e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-2328

GATX Corporation

(Exact name of registrant as specified in its charter)


New York		36-1124040
(State of incorporation)		(I.R.S. Employer Identification No.)

222 West Adams Street
Chicago, Illinois 60606-5314
(Address of principal executive offices, including zip code)

(312) 621-6200
(Registrant’s telephone number, including area code)

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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of September 30, 2010, 46.3 million common shares were outstanding.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($ in millions, except share data)


	September 30			December 31
	2010			2009
Assets

Cash and Cash Equivalents	$	23.6		$	41.7
Restricted Cash		32.0			33.2

Receivables
Rent and other receivables		69.2			68.7
Finance leases		324.3			309.7
Less: allowance for possible losses		(12.9	)		(13.4	)

		380.6			365.0

Operating Assets and Facilities
Rail (includes $123.6 relating to a consolidated VIE at September 30, 2010)		5,327.0			5,449.0
Specialty		263.1			245.4
ASC		387.6			380.2
Less: allowance for depreciation (includes $12.2 relating to a consolidated VIE at Sept. 30, 2010)		(2,037.0	)		(2,041.3	)

		3,940.7			4,033.3

Investments in Affiliated Companies		462.2			452.2
Goodwill		94.0			97.5
Other Assets		200.4			183.5

Total Assets	$	5,133.5		$	5,206.4


Liabilities and Shareholders’ Equity

Accounts Payable and Accrued Expenses	$	123.9		$	123.0
Debt
Commercial paper and borrowings under bank credit facilities		72.0			70.8
Recourse		2,534.6			2,553.0
Nonrecourse (includes $61.3 relating to a consolidated VIE at September 30, 2010)		222.7			234.2
Capital lease obligations		50.3			54.8

		2,879.6			2,912.8

Deferred Income Taxes		742.2			730.6
Other Liabilities		289.2			337.4

Total Liabilities		4,034.9			4,103.8

Shareholders’ Equity
Preferred stock ($1.00 par value, 5,000,000 shares authorized, 16,816 and 17,046 shares of Series A and B $2.50 Cumulative Convertible Preferred Stock issued and outstanding as of September 30, 2010 and December 31, 2009, respectively, aggregate liquidation preference of $1.0)		*			*
Common stock ($0.625 par value, 120,000,000 authorized, 65,421,069 and 65,224,956 shares issued and 46,298,549 and 46,101,570 shares outstanding as of September 30, 2010 and December 31, 2009, respectively)		40.9			40.6
Additional paid in capital		621.5			616.8
Retained earnings		1,110.9			1,090.0
Accumulated other comprehensive loss		(114.4	)		(84.5	)
Treasury stock at cost (19,122,520 shares at September 30, 2010 and 19,123,386 at December 31, 2009)		(560.3	)		(560.3	)

Total Shareholders’ Equity		1,098.6			1,102.6


Total Liabilities and Shareholders’ Equity	$	5,133.5		$	5,206.4


*		Less than $0.1 million.

The accompanying notes are an integral part of these consolidated financial statements.

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in millions, except per share data)


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2010		2009		2010		2009
Gross Income
Lease income	$	216.1	$	223.0	$	651.0	$	678.9
Marine operating revenue		64.8		36.3		125.5		75.7
Asset remarketing income		10.1		3.1		28.4		25.2
Other income		17.7		14.2		55.6		42.6

Revenues		308.7		276.6		860.5		822.4
Share of affiliates’ earnings		5.7		15.6		30.6		23.0

Total Gross Income		314.4		292.2		891.1		845.4

Ownership Costs
Depreciation		54.3		55.3		161.1		161.8
Interest expense, net		41.3		40.3		125.1		125.1
Operating lease expense		35.0		34.2		104.4		101.7

Total Ownership Costs		130.6		129.8		390.6		388.6

Other Costs and Expenses
Maintenance expense		65.7		65.8		198.7		195.3
Marine operating expense		43.7		25.8		85.2		51.0
Selling, general and administrative		31.0		34.8		97.3		101.9
Other expense		15.1		8.8		39.5		22.2

Total Other Costs and Expenses		155.5		135.2		420.7		370.4


Income before Income Taxes		28.3		27.2		79.8		86.4
Income Taxes		7.2		7.6		18.5		26.5

Net Income	$	21.1	$	19.6	$	61.3	$	59.9


Per Share Data
Basic	$	0.45	$	0.43	$	1.33	$	1.28
Average number of common shares (in millions)		46.2		45.9		46.1		46.8

Diluted		0.45		0.42		1.31		1.24
Average number of common shares and common share equivalents (in millions)		46.7		48.0		47.0		48.9

Dividends declared per common share	$	0.28	$	0.28	$	0.84	$	0.84

The accompanying notes are an integral part of these consolidated financial statements.

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in millions)


	Nine Months Ended
	September 30
	2010			2009
Operating Activities
Net income	$	61.3		$	59.9

Adjustments to reconcile income to net cash provided by operating activities:
Gains on sales of assets		(35.1	)		(16.9	)
Depreciation		169.3			168.4
Reversal of provision for losses		(0.2	)		(5.8	)
Asset impairment charges		5.8			7.7
Deferred income taxes		12.7			18.2
Share of affiliates’ earnings, net of dividends		(1.4	)		(10.9	)
Change in income taxes payable		(4.9	)		(9.6	)
Change in accrued operating lease expense		(38.2	)		(34.6	)
Employee benefit plans		(20.2	)		(43.7	)
Other		1.5			(0.7	)

Net cash provided by operating activities		150.6			132.0

Investing Activities
Additions to operating assets and facilities		(219.5	)		(315.0	)
Investments in affiliates		(24.9	)		(61.2	)
Other		(0.1	)		(0.3	)

Portfolio investments and capital additions		(244.5	)		(376.5	)
Purchases of leased-in assets		(1.5	)		(10.7	)
Portfolio proceeds		55.4			55.2
Proceeds from sales of other assets		21.9			17.0
Proceeds from sale-leaseback		78.9			45.7
Net decrease in restricted cash		1.2			3.7
Other		—			33.1

Net cash used in investing activities		(88.6	)		(232.5	)

Financing Activities
Net proceeds from issuances of debt (original maturities longer than 90 days)		259.1			636.5
Repayments of debt (original maturities longer than 90 days)		(298.0	)		(409.9	)
Net increase (decrease) in debt with original maturities of 90 days or less		2.6			(43.0	)
Payments on capital lease obligations		(4.4	)		(8.6	)
Stock repurchases		—			(55.1	)
Employee exercises of stock options		0.8			—
Cash dividends		(40.3	)		(39.4	)
Other		—			0.7

Net cash (used in) provided by financing activities		(80.2	)		81.2

Effect of Exchange Rate Changes on Cash and Cash Equivalents		0.1			0.7

Net decrease in Cash and Cash Equivalents during the period		(18.1	)		(18.6	)
Cash and Cash Equivalents at beginning of period		41.7			102.2

Cash and Cash Equivalents at end of period	$	23.6		$	83.6

The accompanying notes are an integral part of these consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. Description of Business

GATX Corporation (“GATX” or the “Company”) leases, operates and manages long-lived, widely used assets in the rail, marine and industrial equipment markets. GATX also invests in joint ventures that complement existing business activities. Headquartered in Chicago, Illinois, GATX has three financial reporting segments: Rail, Specialty and American Steamship Company (“ASC”).

NOTE 2. Basis of Presentation

The accompanying unaudited consolidated financial statements of GATX Corporation and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by these accounting principles for complete financial statements. In the opinion of management, all adjustments (which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2010, are not necessarily indicative of the results that may be achieved for the entire year ending December 31, 2010. In particular, ASC’s fleet is generally inactive for a significant portion of the first quarter of each year due to the winter conditions on the Great Lakes. In addition, the timing of asset remarketing income is dependent, in part, on market conditions and, therefore, does not occur evenly from period to period. For further information, refer to the consolidated financial statements and footnotes for the year ended December 31, 2009, as set forth in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”).

Accounting Adjustment

During the first quarter of 2010, the Company discovered a clerical error in the preparation of its Consolidated Balance Sheet as of December 31, 2009, and Consolidated Statement of Cash Flows for the quarter and year ended December 31, 2009. The error resulted in a $13.1 million overstatement in each of cash and cash equivalents; accounts payable and accrued expenses; and net cash provided by operating activities of continuing operations. Management has determined that the effect of this error is immaterial to prior periods and adjusted its Consolidated Balance Sheet and Consolidated Statement of Cash Flows in 2010 to correct this error.

Accounting Changes

As of January 1, 2010, GATX adopted newly issued authoritative accounting guidance that revises the accounting and reporting for Variable Interest Entities (“VIEs”). The guidance requires that a qualitative and quantitative analysis be completed each reporting period to determine whether a VIE must be consolidated and further requires additional disclosures related to significant judgments and assumptions considered in the analysis and the nature of risks associated with the VIE. The application of this guidance had no impact on GATX’s financial position, results of operations or cash flows; however, as of the adoption date, certain existing investments were determined to be VIEs and in one instance, GATX was determined to be the primary beneficiary of an entity that was previously consolidated. See Note 6 for additional details.

NOTE 3. Investments in Affiliated Companies

Investments in affiliated companies represent investments in, and loans to and from, domestic and foreign companies and joint ventures that are in businesses similar to those of GATX, such as lease financing and related services for customers operating rail, marine and industrial equipment assets, as well as other business activities, including ventures that provide asset residual value guarantees.

Operating results for all affiliated companies, assuming GATX held a 100% interest, would be (in millions):


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2010		2009		2010		2009
Revenues	$	155.5	$	160.8	$	488.9	$	489.5
Pre-tax income reported by affiliates		15.7		30.2		57.8		40.1

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

NOTE 4. Fair Value Disclosure

The following tables set forth GATX’s assets and liabilities measured at fair value on a recurring basis (in millions):


			Quoted Prices in
			Active Markets		Significant		Significant
			for Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
	2010		(Level 1)		(Level 2)		(Level 3)
Assets
Interest rate derivatives (a)	$	21.9	$	—	$	21.9	$	—
Warrants and foreign exchange rate derivatives (b)		1.3		—		1.3		—
Available for sale equity securities		3.4		3.4		—		—

Liabilities
Interest rate derivatives (a)		9.1		—		9.1		—
Foreign exchange rate derivatives (b)		0.1		—		0.1		—


			Quoted Prices in
			Active Markets		Significant		Significant
			for Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2009		(Level 1)		(Level 2)		(Level 3)
Assets
Interest rate derivatives (a)	$	15.6	$	—	$	15.6	$	—
Warrants and foreign exchange rate derivatives (b)		1.6		—		1.6		—
Available for sale equity securities		2.9		2.9		—		—

Liabilities
Interest rate derivatives (a)		4.2		—		4.2		—
Foreign exchange rate derivatives (b)		*		—		*		—


*		Less than $0.1 million

(a)		Designated as hedges

(b)		Not designated as hedges

Available for sale equity securities are valued based on quoted prices in an active exchange market. Warrants and derivative contracts are valued using a pricing model with inputs (such as yield curves and credit spreads) that are observable in the market or can be derived principally from or corroborated by observable market data.

In the first nine months of 2010, GATX performed nonrecurring Level 3 fair value measurements for $3.8 million of rail assets with a carrying value of $9.6 million and recognized aggregate impairment losses of $5.8 million, which were included in other expense. The fair values were determined using discounted cash flow methodologies and third party appraisal data, as applicable. Losses of $4.8 million (fair value of $3.0 million) were recorded in connection with an Association of American Railroads industry-wide, regulatory mandate that resulted in a significant decrease to the expected economic life of 358 aluminum hopper railcars and losses of $1.0 million (fair value of $0.8 million) were recorded relating to scrapped wheelsets in Rail’s European fleet.

Derivative instruments

GATX recognizes all derivative instruments at fair value and classifies them on the balance sheet as either other assets or other liabilities. Classification of derivative activity in the statements of income and cash flows is generally determined by the nature of the hedged item. Gains and losses on derivatives that are not accounted for as hedges are classified as other operating expenses, and the related cash flows are included in cash flows from operating activities. Although GATX does not hold or issue derivative financial instruments for purposes other than hedging, certain derivatives

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

may not qualify for hedge accounting. Changes in the fair value of these derivatives are recognized in earnings immediately.

Fair Value Hedges — GATX uses interest rate swaps to convert fixed rate debt to floating rate debt and to manage the fixed to floating rate mix of its debt obligations. For fair value hedges, changes in fair value of both the derivative and the hedged item are recognized in earnings as interest expense. As of September 30, 2010, and December 31, 2009, GATX had three instruments outstanding with aggregate notional amounts of $350.0 million and $385.0 million, respectively. As of September 30, 2010, these derivatives had maturities ranging from 2012-2015.

Cash Flow Hedges — GATX uses interest rate swaps to convert floating rate debt to fixed rate debt and to manage the fixed to floating rate mix of its debt obligations. GATX also uses interest rate swaps and Treasury rate locks to hedge its exposure to interest rate risk on existing and anticipated transactions. As of September 30, 2010, and December 31, 2009, GATX had 13 instruments and 15 instruments outstanding, respectively, with aggregate notional amounts of $131.6 million and $243.5 million, respectively. As of September 30, 2010, these derivatives had maturities ranging from 2011-2015. Within the next 12 months, GATX expects to reclassify $6.4 million ($4.0 million after tax) of net losses on previously terminated derivatives from accumulated other comprehensive income (loss) to earnings. Amounts are reclassified when interest and operating expense related to the hedged risks affect earnings.

Certain of GATX’s derivative instruments contain credit risk provisions that could require GATX to make immediate payment on net liability positions in the event that GATX defaulted on a certain portion of its outstanding debt obligations. The aggregate fair value of all derivative instruments with credit risk related contingent features that are in a liability position as of September 30, 2010, was $9.1 million. GATX is not required to post any collateral on its derivative instruments and does not expect the credit risk provisions to be triggered.

In the event that a counterparty fails to meet the terms of the interest rate swap agreement or a foreign exchange contract, GATX’s exposure is limited to the fair value of the swap if in GATX’s favor. GATX manages the credit risk of counterparties by transacting only with institutions that the Company considers financially sound and by avoiding concentrations of risk with a single counterparty. GATX considers the risk of non-performance by a counterparty to be remote.

The income statement and other comprehensive income (loss) impacts of GATX’s derivative instruments were as follows (in millions):


		Three Months Ended						Nine Months Ended
Derivative		September 30						September 30
Designation	Location of Gain (Loss) Recognized	2010			2009			2010			2009
Fair value hedges (a)	Interest expense	$	4.0		$	1.6		$	11.7		$	(6.1	)
Cash flow hedges	Amount recognized in other comprehensive (loss) income (effective portion)		(2.7	)		(2.4	)		(10.9	)		12.6
Cash flow hedges	Amount reclassified from accumulated other comprehensive loss to interest expense (effective portion)		(2.0	)		(2.2	)		(5.7	)		(4.4	)
Cash flow hedges	Amount reclassified from accumulated other comprehensive loss to operating lease expense (effective portion)		(0.4	)		(0.8	)		(1.2	)		(1.2	)
Cash flow hedges	Amount recognized in other expense (ineffective portion)		—			(0.1	)		(0.1	)		(0.5	)


(a)		Equally offsetting the amount recognized in interest expense was the fair value adjustment relating to the underlying debt.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Other Financial Instruments

The carrying amounts of cash and cash equivalents, restricted cash, money market funds, rent and other receivables, accounts payable, commercial paper and bank credit facilities approximate fair value due to the short maturity of those instruments. The fair values of investment funds were based on the best information available and may include quoted investment fund values. The fair values of fixed and floating rate debt, excluding convertible notes, were estimated based on discounted cash flow analyses using interest rates currently offered for loans with similar terms to borrowers of similar credit quality. Convertible notes were valued using third-party quotes. The following table sets forth the carrying amounts and fair values of GATX’s other financial instruments as of (in millions):


	September 30, 2010				December 31, 2009
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Assets
Investment Funds	$	8.0	$	11.7	$	10.5	$	11.2

Liabilities
Convertible notes	$	—	$	—	$	41.9	$	50.1
Recourse fixed rate debt		2,191.6		2,372.3		2,174.3		2,253.0
Recourse floating rate debt		343.0		342.7		336.8		334.5
Nonrecourse debt		222.7		239.3		234.2		249.7

NOTE 5. Commercial Commitments

In connection with certain investments or transactions, GATX has entered into various commercial commitments, such as guarantees and standby letters of credit, which could potentially require performance in the event of demands by third parties. Similar to GATX’s balance sheet investments, these guarantees expose GATX to credit, market and equipment risk; accordingly, GATX evaluates its commitments and other contingent obligations using techniques similar to those used to evaluate funded transactions.

The following table sets forth GATX’s commercial commitments as of (in millions):


	September 30		December 31
	2010		2009
Affiliate guarantees	$	30.0	$	38.1
Asset residual value guarantees		50.0		49.5
Lease payment guarantees		53.1		59.2
Other		—		77.8

Total guarantees (a)		133.1		224.6
Standby letters of credit and bonds		10.8		13.8

	$	143.9	$	238.4


(a)		At September 30, 2010 and December 31, 2009, the carrying value of liabilities on the balance sheet for guarantees were $7.5 million and $8.1 million, respectively. The expirations of these guarantees range from 2010 to 2019. GATX is not aware of any event that would require it to satisfy these guarantees.

Affiliate guarantees generally involve guaranteeing repayment of the financing utilized to acquire or lease in assets and are in lieu of making direct equity investments in the affiliate. GATX is not aware of any event of default which would require it to satisfy these guarantees and expects the affiliates to generate sufficient cash flow to satisfy their lease and loan obligations.

Asset residual value guarantees represent GATX’s commitment to third parties that an asset or group of assets will be worth a specified amount at the end of a lease term. GATX earns an initial fee for providing these asset value guarantees, which is amortized into income over the guarantee period. Upon disposition of the assets, GATX receives a share of any proceeds in excess of the amount guaranteed and such residual sharing gains are recorded in asset remarketing income. If, at the end of the lease term, the net realizable value of the asset is less than the guaranteed amount, any liability resulting from GATX’s performance pursuant to the residual value guarantee will be reduced by the value realized from disposition of the asset. Asset residual value guarantees include those related to assets of affiliated companies.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Lease payment guarantees represent GATX’s guarantees to financial institutions of finance and operating lease payments to unrelated parties in exchange for a fee. Any liability resulting from GATX’s performance pursuant to the lease payment guarantees will be reduced by the value realized from the underlying asset or group of assets.

Other in 2009 consisted of GATX’s potential reimbursement obligation to Airbus S.A.S. (“Airbus”) for amounts Airbus may have been required to pay to GATX Flightlease Aircraft Company Ltd. (“GFAC”), a joint venture partially owned by GATX, in connection with an aircraft purchase contract entered into by GFAC and Airbus in 2001. The aircraft purchase contract and other agreements relating thereto had been the subject of various litigation proceedings, which were resolved in the second quarter of 2010.

GATX and its subsidiaries are also parties to standing letters of credit and bonds primarily related to workers’ compensation and general liability insurance coverages. No material claims have been made against these obligations. At September 30, 2010, GATX does not expect any material losses to result from these off balance sheet instruments since performance is not anticipated to be required.

NOTE 6. Variable Interest Entities

GATX determines whether an entity is a VIE based on the sufficiency of the entity’s equity and whether the equity holders have the characteristics of a controlling financial interest. To determine if it is the primary beneficiary of a VIE, GATX assesses whether it has the power to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that may be significant to the VIE. These determinations are both qualitative and quantitative in nature and require certain judgments and assumptions about the VIE’s forecasted financial performance and the volatility inherent in those forecasted results. GATX evaluates new investments for VIE determination and regularly reviews all existing entities for any events that may result in an entity becoming a VIE or in GATX becoming the primary beneficiary of an existing VIE.

GATX is the primary beneficiary of a consolidated VIE related to a structured lease financing for a portfolio of railcars because it has the power to direct the significant activities of the VIE through its ownership of the equity interests in the transaction. The carrying amounts of assets and liabilities of the VIE that GATX consolidates were as follows (in millions):


	September 30
	2010
Operating assets, net of accumulated depreciation (a)	$	111.4
Nonrecourse debt		61.3


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

GATX is also involved with other entities determined to be VIEs for which GATX is not the primary beneficiary. These VIEs primarily relate to operating leases, leveraged leases and certain investments in affiliates. These VIEs are involved in railcar and equipment leasing activities and have been financed through a mix of equity investments and third party lending arrangements. GATX determined that it is not the primary beneficiary of these VIEs because it does not have the power to direct the activities that most significantly impact the entities’ economic performance. For certain investments in affiliates determined to be VIEs, GATX concluded that power was shared among 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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The carrying amounts and maximum exposure to loss with respect to VIEs that GATX does not consolidate were as follows (in millions):


	September 30, 2010				December 31, 2009
	Net		Maximum		Net		Maximum
	Carrying		Exposure		Carrying		Exposure
	Amount		to Loss		Amount		to Loss
Investments in affiliates (a)	$	64.5	$	64.5	$	42.1	$	50.2
Leveraged leases		72.9		72.9		73.4		73.4
Other investment		1.0		1.0		1.0		1.0

Total	$	138.4	$	138.4	$	116.5	$	124.6


(a)		The difference in 2009 between the carrying value and the maximum exposure to loss related to GATX’s guarantee of an affiliate’s lease obligation. The guarantee was eliminated upon GATX’s acquisition of the railcars from the affiliate and the subsequent termination of the entity.

NOTE 7. Comprehensive Income

The components of comprehensive income (loss) were as follows (in millions):


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2010		2009		2010			2009
Net income	$	21.1	$	19.6	$	61.3		$	59.9
Other comprehensive income, net of taxes:
Foreign currency translation gain (loss)		44.3		33.9		(28.2	)		17.1
Unrealized gain (loss) on securities		0.1		—		0.8			(0.5	)
Unrealized (loss) gain on derivative instruments		—		—		(4.5	)		2.5
Post retirement benefit plans		0.2		0.3		2.0			0.6

Comprehensive income	$	65.7	$	53.8	$	31.4		$	79.6

NOTE 8. Share-Based Compensation

In the first nine months of 2010, GATX granted 368,700 stock appreciation rights (“SARs”), 74,440 restricted stock units, 75,730 performance shares and 20,844 phantom stock units. For the three and nine months ended September 30, 2010, total share-based compensation expense was $1.6 million ($1.0 million after tax) and $5.0 million ($3.1 million after tax), respectively. For the three and nine months ended September 30, 2009, total share-based compensation expense was $1.9 million ($1.1 million after tax) and $5.0 million ($3.1 million after tax), respectively.

The weighted average estimated fair value of GATX’s 2010 SAR awards and underlying assumptions thereof are noted in the table below. The vesting period for the 2010 SAR grant is three years, with 1/3 vesting after each year.


	2010
Weighted average fair value of SAR award	$	11.13
Annual dividend	$	1.12
Expected life of the SAR, in years		4.3
Risk free interest rate		2.0	%
Dividend yield		4.3	%
Expected stock price volatility		41.78	%

NOTE 9. Income Taxes

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

the functional currency tax election of a foreign wholly-owned subsidiary resulted in the recognition of a $2.4 million deferred tax benefit. Excluding the effect of these tax benefits from each year, GATX’s effective tax rate for the first nine months of 2010 and 2009 was 30% and 33%, respectively. The difference between the 2010 and 2009 effective tax rates was driven by variability in the mix of domestic and foreign sourced pre-tax earnings, which are taxed at different rates.

As of September 30, 2010, GATX’s gross liability for unrecognized tax benefits totaled $52.2 million, which, if fully recognized, would decrease income tax expense by $33.1 million ($31.0 million net of federal tax).

NOTE 10. Pension and Other Post-Retirement Benefits

The components of pension and other post-retirement benefit costs for the three months ended September 30, 2010 and 2009, were as follows (in millions):


							2010 Retiree			2009 Retiree
	2010 Pension			2009 Pension			Health and			Health and
	Benefits			Benefits			Life			Life
Service cost	$	1.2		$	1.2		$	(0.1	)	$	0.1
Interest cost		5.6			5.8			0.6			0.8
Expected return on plan assets		(8.5	)		(7.9	)		—			—
Amortization of:
Unrecognized prior service credit		(0.2	)		(0.2	)		(0.1	)		(0.1	)
Unrecognized net actuarial loss (gain)		1.1			0.7			(0.2	)		(0.1	)

Net costs (a)	$	(0.8	)	$	(0.4	)	$	0.2		$	0.7

The components of pension and other post-retirement benefit costs for the nine months ended September 30, 2010 and 2009, were as follows (in millions):


							2010 Retiree			2009 Retiree
	2010 Pension			2009 Pension			Health and			Health and
	Benefits			Benefits			Life			Life
Service cost	$	4.0		$	3.6		$	0.1		$	0.1
Interest cost		16.6			17.6			1.8			2.2
Expected return on plan assets		(25.1	)		(23.1	)		—			—
Amortization of:
Unrecognized prior service credit		(0.8	)		(0.8	)		(0.1	)		(0.1	)
Unrecognized net actuarial loss (gain)		4.5			2.1			(0.2	)		(0.3	)

Net costs (a)	$	(0.8	)	$	(0.6	)	$	1.6		$	1.9


(a)		The amounts reported herein are based on estimated annual costs. Actual annual costs for the year ending December 31, 2010, may differ from these estimates.

NOTE 11. Convertible Debt

In January 2010, GATX called the remaining outstanding balance of its convertible notes for redemption. As a result, the holders of the notes exercised their conversion options and GATX paid $41.9 million for the principal balance and issued 140,904 shares of GATX common stock for the intrinsic value. Additionally, accrued interest of $0.1 million was forfeited upon conversion and reclassified to additional paid in capital.

NOTE 12. Earnings Per Share

Basic earnings per share were computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding during each period. Shares issued or reacquired during the period, if applicable, were weighted for the portion of the period that they were outstanding. Diluted earnings per share give effect to the impact of potentially dilutive securities, including convertible preferred stock, employee stock options/SARs, restricted stock and convertible debt.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following table sets forth the computation of basic and diluted net income per common share (in millions, except per share amounts):


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2010		2009		2010		2009
Numerator:
Net income	$	21.1	$	19.6	$	61.3	$	59.9
Less: Dividends paid and accrued on preferred stock		*		*		*		*

Numerator for basic earnings per share — income available to common shareholders	$	21.1	$	19.6	$	61.3	$	59.9
Effect of dilutive securities:
Add: Dividends paid and accrued on preferred stock		*		*		*		*
After-tax interest expense on convertible securities		—		0.3		0.2		1.0

Numerator for diluted earnings per share — income available to common shareholders	$	21.1	$	19.9	$	61.5	$	60.9
Denominator:
Denominator for basic earnings per share — weighted average shares		46.2		45.9		46.1		46.8
Effect of dilutive securities:
Equity compensation plans		0.4		0.3		0.5		0.3
Convertible preferred stock		0.1		0.1		0.1		0.1
Convertible securities		—		1.7		0.3		1.7

Denominator for diluted earnings per share — adjusted weighted average and assumed conversion		46.7		48.0		47.0		48.9

Basic earnings per share	$	0.45	$	0.43	$	1.33	$	1.28


Diluted earnings per share	$	0.45	$	0.42	$	1.31	$	1.24


*		Less than $0.1 million.

NOTE 13. Legal Proceedings and Other Contingencies

Various legal actions, claims assessments and other contingencies arising in the ordinary course of business are pending against GATX and certain of its 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. For a discussion of these matters, please refer to Note 22 to the Company’s consolidated financial statements as set forth in GATX’s Annual Report on Form 10-K for the year ended December 31, 2009. Except as noted below, there have been no material changes or developments in these matters.

Polskie Koleje Panstwowe S.A. v. DEC sp. z o.o.

In December 2005, Polskie Koleje Panstwowe S.A. (“PKP”) filed a complaint, Polskie Koleje Panstwowe S.A. v. DEC sp. z o.o., in the Regional Court in Warsaw, Poland against DEC sp. z o.o. (“DEC”), an indirect wholly-owned subsidiary of the Company currently named GATX Rail Poland, sp. z o.o. The complaint alleges that, prior to GATX’s acquisition of DEC in 2001, DEC breached a Conditional Sales Agreement (the “Agreement”) to purchase shares of Kolsped S.A. (“Kolsped”), an indirect subsidiary of PKP. The allegedly breached condition required DEC to obtain a release of Kolsped’s ultimate parent company, PKP, from its guarantee of Kolsped’s promissory note securing a $9.8 million bank loan. Pursuant to an amendment to the Agreement, DEC satisfied this condition by providing PKP with a blank promissory note (the “DEC Note”) and a promissory note declaration which allowed PKP to fill in the DEC Note up to $10 million in the event a demand was made upon it as guarantor of Kolsped’s note to the bank (the “Kolsped Note”). In May 1999, the then current holder of the Kolsped Note, a bank (“Bank”), sued PKP under its guarantee. PKP lost the DEC Note and therefore did not use it to satisfy the guarantee, and the Bank ultimately secured a judgment against PKP in 2002. PKP also failed to notify DEC of the Bank’s lawsuit while the lawsuit was pending.

After exhausting its appeals of the judgment entered against it, PKP filed suit against DEC in December 2005, alleging that DEC failed to fulfill its obligation to release PKP as a guarantor of the Kolsped Note and is purportedly liable to

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

PKP, as a third party beneficiary of the Agreement. DEC has filed an answer to the complaint denying the material allegations and raising numerous defenses, including, among others, that: (i) the Agreement did not create an actionable obligation, but rather was a condition precedent to the purchase of shares in Kolsped; (ii) DEC fulfilled that condition by issuing the DEC Note, which was subsequently lost by PKP and redeemed by a Polish court; (iii) PKP was not a third party beneficiary of the Agreement; and (iv) the action is barred by the governing limitations period. The first day of trial was held on March 5, 2008, and the second and final day of trial was held on December 7, 2009. On February 16, 2010, the court issued a written opinion in favor of DEC and rejecting all of PKP’s claims. An appeal by PKP is pending.

As of September 30, 2010, PKP’s claims for damages totaled approximately PLN 136.6 million, or $47.0 million, which consists of the principal amount, interest and costs allegedly paid by it to the Bank and statutory interest. Statutory interest would be assessed only if the Court of Appeals, or the trial court on remand, ultimately awards damages to PKP, in which case interest would be assessed on the amount of the award from the date of filing of the claim in December 2005, to the date of the award. The Company has recorded an accrual of $15.5 million for this litigation pending final resolution on appeal. While the ultimate resolution of this matter for an amount in excess of this accrual is possible, the Company believes that any such excess would not be material to its financial position or liquidity. However, such resolution could have a material adverse effect on the results of operations in a particular quarter or fiscal year.

Viareggio Derailment

On June 29, 2009, a train consisting of fourteen liquefied petroleum gas (“LPG”) tank cars owned by GATX Rail Austria GmbH (an indirect subsidiary of the Company, “GATX Rail Austria”) and its subsidiaries derailed while passing through the city of Viareggio, Italy. Five tank cars overturned and one of the overturned cars was punctured, resulting in a release of LPG, which subsequently ignited. Thirty-two people died and others were injured in the fire, which also resulted in property damage. The LPG tank cars were leased to FS Logistica S.p.A., a subsidiary of the Italian state-owned railway, Ferrovie dello Stato S.p.A (the “Italian Railway”). The cause of the accident is currently under investigation by various Italian authorities. Due to the ongoing nature of the investigation, many of the facts about the accident have not been made available to GATX Rail Austria, although certain Italian authorities have asserted that the derailment was a result of a structural failure in a wheelset on one of the tank cars. GATX Rail Austria and its subsidiaries have offered their cooperation to the authorities who are investigating the accident. GATX Rail Austria has received notices of claims from approximately 246 persons and companies who allegedly suffered damages as a result of the accident. The Company and its subsidiaries maintain insurance for losses related to property damage and personal injury, and the Company’s insurers are working cooperatively with the insurer for the Italian Railway to adjust and settle claims. The Company cannot predict either the outcome of the ongoing investigations by the Italian authorities or what other legal proceedings, if any, may be initiated against GATX Rail Austria, its subsidiaries or personnel, and therefore the Company cannot reasonably estimate the loss or range of loss (including defense costs), if any, that may ultimately be incurred in connection with this accident. The Company has not established any accruals for potential liability related to this accident.

Flightlease Litigation

As previously reported in GATX’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, this matter has been settled and is now fully concluded.

NOTE 14. Financial Data of Business Segments

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

GATX leases, operates and manages long-lived, widely used assets in the rail, marine and industrial equipment markets. GATX also invests in joint ventures that complement existing business activities. Headquartered in Chicago, Illinois, GATX has three financial reporting segments: Rail, Specialty and ASC.

Rail is principally engaged in leasing tank and freight railcars and locomotives. Rail provides railcars primarily pursuant to full-service leases, under which it maintains the railcars, pays ad valorem taxes and insurance, and provides other ancillary services. Rail also offers net leases for railcars and most of its locomotives, in which case the lessee is responsible for maintenance, insurance and taxes.

Specialty provides leasing, asset remarketing and asset management services to the marine and industrial equipment markets. Specialty offers operating leases, direct finance leases and loans, and extends its market reach through joint venture

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

investments.

ASC owns and operates the largest fleet of U.S. flagged self-unloading vessels on the Great Lakes, providing waterborne transportation of dry bulk commodities for a range of industrial customers.

Segment profit is an internal performance measure used by the Chief Executive Officer to assess the performance of each segment in a given period. Segment profit includes all revenues, including earnings from affiliates, attributable to the segments as well as ownership and operating costs that management believes are directly associated with the maintenance or operation of the revenue earning assets. Operating costs include maintenance costs, marine operating costs and other operating costs such as litigation, asset impairment charges, provisions for losses, environmental costs and asset storage costs. Segment profit excludes selling, general and administrative expenses, income taxes and certain other amounts not allocated to the segments. These amounts are included in Other.

GATX allocates debt balances and related interest expense to each segment based upon a pre-determined fixed recourse leverage level expressed as a ratio of recourse debt (including off balance sheet debt) to equity. The leverage levels for Rail, Specialty and ASC are set at 4:1, 3:1 and 1.5:1, respectively. Management believes that by utilizing this leverage and interest expense allocation methodology, each operating segment’s financial performance reflects appropriate risk-adjusted borrowing costs.

The following tables present certain segment data for the three and nine months ended September 30, 2010 and 2009 (in millions):


											GATX
	Rail			Specialty		ASC		Other			Consolidated
Three Months Ended September 30, 2010
Profitability
Revenues	$	221.6		$	21.0	$	65.9	$	0.2		$	308.7
Share of affiliates’ earnings		(2.1	)		7.8		—		—			5.7

Total gross income		219.5			28.8		65.9		0.2			314.4
Ownership costs		112.8			12.2		5.6		—			130.6
Other costs and expenses		74.0			3.0		47.8		(0.3	)		124.5

Segment profit	$	32.7		$	13.6	$	12.5	$	0.5			59.3
SG&A												31.0

Income before income taxes											$	28.3
Capital Expenditures
Portfolio investments and capital additions	$	93.0		$	19.5	$	0.3	$	0.6		$	113.4
Selected Balance Sheet Data at September 30, 2010
Investments in affiliated companies	$	100.4		$	361.8	$	—	$	—		$	462.2
Identifiable assets	$	4,040.6		$	718.2	$	274.5	$	100.2		$	5,133.5

Three Months Ended September 30, 2009
Profitability
Revenues	$	222.7		$	16.4	$	37.3	$	0.2		$	276.6
Share of affiliates’ earnings		3.6			12.0		—		—			15.6

Total gross income		226.3			28.4		37.3		0.2			292.2
Ownership costs		112.0			11.8		5.4		0.6			129.8
Other costs and expenses		66.6			3.4		30.6		(0.2	)		100.4

Segment profit	$	47.7		$	13.2	$	1.3	$	(0.2	)		62.0
SG&A												34.8

Income before income taxes											$	27.2
Capital Expenditures
Portfolio investments and capital additions	$	105.3		$	78.3	$	0.3	$	2.2		$	186.1
Selected Balance Sheet Data at December 31, 2009
Investments in affiliated companies	$	120.9		$	331.3	$	—	$	—		$	452.2
Identifiable assets	$	4,157.7		$	672.9	$	269.2	$	106.6		$	5,206.4

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	Rail			Specialty		ASC		Other			GATX Consolidated
Nine Months Ended September 30, 2010
Profitability
Revenues	$	676.1		$	54.7	$	128.6	$	1.1		$	860.5
Share of affiliates’ earnings		1.8			28.8		—		—			30.6

Total gross income		677.9			83.5		128.6		1.1			891.1
Ownership costs		340.3			35.0		13.2		2.1			390.6
Other costs and expenses		226.2			8.3		93.4		(4.5	)		323.4

Segment profit	$	111.4		$	40.2	$	22.0	$	3.5			177.1
SG&A												97.3

Income before income taxes											$	79.8
Capital Expenditures
Portfolio investments and capital additions	$	181.5		$	52.6	$	7.3	$	3.1		$	244.5

Nine Months Ended September 30, 2009
Profitability
Revenues	$	685.5		$	57.1	$	78.8	$	1.0		$	822.4
Share of affiliates’ earnings		(8.8	)		31.8		—		—			23.0

Total gross income		676.7			88.9		78.8		1.0			845.4
Ownership costs		337.6			35.1		13.1		2.8			388.6
Other costs and expenses		203.9			10.3		55.6		(1.3	)		268.5

Segment profit	$	135.2		$	43.5	$	10.1	$	(0.5	)		188.3
SG&A												101.9

Income before income taxes											$	86.4
Capital Expenditures
Portfolio investments and capital additions	$	277.3		$	85.9	$	6.9	$	6.4		$	376.5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This document contains statements that may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor provisions of those sections and the Private Securities Litigation Reform Act of 1995. Some of these statements may be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” or other words and terms of similar meaning. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those described in GATX’s Annual Report on Form 10-K for the year ended December 31, 2009, and other filings with the Securities and Exchange Commission (“SEC”), and that actual results or developments may differ materially from those in the forward-looking statements. Specific factors that might cause actual results to differ from expectations include, but are not limited to, general economic, market, regulatory and political conditions in the rail, marine, industrial and other industries served by GATX and its customers; lease rates, utilization levels and operating costs in GATX’s primary operating segments; conditions in the capital markets; changes in GATX’s credit ratings and financing costs; regulatory rulings that may impact the economic value and operating costs of assets; costs associated with maintenance initiatives; competitive factors in GATX’s primary markets including lease pricing and asset availability; changes in loss provision levels within GATX’s portfolio; impaired asset charges that may result from changing market conditions or portfolio management decisions implemented by GATX; the opportunity for remarketing income; and the outcome of pending or threatened litigation. Given these risks and uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis, judgment, belief or expectation only as of the date hereof. GATX has based these forward-looking statements on information currently available and disclaims any intention or obligation to update or revise these forward-looking statements to reflect subsequent events or circumstances.

Business Overview

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based on financial data derived from the financial statements prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) and certain other financial data that is prepared using non-GAAP components. For a reconciliation of these non-GAAP components to the most comparable GAAP components, see Non-GAAP Financial Measures at the end of this Item.

Operating results for the nine months ended September 30, 2010, are not necessarily indicative of the results that may be achieved for the entire year ending December 31, 2010. For further information, refer to GATX’s Annual Report on Form 10-K, as filed with the SEC, which contains the Company’s consolidated financial statements for the year ended December 31, 2009.

DISCUSSION OF OPERATING RESULTS

Net income was $21.1 million or $0.45 per diluted share for the third quarter of 2010 compared to net income of $19.6 million or $0.42 per diluted share for the third quarter of 2009. Results for the third quarter of 2010 include $2.7 million or $0.06 per diluted share of after tax unrealized losses related to certain interest rate swaps at GATX’s European Rail affiliate AAE Cargo A.G. (“AAE”) and a $1.9 million or $0.04 per diluted share deferred tax benefit attributable to a reduction of statutory tax rates in the United Kingdom. Third quarter 2009 results include $0.2 million of unrealized losses related to the AAE interest rate swaps.

Net income was $61.3 million or $1.31 per diluted share for the first nine months of 2010 compared to net income of $59.9 million or $1.24 per diluted share for the first nine months of 2009. The 2010 results include aggregate after tax income of $1.7 million or $0.04 per diluted share related to the previously mentioned deferred tax benefit and the favorable resolution of a litigation matter and tax accrual reversal that occurred in the second quarter, partially offset by unrealized losses related to certain interest rate swaps at AAE. Results for the first nine months of 2009 include $18.5 million or $0.38 per diluted share of after tax unrealized losses related to the previously mentioned interest rate swaps at AAE.

Total investment volume was $244.5 million for the first nine months of 2010 compared to $376.5 million for the first nine months of 2009.

The following table presents a financial summary of GATX’s operating segments (in millions, except per share data):


	Three Months Ended						Nine Months Ended
	September 30						September 30
	2010			2009			2010			2009
Gross Income
Rail	$	219.5		$	226.3		$	677.9		$	676.7
Specialty		28.8			28.4			83.5			88.9
ASC		65.9			37.3			128.6			78.8

Total segment gross income		314.2			292.0			890.0			844.4
Other		0.2			0.2			1.1			1.0

Consolidated Gross Income	$	314.4		$	292.2		$	891.1		$	845.4


Segment Profit
Rail	$	32.7		$	47.7		$	111.4		$	135.2
Specialty		13.6			13.2			40.2			43.5
ASC		12.5			1.3			22.0			10.1

Total Segment Profit		58.8			62.2			173.6			188.8
Less:
Selling, general and administrative expenses		31.0			34.8			97.3			101.9
Unallocated interest expense, net		—			0.6			2.3			3.0
Other income and expense, including eliminations		(0.5	)		(0.4	)		(5.8	)		(2.5	)
Income taxes		7.2			7.6			18.5			26.5

Net Income	$	21.1		$	19.6		$	61.3		$	59.9


Basic earnings per share	$	0.45		$	0.43		$	1.33		$	1.28
Diluted earnings per share	$	0.45		$	0.42		$	1.31		$	1.24

Return on Equity

GATX’s return on equity (“ROE”) is shown for the trailing twelve months ended September 30:


	2010			2009
ROE		7.5	%		7.4	%

Segment Operations

Segment profit is an internal performance measure used by the Chief Executive Officer to assess the performance of each segment in a given period. Segment profit includes all revenues, including affiliate earnings, attributable to the segments as well as ownership and operating costs that management believes are directly associated with the maintenance or operation of the revenue earning assets. Operating costs include maintenance costs, marine operating costs, and other operating costs such as litigation, asset impairment charges, provisions for losses, environmental costs and asset storage costs. Segment profit excludes selling, general and administrative expenses, income taxes and certain other amounts not allocated to the segments. These amounts are discussed below in Other.

GATX allocates debt balances and related interest expense to each segment based upon a pre-determined, fixed recourse leverage level expressed as a ratio of recourse debt (including off balance sheet debt) to equity. The leverage levels for Rail, Specialty and ASC are set at 4:1, 3:1 and 1.5:1, respectively. Management believes that by utilizing this leverage and interest expense allocation methodology, each operating segment’s financial performance reflects appropriate risk-adjusted borrowing costs.

Rail

During 2010, the Rail leasing environment has shown a gradual improvement, reflective of increased railroad traffic and higher demand for railcars; however, lease rates remain under pressure due to the number of idle cars that remain across the industry. The market impact of the idle cars is expected to result in leases renewing at rates lower than the expiring rates, which will continue to have a negative effect on lease income for the remainder of 2010 and 2011. Lease rates on renewals and assignments during the quarter were generally higher than in previous quarters in absolute terms, but lower than the expiring rates. In the third quarter, the average lease renewal rate on cars in the GATX Lease Price Index (LPI) (see definition below) decreased 15.7% from the average expiring lease rate, compared to decreases of 18.6% for the second quarter and 8.5% for the third quarter of 2009. Utilization increased to 96.8% at the end of the third quarter, compared to 96.5% at the end of the second quarter and 95.9% at September 30, 2009. Rail entered 2010 with approximately 17,200 North American cars on leases scheduled to expire during the year, of which approximately 12,100 expired through the current quarter. Lease terms on renewals for cars in the LPI averaged 36 months in the current quarter and the second quarter, and 39 months in the third quarter of 2009. Rail continues to focus on shortening lease term in the current pricing environment in anticipation of an eventual market recovery. In Europe, Rail’s wholly-owned tank car fleet has been less volatile due to its concentration in the more stable petroleum market. Fleet utilization at the end of the current quarter increased to 95.3% compared to 94.4% at the end of the second quarter and 94.7% at September 30, 2009. AAE, which serves the freight railcar markets, continued to experience pressure on fleet utilization. During the first nine months of 2010, Rail’s investment volume was $181.5 million, compared to $277.3 million in 2009.

Components of Rail’s operating results are outlined below (in millions):


	Three Months Ended					Nine Months Ended
	September 30					September 30
	2010			2009		2010		2009
Gross Income
Lease income	$	201.4		$	208.8	$	606.6	$	634.3
Asset remarketing income		2.7			0.2		15.5		11.4
Other income		17.5			13.7		54.0		39.8

Revenues		221.6			222.7		676.1		685.5
Affiliate earnings		(2.1	)		3.6		1.8		(8.8	)

		219.5			226.3		677.9		676.7

Ownership Costs
Depreciation		46.1			47.4		141.2		141.0
Interest expense, net		32.0			30.6		95.5		95.7
Operating lease expense		34.7			34.0		103.6		100.9

		112.8			112.0		340.3		337.6

Other Costs and Expenses
Maintenance expense		61.6			61.0		190.5		185.1
Other costs		12.4			5.6		35.7		18.8

		74.0			66.6		226.2		203.9

Segment Profit	$	32.7		$	47.7	$	111.4	$	135.2

GATX Lease Price Index

The GATX Lease Price Index is an internally generated business indicator that measures general lease rate pricing on renewals within Rail’s North American fleet. The index reflects the weighted average lease rate for a select group of railcar types that Rail believes to be representative of its overall North American fleet. The LPI measures the percentage change between the weighted average renewal lease rate and the weighted average expiring lease rate. Average renewal term reflects the weighted average renewal lease term in months.

Rail’s Fleet Data

The following table summarizes certain fleet data for Rail’s North American railcars for the quarters indicated:


	September 30			December 31			March 31			June 30			September 30
	2009			2009			2010			2010			2010
Beginning balance		111,154			111,206			110,870			108,918			108,626
Cars added		1,478			774			346			434			1,189
Cars scrapped		(1,302	)		(1,108	)		(1,026	)		(726	)		(917	)
Cars sold		(124	)		(2	)		(1,272	)		—			(98	)

Ending balance		111,206			110,870			108,918			108,626			108,800

Utilization rate at quarter end		95.9	%		95.9	%		96.0	%		96.5	%		96.8	%
Average active railcars		106,136			106,310			105,461			104,530			104,611
Average active railcars — year to date		107,867			N/A			N/A			N/A			104,906

The following table summarizes certain fleet data for Rail’s European railcars for the quarters indicated:


	September 30			December 31			March 31			June 30			September 30
	2009			2009			2010			2010			2010
Beginning balance		20,000			20,005			20,033			20,321			20,302
Cars added		91			100			288			15			61
Cars scrapped or sold		(86	)		(72	)		—			(34	)		(137	)

Ending balance		20,005			20,033			20,321			20,302			20,226

Utilization rate at quarter end		94.7	%		94.7	%		94.4	%		94.4	%		95.3	%
Average active railcars		19,045			18,987			19,117			19,198			19,223
Average active railcars — year to date		19,104			N/A			N/A			N/A			19,180

The following table summarizes certain fleet data for Rail’s North American locomotives for the quarters indicated:


	September 30			December 30			March 31			June 30			September 30
	2009			2009			2010			2010			2010
Beginning balance		536			523			529			535			536
Locomotives added		—			6			6			1			6
Locomotives scrapped or sold		(13	)		—			—			—			—

Ending balance		523			529			535			536			542

Utilization rate at quarter end		90.1	%		89.8	%		90.3	%		98.1	%		98.7	%
Average active locomotives		471			472			479			517			531
Average active locomotives — year to date		485			N/A			N/A			N/A			510

Rail’s Lease Income

Components of Rail’s lease income are outlined below (in millions):


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2010		2009		2010		2009
North American railcars	$	157.6	$	164.2	$	476.7	$	506.2
European railcars		34.7		36.6		104.6		104.0
Locomotives		9.1		8.0		25.3		24.1

	$	201.4	$	208.8	$	606.6	$	634.3

Comparison of the First Nine Months of 2010 to the First Nine Months of 2009

Segment Profit

Rail’s segment profit for the first nine months of 2010 and 2009 reflects unrealized losses of $8.9 million and $22.0 million, respectively, representing the change in the fair value of certain interest rate swaps at AAE. Excluding the unrealized losses, Rail’s segment profit decreased $36.9 million, primarily due to lower North American lease income, higher maintenance costs in Europe and higher asset impairment charges, partially offset by higher asset remarketing income and scrapping gains.

Gross Income

Lease income in North America decreased $29.5 million, primarily due to an average of approximately 3,000 fewer cars on lease resulting from lease end returns and car sales. In Europe, a $0.6 million increase in lease income was driven primarily by higher rates on new railcar placements, largely offset by the foreign exchange effects of a stronger U.S. Dollar. Asset remarketing income increased $4.1 million due to increased railcar sales in the current year. Other income was $14.2 million higher, primarily due to higher scrapping gains, income from an end-of-lease settlement and higher repair revenue, which was largely offset in maintenance expense. Share of affiliates’ earnings was $10.6 million higher, primarily due to a $13.1 million decrease in unrealized losses on interest rate swaps at AAE. Excluding the unrealized losses, share of affiliates’ earnings was $2.5 million lower, primarily due to lower operating earnings at AAE, partially offset by an affiliate asset remarketing gain.

AAE holds multiple derivative instruments to hedge interest rate risk associated with forecasted floating rate debt issuances. These instruments do not qualify for hedge accounting and as a result, changes in their fair values are recognized currently in income. The unrealized losses recognized were primarily driven by declines in benchmark interest rates. AAE’s earnings may be impacted by future unrealized gains or losses associated with these instruments.

Ownership Costs

Ownership costs increased $2.7 million resulting from investment volume. The mix of ownership costs compared to 2009 was impacted by a $78.9 million sale-leaseback of 947 railcars in 2010 and a $45.7 million sale-leaseback of 597 railcars in 2009.

Other Costs and Expenses

In North America, maintenance costs were $3.1 million lower, primarily due to lower railroad repair volumes, largely offset by higher costs and higher customer liability repairs. In Europe, maintenance costs were $8.6 million higher, primarily due to higher repair volumes, including costs associated with a wheelset replacement program and the absence of a manufacturer’s warranty reimbursement received in the prior year.

Other costs in 2010 were $16.9 million higher than the prior year. In 2009, a net $2.5 million benefit was recorded upon the restructuring of a lease contract with a customer that declared bankruptcy and a $2.8 million insurance recovery was received related to a GATX repair facility in Europe. In the current year, higher storage fees and asset impairment charges and net remeasurement losses on non-functional currency denominated assets and liabilities also contributed to the increase. Asset impairment charges in the current year primarily consisted of a $4.8 million charge in North America resulting from an American Association of Railroads industry-wide regulatory mandate that resulted in a significant decrease to the expected economic life of 358 GATX aluminum hopper railcars. In the prior year, an asset impairment charge in North America of $4.4 million was offset by the reversal of a $6.9 million provision for losses, each attributable to the lease restructuring noted above.

Comparison of the Third Quarter 2010 to the Third Quarter 2009

Segment Profit

Rail’s segment profit for the third quarter of 2010 and 2009 reflects unrealized losses of $3.0 million and $0.2 million, respectively, representing the change in the fair value of certain interest rate swaps at AAE. Excluding the unrealized losses, Rail’s segment profit was $12.2 million lower, primarily due to lower North American lease income, lower AAE operating results, and higher other costs and expenses, partially offset by higher asset remarketing and scrapping income.

Gross Income

Lease income in North America decreased $6.6 million, primarily due to an average of 1,525 fewer cars on lease. Lease income in Europe was $1.9 million lower, primarily due to the foreign exchange effects of a stronger U.S. Dollar, partially offset by higher income from an average of 178 more cars on lease. Asset remarketing income increased $2.5 million due to increased railcar sales. Other income was $3.8 million higher, primarily due to higher equalization revenue, which is offset in other operating costs, and higher scrapping gains. Share of affiliates’ earnings was $5.7 million lower than the prior year period. The current period includes a $3.0 million unrealized loss on interest rate swaps at AAE compared to a $0.2 million unrealized loss in 2009. Excluding the losses from both periods, share of affiliates’ earnings decreased $2.9 million due to lower operating earnings at AAE.

Ownership Costs

Ownership costs were comparable to the prior year. The mix of ownership costs compared to 2009 was impacted by a $78.9 million sale-leaseback of 947 railcars in 2010 and a $45.7 million sale-leaseback of 597 railcars in 2009.

Other Costs and Expenses

In North America, maintenance costs decreased $2.4 million, largely due to lower railroad repairs and lower program and fleet issues. In Europe, maintenance costs were $3.0 million higher, primarily due to higher revision volumes and higher costs, including costs associated with a wheelset replacement program, partially offset by the foreign exchange effects of a stronger U.S. Dollar.

Other costs were $6.8 million higher in the current period, primarily due to higher equalization expense and the absence of a prior year $2.8 million insurance recovery related to a GATX repair facility in Europe.

Rail Regulatory Update

In 2009, the U.S. Pipeline and Hazardous Materials Safety Administration, in coordination with the Federal Railroad Administration (“FRA”) issued final interim rules (the “FRA Interim Rules”) that, among other things, established new interim design standards for pressurized tank cars that transport toxic-by-inhalation hazardous materials (“TIH cars”). The designation “final interim” indicates that the FRA intends to continue to research enhanced design standards for TIH cars and will issue additional rulemaking in the future that will prescribe final design requirements. Under the FRA Interim Rules, TIH cars manufactured after the effective date of the rules must be built to a higher pressure class rating relative to U.S. Department of Transportation specifications for tank cars used to transport other commodities. Unlike the original version of the rules proposed in 2008, the FRA Interim Rules as adopted do not include a retirement schedule for TIH cars manufactured prior to effective date of the rules. However, the FRA Interim Rules require that existing TIH cars receive appropriate certification from the Association of American Railroads (“AAR”) in order to remain in TIH service. All GATX tank cars currently in TIH service have received this certification. As of September 30, 2010, only 1,668 TIH cars remained in service in GATX’s fleet (approximately 1.5% of its North American fleet) and, based upon management’s review to date, GATX does not expect that the FRA Interim Rules will have a material impact on the Company’s financial position or results of operations.

Specialty

Specialty’s total asset base, including off balance sheet assets, was $721.7 million at September 30, 2010, compared to $676.9 million at December 31, 2009, and $677.0 million at September 30, 2009. Investment volume was $52.6 million in the first nine months of 2010 compared to $85.9 million in the prior year period. Investments in 2010 primarily consisted of $27.3 million of equipment and $24.9 million in affiliates. Specialty continues to evaluate investment opportunities in a disciplined manner, focusing on targeted asset types, asset cost and appropriate risk adjusted returns. Marine affiliate market conditions remain under pressure due to decreased demand for transport services as well as a greater number of vessels serving these markets. Specialty’s aircraft engine leasing affiliate continues to produce positive operating results.

Components of Specialty’s operating results are outlined below (in millions):


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2010		2009		2010		2009
Gross Income
Lease income	$	13.6	$	13.2	$	41.3	$	41.5
Asset remarketing income		7.4		2.9		12.9		13.8
Other income		—		0.3		0.5		1.8

Revenues		21.0		16.4		54.7		57.1
Affiliate earnings		7.8		12.0		28.8		31.8

		28.8		28.4		83.5		88.9
Ownership Costs
Depreciation		4.6		4.7		13.0		14.5
Interest expense, net		7.3		6.9		21.0		19.6
Operating lease expense		0.3		0.2		1.0		1.0

		12.2		11.8		35.0		35.1

Other Costs and Expenses		3.0		3.4		8.3		10.3

Segment Profit	$	13.6	$	13.2	$	40.2	$	43.5

Specialty’s Portfolio Data

The following table summarizes information on the owned and managed Specialty portfolio (in millions):


	September 30		December 31		March 31		June 30		September 30
	2009		2009		2010		2010		2010
Net book value of owned assets (a)		677.0		676.9		694.6		699.4		721.7
Net book value of managed portfolio		262.3		251.9		247.3		228.1		215.1


(a)		Includes off balance sheet assets

Comparison of the First Nine Months of 2010 to the First Nine Months of 2009

Segment Profit

Specialty’s segment profit for the first nine months of 2010 was $3.3 million lower than the prior year, primarily due to lower affiliate earnings, partially offset by lower other costs and expenses.

Gross Income

Lease income was comparable to the prior year as modest differences in income resulted primarily from the timing of new investments and asset dispositions. Asset remarketing income was also comparable to the prior year. Other income decreased $1.3 million, primarily due to lower fee income. Share of affiliates’ earnings decreased $3.0 million, primarily due to lower marine affiliate operating earnings which reflect lower charter rates and the impact of several out of service vessels undergoing repair work.

Ownership Costs

Ownership costs were comparable to the prior year.

Other Costs and Expenses

Other costs and expenses decreased $2.0 million, primarily due to lower provisions for losses and asset impairment charges.

Comparison of the Third Quarter of 2010 to the Third Quarter of 2009

Segment Profit

Specialty’s segment profit for the third quarter of 2010 approximated the prior year, as higher asset remarketing income was largely offset by lower affiliate earnings.

Gross Income

Lease income was $0.4 million higher, primarily due to income from new investments. Asset remarketing income was $4.5 million higher, primarily due to a gain on a sales type lease recorded in the current year. Share of affiliates’ earnings decreased $4.2 million, primarily due to lower affiliate asset remarketing gains.

Ownership Costs

Ownership costs were comparable to the prior year.

Other Costs and Expenses

Other costs and expenses decreased $0.4 million, primarily due to the absence of asset impairment charges taken in the prior year.

ASC

The Great Lakes dry bulk transportation market entered 2010 with significant uncertainty after experiencing record lows in 2009 in terms of volume of commodities transported, driven by the capacity reductions in the steel industry and the resultant decline in demand for iron ore. An increase in economic activity in 2010 led to a partial recovery in steel production and a significant increase in demand for iron ore. ASC is operating 13 vessels in 2010 compared to 8 vessels in the prior year. During the first nine months of 2010, ASC carried 19.5 million net tons of freight compared to 12.6 million net tons carried in the prior year, a reflection of the increase in demand for iron ore noted above.

Components of ASC’s operating results are outlined below (in millions):


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2010		2009		2010		2009
Gross Income
Marine operating revenues	$	64.8	$	36.3	$	125.5	$	75.7
Lease income		1.1		1.0		3.1		3.1

		65.9		37.3		128.6		78.8
Ownership Costs
Depreciation		3.6		3.2		6.9		6.3
Interest expense, net		2.0		2.2		6.3		6.8

		5.6		5.4		13.2		13.1

Other Costs and Expenses
Maintenance expense		4.1		4.8		8.2		10.2
Marine operating expense		43.7		25.8		85.2		51.0
Other costs		—		—		—		(5.6	)

		47.8		30.6		93.4		55.6

Segment Profit	$	12.5	$	1.3	$	22.0	$	10.1

Comparison of the First Nine Months of 2010 to the First Nine Months of 2009

Segment Profit

ASC’s segment profit for the first nine months of 2010 was $11.9 million higher than the prior year. The prior year results included the receipt of a $5.6 million litigation settlement. Excluding the impact of the litigation settlement, the increase from the prior year was primarily due to significantly higher freight volume and lower maintenance expense.

Gross Income

Gross income increased $49.8 million, primarily due to significantly higher iron ore freight volume, higher freight rates and higher fuel surcharges (which are offset in operating expenses).

Ownership Costs

Ownership costs between the two periods were comparable.

Other Costs and Expenses

Maintenance costs decreased $2.0 million due to lower required vessel maintenance and repairs in 2010. Marine operating expenses increased $34.2 million, primarily due to increased shipping activity in 2010 and increased costs for fuel. Other costs in 2009 reflect the receipt of the litigation settlement.

Comparison of the Third Quarter of 2010 to the Third Quarter of 2009

Segment Profit

ASC’s segment profit for the third quarter of 2010 was $11.2 million higher than the prior year, primarily due to significantly higher freight volume and lower maintenance expense.

Gross Income

Gross income increased $28.6 million, primarily due to significantly higher iron ore freight volume, higher freight rates and higher fuel surcharges (which are offset in operating expenses).

Ownership Costs

Ownership costs between the two periods were comparable.

Other Costs and Expenses

Maintenance costs decreased $0.7 million due to lower required vessel maintenance and repairs in 2010. Marine operating expenses increased $17.9 million, primarily due to increased shipping activity in 2010 and increased costs for fuel.

Other

Other is comprised of selling, general and administrative expenses (“SG&A”), unallocated interest expense and miscellaneous income and expense not directly associated with the reporting segments and eliminations.

Components of Other are outlined below (in millions):


	Three Months Ended						Nine Months Ended
	September 30						September 30
	2010			2009			2010			2009
Selling, general and administrative expenses	$	31.0		$	34.8		$	97.3		$	101.9
Unallocated interest expense, net		—			0.6			2.3			3.0
Other income and expense, including eliminations		(0.5	)		(0.4	)		(5.8	)		(2.5	)
Income taxes		7.2			7.6			18.5			26.5

SG&A for the first nine months of 2010 was $4.6 million lower than the prior year and $3.8 million lower for the third quarter of 2010, primarily due to reduced spending across a number of functional areas. Unallocated interest expense (the difference between external interest expense and amounts allocated to the reporting segments in accordance with assigned leverage targets) for the first nine months of 2010 was $0.7 million lower than the prior year period, and for the third quarter of 2010 was $0.6 million lower than the prior year period. These decreases were primarily due to the timing of debt issuances and investment spending in both years. Other income and expense for the first nine months of 2010 primarily reflects a $6.5 million benefit from the resolution of a litigation matter, partially offset by a $2.0 million addition to an environmental reserve related to a sold facility. Other income and expense for the first nine months of 2009 primarily consisted of the reversal of a non-income tax accrual.

Income Taxes

GATX’s effective tax rate was 23% for the nine months ended September 30, 2010, compared to 31% for the nine months ended September 30, 2009. In the current year, GATX’s liability for unrecognized tax benefits was reduced by $3.7 million in connection with the close of various federal and foreign tax audits. Additionally, a $1.9 million deferred tax benefit was recognized in connection with a reduction in the statutory tax rates in the United Kingdom. In 2009, a change in the functional currency tax election of a foreign wholly-owned subsidiary resulted in the recognition of a $2.4 million deferred tax benefit. Excluding the effect of the tax benefits from each year, GATX’s effective tax rate for the first nine months of 2010 and 2009 was 30% and 33%, respectively. The difference between the 2010 and 2009 effective tax rates was driven by variability in the mix of domestic and foreign sourced pre-tax earnings, which is taxed at different rates.

Cash Flow and Liquidity

GATX generates a significant amount of cash from its operating activities and proceeds from its investment portfolio, which is used to service debt, pay dividends, and fund portfolio investments and capital additions. Cash flows from operations and portfolio proceeds are impacted by changes in working capital and the timing of asset dispositions. As a result, cash flow components may vary materially from quarter to quarter and year to year. As of September 30, 2010, GATX had unrestricted cash balances of $23.6 million.

Net cash provided by operating activities for the first nine months of 2010 was $150.6 million, an increase of $18.6 million from the prior year. The increase was primarily driven by lower U.S. pension plan contributions and other changes in working capital, partially offset by lower lease income. Current year U.S. pension plan contributions were $14.4 million compared to $38.3 million in the prior year. Additionally, in the first quarter of 2010, GATX discovered a clerical error in the preparation of its Consolidated Statement of Cash Flows for the fourth quarter of 2009, resulting in a $13.1 million overstatement of net cash provided by operating activities for the year ending December 31, 2009. Management has determined that the effect of this error is immaterial to prior periods and adjusted its Consolidated Statement of Cash Flows in 2010 to correct this error.

Portfolio investments and capital additions for the first nine months of 2010 totaled $244.5 million, a decrease of $132.0 million from the prior year. Rail and Specialty investments in 2010 were $181.5 million and $52.6 million, respectively, compared to $277.3 million and $85.9 million, respectively, in 2009. Specialty investments included scheduled repayments of loans to affiliates of $6.8 million in 2010 and $54.3 million in 2009.

Portfolio proceeds for the first nine months of 2010 of $55.4 million were comparable to prior year. Proceeds from sales of other assets were $21.9 million for the first nine months of 2010 and $17.0 million for the first nine months of 2009 and primarily consisted of cash received from the scrapping of railcars. Other proceeds for the first nine months of 2009 consisted of $33.1 million received from the partial liquidation of a money market fund investment.

GATX funds its investments and meets its debt, lease and dividend obligations through available cash balances, cash generated from operating activities, portfolio proceeds, sales of other assets, commercial paper issuances, committed revolving credit facilities and the issuance of secured and unsecured debt. Cash from operations and commercial paper issuances are the primary sources of cash used to fund daily operations. GATX utilizes both domestic and international capital markets and banks for its debt financing needs.

Proceeds from the issuance of debt for the first nine months of 2010 were $259.1 million (net of hedges and debt issuance costs). Debt repayments of $298.0 million for the first nine months of 2010 primarily consisted of debt maturities and the repayment of convertible debt principal.

In the first nine months of 2009, 2.8 million shares were repurchased for $55.1 million. These purchases were made under the Company’s $200 million share repurchase program and as of September 30, 2010, $68.6 million of authorization remains. There were no stock repurchases in the first nine months of 2010.

GATX has a $550 million unsecured revolving credit facility that matures in May 2012. As of September 30, 2010, availability under the facility was $525.5 million, with $15.0 million of commercial paper outstanding and $9.5 million of letters of credit issued, both of which are backed by the facility.

The $550 million revolving credit facility contains various restrictive covenants, including requirements to maintain a fixed charge coverage ratio and an asset coverage test. The indentures for GATX’s public debt contain limitation on liens provisions that limit the amount of secured indebtedness that GATX may incur, subject to several exceptions, including those permitting an unlimited amount of purchase money indebtedness and nonrecourse indebtedness. The loan agreements for certain of GATX’s wholly-owned European Rail subsidiaries (collectively, “GRE”) also contain restrictive covenants, including leverage and cash flow covenants specific to those subsidiaries, restrictions on making loans and limitations on the ability of these subsidiaries to repay loans to certain related parties (including GATX) and to pay dividends to GATX. The covenants relating to loans and dividends effectively limit the ability of GRE to transfer funds to GATX. GATX does not anticipate any covenant violations nor does it anticipate that any of these covenants will restrict its operations or its ability to procure additional financing. As of September 30, 2010, GATX was in compliance with all covenants and conditions of its credit agreements.

The availability of GATX’s funding options may be affected by certain factors, including the global capital market environment and outlook as well as GATX’s financial performance. GATX’s access to capital markets at competitive rates is dependent on its credit rating and rating outlook, as determined by rating agencies such as Standard & Poor’s (“S&P”) and Moody’s Investor Service (“Moody’s”). In August 2010, S&P lowered its credit rating on GATX’s long-term unsecured debt from BBB+ to BBB and revised GATX’s rating outlook from negative to stable. In September 2010, Moody’s maintained GATX’s credit rating at Baa1 and revised GATX’s rating outlook from negative to stable. GATX’s short-term unsecured debt ratings of A-2 by S&P and P-2 by Moody’s are unchanged.

Critical Accounting Policies

There have been no changes to GATX’s critical accounting policies during the nine months ending September 30, 2010; refer to GATX’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, for a summary of GATX’s policies.

Non-GAAP Financial Measures

This report includes certain financial performance measures computed using non-GAAP components as defined by the SEC. As required under SEC rules, GATX has provided a reconciliation of these non-GAAP components to the most directly comparable GAAP components. Financial performance measures disclosed in this report are intended to provide additional insight into the historical operating results and financial position of the Company. Management uses these performance measures to assist in analyzing GATX’s financial performance from period to period and to establish criteria for compensation decisions. These measures are not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies.

Glossary of Key Terms

	•		Non-GAAP Financial Measures — Numerical or percentage based measures of a company’s historical performance, financial position or liquidity calculated using a component different from that presented in the financial statements as prepared in accordance with GAAP.

	•		Off Balance Sheet Assets — Assets, primarily railcars, which are financed with operating leases and therefore not recorded on the balance sheet. GATX estimates the off balance sheet asset amount by calculating the present value of committed future operating lease payments using the interest rate implicit in each lease.

	•		On Balance Sheet Assets — Total assets as reported on the balance sheet.

	•		Total On and Off Balance Sheet Assets — Management believes that the total of on and off balance sheet assets provides investors with a more meaningful representation of the assets deployed in GATX’s businesses.

Reconciliation of non-GAAP financial information (in millions):


	September 30		December 31		March 31		June 30		September 30
	2009		2009		2010		2010		2010
Consolidated On Balance Sheet Assets	$	5,258.0	$	5,206.4	$	5,307.0	$	5,083.0	$	5,133.5
Off Balance Sheet Assets		1,008.4		1,016.1		942.9		944.1		982.9

Total On and Off Balance Sheet Assets	$	6,266.4	$	6,222.5	$	6,249.9	$	6,027.1	$	6,116.4

Shareholders’ Equity	$	1,112.2	$	1,102.6	$	1,096.2	$	1,044.9	$	1,098.6

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Since December 31, 2009, there have been no material changes in GATX’s interest rate and foreign currency exposures or types of derivative instruments used to hedge these exposures. For a discussion of the Company’s exposure to market risk, refer to Part II: Item 7A, Quantitative and Qualitative Disclosure about Market Risk of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

Item 4. Controls and Procedures

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the Company’s 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, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, the Company’s disclosure controls and procedures were effective.

No change in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the quarter ended September 30, 2010, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

EXHIBIT INDEX


Exhibit
Number		Exhibit Description

		*Filed with this Report*:

31A.		Certification Pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a) (CEO Certification).

31B.		Certification Pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a) (CFO Certification).

32.		Certification Pursuant to 18 U.S.C. Section 1350 (CEO and CFO Certification).

101.		The following materials from GATX Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2010 and December 31, 2009, (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2010 and 2009, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009, and (iv) Notes to the Consolidated Financial Statements, tagged as block of text.*


*		Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.


	GATX CORPORATION (Registrant)
	/s/ Robert C. Lyons
	Robert C. Lyons
	Senior Vice President and Chief Financial Officer (Duly Authorized Officer)

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Item No.	Page No.
Part I — FINANCIAL INFORMATION

Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)		1
Consolidated Statements of Income (Unaudited)		2
Consolidated Statements of Cash Flows (Unaudited)		3
Notes to the Consolidated Financial Statements (Unaudited)		4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements		15
Business Overview		15
Discussion of Operating Results		16
Segment Operations		17
Cash Flow and Liquidity		25
Critical Accounting Policies		26
Non-GAAP Financial Measures		26

Item 3. Quantitative and Qualitative Disclosures about Market Risk		27

Item 4. Controls and Procedures		27

Part II — OTHER INFORMATION

Item 1. Legal Proceedings		28

Item 1A. Risk Factors		28

Item 6. Exhibits		29

SIGNATURE		30

EXHIBIT INDEX		31
EX-31.A
EX-31.B
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT