Variable Interest Entities

We evaluate whether an entity is a variable interest entity (“VIE”) based on the sufficiency of the entity’s equity and determining whether the equity holders have the characteristics of a controlling financial interest. We assess whether we are the primary beneficiary of a VIE based on our ability to direct the activities that most significantly impact the economic performance of the VIE and our obligation to absorb losses or our right to receive benefits that may be significant to the VIE. These determinations are both qualitative and quantitative, and they require us to make judgments and assumptions about the VIE’s forecasted financial performance and the volatility inherent in those forecasts. We evaluate new investments for VIE classification, and we regularly review all existing entities for events that may result in an entity becoming a VIE or us becoming a primary beneficiary.

We determined that we are the primary beneficiary of one of our VIEs, a structured lease financing for a portfolio of railcars, because we have the authority to direct its significant activities. We consolidate this VIE and the risks associated with it are similar to those of our wholly-owned railcar leasing activities.

The following table shows the carrying amounts of our consolidated VIE's assets and liabilities (in millions):



	June 30 2013		December 31 2012
Operating assets, net of accumulated depreciation (a)	$	95.8	$	98.4
Nonrecourse debt	30.3		35.1

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(a) All operating assets are pledged as collateral on the nonrecourse debt.

We determined that we are not the primary beneficiary of our other VIEs, primarily investments in railcar and equipment leasing affiliates that were financed through a variety of equity investments and third party lending arrangements. We are not the primary beneficiary of these VIEs because we do not have the power to direct the activities that most significantly impact the entities’ economic performance. For the investments in affiliates that we determined are VIEs, we concluded that power was shared by the affiliate partners based on the terms of the relevant joint venture agreements, which require approval of all partners for significant decisions involving the VIE.

The following table shows the carrying amounts and maximum exposure to loss for our VIEs that we do not consolidate (in millions):



	June 30, 2013				December 31, 2012
	Net Carrying Amount		Maximum Exposure to Loss		Net Carrying Amount		Maximum Exposure to Loss
Investments in affiliates	$	121.3	$	121.3	$	110.7	$	110.7
Other investment	0.6		0.6		0.7		0.7
Total	$	121.9	$	121.9	$	111.4	$	111.4