GATX Corporation Reports 2006 Fourth Quarter and Full-Year Results; Board of Directors Authorizes $300 Million Share Repurchase Program.CHICAGO -- GATX GATX General American Transportation Corporation Corporation (NYSE NYSE See: New York Stock Exchange :GMT (Greenwich Mean Time) See UTC. GMT - Universal Time 1 ) today reported 2006 fourth quarter and full-year results. Per share results for the fourth quarter and full year ending December 31 are summarized below: [TABLE OMITTED] In the third quarter of 2006, GATX signed an agreement to sell the majority of its aircraft leasing business to Macquarie Aircraft Leasing Limited (MALL). As a result, the aircraft leasing segment is reported as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and prior periods have been restated to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current presentation. In the 2006 fourth quarter, net income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $27.7 million or $.50 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with net income of $9.4 million or $.19 per diluted share in the fourth quarter of 2005. The fourth quarter of 2005 included $9.9 million or $.19 per diluted share of tax expense associated with the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of foreign earnings. Net income from continuing operations for the full-year 2006 was $150.5 million or $2.63 per diluted share, including a total of $9.9 million or $.16 per diluted share of benefits from a tax rate change, and derivative activity at an affiliate. This compares with $105.6 million or $1.94 per diluted share in the prior year, which included the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. tax expense from repatriation of foreign earnings. Highlights for the 2006 fourth quarter and year include: * Utilization of Rail's North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. fleet remained at 99% and the lease renewal success rate remained at a historical high throughout 2006. In the fourth quarter, lease renewal rates increased 19% over expiring rates and average renewal lease term remained long at 70 months, both on a basket of common car types. * Investment volume in 2006 exceeded levels achieved in 2005 and 2004. Total investment volume reached $763 million in 2006, up from $503 million in 2005 and $535 million in 2004. * On November 30, 2006, GATX sold its wholly-owned aircraft to MALL. On January 17, 2007, GATX sold its interests in joint venture aircraft to MALL, completing GATX's exit from the aircraft leasing business. * American Steamship steamship, watercraft propelled by a steam engine or a steam turbine. Early Steam-powered Ships Marquis Claude de Jouffroy d'Abbans is generally credited with the first experimentally successful application of steam power to navigation; in 1783 his Company (ASC ASC Ambulatory surgery center, see there ) results improved in 2006 due to the contribution from the six vessels purchased in June from Oglebay Norton, increasing rates, and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. operating conditions on the Great Lakes Great Lakes, group of five freshwater lakes, central North America, creating a natural border between the United States and Canada and forming the largest body of freshwater in the world, with a combined surface area of c.95,000 sq mi (246,050 sq km). . Brian A. Kenney, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of GATX, stated, "Our 2006 results reflect continuing strength in our markets. Net income from continuing operations increased substantially over 2005. We grew our rail, marine and industrial equipment assets while maintaining our disciplined investment approach. We also improved the risk profile of the Company through the sale of the air business, and this is reflected in our higher credit ratings. GATX earned a return on equity from continuing operations of approximately 14% in 2006 - a return that I believe is attractive on a risk-adjusted basis given our new business mix. "We expect that GATX will show continued improvement in financial returns in 2007. Average lease rates in Rail should continue increasing, and we will work hard to continue extending average lease terms. We invested $534 million in rail assets in 2006, representing a 33% increase over 2005 investment volume of $403 million. This is encouraging given the historically high price for new railcars and intense competition in the secondary market. Despite signs of increasing weakness in certain segments of the freight car market, we expect Rail's income contribution to increase significantly in 2007." Mr. Kenney continued, "Net income at Specialty was down slightly in 2006, as the shipping market cooled from its record-breaking performance in 2005. Vessel utilization remained high and even with the expected decrease in rates, our shipping joint ventures performed very well. We expect similar results from these joint ventures in 2007. Asset remarketing income, primarily from the managed portfolios, was stronger than originally expected in 2006. In 2007, we expect Specialty's income contribution to decline versus 2006 as we do not anticipate the same level of remarketing gains that were achieved in the prior year. "ASC's operating performance in 2006 improved due to the contribution of the six vessels acquired in June and the strong market environment. We expect similar operating performance in 2007. Due to this acquisition and the sale of the Air leasing business, we will break out ASC as a segment for financial reporting purposes, beginning with the Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. to be filed later this quarter. "As a result of the successful completion of the Air sale and factors such as our current outlook for investment volume and leverage, the GATX Board of Directors has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: a $300 million share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program. This authorization enables GATX to return a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. portion of the net Air sale proceeds to shareholders while also
providing the continued flexibility to invest in rail, marine, and
industrial equipment assets - and to do so even more aggressively when
warranted by asset prices."Mr. Kenney concluded, "We look forward in 2007 to capitalizing on continued strength in the rail market and more fully capturing the benefits of refocusing Noun 1. refocusing - focusing again focalisation, focalization, focusing - the act of bringing into focus the Company on its most attractive assets. We expect 2007 income from continuing operations to be in the range of $2.90-$3.10 per diluted share, representing a substantial increase over 2006 levels. This reflects expectations for continued improvement in Rail's income contribution, a decrease in Specialty's income versus recent high levels, and the positive impact of a lower share count." GATX RAIL Rail reported net income of $26.9 million in the fourth quarter of 2006, compared with $17.9 million in the fourth quarter of 2005. For the full year, Rail reported $116.4 million in net income versus $81.7 million in 2005. Net income increased year over year primarily due to an increased number of cars on lease, higher average lease rates, improved contributions from European operations, and increased remarketing income. The 2006 full-year results include $4.0 million of after-tax benefit related to derivative activity at an affiliate and $5.9 million of deferred tax benefits from an enacted reduction in Canadian statutory tax rates, while the 2005 fourth quarter and full-year results included $5.3 million of tax expense related to the repatriation of foreign earnings. At December 31, 2006, Rail's North American fleet totaled more than 110,000 cars and fleet utilization remained at 99% each quarter in 2006, up from 98% at year end 2005. During the fourth quarter, lease renewal pricing on a basket of Rail's most common car types increased 19% over expiring lease rates, comparable to the prior quarter. Rail also extended the average term on basket renewals during the fourth quarter to 70 months, compared with 62 months in the fourth quarter of 2005. This action is expected to temper future earnings volatility. Total investment volume at Rail was $534 million, up from $403 million in 2005 and $490 million in 2004. Rail acquired 6,302 cars for its North American fleet during 2006, comprised of 3,495 new and 2,807 used railcars, and sold or scrapped 3,975 cars. These actions created net growth in the fleet of more than 2,300 cars during the year. Many of the new railcars were acquired at advantaged prices through our Committed Purchase Program. Additionally, Rail's success in acquiring used railcars is a result of a proactive initiative to target certain used car types. Rail also identified additional attractive investment opportunities in Europe, investing more than $45 million in this important market. In macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. data related to Rail's business, North American manufacturing capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. , as reported by the Federal Reserve, was 82% in December 2006, up from 81% in the same period 2005. Backlogs at the railcar manufacturers, as reported by the Railway Supply Institute, totaled nearly 86,000 cars at the end of the fourth quarter 2006, up from approximately 69,000 during the same period 2005 and down from 88,000 in the third quarter 2006. Carloadings on the U.S. rails, excluding intermodal, as reported by the Association of American Railroads, increased 1.2% over 2005. Chemical shipments were down 1.1% in 2006 versus 2005. GATX SPECIALTY Specialty reported net income of $7.0 million in the fourth quarter of 2006 compared with $4.8 million in the prior year period. For the full-year 2006, Specialty reported net income of $55.1 million, compared with $60.9 million in 2005. Both 2006 and 2005 results reflect very strong remarketing activity. The 2006 results also reflect marine joint venture income that slowed as expected from record levels in 2005. Remarketing gains in 2006 were robust, totaling $27.9 million, comprised of $.8 million from gains on sales of owned assets and $27.1 million in residual sharing income from the managed portfolio. Similarly, in 2005, remarketing gains at Specialty totaled $28.1 million. These high levels of remarketing activity are not expected to occur again in 2007. Note that the Specialty segment now includes the results of GATX's 50% interest in the aircraft engine leasing joint venture, Rolls-Royce & Partners Finance, which was previously included in the Air segment. GATX plans to retain its interest in this investment. Prior periods have been restated to conform to the current presentation. The Specialty portfolio currently consists of approximately $500 million of owned assets (including on and off balance sheet assets) and third-party managed portfolios totaling approximately $470 million. DISCONTINUED OPERATIONS In the third quarter of 2006, GATX signed an agreement to sell the majority of its aircraft leasing business to MALL. The sale of the wholly-owned aircraft was completed on November 30, 2006 and sale of the interests in joint venture aircraft was completed on January 17, 2007. In addition to the sale to MALL, GATX sold 27 aircraft to AerCap in the latter half of the year, and in July 2006 completed the sale of GATX's share of the Pembroke joint venture to management. In the first quarter of 2007, GATX will record final Air sale purchase price adjustments in Discontinued Operations; adjustments are not expected to be material to GATX's overall financial position. SEGMENT REPORTING segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four Based on GATX's exit from the aircraft leasing business, the Company may reformat (1) To change the record layout of a file or database. (2) To initialize a disk over again. segment results in the future. Any changes to segment reporting will be detailed in the Company's 2006 Annual Report on Form 10-K. COMPANY DESCRIPTION GATX Corporation (NYSE:GMT) provides lease financing and related services to customers operating rail, 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 New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. since 1916. For more information, visit the Company's website at www.gatx.com. TELECONFERENCE INFORMATION GATX Corporation will host a teleconference to discuss 2006 results. Teleconference details are as follows: > > > > Thursday, January 25th > > > > 11:00 A.M. Eastern Time > > > > Domestic Dial-In: 1-800-706-6082 > > > > International Dial-In: 1-706-634-7421 > > > > Replay: 1-800-642-1687 / Access Code: 5984330 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. FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements may constitute forward-looking statements made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provision of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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; lease rates, utilization levels and operating costs operating costs npl → gastos mpl operacionales in GATX's primary asset segments; conditions in the capital markets; changes in GATX's or GATX Financial Corporation's credit ratings; dynamics affecting companies within the markets served by GATX; regulatory rulings that may impact the economic value and operating costs of assets; competitive factors in GATX's primary markets including lease pricing and asset availability; changes in loss provision levels within GATX's portfolio; impaired asset Impaired Asset An asset with a market value that is worth less than its book value. Notes: If the sum of all estimated future cash flows is less than the carrying value of the asset, then the asset would be considered impaired and would have to be written down to its fair charges that may result from changing market conditions or implementation of portfolio management initiatives by GATX; the outcome of pending or threatened litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and general market conditions in the rail, air, marine and other large-ticket industries. Other factors and unanticipated events could adversely affect our business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets and financial performance. We discuss certain of these matters more fully, as well as certain risk factors that may affect our business operations, financial condition and results of operations, in other of our filings with the SEC, including our Annual Report on Form 10-K/A. These risks, uncertainties and other factors should be carefully considered in evaluating the forward-looking statements. The forward-looking statements included in this press release are made only as of the date of this release, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. Investor, corporate, financial, historical financial, photographic and news release information may be found at www.gatx.com. --Tabular Follows-- [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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