<PAGE>
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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.................. For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 33-44946
RAILCAR TRUST NO. 1992-1
(Exact name of Registrant as specified in its charter)
Delaware 36-3822700
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
c/o Wilmington Trust Company
Rodney Square North
1100 N. Market St.
Wilmington, Delaware 19890
(Address of principal executive offices and ZIP code)
Registrant's telephone number, including area code: (302) 651-1000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
----------
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
-------- ---------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PART I........................................................................................................... 1
ITEM 1. Business of the Company....................................................................... 1
ITEM 2. Properties.................................................................................... 4
ITEM 3. Legal Proceedings............................................................................. 4
ITEM 4. Submission of Matters to a Vote of Security Holders........................................... 4
PART II.......................................................................................................... 4
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters......................... 4
ITEM 6. Selected Consolidated Financial Data.......................................................... 5
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 6
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk.................................... 7
ITEM 8. Financial Statements and Supplementary Data................................................... 8
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Statement Disclosure................................................................ 8
PART III......................................................................................................... 8
ITEM 10. Directors and Executive Officers of the Registrant............................................ 8
ITEM 11. Executive Compensation........................................................................ 8
ITEM 12. Security Ownership of Certain Beneficial Owners and Management................................ 9
ITEM 13. Certain Relationships and Related Transactions................................................ 9
PART IV.......................................................................................................... 10
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.............................. 10
</TABLE>
-i-
<PAGE>
PART I
ITEM 1. Business of the Company
Railcar Trust No. 1992-1 (the "Trust") is engaged in railcar leasing. The Trust
was organized in connection with the transactions described below (collectively,
the "Railcar Transaction").
Organization of the Trust
In June 1992, Itel Rail Corporation and certain of its affiliates ("Rail")
completed a transaction with General Electric Capital Corporation and certain of
its affiliates ("GECC") pursuant to which Rail and Railcar Services Corporation,
a Delaware special purpose corporation (the "SPC"), contributed substantially
all of their owned railcars, subject to approximately $170 million of existing
indebtedness ("Assumed Indebtedness"), to the Trust. Certain contracts
(including current end-user leases) relating to such railcars and cash in an
amount necessary to fund payments on the Assumed Indebtedness prior to the first
rental payment date under the Leases (as defined below) were also contributed to
the Trust.
Contribution to the Partnership
The Trust in turn contributed all of the railcars, subject to the Assumed
Indebtedness and together with the aforementioned contracts, to Railcar
Associates, L.P. (the "Partnership"). GE Railcar Associates, Inc.
("Associates") and GE Railcar Leasing Associates, Inc. ("GE Leasing"), each an
indirect wholly owned subsidiary of General Electric Corporation, also
contributed certain railcars, together with certain contracts relating to such
railcars, to the Partnership. The Trust is a 64.00% general partner and a
34.99% limited partner in the Partnership. Associates is a 1% general partner
and the managing general partner of the Partnership. GE Leasing is a 0.01%
limited partner in the Partnership.
In connection with the Railcar Transaction, the Partnership assumed the Assumed
Indebtedness, which is secured by certain of the railcars, and agreed to pay all
amounts owing thereunder as they become due. The Assumed Indebtedness is being
serviced out of rental receipts by the Partnership pursuant to certain leases
(the "Leases") of all of the contributed railcars between the Partnership and GE
Capital Railcar Associates, Inc. ("Lessee"). The Partnership invests any
available cash, pending application to the Assumed Indebtedness, at a fixed rate
of return with GECC. The parties agreed that the Trust and not the Partnership
would bear the economic impact of the Assumed Indebtedness and that payments in
respect of the Assumed Indebtedness would be made from amounts that would
otherwise have been distributed to the Trust. To this end, Partnership
distributions to the partners other than the Trust are proportionately increased
in respect of amounts paid on the Assumed Indebtedness.
1
<PAGE>
The Leases
The Leases between the Partnership and the Lessee are for a twelve-year (12)
term expiring in 2004. Pursuant thereto, the Lessee pays to the Partnership
fixed annual rental payments in the approximate amount of $153 million ("Basic
Rent"). The Leases include the grant to the Lessee of an assignable fixed price
purchase option at the end of the term of the Leases for all, but not less than
all, of the railcars for approximately $500 million. The Leases are net leases
under which the Lessee is responsible for maintenance and other expenses of the
railcars and all obligations of the Lessee are unconditionally guaranteed by
GECC. The Lessee has an annual obligation to make certain contingent payments
to the Partnership in addition to the Basic Rent as determined pursuant to the
Leases ("Additional Rent").
The Trust Notes
Upon the closing of the Railcar Transaction, the Trust issued certain 7.75%
trust notes due June 1, 2004 in an aggregate principal amount of $998,430,000
("Trust Notes"). The Trust Notes were issued pursuant to an Indenture between
the Trust and Harris Trust and Savings Bank. The Trust Notes are obligations of
the Trust, secured by the partnership interests in the Partnership owned by the
Trust, subject to certain excepted rights. All payments of the principal,
premium (if any), and interest on the Trust Notes are intended to be made or
funded by the Trust out of distributions made to the Trust by the Partnership of
a portion of Net Cash Flow (as defined in the Partnership Agreement) of the
Partnership, which is derived from the Basic Rent paid by the Lessee to the
Partnership. The Trust Notes are not registered on any exchanges.
The Trust Notes are represented by Trust Notes registered in the name of the
nominee of The Depository Trust Company ("DTC"). The Trust Notes were made
available for purchase in book-entry form in minimum denominations of $1,000 and
integral multiples thereof. The Trust was informed by DTC that DTC's nominee is
Cede & Co. ("Cede"). Except in limited circumstances, no beneficial owner of
the Trust Notes is entitled to receive a certificate representing such person's
interest in the Trust Notes. Cede is the only holder of record of the Trust
Notes.
Ownership of the Trust
Until November 10, 1993, the Trust was a consolidated affiliate of Rail, its
principal beneficiary, which held a 99% interest in the Trust. On November 10,
1993, Rail distributed as a dividend a 30% Trust interest to its parent, Signal
Capital Holdings Corporation ("Signal Capital Holdings"). Signal Capital
Holdings, on the same date, distributed the same 30% Trust interest as a
dividend to its parent, Itel Rail Holdings Corporation ("Itel Rail Holdings").
At such time, Rail continued to hold a 69% Trust interest.
2
<PAGE>
Prior to July 25, 1994, Rail was liquidated and/or merged with and into Signal
Capital Holdings and Signal Capital Holdings, in turn, distributed a 0.5%
interest in the Trust to its parent, Itel Rail Holdings. Such transactions
resulted in Signal Capital Holdings owning a 68.5% Trust interest, and Itel Rail
Holdings owning a 30.5% Trust interest. On July 25, 1994, SCAP Associates,
L.L.C., a Delaware limited liability company ("SCAP"), acquired from Itel Rail
Holdings a 30% beneficial interest in the Trust and 100% of the stock of Signal
Capital Holdings. SCAP subsequently acquired Itel Rail Holdings' remaining 0.5%
interest in the Trust.
During October 1994, SCAP and Signal Capital Holdings sold all of their
respective interests in the Trust, constituting 99% of the beneficial interest
in the Trust, to multiple investors. The names of each trustor and their
respective percentage beneficial interests ("Beneficial Interests") in the Trust
are set forth below:
<TABLE>
<CAPTION>
Name of Trustor % Beneficial Interest
--------------- ---------------------
<S> <C>
First of St. Louis Leasing Corporation No. 1 5.00000000%
The Fifth Third Leasing Company 3.09670292%
First Security Bank of Idaho, National Association 1.64187774%
First Security Bank of Utah, National Association 1.64187774%
First Security Leasing Company 0.76802089%
MetLife Capital, Limited Partnership 21.56719664%
Nat-Lea, Inc. 1.85802816%
BancBoston Leasing, Inc. 10.87503350%
U.S. Bancorp Leasing & Financial 3.87504300%
First Union Commercial Leasing Group, L.L.C. 12.77921530%
Phoenix Home Life Mutual Insurance Company 7.05927915%
Sun Life Assurance Company of Canada (U.S.) 8.33645448%
BA Leasing & Capital Corporation 20.50127048%
Railcar Services Corporation 1.00000000%
</TABLE>
3
<PAGE>
ITEM 2. Properties
See Item 1--Business of the Company and the Consolidated Financial Statements.
All of the Trust's materially important physical properties have been
contributed to the Partnership and, in turn, leased to the Lessee pursuant to
the Leases.
ITEM 3. Legal Proceedings
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
The Trust is managed pursuant to the Second Amended and Restated Trust Agreement
dated May 1, 1992 ("Trust Agreement"), an Interinvestor Agreement dated October
21, 1994 ("Interinvestor Agreement") and a Tax Matters Agreement dated as of
March 20, 1995. Under the Trust Agreement, a trustee, Wilmington Trust Company
("WTC") acts as a management functionary. WTC is authorized to act
independently only in the case of certain administrative actions with respect to
the Trust Indenture and the Trust Notes and in certain other cases where it has
express authority to act under the Trust Agreement. In all other cases, WTC may
take action only as it is directed by the holders of a majority of the
Beneficial Interests in the Trust. The Trust Agreement imposes an obligation on
WTC to provide various notices to the trustors upon events of default under the
underlying Partnership and Lease documents. In connection with such defaults,
WTC is required to take such action as it is directed by the holders of a
majority of the Beneficial Interests in the Trust.
During 1999, no material matters with respect to the business and operation of
the Trust came to a vote of trustors pursuant to the Trust Agreement and the
Interinvestor Agreement.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters
Neither the Beneficial Interests in the Trust nor the Trust Notes are registered
on any exchange. There is no established public trading market for either the
Beneficial Interests in the Trust or the Trust Notes.
4
<PAGE>
ITEM 6. Selected Consolidated Financial Data
The following selected consolidated financial data is qualified by reference to,
and should be read in conjunction with, the Company's 1999 Consolidated
Financial Statements and notes thereto and the discussion thereof included
elsewhere in this Form 10-K. The selected consolidated financial data as of
December 31, 1999 and 1998, and for the years ended December 31, 1999, 1998 and
1997 have been derived from consolidated financial statements that have been
audited by Ernst & Young LLP, independent auditors, whose report with respect
thereto is included elsewhere in this Form 10-K. The selected consolidated
statements of income data for the years ended December 31, 1996 and 1995 and the
consolidated balance sheet data as of December 31, 1997, 1996 and 1995 have
been derived from audited consolidated financial statements of the Trust not
included in this Form 10-K.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1999 1998 1997 1996 1995
------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Statement of Income Data
(in 000's):
Rental revenue................... $153,034 $169,285 $153,801 $153,034 $152,457
Operating income................. 103,125 119,255 103,660 102,820 102,203
Net income....................... 52,268 60,374 37,279 29,493 22,090
<CAPTION>
As of December 31,
------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data (in 000's):
Total assets..................... $732,902 $790,756 $848,587 $898,113 $950,002
Current maturities of long-term
debt............................. 94,571 101,401 110,999 84,782 79,844
Long-term debt................... 474,551 568,999 670,263 781,119 865,753
Trust surplus (deficit).......... 151,064 106,128 51,022 14,493 (15,000)
</TABLE>
5
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Financial Liquidity and Capital Resources
As discussed in Item 1 above, substantially all of the physical property of the
Trust, consisting primarily of railcars, was contributed to the Partnership of
which the Trust is a 98.99% partner. At such time, the Partnership assumed the
Assumed Indebtedness. The Partnership then leased to the Lessee all of the
property contributed by the Trust, along with other railcars it received as a
contribution from its other partners. Financing of the Trust was accomplished
by issuance of $998 million of Trust Notes secured by the Trust's ownership
interest in the Partnership, as more specifically described in Item 1 of this
report. No new borrowings occurred during 1999.
As noted above, fixed rental receipts by the Partnership under the Leases are
used to service the Assumed Indebtedness and other expenses of the Partnership.
Remaining Partnership available cash is distributed to the partners, the Trust's
share of which must be used by the Trust to service the Trust Notes. During
1999, the Trust received rental revenues of $153.0 million pursuant to the
Leases. Total operating expenses of $49.9 million were incurred, resulting in
operating income in the amount of $103.1 million. Payment of interest expense,
net in the amount of $50.0 million and accounting for minority interests in the
Partnership, resulted in net income of $52.3 million at the Trust level.
Debt Maturities and Repayments
Current maturities of long-term debt of $94.6 million at December 31, 1999
represent debt, which is being serviced by cash flow from the Leases.
The Trust generated $113.7 million in cash from operating activities. Those
amounts were used to repay the Assumed Indebtedness and the Trust Notes as
payments became due. Of the net cash from operating activities, $101.4 million
was used to reduce borrowings, $1.7 million was distributed to the minority
interests in the Partnership and $7.3 million was distributed on a prorated
basis to the holders of the Beneficial Interest in the Trust as a distribution
of Additional Rent with respect to use and maintenance in 1997. The 1998
Additional Rent payment of $3.2 million has been received, but has not been
distributed (see Note A to the Consolidated Financial Statements). The
principal amount outstanding under the Assumed Indebtedness decreased by $2.5
million to a total of $25.4 million at year-end 1999, and the principal amount
outstanding under the Trust Notes decreased by $98.8 million to a total amount
of $543.7 million at year-end 1999.
6
<PAGE>
Results of Operations
Rental revenues for the years ended December 31, 1999, 1998, and 1997 were
$153.0 million, $169.3 million, and $153.8 million, respectively, reflecting
rent on the Leases. The decline from 1998 to 1999 in rental revenues is due to
the receipt of Additional Rent in 1998. No Additional Rent was accrued in 1999.
This compares to $16.3 million in Additional Rent for 1998 (the 1998 Additional
Rent included payments of $5.3 million, $7.0 million and $4.0 million for the
years 1996, 1997, and 1998 respectively). Operating income plus depreciation
prior to minority interests and interest expense was $152.9 million, $169.0
million, and $153.4 million in 1999, 1998, and 1997, respectively. Operating
income before interest expense and minority interests was $103.1 million, $119.3
million, and $103.7 million in 1999, 1998, and 1997, respectively. With the
scheduled reduction of outstanding debt, interest expense continued to decline;
the net was $50.0 million, $57.9 million, $65.5 million in 1999, 1998, and 1997,
respectively. Net income decreased from 1998 to 1999 due to a difference in the
amount of Additional Rents recorded (none in 1999 versus $16.3 million in 1998).
Partially offsetting this was a reduction in interest expense from 1998 to 1999
of $7.9 million. Net income was $52.3 million, $60.4 million, and $37.3 million
in 1999, 1998, and 1997, respectively. The Trust does not provide for income
taxes, as the liability for such taxes is that of the holders of Beneficial
Interests in the Trust.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
The following table provides information about the Trust's debt obligations. As
noted before, the Trust issued 7.75% notes due June 1, 2004, which are, paid per
a set amortization schedule. The table presents the principal cash flows and
related rates by expected maturity date.
<TABLE>
<CAPTION>
(In Thousands) 2000 2001 2002 2003 2004 Total Fair Value
- ------------------------- ------- -------- -------- -------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> 12/31/99
--------
<C>
Long Term Debt including $94,571 $134,131 $128,435 $138,525 $73,460 $569,122 $581,520
Current Portion
Fixed Rate 7.75% 7.75% 7.75% 7.75% 7.75%
</TABLE>
7
<PAGE>
Impact of the Year 2000
The Year 2000 Issue was the result of computer programs being written using two
digits rather than four to define the applicable year. Due to the nature of the
Trust, the Year 2000 implications are not material. The railcars owned by the
Trust are leased on a twelve-year contract expiring in 2004. The Trust receives
quarterly lease payments totaling $153 million for the year, which provides the
majority of the revenue. The Trust was designed to operate solely on the lease
payments. The Year 2000 impact did not affect the Trust's ability to repay its
indebtedness.
ITEM 8. Financial Statements and Supplementary Data
The response to this item is submitted as a separate section of this report
starting on page F-1.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Statement Disclosure
Not applicable.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
Not applicable.
ITEM 11. Executive Compensation
Not applicable.
8
<PAGE>
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
Following is a list of the persons known to the Registrant to be the beneficial
owner of more than five percent of the Beneficial Interests in the Trust:
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Title of Class Name and Address of Beneficial Owner Ownership Percent of Class
- -------------- ------------------------------------ ------------------ ----------------
<S> <C> <C> <C>
Beneficial First of St. Louis Leasing Corporation No. 1 N/A 5.000%
Interest 800 Market Street
St. Louis, MO 63101
Beneficial MetLife Capital, Limited Partnership N/A 21.567%
Interest 334 Madison Avenue
Convent Station, NJ 07961
Beneficial BancBoston Leasing, Inc. N/A 10.875%
Interest 100 Federal Street, Mailstop 01-23-90
Boston, MA 02110
Beneficial First Union Commercial Leasing Group, L.L.C. N/A 12.779%
Interest One First Union Center
Charlotte, NC 28288
Beneficial Phoenix Home Life Mutual Insurance Company N/A 7.059%
Interest One American Row
Hartford, CT 06102-5056
Beneficial Sun Life Assurance Company of Canada (U.S.) N/A 8.336%
Interest One Sun Life Executive Park
Wellesley Hills, MA 94111
Beneficial BA Leasing & Capital Corporation N/A 20.501%
Interest 555 California Street
San Francisco, CA 94104
</TABLE>
ITEM 13. Certain Relationships and Related Transactions
Not applicable.
9
<PAGE>
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) and (2)--The response to this portion of Item 14 is submitted
as a separate section of this report starting on page F-1.
(3) Listing of Exhibits.
(b) Report on Form 8-K.
None
(c) Exhibits
(d) The response to this portion of Item 14 is submitted as Schedule
I - Condensed Financial Information of Registrant on pages F-10 -
F-12.
Number Description
- ------ -----------
4.1 Indenture, dated June 1, 1992, between Railcar Trust No. 1992-1 and
Harris Trust and Savings Bank, as Trustee, providing for 7.75% Trust
Notes due 2004.*
4.2 The Partnership is also party to other instruments defining the rights
of holders of long-term debt of the Trust where the total indebtedness
authorized under each agreement does not exceed 10% of the total assets
of the Trust on a consolidated basis. Pursuant to Item 601(b)(4)(iii) of
Regulation S-K, the Trust is not filing such instruments. The Trust
hereby undertakes to furnish to the Securities and Exchange Commission
upon request copies of any or all such instruments.
10.1 Participation Agreement, dated December 31, 1991, among General Electric
Railcar Services Corporation, GE Railcar Associates, Inc., GE Railcar
Leasing Associates, Inc., General Electric Capital Corporation, Itel
Rail Funding Corporation, Rex Railways, Inc., and Railcar Associates,
L.P.*
10.2 Second Amended and Restated Trust Agreement, dated May 1, 1992, between
Itel Rail Corporation and Wilmington Trust Company, as Trustees.**
10
<PAGE>
10.3(a) Amended and Restated Agreement of Limited Partnership of Railcar
Associates, L.P., dated June 1, 1992, among GE Railcar Associates, Inc.,
GE Railcar Leasing Associates, Inc., and Railcar Trust No. 1992-1.*
(b) Guaranty, dated June 1 1992, by General Electric Capital Corporation of
certain obligations under the above Agreement of Limited Partnership.*
10.4(a) Master Lease Agreement, dated June 1, 1992, between Railcar Associates,
L.P. and GE Capital Railcar Associates, Inc.*
(b) Lease Guaranty, dated June 1, 1992, by General Electric Capital
Corporation of the obligations of GE Capital Railcar Associates, Inc.
under the above Master Lease Agreement.*
27 Financial Data Schedule.
___________________________________________________________________________
* Incorporated by reference to Railcar Trust No. 1992-1's Quarterly Report on
Form 10-Q, for the fiscal quarter ended June 30, 1992.
** Incorporated by reference from Amendment No. 4 to Railcar Trust No.
1992-1's Registration Statement on Form S-1, Registration Number 33-44946,
filed May 18, 1992, Exhibit 10.5.
11
<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.
March 28, 2000 RAILCAR TRUST NO. 1992-1
By: /s/ David A. Vanaskey, Jr.
--------------------------
Name: David A. Vanaskey, Jr.
Title: Assistant Vice President
Wilmington Trust Company, Trustee
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ David A. Vanaskey, Jr.
- ------------------------------------------------------- Assistant Vice President
David A. Vanaskey, Jr. Wilmington Trust Co., Trustee March 28, 2000
/s/ Bruce L. Bisson
- ------------------------------------------------------- Vice President
Bruce L. Bisson Wilmington Trust Co., Trustee March 28, 2000
</TABLE>
12
<PAGE>
ITEM 8, ITEM 14(a) (1) AND (2) AND ITEM 14(d)
RAILCAR TRUST NO. 1992-1
ANNUAL REPORT ON FORM 10-K
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Page(s)
<S> <C>
Report of Ernst & Young LLP, Independent Auditors................................................. F-1
Consolidated Balance Sheets--December 31, 1999 and 1998........................................... F-2
Consolidated Statements of Income for the years ended December 31, 1999, 1998, and 1997........... F-3
Consolidated Statements of Trust Surplus for the years ended December 31, 1999, 1998, and 1997.... F-4
Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998, and 1997....... F-5
Notes to the Consolidated Financial Statements.................................................... F-6
Financial Statement Schedule for the years ended December 31, 1999, 1998, and 1997
Schedule I - Condensed Financial Information of Registrant.................................. F-10
</TABLE>
All other schedules are omitted because they are not required or are not
applicable, or the required information is shown in the financial statements or
notes thereto.
13
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Trustees
Railcar Trust No. 1992-1
We have audited the accompanying consolidated balance sheets of Railcar
Trust No. 1992-1 (The Trust) as of December 31, 1999 and 1998, and the related
consolidated statements of income, Trust surplus, and cash flows for each of the
three years in the period ended December 31, 1999. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and schedule 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Railcar Trust No. 1992-1 at December 31, 1999 and 1998, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
/s/ Ernst & Young LLP
Tampa, Florida
March 10, 2000
F-1
<PAGE>
RAILCAR TRUST NO. 1992-1
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
December 31,
1999 1998
------------ ------------
<S> <C> <C>
Assets
Cash and cash equivalents...................................... $ 4,023 $ 691
Restricted cash................................................ 838 869
Rent receivable from GE Capital Railcar Associates, Inc........ 13,095 23,753
Prepaid expenses and other..................................... 571 725
-------- --------
Total current assets...................................... 18,527 26,038
Rental equipment, net.......................................... 713,482 763,263
Deferred financing fees........................................ 893 1,455
-------- --------
Total assets................................................... $732,902 $790,756
======== ========
Liabilities and Trust Surplus
Accrued interest and other expenses............................ $ 4,627 $ 5,347
Current maturities of long-term debt........................... 94,571 101,401
-------- --------
Total current liabilities................................. 99,198 106,748
Long-term debt:
Trust notes.................................................. 451,700 543,565
Secured indebtedness......................................... 22,851 25,434
-------- --------
Total long-term debt...................................... 474,551 568,999
Minority interest in Partnership............................... 8,089 8,881
Trust surplus:
Capital distributions in excess of contributions............ (81,955) (74,623)
Cumulative net earnings..................................... 233,019 180,751
-------- --------
Net trust surplus......................................... 151,064 106,128
-------- --------
Total liabilities and trust surplus............................ $732,902 $790,756
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-2
<PAGE>
RAILCAR TRUST NO. 1992-1
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Rental revenue from GE Capital Railcar Associates, Inc... $153,034 $169,285 $153,801
Operating expenses:
Depreciation............................................ (49,781) (49,781) (49,781)
General, administrative, and other...................... (128) (249) (360)
-------- -------- --------
Total operating expenses.............................. (49,909) (50,030) (50,141)
-------- -------- --------
Operating income......................................... 103,125 119,255 103,660
Interest expense......................................... (49,975) (57,908) (65,494)
Minority interest........................................ (882) (973) (887)
-------- -------- --------
Net income............................................... $ 52,268 $ 60,374 $ 37,279
======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-3
<PAGE>
RAILCAR TRUST NO. 1992-1
CONSOLIDATED STATEMENTS OF TRUST SURPLUS (DEFICIT)
(In Thousands)
<TABLE>
<CAPTION>
Capital
distributions Cumulative
in excess of net Net trust
contributions earnings surplus
--------------- ------------ -------------
<S> <C> <C> <C>
Balance at December 31, 1996.................. (68,605) 83,098 14,493
Net income.................................... -- 37,279 37,279
Distribution to Holders of Beneficial Interest (750) -- (750)
-------- -------- --------
Balance at December 31, 1997.................. (69,355) 120,377 51,022
Net income.................................... -- 60,374 60,374
Distribution to Holders of Beneficial Interest (5,268) -- (5,268)
-------- -------- --------
Balance at December 31, 1998.................. (74,623) 180,751 106,128
Net income.................................... -- 52,268 52,268
Distribution to Holders of Beneficial Interest (7,332) -- (7,332)
-------- -------- --------
Balance at December 31, 1999.................. $(81,955) $233,019 $151,064
======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-4
<PAGE>
RAILCAR TRUST NO. 1992-1
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
-------------- -------------- -------------
<S> <C> <C> <C>
Operating activities:
Net income........................................................... $ 52,268 $ 60,374 $ 37,279
Adjustments to reconcile net income to net cash provided by
Operating activities:
Depreciation....................................................... 49,781 49,781 49,781
Amortization of discount on debt and deferred financing
fees............................................................. 839 1,018 1,167
Minority interest.................................................. 882 973 887
Changes in assets and liabilities, net:
Restricted cash.................................................. 31 18,019 (969)
Rent receivable from GE Capital Railcar Associates, Inc. 10,658 (11,000) 0
Other current liabilities........................................ (720) (1,248) (962)
--------- --------- --------
Net cash provided by operating activities.......................... 113,739 117,917 87,183
Financing activities:
Principal payments on borrowings..................................... (101,401) (111,000) (84,783)
Distributions to beneficiaries....................................... (7,332) (5,268) (750)
Distributions to minority interest................................... (1,674) (1,545) (1,553)
--------- --------- --------
Net cash used in financing activities.............................. (110,407) (117,813) (87,086)
--------- --------- --------
Net increase in cash and cash equivalents............................. 3,332 104 97
Cash and cash equivalents at beginning of the year.................... 691 587 490
--------- --------- --------
Cash and cash equivalents at end of the year.......................... $ 4,023 $ 691 $ 587
========= ========= ========
Supplemental cash flow information:
Interest paid during the year....................................... $ 49,860 $ 58,382 $ 65,586
========= ========= ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-5
<PAGE>
RAILCAR TRUST No. 1992-1
Notes to the Consolidated Financial Statements
- -------------------------------------------------------------------------------
Note A Organization and Operations
Railcar Trust No. 1992-1 (the "Trust") holds a majority interest in Railcar
Associates, L.P., a limited partnership (the "Partnership"). The Partnership
leases approximately 59,000 railcars within the United States. GE Capital
Railcar Associates, Inc. (the "Lessee") is the sole lessee of the railcars. The
leases mature in 2004 with quarterly fixed rental payments totaling
approximately $153 million annually. These rental payments are guaranteed by
General Electric Capital Corporation ("GECC"). The Lessee has an option to
purchase all the railcars under lease for approximately $500 million at the end
of the lease. The Lessee is responsible for maintenance, taxes, insurance, and
other expenses involved with operating the railcars.
The Lessee has an annual obligation to make certain contingent rental payments
to the Partnership in addition to the previously described quarterly fixed
rental payments ("Additional Rent"). The Additional Rent calculation is
prepared by the Lessee and is subject to verification by an independent auditor.
Prior to 1998, Additional Rent was recorded when independent verification was
received due to the lack of information available to the lessor. In 1998, in a
change in accounting estimate due to additional information becoming available,
approximately $16.3 million in Additional Rent was recorded related to 1996,
1997 and 1998. For 1999, cash of $7.3 million relating to the 1997 Additional
Rent was received by the Trust in the first quarter of 1999 and was distributed
in the second quarter of 1999 on a prorata basis to the holders of the
Beneficial Interest in the Trust. Cash of $3.2 million relating to the 1998
Additional Rent was received by the Trust in the fourth quarter of 1999 and has
been verified by an independent auditor. This amount was distributed in the
first quarter of 2000 on a prorata basis to the holders of the Beneficial
Interest in the Trust. Additional Rent for 1999 is expected to be immaterial and
has not been recorded due to the lack of information available to the
Partnership. Any actual Additional Rent will be recorded when received as stated
in Policy Note B.
The Partnership has the following partners:
Partner Interest (%)
Railcar Trust No. 1992-1 98.99 %
GE Railcar Associates, Inc. 1.00 %
GE Railcar Leasing Associates, Inc. 0.01 %
The partners share in profits or losses and distributions in accordance with a
specific formula, as defined in the Amended and Restated Agreement of Limited
Partnership.
Note B Summary of Significant Accounting Policies
Principles of Consolidation: The consolidated financial statements include the
financial results of the Trust and the Partnership. All interentity
transactions have been eliminated.
Use of Estimates: The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to make estimates
and assumptions that affect amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
F-6
<PAGE>
RAILCAR TRUST No. 1992-1
Notes to the Consolidated Financial Statements
- -------------------------------------------------------------------------------
Cash, Cash Equivalents, and Restricted Cash: The Trust considers all highly
liquid investments with an original maturity of three months or less to be cash
equivalents. Due to the short maturity of these instruments, the carrying
amount approximates fair value. Restricted cash balances represent short-term
investments held by GECC. The investments are restricted as to the availability
to the Partnership and are available only to service principal and interest
payments on the Partnership's debt.
Rental Equipment: Rental equipment (railcars) is carried at cost, which is based
upon the historical cost of the contributing partners. Railcars are depreciated
to the estimated residual value using the straight-line method over the terms of
the leases.
<TABLE>
<CAPTION>
December 31,
1999 1998
---------- ----------
(In Thousands)
<S> <C> <C>
Rail cars (at cost)................... $1,388,582 $1,388,582
Accumulated depreciation.............. (675,100) (625,319)
---------- ----------
Net book value........................ $ 713,482 $ 763,263
========== ==========
</TABLE>
Income Taxes: The Trust does not provide for income taxes, as the liability for
such taxes is that of the beneficial owners of the Trust. The net trust deficit
for federal income tax purposes was approximately $326 million at December 31,
1999.
Revenue Recognition: Contingent rental fees and additional rents are recorded
when due and realizable. For additional rent not yet verified by an independent
audit, management of the Partnership applies their best estimate.
Note C Long-Term Debt
Trust Notes: In June 1992, the Trust issued $998 million of 7.75% Trust Notes
(the "Trust Notes"). The Trust Notes mature through 2004 and are secured by the
Trust's ownership interest in the Partnership. The Trust Notes were originally
issued at a discount. The effective interest rate on the Trust Notes is 7.775%.
The proceeds from the Trust Notes, after the payment of certain expenses and the
establishment of certain reserves, were distributed to beneficiaries of the
Trust.
F-7
<PAGE>
RAILCAR TRUST No. 1992-1
Notes to the Consolidated Financial Statements
- -------------------------------------------------------------------------------
Secured Indebtedness: The Partnership has long-term debt, which is secured by
certain of the railcars, and has agreed to pay all amounts owed thereunder as
they become due. This debt has interest rates ranging from 9.95% to 11.1% and
matures at various times through 2003. Some components of the debt have annual
sinking fund requirements. The debt is being serviced out of rental receipts of
the Partnership pursuant to the leases.
The Trust's debt agreements are secured by assets with an aggregate net book
value of approximately $713 million at December 31, 1999.
<TABLE>
<CAPTION>
December 31,
1999 1998
---------- ----------
(In Thousands)
<S> <C> <C>
Trust notes........................... $543,688 $ 642,488
Secured indebtedness.................. 25,434 27,912
-------- ---------
Total debt.......................... 569,122 670,400
Less: Current maturities.............. (94,571) (101,401)
-------- ---------
Long-term debt...................... $474,551 $ 568,999
======== =========
</TABLE>
The fair value of the Trust's long-term debt was approximately $ 582 million at
December 31, 1999 and was estimated using a discounted cash flow analysis based
on the Trust's incremental borrowing rate.
The aggregate annual maturities of long-term debt (in thousands) as of December
31 are as follows:
<TABLE>
<S> <C>
2000 $ 94,571
2001 134,131
2002 128,435
2003 138,525
2004 73,460
--------
Total debt $569,122
========
</TABLE>
F-8
<PAGE>
RAILCAR TRUST No. 1992-1
Notes to the Consolidated Financial Statements
- -------------------------------------------------------------------------------
Note D Summary of Quarterly Financial Data (Unaudited)
The following table summarizes the Trust's quarterly consolidated financial
information:
<TABLE>
<CAPTION>
Quarter Ended
March 31, June 30, September 30, December 31,
--------------------- --------------------- --------------------- ---------------------
(In Thousands) 1999 1998 1999 1998 1999 1998 1999 1998
- ------------------ --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.......... $38,259 $38,259 $38,259 $43,580 $38,259 $38,188 $38,257 $49,258
Operating income.. 25,785 25,744 25,752 31,064 25,792 25,636 25,796 36,811
Net income........ 12,300 10,229 12,687 16,131 13,467 11,262 13,814 22,752
</TABLE>
Note: Additional Rent was reflected in the above revenues, operating income and
net income in the amount of $5,251 thousand in the quarter ended June 30, 1998
for 1996 Operations and $11,000 thousand in the quarter ended December 31, 1998,
of which, $7,000 thousand was for 1997 Operations and $4,000 thousand was for
1998 Operations.
F-9
<PAGE>
RAILCAR TRUST NO. 1992-1
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RAILCAR TRUST NO. 1992-1 (PARENT COMPANY)
BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
December 31,
1999 1998
------------ ------------
<S> <C> <C>
Assets
Cash and cash equivalents...................................... $ 3,995 $ 663
Prepaid expenses and other..................................... 562 716
-------- --------
Total current assets........................................ 4,557 1,379
Investment in Partnership...................................... 692,815 749,934
Deferred financing fees........................................ 893 1,455
-------- --------
Total assets................................................... $698,265 $752,768
======== ========
Liabilities and Trust Surplus
Accrued interest............................................... $ 3,513 $ 4,152
Current maturities of Trust notes.............................. 91,988 98,923
-------- --------
Total current liabilities................................... 95,501 103,075
Trust notes.................................................... 451,700 543,565
-------- --------
Total liabilities........................................... 547,201 646,640
Trust surplus:
Capital distributions in excess of contributions.............. (81,955) (74,623)
Cumulative net earnings....................................... 233,019 180,751
-------- --------
Net trust surplus........................................... 151,064 106,128
-------- --------
Total liabilities and trust surplus............................ $698,265 $752,768
======== ========
</TABLE>
F-10
<PAGE>
RAILCAR TRUST NO. 1992-1
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RAILCAR TRUST NO. 1992-1 (PARENT COMPANY)
STATEMENTS OF INCOME
(In Thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Interest income.................................................... $ 73 $ 35 $ 10
Expenses:
Interest........................................................... (47,182) (54,710) (60,252)
General and administrative......................................... (128) (144) (110)
-------- -------- --------
(47,310) (54,854) (60,362)
-------- -------- --------
Loss from operations before equity in earnings of Partnership....... (47,237) (54,819) (60,352)
Equity in earnings of Partnership................................... 99,505 115,193 97,631
-------- -------- --------
Net income.......................................................... $ 52,268 $ 60,374 $ 37,279
======== ======== ========
</TABLE>
F-11
<PAGE>
RAILCAR TRUST NO. 1992-1
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RAILCAR TRUST NO. 1992-1 (PARENT COMPANY)
STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
Operating activities:
Net income.............................................. $ 52,268 $ 60,374 $ 37,279
Adjustments to reconcile net income to net cash used in
operating activities:
Equity in earnings of Partnership..................... ( 99,505) (115,193) (97,631)
Amortization of discount on debt and deferred fees.... 839 881 1,022
Accrued interest...................................... (639) (591) (400)
--------- --------- --------
Net cash used in operating activities................. (47,037) (54,529) (59,730)
Investing activities:
Net distributions from Partnership...................... 156,624 151,228 122,412
--------- --------- --------
Net cash provided by investing activities............. 156,624 151,228 122,412
Financing activities:....................................
Principal payments on borrowings........................ (98,923) (91,318) (61,838)
Distribution to beneficiaries........................... (7,332) (5,268) (750)
--------- --------- --------
Net cash used in financing activities................. (106,255) (96,586) (62,588)
--------- --------- --------
Net increase in cash and cash equivalents................ 3,332 113 94
Cash and cash equivalents at beginning of year........... ----------- ----------- ----------
663 550 456
--------- --------- --------
Cash and cash equivalents at end of year................. $ 3,995 $ 663 $ 550
========= ========= ========
</TABLE>
F-12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 4,861
<SECURITIES> 0
<RECEIVABLES> 13,095
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 18,527
<PP&E> 1,388,582
<DEPRECIATION> 675,100
<TOTAL-ASSETS> 732,902
<CURRENT-LIABILITIES> 99,198
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 151,064
<TOTAL-LIABILITY-AND-EQUITY> 732,902
<SALES> 0
<TOTAL-REVENUES> 153,034
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 49,909
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,975
<INCOME-PRETAX> 52,268
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,268
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
