SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported) June 10, 1997
GATX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
New York 1-2328 36-1124040
(State or other jurisdiction (Commission file number) (I.R.S. employer
of incorporation) identification number)
500 West Monroe Street, Chicago, Illinois 60661-3676
(Address of principal executive offices)
Registrant's telephone number, including area code (312) 621-6200
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GATX Capital Corporation, an indirect wholly owned subsidiary of the
Company, is filing a Current Report on Form 8-K, stating the following:
As previously reported, GATX/Airlog Company ("Airlog"), a California
General Partnership, of which a subsidiary of the Company is a partner, and the
Company, filed a complaint for Declaratory Judgment against Evergreen
International Airlines, Inc. ("Evergreen") in the United States District Court
for the Northern District of California (No. C96-2494) seeking a declaration
that neither the Company nor Airlog has any liability to Evergreen as a result
of the issuance of Airworthiness Directive 96-01-03 (the "Airworthiness
Directive") by the Federal Aviation Administration (the "FAA") in January of
1996. The effect of the Airworthiness Directive is to reduce significantly the
amount of freight that three of Evergreen's B747 aircraft may carry. These three
aircraft, along with a fourth no longer owned by Evergreen, were modified from
passenger to freight configuration by subcontractors of Airlog, pursuant to
contracts between Airlog and Evergreen or one of its affiliates. The four
aircraft are part of a group of ten B747 aircraft (the "Affected Aircraft") that
were modified by subcontractors of Airlog pursuant to a design approved by the
FAA at the time the modifications were made, and which are subject to the
Airworthiness Directive. Evergreen filed an answer and counterclaim asserting
that Airlog and the Company are liable to it under a number of legal theories in
connection with the application of the Airworthiness Directive to the three
aircraft.
On June 5, 1997, the Court ruled on a Motion For Partial Summary
Judgement that had been filed by Airlog and the Company with respect to several
of Evergreen's counterclaims. The Court granted the Motion as to Evergreen's
counterclaim that alleged Airlog breached its warranty under the Purchase
Agreement pursuant to which Airlog sold one of the converted aircraft to
Evergreen, and denied the Motion as to Evergreen's counterclaim that Airlog
breached its warranty under the Modification Agreements pursuant to which Airlog
manufactured and installed freighter conversion kits with respect to two other
aircraft owned by Evergreen. The court ruled that the Purchase Agreement was a
contract for the sale of goods and that claims thereunder were barred by the
four year statute of limitations under the California Commercial Code (the
"Code"). The Court ruled that the Modification Agreements were contracts of
services not governed by the Code, and that any applicable statute of
limitations did not begin to run until Evergreen had, or should have had,
knowledge of the alleged breach. The Court also denied the Motion with respect
to Evergreen's counterclaim in which it alleged that Airlog negligently
misrepresented certain facts which purportedly induced Evergreen to enter into
the Purchase and Modification Agreements.
The Court's ruling bars Evergreen from recovering under its claim for
breach of warranty under the Purchase Agreement, and permits Evergreen (subject
to reconsideration or appeal) to proceed with its claim for breach of warranty
under the Modification Agreements and its claim of negligent misrepresentation.
The ruling does not represent a decision that Evergreen is entitled to prevail
on those claims. Airlog and the Company have other defenses to those claims that
they intend to assert vigorously.
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American International Airways, Inc. ("AIA") has filed a Joint Case
Management Statement and Proposed Order in the litigation which it previously
filed against Airlog, Airlog Management Corp. and the Company in the United
States District Court for the Northern District of California (97-0378),
specifying the damages it has allegedly suffered as a result of the application
of the Airworthiness Directive to the two Affected Aircraft owned by it. In the
pleading, AIA alleges that it sustained damages of $ 43,787,954 to date, and
further alleges that it continues to accrue damages of $ 1,800,000 per month
until the aircraft in question are operational.
The Company, Airlog , Airlog Management Company and GATX Aircraft
Corporation have entered into a Tolling Agreement dated as of May 6, 1997, with
The Bank of New York . Under the Tolling Agreement, the parties have agreed that
any defense of expiration of the statute of limitations or statute of repose or
laches applicable to any causes of action arising out of the sale of goods or
services in connection with the Affected Aircraft owned by the Bank of New York
by or on behalf of the parties thereto is tolled to and including May 6, 1999.
The Company has recently been informed that Tower Airlines, the owner
of one of the Affected Aircraft, has filed a complaint against Airlog and the
Company. As of the date of this report, no summons has been served on either
Airlog or the Company with respect to such action, and the Company has no
further information with respect thereto.
Although it is impossible to predict the outcome of any litigation with
certainty, Airlog and the Company continue to believe the above described claims
are without merit and that they have adequate defenses thereto.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, duly authorized.
GATX Corporation
June 10, 1997 By: /s/ David M. Edwards
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David M. Edwards
Vice President Finance and
Chief Financial Officer
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