EXHIBIT 99.1
| | |
 | | NEWS RELEASE |
| FOR RELEASE: IMMEDIATELY | | |
GATX CORPORATION REPORTS 2005 SECOND QUARTER RESULTS
CHICAGO, July 28- GATX Corporation (NYSE:GMT) today announced net income from continuing operations for the second quarter of $34.5 million or $.62 per diluted share, compared to $19.7 million or $.38 per diluted share in the second quarter of 2004. Net income from continuing operations for the first six months of 2005 was $62.9 million or $1.14 per diluted share, compared to $39.4 million or $.76 per diluted share in the comparable prior year period. The 2005 second quarter and year-to-date net income includes $.12 per diluted share of after-tax expenses associated with liability management.
Highlights for the quarter included:
| | • | | North American railcar fleet utilization remained at 98% and lease renewal rates continued to increase, reflecting a very strong market |
| |
| | • | | Aircraft lease rates continued to improve on many aircraft and utilization of GATX’s air portfolio increased to 100% |
| |
| | • | | Driven by a strong international shipping market, Specialty’s marine joint ventures continued to experience high asset utilization and charter rates |
| |
| | • | | Specialty also generated a $12.8 million fee from a transaction within one of its managed portfolios, resulting in unusually high remarketing income. |
Brian A. Kenney, president and CEO of GATX, stated, “As highlighted by our strong second quarter results, market conditions are increasingly positive. In particular, strength in railcar demand is exceeding our original expectations.
“In Air, our fleet is effectively fully utilized and we are using renewals as an opportunity to improve lease rates. In Specialty, marine income and remarketing income on both owned and managed assets contributed to an outstanding quarter.
“The investment environment, characterized by rising asset prices, is also indicative of the strength of our underlying markets. In rail, new car prices have increased sharply. While this
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provides us with advantaged new car costs under our Committed Purchase Program, economics on car purchases in the spot market are less appealing at this time. We will remain disciplined in our investment approach.”
Mr. Kenney concluded, “We previously announced that we expected GAAP earnings to be in the range of $1.45 — $1.55 for 2005. Based on the improving trend in Rail and Specialty’s marine business, coupled with unexpectedly high remarketing income, our 2005 outlook has improved. We now expect 2005 GAAP earnings to be in the range of $1.90 — $2.00 per diluted share.”
GATX RAIL
GATX Rail reported net income of $23.1 million in the second quarter of 2005, compared to $18.7 million in the prior year period. Year to date, GATX Rail reported $43.1 million in net income versus $31.4 million in the first six months of 2004. Net income increased year over year primarily due to an increased number of cars on lease and higher average lease rates.
At June 30, 2005, Rail’s North American fleet totaled approximately 107,000 cars and utilization was 98%, flat with year end 2004 and the first quarter of 2005. During the quarter, lease renewal pricing on a basket of Rail’s most common car types increased approximately 15% over expiring lease rates. This compares to an increase of 8% in the fourth quarter of 2004 and 9% in the first quarter 2005. Rail acquired 1,206 cars for its fleet during the second quarter of 2005, including new cars associated with specific customer lease transactions, new cars delivered under the Committed Purchase Program, and used cars purchased in the secondary market. Rail also sold or scrapped 1,359 cars during the quarter. Maintenance expense in the second quarter was slightly below the comparable 2004 period and first quarter 2005 due to fewer wheel replacements and cars repaired.
Macroeconomic data associated with GATX Rail’s business improved somewhat in the second quarter. North American manufacturing capacity utilization, as reported by the Federal Reserve, was 80%, up from 79% in the first quarter and up from 78% in the second quarter 2004. Backlogs at the railcar manufacturers increased to more than 60,000 cars at the end of the quarter.
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Year-to-date rail industry carloadings, excluding intermodal, increased 1.7% over the same period in 2004 and industry-wide chemical shipments were up slightly (+0.3%) in the first six months of 2005 versus the prior year.
GATX AIR
GATX Air recorded break even results in the second quarter of 2005 compared to net income of $2.6 million in the prior year period. For the first six months of 2005, GATX Air reported net income of $4.8 million compared to $4.6 million in the comparable 2004 period. In the 2005 second quarter, GATX Air reported a one-time operating lease expense of $4.8 million related to the restructuring of a lease with a bankrupt carrier, ATA Holdings.
There are no new aircraft deliveries scheduled for 2005 and Air has nearly completed its originally scheduled aircraft renewals, with one aircraft remaining available. Utilization of the owned fleet was 100% at June 30, 2005 and lease rates on most aircraft types continued to show signs of a recovery. Year to date, GATX Air has announced the formation of a new joint venture and has been awarded two new management contracts, reflecting Air’s strategy to expand its managed aircraft.
An updated slide presentation summarizing the GATX Air portfolio and market data is available at www.gatx.com.
GATX SPECIALTY FINANCE
GATX Specialty Finance reported net income of $23.8 million in the 2005 second quarter compared to $9.1 million in the prior year period. Year to date, Specialty reported net income of $33.8 million compared to $25.0 million in the same period in 2004. The 2005 second quarter and year-to-date results reflect strong results in shipping joint ventures and significant remarketing income. In particular, a transaction within a managed portfolio resulted in $12.8 million of pre-tax remarketing income at Specialty. While generating remarketing income from its owned and managed portfolios is core to Specialty’s business, the magnitude of this specific gain is unusual.
The Specialty portfolio currently consists of $432 million of owned assets and third-party managed portfolios totaling approximately $675 million. GATX is selectively pursuing new investments in Specialty, particularly in shipping/marine and other targeted assets.
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CREDIT STATISTICS
Net charge-offs and impairments totaled $1.1 million in the second quarter 2005, or an annualized 0.1% of average total assets, compared to $10.0 million (annualized 0.6% of average total assets) in the same period for 2004. Non-performing investments (lease receivables, finance leases, operating lease assets and loans) at the end of the 2005 second quarter totaled $55.7 million, compared to $62.4 million at the end of the second quarter 2004.
DISCONTINUED OPERATIONS
In the second quarter of 2004, GATX completed the sale of substantially all its technology leasing assets. The technology leasing segment is accounted for as a discontinued operation in all periods presented.
COMPANY DESCRIPTION
GATX Corporation (NYSE:GMT) provides lease financing and related services to customers operating rail, air, marine and other targeted assets. GATX is a leader in leasing transportation assets and controls one of the largest railcar fleets in the world. Applying over a century of operating experience and strong market and asset expertise, GATX provides quality assets and services to customers worldwide. GATX has been headquartered in Chicago, IL since its founding in 1898 and has traded on the New York Stock Exchange since 1916. For more information, visit the Company’s website at www.gatx.com.
TELECONFERENCE INFORMATION
GATX Corporation will host a teleconference to discuss 2005 second quarter results. Teleconference details are as follows:
Thursday, July 28th
11:00 AMEastern Time
Domestic Dial-In: 1-800-706-6082
International Dial-In: 1-706-634-7421
Replay: 1-800-642-1687 / Access Code: 7888356
Call in details, a copy of this press release and real-time audio access are available at 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 www.gatx.com or by calling the GATX Investor Relations Department.
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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,” “expect,” “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 GATX’s or GATX Financial Corp.’s credit rating, either of which could have an effect on the Company’s borrowing costs or 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, and other large-ticket industries.
NON-GAAP FINANCIAL MEASURES
This release includes certain financial performance measures computed using non-GAAP (Generally Accepted Accounting Principles) components as defined by the Securities and Exchange Commission (SEC). These measures are: return on equity from continuing operations; return on assets including off balance sheet assets; and SG&A efficiency before IDC on owned and managed assets. As required under SEC rules, GATX has provided a reconciliation of those non-GAAP components to the most directly comparable GAAP components, which is available with this release and on our website at www.gatx.com. Financial performance measures disclosed in this press release are meant to provide additional information and insight into historical operating results and the financial position of the business. Management uses these performance measures to assist in analyzing GATX’s underlying financial performance from period to period and to establish criteria for compensation decisions. These measures are not in accordance with, or a substitute for, GAAP and may be different from or inconsistent with non-GAAP financial measures used by other companies.
| | | | | |
| FOR FURTHER INFORMATION CONTACT: |
| GATX Corporation: | | Rhonda S. Johnson | | 312-621-6262 |
Investor, corporate, financial, historical financial, photographic and news release information may be found at www.gatx.com.
—Tabular Follows—
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GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Millions, Except Per Share Data)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30 | | | June 30 | |
| | | 2005 | | | 2004 | | | 2005 | | | 2004 | |
Gross Income | | | | | | | | | | | | | | | | |
| Lease income | | $ | 216.4 | | | $ | 192.5 | | | $ | 432.1 | | | $ | 379.6 | |
| Marine operating revenue | | | 40.1 | | | | 33.3 | | | | 46.0 | | | | 40.0 | |
| Interest income | | | 3.0 | | | | 3.9 | | | | 6.4 | | | | 12.4 | |
| Asset remarketing income | | | 22.4 | | | | 8.6 | | | | 32.8 | | | | 27.1 | |
| Gain on sale of securities | | | 1.5 | | | | 2.1 | | | | 6.4 | | | | 3.2 | |
| Fees | | | 3.5 | | | | 5.1 | | | | 7.1 | | | | 8.7 | |
| Other | | | 12.1 | | | | 21.1 | | | | 25.2 | | | | 35.8 | |
| | | | | | | | | | | | | |
| Revenues | | | 299.0 | | | | 266.6 | | | | 556.0 | | | | 506.8 | |
| Share of affiliates’ earnings | | | 31.3 | | | | 16.4 | | | | 54.2 | | | | 34.0 | |
| | | | | | | | | | | | | |
Total Gross Income | | | 330.3 | | | | 283.0 | | | | 610.2 | | | | 540.8 | |
| | | | | | | | | | | | | | | | | |
Ownership Costs | | | | | | | | | | | | | | | | |
| Depreciation | | | 49.4 | | | | 48.3 | | | | 101.2 | | | | 93.4 | |
| Interest, net | | | 40.8 | | | | 39.9 | | | | 82.5 | | | | 78.4 | |
| Operating lease expense | | | 50.9 | | | | 43.5 | | | | 94.4 | | | | 87.2 | |
| | | | | | | | | | | | | |
Total Ownership Costs | | | 141.1 | | | | 131.7 | | | | 278.1 | | | | 259.0 | |
| | | | | | | | | | | | | | | | | |
Other Costs and Expenses | | | | | | | | | | | | | | | | |
| Maintenance expense | | | 45.8 | | | | 47.1 | | | | 94.9 | | | | 93.4 | |
| Marine operating expenses | | | 30.4 | | | | 25.9 | | | | 35.3 | | | | 31.5 | |
| Other operating expenses | | | 12.1 | | | | 9.5 | | | | 22.3 | | | | 22.2 | |
| Debt extinguishment costs | | | 11.9 | | | | — | | | | 11.9 | | | | — | |
| Selling, general and administrative | | | 42.3 | | | | 43.2 | | | | 81.0 | | | | 81.4 | |
| Reversal of provision for possible losses | | | (2.0 | ) | | | (3.1 | ) | | | (5.2 | ) | | | (5.0 | ) |
| Asset impairment charges | | | 1.3 | | | | 1.0 | | | | 3.4 | | | | 1.1 | |
| Fair value adjustments for derivatives | | | (6.8 | ) | | | .4 | | | | (8.9 | ) | | | (.7 | ) |
| | | | | | | | | | | | | |
Total Other Costs and Expenses | | | 135.0 | | | | 124.0 | | | | 234.7 | | | | 223.9 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Income from Continuing Operations before Income Taxes | | | 54.2 | | | | 27.3 | | | | 97.4 | | | | 57.9 | |
Income Taxes | | | 19.7 | | | | 7.6 | | | | 34.5 | | | | 18.5 | |
| | | | | | | | | | | | | |
Income from Continuing Operations | | | 34.5 | | | | 19.7 | | | | 62.9 | | | | 39.4 | |
| | | | | | | | | | | | | | | | | |
Discontinued Operations | | | | | | | | | | | | | | | | |
| Operating results, net of taxes | | | .4 | | | | 15.5 | | | | .4 | | | | 18.7 | |
| Loss on sale of segment, net of taxes | | | — | | | | (.4 | ) | | | — | | | | (.4 | ) |
| | | | | | | | | | | | | |
Total Discontinued Operations | | | .4 | | | | 15.1 | | | | .4 | | | | 18.3 | |
| | | | | | | | | | | | | |
Net Income | | $ | 34.9 | | | $ | 34.8 | | | $ | 63.3 | | | $ | 57.7 | |
| | | | | | | | | | | | | |
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GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Millions, Except Per Share Data)
(Continued)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30 | | | June 30 | |
| | | 2005 | | | 2004 | | | 2005 | | | 2004 | |
Per Share Data | | | | | | | | | | | | | | | | |
| Basic: | | | | | | | | | | | | | | | | |
| Income from continuing operations | | $ | .69 | | | $ | .40 | | | $ | 1.26 | | | $ | .80 | |
| Income from discontinued operations | | | .01 | | | | .31 | | | | .01 | | | | .37 | |
| | | | | | | | | | | | | |
| Total | | $ | .70 | | | $ | .71 | | | $ | 1.27 | | | $ | 1.17 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Average number of common shares (in thousands) | | | 49,931 | | | | 49,297 | | | | 49,778 | | | | 49,279 | |
| | | | | | | | | | | | | | | | | |
| Diluted: | | | | | | | | | | | | | | | | |
| Income from continuing operations | | $ | .62 | | | $ | .38 | | | $ | 1.14 | | | $ | .76 | |
| Income from discontinued operations | | | .01 | | | | .28 | | | | .01 | | | | .33 | |
| | | | | | | | | | | | | |
| Total | | $ | .63 | | | $ | .66 | | | $ | 1.15 | | | $ | 1.09 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Average number of common shares and common share equivalents (in thousands) | | | 61,039 | | | | 54,794 | | | | 60,794 | | | | 54,784 | |
| | | | | | | | | | | | | | | | | |
| Dividends declared per common share | | $ | .20 | | | $ | .20 | | | $ | .40 | | | $ | .40 | |
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GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In Millions)
| | | | | | | | | |
| | | June 30 | | | December 31 | |
| | | 2005 | | | 2004 | |
| | | | | | | | | |
Assets | | | | | | | | |
| | | | | | | | | |
Cash and Cash Equivalents | | $ | 112.2 | | | $ | 63.4 | |
Restricted Cash | | | 57.1 | | | | 60.0 | |
| | | | | | | | | |
Receivables | | | | | | | | |
| Rent and other receivables | | | 78.2 | | | | 77.0 | |
| Finance leases | | | 312.7 | | | | 285.9 | |
| Loans | | | 59.1 | | | | 89.2 | |
| Less — allowance for possible losses | | | (17.5 | ) | | | (22.1 | ) |
| | | | | | | |
| | | | 432.5 | | | | 430.0 | |
| | | | | | | | | |
Operating Lease Assets, Facilities and Other | | | | | | | | |
| Rail | | | 3,592.3 | | | | 3,847.9 | |
| Air | | | 1,574.1 | | | | 1,704.1 | |
| Specialty | | | 59.8 | | | | 65.4 | |
| Other | | | 234.3 | | | | 212.3 | |
| Less — allowance for depreciation | | | (1,918.3 | ) | | | (1,924.1 | ) |
| | | | | | | |
| | | | 3,542.2 | | | | 3,905.6 | |
| Progress payments for aircraft and other equipment | | | 20.9 | | | | 20.0 | |
| | | | | | | |
| | | | 3,563.1 | | | | 3,925.6 | |
| | | | | | | | | |
Investments in Affiliated Companies | | | 814.0 | | | | 718.6 | |
Goodwill | | | 86.0 | | | | 93.9 | |
Other Investments | | | 53.7 | | | | 79.0 | |
Other Assets | | | 245.4 | | | | 242.4 | |
| | | | | | | |
| | | $ | 5,364.0 | | | $ | 5,612.9 | |
| | | | | | | |
| | | | | | | | | |
Liabilities and Shareholders’ Equity | | | | | | | | |
| | | | | | | | | |
Accounts Payable and Accrued Expenses | | $ | 342.0 | | | $ | 378.2 | |
| | | | | | | | | |
Debt | | | | | | | | |
| Commercial paper and bank credit facilities | | | 16.5 | | | | 72.1 | |
| Recourse | | | 2,679.5 | | | | 2,887.1 | |
| Nonrecourse | | | 90.7 | | | | 93.5 | |
| Capital lease obligations | | | 71.5 | | | | 79.4 | |
| | | | | | | |
| | | | 2,858.2 | | | | 3,132.1 | |
| | | | | | | | | |
Deferred Income Taxes | | | 735.8 | | | | 721.0 | |
Other Liabilities | | | 328.3 | | | | 300.7 | |
| | | | | | | |
Total Liabilities | | | 4,264.3 | | | | 4,532.0 | |
| | | | | | | | | |
Total Shareholders’ Equity | | | 1,099.7 | | | | 1,080.9 | |
| | | | | | | |
| | | $ | 5,364.0 | | | $ | 5,612.9 | |
| | | | | | | |
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GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended June 30, 2005
(In Millions)
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | GATX | |
| | | Rail | | | Air | | | Specialty | | | Other | | | Consolidated | |
Gross Income | | | | | | | | | | | | | | | | | | | | |
| Lease income | | $ | 180.5 | | | $ | 28.1 | | | $ | 7.8 | | | $ | — | | | $ | 216.4 | |
| Marine operating revenue | | | — | | | | — | | | | — | | | | 40.1 | | | | 40.1 | |
| Interest income | | | — | | | | .2 | | | | 2.6 | | | | .2 | | | | 3.0 | |
| Asset remarketing income | | | 1.3 | | | | .1 | | | | 21.0 | | | | — | | | | 22.4 | |
| Gain on sale of securities | | | .5 | | | | — | | | | 1.0 | | | | — | | | | 1.5 | |
| Fees | | | .4 | | | | 1.9 | | | | 1.2 | | | | — | | | | 3.5 | |
| Other | | | 15.8 | | | | — | | | | .5 | | | | (4.2 | ) | | | 12.1 | |
| | | | | | | | | | | | | | | | |
| Revenues | | | 198.5 | | | | 30.3 | | | | 34.1 | | | | 36.1 | | | | 299.0 | |
| Share of affiliates’ earnings | | | 6.9 | | | | 11.8 | | | | 12.6 | | | | — | | | | 31.3 | |
| | | | | | | | | | | | | | | | |
Total Gross Income | | | 205.4 | | | | 42.1 | | | | 46.7 | | | | 36.1 | | | | 330.3 | |
| | | | | | | | | | | | | | | | | | | | | |
Ownership Costs | | | | | | | | | | | | | | | | | | | | |
| Depreciation | | | 31.5 | | | | 14.9 | | | | 1.0 | | | | 2.0 | | | | 49.4 | |
| Interest, net | | | 19.5 | | | | 14.4 | | | | 5.2 | | | | 1.7 | | | | 40.8 | |
| Operating lease expense | | | 44.7 | | | | 5.4 | | | | .9 | | | | (.1 | ) | | | 50.9 | |
| | | | | | | | | | | | | | | | |
Total Ownership Costs | | | 95.7 | | | | 34.7 | | | | 7.1 | | | | 3.6 | | | | 141.1 | |
| | | | | | | | | | | | | | | | | | | | | |
Other Costs and Expenses | | | | | | | | | | | | | | | | | | | | |
| Maintenance expense | | | 45.5 | | | | .1 | | | | .2 | | | | — | | | | 45.8 | |
| Marine operating expenses | | | — | | | | — | | | | — | | | | 30.4 | | | | 30.4 | |
| Other operating expenses | | | 9.8 | | | | .4 | | | | 1.9 | | | | — | | | | 12.1 | |
| Debt extinguishment costs | | | — | | | | — | | | | — | | | | 11.9 | | | | 11.9 | |
| Selling, general and administrative | | | 17.3 | | | | 7.1 | | | | 1.6 | | | | 16.3 | | | | 42.3 | |
| Reversal of provision for possible losses | | | (.2 | ) | | | (.1 | ) | | | (.9 | ) | | | (.8 | ) | | | (2.0 | ) |
| Asset impairment charges | | | .9 | | | | — | | | | .4 | | | | — | | | | 1.3 | |
| Fair value adjustments for derivatives | | | — | | | | — | | | | (2.1 | ) | | | (4.7 | ) | | | (6.8 | ) |
| | | | | | | | | | | | | | | | |
Total Other Costs and Expenses | | | 73.3 | | | | 7.5 | | | | 1.1 | | | | 53.1 | | | | 135.0 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Income (Loss) from Continuing Operations before Income Taxes | | | 36.4 | | | | (.1 | ) | | | 38.5 | | | | (20.6 | ) | | | 54.2 | |
Income Tax Provision (Benefit) | | | 13.3 | | | | (.1 | ) | | | 14.7 | | | | (8.2 | ) | | | 19.7 | |
| | | | | | | | | | | | | | | | |
Income (Loss) from Continuing Operations | | $ | 23.1 | | | $ | — | | | $ | 23.8 | | | $ | (12.4 | ) | | $ | 34.5 | |
| | | | | | | | | | | | | | | | |
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GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended June 30, 2004
(In Millions)
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | GATX | |
| | | Rail | | | Air | | | Specialty | | | Other | | | Consolidated | |
Gross Income | | | | | | | | | | | | | | | | | | | | |
| Lease income | | $ | 160.2 | | | $ | 24.7 | | | $ | 7.6 | | | $ | — | | | $ | 192.5 | |
| Marine operating revenue | | | — | | | | — | | | | — | | | | 33.3 | | | | 33.3 | |
| Interest income | | | — | | | | .1 | | | | 3.8 | | | | — | | | | 3.9 | |
| Asset remarketing income | | | 1.7 | | | | .2 | | | | 6.7 | | | | — | | | | 8.6 | |
| Gain on sale of securities | | | — | | | | — | | | | 2.1 | | | | — | | | | 2.1 | |
| Fees | | | .9 | | | | 3.4 | | | | .8 | | | | — | | | | 5.1 | |
| Other | | | 16.8 | | | | .6 | | | | 1.1 | | | | 2.6 | | | | 21.1 | |
| | | | | | | | | | | | | | | | |
| Revenues | | | 179.6 | | | | 29.0 | | | | 22.1 | | | | 35.9 | | | | 266.6 | |
| Share of affiliates’ earnings | | | 6.0 | | | | 6.4 | | | | 4.0 | | | | — | | | | 16.4 | |
| | | | | | | | | | | | | | | | |
Total Gross Income | | | 185.6 | | | | 35.4 | | | | 26.1 | | | | 35.9 | | | | 283.0 | |
| | | | | | | | | | | | | | | | | | | | | |
Ownership Costs | | | | | | | | | | | | | | | | | | | | |
| Depreciation | | | 30.8 | | | | 14.5 | | | | 1.0 | | | | 2.0 | | | | 48.3 | |
| Interest, net | | | 18.1 | | | | 9.0 | | | | 6.6 | | | | 6.2 | | | | 39.9 | |
| Operating lease expense | | | 41.4 | | | | 1.0 | | | | 1.1 | | | | — | | | | 43.5 | |
| | | | | | | | | | | | | | | | |
Total Ownership Costs | | | 90.3 | | | | 24.5 | | | | 8.7 | | | | 8.2 | | | | 131.7 | |
| | | | | | | | | | | | | | | | | | | | | |
Other Costs and Expenses | | | | | | | | | | | | | | | | | | | | |
| Maintenance expense | | | 45.6 | | | | 1.1 | | | | .4 | | | | — | | | | 47.1 | |
| Marine operating expenses | | | — | | | | — | | | | — | | | | 25.9 | | | | 25.9 | |
| Other operating expenses | | | 7.7 | | | | .4 | | | | 1.4 | | | | — | | | | 9.5 | |
| Selling, general and administrative | | | 16.9 | | | | 5.1 | | | | 2.2 | | | | 19.0 | | | | 43.2 | |
| Reversal of provision for possible losses | | | — | | | | — | | | | (3.1 | ) | | | — | | | | (3.1 | ) |
| Asset impairment charges | | | — | | | | — | | | | .7 | | | | .3 | | | | 1.0 | |
| Fair value adjustments for derivatives | | | — | | | | — | | | | .4 | | | | — | | | | .4 | |
| | | | | | | | | | | | | | | | |
Total Other Costs and Expenses | | | 70.2 | | | | 6.6 | | | | 2.0 | | | | 45.2 | | | | 124.0 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Income (Loss) from Continuing Operations before Income Taxes | | | 25.1 | | | | 4.3 | | | | 15.4 | | | | (17.5 | ) | | | 27.3 | |
Income Tax Provision (Benefit) | | | 6.4 | | | | 1.7 | | | | 6.3 | | | | (6.8 | ) | | | 7.6 | |
| | | | | | | | | | | | | | | | |
Income (Loss) from Continuing Operations | | $ | 18.7 | | | $ | 2.6 | | | $ | 9.1 | | | $ | (10.7 | ) | | $ | 19.7 | |
| | | | | | | | | | | | | | | | |
Page 11
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Six Months Ended June 30, 2005
(In Millions)
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | GATX | |
| | | Rail | | | Air | | | Specialty | | | Other | | | Consolidated | |
Gross Income | | | | | | | | | | | | | | | | | | | | |
| Lease income | | $ | 358.8 | | | $ | 57.9 | | | $ | 15.4 | | | $ | — | | | $ | 432.1 | |
| Marine operating revenue | | | — | | | | — | | | | — | | | | 46.0 | | | | 46.0 | |
| Interest income | | | — | | | | .3 | | | | 4.4 | | | | 1.7 | | | | 6.4 | |
| Asset remarketing income | | | 8.2 | | | | 1.1 | | | | 23.5 | | | | — | | | | 32.8 | |
| Gain on sale of securities | | | .5 | | | | — | | | | 5.9 | | | | — | | | | 6.4 | |
| Fees | | | .9 | | | | 4.1 | | | | 2.1 | | | | — | | | | 7.1 | |
| Other | | | 31.0 | | | | .2 | | | | .1 | | | | (6.1 | ) | | | 25.2 | |
| | | | | | | | | | | | | | | | |
| Revenues | | | 399.4 | | | | 63.6 | | | | 51.4 | | | | 41.6 | | | | 556.0 | |
| Share of affiliates’ earnings | | | 10.0 | | | | 22.2 | | | | 22.0 | | | | — | | | | 54.2 | |
| | | | | | | | | | | | | | | | |
Total Gross Income | | | 409.4 | | | | 85.8 | | | | 73.4 | | | | 41.6 | | | | 610.2 | |
| | | | | | | | | | | | | | | | | | | | | |
Ownership Costs | | | | | | | | | | | | | | | | | | | | |
| Depreciation | | | 66.6 | | | | 30.6 | | | | 2.0 | | | | 2.0 | | | | 101.2 | |
| Interest, net | | | 42.1 | | | | 27.7 | | | | 10.1 | | | | 2.6 | | | | 82.5 | |
| Operating lease expense | | | 86.7 | | | | 5.9 | | | | 2.0 | | | | (.2 | ) | | | 94.4 | |
| | | | | | | | | | | | | | | | |
Total Ownership Costs | | | 195.4 | | | | 64.2 | | | | 14.1 | | | | 4.4 | | | | 278.1 | |
| | | | | | | | | | | | | | | | | | | | | |
Other Costs and Expenses | | | | | | | | | | | | | | | | | | | | |
| Maintenance expense | | | 93.7 | | | | .5 | | | | .7 | | | | — | | | | 94.9 | |
| Marine operating expenses | | | — | | | | — | | | | — | | | | 35.3 | | | | 35.3 | |
| Other operating expenses | | | 17.9 | | | | .8 | | | | 3.6 | | | | — | | | | 22.3 | |
| Debt extinguishment costs | | | — | | | | — | | | | — | | | | 11.9 | | | | 11.9 | |
| Selling, general and administrative | | | 35.3 | | | | 13.8 | | | | 3.5 | | | | 28.4 | | | | 81.0 | |
| Reversal of provision for possible losses | | | (1.0 | ) | | | (.4 | ) | | | (2.3 | ) | | | (1.5 | ) | | | (5.2 | ) |
| Asset impairment charges | | | 1.9 | | | | — | | | | 1.5 | | | | — | | | | 3.4 | |
| Fair value adjustments for derivatives | | | — | | | | — | | | | (2.4 | ) | | | (6.5 | ) | | | (8.9 | ) |
| | | | | | | | | | | | | | | | |
Total Other Costs and Expenses | | | 147.8 | | | | 14.7 | | | | 4.6 | | | | 67.6 | | | | 234.7 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Income (Loss) from Continuing Operations before Income Taxes | | | 66.2 | | | | 6.9 | | | | 54.7 | | | | (30.4 | ) | | | 97.4 | |
Income Tax Provision (Benefit) | | | 23.1 | | | | 2.1 | | | | 20.9 | | | | (11.6 | ) | | | 34.5 | |
| | | | | | | | | | | | | | | | |
Income (Loss) from Continuing Operations | | $ | 43.1 | | | $ | 4.8 | | | $ | 33.8 | | | $ | (18.8 | ) | | $ | 62.9 | |
| | | | | | | | | | | | | | | | |
Page 12
GATX CORPORATION AND SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Six Months Ended June 30, 2004
(In Millions)
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | GATX | |
| | | Rail | | | Air | | | Specialty | | | Other | | | Consolidated | |
Gross Income | | | | | | | | | | | | | | | | | | | | |
| Lease income | | $ | 319.6 | | | $ | 45.3 | | | $ | 14.7 | | | $ | — | | | $ | 379.6 | |
| Marine operating revenue | | | — | | | | — | | | | — | | | | 40.0 | | | | 40.0 | |
| Interest income | | | — | | | | .2 | | | | 12.2 | | | | — | | | | 12.4 | |
| Asset remarketing income | | | 6.1 | | | | .4 | | | | 20.6 | | | | — | | | | 27.1 | |
| Gain on sale of securities | | | — | | | | — | | | | 3.2 | | | | — | | | | 3.2 | |
| Fees | | | 1.9 | | | | 5.1 | | | | 1.7 | | | | — | | | | 8.7 | |
| Other | | | 29.9 | | | | 1.3 | | | | 1.2 | | | | 3.4 | | | | 35.8 | |
| | | | | | | | | | | | | | | | |
| Revenues | | | 357.5 | | | | 52.3 | | | | 53.6 | | | | 43.4 | | | | 506.8 | |
| Share of affiliates’ earnings | | | 9.8 | | | | 15.6 | | | | 8.6 | | | | — | | | | 34.0 | |
| | | | | | | | | | | | | | | | |
Total Gross Income | | | 367.3 | | | | 67.9 | | | | 62.2 | | | | 43.4 | | | | 540.8 | |
| | | | | | | | | | | | | | | | | | | | | |
Ownership Costs | | | | | | | | | | | | | | | | | | | | |
| Depreciation | | | 61.0 | | | | 28.3 | | | | 2.1 | | | | 2.0 | | | | 93.4 | |
| Interest, net | | | 34.9 | | | | 18.3 | | | | 14.1 | | | | 11.1 | | | | 78.4 | |
| Operating lease expense | | | 83.1 | | | | 2.0 | | | | 2.1 | | | | — | | | | 87.2 | |
| | | | | | | | | | | | | | | | |
Total Ownership Costs | | | 179.0 | | | | 48.6 | | | | 18.3 | | | | 13.1 | | | | 259.0 | |
| | | | | | | | | | | | | | | | | | | | | |
Other Costs and Expenses | | | | | | | | | | | | | | | | | | | | |
| Maintenance expense | | | 91.5 | | | | 1.3 | | | | .6 | | | | — | | | | 93.4 | |
| Marine operating expenses | | | — | | | | — | | | | — | | | | 31.5 | | | | 31.5 | |
| Other operating expenses | | | 18.7 | | | | .8 | | | | 2.6 | | | | .1 | | | | 22.2 | |
| Selling, general and administrative | | | 33.4 | | | | 10.5 | | | | 5.1 | | | | 32.4 | | | | 81.4 | |
| Provision (reversal) for possible losses | | | .2 | | | | (.4 | ) | | | (4.8 | ) | | | — | | | | (5.0 | ) |
| Asset impairment charges | | | — | | | | — | | | | .8 | | | | .3 | | | | 1.1 | |
| Fair value adjustments for derivatives | | | — | | | | — | | | | (.7 | ) | | | — | | | | (.7 | ) |
| | | | | | | | | | | | | | | | |
Total Other Costs and Expenses | | | 143.8 | | | | 12.2 | | | | 3.6 | | | | 64.3 | | | | 223.9 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Income (Loss) from Continuing Operations before Income Taxes | | | 44.5 | | | | 7.1 | | | | 40.3 | | | | (34.0 | ) | | | 57.9 | |
Income Tax Provision (Benefit) | | | 13.1 | | | | 2.5 | | | | 15.3 | | | | (12.4 | ) | | | 18.5 | |
| | | | | | | | | | | | | | | | |
Income (Loss) from Continuing Operations | | $ | 31.4 | | | $ | 4.6 | | | $ | 25.0 | | | $ | (21.6 | ) | | $ | 39.4 | |
| | | | | | | | | | | | | | | | |
Page 13
GATX CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION (UNAUDITED)
(In Millions, Except Railcar Data)
| | | | | | | | | | | | | |
| | | 6/30/2005 | | | 12/31/2004 | | | 6/30/2004 | |
Total Continuing Assets, Excluding Cash(a) | | $ | 6,527.3 | | | $ | 6,726.8 | | | $ | 6,509.4 | |
| Reservable Assets | | | 450.0 | | | | 452.1 | | | | 481.1 | |
| | | | | | | | | | | | | |
| Investment Volume (Quarter) | | | 94.2 | | | | | | | | 264.5 | |
| (Year to Date) | | | 188.5 | | | | | | | | 369.1 | |
| | | | | | | | | | | | | |
| Allowance for Losses | | | 17.5 | | | | 22.1 | | | | 31.3 | |
| Allowance for Losses as a Percentage of Reservable Assets | | | 3.9 | % | | | 4.9 | % | | | 6.5 | % |
| Net Charge-Offs and Asset Impairments and Write-Downs | | | 1.1 | | | | | | | | 10.0 | |
| Net Charge-Offs/Impairments/Write-Downs as a Percentage of Average Total Assets | | | .1 | % | | | | | | | .6 | % |
| | | | | | | | | | | | | |
| Non-performing Investments | | | 55.7 | | | | 57.2 | | | | 62.4 | |
| | | | | | | | | | | | | |
Capital Structure | | | | | | | | | | | | |
| Commercial Paper and Bank Credit Facilities, Net of Unrestricted Cash | | | (95.7 | ) | | | 8.7 | | | | (209.0 | ) |
| Debt: | | | | | | | | | | | | |
| On Balance Sheet | | | | | | | | | | | | |
| Recourse | | | 2,679.5 | | | | 2,887.1 | | | | 3,123.4 | |
| Nonrecourse | | | 90.7 | | | | 93.5 | | | | 96.3 | |
| | | | | | | | | | | | | |
| Off Balance Sheet | | | | | | | | | | | | |
| Recourse | | | 1,026.8 | | | | 937.3 | | | | 944.2 | |
| Nonrecourse | | | 307.2 | | | | 311.4 | | | | 309.1 | |
| | | | | | | | | | | | | |
| Capital Lease Obligations | | | 71.5 | | | | 79.4 | | | | 106.2 | |
| | | | | | | | | | | | | |
| Total Net Debt Obligations | | | 4,080.0 | | | | 4,317.4 | | | | 4,370.2 | |
| Total Recourse Debt | | | 3,682.1 | | | | 3,912.5 | | | | 3,964.8 | |
| Shareholders’ Equity and Allowance for Losses | | | 1,117.2 | | | | 1,103.0 | | | | 961.4 | |
| | | | | | | | | | | | | |
| Recourse Leverage | | | 3.3 | | | | 3.5 | | | | 4.1 | |
| | | | | | | | | | | | | |
Asset Remarketing Income | | | | | | | | | | | | |
| Disposition gains on owned assets | | | 8.7 | | | | | | | | 1.5 | |
| Residual sharing fees | | | 13.7 | | | | | | | | 7.1 | |
| | | | | | | | | | | |
| | | | 22.4 | | | | | | | | 8.6 | |
| | | | | | | | | | | | | |
Railcar Data | | | | | | Full Year | | | | |
| North American Fleet Utilization | | | 98 | % | | | 98 | % | | | 96 | % |
| | | | | | | | | | | | | |
| Beginning Fleet Size | | | 106,706 | | | | 105,248 | | | | 104,788 | |
| Additions | | | 1,206 | | | | 6,236 | | | | 2,499 | |
| Scrapped/Sold | | | (1,359 | ) | | | (4,665 | ) | | | (927 | ) |
| | | | | | | | | | |
| Ending Fleet Size | | | 106,553 | | | | 106,819 | | | | 106,360 | |
| (a) | | Includes Off Balance Sheet Assets |
Page 14
GATX CORPORATION AND SUBSIDIARIES
FINANCIAL PERFORMANCE MEASURES (UNAUDITED)
(In Millions)
Financial Performance Measures:
Ratios are based on continuing operations and are shown for the trailing 12 months ended:
| | | | | | | | | |
| | | June 30 |
| | | 2005 | | 2004 |
| Return on equity | | | 17.9 | % | | | 9.5 | % |
| Return on assets | | | 2.7 | % | | | 1.2 | % |
| SG&A efficiency ratio | | | 1.71 | % | | | 1.74 | % |
The 2005 12-month trailing return measures were positively affected by 2004 non-operating events including the gain from the sale of the Staten Island property, insurance recoveries and other tax benefits.
| | | |
Definitions: | | |
| Return on equity: | | Income from continuing operations divided by average total shareholders’ equity. |
| Return on assets: | | Income from continuing operations divided by average total on and off balance sheet (owned) assets. |
| SG&A efficiency ratio: | | Selling, general and administrative expenses (SG&A) before capitalized initial direct costs (IDC) divided by average total owned and managed assets. IDC are expenses incurred by GATX to originate new leases and loans which are deferred and amortized over the term of the lease or loan. |
Reconciliation of Non-GAAP Components used in Computation of Financial Performance Measures:
| | | | | | | | | |
| | | 12 Months Ended | |
| | | June 30 | |
| | | 2005 | | | 2004 | |
| | | | | | | | | |
| | | | | | | |
| Income from continuing operations | | $ | 182.0 | | | $ | 82.7 | |
| | | | | | | |
| | | | | | | | | |
| SG&A expenses | | $ | 162.9 | | | $ | 168.8 | |
| IDC | | | .9 | | | | 3.3 | |
| | | | | | | |
| SG&A before IDC | | $ | 163.8 | | | $ | 172.1 | |
| | | | | | | |
| | | | | | | | | | | | | |
| | | 6/30/05 | | | 6/30/04 | | | 6/30/03 | |
| On balance sheet assets from continuing operations | | $ | 5,364.0 | | | $ | 5,533.1 | | | $ | 5,631.4 | |
| Off balance sheet assets from continuing operations | | | 1,334.0 | | | | 1,253.3 | | | | 1,302.0 | |
| | | | | | | | | | |
| Total on and off balance sheet (owned) assets from continuing operations | | $ | 6,698.0 | | | $ | 6,786.4 | | | $ | 6,933.4 | |
| Managed assets from continuing operations | | | 2,722.5 | | | | 2,913.8 | | | | 3,190.2 | |
| | | | | | | | | | |
| Total owned and managed assets from continuing operations | | $ | 9,420.5 | | | $ | 9,700.2 | | | $ | 10,123.6 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Shareholders’ equity | | $ | 1,099.7 | | | $ | 930.1 | | | $ | 808.0 | |
| | | | | | | | | | |
Financial performance measures disclosed in this press release are meant to provide additional information and insight into historical operating results and the financial position of the business. Management uses these performance measures to assist in analyzing GATX’s underlying financial performance from period to period and to establish criteria for compensation decisions. GATX presented return on assets, including off balance sheet assets, because it believes that incorporating off balance sheet assets, primarily railcars financed with operating leases, results in a more accurate measure of the return GATX receives on assets in which it has an ownership-like interest. The SG&A efficiency ratio as presented is a more accurate measurement of actual SG&A incurred for the year as it relates to the underlying owned and managed assets, an asset base which is more reflective of the support services and administrative activities performed for both GATX and its customers. These measures are not in accordance with, or a substitute for, GAAP and may be different from or inconsistent with non-GAAP financial measures used by other companies.
