Fair Value Disclosure

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosure

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):

Assets	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total December 31, 2012
Interest rate derivatives (a)	$	—	$	10.2	$	—	$	10.2
Available for sale equity securities	3.3		—		—		3.3
Liabilities
Interest rate derivatives (a)	—		1.0		—		1.0
Interest rate derivatives (b)	—		0.3		—		0.3
Foreign exchange rate derivatives (b)	—		2.1		—		2.1

Assets	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total December 31, 2011
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

_________

(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 in 2012 and 2011(in millions):

	Fair Value of Assets		Impairment Losses
2012
Investment in affiliated companies	$	32.9	$	14.8
Operating assets	0.7		0.7
2011
Operating assets	2.8		4.1

In 2012, impairment losses related to the Enerven affiliate and a corporate aircraft on lease. In 2011, impairment losses related to the corporate aircraft on lease and a helicopter held for sale. The fair value of the Enerven affiliate was primarily based on expected final proceeds to be received after all sale and liquidation proceedings are concluded. The fair values of the operating assets were based primarily on the expected future proceeds to be received from the assets, including their disposition.

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, 2012 and 2011, GATX had one instrument and three instruments outstanding, respectively, with an aggregate notional amount of $100.0 million and $350.0 million, respectively. As of December 31, 2012, this derivative had a maturity in 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, 2012 and 2011, GATX had 12 instruments and 11 instruments outstanding, respectively, with an aggregate notional amount of $129.2 million and $73.4 million, respectively. As of December 31, 2012, these derivatives had maturities ranging from 2013-2019. Within the next 12 months, GATX expects to reclassify $6.8 million ($4.3 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.

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 December 31, 2012, was $3.4 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	2012			2011			2010
Fair value hedges *	Interest expense	$	5.0		$	2.3		$	(7.4	)
Cash flow hedges	Other comprehensive loss (effective portion)	(0.2		)	(5.9		)	(8.1		)
Cash flow hedges	Interest expense (effective portion reclassified from accumulated other comprehensive loss)	4.2			2.5			7.7
Cash flow hedges	Operating lease expense (effective portion reclassified from accumulated other comprehensive loss)	1.4			1.5			1.5
Cash flow hedges	Other (expense) income (ineffective portion)	(0.1		)	—			(0.1		)
Non-designated	Other (expense) income	(5.0		)	1.8			0.4

_________

(*) 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 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 following table sets forth the carrying amounts and fair values of GATX’s other financial instruments as of December 31 (in millions):

	2012		2012		2011		2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Investment Funds	$	2.5	$	5.8	$	2.7	$	7.4
Loans	27.2		27.7		30.4		30.7
Liabilities
Recourse fixed rate debt	$	2,343.3	$	2,513.4	$	2,627.2	$	2,754.9
Recourse floating rate debt	809.1		807.9		727.6		714.8
Nonrecourse debt	130.6		138.2		149.4		159.3