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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, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-2328
GATX Corporation
Incorporated in the IRS Employer Identification Number
State of New York 36-1124040
500 West Monroe Street
Chicago, Illinois 60661-3676
(312) 621-6200
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class or series on which registered
- ------------------------------ ------------------------
Common Stock New York Stock Exchange
Chicago Stock Exchange
London Stock Exchange
$2.50 Cumulative Convertible Preferred Stock New York Stock Exchange
Chicago Stock Exchange
$2.50 Cumulative Convertible Preferred New York Stock Exchange
Stock, Series B Chicago Stock Exchange
$3.875 Cumulative Convertible Preferred Stock New York Stock Exchange
Chicago Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
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. x/
-----
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
---- ----
As of March 7, 1997, 20,342,269 common shares were outstanding, and the
aggregate market value of the common shares (based upon the March 7, 1997
closing price of these shares on the New York Stock Exchange) of GATX
Corporation held by nonaffiliates was approximately $1,014.6 million.
Documents Incorporated by Reference
Portions of the GATX Annual Report to Shareholders for the year ended
December 31, 1996 are incorporated by reference into Parts I and II. Portions of
GATX's proxy statement dated March 14, 1997 are incorporated by reference into
Part III.
PART I
Item 1. Business
GATX Corporation is a holding company whose subsidiaries engage in the leasing
and management of railroad tank cars and specialized freight cars; provide
equipment and capital asset financing and related services; own and operate tank
storage terminals, pipelines and related facilities; engage in Great Lakes
shipping; and provide distribution and logistics support services and
warehousing facilities. Information concerning financial data of business
segments and the basis for grouping products or services is contained in Exhibit
13, GATX Annual Report to Shareholders for the year ended December 31, 1996 on
page 33 and pages 38 through 41, which is incorporated herein by reference (page
references are to the Annual Report to Shareholders).
Industry Segments
RAILCAR LEASING AND MANAGEMENT
The Railcar Leasing and Management segment (Transportation), headquartered in
Chicago, Illinois, is principally engaged in leasing specialized railcars,
primarily tank cars, under full service leases. As of December 31, 1996, its
North American fleet consisted of approximately 77,500 railcars, including
60,400 tank cars and 17,100 specialized freight cars, primarily Airslide(TM)
covered hopper cars and plastic pellet cars. In addition to roughly 66,900
railcars in the United States, Transportation has approximately 9,000 railcars
in its Canadian fleet and 1,600 railcars in its Mexican fleet. Transportation
has upgraded its fleet over time by adding new larger capacity cars and retiring
older smaller capacity cars. Transportation's railcars have a useful life of
approximately 30 to 33 years. The average age of the railcars in
Transportation's fleet is approximately 16 years.
The following table sets forth the approximate tank car fleet capacity of
Transportation as of the end of each of the years indicated and the number of
cars of all types added to Transportation's fleet during such years; 1996
additions include 8,700 cars from Transportation's acquisition of the remaining
interest in its Canadian subsidiary, CGTX, Inc.
Year Ended December 31,
-----------------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ -----
Tank car fleet capacity
(in millions of gallons) 1,353 1,176 1,090 1,024 993
Number of railcars added to
North American fleet 13,200 6,200 4,900 3,000 1,600
Transportation's customers use its railcars to ship over 700 different
commodities, primarily chemicals, petroleum, and food products. For 1996,
approximately 53% of railcar leasing revenue was attributable to shipments of
chemical products, 23% to petroleum products, and 18% to food products. Many of
these products require cars with special features; Transportation offers a wide
variety of sizes and types of cars to meet these needs. Transportation leases
railcars to over 700 customers, including major chemical, oil, food and
agricultural companies. No single customer accounts for more than 3% of total
railcar leasing revenue.
-1-
Transportation typically leases new railcars to its customers for a term of five
years or longer, whereas renewals or leases of used cars are typically for
periods ranging from less than a year to seven years with an average lease term
of about three years. The utilization rate of Transportation's railcars as of
December 31, 1996 was approximately 95%.
Under its full service leases, Transportation maintains and services its
railcars, pays ad valorem taxes, and provides many ancillary services. Through
its Car Status Service System, for example, Transportation provides customers
with timely information about the location and readiness of their leased cars to
enhance and maximize the utilization of this equipment. Transportation also
maintains a network of major service centers consisting of four domestic, three
Canadian and one Mexican service center, and 37 mobile trucks in 26 locations.
Transportation also utilizes independent third-party repair shops.
Transportation purchases most of its new railcars from Trinity Industries, Inc.
(Trinity), a Dallas- based metal products manufacturer, under a contract entered
into in 1984 and extended from time to time thereafter, most recently in 1992.
Transportation anticipates that through this contract it will continue to be
able to satisfy its customers' new car lease requirements. Transportation's
engineering staff provides Trinity with design criteria and equipment
specifications, and works with Trinity's engineers to develop new technology
where needed in order to upgrade or improve car performance or in response to
regulatory requirements.
The full-service railcar leasing industry is comprised of Transportation, Union
Tank Car Company, General Electric Railcar Services Corporation, Shippers Car
Line division of ACF Industries, Incorporated, Procor Limited, and many smaller
companies. Of the approximately 215,000 tank cars owned and leased in the United
States at December 31, 1996, Transportation had approximately 54,200. Principal
competitive factors include price, service and availability.
FINANCIAL SERVICES
GATX Financial Services, through its principal subsidiary, GATX Capital
Corporation, provides asset-based financing of transportation, information
technology and industrial equipment through capital leases, secured equipment
loans, and operating leases. GATX Capital also provides related financial
services which include the arrangement of lease transactions for investment by
other lessors and the management of lease portfolios for third parties. In these
underwriting and management activities, GATX Capital seeks fee income and
residual participation income. In addition to its San Francisco home office,
GATX Capital has two domestic and eleven foreign offices.
The financial services industry is both crowded and efficient. GATX Capital is
one of the larger non-bank financial services companies. GATX Capital competes
with captive leasing companies, leasing subsidiaries of commercial banks,
independent leasing companies, lease brokers, investment bankers, and also with
the manufacturers of equipment. Financial services companies compete on the
basis of service, effective rates and transaction structuring skills.
GATX Capital participates in selected areas where it thinks the application of
its strengths can result in above-market returns in exchange for assuming
appropriate levels of risk. GATX Capital has developed a portfolio of assets
diversified across industries and equipment classifications, the largest of
which include aircraft, rail and information technology. At December 31, 1996,
GATX Capital had approximately 700 financing contracts with 600 customers,
aggregating $1.8 billion of investments before reserves. Of this amount, 33%
consisted of investments associated with commercial jet aircraft, 20% railroad
equipment, 12% warehouse and production equipment, 12% information technology
equipment, 11% marine equipment, and 12% other.
-2-
TERMINALS AND PIPELINES
GATX Terminals Corporation (Terminals) is engaged in the storage, handling and
intermodal transfer of petroleum and chemical commodities at key points in the
bulk liquid distribution chain. All of its terminals are located near major
distribution and transportation points and most are capable of receiving and
shipping bulk liquids by ship, rail, barge and truck. Many of the terminals also
are linked with major interstate pipelines. In addition to storing, handling and
transferring bulk liquids, Terminals provides blending and testing services at
most of its facilities. Terminals, headquartered in Chicago, Illinois, owns and
operates 26 terminals in 11 states, and seven terminals in the United Kingdom.
Terminals also has joint venture interests in 14 international facilities.
Additionally, Terminals owns or holds interests in four refined product pipeline
systems.
As of December 31, 1996, Terminals had a total storage capacity of 73 million
barrels. This includes 54 million barrels of bulk liquid storage capacity in the
United States, 7 million barrels in the United Kingdom, and an equity interest
in another 12 million barrels of storage capacity in Europe, Mexico and the Far
East. Terminals' smallest bulk liquid facility has a storage capacity of 95,000
barrels while its largest facility, located in Pasadena, Texas, has a capacity
of over 12 million barrels. Capacity utilization at Terminals' wholly owned
facilities was 89% at the end of 1996; throughput for the year was 705 million
barrels.
For 1996, 54% of Terminals' revenue was derived from petroleum storage, 25% from
chemical storage, 20% from pipelines, and 1% from other products. Demand for
Terminals' facilities depends in part upon demand for petroleum and chemical
products and is also affected by refinery output, foreign imports, availability
of other storage facilities, and the expansion of its customers into new
geographical markets.
Terminals serves over 350 customers, including major oil and chemical companies
as well as trading firms and larger independent refiners. No single customer
accounts for more than 4% of Terminals' revenue. Customer service contracts are
both short term and long term.
Terminals along with two Dutch companies, Paktank N.V. and Van Ommeren N.V., are
the three major international public terminaling companies. The domestic public
terminaling industry consists of Terminals, Paktank Corporation,
International-Matex Tank Terminals, and many smaller independent terminaling
companies. In addition to public terminaling companies, oil and chemical
companies also have significant storage capacity and compete with Terminals in a
number of markets. Terminals' pipelines compete with rail, trucks and other
pipelines for movement of liquid petroleum products. Principal competitive
factors include price, location relative to distribution facilities, and
service.
LOGISTICS AND WAREHOUSING
GATX Logistics, Inc. (Logistics) is one of the largest third-party providers of
distribution and logistics support services and warehousing facilities in the
United States. Logistics, headquartered in Jacksonville, Florida, operates 106
facilities covering approximately 22 million square feet of warehousing space in
North America with utilization of 91% at the end of 1996. Value-adding services
are strategically the most important benefit GATX Logistics provides. Examples
of these services are logistics planning, information management, just-in-time
delivery systems, packaging, sub-assembly, freight management and returns
management.
-3-
GATX Logistics serves about 600 customers, many of which are Fortune 1000
companies. Most customers are manufacturers, but the customer base also includes
retailers. In the warehousing sector, GATX Logistics competes primarily with
in-house or private operations and with other national operators as well as
multi-regional and local operators. In providing transportation and logistics
services, GATX Logistics competes with the major trucking companies and
providers of specialized distribution services.
GATX Logistics' revenue source by industry served during 1996 was 19% motor
vehicle, 15% grocery, 13% farm and construction equipment, 12% consumer
products, 10% major appliances, 9% apparel and retail, 9% electronics, 4%
chemical, and 9% other. No single customer accounts for more than 10% of
Logistics' revenue.
GREAT LAKES SHIPPING
American Steamship Company (ASC), with the largest carrying capacity of the
domestic Great Lakes vessel fleets, provides modern and efficient waterborne
transportation of dry bulk materials to the integrated steel, electric utility
and construction industries. ASC's fleet is entirely comprised of self-unloading
vessels which do not require shoreside assistance to discharge cargo. ASC's
eleven vessels range in size from 635 feet to 1,000 feet, transport cargoes from
17,000 net tons up to 70,000 net tons depending on vessel size, and can unload
at speeds from 2,800 net tons per hour up to 10,000 net tons per hour. Great
Lakes vessels are not subject to the severe rusting condition typical of salt
water vessels. As a result, ASC's vessels have expected lives of 50 to 75 years.
In 1996, ASC carried 24.6 million tons of cargo. ASC primarily transported iron
ore, limestone and coal aggregates. Other commodities transported include sand,
salt, potash, gypsum, grain, marble chips and slag. ASC's revenue source by
industry served during 1996 was 53% steel, 21% construction, 19% power
generation, and 7% other. No single customer accounts for more than 28% of ASC's
revenue.
ASC competes with three other U.S. flag Great Lakes commercial fleets, which
include U.S.S. Great Lakes Fleet, Inc., Oglebay Norton Company, and Interlake
Steamship, and with steel companies which operate captive fleets. Great Lakes
shipping is the only major activity of GATX which consumes substantial
quantities of petroleum products; fuel for these operations is presently in
adequate supply. Competition is based primarily on service and price. ASC is
headquartered in Williamsville, New York, and has one regional office.
-4-
Trademarks, Patents and Research Activities
- --------------------------------------------
Patents, trademarks, licenses, and research and development activities are not
material to these businesses taken as a whole.
Seasonal Nature of Business
- ---------------------------
Great Lakes shipping is seasonal due to the effects of winter weather
conditions. However, seasonality is not considered significant to the operations
of GATX and its subsidiaries taken as a whole.
Customer Base
- ---------------
GATX and its subsidiaries are not dependent upon a single customer or a few
customers. The loss of any one customer would not have a material adverse effect
on any segment or GATX as a whole.
Employees
- ----------
GATX and its subsidiaries have approximately 6,000 active employees, of whom 21%
are hourly employees covered by union contracts.
Environmental Matters
- ----------------------
Certain operations of GATX's subsidiaries (collectively GATX) present potential
environmental risks principally through the transportation or storage of various
commodities. Recognizing that some risk to the environment is intrinsic to its
operations, GATX is committed to protecting the environment, as well as
complying with applicable environmental protection laws and regulations. GATX,
as well as its competitors, is subject to extensive regulation under federal,
state and local environmental laws which have the effect of increasing the costs
and liabilities associated with the conduct of its operations. In addition,
GATX's foreign operations are subject to environmental regulations in effect in
each respective jurisdiction.
GATX's policy is to monitor and actively address environmental concerns in a
responsible manner. GATX has received notices from the U.S. Environmental
Protection Agency (EPA) that it is a potentially responsible party (PRP) for
study and clean-up costs at 11 sites under the requirements of the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(Superfund). Under Superfund and comparable state laws, GATX may be required to
share in the cost to clean-up various contaminated sites identified by the EPA
and other agencies. In all but one instance, GATX is one of a number of
financially responsible PRPs and has been identified as contributing only a
small percentage of the contamination at each of the sites. Due to various
factors such as the required level of remediation and participation in clean-up
efforts by others, GATX's total clean-up costs at these sites cannot be
predicted with certainty; however, GATX's best estimates for remediation and
restoration of these sites have been determined and are included in its
environmental reserves.
-5-
Future costs of environmental compliance are indeterminable due to unknowns such
as the magnitude of possible contamination, the timing and extent of the
corrective actions that may be required, the determination of the company's
liability in proportion to other responsible parties, and the extent to which
such costs are recoverable from third parties including insurers. Also, GATX may
incur additional costs relating to facilities and sites where past operations
followed practices and procedures that were considered acceptable at the time
but in the future may require investigation and/or remedial work to ensure
adequate protection to the environment under current or future standards. If
future laws and regulations contain more stringent requirements than presently
anticipated, expenditures may be higher than the estimates, forecasts, and
assessments of potential environmental costs provided below. However, these
costs are expected to be at least equal to the current level of expenditures. In
addition, GATX has provided indemnities for environmental issues to the buyers
of three divested companies for which GATX believes it has adequate reserves.
GATX's environmental reserve at the end of 1996 was $88 million and reflects
GATX's best estimate of the cost to remediate known environmental conditions.
Additions to the reserve were $12 million in 1996 and $14 million in 1995.
Expenditures charged to the reserve amounted to $18 million and $16 million in
1996 and 1995, respectively.
In 1996, GATX made capital expenditures of $17 million for environmental and
regulatory compliance compared to $18 million in 1995. These projects included
marine vapor recovery, discharge prevention compliance, waste water systems,
impervious dikes, tank modifications for emissions control, and tank car
cleaning systems. Environmental projects authorized or currently under
consideration would require capital expenditures of approximately $20 million in
1997. GATX anticipates it will make annual expenditures at a similar level over
each of the next five years.
Item 2. Properties
- --------------------
Information regarding the location and general character of certain properties
of GATX is included in Item 1, Business, of this document and in Exhibit 13,
GATX Annual Report to Shareholders for the year ended December 31, 1996 on page
71, GATX Location of Operations (page reference is to the Annual Report to
Shareholders). The major portion of Terminals' land is owned; the balance,
including some of its dock facilities, is leased. Most of the warehouses
operated by GATX Logistics are leased; the others are managed for third parties.
Item 3. Legal Proceedings
- --------------------------
On July 14, 1995, a judgment in the amount of $9.7 million was entered against
GATC by the U.S. District Court for the Northern District of Illinois in the
matter of General American Transportation Corporation v. Cryo-Trans,
Incorporated (Case No. 91 C 1305), a case involving an alleged patent
infringement by GATC in the construction and use of its ArcticarTM cryogenically
cooled railcar. GATC was also permanently enjoined from any further infringement
of the patent. The Federal Circuit Court of Appeals has reversed the judgment
against GATC, and the appellant has filed a motion for an appeal to the United
States Supreme Court. Even in the event of an adverse decision on appeal to the
Supreme Court and reinstatement of the original judgment against GATC, GATX does
not believe the costs associated with the disposition of the affected cars will
have a material adverse effect on GATX.
-6-
On July 11, 1996, GATX/Airlog Company ("Airlog"), a California general
partnership of which a subsidiary of GATX Capital Corporation (a wholly-owned
subsidiary of GATX Corporation) ("Capital") is a partner, and Capital 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 Capital
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.
Between 1988 and 1990, these three aircraft, along with a fourth no longer owned
by Evergreen, were modified from passenger to freight configuration by
subcontractors of Airlog, with Evergreen's knowledge and consent, pursuant to
contracts between Airlog and Evergreen or one of its affiliates. These 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. The three Evergreen aircraft were flown as part of its
fleet for more than five years, and the seven other modified aircraft were flown
by Evergreen and the three other operators for significant periods. Capital
guaranteed certain of Airlog's obligations to Evergreen. Capital did not issue
guarantees with respect to Airlog's obligations to any of Airlog's other
customers for the affected aircraft.
Evergreen filed an answer and counterclaim on August 1, 1996, asserting that
Airlog and Capital are liable to it under a number of legal theories in
connection with the application of the Airworthiness Directive to the three
aircraft. In an initial disclosure statement dated October 29, 1996, and served
on Airlog and Capital pursuant to applicable discovery rules, Evergreen alleges
to have suffered damages which it has calculated as follows: (i) out-of-service
costs amounting to approximately $16.2 million as of October 15, 1996; (ii)
denial of access to then currently favorable capital markets, resulting in an
alleged inability to issues shares in an initial public offering with a value of
as much as $1.8 billion; (iii) lost flight revenues and profits amounting to
approximately $25.8 million; (iv) lost business opportunities and profits
attributable to Evergreen's diminished 747 fleet capacity (which Evergreen did
not quantify, but has indicated is subject to further calculation); and
maintenance costs in responding to the Airworthiness Directive (and to related
airworthiness directives issued by the FAA) of approximately $1.6 million as of
March 1996. The counterclaim also seeks exemplary and punitive damages in an
unspecified amount. Airlog and Capital have filed a motion seeking partial
summary judgment as to four of Evergreen's counterclaims. Airlog and Capital
have alleged that three counterclaims, each for breach of warranty are barred by
the California Commercial Code's four-year statute of repose, and that a fourth
counterclaim, which seeks recovery for negligent misrepresentation is barred by
the "economic loss doctrine" which prevents contracting parties from attempting
to use tort law to avoid liability limitations they agreed to in their
contracts.
Capital learned that on December 18, 1996, General Electric Capital Corporation
and a subsidiary (collectively, "GECC") filed a Complaint in the Superior Court
for the county of San Francisco (Case No. 983351) against Airlog and Capital
among others. The Complaint asserts causes of action under a number of legal
theories arising out of the modification of three B747 aircraft from passenger
to freighter configuration. These aircraft were modified by subcontractors of
Airlog in 1991 with GECC's knowledge and consent, and are three of the ten
Affected Aircraft. The Complaint seeks direct and consequential damages which it
alleges may be in excess of $50 to $75 million, a declaration requiring
defendants promptly to repair the aircraft and punitive damages. To the best of
the Company's knowledge, no Summons has been served on any of the defendants in
this action.
-7-
On January 31, 1997, American International Airways, Inc. ("AIA") filed a
complaint in the United States District Court for the Northern District of
California (C97-0378) against Airlog, Capital, Airlog Management Corp., and
others asserting that Airlog and Capital are liable to it under a number of
legal theories in connection with the application of the Airworthiness Directive
to two aircraft owned by AIA. These aircraft were modified by subcontractors of
Airlog in 1992 and 1994 with AIA's knowledge and consent, and are two of the ten
Affected Aircraft. The Complaint seeks damages (to be trebled under one count of
the complaint) of an unspecified amount relating to lost revenues, lost profits,
denied access to capital markets, repair costs, disruption of its business plan,
lost business opportunities, maintenance and engineering costs, and other
additional consequential, direct, incidental and related damages. The Complaint
asks in the alternative for a recision of AIA's agreements with Airlog and a
return of amounts paid, and for injunctive relief directing that Airlog, and
certain individual defendants, properly staff and manage the correction of the
alleged deficiencies that caused the FAA to issue the Airworthiness Directive.
Consistent with its ongoing product support, Airlog continues to pursue, with
the apparent cooperation of each of the four operators of the Affected Aircraft,
including Evergreen, GECC and AIA, solutions to the FAA's concerns raised in the
Airworthiness Directive. While the results of any litigation are impossible to
predict with certainty, GATX believes that each of the foregoing claims are
without merit, and that Capital and Airlog have adequate defenses thereto.
In November of 1995, the New Jersey Department of Environmental Protection (the
"DEP") served GATX Terminals Corporation with a Notice of Violation alleging
that during 1994 and 1995 the marine vapor recovery units at its Carteret, New
Jersey facility produced emissions of carbon monoxide in excess of limits
allowed by operating permits for those units. The violation was the result of a
design flaw in the vapor recovery equipment, which was promptly corrected.
Terminals and the DEP are currently negotiating a resolution of the violation,
which could result in the assessment of a monetary penalty against Terminals in
excess of $100,000.
Various lawsuits have been filed in the Superior Court for the State of
California and served upon Terminals, Calnev Pipe Line Company, or another GATX
subsidiary seeking an unspecified amount of damages arising out of the May 1989
explosion in San Bernardino, California. Those suits, all of which were filed in
the County of San Bernardino unless otherwise indicated, are: Aguilar, et al, v.
Calnev Pipe Line Company, et al, filed February 1990 in the County of Los
Angeles (No. 0751026); Alba, et al, v. Southern Pacific Railroad Co., et al,
filed November 1989 (No. 252842) and dismissed April 1996; Terry, et al, v.
Southern Pacific, et al, filed December 1989 (No. 253604) and dismissed March
1996; Charles, et al, v. Calnev Pipe Line, Inc., et al, filed May 1990 (No.
256269) and settled March 1996; Mary Washington v. Southern Pacific, et al,
filed May 1990 (No. 256346) and settled March 1995; Stewart, et al, v. Southern
Pacific Railroad Co., et al, filed May 1990 (No. 256464) and settled May 1994 ;
Pearson v. Calnev Pipe Line Company, et al, filed May 1990 in the County of San
Bernardino (No. 256206); Pollack v. Southern Pacific Transportation, et al,
filed May 1992 (No. 271247); Davis v. Calnev Pipe Line Company, et al, filed May
1990 (No. 256207); J. Roberts, et al, v. Southern Pacific Transportation, et al,
filed November 1992 (No. 275936) and dismissed June 1995; Irby, et al, v.
Southern Pacific, et al, (No. 255715) filed April 1990 and settled May 1994;
Reese, et al, v. Southern Pacific, et al (No. 256434) filed May 1990 and settled
May 1994; Nancy Washington, et al, v. Southern Pacific, et al, (No. 256435)
filed May 1990 and settled April 1994. As Terminals' insurance carriers have
assumed the defense of these lawsuits without a reservation of rights and have
paid all of the settlements entered into between the parties to date, GATX
believes that the likelihood of a material adverse effect on GATX's consolidated
financial position or operations is remote.
-8-
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None.
Executive Officers of the Registrant
- -------------------------------------
Pursuant to General Instruction G(3), the following information regarding
executive officers is included in Part I in lieu of inclusion in the GATX Proxy
Statement:
Office
Held
Name Office Held Since Age
Ronald H. Zech Chairman and Chief Executive Officer 1996 53
David M. Edwards Vice President, Finance and 1994 45
Chief Financial Officer
David B. Anderson Vice President, Corporate Development, 1995 55
General Counsel and Secretary
William L. Chambers Vice President, Human Resources 1993 59
Gail L. Duddy Vice President, Compensation and 1997 44
Benefits
Ralph L. O'Hara Controller 1986 52
Brian A. Kenney Vice President and Treasurer 1997 37
Officers are elected annually by the Board of Directors. Previously, Mr. Zech
was President of GATX Financial Services from 1985 to 1994. In 1994 Mr. Zech was
elected as President and Chief Operating Officer of GATX. On January 1, 1996, he
was elected as Chief Executive Officer and on April 26, 1996, Chairman. Mr.
Edwards was Senior Vice President - Finance and Administration of GATX Financial
Services from 1990 to 1994. Mr. Anderson was Vice President, Corporate
Development, General Counsel and Secretary of Inland Steel Industries from 1986
until 1995. Concurrently, he served as President of Inland Engineered Materials
Corporation. Mr. Chambers was engaged in human resource consulting from 1991
until 1993. Ms. Duddy joined GATX in 1992 as Director of Compensation and in
1995 also assumed responsibility for the benefits function. Prior to coming to
GATX, Ms. Duddy served as a Senior Compensation Consultant at William M. Mercer,
Inc. Mr. Kenney was Managing Director, Corporate Finance and Banking, for AMR
Corporation from 1990-1995.
PART II
Item 5. Market for the Registrant's Common Stock and Related Shareholder
Matters
- --------------------------------------------------------------------------
Information required by this item is contained in Exhibit 13, GATX Annual Report
to Shareholders for the year ended December 31, 1996 on page 65, which is
incorporated herein by reference (page reference is to the Annual Report to
Shareholders).
-9-
Item 6. Selected Financial Data
- ---------------------------------
Information required by this item is contained in Exhibit 13, GATX Annual Report
to Shareholders for the year ended December 31, 1996, on pages 66 and 67, which
is incorporated herein by reference (page references are to the Annual Report to
Shareholders).
Item 7. Management Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
Information required by this item is contained in Item 1, Business, section of
this document and in Exhibit 13, GATX Annual Report to Shareholders for the year
ended December 31, 1996, the management discussion and analysis of 1996 compared
to 1995 on pages 35, 36, 37, 43, 45, 47 and 48, the financial data of business
segments on pages 38 through 41, and the management discussion and analysis of
1995 compared to 1994 on pages 68, 69, and 70, which is incorporated herein by
reference (page references are to the Annual Report to Shareholders).
Item 8. Financial Statements and Supplementary Data
- ------------------------------------------------------
The following consolidated financial statements of GATX Corporation, included in
Exhibit 13, GATX Annual Report to Shareholders for the year ended December 31,
1996, which is incorporated herein by reference (page references are to the
Annual Report to Shareholders):
Statements of Consolidated Income and Reinvested Earnings -- Years ended
December 31, 1996, 1995 and 1994 on page 42.
Consolidated Balance Sheets -- December 31, 1996 and 1995, on page 44.
Statements of Consolidated Cash Flows -- Years ended December 31, 1996,
1995 and 1994, on page 46.
Notes to Consolidated Financial Statements on pages 50 through 64.
Quarterly results of operations are contained in Exhibit 13, GATX Annual Report
to Shareholders for the year ended December 31, 1996 on page 65, which is
incorporated herein by reference (page reference is to the Annual Report to
Shareholders).
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
- --------------------------------------------------------------------------
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
- -------------------------------------------------------------
Information required by this item regarding directors is contained in sections
entitled "Nominees For Directors" and "Additional Information Concerning
Nominees" in the GATX Proxy Statement dated March 14, 1997, which sections are
incorporated herein by reference. Information regarding officers is included at
the end of Part I.
-10-
Item 11. Executive Compensation
- ---------------------------------
Information required by this item regarding executive compensation is contained
in sections entitled "Compensation of Directors" and "Compensation of Executive
Officers" in the GATX Proxy Statement dated March 14, 1997, which sections are
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- --------------------------------------------------------------------------
Information required by this item regarding the Company's Common Stock is
contained in sections entitled "Nominees For Directors," "Security Ownership of
Management" and "Beneficial Ownership of Common Stock" in the GATX Proxy
Statement dated March 14, 1997, which sections are incorporated herein by
reference. There are no persons known to the Company who beneficially owned as
of March 12, 1997 more than 5% of the Company's $3.875 Cumulative Convertible
Preferred Stock ("CCP Stock").
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
None.
PART IV
Item 14. Financial Statement Schedules, Reports on Form 8-K and Exhibits.
- ---------------------------------------------------------------------------
a) 1. -Financial Statements
The following consolidated financial statements of GATX
Corporation included in the Annual Report to Shareholders
for the year ended December 31, 1996, are filed in
response to Item 8:
Statements of Consolidated Income and Reinvested Earnings
-- Years ended December 31, 1996, 1995 and 1994
Consolidated Balance Sheets -- December 31, 1996 and 1995
Statements of Consolidated Cash Flows -- Years ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
2. -Financial Statement Schedules: Page
Schedule I Condensed Financial
Information of Registrant.......18
Schedule II Valuation and Qualifying Accounts...22
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and, therefore, have
been omitted.
b) Current Report on Form 8-K dated January 24, 1997 with respect to
certain litigation filed against GATX/Airlog, a California
general partnership of which GATX Capital Corporation is a
partner, and GATX Capital Corporation.
-11-
c) EXHIBIT INDEX
Exhibit
Number Exhibit Description Page
3A. Restated Certificate of Incorporation of GATX Corporation, as
amended, incorporated by reference to GATX's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991, file
number 1-2328.
3B. By-Laws of GATX Corporation, as amended and restated as of
July 29, 1994, incorporated by reference to GATX's Annual
Report on Form 10-K for the fiscal year ended December 31,
1994, file number 1-2328.
10A. GATX Corporation 1985 Long Term Incentive Compensation Plan,
as amended, and restated as of April 27, 1990, incorporated
by reference to GATX's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990, file No. 1-2328.
Amendment to said Plan effective as of April 1, 1991,
incorporated by reference to GATX's Annual Report
on Form 10-K for the fiscal year ended December 31, 1991, file
number 1-2328; Sixth Amendment to said Plan effective
January 31, 1997, submitted to the SEC along with the
electronic transmission of this Annual Report on Form 10-K.
10B. GATX Corporation 1995 Long Term Incentive Compensation Plan,
incorporated by reference to GATX's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1995, file
number 1-2328. First Amendment of said Plan effective as of
January 31, 1997 submitted to the SEC along with the
electronic transmission of this Annual Report on Form 10-K.
10C. Management Incentive Plan dated January 1, 1997, file number
1-2328. Submitted to the SEC along with the electronic
submission of this Report on Form 10-K.
10D. GATX Corporation Deferred Fee Plan for Directors, as Amended
and Restated as of October 25, 1996, file number 1-2328.
Submitted to the SEC along with the electronic submission of
this Report on Form 10-K.
10E. 1984 Executive Deferred Income Plan Participation Agreement
between GATX Corporation and participating directors and
executive officers dated September 1, 1984, as amended,
incorporated by reference to GATX's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991, file number
1-2328.
10F. 1985 Executive Deferred Income Plan Participation Agreement
between GATX Corporation and participating directors and
executive officers dated July 1, 1985, as amended,
incorporated by reference to GATX's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991, file number
1-2328.
-12-
Exhibit
Number Exhibit Description Page
10G. 1987 Executive Deferred Income Plan Participation Agreement
between GATX Corporation and participating directors and
executive officers dated December 31, 1986, as amended,
incorporated by reference to GATX's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991, file number
1-2328.
10H. Amendment to Executive Deferred Income Plan Participation
Agreements between GATX and certain participating directors
and participating executive officers entered into as of
January 1, 1990, incorporated by reference to GATX's Annual
Report on Form 10-K for the fiscal year ended December 31,
1989, file number 1-2328.
10I. Retirement Supplement to Executive Deferred Income Plan
Participation Agreements entered into as of January 23, 1990,
between GATX and certain participating directors incorporated
by reference to GATX's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, file number 1-2328 and
between GATX and certain other participating directors
incorporated by reference to GATX's Annual Report on Form
10-K for the fiscal year ended December 31, 1990, file
number 1-2328.
10J. Amendment to Executive Deferred Income Plan Participation
Agreements between GATX and participating executive officers
entered into as of April 23, 1993, incorporated by reference
to GATX's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, file number 1-2328.
10K. Director's Deferred Stock Plan approved on July 26,1996,
effective as of April 26, 1996 1992, Summary of Plan
incorporated by reference to GATX's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1996, file
number 1-2328.
10L. Agreement for Continued Employment Following Change of Control
or Disposition of a Subsidiary between GATX Corporation and
certain executive officers dated as of January 1, 1995,
incorporated by reference to GATX's Quarterly Report on Form
10-Q for the quarterly period ended March 31,1995, file number
1-2328.
10M. Agreements for Continued Employment Following Change of
Control or Disposition of a Subsidiary between GATX
Corporation and an additional executive officer dated as of
July 1, 1995 and between GATX and another executive officer
dated as of January 1, 1996. Incorporated by reference to
GATX's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, file number 1-2328.
-13-
Exhibit
Number Exhibit Description Page
10N. Agreement dated July 29, 1994, supplementing the Agreement for
Continued Employment Following Change of Control or
Disposition of a Subsidiary between GATX Corporation and
Ronald H. Zech, incorporated by reference to GATX's Annual
Report on Form 10-K for the fiscal year ended December 31,
1994, file number 1-2328.
10O. Letter Agreement dated August 17, 1993 between William
Chambers and GATX, incorporated by reference to GATX's
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1995, file number 1-2328.
10P. Letter Agreement dated May 31, 1995 between David B. Anderson
and GATX. Incorporated by reference to GATX's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, file
number 1-2328.
10Q. Arrangements between James J. Glasser and GATX associated with
Mr. Glasser's retirement from GATX as described on page 11 in
the Section of the GATX Proxy Statement dated March 13, 1996
entitled "Termination of Employment and Change of Control
Arrangements" are incorporated herein by reference thereto,
file number 1-2328.
11A. Statement regarding computation of per
share earnings. 22
11B. Statement regarding computation of per
share earnings (full dilution) 23
12. Statement regarding computation of ratios
of earnings to combined fixed charges
and preferred stock dividends. 24
13. Annual Report to Shareholders for the year ended December 31,
1996, pages 33-73, with respect to the Annual Report on Form
10-K for the fiscal year ended December 31, 1996, file number
1-2328. Submitted to the SEC along with the electronic
submission of this Report on Form 10-K.
21. Subsidiaries of the Registrant. 25
23. Consent of Independent Auditors. 26
24. Powers of Attorney with respect to the Annual Report on Form
10-K for the fiscal year ended December 31, 1996, file number
1-2328. Submitted to the SEC along with the electronic
submission of this Report on Form 10-K.
27. Financial Data Schedule for GATX Corporation for the fiscal
year ended December 31, 1995, file number 1-2328. Submitted to
the SEC along with the electronic submission of this Report on
Form 10-K.
-14-
Exhibit
Number Exhibit Description Page
99A. Undertakings to the GATX Corporation Salaried Employees
Retirement Savings Plan, incorporated by reference to GATX's
Annual Report on Form 10-K for the fiscal year ended December
31, 1982, file number 1-2328.
99B. Undertakings to the GATX Corporation 1995 Long Term Incentive
Plan for the fiscal year ended December 31, 1995, file number
1-2328, incorporated by reference to GATX's Annual Report on
Form 10-K for the year ended December 31, 1995.
99C. Undertakings to the GATX Logistics Inc. 401(k) Cash
Accumulation Plan incorporated by reference to the
Form S-8 Registration Statement filed with the SEC on
June 19,1996, Registration No.33-06315.
-15-
REPORT OF INDEPENDENT AUDITORS
To the Shareholders
and Board of Directors
GATX Corporation
We have audited the consolidated financial statements and related schedules of
GATX Corporation and subsidiaries listed in Item 14 (a)(1) and (2) of the Annual
Report on Form 10-K of GATX Corporation for the year ended December 31, 1996.
These financial statements and related schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and related schedules 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 and related schedules.
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 GATX
Corporation and subsidiaries at December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statements schedules,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects, the information set forth therein.
ERNST & YOUNG LLP
Chicago, Illinois
January 28, 1997
-16-
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 CORPORATION
(Registrant)
/s/Ronald H. Zech By: /s/David B. Anderson
-------------------- -----------------------
Ronald H. Zech David B. Anderson
Chairman and (Attorney in Fact)
Chief Executive Officer March 19, 1997
March 19, 1997
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.
/s/Ronald H. Zech By /s/David B. Anderson
------------------------- ------------------------
Ronald H. Zech Chairman and David B. Anderson,
March 19, 1997 Chief Executive Officer (Attorney in Fact)
March 19, 1997
/s/David M. Edwards
------------------------
David M. Edwards Vice President Finance and
March 19, 1997 Chief Financial Officer
/s/Ralph L. O'Hara
--------------------------
Ralph L. O'Hara Controller and
March 19, 1997 Principal Accounting Officer
Franklin A. Cole Director
James M. Denny Director By /s/David B. Anderson
----------------------
Richard Fairbanks Director David B. Anderson
William C. Foote Director (Attorney in Fact)
Deborah M. Fretz Director
Richard A. Giesen Director
Miles L. Marsh Director
Charles Marshall Director
Michael E. Murphy Director
Date: March 19, 1997
-17-
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
GATX CORPORATION
(PARENT COMPANY)
STATEMENTS OF INCOME
(In Millions)
Year Ended December 31
-------------------------
1996 1995 1994
------ ------ -----
Gross loss .............................. $ (1.3) $ (1.0) $ (3.2)
Costs and expenses
Interest ........................... 30.6 31.7 17.2
Provision for depreciation ......... 1.0 .8 .7
Selling, general and administrative 16.0 20.4 18.3
------ ------ ------
47.6 52.9 36.2
------ ------ ------
Loss before income taxes and share of net
income of subsidiaries ............. (48.9) (53.9) (39.4)
Income taxes (credit) ................... (17.7) (21.3) (14.2)
------ ------ ------
Loss before share of net income
of subsidiaries .................... (31.2) (32.6) (25.2)
Share of net income of subsidiaries ..... 133.9 133.4 116.7
------ ------ ------
Net income .............................. $ 102.7 $ 100.8 $ 91.5
====== ====== ======
-18-
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONT'D)
GATX CORPORATION
(PARENT COMPANY)
BALANCE SHEETS
(In Millions)
ASSETS
December 31
---------------------
1996 1995
-------- --------
Cash and cash equivalents ........... $ .2 $ .4
Operating lease assets and facilities 10.9 9.2
Less - Allowance for depreciation ... (3.4) (2.4)
-------- --------
7.5 6.8
Investment in subsidiaries .......... 1,283.3 1,223.1
Other assets ........................ 22.0 12.9
TOTAL ASSETS ........................ $ 1,313.0 $ 1,243.2
======== ========
-19-
LIABILITIES, DEFERRED ITEMS AND SHAREHOLDERS' EQUITY
December 31
--------------------
1996 1995
------- -------
Accounts payable and accrued expenses ................. $ 16.6 $ 24.9
Due to subsidiaries ................................... 492.1 458.6
Other deferred items .................................. 29.4 41.9
-------- --------
Total liabilities and deferred items ............. 538.1 525.4
Shareholders' equity:
Preferred Stock .................................. 3.4 3.4
Common Stock ..................................... 14.4 14.3
Additional capital ............................... 329.0 324.8
Reinvested earnings .............................. 463.7 409.0
Cumulative foreign currency translation adjustment 11.4 13.4
-------- --------
821.9 764.9
Less - Cost of shares in treasury ................ (47.0) (47.1)
-------- --------
Total shareholders' equity ....................... 774.9 717.8
-------- --------
TOTAL LIABILITIES, DEFERRED ITEMS
AND SHAREHOLDERS' EQUITY ......................... $ 1,313.0 $ 1,243.2
======== ========
-20-
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONT'D)
GATX CORPORATION
(PARENT COMPANY)
STATEMENTS OF CASH FLOWS
(In Millions)
Year Ended December 31
-------------------------
1996 1995 1994
-------- -------- -------
OPERATING ACTIVITIES
Net income ....................................... $ 102.7 $ 100.8 $ 91.5
Adjustments to reconcile net
income to net cash provided by
operating activities:
Provision for depreciation .............. 1.0 .8 .7
Deferred income taxes (credit) .......... (6.8) (10.8) (5.8)
Share of net income of subsidiaries
less dividends received ............. (60.3) (61.0) (49.0)
Other (includes working capital) ................. (23.5) (4.3) 9.3
------ ------ ------
NET CASH PROVIDED BY
OPERATING ACTIVITIES ............................. 13.1 25.5 46.7
INVESTING ACTIVITIES
Additions to operating lease assets and facilities (1.8) (.9) (.5)
------ ------ ------
NET CASH USED IN
INVESTING ACTIVITIES ............................. (1.8) (.9) (.5)
FINANCING ACTIVITIES
Issuance of Common Stock under
employee benefit programs .................... 3.1 5.5 4.6
Cash dividends to shareholders ................... (48.0) (45.3) (43.1)
Advances (to) from subsidiaries .................. 33.4 14.5 (6.7)
------ ------ ------
NET CASH USED IN
FINANCING ACTIVITIES ............................. (11.5) (25.3) (45.2)
NET (DECREASE) INCREASE
IN CASH AND CASH EQUIVALENTS ..................... $ (.2) $ (.7) $ 1.0
====== ===== ======
-21-
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
GATX CORPORATION AND SUBSIDIARIES
(In Millions)
- ----------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- ----------------------------------------------------------------------------------------------------------------
Additions
DESCRIPTION Balance at Charged to Charged to Balance
Beginning Costs and Other Accounts- Deductions- at End
of Period Expenses Describe Describe of Period
- ---------------------------------------------------------------------------------------------------------------
Year ended December 31, 1996:
Allowance for possible
losses - Note A $ 100.0 $ 12.5 $ 15.5 (B) $ (6.9) (C) $ 121.1
Year ended December 31, 1995:
Allowance for possible
losses - Note A $ 89.6 $ 18.4 $ 5.2 (B) $ (13.2) (C) $ 100.0
Year ended December 31, 1994:
Allowance for possible
losses - Note A $ 96.0 $ 19.2 $ 2.5 (B) $ (28.1) (C) $ 89.6
Note A - Deducted from asset accounts.
Note B - Represents principally recovery of amounts previously written off.
Note C - Represents principally reductions in asset values charged off
or transferred to claims and uncollectible amounts.
-22-
EXHIBIT 11A
GATX CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME (LOSS) PER SHARE OF
COMMON STOCK AND COMMON STOCK EQUIVALENTS
(In Millions, Except Per Share Amounts)
Year Ended December 31
---------------------------------------------
1996 1995 1994 1993 1992
------- ------ ------ ------ ------
Average number of shares
of Common Stock outstanding 20.2 20.0 19.9 19.6 19.4
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 .3 .4 .3 .3 *
------- ------- ------ ------ ------
Total 20.5 20.4 20.2 19.9 19.4
======= ======= ====== ====== ======
Net income (loss) $ 102.7 $ 100.8 $ 91.5 $ 72.7 $ (16.5)
Deduct - Dividends paid and
accrued on Preferred Stock 13.2 13.2 13.3 13.3 13.3
------- ------- ------ ------ ------
Net income (loss), as adjusted $ 89.5 $ 87.6 $ 78.2 $ 59.4 $ (29.8)
======= ======= ====== ====== ======
Net income (loss) per share $ 4.37$ 4.30$ 3.88$ 2.99$ (1.53)
======= ======= ====== ====== ======
* Common share equivalents are not considered in the computation of loss per share.
-23-
EXHIBIT 11B
GATX CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME (LOSS) PER SHARE OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS ASSUMING FULL DILUTION
(PRINCIPALLY CONVERSION OF ALL OUTSTANDING PREFERRED STOCK)
(In Millions, Except Per Share Amounts)
Year Ended December 31
-----------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ -----
Average number of shares used to
compute primary earnings per share 20.5 20.4 20.2 19.9 19.4
Common Stock issuable upon assumed
conversion of Preferred Stock 4.0 4.0 4.0 * *
------- ------- ------ ------ ------
Total 24.5 24.4 24.2 19.9 19.4
======= ======= ====== ====== ======
Net income (loss) as adjusted
per primary computation $ 89.5 $ 87.6 $ 78.2 $ 59.4 $ (29.8)
Add - Dividends paid and
accrued on Preferred Stock 13.2 13.2 13.3 * *
------- ------- ------ ------ ------
Net income (loss), as adjusted $ 102.7 $ 100.8 $ 91.5 $ 59.4 $ (29.8)
======= ======= ====== ====== ======
Net income (loss) per share,
assuming full dilution $ 4.19$ 4.13$ 3.78$ 2.99$ (1.53)
======= ======= ====== ====== ======
* Conversion of Preferred Stock is excluded from computation of fully diluted
earnings because of antidilutive effects.
Additional fully diluted computation (1)
Average number of shares used to
compute primary earnings per share 19.6 19.4
Common stock issuable upon assumed
conversion of Preferred Stock, and
stock option exercises 4.4 4.3
------- --------
24.0 23.7
======= =======
Net income (loss) as adjusted
per primary computation $ 59.4 $(29.8)
Add - Dividends paid and accrued
on Preferred Stock 13.3 13.3
------- ------
$ 72.7 $(16.5)
======= ======
Net income (loss) per share,
assuming full dilution......................... $ 3.03 $ (.70)
(1) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an antidilutive result.
-24-
EXHIBIT 12
GATX CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(In Millions Except For Ratios)
1996 1995 1994
-------- -------- ------
Earnings available for fixed charges:
Net income $ 102.7 $ 100.8 $ 91.5
Add:
Income taxes 54.4 47.6 48.8
Equity in net earnings of affiliated companies,
net of distributions received 8.0 6.5 3.7
Interest on indebtedness and amortization
of debt discount and expense 202.8 170.1 148.2
Amortization of capitalized interest 3.7 1.1 1.1
Portion of rents representative of
interest factor (deemed to be one-third) 56.7 43.9 37.9
------ ------ ------
Total earnings available for fixed charges $ 428.3 $ 370.0 $ 331.2
====== ====== ======
Preferred dividend requirements $ 13.2 $ 13.2 $ 13.3
Ratio to convert preferred
dividends to pretax basis (A) 173% 169% 171%
------ ------ ------
Preferred dividend factor on pretax basis 22.8 22.3 22.7
Fixed charges:
Interest on indebtedness and amortization
of debt discount and expense 202.8 170.1 148.2
Capitalized interest 6.8 6.2 3.0
Portion of rents representative of interest
factor (deemed to be one-third) 56.7 43.9 37.9
------ ------ ------
Combined fixed charges and
preferred stock dividends $ 289.1 $ 242.5 $ 211.8
====== ====== ======
Ratio of earnings to combined fixed charges
and preferred stock dividends (B) 1.48X 1.53x 1.56x
(A) To adjust preferred dividends to a pretax basis, income before income
taxes and equity in net earnings of affiliated companies is divided by
income before equity in net earnings of affiliated companies.
(B) The ratios of earnings to combined fixed charges and preferred stock
dividends represent the number of times "fixed charges and preferred
stock dividends" were covered by "earnings." "Fixed charges and
preferred stock dividends" consist of interest on outstanding debt and
capitalized interest, one-third (the proportion deemed representative
of the interest factor) of rentals, amortization of debt discount and
expense, and dividends on preferred stock adjusted to a pretax basis.
"Earnings" consist of consolidated net income before income taxes and
fixed charges, less equity in net earnings of affiliated
companies, net of distributions received.
-25-
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
The following is a list of subsidiaries included in GATX's consolidated
financial statements (excluding a number of subsidiaries which, considered in
the aggregate, would not constitute a significant subsidiary), and the state of
incorporation of each:
General American Transportation Corporation (New York)--includes one domestic
subsidiary, four foreign subsidiaries and an interest in one foreign
affiliate, Business Segment--Railcar Leasing and Management
GATX Financial Services, Inc. (Delaware)--56 domestic subsidiaries (which
includes GATX Capital Corporation), 12 foreign subsidiaries and six
domestic affiliates, Business Segment--Financial Services
GATX Terminals Corporation (Delaware)--three domestic subsidiaries, three
foreign subsidiaries, one domestic affiliate, and interests in 13 foreign
affiliates, Business Segment--Terminals and Pipelines
GATX Logistics, Inc. (Florida)--9 domestic subsidiaries and two foreign
subsidiaries, Business Segment--Logistics and Warehousing
American Steamship Company (New York)--12 domestic subsidiaries,
Business Segment--Great Lakes Shipping
-26-
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following: (i) Registration
Statement No. 2-92404 on Form S-8, filed July 26, 1984; (ii) Registration
Statement No. 2-96593 on Form S-8, filed March 22, 1985; (iii) Registration
Statement No. 33-38790 on Form S-8 filed February 1, 1991; (iv) Registration
Statement No. 33-41007 on Form S-8 filed June 7, 1991; (v) Registration
Statement No. 33-61183 filed on July 20, 1995; and (vi) Registration Statement
No. 33-06315 on Form S-8 filed June 19, 1996 of GATX Corporation, of our report
dated January 28, 1997 with respect to the consolidated financial statements and
schedules of GATX Corporation included and/or incorporated by reference in the
Annual Report on Form 10-K for the year ended December 31, 1996.
ERNST & YOUNG LLP
Chicago, Illinois
March 14, 1997
-27-
EXHIBIT FILED WITH DOCUMENT
10A. GATX Corporation 1985 Long Term Incentive Compensation Plan,
as amended, and restated as of April 27, 1990, incorporated
by reference to GATX's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990, file No. 1-2328.
Amendment to said Plan effective as of April 1, 1991,
incorporated by reference to GATX's Annual Report
on Form 10-K for the fiscal year ended December 31, 1991, file
number 1-2328; Sixth Amendment to said Plan effective
January 31, 1997, submitted to the SEC along with the
electronic transmission of this Annual Report on Form 10-K.
10B. GATX Corporation 1995 Long Term Incentive Compensation Plan,
incorporated by reference to GATX's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1995, file
number 1-2328. First Amendment of said Plan effective as of
January 31, 1997 submitted to the SEC along with the
electronic transmission of this Annual Report on Form 10-K.
10C. Management Incentive Plan dated January 1, 1997, file number
1-2328. Submitted to the SEC along with the electronic
submission of this Report on Form 10-K.
10D. GATX Corporation Deferred Fee Plan for Directors, as Amended
and Restated as of October 25, 1996, file number 1-2328.
Submitted to the SEC along with the electronic submission of
this Report on Form 10-K.
11A. Statement regarding computation of per share earnings.
11B. Statement regarding computation of per share earnings
(full dilution)
12. Statement regarding computation of ratios of earnings to
combined fixed charges and preferred stock dividends.
13. Annual Report to Shareholders for the year ended December 31,
1996, pages 33-73, with respect to the Annual Report on Form
10-K for the fiscal year ended December 31, 1996, file number
1-2328. Submitted to the SEC along with the electronic
submission of this Report on Form 10-K.
21. Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
24. Powers of Attorney with respect to the Annual Report on Form
10-K for the fiscal year ended December 31, 1996, file number
1-2328. Submitted to the SEC along with the electronic
submission of this Report on Form 10-K.
27. Financial Data Schedule for GATX Corporation for the fiscal
year ended December 31, 1995, file number 1-2328. Submitted to
the SEC along with the electronic submission of this Report on
Form 10-K.