Fair Value Disclosure

12 Months Ended

Dec. 31, 2011

Fair Value Disclosures [Abstract]

Fair Value Disclosure

NOTE 9.     Fair Value Disclosure

The following tables set forth GATX’s assets and liabilities measured at fair value on a recurring basis as of December 31 (in millions):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total December 31, 2011
Assets
Interest rate derivatives(a)	$	—	$	15.3	$	—	$	15.3
Foreign exchange rate derivatives(b)		—		2.1		—		2.1
Available for sale equity securities		2.9		—		—		2.9
Liabilities
Interest rate derivatives(a)		—		2.1		—		2.1
Interest rate derivatives(b)		—		0.3		—		0.3

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total December 31, 2010
Assets
Interest rate derivatives(a)	$	—	$	17.6	$	—	$	17.6
Available for sale equity securities		4.3		—		—		4.3
Liabilities
Interest rate derivatives(a)		—		4.3		—		4.3
Interest rate derivatives(b)		—		0.3		—		0.3
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 on an active exchange. Derivatives 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 table sets forth certain disclosures relating to GATX’s non-recurring Level 3 fair value measurements as of December 31:

	Fair Value of Assets		Carrying Value of Assets		Impairment Losses
2011	$	6.8	$	13.5	$	6.7
2010		8.1		16.2		8.1

In 2011, impairment losses of $2.6 million related to scrapped wheelsets in Rail’s European fleet and an aggregate of $4.1 million primarily related to an aircraft held for lease and a helicopter held for sale. In 2010, 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, losses of $1.5 million related to scrapped wheelsets in Rail’s European fleet, and losses of $1.8 million related to an aircraft held for lease.

Derivative instruments

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 December 31, 2011 and 2010, GATX had three instruments outstanding with an aggregate notional amount of $350.0 million for each period. As of December 31, 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 December 31, 2011 and 2010, GATX had 11 instruments and 12 instruments outstanding, respectively, with an aggregate notional amount of $73.4 million and $127.0 million, respectively. As of December 31, 2011, these derivatives had maturities ranging from 2012-2014. Within the next 12 months, GATX expects to reclassify $7.0 million ($4.4 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 December 31, 2011, was $2.4 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 for the years ended December 31 were (in millions):

Derivative Designation	Location of Gain (Loss) Recognized	2011			2010			2009
Fair value hedges(a)	Interest expense	$	(2.3	)	$	7.4		$	(9.3	)
Cash flow hedges	Other comprehensive (loss) income (effective portion)		(5.9	)		(8.1	)		15.8
Cash flow hedges	Interest expense (effective portion reclassified from accumulated other comprehensive loss)		(2.5	)		(7.7	)		(6.2	)
Cash flow hedges	Operating lease expense (effective portion reclassified from accumulated other comprehensive loss)		(1.5	)		(1.5	)		(1.4	)
Cash flow hedges	Other expense (ineffective portion)		—			(0.1	)		(0.4	)
Non-designated	Other expense		(1.8	)		(0.4	)		(0.2	)

(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, rent and other receivables, accounts payable, and commercial paper and bank credit facilities approximate fair value due to the short maturity of those instruments. The fair values of investment funds are based on the best information available and may include quoted investment fund values. The fair values of fixed and floating rate debt were estimated based on discounted cash flow analyses using interest rates currently offered for loans with similar terms to borrowers of similar credit quality. The following table sets forth the carrying amounts and fair values of GATX’s other financial instruments as of December 31 (in millions):

	2011 Carrying Amount		2011 Fair Value		2010 Carrying Amount		2010 Fair Value
Assets
Investment Funds	$	2.7	$	7.4	$	6.8	$	10.2
Loans		30.4		30.7		0.5		0.5
Liabilities
Recourse fixed rate debt	$	2,627.2	$	2,754.9	$	2,459.3	$	2,615.9
Recourse floating rate debt		727.6		714.8		342.5		341.5
Nonrecourse debt		149.4		159.3		217.2		233.0