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 LLC, 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 North American 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, 1998, the Company's fleet was comprised of 60,573 tank cars and 16,001 railway cars of other types. A total of 31,132 cars were added to the lease fleet during the ten years ended December 31, 1998. These cars accounted for approximately 41% of total railcar lease revenues during 1998. Most of the Company's cars were built by the Company or to its specifications and the balance was 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 and coal 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.
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 1998 for newly-manufactured railcars was approximately six years. The average term of leases entered into during 1998 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 ensure optimum utilization of the North American 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 employs a variety of methods to meet its railcar financing needs. During 1998 the Company entered into a sale-leaseback transaction for $130.0 million and issued $80.0 million of unsecured notes. Prior to 1994, the Company had relied primarily on equipment trust certificates to finance railcar lease fleet additions. The Company expects that future railcar financing needs will be met primarily with a combination of secured and unsecured borrowings and sale-leaseback transactions.
Approximately 27% 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").
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; Evanston, Wyoming; 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. The subsidiary is also engaged in the manufacturing and distribution of sulphur bentonite products and micronutrients to the agricultural industry.
Fasteners
The Company's fastener business, which is conducted through several wholly-owned subsidiaries, consists of manufacturing and distributing a wide range of fasteners worldwide 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.
Other Railway Equipment and Services
A subsidiary of the Company manufactures mobile railcar moving vehicles for in-plant and yard switching and provides contract switching services to companies with on-site rail yards.
Segment Information
The principal activity of the Company's primary industry segment is railcar leasing, services and sales. Other activities of the Company, as described above, plus corporate headquarters items, are shown as All Other in the following table:
Geographic Information
The following table presents geographic information for the Company. Revenues are attributed to countries based on the location of customers.
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.
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 principal competitors are General American Transportation Corporation (including its Canadian affiliate, Canadian General Transit Company, Limited), General Electric Railcar Services Corporation, and ACF Industries, Incorporated. 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, 1998, the Company had approximately 4,960 employees.
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 1998 the Company spent approximately $5.7 million on remediation and related matters, compared with $7.8 million and $3.5 million in 1997 and 1996, respectively. The Company expects to spend approximately $9.9 million in 1999 on similar activities.
In October 1990, the Pennsylvania Office of Attorney General ("OAG") and the Pennsylvania Department of Environmental Resources ("DER") commenced an investigation of alleged violations of the Pennsylvania Solid Waste Management Act ("Act") with respect to the handling of solid and hazardous waste material at the Company's railcar repair facility in Altoona, Pennsylvania. At the request of the DER, the Company cooperated voluntarily in a site assessment of areas of potential environmental contamination at the facility. The Company and the OAG reached a plea agreement in connection with the investigation, which was approved by the Court of Common Pleas of Blair County, Pennsylvania, on November 20, 1998. Pursuant to the agreement, the Company was charged with four third-degree misdemeanor violations of the Act. The Company agreed to make contributions totaling $455,735 to three local government agencies to remediate the site, to reimburse $82,077 in investigation and grand jury costs, and to cooperate with the OAG's continuing investigation. The Company was also placed on probation for six months. The Company believes that current operations at the facility are in substantial compliance.
The Company has been designated as a Potentially Responsible Party ("PRP") by the EPA at two sites: Auto Ion Chemical Company, Kalamazoo, Michigan 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 believes that amounts accrued for remedial activities and environmental liabilities (which in the aggregate are not material) are adequate.
ITEM 2.
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 85% of productive capacity for railcar manufacturing, 75% for railcar servicing and repair, 80% for sulphur processing, 85% for fastener production, 85% for containment vessel head manufacturing, and 95% for liquefied petroleum gas storage.
Railcars
The Company owns approximately 86 percent of its total lease fleet of 76,574 railcars, of which 60,573 are tank cars and 16,001 are other railway freight cars. Of the approximately 65,670 owned cars, 48,140 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; Evanston, Wyoming; 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. The Company also owns facilities in North America for the manufacture and distribution of sulphur bentonite products and micronutrients.
Fasteners
The Company owns (either directly or through its subsidiaries) fastener manufacturing facilities in Ashland, Ohio; Milton, Ontario; Montreal, Quebec; and Gaffney, South Carolina. In addition, the Company leases several small plants in the United States, Canada and Sweden.
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.
Other Railway Equipment Facilities
A subsidiary of the Company owns a mobile railcar moving vehicle manufacturing facility in LaGrange, Georgia.
Other Properties
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.
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, the ultimate resolution of these matters will not have a material effect on the Company's consolidated financial position, results of operations or liquidity. See discussion of Environmental Matters in Item 1 of this Form 10-K.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Not applicable.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements - --------------------------
This annual report on Form 10-K for the year ended December 31, 1998 contains forward-looking statements that involve substantial risks and uncertainties. Such statements include, without limitation, statements regarding the estimated costs to resolve the Company's Year 2000 issues, the time frame necessary for the Company to achieve Year 2000 compliance and the likely results of non-compliance by the Company or by one or more of the its customers, suppliers or strategic business partners. Important factors that could cause the Company's actual results to differ materially from those implied by such forward-looking statements include: The Company does not know the full scope of its Year 2000 issues because it has not yet completed the assessment phase of its compliance program. The Company cannot ascertain the magnitude of any Year 2000 problems that may be resident in the systems of its material suppliers, or the impact any such problems could have on such suppliers' ability to continue to provide inventory to the Company on a timely manner. The occurrence of Year 2000 related failures in the computer and information systems of the Company or any of the Company's significant suppliers or customers could have a material adverse effect on the business, results of operations or financial condition of the Company.
1998 versus 1997
Results of Operations - ---------------------
Services revenues increased $19.9 million, primarily due to the effect of railcars added to the lease fleet in 1997 and 1998.
Net sales revenues increased $14.4 million. The increase primarily resulted from the Company's sulphur service processing operations with the remaining increase primarily due to increased fastener sales, partially offset by lower sales of covered hopper railcars.
Gain on sale of assets increased due to the sale of certain future income rights retained as a condition of the May 1996 sale of a storage facility used in the liquefied petroleum gas storage operations.
Gross margin percentages increased from the comparable period in 1997 due to decreased railcar maintenance expenses, and improved sale margins for tank cars, sulphur products and fasteners.
Financial Condition - -------------------
Operating activities provided $256.0 million of cash in 1998. These funds, along with the issuance of unsecured debt and the sale-leaseback transaction, were used to provide financing for railcar additions, service borrowed debt obligations, advance funds to parent 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 1998, the Company spent $259.0 million for the construction and purchase of railcars and other fixed assets and $22.7 million for the purchase of assets engaged in the manufacturing and distribution of sulphur bentonite and micronutrients, and other assets.
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 1998, the Company issued $80.0 million in unsecured notes and entered into a sale-leaseback transaction for $130.0 million. Other financing activities of the Company included $188.8 million for principal repayments on borrowed debt and $48.0 million for cash dividends. Net cash used in financing activities was $26.2 million.
Management expects that the future cash to be provided by operating activities, long-term financings, and collection of funds previously advanced to parent will be adequate to provide for the continued expansion of the Company's business and enable it to meet its debt service obligations.
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, 1998:
The minimum future lease rentals above relate to leases in effect at December 31, 1998. Based upon its historical experience, the Company expects that the railcars (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 cannot be ascertained and are not reflected above.
The Company has consistently maintained high fleet utilization. The Company's lease fleet utilization has averaged 98% during the last five years. 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. Foreign currency forward contracts, all with initial maturities of less than one year, amounted to $3.4 million and $1.5 million at December 31, 1998 and 1997, respectively.
Year 2000 - ---------
Because of the potential importance to the Company of Year 2000 questions, the Company has established a Year 2000 program to determine the Company's state of readiness and the costs that it anticipates it will have to incur in light of the possible problems.
Based on its assessment to date, the Company has determined that its information processing and delivery systems are not yet capable of handling certain Year 2000 processing tasks. The Company believes its Year 2000 program will mitigate any material Year 2000 risks. However, if this program is not implemented or completed on a timely basis, Year 2000 problems could have a material adverse impact on the operations of the Company.
The Company's Year 2000 program involves the following phases: assessment, remediation, testing, and final implementation. As part of the assessment phase, the Company reviewed its hardware, software, and operating systems to identify potential problems and to prioritize remedial actions to be taken. The Company reviewed the resources, both financial and personnel, necessary to address the Year 2000 problems, assigned responsibility for implementation of the Year 2000 program to a senior manager, and has provided for regular reporting and monitoring of the Year 2000 program by senior management.
The Company's Year 2000 assessment indicated that the Company's accounting, invoicing, general business and fleet management systems would be affected by Year 2000 problems. The Company has begun the necessary corrective work on these systems. This work is approximately 85% complete. The Company's timetable calls for this work to be substantially completed by April 1, 1999, with testing of the completed systems to be done by July 1, 1999.
The Company does not believe its main products (i.e., tank cars and other rail cars) have any material Year 2000 exposures. Therefore, the Company does not believe Year 2000 problems present a material exposure to the Company in this area.
Similarly, no material problems have been identified in connection with the Company's production machinery and equipment.
As part of its Year 2000 program, the Company has been gathering information about how Year 2000 issues might affect its significant suppliers. At this point, the Company does not know of any Year 2000 problem with any suppliers that could materially impact the Company's results of operations. However, the Company cannot be sure this will be true and the potential impact of any problems is difficult to determine.
The Company's systems interact directly with certain third parties, including financial institutions. The Company is working with these third parties to minimize any Year 2000 problems. The Company understands that these third parties are in the process of addressing their Year 2000 problems and that they believe their problems will be addressed on a timely basis.
The Company is using both in-house resources and outside consultants to implement the necessary changes required by its Year 2000 program. The total cost of the program is estimated to be $4.8 million, which will be funded from operating cash flow. Through December 31, 1998, the Company has spent approximately $2.6 million related to its Year 2000 program. Of this amount $2.4 million has been expensed and $0.2 million has been capitalized. Of the remaining amount, approximately $0.5 million is expected to be capitalized with the rest being expensed.
While management of the Company believes that its Year 2000 program will be effective to resolve all material Year 2000 problems in a timely manner, the Company has not yet completed all phases of its program. If the Company does not complete its program or if the program is not completed on time, the Company could experience delays in taking customer orders, invoicing customers, and other fleet management work. In addition, disruptions in the general economy resulting from Year 2000 issues could materially adversely affect the Company. The amount of any potential liability or lost revenue from any of these cannot be reasonably estimated at this time.
At present, the Company's Year 2000 program does not include contingency plans in the event that all phases of the Year 2000 program are not timely completed. The Company will continue to evaluate the need for contingency plans as it implements its Year 2000 program.
New Accounting Pronouncements - -----------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities", which the Company is required to adopt effective January 1, 2000. This Statement will require the Company to recognize all derivatives on the balance sheet at fair value. The Company does not believe the effect of adoption will be material to its financial position or results of operations.
1997 versus 1996
Results of Operations - ---------------------
Services revenues increased $33.4 million, primarily due to the effect of railcars added to the lease fleet.
Net sales revenues increased $128.3 million, primarily due to increased railcar sales.
Gross margin percentages decreased from the comparable period in 1996 due to increased car maintenance expenses, increased railcar rental expenses from previous years' sale-leaseback transactions and lower margins on new railcars sold that were manufactured by a third-party.
Gain on sale of assets decreased $9.7 million, primarily due to a gain on the sale of a storage facility used in the liquefied petroleum gas storage operations in 1996. Other income decreased $3.1 million, primarily due to the receipt of certain fees in connection with the termination of an agreement pursuant to which a subsidiary of the Company was to acquire Hawker Siddeley Canada Inc.
Financial Condition - -------------------
Operating activities provided $217.4 million of cash in 1997. These funds, along with the issuance of unsecured debt, were used to provide financing for railcar additions, service borrowed debt obligations, advance funds to parent, and pay dividends to the Company's stockholder.
In 1997, the Company spent $261.3 million for the construction and purchase of railcars and other fixed assets and $10.6 million for the purchase of assets engaged in the manufacturing and distribution of sulphur bentonite and micronutrients.
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 1997, the Company issued $400.0 million in unsecured notes. Other financing activities of the Company included $210.1 million for principal repayments on borrowed debt and $70.0 million for dividends. Net cash provided by financing activities was $119.9 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.
ITEM 7A.
ITEM 7A. DISCLOSURES ABOUT MARKET RISK
The market risk inherent in the Company's financial instruments is the potential loss in fair value arising from adverse changes in interest rates. Under its current policies, the Company does not use interest rate derivative instruments to manage exposure to interest rate changes.
The following table provides information about the Company's debt obligations that are sensitive to changes in interest rates. The table presents principal cash flows and related weighted-average interest rates by expected maturity dates and estimated fair value of the Company's debt obligations.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
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, 1998 and 1997, 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, 1998. 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, 1998 and 1997, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois March 8, 1999
UNION TANK CAR COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME
(Dollars in Thousands)
See Notes to Consolidated Financial Statements.
UNION TANK CAR COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
See Notes to Consolidated Financial Statements.
UNION TANK CAR COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY Years Ended December 31, 1998, 1997 and 1996
(Dollars in Thousands)
See Notes to Consolidated Financial Statements.
UNION TANK CAR COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
See Notes to Consolidated Financial Statements
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 LLC ("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.
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, 1998, 1997 and 1996, MIC absorbed a gain of $1,968, a gain of $504, and a loss of $46, 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 7.
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.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
UNION TANK CAR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Railcar Lease Data
Railcars are leased directly to several hundred shippers, located throughout North America. The Company leases to a wide variety of customers, and no customer accounted for more than 5% of consolidated lease revenues. Each lease involves one to several thousand cars, normally for periods ranging from one to twenty years. The average term of leases entered into during 1998 for newly-manufactured cars was approximately six years. The average term of leases entered into during 1998 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 lease rentals to be received on the railcar lease fleet (including railcars leased from others) were as follows as of December 31, 1998:
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:
UNION TANK CAR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Railcar Lease Fleet and Fixed Assets
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 at December 31, 1998:
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:
6. Lease Commitments
The Company as lessee has entered into long-term leases for certain railcars and various manufacturing, office and warehouse facilities.
The railcar lease fleet includes the following capitalized leases:
In 1998, 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 $130,018 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, 2009, (ii) March 30, 2014 (the base term lease expiration date) and (iii) March 30, 2021 (the end of the optional lease renewal term).
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).
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.
UNION TANK CAR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
At December 31, 1998, future minimum rental commitments for all noncancelable leases are as follows:
Minimum future sublease revenue to be received under existing capitalized and sale-leaseback leases as of December 31, 1998 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.
Sublease rentals recorded as revenue for the years ended December 31, 1998, 1997 and 1996 were approximately $71,000, $65,000 and $60,000, respectively.
Rentals charged to costs and expenses were $57,191, $48,101, and $44,581 in 1998, 1997, and 1996, respectively.
UNION TANK CAR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Borrowed Debt
Equipment obligations are secured by railcars with an original cost of $941,550 and $1,246,207 at December 31, 1998 and 1997, respectively. The above equipment obligations include $188 and $232 of capitalized leases at December 31, 1998 and 1997, respectively.
In August and September 1998, the Company issued an aggregate total of $80,000 principal amount of unsecured Medium-Term Notes. The notes bear interest at rates between 5.78% and 6.51% per year, with maturity ranging from three to ten years. Interest on $55,000 principal amount of notes issued in August 1998 will be payable semiannually on February 15 and August 15, commencing on February 15, 1999. Interest on $25,000 principal amount of notes issued in September 1998 will be payable semiannually on March 1 and September 1, commencing on March 1, 1999. The notes are non-redeemable and not subject to a sinking fund. These notes were issued pursuant to a registration statement filed by the Company with the Securities and Exchange Commission on January 28, 1998, covering an aggregate $300,000 of debt securities and pass through certificates which may be issued from time to time.
The Company's Canadian subsidiaries have approximately $12,099 of credit lines available on a no-fee basis. No amounts were outstanding as of December 31, 1998 and 1997.
Maturities of debt obligations for the years 1999 - 2003 are $260,059 as follows: $46,951 in 1999, $44,872 in 2000, $79,614 in 2001, $38,574 in 2002 and $50,048 in 2003.
Subsequent to year end, the Company issued $45,000 principal amount of unsecured Medium-Term Notes. The notes bear interest at rates between 6.00% and 6.35% with maturity ranging from three to nine years. Interest will be payable semiannually on March 1 and September 1, commencing September 1, 1999.
UNION TANK CAR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The estimated fair value of borrowed debt is as follows:
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.
8. 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.
The following summarizes the provision for income taxes:
UNION TANK CAR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In 1998, 1997, and 1996 the Company paid foreign withholding taxes of $2,594, $1,481, and $844, respectively.
Income tax expense is based upon domestic and foreign income before taxes as follows:
Income tax effects of significant items which resulted in effective tax rates of 36.6% in 1998, 36.1% in 1997, and 36.8% in 1996 follow:
The excess tax on foreign income represents differences due to higher foreign tax rates and foreign tax credits not benefited.
UNION TANK CAR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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, 1998 and 1997 net deferred income tax liabilities of $437,693 and $494,871 shown in the accompanying consolidated balance sheet are composed of $476,933 and $515,207 in deferred tax liabilities and deferred investment tax credits of $15,398 and $17,904, partially offset by $54,638 and $38,240 in deferred tax assets, respectively. These deferred income tax assets and (liabilities) result from the following temporary differences:
The above assets exclude certain state deferred income tax assets related to loss carryforwards (which expire over the next ten years) in the gross amount of $5,200 at December 31, 1998 and $7,200 at December 31, 1997.
9. 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.
UNION TANK CAR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. 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 1998, 1997 and 1996 was $8,175, $6,830 and $6,269, respectively.
As of December 31, 1998, 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 (income) expense was ($191), ($59) and $56 for 1998, 1997 and 1996, respectively. Accrued defined benefit pension liability recognized in the consolidated balance sheet was $1,610 and $2,344 at December 31, 1998 and 1997, respectively.
11. 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, 1998 and 1997, the liability for postretirement health care and life insurance benefits was $4,003 and $3,937 respectively, and was included in accrued liabilities in the consolidated balance sheet.
Expense related to these benefits was $422, $333 and $363 in 1998, 1997, and 1996, respectively.
12. 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.
UNION TANK CAR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Summarized Financial Information of Procor Limited
Summarized consolidated financial information for the Company's wholly-owned subsidiary, Procor Limited, is as follows:
Services and net sales in 1998, 1997 and 1996 includes $23,497, $18,795 and $21,982, respectively, representing the sale of railcars to Procor Limited's parent.
14. Related Party Transactions
The following table sets forth the major related party transaction amounts included in the consolidated financial statements.
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 $110,481 and $170,550 at December 31, 1998 and 1997, 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 $20,459 and $7,155 at December 31, 1998 and 1997, 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 $1,128 in 1998, $896 in 1997 and $907 in 1996 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.
During 1998, the Company purchased from an affiliate all of the capital stock of a company that manufactures mobile railcar moving vehicles and provides contract switching services to companies with on-site rail yards. The purchase price was equal to the appraised value of approximately $60,000. Since the historical cost of the net assets of the company acquired was less than the purchase price and because the seller was a related party, a non-cash dividend of $41,339 was recorded.
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, 1998 and 1997 was $57,614 and $54,014, respectively, which represents 80% ownership in this partnership. The minority partner's interest in the partnership at December 31, 1998 and 1997 is $14,403 and $13,503, respectively, which is included in accrued liabilities. The minority interest in income, $900, $887 and $912 for the years ended December 31, 1998, 1997 and 1996, respectively, is reflected in other income.
15. Derivative Financial Instruments
The Company's Canadian subsidiaries periodically enter into foreign currency forward contracts to hedge against U.S. dollar exposures. Foreign currency forward contracts, all with initial maturities of less than one year, amounted to $3,365 and $1,500 at December 31, 1998 and 1997, respectively.
16. Quarterly Data (Unaudited)
UNION TANK CAR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. Supplementary Disclosures of Cash Flow Information
Unrealized foreign currency translation gains and losses, which are non-cash items, are excluded from the change in advances to parent.
18. Industry Segment Information
The Company's industry and geographic data are found under the "Segment Information" caption of Item 1 of this Form 10-K. The aforementioned data are an integral part of the Notes to Consolidated Financial Statements.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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. Mr. Fischl was appointed a Vice President of The Marmon Group, Inc. ("Marmon") in May, 1998.
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 Corporation, a manufacturer of electronic components.
Robert C. Gluth
Mr. Gluth is Executive Vice President and a Director of Marmon Industrial LLC ("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 Marmon. Mr. Gluth is also Treasurer of each of TMC, MIC and Marmon.
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.
There are no 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.
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.
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, 1998, 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 1998 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 14 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
* Represents the aggregate amounts of Company contributions to defined contribution plans on behalf of each of the named individuals.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
MIC, a Delaware single member limited liability company 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.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See Note 14 to the consolidated financial statements included in Item 8 of this Form 10-K for a description of certain related party transactions.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
b) Reports on Form 8-K
On November 16, 1998, the Company filed a report on Form 8-K disclosing that on September 10, 1998 the Company had entered into a Selling Agency Agreement with Salomon Smith Barney Inc. and Morgan Stanley & Co. Incorporated relating to the issuance and sale by the Company of up to $70 million principal amount of Medium-Term Notes, Series C.
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, Director and Treasurer
Dated: March 8, 1999
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/ Robert A. Pritzker President and Director March 8, 1999 - ------------------------ Robert A. Pritzker (principal executive officer)
/s/ Robert C. Gluth Executive Vice President, March 8, 1999 - ------------------------ Robert C. Gluth Director and Treasurer (principal financial officer and principal accounting officer)
/s/ Kenneth P. Fischl Director and President, Tank March 8, 1999 - ------------------------ Kenneth P. Fischl Car Division
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 12 to the consolidated financial statements)........... 44
Exhibit 21 Subsidiaries of the registrant....................... 45
Exhibit 23 Consent of Ernst & Young LLP, Independent Auditors... 46
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.