UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________

FORM 10-Q

__________________________________________



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2018



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-2328

GATX Corporation

(Exact name of registrant as specified in its charter)



New York	36-1124040
(State of incorporation)	(I.R.S. Employer Identification No.)
~~222 West Adams Street~~233 South Wacker Drive
Chicago, Illinois ~~60606-5314~~60606-7147
(Address of principal executive offices, including zip code)
(312) 621-6200
(Registrant's telephone number, including area code)

Indicate by check mark whether the ~~registrant~~registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company, ~~(as defined~~" and "emerging growth company" in Rule 12b-2 of the Exchange ~~Act).~~Act.



x	Large accelerated filer	¨	~~Accelerated filer~~Smaller reporting company
¨	Non-accelerated filer	¨	~~Smaller reporting~~Emerging growth company
¨	Accelerated filer		¨	~~Emerging growth company~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

Common shares outstanding were ~~38.3~~37.6 million at September 30, ~~2017.~~2018.

GATX CORPORATION

FORM 10-Q

QUARTERLY REPORT FOR THE PERIOD ENDED SEPTEMBER 30, ~~2017~~2018

INDEX



Item No.		Page No.
~~Part I - FINANCIAL INFORMATION~~
	Forward-Looking Statements	1

Part I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets (Unaudited)	2
	Consolidated Statements of Comprehensive Income (Unaudited)	3
	Consolidated Statements of Cash Flows (Unaudited)	4

	Notes to the Consolidated Financial Statements (Unaudited)
	Note 1. Description of Business	5
	Note 2. Basis of Presentation	5
	Note 3. Revenue	8
	Note 4. Fair Value Disclosure	9
	Note 5. Pension and Other Post-Retirement Benefits	11
	Note 6. Share-Based Compensation	12
	Note 7. Income Taxes	12
	Note 8. Commercial Commitments	13
	Note 9. Earnings per Share	13
	Note 10. Accumulated Other Comprehensive Income (Loss)	14
	Note 11. Legal Proceedings and Other Contingencies	15
	Note 12. Financial Data of Business Segments	15

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	~~Business~~ Overview	1920
	Discussion of Operating Results	2021
	Segment Operations	2122
	Cash Flow and Liquidity	3638
	Critical Accounting Policies and Estimates	3941
	Non-GAAP Financial Measures	3941
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4345
Item 4.	Controls and Procedures	4345

Part II - OTHER INFORMATION
Item 1.	Legal Proceedings	4445
Item 1A.	Risk Factors	4445
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4445
Item 6.	Exhibits	4446
SIGNATURE		4547

FORWARD-LOOKING STATEMENTS

Statements in this report not based on historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and, accordingly, involve known and unknown risks and uncertainties that are difficult to predict and could cause our actual results, performance, or achievements to differ materially from those discussed. These ~~statements~~ include statements as to our future expectations, beliefs, plans, strategies, objectives, events, conditions, financial performance, prospects, or future events. In some cases, forward-looking statements can be identified by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “outlook,” “continue,” “likely,” “will,” ~~and~~ “would”, and similar words and phrases. Forward-looking statements are necessarily based on estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. Accordingly, you should not place undue reliance on forward-looking statements, which speak only as of the date they are made, and are not guarantees of future performance. We do not undertake any obligation to publicly update or revise these forward-looking statements.

A detailed discussion of the known material risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, and in our other filings with the Securities and Exchange Commission ("SEC"). The following factors, in addition to those discussed under "Risk Factors", in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, could cause actual results to differ materially from our current expectations expressed in forward looking statements:



• exposure to damages, fines, criminal and civil penalties, and reputational harm arising from a negative outcome in litigation, including claims arising from an accident involving our railcars • inability to maintain our assets on lease at satisfactory rates due to oversupply of railcars in the market or other changes in supply and demand • ~~weak economic conditions and other factors that may decrease~~a significant decline in customer demand for our railcars or other assets ~~and~~or services, including as a result of: •◦ ~~decreased demand for portions of~~weak macroeconomic conditions ◦ weak market conditions in our ~~railcar fleet due to~~ customers' businesses ◦ declines in harvest or production volumes ◦ adverse changes in the price of, or demand for, commodities ~~that are shipped~~ ◦ changes in railroad operations or efficiency ◦ changes in supply chains ◦ availability of pipelines, trucks, and other alternative modes of transportation ◦ other operational or commercial needs or decisions of our ~~railcars~~customers • higher costs associated with increased railcar assignments following non-renewal of leases, customer defaults, and compliance maintenance programs or other maintenance initiatives • events having an adverse impact on assets, customers, or regions where we have a concentrated investment exposure • financial and operational risks associated with long-term railcar purchase commitments, including increased costs due to tariffs or trade disputes • reduced opportunities to generate asset remarketing income	• operational and financial risks related to our affiliate investments, including the Rolls-Royce & Partners Finance joint ventures (collectively the ~~“RRPF affiliates”~~"RRPF affiliates") • the impact of changes to the Internal Revenue Code as a result of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), and uncertainty as to how this legislation will be interpreted and applied. • fluctuations in foreign exchange rates	• failure to successfully negotiate collective bargaining agreements with the unions representing a substantial portion of our employees • ~~changes in railroad operations that could decrease demand for railcars, either due to increased railroad efficiency or decreased attractiveness of rail service relative to other modes~~ • ~~the impact of regulatory requirements applicable to tank cars carrying crude, ethanol, and other flammable liquids~~ • asset impairment charges we may be required to recognize • deterioration of conditions in the capital markets, reductions in our credit ratings, or increases in our financing costs • competitive factors in our primary markets, including competitors with a significantly lower cost of capital than GATX • risks related to our international operations and expansion into new geographic markets, including the imposition of new or additional tariffs, quotas, or trade barriers • changes in, or failure to comply with, laws, rules, and regulations • inability to obtain cost-effective insurance • environmental remediation costs • inadequate allowances to cover credit losses in our portfolio • inability to maintain and secure our information technology infrastructure from cybersecurity threats and related disruption of our business

PART I - FINANCIAL INFORMATION

Item 1.Financial Statements

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions, except share data)


	September 30			December 31
	2017			2016			September 30			December 31
	(Unaudited)						2018			2017
Assets
Cash and Cash Equivalents	$	199.2		$	307.5		$	254.5		$	296.5
Restricted Cash	3.7			3.6			4.1			3.2
Receivables
Rent and other receivables	83.2			85.9			85.2			83.4
Finance leases	139.1			147.7			129.0			136.1
Less: allowance for losses	(6.5		)	(6.1		)	(6.5		)	(6.4		)
	215.8			227.5			207.7			213.1

Operating Assets and Facilities	8,915.9			8,446.4			9,262.9			9,045.4
Less: allowance for depreciation	(2,814.6		)	(2,641.7		)	(2,965.0		)	(2,853.3		)
	6,101.3			5,804.7			6,297.9			6,192.1
Investments in Affiliated Companies	449.3			387.0			478.5			441.0
Goodwill	84.6			78.0			83.6			85.6
Other Assets	208.0			297.1			191.1			190.9
Total Assets	$	7,261.9		$	7,105.4		$	7,517.4		$	7,422.4

Liabilities and Shareholders’ Equity
Accounts Payable and Accrued Expenses	$	133.8		$	174.8		$	152.8		$	154.3
Debt
Commercial paper and borrowings under bank credit facilities	15.7			3.8			—			4.3
Recourse	4,266.7			4,253.2			4,397.3			4,371.7
Capital lease obligations	12.8			14.9			11.6			12.5
	4,295.2			4,271.9			4,408.9			4,388.5
Deferred Income Taxes	1,157.7			1,089.4			890.7			853.7
Other Liabilities	205.0			222.1			227.0			233.2
Total Liabilities	5,791.7			5,758.2			5,679.4			5,629.7
Shareholders’ Equity
Common stock, $0.625 par value: Authorized shares — 120,000,000 Issued shares — 67,071,263 and 66,953,606 Outstanding shares — 38,311,330 and 39,442,893	41.6			41.5
Common stock, $0.625 par value: Authorized shares — 120,000,000 Issued shares — 67,325,950 and 67,083,149 Outstanding shares — 37,632,377 and 37,895,641							41.6			41.6
Additional paid in capital	695.8			687.8			703.6			698.0
Retained earnings	1,936.2			1,828.0			2,387.0			2,261.7
Accumulated other comprehensive loss	(129.4		)	(211.1		)	(157.8		)	(109.6		)
Treasury stock at cost (28,759,933 and 27,510,713 shares)	(1,074.0		)	(999.0		)
Treasury stock at cost (29,693,573 and 29,187,508 shares)							(1,136.4		)	(1,099.0		)
Total Shareholders’ Equity	1,470.2			1,347.2			1,838.0			1,792.7
Total Liabilities and Shareholders’ Equity	$	7,261.9		$	7,105.4		$	7,517.4		$	7,422.4

See accompanying notes to consolidated financial statements.

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In millions, except per share data)


	Three Months Ended September 30						Nine Months Ended September 30						Three Months Ended September 30						Nine Months Ended September 30
	2017			2016			2017			2016			2018			2017			2018			2017
Revenues
Lease revenue	$	276.6		$	281.8		$	823.4		$	847.5		$	271.9		$	276.6		$	816.1		$	823.4
Marine operating revenue	62.9			62.1			135.0			139.7			60.8			62.9			130.8			135.0
Other revenue	20.1			19.0			65.7			69.0			17.0			20.1			57.6			65.7
Total Revenues	359.6			362.9			1,024.1			1,056.2			349.7			359.6			1,004.5			1,024.1
Expenses
Maintenance expense	84.9			79.6			247.7			244.6			77.5			84.9			240.7			247.7
Marine operating expense	38.9			39.2			89.8			88.9			39.4			38.9			89.5			89.8
Depreciation expense	78.6			75.9			227.9			221.0			81.6			78.6			240.1			227.9
Operating lease expense	15.8			19.2			46.8			54.5			11.8			15.8			37.5			46.8
Other operating expense	8.5			10.1			25.9			33.7			8.5			8.5			26.2			25.9
Selling, general and administrative expense	42.8			48.1			128.8			127.8			46.5			42.5			137.6			127.8
Total Expenses	269.5			272.1			766.9			770.5			265.3			269.2			771.6			765.9
Other Income (Expense)
Net gain on asset dispositions	9.4			62.7			56.3			122.8			10.3			9.4			72.5			56.3
Interest expense, net	(40.2		)	(36.2		)	(119.4		)	(109.9		)	(42.6		)	(40.2		)	(124.7		)	(119.4		)
Other (expense) income	(2.1		)	4.3			(4.5		)	(2.9		)
Other expense													(3.8		)	(2.4		)	(14.9		)	(5.5		)
Income before Income Taxes and Share of Affiliates’ Earnings	57.2			121.6			189.6			295.7			48.3			57.2			165.8			189.6
Income taxes	(20.4		)	(41.1		)	(60.3		)	(98.6		)	(13.1		)	(20.4		)	(42.8		)	(60.3		)
Share of affiliates’ earnings, net of taxes	12.2			15.2			30.6			29.1			11.8			12.2			39.1			30.6
Net Income	$	49.0		$	95.7		$	159.9		$	226.2		$	47.0		$	49.0		$	162.1		$	159.9
Other Comprehensive Income, Net of Taxes
Foreign currency translation adjustments	15.4			11.0			74.0			16.2			(4.7		)	15.4			(40.2		)	74.0
Unrealized gain on securities	—			1.3			—			1.6
Unrealized gain (loss) on derivative instruments	0.7			0.5			3.6			(6.8		)
Unrealized gain on derivative instruments													1.6			0.7			2.3			3.6
Post-retirement benefit plans	1.4			(6.0		)	4.1			(3.3		)	5.3			1.4			9.1			4.1
Other comprehensive income	17.5			6.8			81.7			7.7
Other comprehensive income (loss)													2.2			17.5			(28.8		)	81.7
Comprehensive Income	$	66.5		$	102.5		$	241.6		$	233.9		$	49.2		$	66.5		$	133.3		$	241.6

Share Data
Basic earnings per share	$	1.27		$	2.39		$	4.10		$	5.55		$	1.25		$	1.27		$	4.29		$	4.10
Average number of common shares	38.6			40.1			39.0			40.7			37.7			38.6			37.8			39.0

Diluted earnings per share	$	1.25		$	2.36		$	4.04		$	5.49		$	1.22		$	1.25		$	4.21		$	4.04
Average number of common shares and common share equivalents	39.2			40.6			39.6			41.2			38.5			39.2			38.5			39.6

Dividends declared per common share	$	0.42		$	0.40		$	1.26		$	1.20		$	0.44		$	0.42		$	1.32		$	1.26

See accompanying notes to consolidated financial statements.

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)


	Nine Months Ended September 30						Nine Months Ended September 30
	2017			2016			2018			2017
Operating Activities
Net income	$	159.9		$	226.2		$	162.1		$	159.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	238.5			230.6			253.3			238.5
Change in accrued operating lease expense	(21.2		)	(11.0		)	(2.2		)	(21.2		)
Net gains on sales of assets	(48.4		)	(41.3		)	(70.9		)	(48.4		)
Deferred income taxes	44.8			83.6			28.0			44.8
Change in income taxes payable	(4.9		)	(8.1		)	(0.4		)	(4.9		)
Share of affiliates’ earnings, net of dividends	(22.0		)	(29.0		)	(39.0		)	(22.0		)
Other	(29.2		)	(15.5		)	10.4			(28.9		)
Net cash provided by operating activities	317.5			435.5			341.3			317.8
Investing Activities
Additions to operating assets and facilities	(422.4		)	(442.6		)	(536.7		)	(422.4		)
Investments in affiliates	(36.6		)	—			—			(36.6		)
Portfolio investments and capital additions	(459.0		)	(442.6		)	(536.7		)	(459.0		)
Purchases of previously leased-in assets	(93.2		)	(116.5		)
Purchases of leased-in assets							(66.6		)	(93.2		)
Portfolio proceeds	131.0			170.6			198.6			131.0
Proceeds from sales of other assets	24.3			18.6			28.5			24.3
Proceeds from sale-leasebacks	90.6			82.5			59.2			90.6
Other							2.7			(0.2		)
Net cash used in investing activities	(306.3		)	(287.4		)	(314.3		)	(306.5		)
Financing Activities
Net proceeds from issuances of debt (original maturities longer than 90 days)	297.5			801.8			297.1			297.5
Repayments of debt (original maturities longer than 90 days)	(301.5		)	(798.7		)	(263.1		)	(301.5		)
Net increase (decrease) in debt with original maturities of 90 days or less	11.1			(2.5		)
Net decrease (increase) in debt with original maturities of 90 days or less							(4.2		)	11.1
Stock repurchases	(75.0		)	(95.1		)	(37.4		)	(75.0		)
Dividends	(51.8		)	(51.2		)	(52.7		)	(51.8		)
Other	(2.8		)	(6.0		)	(3.6		)	(2.9		)
Net cash used in by financing activities	(122.5		)	(151.7		)
Net cash used in financing activities							(63.9		)	(122.6		)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	3.1			(0.2		)	(4.2		)	3.1
Net decrease in Cash, Cash Equivalents, and Restricted Cash during the period	(108.2		)	(3.8		)	(41.1		)	(108.2		)
Cash, Cash Equivalents, and Restricted Cash at beginning of period	311.1			219.7			299.7			311.1
Cash, Cash Equivalents, and Restricted Cash at end of period	$	202.9		$	215.9		$	258.6		$	202.9

See accompanying notes to consolidated financial statements.

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. Description of Business

As used herein, "GATX," "we," "us," "our," and similar terms refer to GATX Corporation and its subsidiaries, unless indicated otherwise.

We lease, operate, manage, and remarket long-lived, widely-used assets, primarily in the rail market. We report our financial results through fourprimary business segments: Rail North America, Rail International, Portfolio Management, and American Steamship Company (“ASC”)~~, and Portfolio Management.~~.

NOTE 2. Basis of Presentation

We prepared the accompanying unaudited consolidated financial statements in accordance with USU.S. Generally Accepted Accounting Principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, our unaudited consolidated financial statements do not include all of the information and footnotes required for complete financial statements. We have included all of the normal recurring adjustments that we deemed necessary for a fair presentation. Certain prior year amounts have been reclassified to conform to the 2018 presentation.

Operating results for the nine months ended September 30, ~~2017,~~2018 are not necessarily indicative of the results we may achieve for the entire year ending December 31, ~~2017.~~2018. In particular, ASC's fleet is inactive for a significant portion of the first quarter of each year due to winter conditions on the Great Lakes. In addition, asset remarketing income does not occur evenly throughout the year. For more information, refer to the consolidated financial statements and footnotes in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

New Accounting Pronouncements Adopted

~~Equity Method and Joint Ventures~~



Standard/Description	Effective Date and Adoption Considerations	Effect on Financial Statements or Other Significant Matters
Revenue from Contracts with Customers ~~In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-07,~~ ~~Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting~~, which eliminates the requirement to retrospectively apply equity method accounting when an entity increases ownership or influence in a previously held investment. The new guidance was effective for us in the first quarter of 2017. Application of the new guidance did not impact our financial statements or related disclosures. ~~Stock Compensation~~ ~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,~~ which simplifies and clarifies certain aspects of share-based payments accounting and presentation. The update requires recognition of excess tax benefits and tax deficiencies, which arise due to differences between the measure of compensation expense and the amount deductible for tax purposes, to be recorded directly through earnings as a component of income tax expense. Previously, these differences were generally recorded in additional paid-in capital and thus had no impact on net income. The change in treatment of excess tax benefits and tax deficiencies also impacts the computation of diluted earnings per share, and the cash flows associated with those items are classified as operating activities on the consolidated statements of cash flows. The guidance also clarifies that all cash payments made to taxing authorities on the employees' behalf for withheld shares should be classified as financing activities on the consolidated statements of cash flows. Additionally, the guidance permits entities to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated as of the initial valuation date, as allowed under the previous guidance, or recognized when they occur. We changed our accounting policy to recognize forfeitures when they occur as part of this adoption. These amendments became effective in the first quarter of 2017, and we adopted this guidance as of January 1, 2017. Adoption of this new standard did not have a material impact on our financial statements or related disclosures. In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers(Topic 606), which supersedes most current revenue recognition guidance, including industry-specific guidance. Subsequently, the FASB has issued updates which provide additional implementation guidance. The new guidance requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services.	We adopted this guidance in the first quarter of 2018 applying the modified retrospective approach.	We have completed our review of all revenue sources in scope for the new standard, and marine operating revenue is our largest component. In accordance with the new standard, the basis for determining revenue and expenses allocable to in-process shipments has been modified; however, the impact does not have a material impact on our financial statements. The net cumulative effect adjustment for this change was immaterial to retained earnings as of January 1, 2018.
Financial Instruments In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities, which modifies the accounting and reporting requirements for certain equity securities and financial liabilities.	We adopted the new guidance in the first quarter of 2018.	The application of this new guidance did not impact our financial statements or related disclosures.

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

~~Statement of Cash Flows~~

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash,~~ which clarifies the classification and presentation of changes in restricted cash on the statement of cash flows. We elected to early adopt the new guidance as of January 1, 2017, using the retrospective method. Application of the new guidance requires presentation of restricted cash together with cash and cash equivalents on the consolidated statements of cash flows and eliminates the disclosure of the related changes in restricted cash within investing activities.

New Accounting Pronouncements ~~Not Yet~~ Adopted (Continued)



Standard/Description	Effective Date and Adoption Considerations	Effect on Financial Statements or Other Significant Matters
Income Taxes In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which modifies how an entity will recognize the income tax consequences of an intra-entity transfer of an asset when the transfer occurs.	We adopted the new guidance in the first quarter of 2018, applying the modified retrospective method.	The application of this new guidance had an immaterial impact on our financial statements and related disclosures, including the net cumulative effect adjustment recorded in retained earnings as of January 1, 2018.
Compensation In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which modifies how an entity must present service costs and other components of net benefit cost.	We adopted the new guidance in the first quarter of 2018, applying the retrospective method. The optional practical expedient was elected.	Application of the new guidance had an immaterial impact on the presentation of our financial statements as certain components of our net periodic pension and other post-retirement benefits costs were reclassified to an alternative income statement line.
Deferred Income Tax In December 2017, the FASB issued ASU 2017-15, Codification Improvements to Topic 995, U.S. Steamship Entities, which supersedes obsolete guidance in Topic 995 on unrecognized deferred taxes related to certain statutory reserve deposits. If an entity has unrecognized deferred income taxes related to statutory deposits made on or before December 15, 1992, the entity would be required to recognize the unrecognized income taxes in accordance with Topic 740.	We elected to early adopt this new guidance in the first quarter of 2018, applying the modified retrospective method.	The application of this new guidance had an immaterial impact on our financial statements and related disclosures, including the net cumulative effect adjustment recorded in retained earnings as of January 1, 2018.
Accumulated Other Comprehensive Income In February 2018, the FASB issued ASU 2018-02, Income Statement Reporting - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits reclassification of certain stranded tax effects from the Tax Cuts and Jobs Act from Accumulated Other Comprehensive Income to Retained Earnings. The amount of the reclassification is calculated on the basis of the difference between the historical and newly enacted tax rates recorded for the applicable AOCI components.	We adopted the new guidance in the first quarter of 2018.	The application of this new guidance resulted in the reclassification of stranded tax effects resulting from the newly enacted Tax Act of $19.4 million from Accumulated Other Comprehensive Income to Retained Earnings.

~~Revenue from Contracts with Customers~~

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~, which supersedes most current revenue recognition guidance, including industry-specific guidance. Subsequently, the FASB has issued updates which provide additional implementation guidance. The new guidance requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The FASB delayed the effective date of this guidance to the first quarter of 2018, with early adoption permitted as of the original effective date of the first quarter of 2017. We plan to adopt this guidance as of January 1, 2018, using the modified retrospective approach. Our primary source of revenue is lease revenue, which will continue to be within the scope of existing lease accounting guidance upon adoption of Topic 606. We have substantially completed our review of all other revenue sources in scope for the new standard and have concluded the new guidance will not have a material impact on our financial statements.

~~Leases~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~, which supersedes most current lease guidance. The new guidance requires companies to recognize most leases on the balance sheet and modifies accounting, presentation, and disclosure for both lessors and lessees. The new guidance is effective for us in the first quarter of 2019, with early adoption permitted. We plan to adopt this guidance on January 1, 2019, using a modified retrospective transition method, and we expect to utilize the package of three optional practical expedients as provided in the standard. We continue to assess the effect the new guidance will have on our consolidated financial statements and related disclosures.

~~Financial Instruments~~

~~In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities,~~ which modifies the accounting and reporting requirements for certain equity securities and financial liabilities. The new guidance is effective for us beginning in the first quarter of 2018, with certain provisions eligible for early adoption. We do not expect the new guidance to have a significant impact on our financial statements or related disclosures.

~~Credit Losses~~

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,~~ which modifies how entities will measure credit losses. The new guidance is effective for us in the first quarter of 2020, with early adoption permitted. We are evaluating the effect the new guidance will have on our financial statements and related disclosures.

~~Statement of Cash Flows~~

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,~~ which clarifies the classification of certain cash receipts and payments in the statement of cash flows. The new guidance is effective for us in the first quarter of 2018, with early adoption permitted. We do not expect the new guidance to have a significant impact on our financial statements or related disclosures.

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

New Accounting Pronouncements Not Yet Adopted

~~Income Taxes~~

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,~~ which modifies how an entity will recognize the income tax consequences of an intra-entity transfer of an asset when the transfer occurs. The new guidance is effective for us in the first quarter of 2018, with early adoption permitted. We plan to adopt this guidance on January 1, 2018, applying the retrospective method. We do not expect the new guidance to have a material impact on our financial statements and related disclosures.



Standard/Description	Effective Date and Adoption Considerations	Effect on Financial Statements or Other Significant Matters
Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes most current lease guidance. The FASB subsequently issued ASU 2018-10 and ASU 2018-11, Lease (Topic 842), for codification and targeted improvements to the standard. The new guidance requires companies to recognize most leases on the balance sheet and modifies accounting, presentation, and disclosure for both lessors and lessees.	~~Compensation~~ ~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,~~ which modifies how an entity must present service costs and other components of net benefit cost. The new guidance is effective for us in the first quarter of 2018, with early adoption permitted. We plan to adopt this guidance on January 1, 2018, applying the retrospective method. We do not expect the new guidance to have a significant impact on our financial statements and related disclosures. ~~Derivatives and Hedging~~ ~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,~~ which expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The update to the standard is effective for us beginning in the first quarter of 2019, with early adoption permitted in any interim period. We do not expect the new guidance to have a significant impact on our financial statements or related disclosures. The new guidance is effective for us in the first quarter of 2019 with early adoption permitted. We plan to adopt this guidance on January 1, 2019, using a modified retrospective transition method with a cumulative effect adjustment upon adoption, and we expect to utilize the package of optional practical expedients as provided in the standard.	We continue to assess the effect the new guidance will have on our consolidated financial statements and related disclosures. The adoption of the amended lease guidance will require us to recognize right of use assets and lease liabilities on our balance sheet attributable to operating leases for railcars, offices, and certain equipment. We are in the process of completing our analysis to determine applicable amounts.
Credit Losses In June 2016, the FASB issued ASU 2016-13, Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which modifies how entities will measure credit losses.	The new guidance is effective for us in the first quarter of 2020, with early adoption permitted.	We are evaluating the effect the new guidance will have on our financial statements and related disclosures.
Derivatives and Hedging In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness.	The update to the standard is effective for us beginning in the first quarter of 2019, with early adoption permitted in any interim period.	We do not expect the new guidance to have a significant impact on our financial statements or related disclosures.
Compensation In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which modifies the accounting for nonemployee share-based payments.	The new guidance is effective for us in the first quarter of 2019, with early adoption permitted in any interim period.	We are evaluating the effect the new guidance will have on our financial statements and related disclosures.

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

NOTE 3. Revenue

Adoption of Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers”

In the first quarter of 2018, we adopted Topic 606 using the modified retrospective method with respect to applicable contracts existing as of January 1, 2018. As provided in the guidance, we recognize marine operating revenue in the amount that corresponds directly to the value transferred to the customer. Contract assets and liabilities related to our customer performance obligations are not material to our financial statements. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with appropriate accounting guidance. We recorded an immaterial cumulative adjustment to opening retained earnings, with the impact completely attributable to our marine operating revenue.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

We disaggregate revenue into three categories as presented on our income statement:

Lease Revenue

Lease revenue, which includes operating lease revenue and finance lease revenue, is our primary source of revenue which continues to be within the scope of existing lease guidance. Therefore, the adoption of Topic 606 had no impact on our recognition or presentation of lease revenue.

Operating Lease Revenue

We lease railcars and other operating assets under full-service and net operating leases. We price full-service leases as an integrated service that includes amounts related to executory costs, such as maintenance, insurance, and ad valorem taxes. We do not offer stand-alone maintenance service contracts and are unable to separate executory costs from full-service lease revenue. Operating lease revenue, including amounts related to executory costs, is recognized on a straight-line basis over the term of the underlying lease. As a result, we may not recognize lease revenue in the same period as maintenance and other executory costs, which we expense as incurred. Contingent rents are recognized when the contingency is resolved. Revenue is not recognized if collectability is not reasonably assured.

Finance Lease Revenue

In certain cases, we lease railcars and other operating assets that, at lease inception, are classified as finance leases. We recognize unearned income as lease revenue using the interest method, which produces a constant yield over the lease term. Initial unearned income is the amount that the original lease payment receivable and the estimated residual value of the leased asset exceeds the original cost or carrying value of the leased asset.

Marine Operating Revenue

We generate marine operating revenue through shipping services completed by our marine vessels. Upon adoption of Topic 606, marine operating revenue is recognized over time as the performance obligation is satisfied, beginning when cargo is loaded through its delivery and discharge. Revenue is recognized pro rata over the projected duration of each voyage, which is derived from our historical voyage data.

Other Revenue

Other revenue comprises customer liability repair revenue, utilization income, fee income, interest on loans, and other miscellaneous revenues. Select components of other revenue are within the scope of Topic 606 but based on our assessment, we determined that our

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

current revenue elements and timing for purposes of income recognition are consistent with applicable provisions in the new standard. The remaining items are considered lease components that continue to be within the scope of existing lease guidance.

NOTE 3.4. Fair Value Disclosure

The following tables show our assets and liabilities that are measured at fair value on a recurring basis (in millions):


Assets	Total September 30 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total September 30 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate derivatives (1)	$	0.1	$	—	$	0.1	$	—
Foreign exchange rate derivatives (1)	2.6		—		2.6		—		$	3.2	$	—	$	3.2	$	—
Foreign exchange rate derivatives (2)	0.3		—		0.3		—		0.2		—		0.2		—
Liabilities
Interest rate derivatives (1)	0.9		—		0.9		—		13.3		—		13.3		—
Foreign exchange rate derivatives (1)	22.8		—		22.8		—		21.4		—		21.4		—
Foreign exchange rate derivatives (2)	2.9		—		2.9		—		4.0		—		4.0		—


Assets	Total December 31 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total December 31 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Foreign exchange rate derivatives (1)									$	1.2	$	—	$	1.2	$	—
Liabilities
Interest rate derivatives (1)	$	2.9	$	—	$	2.9	$	—	4.7		—		4.7		—
Foreign exchange rate derivatives (1)	12.2		—		12.2		—		27.7		—		27.7		—
Foreign exchange rate derivatives (2)	1.3		—		1.3		—		6.9		—		6.9		—
Liabilities
Interest rate derivatives (1)	0.1		—		0.1		—

_________


(1)	Designated as hedges.


(2)	Not designated as hedges.

We value derivatives using a pricing model with inputs (such as yield curves and foreign currency rates) that are observable in the market or that can be derived principally from observable market data.

Derivative instruments

Fair Value Hedges

We use interest rate swaps to manage the fixed-to-floating rate mix of our debt obligations by converting ~~the~~a portion of our fixed rate debt to floating rate debt. For fair value hedges, we recognize changes in fair value of both the derivative and the hedged item as interest expense. We had ~~eight~~nine instruments outstanding with an aggregate notional amount of ~~$450.0~~$500.0 million as of September 30, ~~2017 that mature~~2018 with maturities ranging from ~~2018~~2019 to 2022 and ~~eight~~ten instruments outstanding with an aggregate notional amount of $550.0 million as of December 31, ~~2016~~2017 with maturities ranging from ~~2017~~2018 to ~~2020.~~2022.

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Cash Flow Hedges

We use interest rate swaps to convert floating rate debt to fixed rate debt. We use Treasury rate locks and swap rate locks to hedge our exposure to interest rate risk on anticipated transactions. We also use currency swaps to hedge our exposure to fluctuations in the exchange rates of the foreign currencies in which we conduct business. We had ~~eleven~~8 instruments outstanding with an aggregate notional amount of ~~$290.2~~$291.1 million as of September 30, ~~2017~~2018 that mature from ~~2017~~2018 to 2022 and ~~nine~~five instruments outstanding with an aggregate notional amount of ~~$412.1~~$285.6 million as of December 31, ~~2016~~2017 with maturities ranging from ~~2017~~2019 to 2022. Within the next 12 months, we expect to reclassify ~~$5.2~~$2.9 million ($~~3.3~~2.2 million after-tax) of net losses on previously terminated derivatives from accumulated other comprehensive income (loss) to interest expense or operating lease expense, as applicable. We reclassify these amounts when interest and operating lease expense on the related hedged transactions affect earnings.

Non-designated Derivatives

We do not hold derivative financial instruments for purposes other than hedging, although certain of our derivatives are not designated as accounting hedges. We recognize changes in the fair value of these derivatives in other (income) expense immediately.

Some of our derivative instruments contain credit risk provisions that could require us to make immediate payment on net liability positions in the event that we default on certain outstanding debt obligations. The aggregate fair value of our derivative instruments with credit risk related contingent features that are in a liability position as of September 30, ~~2017,~~2018 was ~~$23.7~~$34.7 million. We are not required to post any collateral on our derivative instruments and do not expect the credit risk provisions to be triggered.

In the event that a counterparty fails to meet the terms of an interest rate swap agreement or a foreign exchange contract, our exposure is limited to the fair value of the swap, if in our favor. We manage the credit risk of counterparties by transacting with institutions that we consider financially sound and by avoiding concentrations of risk with a single counterparty. We believe that the risk of non-performance by any of our counterparties is remote.

The following table shows the impacts of our derivative instruments on our statement of comprehensive income (in millions):


		Three Months Ended September 30						Nine Months Ended September 30							Three Months Ended September 30						Nine Months Ended September 30
Derivative Designation	Location of Loss (Gain) Recognized	2017			2016			2017			2016			Location of Loss (Gain) Recognized	2018			2017			2018			2017
Fair value hedges (1)	Interest expense	$	0.6		$	2.6		$	1.5		$	(3.3	)	Interest expense	$	1.0		$	0.6		$	8.6		$	1.5
Cash flow hedges	Other comprehensive (income) loss (effective portion)	(11.1		)	(2.8		)	(34.8		)	(26.8		)	Other comprehensive loss (effective portion)	2.7			(11.1		)	8.4			(34.8		)
Cash flow hedges	Interest expense (effective portion reclassified from accumulated other comprehensive loss)	1.7			1.7			5.1			5.1			Interest expense (effective portion reclassified from accumulated other comprehensive loss)	1.1			1.7			3.3			5.1
Cash flow hedges	Operating lease expense (effective portion reclassified from accumulated other comprehensive loss)	—			0.7			—			1.1			Operating lease expense (effective portion reclassified from accumulated other comprehensive loss)	0.1			—			0.1			—
Cash flow hedges (2)	Other (income) expense (effective portion reclassified from accumulated other comprehensive loss)	10.1			3.3			33.8			13.6			Other (income) expense (effective portion reclassified from accumulated other comprehensive loss)	(2.2		)	10.1			(10.3		)	33.8
Non-designated	Other (income) expense	(2.0		)	2.2			4.1			(0.1		)	Other (income) expense	3.0			(2.0		)	(2.7		)	4.1

_________


(1)	The fair value adjustments related to the underlying debt equally offset the amounts recognized in interest expense.


(2)	Includes (income) expense on foreign currency derivatives that are substantially offset by foreign currency remeasurement adjustments on related hedged instruments, also recognized in Other (income) expense.

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

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. We ~~base the fair values of investment funds, which are accounted for under the cost method, on the best information available, which may include quoted investment fund values. We~~ estimate the fair values of ~~loans and~~ fixed and floating rate debt using discounted cash flow analyses that are based on interest rates currently offered for loans with similar terms to borrowers of similar credit quality. The inputs we use to estimate each of these values are classified in Level 2 of the fair value hierarchy because they are directly or indirectly observable inputs.

The following table shows the carrying amounts and fair values of our other financial instruments (in millions):


	September 30, 2017				December 31, 2016				September 30, 2018				December 31, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Investment funds	$	0.6	$	1.2	$	0.6	$	1.2
Loans	0.2		0.2		6.2		6.2
Liabilities
Recourse fixed rate debt	$	3,864.6	$	3,977.6	$	3,858.5	$	3,852.6	$	3,998.4	$	3,935.5	$	3,971.2	$	4,089.1
Recourse floating rate debt	425.0		429.4		417.8		412.2		423.8		425.2		426.0		428.7

~~NOTE 4. Assets Held for Sale~~

~~The following table summarizes our assets held for sale (in millions):~~

September 30 December 31
2017 2016
Rail North America $ 4.4
$ 43.9
Portfolio Management 19.2
45.6
$ 23.6
$ 89.5

For assets classified as held for sale, in the first nine months of 2017, we sold inland marine assets in the Portfolio Management segment with a carrying value of $26.4 million for proceeds of $28.2 million, resulting in a net gain of $1.8 million. At Rail North America, we sold certain railcars with a carrying value of $21.8 million for proceeds of $49.9 million, resulting in a net gain of $28.1 million. In addition, other railcars that were not sold with a carrying value of $19.7 million were reclassified out of assets held for sale and written down to their estimated fair value, resulting in the recognition of a $1.9 million impairment loss. All assets classified as held for sale at September 30 are expected to be sold in 2017.

~~GATX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

NOTE 5. Pension and Other Post-Retirement Benefits

The following table shows the components of our pension and other post-retirement benefits expense for the three months ended September 30, ~~2017~~2018 and ~~2016~~2017 (in millions):


	2017 Pension Benefits			2016 Pension Benefits			2017 Retiree Health and Life		2016 Retiree Health and Life			2018 Pension Benefits			2017 Pension Benefits			2018 Retiree Health and Life			2017 Retiree Health and Life
Service cost	$	1.6		$	1.5		$	—	$	0.1		$	2.0		$	1.6		$	0.1		$	—
Interest cost	3.8			3.9			0.2		0.2			3.7			3.8			0.2			0.2
Expected return on plan assets	(5.9		)	(6.5		)	—		—			(5.6		)	(5.9		)	—			—
Settlement expense	—			5.7			—		—			2.1			—			—			—
Amortization of (1):
Unrecognized prior service credit	—			(0.2		)	—		(0.1		)	—			—			(0.1		)	—
Unrecognized net actuarial loss	2.2			2.6			—		—			2.5			2.2			—			—
Net expense	$	1.7		$	7.0		$	0.2	$	0.2
Net periodic cost												$	4.7		$	1.7		$	0.2		$	0.2

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following table shows the components of our pension and other post-retirement benefits expense for the nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 (in millions):


	2017 Pension Benefits			2016 Pension Benefits			2017 Retiree Health and Life			2016 Retiree Health and Life			2018 Pension Benefits			2017 Pension Benefits			2018 Retiree Health and Life			2017 Retiree Health and Life
Service cost	$	4.9		$	4.5		$	0.1		$	0.2		$	6.1		$	4.9		$	0.2		$	0.1
Interest cost	11.5			11.8			0.7			0.7			11.1			11.5			0.7			0.7
Expected return on plan assets	(17.9		)	(19.5		)	—			—			(16.7		)	(17.9		)	—			—
Settlement expense	0.1			5.7			—			—			2.1			0.1			—			—
Amortization of (1):
Unrecognized prior service credit	—			(0.7		)	(0.1		)	(0.2		)	—			—			(0.2		)	(0.1		)
Unrecognized net actuarial loss (gain)	6.9			7.7			(0.2		)	(0.2		)	7.6			6.9			—			(0.2		)
Net expense	$	5.5		$	9.5		$	0.5		$	0.5
Net periodic cost													$	10.2		$	5.5		$	0.7		$	0.5

________

(1) Amounts reclassified from accumulated other comprehensive loss.

In 2018, we adopted ASU 2017-07 which modifies how an entity must present service costs and other components of net benefit cost. See "Note 2. Basis of Presentation" for further details. In accordance with this new guidance, the service cost component of net periodic cost is recorded in the applicable operating expense line, including maintenance expense and selling, general and administrative expense in the Statements of Comprehensive Income; and the other components are recorded in other expense.

During the third quarter of ~~2016,~~2018, we recorded a settlement accounting ~~adjustment~~expense of ~~$5.7~~$2.1 million attributable to ~~lump sum payments elected by eligible retirees as part of a voluntary early retirement program offered in 2015.~~certain lump-sum distributions made during the period.

NOTE 6. Share-Based Compensation

During the nine months ended September 30, ~~2017,~~2018, we granted ~~eligible incentive plan participants the aggregate of 354,400~~320,100 non-qualified employee stock options, ~~49,840~~61,490 restricted stock units, ~~63,710~~58,440 performance shares, and ~~18,080~~17,709 phantom stock units. For the three months and nine months ended September 30, 2018, total share-based compensation expense was $5.7 million and $15.4 million and the related tax benefits were $1.4 million and $3.9 million. For the three months and nine months ended September 30, 2017, total share-based compensation expense was $3.4 million and $10.6 million and the related tax benefits were $1.3 million and $4.1 million. For the three months and nine months ended September 30, 2016, total share-based compensation expense was $3.2 million and $9.1 million and the related tax benefits were $1.3 million and $3.5 million.

~~GATX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

The estimated fair value of our ~~2017~~2018 non-qualified employee stock option awards and related underlying assumptions are shown in the table below.


	2017			2018
Estimated fair value, including present value of dividends	$	19.40
Weighted average estimated fair value				$	21.87
Quarterly dividend rate	$	0.42		$	0.44
Expected term of stock option awards, in years	4.7
Expected term of stock options and stock appreciation rights, in years				4.5
Risk-free interest rate	1.9		%	1.4		%
Dividend yield	2.8		%	2.5		%
Expected stock price volatility	27.7		%	27.9		%
Present value of dividends	$	7.50		$	7.51

NOTE 7. Income Taxes

On December 22, 2017, the Tax Act was enacted, which made broad and complex changes to the U.S. tax laws. In particular, the U.S. corporation income tax rate was reduced to 21% from 35%, and a new territorial tax system was implemented that will affect the future

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

U.S. taxation of earnings repatriated from our foreign subsidiaries and affiliates. Other provisions included an immediate deduction for qualified investments and limitations on the deductibility of interest expense and executive compensation. Due to our net operating loss position, these adjustments had no cash impact on our tax positions.

In 2017, we recorded a one-time non-cash net tax benefit of $315.9 million, which represented our provisional estimate of the impact of the Tax Act. This amount included a net benefit of $371.4 million associated with the re-measurement of our net deferred tax liability utilizing the lower U.S. tax rate. The Tax Act also imposed a one-time transitional repatriation tax of $57.2 million on certain undistributed earnings of our non-U.S. subsidiaries and affiliates.

We continue to evaluate the provisions of the Tax Act, and the ultimate impact may differ from this provisional estimate, due to, among other things, changes in interpretations and assumptions made by us, additional guidance that may be issued by the Internal Revenue Service and the U.S. Department of the Treasury, and actions that we may take. In addition, these estimates may change due to guidance provided by state taxing authorities and the completion of our 2017 U.S. and state income tax returns. No adjustments were made to our initial provisional estimate during the nine months ended September 30, 2018.

Our effective tax rate was 26% for the nine months ended September 30, 2018, compared to 32% for the nine months ended September 30, ~~2017, compared to 33% for the nine months ended September 30, 2016.~~2017. The difference in the effective rates for the current year compared to the prior year is primarily attributable to the reduction in the U.S. corporation income tax rate from 35% to 21%, as part of the Tax Act. Additionally, the effective tax rate was impacted by the mix of pre-tax income among domestic and foreign jurisdictions, which are taxed at different rates. ~~Additionally, during the quarter, based upon the status of our current state income~~Incremental tax audits and our expectations of the ultimate resolution, we released the remaining balance of our liability for unrecognized tax benefits and recognized an income tax benefit of $4.3 million ($2.8 million, net of federal tax). Also, our consolidated state income tax rate increased, effective July 1, 2017, due to legislation enacted in the state of Illinois. Accordingly, we recorded a deferred state income tax adjustment of $3.1 million in the quarter. Finally, the 2017 effective tax rate reflects incremental benefits associated with ~~equity awards~~share-based compensation were also recognized in ~~accordance with~~each of the ~~adoption of new accounting rules~~nine-month periods ended September 30, 2018 and ~~the impact of reductions in the statutory tax rates in Quebec and Saskatchewan, Canada and India, partially offset by an increase to the effective tax rate in Germany.~~2017.

NOTE 8. Commercial Commitments

We have entered into various commercial commitments, such as guarantees, standby letters of credit, and performance bonds, related to certain transactions. These commercial commitments require us to fulfill specific obligations in the event of third-party demands. Similar to our balance sheet investments, these commitments expose us to credit, market, and equipment risk. Accordingly, we evaluate these commitments and other contingent obligations using techniques similar to those we use to evaluate funded transactions.

The following table shows our commercial commitments (in millions):


	September 30		December 31
	2017		2016		September 30 2018		December 31 2017
Lease payment guarantees	$	7.6	$	15.0	$	2.7	$	4.9
Standby letters of credit and performance bonds	8.8		8.9		17.4		17.8
Total commercial commitments (1)	$	16.4	$	23.9	$	20.1	$	22.7

_______

~~(1)~~

~~The carrying value of liabilities on the balance sheet for commercial commitments was~~ ~~$2.3 million~~ ~~at September 30, 2017 and $3.0 million at December 31, 2016. The expirations of these commitments range from~~ ~~2017 to 2023~~.

(1) The carrying value of liabilities on the balance sheet for commercial commitments was $1.2 million at September 30, 2018 and $2.0 million at December 31, 2017. The expirations of these commitments range from 2019 to 2023. We are not aware of any event that would require us to satisfy any of our commitments.

Lease payment guarantees are commitments to financial institutions to make lease payments for a third party in the event they default. We reduce any liability that may result from these guarantees by the value of the underlying asset or group of assets.

We are also parties to standby letters of credit and performance bonds, which primarily relate to contractual obligations and general liability insurance coverages. No material claims have been made against these obligations, and no material losses are anticipated.

~~GATX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

NOTE 9. Earnings per Share

We compute basic earnings per share by dividing net income available to our common shareholders by the weighted average number of shares of our common stock outstanding. We ~~weighted~~weight shares issued or reacquired ~~during the period~~ for the portion of the period that they were outstanding. Our diluted earnings per share reflect the impacts of our potentially dilutive securities, which include our equity compensation awards.

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following table shows the computation of our basic and diluted net income per common share (in millions, except per share amounts):


	Three Months Ended September 30				Nine Months Ended September 30				Three Months Ended September 30				Nine Months Ended September 30
	2017		2016		2017		2016		2018		2017		2018		2017
Numerator:
Net income	$	49.0	$	95.7	$	159.9	$	226.2	$	47.0	$	49.0	$	162.1	$	159.9

Denominator:
Weighted average shares outstanding - basic	38.6		40.1		39.0		40.7		37.7		38.6		37.8		39.0
Effect of dilutive securities:
Equity compensation plans	0.6		0.5		0.6		0.5		0.8		0.6		0.7		0.6
Weighted average shares outstanding - diluted	39.2		40.6		39.6		41.2		38.5		39.2		38.5		39.6
Basic earnings per share	$	1.27	$	2.39	$	4.10	$	5.55	$	1.25	$	1.27	$	4.29	$	4.10
Diluted earnings per share	$	1.25	$	2.36	$	4.04	$	5.49	$	1.22	$	1.25	$	4.21	$	4.04

NOTE 10. Accumulated Other Comprehensive Income (Loss)

The following table shows the change in components for accumulated other comprehensive loss (in millions):


	Foreign Currency Translation Gain (Loss)			Unrealized Gain (Loss) on Derivative Instruments			Post-Retirement Benefit Plans			Total			Foreign Currency Translation Gain (Loss)			Unrealized Loss on Derivative Instruments			Post-Retirement Benefit Plans			Total
Balance at December 31, 2016	(103.7		)	(20.3		)	(87.1		)	(211.1		)
Balance at December 31, 2017													$	(10.5	)	$	(15.5	)	$	(83.6	)	$	(109.6	)
Change in component	17.9			(5.1		)	—			12.8			14.9			(11.5		)	—			3.4
Reclassification adjustments into earnings(1)	—			5.8			2.2			8.0			—			9.3			2.5			11.8
Income tax effect	—			0.1			(0.9		)	(0.8		)	—			0.7			(0.6		)	0.1
Balance at March 31, 2017	$	(85.8	)	$	(19.5	)	$	(85.8	)	$	(191.1	)
Reclassification adjustments into retained earnings (2)													—			(3.0		)	(16.4		)	(19.4		)
Balance at March 31, 2018													$	4.4		$	(20.0	)	$	(98.1	)	$	(113.7	)
Change in component	40.7			(18.4		)	—			22.3			(50.4		)	18.0			—			(32.4		)
Reclassification adjustments into earnings	—			21.3			2.2			23.5
Reclassification adjustments into earnings (1)													—			(15.2		)	2.5			(12.7		)
Income tax effect	—			(0.8		)	(0.8		)	(1.6		)	—			(0.6		)	(0.6		)	(1.2		)
Balance at June 30, 2017	$	(45.1	)	$	(17.4	)	$	(84.4	)	$	(146.9	)
Balance at June 30, 2018													$	(46.0	)	$	(17.8	)	$	(96.2	)	$	(160.0	)
Change in component	15.4			(10.5		)	—			4.9			(4.7		)	2.8			4.6			2.7
Reclassification adjustments into earnings	—			11.8			2.2			14.0
Reclassification adjustments into earnings (1)													—			(1.0		)	2.4			1.4
Income tax effect	—			(0.6		)	(0.8		)	(1.4		)	—			(0.2		)	(1.7		)	(1.9		)
Balance at September 30, 2017	(29.7		)	(16.7		)	(83.0		)	(129.4		)
Balance at September 30, 2018													$	(50.7	)	$	(16.2	)	$	(90.9	)	$	(157.8	)

________


(1)	See "Note 4. Fair Value Disclosure" and "Note 5. Pension and Other Post-Retirement Benefits" for impacts of the reclassification adjustments on the statement of comprehensive income.


(2)	As detailed in "Note 2. Basis of Presentation", we adopted ASU 2018-02, which permits reclassification of certain stranded tax effects related to the Tax Act from Accumulated Other Comprehensive Income to Retained Earnings.

~~See "Note 3. Fair Value Disclosure" and "Note 5. Pension and Other Post-Retirement Benefits" for impacts of the reclassification adjustments on the statement of comprehensive income.~~

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

NOTE 11. Legal Proceedings and Other Contingencies

Various legal actions, claims, assessments and other contingencies arising in the ordinary course of business are pending against GATX and certain of our subsidiaries. These matters are subject to many uncertainties, and it is possible that some of these matters could ultimately be decided, resolved or settled adversely. For a full discussion of our pending legal matters, please refer to "Note 22. Legal Proceedings and Other Contingencies" of our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

~~Viareggio Derailment~~

In June 2009, a train consisting of fourteen liquefied petroleum gas (“LPG”) tank cars owned by GATX Rail Austria GmbH and its subsidiaries (collectively, “GRA”) derailed while passing through the City of Viareggio, in the province of Lucca, Italy. Five tank cars overturned and one of the overturned cars was punctured by a peg or obstacle along the side of the track, resulting in a release of LPG, which subsequently ignited. The accident resulted in multiple deaths, personal injuries and property damage. The LPG tank cars were leased to FS Logistica S.p.A., a subsidiary of the Italian state-owned railway, Ferrovie dello Stato S.p.A (the “Italian Railway”).

On December 14, 2012, the prosecutors for Lucca charged the Italian Railway, GRA, and a number of their maintenance, operations, and managerial employees with various negligence-based crimes related to the accident. A trial was held in the court of Lucca and, on January 31, 2017, the court announced guilty verdicts against various Italian Railway companies, GRA, and certain of their employees. The court imposed a fine of 1.4 million Euros against GRA and prison sentences against the employees. GRA disagrees with the trial court’s ruling and believes that the evidence shows it and its employees acted diligently and in accordance with all applicable laws and regulations at all times. On October 14, 2017, GRA filed its appeal of the trial court’s ruling with the Court of Appeal in Florence (Corte d’Appello di Firenze) and, pending the final disposition of the appeal, these fines and penalties are not enforceable.

With respect to civil claims, the insurers for the Italian Railway and GRA have fully settled and resolved most of the claims arising out of the accident. With respect to unsettled claims, the Lucca court ordered all convicted defendants (including various Italian Railway entities and GRA) to pay final damages or advances to the remaining 56 claimants. The amount of these awards is immaterial and GRA expects that its insurers will continue to cover most of these damages to claimants except for a small number of civil claims. GRA will continue to incur legal expenses for the criminal appeals although they are not expected to be material. We cannot predict the outcome of the appeals process and thus cannot reasonably estimate the possible amount or range of costs that may be ultimately incurred in connection with this litigation.

NOTE 12. Financial Data of Business Segments

The financial data presented below depicts the profitability, financial position, and capital expenditures of each of our business segments.

We lease, operate, manage, and remarket long-lived, widely-used assets, primarily in the rail market. We report our financial results through four primary business segments: Rail North America, Rail International, Portfolio Management, and American Steamship Company (“ASC”)~~, and Portfolio Management.~~.

Rail North America is composed of our ~~wholly owned~~ operations in the United States, Canada, and Mexico, as well as an affiliate investment. Rail North America primarily provides railcars pursuant to full-service leases under which it maintains the railcars, pays ad valorem taxes and insurance, and provides other ancillary services.

Rail International is composed of our ~~wholly owned European~~ operations in Europe ("GATX Rail Europe" or "GRE"), ~~our wholly owned railcar leasing business in~~ India ("Rail India"), and ~~our wholly owned operations in Russia.~~Russia ("Rail Russia"). GRE leases railcars to customers throughout Europe pursuant to full-service leases under which it maintains the railcars and provides value-adding services according to customer requirements.

ASC operates the largest fleet of US-flagged vessels on the Great Lakes, providing waterborne transportation of dry bulk commodities such as iron ore, coal, limestone aggregates, and metallurgical limestone.

Portfolio Management is composed primarily of our ownership in a group of joint ventures with Rolls-Royce plc that lease aircraft spare engines, as well as five liquefied gas carrying vessels (the "Norgas Vessels") and assorted other marine assets. In prior years, Portfolio Management

~~GATX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

generated leasing, marine operating, asset remarketing, and management fee income through a collection of diversified wholly owned assets and joint venture investments. ~~We are in~~In 2015, we made the ~~process of disposing of~~decision to exit the majority of the marine investments, excluding the Norgas Vessels, within our Portfolio Management segment, including six chemical parcel tankers, a number of inland marine vessels, and our 50% interest in ~~this segment.~~the Cardinal Marine joint venture, all of which had been sold as of December 31, 2017.

Segment profit is an internal performance measure used by the Chief Executive Officer to assess the performance of each segment in a given period. Segment profit includes all revenues, pre-tax earnings from affiliates, and net gains on asset dispositions that are attributable to the segments, as well as expenses that management believes are directly associated with the financing, maintenance, and operation of the revenue earning assets. Segment profit excludes selling, general and administrative expenses, income taxes, and certain other amounts not allocated to the segments. These amounts are included in Other.

We allocate debt balances and related interest expense to each segment based upon predetermined debt to equity leverage ratios. The leverage levels are 5:1 for Rail North America, 3:1 for Rail International, ~~1.5:1 for ASC, and~~ 1:1 for Portfolio ~~Management.~~Management, and 1.5:1 for ASC. We believe that by using this leverage and interest expense allocation methodology, each operating segment’s financial performance reflects appropriate risk-adjusted borrowing costs.

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following tables show certain segment data for each of our business segments (in millions):


	Rail North America			Rail International			ASC			Portfolio Management			Other			GATX Consolidated			Rail North America			Rail International			Portfolio Management			ASC			Other			GATX Consolidated
Three Months Ended September 30, 2017
Profitability
Three Months Ended September 30, 2018
Revenues
Lease revenue	$	224.5		$	50.3		$	1.1		$	0.7		$	—		$	276.6		$	218.2		$	52.3		$	0.3		$	1.1		$	—		$	271.9
Marine operating revenue	—			—			59.1			3.8			—			62.9			—			—			3.1			57.7			—			60.8
Other revenue	17.9			2.0			—			0.2			—			20.1			15.2			1.8			—			—			—			17.0
Total Revenues	242.4			52.3			60.2			4.7			—			359.6			233.4			54.1			3.4			58.8			—			349.7
Expenses
Maintenance expense	66.1			11.1			7.7			—			—			84.9			60.6			10.1			—			6.8			—			77.5
Marine operating expense	—			—			34.7			4.2			—			38.9			—			—			4.4			35.0			—			39.4
Depreciation expense	60.1			12.8			4.0			1.7			—			78.6			62.5			13.8			1.8			3.5			—			81.6
Operating lease expense	15.5			—			0.3			—			—			15.8			11.8			—			—			—			—			11.8
Other operating expense	7.3			1.1			—			0.1			—			8.5			7.1			1.3			0.1			—			—			8.5
Total Expenses	149.0			25.0			46.7			6.0			—			226.7			142.0			25.2			6.3			45.3			—			218.8
Other Income (Expense)
Net gain on asset dispositions	8.1			1.0			—			0.3			—			9.4			9.6			0.5			0.2			—			—			10.3
Interest (expense) income, net	(30.5		)	(8.5		)	(1.4		)	(2.2		)	2.4			(40.2		)	(31.8		)	(8.9		)	(2.6		)	(1.5		)	2.2			(42.6		)
Other (expense) income	(0.9		)	0.3			—			—			(1.5		)	(2.1		)
Other expense (income)																			(1.2		)	0.2			—			(0.1		)	(2.7		)	(3.8		)
Share of affiliates' pre-tax income	0.1			—			—			16.0			—			16.1			0.2			—			14.3			—			—			14.5
Segment profit	$	70.2		$	20.1		$	12.1		$	12.8		$	0.9		116.1
Segment profit (loss)																			$	68.2		$	20.7		$	9.0		$	11.9		$	(0.5	)	$	109.3
Less:
Selling, general and administrative expense	Selling, general and administrative expense															42.8			Selling, general and administrative expense															46.5
Income taxes (includes $3.9 related to affiliates' earnings)																24.3
Income taxes (includes $2.7 related to affiliates' earnings)																			Income taxes (includes $2.7 related to affiliates' earnings)															15.8
Net income	Net income															$	49.0		Net income															$	47.0

Net Gain on Asset Dispositions
Asset Remarketing Income:
Disposition gains on owned assets	$	7.5		$	0.1		$	—		$	—		$	—		$	7.6
Net gains on disposition of owned assets																			$	6.7		$	—		$	—		$	—		$	—		$	6.7
Residual sharing income	0.2			—			—			0.3			—			0.5			0.5			—			0.2			—			—			0.7
Non-remarketing disposition gains (1)	0.4			0.9			—			—			—			1.3
Non-remarketing net gains (1)																			2.4			0.5			—			—			—			2.9
	$	8.1		$	1.0		$	—		$	0.3		$	—		$	9.4		$	9.6		$	0.5		$	0.2		$	—		$	—		$	10.3

Capital Expenditures
Portfolio investments and capital additions	$	103.3		$	22.9		$	0.8		$	36.6		$	0.1		$	163.7		$	129.1		$	40.4		$	—		$	—		$	0.2		$	169.7

Selected Balance Sheet Data at September 30, 2017
Selected Balance Sheet Data at September 30, 2018																			Selected Balance Sheet Data at September 30, 2018
Investments in affiliated companies	$	9.8		$	—		$	—		$	439.5		$	—		$	449.3		$	3.7		$	—		$	474.8		$	—		$	—		$	478.5
Identifiable assets	$	4,841.2		$	1,290.0		$	310.1		$	616.8		$	203.8		$	7,261.9		$	5,000.0		$	1,357.3		$	614.9		$	303.5		$	241.7		$	7,517.4

__________

(1) Includes net gains from scrapping ~~gains.~~of railcars.

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	Rail North America			Rail International			ASC			Portfolio Management			Other		GATX Consolidated			Rail North America			Rail International			Portfolio Management			ASC			Other			GATX Consolidated
Three Months Ended September 30, 2016
Profitability
Three Months Ended September 30, 2017
Revenues
Lease revenue	$	233.0		$	46.6		$	1.0		$	1.2		$	—	$	281.8		$	224.5		$	50.3		$	0.7		$	1.1		$	—		$	276.6
Marine operating revenue	—			—			51.8			10.3			—		62.1			—			—			3.8			59.1			—			62.9
Other revenue	17.3			1.6			—			0.1			—		19.0			17.9			2.0			0.2			—			—			20.1
Total Revenues	250.3			48.2			52.8			11.6			—		362.9			242.4			52.3			4.7			60.2			—			359.6
Expenses
Maintenance expense	62.8			10.7			6.1			—			—		79.6			66.1			11.1			—			7.7			—			84.9
Marine operating expense	—			—			31.5			7.7			—		39.2			—			—			4.2			34.7			—			38.9
Depreciation expense	58.4			11.6			4.2			1.7			—		75.9			60.1			12.8			1.7			4.0			—			78.6
Operating lease expense	17.2			—			2.0			—			—		19.2			15.5			—			—			0.3			—			15.8
Other operating expense	8.6			1.2			—			0.3			—		10.1			7.3			1.1			0.1			—			—			8.5
Total Expenses	147.0			23.5			43.8			9.7			—		224.0			149.0			25.0			6.0			46.7			—			226.7
Other Income (Expense)
Net gain on asset dispositions	13.1			0.5			—			49.1			—		62.7			8.1			1.0			0.3			—			—			9.4
Interest (expense) income, net	(27.1		)	(7.3		)	(1.1		)	(2.1		)	1.4		(36.2		)	(30.5		)	(8.5		)	(2.2		)	(1.4		)	2.4			(40.2		)
Other (expense) income	(1.4		)	5.5			(0.1		)	—			0.3		4.3			(0.9		)	0.3			—			—			(1.8		)	(2.4		)
Share of affiliates' pre-tax (loss) income	—			(0.1		)	—			15.2			—		15.1
Share of affiliates' pre-tax income																		0.1			—			16.0			—			—			16.1
Segment profit	$	87.9		$	23.3		$	7.8		$	64.1		$	1.7	184.8			$	70.2		$	20.1		$	12.8		$	12.1		$	0.6		$	115.8
Less:
Selling, general and administrative expense	Selling, general and administrative expense														48.1			Selling, general and administrative expense															42.5
Income taxes (includes $0.1 tax benefit related to affiliates' earnings)															41.0
Income taxes (includes $3.9 related to affiliates' earnings)																		Income taxes (includes $3.9 related to affiliates' earnings)															24.3
Net income	Net income														$	95.7		Net income															$	49.0

Net Gain on Asset Dispositions
Asset Remarketing Income:
Disposition gains on owned assets	$	11.9		$	—		$	—		$	(0.3	)	$	—	$	11.6
Net gains on disposition of owned assets																		$	7.5		$	0.1		$	—		$	—		$	—		$	7.6
Residual sharing income	0.3			—			—			49.4			—		49.7			0.2			—			0.3			—			—			0.5
Non-remarketing disposition gains (1)	0.9			0.5			—			—			—		1.4
Non-remarketing net gains (1)																		0.4			0.9			—			—			—			1.3
	$	13.1		$	0.5		$	—		$	49.1		$	—	$	62.7		$	8.1		$	1.0		$	0.3		$	—		$	—		$	9.4

Capital Expenditures
Portfolio investments and capital additions	$	108.4		$	10.8		$	—		$	—		$	1.2	$	120.4		$	103.3		$	22.9		$	36.6		$	0.8		$	0.1		$	163.7

Selected Balance Sheet Data at December 31, 2016
Selected Balance Sheet Data at December 31, 2017																		Selected Balance Sheet Data at December 31, 2017
Investments in affiliated companies	$	10.5		$	1.2		$	—		$	375.3		$	—	$	387.0		$	6.8		$	—		$	434.2		$	—		$	—		$	441.0
Identifiable assets	$	4,775.6		$	1,128.7		$	278.8		$	593.5		$	328.8	$	7,105.4		$	4,915.0		$	1,332.9		$	582.8		$	286.7		$	305.0		$	7,422.4

__________

(1) Includes net gains from scrapping ~~gains.~~of railcars.

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	Rail North America			Rail International			ASC			Portfolio Management			Other			GATX Consolidated			Rail North America			Rail International			Portfolio Management			ASC			Other			GATX Consolidated
Nine Months Ended September 30, 2017
Profitability
Nine Months Ended September 30, 2018
Revenues
Lease revenue	$	677.4		$	139.8		$	3.1		$	3.1		$	—		$	823.4		$	655.3		$	156.9		$	0.8		$	3.1		$	—		$	816.1
Marine operating revenue	—			—			113.2			21.8			—			135.0			—			—			11.0			119.8			—			130.8
Other revenue	60.0			4.7			—			1.0			—			65.7			51.1			6.0			0.5			—			—			57.6
Total Revenues	737.4			144.5			116.3			25.9			—			1,024.1			706.4			162.9			12.3			122.9			—			1,004.5
Expenses
Maintenance expense	202.3			30.8			14.6			—			—			247.7			192.8			33.8			—			14.1			—			240.7
Marine operating expense	—			—			70.6			19.2			—			89.8			—			—			12.9			76.6			—			89.5
Depreciation expense	178.8			35.8			8.1			5.2			—			227.9			185.8			41.7			5.5			7.1			—			240.1
Operating lease expense	45.3			—			1.5			—			—			46.8			37.5			—			—			—			—			37.5
Other operating expense	21.7			3.5			—			0.7			—			25.9			21.5			4.3			0.4			—			—			26.2
Total Expenses	448.1			70.1			94.8			25.1			—			638.1			437.6			79.8			18.8			97.8			—			634.0
Other Income (Expense)
Net gain on asset dispositions	42.6			2.6			—			11.1			—			56.3			68.4			3.2			0.8			0.1			—			72.5
Interest (expense) income, net	(90.1		)	(24.5		)	(3.9		)	(6.8		)	5.9			(119.4		)	(93.1		)	(26.5		)	(7.6		)	(4.3		)	6.8			(124.7		)
Other (expense) income	(4.1		)	(2.3		)	0.8			2.3			(1.2		)	(4.5		)
Share of affiliates' pre-tax income (loss)	0.4			(0.1		)	—			39.9			—			40.2
Other expense																			(3.3		)	(7.3		)	—			(0.2		)	(4.1		)	(14.9		)
Share of affiliates' pre-tax income																			0.5			—			47.6			—			—			48.1
Segment profit	$	238.1		$	50.1		$	18.4		$	47.3		$	4.7		358.6			$	241.3		$	52.5		$	34.3		$	20.7		$	2.7		$	351.5
Less:
Selling, general and administrative expense	Selling, general and administrative expense															128.8			Selling, general and administrative expense															137.6
Income taxes (includes $9.6 related to affiliates' earnings)																69.9
Income taxes (includes $9.0 related to affiliates' earnings)																			Income taxes (includes $9.0 related to affiliates' earnings)															51.8
Net income	Net income															$	159.9		Net income															$	162.1

Net Gain on Asset Dispositions
Asset Remarketing Income:
Disposition gains on owned assets	$	39.5		$	0.1		$	—		$	1.8		$	—		$	41.4
Net gains on disposition of owned assets																			$	60.8		$	—		$	—		$	0.1		$	—		$	60.9
Residual sharing income	0.5			—			—			9.3			—			9.8			0.9			—			0.8			—			—			1.7
Non-remarketing disposition gains (1)	4.5			2.5			—			—			—			7.0
Asset impairments	(1.9		)	—			—			—			—			(1.9		)
Non-remarketing net gains (1)																			6.7			3.2			—			—			—			9.9
	$	42.6		$	2.6		$	—		$	11.1		$	—		$	56.3		$	68.4		$	3.2		$	0.8		$	0.1		$	—		$	72.5

Capital Expenditures
Portfolio investments and capital additions	$	333.7		$	74.7		$	13.6		$	36.6		$	0.4		$	459.0		$	414.7		$	104.5		$	—		$	15.8		$	1.7		$	536.7

__________

(1) Includes net gains from scrapping ~~gains.~~of railcars.

GATX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)


	Rail North America			Rail International			ASC			Portfolio Management			Other			GATX Consolidated			Rail North America			Rail International			Portfolio Management			ASC			Other			GATX Consolidated
Nine Months Ended September 30, 2016
Profitability
Nine Months Ended September 30, 2017
Revenues
Lease revenue	$	703.0		$	136.8		$	3.1		$	4.6		$	—		$	847.5		$	677.4		$	139.8		$	3.1		$	3.1		$	—		$	823.4
Marine operating revenue	—			—			102.3			37.4			—			139.7			—			—			21.8			113.2			—			135.0
Other revenue	63.5			4.8			—			0.7			—			69.0			60.0			4.7			1.0			—			—			65.7
Total Revenues	766.5			141.6			105.4			42.7			—			1,056.2			737.4			144.5			25.9			116.3			—			1,024.1
Expenses
Maintenance expense	196.2			36.1			12.3			—			—			244.6			202.3			30.8			—			14.6			—			247.7
Marine operating expense	—			—			64.0			24.9			—			88.9			—			—			19.2			70.6			—			89.8
Depreciation expense	173.0			34.2			8.6			5.2			—			221.0			178.8			35.8			5.2			8.1			—			227.9
Operating lease expense	50.6			—			4.0			—			(0.1		)	54.5			45.3			—			—			1.5			—			46.8
Other operating expense	25.0			3.8			—			4.9			—			33.7			21.7			3.5			0.7			—			—			25.9
Total Expenses	444.8			74.1			88.9			35.0			(0.1		)	642.7			448.1			70.1			25.1			94.8			—			638.1
Other Income (Expense)
Net gain on asset dispositions	36.4			1.5			—			84.9			—			122.8			42.6			2.6			11.1			—			—			56.3
Interest (expense) income, net	(81.2		)	(21.9		)	(3.3		)	(6.4		)	2.9			(109.9		)	(90.1		)	(24.5		)	(6.8		)	(3.9		)	5.9			(119.4		)
Other (expense) income	(3.8		)	2.0			(0.3		)	—			(0.8		)	(2.9		)	(4.1		)	(2.3		)	2.3			0.8			(2.2		)	(5.5		)
Share of affiliates' pre-tax income (loss)	0.3			(0.2		)	—			33.0			—			33.1			0.4			(0.1		)	39.9			—			—			40.2
Segment profit	$	273.4		$	48.9		$	12.9		$	119.2		$	2.2		456.6			$	238.1		$	50.1		$	47.3		$	18.4		$	3.7		$	357.6
Less:
Selling, general and administrative expense	Selling, general and administrative expense															127.8			Selling, general and administrative expense															127.8
Income taxes (includes $4.0 related to affiliates' earnings)																102.6
Income taxes (includes $9.6 related to affiliates' earnings)																			Income taxes (includes $9.6 related to affiliates' earnings)															69.9
Net income	Net income															$	226.2		Net income															$	159.9

Net Gain on Asset Dispositions
Asset Remarketing Income:
Disposition gains on owned assets	$	32.5		$	—		$	—		$	4.2		$	—		$	36.7
Net gains on disposition of owned assets																			$	39.5		$	0.1		$	1.8		$	—		$	—		$	41.4
Residual sharing income	0.7			—			—			82.5			—			83.2			0.5			—			9.3			—			—			9.8
Non-remarketing disposition gains (1)	3.2			1.5			—			—			—			4.7
Non-remarketing net gains (1)																			4.5			2.5			—			—			—			7.0
Asset impairments	—			—			—			(1.8		)	—			(1.8		)	(1.9		)	—			—			—			—			(1.9		)
	$	36.4		$	1.5		$	—		$	84.9		$	—		$	122.8		$	42.6		$	2.6		$	11.1		$	—		$	—		$	56.3

Capital Expenditures
Portfolio investments and capital additions	$	366.7		$	63.2		$	9.1		$	—		$	3.6		$	442.6		$	333.7		$	74.7		$	36.6		$	13.6		$	0.4		$	459.0

__________

(1) Includes net gains from scrapping ~~gains.~~of railcars.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~BUSINESS~~ OVERVIEW

We lease, operate, manage, and remarket long-lived, widely-used assets, primarily in the rail market. We report our financial results through four primary business segments: Rail North America, Rail International, Portfolio Management, and American Steamship Company (“ASC”)~~, and Portfolio Management.~~.

The following discussion and analysis should be read in conjunction with the MD&A in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. We based the discussion and analysis that follows on financial data we derived from the financial statements prepared in accordance with USU.S. Generally Accepted Accounting Standards ("GAAP") and on certain other financial data that we prepared using non-GAAP components. For a reconciliation of these non-GAAP components to the most comparable GAAP components, see “Non-GAAP Financial Measures” at the end of this item.

Operating results for the three and nine months ended September 30, ~~2017~~2018 are not necessarily indicative of the results we may achieve for the entire year ending December 31, ~~2017.~~2018. In particular, ASC's fleet is inactive for a significant portion of the first quarter of each year due to winter conditions on the Great Lakes. In addition, asset remarketing income does not occur evenly throughout the year. For more information about our business, refer to our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

DISCUSSION OF OPERATING RESULTS

The following table shows a summary of our reporting segments and consolidated financial results ~~for the three and nine months ended September 30~~ (in millions, except per share data):


	Three Months Ended September 30						Nine Months Ended September 30						Three Months Ended September 30						Nine Months Ended September 30
	2017			2016			2017			2016			2018			2017			2018			2017
Segment Revenues
Rail North America	$	242.4		$	250.3		$	737.4		$	766.5		$	233.4		$	242.4		$	706.4		$	737.4
Rail International	52.3			48.2			144.5			141.6			54.1			52.3			162.9			144.5
Portfolio Management													3.4			4.7			12.3			25.9
ASC	60.2			52.8			116.3			105.4			58.8			60.2			122.9			116.3
Portfolio Management	4.7			11.6			25.9			42.7
	$	359.6		$	362.9		$	1,024.1		$	1,056.2		$	349.7		$	359.6		$	1,004.5		$	1,024.1
Segment Profit
Rail North America	$	70.2		$	87.9		$	238.1		$	273.4		$	68.2		$	70.2		$	241.3		$	238.1
Rail International	20.1			23.3			50.1			48.9			20.7			20.1			52.5			50.1
Portfolio Management													9.0			12.8			34.3			47.3
ASC	12.1			7.8			18.4			12.9			11.9			12.1			20.7			18.4
Portfolio Management	12.8			64.1			47.3			119.2
	115.2			183.1			353.9			454.4			109.8			115.2			348.8			353.9
Less:
Selling, general and administrative expense	42.8			48.1			128.8			127.8			46.5			42.5			137.6			127.8
Unallocated interest expense, net	(2.4		)	(1.4		)	(5.9		)	(2.9		)
Unallocated interest (income) expense													(2.2		)	(2.4		)	(6.8		)	(5.9		)
Other, including eliminations	1.5			(0.3		)	1.2			0.7			2.7			1.8			4.1			2.2
Income taxes ($3.9 and $(0.1) QTR and $9.6 and $4.0 YTD related to affiliates' earnings)	24.3			41.0			69.9			102.6
Income taxes ($2.7 and $3.9 QTR and $9.0 and $9.6 YTD related to affiliates' earnings)													15.8			24.3			51.8			69.9
Net Income	$	49.0		$	95.7		$	159.9		$	226.2		$	47.0		$	49.0		$	162.1		$	159.9

Net income, excluding tax adjustments and other items (non-GAAP)	$	49.0		$	61.1		$	158.8		$	189.9		$	47.0		$	49.0		$	167.9		$	158.8
Diluted earnings per share (GAAP)	$	1.25		$	2.36		$	4.04		$	5.49
Diluted earnings per share													$	1.22		$	1.25		$	4.21		$	4.04
Diluted earnings per share, excluding tax adjustments and other items (non-GAAP)	$	1.25		$	1.50		$	4.01		$	4.61		$	1.22		$	1.25		$	4.36		$	4.01

Investment Volume	$	163.7		$	120.4		$	459.0		$	442.6		$	169.7		$	163.7		$	536.7		$	459.0

The following table shows our return on equity ("ROE") for the trailing ~~twelve~~12 months ended September 30:


	2017		2016		2018		2017
ROE (GAAP)	13.4	%	21.5	%	30.5	%	13.4	%
ROE, excluding tax adjustments and other items (non-GAAP)(1)	14.4	%	19.0	%	13.0	%	14.4	%

_________


(1)	See "Non-GAAP Financial Measures" at the end of this item for further details.

Net income was ~~$159.9~~$162.1 million, or ~~$4.04~~$4.21 per diluted share, for the first nine months of ~~2017~~2018 compared to ~~$226.2~~$159.9 million, or ~~$5.49~~$4.04 per diluted share, in ~~2016.~~2017. Results for the nine months ended September 30, 2018 included costs of approximately $5.8 million (after-tax) associated with the closure of a maintenance facility at Rail International, and results for the nine months ended September 30, 2017 ~~and 2016,~~ included a net ~~gains~~gain of approximately $1.1 million ~~and $2.1 million, respectively, associated with~~(after-tax) from the planned exit of the majority of Portfolio Management's marine investments. In addition, during the nine months ended September 30, 2016, net proceeds of $30.3 million were recorded as a result of the settlement of a residual sharing agreement, and a $3.9 million benefit from deferred income tax adjustments was recorded due to enacted statutory rate decreases in the United Kingdom. Seeinvestments (see "Non-GAAP Financial Measures" at the end of this item for further ~~details.~~details). Excluding the impact of these items, net income ~~decreased $31.1~~increased $9.1 million compared to the prior year.

The increase was driven by higher asset disposition gains and lower maintenance expense at Rail North America, higher lease revenue, resulting from more railcars on lease, and the positive impacts of foreign exchange rates, both at Rail International, and higher income from affiliates. These positive impacts were partially offset by lower lease revenue at Rail North America, due to lower lease rates and fewer railcars on lease, as well as lower residual sharing fees from our managed portfolio and lower marine operating results at our Portfolio Management segment.

Net income was ~~$49.0~~$47.0 million, or ~~$1.25~~$1.22 per diluted share, for the third quarter of ~~2017~~2018 compared to ~~$95.7~~$49.0 million, or ~~$2.36~~$1.25 per diluted share, in 2016. Results for the third quarter of 2016 included net gains of approximately $0.4 million associated with the planned exit of the majority of Portfolio Management's marine investments. In addition, during the third quarter of 2016, net proceeds of $30.3 million were recorded as a result of the settlement of a residual sharing agreement, and a $3.9 million benefit from deferred income tax adjustments was recorded due to enacted statutory rate decreases in the United Kingdom. See "Non-GAAP Financial Measures" at the end of this item for further details. Excluding the impact of these items, net2017. Net income decreased ~~$12.1~~$2.0 million compared to the prior year.

The ~~decreases in both the quarter and year-to-date net income for 2017 were primarily driven by lower disposition gains and~~decrease was largely due to lower lease revenue, ~~at Rail North America, resulting from~~as a result of lower lease rates and fewer railcars on ~~lease. In the prior year, disposition gains for~~lease at Rail North America, as well as lower affiliate income. These negative impacts were partially offset by lower maintenance expense at Rail North America, as well as higher lease revenue, resulting from more railcars on lease, and lower maintenance expense, both ~~the quarter and year-to-date included sizeable residual sharing fees from the managed portfolio~~ at ~~our Portfolio Management segment.~~Rail International.

~~SEGMENT OPERATIONS~~Segment Operations

We allocate debt balances and related interest expense to each segment based upon predetermined debt to equity leverage ratios. The leverage levels are 5:1 for Rail North America, 3:1 for Rail International, ~~1.5:1 for ASC, and~~ 1:1 for Portfolio ~~Management.~~ Management, and 1.5:1 for ASC.We believe that by using this leverage and interest expense allocation methodology, each operating segment’s financial performance reflects appropriate risk-adjusted borrowing costs.

RAIL NORTH AMERICA

Segment Summary

~~Challenging conditions continue in the North American railcar leasing market due to the oversupply of existing railcars and a large railcar manufacturing backlog. Despite this difficult~~The operating environment for Rail North America ~~has been successful in maintaining high utilization of its railcars across all tank~~continued to improve, as railroad car loadings increased and ~~freight types.~~

railroad velocity decreased relative to 2017. Despite absolute lease rates improving, revenue pressure continues. At September 30, ~~2017,~~2018, Rail North America's wholly owned fleet, excluding boxcars, consisted of approximately ~~103,700 cars. Fleet~~103,400 cars, and fleet utilization ~~excluding boxcars,~~ was ~~98.5% at the end of September 30, 2017, compared to 98.8% at the end of prior quarter, and 99.0%~~99.2% at September 30, ~~2016. Fleet utilization for approximately 16,600 boxcars was 92.4% at the end of September 30, 2017,~~2018, compared to ~~90.2%~~98.9% at the end of the prior quarter, and 98.5% at September 30, 2017. Fleet utilization for our approximately 16,000 boxcars was 94.7% at September 30, ~~2016.~~2018, compared to 92.8% at the end of the prior quarter, and 92.4% at September 30, 2017.

For the third quarter of 2018, an average of approximately 102,100 railcars, excluding boxcars, were on lease, compared to 101,300 in the prior quarter and 102,600 at September 30, 2017. The decrease in railcars on lease in the current year is largely due to railcars that

were sold or scrapped, consistent with our ongoing strategy to optimize the composition of our fleet. During the third quarter of ~~2017,~~2018, the renewal rate change of the Lease Price Index (the "LPI", see definition below) ~~decreased 27.0%~~was negative 11.5%, compared to ~~decreases of 21.4%~~negative 16.1% in the prior quarter and ~~21.4%~~negative 27.0% in the third quarter of ~~2016.~~2017. Lease terms on renewals for cars in the LPI averaged 3533 months in the current quarter, compared to 3241 months in the prior quarter, and 2935 months in the third quarter of ~~2016.~~2017. Additionally, the renewal success rate, which represents the percentage of expiring leases that were renewed with the existing lessee, was ~~74.9%~~82.9% in the current quarter, compared to ~~75.1%~~78.6% in the prior quarter, and ~~74.1%~~74.9% in the third quarter of ~~2016.~~2017. Railcars returned by our customers may incur transitional costs, including additional repairs and related service prior to being leased to new customers, which may increase maintenance and associated expenses.

In 2014, we entered into a long-term supply agreement with Trinity Rail Group, LLC ("Trinity"), a subsidiary of Trinity Industries that took effect in mid-2016. Under the terms of that agreement, we may order up to 8,950 newly built railcars over a four-year period from March, 2016 through March, 2020. We may order either tank or freight cars; however, we expect that the majority of the order will be for tank cars. As of September 30, 2018, 7,715 railcars have been ordered, of which 5,095 railcars have been delivered. On May 24, 2018, we amended our long-term supply agreement with Trinity to extend the ~~challenging lease rate environment persists,~~term to December 2023. We agreed to purchase an additional 4,800 tank cars (1,200 per year) beginning in January 2020 and continuing through the expiration of the extended term. Pricing will be on an agreed upon or cost-plus basis subject to certain adjustments and surcharges specified in the agreement.

On July 30, 2018, we entered into a multi-year railcar supply agreement with American Railcar Industries, Inc. ("ARI"), pursuant to which we will ~~continue~~purchase 7,650 newly built railcars. The order encompasses a mix of tank and freight cars to ~~experience pressure on~~be delivered over a five-year period, beginning in April 2019. ARI will deliver 450 railcars in 2019, with the ~~LPI. For~~remaining 7,200 to be delivered ratably over the ~~third quarter~~four-year period of ~~2017,~~2020 to 2023. The agreement also includes an ~~average of approximately 102,600~~option to order up to an additional 4,400 railcars ~~excluding boxcars, were on lease, compared~~subject to ~~102,800 in the prior quarter and 103,500 in the third quarter of 2016.~~certain restrictions.

As of September 30, ~~2017,~~2018, leases for approximately ~~5,290 railcars in our term lease fleet~~5,400 tank cars and freight cars and approximately ~~1,920~~1,100 boxcars are scheduled to expire over the remainder of ~~2017.~~2018. These amounts exclude ~~railcars with~~ leases expiring ~~over the remainder of 2017~~in 2018 that have already been renewed or assigned to a new lessee.

The following table shows Rail North America's segment results (in millions):


	Three Months Ended September 30						Nine Months Ended September 30						Three Months Ended September 30						Nine Months Ended September 30
	2017			2016			2017			2016			2018			2017			2018			2017
Revenues
Lease revenue	$	224.5		$	233.0		$	677.4		$	703.0		$	218.2		$	224.5		$	655.3		$	677.4
Other revenue	17.9			17.3			60.0			63.5			15.2			17.9			51.1			60.0
Total Revenues	242.4			250.3			737.4			766.5			233.4			242.4			706.4			737.4

Expenses
Maintenance expense	66.1			62.8			202.3			196.2			60.6			66.1			192.8			202.3
Depreciation expense	60.1			58.4			178.8			173.0			62.5			60.1			185.8			178.8
Operating lease expense	15.5			17.2			45.3			50.6			11.8			15.5			37.5			45.3
Other operating expense	7.3			8.6			21.7			25.0			7.1			7.3			21.5			21.7
Total Expenses	149.0			147.0			448.1			444.8			142.0			149.0			437.6			448.1

Other Income (Expense)
Net gain on asset dispositions	8.1			13.1			42.6			36.4			9.6			8.1			68.4			42.6
Interest expense, net	(30.5		)	(27.1		)	(90.1		)	(81.2		)	(31.8		)	(30.5		)	(93.1		)	(90.1		)
Other expense	(0.9		)	(1.4		)	(4.1		)	(3.8		)	(1.2		)	(0.9		)	(3.3		)	(4.1		)
Share of affiliate's pre-tax income	0.1			—			0.4			0.3
Share of affiliates' pre-tax income													0.2			0.1			0.5			0.4
Segment Profit	$	70.2		$	87.9		$	238.1		$	273.4		$	68.2		$	70.2		$	241.3		$	238.1

Investment Volume	$	103.3		$	108.4		$	333.7		$	366.7		$	129.1		$	103.3		$	414.7		$	333.7

The following table shows the components of Rail North America's lease revenue (in millions):


	Three Months Ended September 30				Nine Months Ended September 30				Three Months Ended September 30				Nine Months Ended September 30
	2017		2016		2017		2016		2018		2017		2018		2017
Railcars	$	195.9	$	201.4	$	591.8	$	611.0	$	188.9	$	195.9	$	568.4	$	591.8
Boxcars	18.9		21.7		56.3		62.5		19.5		18.9		57.8		56.3
Locomotives	9.7		9.9		29.3		29.5		9.8		9.7		29.1		29.3
	$	224.5	$	233.0	$	677.4	$	703.0
Total									$	218.2	$	224.5	$	655.3	$	677.4

Lease Price Index

Our LPI is an internally-generated business indicator that measures lease rate pricing on renewals for our North American railcar fleet, excluding boxcars. We calculate the index using the weighted average lease rate for a group of railcar types that we believe best represents our overall North American fleet, excluding boxcars. The average renewal lease rate change is reported as the percentage change between the average renewal lease rate and the average expiring lease rate, weighted by fleet composition. The average renewal lease term is reported in months and reflects the average renewal lease term of railcar types in the LPI, weighted by fleet composition.

Rail North America Fleet Data

The following table shows fleet activity for Rail North America railcars, excluding boxcars, for the quarter ended:


	September 30 2016		December 31 2016		March 31 2017		June 30 2017		September 30 2017		September 30 2017		December 31 2017		March 31 2018		June 30 2018		September 30 2018
Beginning balance	105,368		104,874		104,522		103,672		104,007		104,007		103,692		103,730		102,597		102,890
Cars added	764		1,087		795		1,224		637		637		786		1,226		1,231		1,381
Cars scrapped	(590	)	(579	)	(806	)	(640	)	(854	)	(854	)	(600	)	(673	)	(720	)	(431	)
Cars sold	(668	)	(860	)	(839	)	(249	)	(98	)	(98	)	(148	)	(1,686	)	(218	)	(420	)
Ending balance	104,874		104,522		103,672		104,007		103,692		103,692		103,730		102,597		102,890		103,420
Utilization rate at quarter end	99.0	%	98.9	%	99.1	%	98.8	%	98.5	%	98.5	%	98.2	%	98.2	%	98.9	%	99.2	%
Average active railcars	103,479		103,702		102,976		102,760		102,555		102,555		102,078		101,208		101,330		102,056

The following table shows fleet statistics for Rail North America ~~boxcars:~~boxcars for the quarter ended:


	September 30 2016		December 31 2016		March 31 2017		June 30 2017		September 30 2017		September 30 2017		December 31 2017		March 31 2018		June 30 2018		September 30 2018
Ending balance	18,089		17,706		17,415		17,138		16,555		16,555		16,398		16,227		16,007		15,859
Utilization	94.7	%	93.8	%	92.9	%	90.2	%	92.4	%	92.4	%	92.6	%	93.5	%	92.8	%	94.7	%

Comparison of the First Nine Months of ~~2017~~2018 to the First Nine Months of ~~2016~~2017

Segment Profit

~~Segment~~In the first nine months of 2018, segment profit ~~was~~of $241.3 million increased 1.3% compared to $238.1 million in the same period in the prior year. The increase was driven by higher asset disposition gains and lower maintenance expense, partially offset by lower lease revenue and lower termination fees.

Revenues

In the first nine months of 2018, lease revenue decreased $22.1 million, or 3.3%, primarily due to lower lease rates and fewer railcars on lease. Other revenue decreased $8.9 million, largely a result of lower termination fees in the current period, partially offset by higher repair revenue. Other revenue in 2017 included $7.8 million of compensation for damage to returned railcars. The expenses to repair these railcars are recognized as incurred.

Expenses

In the first nine months of 2018, maintenance expense decreased $9.5 million, largely due to fewer tank qualifications, lower assignment-related costs, and fewer repairs performed by the railroads. Maintenance expenses will likely increase in the fourth quarter of 2018 and into 2019 as tank car compliance service events increase. Depreciation expense increased $7.0 million due to new railcar investments and the purchase of railcars previously on operating leases. Operating lease expense decreased $7.8 million, resulting from the purchase of railcars previously on operating leases in both 2018 and 2017.

Other Income (Expense)

In the first nine months of 2018, net gain on asset dispositions increased $25.8 million, attributable to more railcars sold in the current year, as well as higher scrapping gains resulting primarily from a higher scrap price per ton. Net interest expense increased $3.0 million, driven by a higher average debt balance.

Investment Volume

During the first nine months of 2018, investment volume was $414.7 million compared to $333.7 million in the same period in 2017. We acquired 3,045 newly built railcars and purchased 793 railcars in the secondary market in the first nine months of ~~2017~~2018, compared to ~~$273.4~~2,532 newly built railcars and 212 railcars purchased in the secondary market in the same period in 2017.

Our investment volume is predominantly composed of acquired railcars, but also includes certain capitalized repairs and improvements to owned railcars and our maintenance facilities. As a result, the dollar value of investment volume does not necessarily correspond to the number of railcars acquired in any given period. In addition, the comparability of amounts invested and the number of railcars acquired in each period is impacted by the mix of railcars purchased, which may include tank cars and freight cars, as well as newly manufactured railcars or those purchased in the secondary market.

Comparison of the Third Quarter of 2018 to the Third Quarter of 2017

Segment Profit

In the third quarter of 2018, segment profit of $68.2 million decreased 2.8% compared to $70.2 million in the same period in the prior year. The decrease was driven by lower lease revenue and ~~higher maintenance expense,~~other revenue, partially offset by ~~higher asset disposition gains.~~lower maintenance expense.

Revenues

~~Lease~~In the third quarter of 2018 lease revenue decreased ~~$25.6~~$6.3 million, ~~in the first nine months of 2017,~~or 2.8%, primarily due to lower lease rates and fewer railcars on lease. Other revenue decreased ~~$3.5~~$2.7 million, ~~in the first nine months of 2017~~ due to lower ~~repair revenue~~excess mileage and lower lease termination fees. Other revenue in 2016 included a lease termination fee of approximately $10.0 million for allowing a customer to return railcars prior to the contractual end of an existing lease. Other revenue in the current year included $7.8 million for compensation of damages to returned cars. The expenses to repair these cars will be recognized as incurred. In some cases, it may be more economical to scrap the railcar rather than incur these expenses.

equalization revenue.

Expenses

~~Maintenance~~In the third quarter of 2018, maintenance expense ~~increased $6.1~~decreased $5.5 million, ~~in the first nine months of 2017, primarily~~largely due to ~~an increase in~~fewer tank qualifications, lower assignment-related costs, ~~associated with cars assigned to new lessees, partially offset by lower expenses for the boxcar fleet~~ and ~~lower~~fewer repairs performed by the railroads. Depreciation expense increased ~~$5.8~~$2.4 million ~~in the first nine months of 2017, largely~~ due to new ~~investments.~~railcar investments and the purchase of railcars previously on operating leases. Operating lease expense decreased ~~$5.3~~$3.7 million, ~~in the first nine months of 2017,~~ resulting from the purchase of railcars previously on operating leases in both ~~years. Other operating expense decreased $3.3 million in the first nine months of 2017, primarily due to lower switching~~2018 and ~~freight costs.~~2017.

Other Income (Expense)

~~Net~~In the third quarter of 2018, net gain on asset dispositions increased ~~$6.2~~$1.5 million, ~~in the first nine months of 2017, in part due~~attributable to ~~higher average net gains on railcar~~more railcars sold and ~~locomotive sales. In addition,~~ higher scrapping gains ~~resulting from more railcars scrapped and higher scrap prices, were partially offset by an impairment loss recorded~~ in the current year, ~~on certain railcars.~~partially offset by the absence of net gains from locomotives sold in the prior year. The higher scrapping gains were due to higher scrap prices that more than offset fewer railcars scrapped. Net interest expense increased ~~$8.9~~$1.3 million, ~~in the first nine months of 2017, due to~~driven by a higher average interest rate and a higher average debt balance. ~~Other expense in the first nine months of 2017 was comparable to the same period in the prior year.~~

~~Investment Volume~~

During the first nine months of 2017, investment volume was $333.7 million compared to $366.7 million in the same period in 2016. We acquired 2,532 newly built railcars and purchased 212 railcars in the secondary market in the first nine months of 2017, compared to 2,361 newly built railcars and 25 railcars purchased in the secondary market in the same period in 2016.

~~Comparison of the Third Quarter of 2017 to the Third Quarter of 2016~~

~~Segment Profit~~

Segment profit was $70.2 million in the third quarter of 2017, compared to $87.9 million in the same period in the prior year. The decrease was driven by lower lease revenue and lower asset disposition gains.

~~Revenues~~

Lease revenue decreased $8.5 million in the third quarter of 2017, primarily due to lower lease rates and fewer cars on lease. Other revenue in the third quarter of 2017 was comparable to the same period in the prior year.

~~Expenses~~

Maintenance expense increased $3.3 million in the third quarter of 2017, primarily due to an increase in costs associated with cars assigned to new lessees, partially offset by lower expenses for the boxcar fleet and lower repairs performed by the railroads. Depreciation expense increased $1.7 million in the period, largely due to new investments. Operating lease expense decreased $1.7 million in the third quarter of 2017, resulting from the purchase of railcars previously on operating leases in both years. Other operating expense decreased $1.3 million in the period, primarily due to lower switching and freight costs.

~~Other Income (Expense)~~

Net gain on asset dispositions decreased $5.0 million in the third quarter of 2017, primarily due to fewer railcars sold in the current year, as well as lower scrapping gains. Net interest expense increased $3.4 million in the third quarter of 2017, due to a higher average interest rate and a higher average debt balance. Other expense in the third quarter of 2017 was comparable to the same period in the prior year.

RAIL INTERNATIONAL

Segment Summary

Rail International, composed primarily of GATX Rail Europe ("GRE"), produced solid operating results in ~~2017. Despite pressure on lease rates,~~the first nine months of 2018. In Europe, we continue to see gradual, broad improvement across the chemical, petroleum, and freight markets, and GRE ~~benefited from stable demand, leading to success~~was successful in maintaining high fleet ~~utilization.~~utilization across all railcar types in the third quarter of 2018. Railcar utilization for GRE was ~~95.6%~~98.4% at ~~the end of the third quarter of 2017,~~September 30, 2018, compared to ~~95.7%~~97.8% at the end of the prior quarter and ~~95.0%~~95.6% at September 30, ~~2016.~~2017. In addition, Rail India and Rail Russia benefited from more cars on lease as they continue to expand their fleets.

~~GRE's results in 2016 were impacted by higher wheelset costs,~~In the second quarter of 2018, GRE recorded $8.6 million of expense attributable to the closure of a ~~refurbishment program enacted to address anti-corrosion paint issues on certain wheelsets.~~railcar maintenance facility in Germany.

The following table shows Rail International's segment results (in millions):


	Three Months Ended September 30						Nine Months Ended September 30						Three Months Ended September 30						Nine Months Ended September 30
	2017			2016			2017			2016			2018			2017			2018			2017
Revenues
Lease revenue	$	50.3		$	46.6		$	139.8		$	136.8		$	52.3		$	50.3		$	156.9		$	139.8
Other revenue	2.0			1.6			4.7			4.8			1.8			2.0			6.0			4.7
Total Revenues	52.3			48.2			144.5			141.6			54.1			52.3			162.9			144.5

Expenses
Maintenance expense	11.1			10.7			30.8			36.1			10.1			11.1			33.8			30.8
Depreciation expense	12.8			11.6			35.8			34.2			13.8			12.8			41.7			35.8
Other operating expense	1.1			1.2			3.5			3.8			1.3			1.1			4.3			3.5
Total Expenses	25.0			23.5			70.1			74.1			25.2			25.0			79.8			70.1

Other Income (Expense)
Net gain on asset dispositions	1.0			0.5			2.6			1.5			0.5			1.0			3.2			2.6
Interest expense, net	(8.5		)	(7.3		)	(24.5		)	(21.9		)	(8.9		)	(8.5		)	(26.5		)	(24.5		)
Other income (expense)	0.3			5.5			(2.3		)	2.0			0.2			0.3			(7.3		)	(2.3		)
Share of affiliate's pre-tax loss	—			(0.1		)	(0.1		)	(0.2		)
Share of affiliates' pre-tax loss													—			—			—			(0.1		)
Segment Profit	$	20.1		$	23.3		$	50.1		$	48.9		$	20.7		$	20.1		$	52.5		$	50.1

Investment Volume	$	22.9		$	10.8		$	74.7		$	63.2		$	40.4		$	22.9		$	104.5		$	74.7

The following table shows fleet activity for GRE railcars for the quarter ended:


	September 30 2016		December 31 2016		March 31 2017		June 30 2017		September 30 2017		September 30 2017		December 31 2017		March 31 2018		June 30 2018		September 30 2018
Beginning balance	23,088		22,966		23,122		23,131		23,180		23,180		23,227		23,166		23,004		23,124
Cars added	78		287		207		288		179		179		197		63		245		258
Cars scrapped or sold	(200	)	(131	)	(198	)	(239	)	(132	)	(132	)	(258	)	(225	)	(125	)	(148	)
Ending balance	22,966		23,122		23,131		23,180		23,227		23,227		23,166		23,004		23,124		23,234
Utilization rate at quarter end	95.0	%	95.6	%	95.0	%	95.7	%	95.6	%	95.6	%	96.8	%	96.7	%	97.8	%	98.4	%
Average active railcars	21,830		22,002		22,012		22,024		22,215		22,215		22,290		22,327		22,407		22,759

Comparison of the First Nine Months of ~~2017~~2018 to the First Nine Months of ~~2016~~2017

Foreign Currency

Rail International's reported results of operations are impacted by fluctuations in the exchange rates of the foreign currencies in which it conducts business, primarily the euro. ~~During~~In the first nine months of ~~2017, the value of the~~2018, a stronger euro ~~fluctuated; however, in aggregate, the changes did not have a meaningful impact on reported~~positively impacted lease revenue ~~or reported~~by approximately $9.8 million and segment profit, excluding other income (expense), by approximately $5.0 million compared to the ~~first nine months of 2016.~~same period in 2017.

Segment Profit

~~Segment profit was $50.1 million in~~In the first nine months of ~~2017,~~2018, segment profit of $52.5 million increased 4.8% compared to ~~$48.9~~$50.1 million in the same period in the prior year. The increase was largely due to ~~lower maintenance expense and higher~~the positive impact of foreign exchange rates, as well as more railcars on lease, ~~revenue,~~ partially offset by the ~~absence of insurance proceeds recognized in the prior year for previously expensed legal defense~~railcar maintenance facility closure costs.

Revenues

~~Lease revenue increased $3.0 million in~~In the first nine months of ~~2017~~2018, lease revenue increased $17.1 million, or 12.2%, due to more ~~cars~~railcars on ~~lease.~~lease and the impact of foreign exchange rates. Other revenue inincreased $1.3 million, driven by higher repair revenue.

Expenses

In the first nine months of ~~2017 was comparable to same period in the prior year.~~

~~Expenses~~

~~Maintenance~~2018, maintenance expense ~~decreased $5.3~~increased $3.0 million, ~~in the first nine months of 2017,~~ primarily due to ~~lower~~higher wheelset costs and other maintenance expenses, as well as the impact of foreign exchange rates, partially offset by fewer railcars undergoing regulatory compliance ~~maintenance.~~repairs. Depreciation expense increased ~~$1.6~~$5.9 million, ~~in the first nine months of 2017,~~ driven by the impact of new ~~cars~~railcars added to the ~~fleet. Other operating expense in~~fleet, as well as the ~~first nine months~~impacts of ~~2017 was comparable to the same period in the prior year.~~foreign exchange rates.

Other Income (Expense)

~~Net~~In the first nine months of 2018, net gain on asset dispositions increased ~~$1.1~~$0.6 million, ~~in the first nine months of 2017, primarily due~~attributable to higher railcar scrapping ~~gains resulting from more railcars scrapped.~~gains. Net interest expense increased ~~$2.6~~$2.0 million, ~~in the first nine months of 2017,~~ due to a higher average ~~interest rate~~debt balance and a higher average ~~debt balance.~~interest rate. Other expense increased ~~$4.3~~$5.0 million, ~~in the first nine months of 2017,~~ driven by the absence of insurance proceeds recognized in the prior year for previously expensed legal defense costs, partially offset by the unfavorable impact of changes in foreign exchange rates on non-functional currency items and derivatives.

~~Investment Volume~~

During the first nine months of 2017, investment volume was $74.7 million compared to $63.2 million in the same period in 2016. GRE acquired 674 railcars and Rail India acquired 229 railcars in 2017 compared to 592 railcars at GRE and 20 railcars at Rail Russia in 2016.

~~Comparison of the Third Quarter of 2017 to the Third Quarter of 2016~~

~~Foreign Currency~~

In the third quarter of 2017, a stronger euro positively impacted reported lease revenue by approximately $2.6 million and reported segment profit, excluding other income (expense), by approximately $1.6 million compared to the third quarter of 2016.

~~Segment Profit~~

Segment profit was $20.1 million in the third quarter of 2017, compared to $23.3 million in the same period in the prior year. The decrease was largely due to the absence of insurance proceeds recognized in the prior year for previously expensed legal defense costs, partially offset by higher lease revenue.

~~Revenues~~

~~Lease revenue increased $3.7 million in the third quarter of 2017, primarily due to more cars on lease, as well as the effects of a stronger euro.~~

~~Expenses~~

Maintenance expense increased $0.4 million in the third quarter of 2017, primarily due to the effects of a stronger euro and higher workshop costs, partially offset by the impact of fewer railcars undergoing regulatory compliancerailcar maintenance and lower wheelset costs. Depreciation expense increased $1.2 million in the third quarter of 2017, driven by the impact of new cars added to the fleet. Other operating expense in the third quarter of 2017 was comparable to the same period in the prior year.

~~Other Income (Expense)~~

Net gain on asset dispositions increased $0.5 million in the third quarter of 2017, driven by higher gains on scrapped railcars and parts. Net interest expense increased $1.2 million in the third quarter of 2017, due to a higher average interest rate and a higher average debt balance. Other income decreased $5.2 million during the period, largely due to the absence of insurance proceeds recognized in the prior year for previously expensed legal defensefacility closure costs, partially offset by the favorable impact of changes in foreign exchange rates on non-functional currency items and derivatives.

~~ASC~~Investment Volume

~~Segment Summary~~

ASC's operations have benefited from strong demand and opportunities for spot business, as well as favorable sailing conditions in 2017. During the third quarter of 2017, twelve vessels were in operation, compared to eleven vessels in the prior year. ASC transported 19.3 million net tons of freight duringIn the first nine months of ~~2017,~~2018, investment volume was $104.5 million compared to ~~18.2~~$74.7 million ~~net tons~~ in the ~~prior year.~~same period in 2017. In the first nine months of 2018, GRE acquired 566 railcars, Rail India acquired 648 railcars, and Rail Russia acquired 64 railcars, compared to 674 railcars at GRE, 229 at Rail India and none at Rail Russia in the same period in 2017.

~~The following table shows ASC’s segment results (in millions):~~

Three Months Ended
September 30 Nine Months Ended
September 30
2017 2016 2017 2016
Revenues

Lease revenue $ 1.1
$ 1.0
$ 3.1
$ 3.1
Marine operating revenue 59.1
51.8
113.2
102.3
   Total Revenues 60.2
52.8
116.3
105.4

Expenses
Maintenance expense 7.7
6.1
14.6
12.3
Marine operating expense 34.7
31.5
70.6
64.0
Depreciation expense 4.0
4.2
8.1
8.6
Operating lease expense 0.3
2.0
1.5
4.0
   Total Expenses 46.7
43.8
94.8
88.9

Other Income (Expense)
Interest expense, net (1.4 ) (1.1 ) (3.9 ) (3.3 )
Other (expense) income —
(0.1 ) 0.8
(0.3 )
Segment Profit
$ 12.1
$ 7.8
$ 18.4
$ 12.9

Investment Volume $ 0.8
$ —
$ 13.6
$ 9.1
Total Net Tons Carried (000's) 9,811
8,680
19,348
18,193
Our investment volume is predominantly composed of acquired railcars, but may also include certain capitalized repairs and improvements to owned railcars. As a result, the dollar value of investment volume does not necessarily correspond to the number of railcars acquired in any given period. In addition, the comparability of amounts invested and the number of railcars acquired in each period is impacted by the mix of the various car types acquired, as well as fluctuations in the exchange rates of the foreign currencies in which Rail International conducts business.

Comparison of the ~~First Nine Months~~Third Quarter of ~~2017~~2018 to the ~~First Nine Months~~Third Quarter of ~~2016~~2017

Foreign Currency

Rail International's reported results of operations are impacted by fluctuations in the exchange rates of the foreign currencies in which it conducts business, primarily the euro. In the third quarter of 2018, a weaker euro negatively impacted lease revenue by approximately $0.5 million and segment profit, excluding other income (expense), by approximately $0.3 million compared to the same period in 2017.

Segment Profit

~~Segment profit was $18.4 million in~~In the ~~first nine months~~third quarter of ~~2017, compared to~~2018, segment profit of ~~$12.9~~$20.7 million increased 3.0% compared to $20.1 million in the same period in the prior year. The increase was ~~primarily~~largely due to ~~higher volume~~lower maintenance expense and ~~a favorable commodity mix, as well as lower operating~~more railcars on lease, ~~expense resulting from~~partially offset by the ~~return~~negative impact of ~~a leased vessel in the first quarter of 2017.~~foreign exchange rates.

Revenues

~~Marine operating~~In the third quarter of 2018, lease revenue increased ~~$10.9~~$2.0 million, ~~in the first nine months of 2017, primarily~~or 4.0%, due to ~~higher volume, higher freight rates and a favorable mix~~more railcars on lease, partially offset by the impact of ~~commodities shipped. Higher fuel~~foreign exchange rates. Other revenue ~~which is offset in marine operating expense, also contributed to the variance. The terms of our contracts provide that a substantial portion of fuel costs are passed on to customers.~~

decreased $0.2 million, driven by lower repair revenue.

Expenses

Maintenance expense increased $2.3 million in the first nine months of 2017, due to more winter work and higher operating repairs. Marine operating expense increased $6.6 million in the first nine months of 2017, largely driven by higher fuel costs and the impact of an additional vessel in operation and more overall operating days. Operating lease expense decreased $2.5 million in the first nine months of 2017, attributable to the return of the leased vessel noted above.

~~Investment Volume~~

~~Investments in each period consisted of structural and mechanical upgrades to our vessels.~~

~~Comparison of the Third Quarter of 2017 to the Third Quarter of 2016~~

~~Segment Profit~~

~~Segment profit was $12.1 million in~~In the third quarter of ~~2017, compared to $7.8~~2018, maintenance expense decreased $1.0 million, ~~in the same period in the prior year. The increase was~~ primarily due to fewer railcars undergoing regulatory compliance repairs, partially offset by higher ~~volume and a favorable commodity mix, as well as lower operating lease~~wheelset costs. Depreciation expense ~~resulting from~~increased $1.0 million, driven by the ~~return~~impact of ~~a leased vessel in~~new railcars added to the ~~first quarter of 2017.~~fleet.

~~Revenues~~Other Income (Expense)

~~Marine operating revenue increased $7.3 million in~~In the third quarter of ~~2017, primarily~~2018, net gain on asset dispositions decreased $0.5 million, attributable to lower railcar scrapping gains. Net interest expense increased $0.4 million, due to a higher ~~volume~~average interest rate and a ~~favorable commodity mix. Higher fuel revenue, which is offset in marine operating expense, also contributed to the variance.~~

~~Expenses~~

~~Maintenance expense increased $1.6 million in the third quarter of 2017 due to more winter work and~~ higher operating repairs. Marine operating expense increased $3.2 million in the third quarter of 2017, largely driven by higher fuel costs and the impact of an additional vessel in operation and more overall operating days. Operating lease expense decreased $1.7 million in the third quarter of 2017, attributable to the return of the leased vessel noted above.average debt balance.

PORTFOLIO MANAGEMENT

Segment Summary

Portfolio Management's segment profit ~~includes~~is primarily attributable to income from ~~our investment in~~ the ~~Rolls-Royce & Partners Finance companies (collectively the "RRPF affiliates").~~RRPF affiliates. The RRPF affiliates are a group of ~~sixteen~~eighteen 50% owned domestic and foreign joint ventures with Rolls-Royce plc (or affiliates thereof, collectively “Rolls-Royce”), a leading manufacturer of commercial aircraft jet engines. Segment profit included earnings from the RRPF affiliates of $47.6 million and $14.3 million for the nine months and three months ended September 30, 2018, compared to $38.8 million and $15.3 million for the ~~first nine months and third quarter of 2017, compared to $32.0 million and $14.2 million~~same periods in ~~2016.~~2017. As of September 30, ~~2017,~~2018, the RRPF affiliates owned ~~409~~439 aircraft spare engines with a net book value of approximately $3,959 million, compared to ~~410~~432 aircraft spare engines with a net book value of approximately $3,764 million at ~~September 30, 2016.~~

Portfolio Management's results also include the operations of five liquefied gas carrying vessels (the "Norgas Vessels"). During the first nine months of 2017, the Norgas Vessels experienced lower rates, due in part to the impact of new competing vessels that entered the market during the current year, as well as lower utilization of our vessels resulting from supply disruptions caused by unplanned outages at certain customers' petrochemical plants.December 31, 2017.

As we have disclosed previously, we made the decision to exit the majority of our marine investments, including six chemical parcel tankers (the "Nordic Vessels"), most of our inland marine vessels, and our 50% interest in the Cardinal Marine joint venture. ~~To date,~~As of December 31, 2017, we ~~have~~had completed ~~the~~all planned sales of the ~~Nordic Vessels,~~marine assets, including our 50% interest in the Cardinal Marine joint ~~venture, and the majority of our inland marine assets. In the first nine months of 2017, we sold~~venture.

Portfolio Management continues to own other marine assets, consisting primarily of five liquefied gas-carrying vessels (the "Norgas Vessels"). The Norgas Vessels specialize in the transport of pressurized gases and chemicals, such as liquefied petroleum gas, liquefied natural gas, and ethylene, primarily on shorter-term spot contracts for total proceeds of $28.2 million, resulting in a net gain of $1.8 million. In the first nine months of 2016, we sold marine assets for total proceeds of $48.4 million, resulting in a net gain of $4.2 million. We

~~expect to sell the remaining targeted inland marine assets in 2017. Upon completion of these sales, Portfolio Management will continue to own~~major oil and ~~operate some marine investments, primarily the Norgas Vessels.~~chemical customers worldwide.

Portfolio Management's total asset base was $614.9 million at September 30, 2018, compared to $582.8 million at December 31, 2017, and $616.8 million at September 30, 2017, compared to $593.5 million at December 31, 2016, and $606.2 million at September 30, 2016. Assets held for sale were $19.2 million at September 30, 2017, $45.6 million at December 31, 2016, and $60.5 million at September 30, 2016.2017.

The following table shows Portfolio Management’s segment results (in millions):


	Three Months Ended September 30						Nine Months Ended September 30						Three Months Ended September 30						Nine Months Ended September 30
	2017			2016			2017			2016			2018			2017			2018			2017
Revenues
Lease revenue	$	0.7		$	1.2		$	3.1		$	4.6		$	0.3		$	0.7		$	0.8		$	3.1
Marine operating revenue	3.8			10.3			21.8			37.4			3.1			3.8			11.0			21.8
Other revenue	0.2			0.1			1.0			0.7			—			0.2			0.5			1.0
Total Revenues	4.7			11.6			25.9			42.7			3.4			4.7			12.3			25.9

Expenses
Marine operating expense	4.2			7.7			19.2			24.9			4.4			4.2			12.9			19.2
Depreciation expense	1.7			1.7			5.2			5.2			1.8			1.7			5.5			5.2
Other operating expense	0.1			0.3			0.7			4.9			0.1			0.1			0.4			0.7
Total Expenses	6.0			9.7			25.1			35.0			6.3			6.0			18.8			25.1

Other Income (Expense)
Net gain on asset dispositions	0.3			49.1			11.1			84.9			0.2			0.3			0.8			11.1
Interest expense, net	(2.2		)	(2.1		)	(6.8		)	(6.4		)	(2.6		)	(2.2		)	(7.6		)	(6.8		)
Other income	—			—			2.3			—			—			—			—			2.3
Share of affiliates' pre-tax income	16.0			15.2			39.9			33.0			14.3			16.0			47.6			39.9
Segment Profit	$	12.8		$	64.1		$	47.3		$	119.2		$	9.0		$	12.8		$	34.3		$	47.3

Investment Volume	$	36.6		—			$	36.6		—			$	—		$	36.6		$	—		$	36.6

The following table shows the ~~approximate~~ net book values of Portfolio Management's assets (in millions):

September 30
2016 December 31
2016 March 31
2017 June 30
2017 September 30
2017
Net book value of owned assets $ 241.2
$ 218.2
$ 214.8
$ 199.4
$ 177.3
Affiliate investments 365.0
375.3
385.2
396.1
439.5
Net book value of managed assets 55.9
51.8
50.0
45.8
43.9



	September 30 2017		December 31 2017		March 31 2018		June 30 2018		September 30 2018
Investment in RRPF Affiliates	$	439.5	$	434.2	$	449.1	$	462.1	$	474.8
Owned assets	177.3		148.6		148.8		143.9		140.1
Managed assets (1)	43.9		41.6		37.9		36.0		34.1

________


(1)	Amounts shown represent the estimated net book value of assets managed for third parties and are not included in our consolidated balance sheets.

RRPF Affiliates Engine Portfolio Data

The following table shows portfolio activity for the RRPF affiliates' aircraft spare engines for the quarter ended:


	September 30 2016		December 31 2016		March 31 2017		June 30 2017		September 30 2017		September 30 2017		December 31 2017		March 31 2018		June 30 2018		September 30 2018
Beginning balance	435		410		407		404		405		405		409		432		437		449
Engine acquisitions	2		15		—		3		5		5		27		9		17		3
Engine dispositions	(27	)	(18	)	(3	)	(2	)	(1	)	(1	)	(4	)	(4	)	(5	)	(13	)
Ending balance	410		407		404		405		409		409		432		437		449		439
Utilization rate at quarter end	93.9	%	94.6	%	94.6	%	94.8	%	96.1	%	96.1	%	94.7	%	94.5	%	94.7	%	96.8	%

Comparison of the First Nine Months of ~~2017~~2018 to the First Nine Months of ~~2016~~2017

Comparisons of reported results for the current year and ~~the~~ prior year are impacted by the ~~sales~~sale of marine investments.

Segment Profit

~~Segment profit was $47.3 million in~~In the first nine months of ~~2017,~~2018, segment profit was $34.3 million, compared to ~~$119.2~~$47.3 million for the same period in the prior year. Segment profit for the first nine months of 2017 included net gains of approximately $1.8 million ~~and $3.4 million in the first nine months of 2017 and 2016~~ associated with the planned exit of marine investments. The net gains in 2017 were from the sale of marine investments. The net gains in 2016 consisted of $4.2 million from the sale of marine investments and $1.0 million resulting from additional proceeds received from the sale of the Cardinal Marine joint venture, partially offset by $1.8 million of impairment losses related to certain of the remaining assets held for sale. In addition, segment profit in the first nine months of 2016 included $49.1 million of income from the settlement of a residual sharing agreement. Excluding ~~these items,~~this item, results for the Portfolio Management segment were ~~$21.2~~$11.2 million lower in the first nine months of ~~2017,~~2018 compared to the same period in the prior year, primarily due to the absence of operating income from the marine assets sold during 2017, lower residual sharing ~~gains~~fees from the managed portfolio, and a lower ~~aggregate marine operating results,~~contribution from the Norgas Vessels, partially offset by higher ~~earnings from affiliates.~~RRPF affiliate income.

Revenues

~~Lease revenue decreased $1.5 million in~~In the first nine months of ~~2017,~~2018, lease revenue decreased $2.3 million, primarily due to the impact of the sales of leased assets in ~~2016.~~2017. Marine operating revenue decreased ~~$15.6~~$10.8 million, ~~in the first nine months of 2017, largely~~ due to lower revenue from the Norgas Vessels ~~resulting from substantially lower rates, as well as~~and the absence of revenue from the ~~Nordic Vessels and other inland~~ marine assets that were sold in ~~2016~~2017. The revenue from the Norgas Vessels declined due to lower charter rates, as a result of weak demand and ~~2017.~~oversupply of vessels in the market, as well as lower utilization.

Expenses

~~Marine operating expense decreased $5.7 million in~~In the first nine months of ~~2017,~~2018, marine operating expense decreased $6.3 million, primarily due to the absence of the ~~Nordic Vessels and other inland~~ marine assets that were sold in 2016 and 2017, partially offset by higher expenses for the Norgas Vessels. Depreciation expense in the first nine months of 2017 was comparable to the same period in the prior year. Other operating expense decreased $4.2 million in the first nine months of 2017, due to a loss reserve recorded in 2016 in connection with one investment.2017.

Other Income (Expense)

~~Net~~In the first nine months of 2018, net gain on asset dispositions decreased ~~$73.8 million in the first nine months of 2017.~~$10.3 million. Net gains of approximately $1.8 ~~million and $2.4~~ million were recorded in the first nine months of 2017 ~~and 2016~~ associated with the planned exit of marine investments. ~~In addition, income of $49.1~~Excluding this item, net gain on asset dispositions decreased $8.5 million ~~was recorded~~ in the first nine months of ~~2016 from the settlement of a residual sharing agreement. Excluding these items, net gain on asset dispositions decreased $24.1 million, primarily~~2018 due to lower residual sharing fees from the managed ~~portfolio in in~~portfolio.

In the first nine months of ~~2017.~~

~~Other~~2018, income ~~in the first nine months of 2017 reflects conditional proceeds that we received in the first quarter related to the sale of certain aircraft assets completed in a prior year.~~

~~Share~~from our share of affiliates' ~~pre-tax income~~earnings increased ~~$6.9~~$7.7 million, ~~in the first nine months of 2017,~~ primarily from earnings at RRPF due to higher ~~income from the RRPF affiliates due to the absence of asset impairments that were recorded in the first nine months of 2016 and higher~~ operating ~~results, partially offset by lower net asset disposition gains in the current year. The higher operating results were~~income, driven by ~~the positive impact of newer~~ engines added to the ~~portfolio in 2016 and 2017.~~fleet, as well as higher net disposition gains on engines sold.

Investment Volume

During the first nine months of ~~2017,~~2018, there was no investment volume, ofcompared to $36.6 million ~~was~~in the same period in 2017 to fund the purchase of additional aircraft spare engines in the RRPF affiliates.

Comparison of the Third Quarter of ~~2017~~2018 to the Third Quarter of ~~2016~~2017

Comparisons of reported results for the current quarter and prior year quarter are impacted by the sale of marine investments.

Segment Profit

~~Segment profit was $12.8 million for~~In the third quarter of ~~2017,~~2018, segment profit was $9.0 million, compared to ~~$64.1~~$12.8 million for the same period in the prior year. ~~Segment profit in the third quarter of 2016 included net gains of approximately $0.7 million associated with the planned exit of marine investments and $49.1 million of~~The decrease reflects lower operating income from the ~~settlement of a residual sharing agreement. Excluding these items, results for the Portfolio Management segment were $1.5 million~~Norgas Vessels and lower ~~for the third quarter of 2017, primarily due to lower aggregate marine operating results, partially offset by higher earnings from affiliates.~~RRPF affiliate income.

Revenues

~~Lease revenue in~~In the third quarter of ~~2017 was comparable~~2018, lease revenue decreased $0.4 million, primarily due to the ~~same period~~impact of the sales of leased assets in ~~the prior year.~~2017. Marine operating revenue decreased ~~$6.5~~$0.7 million, ~~in the third quarter of 2017, largely~~ due to lower revenue from the Norgas Vessels. The revenue from the Norgas Vessels ~~resulting from substantially~~declined due to lower charter rates, as a result of oversupply of vessels in the market, as well as ~~the absence of revenue from the Nordic Vessels and other inland marine assets that were sold in 2016 and 2017.~~lower utilization.

Expenses

~~Marine operating expense decreased $3.5 million in~~In the third quarter of ~~2017,~~2018, marine operating expense increased $0.2 million, primarily due to ~~the absence~~drydocking costs for two of the ~~Nordic~~Norgas Vessels ~~and other inland marine assets that were sold in 2016 and 2017, partially offset by higher expenses for the Norgas Vessels. Depreciation expense and Other operating expense~~incurred in the ~~third quarter of 2017 was comparable to the same period in the prior~~current year.

Other Income (Expense)

~~Net gain on asset dispositions decreased $48.8 million in~~In the third quarter of 2018, income from our share of affiliates' earnings decreased $1.7 million, primarily from earnings at RRPF due to lower net disposition gains on engines sold, partially offset by higher operating income, driven by more engines on lease.

ASC

Segment Summary

ASC continues to perform well amid favorable operating conditions. During the first nine months of 2018, ASC deployed 10 vessels, carrying 17.7 million net tons of freight, compared to 12 vessels, carrying 19.3 million net tons during the first nine months of 2017.

The following table shows ASC’s segment results (in millions):



	Three Months Ended September 30						Nine Months Ended September 30
	2018			2017			2018			2017
Revenues
Lease revenue	$	1.1		$	1.1		$	3.1		$	3.1
Marine operating revenue	57.7			59.1			119.8			113.2
Total Revenues	58.8			60.2			122.9			116.3

Expenses
Maintenance expense	6.8			7.7			14.1			14.6
Marine operating expense	35.0			34.7			76.6			70.6
Depreciation expense	3.5			4.0			7.1			8.1
Operating lease expense	—			0.3			—			1.5
Total Expenses	45.3			46.7			97.8			94.8

Other Income (Expense)
Net gain on asset dispositions	—			—			0.1			—
Interest expense, net	(1.5		)	(1.4		)	(4.3		)	(3.9		)
Other (expense) income	(0.1		)	—			(0.2		)	0.8
Segment Profit	$	11.9		$	12.1		$	20.7		$	18.4

Investment Volume	$	—		$	0.8		$	15.8		$	13.6
Total Net Tons Carried (000's)	8,703			9,811			17,710			19,348

Comparison of the First Nine Months of 2018 to the First Nine Months of 2017

Segment Profit

In the first nine months of 2018, segment profit was $20.7 million, compared to segment profit of $18.4 million in the same period in 2017. ~~Income~~In 2018, higher rates, favorable operating conditions and efficient fleet performance more than offset lower volume.

Revenues

In the first nine months of ~~$49.1~~2018, marine operating revenue increased $6.6 million, or 5.8%, primarily due to higher rates and late 2017 sailing season surcharges realized in 2018. Higher fuel revenue, which is offset in marine operating expense, also contributed to the variance. The terms of our contracts provide that a substantial portion of fuel costs are passed on to customers.

Expenses

In the first nine months of 2018, maintenance expense decreased $0.5 million, due to lower operating repairs, as well as fewer vessels deployed in the current year. Marine operating expense increased $6.0 million, largely driven by higher fuel costs, partially offset by fewer operating days. Operating lease expense in 2017 was ~~recorded~~for a vessel that was returned at the end of the prior year.

Investment Volume

ASC's investments in each period consisted of structural and mechanical improvements to our vessels.

Comparison of the Third Quarter of 2018 to the Third Quarter of 2017

Segment Profit

In the third quarter of ~~2016 from~~2018, segment profit was $11.9 million, compared to segment profit of $12.1 million in the ~~settlement~~same period in 2017. In 2018, lower volume was offset by more efficient operations and a favorable mix of ~~a residual sharing agreement. Net losses of approximately $0.3 million were also recorded in~~commodities carried.

Revenues

In the third quarter of ~~2016 associated with the planned exit of~~2018, marine ~~investments. Excluding these items, net gain on asset dispositions is comparable~~operating revenue decreased $1.4 million, or 2.4%, primarily due to lower volume.

Expenses

In the third quarter of ~~2016~~

~~Share of affiliates' pre-tax income increased $0.8~~2018, maintenance expense decreased $0.9 million due to lower operating repairs, as well as fewer vessels deployed in the ~~third quarter of 2017,~~current year. Marine operating expense increased $0.3 million, primarily due to higher ~~income from the RRPF affiliates as a result of higher operating results,~~fuel costs, partially offset by ~~lower net asset disposition gains in~~ the ~~current year. The higher operating results were driven by the positive~~ impact of ~~newer engines added~~fewer operating days. Operating lease expense in 2017 was for a vessel that was returned at the end of the prior year.

Investment Volume

ASC's investments in each period consisted of structural and mechanical improvements to ~~the portfolio in 2016 and 2017.~~our vessels.

OTHER

Other comprises selling, general and administrative expenses (“SG&A”), unallocated interest expense, and miscellaneous income and expense not directly associated with the reporting segments and eliminations.

The following table shows components of ~~other~~Other (in millions):


	Three Months Ended September 30						Nine Months Ended September 30
	2017			2016			2017			2016			Three Months Ended September 30						Nine Months Ended September 30
													2018			2017			2018			2017
Selling, general and administrative expense	$	42.8		$	48.1		$	128.8		$	127.8		$	46.5		$	42.5		$	137.6		$	127.8
Unallocated interest (income) expense, net	(2.4		)	(1.4		)	(5.9		)	(2.9		)
Unallocated interest (income) expense													(2.2		)	(2.4		)	(6.8		)	(5.9		)
Other expense (income), including eliminations	1.5			(0.3		)	1.2			0.7			2.7			1.8			4.1			2.2

SG&A, Unallocated Interest and Other

During the third quarter ~~GATX early terminated~~of 2017, we exercised our option to terminate the office lease at ~~its~~our corporate ~~headquarters.~~headquarters early. As a result, accelerated depreciation on leasehold ~~improvements~~improvement was recorded in SG&A, and ~~certain associated~~lease termination costs were recorded in ~~SG&A and Other~~other expense (income)~~, respectively.~~.

SG&A increased ~~$1.0~~$9.8 million infor the first nine months of ~~2017, due to a combination of higher compensation~~2018 and ~~employee benefits costs, accelerated depreciation expense~~$4.0 million for leasehold improvements, and higher information technology expense, substantially offset by the impact of a settlement accounting adjustment recorded in the prior year attributable to the early retirement program offered to eligible employees. SG&A decreased $5.3 million in the third quarter of ~~2017, driven by the impact of the settlement accounting adjustment noted above, partially offset by~~2018, both variances primarily due to higher employee compensation expenses and accelerated depreciation ~~for~~of leasehold improvements ~~and higher information technology expense.~~beginning in the prior year. The negative impacts of changes in foreign exchange rates also contributed to the increase compared to the prior year nine-month period.

Unallocated interest expense (the difference between external interest expense and interest expense allocated to the reporting segments in accordance with assigned leverage targets) in any year is affected by our consolidated leverage position, the timing of debt issuances and investing activities, and intercompany allocations.

Other expense (income), including eliminations, ~~was $0.5~~increased $1.9 million ~~higher in~~for the first nine months of ~~2017, attributable to~~2018 and $0.9 million for the ~~early lease termination costs, partially offset~~third quarter of 2018, both variances driven by ~~costs incurred in the prior year related to the prepayment of debt. Other~~incremental pension expense ~~(income), including eliminations, was $1.8 million higher~~ in the third quarter of ~~2017, largely~~2018 associated with certain lump sum distributions, as well as the impacts of foreign exchange on a ~~result~~foreign pension plan, partially offset by the absence of costs recorded in the prior year associated with the early termination of the ~~early lease termination costs.~~office lease.

Consolidated Income Taxes

See "Note 7. 7. Income ~~Taxes"~~Taxes" in Part I, Item 1 of this Form 10-Q.

CASH FLOW AND LIQUIDITY

We generate a significant amount of cash from operating activities and ~~from our~~ investment portfolio proceeds. We also access domestic and international capital markets by issuing unsecured or secured debt and commercial paper. We use these resources, along with ~~our~~ available cash balances, to fulfill our debt, lease, and dividend obligations, to support our share repurchase ~~program,~~programs, and to fund portfolio investments and capital additions. We primarily use cash from operations ~~and commercial paper issuances~~ to fund daily operations.

The timing of asset dispositions and changes in working capital ~~impacts~~impact cash flows from portfolio proceeds and operations. As a result, these cash flow components may vary materially from quarter to quarter and year to year. As of September 30, ~~2017,~~2018, we had an unrestricted cash balance of ~~$199.2~~$254.5 million.

The following table shows our principal sources and uses of cash for the nine months ended September 30 (in millions):


	2017			2016			2018			2017
Principal sources of cash
Net cash provided by operating activities	$	317.5		$	435.5		$	341.3		$	317.8
Portfolio proceeds	131.0			170.6			198.6			131.0
Other asset sales	24.3			18.6			28.5			24.3
Proceeds from sale-leasebacks	90.6			82.5			59.2			90.6
Proceeds from issuance of debt, commercial paper, and credit facilities	308.6			801.8			297.1			308.6
Total							$	924.7		$	872.3
	$	872.0		$	1,509.0
Principal uses of cash
Portfolio investments and capital additions	$	(459.0	)	$	(442.6	)	$	(536.7	)	$	(459.0	)
Repayments of debt, commercial paper, and credit facilities	(301.5		)	(801.2		)	(267.3		)	(301.5		)
Purchases of previously leased-in assets	(93.2		)	(116.5		)
Purchases of leased-in assets							(66.6		)	(93.2		)
Payments on capital lease obligations	(2.1		)	(3.4		)	(0.9		)	(2.1		)
Stock repurchases	(75.0		)	(95.1		)	(37.4		)	(75.0		)
Dividends	(51.8		)	(51.2		)	(52.7		)	(51.8		)
	$	(982.6	)	$	(1,510.0	)
Total							$	(961.6	)	$	(982.6	)

Net cash provided by operating activities of ~~$317.5~~$341.3 million ~~decreased $118.0~~increased $23.5 million compared to ~~2016.~~2017. The ~~decrease~~increase was driven by lower operating lease payments and the timing of interest payments, as well as the positive impact of changes in foreign exchange rates. These positive drivers were partially offset by lower lease revenue, lower affiliate dividends, and lower fee income, which included ~~$9.8~~$1.7 million of residual sharing income in ~~2017~~2018 compared to ~~$83.2~~$9.8 million in 2016, lower contributions from our marine operations at Portfolio Management, and lower lease revenue. In addition, the net impact of changes in the balances of certain working capital items negatively impacted cash provided from operating activities.2017.

Portfolio proceeds primarily consist of ~~loan and finance lease receipts,~~ proceeds from sales of operating assets and loan and finance lease receipts. Portfolio proceeds of $198.6 million for the nine months of 2018 increased by $67.6 million from the prior year, primarily due to higher proceeds from sales of ~~securities, and capital distributions~~railcars at Rail North America, partially offset by lower proceeds from ~~affiliates. Portfolio proceeds included net proceeds of $28.2 million in 2017 and $48.4 million in 2016 from the~~ sales of marine ~~investments as part of our decision to exit the majority of the marine~~ assets at ~~our~~ Portfolio ~~Management segment.~~Management.

Rail North America completed a sale-leaseback ~~financings~~financing for 467 railcars in the third quarter of 2018 and 699 railcars in the ~~first nine months~~second quarter of ~~2017 and 574 railcars in the first nine months of 2016.~~

2017.

Proceeds from the issuance of debt for the ~~first~~ nine months ended September 30, 2018 were $297.1 million (net of ~~2017 were~~hedges and debt issuance costs), compared to $308.6 million (net of hedges and debt issuance costs)~~, primarily attributable to~~ in the same period in 2017. In each of 2018 and 2017, a ~~$300 million,~~$300-million, 10-year unsecured financing ~~that~~ was completed. In the first nine months of 2016, proceeds, net of hedges and debt issuance costs, of $801.8 million included a $350 million 10-year unsecured offering, a $200 million 5-year unsecured financing, and a $150 million 50-year unsecured offering, as well as $125 million drawn and subsequently repaid on a secured railcar funding facility. Debt repayments of ~~$301.5~~$267.3 million for the first nine months of ~~2017~~2018 were ~~$499.7~~$34.2 million lower than prior year. ~~Each year~~Repayments in both years consisted of scheduled maturity ~~payments. Debt repayments in 2016 also included~~payments and the early ~~retirements. Additionally, we extended the maturities~~retirement of certain ~~of our credit facilities and loans in the second quarter of 2017.~~debt issuances.

Portfolio investments and capital additions primarily consist of purchases of operating assets, investments in affiliates, and capitalized asset improvements. Portfolio investments and capital additions of ~~$459.0~~$536.7 million for the first nine months of 2018 increased ~~$16.4~~$77.7 million compared to ~~2016, primarily~~2017, due to more railcars acquired at Rail North America and Rail International, partially offset by the absence of investments at the RRPF affiliates at Portfolio Management ~~partially offset by lower investments at Rail North America resulting from~~in the ~~mix and related cost of railcars purchased as part of our long-term supply agreement.~~prior year.

Purchases of leased-in assets of ~~$93.2~~$66.6 million for the first nine months of 2018 decreased ~~$23.3~~$26.6 million compared to ~~2016. A~~the same period in 2017. The decrease was attributable to a $24.0 million decrease at ASC, related to the purchase of ~~$47.3~~a vessel in 2017 that was previously on lease, and a $2.6 million decrease at Rail North America due to fewer railcars purchased ~~was partially offset by a $24.0 million increase at ASC for the purchase of a vessel that was previously on lease.~~in 2018 (1,232 railcars in 2018 compared to 1,815 railcars in 2017).

~~In the first quarter of~~On January 29, 2016, our ~~board~~Board of ~~directors authorized~~Directors (the "Board") approved a $300 million share repurchase program, pursuant to which we are authorized to purchase shares of our common stock in the open market, in privately negotiated transactions, or otherwise, including pursuant to Rule 10b5-1 plans. As of December 31, 2017, $80.0 million remained available under this program. On January 26, 2018, the Board approved an additional share repurchase authorization of $170 million, bringing our aggregate available repurchase authorization to $250 million. During the nine months ended September 30, ~~2017,~~2018, we acquired 0.5 million shares of common stock for $37.4 million, compared to 1.2 million shares of common stock for $75.0 million ~~compared to 2.2 million shares for $95.0 million~~ during the same period in ~~2016.~~2017. As of September 30, ~~2017, $105.0~~2018, $212.6 million remained available under the repurchase ~~authorization.~~authorizations.

Contractual and Other Commercial Commitments

The following table shows our contractual commitments, including debt principal and related interest payments, lease payments, and purchase commitments at September 30, ~~2017~~2018 (in millions):


	Payments Due by Period														Payments Due by Period
	Total		2017 (1)		2018		2019		2020		2021		Thereafter		Total		2018 (1)		2019		2020		2021		2022		Thereafter
Recourse debt	$	4,300.3	$	1.5	$	523.8	$	550.0	$	350.0	$	365.0	$	2,510.0	$	4,444.9	$	71.1	$	550.0	$	350.0	$	563.8	$	250.0	$	2,660.0
Interest on recourse debt (2)	1,711.4		18.6		151.2		134.2		119.7		107.3		1,180.4		1,832.4		42.0		160.9		146.5		134.6		114.0		1,234.4
Commercial paper and credit facilities	15.7		15.7		—		—		—		—		—
Capital lease obligations, including interest	13.6		0.4		1.6		11.6		—		—		—		12.0		0.4		11.6		—		—		—		—
Recourse operating leases	646.8		10.3		88.8		80.8		76.3		65.3		325.3		598.0		19.3		67.9		68.6		65.3		57.0		319.9
Purchase commitments (3)	898.5		157.7		398.0		323.0		19.8		—		—		2,151.9		211.2		348.1		436.2		376.4		385.4		394.6
	$	7,586.3	$	204.2	$	1,163.4	$	1,099.6	$	565.8	$	537.6	$	4,015.7
Total															$	9,039.2	$	344.0	$	1,138.5	$	1,001.3	$	1,140.1	$	806.4	$	4,608.9

__________


(1)	For the remainder of the year.


(2)	For floating rate debt, future interest payments are based on the applicable interest rate as of September 30, ~~2017.~~2018.


(3)	Primarily railcar purchase commitments. The amounts shown for all years are based on management's estimates of the timing, anticipated car types, and related costs of railcars to be purchased under its agreements.

In 2014, we entered into a long-term supply agreement with Trinity Rail Group, LLC ("Trinity"), a subsidiary of Trinity Industries ~~Inc.~~ that took effect in mid-2016. Under the terms of that agreement, we may order up to 8,950 newly built railcars over a four-year period from March, 2016 through March, 2020. We may order either tank or freight cars; however, we expect that the majority of the order will be for tank cars. ~~Pursuant~~As of September 30, 2018, 7,715 railcars have been ordered, of which 5,095 railcars have been delivered. On May 24, 2018, we amended our long-term supply agreement with Trinity to extend the ~~terms~~term to December 2023. We agreed to purchase an additional 4,800 tank cars (1,200 per year) beginning in January 2020 and continuing through the expiration of the extended term. Pricing will be on an agreed upon or cost-plus basis subject to certain adjustments and surcharges specified in the agreement.

On July 30, 2018, we entered into a multi-year railcar supply agreement ~~the parties conducted a review of the contract pricing in January 2017 as it no longer reflected market rates. Based on this review, the parties agreed to reduce contract pricing for future orders~~with American Railcar Industries, Inc. ("ARI"), pursuant to which we will purchase 7,650 newly built railcars. The order encompasses a mix of tank and freight cars to be delivered over a five-year period, beginning in April 2019. ARI will deliver 450 railcars in 2019, with the ~~terms~~remaining 7,200 to be delivered ratably over the four-year period of ~~the agreement.~~2020 to 2023. The agreement also includes an option to order up to an additional 4,400 railcars subject to certain restrictions.

Short-Term Borrowings

The following table ~~provides~~shows additional information regarding our short-term borrowings for the nine months ended September 30, ~~2017:~~

Europe (1)
Balance as of September 30 (in millions) $ 15.7
Weighted average interest rate 0.6 %
Euro/Dollar exchange rate 1.18

Average daily amount outstanding year to date (in millions) $ 8.2
Weighted average interest rate 0.7 %
Average Euro/Dollar exchange rate $ 1.11

Average daily amount outstanding during 3rd quarter (in millions) $ 13.8
Weighted average interest rate 0.6 %
Average Euro/Dollar exchange rate 1.18

Maximum daily amount outstanding year to date (in millions) $ 23.2
Euro/Dollar exchange rate 1.18

~~_________~~2018:

~~(1)~~



	Europe (1)
Balance as of September 30 (in millions)	$	—
Weighted average interest rate	N/A
Euro/Dollar exchange rate	N/A

Average daily amount outstanding year to date (in millions)	$	3.7
Weighted average interest rate	0.9		%
Average Euro/Dollar exchange rate	1.19

Average daily amount outstanding during 3rd quarter (in millions)	$	2.6
Weighted average interest rate	0.9		%
Average Euro/Dollar exchange rate	1.16

Maximum daily amount outstanding (in millions)	$	11.3
Euro/Dollar exchange rate	1.17

__________


(1)	Short-term borrowings in Europe are composed of borrowings under bank credit facilities.

Credit Lines and Facilities

We have a $600 million, 5-year unsecured revolving credit facility in the ~~US that matures in~~U.S. In the second quarter of 2018, we extended the maturity on this facility by one year from May ~~2022.~~2022 to May 2023. As of September 30, ~~2017,~~2018, the full $600 million was available under the facility. Additionally, we have a $250 million 5-year secured railcar ~~funding~~ facility in the USU.S. with a 3-year revolving period that matures in May 2022. As of September 30, ~~2017,~~2018, the full $250 million was available under this facility.

Restrictive Covenants

Our $600 million revolving credit facility contains various restrictive covenants, including requirements to maintain a fixed charge coverage ratio and an asset coverage test. ~~Certain~~Some of our ~~other financings~~bank term loans have the same financial covenants as the facility.

The indentures for our public debt also contain various restrictive covenants, including limitations on liens provisions that ~~limit~~restrict the amount of additional secured indebtedness that we may incur. Additionally, certain exceptions to the covenants permit us to incur an unlimited amount of purchase money and nonrecourse indebtedness.

The loan agreements for certain of our European rail subsidiaries also contain restrictive covenants, including leverage and cash flow covenants specific to those subsidiaries, restrictions on making loans, and limitations on the ability of those subsidiaries to repay loans or to distribute capital to certain related parties (including GATX, the USU.S. parent company). These covenants effectively limit GRE's ability to transfer funds to GATX.

We do not anticipate any covenant violations nor do we ~~anticipate~~expect that any of these covenants will restrict our operations or our ability to obtain additional financing. At September 30, ~~2017,~~2018, we were in compliance with all covenants and conditions of all of our credit agreements.

Credit Ratings

The global capital market environment and outlook may affect our funding options and our financial performance. Our access to capital markets at competitive rates depends on our credit rating and ~~ratings~~rating outlook, as determined by rating agencies. As of September 30, ~~2017,~~ 2018,

our long-term unsecured debt was rated BBB by Standard & Poor's and Baa2 by Moody’s ~~Investors~~Investor Service and our short-term unsecured debt was rated A-2 by Standard & Poor's and P-2 by Moody’s ~~Investors~~Investor Service. Our rating outlook from both agencies was stable.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no changes to our critical accounting policies during the nine months ended September 30, ~~2017.~~2018. Refer to our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, for a summary of our policies.

NON-GAAP FINANCIAL MEASURES

In addition to financial results reported in accordance with GAAP, we compute certain financial measures using non-GAAP components, as defined by the SEC. These measures are not in accordance with, or a substitute for, GAAP, and our financial measures may be different from non-GAAP financial measures used by other companies. We have provided a reconciliation of our non-GAAP components to the most directly comparable GAAP components.

Reconciliation of Non-GAAP Components Used in the Computation of Certain Financial Measures

Balance Sheet Measures

We include total on- and off-balance sheet assets because a portion of our North American railcar fleet has been financed through sale-leasebacks that are accounted for as operating leases and are not recorded on the balance sheet. Similarly, ~~ASC utilizes~~ASC's fleet previously included vessels that ~~are~~were accounted for as operating leases and ~~are~~were not recorded on the balance sheet. We include these leased-in assets in our calculation of total assets (as adjusted) because we believe it gives investors a more comprehensive representation of the magnitude of the assets we operate and that drive our financial performance. In addition, this calculation of total assets (as adjusted) provides consistency with other non-financial information we disclose about our fleet, including the number of railcars in the fleet, average number of cars on lease, and utilization. We also provide information regarding our leverage ratios, which are expressed as a ratio of debt (including off-balance sheet debt) to equity. The off-balance sheet debt amount in this calculation is the equivalent of the off-balance sheet asset amount. We believe reporting this corresponding off-balance sheet debt amount provides investors and other users of our financial statements with a more comprehensive representation of our debt obligations, leverage, and capital structure.

The following table shows total balance sheet assets (in millions):


	September 30 2016		December 31 2016		March 31 2017		June 30 2017		September 30 2017		September 30 2017		December 31 2017		March 31 2018		June 30 2018		September 30 2018
Total assets (GAAP)	$	7,089.3	$	7,105.4	$	7,096.9	$	7,272.1	$	7,261.9	$	7,261.9	$	7,422.4	$	7,468.0	$	7,495.5	$	7,517.4
Off-balance sheet assets:
Rail North America	478.9		456.5		423.9		488.1		471.3		471.3		435.7		411.7		401.7		432.6
ASC	4.2		2.6		0.7		0.5		0.2		0.2		—		—		—		—
Total off-balance sheet assets	$	483.1	$	459.1	$	424.6	$	488.6	$	471.5	$	471.5	$	435.7	$	411.7	$	401.7	$	432.6

Total assets, as adjusted (non-GAAP)	$	7,572.4	$	7,564.5	$	7,521.5	$	7,760.7	$	7,733.4	$	7,733.4	$	7,858.1	$	7,879.7	$	7,897.2	$	7,950.0

Shareholders’ Equity	$	1,371.5	$	1,347.2	$	1,385.2	$	1,443.0	$	1,470.2
Shareholders’ Equity (GAAP)											$	1,470.2	$	1,792.7	$	1,839.7	$	1,817.6	$	1,838.0

The following table shows the components of recourse leverage (in millions, except recourse leverage ratio):


	September 30 2016			December 31 2016			March 31 2017			June 30 2017			September 30 2017			September 30 2017			December 31 2017			March 31 2018			June 30 2018			September 30 2018
Debt, net of unrestricted cash:
Unrestricted cash	$	(211.5	)	$	(307.5	)	$	(155.2	)	$	(284.3	)	$	(199.2	)	$	(199.2	)	$	(296.5	)	$	(233.1	)	$	(237.4	)	$	(254.5	)
Commercial paper and bank credit facilities	5.1			3.8			3.0			15.7			15.7			15.7			4.3			4.4			4.3			—
Recourse debt	4,204.4			4,253.2			4,250.9			4,261.2			4,266.7			4,266.7			4,371.7			4,359.5			4,397.9			4,397.3
Capital lease obligations	15.1			14.9			13.5			13.1			12.8			12.8			12.5			12.2			11.9			11.6
Total debt, net of unrestricted cash (GAAP)	4,013.1			3,964.4			4,112.2			4,005.7			4,096.0			4,096.0			4,092.0			4,143.0			4,176.7			4,154.4
Off-balance sheet recourse debt	483.1			459.1			424.6			488.6			471.5			471.5			435.7			411.7			401.7			432.6
Total debt, net of unrestricted cash, as adjusted (non-GAAP)	$	4,496.2		$	4,423.5		$	4,536.8		$	4,494.3		$	4,567.5		$	4,567.5		$	4,527.7		$	4,554.7		$	4,578.4		$	4,587.0

Total recourse debt (1)	$	4,496.2		$	4,423.5		$	4,536.8		$	4,494.3		$	4,567.5		$	4,567.5		$	4,527.7		$	4,554.7		$	4,578.4		$	4,587.0
Shareholders' Equity(2)	$	1,371.5		$	1,347.2		$	1,385.2		$	1,443.0		$	1,470.2		$	1,470.2		$	1,792.7		$	1,839.7		$	1,817.6		$	1,838.0
Recourse Leverage ~~(2)~~(3)	3.3			3.3			3.3			3.1			3.1			3.1			2.5			2.5			2.5			2.5

________


(1)	Includes on- and off-balance sheet recourse debt, capital lease obligations, and commercial paper and bank credit facilities, net of unrestricted cash.


(2)	Balances for December 31, 2017, March 31, 2018, June 30, 2018, and September 30, 2018 reflect the impact of the Tax Act recognized in the fourth quarter of 2017.


(3)	Calculated as total recourse debt / shareholder's equity. The reduction in recourse leverage beginning with December 31, 2017 is due to the increase in shareholders' equity resulting from the impact of the Tax Cuts and Jobs Act.

Net Income Measures

We exclude the effects of certain tax adjustments and other items for purposes of presenting net income, diluted earnings per share, and return on equity because we believe these items are not attributable to our business operations. Management utilizes net income, excluding tax adjustments and other items, when analyzing financial performance because such amounts reflect the underlying operating results that are within management’s ability to influence. Accordingly, we believe presenting this information provides investors and other users of our financial statements with meaningful supplemental information for purposes of analyzing year-to-year financial performance on a comparable basis and assessing trends.

The following tables show our net income and diluted earnings per share, excluding tax adjustments and other items (in millions, except per share data):

Impact of Tax Adjustments and Other Items on Net Income:

Three Months Ended
September 30 Nine Months Ended
September 30
2017 2016 2017 2016
Net income (GAAP) $ 49.0
$ 95.7
$ 159.9
$ 226.2

Adjustments attributable to consolidated pre-tax income:
Net loss (gain) on wholly owned Portfolio Management marine investments (1) —
0.3
(1.8 ) (2.4 )
Residual sharing settlement at Portfolio Management (3) —
(49.1 ) —
(49.1 )
Total adjustments attributable to consolidated pre-tax income $ —
$ (48.8 ) $ (1.8 ) $ (51.5 )
Income taxes thereon, based on applicable effective tax rate $ —
$ 18.7
$ 0.7
$ 19.7

Adjustments attributable to affiliates' earnings, net of taxes:
Net gain on Portfolio Management marine affiliate (1) —
(0.6 ) —
(0.6 )
Income tax rate change (6) —
(3.9 ) —
(3.9 )
Total adjustments attributable to affiliates' earnings, net of taxes $ —
$ (4.5 ) $ —
$ (4.5 )

Net income, excluding tax adjustments and other items (non-GAAP) $ 49.0
$ 61.1
$ 158.8
$ 189.9



	Three Months Ended September 30				Nine Months Ended September 30
	2018		2017		2018			2017
Net income (GAAP)	$	47.0	$	49.0	$	162.1		$	159.9

Adjustments attributable to consolidated pre-tax income:
Costs attributable to the closure of a maintenance facility at Rail International (1)	—		—		8.6			—
Net gain on wholly owned Portfolio Management marine investments (2)	—		—		—			(1.8		)
Total adjustments attributable to consolidated pre-tax income	$	—	$	—	$	8.6		$	(1.8	)
Income taxes thereon, based on applicable effective tax rate	—		—		(2.8		)	0.7
Net income, excluding tax adjustments and other items (non-GAAP)	$	47.0	$	49.0	$	167.9		$	158.8

Impact of Tax Adjustments and Other Items on Diluted Earnings per Share:

Three Months Ended
September 30 Nine Months Ended
September 30
2017 2016 2017 2016
Diluted earnings per share (GAAP) $ 1.25
$ 2.36
$ 4.04
$ 5.49
Adjustments attributable to consolidated income, net of taxes:
Net gain on wholly owned Portfolio Management marine investments (1) —
—
(0.03 ) (0.04 )
Residual sharing settlement at Portfolio Management (3) —
(0.75 ) —
(0.74 )
Adjustments attributable to affiliates' earnings, net of taxes:
Net gain on Portfolio Management marine affiliate —
(0.02 ) —
(0.01 )
Income tax rate change —
(0.10 ) —
(0.10 )
Diluted earnings per share, excluding tax adjustments and other items (non-GAAP)* $ 1.25
$ 1.50
$ 4.01
$ 4.61

~~_______~~

~~(*) Sum of individual components may not be additive due to rounding.~~



	Three Months Ended September 30				Nine Months Ended September 30
	2018		2017		2018		2017
Diluted earnings per share (GAAP)	$	1.22	$	1.25	$	4.21	$	4.04
Adjustments attributable to consolidated income, net of taxes:
Costs attributable to the closure of a maintenance facility at Rail International (1)	—		—		0.15		—
Net gain on wholly owned Portfolio Management marine investments (2)	—		—		—		(0.03		)
Diluted earnings per share, excluding tax adjustments and other items (non-GAAP)	$	1.22	$	1.25	$	4.36	$	4.01

The following table shows our net income and return on equity, excluding tax adjustments and other items, for the trailing ~~twelve~~12 months ended September 30 (in millions):

2017 2016
Net income (GAAP) $ 190.8
$ 284.4
Adjustments attributable to consolidated pre-tax income:
Net loss (gain) on wholly owned Portfolio Management marine investments (1) 3.1
(16.7 )
Railcar impairment at Rail North America (2) 29.8
—
Residual sharing settlement at Portfolio Management (3) —
(49.1 )
Early retirement program (4) —
9.0
Total adjustments attributable to consolidated pre-tax income $ 32.9
$ (56.8 )
Income taxes thereon, based on applicable effective tax rate $ (11.8 ) $ 21.6

Other income tax adjustments attributable to consolidated income:
Foreign tax credit utilization (5) (7.1 ) —
Income tax rate changes (6) —
14.1
Total other income tax adjustments attributable to consolidated income $ (7.1 ) $ 14.1

Adjustments attributable to affiliates' earnings, net of taxes:
Net gain on Portfolio Management marine affiliate (1) —
(0.6 )
Income tax rate changes (7) —
(11.6 )
Total adjustments attributable to affiliates' earnings, net of taxes $ —
$ (12.2 )
Net income, excluding tax adjustments and other items (non-GAAP) $ 204.8
$ 251.1
Return on Equity (GAAP) 13.4 % 21.5 %
Return on Equity, excluding tax adjustments and other items (non-GAAP) 14.4 % 19.0 %



	2018			2017
Net income (GAAP)	$	504.2		$	190.8
Adjustments attributable to consolidated pre-tax income:
Costs attributable to the closure of a maintenance facility at Rail International (1)	8.6			—
Net loss on wholly owned Portfolio Management marine investments (2)	—			3.1
Railcar impairment at Rail North America (3)	—			29.8
Total adjustments attributable to consolidated pre-tax income	$	8.6		$	32.9
Income taxes thereon, based on applicable effective tax rate	$	(2.8	)	$	(11.8	)

Other income tax adjustments attributable to consolidated income:
Impact of the Tax Act (4)	(315.9		)	—
Foreign tax credit utilization (5)	—			(7.1		)
Total other income tax adjustments attributable to consolidated income	$	(315.9	)	$	(7.1	)

Net income, excluding tax adjustments and other items (non-GAAP)	$	194.1		$	204.8
Return on Equity (GAAP)	30.5		%	13.4		%
Return on Equity, excluding tax adjustments and other items (non-GAAP) (6)	13.0		%	14.4		%

_______


(1)	In the second quarter of 2018, Rail International recorded expenses attributable to the closure of a maintenance facility.


(2)	In 2015, we made the decision to exit the majority of our non-core, marine investments within our Portfolio Management segment. As a result, we recorded ~~losses~~gains and ~~gains~~losses associated with the impairments and sales of certain investments.


~~(2)~~(3)	Impairment losses in the fourth quarter of 2016 related specifically to certain railcars in flammable service that we believe ~~were~~have been permanently and negatively impacted by regulatory changes.


~~(3)~~	~~Income in the third quarter of 2016 as a result of the settlement of a residual sharing agreement.~~

(4)

~~Expenses~~Amount shown represents the estimated impact of corporate income tax changes enacted by the Tax Act, recorded in the fourth quarter of ~~2015 associated with an early retirement program offered~~2017. The ultimate impact of the Tax Act may differ from these estimates, due to, ~~certain eligible employees.~~among other things, changes in interpretations and assumptions made by us, additional guidance that may be issued by the U.S. Department of the Treasury, and actions that we may take.


(5)	~~Tax benefits~~Benefits in the fourth quarter of 2016 attributable to the utilization of foreign tax credit carryforwards.


(6)	~~Deferred income tax adjustments~~Shareholders' equity used in this calculation excludes the ~~fourth quarter~~impact of ~~2015 attributable to an increase of our effective state income tax rate.~~the Tax Act, as described above.


~~(7)~~	~~Deferred income tax adjustments in the third quarter of 2016 and the fourth quarter of 2015 due to enacted statutory rate decreases in the United Kingdom.~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Since December 31, ~~2016,~~2017, there have been no material changes in our interest rate and foreign currency exposures or types of derivative instruments used to hedge these exposures. For a discussion of our exposure to market risk, refer to "Item 7A. Quantitative and Qualitative Disclosure about Market Risk" of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

Item 4. Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective.

No change in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the quarter ended September 30, ~~2017,~~2018, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Information concerning litigation and other contingencies is described in "Note 11. Legal Proceedings and Other Contingencies" in Part I, Item 1 of this Form 10-Q and is incorporated herein by reference.

Item 1A. Risk Factors

Since December 31, ~~2016,~~2017, there have been no material changes in our risk factors. For a discussion of our risk factors, refer to "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~(c)~~ On January 29, 2016, ~~our board of directors authorized~~the Board approved a $300 million share repurchase program, pursuant to which we are authorized to purchase shares of our common stock in the open market, in privately negotiated transactions, or otherwise, including pursuant to Rule 10b5-1 plans. As of December 31, 2017, $80.0 million remained available under this program. On January 26, 2018, the Board approved an additional share repurchase authorization of $170 million, bringing our aggregate available repurchase authorization to $250 million. The share repurchase authorizations do not have an expiration date, do not obligate the Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time. The timing of share repurchases will be dependent on market conditions and other factors. As of September 30, ~~2017, $105.0~~2018, $212.6 million remained available under the repurchase ~~authorization.~~authorizations.

The following is a summary of common stock repurchases completed by month during the third quarter of ~~2017:~~2018:

													Issuer Purchases of Equity Securities
	(a)	(b)		(c)	(d)		(a)	(b)		(c)	(d)
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)		Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
August 1, 2017 - August 31, 2017	155,596	$	61.76	155,596	$	120.4
September 1, 2017 - September 30, 2017	259,146	$	59.39	259,146	$	105.0
August 1, 2018 - August 31, 2018							40,542	$	85.60	40,542	$	221.5
September 1, 2018 - September 30, 2018							105,922	$	83.90	105,922	$	212.6
Total	414,742	$	60.28	414,742			146,464	$	84.37	146,464

Item 6. Exhibits



Exhibit Number			Exhibit Description

		Filed with this ~~Report~~: Report:

~~31A.~~	31A	Certification Pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a) (CEO Certification).

~~31B.~~	31B	Certification Pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a) (CFO Certification).

~~32.~~	32	Certification Pursuant to 18 U.S.C. Section 1350 (CEO and CFO Certification).

~~101.~~	101	The following materials from GATX Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2017,~~2018, are formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, (ii) Consolidated Statements of Comprehensive Income for the three months and nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, (iii) Consolidated Statements of Cash Flows for the ~~three months and~~ nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, and (iv) Notes to the Consolidated Financial Statements.



Incorporated by Reference:
10.1	Form of Restricted Stock Unit Agreement for grants under the Amended and Restated 2012 Incentive Award Plan to Robert C. Lyons and Thomas A. Ellman is incorporated herein by reference to Exhibit 10.1 to GATX's Form 8-K dated August 10, 2018.*
10.2	Form of Confidential Information, Non-Competition, and Non-Solicitation Agreement between the Corporation and Robert C. Lyons and Thomas A. Ellman is incorporated herein by reference to Exhibit 10.2 to GATX's Form 8-K dated August 10, 2018.*

________

(*) Compensatory plans or arrangements.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GATX CORPORATION

(Registrant)

/s/ ~~Robert C. Lyons~~Thomas A. Ellman

~~Robert C. Lyons~~Thomas A. Ellman

Executive Vice President and Chief Financial Officer

(Duly Authorized Officer)

Date: October ~~27, 2017~~26, 2018

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