- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended Commission File Number
September 30, 1997 1-2328
GATX Corporation
Incorporated in the IRS Employer Identification No.
State of New York 36-1124040
500 West Monroe Street
Chicago, Illinois 60661-3676
(312) 621-6200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
Registrant had 24,449,833 shares of common stock outstanding as of October 31,
1997.
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PART I -- FINANCIAL INFORMATION
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
In Millions, Except Per Share Amounts
Three Nine
Months Ended Months Ended
September 30 September 30
------------------- --------------------
1997 1996 1997 1996
-------- -------- --------- --------
Gross income .................................. $ 430.9 $ 367.8 $ 1,260.2 $1,009.2
Costs and expenses
Operating expenses ........................ 212.2 171.3 613.9 487.0
Interest .................................. 56.3 55.2 163.1 148.2
Provision for depreciation and amortization 62.8 52.6 185.2 145.2
Provision for possible losses ............. 3.5 2.9 9.6 9.9
Selling, general and administrative ....... 63.9 41.9 173.6 115.4
------- -------- -------- --------
398.7 323.9 1,145.4 905.7
------- -------- -------- --------
Income before income taxes and equity in
net earnings of affiliated companies ....... 32.2 43.9 114.8 103.5
Income taxes .................................. 13.0 17.8 47.5 41.3
------- -------- ------- -------
Income before equity in net earnings
of affiliated companies .................... 19.2 26.1 67.3 62.2
Equity in net earnings of affiliated companies 8.8 7.3 22.1 21.6
------- -------- ------- -------
Net income .................................... $ 28.0 $ 33.4 $ 89.4 $ 83.8
======= ======== ======= =======
Per common share:
Net income ................................ $ 1.12 $ 1.47 $ 3.70 $ 3.61
Net income, assuming full dilution ........ 1.12 1.37 3.59 3.43
Dividends declared ........................ .46 .43 1.38 1.29
<FN>
Note - The consolidated balance sheet at December 31, 1996 has been derived from
the audited financial statements at that date. All other consolidated financial
statements are unaudited but include all adjustments, consisting only of normal
recurring items, which management considers necessary for a fair statement of
the consolidated results of operations and financial position for the respective
periods. Operating results for the nine months ended September 30, 1997 are not
necessarily indicative of the results that may be achieved for the entire year
ending December 31, 1997.
</FN>
-1-
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In Millions
ASSETS
September 30 December 31
1997 1996
(Unaudited)
----------- -----------
Cash and cash equivalents ............... $ 72.4 $ 46.2
Receivables
Trade accounts ...................... 105.8 130.1
Finance leases ...................... 884.4 761.3
Secured loans ....................... 200.9 222.6
Less - Allowance for possible losses (131.6) (121.1)
-------- --------
1,059.5 992.9
Operating lease assets and facilities
Railcars and support facilities ..... 2,446.8 2,436.5
Tank storage terminals and pipelines 1,404.0 1,377.8
Great Lakes vessels ................. 199.4 199.3
Operating lease investments and other 668.5 605.6
-------- --------
4,718.7 4,619.2
Less - Allowance for depreciation ... (1,872.8) (1,772.8)
-------- --------
2,845.9 2,846.4
Investments in affiliated companies ..... 533.5 464.2
Other assets ............................ 425.1 400.5
-------- --------
TOTAL ASSETS ............................ $4,936.4 $4,750.2
======== ========
-2-
LIABILITIES, DEFERRED ITEMS AND SHAREHOLDERS' EQUITY
September 30 December 31
1997 1996
(Unaudited)
----------- -----------
Accounts payable ............................ $ 283.1 $ 312.6
Accrued expenses ............................ 84.9 51.7
Debt
Short-term debt ........................ 572.5 243.8
Long-term debt ......................... 2,254.3 2,436.9
Capital lease obligations .............. 213.4 227.2
-------- --------
3,040.2 2,907.9
Deferred income taxes ....................... 337.3 339.2
Other deferred items ........................ 363.3 363.9
-------- --------
Total liabilities and deferred items 4,108.8 3,975.3
Shareholders' equity
Preferred Stock ........................ - 3.4
Common Stock ........................... 17.0 14.4
Additional capital ..................... 337.2 329.0
Reinvested earnings .................... 515.0 463.7
Cumulative unrealized equity adjustments 5.2 11.4
-------- --------
874.4 821.9
Less - Cost of common shares in treasury (46.8) (47.0)
-------- --------
Total shareholders' equity ......... 827.6 774.9
-------- --------
TOTAL LIABILITIES, DEFERRED ITEMS
AND SHAREHOLDERS' EQUITY ............... $4,936.4 $4,750.2
======== ========
-3-
GATX CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
In Millions
Three Months Ended Nine Months Ended
September 30 September 30
----------------- ----------------
1997 1996 1997 1996
------- ------- ------ ------
OPERATING ACTIVITIES
Net income ....................................... $ 28.0 $ 33.4 $ 89.4 $ 83.8
Adjustments to reconcile net income to net
cash provided by operating activities:
Realized gain on disposition of leased
equipment ............................. (24.2) (4.9) (64.7) (24.2)
Provision for depreciation and amortization 62.8 52.6 185.2 145.2
Provision for possible losses ............. 3.5 2.9 9.6 9.9
Deferred income taxes ..................... (3.9) 2.3 (0.8) 6.3
Net change in trade receivables, inventories,
accounts payable and accrued expenses ........ 11.4 52.1 26.3 42.9
Other ............................................ (2.6) (20.2) (47.7) (46.2)
------ ------ ------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES .... 75.0 118.2 197.3 217.7
INVESTING ACTIVITIES
Additions to operating lease assets and facilities (90.9) (101.4) (268.0) (362.0)
Additions to equipment on lease,
net of nonrecourse financing ................. (282.6) (71.7) (438.8) (268.5)
Secured loans extended ........................... (13.7) (8.4) (28.6) (108.7)
Investments in affiliated companies .............. (7.2) (3.0) (79.3) (36.0)
Other investments and progress payments .......... (10.6) (92.7) (35.0) (129.9)
------ ------ ------ ------
Capital additions and portfolio investments .. (405.0) (277.2) (849.7) (905.1)
Portfolio proceeds:
From disposition of leased equipment ......... 73.0 13.9 201.9 66.2
From return of investment .................... 58.3 131.0 184.7 217.2
------ ------ ------ ------
Total portfolio proceeds .................. 131.3 144.9 386.6 283.4
Proceeds from other asset dispositions ........... 171.0 216.2 174.5 223.5
------ ------ ------ ------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES .................. (102.7) 83.9 (288.6) (398.2)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt ......... 46.4 75.6 130.1 394.6
Repayment of long-term debt ...................... (52.0) (32.4) (311.5) (233.5)
Net increase (decrease) in short-term debt ....... 83.1 (172.7) 343.0 120.4
Repayment of capital lease obligations ........... (4.4) (5.1) (13.8) (13.6)
Issuance of Common Stock and other ............... 4.9 .5 7.8 1.7
Cash dividends ................................... (11.2) (12.0) (38.1) (36.0)
------ ------ ------ ------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES .................. 66.8 (146.1) 117.5 233.6
------ ------ ------ ------
NET INCREASE IN CASH AND
CASH EQUIVALENTS ........................... $ 39.1 $ 56.0 $ 26.2 $ 53.1
====== ====== ====== ======
-4-
MANAGEMENT'S DISCUSSION OF OPERATIONS
COMPARISON OF FIRST NINE MONTHS OF 1997
TO FIRST NINE MONTHS OF 1996
GENERAL
GATX Corporation's net income for the first nine months of 1997 was $89.4
million, a 7% increase from the $83.8 million for the first nine months of 1996.
Earnings per share on a fully diluted basis increased to $3.59 from $3.43 for
the 1996 period. Asset remarketing income at GATX Capital of $77 million
(pretax) for the first three quarters of 1997 is not anticipated to continue at
this historically high level during the fourth quarter as these gains do not
fall evenly from period to period.
Gross income of $1,260 million increased $251 million from the first nine months
of 1996. Technology equipment sales at GATX Capital accounted for $138 million
of the increase, almost exclusively due to the October 1996 acquisition of the
remaining 50% interest in Centron. The $77 million of asset remarketing income
at Capital represents a $35 million increase, and lease income increased $39
million from the year ago period based on a larger investment portfolio.
Transportation's gross income increased $45 million, driven by more U.S.
railcars on lease at higher rates and higher Canadian revenues. Transportation's
July 1996 acquisition of the remaining 55% interest in CGTX, its Canadian
railcar subsidiary, resulted in nine months of revenues being recorded in 1997
versus three months through September 1996.
Net cash provided by operating activities of $197 million for the first three
quarters of 1997 decreased $20 million from the comparable year ago period. To
the extent gains on leased equipment dispositions increase, cash flow from
operations decreases, since the entire proceeds from the sale are included in
portfolio proceeds; these gains increased $41 million. Portfolio proceeds of
$387 million, a $103 million increase, include GATX Capital's sale of assets,
loan principal and lease rents received, and joint venture cash distributions.
Capital additions and portfolio investments of $850 million decreased $55
million from the $905 million invested for the first nine months of 1996.
Transportation's year-to-date capital additions of $217 million were $112
million lower than in 1996, which included the $84 million CGTX acquisition.
Also, fewer railcars have been added to Transportation's fleet in 1997; about
3,300 new and used railcars were purchased versus almost 3,900 for the first
nine months of 1996. Terminals' capital additions also were reduced appreciably;
$48 million of spending in 1997 represents less than half of 1996's additions,
which included a major pipeline expansion. Balanced against Transportation's and
Terminals' lower investment levels is GATX Capital's $120 million increase in
portfolio investments, with 1997's investments including $193 million to fund a
portion of the recently announced Pitney Bowes portfolio acquisition.
While year-to-date capital additions and portfolio investments are down from
last year, the total for 1997 is expected to surpass last year's $1,185 million.
The fourth quarter of 1997 will include funding the remainder of the Pitney
Bowes acquisition and also Transportation's acquisition of a 40% interest in
KVG, a German railcar company, which closed in October 1997.
-5-
GATX, through its subsidiaries, had available unused committed lines of credit
of $371 million at September 30, 1997. General American Transportation
Corporation (GATC) has a $650 million shelf registration for pass through
certificates and debt securities, under which $100 million of notes and $236
million of pass through certificates have been issued. During the third quarter
of 1997, GATC completed a sale-leaseback of $167 million of railcars, $129
million of which was in the form of pass through certificates. This most recent
sale-leaseback is distinguished from prior sale-leasebacks in that the
obligation is non-recourse to GATC; prior sale-leasebacks were on a recourse
basis. GATX Capital has a $532 million shelf registration, of which the entire
amount was available on September 30, 1997. Neither GATC nor GATX Capital have
issued any medium-term notes for the first nine months of 1997.
Management's discussion 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 that could
cause actual results to differ materially from those projected. These risks and
uncertainties include, but are not limited to, unanticipated changes to the
aircraft, petroleum, chemical, rail, technology, and steel industries.
-6-
RESULTS OF OPERATIONS
Following is a discussion of the operating results of GATX's business segments:
RAILCAR LEASING AND MANAGEMENT (TRANSPORTATION)
- --------------------------------------------------------------------------------
Nine Months Ended
(In Millions) September 30
---------------------
1997 1996 Change
------ ------ ---------------------
Gross Income $355.2 $310.2 $ 45.0 15%
Net Income $ 55.3 $ 50.6 $ 4.7 9%
- --------------------------------------------------------------------------------
Transportation's gross income for the first nine months of 1997 increased 15%
from the comparable prior year period. The consolidation of CGTX accounted for
$28 million of the increase with the remaining revenue increase primarily due to
approximately 2,500 more cars on lease in the U.S. and Mexico, as well as higher
overall average lease rates. About 75,200 tank and freight cars were on lease
throughout North America at the end of the first nine months of the year,
including 8,700 cars in Canada. With a total fleet of 79,400 railcars,
utilization ended the period at 95%, up from slightly under 94% at September 30,
1996.
Net income increased 9% from the first nine months of 1996 primarily due to the
same reasons that revenues increased. While all major cost areas (asset
ownership, repairs, and SG&A) increased, total costs as a percentage of revenue
decreased by almost 1% from the first nine months of 1996. Because the majority
of recent years' U.S. railcar additions have been financed using
sale-leasebacks, those asset ownership costs are included as operating lease
expense (a component of operating expenses), whereas CGTX railcars are financed
with debt and, therefore, CGTX asset ownership costs are recorded as
depreciation and interest. Prior to acquiring the remaining 55% interest in CGTX
in July 1996, the operating results of CGTX were recorded as equity in net
earnings of affiliates; subsequently CGTX's revenues and costs were fully
consolidated.
-7-
FINANCIAL SERVICES
- --------------------------------------------------------------------------------
Nine Months Ended
(In Millions) September 30
1997 1996 Change
------- -------- ------------------
Gross Income $429.5 $219.1 $210.4 96%
Net Income $ 47.7 $ 39.1 $ 8.6 22%
- --------------------------------------------------------------------------------
Gross income at GATX Capital of $430 million increased $210 million from the
first nine months of 1996 due to technology equipment sales, higher asset
remarketing gains and fees, and increased lease income. Of the $210 million
increase, $138 million is due to technology equipment sales, primarily from
Centron, one of GATX Capital's technology subsidiaries. No comparable technology
sales (and related cost of sales) were recorded for the first nine months of
1996 as the remaining interest in Centron was acquired in the fourth quarter of
1996. Pretax asset remarketing gains and fees were $77 million compared to $42
million for the first three quarters of 1996. Asset remarketing income does not
occur evenly from period to period, and it is expected that it will not continue
at the same pace for the fourth quarter of 1997. Lease income of $179 million
increased $39 million from last year based on a larger asset portfolio.
In the third quarter of 1997, GATX Capital announced a significant portfolio
acquisition from Pitney Bowes, and a portion of the acquisition funded. In the
fourth quarter the remaining portion to be retained solely by GATX Capital will
fund, and a joint venture, in which Pitney and Capital will participate, also
will be established.
Net income for the first nine months was a record $47.7 million, a $8.6 million
increase over the comparable 1996 period due primarily to the increased asset
remarketing income, partially offset by increased SG&A, operating lease expense,
and interest expense. The increase in SG&A includes the effect of consolidating
Centron's operations; nine months of Centron SG&A were recorded in 1997, with no
SG&A for the corresponding period in 1996. In the third quarter of 1997, GATX
Capital recognized certain expenses related to the acquisition of the Pitney
Bowes portfolio and the purchase of the remaining 20% interest in Sun Financial.
The provision for possible losses was $10 million for the first nine months of
1997, consistent with the year ago period. The allowance for possible losses at
September 30, 1997 was almost $125 million compared to $114 million at December
31, 1996, with the increase resulting largely from the year-to-date provision.
-8-
TERMINALS AND PIPELINES
- --------------------------------------------------------------------------------
Nine Months Ended
(In Millions) September 30
1997 1996 Change
------ ------ ------------------
Gross Income $219.4 $220.1 $(0.7) -
Net Income $ 3.4 $ 11.3 $(7.9) (70)%
- --------------------------------------------------------------------------------
Terminals' gross income for the first nine months of 1997 is essentially
unchanged from the comparable 1996 period. Low industry wide petroleum inventory
levels continue to create a supply-demand imbalance, substantially weakening the
petroleum bulk liquid storage market. This imbalance continues to cause pricing
pressure for petroleum storage services. Chemical storage revenue declined
slightly from the prior year while pipeline revenues increased compared to the
first nine months of 1996. Throughput of petroleum and chemical products was 484
million barrels for the first nine months of 1997 compared to 479 million
barrels for the same period in 1996. Capacity utilization at wholly-owned
facilities was 94% at September 30, 1997 versus 84% a year ago.
Terminals' net income for the first nine months of 1997 was $3 million, a
significant decrease from last year's $11 million. Included in the 1997 results
is $4.2 million (pretax) of primarily SG&A costs for transformation initiatives
as Terminals continues its rationalization process and evaluation of its markets
and facilities. Asset ownership costs (depreciation and interest) were $8
million higher than the first nine months of 1996 reflecting the full impact of
business expansion and facilities improvements in the prior year. Equity
earnings were $9.4 million, $.4 million higher than the first nine months of
1996, in part due to higher earnings from the Olympic Pipeline joint venture.
-9-
LOGISTICS AND WAREHOUSING
- --------------------------------------------------------------------------------
Nine Months Ended
(In Millions) September 30
1997 1996 Change
------ ------- ------------------
Gross Income $192.1 $ 203.8 $(11.7) (6)%
Net Income $ .6 $ .5 $ .1 20%
- --------------------------------------------------------------------------------
GATX Logistics' gross income of $192 million decreased $12 million from the
first nine months of 1996 reflecting slower production periods by certain
customers, non-renewing customers, and fewer secondary public warehousing
locations.
Despite the decrease in gross income, net income of $.6 million was up slightly
from last year, due in part to lower SG&A and higher interest income.
GREAT LAKES SHIPPING
- --------------------------------------------------------------------------------
Nine Months Ended
(In Millions) September 30
1997 1996 Change
----- ----- ------------------
Gross Income $62.0 $57.5 $ 4.5 8%
Net Income $ 7.0 $ 4.1 $ 2.9 71%
- --------------------------------------------------------------------------------
American Steamship Company's gross income for the first nine months of 1997 was
$4.5 million above the prior year period due to more tons carried and a gain
from a third-party vessel financing and remarketing transaction, which was
partnered with GATX Capital. For the first three quarters of 1997, 17.3 million
tons were carried, up from 16.6 million tons for last year's period. For last
year, Great Lakes navigation was hampered by poor weather conditions early in
the season, and two vessels were temporarily out of service in the third
quarter.
Net income increased $2.9 million from last year, primarily attributable to the
increase in gross income.
-10-
COMPARISON OF THIRD QUARTER 1997 TO
THIRD QUARTER 1996
GENERAL
For the third quarter 1997, net income was $28 million as compared to $33
million for the third quarter of 1996. Earnings per share, on a fully diluted
basis, was $1.12 versus $1.37 for the 1996 period.
GROSS INCOME
- --------------------------------------------------------------------------------
(In Millions) Three Months Ended
September 30
Business Segment 1997 1996 Change
- -------------------------------- -------- -------- ------------------
Railcar Leasing and Management $120.3 $113.8 $ 6.5 6%
Financial Services 142.7 86.5 56.2 65
Terminals and Pipelines 73.2 74.3 (1.1) (1)
Logistics and Warehousing 64.7 64.9 (.2) -
Great Lakes Shipping 30.6 29.6 1.0 3
- --------------------------------------------------------------------------------
NET INCOME
- --------------------------------------------------------------------------------
(In Millions) Three Months Ended
September 30
Business Segment 1997 1996 Change
- ------------------------------- -------- -------- ------------------
Railcar Leasing and Management $18.8 $17.8 $ 1.0 6%
Financial Services 11.7 19.1 (7.4) (39)
Terminals and Pipelines 2.3 2.0 .3 15
Logistics and Warehousing .5 .1 .4 400
Great Lakes Shipping 3.3 2.6 .7 27
- --------------------------------------------------------------------------------
Increases and decreases in gross income and net income between these quarters
for all segments were principally due to the same reasons as discussed
previously in relation to the nine-month periods.
-11-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In September 1997, judgment was entered against General American Transportation
Corporation ("GATC"), its wholly owned subsidiary, GATX Terminals Corporation
("GTC") and seven other defendants not related to GATX for compensatory damages
of approximately $1.9 million plus interest from the date of the incident to
twenty individuals in a class action law suit filed in the Civil District Court
for the Parish of Orleans, LA, In Re New Orleans Train Car Leakage Fire Incident
(No. 87-16374). The judgment allocated responsibility for twenty percent of the
compensatory damages to GATC and ten percent to GTC. The judgment also provided
for punitive damages of $3.4 billion in the aggregate against five of the nine
named defendants, including $190 million against GTC. The litigation arose out
of an incident which began on September 9, 1987, when butadiene leaked from a
tank car owned by GATC and caught fire. The incident resulted in no deaths or
significant injuries and only minimal property damage, but caused the overnight
evacuation of a number of residents from the immediate area.
On October 31, 1997, the Louisiana Supreme Court ruled that the trial court
erred in rendering a judgment awarding damages prior to rendering a judgment
adjudicating all liability issues in the case. Accordingly, it vacated
the trial court's September 1997 judgment awarding both compensatory and
punitive damages, and remanded the case back to the trial court for
further proceedings not inconsistent with its ruling. The Company will
evaluate any further ruling of the trial court, and if appropriate ask the
court for post judgment relief. If necessary, the Company will appeal any
final judgment against it.
Although more than 8,000 claims have been made, the Company believes that the
damages, if any, that may be awarded to the remaining claimants should average
substantially less than those awarded to the initial twenty plaintiffs. The
Company also believes that the award of compensatory damages to the twenty
plaintiffs was excessive, and that the punitive damages judgment as to GTC was
unwarranted and excessive.
-12-
Item 6. Exhibits and Reports on Form 8-K Page
(a) 11A Statement regarding computation of earnings per share. 15
11B Statement regarding computation of earnings per share assuming 16
full dilution.
27 Financial Data Schedule for GATX Corporation for the quarter
ended September 30, 1997. Submitted to the SEC along with the
electronic submission of this Quarterly Report on Form 10-Q.
(b) Reports on Form 8-K.
GATX filed a report on Form 8-K on August 28, 1997, under Item 5.,
Other Events.
GATX filed a report on Form 8-K on September 9, 1997, under
Item 5., Other Events.
-13-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GATX CORPORATION
(Registrant)
/s/David M. Edwards
---------------------------
David M. Edwards
Vice President, Finance
and Chief Financial Officer
(Duly Authorized Officer)
Date: November 13, 1997
-14-
Exhibit 11A
GATX CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS
In Millions, Except Per Share Amounts
Three Months Ended Nine Months Ended
September 30 September 30
-------------- --------------
1997 1996 1997 1996
------ ----- ----- ----
Average number of shares of
Common Stock outstanding ............. 24.4 20.2 22.0 20.2
Shares issuable upon assumed exercise of
stock options, reduced by the number of
shares which could have been purchased
with the proceeds from exercise of
such options ......................... .5 .3 .4 .3
------ ------ ------ ------
Total shares ............................. 24.9 20.5 22.4 20.5
====== ====== ====== ======
Net income ............................... $ 28.0 $ 33.4 $ 89.4 $ 83.8
Deduct - Dividends paid and accrued on
Preferred Stock ...................... -- 3.3 6.6 9.9
Net income, as adjusted .................. $ 28.0 $ 30.1 $ 82.8 $ 73.9
====== ====== ====== ======
Net income per share ..................... $ 1.12 $ 1.47 $ 3.70 $ 3.61
====== ====== ====== ======
<FN>
Note: In February 1997, the Financial Accounting Standards Board issued
Statement No. 128 (FAS 128), Earnings per Share, which is required to be
adopted on December 31, 1997. At that time, the Company will be required
to change the method currently used to compute earnings per share and to
restate all prior periods. In addition to changes in the computation,
the terms "primary" and "fully diluted" earnings per share will be
replaced with the terms "basic" and "diluted," respectively. Under the
new requirements for calculating primary/basic earnings per share, the
dilutive effect of stock options will be excluded. The impact is
expected to result in an increase in primary/basic earnings per share of
approximately $.03 and $.02 per share for each of the quarters ended
September 30, 1997 and September 30, 1996, respectively. The impact of
FAS 128 on the calculation of fully diluted/diluted earnings per share
for these quarters is expected to result in no change.
</FN>
-15-
Exhibit 11B
GATX CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS
ASSUMING FULL DILUTION
In Millions, Except Per Share Amounts
Three Months Ended Nine Months Ended
September 30 September 30
-------------- ----------------
1997 1996 1997 1996
----- ----- ----- -----
Average number of shares used to
compute primary earnings per share ..... 24.9 20.5 22.4 20.5
Common Stock issuable upon assumed conversion
of Preferred Stock ..................... .1 4.0 2.5 4.0
------ ------ ------ -------
Total shares ................................. 25.0 24.5 24.9 24.5
====== ====== ====== =======
Net income as adjusted per primary computation $ 28.0 $ 30.1 $ 82.8 $ 73.9
Add - Dividends paid and accrued
on preferred stock ......................... - 3.3 6.6 9.9
Net income, as adjusted ...................... $ 28.0 $ 33.4 $ 89.4 $ 83.8
====== ====== ====== =======
Net income per share, assuming full dilution . $ 1.12 $ 1.37 $ 3.59 $ 3.43
====== ====== ====== =======
<FN>
Note: See discussion of FAS 128 effect on Exhibit 11A.
</FN>
-16-
EXHIBITS FILED WITH DOCUMENT
(a) 11A Statement regarding computation of earnings per share.
11B Statement regarding computation of earnings per share assuming
full dilution.
27 Financial Data Schedule for GATX Corporation for the quarter
ended September 30, 1997. Submitted to the SEC along with the
electronic submission of this Quarterly Report on Form 10-Q.