<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED COMMISSION FILE NUMBER
MARCH 31, 2000 1-2328
---------------------------
GATX CORPORATION
INCORPORATED IN THE IRS EMPLOYER IDENTIFICATION NO.
STATE OF NEW YORK 36-1124040
500 WEST MONROE STREET
CHICAGO, IL 60661-3676
(312) 621-6200
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 (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
--- ---
REGISTRANT HAD 47,688,928 SHARES OF COMMON STOCK OUTSTANDING AS OF APRIL
28, 2000.
================================================================================
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended
March 31
-------------------------------
2000 1999
------------- -------------
GROSS INCOME
Lease, interest and financing services $ 290.2 $ 252.3
Distribution services 156.1 142.5
Other income (1.2) 36.4
------------- -------------
REVENUES 445.1 431.2
Share of affiliates' earnings 22.0 20.2
------------- -------------
TOTAL GROSS INCOME 467.1 451.4
OWNERSHIP COSTS
Depreciation and amortization 96.0 68.5
Interest 68.4 55.0
Operating lease expense 56.6 54.1
------------- -------------
TOTAL OWNERSHIP COSTS 221.0 177.6
OTHER COSTS AND EXPENSES
Operating expenses 119.9 149.5
Selling, general and administrative 57.4 54.8
Provision for possible losses 2.2 2.6
------------- -------------
INCOME BEFORE INCOME TAXES 66.6 66.9
INCOME TAXES 26.0 27.7
------------- -------------
NET INCOME $ 40.6 $ 39.2
============= =============
PER COMMON SHARE
Basic net income per share $ .84 $ .79
Diluted net income per share $ .82 $ .78
Dividends paid $ .30 $ .275
Note - The consolidated balance sheet at December 31, 1999 has been derived from
the audited financial statements at that date. All other consolidated financial
statements are unaudited but include all adjustments, consisting only of normal
recurring items, which management considers necessary for a fair statement of
the consolidated results of operations and financial position for the respective
periods. Operating results for the three months ended March 31, 2000 are not
necessarily indicative of the results that may be achieved for the entire year
ending December 31, 2000. Certain amounts in 1999 have been reclassified to
conform to the current presentation.
1
<PAGE> 3
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
March 31 December 31
2000 1999
----------- -----------
(Unaudited)
ASSETS
CASH AND CASH EQUIVALENTS $ 123.7 $ 102.5
RECEIVABLES
Trade accounts 127.5 153.6
Finance leases 685.4 645.7
Secured loans 426.2 358.0
Less - Allowance for possible losses (112.6) (115.7)
---------- ----------
1,126.5 1,041.6
OPERATING LEASE ASSETS AND FACILITIES
Railcars and service facilities 2,820.0 2,698.7
Tank storage terminals and pipelines 1,496.6 1,221.7
Operating lease investments and other 1,475.6 1,404.5
---------- ----------
5,792.2 5,324.9
Less - Allowance for depreciation (2,193.1) (2,042.9)
---------- ----------
3,599.1 3,282.0
INVESTMENTS IN AFFILIATED COMPANIES 927.6 957.3
OTHER ASSETS 516.0 483.4
---------- ----------
$ 6,292.9 $ 5,866.8
========== ==========
2
<PAGE> 4
March 31 December 31
2000 1999
----------- -----------
(Unaudited)
LIABILITIES, DEFERRED ITEMS
AND SHAREHOLDERS' EQUITY
ACCOUNTS PAYABLE $ 307.1 $ 372.3
ACCRUED EXPENSES 62.1 65.8
DEBT
Short-term 735.9 377.4
Long-term:
Recourse 2,778.7 2,785.7
Nonrecourse 534.4 463.8
Capital lease obligations 178.1 183.1
---------- --------
4,227.1 3,810.0
DEFERRED INCOME TAXES 533.8 457.2
OTHER DEFERRED ITEMS 324.5 325.5
---------- --------
TOTAL LIABILITIES AND DEFERRED ITEMS 5,454.6 5,030.8
SHAREHOLDERS' EQUITY
Preferred stock - -
Common stock 34.6 34.5
Additional capital 341.6 338.7
Reinvested earnings 569.1 543.0
Accumulated other comprehensive gain 4.2 1.2
---------- --------
949.5 917.4
Less - Cost of common shares in treasury (111.2) (81.4)
---------- --------
TOTAL SHAREHOLDERS' EQUITY 838.3 836.0
---------- --------
$ 6,292.9 $5,866.8
========= ========
3
<PAGE> 5
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 40.6 $ 39.2
Adjustments to reconcile net income
to net cash provided by operating activities:
Realized gains on remarketing of leased equipment (9.8) (18.2)
Depreciation and amortization 96.0 68.5
Provision for possible losses 2.2 2.6
Deferred income taxes 33.0 17.3
Net change in trade receivables, inventories,
accounts payable and accrued expenses (50.4) (49.0)
Other (24.6) 9.0
-------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 87.0 69.4
INVESTING ACTIVITIES
Additions to operating lease assets and facilities (196.7) (101.5)
Additions to equipment on lease, net of nonrecourse financing (155.9) (88.6)
Secured loans extended (113.9) (74.6)
Investments in affiliated companies (53.4) (67.6)
Other investments and progress payments (8.6) (10.0)
-------------- --------------
Capital additions and portfolio investments (528.5) (342.3)
Portfolio proceeds:
From remarketing of leased equipment 12.0 72.5
From return of investment 87.2 69.5
-------------- --------------
Total portfolio proceeds 99.2 142.0
Proceeds from other asset sales 18.2 43.2
-------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (411.1) (157.1)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 121.7 119.8
Repayment of long-term debt (59.2) (129.2)
Net increase in short-term debt 330.4 115.1
Repayment of capital lease obligations (6.6) (7.7)
(Repurchase) issuance of common stock and other (26.5) 3.3
Cash dividends (14.5) (13.6)
-------------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 345.3 87.7
-------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 21.2 $ -
============== ==============
</TABLE>
4
<PAGE> 6
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------------------------
2000 1999
---------------- ----------------
<S> <C> <C>
Net income $ 40.6 $ 39.2
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment (12.7) (1.3)
Unrealized gain (loss) on securities, net of
reclassification adjustments (a) 15.7 (1.4)
----------------
----------------
Other comprehensive income (loss) 3.0 (2.7)
---------------- ----------------
COMPREHENSIVE INCOME $ 43.6 $ 36.5
================ ================
(a) Reclassification adjustments:
Unrealized gain on securities $ 24.2 $ .9
Less - Reclassification adjustment for gains
realized included in net income (8.5) (2.3)
----------------
----------------
Net unrealized gain (loss) on securities $ 15.7 $ (1.4)
================ ================
</TABLE>
5
<PAGE> 7
GATX CORPORATION AND SUBSIDIARIES
FINANCIAL DATA OF BUSINESS SEGMENTS (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
GATX
Integrated
Financial Solutions Corporate
GATX Rail Services Group and Other Intersegment Total
--------- -------- ---------- --------- ------------ -----
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 2000
PROFITABILITY
Revenues $ 140.2 $ 150.0 $ 156.1 $ .2 $ (1.4) $ 445.1
Share of affiliates' earnings 1.1 18.9 2.0 - - 22.0
-----------------------------------------------------------------------------
Gross Income 141.3 168.9 158.1 .2 (1.4) 467.1
Interest expense 14.7 38.2 14.4 1.6 (.5) 68.4
Depreciation and amortization 25.8 52.5 16.6 .4 .7 96.0
Income (loss) before taxes 29.3 37.4 5.1 (5.3) .1 66.6
Net income (loss) 18.5 22.9 3.0 (3.8) - 40.6
FINANCIAL POSITION
Debt 918.1 2,457.2 755.9 103.7 (7.8) 4,227.1
Equity 336.8 390.1 205.9 (89.5) (5.0) 838.3
Investments in affiliated companies 92.3 717.4 117.9 - - 927.6
Identifiable assets 1,788.8 3,333.7 1,250.0 25.1 (104.7) 6,292.9
ITEMS AFFECTING CASH FLOW
Net cash provided by (used in)
operating activities 53.3 48.4 (6.0) (8.7) - 87.0
Portfolio proceeds - 99.2 - - - 99.2
-----------------------------------------------------------------------------
Total cash provided (used) 53.3 147.6 (6.0) (8.7) - 186.2
Capital additions and portfolio
investments 131.4 326.6 70.2 .3 - 528.5
- -------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, 1999
PROFITABILITY
Revenues $ 137.6 $ 151.4 $ 142.5 $ .6 $ (.9) $ 431.2
Share of affiliates' earnings .9 13.5 5.8 - - 20.2
-----------------------------------------------------------------------------
Gross Income 138.5 164.9 148.3 .6 (.9) 451.4
Interest expense 12.4 28.5 12.9 1.6 (.4) 55.0
Depreciation and amortization 24.4 29.9 13.7 .3 .2 68.5
Income (loss) before taxes 27.9 30.4 13.9 (5.4) .1 66.9
Net income (loss) 17.5 17.6 7.6 (3.5) - 39.2
FINANCIAL POSITION AT DECEMBER 31, 1999
Debt 831.0 2,255.3 664.9 67.6 (8.8) 3,810.0
Equity 327.5 362.8 216.6 (65.9) (5.0) 836.0
Investments in affiliated companies 91.3 665.5 199.8 .7 - 957.3
Identifiable assets 1,693.8 3,088.9 1,166.4 29.8 (112.1) 5,866.8
ITEMS AFFECTING CASH FLOW
Net cash provided by (used in)
operating activities 42.1 31.8 3.0 (7.5) - 69.4
Portfolio proceeds - 142.0 - - - 142.0
-----------------------------------------------------------------------------
Total cash provided (used) 42.1 173.8 3.0 (7.5) - 211.4
Capital additions and portfolio
investments 102.2 215.5 23.8 .8 - 342.3
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
COMPARISON OF FIRST THREE MONTHS OF 2000
TO FIRST THREE MONTHS OF 1999
GATX Corporation's net income for the first quarter of 2000 was $41 million
compared to $39 million for the first quarter 1999. Earnings per share on a
diluted basis increased 5% to $.82 from $.78 for the prior year quarter. GATX
repurchased approximately 900,000 shares of common stock during the first
quarter for $30 million. The cumulative two million shares repurchased since
August 1999 had a $.02 per share effect on earnings per share versus 1999.
Gross income of $467 million increased by $16 million from the prior year
quarter, while net income was $1.4 million higher. GATX Rail's rental revenue
increased 3% from the prior year period due to a larger active fleet. Financial
Services' lease income increased $35 million as a result of a higher average
lease portfolio in 2000. The decrease in asset remarketing income was partially
offset by an increase in gains from stock sales. Partially offsetting these
increases was the absence in the current year quarter of Financial Services'
Value Added Reselling (VAR) business line, which was sold in the second quarter
of 1999 and contributed $37 million to gross income in the prior year quarter.
Gross income at Integrated Solutions increased from the prior year period due to
continued strong customer demand and throughput levels across most regions in
the terminal and pipeline operations and a larger contribution from chemical
logistics operations. Current year results also include the operations of two
international terminal facilities purchased in the first quarter. Partially
offsetting this increase is a nonrecurring gain on last year's sale of rights
along the Central Florida Pipeline as well as the absence of revenues from
locations that were closed or sold in 1999.
Net cash provided by operating activities for the first quarter of 2000 was $87
million, a $18 million increase from last year's quarter, due to higher
depreciation taken in the current year quarter as well as lower asset
remarketing gains. All cash received from asset dispositions, including gain and
return of principal, are included in investing activities as portfolio proceeds.
Total debt of $4.2 billion increased $417 million from December 31, 1999, as a
result of a $358 million increase in short-term debt and a $59 million increase
in long-term debt and capital lease obligations. The increase in short-term debt
primarily reflects $136 million of commercial paper at GATX Capital and $194
million of commercial paper and money market funds at GATX Rail Corporation
(GRC). Subsequent to March 31, 2000, GRC completed a leveraged lease transaction
and used proceeds of $169 million to pay down short-term debt. The $71 million
increase in nonrecourse long-term debt is primarily the result of transactions
at GATX Capital.
Capital additions and portfolio investments for the quarter totaled $529
million, an increase of $186 million from the first quarter of 1999. GATX Rail
invested $131 million, compared to $102 million in the first quarter of 1999, in
its railcar fleet, facilities, and international affiliates. This increase
primarily reflects an investment in approximately 900 additional railcars as
compared with the prior year period. Integrated Solutions' investment of $70
million increased $46 million over the prior year quarter primarily due to the
purchase of two international terminal facilities that had previously
7
<PAGE> 9
been 50/50 joint ventures with Koninklijke Vopak N.V. Portfolio investments at
Financial Services for the quarter of $327 million were $111 million higher than
the prior year and primarily reflect investments in technology assets and joint
ventures. Full year capital additions are expected to be approximately $550
million, while portfolio investments are anticipated to approximate $1.3
billion. These projections may change significantly depending on market
conditions and opportunities to acquire portfolios of desirable assets.
Internally generated cash flow and GATX's external financing sources will fund
capital additions and portfolio investments.
GATX, through its subsidiaries, had unused committed lines of credit of $226
million at March 31, 2000. GATX Capital issued $136 million of commercial paper
and $71 million of nonrecourse debt during the first quarter. Additional
financing needs were met by cash flow from operations, portfolio proceeds and
short-term debt. GRC has a $650 million shelf registration for debt securities
and pass-through certificates of which $220 million of notes and $106 million of
pass-through certificates have been issued through March 31, 2000. GATX Capital
has a shelf registration for $1.015 billion of which $485 million has been
issued.
OTHER MATTERS
The Financial Accounting Standards Board issued Statement No. 133 - Accounting
for Derivative Instruments and Hedging Activities (SFAS No. 133). This new
accounting standard will require that all derivatives be recorded on the balance
sheet at fair value. If the derivative is a hedge, depending on the nature of
the hedge, changes in the fair value of derivatives will either be offset
against the change in the fair value of the hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
GATX utilizes fundamental derivatives to hedge changes in interest rates and
foreign currencies. In July 1999, Statement No. 137 was issued which deferred
the effective date of SFAS No. 133 for one year. SFAS No. 133 is now required to
be adopted in years beginning after June 15, 2000. Management is currently
assessing the impact that the adoption of SFAS No. 133 will have on the
company's financial position, results of operations, and cash flows. GATX
expects to adopt SFAS No. 133 effective January 1, 2001.
Management's discussion includes statements that may constitute forward-looking
statements made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. This information may involve risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements. Although GATX believes that the expectations
reflected in such forward-looking statements are based on reasonable
assumptions, such statements are subject to risks and uncertainties that could
cause actual results to differ materially from those projected. These risks and
uncertainties include, but are not limited to, unanticipated changes in the
markets served by GATX such as the petroleum, chemical, rail, air, and
technology industries.
8
<PAGE> 10
RESULTS OF OPERATIONS
Following is a discussion of the operating results of GATX's business segments:
GATX RAIL
- --------------------------------------------------------------------------------
GATX Rail's gross income for the first three months of 2000 increased 2% from
the comparable prior year period due to a larger active fleet. Average rental
rates on the total fleet were comparable to last year's levels. Approximately
85,000 tank and freight cars were on lease throughout North America at March 31,
2000, compared to 82,000 railcars a year ago. With a total North American fleet
of 90,400 railcars, utilization at the end of the period was 94%, down from 95%
a year ago.
Net income increased 6% from the first quarter of 1999 and approximated 13% of
gross income, which was comparable to the prior year. A larger active fleet and
lower operating costs offset by an increase in asset ownership costs
(depreciation, interest, and operating lease expense) contributed to the growth
in net income.
FINANCIAL SERVICES
- --------------------------------------------------------------------------------
Gross income at Financial Services of $169 million grew $4 million from the
prior year quarter as increased lease volume, greater joint venture income and
higher warrant-based income were offset by lower asset remarketing income and
the absence of the VAR business line that had contributed $37 million in the
first quarter of 1999. The $14 million decrease in asset remarketing income was
partially offset by a $9 million increase in gains from stock sales. Asset
remarketing income includes both gains from asset sales and residual sharing
fees. Asset remarketing income and gains from the sale of stock do not occur
evenly from period to period.
Net income of $23 million increased $5 million from last year as a result of a
higher average portfolio balance and increases in joint venture and
warrant-based income. Partially offsetting these were increases in interest and
depreciation, which resulted from additional debt and higher interest rates
incurred to finance the purchase of operating lease assets and from the
depreciation of a greater average investment in operating lease assets than the
prior year quarter, respectively.
GATX INTEGRATED SOLUTIONS
- --------------------------------------------------------------------------------
GATX Integrated Solutions' gross income of $158 million increased $10 million
from the prior year quarter primarily as a result of strong demand and
throughput in the terminal and pipeline businesses, the full consolidation of
two international facilities during the first quarter of 2000 that had
previously been 50% owned joint ventures with Koninklijke Vopak N.V, and a
larger contribution from the chemical logistics operations. Partially offsetting
this increase is a nonrecurring gain on last year's sale of rights along the
Central Florida Pipeline as well as the absence of revenues from locations that
were closed or sold in 1999. Throughput of petroleum and chemical products was
156 million barrels for ongoing operations during the first quarter of 2000, up
from 127 million barrels for the same quarter last year. Domestic capacity
utilization was 94% at the end of the first quarter, which was comparable to the
prior year period.
Current year results were negatively impacted by lower results at Olympic
Pipeline Company (Olympic), which is 25% owned by GATX Terminals Corporation. In
June 1999, a rupture and explosion occurred on a pipeline owned by Olympic.
Several lawsuits have been filed against
9
<PAGE> 11
Olympic, and the affected section of the pipeline has not resumed operations.
Management is continuing to evaluate other potential impacts, if any, of this
incident on GATX Terminals Corporation.
Net income of $3 million decreased $5 million from the prior year quarter
primarily due to the nonrecurring gain on the sale of rights along the Central
Florida Pipeline, the absence of earnings from locations that were closed or
sold in 1999, increased development costs in chemical and rail logistics, and
costs incurred in the current year related to the newly acquired international
terminals.
Subsequent to quarter-end, GATX has entered into an agreement to sell 81% of
GATX Logistics, a member of the Integrated Solutions Group. Management
anticipates that this transaction will not have a material impact on Integrated
Solutions' net income going forward as historically the earnings contribution
from GATX Logistics has not been significant.
CORPORATE AND OTHER
- --------------------------------------------------------------------------------
Corporate and Other net expense of $4 million was comparable to the prior year
period. Results include a favorable settlement of an environmental claim in 2000
and insurance proceeds in 1999.
10
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
GATX Rail Corporation (GRC) and GATX Terminals Corporation (Terminals), both
subsidiaries of GATX Corporation, are two of the nine defendants named in In re
New Orleans Tank Car Leakage Fire Litigation, Civil Action No. 87-16374, Civil
District Court for the Parish of Orleans, State of Louisiana (the Tank Car
Litigation). The litigation arises from the September 1987 leak of butadiene
from a tank car owned by GRC and the subsequent fire. The butadiene was loaded
into the tank car at a facility owned and operated by Terminals. Discovery taken
to date has shown the leak and fire did not cause any deaths or serious personal
injuries, but did result in an approximate thirty-six hour evacuation of persons
in the affected area.
The Tank Car Litigation was certified as a class action in 1993. A trial of the
compensatory damage claim of twenty selected plaintiffs and of the punitive
damage claims of the class was conducted in 1997. In September 1997, the jury
awarded approximately $1,900,000 plus interest as compensatory damages to the
twenty plaintiffs and $3,400,000,000 as punitive damages in favor of the class
including $190,000,000 against Terminals. GRC is not liable for punitive
damages. In July 1999, the Court conducted a trial on the compensatory claims of
an additional twenty plaintiffs; the jury awarded a total of $344,300 in
compensatory damages.
In October 1999, GRC, Terminals, three other defendants and the Plaintiffs'
Management Committee acting on behalf of the Class executed a settlement
agreement (the Preliminary Settlement Agreement) which provides for the release
of any and all claims against the five defendants, including GRC and Terminals.
A sixth defendant subsequently entered into a separate settlement agreement with
the class. The settling defendants hereinafter are collectively referred to as
the Settling Defendants.
In November 1999, the Court gave preliminary approval to the settlement and
directed that notice of the proposed settlement be given to all class members
and other interested persons. The Court also ordered that a final hearing on the
settlement be conducted on March 22, 2000 (the Fairness Hearing).
At the Fairness Hearing, the Court considered objections to the settlement and
concluded that the objections were not meritorious, and further determined that
the proposed settlement was fair, reasonable and adequate to the class. Based on
the foregoing, the Court entered a Final Order and Judgment (a) approving the
Preliminary Settlement Agreement, and (b) ordering that (i) on the Final
Settlement Date (viz., the date on which the period for appeal expires or final
affirmation of the Final Order and Judgment on appeal or final dismissal or
denial of all such appeals occur) all judgements in the litigation as to the
Settling Defendants are fully satisfied, and (ii) all persons except those who
had properly and timely opted out of the Class are barred from bringing any
cause of action related to the tank car incident. The Court retained
jurisdiction over the litigation for purposes of any proposed disbursement of
settlement proceeds (and the process with respect thereto) and further
proceedings in the matter including the litigation against the non-settling
defendants. The Court also certified the Final Order and Judgment as a final
appealable judgement. The appeal period will expire on May 30, 2000.
11
<PAGE> 13
GATX believes that the required amounts to be paid by GRC and Terminals pursuant
to the Final Order and Judgment will not be material to GATX's consolidated
financial position or results of operations. Should the matter be appealed and
in such case the settlement be set aside, GRC and Terminals will aggressively
defend any future trials and pursue post-judgment review of the compensatory and
punitive awards and, if necessary, appeal of any final judgment.
GATX Capital Corporation (Capital), a subsidiary of GATX Corporation, is a party
to actions arising from the issuance by the Federal Aviation Administration (the
FAA) in January 1996 of Airworthiness Directive 96-01-03 (the AD). The AD had
the effect of significantly reducing the amount of freight that ten 747 aircraft
may carry. These aircraft (the Affected Aircraft) were modified from passenger
to freighter configuration by GATX/Airlog Company (Airlog), a California general
partnership. A subsidiary of Capital, GATX Aircraft Corporation, is a partner in
Airlog. The modifications were carried out between 1988 and 1994 by
subcontractors of Airlog under authority of Supplemental Type Certificates
(STCs) issued by the FAA in 1987 pursuant to a design approved by the FAA. In
the AD, the FAA stated that the STCs were issued "in error."
While the amounts claimed in the Airlog matter are substantial and the results
of litigation are impossible to predict with certainty, Capital believes that
each of the claims brought against it is without merit, and that Capital and
Airlog have adequate defenses thereto. There have been no material developments
to the previously reported status of this litigation.
GATX and its subsidiaries are engaged in various matters of litigation,
including but not limited to those described above, and have a number of
unresolved claims pending, including proceedings under governmental laws and
regulations related to environmental matters. While the amounts claimed are
substantial and the ultimate liability with respect to such litigation and
claims cannot be determined at this time, management believes that damages, if
any, required to be paid by GATX and its subsidiaries in the discharge of such
liability could be material to the results of operations for a given quarter or
year but are not likely to be material to GATX's consolidated financial
position.
12
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) GATX's Annual Meeting of Stockholders was held on April 28, 2000.
(b) Matters voted upon at the meeting were:
Number of Shares Voted
----------------------
For Withheld
--- --------
1. Election of Directors.
Rod F. Dammeyer 41,465,998 341,931
James M. Denny 41,465,342 342,587
Richard Fairbanks 41,480,362 327,567
William C. Foote 41,481,922 326,007
Deborah M. Fretz 41,471,148 336,781
Miles L. Marsh 41,473,615 334,314
Michael E. Murphy 41,457,599 350,330
John W. Rogers, Jr. 41,465,259 342,670
Ronald H. Zech 41,463,647 344,282
2. Ratification of appointment of Ernst & 41,702,493 For
Young LLP as independent auditors 66,788 Against
for Fiscal 2000. 38,648 Abstentions
There were no broker non-votes with respect to the election of the directors or
the ratification of appointment of independent auditors.
13
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K PAGE
(a) 11A Computation of Basic Net Income Per Share of Common Stock. 15
11B Computation of Diluted Net Income Per Share of Common Stock. 16
27 Financial Data Schedule for GATX Corporation for the quarter
ended March 31, 2000. Submitted to the SEC along with the
electronic submission of this Quarterly Report on Form 10-Q.
(b) No reports on Form 8-K were filed during the reporting period.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GATX CORPORATION
------------------------------
(Registrant)
/s/ Brian A. Kenney
------------------------------
Brian A. Kenney
Vice President and
Chief Financial Officer
(Duly Authorized Officer)
Date: May 10, 2000
14
<PAGE> 1
EXHIBIT 11A
GATX CORPORATION AND SUBSIDIARIES
COMPUTATION OF BASIC NET INCOME PER SHARE OF COMMON STOCK
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended
March 31
-------------------
2000 1999
------ ------
Average number of shares of common stock outstanding 48.4 49.4
Net income $ 40.6 $ 39.2
Deduct - Dividends paid and accrued on preferred stock - -
------ ------
Net income, as adjusted $ 40.6 $ 39.2
====== ======
Basic net income per share $ .84 $ .79
====== ======
15
<PAGE> 1
EXHIBIT 11B
GATX CORPORATION AND SUBSIDIARIES
COMPUTATION OF DILUTED NET INCOME PER SHARE OF COMMON STOCK
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended
March 31
-----------------
2000 1999
------ ------
Average number of shares used to compute basic earnings
per share 48.4 49.4
Shares issuable upon assumed exercise of stock options,
reduced by the number of shares which could have
been purchased with the proceeds from exercise
of such options .7 1.0
Common stock issuable upon assumed conversion of
preferred stock .1 .1
------ ------
Total shares 49.2 50.5
====== ======
Net income, as adjusted per basic computation $ 40.6 $ 39.2
Add - Dividends paid and accrued on preferred stock -- --
------ ------
Net income, as adjusted $ 40.6 $ 39.2
====== ======
Diluted net income per share $ .82 $ .78
====== ======
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED INCOME STATEMENT OF GATX AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 124
<SECURITIES> 0
<RECEIVABLES> 1,239
<ALLOWANCES> 113<F1>
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 5,792
<DEPRECIATION> 2,193
<TOTAL-ASSETS> 6,293
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 3,491<F3>
0
0
<COMMON> 35
<OTHER-SE> 803
<TOTAL-LIABILITY-AND-EQUITY> 6,293
<SALES> 0
<TOTAL-REVENUES> 467
<CGS> 0
<TOTAL-COSTS> 120<F4>
<OTHER-EXPENSES> 96<F5>
<LOSS-PROVISION> 2
<INTEREST-EXPENSE> 68
<INCOME-PRETAX> 67<F6>
<INCOME-TAX> 26
<INCOME-CONTINUING> 41
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41
<EPS-BASIC> .84
<EPS-DILUTED> .82
<FN>
<F1>RECEIVABLES CONSIST OF THREE COMPONENTS: TRADE ACCOUNTS OF 128 MILLION, FINANCE
LEASES OF 685 MILLION, AND SECURED LOANS OF 426 MILLION.
<F2>NOT APPLICABLE BECAUSE GATX HAS AN UNCLASSIFIED BALANCE SHEET.
<F3>BONDS CONSIST OF THREE COMPONENTS: RECOURSE LONG-TERM DEBT OF 2,779 MILLION
NONRECOURSE LONG-TERM DEBT OF 534 MILLION AND CAPITAL LEASE OBLIGATIONS OF 178
MILLION.
<F4>THIS VALUE REPRESENTS OPERATING EXPENSES ON THE CONSOLIDATED INCOME STATEMENT.
<F5>THIS VALUE REPRESENTS THE PROVISION FOR DEPRECIATION AND AMORTIZATION ON THE
CONSOLIDATED INCOME STATEMENT.
<F6>THIS VALUE REPRESENTS INCOME BEFORE INCOME TAXES.
</FN>
</TABLE>
