Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
[X] OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
[_] OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ____________
Commission file number 1-5666
-----------------------------
UNION TANK CAR COMPANY
(Exact name of registrant as specified in its charter)
Delaware 36-3104688
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
225 West Washington Street, Chicago, Illinois 60606
---------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (312) 372-9500
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 [_]
There is no voting stock held by non-affiliates of the registrant. This report
is being filed by the registrant as a result of undertakings made pursuant to
Section 15(d) of the Securities Exchange Act of 1934.
Included in this filing are 16 pages, sequentially numbered in the bottom center
of each page.
-1-
UNION TANK CAR COMPANY AND SUBSIDIARIES
FORM 10-Q
INDEX
Page
----
Part I. Financial Information
Item 1. Financial Statements
Condensed consolidated statement of income -
three months ended March 31, 2002 and 2001 3
Condensed consolidated balance sheet -
March 31, 2002 and December 31, 2001 4
Condensed consolidated statement of cash flows -
three months ended March 31, 2002 and 2001 5
Notes to condensed consolidated financial statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
Part II. Other Information
Item 1. Legal Proceedings 15
Signatures 16
-2-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNION TANK CAR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
------------------------------
2002 2001
-------------- ------------
Revenues
Services (leasing and other) $ 172,055 $ 175,560
Net sales 140,371 166,597
-------------- ------------
312,426 342,157
Other income 4,536 8,788
-------------- ------------
316,962 350,945
Costs and expenses
Cost of services 105,290 105,426
Cost of sales 113,213 139,575
General and administrative 36,513 36,684
Interest 20,462 20,746
-------------- ------------
275,478 302,431
-------------- ------------
Income before income taxes 41,484 48,514
Provision for income taxes
Current 8,275 10,284
Deferred 8,345 10,039
-------------- ------------
16,620 20,323
-------------- ------------
Net income $ 24,864 $ 28,191
============== ============
See notes to condensed consolidated financial statements.
-3-
UNION TANK CAR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
March 31, December 31,
2002 2001
----------- ------------
(Unaudited)
Assets
- ------
Cash and cash equivalents $ 71,711 $ 12,047
Short-term investments - 110,107
Accounts receivable, primarily due within one year 135,159 135,145
Accounts and notes receivable, affiliates 44,379 57,065
Inventories, net of LIFO reserves of $29,073
($28,868 at December 31, 2001) 144,133 142,812
Prepaid expenses and deferred charges 17,271 14,284
Advances to parent company, principally at LIBOR plus 1% 352,110 340,365
Railcar lease fleet, net 1,596,088 1,606,364
Intermodal tank container lease fleet, net 296,498 296,739
Fixed assets, net 194,889 198,742
Investment in aircraft direct financing lease 25,949 26,611
Other assets 55,771 56,789
---------- ----------
Total assets $2,933,958 $2,997,070
========== ==========
Liabilities and Stockholder's Equity
- ------------------------------------
Accounts payable $ 50,062 $ 62,705
Accrued liabilities 246,802 277,253
Borrowed debt, including $71,519 due within one year
($99,235 at December 31, 2001) 1,107,999 1,145,063
---------- ----------
1,404,863 1,485,021
Deferred income taxes and investment tax credits 485,027 476,751
Minority interest liability 83,289 82,383
Stockholder's equity
Common stock and additional capital 240,148 240,148
Retained earnings 720,631 712,767
---------- -----------
Total stockholder's equity 960,779 952,915
---------- -----------
Total liabilities and stockholder's equity $2,933,958 $2,997,070
========== ==========
See notes to condensed consolidated financial statements.
-4-
UNION TANK CAR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
----------------------
2002 2001
-------- --------
Cash flows from operating activities:
Net income $ 24,864 $ 28,191
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 38,084 41,282
Deferred taxes 8,345 10,039
Gain on disposition of railcars and other fixed assets (1,222) (622)
Other non-cash income and expenses 1,563 2,523
Changes in assets and liabilities:
Accounts receivable 13,896 (3,577)
Inventories (1,004) 11,449
Prepaid expenses and deferred charges (2,736) (2,824)
Accounts payable and accrued expenses (44,007) (30,737)
-------- --------
Net cash provided by operating activities 37,783 55,724
Cash flows from investing activities:
Construction and purchase of railcars and other fixed assets (25,752) (49,499)
Decrease in short-term investments 110,107 51,316
(Increase) decrease in advance to parent (12,465) 9,204
Decrease (increase) in other assets 178 (548)
Proceeds from disposals of railcars and other fixed assets 4,028 2,844
-------- --------
Net cash provided by investing activities 76,096 13,317
Cash flows from financing activities:
Proceeds from issuance of borrowed debt 431 1,356
Principal payments of borrowed debt (37,456) (11,539)
Cash dividends (17,000) (19,000)
-------- --------
Net cash used in financing activities (54,025) (29,183)
Effect of exchange rates on cash and cash equivalents (190) (4,003)
-------- --------
Net increase in cash and cash equivalents 59,664 35,855
Cash and cash equivalents at beginning of year 12,047 34,567
-------- --------
Cash and cash equivalents at end of period $ 71,711 $ 70,422
======== ========
Cash paid during the period for:
Interest (net of amount capitalized) $ 19,593 $ 20,472
Income taxes 8,581 13,092
See notes to condensed consolidated financial statements.
-5-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)
1. UNION TANK CAR COMPANY (the "Company") is a wholly-owned subsidiary of
Marmon Industrial LLC ("Marmon Industrial"). Marmon Industrial is a
wholly-owned subsidiary of Marmon Holdings, Inc. ("Marmon Holdings"),
substantially all of the stock of which is owned, directly or
indirectly, by trusts for the benefit of certain members of the Pritzker
family. As used herein, "Pritzker family" refers to the lineal
descendants of Nicholas J. Pritzker, deceased.
2. The accompanying unaudited condensed consolidated financial statements
include all adjustments, consisting of normal recurring accruals, which
the Company considers necessary for a fair presentation. These interim
financial statements do not include all disclosures normally provided in
annual financial statements. Accordingly, they should be read in
conjunction with the consolidated financial statements and notes thereto
in the Company's 2001 Annual Report on Form 10-K.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
The 2002 interim results presented herein are not necessarily indicative
of the results of operations for the full year 2002.
3. As more fully described in the Company's 2001 Annual Report on Form
10-K, under an arrangement with Marmon Industrial, the Company is
included in the consolidated federal income tax return of Marmon
Holdings. As a member of a consolidated federal income tax group, the
Company is contingently liable for the federal income taxes of the other
members of the group.
4. The Company and its subsidiaries have been named as defendants in a
number of lawsuits, and certain claims are pending. The Company has
accrued what it reasonably expects to pay in resolution of these matters
and, in the opinion of management, their ultimate resolution will not
have a material effect on the Company's consolidated financial position
or results of operations.
5. Foreign currency translation adjustments and transaction gains and
losses are assumed by the Company's parent. For the three months ended
March 31, 2002 and 2001, Marmon Industrial absorbed gains of $672 and
$1,440, respectively.
6. The Company's short-term investments consist of commercial paper with
original maturities between four and six months. No such investments
were held at March 31, 2002.
7. The Company's foreign subsidiaries periodically enter into foreign
currency forward contracts to hedge against U.S. dollar exposures. The
notional amounts of the foreign currency forward contracts, all with
initial maturities of less than one year, amounted to $21,980 at
December 31, 2001. There were no foreign currency forward contracts
outstanding at March 31, 2002.
-6-
8. Consolidating Financial Information
Condensed consolidated statements of income for three months ended March 31,
2002 and 2001 are as follows:
Three Months Ended March 31, 2002
---------------------------------
Union Tank Car Procor Other
Company Holdings Subsidiaries Eliminations Consolidated
-------------- ---------- ------------ ------------ ------------
Revenues
Services $ 113,905 $ 15,607 $ 53,549 $ (11,006) $ 172,055
Net sales 6,735 1,899 134,443 (2,706) 140,371
-------------- ---------- ------------ ------------ ------------
120,640 17,506 187,992 (13,712) 312,426
Other income (669) 1,742 1,314 2,149 4,536
-------------- ---------- ------------ ------------ ------------
119,971 19,248 189,306 (11,563) 316,962
Costs and expenses
Cost of services 72,097 8,545 35,654 (11,006) 105,290
Cost of sales 6,606 2,436 106,877 (2,706) 113,213
General and administrative 10,102 624 25,787 - 36,513
Interest 13,831 791 3,691 2,149 20,462
-------------- ---------- ------------ ------------ ------------
102,636 12,396 172,009 (11,563) 275,478
-------------- ---------- ------------ ------------ ------------
Income before income taxes 17,335 6,852 17,297 - 41,484
Provision for income taxes 7,926 2,301 6,393 - 16,620
-------------- ---------- ------------ ------------ ------------
Net income $ 9,409 $ 4,551 $ 10,904 $ - $ 24,864
============== ========== ============ ============ ============
Three Months Ended March 31, 2001
---------------------------------
Union Tank Car Procor Other
Company Holdings Subsidiaries Eliminations Consolidated
-------------- ---------- ------------ ------------ ------------
Revenues
Services $ 117,517 $ 17,485 $ 54,021 $ (13,463) $ 175,560
Net sales 8,551 6,727 154,345 (3,026) 166,597
-------------- ---------- ------------ ------------ ------------
126,068 24,212 208,366 (16,489) 342,157
Other income (1,402) 3,410 3,477 3,303 8,788
-------------- ---------- ------------ ------------ ------------
124,666 27,622 211,843 (13,186) 350,945
Costs and expenses
Cost of services 74,247 9,553 35,089 (13,463) 105,426
Cost of sales 8,014 5,902 128,685 (3,026) 139,575
General and administrative 9,807 837 26,040 - 36,684
Interest 12,791 1,197 3,455 3,303 20,746
-------------- ---------- ------------ ------------ ------------
104,859 17,489 193,269 (13,186) 302,431
-------------- ---------- ------------ ------------ ------------
Income before income taxes 19,807 10,133 18,574 - 48,514
Provision for income taxes 8,388 4,721 7,214 - 20,323
-------------- ---------- ------------ ------------ ------------
Net income $ 11,419 $ 5,412 $ 11,360 $ - $ 28,191
============== ========== ============ ============ ============
-7-
8. Consolidating Financial Information (Continued)
Condensed consolidated balance sheets as of March 31, 2002 and December 31,
2001 are as follows:
March 31, 2002
--------------
Union Tank Car Procor Other
Company Holdings Subsidiaries Eliminations Consolidated
-------------- ---------- -------------- -------------- --------------
Assets
- ------
Cash and cash equivalents $ 2,515 $ 68,300 $ 896 $ - $ 71,711
Short-term investments - - - - -
Accounts receivable 20,513 11,176 104,412 (942) 135,159
Accounts and notes receivable, affiliates - 25 44,354 - 44,379
Inventories, net 31,198 4,631 108,304 - 144,133
Prepaid expenses and deferred charges 6,732 1,032 8,594 913 17,271
Advances to parent company 121,156 (3,107) 236,640 (2,579) 352,110
Railcar lease fleet, net 1,311,711 120,301 164,076 - 1,596,088
Intermodal tank container lease fleet, net - - 296,498 - 296,498
Fixed assets, net 94,216 14,199 86,474 - 194,889
Investment in direct financing lease - 25,949 - - 25,949
Investment in subsidiaries 889,347 - 174,693 (1,064,040) -
Other assets 479 641 55,292 (641) 55,771
-------------- ---------- ------------ ------------ -------------
Total assets $ 2,477,867 $ 243,147 $ 1,280,233 $ (1,067,289) $ 2,933,958
============== ========== ============ ============ =============
Liabilities and Stockholder's Equity
- ------------------------------------
Accounts payable $ 28,083 $ 618 $ 22,004 $ (643) $ 50,062
Accrued liabilities 177,093 10,053 56,930 2,726 246,802
Borrowed debt 898,685 36,007 173,307 - 1,107,999
-------------- ---------- ------------ ------------ -------------
1,103,861 46,678 252,241 2,083 1,404,863
Deferred income taxes and investment
tax credits 363,247 45,943 75,837 - 485,027
Minority interest liability - - 1,547 81,742 83,289
Stockholder's equity
Common stock and additional capital 331,752 13,012 481,660 (586,276) 240,148
Retained earnings 628,333 152,253 505,031 (564,986) 720,631
Equity adjustment from foreign
currency translation 50,674 (14,739) (36,083) 148 -
-------------- ---------- ------------ ------------ -------------
Total stockholder's equity 1,010,759 150,526 950,608 (1,151,114) 960,779
-------------- ---------- ------------ ------------ -------------
Total liabilities and
stockholder's equity $ 2,477,867 $ 243,147 $ 1,280,233 $ (1,067,289) $ 2,933,958
============== ========== ============ ============ =============
-8-
8. Consolidating Financial Information (Continued)
December 31, 2001
-----------------
Union Tank Car Procor Other
Company Holdings Subsidiaries Eliminations Consolidated
-------------- -------- ------------ ------------ ------------
Assets
- ------
Cash and cash equivalents $ 60 $ 8,590 $ 3,397 $ - $ 12,047
Short-term investments - 110,107 - - 110,107
Accounts receivable 26,721 15,805 93,174 (555) 135,145
Accounts and notes receivable, affiliates - 1 57,064 - 57,065
Inventories, net 21,993 4,914 115,905 - 142,812
Prepaid expenses and deferred charges 5,563 881 6,880 960 14,284
Advances to parent company 150,331 (50,474) 243,087 (2,579) 340,365
Railcar lease fleet, net 1,315,178 123,159 168,027 - 1,606,364
Intermodal tank container lease fleet, net - - 296,739 - 296,739
Fixed assets, net 96,345 14,600 87,797 - 198,742
Investment in direct financing lease - 26,611 - - 26,611
Investment in subsidiaries 853,848 - 148,389 (1,002,237) -
Other assets 507 640 56,282 (640) 56,789
------------ ------------ -------------- ------------- --------------
Total assets $ 2,470,546 $ 254,834 $ 1,276,741 $ (1,005,051) $ 2,997,070
============ ============ ============== ============= ==============
Liabilities and Stockholder's Equity
- ------------------------------------
Accounts payable $ 27,168 $ 2,413 $ 33,353 $ (229) $ 62,705
Accrued liabilities 206,231 12,173 55,985 2,864 277,253
Borrowed debt 922,533 48,646 173,884 - 1,145,063
------------ ------------ -------------- ------------- --------------
1,155,932 63,232 263,222 2,635 1,485,021
Deferred income taxes and investment
tax credits 358,142 45,381 73,228 - 476,751
Minority interest liability - - 4,956 77,427 82,383
Stockholder's equity
Common stock and additional capital 331,752 13,012 481,641 (586,257) 240,148
Retained earnings 573,998 147,702 489,952 (498,885) 712,767
Equity adjustment from foreign
currency translation 50,722 (14,493) (36,258) 29 -
------------ ------------ -------------- ------------- --------------
Total stockholder's equity 956,472 146,221 935,335 (1,085,113) 952,915
------------ ------------ -------------- ------------- --------------
Total liabilities and stockholder's
equity $ 2,470,546 $ 254,834 $ 1,276,741 $ (1,005,051) $ 2,997,070
============ ============ ============== ============= ==============
-9-
8. Consolidating Financial Information (Continued)
Condensed consolidated statements of cash flows for three months ended March 31,
2002 and 2001 are as follows:
Three Months Ended March 31, 2002
---------------------------------
Union Tank Car Procor Other
Company Holdings Subsidiaries Eliminations Consolidated
-------------- ----------- ------------ ------------ ------------
Net cash provided by operating activities: $ 4,478 $ 9,032 $ 24,273 $ - $ 37,783
Cash flows from investing activities:
Construction and purchase of railcars and
other fixed assets (17,896) (240) (7,616) - (25,752)
Decrease in short-term investments - 110,107 - - 110,107
Decrease (increase) in advance to parent 54,873 (47,367) 6,447 (26,418) (12,465)
Decrease in other assets - - 178 - 178
Proceeds from disposals of railcars and
other fixed assets 1,848 984 1,196 - 4,028
-------------- ----------- ------------ ------------ ------------
Net cash provided by (used in) investing
activities 38,825 63,484 205 (26,418) 76,096
Cash flows from financing activities:
Proceeds from issuance of borrowed debt - - 431 - 431
Principal payments of borrowed debt (23,848) (12,617) (991) - (37,456)
Cash dividends (17,000) - (26,418) 26,418 (17,000)
-------------- ----------- ------------ ------------ ------------
Net cash (used in) provided by financing
activities (40,848) (12,617) (26,978) 26,418 (54,025)
Effect of exchange rates on cash and cash
equivalents - (189) (1) - (190)
-------------- ----------- ------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents 2,455 59,710 (2,501) - 59,664
Cash and cash equivalents at beginning of year 60 8,590 3,397 - 12,047
-------------- ----------- ------------ ------------ ------------
Cash and cash equivalents at end of period $ 2,515 $ 68,300 $ 896 $ - $ 71,711
============== =========== ============ ============ ============
-10-
8. Consolidating Financial Information (Continued)
Three Months Ended March 31, 2001
---------------------------------
Union Tank Car Procor Other
Company Holdings Subsidiaries Eliminations Consolidated
-------------- -------- ------------ ------------ ------------
Net cash provided by operating activities: $ 8,980 $ 4,388 $ 42,356 $ - $ 55,724
Cash flows from investing activities:
Construction and purchase of railcars and
other fixed assets (40,105) (211) (9,183) - (49,499)
Decrease in short-term investments - 51,316 - - 51,316
Decrease (increase) in advance to parent 55,084 (5,059) (37,566) (3,255) 9,204
Increase in other assets - - (548) - (548)
Proceeds from disposals of railcars and other
fixed assets 1,702 351 791 - 2,844
---------- --------- -------- ------- --------
Net cash provided by (used in) investing
activities 16,681 46,397 (46,506) (3,255) 13,317
Cash flows from financing activities:
Proceeds from issuance of borrowed debt - - 1,356 - 1,356
Principal payments of borrowed debt (8,693) (1,657) (1,189) - (11,539)
Cash dividends (19,000) (3,255) - 3,255 (19,000)
---------- --------- -------- ------- --------
Net cash (used in) provided by financing
activities (27,693) (4,912) 167 3,255 (29,183)
Effect of exchange rates on cash and cash
equivalents - (3,950) (53) - (4,003)
---------- --------- -------- ------- --------
Net (decrease) increase in cash and cash
equivalents (2,032) 41,923 (4,036) - 35,855
Cash and cash equivalents at beginning of year 4,494 23,111 6,962 - 34,567
---------- --------- -------- ------- --------
Cash and cash equivalents at end of period $ 2,462 $ 65,034 $ 2,926 $ - $ 70,422
========== ========= ======== ======= ========
-11-
9. Segment Information
Intermodal
Tank
Metals Container Consolidated
Railcar Distribution Leasing All Other Totals
----------- --------------- -------------- ------------ -------------
(Dollars in Millions)
Three months ended March 31, 2002
- ---------------------------------
Revenues from external customers $ 142.0 $ 101.9 $ 19.5 $49.0 $ 312.4
Income before income taxes 32.0 3.2 0.9 5.4 41.5
Three months ended March 31, 2001
- ---------------------------------
Revenues from external customers $ 151.5 $ 119.8 $ 18.5 $52.4 $ 342.2
Income before income taxes 38.5 2.9 2.2 4.9 48.5
10. Accounting for Goodwill and Intangible Assets
The Company adopted the non-amortization provisions of Statement of Financial
Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets", on
January 1, 2002. The Company has not yet determined the financial impact that
the impairment provisions of SFAS No. 142 will have on its consolidated
financial statements. Any impairment charge resulting from the transitional
impairment testing will be reflected as a cumulative effect of a change in
accounting principle. There were no changes in the $11.6 million carrying amount
of goodwill during the three months ended March 31, 2002, which is classified in
Other Assets in the condensed consolidated balance sheet.
The following table provides comparative earnings had the non-amortization
provisions of SFAS No. 142 been adopted for all periods presented:
Three Months Ended March 31
---------------------------
2002 2001
----------- ---------
Reported net income $ 24,864 $ 28,191
Goodwill amortization - 2,719
--------- ---------
Adjusted net income $ 24,864 $ 30,910
========= =========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
- ---------------------
1st Quarter 2002 versus 2001
- ----------------------------
Performance of the railcar and tank container leasing businesses continue to be
adversely affected by the continuing general economic slowdown in all major
markets. Demand for existing equipment remained low causing downward pressure on
both lease rental rates and fleet utilization. Service revenues decreased $3.5
million primarily due to decreased railcar service revenues ($2.7 million) and
decreased intermodal tank container operations revenues ($1.0 million). Gross
margin on service revenues decreased $3.4 million primarily due to both weaker
railcar service operations ($2.2 million) and intermodal tank container
operations ($1.1 million).
-12-
Demand for new railcars remained weak, resulting in continuing low levels of
production and capacity utilization. Demand for the products of the metals
distribution business was also impacted by the continuing general economic
slowdown in the U.S. As a result, overall sales revenues decreased $26.2 million
primarily due to reduced sales of railcars ($6.6 million) and metal products
($18.2 million). Gross margin on sales revenues increased $0.1 million partially
due to adoption of the non-amortization provisions of Statement of Financial
Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets", on
January 1, 2002. Cost of sales included $3.3 million goodwill amortization for
the first quarter of 2001.
Other income decreased $4.3 million mainly due to reduced interest income ($2.3
million) reflective of lower average interest rates.
Financial Condition and Liquidity
- ---------------------------------
2002 versus 2001
- ----------------
Operating activities provided $37.8 million of cash in the first quarter of
2002. These funds, along with redemption of short-term investments, were used to
service borrowed debt obligations, finance railcar additions, pay dividends to
the Company's stockholder, and advance funds to parent.
It is the Company's policy to pay to its stockholder a quarterly dividend equal
to 70% of net income. To the extent that the Company generates cash in excess of
its operating needs, such funds, in excess of the amounts paid as dividends, are
advanced to its parent and bear interest at commercial rates. Conversely, when
the Company requires additional funds to support its operations, prior advances
are repaid by its parent. No restrictions exist regarding the amount of
dividends which may be paid or advances which may be made by the Company to its
parent.
During the first quarter of 2002, the Company spent $25.8 million for
construction and purchase of railcars and other fixed assets. Since capital
expenditures for railcars are generally incurred subsequent to receipt of firm
customer lease orders, such expenditures are discretionary to the Company based
on its desire to enter into those lease orders. Capital expenditures for
intermodal tank containers are likewise discretionary in the intermodal tank
container business.
During the first quarter of 2002, the Company's financing activities included
$37.5 million for principal repayments on borrowed debt and $17.0 million for
cash dividends. Net cash used in financing activities was $54.0 million.
Management expects future cash to be provided from operating activities,
long-term financings and collection of funds previously advanced to parent will
be adequate to provide for the continued expansion of the Company's business and
enable it to meet its debt service obligations.
-13-
New Accounting Pronouncements
- -----------------------------
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", which provides additional guidance on the
financial accounting and reporting for the impairment or disposal of long-lived
assets. The Company adopted the new rule as of January 1, 2002. The adoption of
the new rule had no material effect on the Company's results of operations or
financial position.
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which is effective for fiscal years beginning after June 15, 2002.
The Statement requires legal obligations associated with the retirement of
long-lived assets to be recognized at their fair value at the time that the
obligations are incurred. Upon initial recognition of a liability, that cost
should be capitalized as part of the related long-lived asset and allocated to
expense over the useful life of the asset. The Company will adopt the new rule
on asset retirement obligations on January 1, 2003. The effect of adoption of
SFAS No. 143 is not anticipated to have a material effect on the Company's
results of operations or financial position.
-14-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At March 31, 2002, there had been no significant change to the Company's
exposure to market risk since December 31, 2001.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to "Business - Environmental Matters" in the
Company's Annual Report on Form 10-K for the year ended December 31,
2001 for a description of certain environmental matters.
-15-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNION TANK CAR COMPANY
REGISTRANT
Dated: May 9, 2002 /s/ R.C. Gluth
-------------------------------
R.C. Gluth
Executive Vice President,
Director and Treasurer
(principal financial officer
and principal accounting
officer)
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