2021 ANNUAL REPORT
Empowering our
customers to propel
the world forward
WE PROVIDE INNOVATIVE, UNPARALLELED SERVICE THAT ENABLES
OUR CUSTOMERS TO TRANSPORT WHAT MATTERS SAFELY AND
SUSTAINABLY WHILE CHAMPIONING THE WELL-BEING OF OUR
EMPLOYEES AND COMMUNITIES.
—
With more than 120 years of experience, market leadership positions in
our businesses, and highly skilled, dedicated employees, GATX leases
transportation assets and provides critical services to customers
worldwide. Our diverse portfolio of assets includes railcars, aircraft
spare engines, and tank containers.
We operate through three primary business segments:
Rail North America, Rail International, and Portfolio Management.
NON-GAAP FINANCIAL MEASURES
For a reconciliation of non-GAAP financial measures contained herein, refer to our Annual Report on Form 10-K that has been
included as part of this Annual Report to Shareholders.
All data (including segment overview sections) as of December 31, 2021.
Financial Highlights (in millions, except per share data)
2019
2020
2021
Net Income from Continuing Operations
Per Diluted Share Net Income from Continuing Operations
$ 180.8
$ 4.97
$ 150.2
$ 4.24
$ 143.1
$ 3.98
Excluding Tax Adjustments and Other Items (a)
Net Income from Continuing Operations
Per Diluted Share Net Income from Continuing Operations
2019
2020
2021
$ 178.0
$ 4.89
$ 162.5
$ 4.59
$ 182.2
$ 5.06
(a) The following items for each year noted are referred to as ”Tax Adjustments and Other Items“:
• Results for 2021 included net gain from insurance recoveries for storm damage to a maintenance facility at Rail North America, write-off of unamortized
deferred financing costs associated with the early redemption of our $150 million 5.625% Senior Notes due 2066, and deferred income tax adjustment
due to an enacted corporate income tax rate increase in the United Kingdom.
• Results for 2020 included a deferred income tax adjustment due to the elimination of a previously announced corporate income tax rate reduction in the
United Kingdom.
• Results for 2019 included a deferred income tax adjustment due to an enacted corporate income tax rate decrease in Alberta, Canada.
Investment at a Glance
Cash Returned to Shareholders
$1.486 Billion+
RETURNED TO
SHAREHOLDERS
(2012 – 2021)
INCOME PER
DILUTED SHARE 1, 2
RETURN
ON EQUITY
1
2
0
2
1
2
0
2
0
2
0
1
9
$5.06
$4.59
$4.89
2
0
2
1
2
0
2
0
2
0
1
9
11%
11%
14%
INVESTMENT
2
VOLUME
CASH FROM OPERATIONS
AND PORTFOLIO PROCEEDS 2
2
0
2
1
2
0
2
0
2
0
1
9
$1,132
$1,064
$723
2
0
2
1
2
0
2
0
2
0
1
9
$507
$437
$426
$187
$694
$131
$568
$250
$676
($ millions)
($ millions)
Cash from Operations
Portfolio Proceeds
1. Non-GAAP Financial Measures; see Footnote (a) above.
2. Reflects continuing operations.
Asset Mix
RAIL
NORTH AMERICA
64%
11%
PORTFOLIO
MANAGEMENT
$9.54
Billion
NBV
$1.4B
$1.2B
$1B
$800MM
$600MM
$400MM
$200MM
$0
RAIL
INTERNATIONAL
18%
7%
OTHER
(INCLUDES TRIFLEET)
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Cumulative Dividends Cumulative Share Repurchase
Rail North America
GATX is the premier provider of railcar leasing and services in North
America. As part of our offerings, we provide maintenance, engineering
support, training, and other services our customers rely on to ship their
products safely and efficiently.
In 2021, the operating environment at Rail North America steadily improved
as rail carloads increased and industrywide cars in storage decreased from
the previous year. Throughout the year, absolute lease rates for most car
types in our fleet gradually improved. Capitalizing on strengthening market
conditions, Rail North America ended the year with 99.2% fleet utilization
and an 83% renewal success rate. We also continued to increase the
percentage of maintenance events performed in our owned network,
where we believe our safety, quality, delivery, and cost metrics are superior.
During the year, we identified economically attractive opportunities to
invest in over 1,000 new railcars outside of committed supply agreements.
These cars will be delivered by mid-2022 and have been placed with high-
quality customers. In addition, we further optimized our fleet by selectively
selling railcars into a robust secondary market, generating remarketing
income of over $80 million.
We expect the North American railcar leasing market will continue to
improve in 2022. With our diversified fleet, quality customer base, and
outstanding service offerings, we believe Rail North America is well-
positioned to continue its strong performance.
Rail North America Industries Served
Chemicals
Refiners and Other Petroleum
Railroads and Other Transports
Food and Agriculture
Mining, Minerals and Aggregate
Other
Rail North America Fleet Mix
General Service Tank
Gravity Covered Hopper
Boxcar
High Pressure Tank
Specialty Tank
Other Covered Hopper
Open Top
Other
28%
23%
20%
14%
5%
10%
33%
15%
12%
10%
9%
8%
8%
5%
$2.2 Billion in Contractual Lease Receipts——99.2% Fleet Utilization (Excludes Boxcars)——42,700+ Service Events Performed in 2021——850+ Customers——114,500+ Wholly Owned Railcars Rail International
Our Rail International segment is primarily composed of GATX Rail
Europe (GRE) and GATX Rail India (GRI).
GRE is a leading full-service railcar lessor in Europe offering a high-
quality and diverse fleet in more than 20 countries. In 2021, market
conditions were favorable as demand for new and existing railcars was
robust. GRE maintained high fleet utilization of 98.7% at year end and
experienced higher renewal lease rates while adding over 1,100 new
railcars to its fleet during the year.
GRI is the largest private lessor of railcars in India, serving a variety of
major industry segments. Demand for railcars in 2021 was stable as
GRI’s fleet was 100% utilized at year end. During the year, GRI grew
its fleet while diversifying its car types and customer mix.
In 2021, total investment volume in Rail International was $173 million.
Global supply chain constraints and COVID-19-related interruptions
at railcar manufacturers negatively impacted new railcar deliveries in
Europe and India during the year. Absent further disruptions, we expect
both GRE and GRI to continue to expand and diversify their fleets in
2022 amidst continuing favorable market conditions.
Rail International Industries Served
Mineral Oil
LPG
Chemicals
Freight and Intermodal
Rail International Countries Served
Germany
Poland
Austria
India
Switzerland
Hungary
Czech Republic
France
Other
43%
15%
12%
30%
29%
26%
11%
8%
5%
4%
3%
3%
11%
98.7% GRE Fleet Utilization ——100% GRI Fleet Utilization ——20+ Countries Served in Europe and Asia——250+ Customers——32,300+ Wholly Owned Railcars Portfolio Management
This segment is largely composed of the Rolls-Royce & Partners Finance
affiliates (RRPF), our 50% owned joint venture with Rolls-Royce plc, a
leading manufacturer of commercial aircraft jet engines. RRPF leases
aircraft spare engines to a diverse group of commercial aircraft operators
worldwide as well as to Rolls-Royce for use in their engine maintenance
programs. In 2021, RRPF’s performance was negatively impacted by the
ongoing pandemic and the resulting restrictions placed on long-haul pas-
senger air travel. We anticipate the operating environment for RRPF to
stay challenging in 2022. However, we remain confident in this market’s
ultimate recovery, evidenced by our direct investment in 14 aircraft spare
engines in 2021. These 100% GATX-owned engines are managed by
RRPF and are on long-term leases with commercial airline customers.
GATX’S SHARE OF RRPF’S
PRE-TAX INCOME ($ millions)
2019
2020
2021
$ 94.5
$ 95.5
$ 56.5
RRPF Engine Types
Trent XWB (A350)
Trent 1000 (B787)
Trent 700/7000 (A330)
Trent 900 (A380)
V2500 (A320)
Trent 800 (B777)
Other
37%
18%
16%
8%
7%
3%
11%
Trifleet
Acquired by GATX in late 2020, Trifleet Leasing is one of the largest
tank container lessors in the world with an owned and managed fleet
of approximately 20,000 tank containers. Trifleet’s tank containers
transport a variety of liquids and gases and are leased to a diverse
base of customers in the chemical, industrial gas, energy, food grade,
and pharmaceutical industries. The worldwide tank container market
strengthened throughout 2021, and we expect strong global demand
for tank containers to continue in 2022.
Tank Types
Standard
Petrochemical, oil additives, chemicals, foods
Semi-Standard
Oxidizers, petrochemical, oil additives, chemicals, foods
Gas
Refrigerant gases, LPG, dimethylamine anhydrous, ammonia anhydrous
Specialty
Amines, corrosives, pesticide, hexamethylene diisocyanate
Cryogenic
Liquid natural gas, liquid argon, liquid nitrogen, liquid oxygen, carbon dioxide
71%
12%
10%
6%
1%
407 RRPF AircraftSpare Engines (NBV $4.4 Billion)——$2.2 Billion in ContractualLease Receipts
CHAIRMAN'S LETTER
In 2021, GATX increasingly outperformed our original
expectations as we moved through the year. This was especially
true for Rail North America, which increased segment profit by
$58 million or over 25% from the year prior. Absolute lease rates
have increased for six consecutive quarters, and this pricing
strength was driven by solid demand, our diversified fleet
BRIAN KENNEY
composition, and excellent execution by our commercial team.
As the year progressed, the team took more risk
segment profit was driven by much lower asset
by pushing lease rate increases harder and they
remarketing gains relative to 2020.
succeeded. Further, higher lease renewal success
drove lower fleet churn than expected and, com-
Finally, Trifleet, our newly acquired tank container
bined with fewer railroad repairs and our ongoing
leasing company, also outperformed our expecta-
efforts to drive more repairs into our owned
tions, as the worldwide tank container market
network, we experienced much lower mainte-
strengthened throughout the year.
nance cost than originally expected. The last factor
that drove strength in Rail North America was high
As I end my tenure, I looked back at all the
asset values. Not only did the railcars that we sold
subjects I have addressed in this letter over my
in the secondary market realize the values that we
17 years as the leader of GATX. The topics were
originally planned, but continued high scrap prices
wide-ranging, from discussing how ESG principles
also drove strong gains throughout 2021 as well.
have always been a core part of GATX’s vision
(2017), to our careful approach to investing in the
As expected, our Rail International segment
crude-by-rail boom (2012), to how customer
significantly grew its profitability in 2021,
service is critical to GATX (2020). A common theme
increasing segment profit by over $21 million or
woven into my letters through the years was how
26% from the year prior. That performance was
GATX was thinking about investing in various
driven primarily by very strong underlying markets
market conditions. So, it seems appropriate that I
and increasing earnings from the substantial
use my final chairman’s letter to explain how GATX
investments we made over the last few years.
is thinking about investing as we move into 2022.
Within Portfolio Management, pre-tax earnings in
GATX’s long-term investors know that in the highly
our Rolls-Royce & Partners Finance joint ventures
cyclical markets where we operate, our investment
(“RRPF”) were down nearly $40 million from
model assumes that asset prices and lease rates
the prior year, as we anticipated. This business
revert over time to an “equilibrium” level. All else
continues to operate in a difficult market for
being equal, that assumption generally causes us
long-haul passenger air travel, and the drop in
to invest more heavily in weaker markets when
ROBERT LYONS
In December 2021, Brian Kenney
informed GATX’s board of directors
of his intention to retire after 17 years
new asset prices are low and pull back and look
elsewhere for capital deployment opportunities
in stronger markets when new asset prices are
high. In 2021, GATX experienced rapidly increasing
asset prices across its leasing businesses. On
average, the price of a new general service tank
car for Rail North America increased by 35%, the
price of a new mineral oil tank car for Rail Europe
increased by 18%, and the price of a new standard
tank container at Trifleet increased by over 50%.
of service in his role as CEO of GATX.
Lease rates generally increased for these assets
Robert (Bob) Lyons, currently Executive
as well but at nowhere near the rate of the asset
Vice President and President of Rail
North America, will succeed Brian,
becoming CEO on April 22, 2022.
Since joining GATX in 1997, Bob has
served in a variety of key leadership
price increases. Yet GATX was able to attractively
invest over $1 billion again in 2021—and we
expect a similar level of investment in 2022.
How can we invest at this level and still maintain
the discipline of our investment model? The
answer lies in the phenomenal team at GATX.
positions and has played an integral
They are completely aligned with our investment
role in the Company’s business and
investment strategy. As CFO of GATX
from 2004 to 2018, Bob managed the
Company through a number of economic
cycles, including the Great Recession.
In his current role, Bob is the head of
GATX’s largest business segment—
thesis and know how to execute it well, even with
today’s historically high asset prices. For instance,
commercial teams across our Rail businesses are
locking in customers in advance of our purchase
of new railcars, committing them to lease rates
above our model’s equilibrium rate, and then
extending the lengths of lease terms to allow
GATX to amortize the higher asset cost. In Rail
Rail North America—which accounted
North America, while the market for new tank
for over 70% of GATX’s total 2021
revenues. His appointment as the
CEO-elect represents the culmination
of a multi-year succession planning
process. With this important transition,
Bob becomes the eighth CEO in
GATX’s 120-plus-year history.
cars has been recovering, it has been doing so
at a stubbornly slow pace. However, our commer-
cial team was facing over 1,500 new tank car
deliveries over the next 18 months in order to
fulfill a committed supply agreement with one
of our manufacturers. Instead of accepting a
potential substandard return on those investments,
the team restructured the supply agreement
˝How can we invest at this level and still maintain the discipline of our investment
model? The answer lies in the phenomenal team at GATX. They are completely
aligned with our investment thesis and know how to execute it well, even with
today’s historically high asset prices.˝
from tank car deliveries to boxcar deliveries. We
discipline in 2022 and beyond—regardless of the
project the current robust demand for boxcars to
level of asset prices.
continue in the long term—and in fact, the vast
majority of these cars have already been placed,
I will close my final letter by stating that I leave
before they are delivered, with high-quality cus-
behind an extraordinary team at GATX—led by
tomers on longer, attractive lease terms. This is
a great Board of Directors—that is intensely
a great example of turning a potential problem into
focused on succeeding for their owners, their
a solution for GATX and our customers.
customers, their fellow employees, and their
communities. They will be led by the new CEO
Another great example of what we do when asset
of GATX, Bob Lyons, someone with whom I have
prices are very high in our rail markets is invest in
worked closely for 25 years. There is no one
challenged markets elsewhere, as we did when
better equipped to take GATX to the next level.
we directly invested $352 million in Rolls-Royce
aircraft spare engines early in 2021. Given the
Lastly, it sincerely has been my honor to work
downturn in passenger air traffic, our RRPF joint
with all the employees of GATX over the last 27
venture was temporarily constrained in its ability
years. You have challenged me, you have inspired
to pursue all of the investment opportunities in
me, and you have taught me a tremendous amount
the weakened airline market. In addition, Rolls-
about what it takes to lead a high-performing team.
Royce, our partner in RRPF, had other places that
I will miss you all greatly as friends, and I know
it was prioritizing to invest its capital. Given these
you will continue to be the best team that a
facts as well as the relatively high credit spreads
CEO can imagine.
for world-class airlines early in 2021, we saw an
opportunity for GATX to directly invest in new
Thank you all!
spare engines at an advantaged cost and put
the engines on long-term leases to some of the
stronger airline customers in the world at
attractive lease rates.
Brian A. Kenney
These are just a few examples, and we expect
GATX Corporation
that our team will continue to secure great
investments while maintaining our investment
Chairman, President and Chief Executive Officer
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Form 10-K
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
or
Commission File Number 1-2328
GATX Corporation
(Exact name of registrant as specified in its charter)
(State or Other Jurisdiction of incorporation or Organization)
(I.R.S. Employer Identification No.)
New York
36-1124040
233 South Wacker Drive
Chicago, IL 60606-7147
(Address of principal executive offices, including zip code)
(312) 621-6200
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
Common Stock
Trading Symbol(s)
Name of Each Exchange on Which Registered
GATX
New York Stock Exchange
Chicago Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Í No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No Í
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes Í No ‘
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes Í No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
Non-accelerated filer
Í
‘
Accelerated filer
Smaller reporting company
Emerging growth company
‘
‘
‘
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. Í
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No Í
The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant was approximately $3.1 billion as of June 30, 2021.
There were 35.4 million common shares outstanding at January 31, 2022.
DOCUMENTS INCORPORATED BY REFERENCE
GATX’s definitive Proxy Statement to be filed on or about March 11, 2022
PART III
GATX CORPORATION
2021 FORM 10-K
INDEX
Forward-Looking Statements
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part I
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . .
Discussion of Operating Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Sheet Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Flow Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Critical Accounting Policies and Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Accounting Pronouncements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-GAAP Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part III
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part IV
Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Item 14.
Item 15.
Item 16.
FORWARD-LOOKING STATEMENTS
Statements in this report not based on historical facts are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995 and, accordingly, involve known and unknown risks and uncertainties that are difficult to predict and
could cause our actual results, performance, or achievements to differ materially from those discussed. Forward-looking statements
include statements as to our future expectations, beliefs, plans, strategies, objectives, events, conditions, financial performance,
prospects, or future events. In some cases, forward-looking statements can be identified by the use of words such as “may,” “could,”
“expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “outlook,” “continue,” “likely,” “will,”
“would”, and similar words and phrases. Forward-looking statements are necessarily based on estimates and assumptions that, while
considered reasonable by us and our management, are inherently uncertain. Accordingly, you should not place undue reliance on
forward-looking statements, which speak only as of the date they are made, and are not guarantees of future performance. We do not
undertake any obligation to publicly update or revise these forward-looking statements.
The following factors, in addition to those discussed under “Risk Factors” and elsewhere in this report and in our other filings with
the U.S. Securities and Exchange Commission (“SEC”), could cause actual results to differ materially from our current expectations
expressed in forward-looking statements:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
the duration and effects of the global COVID-19 pandemic and
any mandated pandemic mitigation requirements,
including
impacts on our business, personnel, operations,
adverse
commercial activity,
the demand for our
supply chain,
transportation assets, the value of our assets, our liquidity, and
macroeconomic conditions
exposure to damages, fines, criminal and civil penalties, and
reputational harm arising from a negative outcome in litigation,
including
involving
transportation assets
from an
accident
arising
claims
inability to maintain our
transportation assets on lease at
satisfactory rates due to oversupply of assets in the market or
other changes in supply and demand
a significant decline in customer demand for our transportation
assets or services, including as a result of:
O
O
O
O
O
O
O
O
O
weak macroeconomic conditions
weak market conditions in our customers’ businesses
adverse changes in the price of, or demand for,
commodities
changes in railroad operations, efficiency, pricing and
to
including
service
“precision scheduled railroading”
offerings,
related
those
changes in, or disruptions to, supply chains
availability of pipelines, trucks, and other alternative
modes of transportation
changes in conditions affecting the aviation industry,
including reduced demand for air travel, geographic
exposure and customer concentrations
other operational or commercial needs or decisions of
our customers
customers’ desire to buy,
transportation assets
rather
than lease, our
higher costs associated with increased assignments of our
transportation assets following non-renewal of leases, customer
defaults, and compliance maintenance programs or other
maintenance initiatives
events having an adverse impact on assets, customers, or regions
where we have a concentrated investment exposure
financial and operational
purchase commitments for transportation assets
risks associated with long-term
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
reduced opportunities to generate asset remarketing income
inability to successfully consummate and manage ongoing
acquisition and divestiture activities
reliance on Rolls-Royce in connection with our aircraft spare
engine leasing businesses, and the risks that certain factors that
adversely affect Rolls-Royce could have an adverse effect on our
businesses
fluctuations in foreign exchange rates
inflation or deflation
failure to successfully negotiate collective bargaining agreements
with the unions representing a substantial portion of our employees
asset impairment charges we may be required to recognize
deterioration of conditions in the capital markets, reductions in our
credit ratings, or increases in our financing costs
changes in banks’ inter-lending rate reporting practices and the
phasing out of LIBOR
competitive factors in our primary markets, including competitors
with significantly lower costs of capital
risks related to our international operations and expansion into new
taxes,
geographic markets,
treaties, sanctions, or trade barriers affecting our activities in the
countries where we do business
including laws, regulations,
tariffs,
(cid:129)
changes in, or failure to comply with, laws, rules, and regulations
(cid:129) U.S. and global political conditions
inability to obtain cost-effective insurance
environmental liabilities and remediation costs
potential obsolescence of our assets
inadequate allowances to cover credit losses in our portfolio
operational, functional and regulatory risks associated with severe
weather events, climate change and natural disasters
information technology
inability to maintain and secure our
infrastructure from cybersecurity threats and related disruption of
our business
changes in assumptions,
investment losses in our pension and post-retirement plans
increases in funding requirements or
inability to maintain effective internal control over
reporting and disclosure controls and procedures
financial
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
1
Item 1. Business
GENERAL
PART I
GATX Corporation (“GATX”, “we,” “us,” “our,” and similar terms), a New York corporation founded in 1898, is the leading
global railcar lessor, owning fleets in North America, Europe, and Asia. In addition, jointly with Rolls-Royce plc, we own one of the
largest aircraft spare engine lease portfolios in the world. We report our financial results through three primary business segments:
Rail North America, Rail International, and Portfolio Management. Historically, we also reported financial results for American
Steamship Company (“ASC”) as a fourth segment. On May 14, 2020, we completed the sale of our ASC business to Rand Logistics,
Inc. As a result, ASC is now reported as discontinued operations, and financial data for the ASC segment has been segregated and
presented as discontinued operations for all periods presented. See “Note 25. Discontinued Operations” in Part II, Item 8 of this Form
10-K for additional information. On December 29, 2020, GATX acquired Trifleet Leasing Holding B.V. (“Trifleet”), one of the
largest tank container lessors in the world. Financial results for this business is reported in the Other segment. See “Note 4. Business
Combinations” in Part II, Item 8 of this Form 10-K for additional information.
The following description of our business should be read in conjunction with the information contained in our Management’s
Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 and the consolidated financial
statements included in Item 8 of this Annual Report on Form 10-K.
At December 31, 2021, we had total assets of $9.5 billion, composed largely of railcars.
OPERATIONS
GATX RAIL BUSINESS OVERVIEW
Our wholly owned fleet of approximately 147,000 railcars is one of the largest railcar lease fleets in the world. We currently lease
tank cars, freight cars, and locomotives in North America, tank cars and freight cars in Europe and Russia, and freight cars in India.
The following table sets forth our worldwide rail fleet data as of December 31, 2021:
Tank
Railcars
Freight
Railcars
Total Fleet
Managed
Railcars
Total
Railcars
Locomotives
Rail North America . . . . . . . . .
. . . . . . . . . . .
Rail International
Total . . . . . . . . . . . . . . . . . . . . .
61,540
22,508
84,048
52,976
9,811
62,787
114,516
32,319
146,835
288
7
295
114,804
32,326
147,130
568
—
568
2
Our rail customers primarily operate in the petroleum, chemical, food/agriculture, and transportation industries. Our worldwide
railcar fleet consists of diverse railcar types that our customers use to ship nearly 600 different commodities. The following table
presents an overview of our railcar types as well as the industries of our customers and the commodities they ship.
General-
Service Tank
Cars
High-
Pressure
Tank Cars
Specialty
Tank Cars
Specialty/
Pneumatic
Covered
Hoppers
Gravity
Covered
Hoppers
Open-Top
Cars
Boxcars
Flatcars
Petroleum/
Biofuels
Petroleum
Chemical
Plastics
Agriculture
Energy
Food
Automotive
Principal
Industries
Served
Chemical
Chemical
Petroleum
Food
Energy
Steel
Food
Mining
Industrial
Industrial Construction
Agriculture
Construction
Petroleum
Products
Fertilizer
Products
Ethanol/
Biofuels
Principal
Commodities
Construction
Forest
Products
Liquefied
Petroleum Gas
Products
Sulfuric Acid
Plastics
Fertilizer
Coal
Propylene Molten Sulfur
Flour
Grain
Metals and
Related
Vinyl
Chloride
Monomer
Hydrochloric
Acid
Sugar
Sand
Aggregates
Edible Oils
and Syrups
Miscellaneous
Chemicals
Caustic Soda
Starch
Cement,
Granules
Coke
Consumer
Goods
Manufactured
Goods
Forest
Products
Consumer
Goods
Packaging
Energy
Construction
Steel
Packaged
Food and
Beverages
Paper and
Packaging
Lumber and
Building
Products
Mixed
Freight
Vehicles
Packaged
Goods
Lumber
Steel Products
Chemicals
Phosphoric
Acid
Carbon Black
Soda Ash
Waste
Mixed Freight
GATX’s Worldwide Railcar Fleet
GATX’s Industries Served
Boxcars
9%
Other
9%
General Service
Tank Cars
39%
Mining, Minerals &
Aggregates
11%
Other
8%
Refiners & Other
Petroleum
29%
Tank Cars
57%
Food & Agriculture
11%
Open-Top Cars
7%
Specialty Covered
Hoppers
3%
Covered
Hoppers
18%
Pneumatic Covered
Hoppers
4%
Gravity Covered
Hoppers
11%
Specialty & Acid
Tank Cars
7%
High Pressure
Tank Cars
11%
Railroads & Other
Transports
20%
Chemicals & Plastics
21%
Approximately 147,000 Railcars as of 12/31/2021
Based on 2021 Combined Rail North America and Rail International Revenues
3
RAIL NORTH AMERICA
Rail North America is composed of our operations in the United States, Canada, and Mexico. 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. These railcars have estimated economic useful lives of 27 to 45 years and an average age of
approximately 22 years. Rail North America has a large and diverse customer base, serving approximately 860 customers. In 2021, no
single customer accounted for more than 4% of Rail North America’s total lease revenue, and the top ten customers combined
accounted for approximately 22% of Rail North America’s total lease revenue. Rail North America leases railcars for terms that
generally range from one to ten years, which vary based on railcar types and market conditions. The average remaining lease term of
the North American fleet was approximately 34 months as of December 31, 2021. Rail North America’s primary competitors are
Union Tank Car Company, Wells Fargo Rail, CIT Rail, and Trinity Industries Leasing Company. Rail North America competes
primarily on the basis of availability of railcars, lease rate, maintenance capabilities, customer relationships, and engineering
expertise.
Rail North America purchases new railcars from a number of manufacturers, including Trinity Rail Group, LLC (“Trinity”), a
subsidiary of Trinity Industries, The Greenbrier Companies, Inc. (“Greenbrier”) and its subsidiaries, National Steel Car Ltd., and
Freightcar America. We also acquire railcars in the secondary market. In 2018, we amended a long-term supply agreement with
Trinity to extend the term to December 2023, and we agreed to purchase 4,800 tank cars (1,200 per year) beginning in January 2020
and continuing through 2023. At December 31, 2021, 3,036 railcars have been ordered pursuant to the amended terms of the
agreement, of which 2,280 railcars have been delivered.
In 2018, we entered into a multi-year railcar supply agreement with American Railcar Industries, Inc. (“ARI”), pursuant to which
we agreed to purchase 7,650 newly built railcars. The order encompasses a mix of tank and freight cars to be delivered over a five-
year period, beginning in April 2019 and ending in December 2023. ARI’s railcar manufacturing business was acquired by a
subsidiary of Greenbrier on July 26, 2019, and such subsidiary assumed all of ARI’s obligations under our long-term supply
agreement. As of December 31, 2021, 6,141 railcars have been ordered, of which 3,838 railcars have been delivered. The agreement
included an option to order additional railcars subject to certain restrictions and, as of December 31, 2021, we still have the option to
order 2,200 additional railcars during the remaining term of the agreement.
Rail North America also owns a fleet of locomotives, consisting of 539 four-axle and 29 six-axle locomotives as of December 31,
2021. Locomotive customers are primarily regional and short-line railroads, industrial users, and Class I railroads. Lease terms vary
from month-to-month to ten years. As of December 31, 2021, the average remaining lease term of the locomotive fleet was
approximately 25 months. Rail North America’s primary competitors in locomotive leasing are Wells Fargo Rail, CIT Rail, and
Progress Rail Services Corporation. Competitive factors in the market include availability of locomotives, lease rates, customer
service, and maintenance.
Rail North America also remarkets its rail assets, and these remarketing activities may generate gains which could contribute
significantly to Rail North America’s segment profit.
Maintenance
Rail North America operates an extensive network of maintenance facilities in the United States and Canada dedicated to
performing safe, timely, efficient, and high-quality railcar maintenance services for customers. Services include interior cleaning of
railcars, routine maintenance and general repairs to the car body and safety appliances, regulatory compliance work, wheelset
replacements, interior blast and lining, exterior blast and painting, and car stenciling. To the extent possible, railcar maintenance is
scheduled in a manner that minimizes the amount of time the car is out of service.
In order to increase the efficiency of our maintenance network, Rail North America sold three of its customer-dedicated sites and
three mobile repair units in 2021. Subsequent to year-end, Rail North America has sold one additional customer-dedicated site.
Railcar maintenance demand was not sufficient to consistently achieve adequate productivity from these locations.
4
At December 31, 2021, Rail North America’s maintenance network consisted of:
(cid:129) Six major maintenance facilities that can complete nearly all types of maintenance services.
(cid:129) Two smaller maintenance facilities with more limited capabilities.
(cid:129) Three customer-dedicated sites operating within customer facilities that offer services tailored to the needs of our customers’
fleets.
(cid:129) Five locations with mobile units that travel to many track-side field locations to provide spot repairs and interior cleaning
services.
The maintenance network is supplemented by a number of preferred third-party maintenance providers and railroads. In 2021, third-
party maintenance network expenses accounted for approximately 21% of Rail North America’s total maintenance network expenses,
excluding repairs performed by the railroads. In 2021, wholly owned and third-party maintenance facilities performed approximately
42,700 service events, including multiple independent service events for the same car.
Our maintenance activities are dedicated to servicing our wholly owned railcar fleet pursuant to the provisions of our lease
contracts. This may include services that are not included in the full-service lease agreement, such as repairs of railcar damage or
other customer-specific requirements. Revenue earned from these types of maintenance services is recorded in other revenue. We may
also perform maintenance and repair activities on cars owned by third parties.
Affiliates
GATX is a co-founder of, and owns a 17% share in the RailPulse LLC (“RailPulse”) joint venture. GATX’s partners include
Norfolk Southern Railway Company, Genesee & Wyoming Inc., Trinity Industries, Inc., Watco Companies, LLC, and Greenbrier
Leasing, LLC. The RailPulse joint venture was formed to create an industry-wide telematics platform to enable the use of telematics
devices to gather data and enhance rail safety and the value proposition for rail shippers across North America. As of December 31,
2021, RailPulse is preparing to launch its first service pilot, and has publicly stated its intention to enter regular service in 2023. The
financial results of RailPulse are not currently material to GATX.
RAIL INTERNATIONAL
Rail International is composed of our operations in Europe (“GATX Rail Europe” or “GRE”), India (“GRI”), and Russia (“Rail
Russia”). GRE primarily leases railcars to customers throughout Europe pursuant to full-service leases under which it maintains the
railcars and provides value-added services according to customer requirements. These railcars have estimated useful lives of 35 to 40
years and an average age of approximately 17 years. GRE has a diverse customer base with approximately 240 customers. In 2021,
one customer accounted for approximately 12% of GRE’s total lease revenue and the top ten customers combined accounted for
approximately 50% of GRE’s total lease revenue. GRE’s lease terms generally range from one to ten years and as of December 31,
2021, the average remaining lease term of the European fleet was approximately 26 months. GRE’s primary competitors are VTG
Aktiengesellschaft, the Ermewa Group, Wascosa AG, and Touax. GRE competes principally on the basis of availability of railcars,
customer relationships, lease rate, and maintenance expertise.
GRE acquires new railcars primarily from Gök Yapi San. Tic. a.s., Greenbrier-Astra Rail (Wagony Swidnica sp. z.o.o and Astra
Rail Industries S.A.), Duro Dacovic, On Rail, and Tatravagonka a.s. Additionally, GRE’s Ostróda, Poland maintenance facility
assembles several hundred tank cars each year. As of December 31, 2021, GRE had commitments to acquire from third parties,
primarily from Gök Yapi San. Tic. a.s., Duro Dacovic, Greenbrier-Astra Rail, and Tatravagonka Poprad, approximately 1,400 newly
manufactured railcars to be delivered in 2022. The majority of these railcars have committed leases in place with customers.
As of December 31, 2021, GRI owned 4,830 railcars with estimated useful lives of 15 to 25 years. GRI’s leases are net leases and
have terms generally ranging from four to fourteen years. As of December 31, 2021, the average remaining lease term of the Indian
fleet was approximately 5 years. GRI has a small customer base with twelve customers in the automotive, container, steel, cement,
and bulk commodities transport sector, as well as one customer in the public sector. As of December 31, 2021, GRI had entered into
contracts to acquire 548 railcars to be delivered in 2022, the majority of which have committed leases in place with customers.
As of December 31, 2021, Rail Russia owned 380 railcars with useful lives of 22 to 32 years. Rail Russia’s leases have terms
generally ranging from three to seven years. As of December 31, 2021, the average remaining lease term of the Russian fleet was
approximately 3 years. Rail Russia has a small customer base with three customers in the timber, food products, and chemical sectors.
5
Maintenance
As of December 31, 2021, GRE operates a maintenance facility in Ostróda, Poland. This facility assembles railcars for GRE’s fleet
and performs significant repairs, regulatory compliance, and modernization work for our owned railcars. This facility is supplemented
by a number of third-party repair facilities. The third party facilities accounted for approximately 69% of GRE’s fleet repair costs in
2021.
Similar to our Rail North America segment, GRE’s customers periodically require maintenance services that are not included in the
full-service lease agreement. These services are generally related to the repair of railcar damage caused by customers and railways.
Revenue earned from these maintenance activities is recorded in other revenue.
In India, all railcar maintenance is performed by Indian Railways or third-parties authorized by Indian Railways, in accordance with
regulatory requirements.
In Russia, all railcar maintenance is performed by third-party repair facilities either owned or authorized by Russian Railways, in
accordance with regulatory requirements.
Portfolio Management is composed primarily of our ownership in a group of joint ventures with Rolls-Royce plc that lease aircraft
spare engines, directly-owned aircraft spare engines and five liquefied gas-carrying vessels (the “Specialized Gas Vessels”).
PORTFOLIO MANAGEMENT
Investment Portfolio
Marine Equipment
10%
Other
2%
Aircraft Spare Engine
Leasing Affiliates
56%
GEL Owned Aircraft
Spare Engines
32%
Aggregate Net Book Value of $1,048.7 million as of 12/31/2021
Affiliates
The Rolls-Royce & Partners Finance joint ventures (collectively the “RRPF affiliates”) are a group of 50% owned domestic and
foreign joint ventures with Rolls-Royce plc (or affiliates thereof, collectively “Rolls-Royce”), a leading manufacturer of commercial
aircraft jet engines. The RRPF affiliates are primarily engaged in two business activities: leasing of aircraft spare engines to a diverse
group of commercial aircraft operators worldwide and leasing of aircraft spare engines to Rolls-Royce for use in their engine
maintenance programs. As of December 31, 2021, the RRPF affiliates, in aggregate, owned 407 engines, of which 199 were on lease
to Rolls-Royce. Aircraft engines generally have an estimated economic useful life of 20 to 25 years when new and, depending on
actual usage and with proper maintenance, may achieve extended service well beyond the useful life estimates. As of December 31,
2021, the average age of these engines was approximately 12 years. Lease terms vary, but typically range from 3 to 12 years. Rolls-
Royce acts as manager for each of the RRPF affiliates and also performs substantially all maintenance activities.
Owned and Managed Assets
As of December 31, 2021, Portfolio Management’s owned assets consisted primarily of aircraft spare engines and the Specialized
Gas Vessels.
In 2021, GATX began investing directly in aircraft spare engines through its new entity, GATX Engine Leasing (“GEL”). During
2021, GEL acquired 14 aircraft spare engines for approximately $352 million, including 4 engines for $120 million from the RRPF
affiliates. GEL leases the aircraft spare engines to airline customers, and the engine lease administration is managed by the RRPF
affiliates. Aircraft spare engines generally have an estimated economic useful life of 20 to 25 years when new and, depending on
6
actual usage and with proper maintenance, may achieve extended service well beyond the useful life estimates. As of December 31,
2021, the average age of these engines was approximately 2 years. Lease terms vary, but typically range from 10 to 12 years.
The Specialized Gas Vessels are commercially managed by Anthony Veder Group B.V. (“Veder”). Veder, based in the
Netherlands, owns and operates a fleet of specialized gas-carrying vessels under contracts and charters with customers in the oil and
gas industry. The Specialized Gas Vessels engage in the transport of pressurized gases and chemicals, such as liquefied petroleum gas,
liquefied natural gas, and ethylene, primarily on short- and medium-term contracts for major oil and chemical customers worldwide.
Portfolio Management also manages portfolios of assets for third parties which generate fee and residual sharing income through
portfolio administration and the remarketing of these assets. As of December 31, 2021, Portfolio Management’s managed activities
consisted primarily of managing leases of two power generating assets.
OTHER
On December 29, 2020, GATX acquired Trifleet Leasing Holding B.V. (“Trifleet”), one of largest tank container lessors in the
world, headquartered in Dordrecht, Netherlands. As of December 31, 2021, Trifleet owned and managed a fleet of approximately
20,000 tank containers, leased to a diverse base of approximately 300 customers in the chemical, industrial gas, energy, food,
cryogenic and pharmaceutical industries, as well as to tank container operators. These tank containers have estimated useful lives of
15 to 25 years and an average age of approximately 8 years for the combined owned and managed fleet. Trifleet’s lease terms
generally range from one to five years and as of December 31, 2021, the average remaining lease term of the combined owned and
managed fleet was approximately 23 months. Trifleet manages tank containers on behalf of third-party container investors under long-
term agreements. Under these agreements, Trifleet earns fees for managing these investor-owned fleets, and provides various services,
including the sourcing of new containers and customers, leasing and remarketing of tank containers, and arranging inspection and
maintenance services. Trifleet’s primary competitors are Eurotainer, Exsif, Seaco, and CS Leasing.
Trifleet acquires new tank containers primarily from China International Marine Containers (Group) Ltd. (“CIMC”), Welfit Oddy,
Jingjiang Asian-Pacific Logistics Equipment Co., Ltd. (“JJAP”), and Nantong Tank Container Co., Ltd. As of December 31, 2021,
Trifleet had commitments to acquire from third parties, primarily from CIMC and JJAP, 678 newly manufactured tank containers to
be delivered in 2022.
TRADEMARKS AND PATENTS
Patents, trademarks, and licenses are not material to our businesses taken as a whole.
SEASONAL NATURE OF BUSINESS
GATX’s business is not materially impacted by seasonality of operations.
CUSTOMER BASE
GATX, taken as a whole, is not dependent upon a single customer nor does it have any significant customer concentrations.
Segment concentrations, if material, are described above.
See “Note 14. Concentrations” in Part II, Item 8 of this Form 10-K for additional information.
HUMAN CAPITAL
The strength of our workforce is a significant contributor to our success. To facilitate talent attraction and retention, we endeavor to
make GATX a diverse, inclusive, and safe workplace, with opportunities for our employees to grow and develop in their careers. This
is supported by fair compensation, a range of benefits, health and wellness offerings, and by programs that build connections between
our employees and their communities.
Employees and Employee Relations
As of December 31, 2021, we employed 1,863 persons globally, of whom approximately 35% were union workers covered by
collective bargaining agreements. The hourly employees at our U.S. service centers are represented by the United Steelworkers.
7
Employees at three of Rail North America’s Canadian service centers are represented by Unifor and the Employee Shop Committee of
Rivière-des-Prairies. Certain employees of GATX Rail Europe are represented by one union in Poland.
See “Note 14. Concentrations” in Part II, Item 8 of this Form 10-K for additional information about our employees and
concentration of labor force.
Diversity and Inclusion
GATX is committed to fostering a diverse, equitable, and inclusive environment where employees feel valued and welcomed to be
their best personally and professionally. In recent years, GATX has committed to strengthening its culture of diversity and inclusion
by implementing key hiring and retention initiatives, including:
(cid:129) a hiring initiative, which encourages diverse hires and aims to mitigate unconscious bias;
(cid:129) diverse candidate slates for management and management-feeder positions;
(cid:129) interviewer slates designed to have diverse voices involved in the selection process;
(cid:129) a consistent methodology for evaluating candidates to maintain focus on job-related criteria;
(cid:129) hiring, promoting, and developing female talent in order to increase female representation in leadership positions;
(cid:129) conducting an annual compensation analysis to ensure gender, race, and ethnicity pay equity for professional, managerial, and
executive level positions; and
(cid:129) administration of an employee engagement survey, including specific questions geared toward diversity and inclusion.
In 2021, GATX hired a head of Diversity, Equity, and Inclusion (“DEI”) and initiated:
(cid:129) a Day of Understanding for employees, which included workshops, panels, and speakers on DEI topics, and
(cid:129) targeted DEI training for leaders and salaried employees.
Talent Development and Retention
We believe our ability to attract, retain, and develop top talent is critical to our success. We have been voted a top workplace in
Chicago by our employees and have a high overall rate of retention. In addition, we conduct employee engagement surveys to gather
valuable feedback. We are focused on creating experiences and programs that foster professional growth, performance, and retention
while meeting the evolving needs of our business. GATX invests significant resources in the training and development of our
employees with programs such as Leadership 101 for eligible supervisors, Learning Paths for eligible employees, Business Series
sessions for employees to learn about different aspects of GATX, professional development courses, e-learning, and certification
programs for maintenance personnel to enable career progression through higher skilled roles. Our talent development programs are
designed to broaden representation in leadership pipelines while also providing employees with the resources they need to help
achieve their career goals, build management skills, and lead their organizations. GATX also has employee resource groups dedicated
to enhancing our diverse and inclusive culture, including three resource groups focusing on women in leadership, BIPOC employees,
and LGBTQ+ employees.
Compensation and Benefits
GATX provides comprehensive compensation and benefits programs to support our employees’ overall well-being. In addition to
salaries, these programs include annual bonuses, stock awards, a matched 401(k) plan, comprehensive health insurance, prescription
drug coverage, health savings accounts, and paid time off. Our retirement program includes a defined benefit plan, health
reimbursement account, and pre-65 medical plan for employees retiring from the company. Other benefits include life, disability, and
accident insurance, paid parental leave, identity theft coverage, flexible time off, adoption assistance, tuition reimbursement, and
telecommuting flexibility.
Safety
GATX strives to maintain the highest levels of safety by fostering a culture that makes safety a top priority. GATX utilizes a
continuous improvement methodology to identify safety risks and hazards and drive improvement initiatives.
8
We continue to ensure that our railcar maintenance facility employees and inspectors who are essential workers in the rail industry
can safely perform their jobs every day by screening, maintaining safe work practices, and executing robust cleaning practices within
our repair facility network in order to minimize COVID-19 risk to our employees, their families, and the communities in which we
operate. We continue to manage actual and potential exposure to COVID-19 of our employees to minimize transmission and also
offered vaccine incentives and benefits.
GATX continues to be recognized as a Responsible Care Partner by the American Chemistry Council and the Chemical Industry
Association of Canada (“CIAC”) and is an active participant in the Transportation Community Awareness and Emergency Response
initiative, a national outreach effort assisting communities to prepare for and respond to possible hazardous materials transportation
incidents. In 2020, GATX donated a tank car to the CIAC to provide tank car and service equipment training to emergency responders
throughout Canada. Additionally, GATX offers training on the proper use of our equipment and on regulations that impact our
business. We hold training events at customer locations across North America through the use of our TankTrainer™ mobile classroom.
In the past four years, we have trained more than 1,600 customers and emergency responders.
Community Commitment
We believe that building connections between our employees and their communities creates a more meaningful, fulfilling, and
enjoyable workplace. GATX has a long history of supporting causes in communities where our employees live and work, establishing
a company culture that values strong corporate citizenship. Every year, we organize and encourage employees to volunteer and give
back through programs that focus on addressing the needs of underserved populations and building vibrant communities. In 2021,
through our partnership with Big Shoulders Fund, which provides support to inner-city schools in Chicago, employees engaged
students during virtual service days and volunteered on site to clean and ready schools for the new school year. Further, GATX
employees have mentored Big Shoulders students since 2016 and comprise the largest single group of mentors to the organization. We
also know that our employees’ philanthropic interests and passions are as unique as our employees themselves. Therefore, to further
support and encourage their individual efforts, in 2021 we implemented a “Do Good Day”, a paid day off for full-time corporate
employees in North America to volunteer in their communities for a cause personally meaningful to them. Finally, we held our annual
employee giving campaign and fundraiser for the Make-A-Wish Foundation of Illinois, and in 2021, we celebrated 25 years of
partnership with Make-A-Wish and more than $5 million in total giving to the organization to help grant wishes.
Sustainability
Consistent with our vision, we are committed to growing our business in a sustainable and socially responsible manner, and we
demonstrate our commitment through our programs and initiatives. Our Environmental, Social and Governance (“ESG”) Committee,
a multi-functional team, meets periodically to develop, assess, and prioritize ESG topics that are important to our business and our
stakeholders and to continually improve both the measurement and transparency of our ESG disclosures and practices. The ESG
Committee has primary management responsibility for our ongoing and developing ESG efforts. We maintain a Sustainability page on
our website (www.gatx.com) to highlight our environmental and social responsibility accomplishments and provide key performance
data to our stakeholders. In 2021, GATX issued its first Sustainability Accounting Standards Board (“SASB”) report, which discloses
metrics related to relevant ESG factors. Nothing on our website shall be deemed incorporated by reference into this Annual Report on
Form 10-K.
ENVIRONMENTAL MATTERS
Our operations, facilities and properties are subject
laws and
regulations. These laws cover discharges to waters; air emissions; toxic substances; the generation, handling, storage, transportation,
and disposal of waste and hazardous materials; and the investigation and remediation of contamination. These laws have the effect of
increasing the cost and liability associated with leasing and operating assets, and violations can result in significant fines, penalties, or
other liabilities. Environmental risks and compliance with applicable environmental laws and regulations are inherent in the use of rail
and other transportation assets, which can involve transporting chemicals and other hazardous materials.
local, and foreign environmental
to extensive federal, state,
9
We are subject to, and may from time to time continue to be subject to, environmental cleanup and enforcement actions in the
United States and in the foreign countries in which we operate. In particular, the federal Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), also known as the Superfund law, generally imposes joint and several liability for
investigation, cleanup and enforcement costs on current and former owners and operators of a site, without regard to fault or the
legality of the original conduct. Accordingly, we have been and may, in the future, be named as a potentially responsible party under
CERCLA and other federal, state, local, and foreign laws or regulations for all or a portion of the costs to investigate and clean-up
sites at which certain contaminants may have been discharged or released by us, our current lessees, former owners or lessees of
properties, or other third parties. Environmental remediation and other environmental costs are accrued when considered probable and
amounts can be reasonably estimated. As of December 31, 2021, environmental costs were not material to our financial position,
results of operations or cash flows. For further discussion, see “Note 23. Legal Proceedings and Other Contingencies” in Part II, Item
8 of this Form 10-K.
We recognize that climate change has the potential to impact our leasing business and maintenance operations. GATX continues to
evaluate, quantify, and report on business, operational, and strategic risks associated with climate change. In 2021, GATX calculated
and published 2019 and 2020 Scope 1 and Scope 2 greenhouse gas emissions for all our facilities globally and initiated an assessment
of our full value chain impacts on the environment in an effort to identify opportunities to reduce those impacts.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following information regarding our executive officers is included in Part I in lieu of inclusion in our definitive Proxy
Statement:
Name
Offices Held
. . . . . . . Executive Vice President and President, Rail North America
Brian A. Kenney (1) . . . . . . . Chairman, President and Chief Executive Officer
Thomas A. Ellman . . . . . . . . Executive Vice President and Chief Financial Officer
Deborah A. Golden . . . . . . . . Executive Vice President, General Counsel and Corporate Secretary
Robert C. Lyons (2)
M. Kim Nero . . . . . . . . . . . . . Executive Vice President and Chief Human Resources Officer
N. Gokce Tezel . . . . . . . . . . . Executive Vice President and President, Rail International
Niyi A. Adedoyin . . . . . . . . . Senior Vice President and Chief Information Officer
Jennifer M. McManus . . . . . . Senior Vice President, Controller and Chief Accounting Officer
Paul F. Titterton (3)
Jennifer L. Van Aken . . . . . . Senior Vice President, Treasurer and Chief Risk Officer
Jeffery R. Young . . . . . . . . . . Senior Vice President and Chief Tax Officer
Robert A. Zmudka . . . . . . . . Senior Vice President and Chief Commercial Officer, Rail North America
. . . . . . . Senior Vice President and Chief Operating Officer, Rail North America
Position
Held
Since
Age
2005
2018
2012
2018
2021
2018
2016
2020
2018
2020
2018
2018
62
53
67
58
47
47
54
42
46
47
59
54
(1) On December 3, 2021, Mr. Kenney notified the Board of Directors of his decision to retire as an officer of the Company effective
April 22, 2022, following the Annual Meeting of Shareholders. It is expected that Mr. Kenney will continue to serve on the
Company’s Board as non-executive Chairman until October 31, 2022, at which time he intends to retire from the Board.
(2) On December 3, 2021, the Board appointed Mr. Lyons to the position of President and Chief Executive Officer, effective at the
time of Mr. Kenney’s retirement on April 22, 2022. The Board intends to nominate Mr. Lyons for election as a director at the
2022 Annual Meeting of Shareholders.
(3) On January 28, 2022, the Board appointed Mr. Titterton to the position of Executive Vice President and President, Rail North
America, effective at the time of Mr. Lyons’ transition to the position of President and Chief Executive Officer on April 22,
2022.
(cid:129) Mr. Kenney has served as Chairman, President and Chief Executive Officer since 2005. Previously, Mr. Kenney served as President
from 2004 to 2005, Senior Vice President, Finance and Chief Financial Officer from 2002 to 2004, Vice President, Finance and
Chief Financial Officer from 1999 to 2002, Vice President, Finance from 1998 to 1999, Vice President and Treasurer from 1997 to
1998, and Treasurer from 1995 to 1996.
(cid:129) Mr. Ellman was elected Executive Vice President and Chief Financial Officer in August, 2018. Previously, Mr. Ellman served as
Executive Vice President and President, Rail North America from 2013 to August 2018, Senior Vice President and Chief
Commercial Officer from 2011 to 2013, and Vice President and Chief Commercial Officer from 2006 to 2011. Prior to re-joining
10
GATX in 2006, Mr. Ellman served as Senior Vice President and Chief Risk Officer and Senior Vice President, Asset Management
of GE Equipment Services, Railcar Services and held various positions at GATX in the GATX Rail Finance Group.
(cid:129) Ms. Golden has served as Executive Vice President, General Counsel and Corporate Secretary since June 2012. Previously,
Ms. Golden served as Senior Vice President, General Counsel and Corporate Secretary from 2007 to June 2012. Ms. Golden joined
GATX in 2006 as Vice President, General Counsel and Corporate Secretary. Prior to joining GATX, Ms. Golden served as Vice
President and General Counsel of Midwest Generation, LLC from 2004 to 2005, Deputy General Counsel, State of Illinois, Office
of the Governor from 2003 to 2004 and Assistant General Counsel with Ameritech Corporation/SBC Communications, Inc. from
1997 to 2001.
(cid:129) Mr. Lyons was elected Executive Vice President and President, Rail North America in August 2018. Previously, Mr. Lyons served
as Executive Vice President and Chief Financial Officer from 2012 to August 2018, Senior Vice President and Chief Financial
Officer from 2007 to 2012, Vice President and Chief Financial Officer from 2004 to 2007, Vice President, Investor Relations from
2000 to 2004, Project Manager, Corporate Finance from 1998 to 2000, and Director of Investor Relations from 1996 to 1998.
(cid:129) Ms. Nero was elected Executive Vice President and Chief Human Resources Officer in May 2021. Prior to joining GATX,
Ms. Nero served as Vice President, Human Resources at Ferrara Candy Company. Prior to that, she held positions in sales and then
went on to lead global human resources functions in the financial, pharmaceutical, consumer packaged goods, and manufacturing
industries at Discover, EVRAZ, Eli Lilly, and SC Johnson Wax.
(cid:129) Mr. Tezel was elected Executive Vice President and President, Rail International in August 2018, Previously, Mr. Tezel served as
Senior Vice President and President, Rail International from March 2018 to August 2018, Vice President and Senior Vice President
– Business Development, Rail International from 2015 to March 2018, Vice President and Group Executive, Emerging Markets
from 2012 to 2015, Vice President – International Business Development 2008 to 2012, Vice President – Strategic Growth from
2007 to 2008, Director, Marketing and Product Development from 2005 to 2007, Director, Corporate Finance from 2003 to 2005,
and Associate Director, Corporate Finance from 2000 to 2003.
(cid:129) Mr. Adedoyin has served as Senior Vice President and Chief Information Officer since January 2016. Previously, Mr. Adedoyin
served as Vice President and Chief Information Officer from 2013 to January 2016 and Senior Director, IT Strategy and Project
Management Office from 2008 to 2013.
(cid:129) Ms. McManus was elected Senior Vice President, Controller and Chief Accounting Officer in January 2020. Previously
Ms. McManus served as Senior Director, Investor Relations and Accounting Research, Policy & Planning since May 2017 and
Director, Accounting Research, Policy & Planning from June 2015 to May 2017. Prior to joining GATX, Ms. McManus held
various positions of increasing responsibility with Hyatt Hotels Corporation, Tribune Company, and in public accounting.
(cid:129) Mr. Titterton was elected Senior Vice President and Chief Operating Officer, Rail North America in August 2018. Previously,
Mr. Titterton served as Senior Vice President and Chief Commercial Officer, Rail North America from 2015 to August 2018, Vice
President and Chief Commercial Officer from 2013 to 2015, Vice President and Group Executive, Fleet Management, Marketing
and Government Affairs from 2011 to 2013, Vice President and Executive Director, Fleet Management from 2008 to 2011, and in a
variety of positions of increasing responsibility since joining the company in 1997.
(cid:129) Ms. Van Aken was elected Senior Vice President, Treasurer, and Chief Risk Officer in October, 2020. Previously Ms. Van Aken
served as Vice President, Financial Planning & Analysis from 2019 to 2020, Senior Director, Financial Planning & Analysis from
2018 to 2019, Assistant Treasurer, Corporate Finance from 2016 to 2018, Director, Investment Risk Management from 2015 to
2016, Director, Investor Relations from 2010 to 2015, Director, Corporate Finance from 2009 to 2010, and Manager, Corporate
Finance from 2006 to 2009. Prior to joining GATX, Ms. Van Aken held a number of positions of increasing responsibility in the
financial services industry.
(cid:129) Mr. Young was elected Senior Vice President and Chief Tax Officer in August 2018. Previously, Mr. Young served as Vice
President and Chief Tax Officer from 2015 to August 2018, Vice President of Tax from 2007 to 2015, and as Director of Tax from
2003 to 2007. Prior to joining GATX, Mr. Young spent twenty years in a variety of tax related positions of increasing responsibility
in public accounting and the financial services industry.
(cid:129) Mr. Zmudka was elected Senior Vice President and Chief Commercial Officer, Rail North America in August 2018. Previously,
Mr. Zmudka served as Vice President and Group Executive, North American Sales & Marketing from 2010 to August 2018, Vice
President and Executive Director, Strategic Sales from 2007 to 2010, and Vice President, National Accounts from 2006 to 2007.
11
Mr. Zmudka joined GATX in 1989 and worked in various sales and fleet portfolio roles before being promoted to Vice President,
Regional Sales in 2001.
AVAILABLE INFORMATION
We make available free of charge at our website, www.gatx.com, our most recent annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to the Securities Exchange
Act of 1934, as amended (the “1934 Act”), as soon as reasonably practicable after such reports are electronically filed with, or
furnished to, the U.S. Securities and Exchange Commission (“SEC”). The SEC maintains a website that contains reports, proxy, and
other information that we have filed with the SEC. The SEC website may be found at http://www.sec.gov. Charters for the Audit
Committee, Compensation Committee and Governance Committee of the Board of Directors, the Corporate Governance Guidelines,
the Code of Business Conduct and Ethics and the Code of Ethics for Senior Company Officers are posted under Corporate
Governance in the Investor Relations section of our website, and are available in print upon request by any shareholder. Within the
time period prescribed by SEC and New York Stock Exchange regulations, we will post on our website any amendment to the Code
of Ethics for Senior Company Officers and the Code of Business Conduct and Ethics or any waivers thereof. The information on our
website is not incorporated by reference into this report.
Item 1A. Risk Factors
Investors should consider the risk factors described below as well as other information contained in this filing or our other filings
with the U.S. Securities and Exchange Commission before investing in our securities. If any of the events described in the risk factors
below occur, our business, financial condition and results of operations could be materially adversely affected.
Business and Operational Risks
The global COVID-19 pandemic had an adverse impact on our businesses and financial performance, and the duration and extent
of the pandemic could prolong or increase the adverse impact on some or all of our businesses. We are unable to predict the extent
to which the pandemic and measures taken in response to the pandemic may adversely affect our personnel, operations,
commercial activity, asset values, financial position or liquidity in the future.
The ongoing COVID-19 pandemic (including the emergence of new variants) has caused, to varying degrees, a slowdown of
economic activity around the world (including a decrease in demand for a broad variety of goods and services), disruptions in global
supply chains, a dramatic reduction in air travel, and volatility and disruption of financial markets, and we expect that some or all of
these impacts may continue for the foreseeable future. Such disruptions resulted in, and may still result in, (i) reduced demand for
leasing of certain railcar types and, in particular, for aircraft spare engines, which continue to be adversely impacted, (ii) downward
pressure on lease rates and renewals, and in the case of our RRPF affiliates, accommodations of certain requests by customers for
payment deferrals and rate restructuring, and (iii) reductions in asset disposition for certain of our segments. We also face ongoing
operational challenges from the need to protect employee health and safety and may continue to encounter ongoing workplace
disruptions. Our remote work arrangements for employees pose challenges for those employees and our IT systems, which could
strain our business continuity plans, and introduce operational risk, including cybersecurity and IT systems management risks. The
situation surrounding COVID-19 remains fluid, and financial markets could experience additional disruption or increased volatility
attributable to the pandemic, including the emergence of new variants.
Jurisdictions in which we operate may adopt vaccine, testing, or other pandemic mitigation requirements and, if such requirements
are imposed, they could result in labor disruptions, employee attrition, and difficulty securing future labor needs, as well as have
impacts on the broader employment market and the supply chain, our suppliers, and our customers.
The duration of, and the situation surrounding, the COVID-19 pandemic and its economic consequences are uncertain, rapidly
changing, and difficult to predict, and the pandemic’s impact on our costs, operations, financial performance, and liquidity, as well as
its impact on our ability to successfully execute our business strategy, remains uncertain and difficult to predict. Further, the ultimate
impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our
control, including, but not limited, to: actions taken by other in response to the pandemic; impacts on global and regional economies,
travel, and economic activity; economic uncertainty and volatility in financial markets; and global supply chain disruptions. As a
result, we expect COVID-19 may continue to negatively impact our operating results in future periods, including by increasing many
of the risks described below. However, we are currently unable to provide any assurance as to the likelihood, magnitude, and duration
of any such impact.
12
A significant decrease in lease renewals of our transportation assets by our customers or a significant increase in the number of
compliance-based maintenance events could negatively impact operations and substantially increase our costs.
Decreases in customer demand for our transportation assets could increase the number of leases that are not renewed upon
expiration, resulting in the return of such assets by our customers. Returned transportation assets often must undergo maintenance and
service work before being leased to new customers. A significant increase in the number of leased assets requiring maintenance may
negatively affect our operations and substantially increase maintenance and other related costs.
We also perform a variety of government or industry-mandated maintenance programs on our fleet of transportation assets. These
compliance programs are cyclical in nature, and as a result, we can face significant increases in the number of maintenance events in
any given year. A significant increase in maintenance events or severe constraints in the repair networks may negatively impact our
operations and substantially increase maintenance and other related costs as a result of increased volume or the need to utilize higher
cost third party maintenance providers. In addition, while we rely on third party maintenance providers to assist with these compliance
procedures for our transportation assets, high demand faced by these providers from other asset owners may constrain our access to
the providers or may substantially increase our costs.
Events that negatively affect certain assets, customers, or geographic regions could have a negative impact on our results of
operations.
We generally derive our revenues from a variety of asset types, customers, industries, and geographic locations. However, from
time to time we could have a large investment in a particular asset type, a large revenue stream associated with a particular customer
or industry, or a large number of customers located in a particular geographic region. Decreased demand from a discrete event
impacting a specific asset type, customer, industry, or region in which we have a concentrated exposure could negatively impact our
results of operations. We are monitoring the potential conflict between Russia and Ukraine. The situation remains uncertain, and
while we do not expect that it would be material to GATX, a conflict in Ukraine or the imposition of sanctions on Russia could result
in an adverse impact on certain of our businesses, operations, and assets.
Our long-term railcar purchase commitments could subject us to material operational and financial risks.
Unlike some of our competitors in the railcar leasing market, we do not manufacture railcars. In order to obtain committed access to
a supply of newly built railcars on competitive terms, we regularly enter into long-term supply agreements with manufacturers to
purchase significant numbers of newly built railcars over a multi-year period. Some of these agreements may provide for flexibility in
the pricing, timing, and quantity of our purchasing commitments, while other agreements may provide no such flexibility. Therefore,
if economic conditions weaken during the term of a long-term supply agreement, it is possible that we may be required to continue to
accept delivery of, and pay for, new railcars at times when it may be difficult for us to lease such railcars at reasonable rates, or at all.
Furthermore, we may be required to take delivery of railcars at points when our financing costs may be high. These factors could
negatively affect our revenues and profitability. In addition, if tariffs, trade disputes, commodity prices, supply chain disruptions, or
other factors lead to higher prices for steel or other raw materials used to manufacture railcars, we may be required to pay higher
prices to purchase new railcars, which could adversely affect our ability to profitably lease those railcars to customers.
Soft market conditions and declines in asset values may reduce opportunities for us to generate remarketing income.
We utilize our extensive knowledge and experience to remarket transportation assets in order to optimize the composition of our
fleets, and these activities generate income that contributes significantly to segment profit. Reduced demand for our assets due to
adverse market conditions could reduce opportunities for us to generate remarketing income. A significant or prolonged decline in the
secondary market for our assets could adversely affect our financial performance.
We may not be able to successfully consummate and manage ongoing acquisition and divestiture activities, which could have an
adverse impact on our financial statements.
From time to time, we may acquire other businesses and, based on an evaluation of our business portfolio, divest existing
businesses. These acquisitions and divestitures may present financial, managerial, and operational challenges, including diversion of
management attention from existing businesses, difficulty with integrating or separating personnel and financial and other systems,
increased expenses and costs, assumption of liabilities and indemnities, increased compliance risks, and potential disputes with the
buyers or sellers or third parties. In addition, we may be required to incur asset impairment charges (including charges related to
goodwill and other intangible assets) in connection with acquired businesses, which may reduce our profitability. If we are unable to
consummate such transactions, we will not receive the expected benefits, and alternative favorable opportunities to divest may not be
13
available to us. If we cannot successfully integrate and grow acquisitions and achieve contemplated revenue synergies and cost
savings, or are unable to complete a divestiture, our financial results could be adversely affected.
We rely on Rolls-Royce in connection with our aircraft spare engine leasing businesses, and certain factors that adversely affect
Rolls-Royce could have an adverse effect on those businesses.
GATX and Rolls-Royce plc. (“Rolls-Royce”) each own 50% of domestic and foreign joint venture entities (collectively, the “RRPF
affiliates” or “RRPF”) that own and lease aircraft spare engines to Rolls-Royce and owners and operators of commercial aircraft. In
addition, GATX directly invests in Rolls-Royce aircraft spare engines through its wholly-owned subsidiary, GATX Engine Leasing
Ltd., and places these engines on long-term leases with airline operators, with RRPF serving as the asset manager. Rolls-Royce is a
major customer of the RRPF affiliates, as well as a critical supplier of aircraft spare engines and commercial, technical, and
maintenance services to GATX and the RRPF affiliates. Rolls-Royce and RRPF are facing and may continue to face significant
adverse financial and operational issues due to travel restrictions and the material decline in air travel associated with the COVID-19
pandemic. A deterioration in (1) the performance of services provided by Rolls-Royce or RRPF, or (2) the durability and reliability of
Rolls-Royce engines, or (3) the financial condition, creditworthiness or liquidity of Rolls-Royce or RRPF could negatively impact
GATX’s financial performance.
Many of our employees are represented by unions, and failure to successfully negotiate collective bargaining agreements may
result in strikes, work stoppages, or substantially higher labor costs.
A significant portion of our employees are represented by labor unions and work under collective bargaining agreements that cover
a range of workplace matters, such as wages, health and welfare benefits, and work rules. If we fail to negotiate acceptable labor
agreements, our business could be disrupted by strikes or lockouts. We could also incur increased operating costs due to higher wages
or benefits paid to union workers. Business disruptions or higher operating costs could both have an adverse effect on our financial
position, results of operations, or cash flows.
Our transportation assets may become obsolete.
In addition to changes in laws, rules, and regulations that may make transportation assets obsolete, changes in the preferred method
our customers use to ship their products, changes in demand for particular products, or a shift by customers toward purchasing assets
rather than leasing them may adversely impact us. Our customers’ industries are driven by dynamic market forces and trends, which
are influenced by economic and political factors. Changes in our customers’ markets may significantly affect demand for our
transportation assets.
Risks related to our international operations and expansion into new geographic markets could adversely affect our business,
financial condition, and operating results.
We generate a significant amount of our net income outside the United States. In recent years, we have increased our focus on
international growth and expansion into select emerging markets as a means to grow and diversify earnings.
14
Our foreign operations and international expansion strategy are subject to the following risks associated with international
operations:
(cid:129) Noncompliance with U.S. laws affecting operations outside of the United States, such as the Foreign Corrupt Practices Act
(cid:129) Noncompliance with a variety of foreign laws and regulations
(cid:129)
(cid:129)
Failure to properly implement changes in tax laws and the interpretation of those laws
Failure to develop and maintain data management practices that comply with laws related to cybersecurity, privacy, data
localization, and data protection
Fluctuations in currency values
Sudden changes in foreign currency exchange controls
(cid:129)
(cid:129)
(cid:129) Discriminatory or conflicting fiscal policies
(cid:129) Difficulties enforcing contractual rights or foreclosing to obtain the return of our assets in certain jurisdictions
(cid:129)
(cid:129) Uncollectible accounts and longer collection cycles that may be more prevalent in foreign countries
(cid:129)
Ineffective or delayed implementation of appropriate controls, policies, and processes across our diverse operations and
employee base
Imposition of sanctions against countries where we operate or specific companies or individuals with whom we do business, or
retaliatory sanctions by such countries on U.S. companies
Inability to access railcar or tank container supply
(cid:129)
(cid:129) Nationalization or confiscation of assets by foreign governments, and imposition of additional or new tariffs, quotas, trade
barriers, regulations, and similar restrictions on our operations outside the United States
(cid:129) Unforeseen developments and conditions, including terrorism, war, epidemics, and international tensions and conflicts.
Information Technology Risks
We rely on technology in all aspects of our business operations. If we are unable to adequately maintain and secure our
information technology (“IT”) infrastructure from cybersecurity threats and related disruptions, our business could be negatively
impacted.
Threats to IT systems associated with cybersecurity risks and cyber incidents or attacks have continued to increase in recent years in
their frequency and levels of sophistication and intensity by sophisticated and organized groups and individuals with a wide range of
motives and expertise. We rely on our IT infrastructure to process, transmit, and store electronic information that is used in all aspects
of our business operations, including employee and customer information. As a result of the COVID-19 pandemic, and the
implementation of remote work options for employees, remote access to our networks and systems has increased substantially. All IT
systems are vulnerable to security threats, such as hacking, viruses, malicious software, and other unlawful attempts to disrupt or gain
access to these systems. We are subject to attempted cyber intrusions, hacks and ransom attacks, and we have had and continue to
experience events of this nature and expect them to continue. While we have invested in the protection of our data and IT
infrastructure, the steps we have taken to mitigate these risks may not be effective to prevent breaches of our IT infrastructure, some
of which is managed by third parties, and we may be more vulnerable to a successful cyber-attack or information security incident
from our workforce working remotely. Breaches of our IT infrastructure could lead to disruptions in our business, potentially
including the theft, destruction, loss, misappropriation, or release of confidential employee and customer information stored on our IT
systems or confidential data or other business information and subject us to potential lawsuits or other material legal liabilities or
reputational damage. These disruptions could adversely affect our operations, financial position, and results of operations. While we
maintain insurance to mitigate our exposure to these risks, our insurance policies carry retention and coverage limits, which may not
be adequate to reimburse us for losses caused by security breaches or other cybersecurity events, and we may not be able to collect
fully, if at all, under these insurance policies.
We also are subject to an evolving body of federal, state and foreign laws, regulations, guidelines and principles regarding data
privacy, data protection and data security. Many states as well as foreign governments have passed or proposed laws and regulations
dealing with the collection and use of personal information obtained from their data subjects, including the E.U.’s General Data
Protection Regulation and the California Privacy Rights Act, and we could incur substantial penalties or litigation or reputational
damage related to violations of such laws and regulations.
15
Legal and Regulatory Risks
We have been, and may continue to be, involved in various types of litigation, including claims for personal injury, property
damage, environmental damage, and other claims arising from an accident involving our railcars or other assets.
The nature of our business and assets potentially exposes us to significant personal injury and property damage claims and
litigation, environmental claims, or other types of lawsuits inside and outside the U.S. For example, some of our customers use certain
types of our transportation assets to transport flammable liquids and other hazardous materials, and an accident involving such
transportation assets could lead to litigation and subject us to significant liability. Similarly, if we fail to meet our obligations to
maintain our assets in compliance with governmental regulations and industry rules, we could be subject to fines, penalties, and
claims for such failure as well as any resulting personal injury or property damage. In some jurisdictions, an accident can give rise to
both civil and criminal liabilities for us and, in some cases, our employees. In the event of an unfavorable outcome, we could be
subject to substantial penalties or monetary damages, including criminal penalties and fines, and our employees who are named as
criminal defendants in any such litigation may be subject to incarceration and fines. A substantial adverse judgment against us could
have a material effect on our financial position, results of operations, cash flows, and reputation.
Our transportation assets and operations are subject to various laws, rules, and regulations. If these laws, rules, and regulations
change or we fail to comply with them, it could have a significant negative effect on our business and profitability.
Our fleets of transportation assets and related operations are subject to various U.S. and non-U.S. laws, rules, and regulations
administered by authorities in jurisdictions where we do business. Such laws, rules, and regulations could be changed in ways that
would require us to modify our business models and objectives, impose requirements for additional maintenance or substantial
modification or refurbishment of our assets, or otherwise affect our returns on investments by restricting existing activities and
products, subjecting them to escalating costs or prohibiting them outright. Violations of these laws, rules, and regulations can result in
substantial fines and penalties, including potential limitations on operations or forfeiture of assets, and reputational damage.
We are subject to extensive environmental regulations and the costs of remediation may be material.
We are subject to extensive federal, foreign, state, and local environmental laws and regulations concerning, among other things,
the discharge of hazardous materials and remediation of contaminated sites. In addition, some of our properties, including those
previously owned or leased, have been used for industrial purposes, which may have resulted in discharges onto these properties.
Environmental liability can extend to previously owned or operated properties in addition to properties we currently own or use.
Additionally, we could incur substantial costs, including cleanup costs, fines, and costs arising out of third-party claims for property
or natural resource damage and personal injury as a result of violations of or liabilities under environmental laws and regulations in
connection with our or our lessees’ current or historical operations. Under some environmental laws in the United States and certain
other countries, the owner of a leased asset may be liable for environmental damage, cleanup or other costs in the event of a spill or
discharge of material from such asset without regard to the owner’s fault. Governments or regulators may change the legislative or
regulatory frameworks within which we operate, including environmental laws and regulations, without providing us any recourse to
address any adverse effects such changes may have on our business. Due to the regulatory complexities, risk of unidentified
contaminants on our properties, and the potential liability for our operations as well as those of our lessees, it is possible
environmental and remediation costs may be materially different from the costs we have estimated.
We may be affected by climate change or market or regulatory responses to climate change.
There is increasing global regulatory focus on climate change and greenhouse gas (“GHG”) emissions. Climate change may also
pose regulatory and environmental risks that could harm our results of operations and affect the way we conduct business. Severe
weather, climate change, and natural disasters, such as tornadoes, flooding, fires and earthquakes, could cause significant business
interruptions and result in increased costs and liabilities and decreased revenues. Changes in laws, rules, and regulations, or actions by
authorities or other third parties to address GHG and climate change could negatively impact our customers and business. For
example, restrictions on GHG emissions could significantly increase costs for our customers whose production processes require
significant amounts of energy, which could reduce demand for the lease of our assets, while rail and other transportation assets in our
fleet that are used to carry fossil fuels, such as coal and petroleum, or that directly or indirectly require fossil fuel consumption for
operation of the assets could see reduced demand or be rendered obsolete if government regulations mandate a reduction in fossil fuel
consumption or customer preferences change. New government regulations could also increase our operating costs and compliance
with those regulations could be costly. Any of these factors, individually or in operation with one or more of the other factors, or other
unforeseen impacts of climate change, could reduce the demand for and value of our assets, and could have an adverse effect on our
financial position, results of operations, and cash flows.
16
Industry Risks
We depend on continued demand from our customers to lease or use our transportation assets and services at satisfactory rates.
A significant decline in customer demand could negatively impact our business and financial performance.
Our profitability depends on our ability to lease assets at satisfactory rates and to re-lease assets upon lease expiration. Customer
demand for our transportation assets and services can be adversely affected by various economic and other factors, including:
(cid:129) Weak macroeconomic conditions
(cid:129) Weak market conditions in our customers’ businesses
(cid:129) Adverse changes in the price of, or demand for, commodities
(cid:129)
Changes in railroad operations, efficiency, pricing and service offerings, including those related to “precision scheduled
railroading”
Changes in, or disruptions to, supply chains
(cid:129)
(cid:129) Availability of pipelines, trucks, and other alternative modes of transportation
(cid:129)
(cid:129) Other operational or commercial needs or decisions of our customers
(cid:129) World trade policies
Changes in conditions affecting the aviation industry, including geographic exposure and customer concentrations
Demand for our railcars and other transportation assets is dependent on the strength and growth of our customers’ businesses. Some
of our customers operate in cyclical or fluctuating markets, such as the steel, energy, chemical, transportation, and construction
industries, which are susceptible to macroeconomic downturns and may experience significant changes in demand over time.
Weakness in certain sectors of the economy in the United States and other parts of the world may make it more difficult for us to lease
our transportation assets or to lease them on profitable terms.
Adverse changes in commodity prices or reduced demand for commodities could reduce customer demand for various types of
assets in our fleet. A significant decrease in the price of a commodity may cause producers of that commodity to reduce their
production levels. A significant increase in the price of a commodity could cause our customers to switch to less expensive transport
alternatives. In either case, these changes in customer behavior can reduce demand for the portions of our fleet that are used to
transport the commodity. In addition, demand for transportation assets used to transport ethanol and other renewable fuels may be
affected by government subsidies and mandates, which may be enacted, changed, or eliminated from time to time, while demand for
transportation assets used to transport fossil fuels or that directly or indirectly require consumption of fossil fuels for operation may be
affected by government policies and mandates with respect to climate change.
The availability and relative cost of alternative modes of transportation and changes in customer transportation preferences also
could reduce demand for our assets. For example, technological innovations in the trucking industry and patterns in U.S. economic
growth that favor truck over rail could result in a modal shift away from rail and reduce customer demand for our rail assets. Demand
for our other transportation assets and related services is also influenced by many of the factors discussed above. For example, aircraft
spare engine leasing is influenced by airline and lessee profitability, patterns in global air travel, reliability and durability of engine
types, world trade policies, technological advances, and price and other competitive factors. A significant decline in customer demand
for our assets and services could adversely affect our financial performance.
In many cases, demand for our transportation assets also depends on our customers’ desire to lease, rather than buy, the assets. Tax
and accounting considerations, interest rates, and operational flexibility, among other factors, may influence a customer’s decision to
lease or buy assets. We have no control over these external considerations, and changes in these factors could negatively impact
demand for our transportation assets held for lease.
A significant change in pricing and/or service offerings by North American railroads or poor operating conditions could reduce
demand for our rail assets and negatively impact our financial performance.
Our North American rail asset leasing business is impacted by the operations of the railroads, particularly the eight largest rail
systems known as the “Class I railroads”, most of which are pursuing some form of major operational transformation under the
umbrella term of “precision scheduled railroading” or “PSR”. If PSR results in substantial increases in train velocity or decreases in
dwell time for rail assets, the resulting excess supply of railcars and/or locomotives may adversely impact the demand for our rail
17
assets. Alternatively, if PSR results in increased pricing and/or reduced service frequency and quality, the value proposition of rail
freight for shippers relative to alternative modes of transportation could be reduced. Apart from PSR, other factors such as adverse
weather conditions, railroad mergers, disruptions to railroad operations, and increases in rail traffic could result in slower transit times
making rail transportation less attractive to shippers versus other modes of transport. Each of these cases could reduce demand for our
rail assets and decreased fleet utilization due to modal shift away from rail, all of which could negatively impact revenue and our
results of operations.
Competition could result in decreased profitability.
We operate in a highly competitive business environment. In certain cases, our competitors are larger than we are and have greater
financial resources, higher credit ratings, and a lower cost of capital, while some of our competitors manufacture railcars for their own
leasing businesses. These factors may enable our competitors to offer leases or services to customers at lower rates than we can
provide, thus negatively impacting our profitability, asset utilization, and investment volume.
Economic and Credit Risks
Fluctuations in foreign exchange rates and interest rates could negatively impact our results of operations.
Upon consolidation, we translate the financial results of certain subsidiaries from their local currency to the U.S. dollar, which
exposes us to foreign exchange rate fluctuations. As exchange rates vary, the translated operating results of foreign subsidiaries may
differ materially from period to period. We also have gains and losses on foreign currency transactions, which could vary based on
fluctuations in exchange rates and the timing of the transactions and their settlement. In addition, fluctuations in foreign exchange
rates can affect the demand and price for services we provide both domestically and internationally, and could negatively impact our
results of operations. We also face risks associated with fluctuations in interest rates. We may seek to limit our exposure to foreign
exchange rate and interest rate risk with currency or interest rate derivatives, which may or may not be effective. A material and
unexpected change in interest rates or foreign exchange rates could negatively affect our financial performance.
Deterioration of conditions in the global capital markets or negative changes in our credit ratings may limit our ability to obtain
financing and may increase our borrowing costs.
We rely largely on banks and the capital markets to fund our operations and contractual commitments. Typical funding sources
include commercial paper, bank term loans, public debt issuances, and a variety of other secured and unsecured financing structures.
These markets can experience high levels of volatility and access to capital can be limited for an extended period of time. In addition
to conditions in the capital markets, changes in our financial performance or credit ratings or ratings outlook, as determined by rating
agencies such as Standard & Poor’s and Moody’s Investors Service, could cause us to incur increased borrowing costs or to have
greater difficulty accessing public and private markets for secured and unsecured debt. Financial and market dynamics and volatility,
including as a result of the impact of COVID-19, may heighten these risks. If we are unable to obtain financing on acceptable terms,
our other sources of funds, including available cash, bank facilities, cash flow from operations, and portfolio proceeds, may not be
adequate to fund our operations and contractual commitments.
Changes in banks’ inter-lending rate reporting practices or the phasing out of LIBOR may adversely affect our financial
condition, cash flows, and results of operations.
We have certain borrowing arrangements and financing structures that are based on the London Inter-Bank Offering Rate
(“LIBOR”), primarily at our RRPF affiliates. On November 30, 2020, ICE Benchmark Administration (“IBA”), the administrator of
U.S. Dollar LIBOR (“USD LIBOR”) and other IBORs, announced that, following required consultations, (i) it intends to cease
publication of 1-week and 2-month USD LIBOR at the end of 2021 and (ii) subject to compliance with applicable regulations,
including as to representativeness, it does not intend to cease publication of the remaining USD LIBOR tenors until June 30, 2023.
Globally, financial market participants have begun to transition away from LIBOR and other IBORs to alternative reference rates, and
following the IBA’s announcement, U.S. regulators, including the Federal Reserve Board, issued statements encouraging banks to
stop entering into new USD LIBOR contracts “as soon as practicable,” and by no later than December 31, 2021, as entering into new
contracts after December 31, 2021, would create safety and soundness risks for banks. In addition, the Federal Reserve Board, in
conjunction with the Alternative Reference Rates Committee, a steering committee composed of a diverse set of private and public
sector entities, has recommended replacing USD LIBOR with the Secured Overnight Financing Rate, a new index calculated by short-
term repurchase agreements backed by U.S. Treasury securities. At this time, there continues to be uncertainty regarding the effect
that these developments, any discontinuance, modification or other reforms to LIBOR or any other interest rate benchmarks, or the
18
establishment of alternative reference rates may have on LIBOR or other interest rate benchmarks and ultimately on the amount of
interest paid on, or the market value of, our current or future debt obligations. Uncertainty as to the nature of such potential changes,
alternative reference rates, or other reforms may adversely affect our financial condition, cash flows, and results of operations.
Inflation or deflation could have an unanticipated adverse impact on our financial results.
The timing and duration of the effects of inflation are unpredictable and depend on market conditions and economic factors.
Inflation in lease rates as well as inflation in residual values for rail and other transportation assets has historically benefited our
financial results. However, these benefits may be offset by increases in the costs for goods and services we purchase, including
salaries and wages, health care costs, supplies, utilities, maintenance and repair services, and materials, as well as increased financing
costs. Significant increases in our cost of goods and services could adversely impact our financial performance. Conversely, a period
of prolonged deflation could negatively impact our lease rate pricing, residual values, and asset remarketing opportunities. These
negative impacts of deflation may be offset by decreases to our costs for goods and services, including those listed above.
We could be adversely affected by United States and global political conditions, including acts or threats of terrorism or war.
We may be adversely affected by national and international political developments, instability, and uncertainties, including political
unrest and threats of terrorist attacks or war, which could lead to the following:
(cid:129) Legislation or regulatory action directed toward improving the security of transportation assets against acts of terrorism, which
could affect the construction or operation of transportation assets and increase costs
(cid:129) A decrease in demand for transportation assets and services
(cid:129) Lower utilization of transportation equipment
(cid:129) Lower transportation asset lease and charter rates
(cid:129) Impairments and loss of transportation assets
(cid:129) Capital market disruption, which may raise our financing costs or limit our access to capital
(cid:129) Liability or losses resulting from acts of terrorism involving our assets
(cid:129) A significant deterioration of global growth, and related decreases in confidence or investment activity in the global markets,
arising from political or economic tensions, changes, and trends and/or an increase in trade conflict and protectionism.
Depending upon the severity, scope, and duration of these circumstances, the impact on our financial position, results of operations,
and cash flows could be material.
Risks Related to our Common Stock
There can be no assurance that we will continue to pay dividends or repurchase shares of our common stock at current levels.
The timing, amount and payment of future dividends to shareholders and repurchases of our common stock fall within the discretion
of our Board of Directors (the “Board”). The Board’s decisions regarding the payment of dividends and repurchase of shares depend
on many factors such as our financial condition, earnings, capital requirements, debt service obligations, legal requirements,
regulatory constraints, and other factors that our Board may deem relevant. We cannot guarantee that we will continue to pay
dividends or repurchase shares in the future, and our payment of dividends and repurchase of shares could vary from historical
practices and our stated expectations.
A small number of shareholders could significantly influence our business.
Six shareholders collectively control more than 60% of our outstanding common stock. Accordingly, a small number of
shareholders could affect matters that require shareholder approval, such as the election of directors and the approval of significant
business transactions.
19
General Risk Factors
Changes to assumptions used to calculate post-retirement costs, increases in funding requirements, and investment losses in
pension funds could adversely affect our results of operations.
We calculate our pension and other post-retirement costs using various assumptions, such as discount rates, long-term return on
plan assets, salary increases, health care cost trend rates, and other factors. Changes to any of these assumptions could adversely affect
our financial position and results of operations. Periods of low interest rates reduce the discount rate we use to calculate our funding
obligations, which may increase our funding requirements. Additionally, changes to laws, regulations, or rules could require us to
increase funding requirements or to compensate for investment losses in pension plan assets. If we were forced to increase
contributions to our pension plans, our financial position, results of operations, and cash flows could be negatively affected.
Changes in the mix of earnings in the U.S. and foreign countries and in tax rates and laws could adversely affect our financial
results.
As a global company, we are subject to taxation in the U.S. and numerous other non-U.S. jurisdictions. Significant judgment is
required to determine our consolidated income tax position and related liabilities. Our effective tax rate, cash flows and operating
results could be affected by changes in the mix of earnings in countries with different statutory tax rates, or material audit
assessments, as well as by changes in the local tax laws, regulations and treaties, or the interpretations thereof.
Our allowance for losses may be inadequate.
Our allowance for losses on reservable assets may not be adequate to cover credit losses in our portfolio if unexpected adverse
changes occur in macroeconomic conditions or if discrete events adversely affect specific customers, industries, or markets. If the
credit quality of our customer base materially deteriorates, it may require us to incur additional credit losses and our financial position
or results of operations could be negatively impacted.
We may incur future asset impairment charges.
We review long-lived assets and joint venture investments for impairment annually, or when circumstances indicate the carrying
value of an asset or investment may not be recoverable. Among other circumstances, the following may change our estimates of the
cash flows we expect our long-lived assets or joint venture investments will generate, which could require us to recognize asset
impairment charges:
(cid:129) A weak economic environment or challenging market conditions
(cid:129) New laws, rules or regulations affecting our assets or the commodities that they carry, or changes to existing laws, rules or
regulations
Events related to particular customers or asset types
(cid:129)
(cid:129) Asset or portfolio sale decisions by management.
The fair market value of our long-lived assets may differ from the value of those assets reflected in our financial statements.
Our assets primarily consist of long-lived transportation assets such as rail assets, aircraft spare engines, tank containers, and marine
vessels. The carrying value of these assets on our financial statements may sometimes differ from their fair market value. These
valuation differences may be positive or negative and could be material based on market conditions and demand for certain assets.
We may not be able to obtain cost-effective insurance.
We manage our exposure to risk, in part, by purchasing insurance. There is no guarantee that cost-effective insurance will
consistently be available. If insurance coverage becomes prohibitively expensive or unavailable, we could be forced to reduce our
coverage amount and increase the amount of self-insured risk we retain, thereby increasing our exposure to uninsured adverse
judgments and other losses and liabilities that could have a material effect on our financial position, results of operations, and cash
flows.
20
Our internal control over financial accounting and reporting may not detect all errors or omissions in the financial statements.
If we fail to maintain adequate internal controls over financial accounting, we may not be able to conclude on an ongoing basis that
we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and
related regulations. No system of internal control provides absolute assurance that the financial statements are accurate and free of
material error.
Item 1B. Unresolved Staff Comments
None.
21
Item 2. Properties
Information regarding the general character of our properties is included in Item 1, “Business” of this Form 10-K.
As of December 31, 2021, the locations of our operations were as follows:
Mobile Units
Freeport, Texas
Galena Park, Texas
Clarkson, Ontario
Edmonton, Alberta
Montreal, Quebec
GATX Headquarters
Chicago, Illinois
Rail North America
Major Maintenance Facilities
Colton, California
Hearne, Texas
Waycross, Georgia
Montreal, Quebec
Moose Jaw, Saskatchewan
Red Deer, Alberta
Maintenance Facilities
Plantersville, Texas
Terre Haute, Indiana
Customer Site Locations
Clarkson, Ontario
Freeport, Texas
Geismar, Louisiana*
Rail International
Major Maintenance Facilities
Customer Site Locations
Ostróda, Poland
Płock, Poland
Business Offices
Chicago, Illinois
Houston, Texas
Burlington, Ontario
Calgary, Alberta
Mexico City, Mexico
Business Offices
Amsterdam, Netherlands
Düsseldorf, Germany
Hamburg, Germany
Leipzig, Germany
Moscow, Russia
Gurgaon, India
Paris, France
Vienna, Austria
Warsaw, Poland
Portfolio Management
Chicago, Illinois
Other
Dordrecht, Netherlands
Houston, Texas
Singapore
Shanghai, China
22
(*) This property was sold after December 31, 2021.
Item 3. Legal Proceedings
Information concerning litigation and other contingencies is described in “Note 23. Legal Proceedings and Other Contingencies” in
Part II, Item 8 of this Form 10-K and is incorporated herein by reference.
Item 4. Mine Safety Disclosures
None.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
Our common stock is listed on the New York and Chicago Stock Exchanges under ticker symbol “GATX”. We had approximately
1,448 common shareholders of record as of January 31, 2022.
Issuer Purchases of Equity Securities
On January 25, 2019, our board of directors (“Board”) approved a $300.0 million share repurchase program, pursuant to which we
are authorized to purchase shares of our common stock in the open market, in privately negotiated transactions, or otherwise,
including pursuant to Rule 10b5-1 plans. The share repurchase program does not have an expiration date, does not obligate the
Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time.
The timing of share repurchases will be dependent on market conditions and other factors. As of December 31, 2021, $136.9 million
remained available under the repurchase authorization.
The following is a summary of common stock repurchases completed by month during the fourth quarter of 2021:
Issuer Purchases of Equity Securities
(a)
(b)
Period
Total Number
of Shares
Purchased
Average
Price Paid
per Share
(c)
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
(d)
Maximum Number (or
Approximate Dollar
Value) of Shares that May
Yet Be Purchased Under
the Plans or Programs (in
millions)
October 1, 2021 - October 31, 2021 . . . . . . . . . . . . .
November 1, 2021 - November 30, 2021 . . . . . . . . .
December 1, 2021 - December 31, 2021 . . . . . . . . . .
33,579
45,493
48,000
$
95.29
$ 102.23
$ 102.74
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
127,072
$ 100.59
33,579
45,493
48,000
127,072
$
$
$
146.4
141.8
136.9
23
Equity Compensation Plan Information as of December 31, 2021:
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
(a)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(excluding securities
reflected in Column (a))
(c)
Plan Category
Equity Compensation Plans Approved by
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . .
1,663,635
(1)
$
73.48
(2)
Equity Compensation Plans Not Approved by
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . .
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,663,635
2,490,472
—
2,490,472
(1) Consists of 4,200 stock appreciation rights, 1,185,079 non-qualified stock options, 146,082 performance shares, 106,840
restricted stock units and 221,434 phantom stock units.
(2) The weighted-average exercise price does not include performance shares, restricted stock or phantom stock units.
For additional information about issuable securities under our equity compensation plans and the related weighted-average exercise
price, see “Note 12. Share-Based Compensation” in Part II, Item 8 of this Form 10-K.
24
Common Stock Performance Graph
The performance graph below compares the cumulative total shareholder return on our common stock for the five-year period
ended December 31, 2021, with the cumulative total return of the S&P 500 Index, the S&P MidCap 400 Index, and the Russell 3000
Index. We are not aware of any peer companies whose businesses are directly comparable to ours and, therefore, the graph displays
the returns of the indices noted above as those comprise companies with market capitalizations similar to ours. The graph and table
assume that $100 was invested in our common stock and each of the indices on December 31, 2016, and that all dividends were
reinvested.
Common Stock Performance Graph
GATX, S&P 500, S&P MidCap 400, and Russell 3000
s
n
r
u
t
e
R
e
v
i
t
a
r
a
p
m
o
C
$250
$225
$200
$175
$150
$125
$100
$75
12/31/16
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
GATX
S&P 500
S&P MidCap 400
Russell 3000
12/31/16
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
GATX . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 . . . . . . . . . . . . . . . . . . . . . . .
S&P MidCap 400 . . . . . . . . . . . . . . . .
Russell 3000 . . . . . . . . . . . . . . . . . . . .
$
100.00
100.00
100.00
100.00
$
103.78
121.82
116.23
121.12
$
121.06
116.47
103.33
114.77
$
144.96
153.13
130.37
150.35
$
149.63
181.29
148.16
181.74
$
191.42
233.28
184.81
228.33
Item 6. [Reserved]
25
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
We lease, operate, manage, and remarket long-lived, widely used assets, primarily in the rail market. We report our financial results
through three primary business segments: Rail North America, Rail International, and Portfolio Management. Historically, we also
reported financial results for American Steamship Company (“ASC”) as a fourth segment.
In the first quarter of 2021, GATX began investing directly in aircraft spare engines through its new entity, GATX Engine Leasing
Ltd. (“GEL”). In 2021, GEL acquired 14 aircraft spare engines for approximately $352 million, including 4 engines for $120 million
from Rolls-Royce & Partners Finance joint ventures (collectively the “RRPF affiliates” or “RRPF”). Financial results for this business
are reported in the Portfolio Management segment.
On December 29, 2020, we acquired Trifleet Leasing Holding B.V. (“Trifleet”), one of the largest tank container lessors in the
world. Financial results for this business are reported in the Other segment. See “Note 4. Business Combinations” in Part II, Item 8 of
this Form 10-K for additional information. A more complete description of our business is included in “Item 1. Business,” in Part I of
this Form 10-K.
On May 14, 2020, we completed the sale of our ASC business. As a result, ASC is now reported as discontinued operations, and
financial data for the ASC segment has been segregated and presented as discontinued operations for all periods presented. See “Note
25. Discontinued Operations” Part II, Item 8 of this Form 10-K for additional information. Unless otherwise indicated, the following
information relates to continuing operations.
The following discussion and analysis should be read in conjunction with the audited financial statements included in “Item 8.
Financial Statements and Supplementary Data” in this Form 10-K. We based the discussion and analysis that follows on financial data
we derived from the financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and on
certain other financial data that we prepared using non-GAAP components. For a reconciliation of these non-GAAP measures to the
most comparable GAAP measures, see “Non-GAAP Financial Measures” at the end of this item.
Coronavirus Disease 2019 (“COVID-19”)
On March 11, 2020, the World Health Organization declared COVID-19 a pandemic and on March 13, 2020, the United States
declared a national emergency related to COVID-19. Across our operating segments, we have implemented business continuity and
crisis management plans. The COVID-19 pandemic continues to evolve as new variants emerge, including the scope and duration of
disruptions and the pace and timing of the eventual recovery. Our top priorities continue to be ensuring the health and safety of our
global workforce and serving our various stakeholders with minimal disruptions.
Rail North America
The initial impact of COVID-19 resulted in a decline in industry railcar loadings, had a negative impact on lease rates, and led to a
reduction in the purchase and sale of railcars in the secondary market. Although market conditions and absolute lease rates improved
throughout 2021, the effects of COVID-19 will likely continue to disrupt global manufacturing, supply chains, and consumer
spending, and the risk of ongoing volatility as a result of future COVID-19 disruptions persists.
Rail International
COVID-19 had a minimal impact on our operations in Europe, but it has continued to cause disruptions to railcar manufacturers in
Europe and India, and the risk of ongoing volatility as a result of future COVID-19 disruptions persists.
Rail North America & Rail International Maintenance Operations
Rail freight transportation and railcar repair have been deemed essential businesses globally. Our rail operations teams have
implemented COVID-19 preparation and response programs to ensure the health and safety of our employees while continuing to
provide critical railcar maintenance services. As a result of the resurgence in cases from the COVID-19 variants, disruptions at our
railcar repair facilities increased during the later part of 2021, and future disruptions from additional variants could occur.
26
Rolls-Royce & Partners Finance Joint Ventures (“RRPF affiliates”) and GEL
Global air travel continues to be significantly impacted by COVID-19. In response to the drastic decline in demand, airlines have
reduced system-wide capacity and grounded large portions or all of their fleets. Although some flight operations have resumed, air
travel remains significantly below pre-COVID-19 levels. Many airlines are currently focused on managing their near-term liquidity
positions, restructuring operations, and obtaining government financial support. The major reduction in global air travel and the
disruption across the aviation industry did impact the profitability of our aircraft spare engine leasing business and operating results in
2021, and we expect that it will continue to have a negative impact on our near-term future operating results, the magnitude and
duration of which are still uncertain.
27
DISCUSSION OF OPERATING RESULTS
The following table shows a summary of our reporting segments and consolidated financial results relating to continuing operations
and discontinued operations for years ended December 31 (dollars in millions, except per share data):
Segment Revenues
Rail North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rail International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
$
$
$
891.7
284.3
47.7
33.7
934.1
258.1
17.0
—
964.5
227.7
9.9
—
$
1,257.4
$
1,209.2
$
1,202.1
Segment Profit
Rail North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rail International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Less:
Selling, general and administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unallocated interest (income) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, including eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes ($55.3, $33.6 and $18.0 related to affiliates’ earnings) . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income from Continuing Operations (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Discontinued Operations, Net of Taxes
Net (loss) income from discontinued operations, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of discontinued operation, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Discontinued Operations, Net of Taxes (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations, excluding tax adjustments
and other items (non-GAAP) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from discontinued operations, excluding tax adjustments
and other items (non-GAAP) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from consolidated operations, excluding tax adjustments
and other items (non-GAAP) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share from continuing operations (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share from discontinued operations (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share from consolidated operations (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share from continuing operations, excluding tax adjustments
and other items (non-GAAP) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share from discontinued operations, excluding tax adjustments
and other items (non-GAAP) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share from consolidated operations, excluding tax adjustments
and other items (non-GAAP) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
$
$
$
$
$
$
285.4
105.0
60.8
10.2
461.4
198.3
0.5
11.0
108.5
143.1
—
—
—
143.1
182.2
$
$
227.6
83.5
77.4
—
388.5
172.0
(7.7)
3.1
70.9
$
150.2
$
(2.2)
3.3
1.1
151.3
162.5
$
$
— $
1.1
182.2
$
163.6
3.98
$
— $
3.98
5.06
$
$
4.24
0.03
4.27
4.59
— $
0.03
5.06
$
4.62
$
$
$
$
$
$
$
$
$
$
276.2
78.9
62.4
—
417.5
180.4
(5.8)
3.2
58.9
180.8
30.4
—
30.4
211.2
178.0
22.3
200.3
4.97
0.84
5.81
4.89
0.62
5.51
Return on equity (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on equity, excluding tax adjustments and other items (non-GAAP) (1) . . . . . . . . . . . . . . . . . . .
7.2%
11.0%
8.0%
10.5%
11.7%
13.5%
Investment Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,131.9
$
1,064.0
$
722.8
(1) See “Non-GAAP Financial Measures” at the end of this item for further details.
28
2021 Summary
Net income from continuing operations was $143.1 million, or $3.98 per diluted share, for 2021 compared to $150.2 million, or
$4.24 per diluted share, for 2020, and $180.8 million, or $4.97 per diluted share, for 2019. Results for 2021 included a net negative
impact of $39.1 million ($1.08 per diluted share) from tax adjustments and other items, compared to a net negative impact of
$12.3 million ($0.35 per diluted share) from tax adjustments and other items in 2020 and a net benefit of $2.8 million ($0.08 per
diluted share) in 2019 (see “Non-GAAP Financial Measures” at the end of this item for further details).
(cid:129) At Rail North America, segment profit in 2021 was higher than prior year. The increase was attributable to higher net gains on
asset dispositions and lower maintenance expense, partially offset by lower revenue.
(cid:129) At Rail International, segment profit in 2021 was higher than prior year, due to higher revenue from more railcars on lease and
the positive variance of foreign exchange rates, partially offset by higher maintenance expense.
(cid:129) At Portfolio Management, segment profit in 2021 decreased compared to prior year, primarily due to lower share of affiliates’
earnings from the RRPF affiliates, partially offset by results from our new operations at GEL and higher residual sharing gains
on managed portfolio sales in the current year.
(cid:129) Within Other, segment profit is attributable to Trifleet operations. Trifleet was acquired by GATX on December 29, 2020.
Total investment volume was $1,131.9 in 2021, compared to $1,064.0 million in 2020, and $722.8 million in 2019.
2022 Outlook
Conditions in the Rail North American leasing market gradually improved throughout 2021, and we expect this to continue in 2022.
We expect continued favorable market conditions in our Rail International and Trifleet businesses. The operating environment at
RRPF is expected to continue to be challenging due to the ongoing adverse impact of COVID-19 on global air travel. We have a
strong balance sheet and access to capital which we believe positions us well to manage our transportation assets based on current
market conditions. However, the risk of ongoing volatility as a result of future COVID-19 disruptions persists.
(cid:129) We expect Rail North America’s segment profit in 2022 to increase from 2021. Lease rates for railcars scheduled to renew in
2022 will likely be generally higher than expiring rates, due to the gradual market recovery we have recently experienced. We
also anticipate high renewal success and slightly lower utilization, which will result in slightly higher revenue in 2022 compared
to the prior year. Maintenance expense is expected to be similar to 2021. Finally, we expect remarketing income to be higher in
2022 as we continue to optimize our fleet.
(cid:129) Rail International’s segment profit in 2022 is expected to increase from 2021 as the demand for railcars in Europe continues to
be strong and we continue to invest in the fleet. Lease revenue is expected to be higher in 2022, resulting from more railcars on
lease and higher lease rates. In India, absent any potential COVID-19 disruptions, we anticipate significant growth in our fleet,
which will also contribute to an increase in segment profit.
(cid:129) We anticipate Portfolio Management’s segment profit in 2022 to be lower than 2021. RRPF results are expected to decline as the
reduction in long-haul global air travel will likely continue to impact financial and operating results. We will focus on finding
attractive investment opportunities, such as our direct engine investments at GEL, as we continue to grow the business.
(cid:129) Trifleet’s segment profit in 2022 is expected to increase from 2021. The tank container leasing market is expected to remain
strong, and we anticipate additional investment in the fleet, which will also contribute to higher segment profit in 2022.
Segment Operations
Segment profit is an internal performance measure used by the Chief Executive Officer to assess the profitability of each segment.
Segment profit includes all revenues, expenses, pre-tax earnings from affiliates, and net gains on asset dispositions that are directly
attributable to each segment. We allocate interest expense to the segments based on what we believe to be the appropriate risk-
adjusted borrowing costs for each segment. Segment profit excludes selling, general and administrative expenses, income taxes, and
certain other amounts not allocated to the segments.
29
Segment Summary
RAIL NORTH AMERICA
The operating environment for Rail North America generally improved throughout 2021. Demand for many car types strengthened
during the year, although pockets of weakness persisted in certain car types, and Rail North America experienced sequential increases
in absolute lease rates throughout the year. Utilization remained strong at 99.2% at the end of the year.
During 2021, Rail North America recorded a $5.3 million net gain resulting from an insurance recovery for storm damage to a
maintenance facility.
The following table shows Rail North America’s segment results for the years ended December 31 (in millions):
Revenues
Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses
Maintenance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Income (Expense)
Net gain on asset dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of affiliates’ pre-tax loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2021
2020
2019
814.5
77.2
891.7
235.4
261.1
39.2
30.3
566.0
94.3
(136.2)
1.6
—
285.4
574.4
$
$
$
838.3
95.8
934.1
264.7
258.6
49.3
27.3
599.9
38.3
(139.9)
(4.9)
(0.1)
227.6
642.0
$
$
$
868.3
96.2
964.5
267.9
256.9
54.4
23.9
603.1
54.6
(134.5)
(5.3)
—
276.2
502.2
The following table shows the components of Rail North America’s lease revenue for the years ended December 31 (in millions):
Railcars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Boxcars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Locomotives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2021
2020
2019
720.0
67.9
26.6
814.5
$
$
741.9
67.1
29.3
838.3
$
$
759.8
72.2
36.3
868.3
Rail North America Fleet Data
At December 31, 2021, Rail North America’s wholly owned fleet, excluding boxcars, consisted of approximately 101,600 railcars.
Fleet utilization, excluding boxcars, was 99.2% at the end of 2021, compared to 98.1% at the end of 2020, and 99.3% at the end of
2019. Fleet utilization for approximately 12,900 boxcars was 99.7% at the end of 2021 compared to 95.8% at the end of 2020, and
95.0% at the end of 2019. Utilization is calculated as the number of railcars on lease as a percentage of total railcars in the fleet.
During 2021, an average of approximately 100,800 railcars, excluding boxcars, were on lease, compared to 101,700 in 2020, and
103,500 in 2019. Changes in railcars on lease compared to prior periods are impacted by the utilization of new railcars purchased
30
under our supply agreements or in the secondary market and the disposition of railcars that were sold or scrapped, as well as the fleet
utilization rate.
As of December 31, 2021, leases for approximately 18,500 tank and freight cars and approximately 2,000 boxcars are scheduled to
expire in 2022. These amounts exclude railcars on leases expiring in 2022 that have already been renewed or assigned to a new lessee.
In 2018, we amended a long-term supply agreement with Trinity Rail Group, LLC (“Trinity”), a subsidiary of Trinity Industries to
extend the term to December 2023, and we agreed to purchase 4,800 tank cars (1,200 per year) beginning in January 2020 and
continuing through 2023. At December 31, 2021, 3,036 railcars have been ordered pursuant to the amended terms of the agreement, of
which 2,280 railcars have been delivered.
In 2018, we entered into a multi-year railcar supply agreement with American Railcar Industries, Inc. (“ARI”), pursuant to which
we agreed to purchase 7,650 newly built railcars. The order encompasses a mix of tank and freight cars to be delivered over a five-
year period, beginning in April 2019 and ending in December 2023. ARI’s railcar manufacturing business was acquired by a
subsidiary of The Greenbrier Companies, Inc. (“Greenbrier”) on July 26, 2019, and such subsidiary assumed all of ARI’s obligations
under our long-term supply agreement. As of December 31, 2021, 6,141 railcars have been ordered, of which 3,838 railcars have been
delivered. The agreement included an option to order additional railcars subject to certain restrictions and, as of December 31, 2021,
we still have the option to order 2,200 additional railcars during the remaining term of the agreement.
The following table shows fleet activity for Rail North America railcars, excluding boxcars, for the years ended December 31:
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cars added . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cars scrapped . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cars sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilization rate at year end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Active railcars at year end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average (monthly) active railcars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
103,745
3,371
(3,076)
(2,470)
101,570
2020
2019
102,845
4,696
(2,153)
(1,643)
103,745
105,472
3,145
(2,172)
(3,600)
102,845
99.2%
98.1%
99.3%
100,719
100,769
101,815
101,658
102,127
103,452
31
Rail North America Fleet, excluding Boxcars
100.0%
97.5%
95.0%
92.5%
90.0%
n
o
i
t
a
z
i
l
i
t
U
e
z
i
S
t
e
e
l
F
110,000
105,000
100,000
95,000
90,000
2017
2018
2019
2020
2021
Active Fleet
Idle
Fleet Utilization
The following table shows fleet statistics for Rail North America boxcars for the years ended December 31:
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilization rate at year end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,946
99.7%
14,315
95.8%
15,264
95.0%
2021
2020
2019
The following table shows fleet activity for Rail North America locomotives for the years ended December 31:
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Locomotives added, net of scrapped or sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilization rate at year end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Active locomotives at year end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average (monthly) active locomotives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
645
(68)
577
89.8%
518
521
661
(16)
645
81.1%
523
537
702
(41)
661
85.9%
568
608
2021
2020
2019
Lease Price Index
Our lease price index (“LPI”) is an internally-generated business indicator that measures lease rate pricing on renewals for our
North American railcar fleet, excluding boxcars. We calculate the index using the weighted-average lease rate for a group of railcar
types that we believe best represents our overall North American fleet, excluding boxcars. The average renewal lease rate change is
reported as the percentage change between the average renewal lease rate and the average expiring lease rate, weighted by fleet
composition. The average renewal lease term is reported in months and reflects the average renewal lease term of railcar types in the
LPI, weighted by fleet composition.
During 2021, the renewal rate change of the LPI was negative 8.5%, compared to negative 23.5% in 2020 and negative 3.9% in
2019. Lease terms on renewals for cars in the LPI averaged 32 months in 2021, compared to 31 months in 2020, and 39 months in
2019. Additionally, the renewal success rate, which represents the percentage of railcars on expiring leases that were renewed with the
existing lessee, was 82.7% in 2021, compared to 70.8% in 2020, and 82.2% in 2019. The renewal success rate is an important metric
32
because railcars returned by our customers may remain idle or incur additional maintenance and freight costs prior to being leased to
new customers.
e
g
n
a
h
C
e
t
a
R
e
s
a
e
L
l
a
w
e
n
e
R
g
v
A
20%
0%
-20%
(28.2)%
-40%
33
-60%
Lease Price Index
(3.9)%
(9.8)%
(8.5)%
38
39
(23.5)%
31
32
60
50
40
30
20
)
s
h
t
n
o
m
(
m
r
e
T
l
a
w
e
n
e
R
g
v
A
2017
2018
2019
2020
2021
Average Renewal Lease Rate Change
Average Renewal Lease Term
Comparison of Reported Results
Segment Profit
In 2021, segment profit of $285.4 million increased 25.4% compared to $227.6 million in 2020. Segment profit in 2021 includes a
net gain of $5.3 million attributable to net insurance recoveries for storm damage to a maintenance facility. Excluding this gain,
results for Rail North America were $52.5 million higher than 2020, resulting from higher net gains on asset dispositions and lower
maintenance expense, partially offset by lower revenue. The amount and timing of disposition gains is dependent on a number of
factors and will vary from year to year.
In 2020, segment profit of $227.6 million decreased 17.6% compared to $276.2 million in 2019. The decrease was primarily driven
by lower lease revenue and lower net gains on asset dispositions in the current year, partially offset by lower maintenance expense.
The amount and timing of disposition gains is dependent on a number of factors and will vary from year to year.
Revenues
In 2021, lease revenue decreased $23.8 million, or 2.8%, a result of fewer railcars and locomotives on lease and the impact from
lower lease rates we have recently experienced. Other revenue decreased $18.6 million, due to lower repair revenue, as a result of the
mix of repairs.
In 2020, lease revenue decreased $30.0 million, or 3.5%, a result of fewer railcars and locomotives on lease, lower lease rates, and
lower boxcar revenue. Other revenue decreased $0.4 million, due to lower lease termination fees, offset by higher repair revenue.
33
Expenses
In 2021, maintenance expense decreased $29.3 million. The decrease resulted primarily from fewer regulatory compliance events,
fewer repairs performed by the railroads, and a higher share of repairs being performed by GATX’s owned shops versus contract
shops. Depreciation expense increased $2.5 million due to the timing of new railcar investments and dispositions. Operating lease
expense decreased $10.1 million, resulting from the purchase of railcars previously on operating leases. Other operating expense
increased $3.0 million, due to higher insurance expense and higher switching, storage, and freight costs.
In 2020, maintenance expense decreased $3.2 million. The decrease resulted primarily from fewer repairs performed by the
railroads and lower volumes of repairs on boxcars at third-party shops. Depreciation expense increased $1.7 million due to the timing
of new railcar investments and dispositions. Operating lease expense decreased $5.1 million, resulting from the purchase of railcars
previously on operating leases. Other operating expense increased $3.4 million, due to higher switching, freight, and storage costs.
Other Income (Expense)
In 2021, net gain on asset dispositions increased $56.0 million, due to higher asset remarketing gains, higher net scrapping gains,
and a net gain on insurance recoveries as noted above. The amount and timing of disposition gains is dependent on a number of
factors and will vary from year to year. Higher net scrapping gains were primarily a result of a higher scrap price per ton in 2021. Net
interest expense decreased $3.7 million, primarily driven by a lower average interest rate, partially offset by a higher average debt
balance.
In 2020, net gain on asset dispositions decreased $16.3 million, due to fewer railcars sold, partially offset by lower net scrapping
losses. The amount and timing of disposition gains is dependent on a number of factors and will vary from year to year. Net interest
expense increased $5.4 million, primarily driven by a higher average debt balance and a higher average interest rate.
Investment Volume
During 2021, investment volume was $574.4 million compared to $642.0 million in 2020, and $502.2 million in 2019. We acquired
3,947 railcars in 2021, compared to 5,103 railcars in 2020, and 3,225 railcars in 2019.
Our investment volume is predominantly composed of acquired railcars, but also includes certain capitalized repairs and
improvements to owned railcars and our maintenance facilities. As a result, the dollar value of investment volume does not
necessarily correspond to the number of railcars acquired in any given period. In addition, the comparability of amounts invested and
the number of railcars acquired in each period is impacted by the mix of railcars purchased, which may include tank cars and freight
cars, as well as newly manufactured railcars or those purchased in the secondary market.
Segment Summary
RAIL INTERNATIONAL
Rail International, composed primarily of GATX Rail Europe (“GRE”), produced significantly higher operating results in 2021.
Demand for railcars in Europe remained strong, and renewal lease rates for most car types continued to increase modestly. GRE
continued to grow and diversify its fleet during the year. However, the pace of fleet growth in 2021 was negatively impacted by new
car delivery delays.
Our rail operations in India (“GRI”) continued to focus on investment opportunities, diversification of its fleet, and developing
relationships with customers, suppliers and the Indian Railways. The pace of fleet growth in 2021 was negatively impacted by railcar
manufacturing and supply disruptions as a result of COVID-19.
During 2021, our rail operations in Russia (“Rail Russia”) focused on managing its existing fleet, which consisted of 380 railcars,
and maintaining strong relationships with its customer base.
34
The following table shows Rail International’s segment results for the years ended December 31 (in millions):
2021
2020
2019
Revenues
Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
272.9
11.4
284.3
$
248.4
9.7
258.1
Expenses
Maintenance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57.6
73.6
9.0
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140.2
50.8
66.6
7.5
124.9
Other Income (Expense)
Net gain on asset dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.7
(45.2)
3.4
Segment Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
105.0
Investment Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
173.3
1.2
(45.9)
(5.0)
83.5
216.0
$
$
$
$
219.2
8.5
227.7
46.5
57.8
6.8
111.1
1.7
(40.6)
1.2
78.9
215.7
GRE Fleet Data
At December 31, 2021, GRE’s wholly owned fleet consisted of approximately 27,100 railcars. Fleet utilization was 98.7% at the
end of 2021, compared to 98.1% at the end of 2020 and 99.3% at the end of 2019. Utilization is calculated as the number of railcars
on lease as a percentage of total railcars in the fleet.
During 2021, an average of approximately 26,200 railcars were on lease, compared to 25,200 in 2020 and 23,700 in 2019. Changes
in railcars on lease compared to prior periods are impacted by the number of new railcars purchased or acquired in the secondary
market and the disposition of railcars that were sold or scrapped, as well as the fleet utilization rate.
The following table shows fleet activity for GRE railcars for the years ended December 31:
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cars added . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cars scrapped or sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilization rate at year end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Active railcars at year end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average (monthly) active railcars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
26,343
1,131
(365)
27,109
2020
24,561
2,071
(289)
26,343
2019
23,412
1,417
(268)
24,561
98.7%
98.1%
99.3%
26,754
26,240
25,831
25,174
24,392
23,665
35
e
z
i
S
t
e
e
l
F
28,000
24,000
20,000
16,000
12,000
GRE Fleet
100.0%
97.5%
95.0%
92.5%
90.0%
n
o
i
t
a
z
i
l
i
t
U
2017
2018
2019
2020
2021
Active Fleet
Idle
Fleet Utilization
GRI Fleet Data
The following table shows fleet activity for GRI railcars for the years ended December 31:
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cars added . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cars scrapped or sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilization rate at year end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,156
715
(41)
4,830
100.0%
3,679
477
—
4,156
99.0%
2,053
1,626
—
3,679
100.0%
2021
2020
2019
Comparison of Reported Results
Foreign Currency
Rail International’s reported results of operations are impacted by fluctuations in the exchange rates of the U.S. dollar versus the
foreign currencies in which it conducts business, primarily the euro. In 2021, fluctuations in the value of the euro, relative to the U.S.
dollar, positively impacted lease revenue by approximately $7.6 million and segment profit, excluding other income (expense), by
approximately $4.5 million compared to 2020. In 2020, fluctuations in the value of the euro, relative to the U.S. dollar, positively
impacted lease revenue by approximately $4.1 million and segment profit, excluding other income (expense), by approximately
$3.4 million compared to 2019.
Segment Profit
In 2021, segment profit of $105.0 million increased 25.7% compared to $83.5 million in 2020. The increase was primarily due to
higher revenue from more railcars on lease, as well as the positive variance of foreign exchange rates.
In 2020, segment profit of $83.5 million increased 5.8% compared to $78.9 million in 2019. The increase was primarily due to
higher revenue from more railcars on lease, partially offset by higher maintenance expense and depreciation expense, as well as the
negative impact of changes in foreign exchange rates on non-functional currency items.
36
Revenues
In 2021, lease revenue increased $24.5 million, or 9.9%, due to more railcars on lease at GRE and GRI and the impact of foreign
exchange rates. Other revenue increased $1.7 million, driven by higher repair revenue.
In 2020, lease revenue increased $29.2 million, or 13.3%, due to more railcars on lease at GRE and GRI and the impact of foreign
exchange rates. Other revenue increased $1.2 million, driven by higher repair revenue.
Expenses
In 2021, maintenance expense increased $6.8 million, primarily due to higher wheelset costs and higher costs for other repairs, as
well as the impact of foreign exchange rates. Depreciation expense increased $7.0 million, resulting from the impact of new railcars
added to the fleet.
In 2020, maintenance expense increased $4.3 million, primarily due to higher wheelset costs, partially offset by lower costs for
other repairs. Depreciation expense increased $8.8 million, resulting from the impact of new railcars added to the fleet.
Other Income (Expense)
In 2021, net gain on asset dispositions increased $1.5 million, attributable to higher asset remarketing gains and higher net
scrapping gains. Higher net scrapping gains were positively impacted by a higher scrap price per ton in 2021. Net interest expense
decreased $0.7 million, due to a lower average interest rate, partially offset by a higher average debt balance. Other income (expense)
increased $8.4 million, driven by the positive impact of changes in foreign exchange rates on non-functional currency items and lower
net litigation costs related to the Viareggio matter. See “Note 23. Legal Proceedings and Other Contingencies” in Part II, Item 8 of
this Form 10-K for further details about the Viareggio matter.
In 2020, net gain on asset dispositions decreased $0.5 million, attributable to lower net scrapping gains. Net interest expense
increased $5.3 million, due to a higher average debt balance, partially offset by a lower average interest rate. Other income (expense)
increased $6.2 million, driven by the negative impact of changes in foreign exchange rates on non-functional currency items and
higher net litigation costs related to the Viareggio matter, which reflected the absence of insurance proceeds received in the prior year.
See “Note 24. Legal Proceedings and Other Contingencies” in Part II, Item 8 of this Form 10-K for further details about the Viareggio
matter.
Investment Volume
Investment volume was $173.3 million in 2021, $216.0 million in 2020, and $215.7 million in 2019. During 2021, GRE acquired
1,131 railcars (including 335 assembled at the GRE Ostróda, Poland facility), GRI acquired 715 railcars, and Rail Russia did not
acquire any railcars, compared to 2,071 railcars at GRE (including 374 assembled at the GRE Ostróda, Poland facility), 477 railcars at
GRI, and no railcars at Rail Russia in 2020, and 1,417 railcars at GRE (including 384 assembled at the GRE Ostróda, Poland facility),
1,626 railcars at GRI, and 26 railcars at Rail Russia in 2019.
Our investment volume is predominantly composed of acquired railcars, but may also include certain capitalized repairs and
improvements to owned railcars. As a result, the dollar value of investment volume does not necessarily correspond to the number of
railcars acquired in any given period. In addition, the comparability of amounts invested and the number of railcars acquired in each
period is impacted by the mix of the various car types acquired, as well as fluctuations in the exchange rates of the foreign currencies
in which Rail International conducts business.
Segment Summary
PORTFOLIO MANAGEMENT
Portfolio Management’s segment profit is attributable primarily to income from the RRPF affiliates, a group of 50% owned
domestic and foreign joint ventures with Rolls-Royce plc (or affiliates thereof, collectively “Rolls-Royce”), a leading manufacturer of
commercial aircraft jet engines. Segment profit included earnings from the RRPF affiliates of $56.5 million for 2021, $95.5 million
for 2020, and $94.5 million for 2019. Financial results for 2020 included a transaction involving the refinancing and sale of a group of
aircraft spare engines at the RRPF affiliates. In this transaction, the RRPF affiliates sold 21 aircraft spare engines for total proceeds of
$233.0 million. GATX’s 50% share of the resulting pre-tax net gains was $35.3 million. Portfolio Management did not make any
37
additional investment in the RRPF affiliates in 2021, 2020, or 2019. There were no dividend distributions from the RRPF affiliates in
2021 or 2020, compared to $27.5 million in 2019.
The operating environment for RRPF continued to be challenging in 2021 due to the ongoing adverse impact of COVID-19 on air
travel. RRPF continues to face pressure on both utilization and lease rates as a result of rent deferral requests that have been granted in
the past, and the impact from a number of its customers having declared bankruptcy or undertaken restructuring processes. RRPF
remains focused on preserving a strong liquidity position in the current environment. The risk of ongoing volatility as a result of
future COVID-19 disruptions persists.
In the first quarter of 2021, GATX began investing directly in aircraft spare engines through its new entity, GEL. During the first
quarter of 2021, GEL acquired 14 aircraft spare engines for approximately $352 million, including 4 engines for $120 million from
the RRPF affiliates. All engines are on long-term leases with airline customers and are managed by the RRPF affiliates. Despite the
ongoing adverse impact of COVID-19 on air travel, GEL was able to maintain all of its engines on lease with customers during the
year.
Portfolio Management also owns marine assets, consisting of five liquefied gas-carrying vessels (the “Specialized Gas Vessels”).
The Specialized Gas Vessels are utilized to transport pressurized gases and chemicals, such as liquefied petroleum gas, liquefied
natural gas, and ethylene, primarily on short- and medium-term spot contracts for major oil and chemical customers worldwide. The
gas shipping market continued to experience modest improvement in 2021.
In addition, Portfolio Management manages leases for third parties for which it receives management fee income and earns residual
sharing income from the sale of managed assets. During 2021, Portfolio Management recorded $5.6 million of residual sharing gains
on managed portfolio sales.
Portfolio Management’s total asset base was $1,048.7 million at December 31, 2021, compared to $706.1 million at December 31,
2020, and $653.7 million at December 31, 2019.
The following table shows Portfolio Management’s segment results for the years ended December 31 (in millions):
2021
2020
2019
Revenues
Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marine operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28.1 $
19.1
0.5
47.7
0.8 $
15.6
0.6
17.0
1.0
8.2
0.7
9.9
18.9
6.6
0.6
26.1
(4.7)
(11.2)
—
94.5
62.4
17.5
17.6
1.7
36.8
8.0
(16.6)
2.0
56.5
19.7
5.3
0.5
25.5
2.2
(12.2)
—
95.9
60.8 $
77.4 $
353.0 $
0.5 $
—
Expenses
Marine operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Income (Expense)
Net gain (loss) on asset dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of affiliates’ pre-tax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment Profit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
38
The following table shows the net book value of Portfolio Management’s assets as of December 31 (in millions):
Investment in RRPF Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
GEL owned aircraft spare engines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marine equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
588.1 $
340.4
103.6
16.6
9.8
584.7 $
—
111.1
10.3
17.3
512.4
—
119.9
21.4
24.8
2021
2020
2019
(1) Amounts shown represent the estimated net book value of assets managed for third parties and are not included in our
consolidated balance sheets.
RRPF Affiliates Engine Portfolio Data
As of December 31, 2021,
the RRPF affiliates’ fleet consisted of 407 aircraft spare engines with a net book value of
$4,399.9 million, compared to 445 aircraft spare engines with a net book value of $4,784.1 million at the end of 2020 and 478 aircraft
spare engines with a net book value of $5,036.4 million at the end of 2019.
Engine utilization for the RRPF affiliates was 94.3% at December 31, 2021, compared to 92.8% at the end of 2020 and 96.9% at the
end of 2019. Utilization is calculated as the number of engines on lease as a percentage of total engines in the fleet.
The following table shows portfolio activity for the RRPF affiliates’ aircraft spare engines for the years ended December 31:
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Engine acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Engine dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilization rate at year end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
445
5
(43)
407
94.3%
478
20
(53)
445
92.8%
452
46
(20)
478
96.9%
39
RRPF Affiliates’ Aircraft Spare Engine Portfolio
e
z
i
S
o
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l
o
f
t
r
o
P
500
400
300
200
100
0
100.0%
95.0%
90.0%
85.0%
80.0%
n
o
i
t
a
z
i
l
i
t
U
2019
2020
2021
Leased to Rolls-Royce
Leased to Third Party
Idle
Utilization
Comparison of Reported Results
Segment Profit
In 2021, segment profit was $60.8 million compared to $77.4 million in 2020. The decrease is primarily due to lower share of
affiliates’ earnings at the RRPF affiliates, partially offset by higher results from our new operations at GEL and higher residual
sharing gains on managed portfolio sales in the current year.
In 2020, segment profit was $77.4 million compared to $62.4 million in 2019. The increase is primarily due to higher marine
operating revenue and the absence of impairment losses recognized in the prior year.
Revenues
In 2021, lease revenue was $28.1 million compared to $0.8 million in 2020, due to the addition of our GEL operations in the current
year. Marine operating revenue increased $3.5 million, driven by higher utilization and charter rates from the Specialized Gas Vessels.
In 2020, lease revenue was comparable to the same period in 2019. Marine operating revenue increased $7.4 million, driven by
higher charter rates and utilization from the Specialized Gas Vessels, as well as the transition to the new commercial manager in the
prior year.
Expenses
In 2021, marine operating expense decreased $2.2 million, due to lower bunker fuel expense, offset by higher repairs and
maintenance costs. Depreciation expense increased $12.3 million, due to the investment in new aircraft spare engines in the current
year at GEL.
In 2020, marine operating expense increased $0.8 million, due to higher bunker fuel expense, offset by lower other operating
expenses and management fees for the Specialized Gas Vessels.
40
Other Income (Expense)
In 2021, net gain (loss) on asset dispositions was favorable by $5.8 million, largely due to higher residual sharing gains on managed
portfolio sales in the current year.
In 2020, net gain (loss) on asset dispositions was favorable by $6.9 million, largely due to the absence of impairment losses
recorded in the prior year for certain offshore supply vessels, as well as higher residual sharing fees from the managed portfolio.
In 2021, income from our share of affiliates’ earnings decreased $39.4 million, driven by lower asset remarketing income, including
$35.3 million of gains in 2020 from a transaction at RRPF involving the refinancing and sale of a group of aircraft spare engines.
In 2020, income from our share of affiliates’ earnings increased $1.4 million, driven by higher net disposition gains, including
$35.3 million of gains from a transaction involving the refinancing and sale of a group of aircraft spare engines. Apart from this,
financial results were lower in 2020, due to the significant reduction in global air travel resulting from COVID-19.
Investment Volume
Investment volume was $353.0 million in 2021, compared to $0.5 million in 2020 and no investment in 2019. During 2021, GEL
acquired 14 aircraft spare engines.
OTHER
Other is composed of Trifleet operations, as well as selling, general and administrative expenses (“SG&A”), unallocated interest
expense, miscellaneous income and expense not directly associated with the reporting segments, and certain eliminations.
On December 29, 2020, GATX acquired Trifleet, one of the largest tank container lessors in the world. See “Note 4. Business
Combinations” in Part II, Item 8 of this Form 10-K for additional information.
The following table shows components of Other for the years ended December 31 (in millions):
Other segment profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Selling, general and administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unallocated interest expense ( income)
Other expense (income), including eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.2 $
198.3
0.5
11.0
— $
172.0
(7.7)
3.1
—
180.4
(5.8)
3.2
2021
2020
2019
Trifleet Summary
The worldwide tank container leasing market improved throughout 2021, as demand for tank containers was strong. As a result,
Trifleet experienced higher utilization of its tank containers and higher lease rates during the year. In addition, Trifleet continued to
invest in new tank containers throughout the year.
Trifleet Tank Container Data
At December 31, 2021, Trifleet’s owned and managed fleet consisted of approximately 20,000 tank containers compared to 19,000
at the end of the prior year. Fleet utilization was 89.2% at December 31, 2021 compared to 80.2% at the end of the prior year.
Utilization is calculated as the number of tank containers on lease as a percentage of total tank containers in the fleet.
The following table shows fleet statistics for Trifleet’s tank containers for the years ended December 31:
Ending balance - owned and managed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilization rate at year-end - owned and managed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19,996
89.2%
19,031
80.2%
2021
2020
41
SG&A, Unallocated Interest and Other
In 2021, SG&A of $198.3 million increased $26.3 million from 2020. The increase was primarily attributable to higher employee
compensation expenses, largely due to higher share-based compensation expenses, and the inclusion of Trifleet SG&A expenses in the
current year.
In 2020, SG&A of $172.0 million decreased $8.4 million from 2019. The decrease was largely due to lower employee
compensation and discretionary expenses, partially offset by transaction costs associated with the Trifleet acquisition.
Unallocated interest (expense) income (the difference between external interest expense and interest expense allocated to the
reporting segments) in any year is affected by our consolidated leverage position, the timing of debt issuances and investing activities,
and intercompany allocations.
In 2021, other expense (income), including eliminations, of $11.0 million increased $7.9 million from 2020, driven by the write-off
of unamortized deferred financing costs associated with the early redemption of debt and higher non-service pension expense,
resulting from a settlement expense, both recorded in the current year.
In 2020, other expense (income), including eliminations, was comparable to the prior year.
Consolidated Income Taxes
See “Note 13. Income Taxes” in Part II, Item 8 of this Form 10-K for additional information on income taxes.
Segment Summary
DISCONTINUED OPERATIONS
On May 14, 2020, we completed the sale of our ASC business. As a result, ASC is now reported as discontinued operations, and
financial data for the ASC segment has been segregated and presented as discontinued operations for all periods presented. See “Note
25. Discontinued Operations” in Part II, Item 8 of this Form 10-K for additional information. The ASC business represents the
entirety of GATX’s discontinued operations.
We recognized a gain of $3.3 million, net of taxes, in 2020 in connection with this sale.
In 2019, one of ASC’s vessels was heavily damaged by fire during winter maintenance. As a result, the vessel was removed from
service and written off. Upon final assessment of the damage, the vessel was deemed a total loss, and insurance proceeds of
$27.0 million were received, resulting in a net casualty gain of $10.5 million ($8.1 million net of taxes).
The following table shows the income from discontinued operations, net of taxes (in millions):
Discontinued operations, net of taxes
Net (loss) income from discontinued operations, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . $
Gain on sale of discontinued operations, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Discontinued operations, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
—
— $
(2.2) $
3.3
1.1 $
30.4
—
30.4
2021
2020
2019
Comparison of Reported Results
As a result of the completion of the sale in 2020, there were no operating results in 2021.
In 2020, net loss from discontinued operations, net of taxes, was $2.2 million, compared to net income of $30.4 million in 2019.
The variance was driven by the timing of the sale of the ASC business in the second quarter of 2020. The net casualty gain recorded in
2019, noted above, also contributed to the variance.
42
BALANCE SHEET DISCUSSION
Assets
Total assets were $9.5 billion at December 31, 2021, compared to $8.9 billion at December 31, 2020. The increase in total assets
was primarily driven by the acquisition of aircraft spare engines at GEL and an increase in operating assets at Rail North America.
The following table shows total balance sheet assets by segment as of December 31 (in millions):
Rail North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Rail International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,141.7 $
1,729.9
1,048.7
621.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
9,541.7 $
5,944.4
1,745.8
706.1
541.3
8,937.6
2021
2020
Gross Receivables
Receivables of $170.0 million at December 31, 2021 decreased $21.3 million from December 31, 2020, primarily due to the timing
of payments by customers.
Allowance for Losses
As of December 31, 2021, allowance for losses totaled $6.2 million, or 9.0% of rent and other receivables, compared to
$6.5 million, or 8.7%, at December 31, 2020. Both balances related entirely to general allowances.
See “Note 18. Allowance for Losses” in Part II, Item 8 of this Form 10-K.
Operating Assets and Facilities
Net operating assets and facilities increased $614.1 million from 2020. The increase was primarily due to investments of
$1,115.2 million, including the operating assets acquired at GEL, and $86.8 million for the purchase of assets previously leased,
partially offset by depreciation of $371.6 million, asset dispositions of $145.2 million, and negative foreign exchange rate effects of
$117.4 million.
Investments in Affiliated Companies
Investments in affiliated companies increased $3.7 million in 2021. The increase was primarily driven by our share of earnings from
the RRPF affiliates.
The following table shows our investments in affiliated companies by segment as of December 31 (in millions):
Rail North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Portfolio Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.3 $
588.1
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
588.4 $
—
584.7
584.7
2021
2020
See “Note 7. Investments in Affiliated Companies” in Part II, Item 8 of this Form 10-K.
Goodwill
Goodwill decreased $20.7 million from the prior year. The decrease was primarily driven by the final adjustments recorded as part
of the purchase price allocation related to the Trifleet acquisition. See “Note 4. Business Combinations” in Part II, Item 8 of this Form
10-K for additional information. The remaining changes in goodwill resulted from fluctuations in foreign currency exchange rates.
We tested our goodwill for impairment in the fourth quarter of 2021, and no impairment was indicated.
See “Note 17. Goodwill” in Part II, Item 8 of this Form 10-K.
43
Debt
Total debt increased $553.0 million from the prior year. Issuances of long-term debt of $1,507.4 million were offset by maturities
and principal payments of $884.0 million and the effects of foreign exchange rates on foreign debt balances.
The following table shows the details of our long-term debt issuances in 2021 ($ in millions):
Type of Debt
Term
Interest Rate
Principal Amount
Recourse Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 years
Recourse Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 years
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 years
Recourse Unsecured (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 years
Recourse Unsecured (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years
Recourse Unsecured (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 years
Recourse Unsecured (2)
3.1% Fixed
1.9% Fixed
1.6% Fixed
1.2% Fixed
0.9% Fixed
1.0% Floating (3)
$
$
550.0
400.0
86.7
60.1
26.6
384.0
1,507.4
(1) Denominated in euros, but presented in U.S. dollars in this table.
(2)
In 2021, we drew $384 million on a delayed draw term loan agreement and subsequently repaid $134 million. At December 31,
2021, $250 million was outstanding.
(3) Floating interest rate at December 31, 2021.
As of December 31, 2021, our outstanding debt had a weighted-average remaining term of 9.0 years and a weighted-average
interest rate of 3.79%, compared to 8.1 years and 4.04% at December 31, 2020.
The following table shows the carrying value of our debt and lease obligations by major component as of December 31 (in
millions):
Secured
2021
Unsecured
Total
2020
Total
Commercial paper and borrowings under bank credit facilities . . . . . $
Recourse debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— $
—
286.2
1.5
18.1 $
18.1 $
5,887.5
—
—
5,887.5
286.2
1.5
23.6
5,329.0
348.6
33.3
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
287.7 $
5,905.6 $
6,193.3 $
5,734.5
See “Note 8. Debt” in Part II, Item 8 of this Form 10-K.
Equity
Total equity increased $61.8 million in 2021, primarily due to net income of $143.1 million, $28.7 million from the effects of share-
based compensation, $26.7 million from the effects of post-retirement benefit plan adjustments, and $1.9 million of net unrealized
gains on derivatives. These increases were offset by dividends of $73.7 million, $51.7 million of foreign currency translation
adjustments due to the balance sheet effects of a stronger U.S. dollar relative to the foreign currencies in which our subsidiaries
conduct business, primarily the euro, Canadian dollar, and Polish zloty, and $13.2 million of stock repurchases.
See “Note 20. Shareholders’ Equity” in Part II, Item 8 of this Form 10-K.
44
CASH FLOW DISCUSSION
We generate a significant amount of cash from operating activities and investment portfolio proceeds. We also access domestic and
international capital markets by issuing unsecured or secured debt and commercial paper. We use these resources, along with
available cash balances, to fulfill our debt, lease, and dividend obligations, to support our share repurchase programs, and to fund
portfolio investments and capital additions. We primarily use cash from operations to fund daily operations. The timing of asset
dispositions and changes in working capital impact cash flows from portfolio proceeds and operations. As a result, these cash flow
components may vary materially from year to year.
As of December 31, 2021, we had an unrestricted cash balance of $344.3 million. We also have a $250 million 3-year unsecured
revolving credit facility in the U.S. that matures in 2024 and a $600 million, 5-year unsecured revolving credit facility in the U.S. that
matures in 2026, both of which were fully available as of December 31, 2021.
The following table shows our principal sources and uses of cash from continuing operations for the years ended December 31 (in
millions):
Principal sources of cash
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other asset sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of debt, commercial paper, and credit facilities . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal uses of cash
Portfolio investments and capital additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of debt, commercial paper, and credit facilities . . . . . . . . . . . . . . . .
Purchases of assets previously leased - investing activities . . . . . . . . . . . . . . . . .
Purchases of assets previously leased - financing activities . . . . . . . . . . . . . . . . .
Stock repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
$
$
$
$
507.2
187.1
54.7
1,487.8
2,236.8
(1,131.9)
(884.0)
—
(77.2)
(13.1)
(74.3)
(2,180.5)
$
$
$
$
436.8
131.1
26.0
1,592.9
2,186.8
(1,064.0)
(1,100.0)
—
(40.0)
—
(71.0)
(2,275.0)
$
$
$
$
425.8
250.3
23.0
743.0
1,442.1
(722.8)
(504.6)
(1.0)
(11.3)
(150.0)
(69.3)
(1,459.0)
Additionally, net cash from discontinued operations, including proceeds from the sale of ASC, was $1.1 million, $254.2 million,
and $(0.1) million for the years ended December 31, 2021, 2020, and 2019.
Net Cash Provided by Operating Activities
Net cash provided by operating activities of $507.2 million increased $70.4 million compared to 2020. Comparability among
reporting periods is impacted by the timing of changes in working capital items. Specifically, lower cash payments for operating
leases and income taxes were partially offset by higher payments for other operating expenses.
Portfolio Investments and Capital Additions
Portfolio investments and capital additions primarily consist of purchases of operating assets, investments in affiliates, and
capitalized asset improvements. Portfolio investments and capital additions of $1,131.9 million increased $67.9 million compared to
2020, primarily due to the acquisition of 14 aircraft spare engines at GEL and tank containers at Trifleet, partially offset by the
acquisition of Trifleet in 2020 and fewer railcars acquired at Rail North America and Rail International. The timing of investments
depends on purchase commitments, transaction opportunities, and market conditions.
45
The following table shows portfolio investments and capital additions by segment for the years ended December 31 (in millions):
Rail North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rail International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
574.4
173.3
353.0
31.2
1,131.9
$
$
642.0
216.0
0.5
205.5
1,064.0
$
$
502.2
215.7
—
4.9
722.8
2021
2020
2019
Additionally, portfolio investments and capital additions for discontinued operations were $0.0 million, $18.2 million, and
$18.9 million for the years ended December 31, 2021, 2020 and 2019.
Portfolio Proceeds
Portfolio proceeds primarily consist of proceeds from sales of operating assets and finance lease receipts, as well as capital
distributions from affiliates. Portfolio proceeds of $187.1 million for the year ended December 31, 2021 increased $56.0 million
compared to the year ended December 31, 2020, primarily due to higher proceeds from railcar and locomotive sales at Rail North
America.
The following table shows portfolio proceeds for the years ended December 31 (in millions):
Proceeds from sales of operating assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance lease rents received, net of earned income . . . . . . . . . . . . . . . . . . . . . . . .
Capital distributions and proceeds related to affiliates . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
181.1
6.0
—
187.1
$
$
123.6
7.0
0.5
131.1
$
$
239.6
8.4
2.3
250.3
2021
2020
2019
Other Investing Activity
The following table shows other investing activity for the years ended December 31 (in millions):
Purchases of assets previously leased (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of other assets (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
— $
— $
54.7
(27.6)
27.1
$
26.0
2.0
28.0
$
(1.0)
23.0
2.7
24.7
2021
2020
2019
In 2019, we purchased 49 railcars that were previously leased.
(1)
(2) Proceeds from sales of other assets for all periods were primarily related to railcar scrapping.
Additionally, other investing activity for discontinued operations was $0.0 million, $21.8 million, and $27.0 million for the years
ended December 31, 2021, 2020, and 2019.
46
Net Cash Provided by (Used in) Financing Activities
The following table shows net cash provided by (used in) financing activities for the years ended December 31 (in millions):
2021
2020
2019
Net proceeds from issuances of debt (original maturities longer than 90 days) . . . . . . . $
Repayments of debt (original maturities longer than 90 days) . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in debt with original maturities of 90 days or less . . . . . . . . . .
Purchases of assets previously leased (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock repurchases (2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,491.9 $
(884.0)
(4.1)
(77.2)
(13.1)
(74.3)
23.9
463.1 $
1,586.5 $
(1,100.0)
6.4
(40.0)
—
(71.0)
(26.3)
355.6 $
743.0
(410.0)
(94.6)
(11.3)
(150.0)
(69.3)
59.1
66.9
In 2021, we purchased 2,329 railcars that were previously leased, compared to 732 railcars in 2020 and 157 in 2019.
(1)
(2) During 2021, we repurchased 0.1 million shares of common stock for $13.1 million, compared to zero shares in 2020 and
2.0 million shares of common stock repurchased for $150.0 million in 2019.
Cash Flows from Discontinued Operations
The following table shows cash flow information for our discontinued operations for the years ended December 31 (in millions):
Net Cash (Used in) Provided By Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net Cash Provided By Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Provided By (Used In) Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Provided By (Used In) Discontinued Operations, Net . . . . . . . . . . . . . . . . . . . $
— $
1.1
—
1.1 $
(8.5)
240.9
21.8
254.2 $
$36.8
8.1
(45.0)
(0.1)
2021
2020
2019
LIQUIDITY AND CAPITAL RESOURCES
General
We fund our investments and meet our debt, lease, and dividend obligations using our available cash balances, as well as cash
generated from operating activities, sales of assets, commercial paper issuances, committed revolving credit facilities, distributions
from affiliates, and issuances of secured and unsecured debt. We primarily use cash from operations to fund daily operations. We use
both domestic and international capital markets and banks to meet our debt financing needs.
47
Material Cash Obligations
The following table shows our material cash obligations, including debt principal and related interest payments, lease payments, and
purchase commitments at December 31, 2021 (in millions):
Total
2022
Material Cash Obligations by Period
2024
2023
2025
2026
Thereafter
Recourse debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,930.0 $
Interest on recourse debt (1) . . . . . . . . . . . . . . . . . . .
Commercial paper and credit facilities . . . . . . . . . .
Operating lease obligations . . . . . . . . . . . . . . . . . . .
Purchase commitments (2) . . . . . . . . . . . . . . . . . . . .
1,952.2
18.1
334.6
1,160.6
363.7 $
192.2
18.1
42.4
783.7
500.0 $ 533.1 $ 527.4 $ 461.4 $
180.4
—
40.1
376.9
151.1
—
35.2
—
145.1
—
43.9
—
165.3
—
38.0
—
3,544.4
1,118.1
—
135.0
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,395.5 $ 1,400.1 $ 1,097.4 $ 736.4 $ 713.7 $ 650.4 $
4,797.5
(1) For floating rate debt, future interest payments are based on the applicable interest rate as of December 31, 2021.
(2) Primarily railcar purchase commitments. The amounts shown for all years are based on management’s estimates of the timing,
anticipated car types, and related costs of railcars to be purchased under its agreements. The amount shown for 2022 includes
$1.5 million related to options we exercised to purchase 21 railcars that are currently recorded as finance leases.
In 2018, we amended a long-term supply agreement with Trinity to extend the term to December 2023, and we agreed to purchase
4,800 tank cars (1,200 per year) beginning in January 2020 and continuing through 2023. At December 31, 2021, 3,036 railcars have
been ordered pursuant to the amended terms of the agreement, of which 2,280 railcars have been delivered.
In 2018, we entered into a multi-year railcar supply agreement with American Railcar Industries, Inc. (“ARI”), pursuant to which
we agreed to purchase 7,650 newly built railcars. The order encompasses a mix of tank and freight cars to be delivered over a five-
year period, beginning in April 2019 and ending in December 2023. ARI’s railcar manufacturing business was acquired by a
subsidiary of Greenbrier on July 26, 2019, and such subsidiary assumed all of ARI’s obligations under our long-term supply
agreement. As of December 31, 2021, 6,141 railcars have been ordered, of which 3,838 railcars have been delivered. The agreement
included an option to order additional railcars subject to certain restrictions and, as of December 31, 2021, we still have the option to
order 2,200 additional railcars during the remaining term of the agreement.
The following table shows our future contractual cash receipts arising from our direct finance leases and future rental receipts from
noncancelable operating leases as of December 31, 2021 (in millions):
Total
2022
Contractual Cash Receipts by Period
2024
2025
2023
2026
Thereafter
Operating leases . . . . . . . . . . . . . . . . . . $
Finance leases . . . . . . . . . . . . . . . . . . . .
3,123.3 $
106.9
968.3 $
36.6
753.3 $
15.5
546.4 $
16.1
330.8 $
12.6
195.9 $
11.6
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,230.2 $ 1,004.9 $
768.8 $
562.5 $
343.4 $
207.5 $
328.6
14.5
343.1
Our aggregate future contractual cash receipts at December 31, 2021 increased $234.4 million compared to December 31, 2020,
primarily resulting from the impacts of our new Trifleet and GEL businesses, partially offset by lease receipts in 2021 and committed
lease receipts associated with railcars sold in the current year.
2022 Liquidity Outlook
In addition to our contractual obligations, expenditures in 2022 may also include the purchase of railcars that are currently leased
and other discretionary capital spending for opportunistic asset purchases or strategic investments, including direct investments in
aircraft spare engines. We plan to fund these expenditures in 2022 using available cash at December 31, 2021 in combination with
cash from operations, portfolio proceeds, long-term debt issuances, and our revolving credit facilities.
48
Short-Term Borrowings
We primarily use short-term borrowings as a source of working capital and to temporarily fund differences between our operating
cash flows and portfolio proceeds, and our capital investments and debt maturities. We do not maintain or target any particular level
of short-term borrowings on a permanent basis. Rather, we will temporarily utilize short-term borrowings at levels we deem
appropriate until we decide to pay down these balances.
The following table shows additional information regarding our short-term borrowings:
North America (1)
2020
2021
2019
Europe (2)
2020
2021
2019
Balance as of December 31 (in millions) . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Euro/dollar exchange rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ —
$ — $ — $18.1
$23.6
$ 15.8
—%
n/a
—%
n/a
—%
n/a
0.8%
1.14
0.9%
1.23
0.7%
1.12
Average daily amount outstanding during year (in millions) . . . . . . . .
Weighted-average interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average euro/dollar exchange rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ —
$ — $ 25.6
$20.2
$18.5
$ 16.7
—%
n/a
—%
n/a
2.4%
n/a
0.9%
1.18
0.8%
1.14
0.7%
1.12
Average daily amount outstanding during 4th quarter (in millions) . . . .
Weighted-average interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average euro/dollar exchange rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ —
$ — $ 47.2
$20.0
$21.1
$ 19.9
—%
n/a
—%
n/a
2.1%
n/a
0.9%
1.14
0.9%
1.19
0.7%
1.11
. . . . . . . . . . . . . . . .
Maximum daily amount outstanding (in millions)
Euro/dollar exchange rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ —
$ — $130.0
n/a
n/a
n/a
$34.2
1.22
$35.8
1.18
$161.1
1.11
(1) Short-term borrowings in North America are composed of commercial paper issued in the U.S.
(2) Short-term borrowings in Europe are composed of borrowings under bank credit facilities.
Credit Lines and Facilities
During 2021, we entered into a new $600 million, 5-year unsecured revolving credit facility in the U.S., expiring in May 2026. The
new credit facility contains two extension options. This replaced our prior $600 million, 5-year unsecured revolving credit facility,
which was terminated upon our entry into the new credit facility. As of December 31, 2021, the full $600 million was available under
this facility. Additionally, we entered into a $250 million 3-year unsecured revolving credit facility in the U.S., expiring in May 2024.
This facility also has two one-year extension options. This replaced our prior $250 million 3-year unsecured revolving credit facility,
which was terminated upon our entry into the new credit facility. As of December 31, 2021, the full $250 million was available under
this facility.
Our European subsidiaries have unsecured credit facilities with an aggregate limit of €35.0 million. As of December 31, 2021,
€19.1 million was available under these credit facilities.
Delayed Draw Term Loan
On December 14, 2020, we executed a delayed draw term loan agreement (“Term Loan”) which provided for a 3-year term loan in
the aggregate principal amount of up to $500 million. Advances were allowed from December 14, 2020 through April 17, 2021
pursuant to the terms of the agreement and any amounts borrowed and repaid could not be re-borrowed. The amounts borrowed under
the Term Loan agreement are required to be repaid no later than December 14, 2023. In 2021, we drew $384 million on the Term
Loan, terminated the remaining unused commitment of $116 million, and subsequently repaid $134 million of the outstanding
amount. As of December 31, 2021, $250 million was drawn on the Term Loan.
49
Restrictive Covenants
Our credit facility and certain other debt agreements contain various restrictive covenants. See “Note 8. Debt” in Part II, Item 8 of
this Form 10-K.
Credit Ratings
The global capital market environment and outlook may affect our funding options and our financial performance. Our access to
capital markets at competitive rates depends on our credit rating and rating outlook, as determined by rating agencies. As of
December 31, 2021, our long-term unsecured debt was rated BBB by Standard & Poor’s and Baa2 by Moody’s Investor Service and
our short-term unsecured debt was rated A-2 by Standard & Poor’s and P-2 by Moody’s Investor Service. Our rating outlook from
both agencies was stable.
Leverage
Leverage is expressed as a ratio of debt (including debt and lease obligations, net of unrestricted cash) to equity. The following
table shows the components of recourse leverage as of December 31 (in millions, except recourse leverage ratio):
Debt and lease obligations, net of unrestricted cash:
Unrestricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper and bank credit facilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recourse debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt and lease obligations, net of unrestricted cash . . . . . . . . . . . . . . . . . . .
Total recourse debt (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recourse Leverage (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
$
$
$
$
(344.3)
18.1
5,887.5
286.2
1.5
5,849.0
5,849.0
2,019.2
2.9
$
$
$
$
(292.2)
23.6
5,329.0
348.6
33.3
5,442.3
5,442.3
1,957.4
2.8
$
$
$
$
(151.0)
15.8
4,780.4
432.3
7.9
5,085.4
5,085.4
1,835.1
2.8
(1)
Includes recourse debt, commercial paper and bank credit facilities, and operating and finance lease obligations, net of
unrestricted cash.
(2) Calculated as total recourse debt / shareholders’ equity.
Shelf Registration Statement
During 2019, we filed an automatic shelf registration statement that enables us to issue debt securities and pass-through certificates.
The registration statement is effective for three years and does not limit the amount of debt securities and pass-through certificates we
can issue.
Commercial Commitments
We have entered into various commercial commitments, including standby letters of credit, performance bonds, and guarantees
related to certain transactions. These commercial commitments require us to fulfill specific obligations in the event of third-party
demands. Similar to our balance sheet investments, these commitments expose us to credit, market, and equipment risk. Accordingly,
we evaluate these commitments and other contingent obligations using techniques similar to those we use to evaluate funded
transactions.
50
The following table shows our commercial commitments at December 31, 2021 (in millions):
Standby letters of credit and performance bonds . . . . . $
Derivative guarantees . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Total
9.0 $
0.5
9.5 $
Amount of Commitment Expiration by Period
2024
2022
2026
2025
2023
Thereafter
9.0 $ — $ — $ — $ — $
0.5
—
—
—
—
9.5 $ — $ — $ — $ — $
—
—
—
We are parties to standby letters of credit and performance bonds, which primarily relate to contractual obligations and general
liability insurance coverages. No material claims have been made against these obligations, and no material losses are anticipated. We
also guarantee payment by an affiliate for final settlement of certain derivatives if they are in a liability position at expiration. The
amount of the payment is ultimately determined by the value of the derivative upon final settlement.
Defined Benefit Plan Contributions
In 2021, we contributed $4.2 million to our defined benefit pension plans and other post-retirement benefit plans. In 2022, we
expect to contribute approximately $18.5 million. As of December 31, 2021, our funded pension plans in the aggregate were 106.6%
funded. Additional contributions will depend primarily on plan asset investment returns and actuarial experience, and subject to the
impact of these factors, we may make additional material plan contributions.
GATX Common Stock Repurchases
On January 25, 2019, our board of directors (“Board”) approved a $300.0 million share repurchase program, pursuant to which we
are authorized to purchase shares of our common stock in the open market, in privately negotiated transactions, or otherwise,
including pursuant to Rule 10b5-1 plans. The share repurchase program does not have an expiration date, does not obligate the
Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time.
The timing of share repurchases will be dependent on market conditions and other factors. During 2021, we repurchased 0.1 million
shares of common stock for $13.1 million, excluding commissions, compared to zero shares repurchased in 2020 and 2.0 million
shares repurchased for $150.0 million, excluding commissions, in 2019. As of December 31, 2021, $136.9 million remained available
under the repurchase authorization.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our consolidated financial statements in conformity with GAAP, which requires us to use judgment in making estimates
and assumptions that affect reported amounts of assets, liabilities, revenues, and expenses, as well as information in the related
disclosures. We regularly evaluate our estimates and judgments based on historical experience, market indicators, and other relevant
factors and circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Operating Assets
We state operating assets, including assets acquired under finance leases, at cost and depreciate them over their estimated economic
useful lives to an estimated residual value using the straight-line method. We determine the economic useful life based on our
estimate of the period over which the asset will generate revenue. For the majority of our operating assets, the economic useful life is
greater than 30 years. The residual values are based on historical experience and economic factors. We periodically review the
appropriateness of our estimates of useful lives and residual values based on changes in economic circumstances and other factors.
Changes in these estimates would result in a change in future depreciation expense.
Lease Classification
We analyze all new and modified leases to determine whether we should classify the lease as an operating or finance lease. Our
lease classification analysis relies on certain assumptions that require judgment, such as the asset’s fair value, the asset’s estimated
residual value, the interest rate implicit in the lease, and the asset’s economic useful life. While most of our leases are classified as
operating leases, changes in the assumptions we use could result in a different lease classification, which could change the impacts of
the lease transactions on our results of operations and financial position. See “Note 6. Leases” in Part II, Item 8 of this Form 10-K.
51
Impairment of Long-Lived Assets
We review long-lived assets, such as operating assets, right-of-use assets, and facilities, for impairment annually, or whenever
circumstances indicate that the carrying amount of those assets may not be recoverable. We evaluate the recoverability of assets to be
held and used by comparing the carrying amount of the asset to the undiscounted future net cash flows we expect the asset to generate.
We base estimated future cash flows on a number of assumptions, including lease rates, lease term (including renewals), freight rates
and volume, operating costs, the life of the asset, and final disposition proceeds. If we determine an asset is impaired, we recognize an
impairment loss equal to the amount by which the carrying amount exceeds the asset’s fair value. We classify assets we plan to sell or
otherwise dispose of as held for sale, provided they meet specified accounting criteria, and we record those assets at the lower of their
carrying amount or fair value less costs to sell. See “Note 10. Asset Impairments and Assets Held for Sale” in Part II, Item 8 of this
Form 10-K.
Impairment of Investments in Affiliated Companies
We review the carrying amount of our investments in affiliates annually, or whenever circumstances indicate that their value may
have declined. If management determines that indicators of impairment are present for an investment, we perform an analysis to
estimate the fair value of that investment. Active markets do not typically exist for our affiliate investments and as a result, we may
estimate fair value using a discounted cash flow analysis at the investee level, price-earnings ratios based on comparable businesses,
or other valuation techniques that are appropriate for the particular circumstances of the affiliate. For all fair value estimates, we use
observable inputs whenever possible and appropriate.
Once we make an estimate of fair value, we compare the estimate of fair value to the investment’s carrying value. If the
investment’s estimated fair value is less than its carrying value, then we consider the investment impaired. If an investment is
impaired, we assess whether the impairment is other-than-temporary. We consider factors such as the expected operating results for
the near future, the length of the economic life cycle of the underlying assets of the investee, and our ability to hold the investment
through the end of the underlying assets’ useful life to determine if the impairment is other-than-temporary. We may also consider
actions we anticipate the investee will take to improve its business prospects if it seems probable the investee will take those actions.
If we determine an investment to be only temporarily impaired, we do not record an impairment loss. Alternatively, if we determine
an impairment is other-than-temporary, we record a loss equal to the difference between the estimated fair value of the investment and
its carrying value. See “Note 7. Investments in Affiliated Companies” and “Note 10. Asset Impairments and Assets Held for Sale” in
Part II, Item 8 of this Form 10-K.
Impairment of Goodwill
We review the carrying amount of our goodwill annually, or if circumstances indicate an impairment may have occurred. We
perform the impairment review at the reporting unit level, which is one level below an operating segment. The goodwill impairment
test performed is a two-tiered approach and requires us to make certain judgments to determine the assumptions we use in the
calculation. We first complete a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit
exceeds its carrying value. If necessary, the fair value is then compared to its carrying value, including goodwill. When estimating the
fair value of the reporting unit, we use a discounted cash flow model and base our estimates of future cash flows on revenue and
expense forecasts and include assumptions for future growth. We also consider observable multiples of book value and earnings for
companies that we believe are comparable to the applicable reporting units. If the estimated fair value is less than the carrying
amount, we record an impairment loss for the difference. See “Note 17. Goodwill” in Part II, Item 8 of this Form 10-K.
Pension and Post-Retirement Benefits Assumptions
We use actuarial assumptions to calculate pension and other post-retirement benefit obligations and related costs. The discount rate
and the expected return on plan assets are two assumptions that influence the plan expense and liability measurement. Other
assumptions involve demographic factors such as expected retirement age, mortality, employee turnover, health care cost trends, and
the rate of compensation increases.
We use a discount rate to calculate the present value of expected future pension and post-retirement cash flows as of the
measurement date. The discount rate is based on yields for high-quality, long-term bonds with durations similar to the projected
benefit obligation. We base the expected long-term rate of return on plan assets on current and expected asset allocations, as well as
historical and expected returns on various categories of plan assets. We evaluate these assumptions annually and make adjustments as
required in accordance with changes in underlying market conditions, valuation of plan assets, or demographics. Changes in these
assumptions may increase or decrease periodic benefit plan expense as well as the carrying value of benefit plan obligations. See
“Note 11. Pension and Other Post-Retirement Benefits” in Part II, Item 8 of this Form 10-K.
52
Share-Based Compensation
We grant equity awards to certain employees and non-employee directors in the form of non-qualified stock options, stock
appreciation rights, restricted stock, performance shares, and phantom stock. We recognize compensation expense for our equity
awards over the applicable service period for each award, based on the award’s grant date fair value. We use the Black-Scholes
options valuation model to calculate the grant date fair value of stock options and stock appreciation rights. This model requires us to
make certain assumptions that affect the amount of compensation expense we will record. The assumptions we use in the model
include the expected stock price volatility (based on the historical volatility of our stock price), the risk-free interest rate (based on the
treasury yield curve), the expected life of the equity award (based on historical exercise patterns and post-vesting termination
behavior), and the dividend equivalents we expect to pay during the estimated life of the equity award since our stock options and
stock appreciation rights are dividend participating. We base the fair value of other equity awards on our stock price on the grant date.
We recognize forfeitures when they occur. See “Note 12. Share-Based Compensation” in Part II, Item 8 of this Form 10-K.
Income Taxes
Our operations are subject to taxes in the United States, various states, and foreign countries, and as a result, we may be subject to
audit in all of these jurisdictions. Tax audits may involve complex issues and disagreements with taxing authorities that could require
several years to resolve. GAAP requires that we presume the relevant tax authority will examine uncertain income tax positions. We
must determine whether, based on the technical merits of our position, it is more likely than not that our uncertain income tax
positions will be sustained by taxing authorities upon examination, which may include related appeals or litigation processes. We
must then evaluate income tax positions that meet the “more likely than not” recognition threshold to determine the probable amount
of benefit we would recognize in the financial statements. Establishing accruals for uncertain tax benefits requires us to make
estimates and assessments with respect to the ultimate outcome of tax audit issues for amounts recorded in the financial statements.
The ultimate resolution of uncertain tax benefits may differ from our estimates, potentially impacting our financial position, results of
operations, or cash flows.
We evaluate the need for a deferred tax asset valuation allowance by assessing the likelihood that we will realize tax assets,
including net operating loss and tax credit carryforward benefits. Our assessment of whether a valuation allowance is required
involves judgment, including forecasting future taxable income and evaluating tax planning initiatives, if applicable.
We expect to continue to reinvest foreign earnings outside the United States indefinitely. If future earnings are repatriated to the
United States, or if we expect such earnings to be repatriated, a provision for additional taxes may be required. Under provisions of
the territorial tax system, repatriated earnings are generally exempt from United States income taxation, however, incremental income
taxes may occur from withholding taxes, foreign exchange gains, or other taxable gains recognized in connection with tax basis
differences in our foreign investments. The ultimate tax cost of repatriating such earnings will depend on tax laws in effect and other
circumstances at that time. See “Note 13. Income Taxes” in Part II, Item 8 of this Form 10-K.
NEW ACCOUNTING PRONOUNCEMENTS
See “Note 2. Accounting Changes” in Part II, Item 8 of this Form 10-K for a summary of new accounting pronouncements that may
impact our business.
NON-GAAP FINANCIAL MEASURES
In addition to financial results reported in accordance with GAAP, we compute certain financial measures using non-GAAP
components, as defined by the SEC. These measures are not in accordance with, or a substitute for, GAAP, and our financial measures
may be different from non-GAAP financial measures used by other companies. We have provided a reconciliation of our non-GAAP
components to the most directly comparable GAAP components.
Reconciliation of Non-GAAP Components Used in the Computation of Certain Financial Measures
Net Income Measures
We exclude the effects of certain tax adjustments and other items for purposes of presenting net income, diluted earnings per share,
and return on equity because we believe these items are not attributable to our business operations. Management utilizes net income,
excluding tax adjustments and other items, when analyzing financial performance because such amounts reflect the underlying
operating results that are within management’s ability to influence. Accordingly, we believe presenting this information provides
53
investors and other users of our financial statements with meaningful supplemental information for purposes of analyzing year-to-year
financial performance on a comparable basis and assessing trends.
The following tables show our net income, diluted earnings per share, and return on equity, excluding tax adjustments and other
items for the years ended December 31 (in millions, except per share data):
Impact of Tax Adjustments and Other Items on Net Income:
Net income (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net income from discontinued operations (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments attributable to pre-tax income from continuing operations:
Net insurance proceeds (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt extinguishment costs (2)
Total adjustments attributable to pre-tax income from continuing operations . . . . . . . . . .
Income taxes thereon, based on applicable effective tax rate . . . . . . . . . . . . . . . . . . . . . . .
Other income tax adjustments attributable to income from continuing operations:
Income tax rate change (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other income tax adjustments attributable to income from continuing
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments attributable to affiliates’ earnings from continuing operations, net of taxes:
Income tax rate changes (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total adjustments attributable to affiliates’ earnings, net of taxes . . . . . . . . . . . . . . . . . . .
Net income from continuing operations, excluding tax adjustments
and other items (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments attributable to discontinued operations, net of taxes:
Net casualty gain at ASC (5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total adjustments attributable to discontinued operations, net of taxes . . . . . . . . . . . . . . .
Net income from discontinued operations, excluding tax adjustments
and other items (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
$
$
$
$
$
143.1
—
143.1
(5.3)
4.5
(0.8)
0.2
—
151.3
1.1
150.2
$
$
211.2
30.4
180.8
— $
—
— $
— $
—
—
—
—
—
(2.8)
— $
— $
(2.8)
39.7
39.7
182.2
$
$
12.3
12.3
162.5
$
$
—
—
178.0
—
—
— $
— $
(8.1)
(8.1)
— $
1.1
$
22.3
$
$
$
$
$
$
$
$
$
$
Net income from consolidated operations, excluding tax adjustments
and other items (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
182.2
$
163.6
$
200.3
54
Impact of Tax Adjustments and Other Items on Diluted Earnings per Share:
Diluted earnings per share from consolidated operations (GAAP) . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .
Less: Diluted earnings per share from discontinued operations (GAAP)
Diluted earnings per share from continuing operations (GAAP) . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
$
$
3.98
—
3.98
$
$
4.27
0.03
4.24
$
$
5.81
0.84
4.97
Adjustments attributable to income from continuing operations, net of taxes:
Net insurance proceeds (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt extinguishment costs (2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax rate change (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.11)
0.09
—
—
—
—
—
—
(0.08)
Adjustments attributable to affiliates’ earnings from continuing operations, net of taxes:
Income tax rate changes (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share from continuing operations, excluding tax adjustments
and other items (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.10
0.35
—
$
5.06
$
4.59
$
4.89
Adjustments attributable to discontinued operations, net of taxes:
Net casualty gain at ASC (5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
(0.22)
Diluted earnings per share from discontinued operations, excluding tax adjustments
and other items (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share from consolidated operations, excluding tax adjustments
and other items (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
— $
0.03
5.06
$
4.62
$
$
0.62
5.51
(1) Net gain from insurance recoveries for storm damage to a maintenance facility at Rail North America.
(2) Write-off of unamortized deferred financing costs associated with the early redemption of our $150 million 5.625% Senior Notes
due 2066.
(3) Deferred income tax adjustment due to a reduction of the corporate income tax rate enacted in Alberta, Canada in 2019.
(4) Deferred income tax adjustments due to an enacted corporate income tax rate increase in the United Kingdom in 2021 and the
elimination of a previously announced corporate income tax rate reduction in the United Kingdom in 2020.
(5) Net casualty gain attributable to insurance recovery for a vessel at ASC.
Return on Equity (GAAP)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on Equity, excluding tax adjustments and other items (non-GAAP) (1) . . . . . . . . . . . . . . . . . . . .
7.2%
8.0% 11.7%
11.0% 10.5% 13.5%
(1) Shareholders’ equity used in this calculation excludes the increases resulting from the impact of the Tax Cuts and Jobs Act of
2017.
2021
2020
2019
55
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, we are exposed to interest rate and foreign currency exchange rate risks that could impact our
financial results. To manage these risks we may enter into certain derivative transactions, principally interest rate swaps, Treasury rate
locks, options and currency forwards and swaps. These instruments and other derivatives are entered into only for hedging existing
underlying exposures. We do not hold or issue derivative financial instruments for speculative purposes.
Interest Rate Exposure — Our reported interest expense is affected by changes in interest rates, primarily LIBOR, as a result of the
issuance of floating rate debt instruments. We generally manage the amount of floating rate debt exposure based on the relationship
between lease revenues and interest rates. Based on our floating rate debt instruments at December 31, 2021, and giving effect to
related derivatives, a hypothetical increase in market interest rates of 100 basis points would cause an increase in after-tax interest
expense of $4.3 million in 2022. Comparatively, at December 31, 2020, a hypothetical 100 basis point increase in interest rates would
have resulted in a $4.7 million increase in after-tax interest expense in 2021. Our earnings are also exposed to interest rate changes
from affiliates’ earnings. Certain affiliates issue floating rate debt instruments to finance their investments.
Foreign Currency Exchange Rate Exposure — Certain of our foreign subsidiaries conduct business in currencies other than the U.S.
dollar, principally those operating in Austria, Canada, Germany, Poland and the Netherlands. As a result, we are exposed to foreign
currency risk attributable to changes in the exchange value of the U.S. dollar in terms of the euro, Canadian dollar, and Polish zloty.
Based on 2021 local currency earnings and considering non-functional currency assets and liabilities recorded as of December 31,
2021, and giving effect to related derivatives, a uniform and hypothetical 10% strengthening in the U.S. dollar versus applicable
foreign currencies would decrease after-tax income in 2022 by $8.3 million. Comparatively, based on 2020 local currency earnings
and considering non-functional currency assets and liabilities recorded as of December 31, 2020, a uniform and hypothetical 10%
strengthening in the U.S. dollar versus applicable foreign currencies would have decreased after-tax income in 2021 by $6.5 million.
56
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
Report of Independent Registered Public Accounting Firm on Financial Statements (PCAOB ID: 42)
. . . .
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements
Note 1. Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 2. Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 3. Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 4. Business Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 5. Supplemental Cash Flow Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 6. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 7. Investments in Affiliated Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 8. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 9. Fair Value Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 10. Assets Impairments and Assets Held for Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 11. Pension and Other Post-Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 12. Share-Based Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 13. Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 14. Concentrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 15. Commercial Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 16. Earnings per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 17. Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 18. Allowance for Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 19. Other Assets and Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 20. Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 21. Accumulated Other Comprehensive Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 22. Foreign Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 23. Legal Proceedings and Other Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 24. Financial Data of Business Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 25. Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
58
60
61
62
63
64
64
65
71
71
71
74
78
80
84
84
90
93
95
95
96
97
97
97
98
98
98
99
101
105
57
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of GATX Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of GATX Corporation and subsidiaries (the Company) as of
December 31, 2021 and 2020, the related consolidated statements of comprehensive income, changes in shareholders’ equity and cash
flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal
Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) and our report dated February 17, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the
critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not,
by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the account or
disclosures to which it relates.
58
Impairment of Long-Lived Assets
Description of the
Matter
As described in Notes 3 and 10 to the consolidated financial statements, the Company reviews long-lived assets
for impairment annually, or if circumstances indicate that the carrying amount of those assets may not be
recoverable. The Company evaluates the recoverability of assets to be held and used by comparing the carrying
amount of the asset to the undiscounted future net cash flows the asset is expected to generate. If the Company
determines that an asset is impaired, an impairment loss is recognized equal to the excess of the asset’s carrying
amount over its fair value.
Auditing management’s evaluation of long-lived assets for impairment
involved subjectivity due to the
significant estimation required to determine the undiscounted future net cash flows for assets with indicators of
potential impairment. In particular, these estimates are sensitive to significant assumptions, including lease
rates, operating costs, the life of the asset, and final disposition proceeds, which can be affected by expectations
about future market or economic conditions.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the
Company’s long-lived asset impairment review process, including controls over management’s review of the
significant assumptions discussed above.
To test the Company’s long-lived asset impairment review process, we performed audit procedures that
included, among others, assessing the methodologies used, evaluating the significant assumptions discussed
above and testing the completeness and accuracy of the underlying data used by the Company in its analysis.
We assessed the historical accuracy of management’s estimates, and we compared certain significant
assumptions used by management to current industry and economic trends and evaluated whether changes to
the Company’s business and other relevant factors would affect those significant assumptions.
We have served as the Company’s auditor since 1916.
Chicago, Illinois
February 17, 2022
59
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
December 31
2021
2020
Assets
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables
Rent and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases (as lessor)
Less: allowance for losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Assets and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: allowance for depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease Assets (as lessee)
Right-of-use assets, net of accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases, net of accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in Affiliated Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities and Shareholders’ Equity
Accounts Payable and Accrued Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt
Commercial paper and borrowings under bank credit facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Lease Obligations (as lessee)
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders’ Equity
Common stock, $0.625 par value:
Authorized shares — 120,000,000
Issued shares — 68,254,574 and 67,751,074
Outstanding shares — 35,421,617 and 35,047,317 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid in capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock at cost (32,832,957 and 32,703,757 shares) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
344.3
0.2
$
$
69.8
100.2
(6.2)
163.8
11,163.6
(3,378.8)
7,784.8
270.7
1.5
272.2
588.4
123.0
265.0
9,541.7
215.8
18.1
5,887.5
5,905.6
286.2
1.5
287.7
1,001.0
112.4
7,522.5
42.2
763.8
2,751.5
(160.6)
(1,377.7)
2,019.2
292.2
0.4
74.7
74.0
(6.5)
142.2
10,484.0
(3,313.3)
7,170.7
335.9
37.5
373.4
584.7
143.7
230.3
8,937.6
147.3
23.6
5,329.0
5,352.6
348.6
33.3
381.9
962.8
135.6
6,980.2
41.9
735.4
2,682.1
(137.5)
(1,364.5)
1,957.4
8,937.6
Total Liabilities and Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
9,541.7
$
See accompanying notes to consolidated financial statements.
60
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions, except per share data)
Year Ended December 31
2020
2019
2021
$
1,140.5
19.1
97.8
1,257.4
$
1,087.5
15.6
106.1
1,209.2
1,088.5
8.2
105.4
1,202.1
Revenues
Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Marine operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses
Maintenance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marine operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Income (Expense)
Net gain on asset dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before Income Taxes and Share of Affiliates’ Earnings . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of affiliates’ earnings, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income from Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from Discontinued Operations, Net of Taxes . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Comprehensive Income, Net of Taxes
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain (loss) on derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Post-retirement benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive (loss) gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
297.1
17.5
364.4
39.2
44.0
198.3
960.5
105.9
(204.0)
(3.7)
195.1
(53.2)
1.2
143.1
—
143.1
(51.7)
1.9
26.7
(23.1)
315.5
19.7
330.5
49.3
35.3
172.0
922.3
41.7
(190.3)
(13.0)
125.3
(37.3)
62.2
150.2
1.1
151.3
24.4
(4.5)
6.2
26.1
Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
120.0
$
177.4
$
Share Data
Basic earnings per share from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Basic earnings per share from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share from consolidated operations . . . . . . . . . . . . . . . . . . . . . . . . . . $
Average number of common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted earnings per share from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share from consolidated operations . . . . . . . . . . . . . . . . . . . . . . . . $
Average number of common shares and common share equivalents . . . . . . . . . . . . . . .
$
$
$
$
4.04
—
4.04
35.4
3.98
—
3.98
36.0
$
$
$
$
4.30
0.03
4.33
35.0
4.24
0.03
4.27
35.4
See accompanying notes to consolidated financial statements.
61
314.4
18.9
321.3
54.4
31.3
180.4
920.7
51.6
(180.5)
(7.3)
145.2
(40.9)
76.5
180.8
30.4
211.2
(10.1)
3.9
7.2
1.0
212.2
5.07
0.85
5.92
35.7
4.97
0.84
5.81
36.4
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Year Ended December 31
2020
2019
2021
Operating Activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income from discontinued operations, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating activities:
$
143.1
—
143.1
$
151.3
1.1
150.2
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net gains on sales of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of affiliates’ earnings, net of dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in working capital items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities of continuing operations . . . . . . . . . .
Investing Activities
Additions to operating assets and facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of new businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio investments and capital additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of assets previously leased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities of continuing operations . . . . . . . . . . . . . . . . .
Financing Activities
Net proceeds from issuances of debt (original maturities longer than 90 days) . . . . . . .
Repayments of debt (original maturities longer than 90 days) . . . . . . . . . . . . . . . . . . . .
Net (decrease) increase in debt with original maturities of 90 days or less . . . . . . . . . . .
Purchases of assets previously leased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by financing activities of continuing operations . . . . . . . . . . . . .
Effect of Exchange Rate Changes on Cash and Cash Equivalents . . . . . . . . . . . . . .
Net cash (used in) provided by operating activities of discontinued operations . . . . . . .
Net cash provided by investing activities of discontinued operations . . . . . . . . . . . . . . .
Net cash provided (used in) financial activities of discontinued operations . . . . . . . . . .
Cash provided by (used in) discontinued operations, net . . . . . . . . . . . . . . . . . . . . . .
Net increase in Cash, Cash Equivalents, and Restricted Cash during the year . . . .
Cash, Cash Equivalents, and Restricted Cash at beginning of year . . . . . . . . . . . . .
378.4
(99.4)
2.4
8.8
17.4
34.2
(1.2)
23.5
507.2
(1,130.1)
(1.4)
(0.4)
(1,131.9)
—
187.1
54.7
(27.6)
(917.7)
1,491.9
(884.0)
(4.1)
(77.2)
(13.1)
(74.3)
23.9
463.1
(1.8)
—
1.1
—
1.1
51.9
292.6
342.8
(39.5)
0.3
6.9
15.6
29.1
(62.2)
(6.4)
436.8
(860.8)
(203.2)
—
(1,064.0)
—
131.1
26.0
2.0
(904.9)
1,586.5
(1,100.0)
6.4
(40.0)
—
(71.0)
(26.3)
355.6
(0.1)
(8.5)
240.9
21.8
254.2
141.6
151.0
Cash, Cash Equivalents, and Restricted Cash at end of year . . . . . . . . . . . . . . . . . . $
344.5
$
292.6 $
211.2
30.4
180.8
332.7
(56.2)
6.6
3.9
12.3
33.8
(49.0)
(39.1)
425.8
(722.8)
—
—
(722.8)
(1.0)
250.3
23.0
2.7
(447.8)
743.0
(410.0)
(94.6)
(11.3)
(150.0)
(69.3)
59.1
66.9
(0.5)
36.8
8.1
(45.0)
(0.1)
44.3
106.7
151.0
See accompanying notes to consolidated financial statements.
62
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In millions)
Common Stock
Balance at beginning of year
. . . . . . . . . . . . . . . . . . . . . . . .
Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury Stock
. . . . . . . . . . . . . . . . . . . . . . . .
Balance at beginning of year
Stock repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Paid In Capital
. . . . . . . . . . . . . . . . . . . . . . . .
Balance at beginning of year
Share-based compensation effects . . . . . . . . . . . . . . . . . . . .
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained Earnings
. . . . . . . . . . . . . . . . . . . . . . . .
Balance at beginning of year
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends declared ($2.00 in 2021, $1.92 in 2020 and
$1.84 in 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative impact of accounting standard adoption . . . . . .
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated Other Comprehensive Loss
. . . . . . . . . . . . . . . . . . . . . . . .
Balance at beginning of year
Other comprehensive (loss) income . . . . . . . . . . . . . . . . . . .
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
Shares
2021
Dollars
2020
Shares
2020
Dollars
2019
Shares
2019
Dollars
$
67.8
0.5
68.3
41.9
0.3
42.2
$
67.5
0.3
67.8
41.8
0.1
41.9
$
67.3
0.2
67.5
41.6
0.2
41.8
(32.7)
(0.1)
(32.8)
(1,364.5)
(13.2)
(1,377.7)
(32.7)
—
(32.7)
(1,364.5)
—
(1,364.5)
(30.7)
(2.0)
(32.7)
(1,214.5)
(150.0)
(1,364.5)
735.4
28.4
763.8
2,682.1
143.1
(73.7)
—
2,751.5
(137.5)
(23.1)
(160.6)
720.1
15.3
735.4
2,601.3
151.3
(70.5)
—
2,682.1
(163.6)
26.1
(137.5)
706.4
13.7
720.1
2,419.2
211.2
(68.5)
39.4
2,601.3
(164.6)
1.0
(163.6)
Total Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . .
$
2,019.2
$
1,957.4
$
1,835.1
See accompanying notes to consolidated financial statements.
63
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Description of Business
As used herein, “GATX,” “we,” “us,” “our,” and similar terms refer to GATX Corporation and its subsidiaries, unless indicated
otherwise.
We lease, operate, manage, and remarket long-lived, widely used assets, primarily in the rail market. We report our financial results
through three primary business segments: Rail North America, Rail International, and Portfolio Management. Historically, we also
reported financial results for American Steamship Company (“ASC”) as a fourth segment.
In the first quarter of 2021, GATX began investing directly in aircraft spare engines through its new entity, GATX Engine Leasing
Ltd. (“GEL”). In 2021, GEL acquired 14 aircraft spare engines for approximately $352 million, including 4 engines for $120 million
from Rolls-Royce & Partners Finance joint ventures (collectively the “RRPF affiliates” or “RRPF”). Financial results for this business
are reported in the Portfolio Management segment.
On December 29, 2020, GATX acquired Trifleet Leasing Holding B.V. (“Trifleet”), one of the largest tank container lessors in the
world. Financial results for this business is reported in the Other segment. See “Note 4. Business Combinations” for additional
information.
On May 14, 2020, we completed the sale of our ASC business, subject to customary post-closing adjustments. As a result, ASC is
now reported as discontinued operations, and financial data for the ASC segment has been segregated and presented as discontinued
operations for all periods presented. See “Note 25. Discontinued Operations” for additional information.
NOTE 2. Accounting Changes
New Accounting Pronouncements Adopted
Standard/Description
Income Taxes
In December 2019, the FASB issued ASU 2019-12,
Income Taxes (Topic 740): Simplifying the
Accounting for Income Taxes, which eliminates
exceptions for intraperiod tax allocation and the
recognition of deferred tax liabilities for outside
basis differences and clarifies the methodology for
calculating income taxes in an interim period.
Effective Date and
Adoption
Considerations
Effect on Financial Statements or Other
Significant Matters
The new guidance is
effective for us in the
first quarter of 2022.
The application of this guidance did not impact our
financial statements or related disclosures.
64
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Effective Date and
Adoption
Considerations
Optional expedients are
available for adoption
from March 12, 2020
through December 31,
2022.
Effect on Financial Statements or Other
Significant Matters
For any contracts that reference LIBOR, we are
currently assessing how this standard may be
applied to specific contract modifications through
December 31, 2022.
The new guidance is
effective for us in the
first quarter of 2022.
We do not expect the new guidance to have a
significant impact on our financial statements or
related disclosures.
New Accounting Pronouncements Not Yet Adopted
Standard/Description
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04,
Reference Rate Reform (Topic 848): Facilitation of
the Effects of Reference Rate Reform on Financial
Reporting, which provides optional practical
expedients and exceptions in the application of
GAAP principles to contracts, hedging
relationships, and other transactions that reference
LIBOR or other reference rates being discontinued
as a result of reference rate reform.
Variable Lease Payments
In July 2021, the FASB issued ASU 2021-05,
Leases (Topic 842) - Lessors - Certain Leases with
Variable Lease Payments, which requires lessors to
classify leases as operating leases if they have
variable lease payments that do not depend on an
index or rate and would have selling losses if they
were classified as finance leases.
NOTE 3. Significant Accounting Policies
Basis of Presentation
We prepared the accompanying consolidated financial statements in accordance with U.S. generally accepted accounting principles
(“GAAP”). Certain prior year amounts have been reclassified to conform to the 2021 presentation.
Consolidation
Our consolidated financial statements include our assets, liabilities, revenues, and expenses, as well as the assets, liabilities,
revenues, and expenses of subsidiaries in which we had a controlling financial interest. We have eliminated intercompany transactions
and balances.
Use of Estimates
Preparing financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts we
report. We regularly evaluate our estimates and judgments based on historical experience and other relevant facts and circumstances.
Actual amounts could differ from our estimates.
Lease Classification
We determine the classification of a lease at its inception. If the provisions of the lease subsequently change, other than by renewal
or extension, we evaluate whether that change would have resulted in a different lease classification had the change been in effect at
inception. If so, the revised agreement is considered a new lease for lease classification purposes. See “Note 6. Leases.” In 2019, we
adopted ASU 2016-02, Leases (“Topic 842”). As provided in the guidance, we elected the package of practical expedients that retains
the classification of existing leases at the time of adoption and does not require re-evaluation of embedded leases or reassessment of
initial direct costs.
Revenue Recognition
Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the
consideration we expect to be entitled to in exchange for those goods and services.
65
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We disaggregate revenue into three categories as presented on our income statement:
Lease Revenue
Lease revenue, which includes operating lease revenue and finance lease revenue, is our primary source of revenue.
Operating Lease Revenue
We lease railcars, aircraft spare engines, and other operating assets under full-service and net operating leases. We price
full-service leases as an integrated service that includes amounts related to maintenance, insurance, and ad valorem taxes. We
do not offer stand-alone maintenance service contracts. Operating lease revenue is within the scope of Topic 842, and we have
elected not to separate non-lease components from the associated lease component for qualifying leases. Operating lease
revenue is recognized on a straight-line basis over the term of the underlying lease. As a result, lease revenue may not be
recognized in the same period as maintenance and other costs, which we expense as incurred. Variable rents are recognized
when applicable contingencies are resolved. Revenue is not recognized if collectability is not reasonably assured. See “Note 6.
Leases.”
Finance Lease Revenue
In certain cases, we lease railcars and other operating assets that, at lease inception, are classified as finance leases. In
accordance with Topic 842, finance lease revenue is recognized using the interest method, which produces a constant yield
over the lease term. Initial unearned income is the amount by which the original lease payment receivable and the estimated
residual value of the leased asset exceeds the original cost or carrying value of the leased asset. See “Note 6. Leases.”
Marine Operating Revenue
We generate marine operating revenue through shipping services completed by our marine vessels. For vessels operating in a
pooling arrangement, we recognize pool revenue based on the right to receive our portion of net distributions reported by the pool,
with net distributions being the net voyage revenue of the pool after deduction of voyage expenses. For vessels operating out of the
pool, we recognize revenue over time as the performance obligation is satisfied, beginning when cargo is loaded through its
delivery and discharge.
Other Revenue
Other revenue is comprised of customer liability repair revenue, termination fees, utilization income, fee income, and other
miscellaneous revenues. Select components of other revenue are within the scope of Topic 606. Revenue attributable to terms
provided in our lease contracts are variable lease components that are recognized when earned, in accordance with Topic 842.
Cash and Cash Equivalents
We classify all highly liquid investments with a maturity of three months or less as cash equivalents.
Restricted Cash
Restricted cash is cash and cash equivalents that are restricted as to withdrawal and use. Our restricted cash primarily relates to cash
received from a specific customer and held to pay for potential repairs.
Finance Lease Receivables
We record a gross lease payment receivable and an estimated residual value, net of unearned income for our finance leases. For
sales-type leases, we may also recognize a gain or loss in the period the lease is recorded. Gross lease payment receivables represent
the present value of the rents we expect to receive through the end of the lease term for a leased asset. Estimated residual values are
our estimates of value of an asset at the end of a finance lease term. The combination of these is considered the net investment in a
lease. Over the lease term, the net investment in these leases is reduced and finance lease income is recognized in our consolidated
statements of operations. We evaluate our net investment in finance leases for impairment based on current conditions and reasonable
and supportable forecasts of future conditions under the current expected credit loss standard that we adopted on January 1, 2020. See
the “Allowance for Losses” section within this Note for more information.
66
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Allowance for Losses
The allowance for losses is our estimate of credit losses associated with receivable balances. Receivables include rent and other
receivables and finance lease receivables.
Our loss reserves for rent and other receivables are based on historical loss experience and judgments about the impact of economic
conditions, the state of the markets we operate in, and collateral values, if applicable. In addition, we may establish specific reserves
for known troubled accounts.
We evaluate reserve estimates for finance lease receivables under ASC 326, on a customer-specific basis, considering each
customer’s particular credit situation, current economic conditions, and expected value of the underlying collateral upon its
repossession, to adjust the allowance when necessary. We also consider the factors we use to evaluate rent and other receivables,
which are outlined above.
We charge amounts against the allowance when we deem them uncollectable. We made no material changes in our estimation
methods or assumptions for the allowance during 2021. We believe that the allowance is adequate to cover losses inherent in our
receivables balances as of December 31, 2021. Since the allowance is based on judgments and estimates, it is possible that actual
losses incurred will differ from the estimate. See “Note 18. Allowance for Losses.”
Operating Assets and Facilities
We record operating assets, facilities, and capitalized improvements at cost. We depreciate operating assets and facilities over their
estimated useful lives to estimated residual values using the straight-line method. We depreciate leasehold improvements over the
shorter of their useful lives or the lease term. Our estimated depreciable lives of operating assets and facilities are as follows:
Railcars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Aircraft spare engines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Locomotives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marine vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tank containers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other equipment
15–45 years
20–25 years
15–25 years
30 years
15–25 years
40–50 years
5–15 years
5–30 years
We review our operating assets and facilities for impairment annually, or if circumstances indicate that the carrying amount of those
assets may not be recoverable. We evaluate the recoverability of assets to be held and used by comparing the carrying amount of the
asset to the undiscounted future net cash flows we expect the asset to generate. If we determine an asset is impaired, we recognize an
impairment loss equal to the amount the carrying amount exceeds the asset’s fair value. We classify assets we plan to sell or otherwise
dispose of as held for sale, provided they meet specified accounting criteria, and we record those assets at the lower of their carrying
amount or fair value less costs to sell. See “Note 10. Asset Impairments and Assets Held for Sale” for further information about asset
impairment losses and assets held for sale.
67
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Leased Assets as a Lessee
We record right-of-use assets for operating leases and finance leases as a lessee and we record the related obligations as liabilities.
We amortize the leased assets over the lease terms. We review our right-of-use assets for impairment annually, or if circumstances
indicate that the carrying amount of those assets may not be recoverable.
Investments in Affiliates
We use the equity method to account for investments in joint ventures and other unconsolidated entities if we have the ability to
exercise significant influence over the financial and operating policies of those investees. Under the equity method, we record our
initial investments in these entities at cost and subsequently adjust the investment for our share of the affiliates’ earnings (losses), and
distributions. We include loans to and from affiliates as part of our investment in the affiliate and include interest on any such loans in
our share of the affiliates’ earnings. We review the carrying amount of our investments in affiliates annually, or whenever
circumstances indicate that the value of these investments may have declined. If we determine an investment is impaired on an other-
than-temporary basis, we record a loss equal to the difference between the fair value of the investment and its carrying amount. See
“Note 7. Investments in Affiliated Companies.”
Variable Interest Entities
We evaluate whether an entity is a variable interest entity based on the sufficiency of the entity’s equity and by determining whether
the equity holders have the characteristics of a controlling financial interest. To determine if we are the primary beneficiary of a
variable interest entity, we assess whether we have the power to direct the activities that most significantly impact the economic
performance of the entity as well as the obligation to absorb losses or the right to receive benefits that may be significant to the entity.
These determinations are both qualitative and quantitative, and they require us to make judgments and assumptions about the entity’s
forecasted financial performance and the volatility inherent in those forecasted results. We evaluate new investments for variable
interest entity determination and regularly review all existing entities for events that may result in an entity becoming a variable
interest entity or us becoming the primary beneficiary of an existing variable interest entity.
Goodwill and Intangible Assets
We recognize goodwill when the consideration paid to acquire a business exceeds the fair value of the net assets acquired. We
assign goodwill to the same reporting unit as the net assets of the acquired business and we assess our goodwill for impairment on an
annual basis in the fourth quarter, or if impairment indicators are present. Goodwill is initially assessed for impairment by performing
a qualitative assessment to determine if it was more likely than not that the fair value of the reporting unit exceeded its carrying value.
If necessary, the fair value of the reporting unit is then compared to its carrying value, including goodwill. If the carrying amount of
the applicable reporting unit exceeds its fair value, we record an impairment loss for the difference. The fair values of our reporting
units are determined using discounted cash flow models. See “Note 17. Goodwill.”
We recognize intangible assets acquired in a business combination at their estimated fair value at the time of the business
combination. Intangible assets consist of customer relationships and trade names and are amortized on a straight-line basis over their
estimated useful lives ranging from 10 years to 25 years. We review intangible assets for potential impairment if circumstances
indicate that the carrying amount of those assets may not be recoverable.
Inventory
Our inventory consists primarily of railcar and locomotive repair components. All inventory balances are stated at lower of cost or
net realizable value. Railcar repair components are valued using the average cost method. Inventory is included in other assets on the
balance sheet.
Income Taxes
We calculate provisions for federal, state, and foreign income taxes on our reported income before income taxes. We base our
calculations of deferred tax assets and liabilities on the differences between the financial statement and tax bases of assets and
liabilities, using enacted rates in effect for the year we expect the differences will reverse. We reflect the cumulative effect of changes
in tax rates from those we previously used to determine deferred tax assets and liabilities in the provision for income taxes in the
period the change is enacted. Provisions for income taxes in any given period can differ from those currently payable or receivable
because certain items of income and expense are recognized in different periods for financial reporting purposes than for income tax
68
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
purposes. We may deduct expenses or defer income attributable to uncertain tax positions for tax purposes, and include those items in
our liability for uncertain tax positions in other liabilities on the balance sheet. See “Note 13. Income Taxes.”
Fair Value Measurements
Fair value is the price that a market participant would receive to sell an asset or pay to transfer a liability in an orderly transaction at
the measurement date. We classify fair value measurements according to the three-level hierarchy defined by GAAP, and those
classifications are based on our judgment about the reliability of the inputs we use in the fair value measurement. Level 1 inputs are
quoted prices available in active markets for identical assets or liabilities. Level 2 inputs are observable, either directly or indirectly,
and may include quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are
observable or can be corroborated by observable market data. For assets or liabilities with a specified contractual term, Level 2 inputs
must be observable for substantially the full term of that asset or liability. Level 3 inputs are unobservable, meaning they are
supported by little or no market activity. Fair value measurements classified as Level 3 typically rely on pricing models and
discounted cash flow methodologies, both of which require significant judgment. See “Note 9. Fair Value Disclosure.”
Derivatives
We use derivatives, such as interest rate swap agreements, treasury rate locks, options, cross currency swaps, and currency
forwards, to hedge our exposure to interest rate and foreign currency exchange rate risk on existing and anticipated transactions. We
formally designate derivatives that meet specific accounting criteria as qualifying hedges at inception. These criteria require us to
have the expectation that the derivative will be highly effective at offsetting changes in the fair value or expected cash flows of the
hedged exposure, both at the inception of the hedging relationship and on an ongoing basis.
We recognize all derivative instruments at fair value and classify them on the balance sheet as either other assets or other liabilities.
We generally base the classification of derivative activity in the statements of comprehensive income and cash flows on the nature of
the hedged item. For derivatives we designate as fair value hedges, we recognize changes in the fair value of both the derivative and
the hedged item in earnings. For derivatives we designate as cash flow hedges, we record the effective portion of the change in the fair
value of the derivative as part of other comprehensive income (loss), and we recognize those changes in earnings in the period the
hedged transaction affects earnings. We recognize any ineffective portion of the change in the fair value of the derivative immediately
in earnings. Although we do not hold or issue derivative financial instruments for purposes other than hedging, we may not designate
certain derivatives as accounting hedges. We recognize changes in the fair value of these derivatives in earnings immediately. We
classify gains and losses on derivatives that are not designated as hedges as other expenses, and we include the related cash flows in
cash flows from operating activities. See “Note 9. Fair Value Disclosure.”
Foreign Currency
We translate the assets and liabilities of our operations that have non-US dollar functional currencies at exchange rates in effect at
year-end. Revenue, expenses, and cash flows are translated monthly using average exchange rates. We defer gains and losses resulting
from foreign currency translation and record those gains and losses as a separate component of accumulated other comprehensive
income (loss). Gains and losses resulting from foreign currency transactions and from the remeasurement of non-functional currency
assets and liabilities are recognized net of related hedges in other expense during the periods in which they occur. Net (losses) gains
recognized were $(0.8) million, $(10.8) million and $1.7 million for 2021, 2020, and 2019.
Environmental Liabilities
We record accruals for environmental remediation costs at applicable sites when they are probable and when we can reasonably
estimate the expected costs. We record adjustments to initial estimates as necessary. Since these accruals are based on estimates,
actual environmental remediation costs may differ. We expense or capitalize environmental remediation costs related to current or
future operations as appropriate. See “Note 23. Legal Proceedings and Other Contingencies.”
Defined Benefit Pension and Other Post-Retirement Plans
Our balance sheet reflects the funded status of our pension and post-retirement plans, which is the difference between the fair value
of the plan assets and the projected benefit obligation. We recognize the aggregate overfunding of any plans in other assets, the
aggregate underfunding of any plans in other liabilities, and the corresponding adjustments for unrecognized actuarial gains (losses)
and prior service cost (credits) in accumulated other comprehensive income (loss). We record the service cost component of net
periodic cost in selling, general, and administrative expense in the statements of comprehensive income and the non-service
components in other expense. See “Note 11. Pension and Other Post-Retirement Benefits.”
69
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Maintenance and Repair Costs
We expense maintenance and repair costs as incurred. We capitalize certain costs incurred in connection with planned major
maintenance activities if those activities improve the asset or extend its useful life. We depreciate those capitalized costs over the
estimated useful life of the improvement. We capitalize required regulatory survey costs for vessels and amortize those costs over the
applicable survey period, which is generally five years.
Operating Lease Expense
We classify leases of certain railcars, maintenance facilities, and other equipment as operating leases. We record the lease expense
associated with these leases on a straight-line basis. We also classify our leases of office facilities and related administrative assets as
operating leases, and we record the associated expense in selling, general and administrative expense. See “Note 6. Leases.”
Share-Based Compensation
We base our measurement of share-based compensation expense on the grant date fair value of an award, and we recognize the
expense over the requisite service period. Forfeitures are recorded when they occur. See “Note 12. Share-Based Compensation.”
Net Gain on Asset Dispositions
Net gain on dispositions includes gains and losses on sales of operating assets and residual sharing income, which we also refer to
as asset remarketing income; non-remarketing disposition gains, primarily from scrapping of railcars; and asset impairment losses.
We recognize disposition gains, including non-remarketing gains, upon completion of the sale or scrapping of operating assets.
Residual sharing income includes fees we receive from the sale of managed assets, and we recognize these fees upon completion of
the underlying transactions.
The following table presents the net gain on asset dispositions for the years ended December 31 (in millions):
Net disposition gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residual sharing income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-remarketing net disposition gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset impairment losses (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
82.4
8.9
17.0
(2.4)
Net Gain on Asset Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
105.9
$
39.4
2.5
0.1
(0.3)
41.7
$
$
58.6
1.9
(2.3)
(6.6)
51.6
2021
2020
2019
(1) See “Note 10. Asset Impairments and Assets Held for Sale” for further information about asset impairment losses.
Interest Expense, net
Interest expense is the interest we accrue on indebtedness and the amortization of debt issuance costs and debt discounts and
premiums. We defer debt issuance costs and debt discounts and premiums and amortize them over the term of the related debt. We
report interest expense net of interest income on bank deposits. Interest income on bank deposits was $0.7 million in 2021,
$1.5 million in 2020, and $3.8 million in 2019.
Other Income (Expense)
We include fair value adjustments on certain financial instruments, gains and/or losses on foreign currency transactions and
remeasurements, legal defense costs and litigation settlements, along with other miscellaneous income and expense items in other
income (expense).
70
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Business Combinations
We account for business combinations using the acquisition method of accounting, which requires assets acquired and liabilities
assumed be recorded at their respective fair values as of the acquisition date. The excess consideration paid over the fair value of the
assets acquired and liabilities assumed represents goodwill. The allocation of the purchase price requires management to make
significant estimates in determining fair values. These estimates can include, but are not limited to, expected future cash flows,
discount rates, and the expected use of the acquired assets. Transaction costs associated with business combinations are expensed
when incurred. See “Note 4. Business Combinations.”
Discontinued Operations
On May 14, 2020, we completed the sale of our ASC business. As a result, ASC is now reported as discontinued operations, and
financial data for the ASC segment has been segregated and presented as discontinued operations for all periods presented.
Accordingly, the results of operations from our ASC business are reported in the accompanying consolidated statements of operations
as “discontinued operations, net of taxes” for the years ended December 31, 2021, 2020, and 2019. There were no related assets and
liabilities classified as assets and liabilities of discontinued operations as of December 31, 2021 and 2020 in the accompanying
balance sheets. In addition, cash flows from our ASC business are reported as cash flows from discontinued operations in the
accompanying statements of cash flows for the years ended December 31, 2021, 2020, and 2019. See “Note 25. Discontinued
Operations” for more information.
NOTE 4. Business Combinations
On December 29, 2020, GATX acquired Trifleet Leasing Holding B.V. (“Trifleet”), one of the largest tank container lessors in the
world, for approximately €165 million ($203.2 million) in cash. In 2021, GATX paid a final €1.1 million ($1.4 million) attributable to
post-closing adjustments. Transaction costs associated with this acquisition were approximately $3.1 million.
Headquartered in the Netherlands with offices worldwide, Trifleet owns and manages a fleet of tank containers leased to a diverse
customer base in the chemical, industrial gas, energy, food, cryogenic and pharmaceutical industries, as well as to tank container
operators.
The final purchase price allocation included $171.1 million to operating assets, $12.9 million to identifiable intangible assets,
$23.2 million to other net liabilities acquired and $43.8 million to goodwill. Intangible assets include Trifleet’s customer relationships
and trade name with an estimated useful life of 25 and 10 years, respectively. Goodwill is primarily related to the value we expect to
achieve from the growth of the business. Goodwill is reported in the Other segment and is not deductible for U.S. tax purposes. The
acquisition was not significant in relation to our financial results and, therefore, pro-forma financial information has not been
presented.
NOTE 5. Supplemental Cash Flow Information
Supplemental Cash Flow Information (in millions)
Interest paid (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid, net
$
$
196.6
10.3
$
189.8
21.4
185.1
11.6
2021
2020
2019
(1) Interest paid consisted of interest on debt obligations, interest rate swaps (net of interest received), and finance leases.
NOTE 6. Leases
GATX as Lessor
We lease railcars, aircraft spare engines, tank containers, and other operating assets under full-service and net operating leases. We
price full-service leases as an integrated service that includes amounts related to maintenance, insurance, and ad valorem taxes. In
accordance with applicable guidance, we do not separate lease and non-lease components when reporting revenue for our full-service
operating leases. In some cases, we lease railcars that, at commencement, are classified as finance leases. For certain operating leases,
revenue is based on equipment usage and is recognized when earned. Typically, our leases do not provide customers with renewal
options or options to purchase the asset. Our lease agreements do not generally have residual value guarantees. We collect
reimbursements from customers for damage to our railcars, as well as additional rental payments for usage above specified levels, as
provided in the lease agreements.
71
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table shows the components of our lease income for the years ended December 31 (in millions):
Operating lease income:
Fixed lease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable lease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating lease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance lease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
1,063.4
70.1
1,133.5
7.0
1,140.5
$
$
$
1,020.9
59.4
1,080.3
7.2
1,087.5
$
$
$
1,013.5
65.2
1,078.7
9.8
1,088.5
2021
2020
2019
In accordance with the terms of our leases with customers, we may earn additional revenue, primarily for customer liability repairs.
These amounts are reported in other revenue in the statements of comprehensive income and were $74.8 million, $88.9 million and
$88.2 million in 2021, 2020 and 2019.
The following table shows the components of our finance leases as of December 31 (in millions):
Total contractual lease payments receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated unguaranteed residual value of leased assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
106.9
20.0
(26.7)
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
100.2
$
77.1
24.6
(27.7)
74.0
2021
2020
The following table shows our future contractual receipts from our noncancelable operating and finance leases as of December 31,
2021 (in millions):
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
968.3
753.3
546.4
330.8
195.9
328.6
36.6
15.5
16.1
12.6
11.6
14.5
Operating
Leases (1)
Finance
Leases
$
Total
1,004.9
768.8
562.5
343.4
207.5
343.1
$
3,123.3
$
106.9
$
3,230.2
(1) The future contractual receipts due under our full-service operating leases include executory costs such as maintenance, car taxes,
and insurance.
GATX as Lessee
We lease assets, including railcars at North America, as well as other assets such as offices, maintenance facilities, and other
general purpose equipment. The railcars are subleased to customers as part of our normal course of operations. Certain leases have
options to purchase the underlying assets early, renew the lease, or purchase the underlying assets at the end of the lease term. The
specific terms of the renewal and purchase options vary, and we did not include these amounts in our future contractual rental
payments. Additionally, the contractual rental payments do not include amounts we are required to pay for licenses, taxes, insurance,
and maintenance. Our lease agreements do not contain any material residual value guarantees. At December 31, 2021, we leased
approximately 5,200 railcars at Rail North America, all of which are accounted for as operating leases.
72
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
To calculate the right-of-use asset and lease liability for our leases, we use the implicit rate if readily determinable or when the
implicit rate is not readily determinable, we use our incremental borrowing rate. Our incremental borrowing rate is the interest rate we
estimate we would have to pay to borrow on a collateralized basis over a similar term of the lease payments. The implicit rate was
measurable for railcars leased at Rail North America. For our other operating leases, we used our incremental borrowing rate. Leases
with an initial term of 12 months or less are not recorded on the balance sheet. Operating lease expense is recognized on a straight-line
basis over the lease term.
The following table shows the components of lease expense for the years ended December 31 (in millions):
Finance lease cost:
Amortization of right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Operating lease cost (1):
Fixed lease cost - operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
0.2
—
40.0
40.2
$
$
0.6
0.2
53.3
54.1
$
$
0.7
0.3
59.7
60.7
2021
2020
2019
(1) Total operating lease cost includes amounts recorded in selling, general and administrative expense. Operating lease cost also
includes short-term leases, which are immaterial.
Operating lease cost includes amounts attributable to sale lease-back financing transactions for railcars we lease to customers. Lease
revenue of $40.7 million for the year ended December 31, 2021 was recognized in connection with these operating leases compared to
$64.3 million for the year ended December 31, 2020 and $70.1 million for the year ended December 31, 2019.
The following table shows the maturities of our lease liabilities as of December 31, 2021 (in millions):
Operating
Leases
Finance
Leases
Total
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total undiscounted lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: amounts representing interest
Total discounted lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
42.4
40.1
38.0
35.2
43.9
135.0
334.6
(48.4)
286.2
The following table shows assets recorded as finance leases as of December 31 (in millions):
Railcars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: allowance for depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases, net of accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
$
1.5
—
—
—
—
—
1.5
—
1.5
$
$
$
43.9
40.1
38.0
35.2
43.9
135.0
336.1
(48.4)
287.7
2021
2020
1.5
—
1.5
$
$
37.8
(0.3)
37.5
73
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table shows the lease terms and discount rates related to leases as of December 31:
Weighted-average remaining lease term (years):
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average discount rate:
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
7.9
—
3.40%
0.22%
9.3
—
3.57%
0.95%
9.6
—
3.66%
2.26%
(1) The weighted-average remaining lease term for outstanding finance leases was less than one year in 2021, 2020 and 2019.
The following table shows other information related to leases for the years ended December 31 (in millions):
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating cash flows for finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing cash flows for finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cash for leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash financing lease transactions (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
$
$
$
40.5
—
77.2
117.7
45.1
$
$
$
58.5
—
40.0
98.5
64.9
$
$
$
66.5
0.3
11.3
78.1
7.8
(1) Non-cash financing lease transactions are a result of the reclassification from operating lease liability to finance lease liability
upon notice of the intent to exercise an early buy-out option.
In 2021, we exercised options to acquire 2,329 railcars previously recorded on the balance sheet as a finance lease for $77.2 million,
compared to the exercise of options to acquire 732 railcars for $40.0 million in 2020 and 157 railcars for $10.5 million in 2019.
NOTE 7. Investments in Affiliated Companies
Investments in affiliated companies is composed of investments in domestic and foreign affiliates, and primarily include entities
that lease aircraft spare engines.
The following table presents our investments in affiliated companies and our ownership percentage in those companies by segment
as of December 31 (in millions):
Rolls-Royce & Partners Finance (1) . . . . . . . . . . . . . . . . . . . . .
RailPulse LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rail North America
Portfolio Management
Investments in Affiliated Companies . . . . . . . . . . . . . . . . . . . .
$
$
588.1
0.3
588.4
$
$
584.7
—
584.7
Segment
2021
2020
Percentage
Ownership
50.0%
17.0%
(1) Combined investment balances of a group of 50% owned domestic and foreign joint ventures with Rolls-Royce plc (collectively,
the “RRPF affiliates”).
74
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table shows our share of affiliates’ earnings by segment for the years ended December 31 (in millions):
Rail North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Management
$
Share of affiliates’ pre-tax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— $
56.5
56.5
(55.3)
$
(0.1)
95.9
95.8
(33.6)
Share of affiliates’ earnings, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1.2
$
62.2
$
—
94.5
94.5
(18.0)
76.5
2021
2020
2019
(1)
Income taxes include deferred income tax adjustments of $39.7 million in 2021 due to an enacted corporate income tax rate
increase in the United Kingdom and $12.3 million in 2020 due to the elimination of a previously announced corporate income tax
rate reduction.
The following table shows our cash investments in and distributions and loan payments from our affiliates by segment for the years
ended December 31 (in millions):
Cash Investments
2020
2021
2019
2021
Cash Distributions
2020
2019
Rail North America . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Portfolio Management
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
0.4
—
0.4
$
$
— $
—
— $
— $
—
— $
— $
0.1
0.1
$
0.1
0.6
0.7
$
$
—
27.6
27.6
Summarized Financial Data of Affiliates
The following table shows the aggregated operating results for the years ended December 31 for the affiliated companies we held at
December 31 (in millions):
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net gains on sales of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
407.4
79.5
5.0
$
491.0
115.7
146.1
469.8
86.4
161.4
2021
2020
2019
The following table shows aggregated summarized balance sheet data for our affiliated companies as of December 31 (in millions):
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
$
$
574.3
4,389.4
4,963.7
492.6
3,329.6
1,141.5
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
4,963.7
$
352.7
4,766.9
5,119.6
311.0
3,674.7
1,133.9
5,119.6
2021
2020
75
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Summarized Financial Data for the RRPF Affiliates
Our affiliate investments include interests in each of the RRPF affiliates, a group of 50% owned domestic and foreign joint ventures
with Rolls-Royce plc (or affiliates thereof, collectively “Rolls-Royce”), a leading manufacturer of commercial aircraft jet engines.
The RRPF affiliates are primarily engaged in two business activities: lease financing of aircraft spare engines to a diverse group of
commercial aircraft operators worldwide and lease financing of aircraft spare engines to Rolls-Royce for use in their engine
maintenance programs. In aggregate, the RRPF affiliates owned 407 aircraft engines at December 31, 2021, of which 199 were on
lease to Rolls-Royce. Aircraft engines are generally depreciated over a useful life of 20 to 25 years to an estimated residual value.
Lease terms vary but typically range from 3 to 12 years. Rolls-Royce manages each of the RRPF affiliates and also performs
substantially all required maintenance activities. Our share of affiliates’ earnings (after-tax) from the RRPF affiliates was $1.2 million
in 2021, $62.0 million in 2020, and $76.5 million in 2019. Financial results in 2021 and 2020 included $39.7 million of deferred tax
expense due to an enacted corporate income tax rate increase in the United Kingdom in 2021 and $12.3 million of deferred tax
expense due to the elimination of a previously announced corporate income tax rate reduction in the United Kingdom in 2020. In
2020, financial results included a transaction involving the refinancing and sale of a group of aircraft spare engines at the RRPF
affiliates. In this transaction, the RRPF affiliates sold 21 aircraft spare engines for total proceeds of $233.0 million in 2020. GATX’s
50% share of the resulting pre-tax net gains was $35.3 million.
We derived the following financial information from the combined financial statements of the RRPF affiliates.
The following table shows condensed income statements of the RRPF affiliates for the years ending December 31 (in millions):
2021
2020
2019
Lease revenue from third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease revenue from Rolls-Royce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, including net gains on sales of assets . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
195.5
211.9
(238.3)
(96.7)
(38.5)
79.5
113.4
(107.4)
$
257.6
233.4
(248.7)
(116.0)
(50.3)
115.7
191.7
(45.6)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6.0
$
146.1
$
213.3
256.7
(223.9)
(126.4)
(16.5)
86.4
189.6
(27.9)
161.7
(1) Represents income taxes directly attributable to the RRPF affiliates in the United Kingdom. Certain of the RRPF affiliates are
disregarded entities for income tax purposes and, as a result, income taxes are incurred at the shareholder level.
The following table shows the condensed balance sheets of the RRPF affiliates as of December 31 (in millions):
2021
2020
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent assets, including operating assets, net of accumulated depreciation of $1,415.5 and $1,283.6 (a) . . .
$
573.5
4,389.4
$
352.7
4,766.9
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,962.9
$ 5,119.6
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt:
$
130.9
$
110.4
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current
Noncurrent, net of adjustments for hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
361.8
2,845.1
484.4
1,140.7
200.6
3,243.6
431.1
1,133.9
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,962.9
$ 5,119.6
(a) All operating assets were pledged as collateral for long-term debt obligations.
76
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table shows contractual future lease receipts from noncancelable leases of the RRPF affiliates as of December 31,
2021 (in millions):
Rolls-Royce
Third
Parties
Total
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
214.3 $
191.7
183.9
162.2
137.5
122.5
1,012.1 $
185.6 $
166.3
153.1
138.8
125.3
393.6
1,162.7 $
399.9
358.0
337.0
301.0
262.8
516.1
2,174.8
The following table shows the scheduled principal payments of debt obligations of the RRPF affiliates as of December 31, 2021 (in
millions):
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
364.2
399.6
164.1
210.6
465.6
1,529.9
Total debt principal (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
3,134.0
(1) All debt obligations are nonrecourse to the shareholders.
77
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 8. Debt
Debt Obligations
The following table shows the outstanding balances of our debt obligations and the applicable interest rates as of December 31 ($ in
millions):
Date
of Issue
Final
Maturity
Interest
Rate
2021
2020
Recourse Fixed Rate Debt
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total recourse fixed rate debt . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recourse Floating Rate Debt
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
06/11/12
12/15/20
03/19/13
11/05/18
12/22/16
11/05/19
03/20/20
02/06/15
08/03/20
09/13/16
10/27/21
11/04/19
02/09/17
11/02/17
10/27/21
05/07/18
01/31/19
05/12/20
02/03/21
10/27/21
03/04/14
02/06/15
02/03/21
08/09/21
05/27/11
09/20/11
05/16/16
06/15/22
12/31/22
03/30/23
02/15/24
05/23/24
11/05/24
03/20/25
03/30/25
08/03/25
09/15/26
10/27/26
11/04/26
03/30/27
03/15/28
10/27/28
11/07/28
04/01/29
06/30/30
06/01/31
10/27/31
03/15/44
03/30/45
06/01/51
06/01/51
06/01/21
06/01/21
05/30/66
4.75% $
0.70%
3.90%
4.35%
0.85%
0.96%
1.00%
3.25%
1.13%
3.25%
0.90%
1.07%
3.85%
3.50%
1.17%
4.55%
4.70%
4.00%
1.90%
1.56%
5.20%
4.50%
3.10%
3.10%
4.85%
4.85%
5.63%
250.0 $
113.7
250.0
300.0
119.4
113.7
113.7
300.0
113.7
350.0
26.1
85.3
300.0
300.0
59.1
300.0
500.0
500.0
400.0
85.3
300.0
250.0
300.0
250.0
—
—
—
250.0
122.1
250.0
300.0
128.3
122.2
122.2
300.0
122.1
350.0
—
91.6
300.0
300.0
—
300.0
500.0
500.0
—
—
300.0
250.0
—
—
250.0
50.0
150.0
$ 5,680.0 $ 5,058.5
01/15/21
11/06/17
12/14/23
11/05/21
1.00% $
2.61%
250.0 $
—
—
300.0
300.0
Total recourse floating rate debt
. . . . . . . . . . . . . . . . . . . . . . . .
$
250.0
$
Total debt principal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unamortized debt discount and debt issuance costs . . . . . . . . . . .
Debt adjustment for fair value hedges . . . . . . . . . . . . . . . . . . . . . .
Total Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Denominated in euros, but presented in U.S. dollars in this table.
78
$ 5,930.0 $ 5,358.5
(35.1)
5.6
(43.6)
1.1
$ 5,887.5 $ 5,329.0
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table shows the scheduled principal payments of our debt obligations as of December 31, 2021 (in millions):
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter
Total debt principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
363.7
500.0
533.1
527.4
461.4
3,544.4
5,930.0
Commercial Paper and Borrowings Under Bank Credit Facilities ($ in millions)
December 31
2021
2020
Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
18.1
0.84%
23.6
0.85%
Credit Lines and Facilities
During 2021, we entered into a new $600 million, 5-year unsecured revolving credit facility in the U.S., expiring in May 2026. The
new credit facility contains two extension options. This replaced our prior $600 million, 5-year unsecured revolving credit facility,
which was terminated upon our entry into the new credit facility. As of December 31, 2021, the full $600 million was available under
this facility. Additionally, we entered into a new $250 million 3-year unsecured revolving credit facility in the U.S., expiring in May
2024. This facility also has two one-year extension options. This replaced our prior $250 million 3-year unsecured revolving credit
facility, which was terminated upon our entry into the new credit facility. As of December 31, 2021, the full $250 million was
available under this facility.
In addition, our European subsidiaries have unsecured credit facilities with an aggregate limit of €35.0 million. As of December 31,
2021, €19.1 million was available under these credit facilities.
Annual commitment fees for GATX’s credit facilities were $1.2 million for 2021, $1.2 million for 2020, and $1.6 million for 2019.
Delayed Draw Term Loan
On December 14, 2020, we executed a delayed draw term loan agreement (“Term Loan”) which provided for a 3-year term loan in
the aggregate principal amount of up to $500 million. Advances were allowed from December 14, 2020 through April 17, 2021
pursuant to the terms of the agreement and any amounts borrowed and repaid could not be re-borrowed. The amounts borrowed under
the Term Loan agreement are required to be repaid no later than December 14, 2023. In 2021, we drew $384 million on the Term
Loan, terminated the remaining unused commitment of $116 million, and subsequently repaid $134 million of the outstanding
amount. As of December 31, 2021, $250 million was drawn on the Term Loan.
Restrictive Covenants
Our $600 million revolving credit facility contains various restrictive covenants, including requirements to maintain a fixed charge
coverage ratio and an asset coverage test. Our ratio of earnings to fixed charges, as defined in this facility, was 2.2 for the period
ended December 31, 2021, which is in excess of the minimum covenant ratio of 1.2. At December 31, 2021, we were in compliance
with all covenants and conditions of the facility. Some of our bank term loans have the same financial covenants as the facility.
The indentures for our public debt also contain various restrictive covenants, including limitation on liens provisions that restrict the
amount of additional secured indebtedness that we may incur. As of December 31, 2021, this limit was $1,810.8 million. Additionally,
certain exceptions to the covenants permit us to incur an unlimited amount of purchase money and nonrecourse indebtedness. At
December 31, 2021, we were in compliance with all covenants and conditions of the indentures.
At December 31, 2021, our European rail subsidiaries (“GATX Rail Europe” or “GRE”) had outstanding term loans, public debt,
and private placement debt balances totaling €730.0 million. The loans are guaranteed by GATX Corporation and are subject to
similar restrictive covenants as the revolving credit facility noted above.
79
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We do not anticipate any covenant violations nor do we expect that any of these covenants will restrict our operations or our ability
to obtain additional financing. At December 31, 2021, we were in compliance with all covenants and conditions of all of our credit
agreements.
Shelf Registration Statement
During 2019, we filed an automatic shelf registration statement that enables us to issue debt securities and pass-through certificates.
The registration statement is effective for three years and does not limit the amount of debt securities and pass-through certificates we
can issue.
NOTE 9. Fair Value Disclosure
The assets and liabilities that GATX records at fair value on a recurring basis consisted entirely of derivatives at December 31, 2021
and December 31, 2020.
In addition, we review long-lived assets, such as operating assets and facilities, investments in affiliates, and goodwill, for
impairment whenever circumstances indicate that the carrying amount of these assets may not be recoverable or when assets may be
classified as held for sale. We determine the fair value of the respective assets using Level 3 inputs, including estimates of discounted
future cash flows (including net proceeds from sale), independent appraisals, and market comparables, as applicable. Certain assets
were subject to non-recurring Level 3 fair value measurements during 2021 and 2020 and continue to be held and used at
December 31, 2021 and 2020. The fair value of such assets at the time of their measurement was $2.7 million in 2021 and
$1.7 million in 2020 and included railcars and locomotives. See “Note 10. Asset Impairments and Assets Held for Sale” for further
information.
Derivative Instruments
Fair Value Hedges
We use interest rate swaps to manage the fixed-to-floating rate mix of our debt obligations by converting a portion of our fixed rate
debt to floating rate debt. For fair value hedges, we recognize changes in fair value of both the derivative and the hedged item as
interest expense. We had five instruments outstanding with an aggregate notional amount of $300.0 million as of December 31, 2021
with maturities ranging from 2022 to 2027 and five instruments outstanding with an aggregate notional amount of $300.0 million as
of December 31, 2020 with maturities ranging from 2021 to 2022.
Cash Flow Hedges
We use Treasury rate locks and swap rate locks to hedge our exposure to interest rate risk on anticipated transactions. We also use
currency swaps, forwards, and put/call options to hedge our exposure to fluctuations in the exchange rates of foreign currencies for
certain loans and operating expenses denominated in non-functional currencies. We had one instrument outstanding with an aggregate
notional amount of $101.7 million as of December 31, 2021 that matures in 2022 and one instrument outstanding with an aggregate
notional amount of $105.7 million as of December 31, 2020 that matured in 2021. Within the next 12 months, we expect to reclassify
$1.7 million ($1.2 million after-tax) of net losses on previously terminated derivatives from accumulated other comprehensive loss to
interest expense or operating lease expense, as applicable. We reclassify these amounts when interest and operating lease expense on
the related hedged transactions affect earnings.
Non-Designated Derivatives
We do not hold derivative financial instruments for purposes other than hedging, although certain of our derivatives are not
designated as accounting hedges. We recognize changes in the fair value of these derivatives in other (income) expense immediately.
Certain of our derivative instruments contain credit risk provisions that could require us to make immediate payment on net liability
positions in the event that we default on certain outstanding debt obligations. The aggregate fair value of our derivative instruments
with credit risk related contingent features that were in a liability position as of December 31, 2021 was $0.3 million. We are not
required to post any collateral on our derivative instruments and do not expect the credit risk provisions to be triggered.
In the event that a counterparty fails to meet the terms of an interest rate swap agreement or a foreign exchange contract, our
exposure is limited to the fair value of the swap, if in our favor. We manage the credit risk of counterparties by transacting with
80
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
institutions that we consider financially sound and by avoiding concentrations of risk with a single counterparty. We believe that the
risk of non-performance by any of our counterparties is remote.
The following tables show our derivative assets and liabilities that are measured at fair value (in millions):
Significant Observable Inputs
(Level 2)
Fair Value
December 31,
2021
Fair Value
December 31,
2020
Balance Sheet
Location
Derivative Assets
Interest rate contracts (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets
Foreign exchange contracts (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets
Foreign exchange contracts (2)
Total derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Derivative Liabilities
Interest rate contracts (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities $
Total derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1.4 $
3.6
3.9
8.9 $
0.3 $
0.3 $
5.6
0.4
0.4
6.4
—
—
(1) Designated as hedges.
(2) Not designated as hedges.
We value derivatives using a pricing model with inputs (such as yield curves and foreign currency rates) that are observable in the
market or that can be derived principally from observable market data. As of December 31, 2021 and December 31, 2020, all
derivatives were classified as Level 2 in the fair value hierarchy. There were no derivatives classified as Level 1 or Level 3.
The following table shows the amounts recorded on the balance sheet related to cumulative basis adjustments for fair value hedges
as of December 31 (in millions):
Carrying Amount of the
Hedged Assets/(Liabilities)
Cumulative Amount of Fair
Value Hedging Adjustment
Included in the Carrying
Amount of the Hedged Assets/
(Liabilities)
Line Item in the Balance Sheet in Which the Hedged
Item is Included
2021
2020
2021
2020
Recourse debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(300.4) $
(303.6) $
1.1 $
5.6
The following tables show the impacts of our derivative instruments on our statements of comprehensive income for the years
ended December 31 (in millions):
Derivative Designation
Derivatives in cash flow hedging relationships:
Amount of Loss (Gain)
Recognized in Other
Comprehensive Income
2019
2020
2021
Location of Loss (Gain)
Reclassified from
Accumulated Other
Comprehensive Income
into Income
Amount of Loss (Gain)
Reclassified from
Accumulated Other
Comprehensive Income into
Income
2020
2019
2021
Interest rate contracts . . . . . . . . . . . . . . . . . . . $
— $
(0.5) $
0.5 Interest expense . . . . . . . . . $
1.9 $
2.1 $
2.5
Foreign exchange contracts . . . . . . . . . . . . . . .
(11.9)
20.1
(19.5) Other (income) expense . . .
(12.0)
12.8
(14.3)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(11.9) $
19.6 $
(19.0) Total
. . . . . . . . . . . . . . . . . $
(10.1) $
14.9 $
(11.8)
81
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following tables show the impact of our fair value and cash flow hedge accounting relationships, as well as the impact of our
non-designated derivatives, on the statements of comprehensive income for the years ended December 31 (in millions):
Location and Amount of Gain
(Loss) Recognized in Income on
Fair Value and Cash Flow
Hedging Relationships
Interest
(expense), net
Other income
(expense)
2021
Total amounts of income and expense presented in the statements of comprehensive income in
which the effects of fair value or cash flow hedges are recorded . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Gain (loss) on fair value hedging relationships
Interest rate contracts:
Hedged items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives designated as hedging instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on cash flow hedging relationships
Interest rate contracts:
Amount of gain (loss) reclassified from accumulated other comprehensive income into
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts:
Amount of gain (loss) reclassified from accumulated other comprehensive income into
income (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on non-designated derivative contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(204.0) $
(3.7)
4.5
(4.5)
(1.9)
—
—
—
—
—
12.0
3.1
Location and Amount of Gain
(Loss) Recognized in Income on
Fair Value and Cash Flow
Hedging Relationships
Interest
(expense), net
Other income
(expense)
2020
Total amounts of income and expense presented in the statements of comprehensive income in
which the effects of fair value or cash flow hedges are recorded . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Gain (loss) on fair value hedging relationships
Interest rate contracts:
Hedged items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives designated as hedging instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on cash flow hedging relationships
Interest rate contracts:
Amount of gain (loss) reclassified from accumulated other comprehensive income into
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts:
Amount of gain (loss) reclassified from accumulated other comprehensive income into
income (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on non-designated derivative contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(190.3) $
(13.0)
(4.2)
4.2
(2.1)
—
—
—
—
—
(12.8)
6.2
82
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Location and Amount of Gain
(Loss) Recognized in Income on
Fair Value and Cash Flow
Hedging Relationships
Interest
(expense), net
Other income
(expense)
2019
Total amounts of income and expense presented in the statements of comprehensive income in
which the effects of fair value or cash flow hedges are recorded . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Gain (loss) on fair value hedging relationships
Interest rate contracts:
Hedged items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives designated as hedging instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on cash flow hedging relationships
Interest rate contracts:
Amount of gain (loss) reclassified from accumulated other comprehensive income into
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts:
Amount of gain (loss) reclassified from accumulated other comprehensive income into
income (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on non-designated derivative contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(180.5) $
(7.3)
(9.0)
9.0
(2.5)
—
—
—
—
—
14.3
(1.7)
(1) These amounts are substantially offset by foreign currency remeasurement adjustments on related hedged instruments, also
recognized in other income (expense).
Other Financial Instruments
Except for derivatives, as disclosed above, GATX has no other assets and liabilities measured at fair value on a recurring basis. The
carrying amounts of cash and cash equivalents, restricted cash, rent and other receivables, accounts payable, and commercial paper
and borrowings under bank credit facilities with maturities under one year approximate fair value due to the short maturity of those
instruments. We estimate the fair values of fixed and floating rate debt using discounted cash flow analyses that are based on interest
rates currently offered for loans with similar terms to borrowers of similar credit quality. The inputs we use to estimate each of these
values are classified in Level 2 of the fair value hierarchy because they are directly or indirectly observable inputs.
The following table shows the carrying amounts and fair values of our other financial instruments as of December 31 (in millions):
Liabilities
Recourse fixed rate debt . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recourse floating rate debt . . . . . . . . . . . . . . . . . . . . . . . . .
$
5,666.1
250.0
$
6,040.2
250.0
$
5,056.3
299.9
$
5,696.9
300.4
2021
Carrying
Amount
2021
Fair
Value
2020
Carrying
Amount
2020
Fair
Value
83
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10. Asset Impairments and Assets Held for Sale
We review our operating assets annually, or whenever indicators of impairment may be present. We considered the impact of
COVID-19, and it did not have a material impact on our impairment results. The following table summarizes the components of asset
impairments for the years ended December 31 (in millions):
Attributable to Consolidated Assets
Rail North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Portfolio Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2.4 $
—
2.4 $
0.3 $
—
0.3
$
0.4
6.2
6.6
2021
2020
2019
Impairment losses recorded at Rail North America were primarily attributable to railcars and locomotives with declines in value due
to excessive damage or functional obsolescence. Impairment losses recorded at Portfolio Management related to certain offshore
marine supply vessels.
In the consolidated statements of comprehensive income, impairment losses related to consolidated assets were included in net gain
on asset dispositions.
As of December 31, 2021 and December 31, 2020, assets held for sale were and $3.8 million and $4.8 million, all of which were at
Rail North America. All assets held for sale at December 31, 2021, are expected to be sold in 2022.
NOTE 11. Pension and Other Post-Retirement Benefits
We maintain both funded and unfunded noncontributory defined benefit pension plans covering our domestic employees and the
employees of our subsidiaries. We also have a funded noncontributory defined benefit pension plan related to a former business in the
United Kingdom that has no active employees. The plans base benefits payable on years of service and/or final average salary. We
base our funding policies for the pension plans on actuarially determined cost methods allowable under IRS regulations and statutory
requirements in the UK.
In addition to the pension plans, we have other post-retirement plans that provide health care, life insurance, and other benefits for
certain retired domestic employees who meet established criteria. Most domestic employees that retire with immediate benefits under
our pension plan are eligible for health care and life insurance benefits. The other post-retirement plans are either contributory or
noncontributory, depending on various factors.
Certain lump sum distributions paid to retirees triggered settlement accounting, resulting in the recognition of $2.1 million of
expense in 2021.
84
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We use a December 31 measurement date for all of our plans. The following tables show pension obligations, plan assets, and other
post-retirement obligations as of December 31 (in millions):
2021
Pension
Benefits
2020
Pension
Benefits
2021 Retiree
Health
and Life
2020 Retiree
Health
and Life
Change in Benefit Obligation
Benefit obligation at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost
Interest cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Change in Fair Value of Plan Assets
Plan assets at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
508.6 $
8.7
8.1
(3.1)
(39.9)
(0.5)
481.9 $
465.5
34.3
(0.5)
2.7
(39.9)
475.4 $
8.1
12.3
45.2
(33.4)
1.0
508.6 $
432.7
61.4
1.2
3.6
(33.4)
22.9 $
0.2
0.3
(2.0)
(1.5)
—
19.9 $
—
—
—
1.5
(1.5)
Plan assets at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
462.1 $
465.5 $
— $
24.6
0.2
0.5
(0.2)
(2.2)
—
22.9
—
—
—
2.2
(2.2)
—
Funded Status at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(19.8) $
(43.1) $
(19.9) $
(22.9)
Amount Recognized
Other liabilities and other assets (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accumulated other comprehensive loss (income):
Net actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss (income) . . . . . . . . . . . . . . . . . . . . .
Total recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
After-tax amount recognized in accumulated other comprehensive loss (income) . . . $
(19.8) $
(43.1) $
(19.9) $
(22.9)
75.8
—
75.8
56.0 $
56.7 $
109.9
—
109.9
66.8 $
82.2 $
(4.8)
(0.8)
(5.6)
(25.5) $
(4.2) $
(3.0)
(1.0)
(4.0)
(26.9)
(3.0)
The aggregate accumulated benefit obligation for the defined benefit pension plans was $458.1 million at December 31, 2021 and
$481.6 million at December 31, 2020.
The following table shows our pension plans that have a projected benefit obligation in excess of plan assets as of December 31 (in
millions):
Projected benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
48.5
—
380.7
321.6
The following table shows our pension plans that have an accumulated benefit obligation in excess of plan assets as of December 31
(in millions):
Accumulated benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
42.1
—
41.7
—
2021
2020
2021
2020
85
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table shows the components of net periodic cost (benefit) for the years ended December 31 (in millions):
2021
Pension
Benefits
2020
Pension
Benefits
2019
Pension
Benefits
2021
Retiree
Health and
Life
2020
Retiree
Health and
Life
2019
Retiree
Health and
Life
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . .
Settlement accounting adjustment
. . . . . . . . . . . . . . . . . .
Amortization of:
Unrecognized prior service credit . . . . . . . . . . . . . . . . .
Unrecognized net actuarial loss (gain) . . . . . . . . . . . . .
Net periodic cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8.7
8.1
(18.6)
2.1
—
13.3
13.6
$
$
8.1
12.3
(20.4)
—
—
12.7
12.7
$
$
$
6.5
15.2
(22.0)
—
—
7.9
7.6
$
0.2
0.3
—
—
(0.2)
(0.3)
$
0.2
0.5
—
—
(0.2)
(0.4)
$
— $
0.1
$
0.2
0.9
—
—
(0.2)
(0.1)
0.8
The service cost component of net periodic cost is recorded in selling, general and administrative expense in the statements of
comprehensive income, and the non-service components are recorded in other expense.
We amortize the unrecognized prior service credit using a straight-line method over the average remaining service period of the
employees we expect to receive benefits under the plan. We amortize the unrecognized net actuarial loss (gain), which is subject to
certain averaging conventions, over the average remaining service period of active employees.
86
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We use the following assumptions to measure the benefit obligation, compute the expected long-term return on assets, and measure
the periodic cost for our defined benefit pension plans and other post-retirement benefit plans for the years ended December 31:
2021
2020
2.81%
2.42%
1.80% - 2.74% 1.19% - 2.35%
2.73%
3.09%
3.00%
n/a
3.03%
3.09%
3.00%
n/a
2.41%
2.74%
5.20%
4.30%
3.00%
n/a
1.90%
3.30%
1.20%
2.70%
2.90%
2.44%
2.85%
n/a
1.91%
2.45%
n/a
3.17%
3.35%
5.60%
5.30%
3.00%
n/a
1.20%
2.90%
1.90%
3.60%
3.00%
1.93%
2.46%
n/a
2.85%
3.19%
n/a
Domestic defined benefit pension plans
Benefit Obligation at December 31:
Discount rate — salaried funded plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount rate — salaried unfunded plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount rate — hourly funded plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash balance interest crediting rate — salaried funded plan . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increases — salaried funded and unfunded plans . . . . . . . . . . . . . . . . .
Rate of compensation increases — hourly funded plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Periodic Cost (Benefit) for the years ended December 31:
Discount rate — salaried funded and unfunded plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount rate — hourly funded plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets — salaried funded plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets — hourly funded plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increases — salaried funded and unfunded plans . . . . . . . . . . . . . . . . .
Rate of compensation increases — hourly funded plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign defined benefit pension plan
Benefit Obligation at December 31:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of pension-in-payment increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Periodic Cost (Benefit) for the years ended December 31:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of pension-in-payment increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other post-retirement benefit plans
Benefit Obligation at December 31:
Discount rate - combined health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount rate - combined life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Periodic Cost (Benefit) for the years ended December 31:
Discount rate - combined health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount rate - combined life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We calculate the present value of expected future pension and post-retirement cash flows as of the measurement date using a
discount rate. We base the discount rate on yields for high-quality, long-term bonds with durations similar to that of our projected
benefit obligation. We base the expected return on our plan assets on current and expected asset allocations, as well as historical and
expected returns on various categories of plan assets. We routinely review our historical returns along with current market conditions
to ensure our expected return assumption is reasonable and appropriate.
Assumed Health Care Cost Trend Rates at December 31:
Health care cost trend assumed for next year
Medical claims - pre age 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Medical claims - post age 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prescription drugs claims - pre age 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prescription drugs claims - post age 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Post age 65 Medicare Advantage Part D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate to which the cost trend is expected to decline (the ultimate trend rate)
Medical claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prescription drugs claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year that rate reaches the ultimate trend rate
Medical claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prescription drugs claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
6.20%
5.46%
8.04%
8.04%
15.95%
4.50%
4.50%
2029
2029
6.44%
5.63%
8.78%
8.63%
n/a
4.50%
4.50%
2028
2028
Our investment policies require that asset allocations of domestic and foreign funded pension plans be maintained at certain targets.
The following table shows our weighted-average asset allocations of our domestic funded pension plans at December 31, 2021 and
2020, and current target asset allocation for 2021, by asset category:
Asset Category
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset Category
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan Assets for Salaried
Employees at
December 31
Target
2021
2020
40.9%
56.0%
3.1%
—%
41.9%
53.5%
2.2%
2.4%
54.6%
41.4%
2.9%
1.1%
100.0%
100.0%
100.0%
Plan Assets for Hourly
Employees at
December 31
Target
2021
2020
19.1%
79.0%
1.9%
—%
19.7%
77.5%
1.5%
1.3%
33.7%
62.8%
2.5%
1.0%
100.0%
100.0%
100.0%
88
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table shows the weighted-average asset allocations of our foreign funded pension plan at December 31, 2021 and
2020, and current target asset allocation for 2021, by asset category:
Asset Category
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan Assets at
December 31
2020
2021
Target
—%
—% 30.7%
100.0% 100.0% 69.3%
100.0% 100.0% 100.0%
The following table sets forth the fair value of our pension plan assets as of December 31 (in millions):
Assets measured at net asset value (1):
Short-term investment collective trust fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Common stock collective trust funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed income collective trust funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate collective trust funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1 $
154.6
289.8
8.6
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
462.1 $
4.6
223.0
226.0
11.9
465.5
2021
2020
(1) In accordance with the relevant accounting standards, investments measured at fair value using the net asset value per share (or its
equivalent) practical expedient are not recorded in any specific category of the fair value hierarchy.
The following is a description of the valuation techniques and inputs used as of December 31, 2021 and 2020.
Short-term investment collective trust fund
We value the short-term investment collective trust fund based on the closing net asset values (“NAV”) quoted by the funds. The
short-term investment collective trust fund is a highly liquid investment in obligations of the U.S. Government, or its agencies or
instrumentalities, and the related money market instruments. The short-term investment fund has no unfunded commitments,
restrictions on redemption frequency, or advance notice periods required for redemption. The fund seeks to provide safety of
principal, daily liquidity, and a competitive yield over the long term.
Common stock collective trust funds and fixed income collective trust funds
We value common stock collective trust funds and fixed income collective trust funds based on the closing NAV prices quoted by
the funds. None of the collective trust funds have unfunded commitments, restrictions on redemption frequency, or advance notice
periods required for redemption. The investment objective of each of the common stock funds is long-term total return through capital
appreciation and current income. The fixed income funds are each designed to deliver safety and stability by preserving principal and
accumulated earnings. The fixed income fund seeks to achieve, over an extended period of time, total returns comparable or superior
to broad measures of the long-term domestic investment grade credit bond market.
Real estate collective trust funds
We value real estate collective trust funds based on the NAV provided by the funds’ administrators. A lack of liquidity in the funds
may limit or delay redemptions. The investment objective of the real estate funds, which are diversified by location and property type,
is long-term return through property appreciation, current income, and timely sales.
The primary investing objective of the pension plans is to provide benefits to plan participants and their beneficiaries. To achieve
this goal, we invest in a diversified portfolio of equities, debt, and real estate investments to maximize return and to keep long-term
investment risk at a reasonable level. Equity investments are diversified across U.S. and non-U.S. stocks, growth and value stocks,
and small cap and large cap stocks. Debt securities are predominately investments in long-term, investment-grade corporate bonds.
Real estate investments include investments in funds that are diversified by location and property type.
89
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On a timely basis, but not less than twice a year, we formally review pension plan investments to ensure we adhere to investment
guidelines and our stated investment approach. Our review also evaluates the reasonableness of our investment decisions and risk
positions. We compare our investments’ performance to indices and peers to determine if investment performance has been
acceptable.
In 2022, we expect to contribute approximately $18.5 million to our pension and other post-retirement benefit plans. Additional
contributions to the domestic funded pension plans will depend on investment returns on plan assets and actuarial experience.
The following table shows benefit payments, which reflect expected future service (in millions):
Funded
Plans
Unfunded
Plans
Retiree
Health and
Life
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years 2027-2031 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
28.3
28.2
29.6
28.7
28.0
135.2
278.0
$
$
16.5
2.8
2.5
2.5
2.4
12.8
39.5
$
$
2.0
1.9
1.8
1.6
1.5
5.9
14.7
In addition to our defined benefit plans, we have two 401(k) retirement savings plans available to substantially all salaried
employees and certain other employee groups. We may contribute to the plans as specified by their respective terms and as our Board
of Directors determines. Contributions to our 401(k) retirement plans were $2.3 million for 2021, $2.3 million for 2020, and
$2.3 million for 2019.
NOTE 12. Share-Based Compensation
We provide equity awards to our employees under the GATX Corporation 2012 Incentive Award Plan, including grants of
non-qualified stock options, stock appreciation rights, restricted stock units, performance shares, and phantom stock awards. As of
December 31, 2021, 5.7 million shares were authorized under the 2012 Plan and 2.5 million shares were available for future issuance.
We recognize compensation expense for our equity awards in selling, general and administrative expenses over the applicable service
period of each award. Share-based compensation expense was $17.4 million for 2021, $15.9 million for 2020, and $19.3 million for
2019, and the related tax benefits were $4.4 million for 2021, $4.0 million for 2020, and $4.8 million for 2019.
Stock Options and Stock Appreciation Rights
Stock options and stock appreciation rights entitle the holder to purchase shares of common stock for periods up to seven years
from the grant date. Stock appreciation rights entitle the holder to receive the difference between the market price of our common
stock at the time of exercise and the exercise price, either in shares of common stock, cash, or a combination thereof, at our discretion.
Stock options entitle the holder to purchase shares of our common stock at a specified exercise price. The dividends that accrue on all
stock options and stock appreciation rights are paid upon vesting and continue to be paid until the stock options or stock appreciation
rights are exercised, canceled, or expire. The exercise price for stock options and stock appreciation rights is equal to the average of
the high and low trading prices of our common stock on the date of grant. We recognize compensation expense on a straight-line basis
over the vesting period of the award, which is generally three years.
The estimated fair value of a stock option or stock appreciation right is the sum of the value we derive using the Black-Scholes
option pricing model and the present value of dividends we expect to pay over the expected term of the award. The Black-Scholes
valuation incorporates various assumptions, including expected term, expected volatility, and risk free interest rates. We base the
expected term on historical exercise patterns and post-vesting terminations, and we base the expected volatility on the historical
volatility of our stock price over a period equal to the expected term. We use risk-free interest rates that are based on the implied yield
on recently-issued U.S. Treasury zero-coupon bonds with a term comparable to the expected term. No stock appreciation rights were
issued during 2021, 2020, and 2019.
90
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table shows the weighted-average fair value for our stock options and the assumptions we used to estimate fair value:
Weighted-average estimated fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quarterly dividend rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected term of stock options, in years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected stock price volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Present value of dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
$
29.56
0.50
4.3
0.3%
2.2%
34.4%
8.61 $
$
$
22.50
0.48
4.2
1.3%
2.5%
28.5%
7.89 $
22.23
0.46
4.2
2.5%
2.6%
28.9%
7.29
2021
2020
2019
The following table shows information about outstanding stock options and stock appreciation rights for the year ended
December 31, 2021:
Outstanding at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested and exercisable at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of
Stock Options
and Stock
Appreciation
Rights
(in thousands)
Weighted-
Average
Exercise Price
$
1,467
282
(550)
(8)
(2)
1,189
653
63.56
91.49
55.17
80.64
66.61
73.94
66.18
The following table shows the aggregate intrinsic value of stock options and stock appreciation rights exercised in 2021, 2020, and
2019, and the weighted-average remaining contractual term and aggregate intrinsic value of stock options and stock appreciation
rights outstanding and vested as of December 31, 2021:
Stock Options and Stock Appreciation Rights
Weighted-
Average
Remaining
Contractual
Term
(Years)
Aggregate
Intrinsic Value
(in millions)
Exercised in 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised in 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised in 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Outstanding at December 31, 2021 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested and exercisable at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1
3.1
4.0
7.6
22.5
36.0
24.8
(a) As of December 31, 2021, 4,200 stock appreciation rights and 1,185,079 stock options were outstanding.
Total cash received from employees for exercises of stock options during the years ended December 31, 2021, 2020, and 2019 was
$21.9 million, $6.6 million, and $4.4 million. As of December 31, 2021, we had $7.8 million of unrecognized compensation expense
related to nonvested stock options and stock appreciation rights, which we expect to recognize over a weighted-average period of
1.8 years.
91
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Restricted Stock Units and Performance Shares
Restricted stock units entitle the recipient to receive a specified number of restricted shares of common stock upon vesting.
Restricted stock units do not carry voting rights and are not transferable prior to the expiration of a specified restriction period, which
is generally three years, as determined by the Compensation Committee of the Board of Directors (“Compensation Committee”). We
accrue dividends on all restricted stock units and pay those dividends when the awards vest. We recognize compensation expense for
these awards over the applicable vesting period.
Performance shares are restricted shares that we grant to key employees for achieving certain strategic objectives. The shares
convert to common stock at the end of a specified performance period if predetermined performance goals are achieved, as
determined by the Compensation Committee. We estimate the number of shares we expect will vest as a result of actual performance
against the performance criteria at the time of grant to determine total compensation expense to be recognized. We reevaluate the
estimate annually and adjust total compensation expense for any changes to the estimate of the number of shares we expect to vest.
The performance shares granted include an option to settle shares earned in cash upon vesting for certain eligible employees. As a
result, these awards are accounted for as liability awards and recorded in other liabilities, and the liability and related compensation
expense is adjusted to reflect the fair value of the underlying shares at the end of each reporting period. We recognize compensation
expense for these awards over the applicable vesting period, which is generally three years.
We value our restricted stock units and performance share awards using the average of the high and low values of our common
stock on the grant date of the awards. As of December 31, 2021, there was $8.6 million of unrecognized compensation expense related
to these awards, which we expect to be recognized over a weighted-average period of 1.7 years.
The following table shows information about restricted stock units and performance shares for the year ended December 31, 2021:
Number of Share
Units Outstanding
(in thousands)
Weighted-
Average Grant-
Date Fair Value
Restricted Stock Units:
Nonvested at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Shares:
Nonvested at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net decrease due to estimated performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
138
34
(63)
(2)
107
112
57
(22)
(58)
(1)
88
72.59
91.36
70.79
82.09
79.37
76.03
87.45
84.78
71.98
87.06
83.79
The total fair value of restricted stock units and performance shares that vested during the year was $11.6 million in 2021,
$10.2 million in 2020, and $12.6 million in 2019.
Phantom Stock Awards
We grant phantom stock awards to non-employee directors as a component of their compensation for service on our board of
directors. In accordance with the terms of the phantom stock awards, each director is credited with a quantity of units that equate to,
but are not, common shares. Phantom stock awards are dividend participating, and all dividends are reinvested in additional phantom
shares at the average of the high and low trading prices of our stock on the dividend payment date. At the expiration of each director’s
service on the board of directors, or in accordance with his or her deferral election, whole units of phantom stock will be settled with
shares of common stock and fractional units will be paid in cash. In 2021, we granted 17,466 units of phantom stock and there were
221,434 units outstanding as of December 31, 2021.
92
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13. Income Taxes
The following table shows the components of income before income taxes, excluding affiliates, for the years ended December 31
(in millions):
Income before Income Taxes
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
40.9 $
154.2
195.1 $
(2.0) $
127.3
125.3 $
39.1
106.1
145.2
2021
2020
2019
The following table shows income taxes, excluding domestic and foreign affiliates, for the years ended December 31 (in millions):
2021
2020
2019
Income Tax Expense
Current
Domestic:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Deferred
Domestic:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
$
$
$
0.1
0.3
0.4
18.6
19.0 $
$
6.7
3.0
9.7 $
24.5
34.2 $
53.2 $
(3.4) $
0.3
(3.1) $
11.3
8.2 $
$
3.6
0.9
4.5 $
24.6
29.1 $
37.3 $
(11.3)
(1.2)
(12.5)
19.6
7.1
19.6
4.3
23.9
9.9
33.8
40.9
The following table is a reconciliation between the federal statutory income tax rate and our effective income tax rate for the years
ended December 31 (in millions):
Income taxes at federal statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Adjust for effect of:
Foreign earnings taxed at applicable statutory rates . . . . . . . . . . . . . . . . . . . . .
Foreign deferred tax rate change impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nondeductible compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2021
2020
2019
41.0
$
26.3
$
30.5
10.2
(0.3)
1.9
(3.5)
2.9
1.0
53.2
9.8
(0.7)
0.6
(1.2)
1.2
1.3
$
37.3
$
9.8
(2.8)
0.2
(1.4)
3.8
0.8
40.9
28.2%
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27.3%
29.8%
In 2021, our effective tax rate was 27.3% compared to 29.8% in 2020 and 28.2% in 2019. The 2019 effective tax rate included a net
benefit of $2.8 million associated with the reduction of the corporate income tax rate in Alberta, Canada.
93
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The adjustment for foreign earnings in each year reflected the impact of applicable statutory tax rates on income earned at our
foreign subsidiaries. Compensation is adjusted for the difference between the deductibility of these expenses under the U.S. tax law
versus U.S. GAAP. State income taxes are recognized on domestic pretax income or loss. The amount of our domestic income subject
to state taxes relative to our total worldwide income impacts the effect state income tax has on our overall income tax rate.
Separately, our affiliates incurred income taxes of $55.3 million, $33.6 million, and $18.0 million respectively in 2021, 2020, and
2019. During 2021 and 2020, changes in the statutory tax rate of the United Kingdom resulted in one-time tax expense adjustments of
$39.7 million and $12.3 million, respectively.
The following table shows the significant components of our deferred tax liabilities and assets as of December 31 (in millions):
2021
2020
Deferred Tax Liabilities
Book/tax basis difference due to depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,093.5 $ 1,017.8
93.8
Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26.1
Investments in affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33.4
Lease accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Intangible amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.8
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
68.3
27.5
29.1
1.9
5.4
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,225.7 $ 1,173.9
Deferred Tax Assets
Lease liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Federal net operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign tax credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance on foreign tax credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State net operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance on state net operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign net operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accruals not currently deductible for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension and post-retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
72.2 $
87.8
0.8
(0.8)
45.0
(14.9)
1.6
18.3
1.7
9.8
3.2
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
224.7 $
Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,001.0 $
95.9
53.5
0.8
(0.8)
38.3
(13.9)
2.1
16.0
1.1
16.4
1.7
211.1
962.8
Deferred income taxes are the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. We expect at this time to continue reinvestment of foreign
earnings outside the U.S. indefinitely. Consequently, our tax provision does not include any deferred tax costs that might arise due to
book versus tax basis differences in investments in foreign subsidiaries. Under provisions of the territorial tax system, future dividend
distributions from foreign subsidiaries and affiliates are generally exempt from U.S. income tax. Taxes may arise from withholding
taxes or on foreign exchange or other gains recognized in connection with the basis differences in our investments in foreign
subsidiaries. The ultimate tax cost of repatriating these earnings depends on tax laws in effect and other circumstances at the time of
distribution.
At December 31, 2021, we had a U.S. federal tax net operating loss carryforward of $418.1 million that can be carried forward
indefinitely until the loss is fully recovered. The utilization of net operating losses carried forward are limited to 80% of future taxable
income. We also had foreign tax credits of $0.8 million that expire after 2027. We have recorded a $0.8 million valuation allowance
related to these credits, as we believe it is more likely than not that we will be unable to utilize them.
At December 31, 2021, we had state tax net operating losses of $45.0 million, net of federal benefits that are scheduled to expire at
various times beginning in 2022. We have recorded a $14.9 million valuation allowance related to state net operating losses, as we
believe it is more likely than not that we will be unable to use all of these losses. Additionally, we had foreign net operating losses of
94
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
$1.6 million, which have an unlimited carryforward period. Our use of future operating losses depends on a number of variables,
including the amount of taxable income and state apportionment factors for state net operating loss carryforwards.
At December 31, 2021, our gross liability for unrecognized tax benefits was $10.2 million. An increase of $8.6 million is attributed
to our foreign operations. We recognize interest and penalties related to unrecognized tax benefits as income tax expense. We have
not accrued any amounts for penalties. To the extent interest is not assessed or is otherwise reduced with respect to uncertain tax
positions, we will record any required adjustment as a reduction of income tax expense.
We file one separate federal income tax return and one consolidated federal income tax return with our domestic subsidiaries in the
U.S. jurisdiction, as well as tax returns in various state and foreign jurisdictions. As of December 31, 2021, all audits or statutes of
limitations with respect to our federal tax returns for years prior to 2018 have been closed or expired. Additionally, we currently have
no open federal income tax audits, four open state income tax audits, and one open income tax audit on our foreign operations.
NOTE 14. Concentrations
Concentration of Revenues
We derived revenue from a wide range of industries and companies. In 2021, we generated approximately 27% of our total
revenues from customers in the petroleum industry, 23% from the transportation industry, 20% from the chemical industry, 11% from
food/agriculture industries and 10% from the mining, minerals and aggregates industry. Our foreign identifiable revenues were
primarily derived in Canada, Germany, Poland, United Kingdom, and Austria.
Concentration of Credit Risk
We did not have revenue concentrations greater than 10% from any particular customer for any of the years ended December 31,
2021, 2020, and 2019. Under our lease agreements with customers, we typically retain legal ownership of the assets unless such assets
have been financed by sale-leasebacks. We perform a credit evaluation prior to approval of a lease contract. Subsequently, we monitor
the creditworthiness of the customer and the value of the collateral on an ongoing basis. We maintain an allowance for losses to
provide for credit losses inherent in our receivables balances.
Concentration of Labor Force
As of December 31, 2021, collective bargaining agreements covered approximately 35% of our employees, of which agreements
covering 2% of employees will expire within the next year. The hourly employees at our US service centers are represented by the
United Steelworkers. Employees at three of Rail North America’s Canadian service centers are represented by Unifor and the
Employee Shop Committee of Rivière-des-Prairies. Certain employees of GATX Rail Europe are represented by one union in Poland.
NOTE 15. Commercial Commitments
We have entered into various commercial commitments, such as guarantees, standby letters of credit, performance bonds, and
guarantees related to certain transactions. These commercial commitments require us to fulfill specific obligations in the event of
third-party demands. Similar to our balance sheet investments, these commitments expose us to credit, market, and equipment risk.
Accordingly, we evaluate these commitments and other contingent obligations using techniques similar to those we use to evaluate
funded transactions.
The following table shows our commercial commitments as of December 31 (in millions):
Standby letters of credit and performance bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Derivative guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total commercial commitments (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2021
2020
9.0 $
0.5
9.5 $
9.1
1.5
10.6
(1) There were no liabilities recorded on the balance sheet for commercial commitments at December 31, 2021 and December 31,
2020. As of December 31, 2021, our outstanding commitments expire in 2022 through 2023. We are not aware of any event that
would require us to satisfy any of our commitments.
95
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We are parties to standby letters of credit and performance bonds, which primarily relate to contractual obligations and general
liability insurance coverages. No material claims have been made against these obligations, and no material losses are anticipated. We
also guarantee payment by an affiliate for final settlement of certain derivatives if they are in a liability position at expiration. The
amount of the payment is ultimately determined by the value of the derivative upon final settlement.
NOTE 16. Earnings per Share
We compute basic earnings per share by dividing net income available to our common shareholders by the weighted-average
number of shares of our common stock outstanding. We weight shares issued or reacquired during the year for the portion of the year
that they were outstanding. Our diluted earnings per share reflect the impacts of our potentially dilutive securities, which include our
equity compensation awards.
The following table shows the computation of our basic and diluted net income per common share for the years ended December 31
(in millions, except per share amounts):
2021
2020
2019
Numerator:
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
143.1 $
150.2 $
Net income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
1.1
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
143.1 $
151.3 $
Denominator:
Weighted-average shares outstanding - basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35.4
Effect of dilutive securities:
Equity compensation plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average shares outstanding - diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.6
36.0
35.0
0.4
35.4
Basic earnings per share from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4.04 $
4.30 $
Basic earnings per share from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
0.03
Basic earnings per share from consolidated operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4.04 $
4.33 $
Diluted earnings per share from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3.98 $
4.24 $
Diluted earnings per share from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
0.03
Diluted earnings per share from consolidated operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3.98 $
4.27 $
180.8
30.4
211.2
35.7
0.7
36.4
5.07
0.85
5.92
4.97
0.84
5.81
96
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 17. Goodwill
Our goodwill was $123.0 million as of December 31, 2021 and $143.7 million as of December 31, 2020. In the fourth quarter of
2021, we performed a review for impairment of goodwill, and concluded that goodwill was not impaired. The following table
summarizes the components of goodwill for the years ended December 31 (in millions):
2021
2020
Rail North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Rail International
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23.8 $
58.6
40.6
23.8
62.9
57.0
Total goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
123.0 $
143.7
In December 2020, GATX acquired Trifleet. As a result of this transaction, GATX initially recorded $57.0 million of goodwill. In
2021, GATX finalized the purchase price allocation among the amounts assigned to assets and liabilities, which resulted in a purchase
accounting adjustment to goodwill of $13.2 million. See “Note 4. Business Combinations” for additional information.
The remaining changes in the carrying amount of our goodwill for 2021 resulted from fluctuations in foreign currency exchange
rates.
NOTE 18. Allowance for Losses
The following table shows changes in the allowance for losses at December 31 (in millions):
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Provision for losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charges to allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recoveries and other, including foreign exchange adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2021
2020
6.5 $
0.1
(0.5)
0.1
6.2 $
6.2
0.7
(0.9)
0.5
6.5
NOTE 19. Other Assets and Other Liabilities
The following table shows the components of other assets reported on our balance sheets as of December 31 (in millions):
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Prepaid items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office furniture, fixtures and other equipment, net of accumulated depreciation . . . . . . . . . . . . . . . . . . . . . .
Prepaid pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
52.0 $
42.0
30.2
28.6
8.9
3.8
2.8
96.7
64.3
18.9
32.2
16.0
6.4
4.8
3.0
84.7
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
265.0 $
230.3
The following table shows the components of other liabilities reported on our balance sheets as of December 31 (in millions):
2021
2020
Accrued pension and other post-retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Environmental accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68.3 $
3.5
0.3
40.3
82.0
10.6
—
43.0
Total other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
112.4 $
135.6
97
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 20. Shareholders’ Equity
On January 25, 2019, our board of directors (“Board”) approved a $300 million share repurchase program, pursuant to which we are
authorized to purchase shares of our common stock in the open market, in privately negotiated transactions, or otherwise, including
pursuant to Rule 10b5-1 plans. The share repurchase program does not have an expiration date, does not obligate the Company to
repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time. The timing
of share repurchases will be dependent on market conditions and other factors. During 2021, we repurchased 0.1 million shares of
common stock for $13.1 million. In 2020, we did not repurchase any shares of common stock. In 2019, we purchased 2.0 million
shares of common stock for $150.0 million.
In accordance with our certificate of incorporation, 120 million shares of common stock are authorized, at a par value of $0.625 per
share. As of December 31, 2021, 68.3 million shares were issued and 35.4 million shares were outstanding.
The following shares of common stock were reserved as of December 31, 2021 (in millions):
GATX Corporation 2004 Equity Incentive Compensation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX Corporation 2012 Incentive Award Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.1
5.7
7.8
Our certificate of incorporation also authorizes five million shares of preferred stock at a par value of $1.00 per share. We had no
outstanding shares of preferred stock as of December 31, 2021 or December 31, 2020.
NOTE 21. Accumulated Other Comprehensive Loss
The following table shows the change in components for accumulated other comprehensive loss (in millions):
Foreign
Currency
Translation
Gain (Loss)
Unrealized
Loss on
Derivative
Instruments
Post-
Retirement
Benefit
Plans
Total
Balance at December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(58.0)
$
(14.0)
$
(92.6)
$
(164.6)
Change in component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification adjustments into earnings (1) . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax effect
Balance at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification adjustments into earnings (1) . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax effect
Balance at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification adjustments into earnings (1) . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax effect
(10.1)
—
—
(68.1)
24.4
—
—
(43.7)
(51.7)
—
—
17.4
(11.8)
(1.7)
(10.1)
(20.4)
14.9
1.0
(14.6)
12.5
(10.1)
(0.4)
1.5
7.6
(1.9)
(85.4)
(3.8)
12.1
(2.1)
(79.2)
22.7
12.8
(8.9)
8.8
(4.2)
(3.6)
(163.6)
0.2
27.0
(1.1)
(137.5)
(16.5)
2.7
(9.3)
Balance at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(95.4)
$
(12.6)
$
(52.6)
$
(160.6)
(1) See “Note 9. Fair Value Disclosure” and “Note 11. Pension and Other Post-Retirement Benefits” for impacts of the
reclassification adjustments on the statement of comprehensive income.
NOTE 22. Foreign Operations
For the years ended December 31, 2021, 2020, and 2019, we did not derive revenues in excess of 10% of our consolidated revenues
from any one foreign country. Additionally, at December 31, 2021 and 2020, we did not have more than 10% of our identifiable assets
in any one foreign country.
98
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table shows our domestic and foreign revenues and identifiable assets for the years ended or as of December 31 (in
millions):
Revenues From Continuing Operations
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
468.5 $
788.9
374.9 $
834.3
331.1
871.0
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,257.4 $ 1,209.2 $ 1,202.1
2021
2020
2019
Identifiable Assets From Continuing Operations
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,783.3 $ 3,438.6 $ 2,624.5
5,369.5
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,758.4
5,499.0
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,541.7 $ 8,937.6 $ 7,994.0
NOTE 23. Legal Proceedings and Other Contingencies
GATX and its subsidiaries have been named as defendants in various legal actions and claims, governmental proceedings, and
private civil suits arising in the ordinary course of business, including environmental matters, workers’ compensation claims, and
other personal injury claims. Some of these proceedings include claims for punitive as well as compensatory damages. Several of our
subsidiaries have also been named as defendants or co-defendants in cases alleging injury caused by exposure to asbestos. The
plaintiffs seek an unspecified amount of damages based on common law, statutory, or premises liability. In addition, demand has been
made against GATX for asbestos-related claims under limited indemnities given in connection with the sale of certain of our former
subsidiaries. These matters are subject to many uncertainties, and it is possible that some of these matters could ultimately be decided,
resolved, or settled adversely.
Litigation Accruals
We have recorded accruals totaling $4.6 million at December 31, 2021 for losses related to those litigation matters that we believe
to be probable and for which an amount of loss can be reasonably estimated. However, we cannot determine a reasonable estimate of
the maximum possible loss or range of loss for these matters given that they are at various stages of the litigation process and each
case is subject to the inherent uncertainties of litigation (such as the strength of our legal defenses and the availability of insurance
recovery). Although the maximum amount of liability that may ultimately result from any of these matters cannot be predicted with
absolute certainty, management expects that none of the matters for which we have recorded an accrual, when ultimately resolved,
will have a material adverse effect on our consolidated financial position or liquidity. It is possible, however, that the ultimate
resolution of one or more of these matters could have a material adverse effect on our results of operations in a particular quarter or
year if such resolution results in liability that materially exceeds the accrued amount.
In addition, we have other litigation matters pending for which we have not recorded any accruals because our potential liability for
those matters is not probable or cannot be reasonably estimated based on currently available information. For those matters where we
have not recorded an accrual but a loss is reasonably possible, we cannot determine a reasonable estimate of the maximum possible
loss or range of loss for these matters given that they are at various stages of the litigation process and each case is subject to the
inherent uncertainties of litigation (such as the strength of our legal defenses and the availability of insurance recovery). Although the
maximum amount of liability that may ultimately result from any of these matters cannot be predicted with absolute certainty,
management expects that none of the matters for which we have not recorded an accrual, when ultimately resolved, will have a
material adverse effect on our consolidated financial position or liquidity. It is possible, however, that the ultimate resolution of one or
more of these matters could have a material adverse effect on our results of operations in a particular quarter or year if such resolution
results in a significant liability for GATX.
Environmental
Our operations are subject to extensive federal, state, and local environmental regulations. Our operating procedures include
practices to protect the environment from the risks inherent in full service railcar leasing, which involves maintaining railcars used by
customers to transport chemicals and other hazardous materials. Under some environmental laws in the U.S. and certain other
countries, the owner of a leased transportation asset may be liable for environmental damage and cleanup or other costs in the event of
a spill or discharge of material from such asset without regard to the owner’s fault. While our standard forms of lease agreements
require the lessee to indemnify us against environmental claims and to carry liability insurance coverage, such indemnities and
99
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
insurance may not fully protect us against claims for environmental damage. Additionally, some of our real estate holdings, including
previously owned properties, are or have been used for industrial or transportation-related purposes or leased to commercial or
industrial companies whose activities might have resulted in discharges on the property. As a result, we are subject to environmental
cleanup and enforcement actions. In particular, the federal Comprehensive Environmental Response, Compensation and Liability Act
(“CERCLA”), also known as the Superfund law, as well as similar state laws, impose joint and several liability for cleanup and
enforcement costs on current and former owners and operators of a site without regard to fault or the legality of the original conduct.
If there are other potentially responsible parties (“PRPs”), we generally contribute to the cleanup of these sites through cost-sharing
agreements with terms that vary from site to site. Costs are typically allocated based on the relative volumetric contribution of
material, the period of time the site was owned or operated, and/or the portion of the site owned or operated by each PRP.
At the time a potential environmental issue is identified, initial accruals for environmental liability are established when such
liability is determined to be probable and a reasonable estimate of the associated costs can be made. Costs are estimated based on the
type and level of investigation and/or remediation activities that our internal environmental staff (and where appropriate, independent
consultants) have advised to be necessary to comply with applicable laws and regulations. Activities include surveys and
environmental studies of potentially contaminated sites as well as costs for remediation and restoration of sites determined to be
contaminated. In addition, we have provided indemnities for potential environmental liabilities to buyers of divested companies. In
these instances, accruals are based on the scope and duration of the respective indemnities together with the extent of known
contamination. Estimates are periodically reviewed and adjusted as required to reflect additional information about facility or site
characteristics or changes in regulatory requirements. We conduct a quarterly environmental contingency analysis, which considers a
combination of factors including independent consulting reports, site visits, legal reviews, analysis of the likelihood of participation in
and the ability of other PRPs to pay for cleanup, and historical trend analyses.
We are involved in administrative and judicial proceedings and other voluntary and mandatory cleanup efforts at 13 sites, including
Superfund sites, for which we are contributing to the cost of performing the study or cleanup, or both, of alleged environmental
contamination. As of December 31, 2021, we have recorded accruals of $3.5 million for remediation and restoration costs that we
believe to be probable and for which the amount of loss can be reasonably estimated. These amounts are included in other liabilities
on our balance sheet. Our environmental liabilities are not discounted.
We did not materially change our methodology for identifying and calculating environmental liabilities in the last three years.
Currently, no known trends, demands, commitments, events or uncertainties exist that are reasonably likely to occur and materially
affect the methodology or assumptions described above.
The recorded accruals represent our best estimate of all costs for remediation and restoration of affected sites, without reduction for
anticipated recoveries from third parties, and include both asserted and unasserted claims. However, we are unable to provide a
reasonable estimate of the maximum potential loss associated with these sites because cleanup costs cannot be predicted with
certainty. Various factors beyond our control can impact the amount of loss GATX will ultimately incur with respect to these sites,
including the extent of corrective actions that may be required; evolving environmental
laws and regulations; advances in
environmental technology, the extent of other parties’ participation in cleanup efforts; developments in periodic environmental
analyses related to sites determined to be contaminated, and developments in environmental surveys and studies of potentially
contaminated sites. As a result, future charges associated with these sites could have a significant effect on results of operations in a
particular quarter or year if the costs materially exceed the accrued amount as individual site studies and remediation and restoration
efforts proceed. However, management believes it is unlikely that the ultimate cost to GATX for any of these sites, either individually
or in the aggregate, will have a material adverse effect on our consolidated financial position or liquidity.
100
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 24. 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 three primary business segments: Rail North America, Rail International, and Portfolio Management. Historically, we also
reported financial results for ASC as a fourth segment.
In the first quarter of 2021, GATX began investing directly in aircraft spare engines through its new entity, GEL. In 2021, GEL
acquired 14 aircraft spare engines for approximately $352 million, including 4 engines for $120 million from the RRPF affiliates.
Financial results for this business are reported in the Portfolio Management segment.
On December 29, 2020, GATX acquired Trifleet Leasing Holding B.V. (“Trifleet), one of the largest tank container lessors in the
world. Financial results for this business are reported in the Other segment. See “Note 4. Business Combinations” for additional
information.
On May 14, 2020, we completed the sale of our ASC business, subject to customary post-closing adjustments. As a result, ASC is
now reported as discontinued operations, and financial data for the ASC segment has been segregated and presented as discontinued
operations for all periods presented. See “Note 25. Discontinued Operations” for additional information.
Rail North America is composed of our operations in the United States, Canada, and Mexico. 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 operations in Europe (“GATX Rail Europe” or “GRE”), India (“GRI”), and Russia (“Rail
Russia”). GRE primarily leases railcars to customers throughout Europe pursuant to full-service leases under which it maintains the
railcars and provides value-added services according to customer requirements.
Portfolio Management is composed primarily of our ownership in the RRPF affiliates, a group of joint ventures with Rolls-Royce
plc that lease aircraft spare engines, GEL, our direct ownership of aircraft spare engines that we lease, and five liquefied gas carrying
vessels (the “Specialized Gas Vessels”).
Other includes Trifleet operations, as well as selling, general and administrative expenses, income taxes, and certain other amounts
not allocated to the segments.
Segment profit is an internal performance measure used by the Chief Executive Officer to assess the profitability of each segment.
Segment profit includes all revenues, expenses, pre-tax earnings from affiliates, and net gains on asset dispositions that are directly
attributable to each segment. We allocate interest expense to the segments based on what we believe to be the appropriate risk-
adjusted borrowing costs for each segment. Segment profit excludes selling, general and administrative expenses, income taxes, and
certain other amounts not allocated to the segments.
101
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following tables show certain segment data for the years ended December 31, 2021, 2020, and 2019 (in millions):
Rail North
America
Rail
International
Portfolio
Management
Other
GATX
Consolidated
2021 Profitability
Revenues
Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Marine operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
814.5 $
—
77.2
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
891.7
Expenses
Maintenance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marine operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Income (Expense)
Net gain on asset dispositions . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of affiliates’ pre-tax income . . . . . . . . . . . . . . . . . . . . . .
235.4
—
261.1
39.2
30.3
566.0
94.3
(136.2)
1.6
—
272.9 $
—
11.4
284.3
28.1 $
19.1
0.5
25.0 $
—
8.7
47.7
33.7
1,140.5
19.1
97.8
1,257.4
57.6
—
73.6
—
9.0
140.2
2.7
(45.2)
3.4
—
—
17.5
17.6
—
1.7
36.8
8.0
(16.6)
2.0
56.5
4.1
—
12.1
—
3.0
19.2
0.9
(6.0)
(10.7)
—
Segment profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
285.4 $
105.0 $
60.8 $
(1.3)
Less:
Selling, general and administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes (includes $55.3 related to affiliates’ earnings) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net income from discontinued operations, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net Gain on Asset Dispositions
Asset Remarketing Income:
Net gains on dispositions of owned assets . . . . . . . . . . . . . . $
Residual sharing income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-remarketing net gains (1) . . . . . . . . . . . . . . . . . . . . . . . . .
Asset impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Capital Expenditures
80.7 $
0.9
15.1
(2.4)
94.3 $
1.2 $
—
1.5
—
2.7 $
— $
8.0
—
—
8.0 $
0.5 $
—
0.4
—
0.9 $
297.1
17.5
364.4
39.2
44.0
762.2
105.9
(204.0)
(3.7)
56.5
449.9
198.3
108.5
143.1
—
143.1
82.4
8.9
17.0
(2.4)
105.9
Portfolio investments and capital additions . . . . . . . . . . . . . . $
574.4 $
173.3 $
353.0 $
31.2 $
1,131.9
Selected Balance Sheet Data
Investments in affiliated companies . . . . . . . . . . . . . . . . . . . . $
Identifiable assets from continuing operations . . . . . . . . . . . $
(1) Includes net gains (losses) from scrapping of railcars.
0.3 $
6,141.7 $
— $
1,729.9 $
588.1 $
— $
1,048.7 $ 621.4 $
588.4
9,541.7
102
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Rail North
America
Rail
International
Portfolio
Management Other
GATX
Consolidated
2020 Profitability
Revenues
Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Marine operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
838.3 $
—
95.8
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
934.1
Expenses
Maintenance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marine operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Income (Expense)
Net gain on asset dispositions . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest (expense) income, net . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of affiliates’ pre-tax (loss) income . . . . . . . . . . . . . . . . .
264.7
—
258.6
49.3
27.3
599.9
38.3
(139.9)
(4.9)
(0.1)
248.4 $
—
9.7
258.1
0.8 $ — $
15.6
0.6
—
—
17.0
—
1,087.5
15.6
106.1
1,209.2
50.8
—
66.6
—
7.5
124.9
1.2
(45.9)
(5.0)
—
—
19.7
5.3
—
0.5
25.5
2.2
(12.2)
—
95.9
—
—
—
—
—
—
—
7.7
(3.1)
—
Segment profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
227.6 $
83.5 $
77.4 $
4.6
Less:
Selling, general and administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes (includes $33.6 related to affiliates’ earnings) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net income from discontinued operations, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net Gain on Asset Dispositions
Asset Remarketing Income:
Net gains on dispositions of owned assets . . . . . . . . . . . . . . . $
Residual sharing income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-remarketing net (losses) gains (1) . . . . . . . . . . . . . . . . . . .
Asset impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Capital Expenditures
38.8 $
0.4
(0.6)
(0.3)
38.3 $
0.5 $
—
0.7
—
1.2 $
0.1 $ — $
2.1
—
—
—
—
—
2.2 $ — $
315.5
19.7
330.5
49.3
35.3
750.3
41.7
(190.3)
(13.0)
95.8
393.1
172.0
70.9
150.2
1.1
151.3
39.4
2.5
0.1
(0.3)
41.7
Portfolio investments and capital additions . . . . . . . . . . . . . . . . $
642.0 $
216.0 $
0.5 $205.5 $
1,064.0
Selected Balance Sheet Data
Investments in affiliated companies . . . . . . . . . . . . . . . . . . . . . $
Identifiable assets from continuing operations . . . . . . . . . . . . . $
(1) Includes net gains (losses) from scrapping of railcars.
— $
5,944.4 $
— $
1,745.8 $
584.7 $ — $
706.1 $541.3 $
584.7
8,937.6
103
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Rail North
America
Rail
International
Portfolio
Management
Other
GATX
Consolidated
2019 Profitability
Revenues
Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Marine operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
868.3 $
—
96.2
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
964.5
Expenses
Maintenance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marine operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Income (Expense)
Net gain (loss) on asset dispositions . . . . . . . . . . . . . . . . . . . .
Interest (expense) income, net . . . . . . . . . . . . . . . . . . . . . . . . .
Other (expense) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of affiliates’ pre-tax income . . . . . . . . . . . . . . . . . . . . . .
267.9
—
256.9
54.4
23.9
603.1
54.6
(134.5)
(5.3)
—
219.2 $
—
8.5
227.7
1.0 $
8.2
0.7
9.9
46.5
—
57.8
—
6.8
111.1
1.7
(40.6)
1.2
—
—
18.9
6.6
—
0.6
26.1
(4.7)
(11.2)
—
94.5
— $
—
—
—
—
—
—
—
—
—
—
5.8
(3.2)
—
Segment profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
276.2 $
78.9 $
62.4 $
2.6
Less:
Selling, general and administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes (includes $18.0 related to affiliates’ earnings) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net income from discontinued operations, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net Gain (Loss) on Asset Dispositions
Asset Remarketing Income:
Net gains on dispositions of owned assets . . . . . . . . . . . . . . $
Residual sharing income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-remarketing net (losses) gains (1) . . . . . . . . . . . . . . . . . .
Asset impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
58.5 $
0.4
(3.9)
(0.4)
54.6 $
0.1 $
—
1.6
—
1.7 $
— $
1.5
—
(6.2)
(4.7) $
— $
—
—
—
— $
1,088.5
8.2
105.4
1,202.1
314.4
18.9
321.3
54.4
31.3
740.3
51.6
(180.5)
(7.3)
94.5
420.1
180.4
58.9
180.8
30.4
211.2
58.6
1.9
(2.3)
(6.6)
51.6
Capital Expenditures
Portfolio investments and capital additions . . . . . . . . . . . . . . . $
502.2 $
215.7 $
— $
4.9 $
722.8
Selected Balance Sheet Data
Investments in affiliated companies . . . . . . . . . . . . . . . . . . . . . $
Identifiable assets from continuing operations . . . . . . . . . . . . $
Identifiable assets from discontinued operations . . . . . . . . . . . $
0.2 $
5,646.7 $
— $
— $
1,486.7 $
— $
512.4 $
— $
653.7 $ 206.9 $
— $ — $
512.6
7,994.0
291.1
(1) Includes net gains (losses) from scrapping of railcars.
104
GATX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 25. Discontinued Operations
On May 14, 2020, we completed the sale of our ASC business. The proceeds of $258.3 million in cash included $1.1 million held in
escrow, set aside to satisfy potential indemnification claims for one year after the sale date. The final proceeds of $1.1 million were
received in May 2021.
Accordingly, the results of operations from our ASC business and gain on sale of ASC are reported in the accompanying
consolidated statements of operations as “discontinued operations, net of taxes” for the years ended December 31, 2021, 2020, and
2019. As a result of the completion of the sale in May 2020, there were no operating results in 2021. There were no related assets and
liabilities classified as assets and liabilities of discontinued operations as of December 31, 2021 and 2020 in the accompanying
balance sheets. We recognized a net gain of $3.6 million, net of taxes, during the second quarter of 2020 in connection with this sale.
In the third quarter of 2020, we recognized a net loss of $0.3 million, net of taxes. The net loss on sale recognized in the third quarter
was attributable to final post-closing adjustments and expenses related to the sale.
Results of discontinued operations reflect directly attributable revenues, operating and ownership expenses, and income taxes.
Results also reflect intercompany allocations for interest. Interest expense was zero for 2021, $2.0 million for 2020, and $6.1 million
for 2019. Interest was allocated consistent with GATX’s risk-adjusted approach for continuing operations.
The following table shows the financial results of our discontinued operations for the years ended December 31 (in millions):
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses
Operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (expense) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss) Income from Discontinued Operations Before Taxes . . . . . . . . . . . . . .
Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (Loss) Income from Discontinued Operations, Net of Taxes . . . . . . . . . . .
Gain on Sale of Discontinued Operations, Net of Taxes . . . . . . . . . . . . . . . . . .
Total Discontinued Operations, Net of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
$
— $
27.2
$
191.7
—
—
—
—
—
—
—
$
$
— $
—
— $
22.5
1.7
2.8
27.0
(3.0)
(2.8)
0.6
(2.2)
3.3
1.1
$
$
138.8
10.6
8.2
157.6
3.8
37.9
(7.5)
30.4
—
30.4
The following table shows cash flow information for our discontinued operations for the years ending December 31 (in millions):
Net Cash Used In (Provided By) Operating Activities . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Provided By Investing Activities (1)
Net Cash Provided By (Used In) Financing Activities . . . . . . . . . . . . . . . . . . . . . . . .
$
Cash Provided By (Used In) Discontinued Operations, Net . . . . . . . . . . . . . . . . .
$
— $
1.1
—
1.1
$
$
(8.5)
240.9
21.8
254.2
$
36.8
8.1
(45.0)
(0.1)
2021
2020
2019
(1) Net cash provided by investing activities included $1.1 million in 2021 for the final proceeds from the sale of ASC that had been
held in escrow funds and $257.2 million of proceeds from the sale of ASC in 2020.
105
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Management’s Report Regarding the Effectiveness of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of
our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the
“Exchange Act”)). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the
end of the period covered by this annual report, our disclosure controls and procedures were effective.
Management’s Report Regarding the Effectiveness of Internal Control and Procedures
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act for us. Our internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and
procedures that:
(i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of our assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate as a result
of changes in conditions, or that the degree of compliance with the applicable policies and procedures may deteriorate.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of
our internal control over financial reporting as of the end of the period covered by this annual report based on the framework in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework). Such evaluation included reviewing the documentation of our internal controls, evaluating the design effectiveness of the
internal controls and testing their operating effectiveness.
Based on such evaluation, our management has concluded that as of the end of the period covered by this annual report, our internal
control over financial reporting was effective. Management reviewed the results of its assessment with the Audit Committee of our
Board of Directors.
Ernst & Young LLP, the independent registered public accounting firm that audited the financial statements included in this annual
report, has issued a report on our internal control over financial reporting. That report follows.
106
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of GATX Corporation
Opinion on Internal Control over Financial Reporting
We have audited GATX Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2021, based on
criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, GATX Corporation and subsidiaries (the Company) maintained,
in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of
comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31,
2021, and the related notes and our report dated February 17, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management’s Report Regarding the
Effectiveness of Internal Control and Procedures. Our responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Chicago, Illinois
February 17, 2022
107
Changes in Internal Control Over Financial Reporting
No changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred
during the fiscal quarter ended December 31, 2021, that materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
N/A.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
Information required by this item regarding directors, our Code of Business Conduct and Ethics, Code of Ethics for Senior
Company Officers, Audit Committee Financial Experts, compliance with Section 16(a) of the Exchange Act, and corporate
governance is contained in sections entitled “Director Criteria and Nomination Process”, “Nominees for Election to the Board of
Directors”, “Board of Directors”, “Board Independence”, “Board Leadership Structure”, “Board Committees”, “Director and Officer
Indemnification and Insurance Arrangements”, “Communication with the Board”, and “Audit Committee Report” in our definitive
Proxy Statement to be filed on or about March 11, 2022, which sections are incorporated herein by reference.
Information regarding executive officers is included after Item 1 in Part I of this Form 10-K.
Item 11. Executive Compensation
Information required by this item regarding compensation of our directors and executive officers is contained in sections entitled
“Director Compensation”, “Compensation Discussion and Analysis”, “Compensation Committee Report”, and “Executive
Compensation Tables”, in our definitive Proxy Statement to be filed on or about March 11, 2022, which sections are incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information required by this item regarding security ownership of certain beneficial owners and management is contained in
sections entitled “Security Ownership of Directors and Executive Officers” and “Principal Shareholders” in our definitive Proxy
Statement to be filed on or about March 11, 2022, which sections are incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information required by this item regarding transactions with related persons and director independence is contained in the sections
entitled “Related Party Transactions” and “Board Independence” in our definitive Proxy Statement to be filed on or about March 11,
2022, which sections are incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
Information required by this item regarding fees paid to Ernst & Young is contained in sections entitled “Pre-Approval Policy” and
“Audit and Other Related Fees” in our definitive Proxy Statement to be filed on or about March 11, 2022, which sections are
incorporated herein by reference.
108
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) 1. Financial Statements
Documents Filed as Part of this Report:
Report of Independent Registered Public Accounting Firm on Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets — December 31, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income — Years Ended December 31, 2021, 2020, and 2019 . . . . . . . . . . . . .
Consolidated Statements of Cash Flows — Years Ended December 31, 2021, 2020, and 2019 . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Shareholders’ Equity — Years Ended December 31, 2021, 2020, and 2019 . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting . . . . . . . . . . . . . .
2. Financial Statement Schedules:
Page
58
60
61
62
63
64
107
Schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable, and, therefore, have been omitted.
3. Exhibits.
(c) Separate financial statements of subsidiaries not consolidated and fifty percent or less owned persons.
Under Rule 3-09 of Regulation S-X, we are required to file separate unaudited consolidated financial statements of Alpha
Partners Leasing Limited, the foreign entities of the RRPF affiliates, for the year ended December 31, 2021. We expect to file
those financial statements by amendment to our annual report on Form 10-K/A on or before March 31, 2022.
Exhibit
Number
Exhibit Description
Filed with this Report:
EXHIBIT INDEX
21
23
24
31.1
31.2
32
101
Subsidiaries of the Registrant.
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
Powers of Attorney with respect to the Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Certification Pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a) (CEO Certification).
Certification Pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a) (CFO Certification).
Certification Pursuant to 18 U.S.C. Section 1350 (CEO and CFO Certification).
The following materials from GATX Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021,
are formatted in Inline XBRL (eXtensible Business Reporting Language):
(i) Consolidated Balance Sheets at
December 31, 2021 and December 31, 2020, (ii) Consolidated Statements of Comprehensive Income for the years ended
December 31, 2021, 2020, and 2019, (iii) Consolidated Statements of Cash Flows for the years ended December 31, 2021,
2020, and 2019, (iv) Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2021,
2020, and 2019, and (v) Notes to the Consolidated Financial Statements.
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
Incorporated by Reference:
3.1
3.2
4.1
Restated Certificate of Incorporation of GATX Corporation is incorporated herein by reference to Exhibit 3.2 to GATX’s
Form 8-K dated October 31, 2013, file number 1-2328.
Amended and Restated By-Laws of GATX Corporation, as amended and restated on December 3, 2021, are incorporated
herein by reference to Exhibit 3.1 of GATX’s Form 8-K dated December 7, 2021, file number 1-2328.
Indenture dated as of November 1, 2003 between GATX Financial Corporation and JP Morgan Chase Bank is
incorporated herein by reference to Exhibit 4Q to GATX Financial Corporation’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2003, file number 1-8319.
109
4.2
4.3
10.1
10.2
Indenture dated as of February 6, 2008, between GATX Corporation and U.S. Bank National Association, as Trustee, is
incorporated herein by reference to Exhibit 4.12 to GATX’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2007, file number 1-2328.
Description of the Registrant’s Securities is incorporated herein by reference to Exhibit 4.3 to GATX’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2019, file number 1-2328.
Five Year Credit Agreement dated as of May 21, 2021, among GATX Corporation, as borrower, Citibank, N.A. and BofA
Securities, Inc., as joint lead arrangers and joint book managers, Bank of America, N.A., as syndication agent, PNC Bank,
National Association, U.S. Bank, National Association, Morgan Stanley MUFG Loan Partners, LLC and KeyBank National
Association, as co-documentation agents, Citibank, N.A., as administrative agent, and the lenders party thereto is
incorporated by reference to Exhibit 10.1 to GATX’s Form 8-K dated May 27, 2021, file number 1-2328.
Delayed Draw Term Loan Agreement dated as of December 14, 2020 among GATX Corporation, as borrower, the Initial
Lenders therein, as initial lenders, Bank of America, N.A., as administrative agent, and BOFA Securities, Inc., as sole lead
arranger and sole book manager, is incorporated by reference to Exhibit 10.1 to GATX’s Form 8-K dated December 18,
2020, file number 1-2328.
i.Amendment No. 1 to Delayed Draw Term Loan Agreement, dated as of December 14, 2020, among GATX Corporation, as
borrower, the lenders named therein, Bank of America, N.A., as administrative agent, and BofA Securities, Inc., as sole lead
arranger and sole book manager is incorporated by reference to Exhibit 10.1 to GATX’s Form 8-K dated April 8, 2021, file
number 1-2328
10.3
Supply Agreement by and between GATX Corporation, as Buyer, and Trinity Rail Group, LLC, as Seller, dated
November 3, 2014 is incorporated by reference to Exhibit 10.1 to GATX’s Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2020, file number 1-2328 (Note: Portions of this document have been omitted pursuant to Item
601(b)(2)(ii) of Regulation S-K).
i.
First Amendment to Supply Agreement by and between GATX Corporation, as Buyer, and Trinity Rail Group, LLC, as
Seller, dated May 24, 2018 is incorporated by reference to Exhibit 10.1 to GATX’s Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2018 (Note: Portions of this document have been omitted pursuant to a Request for
Confidential Treatment filed with the Securities and Exchange Commission on July 27, 2018).
Summary of GATX Corporation Non-Employee Directors’ Compensation is incorporated herein by reference to the section
entitled “Director Compensation” in GATX’s Definitive Proxy Statement filed on March 19, 2018, in connection with
GATX’s 2018 Annual Meeting of Shareholders, file number 1-2328.*
GATX Corporation 2004 Equity Incentive Compensation Plan is incorporated herein by reference to Exhibit C to the
Definitive Proxy Statement filed on March 18, 2004 in connection with GATX’s 2004 Annual Meeting of Shareholders, file
number 1-2328.*
i. Amendment of said Plan, effective as of December 7, 2007, is incorporated herein by reference to Exhibit 10.28 to
GATX’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, file number 1-2328.*
ii. Second Amendment of GATX Corporation 2004 Equity Incentive Compensation Plan effective October 22, 2010, is
incorporated by reference to Exhibit 10.7(ii) to GATX’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2010, file number 1-2328.*
Form of GATX Corporation Stock-Settled Stock Appreciation Right (SAR) Agreement for grants under the 2004 Equity
Incentive Compensation Plan to executive officers on or after January 1, 2009, incorporated herein by reference to Exhibit
10.2 to GATX’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009, file number 1-2328.*
GATX Corporation 2012 Incentive Award Plan is incorporated herein by reference to Exhibit A to the Definitive Proxy
Statement filed on March 16, 2012 in connection with GATX’s 2012 Annual Meeting of Shareholders, file number 1-2328.*
i. Amendment and Restatement of said Plan, effective May 5, 2017, is incorporated herein by reference to Exhibit C to the
Definitive Proxy Statement filed on March 24, 2017 in connection with GATX’s 2017 Annual Meeting of Shareholders,
file number 1-2328.*
GATX Corporation Cash Incentive Compensation Plan is incorporated herein by reference to Exhibit D to the Definitive
Proxy Statement filed on March 18, 2004 in connection with GATX’s 2004 Annual Meeting of Shareholders, file number
1-2328.*
i. Amendment of said Plan, effective as of December 7, 2007, is incorporated herein by reference to Exhibit 10.30 to
GATX’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, file number 1-2328.*
Form of Amended and Restated Agreement for Employment Following a Change of Control dated as of January 1, 2009,
between GATX Corporation and Brian A. Kenney is incorporated herein by reference to Exhibit 10.27 to GATX’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2008, file number 1-2328.*
Form of Amended and Restated Agreement for Employment Following a Change of Control dated as of January 1, 2009,
between GATX Corporation and Robert C. Lyons and Deborah A. Golden is incorporated herein by reference to
Exhibit 10.28 to GATX’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, file number 1-2328.*
10.4
10.5
10.6
10.7
10.8
10.9
10.10
110
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
Form of Agreement for Employment Following a Change of Control between GATX Corporation and Thomas A. Ellman
(dated as of January 1, 2014) is incorporated herein by reference to Exhibit 10.1 to GATX’s Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2015, file number 1-2328.*
Form of Agreement for Employment following a Change of Control between GATX Corporation and Niyi Adedoyin (dated
as of January 29, 2016), Jennifer McManus (dated as of October 30, 2020), Paul F. Titterton (dated as of January 1, 2014),
Jennifer Van Aken (dated as of October 30, 2020), Jeffery R. Young (dated as of February 1, 2015), and Robert A. Zmudka
(dated as of August 9, 2018) is incorporated by reference to Exhibit 10.2 to GATX’s Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2015, file number 1-2328.*
Form of Agreement for Employment Following a Change of Control between GATX Corporation and N. Gokce Tezel
(dated as of March 1, 2018) is incorporated herein by reference to Exhibit 10.1 to GATX’s Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2015, file number 1-2328.*
Form of GATX Corporation Indemnification Agreement for directors as of February 23, 2009, is incorporated herein by
reference to Exhibit 10.1 to GATX’s Form 8-K dated February 24, 2009, file number 1-2328.
Form of Stock-Settled Stock Appreciation Right (SAR) Agreement for awards under the GATX Corporation 2012 Incentive
Award Plan to executive officers with Agreements for Employment Following a Change of Control is incorporated by
reference to Exhibit 10.24 of GATX’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, file
number 1-2328.*
Form of Performance Share Agreement for grants under the GATX Corporation 2012 Incentive Award Plan to executive
officers with Agreements for Employment Following a Change of Control is incorporated by reference to Exhibit 10.25 of
GATX’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, file number 1-2328.*
Form of Performance Share Agreement (with cash-election option) for grants under the GATX Corporation 2012 Incentive
Award Plan to executive officers with Agreements for Employment Following a Change of Control is incorporated by
reference to Exhibit 10.1 to GATX’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014, file
number 1-2328.*
Form of Performance Share Agreement (with cash-election option) for grants under the GATX Corporation Amended and
Restated 2012 Incentive Award Plan to executive officers following adoption of the Tax Cuts and Jobs Act of 2017 is
incorporated by reference to Exhibit 10.1 to GATX’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2018.*
Form of Option Agreement for awards under the GATX Corporation 2012 Incentive Award Plan to executive officers with
Agreements for Employment Following a Change of Control, is incorporated by reference to Exhibit 10.1 to GATX’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2016, file number 1-2328.*
Form of Restricted Stock Unit Agreement for Grants under the Amended and Restated 2012 Incentive Award Plan to
Thomas A. Ellman is incorporated by reference to Exhibit 10.1 to GATX’s Form 8-K dated January 28, 2022, file number
1-2328.*
10.21
Form of Confidential Information, Non-Competition, and Non-Solicitation Agreement between the Corporation and Thomas
A. Ellman is incorporated by reference to Exhibit 10.2 to GATX’s Form 8-K dated January 28, 2022, file number 1-2328.*
10.22 Amended and Restated GATX Corporation Directors’ Voluntary Deferred Fee Plan, effective as of December 2, 2016, is
incorporated by reference to Exhibit 10.1 to GATX’s Annual Report on Form 10-K for the fiscal year ended December 31,
2016, file number 1-2328.*
10.23 Amended and Restated GATX Corporation Director’s Phantom Stock Plan, effective as of December 2, 2016,
is
incorporated by reference to Exhibit 10.2 to GATX’s Annual Report on Form 10-K for the fiscal year ended December 31,
2016, file number 1-2328.*
10.24 Undertakings to the GATX Corporation Salaried Employees’ Retirement Savings Plan is incorporated herein by reference to
GATX’s Annual Report on Form 10-K for the fiscal year ended December 31, 1982, file number 1-2328.* (Paper copy).
(*) Compensatory Plans or Arrangements.
Certain instruments evidencing long-term indebtedness of GATX Corporation are not being filed as exhibits to this Report because
the total amount of securities authorized under any such instrument does not exceed 10% of GATX Corporation’s total assets. GATX
Corporation will furnish copies of any such instruments upon request of the Securities and Exchange Commission.
Item 16. Form 10-K Summary
N/A.
111
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
GATX CORPORATION
Registrant
/s/ BRIAN A. KENNEY
Brian A. Kenney
Chairman, President and Chief
Executive Officer
February 17, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
/s/ BRIAN A. KENNEY
Brian A. Kenney
February 17, 2022
/s/ THOMAS A. ELLMAN
Thomas A. Ellman
February 17, 2022
/s/ JENNIFER M. MCMANUS
Jennifer M. McManus
February 17, 2022
Diane M. Aigotti*
Anne L. Arvia*
James B. Ream*
Adam L. Stanley*
David S. Sutherland*
Stephen R. Wilson*
Paul G. Yovovich*
* By: /s/ DEBORAH A. GOLDEN
Deborah A. Golden
February 17, 2022
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
Senior Vice President, Controller and
Chief Accounting Officer
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Executive Vice President, General
Counsel and Corporate Secretary
(Attorney in Fact)
112
SUBSIDIARIES OF THE REGISTRANT
Exhibit 21
The following is a list of subsidiaries included in our consolidated financial statements and the state or country of incorporation of
each:
Company Name
GATX Terminals Overseas Holding Corporation (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX Global Finance B.V. (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX Global Holding GmbH (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX Rail Europe BV (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX Rail Austria GmbH (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX Beteiligungs GmbH (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX Rail Germany GmbH (1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX International Limited (1)(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX Engine Leasing Ltd.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX Rail Poland Sp. z o.o. (2)
GATX Rail Canada Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trifleet Leasing Holding B.V. (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General American Transportation Holding Corp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grupo GATX de Mexico, Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX de Mexico, Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX Third Aircraft LLC (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX Asia Investments Private Limited (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GATX Rail Locomotive Group, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State or Country
of Incorporation
Delaware
Netherlands
Switzerland
Netherlands
Austria
Germany
Germany
United Kingdom
United Kingdom
Poland
Canada
Netherlands
Delaware
Delaware
Delaware
Delaware
Singapore
Delaware
(1) Company is a significant subsidiary as defined in Rule 1-02(w) of Regulation S-X.
(2) Company includes one foreign subsidiary.
(3) Company includes six foreign subsidiaries.
(4) Company includes three domestic subsidiaries.
(5) Company includes seven foreign subsidiaries.
Certain subsidiaries which, if considered as a single subsidiary, would not constitute a “significant subsidiary” as defined in
Regulation S-X, have been omitted.
Consent of Independent Registered Public Accounting Firm
Exhibit 23
We consent to the incorporation by reference in the following Registration Statements:
1. Registration Statement (Form S-3 No. 333-233276) and related prospectus of GATX Corporation,
2. Registration Statement (Form S-8 No. 333-219346) pertaining to the Amended and Restated 2012 Incentive Award Plan,
3. Registration Statement (Form S-8 No. 333-182219) pertaining to the 2012 Incentive Award Plan,
4. Registration Statement (Form S-8 No. 333-145581) pertaining to the Salaried Employees Retirement Savings Plan, and
5. Registration Statement (Form S-8 No. 333-145583) pertaining to the Hourly Employees Retirement Savings Plan of GATX
Corporation;
of our reports dated February 17, 2022, with respect to the consolidated financial statements of GATX Corporation, and the
effectiveness of internal control over financial reporting of GATX Corporation included in this Annual Report (Form 10-K) of GATX
Corporation for the year ended December 31, 2021.
Chicago, Illinois
February 17, 2022
Exhibit 31.1
Certification of Principal Executive Officer
I, Brian A. Kenney, certify that:
1. I have reviewed this Annual Report on Form 10-K of GATX Corporation (the “Company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in
this report;
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during
the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing
the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting.
/s/ BRIAN A. KENNEY
Brian A. Kenney
Chairman, President and Chief Executive Officer
February 17, 2022
Exhibit 31.2
Certification of Principal Financial Officer
I, Thomas A. Ellman, certify that:
1. I have reviewed this Annual Report on Form 10-K of GATX Corporation (the “Company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in
this report;
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during
the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing
the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting.
/s/ THOMAS A. ELLMAN
Thomas A. Ellman
Executive Vice President and Chief Financial Officer
February 17, 2022
GATX CORPORATION AND SUBSIDIARIES
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32
In connection with this Annual Report of GATX Corporation (the “Company”) on Form 10-K for the period ended December 31,
2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
/s/ BRIAN A. KENNEY
Brian A. Kenney
/s/ THOMAS A. ELLMAN
Thomas A. Ellman
Chairman, President and Chief Executive Officer
Executive Vice President and Chief Financial Officer
February 17, 2022
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed
by GATX Corporation for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided to GATX Corporation and will be retained by
GATX Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
BOARD OF DIRECTORS
Diane M. Aigotti (1, 3)
Retired; Former Executive Vice President,
Managing Director and Chief Financial Officer,
Ryan Specialty Group, LLC
Anne L. Arvia (1)
Executive Vice President, Banking and Financial Services,
The Auto Club Group
President and Chief Executive Officer,
The Auto Club Trust
James B. Ream (A, 2, 3)
Retired; Former Senior Vice President – Operations,
American Airlines
Adam L. Stanley (1, 3)
Chief Experience Officer,
Teach For America
David S. Sutherland (2)
Retired; Former President and Chief Executive Officer,
IPSCO, Inc.
Stephen R. Wilson (1, 2)
Retired; Former Chairman, President and
Chief Executive Officer,
CF Industries Holdings, Inc.
Paul G. Yovovich (2, 3)
President,
Lake Capital
Brian A. Kenney *
Chairman, President and Chief Executive Officer,
GATX Corporation
(A) Lead Director
(1) Member, Audit Committee
(2) Member, Compensation Committee
(3) Member, Governance Committee
EXECUTIVE OFFICERS
Brian A. Kenney *
Chairman, President and
Chief Executive Officer
Thomas A. Ellman
Executive Vice President and
Chief Financial Officer
Deborah A. Golden
Executive Vice President, General Counsel and
Corporate Secretary
Robert C. Lyons **
Executive Vice President and
President, Rail North America
M. Kim Nero
Executive Vice President and
Chief Human Resources Officer
N. Gokce Tezel
Executive Vice President and
President, Rail International
Niyi A. Adedoyin
Senior Vice President and
Chief Information Officer
Jennifer M. McManus
Senior Vice President, Controller and
Chief Accounting Officer
Paul F. Titterton ***
Senior Vice President and Chief Operating Officer,
Rail North America
Jennifer L. Van Aken
Senior Vice President, Treasurer and Chief Risk Officer
Jeffery R. Young
Senior Vice President and Chief Tax Officer
Robert A. Zmudka
Senior Vice President and Chief Commercial Officer,
Rail North America
*
Mr. Kenney will retire as President and Chief Executive Officer, effective April 22, 2022, after which he intends to serve on GATX’s
Board of Directors as non-executive Chairman until October 31, 2022.
**
***
The Board appointed Mr. Lyons to the position of President and Chief Executive Officer, effective at the time of Mr. Kenney’s retirement
on April 22, 2022. The Board intends to nominate Mr. Lyons for election as a director at the 2022 Annual Meeting of Shareholders.
The Board appointed Mr. Titterton to the position of Executive Vice President and President, Rail North America, effective at the time of
Mr. Lyons’ transition to the position of President and Chief Executive Officer on April 22, 2022.
ANNUAL MEETING
Friday, April 22, 2022, 9:00 a.m. Central Time
Meeting will be held in a virtual-only format.
SHAREHOLDER INQUIRIES
Inquiries regarding dividend checks, the dividend reinvestment
plan, stock certificates, replacement of lost certificates, address
changes, account consolidation, transfer procedures, and year-
end tax information should be addressed to GATX Corporation’s
transfer agent and registrar:
Computershare
P.O. Box 505000, Louisville, KY 40233
Toll Free Number: (866) 767-6259
TDD for Hearing Impaired: (800) 231-5469
Outside the U.S.: (201) 680-6578
TDD Outside the U.S.: (201) 680-6610
www.computershare.com/investor
INFORMATION RELATED TO SHAREHOLDER OWNERSHIP,
DIVIDEND PAYMENTS, OR SHARE TRANSFERS
Lisa M. Ibarra, Assistant Secretary
Telephone: (312) 621-6603
Email: lisa.ibarra@gatx.com
FINANCIAL INFORMATION AND PRESS RELEASES
A copy of the Company’s Annual Report on Form 10-K for 2021
and selected other information are available without charge.
Corporate information and press releases can be found at
GATX’s website, www.gatx.com. Requests for information can
be made through the site, and many GATX publications can
be directly viewed or downloaded. A variety of current and
historical financial information is also available at this site.
GATX Corporation welcomes and encourages questions
and comments from its shareholders, potential investors,
financial professionals, and the public at large. To better
serve interested parties, the following GATX personnel
may be contacted by email, telephone, letter, or eFax:
TO REQUEST PUBLISHED FINANCIAL
INFORMATION AND FINANCIAL REPORTS
GATX Corporation
Investor Relations Department
233 South Wacker Drive, Chicago, IL 60606-7147
Telephone: (800) 428-8161 eFax: (312) 499-7149
Email: ir@gatx.com
REQUEST LINE FOR MATERIALS
(312) 621-6300
ANALYST, INSTITUTIONAL SHAREHOLDER,
AND FINANCIAL COMMUNITY INQUIRIES
Shari Hellerman, Director, Investor Relations
Telephone: (312) 621-4285 eFax: (312) 499-7149
Email: shari.hellerman@gatx.com
INDIVIDUAL INVESTOR INQUIRIES
Irma Dominguez, Investor Relations Coordinator
Telephone: (312) 621-8799 eFax: (312) 499-7149
Email: irma.dominguez@gatx.com
QUESTIONS REGARDING SALES, SERVICE, LEASE
INFORMATION, OR CUSTOMER SOLUTIONS
(312) 621-6200
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
FORWARD-LOOKING STATEMENTS
Statements in this Annual Report not based on historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and,
accordingly, involve known and unknown risks and uncertainties that are difficult to predict and could cause our actual results, performance, or achievements to differ materially
from those discussed. Forward-looking statements include statements as to our future expectations, beliefs, plans, strategies, objectives, events, conditions, financial performance,
prospects, or future events. In some cases, forward-looking statements can be identified by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,”
“believe,” “estimate,” “predict,” “potential,” “outlook,” “continue,” “likely,” “will,” “would,” and similar words and phrases. Forward-looking statements are necessarily based on
estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. Accordingly, you should not place undue reliance on forward-
looking statements, which speak only as of the date they are made, and are not guarantees of future performance. We do not undertake any obligation to publicly update or revise
these forward-looking statements.
The following factors, in addition to those discussed under "Risk Factors" and elsewhere in the Annual Report on Form 10-K as part of this Annual Report to Shareholders and in
our other filings with the SEC, could cause actual results to differ materially from our current expectations expressed in forward-looking statements:
• the duration and effects of the global COVID-19 pandemic
and any mandated pandemic mitigation requirements,
including adverse impacts on our business, personnel,
operations, commercial activity, supply chain, the demand
for our transportation assets, the value of our assets, our
liquidity, and macroeconomic conditions
• exposure to damages, fines, criminal and civil penalties,
and reputational harm arising from a negative outcome
in litigation, including claims arising from an accident
involving our transportation assets
inability to maintain our transportation assets on lease at
•
satisfactory rates due to oversupply of assets in the market
or other changes in supply and demand
• a significant decline in customer demand for our
transportation assets or services, including as a result of:
» weak macroeconomic conditions
◦ » weak market conditions in our customers’ businesses
◦ » adverse changes in the price of, or demand for,
commodities
◦ » changes in railroad operations, efficiency, pricing
and service offerings, including those related to
“precision scheduled railroading”
◦ » changes in, or disruptions to, supply chains
◦ » availability of pipelines, trucks, and other alternative
modes of transportation
◦ » changes in conditions affecting the aviation industry,
including reduced demand for air travel, geographic
exposure and customer concentrations
◦ » other operational or commercial needs or decisions
of our customers
◦ » customers’ desire to buy, rather than lease, our
transportation assets
• higher costs associated with increased assignments
of our transportation assets following non-renewal of
• competitive factors in our primary markets,
including competitors with significantly lower
leases, customer defaults, and compliance maintenance
costs of capital
programs or other maintenance initiatives
• events having an adverse impact on assets, customers,
or regions where we have a concentrated investment
exposure
• financial and operational risks associated with long-
term purchase commitments for transportation assets
• reduced opportunities to generate asset remarketing
income
inability to successfully consummate and manage
•
ongoing acquisition and divestiture activities
• reliance on Rolls-Royce in connection with our aircraft
spare engine leasing businesses, and the risks that
certain factors that adversely affect Rolls-Royce could
have an adverse effect on our businesses
• fluctuations in foreign exchange rates
•
inflation or deflation
• failure to successfully negotiate collective bargaining
agreements with the unions representing a substantial
portion of our employees
• asset impairment charges we may be required to recognize
• deterioration of conditions in the capital markets,
reductions in our credit ratings, or increases in our
financing costs
• changes in banks’ inter-lending rate reporting practices
and the phasing out of LIBOR
• risks related to our international operations and
expansion into new geographic markets, including
laws, regulations, tariffs, taxes, treaties, or trade
barriers affecting our activities in the countries
where we do business
• changes in, or failure to comply with, laws, rules
and regulations
• U.S. and global political conditions
•
inability to obtain cost-effective insurance
• environmental liabilities and remediation costs
• potential obsolescence of our assets
inadequate allowances to cover credit losses in
•
our portfolio
• operational, functional and regulatory risks
associated with severe weather events, climate
change and natural disasters
•
inability to maintain and secure our information
technology infrastructure from cybersecurity
threats and related disruption of our business
• changes in assumptions, increases in funding
requirements or investment losses in our pension
and post-retirement plans
•
inability to maintain effective internal control
over financial reporting and disclosure controls
and procedures
GATX CORPORATION
233 South Wacker Drive
Chicago, Illinois 60606-7147
(312) 621-6200 | (800) 428-8161
www.gatx.com