GATX 10Q 2008 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended September 30, 2008


o		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
Chicago, Illinois 60606-5314
(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 (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. Yesþ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


þ Large accelerated filer		o Accelerated filer		o Non-accelerated filer (Do not check if a smaller reporting company)		o Smaller reporting company

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

As of September 30, 2008, 48.7 million common shares were outstanding.

GATX CORPORATION
FORM 10-Q
QUARTERLY REPORT FOR THE PERIOD ENDED SEPTEMBER 30, 2008

INDEX


Item No.	Page No.

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)		1
Consolidated Statements of Income (Unaudited)		2
Consolidated Statements of Cash Flows (Unaudited)		3
Notes to the Consolidated Financial Statements (Unaudited)		4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements		14
Business Overview		14
Discussion of Operating Results		15
Segment Operations		15
Cash Flow and Liquidity		23
Critical Accounting Policies		25
Non-GAAP Financial Information		25

Item 3. Quantitative and Qualitative Disclosures about Market Risk		26

Item 4. Controls and Procedures		26

Part II — OTHER INFORMATION

Item 1. Legal Proceedings		26

Item 1A. Risk Factors		26

Item 6. Exhibits		27

SIGNATURE		28

EXHIBIT INDEX		29
EX-31(A)
EX-31(B)
EX-32

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In Millions)


	September 30			December 31
	2008			2007
Assets
Cash and Cash Equivalents	$	47.1		$	104.4
Restricted Cash		39.1			44.7

Receivables
Rent and other receivables		101.3			91.1
Finance leases		354.7			334.6
Loans		5.7			8.8
Less: allowance for possible losses		(11.0	)		(11.0	)

		450.7			423.5

Operating Assets and Facilities
Rail		5,075.7			4,908.5
Specialty		271.5			209.7
ASC		372.0			365.6
Less: allowance for depreciation		(1,975.3	)		(1,974.4	)

		3,743.9			3,509.4

Investments in Affiliated Companies		425.4			317.8
Goodwill		99.8			104.4
Other Assets		288.2			221.4

Total Assets	$	5,094.2		$	4,725.6


Liabilities and Shareholders’ Equity

Accounts Payable and Accrued Expenses	$	142.2		$	119.6

Debt
Commercial paper and borrowings under bank credit facilities		159.9			247.3
Recourse		2,299.4			2,039.9
Nonrecourse		73.3			—
Capital lease obligations		66.1			72.5

		2,598.7			2,359.7

Deferred Income Taxes		776.2			722.8
Other Liabilities		302.4			374.0

Total Liabilities		3,819.5			3,576.1

Shareholders’ Equity
Preferred stock ($1.00 par value, 5,000,000 shares authorized, 17,517 and 18,216 shares of Series A and B $2.50 Cumulative Convertible Preferred Stock issued and outstanding as of September 30, 2008 and December 31, 2007, respectively, aggregate liquidation preference of $1.1 million)		*			*
Common stock ($0.625 par value, 120,000,000 authorized, 65,052,909 and 62,171,716 shares issued and 48,727,223 and 47,899,897 shares outstanding as of September 30, 2008 and December 31, 2007, respectively)		40.5			38.7
Additional paid in capital		590.3			514.3
Retained earnings		1,066.6			939.0
Accumulated other comprehensive income		82.5			86.2
Treasury shares, at cost (16,325,686 shares at September 30, 2008 and 14,271,819 at December 31, 2007)		(505.2	)		(428.7	)

Total Shareholders’ Equity		1,274.7			1,149.5

Total Liabilities and Shareholders’ Equity	$	5,094.2		$	4,725.6


*		Less than $0.1 million.

The accompanying notes are an integral part of these consolidated financial statements.

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In Millions, Except Per Share Data)


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2008		2007		2008		2007
Gross Income
Lease income	$	233.6	$	224.8	$	703.4	$	663.4
Marine operating revenue		98.4		76.3		200.7		156.7
Asset remarketing income		14.5		28.6		44.6		56.3
Other income		33.9		16.5		80.1		49.7

Revenues		380.4		346.2		1,028.8		926.1
Share of affiliates’ earnings		40.1		33.7		81.1		76.0

Total Gross Income		420.5		379.9		1,109.9		1,002.1

Ownership Costs
Depreciation		54.4		49.5		156.5		139.5
Interest expense, net		35.8		32.7		106.3		93.3
Operating lease expense		35.1		38.8		110.8		117.0

Total Ownership Costs		125.3		121.0		373.6		349.8

Other Costs and Expenses
Maintenance expense		65.4		61.7		193.9		172.6
Marine operating expense		73.6		55.1		153.5		113.7
Selling, general and administrative		48.1		42.2		129.1		119.4
Other		7.8		13.7		30.5		33.7

Total Other Costs and Expenses		194.9		172.7		507.0		439.4
Income from Continuing Operations before Income Taxes		100.3		86.2		229.3		212.9
Income Taxes		26.3		22.3		62.2		68.5


Income from Continuing Operations		74.0		63.9		167.1		144.4
Income from Discontinued Operations, net of taxes		—		21.7		—		18.5

Net Income	$	74.0	$	85.6	$	167.1	$	162.9


Per Share Data
Basic:
Income from continuing operations	$	1.52	$	1.31	$	3.53	$	2.86
Income from discontinued operations		—		0.45		—		0.37

Total	$	1.52	$	1.76	$	3.53	$	3.23


Average number of common shares		48.6		48.7		47.3		50.5

Diluted:
Income from continuing operations	$	1.46	$	1.21	$	3.31	$	2.63
Income from discontinued operations		—		0.41		—		0.33

Total	$	1.46	$	1.62	$	3.31	$	2.96


Average number of common shares and common share equivalents		50.9		53.7		51.1		56.2

Dividends declared per common share	$	0.27	$	0.24	$	0.81	$	0.72

The accompanying notes are an integral part of these consolidated financial statements.

GATX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In Millions)


	Nine Months Ended
	September 30
	2008			2007
Operating Activities
Net income	$	167.1		$	162.9
Less: Income from discontinued operations		—			18.5

Income from continuing operations		167.1			144.4
Adjustments to reconcile income from continuing operations to net cash provided by operating activities of continuing operations:
Gain on sales of assets and securities		(64.1	)		(50.5	)
Depreciation		164.1			146.7
Asset impairment charges		4.5			2.3
Deferred income taxes		61.5			61.1
Share of affiliates’ earnings, net of dividends		(44.3	)		(36.6	)
Income taxes payable		(14.1	)		(13.6	)
Operating lease payable		(35.2	)		(35.4	)
Other		(23.5	)		(6.7	)

Net cash provided by operating activities of continuing operations		216.0			211.7

Investing Activities
Additions to operating assets, net of nonrecourse financing for leveraged leases, and facilities		(383.7	)		(395.5	)
Loans extended		—			(7.0	)
Investments in affiliates		(55.3	)		(12.0	)
Other		(5.8	)		(3.2	)

Portfolio investments and capital additions		(444.8	)		(417.7	)
Purchases of leased-in assets		(70.1	)		(6.8	)
Portfolio proceeds		103.4			228.1
Proceeds from sales of other assets		58.8			17.5
Net decrease in restricted cash		5.6			4.3
Other		(42.1	)		—

Net cash used in investing activities of continuing operations		(389.2	)		(174.6	)

Financing Activities
Proceeds from issuances of debt (original maturities longer than 90 days)		339.8			33.9
Repayments of debt (original maturities longer than 90 days)		(21.5	)		(188.4	)
Net increase in debt with original maturities of 90 days or less		(87.1	)		111.5
Payments on capital lease obligations		(6.4	)		(5.5	)
Employee exercises of stock options		7.4			21.7
Stock repurchases		(76.5	)		(300.2	)
Cash dividends		(38.5	)		(36.1	)

Net cash provided by (used in) financing activities of continuing operations		117.2			(363.1	)

Effect of Exchange Rate Changes on Cash and Cash Equivalents		(1.3	)		1.7
Cash Flows of Discontinued Operations (see Note 14)
Net cash used in operating activities		—			(33.9	)
Net cash provided by investing activities		—			229.9

Net Decrease in Cash and Cash Equivalents during the period		(57.3	)		(128.3	)
Cash and Cash Equivalents at beginning of period		104.4			196.2
Cash and Cash Equivalents at end of period	$	47.1		$	67.9


Non-Cash Transaction
Assumption of nonrecourse debt	$	74.7		$	—

The accompanying notes are an integral part of these consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. Description of Business

GATX Corporation (“GATX” or the “Company”) leases, operates and manages long-lived, widely used assets in the rail, marine and industrial equipment markets. GATX also invests in joint ventures that complement existing business activities. Headquartered in Chicago, Illinois, GATX has three financial reporting segments: Rail, Specialty and American Steamship Company (“ASC”).

NOTE 2. Basis of Presentation

The accompanying unaudited consolidated financial statements of GATX Corporation and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by these accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2008, are not necessarily indicative of the results that may be achieved for the entire year ending December 31, 2008. For further information, refer to the consolidated financial statements and footnotes for the year ended December 31, 2007, as set forth in the Company’s Annual Report on Form 10-K/A as filed with the Securities and Exchange Commission (“SEC”).

GATX adopted Statement of Financial Accounting Standards No. 157,Fair Value Measurements (“SFAS No. 157”), effective January 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. SFAS No. 157 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The adoption of SFAS No. 157 had no effect on GATX’s consolidated financial statements. See Note 12 for a complete discussion of SFAS No. 157.

New Accounting Pronouncements

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 requires enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB Statement No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This statement is effective for fiscal years and interim periods beginning after November 15, 2008, with early adoption encouraged. Adoption of SFAS No. 161 will have no impact on GATX’s consolidated financial position, results of operations or cash flows.

In May 2008, the FASB issued Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP No. APB 14-1” or the “FSP”), which clarifies the accounting for convertible debt instruments that may be settled in cash (including partial cash settlement) upon conversion. The FSP requires issuers of applicable convertible debt instruments to account separately for the liability (debt) and equity (conversion option) components in a manner that reflects the issuer’s nonconvertible debt (unsecured debt) borrowing rate. The FSP requires bifurcation of a component of the convertible debt, classification of that component as equity, and then accretion of the resulting discount on the debt as additional interest expense over the expected term of the debt. The FSP requires retrospective application to all periods presented. The FSP is effective for GATX as of January 1, 2009, and early adoption is not permitted. The adoption of this FSP will affect the accounting for GATX’s current 5% convertible notes due 2023 and its previous 7.25% convertible notes that matured in February 2007. GATX is presently evaluating the impact that the application of this FSP will have to its consolidated financial position and results of its operations.

NOTE 3. Investments in Affiliated Companies

Investments in affiliated companies represent investments in, and loans to and from, domestic and foreign companies and joint ventures that are in businesses similar to those of GATX, such as lease financing and related services for customers operating rail, marine and industrial equipment assets, as well as other business activities, including ventures that provide asset residual value guarantees in both domestic and foreign markets.

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

Operating results for all affiliated companies, assuming GATX held a 100% interest, would be (in millions):


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2008		2007		2008		2007
Revenues	$	195.4	$	154.8	$	530.0	$	475.8
Pre-tax income reported by affiliates		87.2		59.3		168.3		161.4

NOTE 4. Pension and Other Post-Retirement Benefits

The components of pension and other post-retirement benefit costs for the three months ended September 30, 2008 and 2007, were as follows (in millions):


							2008 Retiree		2007 Retiree
	2008 Pension			2007 Pension			Health and		Health and
	Benefits			Benefits			Life		Life
Service cost	$	1.2		$	1.4		$	0.1	$	—
Interest cost		5.9			5.8			0.8		0.8
Expected return on plan assets		(8.0	)		(7.7	)		—		—
Amortization of:
Unrecognized prior service credit		(0.3	)		(0.2	)		—		—
Unrecognized net loss		0.4			0.9			—		0.3

Net costs	$	(0.8	)	$	0.2		$	0.9	$	1.1

The components of pension and other post-retirement benefit costs for the nine months ended September 30, 2008 and 2007, were as follows (in millions):


							2008 Retiree		2007 Retiree
	2008 Pension			2007 Pension			Health and		Health and
	Benefits			Benefits			Life		Life
Service cost	$	3.7		$	4.4		$	0.2	$	0.1
Interest cost		17.6			17.4			2.4		2.6
Expected return on plan assets		(24.0	)		(22.9	)		—		—
Amortization of:
Unrecognized prior service credit		(0.8	)		(0.2	)		—		(0.1	)
Unrecognized net loss		1.1			3.1			0.2		0.7

Net costs	$	(2.4	)	$	1.8		$	2.8	$	3.3

The amounts reported herein are based on estimated annual costs. Actual annual costs for the year ending December 31, 2008, may differ from these estimates.

NOTE 5. Commercial Commitments

In connection with certain investments or transactions, GATX has entered into various commercial commitments, such as guarantees and standby letters of credit, which could potentially require performance in the event of demands by third parties. Similar to GATX’s balance sheet investments, these guarantees expose GATX to credit, market and equipment risk; accordingly, GATX evaluates its commitments and other contingent obligations using techniques similar to those used to evaluate funded transactions.

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

The following table sets forth GATX’s commercial commitments as of (in millions):


	September 30		December 31
	2008		2007
Affiliate guarantees	$	42.6	$	20.7
Asset residual value guarantees		68.9		121.7
Lease payment guarantees		64.2		68.8
Other		77.8		77.8

Total guarantees (a)		253.5		289.0
Standby letters of credit and bonds		17.4		17.7

	$	270.9	$	306.7


(a)		At September 30, 2008, the recorded value of GATX’s guarantees was a liability of $9.3 million. The expirations of these guarantees range from 2008 to 2019.

Affiliate guarantees generally involve guaranteeing repayment of the financing utilized by an affiliate to acquire or lease-in assets, which are subsequently leased-out to third parties, and are in lieu of making direct equity investments in the affiliate. GATX is not aware of any event of default which would require it to satisfy these guarantees and expects the affiliates to generate sufficient cash flow to satisfy their lease and loan obligations.

Asset residual value guarantees represent GATX’s commitment to third parties that an asset or group of assets will be worth a specified amount at the end of a lease term. Revenue is earned for providing these guarantees in the form of an initial fee (which is amortized into income over the guarantee period) and by sharing in any proceeds received upon disposition of the assets to the extent such proceeds are in excess of the amount guaranteed (which is recognized when realized). Any liability resulting from GATX’s performance pursuant to these guarantees will be reduced by the value realized from the underlying asset or group of assets. Historically, gains associated with the settlement of residual value guarantees have exceeded any losses and were recorded in asset remarketing income in the consolidated statements of income. Based on known facts and current market conditions, management does not believe that the asset residual value guarantees will result in any significant adverse financial impact to the Company. GATX believes these asset residual value guarantees will likely generate future income in the form of fees and residual sharing proceeds.

Lease payment guarantees represent GATX’s guarantees to financial institutions of finance and operating lease payments of unrelated parties in exchange for a fee.

Other consists of GATX’s indemnification of Airbus S.A.S. (“Airbus”) for amounts Airbus may be required to pay under certain specified circumstances to GATX Flightlease Aircraft Ltd. (“GFAC”), a joint venture partially owned by GATX, in connection with an aircraft purchase contract entered into by GFAC and Airbus in 2001. GATX’s indemnification obligation is capped at $77.8 million. No liability has been recorded with respect to this indemnification as GATX believes that the likelihood of having to perform under the indemnity is remote.

GATX and its subsidiaries are also parties to standing letters of credit and bonds primarily related to workers’ compensation and general liability insurance coverage. No material claims have been made against these obligations. At September 30, 2008, GATX does not expect any material losses to result from these off balance sheet instruments because performance is not anticipated to be required.

NOTE 6. Variable Interest Entities

GATX has ownership interests in certain investments that are considered Variable Interest Entities (“VIEs”) in accordance with FASB Interpretation No. 46(R),Consolidation of Variable Interest Entities(“FIN 46(R)”). GATX does not believe it is the primary beneficiary with respect to any of its VIEs and therefore does not consolidate them. These entities are generally involved in railcar and equipment leasing activities. The nature of GATX’s involvement with these entities primarily consists of equity investments and leveraged leases which were acquired or entered into between 1994 and 2002. GATX continues to evaluate new investments for the application of FIN 46(R) and regularly reviews all existing VIEs in connection with any reconsideration events (as defined in FIN 46(R)) that may result in GATX becoming the primary beneficiary. As of September 30, 2008, GATX’s maximum exposure to loss with respect to its VIEs was approximately $122.8 million, of which $104.3 million was the aggregate carrying value of these investments recorded on its balance sheet. The difference between the carrying value and maximum loss exposure relates to GATX’s guarantee of an affiliate’s lease obligation that runs through 2018.

NOTE 7. Comprehensive Income

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

The components of comprehensive income were as follows (in millions):


	Three Months Ended					Nine Months Ended
	September 30					September 30
	2008			2007		2008			2007
Net income	$	74.0		$	85.6	$	167.1		$	162.9
Other comprehensive income, net of tax:
Foreign currency translation (loss) gain		(56.1	)		25.3		(3.9	)		51.2
Unrealized (loss) gain on securities		(0.8	)		0.7		(0.3	)		(3.0	)
Unrealized gain on derivative instruments		9.9			10.1		0.2			19.3
Post retirement benefit plans		0.1			0.5		0.3			2.1

Comprehensive Income	$	27.1		$	122.2	$	163.4		$	232.5

NOTE 8. Share-Based Compensation

In the first nine months of 2008, GATX granted 308,700 stock appreciation rights (“SAR”), 65,258 restricted stock units and 72,550 performance shares. For the three and nine months ended September 30, 2008, total share-based compensation expense was $2.4 million ($1.5 million after tax) and $7.0 million ($4.3 million after tax), respectively. For the three and nine months ended September 30, 2007, total share-based compensation expense was $1.8 million ($1.1 million after tax) and $7.0 million ($4.3 million after tax), respectively.

The weighted average estimated fair value of GATX’s 2008 SAR awards and underlying assumptions thereof are noted in the table below. The vesting period for the 2008 SAR grant is three years, with 1/3 vesting after each year.


	2008
Weighted average fair value of SAR awards	$	12.17
Annual dividend	$	1.08
Expected life of the option, in years		4.4
Risk free interest rate		2.39	%
Dividend yield		3.0	%
Expected stock price volatility		29.86	%

NOTE 9. Income Taxes

GATX’s effective tax rate for continuing operations was 27% for the nine months ended September 30, 2008, compared to 32% for the nine months ended September 30, 2007. In 2008, the statute of limitations on a state income tax position taken in a prior period expired, resulting in the recognition of previously unrecognized tax benefits of $6.8 million. Additionally, in the current year, lower statutory rates in a number of foreign jurisdictions have benefited GATX’s overall effective tax rate.

As of September 30, 2008, GATX’s gross liability for unrecognized tax benefits totaled $50.8 million, which, if fully recognized, would decrease income tax expense by $33.9 million ($31.8 million net of federal tax).

NOTE 10. Capital Structure and Earnings per Share

In the first nine months of 2008, holders of GATX’s 5.0% senior unsecured notes (the “2003 Notes”) converted $64.8 million of notes, of which $0.7 million was settled in cash and $64.1 million was settled with shares. A total of 2.6 million common shares were issued as a result and no gain or loss was recognized. Additionally, upon conversion, holders of the 2003 Notes forfeited accrued but unpaid interest as of the conversion date. In 2008, forfeited interest due to conversions was $1.0 million, net of tax effects, which was recorded as an adjustment to additional paid in capital. At September 30, 2008, $41.9 million of 2003 Notes were outstanding and convertible at a conversion price of $24.81 per share.

On January 23, 2008, the Company’s Board of Directors authorized a $200 million common stock repurchase program. As of September 30, 2008, 2.1 million shares have been repurchased for $76.5 million, all of which occurred in the first quarter. The repurchased shares were recorded as treasury stock under the cost method. No repurchases have been made since the first quarter as the Company has opted to retain this capital to support potential investment opportunities. Accordingly, the Company

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

no longer expects to complete this program in 2008.

Basic earnings per share were computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding during each period. Shares issued or reacquired during the period, if applicable, were weighted for the portion of the period that they were outstanding. Diluted earnings per share give effect to the impact of potentially dilutive securities, including convertible preferred stock, stock options, SARs, restricted stock and convertible debt.

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


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2008		2007		2008		2007
Numerator:
Income from continuing operations	$	74.0	$	63.9	$	167.1	$	144.4
Income from discontinued operations		—		21.7		—		18.5
Less: Dividends paid and accrued on preferred stock		*		*		*		*

Numerator for basic earnings per share — income available to common shareholders	$	74.0	$	85.6	$	167.1	$	162.9
Effect of dilutive securities:
Add: Dividends paid and accrued on preferred stock		*		*		*		*
After-tax interest expense on convertible securities		0.4		1.1		2.0		3.5

Numerator for diluted earnings per share — income available to common shareholders	$	74.4	$	86.7	$	169.1	$	166.4
Denominator:
Denominator for basic earnings per share — weighted average shares		48.6		48.7		47.3		50.5
Effect of dilutive securities:
Equity compensation plans		0.5		0.5		0.5		0.6
Convertible preferred stock		0.1		0.1		0.1		0.1
Convertible securities		1.7		4.4		3.2		5.0

Denominator for diluted earnings per share — adjusted weighted average and assumed conversion		50.9		53.7		51.1		56.2
Basic earnings per share:
Income from continuing operations	$	1.52	$	1.31	$	3.53	$	2.86
Income from discontinued operations		—		0.45		—		0.37

Total basic earnings per share	$	1.52	$	1.76	$	3.53	$	3.23

Diluted earnings per share:
Income from continuing operations	$	1.46	$	1.21	$	3.31	$	2.63
Income from discontinued operations		—		0.41		—		0.33

Total diluted earnings per share	$	1.46	$	1.62	$	3.31	$	2.96


*		Less than $0.1 million.

NOTE 11. Financial Data of Business Segments

The financial data presented below conforms to SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, and depicts the profitability, financial position and capital expenditures of each of GATX’s continuing business segments.

GATX leases, operates and manages long-lived, widely used assets in the rail, marine and industrial equipment markets. GATX also invests in joint ventures that complement existing business activities. Headquartered in Chicago, Illinois, GATX has three financial reporting segments: Rail, Specialty and ASC.

Rail is principally engaged in leasing tank and freight railcars and locomotives. Rail provides railcars primarily pursuant to full-service leases, under which it maintains the railcars, pays ad valorem taxes and insurance, and provides other ancillary services. Rail also offers net leases for railcars and most of its locomotives, in which case the lessee is responsible for maintenance, insurance and taxes.

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

Specialty provides leasing and related remarketing and asset management services in the marine and industrial equipment markets. The Specialty portfolio consists primarily of operating and direct finance lease assets; joint venture investments; loans; and interests in residual values involving a variety of underlying asset types, including marine, rail, industrial and other equipment.

ASC operates a fleet of self-unloading marine vessels on the Great Lakes and is exclusively engaged in the waterborne transportation of dry bulk commodities.

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, including affiliate earnings, attributable to the segments, as well as ownership and operating costs that management believes are directly associated with the maintenance or operation of the revenue earning assets. Operating costs include maintenance costs, marine operating costs, asset impairment charges and other operating costs such as litigation, provisions for losses, environmental costs, and asset storage costs. 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.

GATX allocates debt balances and related interest expense to each segment based upon a pre-determined fixed recourse leverage level expressed as a ratio of recourse debt (including off balance sheet debt) to equity. The leverage levels for Rail, Specialty and ASC are set at 4:1, 3:1 and 1.5:1, respectively. Management believes that by utilizing this leverage and interest expense allocation methodology, each operating segment’s financial performance reflects an appropriate risk-adjusted cost of capital and is presented on a comparable basis.

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

The following tables present certain segment data for the three and nine months ended September 30, 2008 and 2007 (in millions):


	Rail		Specialty		ASC			Other			Total
Three Months Ended September 30, 2008
Profitability
Revenues	$	262.9	$	21.6	$	99.5		$	(3.6	)	$	380.4
Share of affiliates’ earnings		14.2		25.9		—			—			40.1

Total gross income		277.1		47.5		99.5			(3.6	)		420.5
Total ownership costs		109.0		9.5		6.7			0.1			125.3
Total operating costs		61.8		6.1		78.9			—			146.8

Segment profit		106.3		31.9		13.9			(3.7	)		148.4
SG&A												48.1

Income from continuing operations before income taxes												100.3
Capital Expenditures
Portfolio investments and capital additions		138.7		89.0		(1.4	)		1.9			228.2
Selected Balance Sheet Data at September 30, 2008
Investments in affiliated companies		172.4		253.0		—			—			425.4
Identifiable assets		3,987.1		676.7		296.4			134.0			5,094.2

Three Months Ended September 30, 2007
Profitability
Revenues	$	234.0	$	34.4	$	77.5		$	0.3		$	346.2
Share of affiliates’ earnings		6.3		27.4		—			—			33.7

Total gross income		240.3		61.8		77.5			0.3			379.9
Total ownership costs		108.4		8.1		6.6			(2.1	)		121.0
Total operating costs		63.4		6.3		60.7			0.1			130.5

Segment profit		68.5		47.4		10.2			2.3			128.4
SG&A												42.2

Income from continuing operations before income taxes												86.2
Capital Expenditures
Portfolio investments and capital additions		127.5		56.4		—			0.9			184.8
Selected Balance Sheet Data at December 31, 2007
Investments in affiliated companies		135.4		182.4		—			—			317.8
Identifiable assets		3,768.2		515.6		292.0			149.8			4,725.6

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


	Rail		Specialty		ASC		Other			Total
Nine Months Ended September 30, 2008
Profitability
Revenues	$	759.0	$	69.1	$	203.9	$	(3.2	)	$	1,028.8
Share of affiliates’ earnings		19.1		62.0		—		—			81.1

Total gross income		778.1		131.1		203.9		(3.2	)		1,109.9
Total ownership costs		330.2		26.5		15.9		1.0			373.6
Total operating costs		197.5		12.2		168.2		—			377.9

Segment profit		250.4		92.4		19.8		(4.2	)		358.4
SG&A											129.1

Income from continuing operations before income taxes											229.3
Capital Expenditures
Portfolio investments and capital additions		266.7		158.6		6.4		13.1			444.8
Selected Balance Sheet Data at September 30, 2008
Investments in affiliated companies		172.4		253.0		—		—			425.4
Identifiable assets		3,987.1		676.7		296.4		134.0			5,094.2

Nine Months Ended September 30, 2007
Profitability
Revenues	$	695.1	$	70.5	$	160.0	$	0.5		$	926.1
Share of affiliates’ earnings		15.0		61.0		—		—			76.0

Total gross income		710.1		131.5		160.0		0.5			1,002.1
Total ownership costs		321.5		23.2		15.8		(10.7	)		349.8
Total operating costs		184.8		9.9		125.3		—			320.0

Segment profit		203.8		98.4		18.9		11.2			332.3
SG&A											119.4

Income from continuing operations before income taxes											212.9
Capital Expenditures
Portfolio investments and capital additions		311.9		102.2		4.4		(0.8	)		417.7
Selected Balance Sheet Data at December 31, 2007
Investments in affiliated companies		135.4		182.4		—		—			317.8
Identifiable assets		3,768.2		515.6		292.0		149.8			4,725.6

NOTE 12. Fair Value Disclosure

The Company adopted SFAS No. 157,Fair Value Measurements, on January 1, 2008. SFAS No. 157 applies to all financial instruments being measured and reported on a fair value basis.

SFAS No. 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS No. 157 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1— Quoted prices that are available in active markets for identical assets or liabilities. The types of financial instruments included in Level 1 are marketable equity available for sale securities that are traded in an active exchange market.

Level 2— Pricing inputs other than quoted prices in active markets, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Instruments included in this category are warrants and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Also included in this category is a money market fund investment that at present is not actively traded.

Level 3— Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 includes assets and liabilities whose values are determined using pricing models, discounted cash

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

flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. At September 30, 2008, GATX had no Level 3 financial instruments.

At September 30, 2008, the fair values of GATX’s financial instruments, which are remeasured on a recurring basis, are summarized below (in millions):


	Total		Level 1		Level 2		Level 3
Assets
Derivatives, including warrants	$	16.6		—	$	16.6		—
Available for sale equity securities	$	4.4	$	4.4		—		—
Money market fund (a)	$	38.3		—	$	38.3		—

Liabilities
Derivatives	$	13.1		—	$	13.1		—


(a)		In the quarter ended September 30, 2008, the per share net asset value (NAV) of a money market fund investment fell below one dollar and at present is not actively traded. GATX has been notified that the fund is being liquidated. The amount recorded is based on the last reported NAV by the fund and represents management’s best estimate of fair value.

NOTE 13. 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 its 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 discussion of these matters, please refer to Part I, Item 3, Legal Proceedings in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. Except as noted below, there have been no material changes or developments in these matters.

Polskie Koleje Panstwowe S.A. v. DEC sp. z o.o.

In December 2005, Polskie Koleje Panstwowe S.A. (“PKP”) filed a complaint,Polskie Koleje Panstwowe S.A. v. DEC sp. z o.o.,in the Regional Court in Warsaw, Poland against DEC sp. z o.o. (“DEC”), an indirect wholly owned subsidiary of the Company, currently named GATX Rail Poland, sp. Zo.o. The complaint alleges that, prior to GATX’s acquisition of DEC in 2001, DEC breached a Conditional Sales Agreement (the “Agreement”) to purchase shares of Kolsped S.A. (“Kolsped”) which was an indirect subsidiary of PKP. The allegedly breached condition required DEC to obtain a release of Kolsped’s ultimate parent company, PKP, from its guarantee of Kolsped’s promissory note securing a $9.8 million bank loan. Pursuant to an amendment to the Agreement, DEC satisfied this condition by providing PKP with a blank promissory note (the “DEC Note”) and a promissory note declaration which allowed PKP to fill in the DEC Note up to $10 million in the event a demand was made upon it as guarantor of Kolsped’s note to the bank (the “Kolsped Note”). In May 1999, the then current holder of the Kolsped Note, a bank (“Bank”), sued PKP under its guarantee. PKP lost the DEC Note and therefore did not use it to satisfy the guarantee, and the Bank ultimately secured a judgment against PKP in 2002. PKP also failed to notify DEC of the Bank’s lawsuit while the lawsuit was pending.

After exhausting its appeals of the judgment entered against it, PKP filed suit against DEC in December 2005, alleging that DEC failed to fulfill its obligation to release PKP as a guarantor of the Kolsped Note and is purportedly liable to PKP, as a third party beneficiary of the Agreement. DEC has filed an answer to the complaint denying the material allegations and raising numerous defenses, including, among others, that: (i) the Agreement did not create an actionable obligation, but rather was a condition precedent to the purchase of shares in Kolsped; (ii) DEC fulfilled that condition by issuing the DEC Note, which was subsequently lost by PKP and declared invalid by a Polish court; (iii) PKP was not a third party beneficiary of the Agreement; and (iv) the action is barred by the governing limitations period. The first day of trial was held on March 5, 2008, and the second day, which had previously been scheduled for September 16, 2008, was adjourned to allow time for the parties to discuss a settlement. To date, no settlement has been reached, and the second day of trial has not been rescheduled.

PKP claims damages in the amount of PLN 116.3 million, which consists of the principal amount, interest and costs allegedly paid by it to the Bank and statutory interest. Statutory interest would be assessed only if the court awards damages to PKP, in which case interest would be assessed on the amount of the award from the date of filing of the claim in December 2005, to the date of the award. Based on current exchange rates, the potential exposure to DEC in the event of an adverse judgment, including the damages sought by PKP and any statutory interest that may be assessed thereon, is estimated to be $48 million.

GATX Rail Poland intends to vigorously defend this lawsuit. However, the Company has recorded an accrual of $13.2 million representing management’s best estimate of a probable settlement amount. While the ultimate resolution of this

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

matter for an amount in excess of this accrual is possible, the Company believes that any such excess would not be material to its financial position or liquidity. However, such resolution could have a material adverse effect on the results of operations in a particular quarter or fiscal year.

NOTE 14. Discontinued Operations

Discontinued operations consist of the Company’s former Air (“Air”) segment. On January 17, 2007, GATX completed the sale of the remainder of Air for gross proceeds of $227.1 million. Results of discontinued operations reflect directly attributable revenues, ownership, operating and SG&A expenses and income taxes.

The following table summarizes certain operating data for discontinued operations (in millions):


	Three Months Ended			Nine Months Ended
	September 30			September 30
	2007			2007
Revenues	$	0.1		$	0.6
Loss before income taxes		(0.2	)		(5.5	)

Income (loss) from operations, net of taxes		0.8			(0.2	)
Gain on disposal of segment, net of taxes		20.9			18.7

Net income from discontinued operations	$	21.7		$	18.5

The following table summarizes the components of discontinued operations reported on the consolidated statement of cash flows (in millions):


	Nine Months Ended
	September 30
	2007
Operating Activities
Net cash used in operating activities	$	(33.9	)
Investing Activities
Proceeds from disposal of segment		229.9

Cash provided by discontinued operations, net	$	196.0

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

Forward Looking Statements

This document contains statements that may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor provisions of those sections and the Private Securities Litigation Reform Act of 1995. Some of these statements may be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” or other words and terms of similar meaning. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those described in GATX’s Annual Report on Form 10-K and other filings with the SEC, and that actual results or developments may differ materially from those in the forward-looking statements. Specific factors that might cause actual results to differ from expectations include, but are not limited to, general economic, market, regulatory and political conditions in the rail, marine, and industrial equipment markets and other industries served by GATX and its customers; lease rates, utilization levels and operating costs in GATX’s primary asset segments; conditions in the capital markets; changes in GATX’s credit ratings; regulatory rulings that may impact the economic value and operating costs of assets; competitive factors in GATX’s primary markets including lease pricing and asset availability; changes in loss provision levels within GATX’s portfolio; impaired asset charges that may result from changing market conditions or portfolio management decisions implemented by GATX; the outcome of pending or threatened litigation; and other factors. Given these risks and uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis, judgment, belief or expectation only as of the date hereof. GATX has based these forward-looking statements on information currently available and disclaims any intention or obligation to update or revise these forward-looking statements to reflect subsequent events or circumstances.

Business Overview

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based on financial data derived from the financial statements prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) and certain other financial data that is prepared using non-GAAP components. For a reconciliation of these non-GAAP components to the most comparable GAAP components, see “Non-GAAP Financial Information” at the end of this Item.

GATX Corporation leases, operates and manages long-lived, widely used assets in the rail, marine and industrial equipment markets. GATX also invests in joint ventures that complement existing business activities. Headquartered in Chicago, Illinois, GATX has three financial reporting segments: Rail, Specialty and American Steamship Company (“ASC”).

Operating results for the nine months ended September 30, 2008, are not necessarily indicative of the results that may be achieved for the entire year ending December 31, 2008. For further information, refer to GATX’s Annual Report on Form 10-K/A, as filed with the Securities and Exchange Commission (“SEC”), which contains the Company’s consolidated financial statements for the year ended December 31, 2007.

The Company’s former Air segment has been segregated as discontinued operations for all periods presented; see “Discontinued Operations” for additional information.

DISCUSSION OF OPERATING RESULTS

The following table presents a financial summary of GATX’s operating segments:


	Three Months Ended						Nine Months Ended
	September 30						September 30
	2008			2007			2008			2007
Gross Income
Rail	$	277.1		$	240.3		$	778.1		$	710.1
Specialty		47.5			61.8			131.1			131.5
ASC		99.5			77.5			203.9			160.0

Total segment gross income		424.1			379.6			1,113.1			1,001.6
Other income		(3.6	)		0.3			(3.2	)		0.5

Consolidated Gross Income		420.5			379.9			1,109.9			1,002.1


Segment Profit
Rail		106.3			68.5			250.4			203.8
Specialty		31.9			47.4			92.4			98.4
ASC		13.9			10.2			19.8			18.9

Total Segment Profit		152.1			126.1			362.6			321.1
Less:
Selling, general and administrative expenses		48.1			42.2			129.1			119.4
Unallocated interest expense, net		0.1			(2.1	)		1.2			(10.5	)
Other, including eliminations		3.6			(0.2	)		3.0			(0.7	)
Income taxes		26.3			22.3			62.2			68.5

Income from continuing operations		74.0			63.9			167.1			144.4
Income from discontinued operations, net of taxes		—			21.7			—			18.5

Consolidated Net Income	$	74.0		$	85.6		$	167.1		$	162.9


Basic earnings per share — income from continuing operations	$	1.52		$	1.31		$	3.53		$	2.86
Diluted earnings per share — income from continuing operations	$	1.46		$	1.21		$	3.31		$	2.63

Income from continuing operations, excluding tax benefits	$	74.0		$	54.5		$	160.3		$	134.1
Diluted earnings per share, excluding tax benefits	$	1.46		$	1.04		$	3.18		$	2.45

Return on Equity

GATX’s return on equity (“ROE”) is based on income from continuing operations and is shown for the trailing twelve months ended September 30:


	2008			2007
ROE		17.6	%		15.6	%
ROE, excluding tax benefits		16.2	%		14.6	%

Segment Operations

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, including affiliate earnings attributable to the segments, as well as ownership and operating costs that management believes are directly associated with the maintenance or operation of the revenue earning assets. Operating costs include maintenance costs, marine operating costs, asset impairment charges and other operating costs such as litigation, provisions for losses, environmental costs, and asset storage costs. Segment profit excludes selling, general and administrative expenses, income taxes and certain other amounts not allocated to the segments; these items are discussed below under Other.

GATX allocates debt balances and related interest expense to each segment based upon a pre-determined, fixed recourse leverage level expressed as a ratio of recourse debt (including off balance sheet debt) to equity. The leverage levels for Rail, Specialty and ASC are set at 4:1, 3:1 and 1.5:1, respectively. Management believes that by utilizing this leverage and interest

expense allocation methodology, each operating segment’s financial performance reflects an appropriate risk-adjusted cost of capital and is presented on a comparable basis.

Rail

Segment Summary

Utilization of Rail’s North American fleet was 97.8% at the end of the quarter, down slightly from 98.0% at the end of the second quarter and 97.9% at the end of the prior year. While North American utilization has remained stable, the active fleet as of September 30, 2008, has declined by approximately 1,300 cars from September 30, 2007, as the effects of railcar sales and significantly higher scrapping activity more than offset new railcar placements. In the current quarter, North American average lease renewal pricing on cars in the GATX Lease Price Index (“LPI”, see definition below) decreased 0.3% over the average expiring lease rates, compared to increases of 5.9% for the second quarter and 11.6% for the first quarter. As expected by the Company, the reduction in the LPI between quarters was driven by higher expiring lease rates, as nominal lease renewal rates between quarters remained flat. The LPI is likely to continue to trend lower in the intermediate term due to a combination of higher expiring lease rates and flat or lower nominal lease renewal rates. Lease terms on renewals for LPI cars averaged 57 months in the third quarter of 2008, compared to 63 months for the previous quarter and 65 months for the first quarter of 2008. The North American rail market continues to demonstrate weakness, particularly impacting demand for railcars serving housing and automotive related industries. However, general service tank cars, which comprise the core of Rail’s fleet, continue to experience stable demand and attractive long term lease rates. In Europe, fleet utilization decreased slightly to 97.6% from 97.7% at the end of the second quarter, reflecting seasonal delays in placing newly delivered railcars on lease.

The LPI is an internally generated business metric that is designed to gauge the performance of Rail’s North American fleet. The index reflects the weighted average lease rate for a select group of railcar asset types that GATX believes to be representative of its overall North American fleet.

During the first nine months of 2008, Rail’s portfolio investments were $266.7 million compared to $311.9 million for the comparable prior year period. Rail’s portfolio investments in 2008 have consisted primarily of new railcars acquired pursuant to existing commitments. Additionally, during the first nine months of 2008, Rail acquired 3,628 of previously leased-in railcars for $70.1 million and the assumption of $74.7 million of related nonrecourse debt.

During the first nine months of 2008, GATX conducted extensive analyses regarding a number of railcar portfolio acquisition opportunities. Ultimately, the Company’s view of the current market value of these portfolios was significantly lower than the view of the sellers, thus these opportunities did not warrant further pursuit. Costs of approximately $5 million were incurred as part of this review and analysis process, all of which were reported as a selling, general and administrative expense in the current quarter. It is possible that other railcar portfolio acquisition opportunities may become available in the current market environment. GATX will continue to be diligent in pursuing opportunities should they materialize. Any such transaction will be executed if the Company believes it will result in attractive returns for our shareholders and a capital structure that maintains our access to attractively priced capital.

Components of Rail’s operating results are outlined below (in millions):


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2008		2007		2008		2007
Gross Income
Lease income	$	218.5	$	210.5	$	658.5	$	622.8
Asset remarketing income		8.5		9.2		21.7		28.7
Other income		35.9		14.3		78.8		43.6

Revenues		262.9		234.0		759.0		695.1
Affiliate earnings		14.2		6.3		19.1		15.0

		277.1		240.3		778.1		710.1

Ownership Costs
Depreciation		45.9		41.6		135.7		121.9
Interest expense, net		28.4		28.5		84.8		84.5
Operating lease expense		34.7		38.3		109.7		115.1

		109.0		108.4		330.2		321.5

Operating Costs
Maintenance expense		60.0		55.7		182.0		160.4
Other		1.8		7.7		15.5		24.4

		61.8		63.4		197.5		184.8

Segment profit	$	106.3	$	68.5	$	250.4	$	203.8

Rail’s Lease Income

Components of Rail’s lease income for the three and nine months ended September 30 are outlined below (in millions):


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2008		2007		2008		2007
North America	$	169.4	$	169.7	$	513.0	$	507.0
Europe		40.3		33.4		119.5		94.8
Locomotives		8.8		7.4		26.0		21.0

	$	218.5	$	210.5	$	658.5	$	622.8

Rail’s Fleet Data

The following table summarizes fleet activity for Rail’s North American railcars for the nine months ended September 30:


	2008			2007
Beginning of year balance		112,445			110,478
Cars added		3,131			3,619
Cars scrapped or sold		(5,702	)		(2,890	)

Ending balance		109,874			111,207
Utilization rate at quarter end		97.8	%		97.9	%

The following table summarizes fleet activity for Rail’s European railcars for the nine months ended September 30:


	2008			2007
Beginning of year balance		19,435			18,541
Cars added		253			915
Cars scrapped or sold		(105	)		(103	)

Ending balance		19,583			19,353
Utilization rate at quarter end		97.6	%		96.7	%

Comparison of the First Nine Months of 2008 to the First Nine Months of 2007

Segment Profit

Rail’s segment profit rose 22.9% or $46.6 million over 2007. The current period included a $12.0 million gain on sale of an office building in Poland and the reversal of $8.2 million of reserves due to the settlement of an environmental liability related to inactive sites in Poland. Excluding the impact of these items, the favorable current year variance reflects the effects of lease renewal rate increases, additional locomotives on lease, higher scrapping gains and the net effect of changes in foreign exchange rates. These increases were partially offset by higher maintenance costs.

Gross Income

Gross income for the first nine months of 2008 was $68.0 million higher than the prior year. In North America, lease income increased $6.0 million, primarily reflecting renewal lease rate increases experienced over the past 12 months. Additionally, locomotive lease income increased $5.0 million, primarily due to over 100 additional locomotives on lease. European lease income increased $24.7 million, of which $18.3 million was the result of strengthening foreign currencies and $6.4 million was largely due to an average of almost 900 additional railcars on lease. Asset remarketing income decreased $7.0 million due to fewer asset sales in the current period. Other income increased $35.2 million, primarily due to a $12.0 million gain on sale of an office building in Poland and higher scrapping gains in North America. Compared to the prior year, over 1,300 more cars have been scrapped at record scrap steel prices, resulting in a $15.4 million increase in North American scrapping gains. Affiliate earnings increased primarily due to the fair value adjustment of derivatives at Rail’s AAE Cargo affiliate (“AAE”).

Ownership Costs

Ownership costs increased $8.7 million primarily due to $442.0 million of portfolio additions over the last 12 months and the effect of changes in foreign exchange rates, partially offset by the effect of lower interest rates. The mix of ownership costs was impacted by the acquisition in the first nine months of 2008 of 3,628 previously leased in railcars for $70.1 million and the assumption of $74.7 million of related nonrecourse debt.

Operating Costs

Maintenance expenses increased $21.6 million, primarily due to higher car repair volumes, increased repairs performed by railroads and the effect of changes in foreign exchange rates. In North America, maintenance costs were higher largely due to increased assignments, more cars undergoing scheduled regulatory maintenance, increased wheelset replacements performed by railroads and the effect of Canadian foreign exchange rate changes. In Europe, the increase was primarily due to strengthening foreign currencies. Other operating costs decreased $8.9 million, primarily due to the reversal of reserves resulting from the settlement of an environmental liability related to inactive sites in Europe.

Comparison of the Third Quarter 2008 to the Third Quarter 2007

Segment Profit

Rail’s segment profit increased 55.2% or $37.8 million over 2007. The increase primarily resulted from the effects of a $12.0 million gain on sale of an office building in Poland and the reversal of $8.2 million of reserves due to the settlement of an environmental liability related to inactive sites in Poland. Excluding the impact of these items, the third quarter increase resulted from the effects of higher locomotive lease income, higher scrapping gains, derivative gains at AAE and the net effect of changes in foreign exchange rates. This increase was partially offset by higher maintenance costs.

Gross Income

Gross income for the third quarter was $36.8 million or 15.3% higher than the prior year. In North America, lease income approximated the prior year as the effects of lease renewal rate increases, railcar assignments and new railcar deliveries offset a decline in the average active fleet of approximately 1,000 railcars. Locomotive lease income increased primarily due to over 100 additional locomotives on lease. In Europe, lease income increased $6.9 million, of which $5.4 million was the result of strengthening foreign currencies and $1.5 million was due to an average of over 600 additional railcars on lease. Asset remarketing income decreased slightly due to fewer asset sales in the current year. Other income increased $21.6 million, due to a $12.0 million gain on sale of an office building and higher scrapping gains in North America. Compared to the prior year, over 440 more cars have been scrapped at record scrap steel prices, resulting in a $7.0 million increase in North American scrapping gains. Affiliate earnings increased $7.9 million primarily as a result of the fair value adjustment of derivatives at AAE.

Ownership Costs

Ownership costs increased slightly as the effects of higher debt balances and changes in foreign exchange rates were offset by lower interest rates. The mix of ownership costs was impacted by the acquisition in the first nine months of 2008 of 3,628 previously leased in railcars for $70.1 million and the assumption of $74.7 million of related nonrecourse debt.

Operating Costs

Maintenance expense increased $4.3 million, primarily the result of higher car repair volumes, increased wheelset replacements costs and the effect of changes in foreign exchange rates. In North America, costs increased due to higher volumes of cars repaired due to assignments, scheduled regulatory maintenance and increased wheelset replacements performed by railroads. In Europe, costs were flat as the effect of changes in foreign exchange rates were offset by fewer cars undergoing scheduled regulatory maintenance. Other operating costs decreased $5.9 million, primarily due to the reversal of reserves resulting from the settlement of an environmental liability related to inactive sites in Europe.

Specialty

Segment Summary

Specialty’s total asset base, including off balance sheet assets, was $681.5 million at September 30, 2008, compared to $521.4 million at December 31, 2007, and $496.3 million at September 30, 2007. During the first nine months of 2008, Specialty invested $158.6 million compared to $102.2 million for the comparable prior year period. Specialty’s investments in 2008 have consisted primarily of marine assets, joint ventures and industrial equipment. Capital market volatility continues to create investment uncertainty for Specialty’s industrial equipment customers, which may impact Specialty’s investment opportunities. This challenging investment environment may continue for an indeterminate period of time.

Components of Specialty’s operating results are outlined below (in millions):


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2008		2007		2008		2007
Gross Income
Lease income	$	14.0	$	13.2	$	41.7	$	37.4
Asset remarketing income		6.0		19.4		22.9		27.6
Other income		1.6		1.8		4.5		5.5

Revenues		21.6		34.4		69.1		70.5
Affiliate earnings		25.9		27.4		62.0		61.0

		47.5		61.8		131.1		131.5

Ownership Costs
Depreciation		4.2		3.7		12.2		9.3
Interest expense, net		4.9		3.9		13.0		11.8
Operating lease expense		0.4		0.5		1.3		2.1

		9.5		8.1		26.5		23.2

Operating Costs		6.1		6.3		12.2		9.9


Segment profit	$	31.9	$	47.4	$	92.4	$	98.4

Specialty’s Portfolio Data

The following table summarizes information on the owned and managed Specialty portfolio (in millions):


	September 30
	2008		2007
Net book value of owned assets (a)	$	681.5	$	496.3
Net book value of managed portfolio		315.2		444.8


(a)		Includes off balance sheet assets

Comparison of the First Nine Months of 2008 to the First Nine Months of 2007

Segment Profit

Specialty’s segment profit for the first nine months of 2008 was $6.0 million lower than the prior year, primarily due to lower asset remarketing.

Gross Income

Gross income was comparable to the prior year. Lease income increased $4.3 million, primarily due to income from investments in operating lease assets made in the last 12 months. Asset remarketing income of $22.9 million decreased $4.7 million over prior year. The prior year included an $18.3 million gain on the sale of marine assets. Affiliate earnings increased $1.0 million as strong marine joint venture earnings continued in 2008, partially offset by the absence of income from a joint venture that was liquidated in the prior year.

Ownership Costs

Ownership costs increased $3.3 million, primarily due to depreciation and interest expense on operating lease assets acquired over the last 12 months, partially offset by the absence of expense on assets that were previously leased-in.

Operating Costs

Operating costs increased $2.3 million, primarily due to higher operating costs and the absence of an adjustment to the fair value of derivatives recorded in the prior year.

Comparison of Third Quarter 2008 to Third Quarter 2007

Segment Profit

Specialty’s segment profit for the third quarter decreased $15.5 million, primarily due to lower asset remarketing income.

Gross Income

Gross income was $14.3 million lower than prior year. Lease income increased $0.8 million, primarily due to income from investments in operating lease assets made in the last 12 months. Asset remarketing income decreased $13.4 million as the prior year included an $18.3 million gain from the sale of marine operating assets. Affiliate earnings decreased $1.5 million, primarily due to the absence of income from a joint venture that was liquidated in the prior year, partially offset by current year affilitate asset remarketing gains and higher marine joint venture earnings.

Ownership Costs

Ownership costs increased $1.4 million, primarily due to depreciation and interest expense associated with investments made during the last 12 months.

Operating Costs

Operating costs were comparable between the two years.

ASC

Segment Summary

As of September 30, 2008, ASC’s fleet was fully utilized and the same is expected for the remainder of the sailing season. Additionally, water levels on the Great Lakes have risen during 2008, enabling ASC’s fleet to carry more cargo per trip, resulting in higher revenues and segment profit.

Components of ASC’s operating results are outlined below (in millions):


	Three Months Ended					Nine Months Ended
	September 30					September 30
	2008		2007			2008		2007
Gross Income
Marine operating revenues	$	98.4	$	76.3		$	200.7	$	156.7
Lease income		1.1		1.1			3.2		3.2
Other income		—		0.1			—		0.1

		99.5		77.5			203.9		160.0

Ownership costs
Depreciation		4.3		4.2			8.6		8.3
Interest expense, net		2.4		2.4			7.3		7.5

		6.7		6.6			15.9		15.8

Operating costs
Maintenance expense		5.2		5.7			11.7		11.9
Marine operating expense		73.6		55.1			153.5		113.7
Other operating expenses		0.1		(0.1	)		3.0		(0.3	)

		78.9		60.7			168.2		125.3

Segment profit	$	13.9	$	10.2		$	19.8	$	18.9

Comparison of the First Nine Months of 2008 to the First Nine Months of 2007

Segment Profit

ASC’s segment profit of $19.8 million increased $0.9 million from the prior year. The increase was primarily due to improved fuel recovery and contractual freight rate increases.

Gross Income

Gross income for the first nine months of 2008 increased $43.9 million from the prior year. The increase was primarily due to higher fuel surcharges, which were offset in operating costs, higher contractual freight rates and a shift in cargo mix. Increased volume due to higher water levels also contributed to the increase.

Ownership Costs

Ownership costs for the first nine months of 2008 were comparable to the prior year.

Operating Costs

Operating costs increased $42.9 million, primarily due to increased fuel costs and a $2.9 million charge related to an adverse legal judgment in a dispute with a customer.

Comparison of Third Quarter 2008 to Third Quarter 2007

Segment Profit

ASC’s segment profit of $13.9 million increased $3.7 million from the prior year. The increase was primarily due to improved fuel recovery and contractual freight rate increases.

Gross Income

Gross income for the third quarter of 2008 increased $22.0 million from the prior year. The increase was primarily due to higher fuel surcharges, which were offset in operating costs, higher contractual freight rates and a shift in cargo mix. Increased volume due to higher water levels also contributed to the increase.

Ownership Costs

Ownership costs for the quarter were comparable to the prior year.

Operating Costs

Operating costs increased $18.2 million, primarily due to increased fuel costs.

ASC Regulatory Update

ASC’s vessels take on ballast water when not fully loaded in order to ensure safe operation and vessel control. The United States Coast Guard, the United States Environmental Protection Agency (“EPA”) and various states that border the Great Lakes have initiated rulemaking or otherwise have legislation pending to enact new ballast water regulations to address the potential introduction and spread of non-indigenous aquatic species within the Great Lakes. The EPA, in response to a successful challenge to the exemption of discharges incidental to the normal operation of ships (which includes ballast water) from the permitting requirements of the Clean Water Act, has proposed a new Vessel General Permit (“VGP”) to regulate these discharges. The current exemption will end on December 19, 2008, and compliance with the requirements of the VPG will commence following adoption of final rules. In addition, the state of Minnesota has enacted legislation and adopted final rules, effective October 1, 2008, requiring compliance with a state-issued general permit to cover the discharge of ballast water only in that state’s waters of Lake Superior. ASC will comply with the VPG, if adopted as currently proposed, and the new Minnesota permitting requirements by implementing revised vessel management plans and operational procedures. The Minnesota legislation also requires the installation of a ballast treatment system on existing vessels by 2016. While testing of different ballast water treatment systems and technologies continues, no state or federal agency has agreed to full scale testing aboard a Great Lakes ship. Accordingly, at this time ASC cannot determine the impact on its operations of the installation of such systems.

Other

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

Components of Other are outlined below (in millions):


	Three Months Ended					Nine Months Ended
	September 30					September 30
	2008		2007			2008		2007
Selling, general and administrative expenses	$	48.1	$	42.2		$	129.1	$	119.4
Unallocated interest expense, net		0.1		(2.1	)		1.2		(10.5	)
Other, including eliminations		3.6		(0.2	)		3.0		(0.7	)
Income taxes		26.3		22.3			62.2		68.5

SG&A, Unallocated Interest and Other

SG&A expenses increased $5.9 million for the quarter and $9.7 million for the year, primarily due to approximately $5 million of business development costs incurred related to the review and analysis of potential rail portfolio acquisitions and the effects of foreign exchange rate changes.

Unallocated interest expense is the balance (excess or shortfall) of external interest expense remaining after allocation to the reporting segments. The unallocated amount is a function of the difference between GATX’s average actual debt balances and the average amount of debt allocated to the reporting segments based on assigned leverage targets. Unallocated interest expense in the current year was impacted by higher debt balances driven by robust investment activity over the past year combined with

significant repurchases of common stock. The credit for unallocated interest expense in the prior year was impacted by lower debt balances and interest income on cash balances related to proceeds received from the sale of Air, which was retained in Other.

Other of $3.6 million for the quarter and $3.0 million for the year to date period primarily consists of a $3.8 million write-down of a money market fund investment. During the quarter, the per share net asset value of this fund fell below one dollar and at present is not actively traded. Accordingly, GATX has reclassified this investment on its Consolidated Balance Sheet from Cash and Cash Equivalents to Other Assets. As of September 30, 2008, the carrying amount of this investment was $38.3 million.

Income Taxes

Discontinued Operations

The following table summarizes certain operating data for Discontinued Operations (in millions):


	Three Months Ended			Nine Months Ended
	September 30			September 30
	2007			2007
Revenues	$	0.1		$	0.6
Loss before income taxes		(0.2	)		(5.5	)

Income (loss) from operations, net of taxes		0.8			(0.2	)
Gain on disposal of segment, net of taxes		20.9			18.7

Net income from discontinued operations	$	21.7		$	18.5

See Note 14 to the consolidated financial statements for additional information.

Cash Flow and Liquidity

Over the course of a full year, GATX expects to generate significant cash flow from a combination of operating activities and investment portfolio proceeds. This cash flow is used to service debt, pay dividends, and fund portfolio investments and capital additions. Cash flows from operations and portfolio proceeds are impacted by changes in working capital and the timing of asset dispositions. As a result, cash flow components will vary quarter to quarter. As of September 30, 2008, GATX had unrestricted cash balances of $47.1 million. The following discussion of cash flow activity is presented excluding the impact of discontinued operations.

Net cash provided by operating activities of continuing operations for the first nine months of 2008 was $216.0 million, an increase of $4.3 million from the prior year. The increase was primarily due to higher lease income and lower foreign tax payments, partially offset by higher maintenance expense and the timing of working capital items.

Portfolio investments and capital additions for the first nine months of 2008 totaled $444.8 million, a increase of $27.1 million from the prior year. Rail investments of $266.7 million were $45.2 million lower than the prior year, while Specialty investments of $158.6 million were $56.4 million higher. The timing of investments is dependent on transaction opportunities and market conditions. Additionally, in the first nine months of 2008, Rail acquired 3,628 previously leased-in railcars for $70.1 million and the assumption of $74.7 million of related nonrecourse debt.

Portfolio proceeds of $103.4 million for the first nine months of 2008 decreased $124.7 million from the prior year. Portfolio proceeds were higher in 2007 primarily due to proceeds received from sales of securities. Proceeds from sales of other assets increased $41.3 million primarily due to higher North American scrapping activity and the sale of the Polish office building.

Other investing activity of $42.1 million reflects the Balance Sheet reclassification of a money market fund investment balance from Cash and Cash Equivalents to Other Assets.

GATX also expects to meet debt, lease and dividend obligations, as well as fund capital spending, through commercial paper issuances, committed revolving credit facilities and the issuance of secured and unsecured debt. GATX utilizes both domestic and international banks and capital markets.

Debt proceeds for the first nine months of 2008 were $339.8 million, consisting of issuances of $200.0 million and $150.0 million of recourse term debt, net of issuance costs and hedges. The proceeds were primarily used to fund portfolio additions and repurchase 2.1 million shares of GATX common stock for $76.5 million.

In the first nine months of 2008, holders of GATX’s 5.0% senior unsecured notes converted $64.8 million of notes, of which $0.7 million was settled with cash and $64.1 million was settled with shares. A total of 2.6 million common shares were issued as a result.

Net cash provided by discontinued operations of $196.0 million in 2007 consisted primarily of proceeds received upon completion of the Air sale.

GATX has a $550.0 million senior unsecured revolving bank facility, which matures in May 2012. At September 30, 2008, availability under the bank facility was $376.4 million, with $157.5 million of commercial paper issued and $16.1 million of letters of credit issued, both backed by the facility.

The revolving bank facility contains various restrictive covenants, including requirements to maintain a fixed charge coverage ratio and an asset coverage test. The indentures for GATX’s public debt also contain restrictive covenants, including limitations on loans, advances or investments in related parties and dividends GATX may distribute. Some of the indentures also contain limitation on lien provisions that restrict the amount of secured indebtedness that GATX may incur, subject to several exceptions, including those permitting an unlimited amount of purchase money indebtedness and nonrecourse indebtedness. The loan agreements for certain of GATX’s wholly owned European 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 to certain related parties (including GATX) and to pay dividends to GATX. GATX does not anticipate any covenant violations nor does it anticipate that any of these covenants will restrict its operations or its ability to procure additional financing. At September 30, 2008, GATX was in compliance with all covenants and conditions of the bank facility, public debt indentures and European subsidiary loan agreements.

The availability of GATX’s funding options may be affected by certain factors, including the global capital market environment and outlook as well as GATX’s financial performance. GATX’s access to capital markets at competitive rates is dependent on its credit rating and rating outlook, as determined by rating agencies such as Standard & Poor’s (“S&P”) and Moody’s Investor Service (“Moody’s”). As of September 30, 2008, GATX’s long-term unsecured debt was rated BBB+ by S&P and Baa1 by Moody’s. GATX’s short-term unsecured debt was rated A-2 by S&P and P-2 by Moody’s. GATX’s rating outlook from both agencies was stable.

The capital markets are currently experiencing unprecedented volatility. However, to date, GATX has not experienced any material adverse impact to liquidity. While GATX continues to access the capital markets through debt issuances, primarily commercial paper, liquidity in the A-2/P-2 commercial paper market in particular is volatile from day to day. To the extent that volatility in the capital markets continues, GATX’s access to capital may become limited and its borrowing costs may increase.

At September 30, 2008, GATX’s unconditional purchase obligations of $487.3 million were primarily for railcars to be acquired and were comprised as follows (in millions):


	Payments Due by Period
	Total		2008		2009		2010		2011		2012		Thereafter
Rail	$	460.0	$	91.7	$	288.5	$	68.5	$	11.3	$	—	$	—
Specialty		27.3		27.3		—		—		—		—		—

	$	487.3	$	119.0	$	288.5	$	68.5	$	11.3	$	—	$	—

As of September 30, 2008, $41.9 million of 5.0% senior notes (the “2003 Notes”) were outstanding and convertible into GATX common stock at a conversion price of $24.81 per share. The holders of the 2003 Notes have the right to require all or a portion of the notes to be purchased for cash at a price equal to 100% of the principal amount plus accrued and unpaid interest. GATX has the right to redeem the 2003 Notes at 100% of the principal amount plus accrued and unpaid interest. If GATX provides notice of redemption, the holders of the 2003 Notes may elect to exercise their conversion privilege. Upon conversion, GATX may elect, at its option, to deliver cash, shares of GATX common stock or any combination thereof.

On January 23, 2008, the Company’s Board of Directors authorized a $200 million common stock repurchase program. As of September 30, 2008, 2.1 million shares have been repurchased for $76.5 million, all of which occurred in the first quarter. The repurchased shares were recorded as treasury stock under the cost method. No repurchases were made since the first quarter as the Company has opted to retain this capital to support potential investment opportunities. Accordingly, the Company no longer expects to complete this program in 2008.

Critical Accounting Policies

There have been no changes to GATX’s critical accounting policies during the nine months ending September 30, 2008; refer to GATX’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, for a summary of GATX’s policies.

Non-GAAP Financial Information

This report includes certain financial performance measures computed using non-GAAP components as defined by the SEC. These measures are return on equity excluding tax benefits, income from continuing operations excluding tax benefits and diluted earnings per share excluding tax benefits. As required under SEC rules, GATX has provided a reconciliation of these non-GAAP components to the most directly comparable GAAP components. Financial performance measures disclosed in this report are meant to provide additional information and insight into the historical operating results and financial position of the business. Management uses these performance measures to assist in analyzing GATX’s underlying financial performance from period to period and to establish criteria for compensation decisions. These measures are not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies.

GLOSSARY OF KEY TERMS

	•		Non-GAAP Financial Measures— Numerical or percentage based measures of a company’s historical performance, financial position or liquidity calculated using a component different from that presented in the financial statements as prepared in accordance with GAAP.

	•		Off Balance Sheet Assets— Assets, primarily railcars, which are financed with operating leases and therefore not recorded on the balance sheet. GATX estimates the off balance sheet asset amount by calculating the present value of committed future operating lease payments using the interest rate implicit in each lease.

	•		On Balance Sheet Assets— Total assets as reported on the balance sheet excluding assets of discontinued operations.

	•		Return on Equity —Income from continuing operations divided by average total shareholders’ equity.

	•		Return on Equity, Excluding Tax Benefits —Income from continuing operations excluding tax benefits divided by average total shareholders equity.

Reconciliation of non-GAAP financial information (in millions):


	September 30
	2008		2007
Consolidated On Balance Sheet Assets	$	5,094.2	$	4,500.9
Off Balance Sheet Assets		1,052.2		1,233.0

Total On and Off Balance Sheet Assets	$	6,146.4	$	5,733.9

Shareholders’ Equity	$	1,274.7	$	1,089.7


	Three Months Ended					Nine Months Ended
	September 30					September 30
	2008		2007			2008			2007
Income from Continuing Operations as Reported	$	74.0	$	63.9		$	167.1		$	144.4
Tax benefit adjustment (a)		—		(9.4	)		(6.8	)		(10.3	)

Income from Continuing Operations excluding tax benefits	$	74.0	$	54.5		$	160.3		$	134.1


Diluted Earnings per Share as Reported	$	1.46	$	1.21		$	3.31		$	2.63
Tax benefit adjustment (a)		—		(0.17	)		(0.13	)		(0.18	)

Diluted Earnings per Share excluding tax benefits	$	1.46	$	1.04		$	3.18		$	2.45


(a)		In 2008, the statute of limitations on a state income tax position taken in a prior period expired, resulting in the recognition of previously unrecognized tax benefits. In 2007, enacted reductions in statutory tax rates in foreign jurisdictions resulted in the recognition of deferred tax benefits.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Since December 31, 2007, there have been no material changes in GATX’s interest rate and foreign currency exposures or types of derivative instruments used to hedge these exposures. For a discussion of the Company’s exposure to market risk, refer to Part II: Item 7A, Quantitative and Qualitative Disclosure about Market Risk reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

Item 4. Controls and Procedures

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the Company’s 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, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, the Company’s disclosure controls and procedures were effective.

No change in the Company’s 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, 2008, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Information concerning litigation and other contingencies is described in Note 13 to the consolidated financial statements and is incorporated herein by reference.

Item 1A. Risk Factors

Since December 31, 2007, there have been no material changes in GATX’s Risk Factors. For a discussion of GATX’s risk factors, refer to Part 1: Item 1A, Risk Factors, reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

Item 6. Exhibits

		Exhibits:

		Reference is made to the exhibit index which is included herewith and is incorporated by reference hereto.

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

		Robert C. Lyons
		Senior Vice President and Chief Financial Officer (Duly Authorized Officer)

Date: October 29, 2008

EXHIBIT INDEX


Exhibit Number		Exhibit Description

		*Filed with this Report*:

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

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

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

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Avg

GATX (GATX) 10-Q2008 Q3 Quarterly report

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