GATX Annual Report 2000 | Quarterlytics

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FY2000 Annual Report · GATX

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GATX Corporation
500 West Monroe Street
Chicago, Illinois 60661

TELEPHONE
(312) 621-6200
(800) 428-8161

WEB SITE
www.gatx.com

NYSE: GMT

gatx corporation

ANNUAL REPORT

2000

R E S H A P E D

renewedready

Origami is the art of transforming a ﬂat piece of paper into a distinct three-dimensional
shape. It requires vision, a carefully executed plan, and a clear concept of the ﬁnal
creation — what it will look like and how it will function. The artist must choose material
of an appropriate size and weight and make each fold with thoughtful and deliberate
precision. Every additional crease, every nuance, contributes signiﬁcantly to the end
result, even though their relevance may not be apparent until the ﬁgure is fully evolved.

Over the past year, GATX followed a similarly deliberate and visionary process in trans-
forming itself from a conglomerate into a specialized ﬁnance and leasing company with
a unique combination of capabilities. GATX can now capitalize on the attractive return
and growth opportunities in its core markets.

Though it enters the new century with a different shape, GATX remains committed to
the critical industry sectors that it knows well and has served for many years.

GATX Corporation
500 West Monroe Street
Chicago, Illinois 60661

TELEPHONE
(312) 621-6200
(800) 428-8161

WEB SITE
www.gatx.com

NYSE: GMT

gatx corporation

ANNUAL REPORT

2000

R E S H A P E D

renewedready

Though it enters the new century with a different shape, GATX remains committed to
the critical industry sectors that it knows well and has served for many years.

gatx corporation

A specialized finance and leasing company combining asset knowledge and

services, structuring expertise, creative partnering, and risk capital to serve

customers and partners worldwide.

letter

from the chairman of the board

Diluted Income
Per Share
(IN DOLLARS)

Return on Average
Common Equity
(IN PERCENT)

Portfolio Investments
and Capital Additions(b)
(IN MILLIONS OF DOLLARS)

7
3
.
3

1
0
.
3

9
1

4
1

2
6
.
2

0
1
.
2

5
2
.
2

8
2
9
,
1

6
0
6
,
1

3
0
2
,
1

6
3
2
,
1

9
4
0
,
1

97(a) 98

00(c)

97(a) 98

00(c)

12%
growth in 2000

14%
3-year compound
average growth

10%
5-year compound
average growth

19%
return on average
common equity in 2000

$1.9
billion in 2000
(record investment volume)

17%
3-year compound
average growth

20%
5-year compound
average growth

(a) Excludes effect of $163 million after-tax restructuring charge.
(b) Continuing operations.
(c) Excludes effect of $98 million after-tax provision for litigation.

>
04
08
20
34
56
57
58
59
60

gatx at-a-glance (in foldout)
letter from the chairman of the board
business overview
management’s discussion and analysis
notes to consolidated financial statements
quarterly financial data and common stock information
selected consolidated financial data (5-year summary)
locations of operations
directors and officers
corporate information

dear shareholders

The past year was one of both achievement and transformation for

GATX Corporation. At no other time in our long history has the
company undertaken such signiﬁcant steps to clarify its vision and
position itself for growth. A number of strategic steps taken during
the year, coupled with effort from our many talented employees, led
the stock to record levels and generated an attractive total return for
our many loyal shareholders.

Unfortunately, the year ofﬁcially closed in February 2001 with a
shocking and deeply disappointing event. As a result of litigation
and a jury trial related to certain aircraft conversions undertaken
by GATX/Airlog, an afﬁliate of GATX Capital, we recorded a charge
to earnings that substantially reduced our 2000 net income. We
remain steadfast in our view that GATX was not at fault in this
matter and that the jury’s conclusions in this complex case were
erroneous. However, by reporting our maximum liability in this
matter we were able to address the uncertainty surrounding our
potential exposure in a business activity that we previously exited.
We can now focus our full attention on the substantial opportuni-
ties in our core markets.

As we entered 2000, we outlined three challenging objectives:
reallocate capital to our highest return businesses; redeﬁne GATX
as a specialized ﬁnance and leasing company; and achieve earnings
per share growth in line with our long-term target. Our 51% total
return to shareholders, which far outpaced relevant market indices,
was indicative of the progress we made on these objectives.

The capital reallocation process
was at the center of our efforts
in 2000. While the logic behind
this initiative is simple — we
can maximize returns to share-
holders by focusing on GATX
Capital and GATX Rail, our
high-return ﬁnance and leasing
operations — execution is com-
plex. We completed the sale of
GATX Logistics and we are in
the process of selling GATX
Terminals, steps that should
generate approximately $1 bil-
lion in after-tax proceeds for
the company.

The strategic steps taken dur-
ing the past year clariﬁed our
position as a specialized ﬁnance
and leasing company and led to
new research coverage from a
number of respected ﬁnancial
service analysts. Their support
was critical in correctly placing
GATX within the specialized
finance sector, and we are now
recognized as a unique company
within this arena.

e
c
n
a
l
g

-
a
-
t
a

x
t
a
g

GATX Corporation consists of two primary operating groups, GATX Capital and GATX Rail. Across these
groups, GATX pursues high-return investment opportunities by focusing on specialized markets.

gatx

corporation

Asset Composition *

49% RAIL

18% AIRCRAFT

12%
TECHNOLOGY

17%
DIVERSIFIED

4% VENTURE

Assets *
(IN MILLIONS OF DOLLARS)

9
3
6
,
5

7
2
7
,
4

1
4
9
,
3

0
2
9
,
3

7
2
4
,
3

19%
asset growth in 2000

*continuing operations

R A I L

Market Position

Largest tank car lessor
in North America.
Interest in over 150,000
railcars worldwide.

Largest locomotive operating
lease ﬂeet in North America.

A I R

With partners, third largest
aircraft lessor worldwide.

Own, manage, and have an interest
in over 400 commercial aircraft.
Own 50% interest in world’s largest
aircraft engine lessor.

T E C H N O L O G Y

Leading information technology
(IT) equipment lessor.
Focused on large-volume
Fortune 1000 IT users.

D I V E R S I F I E D

V E N T U R E

Portfolio of large-ticket
equipment on lease worldwide.

Third-party managed portfolio
totaling $3.5 billion.
Established presence
in marine equipment.

Provider of secured lease and loan
ﬁnancing for emerging companies.
Portfolio of over 150
emerging companies.

Diversiﬁed portfolio across
biotechnology, IT, software.

G A T X F I N A N C I A L H I G H L I G H T S
IN MILLIONS, EXCEPT PER SHARE DATA

Gross Income
Income from continuing operations,

excluding after-tax provision for litigation

After-tax provision for litigation

Income from continuing operations
Income from discontinued operations

Net Income

Diluted income per share, excluding
after-tax provision for litigation

Diluted income per share

Strengths

Strategy

2 0 0 0

1 9 9 9

1 9 9 8

$1,390.8

$1,259.5

$1,263.6

128.4
(97.6)

30.8
35.8

66.6

126.3
—

126.3
25.0

151.3

114.2
—

114.2
17.7

131.9

$
$

3.37
1.37

$
$

3.01
3.01

$
$

2.62
2.62

Statistics

Owned Railcars

52%
TANK CARS

Expertise in specialized railcars.
Over 100 years of
industry experience.

Growing international presence.

Deep customer relationships.

Newer, narrow-body ﬂeet
with nine-year average age.

Extensive international presence.
Over 30 years of industry experience.
Owned portfolio is 100%
Stage III compliant.

Diversiﬁed portfolio across
customers and equipment type.

Vendor-independent; customer-
focused rather than volume-driven.

Strong, service-based
customer relationships.

Strengthen leadership position
in North American market.

Broaden customer relationships.

Establish GATX as the leader
in European market.

Pursue global opportunities.

Expand air partnership platform.

Owned Aircraft

Increase the number of aircraft
under management.

Selectively pursue portfolio
acquisition opportunities.

28% B-737

32%
A320/321/318/330

20%
COVERED HOPPERS

11%
BOXCARS/
GONDOLAS

5% INTERMODAL

12% OTHER

19% B-757

8% MD80/DC-9

13% OTHER

Deepen existing
customer relationships.

Continue to expand service offering.

Increase customer base
in North America.

Asset knowledge,
structuring expertise.

Continue expanding diversiﬁed
pool of assets.

Unparalleled partnering capabilities.

Explore new market opportunities.

Growing fee income stream.

More than 15 years of
industry experience.

Pioneer in venture leasing
and ﬁnance.

Excellent relationships with
leading venture capital ﬁrms.

Continue expanding and
diversifying customer base.

Increase regional coverage
across North America.

Selectively pursue
international opportunities.

Technology
Equipment Mix

44%
PC/CLIENT
SERVER

14% MIDRANGE

10% DATA-
COMMUNICATIONS

5% MAINFRAME/
PERIPHERALS

Diversified Portfolio

21% MARINE

24%
PRODUCTION

Customer Mix

13% LIFE SCIENCES

36% TELECOM-
MUNICATIONS

27% OTHER

21% AEROSPACE

22%
VARIOUS
LARGE-TICKET

12% OTHER

13% NETWORK
EQUIPMENT

9% SOFTWARE/ASP

29% OTHER

gatx corporation

A specialized finance and leasing company combining asset knowledge and

services, structuring expertise, creative partnering, and risk capital to serve

customers and partners worldwide.

letter

from the chairman of the board

Diluted Income
Per Share
(IN DOLLARS)

Return on Average
Common Equity
(IN PERCENT)

Portfolio Investments
and Capital Additions(b)
(IN MILLIONS OF DOLLARS)

7
3
.
3

1
0
.
3

9
1

4
1

2
6
.
2

0
1
.
2

5
2
.
2

8
2
9
,
1

6
0
6
,
1

3
0
2
,
1

6
3
2
,
1

9
4
0
,
1

97(a) 98

00(c)

97(a) 98

00(c)

12%
growth in 2000

14%
3-year compound
average growth

10%
5-year compound
average growth

19%
return on average
common equity in 2000

$1.9
billion in 2000
(record investment volume)

17%
3-year compound
average growth

20%
5-year compound
average growth

(a) Excludes effect of $163 million after-tax restructuring charge.
(b) Continuing operations.
(c) Excludes effect of $98 million after-tax provision for litigation.

>
04
08
20
34
56
57
58
59
60

dear shareholders

The past year was one of both achievement and transformation for

Ronald H. Zech
Chairman and
Chief Executive Officer

David M. Edwards
President, GATX Rail

Jesse V. Crews

President, GATX Capital

Brian A. Kenney
Vice President and
Chief Financial Officer

Income per share, excluding the
GATX/Airlog-related reserves
and expenses, increased 12%
in 2000. I am pleased with this
growth, especially in light of
weakness in our rail business
and a slowing economy. GATX
Capital continued to expand its
base of owned assets, partner-
ships, and third-party managed
assets, thereby building long-
term value for our shareholders.
The performance of GATX
Terminals in 2000 also deserves
special recognition, as its dedi-
cated employees stayed focused
during the sale process and gen-
erated strong earnings.

While I am pleased with our
achievements in 2000 and
proud of the people that made
them possible, I also know that
challenges lie ahead. The trans-
formation of GATX from a con-
glomerate to a specialized
finance and leasing company
is a dynamic process. In that
regard, 2001 will be a year of

signiﬁcant transition as we complete a number of strategic steps
while facing an economic environment that is the most difﬁcult we
have experienced in several years. We are entering 2001 with a num-
ber of objectives that will set the stage for consistent, long-term
growth at GATX.

Completing the sale of GATX Terminals is one of our most impor-
tant objectives. We signed an agreement in November to sell our
domestic operations to Kinder Morgan Energy Partners L.P., and we
have sold virtually all of our European operations. Our focus will be
on closing the Kinder Morgan transaction and proceeding with the
sale of our Asian operations.

The sale of GATX Terminals represents the single largest transaction
in our company’s history. This transforming event presents us with
an opportunity to pursue other objectives — such as optimizing
our capital structure for future growth. Using the sale proceeds
conservatively to enhance our credit standing will enable GATX
to fund future growth with lower priced capital. For a specialized
finance company such as GATX, lowering the cost of this “raw mate-
rial” will ultimately strengthen our ﬁnancial performance and
competitive position. While presenting challenges with regard
to managing existing operations and portfolios, a slowing economy
also presents an opportunity to use a portion of the Terminals’ sale
proceeds to selectively pursue attractive portfolio acquisitions.

Another 2001 objective is aligning our organization so that we
are well positioned to capitalize on growth opportunities. We have
already taken signiﬁcant steps in this area. In January 2001, we
announced plans to begin integrating GATX Capital’s rail activities
into GATX Rail, bringing all of our rail operations under the direc-
tion of a single, experienced management team. This strengthens

gatx’s interest in over 150,000 railcars spans north america, europe, australia, and south america.
gatx manages over $10 billion of assets for partners and third parties.

gatx owns, manages, or has an interest in nearly 400 commercial aircraft.

GATX Rail’s position as a global leader in rail leasing and services.
Several corporate functions have also been combined with operating
company units, a move that not only increases efﬁciency but also
provides an opportunity for our best and brightest employees to
broaden their skills and contribute to GATX’s overall success. There
are more opportunities to improve efﬁciency and better align the
company, and we will continue pursuing these in the year ahead.

Achievement of our 2001 objectives will set the stage for attaining
our long-term goals. The GATX vision is clear: to be a global leader
in specialized ﬁnance and leasing. This goal is within our reach
given the established positions we hold in our core markets and our
unique mix of partnering skills, asset knowledge, service capabili-
ties, and structuring expertise. We will pursue asset growth, portfo-
lio acquisitions, partnering, and third-party asset management in
each of our core markets.

In rail, we will strengthen our position as a leading lessor of special-
ized railcars and locomotives in North America. We will sharpen our
operational focus and stress the skills upon which we have built our
valuable North American rail franchise: customer service and unsur-
passed asset knowledge. Although the North American market is
experiencing weakness, the long-term fundamentals of the business
are sound. As competitors pull back or exit the business during this
period of weakness, we will take this opportunity to further improve
our competitive position. Parallel to our North American effort, we
will move aggressively to make GATX the leader in the developing
European rail market. A newly-established team comprising some
of our most experienced rail people will lead our charge in this very
important market.

We expect our aircraft leasing
business to continue its strong
growth. In the past three years,
the air group has doubled to
400 the number of aircraft that
it owns, has an interest in, or
manages. Our partnership with
Rolls-Royce has provided a suc-
cessful entry into the aircraft
engine leasing business, and our
recently-announced acquisition
of 50% of Pembroke Group
substantially expands our com-
mercial aircraft portfolio. As the
third largest aircraft operating
lessor worldwide, we will con-
tinue using our exceptional
partnering skills and strong
customer and manufacturer
relationships to broaden our
presence in the international
aircraft leasing market.

GATX’s technology equipment
leasing business has experi-
enced 40% annualized asset
growth over the past ﬁve years,
and strong growth is expected
to continue in 2001. Serving
primarily Fortune 1000 cus-
tomers, we will expand our
service capabilities and product

investment in joint ventures approached$1billion at the end of 2 0 0 0 .

gatx has a growing international presence across its core markets.

gatx’s share of affiliates’ earningstripled in the past five years.

offering, and selectively look at
portfolio acquisition opportu-
nities. Our experience and
vendor-independent strategy
will drive continued success in
this rapidly changing market.

We plan to expand our activity
in the venture ﬁnance and
leasing market. Over the past
15 years, our strategy of pro-
viding secured lease and loan
ﬁnancing to emerging compa-
nies has generated attractive
risk-adjusted returns for our
shareholders. Volatility in the
capital markets during the past
year led a number of our com-
petitors to limit new investment
volume or exit the business
entirely, resulting in a more
rational competitive environ-
ment and attractive investment
opportunities for GATX. By
maintaining a long-term per-
spective, our investment volume
in this area reached record levels
in 2000, and we plan to carry
this momentum into 2001.

Whether in rail, air, technology, diversiﬁed, or venture, we will adhere
to our traditional risk-return discipline while continually seeking
opportunities to apply our core skills. GATX is a unique company
with a bright future, and I am conﬁdent that we will move through
this transition year well positioned to capitalize on the substantial
growth opportunities in our markets.

In closing, I would like to thank the members of our Board of
Directors, our partners, our employees, and our shareholders. To our
Board members: Your insight and support have been invaluable as we
reshape GATX Corporation. I would particularly like to recognize
Richard Giesen, a Board member who displayed tremendous com-
mitment to GATX for 18 years prior to his recent retirement. To our
partners: We look forward to continued shared success as we jointly
leverage our market knowledge, asset expertise, and competitive
strengths. To our employees: It is difﬁcult to sum up my apprecia-
tion for your effort over the past year. During a period of unprece-
dented change, you tackled every challenge with energy, creativity,
and passion. My conﬁdence in the future of GATX is based on my
conﬁdence in you. Lastly, to our shareholders: The conﬁdence that
you have shown in GATX is not only recognized and appreciated,
it serves as strong motivation. Although we are proud of the total
return GATX generated in 2000, our focus is on the future. The
entire GATX team remains committed to providing you with an
attractive return on your investment.

Sincerely,

R O N A L D H . Z E C H
chairman and chief executive officer

synergistic

individual dolphins take turns
leading or directing a group’s
course. the untrained eye can-
not detect when leadership
shifts from one dolphin to
another; an outside observer
will see only a seamlessly coor-
dinated effort.

we partner with industry leaders

Throughout its history, GATX has enhanced returns by employing a
unique partnering strategy that has led to the achievement of three
objectives: entering new markets, diversifying risk, and expanding
positions in existing markets. By aligning its interests directly with
those of its partners, GATX promotes win-win outcomes that enable
two parties to accomplish more than either could achieve alone.
While many companies have tried partnering strategies in recent
years, GATX has recognized the value of collaborative relationships
for decades and has built a solid foundation of over 50 partnerships.

Forming and managing successful
partnerships is difﬁcult; it is
an art that is learned only with
experience. GATX seeks out
partners that are recognized
leaders in their markets, thus
gaining access to industry
knowledge and insight while
offering partners access to
GATX’s 102 years of ﬁnance
and leasing experience.

In recent years GATX has accel-
erated its use of partnering
across its core markets. In rail,
GATX has formed ventures with
European-based lessors KVG
Kesselwagen and AAE Cargo,
and expanded its North
American presence through
ventures with Kansas City
Southern Industries and the
Electro-Motive Division of
General Motors. In air, ventures
with the Flightlease AG sub-
sidiary of SAirGroup (also parent
of Swissair), Rolls-Royce, and
numerous ﬁnancial institutions
have contributed to substantial
growth in this sector. Within

the diversiﬁed group, ventures with companies such as Pitney Bowes
Financial Services, Gulfstream, and IMC Holdings have opened
doors to attractive asset categories. In the past ﬁve years, GATX’s
investment in joint ventures has increased from $260 million to
nearly $1.0 billion, while GATX’s share of afﬁliates’ earnings nearly
tripled, rising from $27 million to $79 million.

GATX’s joint venture with Rolls-Royce is a prime example of a suc-
cessful, growing partnership. Formed in late 1998, the venture
involved GATX Capital taking a 50% interest in Rolls-Royce and
Partners Finance Limited, now the largest aircraft engine leasing
company in the world. This partnership provided GATX Capital
with its ﬁrst stake in the rapidly growing engine leasing market.
Subsequent growth in this market has exceeded expectations.

Most importantly, the Rolls-Royce partnership has led to addi-
tional opportunities outside of the original venture. GATX Capital
recently acquired a 50% interest in Pembroke Group, a Dublin-
based aircraft lessor in which Rolls-Royce holds the other 50%
interest. The addition of GATX Capital brings a familiar partner
to a growing enterprise that has an interest in approximately 150
commercial aircraft.

GATX will continue to pursue partnership opportunities across its
core markets. Partnerships enable GATX to “touch” more assets than
it could alone, enhancing its competitive position, performance, and
shareholder returns.

the owl capitalizes on its unique
skills: keen eyesight, an acute
sense of hearing, and an ability
to look directly backwards. these
skills permit the owl to see or to
sense what others do not.

insightful

we offer valuableasset knowledge

Unlike most finance companies, GATX primarily deals in hard
assets such as railcars, commercial aircraft, technology and
marine equipment. In-depth asset knowledge sets GATX apart
from the competition. The level of knowledge GATX brings to
every relationship or transaction can come only from experi-
ence — years of dealing with the same assets, in the field, with
the customer. From helping customers solve complex problems
to analyzing and capitalizing on changing asset valuations, GATX
turns asset knowledge into opportunity.

GATX Rail’s primary focus is on
leasing and servicing special-
ized tank cars. The basis for this
strategy is clear: Tank cars are
the most complex railcars in
operation, serving customers in
the chemical, petroleum, and
food industries. Tank cars are
service-intensive, highly engi-
neered assets that play a critical
role in a customer’s distribution
system. This asset complexity
limits the number of competitors
and enhances returns for GATX
and its shareholders.

With a ﬂeet of 70,000 tank cars
in North America, GATX Rail’s
market-leading position is built
around a deep understanding
of this unique asset, developed
through 102 years of experience
in this market.

GATX Rail’s relationship with
chemical giant Atoﬁna demon-
strates the degree of asset knowl-
edge required to be a leader in
full service tank car leasing, and
how this knowledge can help
deepen a customer relationship.

Atoﬁna, a branch of TotalFinaElf, is the ﬁfth largest chemical com-
pany in the world.

Atoﬁna’s manufacturing and distribution process requires trans-
portation of various refrigerants. Ideally, the railcars used in this
process integrate seamlessly with Atoﬁna’s specialized manufactur-
ing facilities. Working closely with Atoﬁna, engineers from GATX
Rail and railcar manufacturer Trinity Industries developed and
delivered 20,000 gallon pressurized tank cars speciﬁcally designed
to meet Atoﬁna’s needs regarding car size, functionality, and the
unique product being transported. GATX Rail’s asset knowledge,
and a clear understanding of the customer’s transportation needs,
enabled it to deliver an ideal solution for this valued customer.

GATX Rail’s relationship with Atoﬁna extends to areas beyond the
traditional railcar lease. GATX Rail’s ﬁnance team has worked closely
with Atoﬁna to design a tailored lease and payment structure, and
Atoﬁna has also been an active user of GATX Rail’s tank car training
and education programs.

Developing innovative solutions for customers is one of GATX Rail’s
core strengths. This strength is borne out of intense asset knowledge,
developed through years of experience in the rail industry. To other
leasing companies, a railcar may be viewed as an inﬂexible, static
asset; at GATX Rail, in-depth knowledge of this asset opens the
door to innovative customer solutions.

011

reliable

the fan is a simple object formed
out of paper or fabric. usually
noted for its texture and design,
its practical functionality is
often overlooked — a fan is
always ready to serve.

we enhance returns throughservice

GATX continually seeks to expand its service capabilities. In most
markets the asset is the focal point for an array of services.
A complete service package results in a cost-effective offering for
customers, stronger and more complex customer relationships,
and enhanced performance and shareholder returns for GATX.
Extensive service capabilities also enable GATX to maintain an
advantage over competitors.

In the highly competitive technol-
ogy equipment leasing business,
service is often the deciding fac-
tor when a company is selecting
an equipment provider. GATX
Technology Services (GTS) has
established a sizeable and suc-
cessful presence in this market.
Several competitors have aligned
themselves directly with tech-
nology equipment manufactur-
ers, effectively serving as the
manufacturers’ captive ﬁnance
arm. GTS has opted to remain
independent so it can focus
solely on the customers’ equip-
ment and service needs.

In addition to this indepen-
dence, GTS differs from other
technology leasing companies
in the wider range of services it
offers. After working with cus-
tomers to identify and select
appropriate technology equip-
ment, GTS tailors a lease that
addresses the customer’s partic-
ular needs for asset tracking,
inventory management, main-
tenance, project management,

and equipment remarketing. To make its technology leasing sup-
port services even more convenient for customers, many are avail-
able on-line, around the clock.

GTS’ customers recognize and appreciate this commitment to service
and the skills and ﬂexibility that back it up. For several years, GTS
has provided Southern Company, one of the largest producers of
electricity in the United States, with desktop and server equip-
ment in conjunction with a range of other services. As part of a
recent review of its IT leasing needs, Southern Company analyzed
the market to ensure it was using the most cost-effective equip-
ment and service programs available. At the conclusion of the
review, Southern Company once again chose GTS, citing its superior
record of customer service and relationship management as a key
differentiating factor.

Fortune 500 companies like Southern Company have numerous
resources for attractively priced technology equipment ﬁnancing.
These companies also recognize that service is the key to managing
their equipment effectively. Combined with competitive pricing,
GTS’ reputation for outstanding customer service has been the key
to its success in establishing relationships with some of the most
recognized names in corporate America.

013

a catamaran is a unique hybrid.
it combines the power of the
wind with the sleekness of a
surf-skimming craft. noted
for its speed and agility, the
catamaran can adapt quickly
to rapidly changing and chal-
lenging conditions.

agile

we structureinnovative financial solutions

GATX uses a unique combination of tools, including asset
knowledge, tax and financial expertise, risk analysis, and risk
management, to structure innovative transactions for customers
and partners worldwide. While “structuring” may appear to be a
somewhat esoteric concept, customers and partners hold this
intangible skill in the highest regard because it drives innovation
and problem solving. Why does GATX excel in this area? Perhaps
because over the years GATX has taken different roles in many
different transactions. GATX’s ability to take multiple roles in a
single transaction, from advisor to investor to arranger, provides
a unique perspective that often leads to a practical, creative solu-
tion that would not otherwise have been possible.

platform. Revamping a ﬂeet presents many challenges, not the least
of which is acquiring a sufﬁcient number of common aircraft in a
timely manner and redeploying existing aircraft. GATX Flightlease
responded to SAA’s challenge by structuring a unique transaction.
The ﬁrst step was to negotiate and arrange a $900 million lease
package encompassing 16 new Boeing 737-800 aircraft. GATX
Capital committed to provide eight of the new aircraft from Boeing
orders it held with pre-existing partnerships, and Flightlease AG
committed to provide eight aircraft. Importantly, the structure of
the transaction also addressed SAA’s need to redeploy its existing
aircraft; as part of the transaction, GATX Flightlease acquired SAA’s
entire ﬂeet of A320 aircraft. Capitalizing on its remarketing capa-
bilities, GATX Flightlease reconﬁgured the aircraft and secured
agreements to place six of these aircraft on lease with TAM, a South
American-based carrier.

Structuring a transaction of this magnitude requires ﬁnancial
expertise, asset knowledge, transaction management skills, and the
ability to coordinate a variety of parties. For SAA, GATX Flightlease
served as arranger, investor, and remarketing agent. By working
directly with SAA, Boeing, and the engine manufacturer, GATX
helped a valued customer address its ﬂeet needs efﬁciently.

015

GATX Capital has used various
partnerships to become the
third largest aircraft operat-
ing lessor worldwide. GATX
Capital’s air partnerships
include GATX Flightlease, a
joint venture between GATX
Capital and Flightlease AG, an
SAirGroup company. With its
experience in aircraft ﬁnance,
partner relationships, and a
high-quality pool of owned
and ordered aircraft, GATX
Capital is uniquely positioned
to structure creative ﬁnancing
solutions for customers.

For example, South African
Airways (SAA) is an established
air carrier providing regional
service throughout Africa, as
well as international service
to cities such as Zurich, Paris,
Frankfurt, London, and New
York. In an effort to bring
greater efﬁciency to its opera-
tion, SAA wanted to convert its
mixed ﬂeet of Airbus A320,
Airbus A300, and Boeing 767-
200 aircraft into a common

growing

lacking sun or water, a
flower will wilt and die.
but planted where condi-
tions are favorable, and
nurtured with knowledge
and care, it will bloom,
grow and thrive.

we are expandinginternationally

GATX is at a unique point in time. GATX’s core skills — including
partnering, asset knowledge, service, and structuring — are in
increasing demand on a global basis. The markets in which GATX
applies these skills, including rail, air, and technology, are also
expanding globally. The convergence of increased demand for
its skills and extraordinary growth in its primary markets offers
GATX an unprecedented opportunity. To exploit this opportunity,
GATX has accelerated international expansion and established a
foundation for growth well into the future.

International rail markets are
undergoing tremendous
change. Railroads and railcars,
formerly government-owned,
are being privatized, ﬂeets are
being upgraded, and freight
rail trafﬁc is increasing. These
changes are driving a greater
demand for all rail services.
With extensive experience in
the modernization of the U.S.
rail market, strong relationships
with multinational customers,
and an established presence
in key international markets,
GATX Rail is well positioned
to capitalize on these trends.

Consider Europe, where there is
a growing effort to make cross-
border freight transportation
more efﬁcient. Freight rail sys-
tems are shifting from govern-
ment ownership and control to
private hands. In addition, there
is a concerted effort among
national governments to ease
road congestion by increasing
freight rail efficiency and
upgrading the European rail

ﬂeet. To capitalize on these trends, GATX Rail invested in two lead-
ing European railcar leasing companies and now has an interest in
a modern ﬂeet comprising 20,000 specialized tank and freight cars.

In recent years, to complement its ownership interests in European
railcars, GATX has provided ﬁnancing on a variety of European rail
equipment. For example, the English, Welsh & Scottish Railway
turned to GATX and a partner for $30 million of lease ﬁnancing
related to the expansion of its freight car ﬂeet. In the passenger rail
market, GATX and a partner, Bombardier, provided equipment
ﬁnancing and residual guarantees totaling $665 million for U.K.-
based Virgin Rail, an operator of cross-country passenger service.

GATX’s international opportunities extend well beyond Europe.
In Australia, Western Mining Corporation utilizes GATX’s patented
TankTrainTM technology to transport sensitive products along remote,
rugged terrain. As in Europe, the Australian passenger rail market
is undergoing a privatization process. GATX provided $411 million of
passenger equipment ﬁnancing for National Express Group Australia,
operator of three private rail franchises there.

As countries develop and expand, the demand for chemicals, petro-
leum, and food products increases and the importance of efﬁcient rail
transportation is magniﬁed. Few companies in the world can match
GATX Rail’s 102 years of experience in the rail industry — experience
that will be used to generate continued international growth.

017

the lion combines strength and
savvy with a bold confidence.
whether staking out a territory
or defending the pride, the lion
forges purposefully ahead.

confident

we seek new growthopportunities

In addition to pursuing growth strategies within its core markets, GATX
is constantly seeking new opportunities. While many opportunities
are extensions of traditional markets, GATX also selectively pursues
entirely new markets, directly or through partnerships. GATX enters
new markets, confident that it can meet challenges more creatively
and effectively than its competition.

With operations and assets on lease
around the world, GATX has
an extensive network of cus-
tomer and partner relationships.
This network serves as a pipe-
line for new ideas and growth
opportunities. Identifying these
opportunities takes an experi-
enced and keen eye; capitalizing
on them requires planning and
effective execution.

When evaluating new oppor-
tunities, GATX considers this
essential question: can it apply
its partnering skills, asset
knowledge, service capabili-
ties, or structuring expertise?
If one or more of these four
skills can be applied to an
opportunity that offers attrac-
tive returns and a potential
platform for future growth,
it is pursued aggressively.

Within existing businesses
such as rail, air, and technology,
growth opportunities come in
the form of enhanced services,
global expansion, and increased
assets under management.

Leveraging its asset knowledge and asset management infrastruc-
ture, GATX Capital’s air group has dramatically expanded its reach
by increasing the number of aircraft under management. In rail,
new services such as enhanced regulatory compliance programs and
web-enabled information exchange lead to stronger and deeper cus-
tomer relationships.

GATX has effectively used its unique skills to extend its presence
into new, yet related markets. Entering the aircraft engine leasing
and executive jet aircraft sectors were natural extensions to GATX
Capital’s established commercial aircraft leasing business. GATX
Rail has selectively expanded its ﬂeet by pursuing new railcar types.
GATX has also carefully built and diversiﬁed its marine portfolio,
leveraging 20-plus years of experience in Great Lakes shipping.

GATX Capital’s diversiﬁed ﬁnance group is charged with generat-
ing entirely new investment concepts. By taking moderate stakes
in a diversiﬁed pool of assets, often partnering with an experienced
leader in a market, GATX gains ﬁrst-hand knowledge of the market
and the potential for generating sustainable growth and attractive
returns. The success of this strategy is proven: technology equip-
ment leasing and venture ﬁnance and leasing, currently two of
GATX’s fastest growing sectors, originated as partnerships within
the diversiﬁed ﬁnance group.

The pursuit of new growth opportunities is a continuous process and
one that drives GATX forward. With rail, air, and technology form-
ing a solid foundation for growth, GATX will continue to identify
and develop new opportunities by leveraging its unique partnering,
asset knowledge, service, and structuring skills.

019

balanced

management’sdiscussion and analysis

During 2000, GATX Corporation redefined its strategic focus and undertook initiatives to position itself as a

specialized finance and leasing company. To accomplish this goal, certain supply chain related businesses

of the GATX Integrated Solutions Group (ISG) were sold in 2000 and all remaining ISG businesses have

been targeted for divestiture in 2001. As a result of these actions, the financial data for the ISG segment

is presented as discontinued operations for all periods presented (see Note 15 to the GATX consolidated

financial statements).

GATX Corporation now has two operating segments: Financial Services, comprised principally of GATX Capital

Corporation, and GATX Rail. Through these businesses, GATX combines asset knowledge and services, struc-

turing expertise, creative partnering and risk capital to serve customers and partners worldwide. The following

discussion should be read in conjunction with the audited consolidated financial statements included herein.

consolidated statements ofincome

IN MILLIONS, EXCEPT PER SHARE DATA/YEAR ENDED DECEMBER 31

2 0 0 0

1 9 9 9

1 9 9 8

Gross Income
Lease, interest and financing services
Other income

Revenues
Share of affiliates’ earnings

Total Gross Income

Ownership Costs
Depreciation and amortization
Interest
Operating lease expense

Total Ownership Costs

Other Costs and Expenses
Operating expenses
Selling, general and administrative
Provision for possible losses
Provision for litigation

Income from Continuing Operations before Income Taxes
Income Taxes

Income from Continuing Operations

Discontinued Operations
Operating results, net of income taxes
Gain on sale of portion of segment, net of income taxes

Total Discontinued Operations

Net Income

Per Share Data
Basic:

Income from continuing operations
Income from discontinued operations

Total
Average number of common shares (in thousands)

Diluted:

Income from continuing operations
Income from discontinued operations

Total
Average number of common shares and common

share equivalents (in thousands)

Dividends declared per common share

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

$1,308.4
3.4

1,311.8
79.0

1,390.8

$1,132.5
62.5

1,195.0
64.5

1,259.5

$1,041.2
173.9

1,215.1
48.5

1,263.6

334.8
242.6
178.7

756.1

188.8
209.2
22.7
160.5

53.5
22.7

30.8

27.4
8.4

35.8

66.6

.64
.75

1.39
47,880

.63
.74

1.37

48,753

1.20

255.5
179.9
153.0

588.4

247.6
203.4
11.0
—

209.1
82.8

126.3

25.0
—

25.0

216.4
180.5
139.4

536.3

327.0
189.1
11.0
—

200.2
86.0

114.2

17.7
—

17.7

$ 151.3

$ 131.9

2.56
.51

3.07
49,296

2.51
.50

3.01

50,301

1.10

2.32
.36

2.68
49,178

2.27
.35

2.62

50,426

1.00

gatx corporation and subsidiaries

Gross Income
(IN MILLIONS OF DOLLARS)

0
.
7
9
1
,
1

6
.
3
6
2
,
1

5
.
9
5
2
,
1

8
.
0
9
3
,
1

4
.
9
8
8

Share of
Affiliates’ Earnings
(IN MILLIONS OF DOLLARS)

0
.
9
5 7
.
4
5 6
.
8
4

4
.
7
2

9
.
8
2

Net Income
(IN MILLIONS OF DOLLARS)

7
.
2
0
1

9
.
1
1
1

3
.
1
5
1

9
.
1
3
1

6
.
6
6

Diluted Earnings
Per Share
(IN DOLLARS)

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

1
0
.
2 3
6
.
5 2
2
.
2

0
1
.
2

7
3
.
1

Management’s Discussion and Analysis (continued)

2 0 0 0 compared to 1 9 9 9

Gross Income
Gross income increased $131.3 million from 1999, primarily reflecting a $118.7 million
increase at Financial Services and a $4.1 million increase at GATX Rail (Rail). Excluding
VAR, the value-added technology equipment sales and service business of Financial Services
that was sold in June 1999, gross income increased $198.8 million over the prior year.

$1,390.8 million

Financial Services’ gross income of $812.3 million increased 17.1% over the prior year.
Excluding VAR, Financial Services’ gross income increased 29.7%. Lease income of $450.8
million increased $120.2 million from 1999, primarily from new leases within the air, technol-
ogy and diversified finance portfolios. Operating lease margin, the excess of operating lease
income over operating lease expense and depreciation, increased 26.3% compared to 1999
due to a larger lease portfolio. Interest income of $60.1 million increased $19.3 million from
the prior year due to higher average loan balances. The average loan balance was $196.3 mil-
lion higher in 2000 compared to 1999 as a result of increased venture finance activity.

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

Gains on the sale of stock derived from warrants received as part of financing and leasing
transactions with non-public start-up companies were $52.3 million, an increase of $37.6
million from the prior year. Asset remarketing income, which includes gains from the sale
of assets from Financial Services’ own portfolio as well as residual sharing fees from the
sale of managed assets, was $57.2 million, $20.7 million lower than 1999. Gains from the
sale of stock and asset remarketing income do not occur evenly between periods.

1.0

1.5

2.0

2.5

3.0

3.5

0.5

Financial Services continued to emphasize its partnering strategy to finance and manage
assets. Share of affiliates’ earnings increased 25.0% to $75.9 million in 2000. Earnings
growth in air and technology joint ventures contributed to this increase.

0.0

Rail’s gross income of $575.0 million increased 0.7% over the prior year. Rental revenue
increased by $8.1 million, or 1.5%, over the prior year primarily due to a larger active North
American fleet and was partially offset by lower lease renewal rates. Several industries serv-
iced by Rail, specifically the chemical and agricultural sectors, are experiencing adverse mar-
ket conditions that have in turn reduced railcar demand. Increased competition and railroad
efficiency have also contributed to lower demand. These factors negatively impacted Rail’s
2000 results, and are expected to continue to adversely affect car demand and lease rates
during 2001. Other revenue decreased by $3.2 million in 2000 primarily because fewer rail-
cars were sold in 2000 compared to the prior year.

1.0

1.5

2.0

2.5

3.0

3.5

0.5

0.0

Approximately 85,100 railcars were on lease throughout North America at year-end, compared
to 83,400 railcars a year ago. Utilization ended the year at 93% on a total fleet of 91,600 rail-
cars, compared to 94% at the end of 1999. Rail added 5,400 railcars during 2000, which was
comparable to 1999 additions. The majority of Rail’s car additions in 2000 occurred during
the first half of the year, as market conditions and growing economic uncertainty led to a sharp
curtailment of new car orders and fleet acquisitions during the second half of the year. It is
anticipated that current market conditions will negatively impact railcar investments in 2001.

Ownership Costs
Ownership costs increased 28.5%, or $167.7 million, compared with the prior year.

$756.1 million

Financial Services’ ownership costs increased $142.2 million from last year. Depreciation
and amortization expense of $230.5 million increased $78.6 million from 1999 and reflected
the high level of investment in operating lease assets. Interest expense increased $60.2 mil-
lion to $182.6 million in 2000. Higher average debt outstanding combined with an increase
in borrowing rates drove interest expense higher in 2000. The average debt balance was
approximately $610.7 million higher in 2000 reflecting the financing necessary to fund
record investment volume. Operating lease expense was comparable year over year.

Rail’s ownership costs increased $22.1 million, or 8.4%, from last year. Although Rail’s fleet
increased in 2000, depreciation and interest did not change appreciably from last year due
to Rail’s continued use of sale-leaseback financing.

gatx corporation and subsidiaries

Management’s Discussion and Analysis (continued)

In 2000, $291.1 million of railcars were sold and leased
back and the resultant ownership costs were included in
operating lease expense. As a result, operating lease expense
increased $21.5 million to $131.9 million in 2000. Interest
expense of $52.8 million was comparable to the prior year
as lower average debt balances offset increases in rates.

Operating Expenses
Operating expenses were 23.7% lower than 1999 largely
due to the sale of the VAR business.

$188.8 million

Excluding VAR, operating expenses at Financial Services
increased $6.7 million, or 11.2%, primarily due to higher
marine operating costs.

Rail’s operating costs decreased $6.8 million, or 5.3%.
Higher repair and maintenance expense was offset by a
number of nonrecurring items that affected both years.
Repair and maintenance expense increased $8.3 million
from 1999 in part due to the increased use of third-party
contract shops necessitated by a labor dispute at Rail’s
domestic service centers that was subsequently resolved
in February 2001.

$209.2 million

Selling, General and
Administrative Expenses
Selling, general and administrative expenses increased
$5.8 million over the prior year due to higher human
resource and administrative expenses associated with
increased growth initiatives. Excluding VAR, Financial
Services’ SG&A increased $16.5 million, or 15.0%, as a
result of a significant increase in business activity, reflect-
ing a record year of new investments. Rail’s SG&A was
comparable to the prior year.

$22.7 million

Provision for Possible Losses
The provision for possible losses is derived from GATX’s
estimate of losses based on a review of credit, collateral
and market risks. The provision for possible losses
increased $11.7 million from 1999. The current year
provision at Financial Services included $5.0 million
related to impairment losses on operating lease equip-
ment. Rail’s provision for possible losses increased
$1.6 million in 2000.

$160.5 million

Provision for Litigation
GATX Capital Corporation (GCC), a subsidiary of GATX
Corporation and the major part of the Financial Services
operating segment, is party to litigation arising from the
issuance by the Federal Aviation Administration of
Airworthiness Directive 96-01-03 in 1996, the effect of
which significantly reduced the amount of freight that
ten 747 aircraft were authorized to carry. GATX/Airlog,
a California partnership in which a subsidiary of GCC is
a partner, through a series of contractors, modified

these aircraft from passenger to freighter configuration
between 1988 and 1994. GCC reached settlements
covering five of the aircraft, and the remaining five are
the subject of this litigation.

On February 16, 2001, a jury found that GATX/Airlog
breached certain warranties under the applicable aircraft
modification agreements, and fraudulently failed to
disclose information to the operators of the aircraft. GCC
ultimately settled this issue with Evergreen International
Airlines, Inc., which had been party to the litigation. On
March 1, 2001, the jury awarded the remaining plaintiff,
Kalitta Air, $47.5 million in damages plus applicable inter-
est. GCC will pursue all means of loss recovery including
appeals and insurance coverage.

GATX recorded a pretax charge of $160.5 million in 2000
to accrue for its obligation under the various settlement
agreements and management’s best estimate of GCC’s
potential liability under the judgment entered in favor of
Kalitta Air.

Income Taxes
The 2000 effective tax rate of 42.4% was higher than the
1999 rate of 39.6% due to the relative impact of foreign
taxes and certain nondeductible expenses on pretax income.

$22.7 million

$30.8 million

Income from
Continuing Operations
Income from continuing operations decreased $95.5
million from last year primarily due to lower earnings at
Financial Services. Financial Services’ net loss of $13.7
million was $84.7 million lower than 1999 and was the
result of an after-tax litigation charge of $97.6 million.
Rail’s net income of $65.7 million was $7.2 million lower
than the prior year. Corporate and Other’s net expense
increased $3.6 million over the prior year.

$35.8 million

Discontinued Operations
Discontinued operations encompasses the GATX
Integrated Solutions Group and comprises GATX
Terminals Corporation (Terminals), GATX Logistics, Inc.
(Logistics), and minor business development efforts.
In July 2000, GATX Corporation announced its intent to
sell Terminals and reached an agreement in November
to sell substantially all of the U.S. terminals and pipeline
assets, representing the bulk of Terminals’ operations.
A portion of this transaction closed in March 2001 and the
remainder is expected to close following regulatory approval.
GATX expects to complete the divestiture of the remaining
terminals and supply chain businesses in 2001. After-tax
proceeds from the sale of all of Terminals’ locations are
expected to approximate $1.0 billion. Ultimate use of pro-
ceeds will depend on market conditions and investment
opportunities at the time each transaction closes.

gatx corporation and subsidiaries

Management’s Discussion and Analysis (continued)

GATX sold 81% of Logistics in May 2000, and the remain-
ing 19% in December 2000. To date, the sale of Logistics
has generated an $8.4 million after-tax gain.

Operating results for 2000 were $27.4 million, an increase
of $2.4 million from 1999. Strong results in the domestic
terminal and pipeline business were partially offset by
losses incurred in the warehousing business and higher
business development costs.

Terminals owned 25.1% of the common stock of
Olympic Pipeline Company (Olympic). On June 10,
1999, a pipeline rupture and explosion occurred on
one of the pipelines owned by Olympic. Several lawsuits
have been filed against Olympic and its operator. On
September 20, 2000, Terminals sold its entire 25.1%
ownership of Olympic’s common stock to the Pipelines
Business Unit of BP Amoco PLC.

1 9 9 9 compared to 1 9 9 8

$1,259.5 million

Gross Income
Gross income decreased $4.1 million from 1998. The com-
parison of 1999 to 1998 is influenced by the 1999 midyear
sale of the VAR business.

Financial Services’ gross income of $693.6 million
decreased $36.5 million from 1998. Excluding VAR, rev-
enues increased 11.0% over 1998. Higher gains on the
sale of stock and an increase in lease income generated
from a higher average investment portfolio were offset
by lower asset remarketing income. Lease income
increased $62.7 million predominately driven by the
growing technology financing portfolio. Pretax asset
remarketing income of $77.9 million was $14.5 million
lower than 1998’s record $92.4 million. A significant por-
tion of 1999 asset remarketing gains was realized from
the sale of marine and air assets. Asset remarketing
income and gains from the sale of stock do not occur
evenly from period to period.

Financial Services’ share of affiliates’ earnings was
$60.7 million in 1999, a 32.5% increase over 1998. The
increase was primarily attributable to increased contribu-
tion from existing rail joint ventures and new air and
marine joint ventures. Several new joint ventures were
formed in 1999, including a joint venture created to
acquire and lease Boeing 737 new generation aircraft
and a joint venture created to provide financing and
leasing to start-up telecommunications companies.

Rail’s gross income of $570.9 million increased 6.7%
over the 1998 period primarily due to a larger active
North American fleet, a slight increase in average lease
rates, and a gain from the sale of 1,700 grain cars that
did not provide an acceptable level of long-term eco-
nomic value. Rail added 5,400 railcars during 1999 and

at year-end 1999 had 83,400 railcars on lease in North
America. Utilization ended the year at 94% on a total
fleet of 88,400 railcars, which was comparable to
utilization at the end of 1998. Rail congestion problems
resulted in strong car demand in the chemical markets
and contributed to unusually high demand in 1998.

Rail’s share of earnings of its two European affiliates was
$3.8 million in 1999 compared to $2.7 million in 1998.
Rail invested an additional $27.8 million in these affiliates’
freight and tank car fleets in 1999.

$588.4 million

Ownership Costs
Ownership costs increased $52.1 million over 1998.
Depreciation and amortization expense of $255.5 million
increased $39.1 million and reflects the high level of port-
folio investments in operating lease assets at Financial
Services. The increase in operating lease expense reflects
Rail’s sale-leaseback financing of railcar additions.

Operating Expenses
Operating expenses decreased $79.4 million from 1998
largely due to the sale of the VAR business.

$247.6 million

$203.4 million

Selling, General and
Administrative Expenses
Selling, general and administrative expenses increased
7.6% over 1998 due to higher human resource and other
administrative expenses associated with increased portfo-
lio investment activity and costs incurred to support busi-
ness development and information systems initiatives.

$82.8 million

Income Taxes
The effective tax rate of 39.6% in 1999 is lower than 1998’s
rate of 43.0%. The 1998 provision was affected by certain
nondeductible expenses, including a goodwill write-down
related to VAR.

Income from
Continuing Operations
Income from continuing operations increased 10.6%
from 1998 and was driven by a $5.8 million increase in
Rail’s earnings and a $4.5 million increase in Financial
Services’ earnings.

$126.3 million

$25.0 million

Discontinued Operations
Discontinued operations contributed $25.0 million and
$17.7 million to net income in 1999 and 1998, respectively.
The year-over-year increase was largely attributable to
higher contribution margins for terminaling operations
as well as lower asset ownership costs and SG&A. The
remainder of the increase was attributable to increased
business development efforts and nonrecurring items,
including a gain on the sale of rights along the Central
Florida Pipeline.

gatx corporation and subsidiaries

consolidatedbalance sheets

IN MILLIONS/DECEMBER 31

Assets
Cash and Cash Equivalents

Receivables
Trade accounts
Finance leases
Secured loans
Less — allowance for possible losses

Operating Lease Assets and Facilities
Railcars and service facilities
Operating lease investments and other
Less — allowance for depreciation

Investments in Affiliated Companies
Other Assets
Net Assets of Discontinued Operations

Liabilities, Deferred Items and Shareholders’ Equity
Accounts Payable
Accrued Expenses

Debt
Short-term
Long-term:
Recourse
Nonrecourse

Capital lease obligations

Deferred Income Taxes
Other Deferred Items

Total Liabilities and Deferred Items

Shareholders’ Equity
Preferred stock
Common stock
Additional capital
Reinvested earnings
Accumulated other comprehensive (loss) income

Less — cost of common shares in treasury

Total Shareholders’ Equity

2 0 0 0

1 9 9 9

$ 173.6

84.5

93.7
878.3
634.1
(95.2)
1,510.9

2,695.3
1,490.4
(1,531.6)
2,654.1

951.2
343.0
630.9

80.8
645.7
358.0
(113.5)

971.0

2,698.7
1,332.4
(1,503.4)

2,527.7

757.5
386.2
702.3

$ 6,263.7

$ 5,429.2

$ 317.3
141.7

$ 284.0
41.7

557.2

377.0

3,093.9
494.2
164.2

4,309.5

410.8
294.9

5,474.2

—
35.0
366.1
552.2
(34.4)
918.9
(129.4)
789.5

2,685.2
418.8
176.2

3,657.2

388.1
222.2

4,593.2

—
34.5
338.7
543.0
1.2

917.4
(81.4)

836.0

$ 6,263.7

$ 5,429.2

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

gatx corporation and subsidiaries

Management’s Discussion and Analysis (continued)

Assets
(IN MILLIONS OF DOLLARS)

7
.
3
6
2
,
6

2
.
9
2
4
,
5

6
.
7
0
3
,
4

8
.
3
8
5
,
4

1
.
1
8
5
,
4

Investments in
Affiliated Companies
(IN MILLIONS OF DOLLARS)

2
.
1
5
9

5
.
7
5
7

4
.
9
0
6

5
.
2
3
6

Total Shareholders’
Equity
(IN MILLIONS OF DOLLARS)

9
.
4
7
7

9
.
2
3
7

4
.
5
5
6

0
.
6
3
8

5
.
9
8
7

Assets
Total assets increased $834.5 million from the prior period. Assets from continuing opera-
tions increased 19.2% to $5.6 billion in 2000 from $4.7 billion in 1999. A record level of
portfolio investments was partially offset by depreciation and amortization, the sale-lease-
back of railcars at Rail, and portfolio asset sales at Financial Services.

$6,263.7 million

In addition to the $6.3 billion of assets on the balance sheet, GATX utilizes approximately $1.6
billion of assets, such as railcars and aircraft, that were financed with operating leases and
therefore are not included on the balance sheet.

Receivables
Receivables, including finance leases and secured loans, increased $539.9 million primarily
due to activity at Financial Services. Significant new investments, specifically venture and
telecommunications, resulted in a $276.1 million increase in secured loans. Finance leases
increased $232.6 million over the prior year due to technology and diversified finance invest-
ments, partially offset by portfolio asset sales.

$1,510.9 million

The allowance for possible losses of $95.2 million decreased $18.3 million compared to the
prior year. The allowance for possible losses at Financial Services decreased $20.4 in 2000 to
$90.6 million and was approximately 2.5% of net investments, down from 3.8% in the prior
year. Write-offs totaled $36.8 million for the year, an increase of $2.6 million from 1999. Rail’s
allowance for possible losses increased $2.1 million in 2000.

Operating Lease Assets and Facilities
Operating lease assets and facilities increased $126.4 million from 1999 largely due to sig-
nificant portfolio investments in aircraft and diversified finance assets and railcar additions.
Offsetting these additions were depreciation, the sale-leaseback of railcars at Rail and port-
folio asset sales at Financial Services.

$2,654.1 million

Investments in Affiliated Companies
Investments in affiliated companies grew 25.6% in 2000 with significant increases in air and
technology joint ventures. In 2000, GATX invested $244.4 million in joint ventures and recog-
nized $79.0 million of equity income. Cash distributions from affiliates increased $51.4 million
from 1999 due to increased distributions from air, technology and real estate joint ventures.

$951.2 million

Other Assets
Other assets decreased $43.2 million compared to 1999, with the majority of the decrease
due to lower balances in progress payments for aircraft and investments in stock warrants
and securities held for investment.

$343.0 million

Net Assets of Discontinued Operations
Net assets of discontinued operations decreased $71.4 million from 1999 reflecting the sale
of Logistics and a decrease in Terminals’ net assets. Net assets of discontinued operations
excludes $514.9 million and $512.1 million of debt for 2000 and 1999, respectively, that was
attributable to discontinued operations but will remain the obligation of GATX.

$630.9 million

Accrued Expenses
Accrued expenses increased $100.0 million compared to the prior year due to the provision
for litigation.

$141.7 million

Debt
Debt increased $652.3 million from the end of 1999 largely due to the funding of record
investment volume at Financial Services.

$4,309.5 million

Total Shareholders’ Equity
Shareholders’ equity decreased $46.5 million mainly due to common stock dividends and
common stock repurchased partially offset by net income.

$789.5 million

gatx corporation and subsidiaries

consolidated statements ofcash flows

IN MILLIONS/YEAR ENDED DECEMBER 31

2 0 0 0

1 9 9 9

1 9 9 8

Operating Activities
Income from continuing operations
Adjustments to reconcile income from continuing operations

to net cash provided by continuing operations:

Realized gains on remarketing of leased equipment
Depreciation and amortization
Provision for possible losses
Deferred income taxes
Provision for litigation

Net change in trade receivables, inventories,
accounts payable and accrued expenses

Other

Net cash provided by continuing operations

Investing Activities
Additions to equipment on lease, net of nonrecourse

financing for leveraged leases

Additions to operating lease assets and facilities
Secured loans extended
Investments in affiliated companies
Other investments and progress payments

Portfolio investments and capital additions
Portfolio proceeds
Proceeds from sale of GATX Logistics, Inc.
Proceeds from other asset sales

Net cash used in investing activities of continuing operations

Financing Activities
Proceeds from issuance of long-term debt
Repayment of long-term debt
Net increase (decrease) in short-term debt
Repayment of capital lease obligations
(Repurchase) issuance of common stock and other
Cash dividends

Net cash provided by (used in) financing

activities of continuing operations

Net Transfers from (to) Discontinued Operations

Net Increase in Cash and Cash Equivalents from Continuing Operations
Net (Decrease) Increase in Cash and Cash Equivalents

from Discontinued Operations

Net Increase in Cash and Cash Equivalents

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

30.8

$ 126.3

$ 114.2

(58.9)
334.8
22.7
26.8
160.5

—
(66.6)
450.1

(700.8)
(394.5)
(436.1)
(244.4)
(152.6)
(1,928.4)
575.5
74.7
304.3

(973.9)

1,587.4
(1,072.2)
180.2
(15.7)
(20.1)
(57.4)

602.2

10.7

89.1

(5.5)
83.6

(72.6)
255.5
11.0
53.0
—

15.3
(100.7)

287.8

(697.0)
(366.4)
(268.8)
(168.0)
(105.8)
(1,606.0)
503.0
—
208.7
(894.3)

981.5
(351.6)
95.6
(16.3)
(27.3)
(54.3)

627.6

(19.6)

1.5

6.5

8.0

(72.9)
216.4
11.0
35.6
—

(17.1)
10.6

297.8

(501.6)
(390.9)
(161.6)
(147.0)
(34.6)
(1,235.7)
805.1
—
252.5
(178.1)

360.1
(347.2)
(69.2)
(14.6)
9.0
(49.3)

(111.2)

2.7

11.2

5.5

16.7

gatx corporation and subsidiaries

Management’s Discussion and Analysis (continued)

Net Cash Provided by
Continuing Operations
(IN MILLIONS OF DOLLARS)

1
.
0
5
4

8
.
7
9
2

8
.
7
8
2

9
.
5
2
2

3
.
8
3
2

Portfolio Investments
and Capital Additions
(IN MILLIONS OF DOLLARS)

4
.
8
2
9
,
1

0
.
6
0
6
,
1

4
.
3
0
2
,
1

7
.
5
3
2
,
1

7
.
8
4
0
,
1

Portfolio Proceeds
(IN MILLIONS OF DOLLARS)

1
.
5
0
8

5
.
5
7
5

0
.
3
0
5

8
.
0
3
4

8
.
4
5
3

GATX generates a significant amount of cash from its operating activities and proceeds
from its investment portfolio, which is used to service debt, pay dividends, and fund port-
folio investments and capital additions. Most of the capital requirements are considered
discretionary and represent additions to equipment, investment portfolio, railcar fleet,
and joint ventures. As a result, the level of capital spending may be adjusted as condi-
tions in the economy or GATX’s businesses warrant.

Net Cash Provided by Continuing Operations
Net cash provided by continuing operations increased $162.3 million from 1999. Net income
adjusted for noncash items generated $516.7 million of cash, an increase of $143.5 million
over 1999, primarily due to increased depreciation and amortization and the provision for
litigation. Changes in working capital and other generated $18.8 million more cash in 2000.

$450.1 million

$1,928.4 million

Portfolio Investments and Capital Additions
Portfolio investments and capital additions increased $322.4 million from 1999. Financial
Services’ portfolio investments of $1.6 billion were $335.0 million higher than in 1999 as a
result of strong market opportunities in the technology leasing, telecommunications and
venture, and air sectors. Financial Services invested $243.0 million and $139.4 million in joint
ventures in 2000 and 1999, respectively. Significant investments were made in air, telecom-
munications and real estate joint ventures in 2000. Financial Services also extended $436.1
million of loans to various businesses in 2000, an increase of $167.3 million over 1999. Rail’s
capital additions in 2000 were $374.8 million, including $369.3 million to acquire 5,400 rail-
cars throughout North America.

$575.5 million

Portfolio Proceeds
Portfolio proceeds increased $72.5 million from 1999. Proceeds from the remarketing of
leased equipment decreased $42.6 million from last year. The timing of assets coming off
lease, opportunities to renew leases at attractive rates and the composition of the invest-
ment portfolio all contributed to the year-over-year decrease in remarketing proceeds.
Proceeds from the return of investments, which include loan principal receipts and return of
capital distributions from joint venture investments, were $397.1 million and $282.0 million
for 2000 and 1999, respectively.

Proceeds from Sale of GATX Logistics, Inc.
This amount relates to the May 2000 sale of 81% of GATX’s interest. Proceeds from the
remaining 19% interest sold in December were not received until 2001.

$74.7 million

Proceeds from Other Asset Sales
Proceeds from other asset sales included the receipt of $291.1 million from the sale-lease-
back of railcars at Rail. Additional asset sales included the sale of approximately 400 rail-
cars at Rail.

$304.3 million

Net Cash Provided by Financing
Activities of Continuing Operations
Net cash provided by financing activities of continuing operations decreased $25.4 million
compared to 1999. Record investment volume and capital additions were funded with pro-
ceeds from debt, cash from operations, and proceeds from asset sales, including the sale
of Logistics.

$602.2 million

GATX repurchased 1.4 million common shares for $48.0 million in addition to the 1.1 million
shares purchased in 1999 for $34.6 million. Additionally, on January 26, 2001, the Board of
Directors authorized management to purchase up to an additional 3.5 million shares of
GATX’s outstanding common stock.

gatx corporation and subsidiaries

Management’s Discussion and Analysis (continued)

Liquidity and Capital Resources
GATX Rail Corporation (GRC) and GATX Capital Corporation
(GCC), both subsidiaries of GATX Corporation (GATX),
have revolving credit facilities. GRC and GCC also have
commercial paper programs and uncommitted money
market lines that are used to fund operating needs. The
GRC revolving credit facility expires in 2003 while GCC’s
revolving credit facility expires in 2001. Under covenants
of the commercial paper programs and rating agency
guidelines, GRC and GCC individually must keep unused
revolving credit capacity at least equal to the amount of
commercial paper outstanding. At December 31, 2000,
GATX and its subsidiaries had available unused commit-
ted lines of credit amounting to $339.4 million.

GRC has a $650.0 million shelf registration for pass-
through certificates and debt securities, of which $476.7
million had been issued. GCC has a shelf registration of
$1.0 billion, of which $600.0 million had been issued.

Risk Management and Market Sensitive Instruments
GATX, like most other companies, is exposed to certain
market risks, including changes in interest rates and
currency exchange rates. To manage these risks, GATX,
pursuant to preestablished and preauthorized policies,
enters into certain derivative transactions, principally
interest rate swaps and currency swaps. These instru-
ments and other derivatives are entered into for hedging
purposes only. GATX does not hold or issue derivative
financial instruments for speculative purposes.

GATX’s interest expense is affected by changes in interest
rates as a result of its use of variable rate debt instruments,
including commercial paper and other floating rate debt.
Based on GATX’s variable rate debt at December 31, 2000,
if market rates were to increase hypothetically by 10% of
GATX’s weighted average floating rate, after-tax interest
expense would increase by approximately $5.6 million
in 2001.

As of December 31, 2000, GCC approved unfunded
transactions totaling $2.1 billion, of which $1.2 billion is
expected to fund in 2001. Once approved for funding, a
transaction may not always be completed for various
reasons or the investment may be shared with a partner
or sold. Additionally, Rail has $124.1 million of commit-
ments to acquire railcars in 2001.

Changes in certain currency exchange rates would also
affect GATX’s reported earnings. Based on 2000 reported
earnings from continuing operations, a uniform and
hypothetical 10% strengthening in the U.S. dollar versus
applicable foreign currencies would decrease after-tax
income from continuing operations in 2001 by approxi-
mately $1.9 million.

At December 31, 2000, approximately $635.3 million of
subsidiary net assets were restricted, limiting the ability
of the subsidiaries to transfer assets to GATX in the form
of loans, advances or dividends. The majority of net asset
restrictions relate to the revolving credit agreement of GRC
and the various loan agreements of GCC. Such restrictions
are not expected to have an adverse impact on the ability
of GATX to meet its cash obligations.

The interpretation and analysis of the results from the hypo-
thetical changes to interest rates and currency exchange
rates should not be considered in isolation; such changes
would typically have corresponding offsetting effects.
For example, offsetting effects are present to the extent that
floating rate debt is associated with floating rate assets.

gatx corporation and subsidiaries

Management’s Discussion and Analysis (continued)

Environmental Matters
Certain operations of GATX’s subsidiaries (collectively
GATX) present potential environmental risks principally
through the transportation or storage of various commodi-
ties. Recognizing that some risk to the environment is
intrinsic to its operations, GATX is committed to protect-
ing the environment as well as complying with applicable
environmental protection laws and regulations. GATX, as
well as its competitors, is subject to extensive regulation
under federal, state and local environmental laws which
have the effect of increasing the costs and liabilities associ-
ated with the conduct of its operations. In addition, GATX’s
foreign operations are subject to environmental laws in
effect in each respective jurisdiction.

GATX’s policy is to monitor and actively address environ-
mental concerns in a responsible manner. GATX has
received notices from the U.S. Environmental Protection
Agency (EPA) that it is a potentially responsible party
(PRP) for study and cleanup costs at 13 sites under
the requirements of the Federal Comprehensive Environ-
mental Response, Compensation and Liability Act of 1980
(Superfund). Under these Acts and comparable state
laws, GATX may be required to share in the cost to clean
up various contaminated sites identified by the EPA and
other agencies. GATX has also received notice that it is a
PRP at one site to undertake a Natural Resource Damage
Assessment. In all instances, GATX is one of a number of
financially responsible PRPs and has been identified as
contributing only a small percentage of the contamination
at each of the sites. Due to various factors such as the
required level of remediation or restoration and participa-
tion in cleanup or restoration efforts by others, GATX’s
total cleanup costs at these sites cannot be predicted
with certainty; however, GATX’s best estimates for remedi-
ation and restoration of these sites have been determined
and are included in its environmental reserves.

Future costs of environmental compliance are indeter-
minable due to unknowns such as the magnitude of possi-
ble contamination, the timing and extent of the corrective
actions that may be required, the determination of the
company’s liability in proportion to other responsible par-
ties, and the extent to which such costs are recoverable
from third parties including insurers. Also, GATX may incur
additional costs relating to facilities and sites where past
operations followed practices and procedures that were
considered acceptable at the time but in the future may
require investigation and/or remedial work to ensure ade-
quate protection to the environment under current or
future standards. If future laws and regulations contain
more stringent requirements than presently anticipated,
expenditures may be higher than the estimates, forecasts,
and assessments of potential environmental costs pro-
vided below. However, these costs are expected to be at

least equal to the current level of expenditures. In addition,
GATX has provided indemnities for environmental issues
to the buyers of three divested companies for which GATX
believes it has adequate reserves.

GATX’s environmental reserve at the end of 2000 was
$83.2 million and reflects GATX’s best estimate of the cost
to remediate known environmental conditions. Additions
to the reserve were $9.3 million and $11.7 million for 2000
and 1999, respectively. Expenditures charged to the reserve
amounted to $11.8 million and $7.6 million in 2000 and
1999, respectively.

In 2000, GATX made capital expenditures of $8.1 million
for environmental and regulatory compliance compared
to $8.3 million in 1999. These projects included marine
vapor recovery systems, discharge prevention compliance,
wastewater systems, impervious dikes, tank modifications
for emissions control, and tank car cleaning systems.

In November 2000, GATX entered into an agreement to
sell substantially all of the U.S. terminals and pipeline
assets, representing the bulk of Terminals’ operations.
The transaction is structured as a sale of the capital stock
of Terminals. Under the terms of the agreement, various
environmental liabilities associated with the terminals
and pipeline assets will be assumed by the buyer. Excluding
the liabilities associated with the sale of Terminals’ opera-
tions, GATX’s environmental reserve at the end of 2000
was $46.2 million.

Forward-Looking Statements
Many economists believe that the U.S. economy is entering
a recessionary environment. Should a recession develop,
GATX’s prospective results would not be immune from the
effects thereof if there were significant changes in demand
for its services or assets provided. Certain statements in
Management’s Discussion and Analysis constitute forward-
looking statements and are made pursuant to the safe
harbor provision of the Private Securities Litigation
Reform Act of 1995. This information may involve risks
and uncertainties that could cause actual results to
differ materially from those suggested in the forward-
looking statements. Although the company believes that
the expectations reflected in such forward-looking state-
ments are based on reasonable assumptions, such
statements are subject to risks and uncertainties that
could cause actual results to differ materially from
those projected. These risks and uncertainties include,
but are not limited to, changes in the U.S. economy,
changes in interest rates and changes in the markets
served by GATX and its customers such as the aircraft,
petroleum, chemical, rail, technology and steel industries.

gatx corporation and subsidiaries

consolidated statements ofchanges in shareholders’ equity

IN MILLIONS, EXCEPT NUMBER OF SHARES/DECEMBER 31

2 0 0 0
DOLLARS

1 9 9 9
DOLLARS

1 9 9 8
DOLLARS

2 0 0 0
SHARES

1 9 9 9
SHARES

1 9 9 8
SHARES

Preferred Stock
Balance at beginning of period
Conversion of preferred stock into common stock

Balance at end of period

Common Stock
Balance at beginning of period
Issuance of common stock
Conversion of preferred stock into common stock

Balance at end of period

Treasury Stock
Balance at beginning of period
Purchase of common stock
Issuance of common stock

Balance at end of period

Additional Capital
Balance at beginning of period
Issuance of common stock

Balance at end of period

Reinvested Earnings
Balance at beginning of period
Net income
Dividends declared

Balance at end of period

Accumulated Other Comprehensive (Loss) Income
Balance at beginning of period
Foreign currency translation (loss) gain
Unrealized (loss) gain on securities, net

Balance at end of period

Total Shareholders’ Equity

$ —
—

—

34.5
.5
—

35.0

(81.4)
(48.0)
—

(129.4)

338.7
27.4

366.1

543.0
66.6
(57.4)
552.2

1.2
(28.6)
(7.0)
(34.4)
$789.5

$ —
—

—

$ —
—

—

25,311
(1,697)
23,614

26,065
(754)

25,311

26,365
(300)

26,065

55,198,346
813,905
8,485

54,822,163
372,413
3,770

54,480,556
340,107
1,500

56,020,736

55,198,346

54,822,163

(6,599,047)
(1,407,900)
4,352

(8,002,595)

(5,538,230)
(1,065,010)
4,193
(6,599,047)

(5,539,440)
—
1,210
(5,538,230)

34.3
.2
—

34.5

(46.8)
(34.6)
—
(81.4)

331.6
7.1

338.7

446.0
151.3
(54.3)

543.0

(32.2)
5.1
28.3

1.2

34.1
.2
—

34.3

(46.8)
—
—
(46.8)

322.6
9.0

331.6

363.4
131.9
(49.3)

446.0

(17.9)
(16.3)
2.0
(32.2)

$836.0

$732.9

consolidated statements ofcomprehensive income

IN MILLIONS/YEAR ENDED DECEMBER 31

2 0 0 0

1 9 9 9

1 9 9 8

Net income
Other comprehensive (loss) income, net of tax:
Foreign currency translation (loss) gain
Unrealized (loss) gain on securities, net of

reclassification adjustments (a)

Other comprehensive (loss) income

Comprehensive Income

(a)Reclassification adjustments:

Unrealized gain on securities
Less — reclassification adjustments for
gains realized included in net income

Net unrealized (loss) gain on securities

$ 66.6

$151.3

$131.9

(28.6)

(7.0)
(35.6)
$ 31.0

5.1

28.3

33.4

(16.3)

2.0
(14.3)

$184.7

$117.6

24.6

37.3

$ 2.8

(31.6)

(7.0)

(9.0)

28.3

(.8)

2.0

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

gatx corporation and subsidiaries

management and auditorsletters

To Our Shareholders
The management of GATX Corporation has prepared the accompanying consolidated ﬁnancial state-
ments and related information included in this 2000 Annual Report to Shareholders and has the pri-
mary responsibility for the integrity of this information. The ﬁnancial statements have been prepared
in conformity with generally accepted accounting principles and necessarily include certain amounts
which are based on estimates and informed judgments of management.

The ﬁnancial statements have been audited by the company’s independent auditors, whose report thereon
appears on this page. Their role is to form an independent opinion as to the fairness with which such state-
ments present the ﬁnancial position of the company and the results of its operations.

GATX maintains a system of internal accounting controls which is designed to provide reasonable assurance
as to the reliability of its ﬁnancial records and the protection of its shareholders’ assets. The concept of rea-
sonable assurance is based on the recognition that the cost of a system of internal control should not exceed
the related beneﬁts. Management believes the company’s system provides this appropriate balance in all
material respects.

GATX’s system of internal controls is further augmented by an audit committee composed of independent
directors, which meets regularly throughout the year with management, the independent auditors and the
internal auditors; an internal audit program that includes prompt, responsive action by management; and
the annual audit of the company’s ﬁnancial statements by independent auditors.

R O N A L D H . Z E C H
chairman and chief
executive officer

B R I A N A . K E N N E Y
vice president and
chief financial officer

W I L L I A M M . M U C K I A N
controller and
chief accounting officer

To the Shareholders and Board of Directors of GATX Corporation
We have audited the accompanying consolidated balance sheets of GATX Corporation and subsidiaries
as of December 31, 2000 and 1999, and the related consolidated statements of income, changes in
shareholders’ equity, comprehensive income, and cash ﬂows for each of the three years in the period
ended December 31, 2000. These ﬁnancial statements are the responsibility of the company’s manage-
ment. Our responsibility is to express an opinion on these ﬁnancial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the ﬁnancial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the ﬁnancial statements. An audit also includes
assessing the accounting principles used and signiﬁcant estimates made by management, as well as evalu-
ating the overall ﬁnancial statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the ﬁnancial statements referred to above present fairly, in all material respects, the
consolidated ﬁnancial position of GATX Corporation and subsidiaries as of December 31, 2000 and
1999, and the results of their operations and cash ﬂows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted in the United States.

Chicago, Illinois
January 23, 2001
(except with respect to Note 17, as to which the date is March 5, 2001)

ERNST & YOUNG LLP

gatx corporation and subsidiaries

notesto consolidated financial statements

NOTE 1
Signiﬁcant accounting policies of GATX and its consolidated subsidiaries are discussed below.

Significant Accounting Policies

consolidation — The consolidated ﬁnancial statements include the accounts of GATX and its majority-
owned subsidiaries. Investments in 20 to 50 percent-owned companies and joint ventures are accounted
for under the equity method and are shown as investments in afﬁliated companies, with pretax operating
results shown as share of afﬁliates’ earnings.

cash equivalents — GATX considers all highly liquid investments with a maturity of three months
or less when purchased to be cash equivalents.

operating lease assets and facilities — Operating lease assets and facilities are stated princi-
pally at cost. Assets acquired under capital leases are included in operating lease assets and the related
obligations are recorded as liabilities. Provisions for depreciation include the amortization of the cost of
capital leases and are computed by the straight-line method which results in equal annual depreciation
charges over the estimated useful lives of the assets. The estimated useful lives of depreciable assets are
as follows:

Railcars
Locomotives
Aircraft
Technology equipment/software
Buildings and leasehold improvements
Marine vessels
Machinery and related equipment

20–38 years
28 years
25 years
2–5 years
5–40 years
15–50 years
3–20 years

goodwill — GATX has classiﬁed the cost in excess of the fair value of net assets acquired as good-
will. Goodwill, which is included in other assets, is being amortized on a straight-line basis over 10 to
40 years. GATX continually evaluates the existence of goodwill impairment on the basis of whether the
goodwill is recoverable from projected undiscounted net cash ﬂows of the related business. Goodwill,
net of accumulated amortization of $18.9 million and $17.2 million, was $56.6 million and $46.9
million as of December 31, 2000 and 1999, respectively. Amortization expense was $7.2 million,
$3.4 million and $11.3 million in 2000, 1999, and 1998, respectively.

income taxes — United States income taxes have not been provided on the undistributed earnings
of foreign subsidiaries and afﬁliates that GATX intends to permanently reinvest in these foreign opera-
tions. The cumulative amount of such earnings was $136.9 million at December 31, 2000.

other deferred items — Other deferred items include the accrual for postretirement beneﬁts
other than pensions; environmental, general liability, litigation and workers’ compensation reserves;
and other deferred credits.

off-balance sheet financial instruments — GATX uses off-balance sheet ﬁnancial instruments
such as interest rate and currency swaps, forwards and similar contracts to set interest and exchange rates
on existing or anticipated transactions. The fair values of GATX’s off-balance sheet ﬁnancial instruments
(futures, swaps, forwards, options, guarantees, and lending and purchase commitments) are based on
current market prices, settlement values or fees currently charged to enter into similar agreements.

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

The fair values of the hedge contracts are not recognized in the ﬁnancial statements. Net amounts paid
or received on such contracts are recognized over the term of the contract as an adjustment to interest
expense or the basis of the hedged ﬁnancial instrument.

environmental liabilities — Expenditures that relate to current or future operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations,
and which do not contribute to current or future revenue generation, are charged to environmental reserves.
Reserves are recorded in accordance with accounting guidelines to cover work at identiﬁed sites when
GATX’s liability for environmental cleanup is both probable and a reasonable estimate of associated costs
can be made; adjustments to initial estimates are recorded as necessary.

revenue recognition — The majority of GATX’s gross income is derived from the rentals of railcars,
commercial aircraft, technology equipment and marine vessels. In addition, income is derived from ﬁnance
leases, asset remarketing, stock sales, secured loans, technology equipment sales, and other services.

foreign currency translation — The assets and liabilities of GATX’s operations located outside
the United States are translated at exchange rates in effect at year end, and income statements are trans-
lated at the average exchange rates for the year. Adjustments resulting from the translation of foreign
currency ﬁnancial statements are deferred and recorded as a separate component of accumulated other
comprehensive (loss) income in the shareholders’ equity section of the balance sheet. The cumulative
foreign currency translation adjustment was $(62.3) million and $(33.7) million at the end of 2000
and 1999, respectively.

investments in equity securities — Financial Services’ venture leasing portfolio includes
stock warrants received from investee companies and common stock resulting from exercising the war-
rants. These securities are accounted for as available-for-sale in accordance with Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. These
securities are carried at fair value. Upon receipt, the fair value of stock warrants is generally not ascer-
tainable due to the early-stage nature of the investee companies; accordingly, assigned values are nomi-
nal. For subsequent reporting, securities are carried at this nominal value until the investee’s common
stock becomes publicly traded. Unrealized gains and losses arising from marking the portfolio to fair
value are included on a net-of-tax basis as a separate component of accumulated other comprehensive
(loss) income. The unrealized gains on these securities were $27.9 million and $34.9 million at the end
of 2000 and 1999, respectively.

use of estimates — The preparation of ﬁnancial statements in conformity with generally accepted
accounting principles necessarily requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the ﬁnancial statements as well as revenues and expenses during the reporting period. Actual
amounts when ultimately realized could differ from those estimates.

reclassifications — Certain amounts in the 1999 and 1998 ﬁnancial statements have been reclassi-
fied to conform to the 2000 presentation.

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

new accounting pronouncements — Effective January 1, 2001, GATX will adopt SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137, Accounting for
Derivative Instruments and Hedging Activities — Deferral of the Effective Date of FASB Statement No. 133, and
SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities — an amendment
of FASB Statement No. 133. SFAS No. 133, as amended, establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in other contracts. The
statement requires that an entity recognize all derivatives as either assets or liabilities in the statement
of ﬁnancial position and measure those instruments at fair value. Derivatives that are not hedges must
be adjusted to fair value through income. If the derivative is a hedge, depending on the qualiﬁed nature
of the hedge, changes in fair value of the derivative will either be offset against the change in fair value
of the hedged assets, liabilities, or ﬁrm commitments through earnings or recognized in accumulated
other comprehensive (loss) income. The change in fair value of the ineffective portion of a hedge will
be immediately recognized in earnings. GATX believes that the adoption of SFAS No. 133, as amended,
will have a material impact on the accounting for stock warrants. Under current accounting guidance,
these items are generally accounted for as available-for-sale securities. Upon adoption of SFAS No. 133,
as amended, these warrants must be accounted for as derivatives, with prospective changes in fair value
recorded in current earnings.

As of December 31, 2000, a total of $27.9 million of unrealized gains, net of tax, was recorded in accu-
mulated other comprehensive (loss) income. Of this amount, $2.5 million is from warrants and will be
subject to SFAS No. 133 while the remaining $25.4 million represents stock held in the available-for-
sale securities portfolio that will continue to be accounted for in accordance with SFAS No. 115.

Apart from warrants, GATX uses interest rate and currency swap agreements, and forward sale agree-
ments, as hedges to manage its exposure to interest rate and currency exchange rate risk on existing and
anticipated transactions. To qualify for hedge accounting under current accounting guidance, the deriv-
ative instrument must be identiﬁed with and reduce the risk arising from a speciﬁc transaction. Interest
income or expense on interest rate swaps is accrued and recorded as an adjustment to the interest income
or expense related to the hedged item. Realized and unrealized gains on currency swaps are deferred
and included in the measurement of the hedged investment over the term of the contract. Fair value
changes arising from forward sale agreements are deferred in the investment section of the balance sheet
and recognized in other comprehensive (loss) income in stockholders’ equity in conjunction with the
designated hedged item. The application of SFAS No. 133, as amended, to derivative instruments other
than warrants is not expected to have a material impact on GATX’s consolidated ﬁnancial statements.

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

NOTE 2
The following information pertains to GATX as a lessor:

Accounting for Leases

finance leases — GATX’s ﬁnance leases include direct ﬁnancing leases and leveraged leases. Investment
in direct ﬁnancing leases consists of lease receivables, plus the estimated residual value of the equipment at
the lease termination dates, less unearned income. Lease receivables represent the total rent to be received
over the term of the lease reduced by rent already collected. Initial unearned income is the amount by
which the original sum of the lease receivable and the estimated residual value exceeds the original cost of
the leased equipment. Unearned income is amortized to lease income over the lease term in a manner that
produces a constant rate of return on the net investment in the lease.

Financing leases that are ﬁnanced principally with nonrecourse borrowings at lease inception and that
meet certain criteria are accounted for as leveraged leases. Leveraged lease receivables are stated net of
the related nonrecourse debt. Initial unearned income represents the excess of anticipated cash ﬂows
(including estimated residual values, and net of the related debt service) over the original investment
in the lease.

The components of the investment in ﬁnance leases were (in millions):

DECEMBER 31

Net minimum future lease receivables
Estimated residual values

Less — unearned income

Investment in finance leases

2 0 0 0

1 9 9 9

$ 800.7
368.4

1,169.1
(290.8)
$ 878.3

$ 664.1
262.7

926.8
(281.1)

$ 645.7

operating leases — The majority of railcar assets and certain other equipment leases included in
operating lease assets are accounted for as operating leases. Rental income from operating leases is usually
reported on a straight-line basis over the term of the lease.

minimum future receipts — Minimum future lease receipts from ﬁnance leases and minimum
future rental receipts from noncancelable operating leases by year at December 31, 2000 were (in millions):

2001
2002
2003
2004
2005
Years thereafter

FINANCE
LEASES

OPERATING
LEASES

$252.2
149.9
94.6
54.1
41.8
208.1

$800.7

$ 788.3
565.3
361.8
240.3
159.2
406.0

$2,520.9

TOTAL

$1,040.5
715.2
456.4
294.4
201.0
614.1

$3,321.6

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

The following information pertains to GATX as a lessee:

capital leases — Assets classiﬁed as operating lease assets and ﬁnance leases that have been ﬁnanced
under capital leases were (in millions):

DECEMBER 31

Railcars
Marine vessels

Less — allowance for depreciation

Finance leases

2 0 0 0

1 9 9 9

$ 149.5
147.7

297.2
(192.2)
105.0
19.4

$ 150.0
159.5

309.5
(194.0)

115.5
6.9

$ 124.4

$ 122.4

operating leases — GATX has ﬁnanced railcars, aircraft, and other assets through sale-leasebacks
that are accounted for as operating leases. In addition, GATX leases certain other assets and ofﬁce facili-
ties. For one of the operating leases, a subsidiary of GATX has provided a guarantee to the lessor that the
residual value will be the projected fair market value of the assets. Total rental expense for the years ended
December 31, 2000, 1999, and 1998 was $178.7 million, $153.0 million, and $139.4 million, respectively.

future minimum rental payments — Future minimum rental payments due under noncancelable
leases at December 31, 2000 were (in millions):

2001
2002
2003
2004
2005
Years thereafter

Less — amounts representing interest

Present value of future minimum capital lease payments

CAPITAL
LEASES

OPERATING
LEASES

NONRECOURSE
OPERATING
LEASES

$ 130.3
138.3
130.7
129.8
138.0
1,394.3

$2,061.4

$ 39.9
37.4
40.0
39.9
41.5
559.6

$758.3

$ 30.3
30.0
28.1
23.3
18.3
117.8

$247.8
(83.6)

$164.2

The above capital lease amounts and certain operating leases do not include the costs of licenses, taxes,
insurance, and maintenance that GATX is required to pay. Interest expense on the above capital leases
was $14.4 million in 2000, $14.6 million in 1999, and $16.1 million in 1998.

The amounts shown as nonrecourse operating leases reﬂect rental payments of three bankruptcy remote,
special-purpose corporations that are wholly-owned by GATX. These rentals are consolidated for
accounting purposes, but do not represent legal obligations of GATX.

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

Secured Loans

NOTE 3
Secured loans are recorded at the principal amount outstanding plus accrued interest. The loan portfolio
is reviewed regularly, and a loan is classiﬁed as impaired and written down when it is probable that GATX
will be unable to collect all amounts due under the loan agreement. Since most loans are collateralized,
impairment is generally measured as the amount the recorded investment in the loan exceeds the fair
value of the collateral, and any adjustment is considered in determining the provision for possible losses.
Interest income is not recognized on impaired loans until the outstanding principal is recovered.

The types of loans in GATX’s portfolio are as follows (in millions):

DECEMBER 31

Equipment
Venture
Golf courses

Total investments

Impaired loans (included in total)

2 0 0 0

1 9 9 9

$368.5
254.4
11.2

$634.1

$ 62.9

$245.7
102.7
9.6

$358.0
$ 22.3

At December 31, 2000, secured loan principal due by year was as follows (in millions):

2001
2002
2003
2004
2005
Years thereafter

LOAN PRINCIPAL

$171.1
109.8
98.9
51.1
19.1
184.1

$634.1

Investments in Affiliated Companies

NOTE 4
GATX has investments in 25 to 50 percent-owned companies and joint ventures that are accounted
for using the equity method. These domestic and foreign investments are in businesses similar to those
of GATX’s principal subsidiaries. Distributions received from such afﬁliates were $119.7 million,
$68.3 million, and $162.4 million in 2000, 1999 and 1998, respectively. These distributions reﬂect
both operating results and return of principal.

For all afﬁliated companies held at the end of a year, operating results, as if GATX held 100 percent
interest, were (in millions):

YEAR ENDED DECEMBER 31

2 0 0 0

1 9 9 9

1 9 9 8

Gross income
Pretax income

$717.2
203.4

$603.5
145.4

$448.5
116.1

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

For all afﬁliated companies held at the end of a year, summarized balance sheet data, as if GATX held
100 percent interest, were (in millions):

DECEMBER 31

Total assets
Long-term liabilities
Other liabilities

Shareholders’ equity

2 0 0 0

1 9 9 9

$5,209.2
2,164.6
623.5

$2,421.1

$4,327.6
1,683.1
554.2

$2,090.3

Foreign Operations

NOTE 5
GATX has a number of investments in subsidiaries and afﬁliated companies that are located in or derive
revenues from foreign countries. Foreign entities contribute signiﬁcantly to share of afﬁliates’ earnings.
The foreign identiﬁable assets represent investments in afﬁliated companies as well as fully consoli-
dated assets for Canadian and Mexican railcar operations, and foreign lease, loan and other investments.

IN MILLIONS, YEAR ENDED OR AT DECEMBER 31

2 0 0 0

1 9 9 9

1 9 9 8

Revenues
Foreign
United States

Share of Affiliates’ Earnings
Foreign
United States

Identifiable Assets for Continuing Operations
Foreign
United States

$ 212.9
1,098.9

$1,311.8

44.7
34.3

79.0

$1,200.3
4,432.5

$5,632.8

$ 164.1
1,030.9

$1,195.0

29.3
35.2

64.5

$ 943.9
3,783.0

$4,726.9

$ 183.2
1,031.9

$1,215.1

19.9
28.6

48.5

$ 702.2
3,217.8

$3,920.0

Foreign cash ﬂows generated are used to meet local operating needs and for reinvestment. The transla-
tion of the foreign balance sheets into U.S. dollars results in an unrealized foreign currency translation
adjustment, a component of accumulated other comprehensive (loss) income.

NOTE 6
Short-term debt (in millions) and weighted average interest rates as of year end were:

Short-Term Debt and Lines of Credit

DECEMBER 31

Commercial paper
Other short-term borrowings

2 0 0 0
AMOUNT

$345.6
211.6

$557.2

2 0 0 0
RATE

7.62%
7.86%

1 9 9 9
AMOUNT

$261.5
115.5

$377.0

1 9 9 9
RATE

6.65%
6.53%

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

Under a revolving credit agreement with a group of banks, GATX Rail Corporation (GRC) may borrow
up to $350.0 million. While at year end no borrowings were outstanding, availability under the
credit line was reduced by $172.0 million of commercial paper outstanding. GRC also had borrowings
of $65.0 million under unsecured money market lines at December 31, 2000.

GATX Capital Corporation (GCC) and one of its wholly-owned subsidiaries have commitments under
credit agreements with a group of banks for revolving credit loans totaling $335.0 million of which
$161.4 million was available at December 31, 2000; availability under the credit line was reduced
by $173.6 million of commercial paper outstanding.

Both GRC’s and GCC’s primary revolving credit agreements contain various restrictive covenants, including
dividend restrictions and requirements to maintain a deﬁned minimum net worth and certain ﬁnancial
ratios. Both GRC and GCC met all credit agreement requirements at December 31, 2000.

Interest expense on short-term debt was $31.7 million in 2000, $25.1 million in 1999, and $23.5 million
in 1998. The portion of interest expense allocated to discontinued operations was $5.8 million, $2.2 mil-
lion and $1.4 million for 2000, 1999 and 1998, respectively.

NOTE 7
Long-term debt (in millions) and the range of interest rates as of year end were:

Long-Term Debt

DECEMBER 31

Variable Rate
Term notes
Nonrecourse obligations

Fixed Rate
Term notes
Nonrecourse obligations

INTEREST
RATES

FINAL
MATURITY

2 0 0 0

1 9 9 9

5.23%– 7.76%
6.19%– 8.38%

2001–2005
2002–2015

5.88%–10.45%
6.28%–10.70%

2001–2011
2001–2005

$ 829.2
91.2

920.4

$ 388.0
28.7

416.7

2,264.7
403.0

2,667.7

2,297.2
390.1

2,687.3

$3,588.1

$3,104.0

Maturities of GATX’s long-term debt as of December 31, 2000 for the next ﬁve years were (in millions):

2001
2002
2003
2004
2005

MATURITIES

$693.7
701.2
771.1
313.7
216.3

At December 31, 2000, certain technology assets, aircraft, railcars, and other equipment with a net
carrying value of $929.7 million were pledged as collateral for $587.1 million of notes and bonds.

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

Interest expense on long-term debt, net of capitalized interest, was $253.5 million in 2000, $191.9 mil-
lion in 1999, and $194.9 million in 1998. Interest expense capitalized as part of the cost of construction
of major assets was $10.6 million in 2000, $4.6 million in 1999, and $3.3 million in 1998. The portion
of the interest allocated to discontinued operations was $51.2 million, $49.5 million, and $52.6 million
for 2000, 1999 and 1998, respectively.

NOTE 8 Off-Balance Sheet Financial Instruments
In the ordinary course of business, GATX utilizes off-balance sheet ﬁnancial instruments to manage
ﬁnancial market risk, including interest rate and foreign exchange risk.

At December 31, 2000, GATX had the following off-balance sheet ﬁnancial instruments (in millions):

Interest Rate Swaps
GATX pays fixed, receives floating
GATX pays floating, receives fixed

Currency Swaps and Forwards
Canadian dollar swaps
Euro forward
Deutsche mark forwards

NOTIONAL
AMOUNT

PAY RATE/
INDEX

RECEIVE
RATE/INDEX

MATURITY

$384.3
285.0 libor–libor+.75%

4.93–7.54% libor–libor+1.57%
5.90–7.20%

2001–2011
2001–2006

RECEIVE

DELIVER

MATURITY

$137.8
$ 28.7
$ 46.8

c$188.9
€ 24.5
84.3dm

2001–2013
2011
2002

Following is a summary of GATX’s interest rate hedge activity (in millions):

Interest Rate Swaps
Balance at January 1, 1999
Additions
Maturities

Balance at December 31, 1999
Additions
Maturities

Balance at December 31, 2000

PAY FIXED

PAY FLOATING

$ 772.8
85.3
(262.9)

595.2
206.7
(417.6)

$ 702.0
—
(10.0)

692.0
150.0
(557.0)

$ 384.3

$ 285.0

GATX uses interest rate swaps and forward starting interest rate swaps to convert ﬂoating rate debt to
ﬁxed rate debt and to manage the ﬂoating/ﬁxed rate mix of the debt portfolio. GATX also uses forward
starting interest rate swaps and treasury derivatives to manage interest rate risk associated with the
anticipated issuance of debt.

Historically, GRC had a program that utilized interest rate swaps to match the cash ﬂow characteristics of its
debt portfolio and its railcar leases. The interest rate swaps effectively converted GRC’s long-term ﬁxed rate
debt to debt with maturities of three months to ﬁve years, matching the terms of the railcar leases. During
2000, GRC terminated this program and implemented a new program that utilizes interest rate swaps to
achieve a target level of ﬂoating interest rate exposure in its debt portfolio to reduce income volatility over
the long-term. GCC uses interest rate swaps in addition to commercial paper and ﬂoating rate medium-term
notes to match fund its ﬂoating rate lease and loan portfolio with ﬂoating rate borrowings.

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

The net amount payable or receivable from the interest rate swap agreements is accrued as an adjustment
to interest expense. The fair value of interest rate swap agreements is determined based on the differences
between the contractual rate of interest and the rates currently quoted for agreements of similar terms
and maturities. The fair value of the interest rate swaps was $1.0 million at December 31, 2000 and $4.9
million at December 31, 1999.

GATX has entered into currency swaps and forwards to hedge $137.8 million of debt obligations of
its Canadian subsidiaries, $46.8 million in debt obligations associated with a German joint venture and
$28.7 million in future euro receipts for a leveraged lease transaction. The fair value of the aggregate of
currency swap and forward agreements was $26.9 million at December 31, 2000 and $6.0 million at
December 31, 1999.

In the event that a counterparty fails to meet the terms of the interest rate swap agreement or a foreign
exchange contract, GATX’s exposure is limited to the interest rate or currency differential. GATX manages
the credit risk of counterparties by dealing only with institutions that the company considers ﬁnancially
sound and by avoiding concentrations of risk with a single counterparty. GATX considers the risk of non-
performance to be remote.

Fair Value of Other Financial Instruments

NOTE 9
The fair value of a ﬁnancial instrument represents the amount at which the instrument could be
exchanged in a current transaction between willing parties. The following methods and assumptions
were used to estimate the fair value of ﬁnancial instruments:

The carrying amount of cash and cash equivalents, trade receivables, accounts payable, and short-term debt
approximates fair value because of the short maturity of those instruments. Also, the carrying amount of
variable rate long-term debt and variable rate secured loans approximates fair value.

The fair value of ﬁxed rate secured loans was estimated using discounted cash ﬂow analyses, at interest
rates currently offered for loans with similar terms to borrowers of similar credit quality.

The fair value of ﬁxed rate long-term debt was estimated by performing a discounted cash ﬂow calcula-
tion using the term and market interest rate for each note based on GATX’s current incremental borrow-
ing rates for similar borrowing arrangements. Portions of ﬁxed rate long-term debt have effectively been
converted to ﬂoating rate debt by utilizing interest rate swaps (GATX pays ﬂoating rate interest, receives
ﬁxed rate interest), as described in Note 8. In such instances, the increase (decrease) in the fair value of
the ﬁxed rate long-term debt would be offset in part by the increase (decrease) in the fair value of the
interest rate swap.

The following table sets forth the carrying amounts and fair values of the company’s ﬁxed rate instruments
(in millions):

DECEMBER 31

Secured loans — fixed
Long-term debt — fixed

2 0 0 0
CARRYING
AMOUNT

$ 623.5
2,667.7

2 0 0 0
FAIR
VALUE

$ 606.2
2,610.4

1 9 9 9
CARRYING
AMOUNT

$ 292.2
2,687.3

1 9 9 9
FAIR
VALUE

$ 290.1
2,621.4

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

Pension and Other Postretirement Benefits

NOTE 10
GATX and certain of its subsidiaries maintain noncontributory deﬁned beneﬁt pension plans covering
their respective employees. Beneﬁts payable under the pension plans are based on years of service and/or
ﬁnal average salary. The funding policy for the pension plans is based on an actuarially determined cost
method allowable under Internal Revenue Service regulations.

In addition to the pension plans, GATX’s other postretirement plans provide health care, life insurance and
other beneﬁts for certain retired employees who meet established criteria. Most domestic employees are eli-
gible for health care and life insurance beneﬁts if they retire from GATX with immediate pension beneﬁts
under the GATX plan. The plans are either contributory or noncontributory, depending on various factors.

The following tables set forth pension obligations and plan assets as of December 31 and other postretire-
ment obligations for continuing operations as of December 31 (in millions):

Change in Benefit Obligation
Benefit obligation at beginning of period
Service cost
Interest cost
Plan amendments
Actuarial loss
Benefits paid

Benefit obligation at end of period

Change in Fair Value of Plan Assets
Plan assets at beginning of period
Actual return on plan assets
Company contributions
Benefits paid

Plan assets at end of period

Funded Status
Funded status of the plan
Unrecognized net gain
Unrecognized prior service cost
Unrecognized net transition (asset) obligation

Accrued cost

Amount Recognized
Prepaid benefit cost
Accrued benefit liability
Intangible asset

Total recognized

2 0 0 0
PENSION
BENEFITS

1 9 9 9
PENSION
BENEFITS

2 0 0 0
RETIREE HEALTH
AND LIFE

1 9 9 9
RETIREE HEALTH
AND LIFE

$312.2
8.3
21.8
.7
(8.7)
(22.0)
$312.3

$353.5
(7.5)
.5
(22.0)
$324.5

$ 12.2
(22.3)
2.0
(.1)
$ (8.2)

$ 1.4
(9.6)
—

$ (8.2)

$304.6
7.4
20.6
—
1.6
(22.0)

$312.2

$325.8
49.2
.5
(22.0)

$353.5

$ 41.3
(46.9)
1.8
(.2)
$ (4.0)

$ 3.6
(9.3)
1.7
$ (4.0)

$ 50.3
.3
3.4
—
(1.6)
(4.9)
$ 47.5

$ —
—
4.9
(4.9)
$ —

$(47.5)
(14.7)
—
.4

$(61.8)

$ —
(56.2)
(5.6)
$(61.8)

$ 51.0
.3
3.4
—
.9
(5.3)

$ 50.3

$ —
—
5.3
(5.3)

$ —

$(50.3)
(14.7)
—
.4
$(64.6)

$ —
(65.0)
.4
$(64.6)

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

The components of pension and other postretirement beneﬁt costs are as follows (in millions):

2 0 0 0
PENSION
BENEFITS

$ 8.3
21.8

1 9 9 9
PENSION
BENEFITS

$ 7.4
20.6

$ 5.9
20.4

(26.1)

(23.9)

(22.6)

—

$ 4.7

(.1)

$ 4.6

—

$ 4.2

Service cost
Interest cost
Expected return on

plan assets
Amortization of:

Unrecognized prior

service cost

Unrecognized net

loss (gain)

Unrecognized net
(asset) obligation

Net costs

1 9 9 8
PENSION
BENEFITS

2 0 0 0
RETIREE HEALTH
AND LIFE

1 9 9 9
RETIREE HEALTH
AND LIFE

1 9 9 8
RETIREE HEALTH
AND LIFE

$ .3
3.4

—

(.3)

—
$3.4

$ .3
3.4

—

(.2)

$3.6

$ .2
3.6

—

(.6)

—

$3.2

Postretirement beneﬁt costs are for continuing operations only. Pension costs include $1.2 million,
$1.4 million and $1.2 million related to discontinued operations for the years ended December 31,
2000, 1999 and 1998, respectively.

GATX amortizes the prior service cost using a straight-line method over the average remaining service
period of employees to receive beneﬁts under the plan.

Assumptions as of December 31:

Discount rate
Expected return on plan assets
Rate of compensation increases

2 0 0 0
PENSION
BENEFITS

1 9 9 9
PENSION
BENEFITS

2 0 0 0
RETIREE HEALTH
AND LIFE

1 9 9 9
RETIREE HEALTH
AND LIFE

7.50%
8.75%
5.00%

7.00%
8.75%
5.00%

7.50%

N/A
5.00%

7.00%

N/A
5.00%

The assumed health care cost trend rate was 5.0% for participants over the age of 65 and 6.0% for par-
ticipants under the age of 65 for 2000 and thereafter. The health care cost trend rate has a signiﬁcant
effect on the other postretirement beneﬁt cost and obligation. A 1% increase in the trend rate would
increase the cost by $.3 million and the obligation by $3.8 million. A 1% decrease in the trend rate
would decrease the cost by $.3 million and the obligation by $3.4 million.

In addition to contributions to its deﬁned beneﬁt plans, GATX maintains two 401(k) retirement plans
that are available to substantially all salaried and certain other employee groups. GATX may contribute
to the plans as deﬁned by their respective terms. Contributions to such plans for continuing operations
were $1.8 million, $1.6 million, and $1.5 million for 2000, 1999, and 1998, respectively.

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

Income Taxes

NOTE 11
Deferred income taxes reﬂect the net tax effects of temporary differences between the carrying amounts
of assets and liabilities for ﬁnancial reporting purposes and the amounts used for income tax purposes.

Signiﬁcant components of GATX’s deferred tax liabilities and assets were (in millions):

DECEMBER 31

2 0 0 0

1 9 9 9

Deferred Tax Liabilities
Book/tax basis difference due to depreciation
Leveraged leases
Investment in joint ventures
Lease accounting (other than leveraged)
Other

Total deferred tax liabilities

Deferred Tax Assets
Alternative minimum tax credit
Accruals not currently deductible for tax purposes
Allowance for possible losses
Postretirement benefits other than pensions
Other

Total deferred tax assets

Net deferred tax liabilities

$197.5
80.6
67.9
192.3
67.2

605.5

18.9
82.9
37.0
21.6
34.3

194.7

$410.8

$211.0
58.3
101.8
99.2
58.0

528.3

16.4
24.4
44.3
22.5
32.6

140.2

$388.1

At December 31, 2000, GATX had an alternative minimum tax credit of $67.5 million, of which
$48.6 million is included as part of net assets of discontinued operations. The credit can be carried
forward indeﬁnitely to reduce future regular tax liabilities.

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

GATX and its United States subsidiaries ﬁle a consolidated federal income tax return. Amounts shown as
Current — Federal represent taxes payable as determined by the Alternative Minimum Tax. Income taxes
for continuing operations consisted of (in millions):

YEAR ENDED DECEMBER 31

2 0 0 0

1 9 9 9

1 9 9 8

Current
Domestic:
Federal
State and local

Foreign

Deferred
Domestic:
Federal
State and local

Foreign

Income tax expense

Income taxes (refunded) paid

$(18.5)
3.1

(15.4)
11.3

(4.1)

24.5
(2.4)
22.1
4.7

26.8

$ 22.7

$(18.3)

$14.4
4.0

18.4
11.4

29.8

44.6
5.7

50.3
2.7

53.0

$82.8

$28.7

$40.5
4.1

44.6
5.8

50.4

22.7
6.8

29.5
6.1

35.6

$86.0

$47.9

The reasons for the difference between GATX’s effective income tax rate and the federal statutory income
tax rate were:

YEAR ENDED DECEMBER 31

2 0 0 0

1 9 9 9

1 9 9 8

Federal statutory income tax rate
Add effect of:

State income taxes
Foreign income
Other

Effective income tax rate

35.0%

1.3
4.4
1.7

3.0
1.5
.1

3.6
2.1
2.3

42.4%

39.6%

43.0%

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

Shareholders’ Equity

NOTE 12
In 1998, the company’s shareholders approved an amendment to GATX’s certiﬁcate of incorporation
that increased authorized shares of common stock from 60 million to 120 million shares and effected a
two-for-one stock split, in the form of a stock dividend. Par value remained at $.625 per share after the
split. All share and per share amounts in the accompanying consolidated ﬁnancial statements have been
restated accordingly.

GATX’s certiﬁcate of incorporation also authorizes 5 million shares of preferred stock at a par value of
$1.00 per share. Shares of preferred stock issued and outstanding consist of Series A and B $2.50 cumula-
tive convertible preferred stock, which entitles holders to a cumulative annual cash dividend of $2.50 per
share. Each share of such preferred stock may be called for redemption by GATX at $63 per share, has a
liquidating value of $60 per share, and may be converted into ﬁve shares of common stock.

Holders of both series of $2.50 convertible preferred stock and common stock are entitled to one vote for
each share held. Except in certain instances, all such classes vote together as a single class.

A total of 9,184,361 shares of common stock were reserved at December 31, 2000, for the following:

Conversion of outstanding preferred stock
Incentive compensation programs
Employee service awards
Employee stock purchase plan

115,613
5,450,755
36,250
3,581,743

9,184,361

In an effort to ensure the fair value to all shareholders in the event of an unsolicited takeover offer for the
company, GATX adopted a Shareholders’ Rights Plan in August 1998. Shareholders received a distribu-
tion of one right for each share of the company’s common stock held. Initially the rights are represented
by GATX’s common stock certiﬁcates and are not exercisable. The rights will be exercisable only if a per-
son acquires or announces a tender offer that would result in beneﬁcial ownership of 20 percent or more
of the company’s common stock. If a person acquires beneﬁcial ownership of 20 percent or more of the
company’s common stock, all holders of rights other than the acquiring person will be entitled to pur-
chase the company’s common stock at half price. The rights are scheduled to expire on August 14, 2008.

Incentive Compensation Plans

NOTE 13
The GATX Corporation 1995 Long Term Incentive Compensation Plan (the 1995 Plan) contains provi-
sions for the granting of nonqualiﬁed stock options, incentive stock options, stock appreciation rights
(SARs), cash and common stock individual performance units (IPUs), restricted stock rights, restricted
common stock, performance awards and exchange stock options. An aggregate of 5,000,000 shares of
common stock may be issued under the 1995 Plan. As of December 31, 2000, 1,758,015 shares were
available for issuance under the 1995 Plan.

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

Nonqualiﬁed stock options and incentive stock options may be granted for the purchase of common stock
for periods not longer than ten years from the date of grant. The exercise price will not be less than the
higher of market value at date of grant or par value of the common stock. All options become exercisable
commencing on a date no earlier than one year from the date of grant.

IPUs may be granted to key employees and, if predetermined performance goals are met, will be redeemed
in cash and common stock, as applicable, with the redemption value determined in part by the fair market
value of the common stock as of the date of redemption and in part by the extent to which preestablished
performance goals have been achieved. A total of 44,842 IPUs were granted during 2000 and 79,477 IPUs
in total were outstanding at the end of the year. In 2000, 9,881 shares of common stock and $.2 million in
cash were paid to the participants in redemption of previously issued IPUs.

Restricted stock rights may be granted to key employees entitling them to receive a speciﬁed number of
shares of restricted common stock. The recipients of restricted common stock are entitled to all dividends
and voting rights, but the shares are not transferable prior to the expiration of a “restriction period” as
determined at the discretion of the Compensation Committee of the Board of Directors. Performance
Awards are granted to employees who have been granted restricted stock rights or restricted common
stock, but these Awards may not exceed the market value of the restricted common stock when restrictions
lapse. The Performance Awards provide cash payments if certain criteria and earnings goals are met over a
predetermined period. During 2000, three grants totaling 1,500 shares of restricted stock were made.

The Exchange Stock Option Program became part of the 1995 Plan in 1999 and allows key employees
to make an irrevocable election to exchange up to 25% of their pensionable incentive payments for stock
options, with a minimum contribution of $5,000 in any calendar year. The purchase price of the options is
based on a percentage of the Black-Scholes value of stock options of GATX common stock as speciﬁed by
the Compensation Committee. Exchange Stock Options are granted in January and are exercisable immedi-
ately following grant thereof. All Exchange Stock Options will terminate on the tenth anniversary of the
date of grant. The exercise price of the options is the fair market value of the common stock on the grant
date. In January 2001, 70,275 options were granted for the year 2000.

Under the GATX Employee Stock Purchase Plan, which became effective July 1, 1999, GATX is
authorized to issue up to 247,167 shares of common stock to eligible employees during the calendar
year. Such employees may have up to $10,000 of earnings withheld to purchase GATX common stock.
The purchase price of the stock on the date of exercise is 85% of the lesser of its market price at the
beginning or end of the plan year. In accordance with the plan, GATX sold 77,964 shares to employees
in 2000.

Stock options are outstanding under the GATX Corporation 1985 Long Term Incentive Compensation
Plan (the 1985 Plan), as amended, but no additional options, stock or awards may be issued thereunder.

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

Data with respect to both the 1985 Plan and the 1995 Plan, including the range of exercise prices per
share for 2000 and 1999, are set forth below:

NUMBER OF SHARES UNDER STOCK OPTION PLANS

2 0 0 0

1 9 9 9

PRICE PER SHARE

Outstanding at January 1
Granted
Exercised
Canceled

Outstanding at December 31

Outstanding at December 31, by year granted:

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000

Total

3,651,100
881,871
(811,903)
(263,026)
3,458,042

3,388,275
591,050
(272,550)
(55,675)

3,651,100

—
49,000
98,200
141,500
224,900
270,576
480,763
427,970
434,262
500,100
830,771

56,000
168,000
153,200
259,800
372,100
451,100
593,800
510,350
504,200
582,550
—

$ 9.97–39.75
28.69–36.22
9.97–39.72
12.75–39.72

$ 9.97–39.75

9.97
14.00
12.75
18.84
20.91
23.78–25.28
23.16–24.91
27.44–33.47
33.38–39.72
30.78–39.75
28.69–36.22

3,458,042

3,651,100

$ 9.97–39.75

Options exercisable at December 31

Options available for future grant at December 31

2,365,356

2,691,175

1,758,015

2,388,041

accounting for stock options — GATX has elected to follow Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for its employee stock options.
Under these guidelines, no compensation expense is recognized because the exercise price of GATX’s
employee stock options equals the market price of the underlying stock on the measurement date.

Pro forma information regarding net income and earnings per share is required by SFAS No. 123,
Accounting for Stock-Based Compensation, and has been determined as if GATX had accounted for its
employee stock options under the fair value method. The fair value for these options was estimated at
the date of grant using a Black-Scholes option pricing model with the following assumptions for 2000,
1999 and 1998: dividend yield of 2.8%, 3.1% and 3.1%, respectively; volatility factor of the expected
market price of GATX’s common stock of .23, .20 and .19, respectively; expected life of the option of ﬁve
years, six years and six years, respectively; and weighted average risk-free interest rate of 5.0%, 6.5% and
4.8%, respectively.

The Black-Scholes model, one of the most frequently referenced models to value options, was developed
for use in estimating the fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly subjective assumptions,
including expected stock price volatility. Because GATX’s employee stock options have characteristics
signiﬁcantly different from those of traded options, and because changes in the subjective input assump-
tions can materially affect the fair value estimate, in management’s opinion the existing models do not
necessarily provide a reliable single measure of the fair value of its employee stock options.

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

For purposes of this pro forma disclosure, the estimated fair value of the options is amortized to expense
over the option vesting period. The resultant pro forma net income and earnings per share were (in mil-
lions, except for earnings per share information):

YEAR ENDED DECEMBER 31

Pro forma net income
Pro forma earnings per share:

Basic
Diluted

2 0 0 0

$62.3

$1.30
$1.28

1 9 9 9

1 9 9 8

$148.5

$129.8

$ 3.01
$ 2.95

$ 2.64
$ 2.57

Commitments, Contingencies and Concentrations of Credit Risk

NOTE 14
GATX’s revenues are derived from a wide range of industries and companies. Approximately 19% of
total revenues are generated from the transportation of products for the chemical industry; for similar
services, 11% of revenues are derived from the petroleum industry. In addition, approximately 17% of
GATX’s assets consist of commercial aircraft operated by various domestic and international airlines.

Under its lease agreements, GATX retains legal ownership of the asset except where such assets have been
financed by sale-leasebacks. With most loan ﬁnancings, the loan is collateralized by the equipment.
GATX performs credit evaluations prior to approval of a lease or loan contract. Subsequently, the credit-
worthiness of the customer and the value of the collateral are monitored on an ongoing basis. GATX
maintains an allowance for possible losses and other reserves to provide for potential losses that could arise
should customers become unable to discharge their obligations to GATX and to provide for permanent
declines in investment value.

At December 31, 2000, GATX and its aircraft joint ventures had commitments of $1.2 billion for orders
and options for interests in 63 new aircraft to be delivered between 2001 and 2006. GATX also had other
ﬁrm commitments totaling $124.1 million to acquire railcars in 2001.

GATX’s subsidiaries had $405.3 million of residual and rental guarantees outstanding at December 31,
2000. Guarantees are commitments issued to guarantee performance of an afﬁliate to a third party, gen-
erally in the form of lease and loan payment guarantees, or to guarantee the value of an asset at the end
of a lease. Lease and loan payment guarantees generally involve guaranteeing repayment of the ﬁnancing
required to acquire assets being leased by an afﬁliate to third parties, and are in lieu of making direct
equity investments in the afﬁliate. Asset residual value guarantees represent GATX Capital Corporation’s
commitment to a third party that an asset or group of assets will be worth a speciﬁed amount at the end
of a lease term. Exposure to certain supplier and loan payment guarantees at GATX’s subsidiaries is miti-
gated by, among other things, a third-party cross guaranty. Based on known and expected market condi-
tions, management does not believe that the asset residual value guarantees will result in any adverse
ﬁnancial impact to GATX.

GATX’s subsidiaries are also parties to letters of credit and bonds totaling $30.5 million and $38.3 million
at December 31, 2000 and 1999, respectively. In GATX’s past experience, virtually no claims have been
made against these ﬁnancial instruments. Management does not expect any material losses to result from
these off-balance sheet instruments because performance is not expected to be required, and, therefore, is
of the opinion that the fair value of these instruments is zero.

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

GATX and its subsidiaries are engaged in various matters of litigation and have a number of unresolved
claims pending, including proceedings under governmental laws and regulations related to environ-
mental matters. While the amounts claimed are substantial, and the ultimate liability with respect to
such litigation and claims cannot be determined at this time, it is the opinion of management that
amounts, if any, required to be paid by GATX and its subsidiaries in the discharge of such liabilities,
are not likely to be material to GATX’s consolidated ﬁnancial position or results of operations.

Discontinued Operations

NOTE 15
In May 2000, GATX sold 81% of GATX Logistics, Inc. (Logistics), a member of the GATX Integrated
Solutions Group (ISG) segment. The remaining 19% of Logistics was sold in December 2000. In July
2000, GATX announced its intent to sell GATX Terminals Corporation (Terminals), a member of ISG,
and reached an agreement in November to sell substantially all of the U.S. terminals and pipeline assets,
representing the bulk of Terminals’ operations. A portion of this transaction closed in March 2001 and
the remainder is expected to close following regulatory approval. GATX expects to complete the divesti-
ture of the remaining terminals and supply chain businesses in 2001.

The overall sale of ISG is expected to generate a net gain. Losses on individual asset sales incurred after the
measurement date have been deferred and will be recognized as a reduction of the overall gain realized on
the sale. The sale of Logistics generated an after-tax gain, of which $8.4 million was recognized in 2000.
The Logistics gain was recognized in the current period as the transaction occurred prior to the measure-
ment date for discontinued operations treatment. An additional $4.2 million after-tax gain will be recog-
nized in the ﬁrst quarter of 2001 on the sale of Logistics.

GATX’s ﬁnancial statements have been restated to reﬂect the ISG segment as a discontinued operation
for all periods presented. Corporate allocations to discontinued operations were for services provided.
Operating results include interest expense on debt to be assumed by the buyer and an allocation of
the interest expense on GATX’s general credit facilities based on actual historical ﬁnancing requirements.

Operating results of the discontinued ISG operation are presented below (in millions):

YEAR ENDED DECEMBER 31

2 0 0 0

1 9 9 9

1 9 9 8

Gross income
Income, net of income taxes of $16.8, $19.8 and $13.9

$469.9
27.4

$599.4
25.0

$586.5
17.7

Assets and liabilities of the discontinued operations are summarized below (in millions):

DECEMBER 31

2 0 0 0

1 9 9 9

Accounts receivable, net
Tank storage terminals, pipelines and other, net
Investment in affiliated companies
Other assets

Accounts payable and accrued expenses
Long-term debt
Deferred items

Net Assets of Discontinued Operations

$ 41.5
856.6
73.9
67.5

64.9
147.8
195.9

$630.9

$ 70.6
754.3
199.8
115.2

112.4
152.8
172.4

$702.3

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

Financial Data of Business Segments

NOTE 16
The ﬁnancial data presented below conforms to SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information, and depict the proﬁtability, ﬁnancial position and cash ﬂow of each of GATX’s
continuing business segments. Segment proﬁtability is presented to reﬂect operating results inclusive
of allocated support expenses from the parent company and interest costs based upon the debt levels
shown below.

Financial Services represents GATX Capital Corporation and its subsidiaries and afﬁliates, which arrange
and service the ﬁnancing of equipment and other capital assets on a worldwide basis, and American
Steamship Company, which operates self-unloading vessels on the Great Lakes.

GATX Rail represents GATX Rail Corporation and its foreign subsidiaries and afﬁliates, which lease and
manage tank cars and other specialized railcars.

IN MILLIONS

2000
Profitability
Revenues
Share of affiliates’ earnings

Gross income

Interest expense
Depreciation and amortization
(Loss) income from continuing operations

before taxes

(Loss) income from continuing operations

Financial Position
Debt
Equity
Investments in affiliated companies
Identifiable assets

Items Affecting Cash Flow
Net cash provided by continuing operations
Portfolio proceeds

Total cash provided
Portfolio investments and capital additions

FINANCIAL
SERVICES

GATX
RAIL

CORPORATE
AND OTHER

INTER-
SEGMENT

TOTAL

$ 736.4
75.9

$ 572.0
3.0

812.3

(182.6)
(230.5)

(23.1)
(13.7)

2,938.9
333.4
866.8
3,950.7

297.1
575.5

872.6
1,552.8

575.0

(52.8)
(100.5)

105.9
65.7

760.3
359.7
83.9
1,669.6

151.8
—

151.8
374.8

$ 7.3
.1

7.4

(7.9)
(1.6)

(29.3)
(21.2)

648.4
101.5
.5
718.9

1.2
—

1.2
.8

$ (3.9)
—
(3.9)

.7
(2.2)

—
—

(38.1)
(5.1)
—
(75.5)

—
—

$1,311.8
79.0

1,390.8

(242.6)
(334.8)

53.5
30.8

4,309.5
789.5
951.2
6,263.7

450.1
575.5

1,025.6
1,928.4

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

IN MILLIONS

1999
Profitability
Revenues
Share of affiliates’ earnings

Gross income

Interest expense
Depreciation and amortization
Income (loss) from continuing operations

before taxes

Income (loss) from continuing operations

Financial Position
Debt
Equity
Investments in affiliated companies
Identifiable assets

Items Affecting Cash Flow
Net cash provided by continuing operations
Portfolio proceeds

Total cash provided (used)
Portfolio investments and capital additions

1998
Profitability
Revenues
Share of affiliates’ earnings

Gross income

Interest expense
Depreciation and amortization
Income (loss) from continuing operations

before taxes

Income (loss) from continuing operations

Financial Position
Debt
Equity
Investments in affiliated companies
Identifiable assets

Items Affecting Cash Flow
Net cash provided by continuing operations
Portfolio proceeds

Total cash provided (used)
Capital additions and portfolio investments

FINANCIAL
SERVICES

GATX
RAIL

CORPORATE
AND OTHER

INTER-
SEGMENT

TOTAL

$ 632.9
60.7

$ 567.1
3.8

693.6

(122.4)
(151.9)

117.9
71.0

2,255.3
362.8
665.5
3,088.9

161.5
503.0

664.5
1,217.8

570.9

(52.6)
(100.1)

117.5
72.9

831.0
327.5
91.3
1,693.8

141.4
—

141.4
386.5

$ 684.3
45.8

$ 532.3
2.7

730.1

(121.4)
(117.2)

121.1
66.5

1,717.4
304.6
570.3
2,443.8

148.5
811.5

960.0
857.8

535.0

(52.9)
(97.3)

108.5
67.1

710.4
298.3
62.2
1,539.9

166.1
—

166.1
384.8

$ 1.9
—

1.9

(7.3)
(1.4)

(25.0)
(16.7)

579.7
150.7
.7
732.1

(15.1)
—
(15.1)
1.7

$ 3.2
—

3.2

(7.8)
(1.1)

(27.1)
(17.9)

539.1
134.1
—
698.3

(16.8)
—
(16.8)
.8

$ (6.9)
—
(6.9)

$1,195.0
64.5

1,259.5

2.4
(2.1)

(1.3)
(.9)

(8.8)
(5.0)
—
(85.6)

—
—

(179.9)
(255.5)

209.1
126.3

3,657.2
836.0
757.5
5,429.2

287.8
503.0

790.8
1,606.0

$ (4.7)
—
(4.7)

$1,215.1
48.5

1,263.6

1.6
(.8)

(2.3)
(1.5)

(3.9)
(4.1)
—
(100.9)

—
(6.4)
(6.4)
(7.7)

(180.5)
(216.4)

200.2
114.2

2,963.0
732.9
632.5
4,581.1

297.8
805.1

1,102.9
1,235.7

gatx corporation and subsidiaries

Notes to Consolidated Financial Statements (continued)

Subsequent Events

NOTE 17
GATX Capital Corporation (GCC), a subsidiary of GATX Corporation and the major part of the Financial
Services operating segment, is party to litigation arising from the issuance by the Federal Aviation
Administration of Airworthiness Directive 96-01-03 in 1996, the effect of which signiﬁcantly reduced
the amount of freight that ten 747 aircraft were authorized to carry. GATX/Airlog, a California partner-
ship in which a subsidiary of GCC is a partner, through a series of contractors, modiﬁed these aircraft
from passenger to freighter conﬁguration between 1988 and 1994. GCC reached settlements covering
ﬁve of the aircraft, and the remaining ﬁve are the subject of this litigation.

On February 16, 2001, a jury found that GATX/Airlog breached certain warranties under the applicable
aircraft modiﬁcation agreements, and fraudulently failed to disclose information to the operators of
the aircraft. GCC ultimately settled this issue with Evergreen International Airlines, Inc., which had been
party to the litigation. On March 1, 2001, the jury awarded the remaining plantiff, Kalitta Air, $47.5
million in damages plus applicable interest. GCC will pursue all means of loss recovery including appeals
and insurance coverage.

GATX recorded a pretax charge of $160.5 million in 2000 to accrue for its obligation under the various
settlement agreements and management’s best estimate of GCC’s potential liability under the judgment
entered in favor of Kalitta Air.

On March 1, 2001, GATX completed the sale of the majority of Terminals’ domestic operations to
Kinder Morgan Energy Partners, L.P. The sale included Terminals’ domestic terminaling operations and
the Central Florida Pipeline Company. The sale of Calnev Pipeline Company to Kinder Morgan Energy
Partners, L.P. is expected to close following regulatory approval. Approximately $800 million of the
purchase price was realized in conjunction with this portion of the transaction, including approxi-
mately $620 million in cash plus the assumption of debt and other liabilities. The remainder of the
purchase price will be realized upon closing of the Calnev Pipeline Company sale.

GATX has also completed the sale of substantially all of Terminals’ European operations, including the sale
of GATX Terminals Antwerpen N.V., a wholly-owned terminal operation based in Antwerp, to Oiltanking
GmbH, and the sale of its 50% interest in Terminales Portuarias, S.A. to its partner, Petrofrance Chemie
S.A. Additionally, subsequent to year-end, GATX sold various smaller supply chain businesses.

In the fourth quarter of 2000, employees at Rail’s four major U.S. service centers rejected the terms of a
company-proposed labor contract. As a result of this situation, the amount of work at Rail’s service cen-
ters declined and the use of third-party contract shops increased. On February 26, 2001, employees at
Rail’s domestic service centers approved a new labor contract. Subsequent to December 31, 2000, Rail
decided to shut down the service center located in East Chicago, Indiana. The three remaining service
centers were not affected by this decision.

gatx corporation and subsidiaries

consolidatedquarterly financial data (unaudited) and common stock information

IN MILLIONS, EXCEPT PER SHARE DATA

FIRST
QUARTER

SECOND
QUARTER

THIRD
QUARTER

FOURTH
QUARTER(b)

TOTAL

2000
Gross income
Ownership costs and operating expenses

from continuing operations

Income (loss) from continuing operations
Income from discontinued operations

Net income (loss)

Per Share Data:(a)
Basic:

$309.0

$342.5

$364.3

$375.0

$1,390.8

204.4
37.6
3.0

233.7
32.4
9.1

244.4
37.6
7.5

$ 40.6

$ 41.5

$ 45.1

Income (loss) from continuing operations
Income from discontinued operations

Total
Diluted:

Income (loss) from continuing operations
Income from discontinued operations

Total

$ .78
.06

$ .84

$ .76
.06

$ .82

.68
.19

.87

.67
.19

.86

$ .79
.16

$ .95

$ .78
.15

$ .93

262.4
(76.8)
16.2
$ (60.6)

$ (1.61)
.34
$ (1.27)

$ (1.60)
.33
$ (1.27)

944.9
30.8
35.8

$ 66.6

.64
.75

1.39

.63
.74

1.37

1999
Gross income
Ownership costs and operating expenses

from continuing operations

Income from continuing operations
Income from discontinued operations

Net income

Per Share Data:(a)
Basic:

Income from continuing operations
Income from discontinued operations

Total
Diluted:

Income from continuing operations
Income from discontinued operations

Total

$303.1

$331.1

$314.1

$311.2

$1,259.5

202.1
31.6
7.6

220.0
32.6
5.5

201.7
36.4
5.8

212.2
25.7
6.1

836.0
126.3
25.0

$ 39.2

$ 38.1

$ 42.2

$ 31.8

$ 151.3

$ .63
.16

$ .79

$ .63
.15

$ .78

.66
.11

.77

.64
.11

.75

$ .74
.11

$ .85

$ .72
.11

$ .83

$ .53
.12

$ .65

$ .52
.12

$ .64

2.56
.51

3.07

2.51
.50

3.01

(a) Quarterly earnings per share results may not be additive, as per share amounts are computed independently for each quarter and the full year is

based on the respective weighted average common shares and common stock equivalents outstanding.

(b) The provision for litigation was $160.5 million on a pretax basis, $97.6 million on an after-tax basis.

common stock information — GATX common stock is listed on the New York and Chicago Stock
Exchanges under ticker symbol GMT. The approximate number of common stock holders of record as
of March 8, 2001 was 3,590. The following table shows the reported high and low sales price of GATX
common shares on the New York Stock Exchange, which is the principal market for GATX shares, and
the dividends declared per share:

COMMON STOCK

First quarter
Second quarter
Third quarter
Fourth quarter

2 0 0 0
HIGH

$40.25
38.75
45.19
50.50

2 0 0 0
LOW

$28.38
33.13
34.13
36.31

1 9 9 9
HIGH

$40.63
40.69
40.88
35.94

1 9 9 9
LOW

$32.00
28.06
30.25
29.00

2 0 0 0
DIVIDENDS
DECLARED

1 9 9 9
DIVIDENDS
DECLARED

$.30
.30
.30
.30

$.275
.275
.275
.275

gatx corporation and subsidiaries

selectedconsolidated financial data (5-year summary)

IN MILLIONS, EXCEPT PER SHARE DATA
YEAR ENDED OR AT DECEMBER 31

2 0 0 0 (a)

1 9 9 9

1 9 9 8

1 9 9 7 (b)

1 9 9 6

Results of Operations
Gross income
Costs and expenses

$1,390.8
1,337.3

$1,259.5
1,050.4

$1,263.6
1,063.4

$1,197.0
1,027.6

$ 889.4
740.2

Income from continuing operations

before income taxes

Income taxes

Income from continuing operations
Income from discontinued operations

Net income (loss)

53.5
22.7

30.8
35.8

66.6

209.1
82.8

126.3
25.0

200.2
86.0

114.2
17.7

169.4
66.8

102.6
(153.5)

149.2
60.1

89.1
13.6

$ 151.3

$ 131.9

$ (50.9)

$ 102.7

Per Share Data
Basic:

Income from continuing operations
Income (loss) from

discontinued operations

Total

Average number of common shares

(in thousands)

Diluted:

Income from continuing operations
Income (loss) from

discontinued operations

Total

Average number of common shares
and common share equivalents
(in thousands)

Dividends declared per share

of common stock

Financial Condition
Assets
Long-term debt and

capital lease obligations

Shareholders’ equity

.64

2.56

2.32

2.15

1.93

.75

.51

.36

1.39

3.07

2.68

(3.43)
$ (1.28)

.29

2.22

47,880

49,296

49,178

45,084

40,379

.63

2.51

2.27

2.06

1.82

.74

.50

.35

1.37

3.01

2.62

(3.34)
$ (1.28)

.28

2.10

48,753

50,301

50,426

45,084

48,924

1.20

1.10

1.00

.92

.86

$6,263.7

$5,429.2

$4,581.1

$4,583.8

$4,307.6

3,752.3
789.5

3,280.2
836.0

2,663.1
732.9

2,674.1
655.4

2,493.9
774.9

(a) The 2000 provision for litigation was $160.5 million on a pretax basis, $97.6 million on an after-tax basis.
(b) The 1997 restructuring charge was $224.8 million on a pretax basis, $162.8 million on an after-tax basis.

gatx corporation and subsidiaries

gatx locationsof operations

Financial Services

headquarters
San Francisco, California

offices
Lafayette, California
Farmington, Connecticut
Tampa, Florida
Chicago, Illinois
Williamsville, New York
Toledo, Ohio
Seattle, Washington
Sydney, Australia
Toulouse, France
Frankfurt, Germany
Tokyo, Japan
Toronto, Ontario
Singapore, Republic of Singapore
London, United Kingdom

affiliates
San Francisco, California
La Grange, Illinois
Sydney, Australia
Bad Homburg, Germany
Dublin, Ireland
Zug, Switzerland
Zurich, Switzerland
Elstree, United Kingdom
London, United Kingdom
Woking, United Kingdom

GATX Rail

headquarters
Chicago, Illinois

business offices
Valencia, California
Atlanta, Georgia
Chicago, Illinois
Hackensack, New Jersey
Philadelphia, Pennsylvania
Pittsburgh, Pennsylvania
Houston, Texas
Mexico City, Mexico
Calgary, Alberta
Toronto, Ontario
Montreal, Quebec

major service centers
Colton, California
Waycross, Georgia
East Chicago, Indiana

Hearne, Texas
Tierra Blanca, Mexico
Red Deer, Alberta
Sarnia, Ontario
Montreal, Quebec
Moose Jaw, Saskatchewan

mini service centers
Macon, Georgia
Terre Haute, Indiana
Geismar, Louisiana
Plaquemine, Louisiana
Midland, Michigan
Cincinnati, Ohio
Catoosa, Oklahoma
Copper Hill, Tennessee
Freeport, Texas (2)
Cd. Valles, Mexico
Coatcacoalcos, Mexico
Guaymas, Mexico
Hibueras, Mexico
Miramar, Mexico
Monterrey, Mexico
Orizaba, Mexico
Tlalnepantla, Mexico

mobile service units
Mobile, Alabama
Colton, California
Lake City, Florida
East Chicago, Indiana
Norco, Louisiana
Carteret, New Jersey
Las Cruces, New Mexico
Albany, New York
Masury, Ohio
Galena Park, Texas
Nederland, Texas
Olympia, Washington
Altamira, Mexico
Coatcacoalcos, Mexico
Guaymas, Mexico
Edmonton, Alberta
Red Deer, Alberta
Vancouver, British Columbia
Montreal, Quebec
Moose Jaw, Saskatchewan

affiliates
Vienna, Austria
Hamburg, Germany
Zug, Switzerland

gatx corporation and subsidiaries

gatx directorsand officers

GATX Board of Directors

rod f. dammeyer 2 , 4
President,
CAC llc

james m. denny 2 , 3
Retired; Former Managing Director,
William Blair Capital Partners, LLC

richard fairbanks 1 , 3
Counselor,
Center for Strategic & International Studies

william c. foote 1 , 3
Chairman, President and Chief Executive Ofﬁcer,
USG Corporation

deborah m. fretz 1 , 4
Senior Vice President,
Mid-Continent Reﬁning, Marketing & Logistics,
Sunoco, Inc.

miles l. marsh 2 , 3
Former Chairman and Chief Executive Ofﬁcer,
Fort James Corporation

michael e. murphy 2 , 4
Retired; Former Vice Chairman
and Chief Administrative Ofﬁcer,
Sara Lee Corporation

john w. rogers, jr. 1 , 4
Chairman and Chief Executive Ofﬁcer,
Ariel Capital Management, Inc.

ronald h. zech
Chairman, President and Chief Executive Ofﬁcer,
GATX Corporation

1 Member, Audit Committee
2 Member, Compensation Committee
3 Member, Nominating Committee
4 Member, Retirement Funds Review Committee

GATX Officers

(left to right)

william j. hasek
Treasurer

william m. muckian
Controller and Chief Accounting Ofﬁcer

gail l. duddy
Vice President, Human Resources

ronald j. ciancio
Vice President, General Counsel and Secretary

clifford j. porzenheim
Vice President, Corporate Strategy

(pictured on page 5)

ronald h. zech
Chairman, President and Chief Executive Ofﬁcer

brian a. kenney
Vice President and Chief Financial Ofﬁcer

gatx corporation and subsidiaries

gatx corporateinformation

Annual Meeting
Friday, April 27, 2001, 9:00 a.m.
Northern Trust Company
Assembly Room, 6th Floor
50 South LaSalle Street
Chicago, Illinois 60675

Financial Information and Press Releases
A copy of the company’s Annual Report on Form 10-K
for 2000 and selected other information are available
without charge.

Corporate information and press releases may be found
at http://www.gatx.com. A variety of current and histor-
ical ﬁnancial information, press releases and photographs
are available at this site.

GATX press releases may be obtained by accessing
PR Newswire Company’s News On-Call automated fax
service at (800) 758-5804. The company identiﬁcation
number for GATX is 105121.

Inquiries
Inquiries regarding dividend checks, the dividend
reinvestment plan, stock certiﬁcates, replacement of
lost certiﬁcates, address changes, account consolida-
tion, transfer procedures and year end tax information
should be addressed to GATX Corporation’s Transfer
Agent and Registrar:

Mellon Investor Services LLC
Overpeck Centre
85 Challenger Road
Ridgeﬁeld Park, NJ 07660

Telephone: (800) 851-9677
TDD for Hearing Impaired: (800) 231-5469
Foreign Shareholders: (201) 329-8660
TDD Foreign Shareholders: (201) 329-8354
Internet: http://www.mellon-investor.com

Information relating to shareholder ownership,
dividend payments, or share transfers:
Lisa M. Ibarra, Assistant Secretary
Telephone: (312) 621-6603
Fax: (312) 621-6647
E-mail: lmibarra@gatx.com

GATX Corporation welcomes and encourages questions
and comments from its shareholders, potential investors,
ﬁnancial professionals and the public at large. To better
serve interested parties, the following GATX personnel
may be contacted by letter, telephone, e-mail and/or fax.

Requests for information or brochures may be made
through GATX’s website. Many GATX publications
may be directly viewed or downloaded from this site.

To request published financial information
and financial reports, contact:
GATX Corporation
Investor Relations Department
500 West Monroe Street
Chicago, Illinois 60661-3676
Telephone: (800) 428-8161
E-mail: ir@gatx.com

Automated request line for materials:
(312) 621-6300

Analysts, institutional shareholders and
financial community professionals:
Robert C. Lyons, Director of Investor Relations
Telephone: (312) 621-6633
E-mail: rclyons@gatx.com

Individual investors’ inquiries:
Irma Dominguez, Investor Relations Coordinator
Telephone: (312) 621-8799
Fax: (312) 621-6648
E-mail: irma.dominguez@gatx.com

Questions regarding sales, service, lease
information, or customer solutions:
E-mail: cs@gatx.com
GATX Rail: (312) 621-6564
GATX Capital: (415) 955-3200

Independent Auditors
Ernst & Young LLP

Design by Addison www.addison.com
Executive Photography by Charlie Westerman
Origami Photography by Howard Bjornson
Printing by Lithographix, Inc.

This annual report is printed on recycled papers.

gatx corporation and subsidiaries

GATX Corporation
500 West Monroe Street
Chicago, Illinois 60661

TELEPHONE
(312) 621-6200
(800) 428-8161

WEB SITE
www.gatx.com

NYSE: GMT

gatx corporation

ANNUAL REPORT

2000

R E S H A P E D

renewedready

Though it enters the new century with a different shape, GATX remains committed to
the critical industry sectors that it knows well and has served for many years.