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GATX Announces Year-End And Fourth Quarter Results

--Previously Announced $163 million after-tax, non-cash charges taken during quarter
--Record Operating Results Achieved by GATX Corporation, General American Transportation, GATX Capital, GATX Logistics and American Steamship Company

CHICAGO, Jan. 27 /PRNewswire/ -- As a result of charges taken in the fourth quarter, GATX Corporation (NYSE: GMT) today reported a net loss for the fourth quarter of 1997 of $140 million or $5.74 per common share. The previously announced charges, which total $163 million after-tax, reflect adjustments to reduce asset values in certain non-strategic or commodity markets at GATX Terminals and GATX Logistics. For the fourth quarter of 1996, GATX reported net income of $18.9 million or $.77 per common

For the full year of 1997, GATX reported a net loss of $50.9 million or $2.55 per common share. For the entire year of 1996, the company recorded net income of $102.7 million or $4.20 per common share common

Before the effect of the $163 million charge taken during the fourth quarter of 1997, GATX quarterly results would have been $22.5 million or $.90 per common share, and for the full year earnings would be $111.9 million or $4.51 per share. Amounts per share are reported on a diluted basis.

RECORD OPERATIONAL YEAR

Ronald H. Zech, chairman and CEO, stated, "GATX had an excellent year in 1997. On an operational basis, GATX achieved record results, and four of our five subsidiaries achieved record operating results for the year. We have taken the necessary steps to reflect market conditions, and we have set the stage for future growth in profitability. We have a solid strategic plan in place to provide increasing value to our shareholders. These strategies set the stage for 1997's performance and resulted in a total return to our shareholders of 54 percent. These same strategies and trends are continuing into 1998, and our outlook for the year ahead is very

"We are particularly pleased with the third consecutive year of record net income and strong growth achieved by GATX Capital. GATX Capital's net income grew by 17 percent, primarily reflecting strong rail and air markets. In addition, asset remarketing income generated from the sale of owned and managed assets grew to record levels.

"General American Transportation also reported a record year. General American Transportation's fleet size grew by more than 4,000 cars to a total of more than 81,000 rail cars, a record high number. It also completed the acquisition of an interest in a European tank car leasing company. Monthly rate increases in our railcar fleet and improved repair cost margins also contributed to improved earnings," Zech explained.

"We have made substantial changes at GATX Terminals to address the changed market environment. Since our announcement this past December of our intention to take aggressive steps to revitalize this operation, we have initiated steps to sell or close our Staten Island terminal and GATX's UK-based terminalling company, which includes seven terminals in the UK.

"American Steamship achieved record net income by capitalizing on improved market conditions, favorable weather, increased vessel utilization as well as generating income by working more closely with other GATX operating companies.

"The improving results at GATX Logistics are supported by new contracts and the continuation of an evolving strategy to focus on longer-term integrated logistics solutions. In addition, GATX Logistics established an exciting foothold in Latin America by starting up operations in Chile.

"At a strategic, consolidated level we have achieved a number of the goals I set out in the 1996 Annual Report. We broadened and deepened our relationships with existing customers by combining services offered among GATX's operating companies. We substantially increased the assets we own or control outside the United States, primarily in Canada, Mexico and Western Europe. We are working GATX's $6 billion of assets more effectively through improved financing techniques such as our innovative securitized financing of railcars. Most importantly, our strategies are providing increasing value to our shareholders," Zech concluded.

CASH FLOW ACHIEVES RECORD LEVELS

Cash flow from operations and portfolio proceeds increased to $750 million for 1997 compared to $652 million in 1996, illustrating the consistently high level of cash generated by the company's growing asset base. The significant increase in cash flow reflects a 29 percent increase in cash generated by portfolio proceeds, as well as continuing strong cash from operations.

GENERAL AMERICAN REPORTS RECORD YEAR

General American Transportation Corporation, GATX's railcar leasing and management subsidiary, reported record earnings of $74.4 million for 1997 compared to $67.7 million for 1996, reflecting new car additions, higher utilization, increased contribution from its Canadian operation. For the fourth quarter of 1997, General American recorded net income of $19.1 million compared to net income of $17.1 million for the fourth quarter of 1996.

General American Transportation has 78,000 railcars on lease in North America, an increase of approximately 4,000 railcars over 1996. Utilization for the North American fleet ended the year at 96 percent, up from 1996 year- end utilization of 95 percent. Fleet repair costs were 22 percent of revenue for 1997, down from 23 percent at the end of 1996.

As part of GATX's overall strategy to extend the reach of its services internationally, General American Transportation Corporation purchased 40 percent of Kesselwaggon Vermietgesellschaft (KVG), a German and Austrian- based tank car and specialty railcar leasing company. KVG owns approximately 10,000 railcars which operate throughout Europe.

GATX CAPITAL REPORTS RECORD YEAR EARNINGS

GATX Capital, GATX's financial services and asset management subsidiary, reported record earnings of $53.6 million for 1997 compared to earnings of $45.9 million for 1996. For the fourth quarter of 1997, GATX Capital reported earnings of $5.9 million compared to $6.8 million in the prior-year period. The results for the quarter reflect the variability of earnings at GATX Capital due to the sales of equipment and asset remarketing fees, which do not fall evenly period to period.

Lease income grew to $246 million in 1997 compared to $196 million in 1996. Strong growth in the revenues derived from GATX Capital's technology investments drove a large part of this improvement.

GATX Capital earns a substantial portion of its net income from the remarketing of assets at the conclusion of their lease terms and when market opportunities occur. Remarketing income can take the form of gains on sales of assets or fees generated from managed portfolio transactions. Gains from the sale of assets for the quarter were $5.1 million compared to $9.8 million last year. For all of 1997, gains from the sale of assets were $68.9 million compared to $35.5 million last year. GATX Capital again had a strong year for fee income, generating $29.4 million for the full year of 1997 compared to $31.8 million for 1996. These gains and fees were generated primarily from air, rail and manufacturing assets. For the fourth quarter of 1997, GATX Capital reported fee income of $5.0 million compared to $10.5 million for the fourth quarter of 1996.

GATX Capital's full year portfolio volume of $866 million was the highest investment level ever, and increased 31 percent over the $659 million invested in 1996. The investments included $256 million in partnerships and joint ventures involving rail, air, and technology assets. Significant achievements at GATX Capital during 1997 included the acquisition of a portfolio of rail, air, and other equipment from Pitney Bowes and the establishment of a new aircraft leasing joint venture.

GATX TERMINALS CONTINUES STRATEGIC REALIGNMENT

GATX Terminals, GATX's bulk-liquid storage, distribution, and pipeline operation, reported earnings, before the effects of a $123.8 million after-tax charge, of $8.2 million for 1997 compared to earnings of $12.6 million for 1996. For the fourth quarter, net earnings, before the charge, would be $4.8 million compared to $1.3 million a year ago. Including the effects of the charge, GATX Terminals reported a loss for the year of $115.6 million and loss for the quarter of $119.0 million.

GATX Terminals' initiatives continue to address ongoing cost reduction efforts and productivity enhancements. During the quarter, GATX Terminals initiated steps to sell or close certain terminals locations as a result of its strategic restructuring. Included in the terminals that are being sold or closed down are the Staten Island terminal, and the storage facilities which make up GATX Terminals in the United Kingdom.

Average capacity utilization for the fourth quarter of 92 percent at Terminals' wholly owned facilities improved from last year's fourth quarter utilization of 87 percent. Barrels of throughput delivered to customers for the year was 639 million barrels compared to 634 million barrels last year.

GATX LOGISTICS' RESULTS IMPROVE

GATX Logistics reported earnings of $1.4 million for the full year 1997, before the effects of a $39 million after-tax charge, compared to earnings of $0.9 million for 1996. For the fourth quarter of 1997, GATX Logistics reported earnings, before the effects of the non-cash charge, of $.8 million compared to fourth quarter 1996 earnings of $.4 million. The charge at GATX Logistics results from a write-down related to certain past acquisitions, which were primarily involved in public warehousing, to better reflect the economics of that sector of the industry.

Including the effects of the charge, GATX Logistics reported a net loss for the year of $37.6 million and a net loss for the quarter of $38.2 million.

GATX Logistics continues to implement its strategy of providing integrated logistics solutions to an expanding customer base and steadily reducing its role in the lower margin, public warehousing business. GATX Logistics continues to win new contracts, to implement strong cost controls, and to achieve growth with existing customers. In addition, GATX Logistics established a presence in Latin America in 1997 with the commencement of operations in Chile.

AMERICAN STEAMSHIP ACHIEVES IMPROVED RESULTS

American Steamship Company, GATX's Great Lakes shipping subsidiary, earned $9.4 million for 1997 compared to earnings of $6.8 million for 1996. This improved performance reflects improved operational performance generated from better vessel utilization, cost control, strong demand for the commodities moved on the Great Lakes, and favorable weather conditions. For the fourth quarter of 1997, American Steamship reported earnings of $2.4 million compared to earnings of $2.7 million for the year ago period.

Demand remained strong throughout 1997 due to both the favorable economy and the increase in demand for shipping tonnage on the Great Lakes. American Steamship's fleet of ten self-unloading vessels transported 26.4 million tons of product in 1997 versus 24.6 million tons in 1996.

In addition, the results for 1997 included a $1.3 million after-tax gain related to a transaction in which American Steamship partnered with GATX Capital in a third-party vessel financing and remarketing. This transaction was previously announced with 1997's second quarter results.

SPECIAL CHARGE

GATX has initiated a number of programs designed to increase earnings and provide its shareholders with superior returns. The $163 million after-tax charge, as well as a number of strategic and operating initiatives, are resulting in an organization that is better positioned for short- and long- term growth. The charges taken in the quarter total $225 million pre-tax, of which $186 million applies to GATX Terminals and $39 million to GATX Logistics.

Since the time that the charges were announced in mid-December 1997, GATX has made substantial progress towards implementing the operational changes related to the charge. GATX has initiated contact with potential buyers of GATX Terminals Limited which includes seven terminals locations in the UK totaling .95 million cubic meters of storage (6.0 million barrels). GATX Terminals has advised employees , customers, and regulatory agencies that its Staten Island (New York Harbor) terminal will be closed or sold (5.2 million barrels). Other smaller facilities are being evaluated or are in the process of sale or closing. These smaller terminals aggregate to approximately 1 million barrels.

GATX Logistics continues to pursue its strategy of focusing on contract integrated solutions and away from public warehousing.

COMPANY DESCRIPTION

In 1998, GATX is celebrating the 100th anniversary of its founding. GATX Corporation provides approximately $6 billion of service-enhanced assets primarily used to help its customers transport, store or distribute their products and information. GATX's assets include railcars and locomotives, bulk liquid terminals and pipelines, ships, commercial aircraft, technology equipment and other assets and related services worldwide. In addition, GATX offers a variety of financial and logistics services focused on enhancing the value of owned and leased assets.

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 that could cause actual results to differ materially from those projected.

ADDITIONAL INFORMATION:

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
                     (In Millions, Except Per Share Data)

                                    Three Months Ended    Twelve Months Ended
                                       December 31            December 31
                                    1997         1996      1997        1996

    Gross Income                   438.7        405.2    1,698.9     1,414.4
    Net (Loss) Income             (140.3)        18.9      (50.9)      102.7
    Basic:  Net (Loss)
      Income Per Share             (5.74)        0.77      (2.55)       4.43
      Average Shares Outstanding  24,448       20,249     22,542      20,189
    Diluted: Net (Loss)
      Income Per Share             (5.74)*       0.77      (2.55)*      4.20
      Average Shares Outstanding  24,448       24,542     22,542      24,462

    Without Effects of
      Special Charge:

                                     Three Months Ended    Twelve Months Ended
                                        December 31            December 31
                                     1997         1996      1997       1996

    Gross Income                    438.7         405.2    1,698.9    1,414.4
    Adjusted Income                  22.5          18.9      111.9      102.7
    Basic:  Adjusted Income
      Per Share                      0.92          0.77       4.67       4.43
      Average Shares Outstanding   24,448        20,249     22,542     20,189
    Diluted: Adjusted Income
      Per Share                      0.90          0.77       4.51       4.20
      Average Shares Outstanding   25,057        24,542     24,836     24,462


    *  Conversion of preferred stock excluded from computation of diluted
    earnings (loss) because of antidilutive effect.

                      GATX CORPORATION BUSINESS SEGMENT DATA
                                  (In Millions)

            Three Months Ended December 31, 1997 and 1996 (Unaudited)

                                       Gross Income            Net Income
                                     1997         1996       1997       1996

    Railcar Leasing and Management  $118.6       $117.7     $19.1       $17.1
    Financial Services               154.9        118.2       5.9         6.8
    Terminals and Pipelines           73.4         77.5    (119.0)        1.3
    Logistics and Warehousing         64.2         63.6     (38.2)        0.4
    Great Lakes Shipping              29.4         27.7       2.4         2.7
    Subtotal                         440.5        404.7    (129.8)       28.3
    Corporate and Other               (1.8)         0.5     (10.5)       (9.4)
    Total consolidated amounts      $438.7       $405.2   ($140.3)       18.9


            Twelve Months Ended December 31, 1997 and 1996 (Unaudited)

                                        Gross Income            Net Income
                                      1997         1996       1997       1996

    Railcar Leasing and Management   $473.8       $427.9     $74.4      $67.7
    Financial Services                584.4        337.3      53.6       45.9
    Terminals and Pipelines           292.8        297.6    (115.6)      12.6
    Logistics and Warehousing         256.3        267.4     (37.6)       0.9
    Great Lakes Shipping               91.4         85.2       9.4        6.8
    Subtotal                        1,698.7      1,415.4     (15.8)     133.9
    Corporate and Other                 0.2         (1.0)    (35.1)     (31.2)
    Total consolidated amounts     $1,698.9     $1,414.4    ($50.9)    $102.7

                      GATX CORPORATION BUSINESS SEGMENT DATA
                                  (In Millions)

    NOTE:  The following data have been adjusted to reflect results of
    operations without the effect of the restructuring provisions recorded at
    Terminals and Logistics.


            Three Months Ended December 31, 1997 and 1996 (Unaudited)

                                                             Income Before
                                  Gross Income            Special Provision
                                 1997      1996            1997       1996
    Railcar Leasing
      and Management           $118.6    $117.7           $19.1      $17.1
    Financial Services          154.9     118.2             5.9        6.8
    Terminals and Pipelines      73.4      77.5             4.8        1.3
    Logistics and Warehousing    64.2      63.6             0.8        0.4
    Great Lakes Shipping         29.4      27.7             2.4        2.7
    Subtotal                    440.5     404.7            33.0       28.3
    Corporate and Other          (1.8)      0.5           (10.5)      (9.4)
    Total consolidated amounts $438.7    $405.2           $22.5      $18.9

            Twelve Months Ended December 31, 1997 and 1996 (Unaudited)

                                                             Income Before
                                  Gross Income            Special Provision
                                 1997      1996            1997       1996

    Railcar Leasing
      and Management            $473.8    $427.9          $74.4      $67.7
    Financial Services           584.4     337.3           53.6       45.9
    Terminals and Pipelines      292.8     297.6            8.2       12.6
    Logistics and Warehousing    256.3     267.4            1.4        0.9
    Great Lakes Shipping          91.4      85.2            9.4        6.8
    Subtotal                   1,698.7   1,415.4          147.0      133.9
    Corporate and Other            0.2      (1.0)         (35.1)     (31.2)
    Total consolidated
      amounts                 $1,698.9  $1,414.4         $111.9     $102.7