1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-2328
GATX Corporation
Incorporated in the IRS Employer Identification Number
State of New York 36-1124040
500 West Monroe Street
Chicago, IL 60661-3676
(312) 621-6200
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class or series which registered
- ---------------------------------------------------- ------------------------
Common Stock New York Stock Exchange
Chicago Stock Exchange
$2.50 Cumulative Convertible Preferred Stock, New York Stock Exchange
Series A Chicago Stock Exchange
$2.50 Cumulative Convertible Preferred Stock, New York Stock Exchange
Series B Chicago Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
As of March 23, 2001, 48,439,284 common shares were outstanding, and
the aggregate market value of the common shares (based upon the March 23, 2001,
closing price of these shares on the New York Stock Exchange) of GATX
Corporation held by nonaffiliates was approximately $1,961.8 million.
Documents Incorporated by Reference
Portions of the GATX Annual Report to Shareholders for the year ended
December 31, 2000, are incorporated by reference into Parts I and II. Portions
of GATX's proxy statement dated March 30, 2001, are incorporated by reference
into Part III.
2
PART I
Item 1. Business
During 2000, GATX Corporation redefined its strategic focus and undertook
initiatives to position itself as a specialized finance and leasing company. To
accomplish this goal, certain supply chain related businesses of the GATX
Integrated Solutions Group (ISG) were sold in 2000 and all remaining ISG
businesses have been targeted for divestiture in 2001. As a result of these
actions, the financial data for the ISG segment is presented as discontinued
operations for all periods presented.
GATX Corporation now has two operating segments: Financial Services and GATX
Rail. Through these businesses, GATX combines asset knowledge and services,
structuring expertise, creative partnering and risk capital to serve customers
and partners worldwide. Information concerning financial data of business
segments and the basis for grouping products or services is contained in Exhibit
13, GATX Annual Report to Shareholders for the year ended December 31, 2000 on
pages 53 and 54, which is incorporated herein by reference (page references are
to the Annual Report to Shareholders).
Industry Segments
Financial Services
Financial Services represents GATX Capital Corporation and its subsidiaries and
affiliates, which arrange and service the financing of equipment and other
capital assets on a worldwide basis, and American Steamship Company, which
operates self-unloading vessels on the Great Lakes. Headquartered in San
Francisco, California, Financial Services provides financing primarily to the
aircraft, rail, technology, venture finance and marine industries. These
financings, which are held within Financial Services' own portfolio and through
partnerships with coinvestors, are structured as leases and secured loans, and
frequently include interests in an asset's residual value and warrants of
non-public start-up companies. For its transaction structuring and portfolio
management services, Financial Services receives fees at the time a transaction
is completed, an asset is remarketed, and/or on an ongoing basis.
Financial Services primarily competes with captive leasing companies, leasing
subsidiaries of commercial banks, independent leasing companies, lease brokers,
investment bankers, financing arms of equipment manufacturers, and other Great
Lakes commercial fleets. No single customer accounts for more than 5% of
Financial Services' revenues. In addition to its San Francisco home office,
Financial Services has 8 domestic and 18 foreign offices.
GATX Rail
GATX Rail (Rail), is headquartered in Chicago, Illinois. Rail is principally
engaged in leasing specialized railcars, primarily tank cars, under full service
leases. As of December 31, 2000, its North American fleet consisted of
approximately 91,600 railcars, comprised of 70,000 tank cars and 21,600
specialized freight cars. In addition to 79,800 railcars in the United States,
Rail has 9,100 railcars in its Canadian fleet and 2,700 railcars in its Mexican
fleet. The utilization rate of Rail's North American railcar fleet at December
31, 2000 was approximately 93%. Rail's railcars have a depreciable life of 20 to
33 years and an average age of approximately 16 years.
In addition to the North American fleet, Rail's investments in affiliated
companies result in ownership interests in two European fleets. Rail owns a 46%
interest in KVG Kesselwagen Vermietgesellschaft mbH, a German and Austrian-based
tank car and specialty railcar leasing company, and an 18.8% interest in AAE
Cargo, headquartered in Switzerland. In March 2001, a subsidiary of Rail
purchased Dyrekcja Eksploatacji Cystern (DEC), Poland's national tank car fleet
and fuel distribution company. DEC assets include 11,500 tank cars and a
maintenance network.
1
3
Rail's customers use its railcars to ship over 700 different commodities,
primarily chemicals, petroleum, and food products. For 2000, approximately 44%
of railcar leasing revenue was attributable to shipments of chemical products,
31% to food and other products, and 25% to petroleum products. Rail leases
railcars to over 700 customers, including major chemical, oil, food and
agricultural companies. No single customer accounts for more than 3% of total
railcar leasing revenue.
Rail typically leases new railcars to its customers for a term of five years or
longer, whereas renewals or leases of existing cars are typically for periods
ranging from less than a year to seven years with an average lease term of about
three years. Rail purchases most of its new railcars from Trinity Industries,
Inc., a Dallas-based metal products manufacturer. Under its full service leases,
Rail maintains and services its railcars, pays ad valorem taxes, and provides
many ancillary services. As of December 31, 2000, Rail operates a network of
major service centers consisting of four domestic, four Canadian and one Mexican
facility. To supplement these nine major service centers, Rail utilizes a fleet
of mobile trucks and also utilizes independent third-party repair shops.
Subsequent to year-end 2000, Rail closed one of its service centers, located in
East Chicago, IN.
The full-service railcar leasing industry is comprised of Rail, Union Tank Car
Company, General Electric Railcar Services Corporation, and various financial
institutions. As of the end of 2000, Rail had 24% of the 271,100 tank cars owned
and leased in the United States. Principal competitive factors include price,
service and availability.
Discontinued Operations - Integrated Solutions Group
Integrated Solutions Group (ISG) consisted of GATX Terminals Corporation
(Terminals), GATX Logistics, Inc. (Logistics) and minor business development
efforts that provided logistics and supply chain services related to chemicals,
petroleum, and dry goods. In May 2000, GATX divested 81% of Logistics. The
remaining 19% of Logistics was sold in December 2000. In July 2000, GATX
announced its intent to sell Terminals and reached an agreement in November to
sell substantially all of the U.S. terminals and pipeline assets, representing
the bulk of Terminals' operations. A portion of this transaction closed in March
2001 and the remainder is expected to close following regulatory approval. GATX
expects to complete the divestiture of the remaining terminals and supply chain
businesses in 2001.
Trademarks, Patents and Research Activities
Patents, trademarks, licenses, and research and development activities are not
material to these businesses taken as a whole.
Seasonal Nature of Business
Marine shipping operations are seasonal due to the effects of winter weather
conditions on the Great Lakes. However, seasonality is not considered
significant to the operations of GATX and its subsidiaries taken as a whole.
Customer Base
GATX as a whole is not dependent upon a single customer or a few customers.
2
4
Employees
GATX and its subsidiaries have approximately 3,200 employees, of whom 36% are
hourly employees covered by union contracts. Employees for continuing operations
were approximately 2,300, of whom 40% are hourly employees covered by union
contracts.
Environmental Matters
Certain operations of GATX's subsidiaries (collectively GATX) present potential
environmental risks principally through the transportation or storage of various
commodities. Recognizing that some risk to the environment is intrinsic to its
operations, GATX is committed to protecting the environment as well as complying
with applicable environmental protection laws and regulations. GATX, as well as
its competitors, is subject to extensive regulation under federal, state and
local environmental laws which have the effect of increasing the costs and
liabilities associated with the conduct of its operations. In addition, GATX's
foreign operations are subject to environmental laws in effect in each
respective jurisdiction.
GATX's policy is to monitor and actively address environmental concerns in a
responsible manner. GATX has received notices from the U.S. Environmental
Protection Agency (EPA) that it is a potentially responsible party (PRP) for
study and cleanup costs at 13 sites under the requirements of the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(Superfund). Under these Acts and comparable state laws, GATX may be required to
share in the cost to clean up various contaminated sites identified by the EPA
and other agencies. GATX has also received notice that it is a PRP at one site
to undertake a Natural Resource Damage Assessment. In all instances, GATX is one
of a number of financially responsible PRPs and has been identified as
contributing only a small percentage of the contamination at each of the sites.
Due to various factors such as the required level of remediation or restoration
and participation in cleanup or restoration efforts by others, GATX's total
cleanup costs at these sites cannot be predicted with certainty; however, GATX's
best estimates for remediation and restoration of these sites have been
determined and are included in its environmental reserves.
Future costs of environmental compliance are indeterminable due to unknowns such
as the magnitude of possible contamination, the timing and extent of the
corrective actions that may be required, the determination of the company's
liability in proportion to other responsible parties, and the extent to which
such costs are recoverable from third parties including insurers. Also, GATX may
incur additional costs relating to facilities and sites where past operations
followed practices and procedures that were considered acceptable at the time
but in the future may require investigation and/or remedial work to ensure
adequate protection to the environment under current or future standards. If
future laws and regulations contain more stringent requirements than presently
anticipated, expenditures may be higher than the estimates, forecasts, and
assessments of potential environmental costs provided below. However, these
costs are expected to be at least equal to the current level of expenditures. In
addition, GATX has provided indemnities for environmental issues to the buyers
of three divested companies for which GATX believes it has adequate reserves.
GATX's environmental reserve at the end of 2000 was $83.2 million and reflects
GATX's best estimate of the cost to remediate known environmental conditions.
Additions to the reserve were $9.3 million in 2000 and $11.7 million in 1999.
Expenditures charged to the reserve amounted to $11.8 million and $7.6 million
in 2000 and 1999, respectively.
In 2000, GATX made capital expenditures of $8.1 million for environmental and
regulatory compliance, which was comparable to 1999. These projects included
marine vapor recovery systems, discharge prevention compliance, waste water
systems, impervious dikes, tank modifications for emissions control, and tank
car cleaning systems.
In November 2000, GATX entered into an agreement to sell substantially all of
the U.S. terminals and pipeline assets, representing the bulk of Terminals'
operations. This transaction is structured as a sale of
3
5
the capital stock of Terminals. Under the terms of the agreement various
environmental liabilities associated with the terminals and pipeline assets will
be assumed by the buyer. Excluding the liabilities associated with the sale of
the Terminals' operations, GATX's environmental reserve at the end of 2000 was
$46.2 million.
Item 2. Properties
Information regarding the location and general character of certain properties
of GATX is included in Item 1, Business, of this document and, for continuing
operations, in Exhibit 13, GATX Annual Report to Shareholders for the year ended
December 31, 2000 on page 58, GATX Locations of Operations (page reference is to
the Annual Report to Shareholders).
At December 31, 2000, locations related to the discontinued operations of ISG
are as follows:
HEADQUARTERS
Chicago, Illinois
TERMINAL LOCATIONS: TERMINAL AFFILIATES: PIPELINE LOCATIONS:
Carson, California Lanshan, China Calnev Pipeline
Richmond, California Kawasaki, Japan Adelanto, California
San Pedro, California Kobe, Japan Barstow, California
Orlando, Florida Yokohama, Japan Colton, California
Tampa, Florida Kertih, Malaysia Las Vegas, Nevada
Argo, Illinois Jurong Town, Singapore
Carteret, New Jersey Wymondham, United Kingdom Central Florida Pipeline
Portland, Oregon (2) Orlando, Florida
Philadelphia, Pennsylvania DISTILLATE AND BLENDING Tampa, Florida
Galena Park, Texas DISTRIBUTION AFFILIATE:
Pasadena, Texas Houston, Texas Manchester Jet Line
Seattle, Washington Manchester, United Kingdom
Antwerpen/Lillo, Belgium
Altamira, Mexico LOGISTICS LOCATIONS:
Pulau Busing, Singapore West Patterson, New Jersey
Exton, Pennsylvania
Pottstown, Pennsylvania
Item 3. Legal Proceedings
GATX Capital Corporation (Capital), a subsidiary of GATX Corporation (the
Company), is a party to actions arising from the issuance by the Federal
Aviation Administration (the FAA) in January 1996 of Airworthiness Directive
96-01-03 (the AD). The AD had the effect of significantly reducing the amount of
freight that ten 747 aircraft could carry. These aircraft (the Affected
Aircraft) were modified from passenger to freighter configuration by GATX/Airlog
Company (Airlog), a California general partnership. A subsidiary of Capital,
GATX Aircraft Corporation, is a partner in Airlog. The modifications were
carried out between 1988 and 1994 by subcontractors of Airlog under authority of
Supplemental Type Certificates (STCs) issued by the FAA in 1987 pursuant to a
design approved by the FAA. In the AD, the FAA stated that the STCs were issued
"in error."
On July 11, 1996, Airlog filed a complaint for Declaratory Judgment against
Evergreen International Airlines, Inc. (Evergreen) in the United States District
Court for the Northern District of California (No. C96-2494) with respect to
three Affected Aircraft seeking a declaration that neither Airlog nor Capital
had any liability to Evergreen as a result of the issuance of the AD. Evergreen
filed an answer and counterclaim on August 1, 1996, which asserted that Airlog
and Capital were liable to it under a number of legal theories in connection
with the application of the AD to its three Affected Aircraft. Evergreen alleged
approximately $160 million in compensatory damages and also sought unspecified
punitive damages.
4
6
On January 31, 1997, American International Airways, Inc. (AIA) filed a
complaint in the United States District Court for the Northern District of
California (C97-0378) against Airlog, Capital, Airlog Management Corp., and
others asserting that Airlog and Capital were liable to it under a number of
legal theories in connection with the application of the AD to two Affected
Aircraft owned by AIA. The Complaint sought damages (to be trebled under one
count of the complaint) of an unspecified amount relating to lost revenues, lost
profits, denied access to capital markets, repair costs, disruption of its
business plan, lost business opportunities, maintenance and engineering costs,
and other additional consequential, direct, incidental and related damages. The
complaint asked in the alternative for a rescission of AIA's agreements with
Airlog, a return of amounts paid, and for injunctive relief directing that
Airlog, and certain individual defendants, properly staff and manage the
correction of the alleged deficiencies that caused the FAA to issue the AD. The
AIA claim was assigned to Kalitta Air (Kalitta Air). Kalitta Air alleged $480
million in compensatory damages, trebling of such damages pursuant to 18 U.S.C.
1964, prejudgment interest and unspecified punitive damages.
On June 4, 1997, Tower Air, Inc. filed an action in the Supreme Court of the
State of New York, County of New York (Index No. 97/602851) against Capital,
Airlog, an officer of Capital and others with respect to one Affected Aircraft
it leased and subsequently purchased from a trust for the benefit of an
affiliate of Airlog. This action asserted causes of action in fraud and deceit,
negligent misrepresentation, breach of contract and negligence and sought
damages in excess of $25 million together with interest, costs, attorneys' fees
and unspecified punitive damages.
On February 25, 1998, The Bank of New York (BNY) filed an action, as purported
beneficial owner of one Affected Aircraft, in the United States District Court
for the Northern District of California (No. C98-0385) against Airlog, Capital
and others. This aircraft was originally converted by Airlog for Evergreen. This
action sought declaratory relief and asserted claims for breach of contract,
intentional misrepresentation, nondisclosure of known facts, negligence,
negligent misrepresentation and unfair competition. BNY alleged approximately
$19 million in compensatory damages, prejudgment interest and unspecified
punitive damages.
On June 15, 1998, General Electric Capital and PALC II, Inc. (collectively GECC)
filed a complaint in the United States District Court for the Northern District
of California (C98-2387) against Airlog, Capital, and others with respect to
three Affected Aircraft. These aircraft were modified in 1991 and 1992. GECC
asserted that the defendants were liable to it under a number of legal theories
in connection with the application of the AD to the three Affected Aircraft
owned by GECC. GECC alleged approximately $100 million in compensatory damages,
trebling of such damages pursuant to 18 U.S.C. 1964, prejudgment interest and
unspecified punitive damages.
Airlog, Capital, and others brought an action in the United States District
Court for the Northern District of California against Pemco Aeroplex, Inc.
(Pemco) (C97-2484WHO), a contractor for Airlog which actually obtained the STCs
and modified certain of the Affected Aircraft, seeking damages, costs and
expenses in connection with the resolution of the concerns of the FAA as
expressed in the AD, repairing the Affected Aircraft, defending against the
litigation involving the plaintiffs arising from the Affected Aircraft, paying
any judgments against plaintiffs that may have been entered in the litigation
and attorneys' fees. In February 2000, Airlog stipulated to the dismissal of
several of the causes of action against Pemco. The claims for contribution and
damages of Airlog, Capital and others against Pemco were barred as a result of
the settlements that Pemco reached with Evergreen and Kalitta. Consequently,
this action has been dismissed.
As a result of the actions discussed above, on July 24, 1998 Airlog filed an
action against the United States of America (C98-1029) in United States District
Court for the Western District of Washington to recover losses suffered by
Airlog as a result of the alleged negligence of the FAA in the development and
approval of the design to convert the Affected Aircraft from passenger to
freighter configuration. The complaint sought damages in excess of $8.3 million
representing the expenses incurred by Airlog in responding to the AD and legal
fees and costs incurred by Airlog in defending the litigation described
5
7
above. On August 27, 1999, the Court dismissed Airlog's action against the
United States. This dismissal was based on the Court's determination that the
governmental discretionary function exception to the Federal Tort Claims Act was
applicable to Airlog's claim. Airlog appealed that decision to the Circuit Court
of Appeals for the Ninth Circuit. On December 13, 2000, the Court of Appeals
affirmed the judgment of the District Court. Airlog has filed a petition with
the Court of Appeals seeking en banc review of the ruling of the court.
Elsinore Aerospace Services LP (Elsinore) was a defendant in the AIA suit
against Airlog, Capital and others. Elsinore cross-claimed against Airlog and
brought a third-party claim against Capital for indemnification and defense
under its contract with Airlog. Under this contract, Elsinore was to develop
engineering, design and analysis necessary to develop Airlog's existing 747-100
STC's into STC's for converting 747-200 aircraft from passenger to freighter
configuration. One Affected Aircraft was converted for AIA under STC's obtained
pursuant to the Elsinore contract. On August 11, 2000, the United States
District Court for the Northern District of California granted Elsinore's motion
for summary judgment against Airlog on this cross-claim. Capital and Airlog
believe the Court's ruling is in error both as a matter of law and application
of the facts of this claim and intend to appeal the Court's ruling.
Trial of the claims of Evergreen and Kalitta Air with respect to the remaining
five aircraft began January 8, 2001 and concluded March 1. Prior to trial,
Capital settled with Tower, BNY, GECC, and during the trial with Evergreen in
each case for undisclosed amounts. At the conclusion of the trial, the jury
awarded Kalitta Air a total of $30.3 million for replacement of its two Affected
Aircraft as damages for breach of contract, and $47.5 million plus interest for
lost profits as damages for fraud by omission. Under instructions provided by
the court to the jury, Kalitta Air is entitled to the higher of the two amounts.
The net after-tax impact of the resolution of the five Airlog cases, including
Evergreen, is $97.6 million, excluding any post-judgment interest expense. This
is Capital's maximum liability for all Airlog-related matters, and does not
reflect the fact that Capital will aggressively pursue all means of loss
recovery including appeals and insurance.
Calnev Pipe Line Company (Calnev), an indirect wholly owned subsidiary of GATX
Terminals Holding Corporation, has agreed in a Compliance Order with Region 9 of
the U.S. Environmental Protection Agency (EPA) to comply with and correct
certain alleged violations of the Clean Air Act. In general, the Order requires
Calnev to: (a) complete construction of a new vapor recovery unit in Las Vegas
and limit use of another; (b) comply with certain throughput limits and VOC
emission limits at the Las Vegas loading rack; (c) engage in certain record
keeping; and, (d) comply with certain authority and permitting requirements of
the EPA and the Clark County, Nevada, Health District. Calnev has not admitted
to any violation of permit, law or regulation. The United States of America, the
State of Nevada and Clark County have reserved the right to assess civil
penalties.
GATX and its subsidiaries are engaged in various matters of litigation and have
a number of unresolved claims pending, including proceedings under governmental
laws and regulations related to environmental matters. While the amounts claimed
are substantial, and the ultimate liability with respect to such litigation and
claims cannot be determined at this time, it is the opinion of management that
amounts, if any, required to be paid by GATX and its subsidiaries in the
discharge of such liabilities are not likely to be material to GATX's
consolidated financial position or results of operations.
6
8
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of the Registrant
Pursuant to General Instruction G(3), the following information regarding
executive officers is included in Part I in lieu of inclusion in the GATX Proxy
Statement:
OFFICE
HELD
NAME OFFICE HELD SINCE AGE
- ------------------------------ --------------------------------------------------------- ------------ ---------
Ronald H. Zech Chairman, President and Chief Executive Officer 1996 57
Ronald J. Ciancio Vice President, General Counsel and Secretary 2000 59
Gail L. Duddy Vice President, Human Resources 1999 48
Brian A. Kenney Vice President and Chief Financial Officer 1999 41
William M. Muckian Controller and Chief Accounting Officer 2000 41
Clifford J. Porzenheim Vice President, Corporate Strategy 1999 37
William J. Hasek Treasurer 1999 44
Officers are elected annually by the Board of Directors. Previously, Mr. Zech
was President of GATX Financial Services from 1985 to 1994. In 1994, Mr. Zech
was elected as President and Chief Operating Officer of GATX. On January 1,
1996, he was elected as Chief Executive Officer and on April 26, 1996, Chairman.
Mr. Ciancio was Assistant General Counsel of GATX from 1984 to 2000. In 2000,
Mr. Ciancio became Vice President, Corporate Counsel and then Vice President,
General Counsel and Secretary. Ms. Duddy joined GATX in 1992 as Director of
Compensation and in 1995 also assumed responsibility for the benefits function.
In 1997, Ms. Duddy was elected Vice President, Compensation, Benefits and
Corporate Human Resources. In 1999, Ms. Duddy was elected Vice President, Human
Recourses of GATX. Mr. Kenney was elected Vice President and Chief Financial
Officer of GATX in 1999 and was Vice President, Finance from 1998 to 1999, Vice
President and Treasurer from 1997 to 1998, and Treasurer from 1995 to 1996. In
2000, Mr. Muckian was elected Controller and Chief Accounting Officer.
Previously, Mr. Muckian was Director of Taxes for GATX from 1996 to 2000. In
1999, Mr. Porzenheim was elected Vice President, Corporate Strategy of GATX. Mr.
Porzenheim was the Director of Corporate Development for GATX from 1996 to 1998.
Mr. Porzenheim was a consultant with the Boston Consulting Group from 1993 to
1996. Mr. Hasek was the Director of Financial Analysis and Budgeting from 1997
to 1999 and Manager of Corporate Finance from 1995 to 1997.
7
9
PART II
Item 5. Market for the Registrant's Common Stock and Related Shareholder Matters
Information required by this item is contained in Exhibit 13, GATX Annual Report
to Shareholders for the year ended December 31, 2000, on page 56, which is
incorporated herein by reference (page reference is to the Annual Report to
Shareholders).
Item 6. Selected Financial Data
Information required by this item is contained in Exhibit 13, GATX Annual Report
to Shareholders for the year ended December 31, 2000, on page 57, which is
incorporated herein by reference (page references are to the Annual Report to
Shareholders).
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Information required by this item is contained in Item 1, Business, section of
this document and in Exhibit 13, GATX Annual Report to Shareholders for the year
ended December 31, 2000, the Management's Discussion and Analysis of 2000
compared to 1999 on pages 23-25, 27, and 29-31, the financial data of business
segments on pages 53 and 54, and the Management's Discussion and Analysis of
1999 compared to 1998 on page 25, which is incorporated herein by reference
(page references are to the Annual Report to Shareholders).
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Information required by this item is contained in Exhibit 13, GATX Annual Report
to Shareholders for the year ended December 31, 2000, the Management's
Discussion and Analysis of 2000 compared to 1999 on page 30 which is
incorporated by reference herein (page reference is to the Annual Report to
Shareholders).
Item 8. Financial Statements and Supplementary Data
The following consolidated financial statements of GATX Corporation, included in
Exhibit 13, GATX Annual Report to Shareholders for the year ended December 31,
2000, which is incorporated herein by reference (page references are to the
Annual Report to Shareholders):
Consolidated Statements of Income - Years Ended December 31, 2000,
1999 and 1998, on page 22.
Consolidated Balance Sheets - December 31, 2000 and 1999, on page 26.
Consolidated Statements of Cash Flows - Years Ended December 31, 2000,
1999 and 1998, on page 28.
Consolidated Statements of Changes in Shareholders' Equity - December
31, 2000, 1999 and 1998, on page 32.
Consolidated Statements of Comprehensive Income - Years Ended December
31, 2000, 1999 and 1998, on page 32.
Notes to Consolidated Financial Statements on pages 34 through 55.
Consolidated quarterly financial data is contained in Exhibit 13, GATX Annual
Report to Shareholders for the year ended December 31, 2000, on page 56, which
is incorporated herein by reference (page reference is to the Annual Report to
Shareholders).
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
8
10
PART III
Item 10. Directors and Executive Officers of the Registrant
Information required by this item regarding directors is contained in sections
entitled "Nominees For Directors" and "Additional Information Concerning
Nominees" in the GATX Proxy Statement dated March 30, 2001, which sections are
incorporated herein by reference. Information regarding officers is included at
the end of Part I.
Item 11. Executive Compensation
Information required by this item regarding executive compensation is contained
in sections entitled "Compensation of Directors" and "Compensation of Executive
Officers" in the GATX Proxy Statement dated March 30, 2001, which sections are
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information required by this item regarding the Company's Common Stock is
contained in sections entitled "Nominees For Directors," "Security Ownership of
Management" and "Beneficial Ownership of Common Stock" in the GATX Proxy
Statement dated March 30, 2001, which sections are incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
None.
9
11
PART IV
Item 14. Financial Statement Schedules, Reports on Form 8-K and Exhibits.
(a) 1. Financial Statements
The following consolidated financial statements of GATX Corporation
included in the Annual Report to Shareholders for the year ended
December 31, 2000, are filed in response to Item 8:
Consolidated Statements of Income - Years Ended December 31, 2000,
1999 and 1998.
Consolidated Balance Sheets - December 31, 2000 and 1999.
Consolidated Statements of Cash Flows - Years Ended December 31, 2000,
1999 and 1998.
Consolidated Statements of Changes in Shareholders' Equity - December
31, 2000, 1999 and 1998.
Consolidated Statements of Comprehensive Income - Years Ended December
31, 2000, 1999 and 1998.
Notes to Consolidated Financial Statements
2. Financial Statement Schedules: Page
----------
Schedule I Condensed Financial Information of Registrant 17-20
Schedule II Valuation and Qualifying Accounts 21
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable, and,
therefore, have been omitted.
(b) Report on Form 8-K.
Form 8-K filed on March 23, 2001, reporting that GATX Rail Overseas
Holding Corporation, a wholly-owned subsidiary of GATX Rail
Corporation and an indirect wholly-owned subsidiary of GATX
Corporation, acquired Dyrekcja Eksploatacji Cystern, Poland's national
tank car fleet and fuel distribution company.
Form 8-K filed on March 5, 2001, reporting that the second phase of a
trial in Federal District Court for the Northern District of
California against a GATX Capital partnership had concluded, awarding
damages to Kalitta Air in the amount of $47.5 million plus applicable
interest. GATX also announced that it settled a related dispute with
Evergreen International Airlines, Inc., which had also been a party in
the litigation. Terms of such settlement were not disclosed.
Form 8-K filed on March 2, 2001, reporting the completion of GATX
Corporation's sale of substantially all of the domestic operations of
GATX Terminals Corporation, a wholly-owned subsidiary of GATX Rail
Corporation and an indirect wholly-owned subsidiary of GATX
Corporation, to Kinder Morgan Energy Partners L.P. and the sale of
substantially all of the European operations.
Form 8-K filed on February 20, 2001, reporting that the Federal
District Court for the Northern District of California ruled that a
GATX Capital partnership breached its warranties under aircraft
modification agreements and fraudulently failed to disclose
information to certain customers.
10
12
Form 8-K filed on February 13, 2001, reporting acquisition of El
Camino Resources, Ltd. by GATX Capital Corporation, an indirect
wholly-owned subsidiary of GATX Corporation.
Form 8-K filed on December 4, 2000, reporting GATX Corporation's
agreement to sell substantially all of the domestic operation of GATX
Terminals Corporation, a wholly-owned subsidiary of GATX Rail
Corporation and an indirect wholly-owned subsidiary of GATX
Corporation, to Kinder Morgan Energy Partners L.P.
(c) Exhibit Index
Exhibit
Number Exhibit Description Page
- ------- ------------------------------------------------------- ----------
3A. Restated Certificate of Incorporation of GATX Corporation, as amended,
incorporated by reference to GATX's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991, file number 1-2328. Third
Amendment of said Plan effective as of April 23, 1999, incorporated by
reference to GATX's Proxy Statement dated March 17, 1999. Fourth
Amendment of said Plan effective as of December 1, 1999, submitted to
the SEC on Form S-8, file number 333-91865.
3B. By-Laws of GATX Corporation, as amended and restated as of July 29,
1994 on Form 10-K for the fiscal year ended December 31, 1994, file
number 1-2328.
10A. GATX Corporation 1985 Long Term Incentive Compensation Plan, as
amended, and restated as of April 27, 1990, incorporated by reference
to GATX's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, file No. 1-2328. Amendment to said Plan effective
as of April 1, 1991, incorporated by reference to GATX's Annual Report
on Form 10-K for the fiscal year ended December 31, 1991, file number
1-2328; Sixth Amendment to said Plan effective January 31,1997,
submitted to the SEC on Form 10-K for the fiscal year ended 1999, file
number 1-2328; Seventh Amendment to said Plan effective June 9, 2000,
and Eighth Amendment of said Plan effective January 26, 2001,
submitted to the SEC with the electronic submission of this report on
Form 10-K.
10B. GATX Corporation 1995 Long Term Incentive Compensation Plan,
Incorporated by reference to GATX's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1995, file number 1-2328. First
Amendment of said Plan effective as of January 31, 1997 submitted to
the SEC on Form 10-K for the fiscal year ended December 31, 1996, file
number 1-2328; Second Amendment of said Plan effective as of December
5, 1997 submitted to the SEC on Form 10-K for the fiscal year ended
1999, file number 1-2328; Third Amendment of said Plan effective as of
April 24, 1998, submitted to the SEC with the electronic submission of
this report on Form 10-K; Fourth Amendment of said Plan effective June
9, 2000, and Fifth Amendment of said Plan effective January 26, 2001,
submitted to the SEC with the electronic submission of this report on
Form 10-K.
11
13
Exhibit
Number Exhibit Description Page
- ------- ------------------------------------------------------- ----------
10C. GATX Corporation Deferred Fee Plan for Directors, as amended and
restated as of July 1, 1998, incorporated by reference to GATX's
Annual Report on Form 10-K for the fiscal year ended December 31,
1999, file number 1-2328.
10D. 1984 Executive Deferred Income Plan Participation Agreement between
GATX Corporation and participating directors and executive executive
officers dated September 1, 1984, as amended, incorporated by
reference to GATX's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991, file number 1-2328.
10E. 1985 Executive Deferred Income Plan Participation Agreement between
GATX Corporation and participating directors and executive officers
dated July 1, 1985, as amended, incorporated by reference to GATX's
Annual Report on Form 10-K for the fiscal year ended December 31,
1991, file number 1-2328.
10F. 1987 Executive Deferred Income Plan Participation Agreement between
GATX Corporation and participating directors and executive officers
dated December 31, 1986, as amended, incorporated by reference to
GATX's Annual Report on Form 10-K for the fiscal year ended December
31, 1991, file number 1-2328.
10G. Amendment to Executive Deferred Income Plan Participation Agreements
between GATX and certain participating directors and participating
executive officers entered into as of January 1, 1990, incorporated by
reference to GATX's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989, file number 1-2328.
10H. Retirement Supplement to Executive Deferred Income Plan Participation
Agreements entered into as of January 23, 1990, between GATX and
certain participating directors incorporated by reference to GATX's
Annual Report on Form 10-K for the fiscal year ended December 31,
1989, file number 1-2328 and between GATX and certain other
participating directors incorporated by reference to GATX's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990, file
number 1-2328.
10I. Amendment to Executive Deferred Income Plan Participation Agreements
between GATX and participating executive officers entered into as of
April 23, 1993, incorporated by reference to GATX's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993, file number
1-2328.
10J. Directors' Deferred Stock Plan approved on July 26,1996, effective as
of April 26, 1996, Summary of Plan incorporated by reference to GATX's
Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1996, file number 1-2328.
12
14
Exhibit
Number Exhibit Description Page
- ------- ------------------------------------------------------- ----------
10K. Agreement for Continued Employment Following Change of Control or
Disposition of a Subsidiary between GATX Corporation and certain
Executive officers dated as of December 1, 2000, submitted to the SEC
with the electronic submission of this report on Form 10-K.
10L. Arrangements between James J. Glasser and GATX associated with Mr.
Glasser's retirement from GATX as described on page 11 in the Section
of the GATX Proxy Statement dated March 13, 1996, entitled
"Termination of Employment and Change of Control Arrangements" are
incorporated herein by reference thereto, file number 1-2328.
10M. Letter Agreement dated August 14, 2000, between David B. Anderson and
GATX, submitted to the SEC with the electronic submission of this
report on Form 10-K.
10N. Stock Purchase Agreement dated February 28, 2001 between GATX Rail
Corporation, a wholly-owned subsidiary of GATX Corporation, GATX
Terminals Holding Corporation, a wholly-owned subsidiary of GATX Rail
Corporation, and Kinder Morgan Energy Partners L.P. to sell
substantially all of the domestic operations of GATX Terminals
Corporation, submitted to the SEC with the electronic submission of
this report on Form 10-K.
10O. Agreements between GATX Corporation and key personnel for issuance of
phantom restricted stock, dated as of June 8, 2000, and January 25,
2001 submitted to the SEC with the electronic submission of this
report on Form 10-K.
11A. Computation of Basic Net Income Per Share. 22
11B. Computation of Diluted Net Income Per Share. 23
12. Statement regarding computation of ratios of earnings to combined
fixed charges and preferred stock dividends. 24
13. Annual Report to Shareholders for the year ended December 31, 2000,
pages 21 - 60 with respect to the Annual Report on Form 10-K for the
fiscal year ended December 31, 2000, file number 1-2328, submitted to
the SEC along with the electronic submission of this Report on Form
10-K.
21. Subsidiaries of the Registrant. 25
23. Consent of Independent Auditors. 26
13
15
Exhibit
Number Exhibit Description Page
- ------- ------------------------------------------------------- ----------
24. Powers of Attorney with respect to the Annual Report on Form 10-K for
the fiscal year ended December 31, 2000, file Number 1-2328, submitted
to the SEC along with the electronic submission of this Report on Form
10-K.
99A. Undertakings to the GATX Corporation Salaried Employees Retirement
Savings Plan, incorporated by reference to GATX's Annual Report on
Form 10-K for the fiscal year ended December 31, 1982, file number
1-2328.
99B. Undertakings to the GATX Corporation 1995 Long Term Incentive Plan for
the fiscal year ended December 31, 1995, file number 1-2328,
Incorporated by reference to GATX's Annual Report on Form 10-K for the
year ended December 31, 1995.
14
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GATX CORPORATION
(Registrant)
/s/ Ronald H. Zech
-----------------------------------------
Ronald H. Zech
Chairman, President and
Chief Executive Officer
March 30, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
/s/ Ronald H. Zech
- -----------------------------------------
Ronald H. Zech Chairman, President and
March 30, 2001 Chief Executive Officer
/s/ Brian A. Kenney
- -----------------------------------------
Brian A. Kenney Vice President and
March 30, 2001 Chief Financial Officer
/s/ William M. Muckian
- -----------------------------------------
William M. Muckian Controller and
March 30, 2001 Chief Accounting Officer
Rod F. Dammeyer Director By /s/ Ronald J. Ciancio
James M. Denny Director --------------------------------------------
Richard Fairbanks Director Ronald J. Ciancio
William C. Foote Director (Attorney in Fact)
Deborah M. Fretz Director March 30, 2001
Miles L. Marsh Director
Michael E. Murphy Director
John W. Rogers, Jr. Director
15
17
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
GATX Corporation
We have audited the consolidated financial statements and related schedules of
GATX Corporation and subsidiaries listed in Item 14 (a)(1) and (2) of the Annual
Report on Form 10-K of GATX Corporation and subsidiaries for the year ended
December 31, 2000. These financial statements and related schedules are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements and related schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
related schedules are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and related schedules. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of GATX
Corporation and subsidiaries at December 31, 2000 and 1999, and the results of
their operations and cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
ERNST & YOUNG LLP
January 23, 2001
Chicago, Illinois (except with respect to Note 17, as to which the date is March
5, 2001)
16
18
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
GATX CORPORATION
(PARENT COMPANY)
STATEMENTS OF INCOME
(IN MILLIONS)
YEAR ENDED DECEMBER 31
-----------------------------------
2000 1999 1998
------- ------- -------
GROSS INCOME $ 6.2 $ 1.9 $ 3.2
COSTS AND EXPENSES
Interest 29.1 28.2 28.3
Depreciation 1.6 1.4 1.1
Selling, general and administrative 23.3 17.6 21.4
------- ------- -------
54.0 47.2 50.8
------- ------- -------
LOSS BEFORE INCOME TAXES AND SHARE OF NET INCOME OF
SUBSIDIARIES (47.8) (45.3) (47.6)
INCOME TAX BENEFIT (14.8) (15.4) (16.4)
------- ------- -------
LOSS BEFORE SHARE OF NET INCOME OF SUBSIDIARIES (33.0) (29.9) (31.2)
SHARE OF NET INCOME FROM CONTINUING SUBSIDIARIES 63.8 156.2 145.4
------- ------- -------
INCOME FROM CONTINUING OPERATIONS 30.8 126.3 114.2
SHARE OF NET INCOME FROM DISCONTINUED OPERATIONS
Operating results, net of income taxes 27.4 25.0 17.7
Gain on sale of portion of segment, net of income taxes 8.4 -- --
------- ------- -------
NET INCOME $ 66.6 $ 151.3 $ 131.9
======= ======= =======
Note: Certain amounts in the 1999 and 1998 financial statements have been
reclassified to conform to the 2000 presentation.
17
19
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONT'D)
GATX CORPORATION
(PARENT COMPANY)
BALANCE SHEETS
(IN MILLIONS)
DECEMBER 31
-----------------------
2000 1999
-------- --------
ASSETS
Cash and Cash Equivalents $ (.8) $ (1.1)
Accounts Receivable 17.0 --
Property and Equipment 13.7 12.8
Less - allowance for depreciation (7.9) (6.3)
-------- --------
5.8 6.5
Investment in Continuing Operations 676.7 626.7
Investment in Discontinued Operations 630.9 702.3
Other Assets 31.6 14.0
-------- --------
$1,361.2 $1,348.4
======== ========
LIABILITIES, DEFERRED ITEMS AND SHAREHOLDERS' Equity
Accounts Payable and Accrued Expenses $ 34.8 $ 17.1
Due to Subsidiaries 535.1 491.7
Other Deferred Items 1.8 3.6
-------- --------
Total Liabilities and Deferred Items 571.7 512.4
Shareholders' Equity
Preferred stock -- --
Common stock 35.0 34.5
Additional capital 366.1 338.7
Reinvested earnings 552.2 543.0
Accumulated other comprehensive (loss) income (34.4) 1.2
-------- --------
918.9 917.4
Less - cost of shares in treasury (129.4) (81.4)
-------- --------
Total Shareholders' Equity 789.5 836.0
-------- --------
$1,361.2 $1,348.4
======== ========
18
20
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONT'D)
GATX CORPORATION
(PARENT COMPANY)
STATEMENTS OF CASH FLOWS
(IN MILLIONS)
YEAR ENDED DECEMBER 31
-----------------------------------
2000 1999 1998
------- ------- -------
OPERATING ACTIVITIES
Income from continuing operations $ 30.8 $ 126.3 $ 114.2
Adjustments to reconcile income from continuing
operations to cash provided by continuing operations:
Depreciation 1.6 1.4 1.1
Deferred income tax benefit (9.7) (7.4) (8.2)
Share of net income of subsidiaries less
dividends received (19.1) (64.6) (84.0)
Other, including working capital (8.2) 4.3 (.2)
------- ------- -------
Net cash (used in) provided by continuing operations (4.6) 60.0 22.9
INVESTING ACTIVITIES
Proceeds from the sale of GATX Logistics, Inc. 74.7 -- --
Additions to operating lease assets and facilities (.8) (1.1) (.8)
------- ------- -------
Net cash provided by (used in) continuing operations 73.9 (1.1) (.8)
FINANCING ACTIVITIES
(Repurchase) issuance of common stock and other (20.1) (27.3) 9.0
Cash dividends to shareholders (57.4) (54.3) (49.3)
Investment in subsidiaries (35.0) -- --
Advances from continuing subsidiaries 43.4 19.5 12.6
------- ------- -------
Net cash used in financing activities of continuing
operations (69.1) (62.1) (27.7)
ADVANCES TO DISCONTINUED OPERATIONS (17.5) (13.0) (6.1)
------- ------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS FROM
CONTINUING OPERATIONS (17.3) (16.2) (11.7)
NET INCREASE IN CASH AND CASH EQUIVALENTS FROM
DISCONTINUED OPERATIONS 17.6 14.9 10.8
------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ .3 $ (1.3) $ (.9)
======= ======= =======
19
21
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONT'D)
GATX CORPORATION
(PARENT COMPANY)
STATEMENTS OF COMPREHENSIVE INCOME
(IN MILLIONS)
YEAR ENDED DECEMBER 31
-----------------------------------
2000 1999 1998
------- ------- -------
NET INCOME $ 66.6 $ 151.3 $ 131.9
Other comprehensive (loss) income, net of tax
Foreign currency (loss) gain (28.6) 5.1 (16.3)
Unrealized (loss) gain on securities, net
of reclassification adjustments (a) (7.0) 28.3 2.0
------- ------- -------
Other comprehensive (loss) income (35.6) 33.4 (14.3)
------- ------- -------
COMPREHENSIVE INCOME $ 31.0 $ 184.7 $ 117.6
======= ======= =======
(a) Reclassification adjustments:
Unrealized gain on securities $ 24.6 $ 37.3 $ 2.8
Less - reclassification adjustments for
Gains realized included in net income (31.6) (9.0) (.8)
------- ------- -------
Net unrealized (loss) gain on securities $ (7.0) $ 28.3 $ 2.0
======= ======= =======
20
22
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
GATX CORPORATION AND SUBSIDIARIES
(IN MILLIONS)
- ---------------------------------------- ---------------- -------------- -------------------- ----------------- -----------------
COL. A COL. B COL. C COL. D COL. E COL. F
- ---------------------------------------- ---------------- -------------- -------------------- ----------------- -----------------
Additions
--------------------------------
DESCRIPTION Balance at Charged to Charged to Balance
Beginning Costs and Other Accounts- Deductions at End of
of Period Expenses Describe Describe Period
- ---------------------------------------- ---------------- -------------- -------------------- ----------------- -----------------
Year ended December 31, 2000:
Allowance for possible
losses -- Note A $ 113.5 $ 17.7 (D) $ 1.0 (B) $ (37.0) (C) $ 95.2
Year ended December 31, 1999:
Allowance for possible
losses -- Note A $ 133.6 $ 11.0 $ 3.7 (B) $ (34.8) (C) $ 113.5
Year ended December 31, 1998:
Allowance for possible
losses -- Note A $ 126.6 $ 11.0 $ 4.3 (B) $ (8.3) (C) $ 133.6
Note A - Deducted from asset accounts.
Note B - Represents principally the recovery of amounts previously written off.
Note C - Represents principally reductions in asset values charged off and
uncollectible amounts.
Note D - Excludes impairment losses on operating lease equipment.
21