Fair Value Disclosure

9 Months Ended

Sep. 30, 2012

Fair Value Disclosure

NOTE 5.         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, 2012		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)	$	11.4	$	—	$	11.4	$	—
Available for sale equity securities and warrants		3.4		3.4		—		—
Liabilities
Interest rate derivatives (a)		1.0		—		1.0		—
Interest rate derivatives (b)		0.3		—		0.3		—
Foreign exchange rate derivatives (b)		0.9		—		0.9		—

	December 31, 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)	$	15.3	$	—	$	15.3	$	—
Foreign exchange rate derivatives (b)		2.1		—		2.1		—
Available for sale equity securities and warrants		2.9		2.9		—		—
Liabilities
Interest rate derivatives (a)		2.1		—		2.1		—
Interest rate derivatives (b)		0.3		—		0.3		—

(a) Designated as hedges

(b) Not designated as hedges

Available for sale equity securities are valued based on quoted prices on an active exchange. Warrants are valued based on the fair value of the underlying securities. 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.

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 September 30, 2012 and December 31, 2011, GATX had three instruments outstanding with an aggregate notional amount of $350.0 million for each period. As of September 30, 2012, 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, 2012 and December 31, 2011, GATX had 12 instruments outstanding with an aggregate notional amount of $99.1 million and 11 instruments outstanding with an aggregated notional amount of $73.4 million, respectively. As of September 30, 2012, these derivatives had maturities ranging from 2012-2019. Within the next 12 months, GATX expects to reclassify $6.9 million ($4.4 million after-tax) of net losses on previously terminated derivatives from accumulated unrealized loss on derivative instruments to earnings. Amounts are reclassified when interest and operating lease expense attributable to the hedged transactions affect earnings.

Non-designated Derivatives — GATX does not hold or issue derivative financial instruments for purposes other than hedging, although certain derivatives are not designated as accounting hedges. Changes in the fair value of these derivatives are recognized in earnings immediately.

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, 2012, was $1.3 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 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
		2012			2011			2012			2011
Fair value hedges (a)	Interest expense	$	(1.3	)	$	0.4		$	(3.9	)	$	(0.3	)
Cash flow hedges	Other comprehensive income (loss) (effective portion)		0.3			0.8			1.0			(5.1	)
Cash flow hedges	Interest expense (effective portion reclassified from accumulated unrealized loss on derivative instruments)		(1.1	)		(2.1	)		(4.1	)		(6.0	)
Cash flow hedges	Operating lease expense (effective portion reclassified from accumulated unrealized loss on derivative instruments)		(0.4	)		(0.4	)		(1.1	)		(1.2	)
Non-designated	Other expense		(2.1	)		2.6			(0.6	)		2.3

(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 (which are accounted for under the cost method) are 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 currently offered for loans with similar terms to borrowers of similar credit quality. The inputs used in estimating each of these fair values are significant observable inputs and therefore are classified in Level 2 of the fair value hierarchy.

The following table sets forth the carrying amounts and fair values of GATX’s other financial instruments as of (in millions):

	September 30, 2012				December 31, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Investment funds	$	2.5	$	5.8	$	2.7	$	7.4
Loans		28.0		28.5		30.4		30.7
Liabilities
Recourse fixed rate debt	$	2,661.4	$	2,830.0	$	2,627.2	$	2,754.9
Recourse floating rate debt		686.0		683.6		727.6		714.8
Nonrecourse debt		133.3		142.2		149.4		159.3