CHICAGO, July 24 /PRNewswire/ -- GATX Corporation (NYSE: GMT) today
announced its 2001 second quarter results. For the quarter, GATX reported
consolidated net income of $21.6 million, or $.44 per diluted share compared
to $41.5 million, or $.86 per diluted share in the prior year period. The
second quarter 2001 results include a $30.6 million pre-tax write-down of
telecommunication assets.
For the six-month period ending June 30, GATX reported income of
$192.3 million, or $3.90 per diluted share. Excluding the gain on the GATX
Terminals sale and other non-recurring charges reported in the 2001 first
quarter, income for the first six months was $53.2 million, or $1.08 per
diluted share compared to income of $82.1 million, or $1.68 per diluted share
in the prior year period. All comments from here forward in this press
release regarding 2001 year-to-date results and outlook exclude the GATX
Terminals-related gain and other non-recurring charges recorded in the 2001
first quarter.
Ronald H. Zech, chairman and president of GATX, stated, "For the 2001
second quarter, increased pre-tax spread and remarketing income were more than
offset by continued market weakness at GATX Rail and write-downs in GATX
Capital's telecommunications portfolio.
"At GATX Rail, we have experienced a decline in market conditions over the
past 18 months, and this trend continues. The problem of excess railcar
inventories has been compounded by a slowing economy. Our customers,
especially those in the chemical industry, are experiencing their own
difficulties and demand for railcars has declined accordingly. GATX Rail
posted second quarter net income of $11.5 million compared to $17.9 million in
the prior year period and $12.1 million in the 2001 first quarter. While the
level of our concern regarding current conditions in the rail sector remains
high, we remain positive about the long-term fundamentals of this business.
"Financial Services, comprised primarily of GATX Capital, posted second
quarter net income of $14.3 million compared to $21.1 million in the prior
year period. Although pre-tax spread increased and remarketing income was
particularly strong, further weakness in its telecommunications portfolio
caused GATX Capital to write down $30.6 million of telecommunication assets
that were deemed impaired.
"During the second quarter, GATX's telecommunications exposure was reduced
to $125 million, or 2% of total assets. This $50 million reduction from the
prior quarter was comprised of the $30.6 million write-down and approximately
$20 million of principal repayments and amortization. We will continue to
aggressively reduce our remaining telecommunications exposure, a strategy that
will suppress near-term earnings as we attempt to bring this issue to a prompt
closure, maximize recovery of our investment, and minimize future uncertainty
surrounding the ultimate impact of GATX's telecommunications exposure.
"Looking at the remainder of 2001, providing an EPS outlook that
incorporates telecommunications-related losses is impractical given the
uncertainty of potential additional charges in that area. Excluding
telecommunications-related losses, we currently expect 2001 income of
approximately $2.20 per share on a diluted basis. This 2001 expectation
incorporates three key assumptions: by opting to use the GATX Terminals sale
proceeds conservatively, we estimate resulting 2001 earnings dilution to be
approximately $.25 per share; GATX Rail is expected to post full year income
of approximately $40 million; and Financial Services is expected to post
income in the range of $65-$70 million, excluding telecommunications-related
losses.
Mr. Zech added, "The dilutive impact of the Terminals sale warrants
further comment. When we initiated the sale process over one year ago, we
anticipated taking a more aggressive approach for the use of the sale
proceeds, thereby minimizing the dilutive earnings impact of the sale. Over
the course of the past year, however, the economic environment has worsened,
and we have adjusted our approach toward the use of proceeds accordingly. By
using the bulk of the proceeds to substantially enhance our liquidity and
improve our capital structure, we have positioned GATX to take full advantage
of market opportunities that arise during periods of economic uncertainty.
However, this strategy has a meaningful negative impact on 2001 earnings.
Ultimately, we are confident that this dilutive trend will reverse as we
continue to invest in our core businesses.
Mr. Zech concluded, "While 2001 year-to-date has been challenging, I am
encouraged by a number of important and positive events that occurred during
the first half of this year, including the El Camino acquisition, the Pembroke
air joint venture, completion of a new labor agreement at GATX Rail, and a
sizeable international railcar acquisition. As we work diligently to improve
our near-term performance, these events, coupled with a strong position in our
core markets, provide the basis for our long-term optimism."
FINANCIAL SERVICES
Financial Services, comprised principally of GATX Capital, reported second
quarter income of $14.3 million compared to $21.1 million in the prior year
period. For the six-month period, Financial Services reported income of
$25.8 million compared to $44.0 million in the prior year period.
Investment volume totaled $361 million during the second quarter compared
to $407 million in the prior year period. For the first half of 2001,
investment volume totaled $1.1 billion compared to $732 million in the prior
year period. The increased year-to-date volume reflects continued growth in
the company's air and technology businesses, including select portfolio
acquisitions in these sectors.
For the second quarter, pre-tax spread totaled $46.7 million compared to
$42.2 million in the prior year period. Annualized pre-tax spread in the
second quarter was 4.7% of average net investments compared to 5.4% in the
prior year period and 5.0% in the 2001 first quarter. Higher lease and
interest income drove the increase in pre-tax spread, more than off-setting a
decline in affiliate income which can be attributed to abnormally high
affiliate income in the year ago period.
Second quarter remarketing income, comprised of both gains on asset sales
and residual sharing fees, was $50.3 million compared to $9.3 million in the
prior year period. For the six-month period, remarketing gains totaled
$64.7 million compared to $18.7 million in the prior year period. The
increased remarketing income was driven by strong secondary market activity in
air and certain other diversified assets.
Warrant income totaled $12.4 million in the second quarter compared to
$8.6 million in the prior year period. For the six-month period, warrant
income totaled $27.6 million compared to $22.6 million in the prior year
period. Reflecting gains realized during the second quarter, the pre-tax
unrealized gains decreased to $12.7 million at the end of the second quarter
from $23.5 million at the end of the 2001 first quarter.
Loss provisions totaled $16.1 million in the quarter compared to
$2.0 million in the prior year period. The allowance for loss was 6.2% of
reservable assets at the end of the second quarter compared to 5.8% in the
prior quarter and 8.2% in the year ago period.
In addition to the $30.6 million telecommunications impaired asset write-
down, net charge-offs of reservable assets during the second quarter totaled
$12.9 million. Total write-downs and net charge-offs in the second quarter
were 1.1% of average net investments compared to .17% in the prior year period
and .32% in the 2001 first quarter. For the six-month period, write-downs and
net charge-offs totaled $55.7 million, or 1.5% of average net investments
compared to .36% in the prior year period.
GATX RAIL
GATX Rail reported income of $11.5 million in the 2001 second quarter
compared to $17.9 million in the prior year period, and $12.1 million in the
2001 first quarter. For the six-month period, GATX Rail reported net income
of $23.6 million compared to $36.4 million in the prior year period.
Utilization and lease rates remain under pressure, as chemical companies
have reduced manufacturing capacity in response to economic conditions.
Industry-wide chemical railcar loadings declined 6% on a comparable basis
through the first half of 2001, and U.S. manufacturing capacity utilization is
at a 15-year low. Utilization of GATX Rail's North American full service
fleet was 91% at the end of the second quarter, down from 92% in the 2001
first quarter and 93% in the prior year period.
GATX Rail continues to take steps to address market weakness. New car
order activity has been limited primarily to customer-specific requests, and
as a result new car deliveries in the second quarter totaled only 860 cars
compared to 1,500 new car deliveries in the prior year period. GATX
Rail's full service North American fleet included 91,600 cars at the end of
the second quarter, essentially flat with year-end 2000 levels.
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 second quarter
results. Teleconference details are as follows:
Tuesday, July 24th
3:00 PM Eastern Time
Domestic Dial-In: 1-888-273-9887
International Dial-In: 1-612-332-0932
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
This press release includes statements that may constitute forward-looking
statements made pursuant to the safe harbor provision of the Private
Securities Litigation Reform Act of 1995. 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.
With respect to outlook comments within this release relating to the 2001
performance of GATX Rail Corporation, GATX Capital Corporation, and GATX
Corporation, risks and uncertainties include, but are not limited to, general
economic conditions, railcar lease rate and utilization levels, dynamics
affecting customers within the chemical, petroleum and food industries,
additional potential write-downs and/or provisions related to GATX's
telecommunications portfolio, and general market conditions in the air,
telecommunications, venture, and other large-ticket leasing 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 press releases may be obtained by accessing PR Newswire's Company
News On-Call's automated fax service at 800-758-5804. The company
identification number for GATX is 105121.
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Millions, Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30 June 30
2001 2000 2001 2000
Gross Income
Revenues $ 422.6 $ 316.4 $ 778.6 $605.4
Share of affiliates'
earnings 15.0 26.1 29.9 46.1
Total Gross Income 437.6 342.5 808.5 651.5
Ownership Costs
Depreciation and
amortization 109.8 79.4 212.9 158.8
Interest, net 68.0 59.4 129.0 113.4
Operating lease expense 48.4 42.9 96.7 83.1
Total Ownership Costs 226.2 181.7 438.6 355.3
Other Costs and Expenses
Operating expenses 61.0 52.0 124.1 82.8
Selling, general
and administrative 66.3 51.1 123.6 92.2
Provision for
possible losses 46.8 2.0 68.1 4.0
Fair value adjustments
for derivatives (.7) - .4 -
Total Other Costs
and Expenses 173.4 105.1 316.2 179.0
Income from Continuing
Operations before
Income Taxes 38.0 55.7 53.7 117.2
Income Taxes 15.5 23.3 26.8 47.2
Income from
Continuing Operations 22.5 32.4 26.9 70.0
Discontinued Operations
Operating results, net
of income taxes (.9) 4.4 1.5 7.4
Gain on sale of portion
of segment, net of income
taxes - 4.7 163.9 4.7
Total Discontinued Operations (.9) 9.1 165.4 12.1
Net Income $21.6 $41.5 $192.3 $82.1
Per Share Data
Basic:
Income from
continuing operations $ .46 $ .68 $ .56 $ 1.46
(Loss) Income from
discontinued operations (.01) .19 3.41 .25
Total $.45 $ .87 $3.97 $ 1.71
Average number of
common shares
(in thousands) 48,495 47,583 48,378 48,012
Diluted:
Income from continuing
operations $ .46 $ .67 $ .55 $ 1.43
(Loss) Income from
discontinued operations (.02) .19 3.35 .25
Total $ .44 $ .86 $3.90 $ 1.68
Average number of
common shares and share
Equivalents
(in thousands) 49,287 48,606 49,314 48,892
Note: Certain amounts in the 2000 financial statements have been
reclassified to conform to the current presentation.
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In Millions)
June 30 December 31
2001 2000
Assets
Cash and Cash Equivalents $362.3 $173.6
Receivables
Trade accounts 62.5 93.7
Finance leases 1,013.0 878.3
Secured loans 613.3 538.0
Less -- allowance for possible losses (111.0) (95.2)
1,577.8 1,414.8
Operating Lease Assets and Facilities, net 2,579.2 2,654.1
Investments in Affiliated Companies 1,130.6 951.2
Other Assets 491.1 439.1
Net Assets of Discontinued Operations 36.6 630.9
$6,177.6 $6,263.7
Liabilities, Deferred Items
and Shareholders' Equity
Accounts Payable $269.3 $317.3
Accrued Expenses 189.6 127.4
Debt
Short-term 384.9 557.2
Long-term:
Recourse 2,755.6 3,093.9
Nonrecourse 639.0 494.2
Capital lease obligations 152.9 164.2
3,932.4 4,309.5
Deferred Items, including Income Taxes 830.8 720.0
Total Shareholders' Equity 955.5 789.5
$6,177.6 $6,263.7
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Millions)
Three Months Ended Six Months Ended
June 30 June 30
2001 2000 2001 2000
Operating Activities
Income from continuing operations $22.5 $32.4 26.9 $70.0
Adjustments to reconcile
income from continuing operations
to net cash provided by
continuing operations:
Realized gains on
remarketing of
leased equipment (41.1) (10.0) (49.6) (19.7)
Depreciation and amortization 109.8 79.4 212.9 158.8
Provision for possible losses 46.8 2.0 68.1 4.0
Deferred income taxes 5.9 6.0 110.0 35.0
Other, including working capital (38.5) (8.5) (234.2) (53.8)
Net cash provided by
continuing operations 105.4 101.3 134.1 194.3
Investing Activities
Additions to operating lease
assets and facilities (62.7) (135.7) (101.7) (291.6)
Additions to equipment
on lease, net of
nonrecourse financing
for leveraged leases (135.9) (158.1) (401.9) (289.3)
Secured loans extended (122.9) (102.6) (203.4) (216.5)
Investments in
affiliated companies (79.3) (71.6) (220.4) (121.1)
Other investments and
progress payments (16.0) (96.4) (129.7) (104.2)
Portfolio investments
and capital additions (416.8) (564.4) (1,057.1)(1,022.7)
Portfolio proceeds 277.4 121.2 525.8 220.4
Proceeds from other asset sales 191.4 288.2 196.4 292.6
Net cash provided by (used in)
investing activities of
continuing operations 52.0 (155.0) (334.9) (509.7)
Financing Activities
Proceeds from issuance of
long-term debt 230.0 659.1 292.0 780.8
Repayment of long-term debt (447.9) (551.8) (751.9) (608.7)
Net (decrease) increase in
short-term debt (216.8) (121.6) (172.3) 208.8
Repayment of capital
lease obligations (3.1) (3.3) (11.3) (9.4)
Issuance (repurchase) of common
stock and other 2.4 (14.7) 14.1 (41.2)
Cash dividends (15.1) (14.2) (30.1) (28.7)
Net cash (used in) provided by
financing activities of
continuing operations (450.5) (46.5) (659.5) 301.6
Net Transfers from (to)
Discontinued Operations - 8.6 (7.6) (58.4)
Net Decrease in Cash and Cash
Equivalents from Continuing
Operations (293.1) (91.6) (867.9) (72.2)
Proceeds from sale of
portion of segment 115.7 74.7 1,144.1 74.7
Taxes paid on gain from
sale of segment (87.5) - (87.5) -
Net Decrease in Cash and
Cash Equivalents from
Discontinued Operations - (2.0) (12.6) (.2)
Net (Decrease) Increase in
Cash and Cash Equivalents $(264.9) $(18.9) $176.1 $2.3
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY DATA (UNAUDITED)
(In Millions, Except Earnings Per Share Amounts)
Three Months Ended Six Months Ended
June 30 June 30
2001 2000 2001 2000
GATX Corporation
Basic net income per share:
Income from
continuing operations $.46 $ .68 $.56 $ 1.46
(Loss) Income from
discontinued operations (.01) .19 3.41 .25
Total $.45 $ .87 $3.97 $ 1.71
Diluted net income per share:
Income from
continuing operations $.46 $ .67 $.55 $ 1.43
(Loss) Income from
discontinued operations (.02) .19 3.35 .25
Total $.44 $ .86 $3.90 $ 1.68
Revenues $ 422.6 $316.4 $ 778.6 $605.4
Share of Affiliates' Earnings 15.0 26.1 29.9 46.1
Gross Income 437.6 342.5 808.5 651.5
Income from Continuing
Operations before
Income Taxes 38.0 55.7 53.7 117.2
Income from
Continuing Operations 22.5 32.4 26.9 70.0
(Loss) Income from
Discontinued Operations (.9) 9.1 165.4 12.1
Net Income $21.6 $41.5 $ 192.3 $82.1
Equity 955.5 837.4
Return on Average Equity (a) 12.0% 19.1%
Assets of
Continuing Operations 5,932.2 5,199.3
Net Asset of
Discontinued Operations 36.6 681.5
Intersegment and
Other Assets 208.8 (19.7)
Total Assets 6,177.6 5,861.1
Return on Average
Total Owned Assets (a) 1.71% 2.75%
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY DATA (UNAUDITED)
(In Millions, Except Earnings Per Share Amounts)
Three Months Ended Six Months Ended
June 30 June 30
2001 2000 2001 2000
Financial Services
Revenues $271.9 $173.2 $485.6 $323.2
Share of Affiliates'
Earnings 13.6 25.3 27.6 44.2
Gross Income 285.5 198.5 513.2 367.4
Depreciation and
Amortization 83.8 53.9 161.7 106.4
Interest 55.9 43.6 111.6 81.8
Operating Lease Expense 12.6 11.6 25.3 22.9
Income before
Income Taxes 23.6 35.4 42.7 72.8
Net Income $14.3 $21.1 $25.8 $44.0
Net Investments 3,976.0 3,233.7
Other Assets (b) 342.5 341.6
Total Assets 4,318.5 3,575.3
Common Equity 586.6 432.5
GATX Capital only
New Investment Volume 360.8 406.5 1,115.4 732.2
Portfolio Pre-Tax
Spread (c) 46.7 42.2 93.5 78.8
Annualized Pre-Tax
Spread as % of
Average Net
Investments 4.7% 5.4% 4.9% 5.3%
Asset remarketing:
Disposition Gains
on Owned Assets 41.0 8.6 49.5 17.9
Residual Sharing Fees 9.3 .7 15.2 .8
Warrant Income 12.4 8.6 27.6 22.6
GATX Rail
Revenues $151.7 $144.3 $294.4 $284.5
Share of
Affiliates' Earnings 1.4 .8 2.3 1.9
Gross Income 153.1 145.1 296.7 286.4
Depreciation
and Amortization 25.0 24.5 49.4 50.3
Interest 12.8 13.8 25.7 28.5
Operating Lease Expense 36.2 31.8 71.5 61.1
Income before
Income Taxes 19.2 29.0 14.2 58.3
Net Income $11.5 $17.9 $7.4 $36.4
Assets 1,613.8 1,624.0
Equity 363.8 337.0
North American Fleet
Fleet Additions 1,200 1,800 1,600 3,900
Total Fleet 91,600 91,500 91,600 91,500
Utilization 91% 93% 91% 93%
(a)Excludes 4Q00 litigation and reserve and 1Q01 Terminals gain
(b)Includes marine operating assets
(c)Lease, interest and affiliate income less ownership costs
SOURCE GATX Corporation
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http://www.gatx.com
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CONTACT:
Analysts and Investors, Robert C. Lyons of
GATX Corporation, +1-312-621-6633
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