-- Third quarter EPS reaches $.93 per share compared to $.83 in the prior
year period
-- Year-to-date investment volume continues at record level
-- Planned sale of GATX Terminals proceeding on schedule
CHICAGO, Oct. 24 /PRNewswire/ -- GATX Corporation (NYSE: GMT) today
announced third quarter consolidated net income of $45.1 million or $.93 per
share on a diluted basis compared to $42.2 million or $.83 per share on a
diluted basis in the prior year period.
Consolidated net income for the first nine months of 2000 was
$127.2 million or $2.61 per share on a diluted basis compared to
$119.5 million or $2.36 per share on a diluted basis in the prior year period,
representing an 11% increase in earnings per share.
Income from continuing operations was $37.6 million or $.78 per share on a
diluted basis in the third quarter compared to $36.4 million or $.72 per share
on a diluted basis in the prior year period. Income from continuing
operations in the first nine months of 2000 was $107.6 million or $2.21 per
share on a diluted basis compared to $100.6 million or $1.99 per share on a
diluted basis in the prior year period.
Ronald H. Zech, chairman, stated, "Third quarter and year-to-date net
income growth primarily reflects continued strength at GATX Capital. The air,
technology, venture, and diversified equipment markets are key contributors to
third quarter and year-to-date performance. The strength within these markets
is also evidenced by record year-to-date investment volume of $1.0 billion, a
31% increase over year ago levels. We expect GATX Capital to post record
results for the year and we are very optimistic about the long-term outlook
for this business.
"At GATX Rail, domestic market conditions continue to be challenging. As
noted previously, car demand and lease rates for both new and used cars
continue to be negatively affected by industry factors. In addition to market
conditions, GATX Rail is addressing an important issue with respect to its
domestic service network. Employees at its four domestic service centers,
represented by the United Steelworkers of America, have rejected the terms of
a company-proposed new labor contract. The company's proposal is designed to
improve the long-term competitive position of GATX Rail's service centers.
Although the service centers remain operational and employees continue to work
without a new contract, the use of third-party contract shops has increased to
ensure seamless customer service. While this has been an effective service
alternative, GATX Rail will incur abnormally high maintenance expenses during
the fourth quarter absent the prompt signing of a new contract.
"Our long-term target of 12-15% EPS growth is predicated on solid
performance at both GATX Capital and GATX Rail. Although performance at GATX
Capital is exceeding our expectations, recent developments regarding continued
weakness in the rail industry and GATX Rail's service center network have led
to greater uncertainty regarding GATX Rail's full year performance. While we
continue to target long-term EPS growth of 12-15%, there are clearly
challenges ahead."
Mr. Zech concluded, "One of our key initiatives this year has been to
reallocate capital and sharpen our focus within GATX Corporation, and I am
extremely pleased with the progress we have made to date. The planned sale of
GATX Terminals Corporation is proceeding on schedule and we remain confident
that we will reach agreement on the sale by year-end. Consummation of this
transaction, coupled with the earlier sale of GATX Logistics, will complete
GATX Corporation's transformation into a specialized finance and leasing
company. I am confident that the long-term fundamentals in our core markets,
combined with greater focus on these markets, will produce attractive returns
for our shareholders."
FINANCIAL SERVICES
Financial Services, comprised principally of GATX Capital, reported third
quarter net income of $26.1 million compared to $20.1 million in the prior
year period. Net income year to date was $70.1 million compared to
$58.5 million in the prior year period. Third quarter and year-to-date
results reflect the diversification of income sources at GATX Capital. Air,
technology and venture markets remain particularly strong. Pre-tax spread,
remarketing gains and warrant-related income all contributed to the strong
third quarter and year-to-date results.
Third quarter and year-to-date pre-tax spread was driven by growth in the
base of operating lease assets. Pre-tax spread totaled 4.5% of average net
investments in the third quarter, a more normalized level compared to an
unusually high 6.6% in the prior year period. Year-to-date pre-tax spread was
5.1% of average net investments compared to 5.7% in the prior year period.
Remarketing gains increased to $21 million in the third quarter compared to
$15 million in the prior year period. Year-to-date remarketing gains were
$40 million compared to $62 million in the prior year period.
GATX Capital continues to identify attractive investment opportunities in
the venture and telecommunications sectors. GATX Capital realized $12 million
of pre-tax warrant income in the third quarter compared to $6 million in the
prior year period, while the unrealized pre-tax gain on the warrant portfolio
totaled a record $94 million at the end of the third quarter.
In addition to the income growth at GATX Capital, current investment
opportunities point to continued strength across core markets. Year-to-date
investment volume totaled $1.0 billion compared to $779 million in the prior
year period.
GATX RAIL
GATX Rail Corporation reported third quarter net income of $15.9 million
compared to $20.0 million in the prior year period. Net income year-to-date
was $52.3 million compared to $55.0 million in the prior year period. Third
quarter and year-to-date results in 1999 include $3.1 million of net income
related primarily to the sale of 1,700 grain cars. Third quarter net income,
excluding the impact of the grain car sale, was $1.0 million lower than the
prior year period.
Results for the quarter were largely driven by a combination of lower new
car demand, a larger number of idle cars, and competitive pricing on lease
renewals. The North American fleet currently totals approximately 92,000 cars
compared to 86,600 cars in the prior year period. Railcar utilization
remained at 93% in the third quarter, down from 95% in the prior year period
but equal to the previous quarter end. The average monthly lease rate on the
total North American fleet remained essentially flat with the prior year
period, and pricing on certain new car orders and renewals trended slightly
lower.
During the third quarter GATX Rail added 1,100 cars to its fleet compared
to 1,300 additions in the prior year period. The decrease in comparative
additions reflects GATX Rail's decision to scale back fleet growth during the
second half of this year in light of market conditions.
GATX INTEGRATED SOLUTIONS
Due to the announcement earlier this year of intent to sell GATX Terminals
Corporation and the sale of 81% of GATX Logistics, Inc., the GATX Integrated
Solutions segment is classified as a discontinued operation for reporting
purposes. Income for the group was $7.5 million in the third quarter compared
to $5.8 million in the prior year period, and year-to-date income was
$19.6 million compared to $18.9 million in the prior year period. Third
quarter results were driven largely by stronger operating results at GATX
Terminals' domestic storage and distribution facilities. This performance
reflects positive market trends as well as excellent strategic execution on
the part of GATX Terminals' management team.
COMPANY DESCRIPTION
GATX Corporation (NYSE: GMT) is a specialized finance and leasing company
that uses asset knowledge, service capabilities, structuring expertise and
partnering skills to serve targeted industries including rail, air,
technology, telecommunications, and marine.
TELECONFERENCE INFORMATION
GATX Corporation will host a teleconference to discuss third quarter
results. Teleconference details are as follows:
Tuesday, October 24th
2:00 PM Central Time
Real-time Audio Access: http://www.gatx.com
Please access the site 10 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 which 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 including but not limited to general conditions, including
demand and pricing in its primary rail, air, technology, and diversified
equipment leasing markets, opportunities for asset resale within these
markets, and stable labor conditions within the company's rail service
network. These factors and others could cause actual results to differ
materially from those projected.
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 automated PR News 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 Nine Months Ended
September 30 September 30
2000 1999 2000 1999
GROSS INCOME
Lease, interest and
financing services $347.4 $300.6 $955.1 $836.8
Other income (expense) .2 (5.4) (2.1) 63.3
REVENUES 347.6 295.2 953.0 900.1
Share of affiliates'
earnings 16.7 18.9 62.8 48.2
TOTAL GROSS INCOME 364.3 314.1 1,015.8 948.3
OWNERSHIP COSTS
Depreciation and
amortization 81.2 66.0 240.0 179.4
Interest 62.7 46.0 176.1 132.4
Operating lease expense 47.4 35.6 130.1 111.2
TOTAL OWNERSHIP COSTS 191.3 147.6 546.2 423.0
OTHER COSTS AND EXPENSES
Operating expenses 52.9 55.2 135.7 207.2
Selling, general and
administrative 54.8 47.6 147.4 144.8
Provision for possible
losses 4.6 2.8 8.6 8.3
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 60.7 60.9 177.9 165.0
INCOME TAXES 23.1 24.5 70.3 64.4
INCOME FROM CONTINUING
OPERATIONS 37.6 36.4 107.6 100.6
DISCONTINUED OPERATIONS:
Operating results 7.5 5.8 14.9 18.9
Gain on sale of portion
of segment - - 4.7 -
NET INCOME $45.1 $42.2 $127.2 $119.5
PER COMMON SHARE
Basic net income per share
Income from continuing
operations $.79 $.74 $2.24 $2.04
Income from discontinued
operations .16 .11 .41 .38
Total $.95 $.85 $2.65 $2.42
Average number of
common shares
(in thousands) 47,541 49,487 47,885 49,447
Diluted net income
per share
Income from continuing
operations $.78 $.72 $2.21 $1.99
Income from discontinued
operations .15 .11 .40 .37
Total $.93 $.83 $2.61 $2.36
Average number of common
shares (in thousands) 48,673 50,579 48,763 50,541
Dividends paid $.30 $.275 $.90 $.825
(a) Certain amounts in 1999 have been reclassified to conform to current
presentation.
(b) Discontinued operations - Operating results for the former Integrated
Solutions Group segment are shown net of taxes of $4.6, $5.0, $9.2,
and $15.9 million, respectively, for the four periods displayed.
Gain on sale reflects the sale of 81% of GATX Logistics, Inc. and is
stated net of income tax benefit of $5.7 million.
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions)
September 30 December 31
2000 1999
(Unaudited)
ASSETS
CASH AND CASH EQUIVALENTS $118.0 $102.5
RECEIVABLES
Trade accounts 117.0 153.6
Finance leases 725.7 645.7
Secured loans 565.7 358.0
Less - Allowance for possible losses (113.0) (115.7)
1,295.4 1,041.6
OPERATING LEASE ASSETS AND FACILITIES, NET 3,500.7 3,282.0
INVESTMENTS IN AFFILIATED COMPANIES 982.5 957.3
OTHER ASSETS 485.4 483.4
$6,382.0 $5,866.8
LIABILITIES, DEFERRED ITEMS AND
SHAREHOLDERS' EQUITY
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $401.7 $438.1
DEBT
Short-term 160.7 377.4
Long-term:
Recourse 3,391.9 2,785.7
Nonrecourse 510.7 463.8
Capital lease obligations 165.3 183.1
4,228.6 3,810.0
DEFERRED ITEMS, INCLUDING INCOME TAXES 875.7 782.7
SHAREHOLDERS' EQUITY 876.0 836.0
$6,382.0 $5,866.8
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Millions)
Three Months Ended Nine Months Ended
September 30 September 30
2000 1999 2000 1999
OPERATING ACTIVITIES
Net income $45.1 $42.2 $127.2 $119.5
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Realized gains on
remarketing of
leased equipment (20.2) (18.4) (40.0) (65.3)
Depreciation and
amortization 94.4 79.6 285.4 220.3
Provision for
possible losses 4.6 2.9 9.0 8.4
Deferred income
taxes 31.4 14.1 74.6 57.4
Net change in trade
receivables, inventories,
Accounts payable and
accrued expenses 8.4 17.9 (29.1) (44.6)
Other (41.8) (17.6) (100.5) (48.0)
NET CASH PROVIDED BY
OPERATING ACTIVITIES 121.9 120.7 326.6 247.7
INVESTING ACTIVITIES
Additions to operating
lease assets and
facilities (78.1) (103.3) (440.9) (320.5)
Portfolio lease
investments, net of
nonrecourse financing
for leveraged leases (121.0) (250.5) (412.6) (434.2)
Secured loans extended (122.0) (73.1) (338.5) (204.7)
Investments in
affiliated companies (42.3) (40.3) (170.0) (136.1)
Other investments and
progress payments (9.1) (17.2) (114.7) (41.1)
Capital additions and
portfolio investments (372.5) (484.4) (1,476.7) (1,136.6)
Portfolio proceeds:
From remarketing of
leased equipment 61.1 31.7 106.2 174.5
From return of
investment 111.0 106.3 286.3 226.2
Total portfolio proceeds 172.1 138.0 392.5 400.7
Proceeds from other
asset sales 23.9 199.8 405.1 251.8
NET CASH USED IN
INVESTING
ACTIVITIES (176.5) (146.6) (679.1) (484.1)
FINANCING ACTIVITIES
Proceeds from issuance of
long-term debt 630.0 67.2 1,410.8 373.9
Repayment of long-term
debt (117.3) (79.9) (728.9) (350.0)
Net (decrease) increase
in short-term debt (431.3) 72.7 (227.6) 310.6
Other receipts (advances) .6 36.0 7.9 (7.9)
Repayment of capital
lease obligations (5.3) (2.0) (15.4) (12.8)
Issuance (repurchase) of
common stock and other 5.4 (6.7) (35.8) (1.5)
Cash dividends (14.3) (13.7) (43.0) (40.9)
NET CASH PROVIDED BY
FINANCING ACTIVITIES 67.8 73.6 368.0 271.4
NET INCREASE IN CASH AND
CASH EQUIVALENTS $13.2 $47.7 $15.5 $35.0
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY DATA (UNAUDITED)
(In Millions, Except Earnings Per Share Amounts)
Three Months Ended Nine Months Ended
September 30 September 30
2000 1999 2000 1999
GATX Corporation
Basic Net Income
per Share
Income from
Continuing Operations $.79 $.74 $ 2.24 $ 2.04
Income from
Discontinued
Operations .16 .11 .41 .38
Total .95 .85 2.65 2.42
Diluted Net Income
per Share
Income from Continuing
Operations .78 .72 2.21 1.99
Income from Discontinued
Operations .15 .11 .40 .37
Total .93 .83 2.61 2.36
Revenues $347.6 $295.2 $953.0 $900.1
Share of Affiliates'
Earnings 16.7 18.9 62.8 48.2
Gross Income 364.3 314.1 1,015.8 948.3
Income from Continuing
Operations Before
Income Taxes 60.7 60.9 177.9 165.0
Income from Continuing
Operations 37.6 36.4 107.6 100.6
Income from Discontinued
Operations 7.5 5.8 19.6 18.9
Net Income $45.1 $42.2 $127.2 $119.5
Equity $876.0 $822.2
Return on Average
Equity (a) 18.7% 18.9%
Finance Assets (b) $5,436.5 $4,375.0
Distribution Service
Assets 1,069.4 1,146.7
Intersegment and Other
Assets (123.9) (77.8)
Total Assets 6,382.0 5,443.9
Return on Average Total
Owned Assets 2.7% 2.8%
Return on Average
Finance Assets (c) 3.1% 3.4%
GATX Rail
Revenues $144.5 $148.2 $429.0 $426.9
Share of Affiliates'
Earnings .7 .6 2.6 2.4
Gross Income 145.2 148.8 431.6 429.3
Depreciation and
Amortization 24.2 24.6 74.5 73.9
Interest 13.0 14.0 41.5 39.5
Operating Lease Expense 35.6 26.9 96.7 80.7
Income Before Income
Taxes 25.6 32.8 83.9 88.6
Net Income $15.9 $20.0 $52.3 $55.0
Assets $1,665.6 $1,670.0
Equity 341.9 335.5
Return on
Average Equity 20.7% 23.2%
North American Fleet
Fleet Additions 1,100 1,300 5,000 4,100
Total Fleet 92,000 86,600 92,000 86,600
Utilization 93% 95% 93% 95%
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY DATA (UNAUDITED)
(In Millions, Except Earnings Per Share Amounts)
Three Months Ended Nine Months Ended
September 30 September 30
2000 1999 2000 1999
Financial Services
Revenues $202.9 $148.3 $526.1 $477.4
Share of Affiliates'
Earnings 16.0 18.3 60.2 45.8
Gross Income 218.9 166.6 586.3 523.2
Depreciation and
Amortization 56.2 40.6 162.6 103.1
Interest 47.8 30.7 129.6 89.0
Operating Lease
Expense 12.0 11.1 34.9 33.2
Income Before Income
Taxes 42.8 33.7 115.6 95.5
Net Income $26.1 $20.1 $70.1 $58.5
Net Investment
Balance $3,313.8 $2,417.3
Other Assets (d) 457.1 287.7
Total Assets 3,770.9 2,705.0
Common Equity 457.3 338.4
Return on Average
Common Equity 20.8% 20.8%
GATX Capital only
New Investment Volume 291.9 369.8 1,024.1 778.9
Portfolio Pre-Tax
Spread (e) 36.8 38.2 115.6 95.2
Annualized Pre-Tax
Spread as % of
Average Net
Investments 4.5% 6.6% 5.1% 5.7%
Asset remarketing:
Disposition Gains
on Owned Assets 19.4 9.5 37.8 50.2
Residual Sharing
Fees 1.4 5.1 1.7 11.8
Warrant Income 11.8 6.3 34.4 14.5
(a) Return on equity calculations based on rolling four quarter net
income
(b) Finance assets include those of GATX Rail and Financial Services
(c) Return based on income of GATX Rail and Financial Services
(d) Includes marine operating assets
(e) Lease, interest and affiliate income less ownership costs
SOURCE GATX Corporation
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Related links:
http://www.gatx.com
Company News On-Call:
http://www.prnewswire.com/comp/105121.html or fax,
800-758-5804, ext. 105121
CONTACT:
Robert C. Lyons, Director of Investor
Relations of GATX Corporation, 312-621-6633
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