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 shows GATX’s commercial commitments as of December 31 (in millions):



	2012		2011
Affiliate guarantees	$	42.0	$	42.0
Asset residual value guarantees	11.2		33.9
Lease payment guarantees	41.0		47.0
Performance bonds	0.6		1.3
Standby letters of credit	9.7		9.8
Total commercial commitments *	$	104.5	$	134.0

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(*)	At December 31, 2012, the carrying value of liabilities on the balance sheet for commercial commitments was $6.4 million. The expirations of these commitments range from 2013 to 2022. GATX is not aware of any event that would require it to satisfy any of these commitments.

Affiliate guarantees generally involve guaranteeing repayment of the financing utilized to acquire assets and are in lieu of making direct equity investments in the affiliate. Affiliate guarantees exclude an affiliate guarantee for which no stated maximum potential future payment is provided and for which the likelihood of performance under the guarantee is considered remote. GATX is not aware of any event that would require it to satisfy these guarantees and expects the affiliates to generate sufficient cash flow to satisfy their financing 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 net gain on asset dispositions. 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 these guarantees will be reduced by the value realized from disposition of the asset.

Lease payment guarantees represent GATX’s guarantee of third-party lease payments to financial institutions. Any liability resulting from GATX’s performance pursuant to these guarantees will be reduced by the value realized from the underlying asset or group of assets.

GATX and its subsidiaries are also parties to standing letters of credit and performance bonds primarily related to workers’ compensation and general liability insurance coverages. No material claims have been made against these obligations and as of December 31, 2012, GATX does not expect any material losses to result from these obligations as performance is not anticipated to be required.