Financial Data of Business Segments

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Financial Data of Business Segments

Financial Data of Business Segments

The financial data presented below depicts the profitability, financial position, and capital expenditures of each of our business segments.

We lease, operate, manage, and remarket long-lived, widely-used assets, primarily in the rail market. We report our financial results through fourprimary business segments: Rail North America, Rail International, American Steamship Company (“ASC”), and Portfolio Management.

Rail North America is composed of our wholly owned operations in the United States, Canada, and Mexico, as well as an affiliate investment. Rail North America primarily provides railcars pursuant to full-service leases under which it maintains the railcars, pays ad valorem taxes and insurance, and provides other ancillary services.

Rail International is composed of our wholly owned European operations ("GATX Rail Europe" or "GRE"), a wholly owned railcar leasing business in India ("Rail India"), and our operations in Russia. GRE leases railcars to customers throughout Europe pursuant to full-service leases under which it maintains the railcars and provides value-adding services according to customer requirements.

ASC operates the largest fleet of US-flagged vessels on the Great Lakes, providing waterborne transportation of dry bulk commodities such as iron ore, coal, limestone aggregates, and metallurgical limestone.

Portfolio Management is composed primarily of our ownership in a group of joint ventures with Rolls-Royce plc that lease aircraft spare engines, as well as five liquefied gas carrying vessels and assorted other marine assets. In prior years, Portfolio Management generated leasing, marine operating, asset remarketing, and management fee income through a collection of diversified wholly owned assets and joint venture investments. We are in the process of disposing of the majority of the marine investments in this segment.

Segment profit is an internal performance measure used by the Chief Executive Officer to assess the performance of each segment in a given period. Segment profit includes all revenues, pretax earnings from affiliates, and net gains on asset dispositions that are attributable to the segments, as well as expenses that management believes are directly associated with the financing, maintenance, and operation of the revenue earning assets. Segment profit excludes selling, general and administrative expenses, income taxes, and certain other amounts not allocated to the segments. These amounts are included in Other.

We allocate debt balances and related interest expense to each segment based upon predetermined debt to equity leverage ratios. The leverage levels are 5:1 for Rail North America, 3:1 for Rail International, 1.5:1 for ASC, and 1:1 for Portfolio Management. We believe that by using this leverage and interest expense allocation methodology, each operating segment’s financial performance reflects appropriate risk-adjusted borrowing costs.

The following tables show certain segment data for each of our business segments (in millions):

	Rail North America			Rail International			ASC			Portfolio Management			Other			GATX Consolidated
Three Months Ended March 31, 2017
Profitability
Revenues
Lease revenue	$	227.2		$	43.3		$	1.0		$	1.2		$	—		$	272.7
Marine operating revenue	—			—			6.4			10.6			—			17.0
Other revenue	24.8			1.1			—			0.5			—			26.4
Total Revenues	252.0			44.4			7.4			12.3			—			316.1
Expenses
Maintenance expense	67.7			10.0			0.2			—			—			77.9
Marine operating expense	—			—			5.3			7.6			—			12.9
Depreciation expense	59.0			11.2			0.1			1.7			—			72.0
Operating lease expense	15.0			—			0.8			—			—			15.8
Other operating expense	8.1			1.2			—			0.3			—			9.6
Total Expenses	149.8			22.4			6.4			9.6			—			188.2
Other Income (Expense)
Net gain on asset dispositions	23.8			0.8			—			0.3			—			24.9
Interest (expense) income, net	(31.1		)	(7.9		)	(1.2		)	(2.2		)	3.2			(39.2		)
Other (expense) income	(2.0		)	(1.5		)	—			2.3			(0.1		)	(1.3		)
Share of affiliates' pretax income	0.1			—			—			11.6			—			11.7
Segment profit (loss)	$	93.0		$	13.4		$	(0.2	)	$	14.7		$	3.1		124.0
Selling, general and administrative expense																42.9
Income taxes (includes $3.0 related to affiliates' earnings)																23.6
Net income																$	57.5
Net Gain on Asset Dispositions
Asset Remarketing Income:
Disposition gains on owned assets	$	21.1		$	—		$	—		$	—		$	—		$	21.1
Residual sharing income	0.1			—			—			0.3			—			0.4
Non-remarketing disposition gains (1)	2.6			0.8			—			—			—			3.4
Asset impairments	—			—			—			—			—			—
	$	23.8		$	0.8		$	—		$	0.3		$	—		$	24.9
Capital Expenditures
Portfolio investments and capital additions	$	102.8		$	18.7		$	7.3		$	—		$	0.2		$	129.0
Selected Balance Sheet Data at March 31, 2017
Investments in affiliated companies	$	10.5		$	1.2		$	—		$	385.2		$	—		$	396.9
Identifiable assets	$	4,862.5		$	1,169.7		$	306.9		$	600.0		$	157.8		$	7,096.9

__________

(1) Includes scrapping gains.

	Rail North America			Rail International			ASC			Portfolio Management			Other		GATX Consolidated
Three Months Ended March 31, 2016
Profitability
Revenues
Lease revenue	$	236.6		$	44.9		$	1.0		$	2.0		$	—	$	284.5
Marine operating revenue	—			—			4.1			16.2			—		20.3
Other revenue	27.8			1.6			—			0.2			—		29.6
Total Revenues	264.4			46.5			5.1			18.4			—		334.4
Expenses
Maintenance expense	65.8			12.5			0.2			—			—		78.5
Marine operating expense	—			—			2.9			9.4			—		12.3
Depreciation expense	56.5			11.1			—			1.7			—		69.3
Operating lease expense	16.8			—			—			—			—		16.8
Other operating expense	6.9			1.4			—			0.5			—		8.8
Total Expenses	146.0			25.0			3.1			11.6			—		185.7
Other Income (Expense)
Net gain on asset dispositions	18.6			0.7			—			3.9			—		23.2
Interest (expense) income, net	(27.2		)	(7.3		)	(1.1		)	(2.2		)	0.6		(37.2		)
Other (expense) income	(1.3		)	(2.2		)	—			—			0.2		(3.3		)
Share of affiliates' pretax income (loss)	0.2			(0.1		)	—			10.1			—		10.2
Segment profit	$	108.7		$	12.6		$	0.9		$	18.6		$	0.8	141.6
Selling, general and administrative expense															38.8
Income taxes (includes $2.7 related to affiliates' earnings)															33.5
Net income															$	69.3
Net Gain on Asset Dispositions
Asset Remarketing Income:
Disposition gains on owned assets	$	17.6		$	—		$	—		$	2.4		$	—	$	20.0
Residual sharing income	0.3			—			—			1.5			—		1.8
Non-remarketing disposition gains (1)	0.7			0.7			—			—			—		1.4
Asset impairments	—			—			—			—			—		—
	$	18.6		$	0.7		$	—		$	3.9		$	—	$	23.2
Capital Expenditures
Portfolio investments and capital additions	$	112.9		$	22.0		$	4.7		$	—		$	0.6	$	140.2
Selected Balance Sheet Data at December 31, 2016
Investments in affiliated companies	$	10.5		$	1.2		$	—		$	375.3		$	—	$	387.0
Identifiable assets	$	4,775.6		$	1,128.7		$	278.8		$	593.5		$	328.8	$	7,105.4

__________

(1) Includes scrapping gains.