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GATX Corporation Announces Second Quarter And First Half Earnings

--Record Six Months Net Income
--Record Quarter Net Income at General American
--Record Cash Flow for Quarter and Six Months

CHICAGO, July 21 /PRNewswire/ -- GATX Corporation (NYSE: GMT) today announced that second quarter earnings were $30.8 million or $0.61 per common share. (All "per share" data in the text section of this press release is on a diluted basis. Basic earnings are included in the tabular section.) This compares to 1997 second quarter earnings of $30.2 million or $0.61 per share.

Earnings for the first six months of 1998 were $68.2 million or $1.35 per share. Earnings for the first six months of 1997 were $61.4 million or $1.24 per share.

Cash flow from operations and portfolio proceeds was $199.0 million for the second quarter compared to $159.3 million a year ago. For the six months ended June 30, 1998, cash flow from operations and portfolio proceeds reached $420.0 million compared to $377.6 million a year ago.

Ronald H. Zech, chairman and CEO, stated, "The second quarter reflects strong results in most of GATX's operations, and the first six months' results are at record levels. At the present time, we believe that the second half of 1998 will produce earnings at similar levels to the first half, and that the third quarter will be stronger than the fourth quarter due to the anticipated timing of remarketing gains. Based on these factors, we expect full-year results for 1998 to set a new record.

"GATX continues to focus on creating incremental value for its shareholders. Earlier this year, GATX split its shares on a two-for-one basis, and increased its common dividend for the thirteenth consecutive year."

General American Transportation, GATX Capital, and GATX Terminals all reported higher quarterly net income in the second quarter compared to last year. General American Transportation continues to benefit from high utilization and new railcar additions. GATX Capital's income through the first half of the year has been outstanding, resulting from significant asset remarketing gains and fees. GATX Terminals' earnings were substantially higher than the year ago period reflecting improvement in utilization, pricing, and the benefits from its 1997 restructuring plan. GATX Logistics' results were hampered by a $1.6 million after-tax write-off of a customer receivable. Although operations were at record levels, American Steamship reported net earnings for the quarter at a slightly lower level than the year ago period. Last year's quarter included a $1.3 million after-tax fee resulting from a collaborative transaction between GATX Capital and American Steamship.

General American Transportation Reports Record Quarter

General American Transportation Corporation, GATX's railcar operations subsidiary, earned $20.1 million for the second quarter of 1998 compared to $18.5 million for the second quarter of 1997. General American continues to benefit from more railcars on lease. General American's North American fleet exceeds 83,000 railcars versus 79,000 a year ago. The utilization rate of the North American fleet was 96 percent at the end of the second quarter versus 94 percent last year.

GATX Capital Reports Solid Asset Remarketing Results

GATX Capital, GATX's financial management and investment subsidiary, reported net income of $13.5 million for the second quarter of 1998 versus $13.1 million for the second quarter of 1997. GATX Capital's performance was strong across major markets in rail, air and diversified industries. GATX Capital's technology leasing segment remained strong, but competitive pricing and a reduction in sales volume hampered results in technology's value-added reselling business. For the quarter, remarketing gains totaled $18.1 million, compared to $15.5 million a year ago. This quarter's asset remarketing results were primarily achieved by the sale of assets from GATX's managed portfolios.

Throughput and Utilization Stronger at GATX Terminals

GATX Terminals, GATX's bulk liquid storage and pipeline subsidiary, reported net income of $4.3 million for the second quarter of 1998 compared to $2.5 million a year ago. Throughput for the second quarter of this year reached 147 million barrels compared to 143 million barrels for last year's second quarter. Utilization at the end of the second quarter was 94 percent compared to 93 percent last year. The 1997 throughput and utilization numbers have been adjusted for facilities which are being shut down or sold as a result of the 1997 restructuring plan. Overall market conditions continued to improve as demand for storage of petroleum products increased.

New Contracts Are Offset by After-tax Receivable Write-off at Logistics

GATX Logistics, Inc., GATX's contract logistics operation, reported a net loss of $1.2 million compared to net income of $0.5 million a year ago. A large customer, Atlas Supply Company, abruptly ceased operations during the quarter; second quarter results include a $1.6 million after-tax receivable write-off associated with its shutdown. Revenues for the second quarter improved to $68.1 million compared to $65.3 million for last year's period. The stronger revenues were primarily attributable to new business as well as increasing revenues with certain existing customers. The backlog of prospective transactions continues to increase reflecting greater customer demand for GATX Logistics' outsourcing solutions.

Strong Demand at American Steamship

American Steamship, GATX's Great Lakes shipping operation, achieved net income of $3.0 million in the second quarter of 1998 compared to $3.3 million a year ago. The 1997 second quarter earnings for American Steamship included a $1.3 million after-tax gain related to a transaction in which American Steamship partnered with GATX Capital. Excluding this gain, American Steamship achieved income of $2.0 million in the 1997 second quarter. Demand from the iron ore, coal and limestone sectors remains strong, and good weather and vessel scheduling led to efficient operations.

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, technology, 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.

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 Newswire Company News On-Call's automated fax service at 800-758-5804. The company identification number for GATX is 105121.

 

                       GATX CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
                       (In Millions Except Per Share Data)

                                          Three Months         Six Months
                                         Ended June 30       Ended June 30
                                         1998     1997      1998       1997
    Gross income                       $437.6    $434.7    $846.5    $829.3
    Costs and expenses
      Operating expenses                210.1     218.4     393.0     401.7
      Interest                           61.1      55.3     119.5     106.8
      Provision for depreciation and
        Amortization                     65.4      62.3     127.4     122.4
      Provision for possible losses       5.2       3.9       7.8       6.1

      Selling, general and
        administrative                   60.3      56.7     115.8     109.7
        Total costs and expenses        402.1     396.6     763.5     746.7

    Income before income taxes and
      Equity in net earnings of
        Affiliated companies             35.5      38.1      83.0      82.6
    Income taxes                         16.1      15.3      36.5      34.5
    Income before equity in net
      Earnings of affiliated companies   19.4      22.8      46.5      48.1

    Equity in net earnings of
      Affiliated companies               11.4       7.4      21.7      13.3

    Net income                          $30.8     $30.2     $68.2     $61.4
    Basic:
      Net income per share              $0.63     $0.63     $1.39     $1.31

      Average number of common
        shares (in thousands)          49,184    42,786    49,111    41,856

    Diluted:
      Net income per share              $0.61     $0.61     $1.35     $1.24
      Average number of common
        shares and common share
        equivalents
        (in thousands)                 50,599    49,605    50,402    49,401


                      GATX CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                (In Millions)
                                                              June 30
                                                       1998           1997
    Cash and cash equivalents                         $136.1          $33.3
    Receivables
      Trade accounts                                   145.4          104.7
      Finance leases                                   653.0          693.0
      Secured loans                                    392.7          204.1
      Less - Allowance for possible losses            (135.9)        (128.1)
        Total receivables                            1,055.2          873.7

    Operating lease assets and facilities            2,807.8        2,963.9
    Investments in affiliated companies                738.0          537.1
    Other assets                                       383.4          421.9
        Total assets                                $5,120.5       $4,829.9

    Accounts payable and accrued expenses             $378.7         $354.3
    Debt
      Short-term debt                                  636.5          489.5
      Recourse long-term debt                        2,178.0        1,961.3
      Nonrecourse long-term debt                       377.0          298.4
      Capital lease obligations                        203.8          218.1
        Total debt                                   3,395.3        2,967.3

    Deferred items, including income taxes             652.5          701.5
    Shareholders' equity                               694.0          806.8

        Total liabilities, deferred items
          And shareholders' equity                  $5,120.5       $4,829.9


                      GATX CORPORATION AND SUBSIDIARIES
                CONSOLIDATED CASH FLOW STATEMENTS (UNAUDITED)
                                (In Millions)

                                         Three Months          Six Months
                                         Ended June 30        Ended June 30
                                        1998      1997      1998       1997

    OPERATING ACTIVITIES
    Net income                          $30.8     $30.2     $68.2     $61.4

    Adjustments to reconcile net income
      to net cash provided by operating
      activities:
      Realized gain on disposition of
        leased equipment                 (2.4)    (14.4)    (28.5)    (40.5)
      Provision for depreciation and
        amortization                     65.4      62.3     127.4     122.4
      Provision for possible losses       5.2       3.9       7.8       6.1
      Deferred income taxes               6.0       4.5      15.5       3.1

    Net change in trade receivables,
      inventories, accounts payable
      and accrued expenses               (8.9)     (4.1)    (38.4)     14.9
    Other                               (31.4)    (17.2)    (33.7)    (45.1)
      Net cash provided by operating
        activities                       64.7      65.2     118.3     122.3

    INVESTING ACTIVITIES
    Additions to operating lease
      assets and facilities            (120.6)    (81.8)   (233.1)   (177.1)
    Portfolio lease investments,
      Net of nonrecourse financing      (65.0)   (105.2)   (136.0)   (156.2)
    Secured loans extended              (77.3)    (12.4)   (106.0)    (14.9)
    Investments in affiliated
      companies                         (37.7)    (58.1)    (54.2)    (72.1)
    Other investments and
      progress payments                 (11.2)     (6.4)    (13.5)    (24.4)
      Capital additions and
        portfolio investments          (311.8)   (263.9)   (542.8)   (444.7)
    Portfolio proceeds:
      From disposition of
        leased equipment                 10.7      40.2     111.1     128.9
      From return of investment         123.6      53.9     190.6     126.4
        Total portfolio proceeds        134.3      94.1     301.7     255.3
    Proceeds from other asset
      dispositions                       10.5       1.7      15.7       3.5
      Net cash used in
        investing activities           (167.0)   (168.1)   (225.4)   (185.9)

    FINANCING ACTIVITIES
    Proceeds from issuance of
      long-term debt                     41.5      43.2     109.8      83.7
    Repayment of long-term debt         (88.7)    (89.2)   (183.3)   (259.5)
    Net increase in short-term debt     192.7     149.9     266.7     259.9
    Repayment of capital
      lease obligations                  (1.9)     (3.2)     (8.3)     (9.4)
    Issuance of common stock
      and other                           1.1      (0.2)      5.1       2.9
    Cash dividends                      (12.3)    (14.2)    (24.6)    (26.9)
      Net cash provided by
        financing activities            132.4      86.3     165.4      50.7

    NET INCREASE (DECREASE) IN CASH
      AND CASH EQUIVALENTS              $30.1    ($16.6)    $58.3    ($12.9)


                    GATX CORPORATION BUSINESS SEGMENT DATA
             Three Months Ended June 30, 1998 and 1997 (Unaudited)
                                 (In Millions)

                                                         Income Before Income
                                                                 Taxes
                                                          And Equity in Net
                                                               Earnings of
                                        Gross Income    Affiliated Companies
                                      1998      1997         1998      1997
    Railcar Leasing and Management  $128.1    $118.7        $31.0     $29.4
    Financial Services               140.0     142.4         12.1      15.3
    Terminals and Pipelines           71.4      75.7          2.8      (1.4)
    Logistics and Warehousing         68.1      65.3         (1.7)      1.3
    Great Lakes Shipping              29.3      30.5          4.6       5.1
    Subtotal                         436.9     432.6         48.8      49.7
    Corporate and Other                0.7       2.1        (13.3)    (11.6)

    Total consolidated amounts      $437.6    $434.7        $35.5     $38.1

                                   Equity in Net Earnings
                                  of Affiliated Companies       Net Income
                                      1998      1997         1998      1997
    Railcar Leasing and Management    $0.6      $0.1        $20.1     $18.5
    Financial Services                 7.8       4.0         13.5      13.1
    Terminals and Pipelines            3.0       3.3          4.3       2.5
    Logistics and Warehousing            -         -         (1.2)      0.5
    Great Lakes Shipping                 -         -          3.0       3.3
    Subtotal                          11.4       7.4         39.7      37.9
    Corporate and Other                  -         -         (8.9)     (7.7)

    Total consolidated amounts       $11.4      $7.4        $30.8     $30.2


                      GATX CORPORATION BUSINESS SEGMENT DATA
               Six Months Ended June 30, 1998 and 1997 (Unaudited)
                                  (In Millions)

                                                          Income Before Income
                                                                  Taxes
                                                           and Equity in Net
                                                              Earnings of
                                    Gross Income         Affiliated Companies
                                   1998      1997        1998          1997
    Railcar Leasing and
      Management                  $253.8    $234.9       $61.2        $58.1
    Financial Services             287.9     286.8        38.8         47.9
    Terminals and Pipelines        141.4     146.2         4.1         (6.2)
    Logistics and Warehousing      129.6     127.4        (0.6)         1.2
    Great Lakes Shipping            31.2      31.4         5.6          5.7
    Subtotal                       843.9     826.7       109.1        106.7
    Corporate and Other              2.6       2.6       (26.1)       (24.1)
    Total consolidated amounts    $846.5    $829.3       $83.0        $82.6

                                Equity in Net Earnings
                                of Affiliated Companies       Net Income
                                    1998      1997        1998         1997
    Railcar Leasing and Management  $1.1      $0.2       $39.5        $36.5
    Financial Services              14.1       7.6        35.1         36.0
    Terminals and Pipelines          6.5       5.5         8.6          1.1
    Logistics and Warehousing          -         -        (0.8)         0.1
    Great Lakes Shipping               -         -         3.7          3.7
    Subtotal                        21.7      13.3        86.1         77.4
    Corporate and Other                -         -       (17.9)       (16.0)
    Total consolidated amounts     $21.7     $13.3       $68.2        $61.4

For further information Contact:
Aaron Hoffman
GATX Corporation
312-621-6493