Fair Value Disclosure

9 Months Ended

Sep. 30, 2011

Fair Value Disclosures [Abstract]

Fair Value Disclosure

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):

	September 30, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Interest rate derivatives (a)	$	17.3	$	—	$	17.3	$	—
Foreign exchange rate derivatives (b)		2.3		—		2.3		—
Available for sale equity securities		3.3		3.3		—		—
Liabilities
Interest rate derivatives (a)		3.0		—		3.0		—

	December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Interest rate derivatives (a)	$	17.6	$	—	$	17.6	$	—
Available for sale equity securities		4.3		4.3		—		—
Liabilities
Interest rate derivatives (a)		4.6		—		4.6		—
Foreign exchange rate derivatives (b)		0.5		—		0.5		—

(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. 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.

The following tables set forth certain disclosures relating to GATX’s non-recurring Level 3 fair value measurements (in millions):

Nine months ended September 30	Fair Value of Assets		Carrying Value of Assets		Impairment Losses
2011	$	3.2	$	5.4	$	2.2
2010		3.8		9.6		5.8

Three months ended September 30	Fair Value of Assets		Carrying Value of Assets		Impairment Losses
2011	$	1.0	$	2.0	$	1.0
2010		0.3		0.7		0.4

For the first nine months and third quarter of 2011, impairment losses of $2.2 million and $1.0 million, respectively, primarily related to scrapped wheelsets in Rail’s European fleet. For the first nine months and third quarter of 2010, impairment losses of $1.0 million and $0.4 million, respectively, related to scrapped wheelsets in Rail’s European fleet. Also in the first nine months of 2010, impairment losses of $4.8 million related to an industry-wide, regulatory mandate issued by the Association of American Railroads that resulted in a significant decrease to the expected economic life of 358 aluminum hopper railcars. In each case, the fair value was determined using discounted cash flow methodologies and third-party appraisal data, as applicable.

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 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, 2011 and December 31, 2010, GATX had three instruments outstanding with an aggregate notional amount of $350.0 million for each period. As of September 30, 2011, 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, 2011 and December 31, 2010, GATX had 12 instruments and 13 instruments outstanding, respectively, with an aggregate notional amount of $78.0 million and $130.4 million, respectively. As of September 30, 2011, these derivatives had maturities ranging from 2012-2015. Within the next 12 months, GATX expects to reclassify $7.1 million ($4.5 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 certain 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, 2011 was $3.0 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 (in millions):

Derivative Designation	Location of Gain (Loss) Recognized	Three Months  Ended September 30						Nine Months  Ended September 30
		2011			2010			2011			2010
Fair value hedges (a)	Interest expense	$	0.4		$	4.0		$	(0.3	)	$	11.7
Cash flow hedges	Amount recognized in other comprehensive income (loss) (effective portion)		0.8			(2.7	)		(5.1	)		(10.9	)
Cash flow hedges	Amount reclassified from accumulated other comprehensive loss to interest expense (effective portion)		(2.1	)		(2.0	)		(6.0	)		(5.7	)
Cash flow hedges	Amount reclassified from accumulated other comprehensive loss to operating lease expense (effective portion)		(0.4	)		(0.4	)		(1.2	)		(1.2	)
Cash flow hedges	Amount recognized in other expense (ineffective portion)		(0.4	)		—			(0.4	)		(0.1	)

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

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 loans and fixed and floating rate debt were estimated based on discounted cash flow analyses using interest rates representative of loans with similar terms to borrowers of comparable credit quality. The following table sets forth the carrying amounts and fair values of GATX’s other financial instruments as of (in millions):

	September 30, 2011				December 31, 2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Investment funds	$	4.4	$	7.3	$	6.8	$	10.2
Loans		18.6		18.7		0.5		0.5
Liabilities
Recourse fixed rate debt	$	2,653.9	$	2,784.7	$	2,459.3	$	2,615.9
Recourse floating rate debt		491.7		487.5		342.5		341.5
Nonrecourse debt		157.8		168.0		217.2		233.0