CHICAGO, April 24 /PRNewswire-FirstCall/ -- GATX Corporation (NYSE: GMT)
today announced its 2003 first quarter results. For the 2003 first quarter,
GATX reported net income of $1.8 million or $.04 per diluted share. The 2003
first quarter results include an $11 million after-tax, or $.22 per diluted
share, loss provision related to the company's air portfolio. In the 2002
first quarter, GATX reported a net loss of $9.8 million or $.20 per diluted
share. The 2002 first quarter results included a $34.9 million, or $.72 per
diluted share, goodwill impairment charge related to the adoption of SFAS 142.
Ronald H. Zech, chairman and president of GATX, stated, "Results in the
2003 first quarter reflect continued uncertainty and softness in our core
markets. In Rail, however, we experienced increased fleet utilization and
customer order activity. While this is a positive development, the
competitive pressure on lease rates continues.
"The air industry experienced another difficult quarter, with the effects
of the Iraq war and SARS outbreak combining to present carriers with
significant additional operating challenges. During the quarter we recorded
an $11 million after-tax loss provision related to a carrier bankruptcy
filing. While pressure in our air business continues, we have made progress
on several fronts: we have now placed all six of our scheduled 2003 new
aircraft deliveries; our owned fleet is 99% utilized; and our 2003 aircraft
renewals are nearly complete.
"At the beginning of the year we indicated that we expected 2003 earnings
to be in the range of $1.30 per diluted share absent a material change in
operating conditions or air-related charges. Based on these assumptions, and
excluding the 2003 first quarter air-related loss provision, our expectations
are unchanged."
GATX RAIL
GATX Rail reported 2003 first quarter income of $9.6 million compared to a
$16.9 million loss in the prior year period and income of $6.3 million in the
2002 fourth quarter. The 2002 first quarter results included the
aforementioned goodwill impairment charge. GATX Rail's utilization, lease
renewal and assignment activity, and new car placements all were above
expectations during the first quarter. Lease rate pricing, however, remains
weak in this market.
GATX Rail's North American fleet totals 106,000 cars, and utilization of
this fleet was 92% at the end of the first quarter, up from 90% at the end of
first quarter 2002 and 91% at the end of 2002. The increase in utilization
reflects positive activity among GATX Rail's customer base, an increase in the
active car count, and a continuation of planned car scrapping.
North American manufacturing capacity utilization, as reported by the
Federal Reserve, was 75%, flat with the prior quarter and prior year period.
Industry-wide chemical shipments were up 4% in the quarter compared to the
prior year period, although the growth in comparable shipments slowed in
March.
FINANCIAL SERVICES
Financial Services reported a 2003 first quarter loss of $1.2 million
compared to income of $7.0 million in the prior year period and a loss of
$31.1 million in the 2002 fourth quarter. The 2003 first quarter results
reflect continued weakness in Financial Services' core air and technology
markets, and an $11 million after-tax loss provision related to one air
carrier. The loss provision fully covers a note receivable from Air Canada,
which recently filed for bankruptcy. The note is related to a previously
restructured lease.
GATX has made available an updated version of its air presentation at
http://www.gatx.com . Key points in the presentation include fleet utilization of
99%, placement or letters of intent on all six 2003 scheduled new aircraft
deliveries, and placement or letters of intent on five of the eight 2003
scheduled existing lease renewals.
Investment volume for the first quarter totaled $201 million compared to
$308 million in the prior year period. The reduction in 2003 volume is
primarily a result of fewer new aircraft deliveries and lower progress
payments compared to 2002.
Remarketing income, comprised of both gains on asset sales and residual
sharing fees, was $10.2 million in the first quarter compared to $7.6 million
in the prior year period. Gains were primarily concentrated in GATX's
specialty portfolio.
CREDIT STATISTICS
At the end of the 2003 first quarter, the allowance for losses was 8.4% of
reservable assets compared to 6.4% in the prior year period and 6.6% at the
end of 2002. The increase in the loss provision is primarily related to the
air-related provision taken in the 2003 first quarter.
Net charge-offs and impairments totaled $7.9 million during the 2003 first
quarter, or 0.4% of average total assets on an annualized basis. In the prior
year period, net charge-offs and impairments totaled $22.1 million (1.2%).
Non-performing leases and loans at the end of the 2003 first quarter
totaled $163.5 million, or 5.7% of Financial Services' investments, compared
to $101.7 million (3.5%) at the end of the prior year period and $94.9 million
(3.3%) at the end of 2002. The increase in non-performing leases and loans is
primarily related to placing the Air Canada note and one A320 aircraft on non-
performing status during renegotiation.
COMPANY DESCRIPTION
GATX Corporation (NYSE: GMT) is a specialized finance and leasing company
combining asset knowledge and services, structuring expertise, partnering and
risk capital to provide business solutions to customers and partners
worldwide. GATX specializes in railcar and locomotive leasing, aircraft
operating leasing, and information technology leasing.
TELECONFERENCE INFORMATION
GATX Corporation will host a teleconference to discuss first quarter
results. Teleconference details are as follows:
Thursday, April 24th
10:00 AM Eastern Time
Domestic Dial-In: 1-800-706-6082
International Dial-In: 1-706-634-7421
Replay: 1-800-642-1687 / Access Code: 9805691
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.
UPDATE ON AIR PORTFOLIO
GATX Corporation has updated its Air portfolio presentation, and the
slides are currently available at http://www.gatx.com or by calling the GATX Investor
Relations Department.
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 1995. 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; regulatory rulings that may impact the economic value of assets;
competitors in the rail and air markets who may have access to capital at
lower costs than GATX; additional potential write-downs and/or provisions
within GATX's portfolio; impaired asset charges; and general market conditions
in the rail, air, technology, venture, and other large-ticket industries.
Investor, corporate, financial, historical financial, photographic and
news release information may be found at http://www.gatx.com .
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Millions, Except Per Share Data)
Three Months Ended
March 31
2003 2002
Gross Income
Lease income $239.7 $255.6
Marine operating revenue 4.2 1.9
Interest income 9.6 15.4
Asset remarketing income 10.3 11.3
Gain on sale of securities .4 .5
Fees 6.6 5.6
Other 16.7 11.4
Revenues 287.5 301.7
Gain on extinguishment of debt .7 13.9
Share of affiliates' earnings 18.5 18.0
Total Gross Income 306.7 333.6
Ownership Costs
Depreciation 79.0 88.6
Interest, net 54.1 53.2
Operating lease expense 46.1 41.5
Total Ownership Costs 179.2 183.3
Other Costs and Expenses
Maintenance expense 40.3 37.8
Marine operating expenses 3.2 1.9
Other operating expenses 11.8 9.5
Selling, general and administrative 44.1 48.6
Provision for possible losses 18.7 17.7
Asset impairment charges 3.6 2.6
Fair value adjustments for derivatives 2.1 1.3
Total Other Costs and Expenses 123.8 119.4
Income from Continuing Operations before
Income Taxes and Cumulative Effect of
Accounting Change 3.7 30.9
Income Tax Provision 1.9 12.0
Income from Continuing Operations before
Cumulative Effect of Accounting Change 1.8 18.9
Discontinued Operations
Gain on sale of portion of segment, net of taxes - 6.2
Total Discontinued Operations - 6.2
Income before Cumulative Effect of Accounting
Change 1.8 25.1
Cumulative Effect of Accounting Change - (34.9)
Net Income (Loss) $1.8 $(9.8)
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Millions, Except Per Share Data)
(Continued)
Three Months Ended
March 31
2003 2002
Per Share Data
Basic:
Income from continuing operations before
cumulative effect of accounting change $.04 $.39
Income from discontinued operations - .13
Cumulative effect of accounting change - (.72)
Total $.04 $(.20)
Average number of common shares (in thousands) 49,063 48,776
Diluted:
Income from continuing operations before
cumulative effect of accounting change $.04 $.39
Income from discontinued operations - .13
Cumulative effect of accounting change - (.72)
Total $.04 $(.20)
Average number of common shares and common
share equivalents (in thousands) 49,063 49,163
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In Millions)
March 31 December 31
2003 2002
Assets
Cash and Cash Equivalents $137.4 $231.1
Restricted Cash 191.3 140.9
Receivables
Rent and other receivables 82.1 97.8
Finance leases 670.0 713.0
Loans 396.4 434.2
Less: allowance for possible losses (97.0) (82.2)
1,051.5 1,162.8
Operating Lease Assets, Facilities and Other
Railcars and service facilities 3,113.8 3,076.9
Operating lease investments and other 2,319.9 2,250.1
Less: allowance for depreciation (2,019.6) (2,008.1)
3,414.1 3,318.9
Progress payments for aircraft and other
equipment 120.6 140.9
3,534.7 3,459.8
Investments in Affiliated Companies 798.3 850.9
Recoverable Income Taxes 150.1 129.8
Goodwill, Net 62.5 62.5
Other Investments 92.3 96.1
Other Assets 273.5 294.4
$6,291.6 $6,428.3
Liabilities and Shareholders' Equity
Accounts Payable and Accrued Expenses $340.4 $399.5
Debt
Short-term 14.5 13.7
Long-term:
Recourse 3,401.4 3,487.9
Nonrecourse 651.9 594.6
Capital lease obligations 132.0 143.7
4,199.8 4,239.9
Deferred Income Taxes 634.2 640.0
Other Liabilities 328.1 347.3
Total Liabilities 5,502.5 5,626.7
Total Shareholders' Equity 789.1 801.6
$6,291.6 $6,428.3
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In Millions)
Three Months Ended
March 31
2003 2002
Operating Activities
Income (loss) from continuing operations,
including accounting change $1.8 $(16.0)
Adjustments to reconcile income (loss)
from continuing operations to net cash
provided by continuing operations:
Realized gains on remarketing of leased
equipment (8.9) (9.8)
Gain on sales of securities (.4) (.5)
Depreciation 83.1 92.9
Provision for possible losses 18.7 17.7
Asset impairment charges 3.6 2.6
Deferred income taxes 24.0 12.3
Gain on extinguishment of debt (.7) (13.9)
Share of affiliates' earnings, net of
dividends (14.0) (13.5)
Cumulative effect of accounting change - 34.9
Other, including working capital (50.9) (44.2)
Net cash provided by continuing operations 56.3 62.5
Investing Activities
Additions to equipment on lease, net of
nonrecourse financing for leveraged leases,
operating lease assets and facilities (165.9) (263.6)
Loans extended (29.0) (11.8)
Investments in affiliated companies (14.9) (14.3)
Progress payments (17.2) (30.5)
Other investments (23.0) (1.4)
Portfolio investments and capital additions (250.0) (321.6)
Portfolio proceeds 222.3 239.2
Proceeds from other asset sales 9.4 3.0
Net cash used in investing activities of
continuing operations (18.3) (79.4)
Financing Activities
Net proceeds from issuance of long-term debt 243.2 576.1
Repayment of long-term debt (299.2) (318.2)
Net increase (decrease) in short-term debt 1.4 (243.0)
Net decrease in capital lease obligations (11.4) (12.0)
Issuance of common stock and other .4 1.5
Cash dividends (15.7) (15.6)
Net cash used in financing activities of
continuing operations (81.3) (11.2)
Net Transfers to Discontinued Operations - (13.6)
Net Decrease in Cash and Cash Equivalents from
Continuing Operations (43.3) (41.7)
Proceeds from Sale of a Portion of Segment - 3.2
Net Decrease in Cash and Cash Equivalents $(43.3) $(38.5)
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
2003 First Quarter
(In Millions)
GATX Financial Corporate GATX
Rail Services and Other Consolidated
Gross Income
Lease income $158.0 $81.7 $- $239.7
Marine operating revenue - 4.2 - 4.2
Interest income - 9.6 - 9.6
Asset remarketing income .1 10.2 - 10.3
Gain on sale of securities - .4 - .4
Fees .9 5.7 - 6.6
Other 11.9 5.2 (.4) 16.7
Revenues 170.9 117.0 (.4) 287.5
Gain on extinguishments
of debt - .7 - .7
Share of affiliates'
earnings 2.1 16.4 - 18.5
Total Gross Income 173.0 134.1 (.4) 306.7
Ownership Costs
Depreciation 29.1 49.9 - 79.0
Interest, net 17.0 32.4 4.7 54.1
Operating lease expense 43.8 2.3 - 46.1
Total Ownership Costs 89.9 84.6 4.7 179.2
Other Costs and Expenses
Maintenance expense 39.4 .9 - 40.3
Marine operating expenses - 3.2 - 3.2
Other operating expenses 10.7 1.1 - 11.8
Selling, general and
administrative 18.3 21.4 4.4 44.1
Provision for possible
losses (.4) 19.1 - 18.7
Asset impairment charges - 3.6 - 3.6
Fair value adjustments
for derivatives - 2.1 - 2.1
Total Other Costs and
Expenses 68.0 51.4 4.4 123.8
Income (Loss) before Income
Taxes 15.1 (1.9) (9.5) 3.7
Income Tax Provision
(Benefit) 5.5 (.7) (2.9) 1.9
Net Income (Loss) $9.6 $(1.2) $(6.6) $1.8
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
2002 First Quarter
(In Millions)
GATX Financial Corporate Discontinued GATX
Rail Services and Other Operations Consolidated
Gross Income
Lease income $156.9 $98.7 $- $- $255.6
Marine operating
revenue - 1.9 - - 1.9
Interest income - 15.4 - - 15.4
Asset remarketing
income 3.7 7.6 - - 11.3
Gain on sale
of securities - .5 - - .5
Fees 1.0 4.6 - - 5.6
Other 10.1 1.9 (.6) - 11.4
Revenues 171.7 130.6 (.6) - 301.7
Gain on
extinguishments
of debt - 13.9 - - 13.9
Share of
affiliates'
earnings 3.7 14.3 - - 18.0
Total Gross
Income 175.4 158.8 (.6) - 333.6
Ownership Costs
Depreciation 26.1 62.5 - - 88.6
Interest, net 14.5 35.1 3.6 - 53.2
Operating lease
expense 42.9 (1.4) - - 41.5
Total Ownership
Costs 83.5 96.2 3.6 - 183.3
Other Costs and
Expenses
Maintenance
expense 37.6 .2 - - 37.8
Marine operating
expenses - 1.9 - - 1.9
Other operating
expenses 6.8 2.7 - - 9.5
Selling, general
and administrative 18.8 25.0 4.8 - 48.6
Provision for
possible losses .3 17.4 - - 17.7
Asset impairment
charges - 2.6 - - 2.6
Fair value
adjustments
for derivatives (.1) 1.4 - - 1.3
Total Other Costs
and Expenses 63.4 51.2 4.8 - 119.4
Income (Loss) from
Continuing
Operations before
Income Taxes and
Cumulative Effect
of Accounting
Change 28.5 11.4 (9.0) - 30.9
Income Tax
Provision
(Benefit) 10.5 4.4 (2.9) - 12.0
Income (Loss) from
Continuing
Operations before
Cumulative Effect
of Accounting
Change 18.0 7.0 (6.1) - 18.9
Discontinued
Operations
Gain on sale of
portion of
segment, net
of taxes - - - 6.2 6.2
Total Discontinued
Operations - - - 6.2 6.2
Income (Loss)
before Cumulative
Effect of
Accounting Change 18.0 7.0 (6.1) 6.2 25.1
Cumulative Effect
of Accounting
Change (34.9) - - - (34.9)
Net (Loss)
Income $(16.9) $ 7.0 $(6.1) $6.2 $(9.8)
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In Millions, Except Railcar Data)
1Q03 12/31/2002 1Q02
Total Assets, Excluding Cash (a) $7,280.8 $7,428.5 $7,172.0
Reservable Assets 1,148.5 1,245.0 1,454.5
Financial Services Investments 2,851.3 2,900.9 2,898.7
Allowance for Losses 97.0 82.2 93.6
Allowance for Losses as a Percentage
of Reservable Assets 8.4% 6.6% 6.4%
Net Charge-Offs and Asset Impairments
and Write-Downs 7.9 22.1
Net Charge-Offs/Impairments/Write-Downs
as a Percentage of Average Total Assets .4% 1.2%
Non-performing Investments 163.5 94.9 101.7
Non-performing Investments as a
Percentage of Financial Services'
Investments 5.7% 3.3% 3.5%
Capital Structure
Short-term Debt, Net of Unrestricted
Cash (122.9) (217.4) (141.1)
Long-term Debt:
On Balance Sheet
Recourse 3,401.4 3,487.9 3,208.3
Nonrecourse 651.9 594.6 671.1
Off Balance Sheet
Recourse 997.4 1,018.8 1,034.9
Nonrecourse 320.5 353.4 338.4
Capital Lease Obligations 132.0 143.7 151.0
Total Net Debt Obligations 5,380.3 5,381.0 5,262.6
Total Recourse Debt 4,407.9 4,433.0 4,253.1
Shareholders' Equity and Allowance
for Losses 886.1 883.8 983.6
Recourse Leverage 5.0 5.0 4.3
Asset Remarketing Income
Disposition gains on owned assets 8.9 9.8
Residual sharing fees 1.4 1.5
10.3 11.3
Railcar Data
North American Fleet Utilization 92% 90%
Beginning Fleet Size 107,150 110,201
Additions 97 256
Scrappings (1,004) (1,077)
Ending Fleet Size 106,243 109,380
(a) Includes Off Balance Sheet Assets
SOURCE GATX Corporation
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Related links:
http://www.gatx.com
Company News On-Call:
http://www.prnewswire.com/comp/105121.html
CONTACT:
Robert C. Lyons of GATX Corporation,
+1-312-621-6633
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