EX-99.2 3 c08893exv99w2.htm PRO FORMA FINANCIAL INFORMATION exv99w2
 

Exhibit 99.2
Pro Forma Financial Information
     GATX Corporation (“GATX” or the “Company”) is headquartered in Chicago, Illinois and provides services primarily through three operating segments: GATX Rail (“Rail”), GATX Air (“Air”), and GATX Specialty (“Specialty”). On September 28, 2006 GATX signed a definitive agreement to sell the majority of its aircraft leasing business to Macquarie Aircraft Leasing Limited (“MALL”). Previously, GATX signed definitive agreements for the sale of 22 wholly owned and partnered aircraft along with letters of intent for an additional five partnered aircraft and sold its interest in its Pembroke affiliate. The combination of the pending and completed sales will result in the disposition of substantially all of Air’s operations.
     The accompanying unaudited pro forma condensed consolidated financial statements reflect the financial position and results of operations of GATX after giving effect to the completion of all of the previously discussed sales, including the sale of aircraft under letters of intent. However, if any of the contemplated disposition transactions are not completed consistent with these expectations, results will vary. See Note 2 to the pro forma financial statements for additional information concerning the details of the MALL transaction and other Air related dispositions. These pro forma statements have been prepared by the Company based on the assumptions identified in the related footnotes and are shown for comparative purposes only. The unaudited pro forma statements do not purport to represent what the actual consolidated results of operations or consolidated financial position of GATX would have been had the dispositions occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with GATX’s historical consolidated financial statements and accompanying footnotes.
     The unaudited pro forma condensed consolidated balance sheet assumes the dispositions occurred on June 30, 2006. The pro forma condensed consolidated income statements for the years ended December 31, 2005, 2004, and 2003 and for the six months ended June 30, 2006 assume the dispositions occurred on January 1 of each respective year.

 

 

GATX CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 2006
(In Millions)
                         
            Pro-Forma     Pro-Forma  
    As Reported     Adjustments     GATX  
Assets
                        
 
Cash and Cash Equivalents
   $ 147.1     $ 740.4   2(a)   $ 887.5  
Restricted Cash
     66.3       —       66.3  
 
                        
Receivables
                        
Rent and other receivables
     83.6       (4.8 )     78.8  
Finance leases
     396.3       (25.4 )     370.9  
Loans
     24.1       (0.4 )     23.7  
Less: Allowance for possible losses
     (10.7 )     —       (10.7 )
 
                  
 
     493.3       (30.6 )     462.7  
 
                        
Operating Lease Assets, Facilities and Other
                        
Rail
     4,126.1       —       4,126.1  
Air
     1,345.0       (1,345.0 )     —  
Specialty
     93.5       —       93.5  
Other
     361.8       —       361.8  
Less: Allowance for depreciation
     (1,969.0 )     171.6       (1,797.4 )
 
                  
 
     3,957.4       (1,173.4 )     2,784.0  
 
                        
Investments in Affiliated Companies
     663.9       (351.3 )     312.6  
Goodwill
     91.8       —       91.8  
Other Assets
     413.1       (126.3 )     286.8  
 
                  
Total Assets
   $ 5,832.9     $ (941.2 )   $ 4,891.7  
 
                  
 
                        
Liabilities and Shareholders’ Equity
                        
 
                        
Accounts Payable and Accrued Expenses
   $ 149.7     $ (8.7 )   $ 141.0  
 
                        
Debt
                        
Commercial paper and bank credit facilities
     318.3       —       318.3  
Recourse
     2,904.5       (731.4 )     2,173.1  
Nonrecourse
     34.6       (29.8 )     4.8  
Capital lease obligations
     57.1       —       57.1  
 
                  
 
     3,314.5       (761.2 )     2,553.3  
 
                        
Current Income Taxes
     —       89.0       89.0  
Deferred Income Taxes
     718.5       (54.2 )      664.3  
Other Liabilities
     501.1       (125.9 )     375.2  
 
                  
Total Liabilities
     4,683.8       (861.0 )     3,822.8  
Total Shareholders’ Equity
     1,149.1       (80.2 )  2(b)     1,068.9  
 
                  
Total Liabilities and Shareholders’ Equity
   $ 5,832.9     $ (941.2 )   $ 4,891.7  
 
                  

The accompanying notes are an integral part of the pro forma financial information presented.

 

 

GATX CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2006
(In Millions)
                         
            Pro-Forma     Pro-Forma  
    As Reported     Adjustments     GATX  
Gross Income
                        
Lease income
   $ 468.0     $ (64.0 )   $ 404.0  
Marine operating revenue
     63.3       —       63.3  
Interest income on loans
     2.7       (0.1 )     2.6  
Asset remarketing income
     34.1       —       34.1  
Fees
     11.0       (7.9 )     3.1  
Other income
     31.7       (0.3 )     31.4  
 
                  
Revenues
     610.8       (72.3 )     538.5  
Share of affiliates’ earnings
     54.5       (18.1 )     36.4  
 
                  
Total Gross Income
     665.3       (90.4 )     574.9  
 
                        
Ownership Costs
                        
Depreciation
     98.1       (22.2 )     75.9  
Interest expense, net
     89.6       (20.4 )     69.2  
Operating lease expense
     89.0       (1.1 )     87.9  
 
                  
Total Ownership Costs
     276.7       (43.7 )     233.0  
 
                        
Other Costs and Expenses
                        
Maintenance expense
     99.2       (1.0 )     98.2  
Marine operating expense
     48.8       —       48.8  
Selling, general and administrative
     82.8       (11.3 )     71.5  
Asset impairment charges
     13.9       (10.7 )     3.2  
Other expenses
     13.9       (0.8 )     13.1  
 
                  
Total Other Costs and Expenses
     258.6       (23.8 )     234.8  
 
                  
 
                        
Income from Continuing Operations before Income Taxes
     130.0       (22.9 )     107.1  
Income Taxes
     41.8       (8.8 )     33.0  
 
                  
Income from Continuing Operations
   $ 88.2     $ (14.1 )   $ 74.1  
 
                  
 
                        
Per Share Data
                        
Basic:
                        
Income from continuing operations
   $ 1.74             $ 1.46  
Average number of common shares (in thousands)
     50,740               50,740  
 
                        
Diluted:
                        
Income from continuing operations
   $ 1.53             $ 1.30  
Average number of common shares and common share equivalents (in thousands)
     61,888               61,888  

The accompanying notes are an integral part of the pro forma financial information presented.

 

 

GATX CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2005
(In Millions)
                         
            Pro-Forma     Pro-Forma  
    As Reported     Adjustments     GATX  
Gross Income
                        
Lease income
   $ 878.4     $ (117.6 )   $ 760.8  
Marine operating revenue
     138.3       —       138.3  
Interest income on loans
     10.0       (0.4 )     9.6  
Asset remarketing income
     43.7       (2.3 )     41.4  
Fees
     17.7       (12.6 )     5.1  
Other
     75.3       (0.5 )     74.8  
 
                  
Revenues
     1,163.4       (133.4 )     1,030.0  
Share of affiliates’ (losses) earnings
     (28.8 )     102.5       73.7  
 
                  
Total Gross Income
     1,134.6       (30.9 )     1,103.7  
 
                        
Ownership Costs
                        
Depreciation
     202.7       (59.8 )     142.9  
Interest expense, net
     164.7       (32.3 )     132.4  
Operating lease expense
     187.0       (7.0 )     180.0  
 
                  
Total Ownership Costs
     554.4       (99.1 )     455.3  
 
                        
Other Costs and Expenses
                        
Maintenance expense
     194.9       (0.8 )     194.1  
Marine operating expense
     108.9       —       108.9  
Selling, general and administrative
     167.5       (25.9 )     141.6  
Asset impairment charges
     83.4       (77.2 )     6.2  
Other expenses
     53.3       (1.0 )     52.3  
 
                  
Total Other Costs and Expenses
     608.0       (104.9 )     503.1  
 
                  
 
                        
(Loss) Income from Continuing Operations before Income Taxes
     (27.8 )     173.1       145.3  
Income Tax (Benefit) Provision
     (12.7 )     68.6       55.9  
 
                  
(Loss) Income from Continuing Operations
   $ (15.1 )   $ 104.5     $ 89.4  
 
                  
 
                        
Per Share Data
                        
Basic:
                        
(Loss) income from continuing operations
   $ (0.30 )           $ 1.79  
Average number of common shares (in thousands)
     50,106               50,106  
 
                        
Diluted:
                        
(Loss) income from continuing operations
   $ (0.30 )           $ 1.68  
Average number of common shares and common share equivalents (in thousands)
     50,106               61,020  

The accompanying notes are an integral part of the pro forma financial information presented.

 

 

GATX CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2004
(In Millions)
                         
            Pro-Forma     Pro-Forma  
    As Reported     Adjustments     GATX  
Gross Income
                        
Lease income
   $ 790.3     $ (101.0 )   $ 689.3  
Marine operating revenue
     111.8       —       111.8  
Interest income on loans
     17.8       (0.1 )     17.7  
Asset remarketing income
     36.5       (5.5 )     31.0  
Fees
     20.9       (9.3 )     11.6  
Other
     189.6       (2.6 )     187.0  
 
                  
Revenues
     1,166.9       (118.5 )     1,048.4  
Share of affiliates’ earnings
     65.2       (11.1 )     54.1  
 
                  
Total Gross Income
     1,232.1       (129.6 )     1,102.5  
 
                        
Ownership Costs
                        
Depreciation
     194.6       (59.5 )     135.1  
Interest expense, net
     162.4       (18.1 )     144.3  
Operating lease expense
     173.6       (3.8 )     169.8  
 
                  
Total Ownership Costs
     530.6       (81.4 )     449.2  
 
                        
Other Costs and Expenses
                        
Maintenance expense
     189.2       (1.6 )     187.6  
Marine operating expense
     87.7       —       87.7  
Selling, general and administrative
     163.3       (21.5 )     141.8  
Asset impairment charges
     3.4       (0.4 )     3.0  
Other expenses
     31.2       (1.8 )     29.4  
 
                  
Total Other Costs and Expenses
     474.8       (25.3 )     449.5  
 
                  
 
                        
Income from Continuing Operations before Income Taxes
     226.7       (22.9 )     203.8  
Income Taxes
     68.2       (9.1 )      59.1  
 
                  
Income from Continuing Operations
   $ 158.5     $ (13.8 )   $ 144.7  
 
                  
 
                        
Per Share Data
                        
Basic:
                        
Income from continuing operations
   $ 3.21             $ 2.93  
Average number of common shares (in thousands)
     49,348               49,348  
 
                        
Diluted:
                        
Income from continuing operations
   $ 2.86             $ 2.63  
Average number of common shares and common share equivalents (in thousands)
     60,082               60,082  

The accompanying notes are an integral part of the pro forma financial information presented.

 

 

GATX CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2003
(In Millions)
                         
            Pro-Forma     Pro-Forma  
    As Reported     Adjustments     GATX  
Gross Income
                        
Lease income
   $ 762.2     $ (90.8 )   $ 671.4  
Marine operating revenue
     85.0       —       85.0  
Interest income on loans
     41.4       0.2       41.6  
Asset remarketing income
     37.9       (0.8 )     37.1  
Fees
     18.0       (7.4 )     10.6  
Other
     76.3       (3.3 )     73.0  
 
                  
Revenues
     1,020.8       (102.1 )     918.7  
Share of affiliates’ earnings
     66.8       (17.6 )     49.2  
 
                  
Total Gross Income
     1,087.6       (119.7 )     967.9  
 
                        
Ownership Costs
                        
Depreciation
     188.0       (55.1 )     132.9  
Interest expense, net
     175.4       (15.0 )     160.4  
Operating lease expense
     176.0       (3.9 )     172.1  
 
                  
Total Ownership Costs
     539.4       (74.0 )     465.4  
 
                        
Other Costs and Expenses
                        
Maintenance expense
     166.0       (1.5 )     164.5  
Marine operating expense
     68.9       —       68.9  
Selling, general and administrative
     163.6       (18.1 )     145.5  
Asset impairment charges
     24.6       (2.4 )     22.2  
Other expenses
     47.2       (8.8 )     38.4  
 
                  
Total Other Costs and Expenses
     470.3       (30.8 )     439.5  
 
                  
 
                        
Income from Continuing Operations before Income Taxes
     77.9       (14.9 )     63.0  
Income Taxes
     16.2       (6.6 )      9.6  
 
                  
Income from Continuing Operations
   $ 61.7     $ (8.3 )   $ 53.4  
 
                  
 
                        
Per Share Data
                        
Basic:
                        
Income from continuing operations
   $ 1.26             $ 1.09  
Average number of common shares (in thousands)
     49,107               49,107  
 
                        
Diluted:
                        
Income from continuing operations
   $ 1.24             $ 1.07  
Average number of common shares and common share equivalents (in thousands)
     51,203               51,203  

The accompanying notes are an integral part of the pro forma financial information presented.

 

 

GATX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
NOTE 1. Basis of Presentation
     The unaudited pro forma condensed consolidated balance sheet of GATX as of June 30, 2006 and unaudited pro forma condensed consolidated statements of income of GATX for the six months ended June 30, 2006 and the years ended December 31, 2005, 2004, and 2003 give effect to the disposition of substantially all the assets and liabilities of the Air segment, including the repayment of related external debt. The unaudited pro forma condensed consolidated balance sheet assumes all sales occurred on June 30, 2006 and the unaudited pro forma condensed consolidated statements of income assume all sales occurred on January 1 of each period presented. In the opinion of management, these statements include all material adjustments necessary to reflect, on a pro forma basis, the impact of the sales on the historical financial information of GATX. The unaudited pro forma condensed consolidated financial statements do not necessarily represent what GATX’s financial position or results of operations would have been had the sales occurred on such dates or project GATX’s financial position or results of operations at or for any future date or period. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical consolidated statements of GATX.
NOTE 2. Pro Forma Condensed Consolidated Balance Sheet Adjustments
     The unaudited pro forma condensed consolidated balance sheet assumes that substantially all of the assets of Air were sold on June 30, 2006. Estimated cash proceeds are based on management’s best estimate of the probable amounts to be realized upon the completion of the MALL transaction and other asset sales. The final determination of proceeds will be dependent on the timing of the sales and resolution of potential purchase price adjustments. As a result, actual amounts will likely vary from these pro forma adjustments.
  (a)   The estimated net cash proceeds, excluding income taxes, resulting from the sale of Air are shown below (in millions):
                         
    MALL     Other     Total  
Estimated cash proceeds
   $ 1,300.9     $ 206.4     $ 1,507.3  
Estimated transaction costs
     (5.5 )     (0.2 )     (5.7 )
Estimated debt repayments
     (709.4 )     (51.8 )     (761.2 )
 
                  
Estimated net proceeds
   $ 586.0     $ 154.4     $ 740.4  
 
                  
     Estimated transaction costs are comprised of direct and indirect expenses expected to be incurred in 2006 as a result of disposing the Air business including commissions, legal, accounting and other disposal expenses. Estimated debt repayments consist of indebtedness directly related to Air assets that management anticipates to pay out of sales proceeds. The total amount of income taxes anticipated to be paid in 2006 upon completion of all sales transactions is estimated to be $89 million, after the utilization of net operating loss and tax credit carry forwards. Actual amounts incurred may differ from these estimates.

 

 

  (b)   The pro forma loss on sale, net of tax is as follows (in millions):
                         
    MALL     Other     Total  
Estimated cash proceeds
   $ 1,300.9     $ 206.4     $ 1,507.3  
Estimated transaction costs
     (5.5 )     (0.2 )     (5.7 )
Net assets of Air as of June 30, 2006
     (1,358.9 )     (188.1 )     (1,547.0 )
 
                  
Pro forma (loss) gain on sale before income taxes
     (63.5 )     18.1       (45.4 )
Estimated income taxes
     6.0       28.8       34.8  
 
                  
Pro forma loss on sale, net of tax
   $ (69.5 )   $ (10.7 )   $ (80.2 )
 
                  
     Estimated income taxes, including the pro forma adjustment for income taxes payable on the condensed consolidated balance sheet, are based on management’s best estimate of the total federal, state and foreign income taxes that will be allocated to GATX as a result of the completion of the disposition of Air’s operations. The ultimate amount of income taxes payable will be dependent on a number of factors not yet fully determinable, including the form and structure of each sales transaction and the implementation of potential tax planning strategies. As a result, actual income taxes will likely differ from pro forma amounts.
     The actual aggregate loss that GATX will report in 2006 upon completion of the disposition of the Air business, including any loss recognized during the nine month period ended September 30, 2006 as a result of adjusting the carrying value of Air’s assets to fair value less costs to sell and recording a loss on the competed sale of Pembroke, will likely differ from the estimated pro forma loss noted above. Such differences will be attributable to Air’s operating results, differences in carrying values of Air’s assets, investing and financing activities occurring subsequent to June 30, 2006 through the date of sale, and the timing of recognition of certain expenses related to the disposal of the Air business.
NOTE 3. Pro Forma Condensed Consolidated Statements of Income Adjustments
     The pro forma condensed consolidated statements of income assume that the sale of Air occurred as of January 1 of each period presented. The statements of income do not include the loss on disposal or costs related to the sale. Additionally, no income has been imputed from the investment of sales proceeds. Actual amounts could vary from these pro forma adjustments.
     The pro forma adjustments reflect the activity related to the assets sold or to be sold and debt anticipated to be repaid as part of the disposition transactions. The pro forma adjustment for income taxes is based on an estimate of Air’s relative contribution to GATX’s consolidated tax position. Actual amounts could vary from these pro forma adjustments.