* 2002 first quarter income totaled $.39 per diluted share excluding gain
on sale of Terminals facility
CHICAGO, April 23 /PRNewswire-FirstCall/ -- GATX Corporation (NYSE: GMT)
today announced its 2002 first quarter results, reporting net income of
$25.1 million or $.51 per diluted share compared to net income of
$170.7 million or $3.45 per diluted share in the prior year period.
Excluding non-comparable items, GATX reported 2002 first quarter income of
$18.9 million or $.39 per diluted share compared to income of $31.6 million or
$.63 per diluted share in the prior year period. Non-comparable items include
gains on the sale of GATX Terminals-related assets in both periods and certain
non-recurring expenses primarily associated with the closing of a railcar
repair facility reported in the 2001 first quarter. All comments from here
forward in this press release reflect operations excluding the aforementioned
items.
Key elements of the 2002 first quarter include:
* Revenues in the 2002 first quarter decreased 15% from the prior year
period due to lower lease and warrant-related revenues at Financial
Services.
* Ownership costs decreased 9% due to lower average investment levels.
* Consistent with plans to improve operating efficiency, the company
substantially reduced 2002 first quarter SG&A compared to the prior year
period.
* Utilization of the company's total North American rail fleet was 91% at
quarter end compared to 92% at year end and 93% in the prior year
period. Utilization of the company's owned aircraft portfolio was 97%
at quarter end, with an additional 2% under letter of intent for lease.
* Investment volume and capital expenditures for the quarter totaled
$322 million compared to $640 million in the prior year period. The
2001 first quarter volume included $220 million of investments related
to the acquisition of the El Camino Resources' technology portfolio and
the acquisition of a rail fleet in Poland. Much of the 2002 first
quarter volume was related to scheduled aircraft deliveries.
Ronald H. Zech, chairman and CEO of GATX, stated, "The 2002 first quarter
was very challenging for GATX. While we made excellent progress in managing
our air portfolio and reducing costs across the company, our end markets have
yet to show signs of a recovery.
"Despite various reports indicating that the U.S. economy has stabilized
and entered a recovery phase, the rail market remains weak. Industrial
manufacturing capacity utilization has not rebounded and rail industry
carloadings declined year over year. As a result, railcar utilization and
pricing remain under pressure. We continue to expect that 2002 income in our
rail business will remain flat with 2001 levels.
"Air travel is slowly recovering from the sharp drop following September
11. Our air group has done an excellent job placing and financing new
deliveries and renewing existing leases. Currently, 15 of 16 scheduled
deliveries in 2002 are leased or under letter of intent. Our focus on
narrow-body aircraft is serving us well in this market. However, competition
in the industry is intense as other major lessors have been aggressively
attempting to maintain high aircraft utilization, which in turn has negatively
affected lease rates. Therefore, while the uncertainty regarding the
placement and financing of our new aircraft deliveries is abating, the income
contribution from our air business will be lower during this recovery period.
"While we are working to maximize income and returns in the face of
unfavorable market conditions, we are also faced with unprecedented volatility
in the capital markets. Credit spreads for most BBB-rated companies have
increased, and it has been especially difficult for companies in the finance
sector. The rating agency downgrades that GATX experienced in the first
quarter are having a negative impact on our near-term financial results: we
are carrying a higher than optimal cash balance in order to maintain high
liquidity, and re-accessing the public unsecured debt markets has proved to be
expensive. However, we are confident that the steps we are taking, including
the successful completion of nearly $600 million in financing in the first
quarter, will enable us to improve our financial flexibility and will lead to
lower long-term borrowing costs."
Mr. Zech concluded, "At the beginning of the year we outlined income
expectations of $2.00-$2.25 per diluted share for 2002. Based on today's
operating and capital market environment, achieving this objective will be a
significant challenge, but one that we will pursue aggressively.
Additionally, we will remain focused on our core strengths: leading positions
in our core franchise businesses; a high-quality asset base; and a commitment
to generating attractive long-term returns for our shareholders."
SEGMENTS
Consistent with the 2001 Annual Report and Form 10-K reporting format, the
financial data for Financial Services and GATX Rail reflect the consolidation
of all rail assets and related activities under a single GATX Rail segment.
Prior period results have been prepared on a comparable basis. Similarly, key
performance data for GATX Rail, including car counts and utilization figures,
incorporate all railcar assets within GATX.
FINANCIAL SERVICES
Financial Services, comprised principally of GATX Capital, reported first
quarter net income of $7.0 million compared to $10.7 million in the prior year
period. The decrease was driven by lower pre-tax spread, warrant income and
remarketing gains, partially offset by lower SG&A expenses.
Investment volume totaled $307 million compared to $483 million in the
prior year period. The prior year period included $130 million related to the
acquisition of the El Camino Resources portfolio. The 2002 first quarter
investment volume includes $173 million related to the air business,
reflecting the company's scheduled deliveries of new A320 and B737 aircraft.
Pre-tax spread totaled $32.3 million in the first quarter compared to
$41.8 million in the prior year period. Annualized pre-tax spread in the
first quarter was 4.6% of average net investments, compared to 5.9% for the
prior year period. Lower net lease income and interest income, reflecting
both pricing competition and lower investment volumes, led to the decline in
pre-tax spread.
Remarketing income, comprised of both gains on asset sales and residual
sharing fees, was $7.6 million in the first quarter compared to $14.4 million
in the prior year period. A decrease in residual sharing fees, which occur
when GATX sells an asset for a third party, contributed to the lower
remarketing income. Warrant income was $.5 million in the first quarter
compared to $15.3 million in the prior year period, reflecting reduced
valuations across many early stage companies and limited IPO activity.
GATX RAIL
GATX Rail reported income of $18.0 million in the first quarter compared
to $12.9 million in the prior year period. The primary drivers behind the
year-over-year improvement include higher remarketing gains, increased joint
venture income, and lower SG&A. These factors more than offset lower
utilization and continued pressure on lease rates.
Utilization of GATX Rail's North American fleet was 91% at the end of the
first quarter, compared to 92% at 2001 year end and 93% at the prior year
period. GATX Rail's North American fleet totaled 128,000 cars at the end of
the first quarter, down from 132,000 at the prior year period. GATX Rail
added 260 railcars in the first quarter compared to 1,300 in the prior year
period. The fleet reduction and lower new car order levels are consistent
with GATX's strategy to limit new car additions to specific customer orders,
while removing excess cars from the system.
North American manufacturing capacity utilization, one of several
benchmarks for economic activity and ultimately demand for railcars, was 74%
at the end of the first quarter, essentially flat with year-end levels. In
addition, first quarter industry railcar loadings were down 4.1% compared to
the prior year. These factors highlight that the manufacturing sector has yet
to show meaningful improvement. Until this occurs, demand for railcars and
underlying lease rate pricing will remain under pressure.
CONSOLIDATED CREDIT STATISTICS
Loss provisions totaled $17.7 million in the first quarter compared to
$21.3 million in the prior year period. Offsetting a portion of the 2002
first quarter provision was a gain of $13.9 million attributable to the
extinguishment of non-recourse debt associated with one particular credit. The
company continues to maintain an appropriate allowance position in light of
economic conditions, and the allowance for losses was 6.4% of reservable
assets at the end of the first quarter compared to 6.0% at the end of 2001 and
6.1% in the prior year period.
Net charge-offs and impairments totaled $22.1 million during the first
quarter, including $14.1 million related to the assets financed with the
aforementioned non-recourse debt. Net charge-offs and impairments were 1.2%
of average total assets on an annualized basis. In the prior year period, net
charge-offs and impairments totaled $30.0 million, or 1.6% of average total
assets on an annualized basis.
Non-performing leases and loans totaled $101.7 million or 3.6% of
Financial Services' investments compared to $96.4 million (3.4%) at the end of
2001 and $113.0 million (4.0%) in the prior year period.
COMPANY DESCRIPTION
GATX Corporation (NYSE: GMT) is a specialized finance and leasing company.
It uniquely combines asset knowledge and services, structuring expertise,
creative partnering and risk capital to provide business solutions to
customers and partners worldwide. GATX specializes in railcar and locomotive
leasing, aircraft operating leasing, information technology leasing, venture
finance and diversified finance.
TELECONFERENCE INFORMATION
GATX Corporation will host a teleconference to discuss first quarter
results. Teleconference details are as follows:
Tuesday, April 23rd
11:00 AM Eastern Time
Domestic Dial-In: 1-877-209-9922
International Dial-In: 1-612-332-0806
Replay: 1-800-475-6701 / Access Code: 635922
Call in details and real-time audio access are available at
http://www.gatx.com. Please access the call 15 minutes prior to the start
time. Following the call, a replay will be available on the same site.
FORWARD-LOOKING STATEMENTS
Certain statements within this document may constitute forward-looking
statements made pursuant to the safe harbor provision of the Private
Securities Litigation Reform Act of 19995. These statements are identified by
words such as "anticipate," "believe," "estimate," "expects," "intend,"
"predict," or "project" and similar expressions. This information may involve
risks and uncertainties that could cause actual results to differ materially
from the forward-looking statements. Although the company believes that the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, such statements are subject to risks and uncertainties
that could cause actual results to differ materially from those projected.
Risks and uncertainties include, but are not limited to, general economic
conditions, aircraft and railcar lease rate and utilization levels, conditions
in the capital markets and the potential for a downgrade in our credit rating,
either of which could have an effect on our borrowing costs or our ability to
access the markets for commercial paper or secured and unsecured debt;
dynamics affecting customers within the chemical, petroleum and food
industries; competitors in the rail and air markets who may have access to
capital at lower costs that GATX; additional potential write-downs and/or
provisions within GATX's portfolio; and general market conditions in the rail,
air, technology, venture, and other large-ticket industries.
Investor, corporate information and press releases may be found at
http://www.gatx.com. A variety of current financial information, historical
financial information, press releases and photographs are available at this
site.
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Millions, Except Per Share Amounts)
Three Months Ended
March 31
2002 2001
Gross Income
Revenues $302.8 $356.0
Gain on extinguishment of debt(a) 13.9 --
Share of affiliates' earnings 18.0 14.5
Total Gross Income 334.7 370.5
Ownership Costs
Depreciation and amortization 92.9 102.7
Interest, net 55.4 61.0
Operating lease expense 43.9 48.3
Total Ownership Costs 192.2 212.0
Other Costs and Expenses
Operating expenses 45.6 63.1
Selling, general and administrative 44.4 57.3
Provision for possible losses 17.7 21.3
Asset impairment charges 2.6 --
Fair value adjustments for derivatives 1.3 1.1
Total Other Costs and Expenses 111.6 142.8
Income from Continuing Operations
before Income Taxes 30.9 15.7
Income Taxes 12.0 11.3
Income from Continuing Operations 18.9 4.4
Discontinued Operations
Operating results, net of taxes -- 2.4
Gain on sale of portion of segment, net of taxes 6.2 163.9
Total Discontinued Operations 6.2 166.3
Net Income $25.1 $170.7
Per Share Data
Basic:
Income from continuing operations $.39 $.09
Income from discontinued operations .12 3.44
Total $.51 $3.53
Average number of common shares (in thousands) 48,776 48,278
Diluted:
Income from continuing operations $.39 $.09
Income from discontinued operations .12 3.36
Total $.51 $3.45
Average number of common shares
and share equivalents (in thousands) 49,163 49,417
Dividends declared per common share $.32 $.31
(a) Represents gain on extinguishment of non-recourse debt that financed a
transaction for which a provision for possible loss of $12.0 million
and an asset impairment charge of $2.3 million were recorded during
the current period.
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions)
March 31 December 31
2002 2001
(Unaudited)
Assets
Cash and Cash Equivalents $185.5 $222.9
Restricted Cash 123.3 124.4
Receivables
Rent and other receivables 138.1 144.2
Finance leases 827.0 868.3
Secured loans 503.2 557.4
Less - allowance for possible losses (93.6) (94.2)
1,374.7 1,475.7
Operating Lease Assets, Facilities and Other
Railcars and service facilities 2,951.7 2,958.2
Operating lease investments and other 1,955.5 1,794.0
Less - allowance for depreciation (2,032.2) (2,028.3)
2,875.0 2,723.9
Progress payments for aircraft
and other equipment 212.5 260.0
3,087.5 2,983.9
Investments in Affiliated Companies 953.4 953.0
Other Assets 394.1 349.8
$6,118.5 $6,109.7
Liabilities, Deferred Items and Shareholders' Equity
Accounts Payable $278.9 $293.6
Accrued Expenses 24.1 36.8
Debt
Short-term 85.5 328.5
Long-term:
Recourse 3,189.5 2,897.3
Nonrecourse 689.9 728.2
Capital lease obligations 151.0 163.0
4,115.9 4,117.0
Deferred Income Taxes 491.2 464.5
Other Deferred Items 318.4 316.0
Total Liabilities and Deferred Items 5,228.5 5,227.9
Total Shareholders' Equity 890.0 881.8
$6,118.5 $6,109.7
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Millions)
Three Months Ended
March 31
2002 2001
Operating Activities
Income from continuing operations $18.9 $4.4
Adjustments to reconcile income from
continuing operations
to net cash provided by continuing operations:
Realized gains on remarketing of leased equipment (9.8) (8.5)
Gains on sales of securities (.5) (15.3)
Depreciation and amortization 92.9 102.7
Provision for possible losses 17.7 21.3
Asset impairment charges 2.6 --
Payments related to litigation settlement -- (94.0)
Deferred income taxes 12.3 104.1
Gain on extinguishment of debt (13.9) --
Other, including working capital (73.1) (86.0)
Net cash provided by continuing operations 47.1 28.7
Investing Activities
Additions to equipment on lease, net of
nonrecourse financing for leveraged leases (250.6) (266.0)
Additions to operating lease assets
and facilities (13.0) (39.0)
Secured loans extended (11.8) (80.5)
Investments in affiliated companies (14.3) (133.0)
Progress payments (30.5) (34.1)
Other investments (1.4) (87.7)
Portfolio investments and capital additions (321.6) (640.3)
Portfolio proceeds 245.8 248.4
Proceeds from other asset sales 6.3 5.0
Net cash used in investing activities
of continuing operations (69.5) (386.9)
Financing Activities
Proceeds from issuance of long-term debt 581.6 62.0
Repayment of long-term debt (318.2) (304.0)
Net (decrease) increase in short-term debt (243.0) 44.5
Net decrease in capital lease obligations (12.0) (8.2)
Issuance of common stock and other 1.5 11.7
Cash dividends (15.6) (15.0)
Net cash used in financing activities
of continuing operations (5.7) (209.0)
Net Transfers to Discontinued Operations (13.6) (7.6)
Net Decrease in Cash and Cash Equivalents
from Continuing Operations (41.7) (574.8)
Proceeds from Sale of Portion of Segment 3.2 1,028.4
(38.5) 453.6
Net Decrease in Cash and Cash Equivalents
from Discontinued Operations -- (12.6)
Net (Decrease) Increase in Cash
and Cash Equivalents $(38.5) $441.0
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
2002 First Quarter
(In Millions)
GATX FINANCIAL CORPORATE DISCONTINUED GATX
RAIL SERVICES AND OTHER OPERATIONS CONSOLIDATED
Revenues
Lease Income $156.9 $98.7 $-- $-- $255.6
Marine Operating
Income -- 1.9 -- -- 1.9
Interest Income -- 15.4 -- -- 15.4
Asset Remarketing
Income (a) 3.7 7.6 -- -- 11.3
Gain on Sale
of Securities -- 0.5 -- -- 0.5
Fees -- 4.6 -- -- 4.6
Other 12.2 1.9 (0.6) -- 13.5
Total Revenues 172.8 130.6 (0.6) -- 302.8
Gain on
Extinguishment
of Debt -- 13.9 -- -- 13.9
Share of
Affiliates'
Earnings 3.7 14.3 -- -- 18.0
Total Gross
Income 176.5 158.8 (0.6) -- 334.7
Depreciation 28.9 63.7 0.3 -- 92.9
Interest Expense 16.7 35.1 3.6 -- 55.4
Operating Lease
Expense 43.1 0.7 0.1 -- 43.9
Total Ownership
Costs 88.7 99.5 4.0 -- 192.2
Operating
Expenses 40.8 4.8 -- -- 45.6
SG&A 18.3 21.7 4.4 -- 44.4
Provision for
Possible Losses 0.3 17.4 -- -- 17.7
Asset Impairment
Charges -- 2.6 -- -- 2.6
Other Expenses (0.1) 1.4 -- -- 1.3
Total Other
Costs and
Expenses 59.3 47.9 4.4 -- 111.6
Income (Loss)
from Continuing
Operations
before Income
Taxes 28.5 11.4 (9.0) -- 30.9
Income Tax
Expense
(Benefit) 10.5 4.4 (2.9) -- 12.0
Income (Loss)
from Continuing
Operations 18.0 7.0 (6.1) -- 18.9
Discontinued
Operations Gain
on Sale, net -- -- -- 6.2 6.2
Total Discontinued
Operations -- -- -- 6.2 6.2
Net Income
(Loss) $18.0 $7.0 $(6.1) $6.2 $25.1
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
2001 First Quarter
(In Millions)
GATX FINANCIAL CORPORATE DISCONTINUED GATX
RAIL SERVICES AND OTHER OPERATIONS CONSOLIDATED
Revenues
Lease Income $152.0 $136.8 $-- $-- $288.8
Marine Operating
Income -- 2.9 -- -- 2.9
Interest Income -- 19.5 -- -- 19.5
Asset Remarketing
Income(a) -- 14.4 -- -- 14.4
Gain on Sale of
Securities -- 15.3 -- -- 15.3
Fees -- 3.9 -- -- 3.9
Other 10.7 0.6 (0.1) -- 11.2
Total Revenues 162.7 193.4 (0.1) -- 356.0
Share of
Affiliates'
Earnings 2.0 12.5 -- -- 14.5
Total Gross
Income 164.7 205.9 (0.1) -- 370.5
Depreciation and
Amortization 28.3 73.8 0.6 -- 102.7
Interest Expense,
net 18.0 50.0 (7.0) -- 61.0
Operating Lease
Expense 39.2 8.3 0.8 -- 48.3
Total Ownership
Costs 85.5 132.1 (5.6) -- 212.0
Operating
Expenses 61.3 1.8 -- -- 63.1
SG&A 21.1 32.3 3.9 -- 57.3
Provision for
Possible Losses 0.1 21.2 -- -- 21.3
Asset Impairment
Charges -- -- -- -- --
Other Expenses 0.4 0.7 -- -- 1.1
Total Other Costs
and Expenses 82.9 56.0 3.9 -- 142.8
(Loss) Income
from Continuing
Operations before
Income Taxes (3.7) 17.8 1.6 -- 15.7
Income Tax
(Benefit)
Expense (0.4) 7.1 4.6 -- 11.3
(Loss) Income
from Continuing
Operations 3.3 10.7 3.0 -- 4.4
Discontinued
Operations
Operating
Results, net -- -- -- 2.4 2.4
Gain on Sale, net -- -- -- 163.9 163.9
Total
Discontinued
Operations -- -- -- 166.3 166.3
Net Income $(3.3)(b) $10.7 $(3.0) $166.3 $170.7
(a)Includes residual sharing income
(b)Excluding non-comparable items, GATX Rail's 2001 net income was
$12.9 million
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In Millions, Except Railcar Data)
1Q02 12/31/01 1Q01
Credit Statistics
Total Assets, Excluding Cash $7,392.2 $7,369.1 $7,651.1
Reservable Assets 1,468.3 1,569.9 1,779.3
Financial Services Investments 2,834.3 2,839.7 2,845.3
Allowance for Losses 93.6 94.2 108.7
Allowance for Losses as
a Percentage of Reservable
Assets 6.4% 6.0% 6.1%
Net Charge-Offs and Asset
Impairments and Write-Downs 22.1 30.0
Net Charge-Offs/Impairments
/Write-Downs as a Percentage
of Average Total Assets 1.2% 1.6%
Non-performing Investments 101.7 96.4 113.0
Non-performing Investments as
a Percentage of Financial
Services' Investments 3.6% 3.4% 4.0%
Capital Structure
Short-term Debt, Net of
Unrestricted Cash (100.0) 105.6 (7.7)
Long-term Debt:
On Balance Sheet
Recourse 3,189.5 2,897.3 2,907.2
Non-recourse 689.9 728.2 689.9
Off Balance Sheet
Recourse 1,166.2 1,183.2 1,159.8
Non-recourse 416.3 423.5 412.6
Capital Lease Obligations 151.0 163.0 156.0
Total Debt Obligations 5,512.9 5,500.8 5,317.7
Total Recourse Debt 4,406.7 4,349.1 4,215.3
Shareholders' Equity and
Allowance for Losses 983.6 976.0 1,046.0
Recourse Leverage 4.5 4.5 4.0
Asset Remarketing Income
Disposition gains on owned assets 9.8 8.5
Residual sharing fees 1.5 5.9
11.3 14.4
Portfolio Pre-Tax Spread 1Q02 1Q01
Lease Income 98.7 136.8
Interest Income 15.4 19.5
Share of Affiliates' Earnings 14.3 12.5
Interest Expense (35.1) (50.0)
Operating Lease Expense
and Depreciation (61.0) (77.0)
Total Portfolio Pre-tax Spread 32.3 41.8
Total Portfolio Pre-tax Spread
as a Percentage of Financial
Services' Investments 4.6% 5.9%
Railcar Data
North American Fleet Utilization 91% 93%
Beginning Fleet Size 128,516 132,378
Additions 256 1,321
Scrappings (786) (1,274)
Ending Fleet Size 127,986 132,425
SOURCE GATX Corporation
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http://www.gatx.com
Company News On-Call:
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CONTACT:
Robert C. Lyons, Analysts and Investors of
GATX Corporation, +1-312-621-6633
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