451 6,058 (3,946)
Accrued interest and other payables 42 (2,488) 2,314
Lessee deposits (364) 4,303 11,155
Other - net 862 (114) 57
--------- --------- ---------
Net cash flows provided by
operating activities 34,456 32,579 33,510
--------- --------- ---------
INVESTING ACTIVITIES
Investment in leased equipment - (2,975) (126,223)
Investment in progress payments (1,024) - (2,023)
--------- --------- ---------
Total investments (1,024) (2,975) (128,246)
Lease rents received, net of earned income 9,757 4,820 5,059
--------- --------- ---------
Net cash flows provided by (used in)
investing activities 8,733 1,845 (123,187)
--------- --------- ---------
FINANCING ACTIVITIES
Proceeds from issuance of member loans - - 129,818
Capital contributions from members - - 33,457
Repayment of nonrecourse obligations (9,191) (8,750) (8,014)
Repayment of member loans (18,292) (12,932) (43,158)
Repayment of capital lease obligation (4,770) (4,415) (4,087)
Distributions to members (8,911) (6,917) (6,204)
--------- --------- ---------
Net cash flows(used in) provided
by financing activities (41,164) (33,014) 101,812
--------- --------- ---------
Net increase in cash and cash equivalents 2,025 1,410 12,135
Cash and cash equivalents at beginning of year 29,778 28,368 16,233
--------- --------- ---------
Cash and cash equivalents at December 31 $ 31,803 $ 29,778 $ 28,368
========= ========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid $ 45,606 $ 42,452 $ 30,370
Taxes paid $ 77 $ 34 $ 11
See accompanying notes.
<PAGE>
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF REPORTING
The accompanying combined financial statements are prepared in accordance with
accounting principles generally accepted in the United States and are presented
in U.S. dollars.
ORGANIZATION
GATX/CL Air Leasing Cooperative Association (the Association) was formed in
September 1990 as a Cooperative Vereniging under the laws of the Netherlands
Antilles to engage in the acquisition and lease of aircraft for use in
international commercial routes. The Initial Members of the Association, each
having a 30% share, are GATX Capital Corporation (GATX) through its wholly
owned subsidiary, GATX Air Antilles, Inc. (GATX Air), and Credit Lyonnais (CL),
a bank organized under the laws of France. Additional Members are four
financial institutions, each having a 10% share. The initial term of the
Association shall expire on December 31, 2009.
GATX/CL Air N.V. (Air N.V.) was incorporated as a limited-liability corporation
on July 11, 1989 under the laws of the Netherlands as a holding and leasing
company. The authorized share capital of Air N.V. is 500,000 Dutch guilders.
It is divided into 5,000 shares of 100 Dutch guilders each. Each shareholder
of Air N.V. is a member of the Association and holds shares in Air N.V. in
proportion to its interest in the Association.
CL is the Managing Director and Co-Manager of the Association. Oyens Trust B.V.
(an affiliate of CL through December 22, 1995) is a Managing Director and
administrative manager of Air N.V. GATX is the manager of the Association and
a Managing Director of Air N.V.
BASIS OF COMBINATION
The accompanying financial statements combine the assets, liabilities, equity,
results of operations and cash flows of the Association and Air N.V.
(collectively, the Companies) in recognition of their common ownership and
control. All significant intercompany transactions and accounts have been
eliminated.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments with a maturity of
three months or less when purchased.
OPERATING LEASES
Leases that do not qualify as direct financing leases are accounted for as
operating leases. Equipment subject to operating leases is stated at cost less
accumulated depreciation plus accrued rent. The Companies' policy is to
depreciate the equipment in a systematic and rational manner over its estimated
useful life, generally ranging from 25 to 30 years. Changes in the
<PAGE>
expected holding period result in an increase or decrease in the rate of
depreciation over the remaining life of the equipment. During 1995,
additional depreciation in the amount of $3.6 million was recorded to reflect a
reduction in the expected holding period of certain equipment.
The Companies review the carrying value of equipment on operating leases at
least annually. If the review indicates that such values have been permanently
impaired, the carrying value is reduced accordingly. Management believes that
no such impairment has occurred through the date of these financial statements.
DIRECT FINANCING LEASES
The Companies' investment in direct financing leases includes lease contracts
receivable plus the estimated unguaranteed residual value of the equipment at
the lease termination date, less unearned income. Lease contracts receivable
includes the total rent to be received over the life of the lease reduced by
rent collected. Initial unearned income is the amount by which the lease
contract receivable plus the estimated residual exceeds the initial investment
in the leased equipment at lease inception. Unearned income is amortized to
produce a level yield over the lease term.
The residual value of equipment under direct financing leases is the estimated
amount to be received by the Companies from the disposition of equipment upon
expiration of the lease. Management reviews residual value estimates at least
annually. If the review results in a lower estimate than had been previously
established and the decline is judged to be other than temporary, the
accounting for the transaction is revised using the new estimate, and the
resulting reduction in the net investment is recognized as an expense in the
period in which the change is made. The Companies have had no such revisions
to their residual value estimates.
ASSETS HELD FOR LEASE
Assets held for lease consist of aircraft which has been returned by the
lessee. Depreciation continues under the Companies' normal depreciation
policy.
AIRCRAFT DELIVERY PROGRESS PAYMENTS
Payments made toward contracts for the future delivery of aircraft under
construction are recorded at cost, including capitalized interest, and are
classified as progress payments.
CREDIT RISK
The Companies' customers are concentrated in the commercial airline industry.
All investments are subject to normal credit policies, collateral requirements
and senior management review. Lease provisions require lessees to meet certain
standards for maintenance and return conditions, and provide for repossession
upon default.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles necessarily requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities at the
date of the financial statements as well as revenues and expenses during the
reporting period. Actual results, when ultimately realized, could differ from
those estimates.
<PAGE>
NEW ACCOUNTING STANDARD
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF. This statement requires the recording of impairment
losses on long-lived assets used in operations when indicators of impairment
are present and when the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amounts. The statement
also requires that assets held for disposal be carried at the lower of the
carrying amount or fair value less cost to sell. For this purpose, management
must commit to a plan to sell or abandon the asset and it must be actively
marketed for sale in the near future. There are no assets held for disposal as
of December 31, 1995. The Companies will adopt Statement 121 in the first
quarter of 1996 and, based on current circumstances, does not believe the effect
of adoption will be material.
2. ASSOCIATION CAPITAL CONTRIBUTIONS, LOANS AND ALLOCATION OF INCOME, LOSSES
AND CASH DISTRIBUTIONS
CAPITAL CONTRIBUTIONS
Each Initial Member and each Additional Member are committed to contribute to
the equity of the Association amounts aggregating up to each member's Equity
Commitment (Initial Contributions). Such Equity Commitments aggregate
$120,000,000 for the Initial Members and $80,000,000 for the Additional
Members. Amounts contributed to the Association under this commitment through
December 31, 1995 aggregated approximately $171,315,000 and represent each
member's Equity Contribution. Each member's pro-rata share of such Equity
Contributions represents its Venture Share of the Association.
Each Additional Member is also required to make Premium Contributions at the
time the Initial Contributions are paid. A portion of the Premium
Contributions are then reallocated to the Initial Members. Premium
Contributions contributed to the Association through December 31, 1995
aggregated approximately $8,566,000.
EXPOSURE CAP
Members are only committed to contribute to the Association a maximum of equity
contributions (excluding Premium Contributions) and loans aggregating
$300,000,000 and $100,000,000 for each Initial Member and each Additional
Member, respectively (Exposure Cap) for a total of $1,000,000,000. Also,
Premium Contributions which may be required by the Additional Members may not
exceed $2,500,000 for each Additional Member. The amount of unused and
available equity and loan contributions from the Members at December 31, 1995
is $197,290,000.
ALLOCATION OF INCOME AND LOSSES
Income and losses are allocated to each member according to its Venture Share.
ALLOCATIONS OF CASH FLOW
Available cash flow, as defined by the Cooperative Agreement, will be
distributed to the members, and shall be allocated in part as a Contingent
Return to all members and in part as a Contingent Management Fee to the Initial
Members (Note 11). Upon liquidation of the Association, remaining net assets of
the Association will be distributed among the members in proportion to their
respective Investment Share, as defined by the Cooperative Agreement.
<PAGE>
3. OPERATING LEASES
The Companies lease aircraft and related equipment to South American, North
American, European and Asian commercial airlines under operating leases.
Earned income from operating leases in 1995, 1994, and 1993 was $71,973,000,
$58,954,000, and $50,910,000, respectively. Earned income was increased
(decreased), due to the change in interest rates by $7,586,000, $3,420,000,
and $(2,753,000) in 1995, 1994, and 1993, respectively.
The Companies project future rentals on variable leases by using the interest
rate in effect at lease inceptions. Future rentals are subject to fluctuations
with the increase and decrease in the interest rate. As of December 31, 1995,
future rentals under operating leases are due as follows (in thousands):
YEAR DUE
--------
1996 $ 52,824
1997 25,175
1998 13,698
1999 10,138
2000 7,468
--------
$109,303
========
4. DIRECT FINANCING LEASES
The Association leases aircraft and related equipment to a South American
commercial airline under direct financing leases with initial terms of 12
years. Earned income from direct financing leases in 1995, 1994, and 1993 was
$7,282,000, $6,409,000, and $5,401,000, respectively. Earned income includes
a reduction of variable rentals of $1,933,000, $3,553,000, and $5,144,000
for 1995, 1994, and 1993, respectively. The components of the Association's
net investment in direct financing leases are as follows (in thousands):
YEAR ENDED DECEMBER 31, 1995 1994
- -------------------------------------- --------- ---------
Lease contracts receivable $ 82,972 $100,532
Estimated unguaranteed residual values 30,700 30,700
Less: Unearned income (31,942) (41,158)
--------- ---------
Investment in direct financing leases $ 81,730 $ 90,074
========= =========
<PAGE>
The Companies project future rental commitments on variable rent leases by
using the interest rate in effect at lease inceptions. Future rentals are
subject to fluctuation with the increase and decrease in interest rates.
As of December 31, 1995, minimum lease payments to be received are as follows
(in thousands):
YEAR DUE
--------
1996 $16,625
1997 15,959
1998 15,959
1999 15,959
2000 15,959
Thereafter 2,511
-------
$82,972
=======
5. LESSEE DEPOSITS
Lessee deposits consist of security deposits and maintenance reserves including
accrued interest. At December 31, 1995 and 1994, security deposits are
$6,089,000 and $5,894,000, respectively, and maintenance reserves are
$35,649,000 and $37,289,000, respectively. Lessee deposits are paid by the
lessee prior to the inception of the lease and are refundable to the lessee
based on the terms of the various leases. Maintenance reserves are charged to
lessees based upon usage of the leased aircraft. Such amounts will be
reimbursed to the lessee as required maintenance is performed. Interest due
to lessees is accrued on the outstanding security deposits and maintenance
reserves at rates ranging from 5.8750% to 6.9375% (based on 30-day LIBOR).
Accrued interest payable on lessee deposits at December 31, 1995 and 1994
aggregated $4,280,000 and $3,200,000, respectively.
6. CAPITAL LEASE OBLIGATION
In November 1991, the Association sold delivery positions for the two aircraft
delivering that month to a third party and leased back the aircraft for a term
of ten years. No gain or loss was recognized on the sale-leaseback. The terms
of the agreement require capital lease treatment by the Association. The
aircraft secure third party financing obtained by the lessor. This financing
is recourse to the Members in their respective ownership shares.
<PAGE>
As of December 31, 1995, future minimum lease payments on the capital lease
obligation are as follows (in thousands):
Year due
--------
1996 $ 8,937
1997 8,937
1998 8,937
1999 7,123
2000 6,586
Thereafter 25,370
----------
Total minimum lease payments 65,890
Amount representing interest
(calculated at 7.9% at lease inception) (16,658)
----------
Present value of minimum lease payments
including $5,154 of current maturities $ 49,232
==========
The capital lease obligation was reduced in 1991 by amounts which the
Association irrevocably placed in a trust to be used solely for the
satisfaction of the obligation, and the minimum lease payments shown above are
net of payments to be made by the trust. The balance of this trust account at
December 31, 1995 is $17,533,000.
The Association has entered into an interest rate swap to manage interest rate
exposure by effectively converting the capital lease obligation from a fixed
rate to a floating rate borrowing. The Association receives or pays interest
on a notional principal amount of $47,271,000 at December 31, 1995 based on the
difference between a nominal rate of 9.07% and the 180-day LIBOR. No actual
borrowing or lending is involved. The swap agreement terminates in 2001. The
differential to be paid or received is accrued as interest rates change and is
recognized currently as an adjustment to interest expense related to the debt.
The aircraft subject to capital lease financing were subleased to a commercial
airline on four-year operating leases commencing in March 1992. Such subleases
are classified as operating leases. The carrying value of the underlying
aircraft subject to the operating leases is $68,046,000 and $70,833,000 at
December 31, 1995 and 1994, respectively. Depreciation expense of $2,744,000,
$2,753,000, and $2,753,000 was recorded in 1995, 1994, and 1993, respectively.
Minimum future rentals to be received under noncancelable subleases aggregate
$9,234,000 receivable over a period ending in 1997. Such rentals are included
in the minimum future rentals under operating leases disclosed in Note 3.
7. NONRECOURSE OBLIGATIONS
Nonrecourse obligations are secured by the underlying leases and leased
assets. In the event of lessee default, the lenders have recourse only to the
pledged equipment and the obligation is nonrecourse to the general credit of
the Association. The Companies' investment in such leases at December 31,
1995 and 1994 (net of the related outstanding debt principal of $98,886,000
and $108,077,000, respectively, included in nonrecourse obligations) is
$43,314,000 and $46,270,000, respectively. Nonrecourse obligations bear
interest based on the 90- to 180-day LIBOR.
<PAGE>
Nonrecourse obligations include the following (in thousands):
YEAR ENDED DECEMBER 31, 1995 1994
- ----------------------------------- ------- --------
Variable Rate Note maturing in 2001 $58,502 $ 63,738
Variable Rate Note maturing in 2000 40,384 44,339
------- --------
$98,886 $108,077
======= ========
As of December 31, 1995, future principal payments on nonrecourse obligations
are as follows (in thousands):
YEAR DUE
- --------
1996 $ 9,636
1997 10,668
1998 11,639
1999 12,693
2000 13,864
Thereafter 40,386
--------
$ 98,886
========
8.LOANS FROM MEMBERS
At December 31, 1995 and 1994, loans from members bearing interest at rates
from 150 to 294 basis points over the 30-to-180-day LIBOR, aggregated
$456,997,000 and $472,234,000 respectively, with accrued interest payable
aggregating $1,151,000 and $1,204,000 respectively. Such borrowings are
collateralized by the aircraft delivery progress payments and leased assets,
subject to priority liens.
The future principal payments on loans from members as of December 31, 1995
are based upon leases and approved amortization schedules then in existence.
Re-lease of the aircraft upon termination of the current leases will extend
the term of the loans.
As of December 31 1995, future principal payments on loans from members are due
as follows (in thousands):
YEAR DUE
- --------
1996 $ 155,346
1997 132,645
1998 7,886
1999 31,766
2000 53,197
Thereafter 76,157
---------
$ 456,997
=========
<PAGE>
Interest on loans from members for 1995, 1994, and 1993 is as follows (in
thousands):
Year ended December 31, 1995 1994 1993
- ------------------------------ -------- -------- --------
Interest costs incurred $ 34,220 $ 27,336 $ 22,100
Accrued interest payable
added to loans from members 2,030 2,864 2,596
Interest paid to members 34,273 28,778 17,346
The Association has entered into an interest rate swap to manage interest rate
exposure by effectively converting a member loan from a floating rate to a
fixed rate borrowing. The Association receives or pays interest on a notional
principal amount of $64,236,000 and $67,496,000 at December 31, 1995 and 1994,
respectively, based on the difference between a 10.47% fixed rate and the
90-day LIBOR. The differential to be paid or received is accrued as interest
rates change and is recognized currently as an adjustment to interest expense
related to the debt. No actual borrowing or lending is involved. The swap
agreement terminates in 2002.
9. AIRCRAFT DELIVERY PROGRESS PAYMENTS AND COMMITMENTS
Interest cost incurred during 1995, 1994, and 1993 aggregated $48,741,000,
$40,591,000, and $34,347,000, respectively of which $1,328,000, $929,000, and
$1,338,000, respectively, was capitalized into progress payments.
At December 31, 1995, remaining obligations to vendors under aircraft delivery
positions aggregated $69,693,000. Obligations under delivery positions, for
which the final payments upon delivery of the aircraft are subject to
escalation clauses, are estimated to be paid in each of the subsequent years
ended December 31, as follows (in thousands):
Estimated
payments due
upon expected
Fixed delivery date
Year ended December 31, obligations of aircraft Total
- ----------------------- ----------- ------------- --------
1996 $ 3,193 $ - $ 3,193
1997 - 66,500 66,500
-------- -------- --------
$ 3,193 $ 66,500 $ 69,693
======== ======== ========
10. OTHER INCOME AND EXPENSE ITEMS
Pursuant to Article 1, paragraph 1(a), of the Netherlands Antilles National
Profit Tax Ordinance of 1940, the Association is subject to Netherlands
Antilles profit tax. An advance tax ruling has been obtained from the
Netherlands Antilles tax authorities in order to determine the tax position of
the Association. Based on this tax ruling, $96,000, $131,000, and $96,000
have been recorded as an estimate for profit taxes in 1995, 1994, and 1993,
respectively.
<PAGE>
The Air N.V. is subject to Netherlands corporate income tax. An advance tax
ruling has been obtained from the Netherlands tax authorities in order to
determine the tax position of the Air N.V. Based on this tax ruling, $41,000,
$43,000, and $43,000 have been recorded as an estimate for corporate income
taxes in 1995, 1994, and 1993, respectively.
No temporary differences exist between the computation of the tax liability for
book and tax purposes which would give rise to deferred income taxes.
In 1995, the Association recognized $3,619,000 from the sale of certain
ownership rights in a foreign tax jurisdiction. The Companies account for the
benefits from transactions which are, in substance, sales of tax benefits
through tax leases, as income in the period completed.
11. RELATED PARTY TRANSACTIONS
The Companies had related-party transactions as follows:
MANAGEMENT OF THE ASSOCIATION AND AIR N.V.
Pursuant to the Association Agreement and a Management Agreement, both dated
September 4, 1990, between the Association and GATX as Manager and CL as Co-
Manager, GATX and CL are to manage, lease and administer the Association
property, among other duties, for an initial term of five years. As
consideration for the performance of their duties under the Management
Agreement, the Manager and Co-Manager jointly receive a monthly management
fee. The management fee is calculated for each leased item of equipment and is
based upon the amount by which the sum of rents, interest and loan or
commitment fees received by the Association exceed an assumed rate of interest
paid with respect to each leased asset (the Management Fee). A Contingent
Management fee will be paid to the Initial Members after the repayment of all
principal and interest on any third-party debt, member loans, and member
contributions and member returns, as defined by the Cooperative Agreement.
However, minimum fees paid to the Manager and Co-Manager will not be less than
$1,200,000 per year.
The Association also reimburses the Manager and Co-Manager for costs as allowed
in the Management Agreement.
GATX and Oyens Trust B.V., are the Managing Directors of Air N.V. They receive
no consideration for performance of their management duties.
The Association and Air N.V. are charged administrative fees by Oyens Trust
N.V. (Curacao) and Oyens Trust B.V., respectively. Both Oyens Trust N.V. and
Oyens Trust B.V. were affiliates at CL until December 22, 1995.
Cash on hand at December 31, 1995 and 1994 is on deposit with CL or its
affiliates.
<PAGE>
Amounts owed to GATX and CL at December 31, 1995, 1994, and 1993, management
fees incurred and costs reimbursed for each of the years in the period ended
December 31 are as follows (in thousands):
For the year ended December 31, 1995
------------------------------------
Amount
receivable
(payable) at
Reimbursed December 31,
Costs Expense Income 1995
---------------------------------- -----------
GATX:
Management fee $ - $ 1,912 $ - $(1,356)
Maintenance reserves and
accrued interest - - 685 12,578
Insurance and lessee buyer
furnished equipment 62 - - (110)
Guarantee fees - 274 - 64
-------- -------- -------- --------
62 2,186 685 11,176
CL (and affiliated companies):
Management fee - 448 - (288)
Other Members' guarantee fees - 758 - (174)
-------- -------- -------- --------
Totals $ 62 $ 3,392 $ 685 $10,714
======== ======== ======== ========
<PAGE>
For the year ended December 31, 1994
------------------------------------
Amount
receivable
(payable) at
Reimbursed December 31,
Costs Expense Income 1994
---------------------------------- -----------
GATX:
Management fee $ - $ 1,531 $ - $ (907)
Security deposits and
accrued interest - - 7 -
Maintenance reserves and
accrued interest - - 529 12,006
Insurance and lessee buyer
furnished equipment 537 - - 312
Guarantee fees - 295 - (73)
-------- -------- -------- --------
537 1,826 536 11,338
CL (and affiliated companies):
Management fee - 372 - (198)
Security deposits and
accrued interest - - 13 -
-------- -------- -------- --------
- 372 13 (198)
Other Members' guarantee fees - 689 - (243)
-------- -------- -------- --------
Totals $ 537 $ 2,887 $ 549 $10,987
======== ======== ======== ========
<PAGE>
For the year ended December 31, 1993
------------------------------------
Amount
receivable
(payable) at
Reimbursed December 31,
Costs Expense Income 1993
---------------------------------- -----------
GATX:
Management fee $ - $ 1,400 $ - $ (673)
Security deposits and
accrued interest - - 45 1,413
Maintenance reserves and
accrued interest - - 400 13,912
Insurance and lessee buyer
furnished equipment 2,846 - - 527
Guarantee fees - (218) - (74)
-------- -------- -------- --------
2,846 1,182 445 15,105
CL (and affiliated companies):
Management fee - 346 - (147)
Security deposits and
accrued interest - - 79 2,512
-------- -------- -------- --------
- 346 79 2,365
Other Members' guarantee fees - (506) - (175)
-------- -------- -------- --------
Totals $ 2,846 $ 1,022 $ 524 $17,295
======== ======== ======== ========
<PAGE>
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
Generally accepted accounting principles require disclosure of the estimated
fair value of the Companies' financial instruments, excluding lease
transactions accounted for under SFAS 13. Fair value is a subjective and
imprecise measurement that is based on assumptions and market data. The use of
different market assumptions and valuation methodologies may have a material
effect on the estimated fair value amounts. Accordingly, management cannot
provide assurance that the fair values presented are indicative of the amounts
that the Companies could realize in a current market exchange.
SHORT-TERM FINANCIAL INSTRUMENTS
The carrying amounts included on the balance sheet approximate fair value
because of the short maturity of these instruments. This assumption applies to
cash and cash equivalents, accounts receivable, accrued interest, and accounts
payable, accrued liabilities, and lease deposits.
NONRECOURSE OBLIGATIONS
The carrying amount of variable nonrecourse obligations of $98,886,000 and
$108,077,000 at December 31, 1995 and 1994, respectively, approximates their
fair values.
MEMBER LOANS
All loans from members are variable rate loans at both December 31, 1995 and
1994. The carrying amount of variable rate loans from members of $456,997,000
and $472,234,000 at December 31, 1995 and 1994, respectively, approximates
their fair value.
INTEREST RATE SWAPS
The fair value of the interest rate swaps is estimated by discounting the fixed
cash flows received under each swap using the rate at which the Companies could
enter into new swaps of similar remaining maturities. The carrying amounts of
$222,000 and $301,000 represent the amount of accrued interest receivable at
December 31, 1995 and 1994. The fair values of $3,823,000 and $1,475,000 which
are liabilities and represent the accrued amount plus the amount that the
Companies would have to pay in the current market to unwind the swaps.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
- -------------------------
(Registrant)
By /s/ Joseph C. Lane
- ------------------------------
Joseph C. Lane
President, Chief Executive Officer,
and Director
March 28, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
By /s/ Joseph C. Lane By /s/ Michael E. Cromar
------------------ ---------------------
Joseph C. Lane Michael E. Cromar
President, Chief Executive Officer, Vice President and
and Director Chief Financial Officer
Dated: March 28, 1996 Dated: March 28, 1996
By /s/ Curt F. Glenn By /s/ David M. Edwards
----------------- ---------------------
Curt F. Glenn David M. Edwards
Principal Accounting Officer, Director
Vice President & Controller
Dated: March 28, 1996 Dated: March 28, 1996
By /s/ Jesse V. Crews By /s/ Alan C. Coe
------------------ ---------------------
Jesse V. Crews Alan C.Coe
Executive Vice President, Chief Executive Vice President
Investment Officer, and Director and Director
Dated: March 28, 1996 Dated: March 28, 1996
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION OF GATX CAPITAL CORPORATION
Pursuant to Section 245 of the General Corporation Law of the State of
Delaware, the undersigned, being Vice President and General Counsel, of GATX
Capital Corporation (the "Corporation"), hereby certifies:
FIRST: The name of the Corporation is GATX CAPITAL CORPORATION, formerly
GATX LEASING CORPORATION and the name under which the Corporation was
originally incorporated is GATX/BOOTHE CORPORATION. The date of filing of its
original Certificate of Incorporation with the Secretary of State was January
9, 1968.
SECOND: This Restated Certificate of Incorporation restates and integrates
the Certificate of Incorporation of this Corporation and does not further amend
the provisions of this Corporation's Certificate of Incorporation as previously
amended and there is no discrepancy between such Certificate of Incorporation
as amended and this Restated Certificate of Incorporation.
THIRD: This Restated Certificate of Incorporation was duly adopted by
unanimous written consent of the board of directors of the Corporation in
accordance with the applicable provisions of Section 245 of the General
Corporation Law of the State of Delaware.
FOURTH: The text of the Certificate of Incorporation is set forth in full
to read as follows:
"RESTATED CERTIFICATE OF INCORPORATION OF GATX CAPITAL CORPORATION"
FIRST: The name of the Corporation is GATX CAPITAL CORPORATION (the
"Corporation").
SECOND: The address of its registered office in the State of Delaware is
1013 Centre Road in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Prentice-Hall Corporation System,
Inc.
THIRD: The purpose of the Corporation shall be to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: THE aggregate number of shares of stock which the Corporation
shall have authority to issue is Six Million (6,000,000). Four Million
(4,000,000) shares of such stock shall be common stock, with a One Dollar
($1.00) par value per share ("Common Stock"), amounting in the aggregate to
Four Million Dollars ($4,000,000). Two Million (2,000,00) shares of such stock
shall be preferred stock, with a One Dollar ($1.00) par value per share,
amounting in the aggregate to Two Million Dollars ($2,000,000).
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof are as follows:
(a)VOTING OF COMMON STOCK. At all elections of directors of the
Corporation, each holder of shares of Common Stock of the Corporation shall be
entitled to cast as many votes as shall equal the number of shares of Common
Stock he or it holds on the applicable record date.
(b)PREFERRED STOCK. The voting powers, designations, preferences and
relative, participating, optional and other special rights, and qualifications,
limitations and restrictions of all shares are as follows:
1.DESIGNATION AND NUMBER. Two Million (2,000,000) shares of the
Corporation's preferred stock, with a One Dollar ($1.00) par value, are hereby
designated "Series A Convertible Preferred Stock"("Series A Stock").
2.DIVIDENDS. The holders of the Series A Stock shall be entitled to
receive cumulative cash dividends of the Corporation simultaneously and on a
share for share basis at the same rate per share with the Common Stock of the
Corporation, when and as such dividends are declared by the Board of Directors;
PROVIDED, HOWEVER, that such dividends shall only be payable out of funds
legally available for the payment of dividends, to shareholders of record on
the respective dates, not exceeding fifty days preceding such dividend payment
dates, fixed for the purpose by the Board of Directors in advance of payment of
each particular dividend. Dividends shall accrue on each such share of
Series A Stock from the date of its original issuance. If such dividend shall
not have been paid on or declared and set apart for all Series A Stock at the
time outstanding, the deficiency shall be fully paid on or declared and set
apart for such Series A Stock before any dividends shall be paid on or declared
or set apart for the Corporation's Common Stock, or on any other securities of
the Corporation junior to the Series A Stock. Accumulated unpaid dividends
shall not bear interest.
3.CONVERSION RIGHTS. All persons who or which own of record the issued
and outstanding shares of Series A Stock (for purposes of this Article Fourth,
collectively, the "Holders") shall have conversion rights as follows:
(A)CONVERSION. Each share of Series A Stock shall be convertible, at the
option of the Holder thereof, at any time after the date of issuance of such
share, at the principal office of the Corporation or any transfer agent for the
Series A Stock, into one fully paid and non-assessable share of Common Stock.
The number of shares of Common Stock into which each share of Series A Stock
may be converted is hereinafter referred to as the "Conversion Rate."
(B) MANNER OF CONVERSION. Before any Holder of Series A Stock shall be
entitled to convert the same into shares of Common Stock, such Holder shall
surrender the certificate or certificates therefor, duly endorsed for transfer
to the Corporation, at the principal office of the Corporation or of any
transfer agent for the Series A Stock and shall give written notice to the
Corporation at such office that he or it elects to convert the same and shall
state therein the name or names in which such Holder wishes the certificate or
certificates for shares of Common Stock to be issued. The Corporation shall,
as soon as practicable thereafter, issue and deliver at such office to such
Holder of Series A Stock, or to such Holder's nominee or nominees, a
certificate or certificates for the number of shares of Common Stock to which
such Holder shall be entitled as aforesaid. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the shares of Series A Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
(C)ADJUSTMENT FOR COMBINATIONS OF CONSOLIDATIONS OF COMMON STOCK. In the
event the Corporation at any time or from time to time after the original
issuance of Common Stock shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive a dividend or
other distribution payable in additional shares of Common Stock, or other
securities or rights (hereinafter referred to as "Common Stock Equivalents")
convertible into or entitling the holder thereof to receive additional shares
of Common Stock without payment of any consideration by such holder for such
Common Stock Equivalents or the additional shares of Common Stock, then, and in
each such event, the maximum number of shares (as set forth in the instrument
relating thereto without regard to any provisions contained therein for a
subsequent adjustment of such number) of Common Stock issuable in payment of
such dividend or distribution or upon conversion or exercise of such Common
Stock Equivalents shall be deemed to be issued and outstanding as of the time
of such issuance or, in the event such a record date shall have been fixed, as
of the close of business on such record date. In each such event the
Conversion Rate shall be increased as of the time of such issuance or, in the
event such a record date shall have been fixed, as of the close of business on
such record date, by multiplying the Conversion Rate by a fraction,
(i)the numerator of which shall be the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance on
the close of business on such record date plus the number of shares of Common
Stock issuable in payment of such dividend or distribution or upon conversion
or exercise of such Common Stock Equivalent; and
(ii)the denominator of which shall be the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance or
the close of business on such record date; PROVIDED, HOWEVER, (w) if such
record date shall have been fixed and such dividend is not fully paid or if
such distribution is not fully made on the date fixed therefor, the Conversion
Rate shall be computed accordingly as of the close of business on such record
date and thereafter the Conversion Rate shall be adjusted pursuant to this
Paragraph(b)(3)(C) of this Article Fourth as of the date of actual payment of
such dividends or distributions; (x) if such Common Stock Equivalents provide,
with the passage of time or otherwise, for any decrease in the number of
shares of Common Stock issuable upon conversion or exercise thereof (or upon
the occurrence of a record date with respect thereto), upon any such decrease
becoming effective, the Conversion Rate shall be recomputed to reflect such
decrease insofar as it affects the rights of conversion or exercise of the
Common Stock Equivalents then outstanding; (y) upon the expiration of any
rights or conversion or exercise under any unexercised Common Stock
Equivalents, the Conversion Rate computed upon the original issue thereof (or
upon the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed as if the
only additional shares of Common Stock issued were the shares of such stock, if
any, actually issued upon the conversion or exercise of such Common Stock
Equivalents; and (z) in the case of Common Stock Equivalents which expire by
their terms not more than sixty days after the date of issuance thereof, no
adjustment of the Conversion Rate shall be made until the expiration or
exercise of all such Common Stock Equivalents whereupon such adjustment shall
be made in the manner provided in Clause (y) above.
(D)Anything in the foregoing paragraph to the contrary notwithstanding, no
shares of Common Stock shall be issued to any Holder, and no conversion shall
be deemed to have taken place, unless and until such Holder shall have executed
an agreement, in form and substance reasonably satisfactory to counsel to the
Corporation, to the effect that (i) such shares of Common Stock are being
acquired for investment and not with a view to the distribution thereof; and
(ii) that such shares of Common Stock may not be sold or otherwise transferred
unless, in the opinion of counsel for the Corporation, such sale or transfer
would not violate or cause the Corporation to violate, any then-applicable
federal or state securities laws.
4.LIQUIDATION, DISSOLUTION OR WINDING-UP PREFERENCE.
(A)In the event of any liquidation, dissolution or winding-up of the
Corporation, either voluntary or involuntary, the Holders of the Series A Stock
shall be entitled to receive, prior and in preference to any distribution of
any of the assets of the Corporation (whether capital or surplus) to the
holders of the Common Stock by reason of their ownership thereof but after
provision has been made for payment of all indebtedness of the Corporation, the
amount of One Hundred Dollars ($100) per share for each share of Series A Stock
then held by them and, in addition, an amount equal to all declared but unpaid
dividends on the Series A Stock held by them. If upon the occurrence of such
event, such assets distributed among the Holders shall be insufficient to
permit the payment to such Holders of the full aforesaid preferential amounts,
then the entire assets, or proceeds thereof, of the Corporation legally
available for distribution shall be distributed ratably among the Holders in
proportion to the full preferential amount each such Holder is otherwise
entitled to receive.
(B)A consolidation or merger of the Corporation with or into any other
corporation or corporations, or a sale of all or substantially all of the
assets of the Corporation, shall not be deemed to be a liquidation, dissolution
or winding-up within the meaning of this Paragraph (b)(4)(B) of this Article
Fourth.
FIFTH: The Corporation shall have perpetual existence.
SIXTH: All corporate powers of the Corporation shall be exercised by the
Board of Directors except as otherwise provided herein or by law.
In furtherance and not in limitation of the powers conferred by law, the
Board of Directors is expressly authorized:
(a)BYLAWS. To alter, amend or repeal the Bylaws or adopt new bylaws of
the Corporation;
(b)VOTING FOR SALE ASSETS. When and as authorized by the affirmative vote
of the holders of a majority of the stock issued and outstanding having voting
power given at a stockholders' meeting duly called upon such notice as is
required by statute, or when authorized by the written consent of the holders
of a majority of the voting stock issued and outstanding, to sell, lease or
exchange all or substantially all of the property and assets of the
Corporation, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or poverty including shares of stock in, or other securities
of, any other corporation or corporations, as its Board of Directors shall deem
expedient and in the best interests of the Corporation;
(c)RESERVES. To fix, abolish, determine and vary from time to time the
amount or amounts to be set apart as reserves;
(d)MORTGAGES. To authorize and cause to be executed mortgages and liens,
with or without limit as to amount, upon the real or personal property of the
Corporation;
(e)INSPECTION OF BOOKS. From time to time to determine whether and to
what extent, at what time and place, and under what conditions and regulations
the accounts and books of the Corporation, or any of them, shall be open to the
inspection of any stockholder; and no stockholder shall have any right to
inspect any account or book or document of the Corporation except as conferred
by stature or bylaw or as authorized by resolution of the stockholders or Board
of Directors;
(f)DIRECTORS' COMPENSATION. To authorize the payment of compensation to
the directors for services to the Corporation, including fees for attendance at
meetings of the Board of Directors or of any committee thereof or salaries for
serving as such directors or committee members, and to determine the amount of
such compensation;
(g)PROFIT PLANS; INSURANCE. From time to time to formulate, establish,
promote and carry out, and to amend, alter, change, revise, recall, repeal or
abolish, a plan or plans for the participation by all or any of the employees,
including directors and officers, of the Corporation, or of any corporation,
company, association, trust or organization in which or in the welfare of which
the Corporation has any interest, and those actively engaged in the conduct of
the Corporation's business, in the profits, gains or business of the
Corporation or of any branch or division thereof, as part of the Corporation's
legitimate expenses, or for the furnishing to such employees, directors,
officers or persons, or any of them, at the Corporation's expense, of medical
services, insurance against accident, sickness or death, pensions during old
age, disability or unemployment, education, housing, social services,
recreation or other similar aids for their relief or general welfare, in such
manner and upon such terms and conditions as the Board of Directors shall
determine;
(h)GUARANTY OF CORPORATION. To authorize the guaranty by the Corporation
of securities, evidences of indebtedness and obligations of other persons,
firms, association and corporations; and
(i)Amendment of this Restated Certificate of Incorporation. To amend,
alter, change or repeal any provision contained in this Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
SEVENTH: Any corporate action upon which a vote of stockholders is required
or permitted may be taken with the written consent of stockholders having not
less than fifty percent (50%) of all of the stock entitled to vote upon the
action if a meeting were held; PROVIDED, HOWEVER, that in no case shall the
written consent be by holders having less than the minimum percentage of the
vote required by statute for the proposed corporate action and provided that
prompt notice be given to all stockholders of the taking of corporate action
without a meeting and by less than unanimous written consent.
EIGHTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for the Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for the Corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation."
IN WITNESS WHEREOF, GATX CAPITAL CORPORATION has caused this certificate to
be signed by Thomas C. Nord, its Vice President and General Counsel, and
attested and sealed by Marty M. Linne, its Assistant Secretary, as of the 29th
day of December, 1995.
GATX CAPITAL CORPORATION
By: /s/ Thomas C. Nord
------------------------
Thomas C. Nord
Vice President and General Counsel
(Corporate Seal)
ATTEST:
By: /s/ Marty M. Linne
---------------------
Marty M. Linne
Assistant Secretary
<PAGE>
Exhibit 12
- ------------
GATX Capital Corporation
Ratio of Earnings to Fixed Charges
Year Ended December 31, 1995
(in thousands)
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
Fixed Charges:
Interest on indebtedness
and amortization of debt
discount and expense $68,396 $62,744 $65,454 $71,889 $71,374
Capitalized interest 1,601 292 279 731 2,549
Portion of rents
representing interest
factor (assumed to
approximate 33%) 6,574 5,120 3,012 2,440 1,346
-------- -------- -------- ------- --------
Total fixed charges 76,571 68,158 68,745 75,060 75,269
======== ======== ======== ======= ========
Earnings available for
fixed charges:
Net income (loss) 32,604 24,851 21,525 (7,197) 28,485
Add (deduct):
Income taxes (benefit) 22,740 18,785 21,361 (9,849) 22,549
Cumulative effect of
accounting changes - - - (9,456) -
Equity in net earnings of
joint ventures, net of
dividends received 13,522 14,322 16,222 40,161 7,109
Fixed charges (excluding
capitalized interest) 74,970 67,864 68,466 74,329 72,720
-------- -------- -------- ------- --------
Total earnings available
for fixed charges $143,836 $125,822 $127,574 $87,988 $130,863
======== ======== ======== ======= ========
Ratio of earnings to
fixed charges 1.88 1.85 1.86 1.17 1.74
======== ======== ======== ======== ========
<PAGE>
Exhibit 23 - Consent of Independent Auditors
We consent to the incorporation by reference in Registration Statements
No.33-6910 on Form S-3 filed July 7, 1986 (as amended by Amendment No. 1 filed
December 19, 1986, Amendment No. 2 filed January 7, 1987, Amendment No. 3
filed December 23, 1987, and Amendment No. 4 filed August 9, 1989),
No. 33-30300 on Form S-3 filed August 2, 1989, No. 33-40327 on Form S-3 filed
May 2, 1991, and No. 33-64474 on Form S-3 filed June 17, 1993 , and
No.35-65053 on Form S-3 filed January 5, 1996 of GATX Capital Corporation of
our report dated January 23, 1996, with respect to the consolidated financial
statements of GATX Capital Corporation included in this Annual Report on Form
10-K for the year ended December 31, 1995.
ERNST & YOUNG LLP
San Francisco, California
March 28, 1996
<PAGE>
<TABLE> <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
</LEGEND>
<MULTIPLIER> 1000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 19,905
<SECURITIES> 0
<RECEIVABLES> 867,230<F1>
<ALLOWANCES> 92,489
<INVENTORY> 28,230<F2>
<CURRENT-ASSETS> 0<F4>
<PP&E> 315,707<F3>
<DEPRECIATION> 0<F3>
<TOTAL-ASSETS> 1,518,383
<CURRENT-LIABILITIES> 0<F4>
<BONDS> 888,848<F5>
0
1,027<F6>
<COMMON> 1,031<F6>
<OTHER-SE> 314,942<F7>
<TOTAL-LIABILITY-AND-EQUITY> 1,518,383
<SALES> 0
<TOTAL-REVENUES> 236,509
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 94,769<F8>
<LOSS-PROVISION> 18,000
<INTEREST-EXPENSE> 68,396
<INCOME-PRETAX> 55,344
<INCOME-TAX> 22,740
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,604
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>CONSISTS OF DIRECT FINANCE LEASE RECEIVABLES OF 406,950, LEVERAGED LEASE
RECEIVABLES OF 220,407, AND SECURED LOANS OF 239,873.
<F2>CONSISTS OF ASSETS HELD FOR SALE
<F4>GATX CAPITAL HAS AN UNCLASSIFIED BALANCE SHEET
<F3>CONSISTS OF COST OF EQUIPMENT LEASED TO OTHERS UNDER OPERATING LEASES, NET
OF DEPRECIATION.
<F5>CONSISTS OF SENIOR TERM NOTES OF 679,600, OBLIGATIONS UNDER CAPITAL LEASES
OF 15,802 AND NONRECOURSE OBLIGATIONS OF 193,446.
<F6>PAR VALUE ONLY
<F7>CONSISTS OF RETAINED EARNINGS OF 162,400, ADDITIONAL PAID-IN CAPITAL OF
151,902 AND TRANSLATION ADJUSTMENT OF 640.
<F8>CONSISTS OF OPERATING LEASE EXPENSE OF 50,424, SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES OF 43,517, AND OTHER EXPENSES OF 828.
</FN>
</TABLE>
EXHIBIT 99
- ----------
MEDIUM TERM NOTES
AMOUNT MATURITY RATE
----------- -------- -----
FIXED: $10,000,000 03/11/96 9.68
$ 5,000,000 01/30/98 10.00
$ 2,000,000 02/25/98 9.76
$ 7,000,000 03/10/98 10.00
$10,000,000 03/16/98 10.00
$ 2,000,000 03/19/98 10.00
$ 6,000,000 03/19/98 10.00
$ 5,000,000 03/20/98 9.93
$10,000,000 04/01/98 10.00
$ 5,000,000 03/22/99 9.90
$16,000,000 04/15/99 9.90
$ 4,000,000 05/10/00 10.20
$ 5,000,000 03/21/01 10.00
$ 5,000,000 03/22/01 10.00
$20,000,000 04/11/01 10.00
$32,600,000 05/05/99 9.85
$30,000,000 03/18/96 5.45
$15,000,000 03/22/96 5.48
$25,000,000 01/15/97 7.90
$10,000,000 05/05/97 8.20
$ 5,000,000 03/10/98 8.67
$13,000,000 04/30/98 6.12
$ 5,000,000 05/07/98 6.11
$ 5,000,000 10/15/98 8.78
$10,000,000 11/15/99 6.38
$17,000,000 07/26/00 6.21
$10,000,000 10/11/00 6.50
$ 2,000,000 10/30/00 9.28
$ 6,000,000 11/15/00 9.12
$10,000,000 10/08/01 9.13
$ 2,000,000 10/08/01 9.05
$10,000,000 01/10/02 9.50
$15,000,000 01/10/02 9.50
$20,000,000 06/03/03 7.20
$10,000,000 06/09/98 6.15
$30,000,000 06/09/00 6.44
$10,000,000 12/05/00 6.17
$10,000,000 06/09/01 6.54
$15,000,000 12/05/01 6.27
$ 5,000,000 04/04/02 7.46
$15,000,000 05/17/02 7.17
$15,000,000 05/17/02 7.17
$15,000,000 12/16/02 6.36
$ 5,000,000 04/14/04 7.92
$ 5,000,000 04/14/04 7.92
$25,000,000 10/13/05 6.86
$15,000,000 11/30/05 6.69
$10,000,000 11/30/05 6.69
FLOATING:
$20,000,000 04/07/97
$20,000,000 02/16/99
