Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---
SECURITIES EXCHANGE ACT OF 1934
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---
SECURITIES EXCHANGE ACT OF 1934
For the Year Ended Commission File Number
December 31, 1996 1-8319
GATX CAPITAL CORPORATION
Incorporated in the IRS Employer Identification Number
State of Delaware 94-1661392
Four Embarcadero Center
San Francisco, CA 94111
(415) 955-3200
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
All Common Stock of Registrant is held by GATX Financial Services, Inc. (A
wholly-owned subsidiary of GATX Corporation).
As of March 17, 1997, Registrant has outstanding 1,031,250 shares of $1 par
value Common Stock.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(a) and
(b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.
DOCUMENTS INCORPORATED BY REFERENCE
Document Part of Form 10-K
Annual Report to Stockholders for Part II Items 6, 7, & 8
Fiscal Year Ended December 31, 1996
(the "Annual Report")
Registration Statement on Form S-1 Part IV Item 14(a)3
filed with the Commission on
December 23, 1981 (file No. 2-75467)
Amendment No. 1 to Form S-1 filed Part IV Item 14(a)3
with the Commission on
February 23, 1982
Amendment No. 2 to Form S-1 filed Part IV Item 14(a)3
with the Commission on March 2, 1982
Form 10-K for the Year Ended Part IV Item 14(a)3
December 31, 1982 filed with the
Commission on March 28, 1983
Form 10-K for the Year Ended Part IV Item 14(a)3
December 31, 1990 filed with the
Commission on March 30, 1991
Form 10-K for the Year Ended Part IV Item 14(a)3
December 31, 1992 filed with the
Commission on March 31, 1993
Form 10-K for the Year Ended Part IV Item 14(a)3
December 31, 1994 filed with the
Commission on March 27, 1995
Form 10-K for the Year Ended Part IV Item 14(a)3
December 31, 1995 filed with the
Commission on March 28, 1996
PART I
Item 1. Business
- -----------------
GATX Capital Corporation and its subsidiaries ("GATX Capital" or the
"Company") actively invest in a wide variety of assets. These investments are
made through a variety of financing instruments, primarily leases and loans,
either for the Company's own account or through partnerships and joint ventures.
GATX Capital actively manages its existing portfolio of investments as well as
those of institutional investors, and manages several joint ventures and
partnerships in which it participates. Additionally, the Company arranges
secured financing for others. The Company also sells computer network technology
equipment and provides technical service on the equipment it sells. GATX
Capital Corporation is a wholly-owned subsidiary of GATX Corporation.
Item 2. Properties
- -------------------
The Company leases all of its office space and owns no materially important
physical properties other than those related directly to its investment
portfolio. The Company's principal offices are rented under a twelve year lease
expiring in 2003.
Item 3. Legal Proceedings
- --------------------------
On July 11, 1996, GATX/Airlog Company ("Airlog"), a California general
partnership of which a subsidiary of the Company is a partner, and the Company
filed a complaint for Declaratory Judgment against Evergreen International
Airlines, Inc., ("Evergreen") in the United States District Court for the
Northern District of California (No. C96-2494) seeking a declaration that
neither the Company nor Airlog has any liability to Evergreen as a result of the
issuance of Airworthiness Directive 96- 01-03 (the "Airworthiness Directive") by
the Federal Aviation Administration (the "FAA") in January of 1996. The effect
of the Airworthiness Directive is to reduce significantly the amount of freight
that three of Evergreen's B747 aircraft may carry.
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. The Company
guaranteed certain of Airlog's obligations to Evergreen. The Company 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 the Company are liable to it under a number of legal theories in
connection with the application of the Airworthiness Directive to the three
aircraft. In an initial disclosure statement dated October 29, 1996, and served
on Airlog and the Company 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 issue 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 the Company have filed a
motion seeking partial summary judgment as to four of Evergreen's counterclaims.
Airlog and the Company 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.
The Company 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 the Company 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.
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, the Company, Airlog Management Corp., and
others asserting that Airlog and the Company are liable to it under a number of
legal theories in connection with the application of the Airworthiness Directive
to 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, the Company believes that each of the foregoing claims
are without merit, and that the Company and Airlog have adequate defenses
thereto.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
Omitted under provisions of the reduced disclosure format.
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters
- --------------------------------------------------------------------------------
Not applicable. All common stock of the Registrant is held by GATX Financial
Services, Inc. (a wholly-owned subsidiary of GATX Corporation). Information
regarding dividends is shown on the consolidated statements of income and
reinvested earnings which are included in Item 8.
Item 6. Selected Financial Data
- -------------------------------
Omitted under provisions of the reduced disclosure format.
Item 7. Management's Discussion and Analysis of Financial Condition
- --------------------------------------------------------------------
and Results of Operations
-------------------------
Incorporate herein by reference to the Annual Report, pages 26-30,included as
Exhibit 13 of this document.
Item 8. Financial Statements and Supplementary Data
- ----------------------------------------------------
The following consolidated financial statements of GATX Capital Corporation,
included in the 1996 Annual Report (Exhibit 13), are incorporated herein by
reference (page references are to the Annual Report):
Consolidated Statements of Income
and Reinvested Earnings for Years
Ended December 31, 1996, 1995, and 1994 Page 31
Consolidated Balance Sheets
As of December 31, 1996 and 1995 Page 32
Consolidated Statements of Cash Flows
Years Ended December 31, 1996, 1995, and 1994 Page 33
Notes to Consolidated Financial Statements Pages 34 - 44
Item 9. Changes in and Disagreements with Accountants on Accounting
- ---------------------------------------------------------------------
and Financial Disclosure
------------------------
None.
PART III
Item 10(a). Directors of the Registrant
- ----------------------------------------
Name Office Held Since Age
- ----------------------------------------------------------------------------
Ronald H. Zech Chairman of the Board 1984 53
Joseph C. Lane President, Chief Executive
Officer and Director 1994 43
David B. Anderson Director 1996 55
Alan C. Coe Executive Vice President
and Director 1994 45
Jesse V. Crews Executive Vice President,
Chief Investment Officer,
and Director 1994 44
David M. Edwards Director 1990 45
Frederick L. Hatton Executive Vice President
and Director 1984 54
Item 10(b). Executive Officers of the Registrant
- -------------------------------------------------
Name Office Held Since Age
- -----------------------------------------------------------------------------
Joseph C. Lane President, Chief Executive
Officer and Director 1994 43
Alan C. Coe Executive Vice President
and Director 1994 45
Jesse V. Crews Executive Vice President,
Chief Investment Officer,
and Director 1994 44
Frederick L. Hatton Executive Vice President
and Director 1984 54
Cal C. Harling Senior Vice President and
Managing Director-
Technology Group 1994 48
Glenn L. Hickerson Senior Vice President and
President-Air Group 1995 59
Kathryn G. Jackson Executive Vice President and
Managing Director-Corporate
Finance 1995 40
Robert J. Sammis Senior Vice President-
Corporate Development 1993 50
Michael C. Cromar Vice President and Chief
Financial Officer 1994 49
Richard M. Tinnon Vice President and Treasurer 1996 34
Thomas C. Nord Vice President, General
Counsel, and Secretary 1980 56
Valerie C. Williams Vice President-Human
Resources 1989 52
Curt F. Glenn Principal Accounting Officer,
Vice President and Controller 1992 42
JOSEPH C. LANE, President, Chief Executive Officer and Director since 1994. Mr.
Lane joined GATX in 1978 as a Financial Analyst. At GATX he has held a variety
of positions including District Manager, Regional Marketing Manager, Managing
Director of Corporate Finance and President of GATX International. Mr. Lane
served as Vice President Corporate Finance for two years with the regional
investment banking firm of Rotan Mosle in Houston, Texas, before re-joining GATX
in 1983. He was elected to the Board of Directors of GATX Capital in 1988. Mr.
Lane was a member of the staff at Yale University and a founding officer of
American Digital Systems. He currently serves as Chairman of the Board of
Directors of Centron Corporation and of Sun Financial. He is Vice Chairman of
the Equipment Leasing Association, the national association of the leasing and
finance industry. He received a Bachelor of Arts degree from Yale University in
1975.
ALAN C. COE, Executive Vice President and Director since 1994. Mr. Coe joined
the Company in 1977 as a Financial Analyst and has held a variety of positions
both domestically and internationally. Prior to 1977, Mr. Coe served as an
officer in the United States Air Force (four years) and as Vice
President-Corporate Finance - with Rotan Mosle in Houston, Texas (three years).
Mr. Coe received a BA from Southern Methodist University in 1973 and his MBA
from Golden Gate University in 1976.
JESSE V. CREWS, Executive Vice President, Chief Investment Officer and
Director since 1995. Mr. Crews joined the Company in 1977 as a Financial Analyst
and held a variety of positions, including Regional Manager of the Singapore
(two years) and New Orleans/Houston (five years) offices before returning to San
Francisco in 1985. He has been broadly responsible for the development of new
business investment opportunities for the Company's own portfolio since 1986 and
as head of the Corporate Finance Group from 1990 to 1994. Mr. Crews received a
BA from Yale and an MBA from the University of Virginia.
FREDERICK L. HATTON, Executive Vice President and Director since 1984. Mr.
Hatton joined the Company in 1983 as Senior Vice President and President of GATX
Air. He is currently responsible for GATX Airlog. He is currently a Director of
IASCO and a Director of the International Society of Transport Aircraft Trading
(CISTAT). Prior to 1983, he served as Vice President Marketing for two years,
and Executive Vice President for four years with International Air Service
Company (IASCO). Prior to IASCO, Mr. Hatton served in a number of managerial
capacities for Flying Tiger Lines. He received a BS from Yale University in
1964, an MS in aerospace management from the University of Southern California
in 1971, and an MBA from the Wharton School in 1972. Mr. Hatton served as a U.S.
Marine Corps fighter pilot from 1964 to 1970, including a tour in Vietnam.
CAL C. HARLING, Senior Vice President-Technology Group since 1994. Mr. Harling
joined the Company in 1987 as Vice President, Technology Financing. Prior to
1987 Mr. Harling was an independent consultant for two years. Mr. Harling worked
for Decimus Corporation, a subsidiary of Bank America Corporation, for ten years
starting in 1975. While at Decimus Mr. Harling held various positions including
Vice President of Vendor Operating Leasing, Vice President of Portfolio
Management, and other management positions in systems development. Mr. Harling
received a BS from California State University, Sacramento in 1973.
GLENN L. HICKERSON, President of the Air Group since 1995 and Executive Vice
President of the Air Group from 1990 to 1995. Prior to joining the Company, he
was President/Managing Director of GPA Asia Pacific (1989-1990) and Vice
President-Commercial Marketing and Sales at Douglas Aircraft Company
(1983-1989). Mr. Hickerson served the Lockheed California Company from 1976
through 1983, the last four years as Vice President-Marketing and Sales-
International. Prior to 1976 he served as Group Vice President-Travel Division
with Marriott Corporation (four years), President, Universal Airlines (five
years) and Secretary-Treasurer, Douglas Finance Corporation (five years). Mr.
Hickerson received a BS from Claremont McKenna College and an MBA from New York
University.
KATHRYN G. JACKSON, Executive Vice President; has managed the Company's
Corporate Finance Group since 1995. She joined the Company in 1981 as Financial
Analyst, and transferred to the Chicago regional office in 1982 serving as
District Manager, Vice President and Managing Director. From 1987 to 1994, she
was employed by D'Accord Financial Services as a Managing Director, member of
the Executive Committee and ultimately served as President, Chairman and Chief
Executive Officer. Ms. Jackson holds a BA from Stanford University and an MBA
from Northwestern University.
ROBERT J. SAMMIS, Senior Vice President-Corporate Development since 1993. Mr.
Sammis joined the Company in 1975 as Associate Counsel. He has served as a
Senior Vice President in charge of Equipment Management and as Managing
Director, International. Mr. Sammis is a Fulbright scholar and, in that
capacity, taught law at the University of Los Andes, Bogota, Columbia. Prior to
joining the Company, he was with Pillsbury, Madison & Sutro as Associate
Counsel. Mr. Sammis received a BA from the University of California and a JD
from the University of Michigan.
MICHAEL E. CROMAR, Vice President and Chief Financial Officer since October
1994. Prior to joining the Company, Mr. Cromar was Vice President, Treasurer and
Chief Financial Officer at The Harper Group, Inc., a San Francisco based
international logistics services company from December 1992 to October 1994.
From September 1988 through August 1992 he served S.A. Louis-Dreyfus & Cie.,
principally as Senior Vice President, Finance and Information, for Gearbulk Ltd.
an industrial bulk shipping joint venture in Bergen, Norway. From 1982 to 1988
he was corporate controller and a director of information technology for
American President Companies, Ltd. From 1975, he held a variety of financial
management positions with Natomas Co., an energy resources company. Mr. Cromar
began his career with Touche Ross & Co. where he was a Certified Public
Accountant. He received a BS degree in Business Administration in 1972 from the
University of Utah and was an infantry officer in the U.S. Army, including
service in Vietnam.
RICHARD M. TINNON, Vice President and Treasurer since 1996. Mr Tinnon joined
GATX Capital in 1987 as a Senior Financial Analyst. He has also served as an
Associated Director of GATX Realty, Director of Financial Planning and Analysis,
Assistant Treasurer, and Assistant to the President. Prior to GATX Capital, Mr.
Tinnon worked for Touche Ross & Co. Mr. Tinnon received his B.A. from Michigan
State University in 1985 and his MBA in 1990 from the University of California,
Berkeley.
VALERIE C. WILLIAMS, Vice President-Human Resources since 1989. Prior to joining
the Company, Ms. Williams was President of VC Williams & Associates, a human
resources consulting firm; was Director, Corporate Compensation and Incentives
at Carson Pirie Scott & Co. and Senior Consultant, Compensation with A.S.
Hansen, Inc. Ms. Williams received her MBA from Lake Forest School of Management
in 1980.
CURT F. GLENN, Principal Accounting Officer, Vice President & Controller since
1992. Mr. Glenn joined the Company in 1980 as Assistant Tax Manager, was
appointed Tax Manager in 1985 and elected Vice President in 1989. Prior to
joining the Company, Mr. Glenn was a Senior Tax Analyst at GATX Corporation (two
years) and a Senior Tax Accountant with Trans Union Corporation (four years).
Mr. Glenn received a B.S. in Accounting from DePaul University in 1977. Mr.
Glenn is currently Chairman of the Federal Tax Committee of the Equipment
Leasing Association.
Items 11, 12 & 13
- -----------------
Omitted under provisions of the reduced disclosure format.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- -------------------------------------------------------------------------
(a) 1. Financial statements
The following consolidated financial statements of GATX Capital Corporation are
included in Item 8.
Consolidated Statements of Income and Reinvested Earnings
Years Ended December 31, 1996, 1995 and 1994
Consolidated Balance Sheets
As of December 31, 1996 and 1995
Consolidated Statements of Cash Flows
Years Ended December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
2. Financial statement schedules
All financial statement schedules have been omitted because they are not
applicable or because required information is provided in the financial
statements, including the notes thereto, which are included in Item 8.
3. Exhibits Required by Item 601 of Regulation S-K
Exhibit Number
--------------
3(a) Restated Certificate of Incorporation of the Company.(6)
3(b) By-laws of the Company.(1)
4(d) Term Loan Agreement between the Company and a Bank dated
December 26, 1990.(2)
10(a) Office Leases, Four Embarcadero Center, dated October 1, 1990
and June 1, 1991, between the Company and
Four Embarcadero Center Venture.(2)
10(b) Tax Operating Agreement dated January 1, 1983 between GATX
Corporation and the Company.(3)
10(c) Credit Agreement among the Company, the Subsidiaries listed in
Schedule II thereto, the Banks listed on the signature pages
thereto and Chase Manhattan Bank, as agent for the Banks,
dated December 14, 1992.(4)
10(d) Amendment No.1, dated December 1, 1994, to Credit Agreement
referred to in 10(c).(5)
10(e) Credit Agreement among the Company, its two subsidiaries
operating in Canada, and the Bank of Montreal, dated
December 14, 1992.(4)
10(f) First Amendment, dated June 20, 1993 to Credit Agreement
referred to in 10(e).(5)
10(g) Second Amendment, dated June 14, 1994, to Credit
Agreement referred to in 10(e).(5)
10(h) Third Amendment, dated December 1, 1994, to Credit Agreement
referred to in 10(e).(5)
12 Ratio of Earnings to Fixed Charges (7)
13 Annual Report to Shareholders, pages 26-45. (7)
23 Consent of Independent Auditors.(7)
27 Financial Data Schedule.(7)
99 Listing of Medium Term Notes.(7)
The Registrant agrees to furnish to the Commission upon request a copy of each
instrument with respect to issues of long-term debt of the Registrant the
authorized principal amount of which does not exceed 10% of the total assets of
Registrant.
(1) Incorporated by reference to Registration Statement on Form S-1, as
amended, (file number 2-75467) filed with the Commission on
December 23, 1981, page II-4.
(2) Incorporated by reference to Form 10-K filed with the Commission
on March 30, 1991.
(3) Incorporated by reference to Form 10-K filed with the Commission
on March 28, 1983.
(4) Incorporated by reference to Form 10-K filed with the Commission
on March 31, 1993.
(5) Incorporated by reference to Form 10-K filed with the Commission
on March 27, 1995.
(6) Incorporated by reference to Form 10-K filed with the Commission
on March 28, 1996.
(7) Submitted to the Securities and Exchange Commission with the
electronic filing of this document.
Item 14(b). Reports on Form 8-K
- ---------------------------------
The company filed no reports on Form 8-K during the last quarter of the
period covered by this report. A current report on Form 8-K was filed on
January 23, 1997, under Item 5., Other Events.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GATX CAPITAL CORPORATION
(Registrant)
By /s/ Joseph C. Lane
-- ------------------
Joseph C. Lane
President, Chief Executive Officer
and Director
March 28, 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.
By /s/ Joseph C. Lane By /s/ Michael E. Cromar
- -- ------------------ -- ---------------------
Joseph C. Lane Michael E. Cromar
President, Chief Executive Officer Vice President and
and Director Chief Financial Officer
Dated: March 28, 1997 Dated: March 28, 1997
By /s/ Curt F. Glenn By /s/ David M. Edwards
- -- ----------------- -- --------------------
Curt F. Glenn David M. Edwards
Principal Accounting Officer, Director
Vice President & Controller
Dated: March 28, 1997 Dated: March 28, 1997
By /s/ Jesse V. Crews By /s/ Alan C. Coe
- -- ------------------ -- ---------------
Jesse V. Crews Alan C. Coe
Executive Vice President, Chief Executive Vice President
Investment Officer and Director and Director
Dated: March 28, 1997 Dated: March 28, 1997
REPORT OF INDEPENDENT AUDITORS
Board of Directors
GATX Capital Corporation
We have audited the accompanying consolidated financial statements of GATX
Capital Corporation (a wholly-owned subsidiary of GATX Corporation) and
subsidiaries listed in the accompanying index to financial statements (Item
14(a)). These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements listed in the accompanying index to
financial statements (Item 14(a)) present fairly, in all material respects, the
consolidated financial position of GATX Capital Corporation and subsidiaries at
December 31, 1996 and 1995 and the consolidated 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.
ERNST & YOUNG LLP
San Francisco, California
January 28, 1997