1996
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[X] SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[_] SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 W. Washington Street, Chicago, Illinois 60606
- - ------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 372-9500
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
- - ------------------- ------------------------
None -
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
-------------------
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K ((S) 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of the 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. [_].
There is no voting stock held by non-affiliates of the registrant. This Annual
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 with respect to
certain long-term debt of the registrant.
UNION TANK CAR COMPANY
FORM 10-K
Year Ended December 31, 1996
CONTENTS
Section Page
- - ------- ----
Part I.
Item 1 Business......................................................... 2
Item 2 Properties....................................................... 10
Item 3 Legal Proceedings................................................ 11
Item 4 Submission of Matters to a Vote of Security Holders.............. 11
Part II.
Item 5 Market for Registrant's Common Equity and Related Stockholder
Matters........................................................ 12
Item 6 Selected Financial Data.......................................... 12
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................... 12
Item 8 Financial Statements and Supplementary Data...................... 16
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure........................................... 39
Part III.
Item 10 Directors and Executive Officers of the Registrant............... 39
Item 11 Executive Compensation........................................... 41
Item 12 Security Ownership of Certain Beneficial Owners and Management... 42
Item 13 Certain Relationships and Related Transactions................... 42
Part IV.
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.. 43
Signatures.................................................................... 44
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PART I
ITEM 1. BUSINESS
General
UNION TANK CAR COMPANY (with its wholly-owned subsidiaries herein collectively
referred to, unless the context otherwise requires, as the "Company") was
organized under the laws of Delaware on September 23, 1980 and is the successor
to a business which was originally incorporated in New Jersey in 1891. The
Company is a wholly-owned subsidiary of Marmon Industrial Corporation, a wholly-
owned subsidiary of Marmon Holdings, Inc. ("Holdings"). Substantially all of the
stock of Holdings 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.
Railcar Leasing, Services and Sales
The principal activity of the Company is the leasing of railway tank cars and
other railcars to United States, Canadian and Mexican manufacturers and other
shippers of chemical products, including liquid fertilizers, petroleum products,
including liquefied petroleum gas, food products and bulk plastics. The Company
owns and operates one of the largest fleets of privately-owned railway tank cars
in the world.
As of December 31, 1996, the Company's fleet was comprised of 55,423 tank cars
and 15,043 railway cars of other types. A total of 26,720 cars were added to the
lease fleet during the ten years ended December 31, 1996. These cars accounted
for approximately 35% of total railcar lease revenues during 1996. Most of the
Company's cars were built by the Company or to its specifications and the
balance were purchased from other sources.
Management estimates that tank cars carrying chemicals and acids account for the
greatest portion of total leasing revenues, followed in order by compressed
gases (particularly liquefied petroleum gas and anhydrous ammonia), refined
petroleum products (such as gasoline, fuel oils and asphalt), food products and
liquid fertilizers.
A significant portion of the revenues from the Company's non-tank car fleet
derives from hopper cars carrying bulk plastics. The remaining non-tank car
revenues are attributable to cars which serve the lumber, dry bulk chemical,
coal and sulphur industries.
The Company builds tank cars primarily for use in its leasing business. In
addition, the Company builds cars for sale to others. Generally, the Company
only manufactures a car following the receipt of a firm order for the lease or
sale of such car.
-2-
Substantially all of the Company's cars are leased directly to several hundred
manufacturers and other shippers under leases covering from one to several
thousand cars and for periods ranging from one to twenty years. The average term
of leases entered into during 1996 for newly-manufactured railcars was
approximately seven years. The average term of leases entered into during 1996
for used tank cars and other railcars was approximately four years. Under the
terms of most leases the Company agrees to provide a full range of services,
including car repair and maintenance. The Company supplies relatively few cars
directly to railroads. The Company markets its cars through regional sales
offices located throughout the United States and Canada and through a sales
agent in Mexico. To insure optimum utilization of the U.S., Canadian and Mexican
lease fleets, the Company maintains fleet data processing systems which contain
information relative to each car, including its mechanical specifications,
maintenance and repair data and lease terms.
The Company has historically issued equipment trust certificates to finance
additions to its fleet. More recently, the Company has also engaged in sale-
leaseback transactions to meet railcar financing needs. In 1996, the Company
entered into a sale-leaseback transaction pursuant to which it sold and leased
back (under an operating lease) an aggregate of approximately 2,151 railcars. In
1995, the Company entered into a sale-leaseback transaction pursuant to which it
sold and leased back (under an operating lease) an aggregate of approximately
2,057 railcars. The Company expects that future railcar financing needs will be
met with a combination of unsecured borrowings and sale-leaseback transactions.
The following table sets forth the minimum rentals to be received, the debt
maturities under outstanding equipment obligations, the minimum lease payments
due (as lessee) under all operating leases and the cost of the fleet. The
figures shown are the minimum future rentals under leases in effect at the dates
indicated. Based upon its historical experience, the Company expects that the
cars (other than those which are retired in the ordinary course of business)
will be re-leased at the expiration of such leases. The rentals under such
future leases and related interest and other expenses to be incurred in the
future cannot be ascertained and therefore are not reflected in this table.
-3-
December 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(Dollars in Millions)
Total minimum future rentals
to be received (as lessor) $1,478.2 $1,363.7 $1,258.5 $1,215.8 $1,190.3
Principal amount of equipment
obligations (1) 713.2 774.8 855.3 869.0 846.0
Total minimum future lease
payments for noncancellable
operating leases (as lessee) 753.5 590.2 426.7 253.0 262.4
Minimum future rentals to be
received within one year
(as lessor) 388.7 361.7 339.7 327.9 321.0
Principal amount of equipment
obligations due within one
year, net of amounts held
for sinking fund purposes (1) 207.4 66.8 73.1 80.7 71.4
Minimum future lease payments
for noncancellable operating
leases due within one year
(as lessee) 43.9 25.4 13.4 13.5 8.6
Gross cost of fleet 2,523.6 2,425.0 2,368.6 2,392.7 2,283.8
Depreciated cost of fleet 1,459.8 1,430.2 1,452.0 1,523.8 1,477.4
For the year ended:
Railcar rentals, including
direct financing leases 459.4 432.0 409.2 397.8 388.1
(1) Includes $143.0 million principal amount of unsecured senior notes
issued by the Company in 1990, due June 15, 1997, the proceeds of
which were used to retire certain higher coupon railcar obligations.
Approximately 42% of the Company-owned fleet of railcars is pledged to secure
equipment obligations. The remaining cars are free of liens.
The Company maintains repair facilities located at strategic points throughout
the United States and Canada. In addition to the work performed by the Company,
certain maintenance and repair work is performed for the Company's account by
railroads when railroad inspection determines the need for such work under the
code of the Association of American Railroads ("AAR").
-4-
The Company is not a common carrier and is not subject to regulation or
supervision as such. The Company's railcars are subject to regulations governing
construction, safety and maintenance promulgated by the Department of
Transportation and various other government agencies and by the AAR. These
regulations have required and may in the future require the Company to make
significant modifications to certain of its cars from time to time.
The Company's facilities for manufacturing and assembling tank cars are located
in East Chicago, Indiana; Oakville, Ontario, Canada; and Sheldon, Texas. The
Company also operates the largest network of shops in North America for
repairing and servicing railcars, as well as a fleet of specially equipped
trucks to perform repairs at customer plant sites. The principal shops are
located in Valdosta, Georgia; Muscatine, Iowa; El Dorado, Kansas; Ville Platte,
Louisiana; Marion, Ohio; Altoona, Pennsylvania; Cleveland, Longview and Sheldon,
Texas; Edmonton, Alberta; Sarnia and Oakville, Ontario; Montreal, Quebec; and
Regina, Saskatchewan.
Other Activities
The Company is engaged in several other activities, as described below.
Sulphur Processing
A subsidiary of the Company provides sulphur producers in Canada and the
Netherlands with various services, including the processing of liquefied sulphur
into crystalline slates and granules and the storage and shipping of the
product. The subsidiary also designs, manufactures and sells sulphur processing
plants worldwide.
Fasteners
The Company's fastener business, which is conducted through several wholly-owned
subsidiaries, consists of manufacturing and distributing a wide range of
fasteners in the United States, Canada and Sweden to the construction industry
and manufacturers of furniture, household appliances, industrial and
agricultural equipment.
Containment Vessel Head Manufacturing
A subsidiary of the Company manufactures and distributes metal containment
vessel heads, primarily made of steel, to the metal containment vessel
construction industry.
Liquefied Petroleum Gas Storage
A subsidiary of the Company operates several underground liquefied petroleum gas
storage caverns in Canada as a service to producers and sellers of liquefied
petroleum gas.
-5-
Segment Data
The principal activity of the Company's primary industry segment is railcar
leasing, services and sales.
Information with regard to the Company's industry and geographic segments is as
follows:
Industry Segments 1996 1995 1994
--------- --------- ---------
(Dollars in Millions)
Revenues
Railcar leasing, services and sales $ 569.2 $ 610.8 $ 519.7
Other 130.4 123.4 83.5
-------- -------- --------
Total segments 699.6 734.2 603.2
-------- -------- --------
Interest income (principally from
advances to parent) 11.1 13.3 10.1
Corporate/unallocated (1.1) (2.2) (2.0)
-------- -------- --------
$ 709.6 $ 745.3 $ 611.3
======== ======== ========
Operating income
Railcar leasing, services and sales $ 206.0 $ 191.1 $ 177.0
Other 18.4 9.7 10.2
-------- -------- --------
Total segments 224.4 200.8 187.2
Interest income (principally from
advances to parent) 11.1 13.3 10.1
Interest expense (72.1) (81.2) (91.4)
Corporate/unallocated (1.2) (2.4) (2.4)
-------- -------- --------
$ 162.2 $ 130.5 $ 103.5
======== ======== ========
Assets, at December 31
Railcar leasing, services and sales $1,794.3 $1,723.3 $1,733.3
Other 74.1 77.6 58.7
-------- -------- --------
Total segments 1,868.4 1,800.9 1,792.0
Advances to parent 111.2 171.2 194.7
Corporate/unallocated 27.2 31.2 31.1
-------- -------- --------
$2,006.8 $2,003.3 $2,017.8
======== ======== ========
Capital expenditures
Railcar leasing, services and sales $ 283.8 $ 206.8 $ 186.8
Other 4.2 21.5 26.4
-------- -------- --------
$ 288.0 $ 228.3 $ 213.2
======== ======== ========
Depreciation
Railcar leasing, services and sales $ 101.3 $ 100.1 $ 100.1
Other 5.4 5.1 3.5
-------- -------- --------
$ 106.7 $ 105.2 $ 103.6
======== ======== ========
-6-
Geographic Segments 1996 1995 1994
---------- ---------- ----------
(Dollars in Millions)
Revenues
United States $ 495.9 $ 541.5 $ 453.7
Canada 193.1 181.9 144.5
Other 10.6 10.8 5.0
-------- -------- --------
Total segments 699.6 734.2 603.2
Interest income (principally from
advances to parent) 11.1 13.3 10.1
Corporate/unallocated (1.1) (2.2) (2.0)
-------- -------- --------
$ 709.6 $ 745.3 $ 611.3
======== ======== ========
Operating income
United States $ 159.8 $ 146.8 $ 139.4
Canada 60.8 51.0 45.2
Other 3.8 3.0 2.6
-------- -------- --------
Total segments 224.4 200.8 187.2
Interest income (principally from
advances to parent) 11.1 13.3 10.1
Interest expense (72.1) (81.2) (91.4)
Corporate/unallocated (1.2) (2.4) (2.4)
-------- -------- --------
$ 162.2 $ 130.5 $ 103.5
======== ======== ========
Assets, at December 31
United States $1,408.3 $1,340.2 $1,376.5
Canada 430.6 431.4 400.8
Other 29.5 29.3 14.7
-------- -------- --------
Total segments 1,868.4 1,800.9 1,792.0
Advances to parent 111.2 171.2 194.7
Corporate/unallocated 27.2 31.2 31.1
-------- -------- --------
$2,006.8 $2,003.3 $2,017.8
======== ======== ========
Intersegment sales are immaterial. Segment operating income includes segment
revenue less operating expenses directly traceable to the segment and an
allocation of common expenses benefiting more than one segment.
Major Customers
Revenues from any one customer did not exceed 5% of consolidated or industry
segment revenues.
Raw Materials
The Company purchases raw materials from a variety of suppliers, with no one
supplier being significant. In the opinion of management the Company will have
adequate availability of raw materials in the future.
-7-
Foreign Operations
The Company does not believe that there are other than normal business risks
attendant to its foreign operations.
Competition
All the activities of the Company are in competition with similar activities
carried on by other companies. In particular, there are several companies
engaged in the business of leasing tank cars in the United States and Canada.
The largest competitor is General American Transportation Corporation (including
its Canadian affiliate, Canadian General Transit Company, Limited). The other
principal competitors in the railcar leasing business are ACF Industries,
Incorporated, and General Electric Railcar Services Corporation. The principal
competitive factors are price, service and product design. The Company's
integration of its North American engineering, manufacturing, repair and leasing
activities has enhanced its ability to provide competitive products and services
to its customers.
Railcar Supply and Demand
The demand for tank cars and bulk plastic hopper cars is generally met with a
combination of the industry's existing fleet and new car additions. The
industry's generally high overall utilization of the tank car and bulk plastic
covered hopper car fleets is evidence of an appropriate level and mix of
equipment to meet existing car demands. New railcars are needed to satisfy
growth, specialized requirements, or the desire of certain customers to utilize
newer equipment. Since railcars are generally built to customer order, the
supply of new railcars generally stays in reasonable balance with demand.
The major underlying factors affecting demand for new railcars are: (a) the rate
of growth of the overall economy, (b) growth of certain industry segments,
manufacturers, or shippers, particularly involving significant new or expanded
production operations, and (c) replacement of aged, obsolete, or worn out
railcars.
Manufacturing Backlog
The Company builds tank cars primarily for use in its leasing business and the
number of cars added in any one year is a small percentage of the Company's
lease fleet. Additionally, for tank cars built for sale to customers, the
Company delivers against orders within a relatively brief period of time.
Therefore, backlog is not material to the Company's business or an understanding
thereof.
Employees
As of December 31, 1996, the Company had approximately 3,900 employees.
-8-
Environmental Matters
The Company believes that all of its facilities are in substantial compliance
with applicable laws and regulations relating to environmental protection. Over
the past several years the Company has attempted to identify and remediate
potential problem areas. In 1996 the Company spent approximately $3.5 million on
remediation and related matters, compared with $4.5 million and $8.5 million in
1995 and 1994, respectively. The Company expects to spend approximately $11.5
million in 1997 on similar activities, including approximately $8.1 million for
capital expenditures. Management believes that amounts accrued for remedial
activities and environmental liabilities (which in the aggregate are not
material) are adequate.
In October, 1990, the Pennsylvania Office of Attorney General and the
Pennsylvania Department of Environmental Resources ("DER") commenced an
investigation of alleged violations of the Pennsylvania Solid Waste Management
Act with respect to the handling of solid and hazardous waste material at the
Company's railcar repair facility in Altoona, Pennsylvania. The Board of
Directors of the Company authorized special counsel to conduct an internal
investigation of the allegations made against the Altoona facility. The Company
is satisfied with current operations at the facility.
At the request of the Pennsylvania DER, the Company has cooperated voluntarily
in a site assessment of areas of potential environmental contamination at the
facility. The Company submitted its consultant's report to the Pennsylvania DER
for review in 1994. The Pennsylvania Attorney General's office and the Company's
counsel began discussions to resolve the criminal investigation in 1994. Those
discussions are continuing up to the present time. The Company is unable to
predict at this time whether satisfactory resolution of the allegations will
occur. If there is no satisfactory resolution of the allegations, it is likely
that the Pennsylvania authorities will initiate criminal proceedings against the
Company.
The Company has been designated as a Potentially Responsible Party ("PRP") by
the EPA at three sites: Auto Ion Chemical Company, Kalamazoo, Michigan;
Douglassville Disposal Site, Union Township, Pennsylvania; and Whitehouse Waste
Oil Pits Site, Jacksonville, Florida. Costs incurred to date have not been
material, either individually or in the aggregate. Because of the level of the
Company's involvement at these sites, management believes that future costs
related to these sites will not be material, either individually or in the
aggregate. The Company has not entered into any cost sharing arrangements with
other PRP's that make it reasonably possible the Company will incur material
costs beyond its pro rata share. Further, management does not believe that any
problems or uncertainties as to the financial liabilities of other PRP's make it
reasonably possible the Company will incur material costs beyond its pro rata
share at these sites. The Company's accruals for these sites are based on the
amount it reasonably expects to pay with respect to the sites.
Management of the Company does not anticipate that the resolution of any of the
matters discussed above will have a material adverse effect on the Company's
results of operations, financial condition or business.
-9-
ITEM 2. PROPERTIES
In the opinion of management, the Company's properties are in good condition,
substantially utilized and adequate to meet the Company's current and reasonably
anticipated future needs.
The Company estimates that its plant facilities were utilized during the year at
an average of approximately 80% of productive capacity for railcar
manufacturing, 80% for railcar servicing and repair, 75% for sulphur processing,
85% for containment vessel head manufacturing, 85% for liquefied petroleum gas
storage and 85% for the other properties.
Railcars
The Company owns approximately 87 percent of its total lease fleet of 70,466
railcars, of which 55,423 are tank cars and 15,043 are other railway freight
cars. Of the approximately 61,225 owned cars, 35,409 are free of liens. Cars
which are not owned are leased from others under long-term net leases.
Railcar Manufacturing and Assembling Facilities
The facilities for the manufacturing and assembling of railcars are located at
East Chicago, Indiana; Oakville, Ontario, Canada; and Sheldon, Texas, together
occupying approximately 170 acres.
Car Servicing and Repair Shops
The Company operates a network of shops for repairing and servicing railcars.
The principal shops owned by the Company are located at Valdosta, Georgia;
Muscatine, Iowa; El Dorado, Kansas; Ville Platte, Louisiana; Marion, Ohio;
Altoona, Pennsylvania; Cleveland, Longview, and Sheldon, Texas; Edmonton,
Alberta; Sarnia and Oakville, Ontario; Montreal, Quebec; and Regina,
Saskatchewan. Several other repair shops and small repair points are
strategically located throughout the United States and Canada.
Sulphur Processing
A subsidiary of the Company owns facilities in Canada and the Netherlands which
process liquefied sulphur into crystalline slates and granules and handle the
formed product.
Containment Vessel Head Manufacturing Facilities
A subsidiary of the Company owns a metal containment vessel head manufacturing
facility in Sheldon, Texas.
Liquefied Petroleum Gas Storage Facilities
A subsidiary of the Company owns several underground liquefied petroleum gas
storage caverns in Canada.
-10-
Other Properties
In connection with its other business activities, the Company owns (either
directly or through its subsidiaries) fastener manufacturing facilities in
Ashland, Ohio; Milton, Ontario; and Montreal, Quebec. In addition, subsidiaries
of the Company which manufacture fasteners lease several small plants in the
United States, Canada and Sweden. The Company and its subsidiaries maintain
numerous sales and business offices and warehouses, most of which are leased,
throughout the United States and Canada.
ITEM 3. LEGAL PROCEEDINGS
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 to resolve such claims, including legal fees, and, in
the opinion of management, ultimate resolution of these matters will not have a
material effect on the Company's consolidated financial position or results of
operations. See discussion of Environmental Matters in Item 1 of this Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
-11-
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Not applicable.
ITEM 6. SELECTED FINANCIAL DATA
Year Ended December 31,
---------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(Dollars in Thousands)
Services and net sales $ 680,642 $ 725,712 $ 595,327 $ 504,823 $ 493,121
Net income 102,583 84,465 63,378 129,730 48,382
Ratio of earnings to
fixed charges 2.84 2.41 2.05 1.89 1.76
At year end:
Total assets $2,006,820 $2,003,346 $2,017,772 $2,054,867 $2,063,267
Long-term obligations 528,344 732,207 807,029 869,440 869,656
The 1993 increase in net income includes an $80,000 credit to earnings to
reflect the adoption of SFAS 109.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
1996 versus 1995
Results of Operations
- - ---------------------
Services revenues increased $27.5 million primarily due to the effect of
railcars added to the lease fleet.
Net sales revenues decreased $72.6 million, primarily because of a shift in
proportion of new car deliveries from sale to lease.
Other income increased $9.3 million, primarily due to a gain on the sale of a
storage facility used in the Company's liquefied petroleum gas storage
operations and the receipt of certain fees in connection with the termination of
a proposed acquisition.
Interest expense decreased $9.0 million primarily due to lower average balances
of debt outstanding and a lower average interest rate on debt outstanding.
-12-
Financial Condition
Operating activities provided $217.6 million of cash in 1996. These funds,
along with the proceeds from the sale-leaseback transaction, the issuance of
borrowed debt, and the collection of funds advanced to parent were used to
provide financing for railcar additions, service borrowed debt obligations and
pay dividends to the Company's stockholder. 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 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.
In 1996, the Company spent $288.0 million for the construction and purchase of
railcars and other fixed assets. The Company received $27.4 million in proceeds
from disposals of railcars and other fixed assets, excluding the $142.4 million
in proceeds from the 1996 sale-leaseback transaction.
Of the capital expenditures for construction and purchase of railcars and other
fixed assets over the past five years, approximately 90% have been for railcars.
Since all material capital expenditures for railcars are incurred subsequent to
receipt of firm customer orders, such expenditures are discretionary to the
Company based on its desire to invest in those particular railcars.
In 1996, the Company entered into a sale-leaseback transaction for $142.4
million and also issued $14.2 million in long-term equipment trust certificates
with an annual interest rate of 7.21% to finance additions to the railcar lease
fleet. Other financing activities of the Company included $76.8 million for
principal repayments on borrowed debt and $71.0 million for dividends. Net cash
provided by financing activities was $8.8 million.
Management expects that the future cash to be provided by operating activities,
long-term railcar financings, and collection of funds previously advanced to
parent will be adequate to provide for the continued expansion of the Company's
business and enable it to meet its debt service obligations.
The following table presents the scheduled cash inflows and outflows over the
next five years based on leases and indebtedness outstanding as of December 31,
1996:
($ in Millions)
1997 1998 1999 2000 2001
------ ------ ------ ------ ------
Cash Inflows
- - ------------
Minimum future lease rentals $388.7 $308.6 $240.9 $170.9 $110.0
Cash Outflows
- - -------------
Minimum future lease payments 43.9 44.6 43.6 44.5 48.1
Principal amount of obligations 210.3 66.8 62.9 61.7 61.6
------ ------ ------ ------ ------
Excess inflows $134.5 $197.2 $134.4 $ 64.7 $ 0.3
====== ====== ====== ====== ======
-13-
The Company has consistently maintained high fleet utilization. The Company's
lease fleet utilization during the last five years has ranged between 96% and
98% with an average of 97%. Utilization rates of the Company's existing railcars
are driven by the long-term requirements of manufacturers and shippers of
chemical products, petroleum products, food products, and bulk plastics, and the
suitability of the Company's fleet to meet such demand. The potential impact of
short-term fluctuations in demand is tempered by the longer-term nature of the
leases, which average four years for existing equipment and longer for new
equipment.
The Company has not experienced any significant impact of inflation and changing
prices on its financial position or results of operations over the last several
years.
The Company's Canadian subsidiaries periodically enter into foreign currency
forward contracts to hedge against U. S. dollar exposures. No foreign currency
contracts were outstanding as of December 31, 1996. Foreign currency forward
contracts, all with initial maturities of less than one year, amounted to $5.4
million at December 31, 1995.
Change in Accounting Principle
In 1996 the Company adopted Financial Accounting Standards Board SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." Adoption of the new standard did not have a material impact on
the Company's financial position, results of operations or cash flow.
Other Matters
The Company has certain environmental matters currently pending, none of which
are significant to the Company's results of operations or financial condition,
either individually or in the aggregate. See further discussion of such matters
under the "Environmental Matters" caption of Item 1 of this Form 10-K.
1995 versus 1994
Results of Operations
Services revenues increased $53.3 million. Slightly more than half of the
increase resulted from expansion of the Company's sulphur service processing
operations with the remaining increase primarily due to the effect of railcars
added to the lease fleet. Gross profit increased approximately 6% from 1994.
Net sales revenues increased $77.1 million, primarily due to increased railcar
sales of $62.2 million.
Other income increased $3.6 million, primarily due to interest earned on an
increased average balance advanced to the Company's parent, as well as an
increase in the average interest rate.
Interest expense decreased $10.3 million primarily due to lower average balances
of debt outstanding and a lower average interest rate on debt outstanding.
-14-
Financial Condition
Operating activities provided $211.3 million of cash in 1995. These funds,
along with the proceeds from the sale-leaseback transaction, the issuance of
borrowed debt, and the collection of funds advanced to parent, were used to
provide financing for railcar additions, service borrowed debt obligations and
pay dividends to the Company's stockholder. 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 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.
In 1995, the Company spent $214.5 million for the construction and purchase of
railcars and other fixed assets. The Company received $9.0 million in proceeds
from disposals of railcars and other fixed assets, excluding the $130.5 million
in proceeds from the sale-leaseback transaction.
In 1995, the Company entered into a sale-leaseback transaction for $130.5
million and also issued $30.2 million in long-term equipment trust certificates
with an annual interest rate of 6.76% to finance additions to the railcar lease
fleet. Other financing activities of the Company included $114.6 million for
principal repayments on borrowed debt and $59.0 million for dividends. Net cash
used in financing activities was $12.9 million.
-15-
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Page
----
Report of Independent Auditors.......................................... 17
Financial Statements
Consolidated statement of income for each of the three years in
the period ended December 31, 1996.................................. 18
Consolidated balance sheet - December 31, 1996 and 1995............... 19
Consolidated statement of stockholder's equity for each of the three
years in the period ended December 31, 1996......................... 20
Consolidated statement of cash flows for each of the three
years in the period ended December 31, 1996......................... 21
Notes to consolidated financial statements............................ 22
-16-
REPORT OF INDEPENDENT AUDITORS
TO UNION TANK CAR COMPANY
We have audited the accompanying consolidated balance sheet of Union Tank Car
Company and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, stockholder's equity and cash flows for each
of the three years in the period ended December 31, 1996. 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Union
Tank Car Company 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
Chicago, Illinois
March 11, 1997
-17-
UNION TANK CAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Dollars in Thousands)
For the Year Ended December 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
Revenues
Services (leasing and other) $526,733 $499,226 $445,973
Net sales 153,909 226,486 149,354
-------- -------- --------
680,642 725,712 595,327
Other income 28,916 19,607 15,959
-------- -------- --------
709,558 745,319 611,286
Costs and expenses
Cost of services 290,867 277,720 236,127
Cost of sales 127,266 200,297 126,078
General and administrative 57,098 55,630 54,120
Interest 72,138 81,179 91,442
-------- -------- --------
547,369 614,826 507,767
-------- -------- --------
Income before income taxes 162,189 130,493 103,519
Provision for income taxes
Current 56,378 42,601 28,637
Deferred income taxes
and investment tax credits 3,228 3,427 11,504
-------- -------- --------
59,606 46,028 40,141
-------- -------- --------
Net income $102,583 $ 84,465 $ 63,378
======== ======== ========
Ratio of earnings to fixed charges 2.84 2.41 2.05
==== ==== ====
See Notes to Consolidated Financial Statements.
-18-
UNION TANK CAR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
December 31,
------------------------
ASSETS 1996 1995
----------- -----------
Cash and cash equivalents $ 71,915 $ 28,781
Accounts receivable, primarily due within one year,
less allowance for doubtful accounts of $3,799 in
1996 and $3,340 in 1995 74,667 71,065
Inventories 65,756 68,477
Due from affiliate - 12,828
Prepaid expenses and deferred charges 13,665 6,479
Advances to parent company,
principally at LIBOR plus 1% 111,169 171,161
Railcar lease fleet, net 1,459,800 1,430,196
Fixed assets, net 147,887 148,985
Investment in direct financing lease 37,347 37,898
Other assets 24,614 27,476
---------- ----------
Total assets $2,006,820 $2,003,346
========== ==========
LIABILITIES, DEFERRED ITEMS AND STOCKHOLDER'S EQUITY
Accounts payable $ 30,036 $ 31,795
Accrued liabilities 180,865 148,388
Borrowed debt 738,632 801,585
---------- ----------
949,533 981,768
Deferred items
Deferred income taxes
and investment tax credits 493,537 491,105
Stockholder's equity
Common stock, no par value; 1,000 shares authorized
and issued 106,689 106,689
Additional capital 6,346 4,652
Retained earnings 450,715 419,132
---------- ----------
Total stockholder's equity 563,750 530,473
---------- ----------
Total liabilities, deferred items and
stockholder's equity $2,006,820 $2,003,346
========== ==========
See Notes to Consolidated Financial Statements.
-19-
UNION TANK CAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
Years Ended December 31, 1996, 1995 and 1994
(Dollars in Thousands)
Common Additional Retained
Stock Capital Earnings Total
--------- ---------- ---------- ----------
Balance at December 31, 1993 $106,689 $4,652 $374,289 $485,630
Net income - - 63,378 63,378
Cash dividends - - (44,000) (44,000)
--------- ------ -------- --------
Balance at December 31, 1994 106,689 4,652 393,667 505,008
Net income - - 84,465 84,465
Cash dividends - - (59,000) (59,000)
--------- ------ -------- --------
Balance at December 31, 1995 106,689 4,652 419,132 530,473
Capital contribution - 1,694 - 1,694
Net income - - 102,583 102,583
Cash dividends - - (71,000) (71,000)
--------- ------ -------- --------
Balance at December 31, 1996 $106,689 $6,346 $450,715 $563,750
========= ====== ======== ========
See Notes to Consolidated Financial Statements.
-20-
UNION TANK CAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
For the Year Ended December 31,
--------------------------------
1996 1995 1994
--------- --------- ---------
Cash flows from operating activities:
Net income $ 102,583 $ 84,465 $ 63,378
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 106,707 105,206 103,671
Gain on disposition of railcars and fixed assets (14,247) (1,795) (4,280)
Deferred taxes 3,228 3,427 11,504
Other non-cash income and expenses 1,092 1,518 2,127
Changes in operating assets and liabilities 18,206 18,508 (13,347)
--------- --------- ---------
Net cash provided by operating activities 217,569 211,329 163,053
Cash flows from investing activities:
Construction and purchase of railcars and
other fixed assets (287,960) (214,470) (189,208)
Decrease in advance to parent 61,245 18,143 19,507
Proceeds from disposals of railcars
and other fixed assets 27,426 8,964 19,753
Purchases of businesses, net of cash acquired - (13,839) (24,000)
Repayments from (advances to) affiliate 12,828 713 (11,203)
Decrease (increase) in other assets and investments 3,308 14,567 (14,940)
Collection of demand note and long-term receivables - - 1,451
--------- --------- ---------
Net cash used in investing activities (183,153) (185,922) (198,640)
Cash flows from financing activities:
Proceeds from sale-leaseback transactions 142,382 130,517 125,537
Proceeds from issuance of borrowed debt 14,231 30,236 100,000
Principal payments of borrowed debt (76,782) (114,614) (110,881)
Cash dividends (71,000) (59,000) (44,000)
Net commercial paper repayments - - (52,409)
--------- --------- ---------
Net cash provided by (used in) financing activities 8,831 (12,861) 18,247
Effect of exchange rates on cash and cash equivalents (113) 932 (1,370)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 43,134 13,478 (18,710)
Cash and cash equivalents at beginning of year 28,781 15,303 34,013
--------- --------- ---------
Cash and cash equivalents at end of year $ 71,915 $ 28,781 $ 15,303
========= ========= =========
See Notes to Consolidated Financial Statements.
-21-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
1. Ownership
UNION TANK CAR COMPANY (with its wholly-owned subsidiaries herein collectively
referred to, unless the context otherwise requires, as the "Company") is a
wholly-owned subsidiary of Marmon Industrial Corporation ("MIC") and a
subsidiary of Marmon Holdings, Inc. ("Holdings"). Substantially all of the
stock of Holdings 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. Summary of Accounting Principles and Practices
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and all subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents includes all highly liquid debt instruments purchased
with an original maturity of three months or less.
Lessor Accounting
Operating Leases - Most of the Company's railcar leases are classified as
operating leases. Aggregate rentals from operating leases are reported as
revenue ratably over the life of the lease. Expenses, including depreciation
and maintenance, are charged as incurred.
Direct Financing Leases - Some of the Company's railcar and other rental
equipment leases are classified as direct financing leases. Gross investment in
leases (minimum lease payments plus estimated residual values) less the cost of
the equipment is designated as unearned income. This unearned income is
recognized over the life of the lease based upon the "constant yield method" or
similar methods which generally result in an approximate level rate of return on
the investment.
Depreciation and Fixed Assets Accounting
Railcars and fixed assets are recorded at cost less accumulated depreciation.
These assets are depreciated to salvage value over their estimated useful lives
on the straight-line method. The estimated useful lives are principally:
railcars, 25-30 years; buildings and improvements, 20-30 years; and machinery
and equipment, 3-20 years.
-22-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The cost of major conversions and betterments are capitalized and depreciated
over their estimated useful lives or, if shorter, the remaining useful lives of
the related assets. Maintenance and repairs are charged to expense when
incurred.
Gains or losses on disposals are included in other income, except for those
related to railcar disposals which are included in cost of services.
Deferred Income Taxes
The Company provides deferred taxes for temporary differences between pre-tax
accounting income and taxable income (principally related to railcar
depreciation).
Deferred Investment Tax Credits
United States investment tax credits (as generated through 1986 and to the
extent not transferred to lessees) and Canadian investment tax credits result in
a reduction of current or deferred income taxes and are due primarily to
investments in certain new railcars. Investment tax credits retained are
deferred and amortized over the estimated useful lives of the related assets.
Foreign Currency Translation
All assets and liabilities are translated at exchange rates in effect at the
date of translation. Average exchange rates are used for revenues, costs and
expenses and income taxes.
Translation adjustments and transaction gains and losses are assumed by the
Company's parent. For the years ended December 31, 1996, 1995 and 1994, MIC
absorbed a loss of $46 and gains of $934 and $271, respectively.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market.
Fair Value of Financial Instruments
All book value amounts for financial instruments approximate the instruments'
fair value except for the borrowed debt discussed in Note 8.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
-23-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Reclassification
The Company has changed its presentation for sale-leaseback transactions. The
Company previously presented the gross revenues and costs related to sale-
leasebacks of railcars which were $130,517 in 1995 and $125,500 in 1994. These
amounts are netted together for all years presented and there is no impact on
reported gross profit. Certain other prior year amounts have been reclassified
to conform to the current year presentation.
3. Railcar Lease Data
Railcars are leased directly to several hundred shippers, located throughout the
United States, Canada and Mexico. The Company leases to a wide variety of
customers, and no customer accounted for more than 5% of consolidated lease
revenues. The leases involve one to several thousand cars, normally for periods
ranging from one to twenty years. The average term of leases entered into during
1996 for newly-manufactured cars was approximately seven years. The average term
of leases entered into during 1996 for used tank cars and other railcars was
approximately four years. Under the terms of most of the leases the Company
agrees to provide a full range of services including car repair and maintenance.
Minimum future rentals to be received on railcar leases at December 31, 1996,
are as follows:
Direct
Financing Operating
Leases Leases Total
--------- ---------- ----------
1997 $ 3,933 $ 384,783 $ 388,716
1998 3,933 304,668 308,601
1999 3,933 236,932 240,865
2000 4,148 166,732 170,880
2001 2,255 107,761 110,016
2002 and after - 259,112 259,112
------- ---------- ----------
Totals $18,202 $1,459,988 $1,478,190
======= ========== ==========
The investment in railcars on direct financing leases is recoverable from future
lease payments and estimated residual values. Details of this investment, which
is classified in the accompanying consolidated balance sheet under railcar lease
fleet, are as follows:
December 31,
-------------------
1996 1995
------- -------
Minimum future lease rentals $18,202 $22,226
Estimated residual values 8,690 8,726
------- -------
Gross investment 26,892 30,952
Less unearned income (5,573) (7,769)
------- -------
Net investment $21,319 $23,183
======= =======
Classified as
Railcar lease fleet (cost) $28,966 $29,085
Less accumulated depreciation (7,647) (5,902)
------- -------
$21,319 $23,183
======= =======
-24-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Railcar Lease Fleet and Fixed Assets
December 31,
-------------------------
1996 1995
----------- ----------
Railcar lease fleet
Gross cost $ 2,523,608 $2,424,960
Less accumulated depreciation (1,063,808) (994,764)
----------- ----------
$ 1,459,800 $1,430,196
=========== ==========
Fixed assets, at cost
Land $ 7,083 $ 7,192
Buildings and improvements 97,420 97,344
Machinery and equipment 227,299 224,616
----------- ----------
331,802 329,152
Less accumulated depreciation (183,915) (180,167)
----------- ----------
$ 147,887 $ 148,985
=========== ==========
5. Investment in Direct Financing Lease
In 1987 one of the Company's Canadian subsidiaries entered into a Canadian
dollar denominated lease of a passenger airplane to a scheduled commercial air
carrier for an 18 year period. Minimum future rentals to be received on the
lease are as follows:
1997 $ 4,421
1998 4,421
1999 4,421
2000 6,120
2001 6,120
2002 and after 24,482
-------
Total $49,985
=======
-25-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The investment is recoverable from future lease payments and estimated residual
value, as follows:
December 31,
-----------------------------
1996 1995
---------- ----------
Minimum future lease rentals $ 49,985 $ 54,630
Estimated residual value 17,338 17,409
---------- ----------
Gross investment 67,323 72,039
Less unearned income (29,976) (34,141)
---------- ----------
Net investment $ 37,347 $ 37,898
========== ==========
6. Lease Commitments
The Company, as lessee, has entered into long-term leases for railcars and
various manufacturing, office and warehouse facilities.
The railcar lease fleet includes the following capitalized leases:
December 31,
-----------------------------
1996 1995
---------- ----------
Capitalized lease cost $16,379 $16,271
Less accumulated depreciation (8,067) (7,546)
---------- ----------
$ 8,312 $ 8,725
========== ==========
In 1996, the Company entered into a sale-leaseback transaction with a trust for
the benefit of an institutional investor pursuant to which it sold and leased
back an aggregate of $142,382 in railcars. The Company has an option to purchase
all or a portion of the railcars at a fixed purchase price on (i) July 2, 2006,
(ii) July 2, 2012 (the base term lease expiration date) and (iii) July 2, 2018
(the end of the optional lease renewal term).
In 1995, the Company entered into a sale-leaseback transaction with a trust for
the benefit of an institutional investor pursuant to which it sold and leased
back an aggregate of $130,517 in railcars. The Company has an option to purchase
all or a portion of the railcars at a fixed purchase price on (i) January 2,
2006, (ii) January 2, 2012 (the base term lease expiration date) and (iii)
January 2, 2018 (the end of the optional lease renewal term).
In 1994, the Company entered into two separate sale-leaseback transactions with
trusts for the benefit of certain institutional investors pursuant to which it
sold and leased back an aggregate of $125,537 in railcars. The Company has an
option to purchase all or a portion of the railcars at a fixed purchase price
(i) January 2, 2005 with respect to certain railcars and January 2, 2006 with
respect to the other railcars, (ii) July 2, 2010 (the base term lease expiration
date) and (iii) July 2, 2017 (the end of the optional lease renewal term).
The exercise price of the fixed price purchase options is equal to the projected
future fair market value of the subject railcars, as determined by an
independent appraiser.
-26-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
At December 31, 1996, future minimum rental commitments for all noncancellable
leases are as follows:
Operating Leases
-----------------
Capitalized Sale- Other Total
Leases Leaseback Operating Operating
----------- --------- --------- ---------
1997 $ 1,524 $ 41,887 $1,991 $ 43,878
1998 84 42,674 1,945 44,619
1999 84 41,722 1,846 43,568
2000 84 42,752 1,752 44,504
2001 84 46,507 1,602 48,109
2002 and after - 528,728 92 528,820
------- -------- ------ --------
1,860 $744,270 $9,228 $753,498
======== ====== ========
Less amount representing interest (271)
-------
Present value of minimum lease payments 1,589
Less current portion (1,356)
-------
Long-term obligation at December 31, 1996 $ 233
=======
Minimum future sublease revenue to be received under existing capitalized and
sale-leaseback leases as of December 31, 1996 is presented below. Future
sublease revenue under other existing operating leases is not material and is
primarily included in other income. The Company expects that the subleased
railcars will be re-leased at the expiration of such leases. The rentals under
such future subleases cannot be ascertained and therefore are not reflected in
this table.
Sale-
Capitalized Leaseback
Leases Leases
----------- ---------
1997 $ 2,606 $ 56,261
1998 2,096 52,436
1999 1,685 46,621
2000 1,327 37,849
2001 840 27,522
2002 and after 774 95,473
------- --------
$ 9,328 $316,162
======= ========
Sublease rentals recorded as revenue for the years ended December 31, 1996, 1995
and 1994 were not material to consolidated revenues.
Rentals charged to costs and expenses were $44,581, $30,065, and $17,034 in
1996, 1995, and 1994, respectively.
-27-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Accrued Liabilities
December 31,
-------------------
1996 1995
-------- --------
Rent (relates primarily to the railcar lease fleet) $ 47,929 $ 28,647
Amounts held on customers' accounts 24,216 23,454
Retirement benefits 16,268 15,643
Deferred income 15,988 11,195
Interest 13,817 14,411
Minority interest in partnership 12,616 11,704
Insurance 11,087 9,847
Other 38,944 33,487
-------- --------
$180,865 $148,388
======== ========
8. Borrowed Debt
December 31,
-------------------
1996 1995
-------- --------
Equipment obligations, payable periodically through 2009 at
6.50%-15.55% (average rate 8.81% as of December 31, 1996
and 8.97% as of December 31, 1995) $570,202 $631,840
Senior notes, 9.75%, due in 1997 143,000 143,000
Other long-term borrowings, payable periodically through
December 31, 2005 (average rate of 12.20% as of
December 31, 1996 and 1995) 25,430 26,745
-------- --------
$738,632 $801,585
======== ========
Equipment obligations are secured by railcars with an original cost of
$1,296,329 and $1,351,084 at December 31, 1996 and 1995, respectively. The above
equipment obligations include $1,589 and $3,955 of capitalized leases at
December 31, 1996 and 1995, respectively.
The senior notes contain certain provisions regarding asset sales and sale-
leaseback restrictions. As of December 31, 1996, the Company was in compliance
with all debt covenants.
In 1996, the Company issued $14,231 in long-term equipment trust certificates to
finance additions to its railcar fleet. The certificates bear interest at a rate
of 7.21% per annum. Interest is due semi-annually through July 2, 2006,
commencing in January, 1997. Principal will be due July 2, 2006.
The Company's Canadian subsidiaries have approximately $13,140 of credit lines
available on a no-charge basis. No amounts were outstanding as of December 31,
1996 and 1995.
-28-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Maturities of debt obligations for the years 1997 - 2001 are $463,251, as
follows: $210,288 in 1997, $66,756 in 1998, $62,907 in 1999, $61,682 in 2000
and $61,618 in 2001.
The estimated fair value of borrowed debt is as follows:
December 31,
---------------------------
1996 1995
--------- ---------
Equipment obligations $615,586 $706,800
Senior notes 145,844 151,509
Other long-term borrowings 32,357 35,903
-------- --------
$793,787 $894,212
======== ========
The current fair value of the Company's borrowed debt is estimated by
discounting the future interest and principal cash flows at the Company's
estimated incremental borrowing rate at the respective year-end for debt with
similar maturities. The Company currently anticipates holding all borrowed debt
obligations until maturity.
9. Income Taxes
The Company is included in the consolidated U.S. federal income tax return of
Holdings. Under an arrangement with MIC, federal income taxes, before
consideration of investment tax credits, are computed as if the Company files a
separate consolidated return. For this computation, the Company generally uses
tax accounting methods which minimize the current tax liability (these methods
may differ from those used in the consolidated tax return). Tax liabilities are
remitted to, and refunds are obtained from, MIC on this basis. If deductions
and credits available to Holdings' entire consolidated group exceed those which
can be used on the return, allocation of the related benefits between the
Company and others will be at the sole discretion of 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 consolidated group.
Undistributed earnings of the Company's non-U.S. subsidiaries reflect full
provision for non-U.S. income taxes. However, since the earnings are
indefinitely reinvested in non-U.S. operations, no provision has been made for
taxes that might be payable upon remittance of such earnings nor is it
practicable to determine the amount of any such liability.
-29-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following summarizes the provision for income taxes:
1996 1995 1994
--------- --------- ---------
State
Current $ 715 $ 455 $ 282
Deferred 493 598 1,424
Federal
Current 35,103 24,288 12,525
Deferred and investment tax credit 4,513 5,706 12,958
Foreign
Current 20,560 17,858 15,830
Deferred and investment tax credit (1,778) (2,877) (2,878)
------- ------- -------
Total $59,606 $46,028 $40,141
======= ======= =======
In 1996, 1995, and 1994 the Company paid foreign withholding taxes of $844,
$1,628, and $1,723, respectively.
Current U.S. income tax provisions were reduced, and deferred tax provisions
increased, by $5,907 in 1994 due to utilization of U.S. alternative minimum tax
credits which had been provided for in 1990 and 1991.
Income tax expense is based upon domestic and foreign income before taxes as
follows:
1996 1995 1994
-------- -------- --------
Domestic $120,348 $ 96,844 $ 76,770
Foreign 41,841 33,649 26,749
-------- -------- --------
Total $162,189 $130,493 $103,519
======== ======== ========
-30-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Income tax effects of significant items which resulted in effective tax rates of
36.8% in 1996, 35.3% in 1995, and 38.8% in 1994 follow:
1996 1995 1994
--------- --------- ---------
Federal income taxes at 35% statutory rate $56,766 $45,673 $36,232
Increase (decrease) resulting from:
Amortization of investment tax credits (2,378) (2,546) (2,662)
State income taxes, net of federal income
tax benefit 958 894 1,109
Excess tax provided on foreign income 3,303 1,292 4,370
Other, net 957 715 1,092
------- ------- -------
Total income taxes $59,606 $46,028 $40,141
======= ======= =======
The excess tax on foreign income represents differences due to higher foreign
tax rates and foreign tax credits not benefited.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The December 31, 1996
and 1995 net deferred income tax liabilities of $493,537 and $491,105 shown in
the accompanying consolidated balance sheet are composed of $510,456 and
$504,065 in deferred tax liabilities and deferred investment tax credits of
$20,446 and 22,935, partially offset by $37,365 and $35,895 in deferred tax
assets, respectively. These deferred income tax assets and (liabilities) result
from the following temporary differences:
1996 1995
----------- -----------
Excess of tax over book depreciation $(475,952) $(471,403)
Other (34,504) (32,662)
--------- ---------
Gross liabilities (510,456) (504,065)
Expenses per books not yet deductible for tax 17,466 18,345
Other tax credits 19,899 17,550
--------- ---------
Gross assets 37,365 35,895
Deferred investment tax credits (20,446) (22,935)
--------- ---------
Net deferred income tax liability $(493,537) $(491,105)
========= =========
-31-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The above assets exclude certain state deferred income tax assets related to
loss carryforwards (which expire over the next twelve years) in the gross amount
of $9,500. These assets have been assigned a 100% valuation reserve due to
significant uncertainty as to ultimate realizability. There have been no
changes in any asset valuation reserves for the year ended December 31, 1996.
10. Contingencies
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 to resolve such claims, 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.
As part of its risk management plan, the Company self-insures certain levels of
its property damage, general liability and products liability exposures, as well
as certain workers' compensation liabilities in states where it is authorized to
do so. The Company maintains no property damage insurance on its railcars. The
Company has accrued for the estimated costs of reported, as well as incurred but
not reported, self-insured claims. The Company reserves the full estimated value
of claims. It does not discount its claims liability.
The Company has certain environmental matters currently pending, none of which
are significant to the Company's results of operations or financial condition,
either individually or in the aggregate. See further discussion of such matters
under the "Environmental Matters" caption of Item 1 of this Form 10-K.
11. Pension Benefits
Substantially all of the Company's employees are covered by discretionary
contribution or defined benefit retirement plans.
Costs of the discretionary contribution pension plans are accrued in amounts
determined on the basis of percentages, generally established annually by the
Company, of employee compensation of the various units covered by such plans.
The contributions are funded as accrued. Discretionary and defined contribution
plan expense for 1996, 1995 and 1994 was $6,269, $6,542 and $5,892,
respectively.
-32-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of December 31, 1996, the Company's defined benefit plans either had their
benefits frozen or were terminated. The benefits are based on payment of a
specific amount, which varies by plan, for each year of service. The Company's
funding policy is to contribute the minimum amount required either by law or
union agreement. Contributions are intended to provide not only for benefits
attributed to service through the plans' termination dates, but also for those
expected to be earned in the future. Benefits are based on both years of service
and compensation. Defined benefit pension plan expense was $56, $320 and $357
for 1996, 1995 and 1994, respectively. Accrued defined benefit pension
liability recognized in the consolidated balance sheet was $2,941 and $3,297 at
December 31, 1996 and 1995, respectively.
12. Retirement Health Care and Life Insurance Benefits
The Company provides limited health care and life insurance benefits for certain
retired employees. These benefits are subject to deductible and copayment
provisions, Medicare supplements and other limitations. At December 31, 1996
and 1995, the liability for postretirement health care and life insurance
benefits was $3,628 and $3,739 respectively, and was included in accrued
liabilities in the consolidated balance sheet.
Expense related to these benefits was $363, $326 and $359 in 1996, 1995, and
1994, respectively.
13. Other Income
1996 1995 1994
------- ------- -------
Interest income $11,076 $13,251 $10,103
Gain on sale of fixed assets 9,784 160 239
Earned income on direct financing leases 6,726 6,913 7,206
Fees received in connection with the termination
of a proposed acquisition by a subsidiary 2,646 - -
Minority interest in net income (912) (896) (790)
Other (404) 179 (799)
------- ------- -------
$28,916 $19,607 $15,959
======= ======= =======
Interest income presented above includes interest earned on advances to MIC as
described in Note 16.
14. Ratio of Earnings to Fixed Charges
The ratio of earnings to fixed charges represents the number of times that
interest expense, amortization of debt discount and the interest component of
rent expense were covered by income before income taxes and cumulative effect of
a change in accounting principle and such interest, amortization and the
interest component of rentals.
-33-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. Summarized Financial Information of Procor Limited
Summarized consolidated financial information for the Company's wholly-owned
subsidiary, Procor Limited, is as follows:
December 31,
--------------------------------
1996 1995
---------------- --------------
Balance Sheet:
Railcar lease fleet, net $213,644 $229,132
All other assets 188,175 177,505
Borrowed debt 134,861 150,665
All other liabilities 153,872 158,356
Years Ended December 31,
--------------------------------------
1996 1995 1994
--------- ---------- ----------
Statement of Income:
Services and net sales $122,669 $132,861 $114,863
Gross profit 38,574 41,054 37,735
Net income 15,951 14,878 10,943
Services and net sales in 1996, 1995 and 1994 includes $21,982, $24,315 and
$10,326, respectively, representing the sale of railcars to the UTLX
International Division of the Company.
16. Related Party Transactions
The following table sets forth the major related party transaction amounts
included in the consolidated financial statements.
Service Interest Management Insurance
Revenues Income Expense Billed
-------- -------- ---------- ---------
1996 $1,941 $ 8,365 $4,428 $2,385
1995 2,901 11,625 4,378 2,755
1994 3,324 8,682 4,867 2,896
-34-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company from time to time advances funds in excess of its current cash
requirements for domestic operations to MIC or MIC's subsidiaries on an
unsecured demand basis. Such advances, which bear interest principally at LIBOR
plus 1%, amounted to $96,454 and $164,521 at December 31, 1996 and 1995,
respectively.
Certain of the Company's Canadian operations and its affiliates enter into
intercompany loans utilizing their respective excess cash balances. These
advances between the Company and subsidiaries of MIC resulted in receivables of
$14,715 and $6,640 at December 31, 1996 and 1995, respectively, that are
included in Advances to Parent Company.
An administrative services fee is paid to The Marmon Group, Inc. ("Marmon"), a
subsidiary of Holdings and an affiliate of MIC, for certain services provided by
Marmon's officers and employees including services with respect to accounting,
tax, finance, legal and related matters which Marmon provides to certain of
Holdings' divisions, subsidiaries and affiliates. Marmon provides these
services to the Company because it is considered more cost efficient to provide
such services in this manner.
The administrative services fee which Marmon charges to the Company and other
entities to which it provides services is determined in the following manner.
First, budgeted administrative expenses of Marmon for the twelve month period
following the date of computation (including wages, salaries and related
expenses, rent, utilities, travel expenses and other similar expenses, but
excluding extraordinary and non-recurring items) are multiplied by the average
of the following three percentages (each of which is given equal weight): (1)
the percent of the sales and services revenues of the Company to the total sales
and services revenues of all entities, including the Company, to which it
provides services; (2) the percent of the assets of the Company to the assets of
all entities, including the Company; and (3) the percent of the net income of
the Company to the net income of all entities, including the Company. In making
this computation, Marmon uses sales and services revenues and net income from
the beginning of the year to the approximate date of computation and assets at
that date.
Marmon takes the amount derived from this formula and applies discretion to
determine the final administrative services fee to be charged. The factors
which are considered include matters such as the following: any known operating
problems and risks that require or may require additional time to be devoted to
the Company by Marmon; significant expansion programs; significant contracts;
unusual tax or accounting matters; and the experience and length of service of
the Company's management.
Included in the preceding table as insurance billed are $907 in 1996, $1,071 in
1995 and $1,179 in 1994 for insurance premiums for coverage that was insured or
reinsured with an insurance company which the Company has been advised is
controlled by trusts for the benefit of an individual related by marriage to a
member of the Pritzker family.
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UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In 1986, the Company entered into a partnership with an affiliate for the
purpose of purchasing used railcars. The Company's investment as of December 31,
1996 and 1995 was $50,464 and $46,814, respectively, which represents 80%
ownership in this partnership. The minority partner's interest in the
partnership at December 31, 1996 and 1995 is $12,616 and $11,704, respectively,
which is included in accrued liabilities. The minority interest in income, $912,
$896 and $790 for the years ended December 31, 1996, 1995 and 1994,
respectively, is reflected in other income.
17. Derivative Financial Instruments
The Company's Canadian subsidiaries periodically enter into foreign currency
forward contracts to hedge against U.S. dollar exposures. No foreign currency
contracts were outstanding as of December 31, 1996. Foreign currency forward
contracts, all with initial maturities of less than one year, amounted to $5,400
at December 31, 1995.
18. Quarterly Data (Unaudited)
Three Months Ended
------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
--------- --------- --------- ---------
1996
Net sales and services revenues $148,687 $172,404 $173,228 $186,323
Cost of sales and services 85,227 107,405 107,563 117,938
-------- -------- -------- --------
Gross profit 63,460 64,999 65,665 68,385
Net income $ 22,643 $ 29,541 $ 24,543 $ 25,856
======== ======== ======== ========
1995
Net sales and services revenues $165,942 $167,358 $204,361 $188,051
Cost of sales and services 105,989 105,827 140,655 125,546
-------- -------- -------- --------
Gross profit 59,953 61,531 63,706 62,505
Net income $ 19,064 $ 20,117 $ 19,648 $ 25,636
======== ======== ======== ========
1994
Net sales and services revenues $134,007 $144,767 $151,715 $164,838
Cost of sales and services 76,305 84,338 95,644 105,918
-------- -------- -------- --------
Gross profit 57,702 60,429 56,071 58,920
Net income $ 14,432 $ 16,000 $ 15,025 $ 17,921
======== ======== ======== ========
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UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. Supplementary Disclosures of Cash Flow Information
For the Year Ended December 31,
----------------------------------
1996 1995 1994
---------- ---------- ----------
Changes in operating assets and liabilities:
Accounts receivable $(4,122) $ 259 $ (3,859)
Inventories 2,126 (2,657) (15,399)
Prepaid expenses and deferred charges (5,652) 1,114 171
Accounts payable and accrued liabilities 25,854 19,792 5,740
------- ------- --------
$18,206 $18,508 $(13,347)
======= ======= ========
Cash paid during the year for:
Interest (net of amount capitalized) $72,178 $81,792 $ 91,928
Income taxes 53,974 41,723 30,880
Unrealized foreign currency translation gains and losses, which are non-cash
items, are excluded from the decrease in advance to parent.
20. Industry Segment Information
The Company's industry and geographic data are found under the "Segment Data"
caption of Item 1 of this Form 10-K. The aforementioned data are an integral
part of the Notes to Consolidated Financial Statements.
-37-
UNION TANK CAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21. Subsequent Event
On January 27, 1997, the Company issued $150,000 in unsecured notes due February
1, 2007. The notes bear interest at the rate of 7.125% per annum, payable semi-
annually on February 1 and August 1, commencing August 1, 1997. The notes are
non-redeemable and not subject to a sinking fund. Proceeds from the notes will
be used for general corporate purposes. These notes were issued pursuant to a
registration statement filed by the Company with the Securities and Exchange
Commission covering $400,000 of debt securities and pass through certificates.
-38-
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
First Elected
Name Age Positions or Offices to Position
- - -------------------------------- ---- ---------------------------------------- -------------
Kenneth P. Fischl 47 Manager - Tank Car Marketing
and Administration 1979
Vice President Fleet Management 1981
Vice President 1992
Executive Vice President and
General Manager Tank Car Division 1992
President Tank Car Division 1993
Director 1994
Mark J. Garrette 43 Vice President Tank Car Division 1994
Vice President and Senior Vice President
and Controller, Tank Car Division 1994
Robert C. Gluth 72 Director 1981
Executive Vice President 1981
and served as Treasurer between
February, 1986 and January, 1987
and since October, 1989
Jay A. Pritzker 74 Director 1981
Chairman of the Board 1981
Robert A. Pritzker 70 Director 1981
President 1981
Robert W. Webb 57 General Counsel 1986
Secretary 1986
-39-
Kenneth P. Fischl
Mr. Fischl was elected as a Director in March, 1994, and appointed President of
the Tank Car Division in February, 1993. He was appointed a Vice President of
the Company and Executive Vice President and General Manager of the Tank Car
Division in July, 1992. He joined the Company in 1977 as a Market Analyst. Mr.
Fischl was promoted to Manager of Tank Car Marketing and Administration in 1979
and became Vice President of Fleet Management in 1981. He held this position
until assuming his current responsibilities.
Mark J. Garrette
Mr. Garrette was appointed Senior Vice President and Controller of the Tank Car
Division and Vice President of the Company in August, 1994. He joined the Tank
Car Division as Vice President and Assistant Controller in May, 1994. Prior to
joining the Company, Mr. Garrette was a Division Vice President of AVX Corp., a
subsidiary of Kyocera Corp., a manufacturer of electronic components.
Robert C. Gluth
Mr. Gluth is Executive Vice President and a Director of MIC, Vice President,
Treasurer and a Director of Holdings, Executive Vice President and Director of
The Marmon Corporation ("TMC"), and Executive Vice President and a Director of
The Marmon Group, Inc. ("Marmon"). Mr. Gluth is also Treasurer of each of TMC,
MIC and Marmon.
Jay A. Pritzker
Mr. Jay A. Pritzker is Chairman of the Board of each of MIC, Holdings, TMC and
Marmon. Mr. Pritzker is also a partner in the law firm of Pritzker & Pritzker,
and Chairman of the Board of Hyatt Corporation.
Robert A. Pritzker
Mr. Robert A. Pritzker is President and a Director of each of MIC, Holdings, TMC
and Marmon. Mr. Pritzker is also a director of Hyatt Corporation.
Robert W. Webb
Mr. Webb is Secretary and a Vice President of each of MIC, Holdings, TMC and
Marmon.
Messrs. Jay A. Pritzker and Robert A. Pritzker are brothers. There are no other
family relationships among the directors and executive officers of the Company.
Directors and executive officers are elected for a term of one year, or until a
successor is appointed.
-40-
Other Directorships
Mr. Robert A. Pritzker is a Director of Southern Peru Copper Corporation and
Acxiom Corporation. Otherwise, none of the members of the Company's Board of
Directors are members of the board of directors of companies with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934 or subject to the requirements of Section 15(d) of that Act or of a company
registered as an investment company under the Investment Company Act of 1940.
ITEM 11. EXECUTIVE COMPENSATION
Kenneth P. Fischl, Vice President; and Mark J. Garrette, Vice President, were
the only executive officers of the Company who in the year ended December 31,
1996, received salary and bonus in excess of $100,000 from the Company and its
subsidiaries for services in all capacities to the Company.
All other officers of the Company received their 1996 compensation from Marmon
and are primarily involved in the management of MIC and Marmon. The Company,
together with the other subsidiaries of MIC, have been required to pay Marmon a
portion of such compensation which is encompassed in the charge for certain
common services provided by Marmon to the Company and such other subsidiaries.
The amount of such charge has been determined pursuant to a formula based upon
the dollar value of revenues, earnings and assets. See Note 16 to the
consolidated financial statements included in Item 8 of this Form 10-K.
Directors of the Company do not receive any compensation in such capacity.
Shown below is the aggregate of all forms of compensation paid by the Company to
Mr. Fischl and Mr. Garrette:
Summary Compensation Table
Annual Compensation
-------------------- All Other
Name and Principal Position Year Salary Bonus Compensation*
- - --------------------------- ------ -------- ------- -------------
Kenneth P. Fischl,
Director and Vice President of 1996 $225,500 $65,000 $25,100
the Company and President and 1995 207,400 55,000 22,900
General Manager of the Tank Car 1994 196,400 45,000 20,300
Division
Mark J. Garrette,
Vice President of the Company and 1996 156,100 29,000 16,000
Senior Vice President of the Tank 1995 149,000 18,000 6,500
Car Division
* Represents the aggregate amounts of Company contributions to defined
contribution plans on behalf of each of the named individuals.
-41-
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
MIC, a Delaware corporation having its principal executive offices at 225 West
Washington Street, Chicago, Illinois, owns 1,000 shares, or 100% of the
Company's issued and outstanding common stock. MIC is a subsidiary of Holdings.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See Note 16 to the consolidated financial statements included in Item 8 of this
Form 10-K for a description of certain related party transactions.
-42-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
Page
----
a) 1. Financial Statements -
Consolidated statement of income for each of the three years
in the period ended December 31, 1996........................... 18
Consolidated balance sheet - December 31, 1996 and 1995......... 19
Consolidated statement of stockholder's equity for each of
the three years in the period ended December 31, 1996........... 20
Consolidated statement of cash flows for each of the three
years in the period ended December 31, 1996..................... 21
Notes to consolidated financial statements....................... 22
2. Index to Exhibits.................................................. 45
b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three months ended
December 31, 1996.
Financial statement schedules are not submitted because they are not
applicable or because the required information is included in the financial
statements or notes thereto.
-43-
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:
UNION TANK CAR COMPANY
(Registrant)
By: /s/ Robert C. Gluth
---------------------------
Robert C. Gluth
Executive Vice President
Dated: March 11, 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 dates indicated:
Signature Title Date
- - ------------------------- ------------------------------ --------------
/s/ Jay A. Pritzker Chairman of the Board March 11, 1997
- - ------------------------- and Director
Jay A. Pritzker
/s/ Robert A. Pritzker President and Director March 11, 1997
- - ------------------------- (principal executive officer)
Robert A. Pritzker
/s/ Robert C. Gluth Executive Vice President, March 11, 1997
- - ------------------------- Director and Treasurer
Robert C. Gluth (principal financial officer
and principal accounting
officer)
/s/ Kenneth P. Fischl Director and President, Tank March 11, 1997
- - ------------------------- Car Division
Kenneth P. Fischl
-44-
UNION TANK CAR COMPANY AND SUBSIDIARIES
INDEX TO EXHIBITS
ITEM 14(a)(3)
Exhibit 3 Articles of incorporation and by-laws
3(a) Restated Certificate of Incorporation of the Company, as filed
with the Secretary of State of Delaware on September 2, 1982
(which was filed as Exhibit 3(a) to the Annual Report on Form
10-K for the fiscal year ended December 31, 1982, and is
incorporated herein by reference)
3(b) By-Laws of the Company, as adopted November 25, 1987 (which was
filed as Exhibit 3(b) to the Annual Report on Form 10-K for the
fiscal year ended December 31, 1988, and is incorporated herein
by reference)
Exhibit 12 Statements re computation of ratios
The computation of the Ratio of Earnings to Fixed
Charges (summarized in Note 14 to the consolidated
financial statements)..................................... 46
Exhibit 21 Subsidiaries of the registrant............................. 47
Exhibit 27 Financial Data Schedule (submitted with the electronic filing
of this document)
Instruments defining the rights of holders of long-term debt are not being filed
herewith pursuant to the provisions of paragraph 4(iii) of Item 601(b) of
Regulation S-K. The Company agrees to furnish a copy of any such instrument to
the Commission upon request.
-45-