S&P puts GATX on negative watch

Standard & Poor's placed the ratings of GATX Corp. and GATX Financial Corp. on negative watch, reflecting continuing pressure on its three major businesses and a weakening financial profile.

GATX reported a fourth quarter loss of $29.4 million, widened from a loss of $12.1 million in fourth quarter 2001, and a decline in profit to $300,000 for the full year from $172.9 million for 2001.

The credit profile has weakened as GATX continues to face weak conditions, S&P said.

Equity declined to $801.6 million at Dec. 31, 2002, from $881.8 million in 2001, due to various impairment charges, which resulted in lease-adjusted recourse debt to equity increasing to 5.1x at Dec. 31 from 4.3x a year earlier.

While it has adequate liquidity, with $231 million of unrestricted cash at Dec. 31 and $775 million of undrawn facilities, the company has indicated that it will evaluate its dividend policy.

In December 2002, GATX announced its intent to sell its ventures operation and curtail investment in the specialty finance business. As a result, GATX will be comprised of rail, air and technology leasing, all of which generate more stable earnings and cash flow.

It is expected that the cash generated from the divestiture of the ventures business and reduced investment in specialty finance will aid GATX's liquidity and enable it to invest in those businesses.

S&P expects internally generated cash, the credit facilities and equipment financings will be sufficient to meet capital spending needs and debt maturities over the intermediate term.

Debt maturities in 2003 are $758 million and, in 2004, $333 million. The company also has the ability to reduce capital spending if conditions warrant.

S&P cuts Reptron to D

Standard & Poor's lowered Reptron Electronics Inc.'s 6.75% subordinated convertible notes due 2004 to D from CCC after the company did not make the interest payment due Feb. 1.

Reptron is in default of its loan and security agreement with secured lenders, as operating results did not meet certain financial covenants for 2002, S&P noted.

Sales and profitability were severely depressed in 2002 due to challenging business conditions in both of Reptron's major business lines, electronics components distribution and electronics manufacturing services.

Fitch rates Lennar notes BBB

Fitch Ratings assigned a BBB rating to Lennar Corp.'s $350 million of 5.95% notes due 2013. The outlook is stable.

Ratings reflect a very strong track record, sound operating and financial policies, well positioned low-basis land holdings in attractive growth markets and the capacity to withstand a meaningful housing downturn, Fitch said.

Under a severe housing contraction scenario, Lennar is expected to generate sufficient cash relative to its financial obligations, allowing the company to manage its capital structure easily within its investment grade rating.

Creditors benefit from Lennar's financial flexibility supported by $1.6 billion in liquidity as of Nov. 30 with zero outstanding on its $926 million revolvers and $731.2 million in cash and equivalents.

Debt to capitalization was 41.6% at the end of fiscal year 2002, while net debt to capitalization was 27.7%.

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