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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------

FORM 10-Q

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

For the quarterly period ended March 31, 2005

or

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

Commission File Number: 1-2328
-------------------------

GATX Corporation
(Exact name of registrant as specified in its charter)

NEW YORK 36-1124040
(State of incorporation) (I.R.S. Employee Identification No.)

500 WEST MONROE STREET
CHICAGO, ILLINOIS 60661-3676
(Address of principal executive offices, including zip code)

(312) 621-6200
(Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act) Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 49,941,741 shares of common
stock were outstanding as of April 29, 2005.



GATX CORPORATION
FORM 10-Q
QUARTERLY REPORT FOR THE PERIOD ENDED MARCH 31, 2005

INDEX



Item No. Page No.
- -------- --------

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
Consolidated Statements of Income (Unaudited).............................................. 1
Consolidated Balance Sheets (Unaudited).................................................... 3
Consolidated Statements of Cash Flows (Unaudited).......................................... 4
Notes to the Consolidated Financial Statements (Unaudited)................................. 5

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Risk Factors........................................................................... 12
Comparison of First Three Months of 2005 to First Three Months of 2004................. 12
Cash Flow and Liquidity................................................................ 22
New Accounting Pronouncements.......................................................... 24
Critical Accounting Policies........................................................... 24
Non-GAAP Financial Measures............................................................ 24
Forward Looking Statements............................................................. 26

Item 3. Quantitative and Qualitative Disclosures about Market Risk................................... 27

Item 4. Controls and Procedures...................................................................... 27

PART II - OTHER INFORMATION

Item 1. Legal Proceedings............................................................................ 28

Item 4. Submission of Matters to a Vote of Security Holders.......................................... 29

Item 6. Exhibits..................................................................................... 29

SIGNATURE............................................................................................. 30

EXHIBIT INDEX......................................................................................... 31




PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)



THREE MONTHS ENDED
MARCH 31, 2005
----------------------------
2005 2004 (a)
------------ -------------

GROSS INCOME
Lease income............................................................................ $ 215.7 $ 187.1
Marine operating revenue................................................................ 5.9 6.7
Interest income......................................................................... 3.4 8.5
Asset remarketing income................................................................ 10.4 18.5
Gain on sale of securities.............................................................. 4.9 1.1
Fees.................................................................................... 3.6 3.6
Other .................................................................................. 13.1 14.7
------------ -------------
Revenues................................................................................ 257.0 240.2
Share of affiliates' earnings........................................................... 22.9 17.6
------------ -------------
TOTAL GROSS INCOME...................................................................... 279.9 257.8

OWNERSHIP COSTS
Depreciation ........................................................................... 51.8 45.1
Interest, net........................................................................... 41.7 38.5
Operating lease expense................................................................. 43.5 43.7
------------ -------------
TOTAL OWNERSHIP COSTS................................................................... 137.0 127.3

OTHER COSTS AND EXPENSES
Maintenance expense..................................................................... 49.1 46.3
Marine operating expenses............................................................... 4.9 5.6
Other operating expenses................................................................ 10.2 12.7
Selling, general and administrative..................................................... 38.7 38.2
Reversal of provision for possible losses............................................... (3.2) (1.9)
Asset impairment charges................................................................ 2.1 .1
Fair value adjustments for derivatives.................................................. (2.1) (1.1)

------------ -------------
TOTAL OTHER COSTS AND EXPENSES.......................................................... 99.7 99.9
------------ -------------

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES................................... 43.2 30.6

INCOME TAXES............................................................................ 14.8 10.9
------------ -------------
INCOME FROM CONTINUING OPERATIONS....................................................... 28.4 19.7

DISCONTINUED OPERATIONS................................................................. -- 3.2
------------ -------------

NET INCOME.............................................................................. $ 28.4 $ 22.9
============ =============


1




THREE MONTHS ENDED
MARCH 31
-------------------------
2005 2004 (a)
----------- -----------

PER SHARE DATA
Basic:
Income from continuing operations....................................................... $ .57 $ .40
Income from discontinued operations..................................................... -- .06
----------- -----------
Total................................................................................... $ .57 $ .46
=========== ===========

Average number of common shares (in thousands).......................................... 49,637 49,258

Diluted: (b)
Income from continuing operations....................................................... $ .52 $ .38
Income from discontinued operations..................................................... -- .06
----------- -----------
Total................................................................................... $ .52 $ .44
=========== ===========

Average number of common shares and common share equivalents (in thousands)............. 60,598 54,779

Dividends declared per common share..................................................... $ .20 $ .20


(a) Results for the period ended March 31, 2004, including the presentation of
per share data, have been restated to reflect Technology as a discontinued
operation. See Note 12 to the consolidated financial statements for
additional information.

(b) Diluted earnings per share for the three months ended March 31, 2004 have
been restated to reflect the impact of EITF 04-8. See Note 10 to the
consolidated financial statements for more information.

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

2


GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN MILLIONS)



MARCH 31 DECEMBER 31
2005 2004
---------- -----------

ASSETS

CASH AND CASH EQUIVALENTS .............................................................. $ 58.5 $ 63.4
RESTRICTED CASH ........................................................................ 60.7 60.0

RECEIVABLES
Rent and other receivables ............................................................. 71.6 77.0
Finance leases ......................................................................... 306.4 285.9
Loans .................................................................................. 79.0 89.2
Less: allowance for possible losses .................................................... (19.4) (22.1)
---------- ----------
437.6 430.0
OPERATING LEASE ASSETS, FACILITIES AND OTHER
Rail ................................................................................... 3,622.4 3,847.9
Air .................................................................................... 1,607.0 1,704.1
Specialty .............................................................................. 64.3 65.4
Other .................................................................................. 213.5 212.3
Less: allowance for depreciation ....................................................... (1,905.9) (1,924.1)
---------- ----------
3,601.3 3,905.6
Progress payments for aircraft and other equipment ..................................... 20.4 20.0
---------- ----------
3,621.7 3,925.6

INVESTMENTS IN AFFILIATED COMPANIES .................................................... 793.8 718.6
GOODWILL ............................................................................... 90.7 93.9
OTHER INVESTMENTS ...................................................................... 74.0 79.0
OTHER ASSETS ........................................................................... 235.2 242.4
---------- ----------
$ 5,372.2 $ 5,612.9
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

ACCOUNTS PAYABLE AND ACCRUED EXPENSES .................................................. $ 308.5 $ 378.2

DEBT
Commercial paper and bank credit facilities ............................................ 19.6 72.1
Recourse ............................................................................... 2,730.7 2,887.1
Nonrecourse ............................................................................ 92.0 93.5
Capital lease obligations .............................................................. 72.5 79.4
---------- ----------
2,914.8 3,132.1

DEFERRED INCOME TAXES .................................................................. 726.5 721.0
OTHER LIABILITIES ...................................................................... 335.9 300.7
---------- ----------
TOTAL LIABILITIES ...................................................................... 4,285.7 4,532.0

SHAREHOLDERS' EQUITY
Preferred stock ($1.00 par value, 5,000,000 shares authorized, 20,840 and 21,468
shares of Series A and B Cumulative Convertible Preferred Stock issued and
outstanding as of March 31, 2005 and December 31, 2004, respectively,
aggregate liquidation preference of $1.3 million) .................................... * *
Common stock ($.625 par value, 120,000,000 authorized, 57,771,976 and 57,477,201
shares issued and 49,825,145 and 49,530,370 shares outstanding as of March 31, 2005
and December 31, 2004, respectively) ................................................. 36.0 35.9
Additional capital ..................................................................... 405.8 401.7
Reinvested earnings .................................................................... 768.7 750.3
Accumulated other comprehensive income ................................................. 4.6 21.6
---------- ----------
1,215.1 1,209.5
Treasury shares, at cost (7,946,831 shares at March 31, 2005 and December 31, 2004)... (128.6) (128.6)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY ............................................................. 1,086.5 1,080.9
---------- ----------
$ 5,372.2 $ 5,612.9
========== ==========


* Less than $.1 million.

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

3


GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)



THREE MONTHS ENDED
MARCH 31
------------------
2005 2004
------ ------

OPERATING ACTIVITIES
Net income .......................................................................... $ 28.4 $ 22.9
Less: Income from discontinued operations ........................................... -- 3.2
------- -------
Income from continuing operations ................................................... 28.4 19.7
Adjustments to reconcile income from continuing operations to net cash (used in)
provided by operating activities of continuing operations:
Realized gains on remarketing of leased equipment .............................. (8.0) (17.4)
Gain on sale of securities ..................................................... (4.9) (1.1)
Depreciation ................................................................... 54.4 48.5
Reversal of provision for possible losses ...................................... (3.2) (1.9)
Asset impairment charges ....................................................... 2.1 .1
Deferred income taxes .......................................................... 11.4 10.1
Share of affiliates' earnings, net of dividends ................................ (16.9) (13.8)
Increase in recoverable income taxes ........................................... (7.8) (.5)
Net decrease in operating lease payable ........................................ (41.7) (31.2)
Other, including working capital ............................................... (23.7) (10.5)
------- -------
Net cash (used in) provided by operating activities of continuing operations ... (9.9) 2.0

INVESTING ACTIVITIES
Additions to equipment on lease, net of nonrecourse financing for leveraged leases,
operating lease assets and facilities .............................................. (71.5) (71.5)
Loans extended ...................................................................... -- (6.3)
Investments in affiliated companies ................................................. (18.4) --
Progress payments ................................................................... (.4) (.9)
Other investments ................................................................... (4.0) (25.9)
------- -------
Portfolio investments and capital additions ......................................... (94.3) (104.6)
Portfolio proceeds .................................................................. 89.7 174.9
Proceeds from other asset sales ..................................................... 206.3 12.0
Net (increase) decrease in restricted cash .......................................... (.7) 1.8
------- -------

Net cash provided by investing activities of continuing operations ............. 201.0 84.1

FINANCING ACTIVITIES
Net proceeds from issuance of debt .................................................. -- 12.4
Repayment of debt ................................................................... (142.4) (66.3)
Net decrease in commercial paper and bank credit facilities ......................... (50.0) (4.8)
Net decrease in capital lease obligations ........................................... (6.4) (14.6)
Issuance of common stock and other .................................................. 4.2 .2
Cash dividends ...................................................................... (10.0) (9.8)
------- -------
Net cash used in financing activities of continuing operations ................. (204.6) (82.9)

EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS ............................... (.4) (.4)
CASH PROVIDED BY DISCONTINUED OPERATIONS, NET (SEE NOTE 12) ......................... 9.0 10.5
------- -------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ................................ $ (4.9) $ 13.3
======= =======


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

4


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. DESCRIPTION OF BUSINESS

GATX Corporation (GATX or the Company) is headquartered in Chicago,
Illinois and provides services primarily through three operating segments: GATX
Rail (Rail), GATX Air (Air), and GATX Specialty Finance (Specialty). GATX
specializes in railcar and locomotive leasing, aircraft operating leasing, and
financing other large-ticket equipment. In addition, GATX owns and operates a
fleet of self-unloading vessels on the Great Lakes through its wholly owned
subsidiary American Steamship Company (ASC).

GATX also invests in companies and joint ventures that complement its
existing business activities. GATX partners with financial institutions and
operating companies to improve scale in certain markets, broaden diversification
within asset classes, and enter new markets.

On June 30, 2004, GATX completed the sale of substantially all the assets
and related nonrecourse debt of GATX Technology Services and its Canadian
affiliate (Technology). Prior to December 31, 2004 the remaining assets
consisting primarily of interests in two joint ventures were sold. Financial
data for Technology has been segregated as discontinued operations for all
periods presented.

NOTE 2. BASIS OF PRESENTATION

The consolidated balance sheet at December 31, 2004 has been derived from
the audited financial statements at that date. All other consolidated financial
statements are unaudited but include all adjustments, consisting only of normal
recurring items which management considers necessary for a fair statement of the
consolidated results of operations, financial position and cash flow for the
respective periods.

Certain amounts in the 2004 financial statements have been reclassified to
conform to the current presentation, including the separate presentation and
reporting of discontinued operations.

NOTE 3. NEW ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 123(R) (revised 2004),
Share-Based Payments, which is a revision of SFAS No. 123, Accounting for
Stock-Based Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of
Cash Flows. Generally, SFAS No. 123(R) requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the
income statement, establishes fair value as the measurement objective and
requires entities to apply a fair value-based measurement method in accounting
for share-based payment transactions. The statement applies to all awards
granted, modified, repurchased or cancelled after July 1, 2005, and unvested
portions of previously issued and outstanding awards. In April 2005, the
Securities and Exchange Commission issued Release No. 33-8568 which deferred the
effective date of SFAS 123(R) to the first interim or annual reporting period of
fiscal years beginning on or after June 15, 2005. GATX expects to implement SFAS
No. 123(R) on January 1, 2006.

In December 2004, the FASB issued FASB Staff Position (FSP) 109-2,
Accounting and Disclosure Guidance for the Foreign Earnings Repatriation
Provision within the American Jobs Creation Act of 2004 which introduced a
special one-time dividends received deduction on the repatriation of certain
foreign earnings to a United States taxpayer (repatriation provision) provided
certain criteria are met. The repatriation provision is available to GATX for
the year ended December 31, 2005. GATX has historically maintained that
undistributed earnings of its foreign subsidiaries and affiliates were intended
to be permanently reinvested in those foreign operations. GATX is currently
evaluating the effect of the repatriation provision on its plan for reinvestment
or repatriation of foreign earnings. The range of reasonably possible amounts of
unremitted earnings considered for repatriation, and the income tax effects of
such repatriation cannot be estimated with certainty at this time. It is
anticipated that the evaluation of the effect of the repatriation provision will
be completed during the third quarter of 2005.

Accounting for Certain Leveraged Leases - Prior to 2004, GATX entered into
two structured leasing investments that are accounted for in the consolidated
financial statements as leveraged leases in accordance with guidance provided in
SFAS No. 13, Accounting for Leases. This accounting guidance requires total
income over the term of a lease to be recognized into income on a proportionate
basis in those years in which the net investment in a lease is positive. The net
investment is based on net cash flows from the lease, including the effect of
related income taxes. During 2004, the Internal Revenue Service (IRS) challenged
the timing of certain tax deductions claimed with respect to these transactions.
GATX believes that its tax position related to these

5


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

transactions was proper, based upon applicable statutes, regulations and case
law in effect at the time the transactions were initiated. GATX and the IRS are
conducting settlement discussions with respect to these transactions. However,
resolution of this matter has not concluded and may ultimately be litigated.

Under existing accounting guidance provided in SFAS No. 13, any changes in
estimates or assumptions not affecting estimated total net income from a
leveraged lease, including the timing of income tax cash flows, do not change
the timing of leveraged lease income recognition. However, the FASB is currently
reviewing this issue and expects to provide new guidance in the form of an FSP
in the second quarter of 2005. If existing rules are modified in such a way as
to require a recalculation of the timing of leveraged lease income recognition
to reflect a settlement of this tax matter, this change in accounting could
result in a one-time, non-cash charge to earnings. An equivalent amount of any
such adjustment would then be recognized as income over the remaining term of
the applicable leases; over the full term of these leases, cumulative accounting
income would not change. The impact to GATX's financial results will be
dependent on the details of the FASB's new guidance and the timing and terms of
any IRS settlement.

NOTE 4. INVESTMENTS IN AFFILIATED COMPANIES

Investments in affiliated companies represent investments in, and loans to
and from, domestic and foreign companies and joint ventures that are in
businesses similar to those of GATX, such as commercial aircraft leasing, rail
equipment leasing, and other business activities, including ventures that
provide asset residual value guarantees in both domestic and foreign markets.

For purposes of preparing the following information, GATX made certain
adjustments to the information provided by the joint ventures. Pre-tax income
was adjusted to reverse interest expense recognized by the joint ventures on
loans from GATX.

For all affiliated companies held at the end of the quarter as part of
continuing operations, operating results, assuming GATX held a 100 percent
interest, would be (in millions):



THREE MONTHS ENDED
MARCH 31
--------------------------
2005 2004
------------ -----------

Revenues............................ $ 179.9 $ 166.2
Pre-tax income...................... 45.8 33.1


NOTE 5. PENSION AND OTHER POST-RETIREMENT BENEFITS

The components of pension and other post-retirement benefit costs for the
three months ended March 31, 2005 and 2004 are as follows (in millions):



2005 PENSION 2004 PENSION 2005 RETIREE 2004 RETIREE
BENEFITS BENEFITS HEALTH AND LIFE HEALTH AND LIFE
------------ ------------ --------------- ----------------

Service cost................................ $ 1.5 $ 1.8 $ .1 $ .1
Interest cost............................... 5.7 5.8 1.1 1.2
Expected return on plan assets.............. (7.5) (7.7) -- --
Amortization of:
Unrecognized prior service cost........... .1 .1 -- --
Unrecognized net loss..................... .6 .4 .1 .2
--------- ----- ----- -----
Net costs................................... $ .4 $ .4 $ 1.3 $ 1.5
========= ===== ===== =====


The previous tables include amounts allocated to discontinued operations,
all of which are immaterial.

GATX uses a December 31 measurement date for all of its plans. The amounts
reported are based on estimated annual costs. Actual annual costs for the year
ending December 31, 2005 may differ from the estimates provided.

GATX expects to contribute approximately $2.8 million to its pension plans
(domestic and foreign) and approximately $8.1 million to its other
post-retirement benefit plans in 2005. Through March 31, 2005 contributions of
$.4 million have been made to the foreign pension plan. In addition,
contributions of $2.1 million have been made to the other post-retirement
benefit

6


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

plans.

NOTE 6. GUARANTEES

In connection with certain investments or transactions, GATX's
subsidiaries have provided guarantees which could potentially require
performance in the event of demands by third parties. Similar to GATX's balance
sheet investments, these guarantees expose GATX to credit, market, and equipment
risks; accordingly, GATX evaluates its commitments and other contingent
obligations using techniques similar to those used to evaluate funded
transactions.

The following table shows GATX's guarantees for continuing operations as
of (in millions):



MARCH 31, 2005 DECEMBER 31, 2004
-------------- -----------------

Affiliate debt guarantees -- recourse to GATX................. $ 12.6 $ 12.4
Asset residual value guarantees............................... 417.8 437.6
Lease and loan payment guarantees............................. 54.6 57.0
------------- ---------------
$ 485.0 $ 507.0
============= ===============


At March 31, 2005, the maximum potential amount of lease, loan or residual
value guarantees under which GATX or its subsidiaries could be required to
perform was $485.0 million. The related carrying value of the guarantees
recorded on the balance sheet, including deferred revenue primarily associated
with residual value guarantees entered into prior to the effective date of FASB
Interpretation No. 45 (FIN 45), Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others, was a liability of $2.8 million. The expiration dates of these
guarantees range from 2005 to 2017. Any liability resulting from GATX's
performance pursuant to the residual value guarantees will be reduced by the
value realized from the underlying asset or group of assets. Historically, gains
associated with the residual value guarantees have exceeded any losses incurred
and are recorded in asset remarketing income in the consolidated statements of
income. Based on known facts and current market conditions, management does not
believe that the asset residual value guarantees will result in any significant
adverse financial impact to the Company. Accordingly, the Company has not
recorded any accrual for contingent losses with respect to the residual value
guarantees as of March 31, 2005. GATX believes these asset residual value
guarantees will likely generate future income in the form of fees and residual
sharing proceeds.

Asset residual value guarantees represent GATX's commitment to third
parties that an asset or group of assets will be worth a specified amount at the
end of a lease term. Revenue is earned for providing these asset value
guarantees in the form of an initial fee (which is amortized into income over
the guaranteed period) and by sharing in any proceeds received upon disposition
of the assets to the extent such proceeds are in excess of the amount guaranteed
(which is recorded when realized).

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

NOTE 7. VARIABLE INTEREST ENTITIES

GATX has ownership interests in certain investments that are considered
Variable Interest Entities (VIEs) in accordance with FASB Interpretation No. 46R
Consolidation of Variable Interest Entities (FIN 46R). However, GATX is not a
primary beneficiary with respect to any of the VIEs. As a result, GATX does not
consolidate these entities. GATX's maximum exposure to loss with respect to
these VIEs is approximately $266.8 million of which $238.2 million was the
aggregate carrying value of these investments recorded on the balance sheet at
March 31, 2005.

NOTE 8. COMPREHENSIVE INCOME

GATX includes foreign currency translation gains (losses), unrealized
gains (losses) on available-for-sale securities and unrealized gains (losses) on
certain qualified derivative instruments in comprehensive income. For the three
months ended March 31, 2005 and 2004, comprehensive income was $11.4 million and
$20.5 million, respectively.

NOTE 9. INCENTIVE COMPENSATION PLANS

7


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

GATX grants stock-based awards to employees pursuant to established
compensation plans, as described more fully in its Annual Report on Form 10-K
for the year ended December 31, 2004. As permitted under SFAS No. 148,
Accounting for Stock-Based Compensation - Transition and Disclosure - an
amendment of SFAS No. 123, the Company accounts for all stock-based employee
compensation plans under the recognition and measurement provisions of
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees. Under these guidelines, no compensation expense is recognized,
because the exercise price of GATX's employee stock options equals the market
value of the underlying stock on the date of grant. See Note 3 relating to new
accounting pronouncements for additional information.

Pro forma information regarding net income and earnings per share is
required to be disclosed as if GATX had accounted for its employee stock options
using the fair value method under SFAS No. 123, Accounting for Stock-Based
Compensation. The Black-Scholes model, one of the most frequently referenced
models used 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 assumptions 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.

The following table illustrates the effect on net income and earnings per
share if the Company had applied the fair value provisions of SFAS No. 123 to
stock-based employee compensation plans (in millions, except for per share
data):



THREE MONTHS ENDED
MARCH 31
----------------------------
2005 2004
----------- ------------

Net income, as reported...................................................... $ 28.4 $ 22.9
Add: Stock-based compensation expense, net of tax............................ .5 .2
Deduct: Total stock-based employee compensation expense determined under the
fair value-based method for all awards, net of tax........................... (1.0) (.7)
----------- ------------
Pro forma net income......................................................... $ 27.9 $ 22.4
=========== ============

NET INCOME PER SHARE:
Basic, as reported........................................................... $ .57 $ .46
Basic, pro forma............................................................. .56 .45
Diluted, as reported......................................................... .52 .44
Diluted, pro forma........................................................... .51 .43


8


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

NOTE 10. EARNINGS PER SHARE

GATX has issued two convertible securities, one in 2002 for $175.0 million
and the other in 2003 for $125.0 million. Shares underlying $175.0 million of
convertible securities issued in 2002 and the related interest expense
adjustment were excluded from the calculation of diluted earnings per share for
the three months ended March 31, 2004 because of antidilutive effects. These
securities are convertible into common stock at a price of $34.09 per share,
which would result in 5,133,471 common shares issued upon conversion.

Shares underlying $125.0 million of convertible securities issued in 2003
and the related interest expense were included in the calculation of diluted
earnings per share for each of the 2005 and 2004 periods in accordance with the
guidance provided in EITF 04-08. These securities are convertible into common
stock with a current conversion price of $24.23 per share, which would result in
5,158,042 common shares issued upon conversion. The conversion price is subject
to adjustment based on various factors, including changes in the dividend on
GATX's common stock. The conversion into common stock is subject to a number of
contingencies including the market price of GATX's common stock and the trading
price of the notes.

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



THREE MONTHS ENDED
MARCH 31
-------------------------------
2005 2004
------------- -------------

NUMERATOR:
Income from continuing operations............................................... $ 28.4 $ 19.7
Income from discontinued operations............................................. -- 3.2
Less: Dividends paid and accrued on preferred stock........................ * *
------------- -------------
NUMERATOR FOR BASIC EARNINGS PER SHARE - INCOME AVAILABLE TO COMMON SHAREHOLDERS 28.4 22.9

Effect of dilutive securities:
Add: Dividends paid and accrued on preferred stock......................... * *
After-tax interest expense on convertible securities............. 3.2 2.2
------------- -------------
NUMERATOR FOR DILUTED EARNINGS PER SHARE - INCOME AVAILABLE TO COMMON $ 31.6 $25.1
SHAREHOLDERS.................................................................

DENOMINATOR:
DENOMINATOR FOR BASIC EARNINGS PER SHARE - WEIGHTED AVERAGE SHARES.............. 49.6 49.3

Effect of dilutive securities:
Stock based incentive plans................................................ .5 .2
Convertible preferred stock................................................ .1 .1
Convertible debt securities ............................................... 10.4 5.2
------------- -------------
DENOMINATOR FOR DILUTED EARNINGS PER SHARE - ADJUSTED WEIGHTED AVERAGE AND 60.6 54.8
ASSUMED CONVERSION...........................................................

BASIC EARNINGS PER SHARE ....................................................... $ .57 $ .46

DILUTED EARNINGS PER SHARE...................................................... $ .52 $ .44


* Less than $.1 million.

9


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

NOTE 11. FINANCIAL DATA OF BUSINESS SEGMENTS

The financial data presented below conforms to SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information, and depicts the
profitability, financial position and capital expenditures of each of GATX's
continuing business segments. Segment profitability is presented to reflect
operating results inclusive of allocated support expenses from the parent
company and estimated applicable interest costs. Technology's results are
classified as discontinued operations and not included in the financial data
presented below.

GATX provides services primarily through three operating segments: Rail,
Air and Specialty. Other is comprised of corporate results (including selling,
general and administrative (SG&A) expense and interest expense not allocated to
segments), and the results of ASC. Management evaluates the performance of each
segment based on several measures, including net income. These results are used
to assess performance and determine resource allocation among the segments.

GATX allocates corporate SG&A expenses to the segments. Corporate SG&A
expenses relate to administration and support functions performed at the
corporate office. Such expenses include information technology, corporate SG&A,
human resources, legal, financial support and executive costs. Directly
attributable expenses are generally allocated to the segments and shared costs
are retained in Other. Amounts allocated to the segments are approximated based
on management's best estimate and judgment of direct support services.

Debt balances and interest expense were allocated based upon a fixed
leverage ratio for each individual operating segment across all reporting
periods, expressed as a ratio of debt to equity. In 2005, leverage ratios were
4.5:1 for Rail, 3:1 for Air and 4:1 for Specialty; 2004 ratios were 5:1 for
Rail, 4:1 for Air and 4:1 for Specialty. Unallocated debt and related interest
expense was assigned to Other in each period. Management believes this leverage
and interest expense allocation methodology gives an accurate indication of each
operating segment's risk-adjusted financial return. The reduction to the 2005
leverage assumptions at Rail and Air better reflect the Company's lower
consolidated leverage position.

The following tables present certain segment data for the three months
ended March 31, 2005 and 2004 (in millions):



INTER-
RAIL AIR SPECIALTY OTHER SEGMENT TOTAL
------- ------- --------- ------ ------- --------

2005 PROFITABILITY
Revenues......................................... $ 200.9 $ 33.3 $ 17.3 $ 5.5 $ -- $ 257.0
Share of affiliates' earnings.................... 3.1 10.4 9.4 -- -- 22.9
------- ------- --------- ------ ------- --------
Total gross income............................... 204.0 43.7 26.7 5.5 -- 279.9
Depreciation .................................... 35.1 15.7 1.0 -- -- 51.8
Interest, net.................................... 22.6 13.3 4.9 .9 -- 41.7
Operating lease expense.......................... 42.0 .5 1.1 -- (.1) 43.5
Income (loss) from continuing operations before
income taxes.................................. 29.8 7.0 16.2 (9.9) .1 43.2
Income (loss) from continuing operations......... 20.0 4.8 10.0 (6.4) -- 28.4
------- ------- --------- ------ ------- ------
SELECTED BALANCE SHEET DATA AT MARCH 31, 2005
Investments in affiliated companies.............. 105.5 522.0 166.3 -- -- 793.8
Identifiable assets from continuing operations 2,555.5 2,031.8 480.1 359.9 (55.1) 5,372.2
------- ------- --------- ------ ------- --------
CASH FLOW
Portfolio investments and capital additions...... 70.1 .6 22.1 1.5 -- 94.3
------- ------- --------- ------ ------- --------


10


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



INTER-
RAIL AIR SPECIALTY OTHER SEGMENT TOTAL
-------- ------- --------- ------ ------- -------

2004 PROFITABILITY
Revenues...................................... $ 177.9 $ 23.3 $ 31.5 $ 7.5 $ -- $ 240.2
Share of affiliates' earnings................. 3.8 9.2 4.6 -- -- 17.6
-------- -------- --------- ------ ------- --------
Total gross income............................ 181.7 32.5 36.1 7.5 -- 257.8
Depreciation ................................. 30.2 13.8 1.1 -- -- 45.1
Interest, net................................. 16.8 9.3 7.5 4.9 -- 38.5
Operating lease expense....................... 41.7 1.0 1.0 -- -- 43.7
Income (loss) from continuing operations
before income taxes......................... 19.4 2.8 24.9 (16.5) -- 30.6
Income (loss) from continuing operations...... 12.7 2.0 15.9 (10.9) -- 19.7
-------- -------- --------- ------ ------- --------
SELECTED BALANCE SHEET DATA AT DECEMBER 31,
2004
Investments in affiliated companies........... 102.5 473.8 142.3 -- -- 718.6
Identifiable assets from continuing
operations.................................. 2,721.2 2,086.4 477.4 372.9 (56.4) 5,601.5

-------- -------- --------- ------ ------- --------
CASH FLOW
Portfolio investments and capital additions... 94.1 1.0 8.9 .6 -- 104.6
-------- -------- --------- ------ ------- --------


NOTE 12. DISCONTINUED OPERATIONS

Consistent with GATX's strategy of focusing on the Company's core
businesses, railcar and aircraft leasing, GATX sold its Technology business
during 2004. On June 30, 2004, GATX completed the sale of substantially all the
assets and related nonrecourse debt of Technology and its Canadian affiliate for
net proceeds of $234.1 million. Subsequently, the remaining assets consisting
primarily of interests in two joint ventures were sold prior to December 31,
2004. Financial data for Technology has been segregated as discontinued
operations for all periods presented.

The following table summarizes the revenues, income before taxes and
operating results of Technology, which has been reclassified to discontinued
operations for all periods presented (in millions):



THREE MONTHS ENDED
MARCH 31
-------------------------
2005 2004
--------- ----------

Gross income................................. $ .4 $ 50.2
Income before taxes.......................... -- 5.1
Operating income, net of tax................. -- 3.2


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




THREE MONTHS ENDED
MARCH 31
------------------------
2005 2004
-------- --------

OPERATING ACTIVITIES
Net cash provided .......................................... $ - $ 34.5
-------- --------
INVESTING ACTIVITIES
Portfolio investments and capital additions............... - (68.4)
Portfolio proceeds........................................ - 48.4
Net proceeds from sale of segment......................... 9.0 -
-------- --------
Net cash provided by (used in) investing activities....... 9.0 (20.0)

FINANCING ACTIVITIES
Net proceeds from issuance of debt........................ - 57.4
Repayment of debt......................................... - (61.4)
-------- --------
Net cash used in financing activities...................... - (4.0)
-------- --------
CASH PROVIDED BY DISCONTINUED OPERATIONS, NET............. $ 9.0 $ 10.5
======== ========


In the three month period ended March 31, 2005, Technology received a
final distribution of $9.0 million associated with the 2004 sale of a joint
venture interest.

11


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

NOTE 13. SUBSEQUENT EVENTS

Subsequent to quarter end, GATX Financial Corporation (GFC), a
wholly-owned subsidiary of GATX completed a bond tender for an aggregate
principal amount of $188.4 million, consisting of $67.7 million of 6-7/8% notes
and $120.7 million of 7-3/4% notes, each issue maturing in December 2006. The
Company expects to recognize expenses of approximately $8.0 million after tax in
the second quarter in connection with the debt tender and other liability
management initiatives. In addition, GFC issued a total of $330.0 million of
senior unsecured debt including $230.0 million of five-year notes with a 5-1/8%
coupon, and $100.0 million of ten-year notes with a 5.7% coupon.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GATX Corporation (GATX or the Company) is headquartered in Chicago,
Illinois and provides services primarily through three operating segments: GATX
Rail (Rail), GATX Air (Air), and GATX Specialty Finance (Specialty). GATX
specializes in railcar and locomotive leasing, aircraft operating leasing, and
financing other large-ticket equipment. In addition, GATX owns and operates a
fleet of self-unloading vessels on the Great Lakes through its wholly owned
subsidiary American Steamship Company (ASC).

On June 30, 2004, GATX completed the sale of substantially all the assets
and related nonrecourse debt of GATX Technology Services and its Canadian
affiliate (Technology). Subsequently, the remaining assets consisting primarily
of interests in two joint ventures were sold prior to December 31, 2004.
Financial data for Technology has been segregated as discontinued operations for
all periods presented.

Operating results for the three months ended March 31, 2005 are not
necessarily indicative of the results that may be achieved for the entire year
ending December 31, 2005. For further information, refer to GATX's Annual Report
on Form 10-K for the year ended December 31, 2004.

This "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains certain non-GAAP (Generally Accepted Accounting
Principals) financial measures. See "Non-GAAP Financial Measures" for additional
information including definitions of terms and reconciliations to related GAAP
components.

RISK FACTORS

For a list of GATX's risk factors, refer to the Annual Report on Form 10-K
for the year ended December 31, 2004.

Circumstances and conditions may change. Accordingly, additional risks and
uncertainties not presently known, or that GATX currently deems immaterial, may
also adversely affect GATX's business operations.

STATEMENT OF INCOME DISCUSSION

The following table presents income from continuing operations and net
income by segment for the three months ended March 31 (in millions):



2005 2004
------------ ------------

Rail.................................. $ 20.0 $ 12.7
Air................................... 4.8 2.0
Specialty............................. 10.0 15.9
Other................................. (6.4) (10.9)
------------ ------------
Income from continuing operations.... 28.4 19.7
Discontinued operations............... -- 3.2
------------ ------------
Net income......................... $ 28.4 $ 22.9
============ ============


12


GATX'S FINANCIAL PERFORMANCE MEASURES

The following table presents financial measures and ratios derived from
the financial statements that the Company uses as one element to analyze the
Company's underlying financial performance from period to period. All amounts
and ratios are based on continuing operations and are shown for the trailing
12-months ended March 31:



2005 2004
---- ----

Return on equity..................... 16.8% 9.6%

Return on assets..................... 2.5% 1.2%

SG&A efficiency ratio................ 1.75% 1.69%


The 2005 trailing 12-month return measures were positively affected by
non-operating events that occurred in the second half of 2004, including the
gain from the sale of a Staten Island property, insurance recoveries and other
tax benefits.

GATX RAIL

SUMMARY

Market conditions in North America continued to improve, favorably
impacting Rail's North American operations. Market indicators, such as car
loadings and ton miles, were up from the comparable prior year period. Rail has
more cars on lease and is realizing higher rental rates. European market
conditions have also continued to be stable. Operations have benefited from
Rail's success in new markets and an increase in the number of cars on lease.

In the first three months of 2005, Rail invested $70.1 million, acquiring
approximately 900 cars in North America. The impact of high steel prices and
competition were limiting factors in the number of attractive investment
opportunities.

Net income of $20.0 million in 2005 increased $7.3 million from the prior
year period. This improvement was driven primarily by higher lease income due to
an increase in the number of active cars and strong remarketing income which was
partially offset by higher ownership and maintenance costs.

In the fourth quarter of 2004, Rail acquired the remaining 50% ownership
interest of the Locomotive Leasing Partners, LLC joint venture (LLP). As a
result, LLP's results are now included in Rail's consolidated financial
statements. The impact of this acquisition was not material to Rail's 2005
results as compared to the prior year.

13


Components of Rail's income statement for the three months ended March 31,
2005 and 2004 are summarized below (in millions):



2005 2004
--------- ---------

GROSS INCOME
Lease income.................................... $ 178.3 $ 159.4
Asset remarketing income........................ 6.9 4.4
Fees............................................ 0.5 1.0
Other........................................... 15.2 13.1
--------- ---------
Revenues.................................... 200.9 177.9
Share of affiliates' earnings................... 3.1 3.8
--------- ---------
TOTAL GROSS INCOME............................. 204.0 181.7

OWNERSHIP COSTS
Depreciation.................................... 35.1 30.2
Interest, net................................... 22.6 16.8
Operating lease expense......................... 42.0 41.7
--------- ---------
TOTAL OWNERSHIP COSTS.......................... 99.7 88.7

OTHER COSTS AND EXPENSES
Maintenance expense............................. 48.2 45.9
Other operating expenses........................ 8.1 11.0
Selling, general and administrative............. 18.0 16.5
(Reversal) provision for possible losses........ (0.8) 0.2
Asset impairment charges........................ 1.0 -
--------- ---------
TOTAL OTHER COSTS AND EXPENSES................. 74.5 73.6

INCOME BEFORE INCOME TAXES...................... 29.8 19.4
INCOME TAXES.................................... 9.8 6.7
--------- ---------
NET INCOME...................................... $ 20.0 $ 12.7
========= =========


Comparison of First Three Months of 2005 to First Three Months of 2004

GROSS INCOME

Rail's first quarter 2005 gross income increased to $204.0 million,
compared to $181.7 million in the prior year period. Additional cars on lease,
higher lease rates and strong remarketing gains all contributed to this
improvement.

First quarter 2005 lease income increased $18.9 million, including a $6.0
million contribution from LLP. Secondary market acquisitions and new railcar
investments made throughout 2004 and the first quarter of 2005 drove the
significant increase in active car counts resulting in a corresponding increase
in lease income. Rail had 5,400 more active cars at the end of first quarter of
2005 compared to the same period in 2004. North American utilization improved to
98% at March 31, 2005 representing approximately 104,200 railcars on lease
compared to 94% at March 31, 2004 with approximately 98,800 railcars on lease.
During the second half of 2004, Rail experienced an increase in average renewal
rates as compared to the average expiring rate on a basket of its most common
car types. This trend continued in the first quarter of 2005 as average renewal
rates within the basket increased approximately 9% compared to the average
expiring rate.

European lease income was favorable to the prior year period due to an
increase in the number of cars on lease resulting from the placement of new car
deliveries throughout 2004. European market conditions continue to be stable.

Asset remarketing income includes gains from the sale of assets from
Rail's own portfolio as well as residual sharing fees from the sale of managed
assets. Asset remarketing income of $6.9 million increased $2.5 million from the
prior year period due to the sale of more railcars and residual sharing gains.

Other income of $15.2 million increased $2.1 million over the prior period
due to increased railcar repair revenue,

14


primarily from third party customers and railroads. Share of affiliates'
earnings of $3.1 million were $.7 million lower than the prior year period.
Excluding LLP's earnings of $1.4 million in 2004, share of affiliates' earnings
were $.7 million higher than the prior year period. The increase was the result
of favorable market conditions at both domestic and foreign joint ventures.

OWNERSHIP COSTS

Ownership costs increased to $99.7 million in the 2005 period compared to
$88.7 million in 2004. Both depreciation and interest expense were higher due to
railcar additions and the acquisition of LLP. Debt balances and interest expense
were allocated to the Rail segment based on a fixed leverage ratio. For the
period ended March 31, 2005, Rail's leverage was set at 4.5:1 compared to 5:1
for the 2004 period. The change in leverage was implemented to better align debt
levels at GATX's business segments with the Company's consolidated leverage
position. This policy change favorably impacted interest expense by
approximately $.7 million in the current period.

OTHER COSTS AND EXPENSES

Maintenance expense of $48.2 million increased $2.3 million from the prior
year period due to a larger active fleet and increased railroad enforcement of
industry rules for wheel replacement. In the coming quarters Rail expects to
undertake a number of railcar conversions, a process of retrofitting or
overhauling idle cars that enables these cars to be used in different service.
This will have a positive long-term financial impact, but will raise maintenance
expense in the near term.

Other operating costs of $8.1 million were $2.9 million lower than 2004.
The favorable variance is primarily attributable to a write-off taken in 2004
related to amounts on deposit with a bankrupt supplier in Europe.

TAXES

See "Consolidated Income Taxes" for a discussion of GATX's consolidated
income tax expense.

FINANCIAL PERFORMANCE MEASURES FOR RAIL

The following table summarizes the performance measures for the trailing
12-months ended March 31 ($'s in millions):



2005 2004
---------- ------------

Return on assets.......................... 1.8% 1.6%
SG&A efficiency ratio..................... 1.90% 1.87%
On balance sheet assets................... $ 2,555.5 $ 2,470.4
Off-balance sheet assets.................. $ 1,258.9 $ 1,170.6
Total assets.............................. $ 3,814.4 $ 3,641.0


15


RAIL'S FLEET DATA

The following table summarizes fleet activity for GATX's wholly owned
North American rail cars for the three months ended March 31:



Railcar roll forward: 2005 2004
- ---------------------- ---------- --------

Beginning balance............................... 106,819 105,248
Cars added...................................... 914 1,269
Cars scrapped or sold........................... (1,027) (1,729)
---------- --------
Ending balance................................. 106,706 104,788
Utilization rate................................ 97.7% 94.3%


GATX AIR

SUMMARY

Air benefited from an improved worldwide operating environment relative to
recent periods, with increased demand for aircraft and a trend toward higher
rental rates. Lease rates continue to recover from the low levels of recent
years, in particular for newer aircraft, which comprise a majority of Air's
fleet. Aircraft utilization continues to be high with 98% of the owned fleet on
lease with customers.

While the aviation industry is recovering, the recovery is fragile, and is
threatened by the high cost of jet fuel and the possibility of further airline
failures. As a result, GATX continues to actively monitor potential lessee
defaults and air asset impairments. United States (U.S.) carriers are
particularly vulnerable as the combination of high fuel prices and pricing
pressure from low-cost carriers have increased operating losses, contributing to
added uncertainty with respect to certain airlines. Air continues to have
limited exposure to North American carriers with less than 10% of its total
aircraft investment in North America as of March 31, 2005.

In March 2005, Air sold a 50% interest in three aircraft, which consisted
of two 737-800's and one A319-100 in connection with the formation of a new
joint venture with HSH Nordbank. A fourth aircraft from Air's portfolio will be
added to the partnership in the second quarter of 2005.

Net income of $4.8 million for the three months ended March 31, 2005
increased $2.8 million compared to the prior year period. The improvement over
prior year was driven by higher lease income from additional aircraft on lease.

16


Components of Air's income statement for the three months ended March 31,
2005 and 2004 are summarized below (in millions):



2005 2004
--------- ----------

GROSS INCOME
Lease income........................................ $ 29.8 $ 20.6
Interest income..................................... 0.1 0.1
Asset remarketing income............................ 1.0 0.2
Fees................................................ 2.2 1.7
Other............................................... 0.2 0.7
--------- ----------
Revenues............................................ 33.3 23.3
Share of affiliates' earnings....................... 10.4 9.2
--------- ----------
TOTAL GROSS INCOME................................ 43.7 32.5

Ownership Costs
Depreciation........................................ 15.7 13.8
Interest, net....................................... 13.3 9.3
Operating lease expense............................. 0.5 1.0
--------- ----------
TOTAL OWNERSHIP COSTS............................. 29.5 24.1

OTHER COSTS AND EXPENSES
Maintenance expense................................. 0.4 0.2
Other operating expenses............................ 0.4 0.4
Selling, general and administrative................. 6.7 5.4
Reversal of provision for possible losses........... (0.3) (0.4)
--------- ----------
TOTAL OTHER COSTS AND EXPENSES.................... 7.2 5.6

INCOME BEFORE INCOME TAXES.......................... 7.0 2.8
INCOME TAX PROVISION................................ 2.2 0.8
--------- ----------
NET INCOME.......................................... $ 4.8 $ 2.0
========= ==========


Comparison of First Three Months of 2005 to First Three Months of 2004

GROSS INCOME

Air's gross income of $43.7 million for the three month period ended March
31, 2005 was $11.2 million higher than the prior year period. The increase was
primarily driven by higher lease income and share of affiliates' earnings. Lease
income of $29.8 million increased $9.2 million from the prior year period due to
income on seven aircraft delivered or acquired subsequent to the prior year
quarter. Share of affiliates' earnings improved $1.2 million reflecting improved
rental rates at certain affiliates and higher fee income at Pembroke Group.

OWNERSHIP COSTS

Ownership costs of $29.5 million for the three month period ended March
31, 2005 were $5.4 million higher than the prior year period. The increase was
due to higher depreciation and interest expense on new aircraft delivered after
the prior year period and higher average interest rates on direct and allocated
debt. The increase was partially offset by a decrease in Air's allocated debt
balance, which reduced interest expense by approximately $1.0 million in the
current period. For the period ended March 31, 2005, Air's leverage was set at
3:1 compared to 4:1 for the 2004 period. The change in leverage was implemented
to better align debt levels at GATX's business segments with the Company's
consolidated leverage position.

17


OTHER COSTS AND EXPENSES

Total other costs and expenses of $7.2 million for the three month period
ended March 31, 2005 were $1.6 million higher than in the prior year period. The
increase from the prior year period was primarily due to a $1.3 million increase
in SG&A expenses, a substantial amount of which was attributable to capitalized
costs on aircraft deliveries in the 2004 period.

TAXES

See "Consolidated Income Taxes" for a discussion of GATX's consolidated
income tax expense.

FINANCIAL PERFORMANCE MEASURES FOR AIR

The following table summarizes the performance measures for the trailing
12-months ended March 31 ($'s in millions):



2005 2004
----------- ----------

Return on assets.................................... .6% .7%
SG&A efficiency ratio............................... .62% .53%
On balance sheet assets............................. $ 2,031.8 $ 1,964.8
Off-balance sheet assets............................ $ 27.7 $ 27.7
Total assets........................................ $ 2,059.5 $ 1,992.5


Results for the 12-month period ended March 31, 2004 were favorably
impacted by a bad debt recovery of $8.4 million in the second quarter of 2004.

AIR'S FLEET DATA

The following table summarizes information on GATX owned and managed
aircraft for the three months ended or as of March 31 ($'s in millions):



2005 2004
------ --------

Utilization by net book value of owned aircraft......... 97.9% 97.0%
Number of owned aircraft................................ 161 161
Number of managed aircraft.............................. 66 70
Non-performing assets................................... $ -- $ --
Impairments and net charge-offs......................... $ -- $ --


18


GATX SPECIALTY FINANCE

SUMMARY

As previously announced, Specialty is pursuing new investments in marine
assets and other selective long-lived industrial equipment in targeted mature
industries. However, in the three-month period ending March 31, 2005, the
portfolio declined as portfolio runoff exceeded new investment. Driving the
reduction was the liquidating venture loan portfolio, the average balance of
which declined $83.3 million compared to the prior year period. At March 31,
2005 the total balance of venture investments was $39.3 million.

Specialty's net income of $10.0 million was $5.9 million lower than the
prior year primarily due to the portfolio runoff and the unusually large asset
remarketing gains in 2004. The decrease in net income was partially offset by
favorable results from the marine joint ventures and gains on the sale of
securities.

Components of Specialty Finance's income statement for the three months
ended March 31 are summarized below (in millions):



2005 2004
------ ------

GROSS INCOME
Lease income......................................... $ 7.6 $ 7.1
Interest income...................................... 1.8 8.4
Asset remarketing income............................. 2.5 13.9
Gain on sale of securities........................... 4.9 1.1
Fees................................................. .9 .9
Other................................................ (.4) .1
------ ------
Revenues............................................. 17.3 31.5
Share of affiliates' earnings........................ 9.4 4.6
------ ------
TOTAL GROSS INCOME................................. 26.7 36.1

OWNERSHIP COSTS
Depreciation......................................... 1.0 1.1
Interest, net........................................ 4.9 7.5
Operating lease expense.............................. 1.1 1.0
------ ------
TOTAL OWNERSHIP COSTS.............................. 7.0 9.6

OTHER COSTS AND EXPENSES
Maintenance expense.................................. .5 .2
Other operating expenses............................. 1.7 1.2
Selling, general and administrative.................. 1.9 2.9
Reversal of provision for possible losses............ (1.4) (1.7)
Asset impairment charges............................. 1.1 .1
Fair value adjustments for derivatives............... (.3) (1.1)
------ ------
TOTAL OTHER COSTS AND EXPENSES..................... 3.5 1.6

INCOME BEFORE INCOME TAXES........................... 16.2 24.9
INCOME TAXES......................................... 6.2 9.0
------ ------
NET INCOME........................................... $ 10.0 $ 15.9
====== ======


19



Comparison of First Three Months of 2005 to First Three Months of 2004

GROSS INCOME

Gross income of $26.7 million was $9.4 million lower than the prior year.
The decrease is primarily due to lower asset remarketing income and interest
income. The decrease was partially offset by higher gains on sale of securities
and share of affiliates' earnings. Asset remarketing in the prior year included
an $11.8 million gain from the final asset sale and dissolution of a corporate
aircraft joint venture. Interest income of $1.8 million was $6.6 million lower
than the prior year due to the runoff of the venture loan portfolio. Also
affecting this decline was a $4.0 million prepayment penalty received in the
first quarter 2004. The increase in gains on sale of securities in the first
quarter 2005 was attributable to a $3.7 million gain from the sale of shares in
an internet search engine company. Share of affiliate earnings of $9.4 million
was $4.8 million higher than the prior year primarily due to higher utilization
and freight rates realized at three marine joint ventures.

OWNERSHIP COSTS

Ownership costs of $7.0 million in 2005 decreased $2.6 million compared to
the prior year primarily due to lower debt balances related to the declining
investment portfolio.

OTHER COSTS AND EXPENSES

Other costs and expenses of $3.5 million increased $1.9 million driven by
the change in fair value adjustments for derivatives which are primarily the
result of currency fluctuations and largely offset by the remeasurement of the
associated investments reported as other income. Asset impairment charges in
2005 for certain assets classified as held for sale offset the benefit of lower
SG&A due to staff reductions.

TAXES

See "Consolidated Income Taxes" for a discussion of GATX's consolidated
income tax expense.

FINANCIAL PERFORMANCE MEASURES FOR SPECIALTY FINANCE ($'S IN MILLIONS)

The following table summarizes the performance measures for the trailing
12-months ended March 31 ($'s in millions):



2005 2004
------ ------

Return on assets............................... 6.4% 6.0%
SG&A efficiency ratio.......................... .61% .93%
On balance sheet assets........................ $480.1 $575.9
Off-balance sheet assets....................... $ 12.4 $ 13.8
Total assets................................... $492.5 $589.7


SPECIALTY'S PORTFOLIO DATA

The following table summarizes information on the owned and managed
Specialty Finance portfolio for the three months ended March 31 ($'s in
millions):



2005 2004
------ ------

Loss allowance as % of reservable assets....... 5.3% 7.8%
Impairments and net charge-offs................ $ .6 $ (.2)
Net book value of managed portfolio............ $684.1 $806.3


Specialty continues to benefit from improving portfolio quality and better
than expected performance, particularly in the venture portfolio.

20



OTHER

SUMMARY

Other is comprised of corporate results, including SG&A and interest
expense net of amounts allocated to the segments, and the results ASC.

Components of the income statement for the three months ended March 31 are
summarized below (in millions):



2005 2004
------ ------

GROSS INCOME
Marine operating revenue.................... $ 5.9 $ 6.7
Other....................................... (.4) .8
------ ------
TOTAL GROSS INCOME........................ 5.5 7.5

OWNERSHIP COSTS.............................
Interest, net............................... .9 4.9
Operating lease expense..................... -- --
------ ------
TOTAL OWNERSHIP COSTS..................... .9 4.9

OTHER COSTS AND EXPENSES....................
Marine operating expenses................... 4.9 5.6
Other operating expenses.................... -- .1
Selling, general and administrative......... 12.1 13.4
Reversal of provision for possible losses... (.7) --
Fair value adjustments for derivatives...... (1.8) --
------ ------
TOTAL OTHER COSTS AND EXPENSES............ 14.5 19.1

LOSS BEFORE INCOME TAXES.................... (9.9) (16.5)
INCOME TAX BENEFIT.......................... (3.5) (5.6)
------ ------
NET LOSS.................................... $ (6.4) $(10.9)
====== ======


Comparison of First Three Months of 2005 to First Three Months of 2004

GROSS INCOME

Gross income of $5.5 million in 2005 decreased by $2.0 million from the
prior year period primarily due to lower marine revenue and a $1.8 million
foreign exchange remeasurement loss from a Euro denominated loan made to a
foreign subsidiary. The unfavorable variance in marine operating revenue is due
to fewer operating days in 2005 compared to the first quarter 2004. Other income
in the current quarter also includes $1.5 million related to receipt of an IRS
refund pursuant to a prior year interest claim.

OWNERSHIP COSTS

Ownership costs of $.9 million were $4.0 million favorable to the prior
year primarily due to higher interest expense attributable to the excess
liquidity carried in 2004, which was not allocated to the business segments.

OTHER COSTS AND EXPENSES

SG&A expenses of $12.1 million were $1.3 million lower than the prior year
period. The variance is primarily attributable to higher professional costs in
2004 associated with the implementation of SOX 404 and legal fees related to the
Airlog insurance recoveries. Marine operating expenses of $4.9 million were $.7
million favorable to the prior year. Consistent with ASC's income variance,
lower operating expenses were attributable to fewer operating days. The net
contribution from ASC was comparable in each period.

Fair value adjustments for derivatives in 2005 of ($1.8) million is the
result of currency fluctuations and is entirely offset by the remeasurement of
the associated Euro denominated loan recorded in other income.

21



TAXES

See "Consolidated Income Taxes" for a discussion of GATX's consolidated
income tax expense.

GATX CONSOLIDATED

CONSOLIDATED INCOME TAXES

GATX's effective tax rate was 34% for the three months ended March 31,
2005 compared to 36% for the three months ended March 31, 2004. The lower tax
rate in 2005 resulted primarily from a lower foreign tax rate enacted in Austria
as compared to the same period in 2004. The difference in the tax rate for the
three months ended March 31, 2005 compared to the federal tax statutory rate of
35% is primarily attributable to lower taxes on foreign income offset by state
income taxes. GATX expects that U.S. taxable income generated in the first
quarter and throughout 2005 will be entirely offset by a consolidated net
operating loss carry forward, resulting in no currently payable or recoverable
U.S. taxes.

The American Jobs Creation Act of 2004 introduced a special one-time
dividends received deduction on the repatriation of certain foreign earnings to
a U.S. taxpayer (repatriation provision) provided certain criteria are met. The
repatriation provision is available to GATX for the year ended December 31,
2005. GATX has historically maintained that undistributed earnings of its
foreign subsidiaries and affiliates were intended to be permanently reinvested
in those foreign operations. GATX is currently evaluating the effect of the
repatriation provision on its plan for reinvestment or repatriation of foreign
earnings. The range of reasonably possible amounts of unremitted earnings
considered for repatriation, and the income tax effects of such repatriation
cannot be estimated with certainty at this time. It is anticipated that the
evaluation of the effect of the repatriation provision will be completed during
the third quarter of 2005.

CASH FLOW AND LIQUIDITY

Over the course of a full year, GATX expects to generate significant cash
flow from a combination of operating activities and investment portfolio
proceeds, which is used to service debt, pay dividends, and fund portfolio
investments and capital additions. Cash flow from operations and portfolio
proceeds are impacted by changes in working capital and the timing of
disposition events. As a result, cash flow components will vary quarter to
quarter. The following discussion of cash flow activity is presented excluding
the impact of discontinued operations.

Net cash used by continuing operations for the first three months of 2005
was $9.9 million and was impacted by changes in working capital including the
payment of semi-annual operating lease payments, incentive compensation payouts
and income taxes. Compared to the prior year period, cash flow decreased $11.9
million due to a combination of higher operating lease payments, incentive
compensation and taxes partially offset by higher lease income. 2005 included a
state income tax payment of $8.0 million related to the 2004 sale of the Staten
Island property.

Portfolio investments and capital additions for the three months of 2005
totaled $94.3 million, a decrease of $10.3 million from the comparable 2004
period. Rail's investment of $70.1 million during the first three months of 2005
was comparable to the prior year period, excluding the $24.0 million refinancing
of an investment in securities at DEC in 2004. Significant 2005 activity at Rail
included the acquisition of 914 new cars in North America. Air invested $.6
million during the first three months of 2005 comparable to prior year period.
Specialty invested $22.1 million during the first three months of 2005, an
increase of $13.2 million from the prior year period primarily due the
acquisition of an interest in a new marine joint venture investment.

Portfolio proceeds of $89.7 million for the first three months of 2005
decreased $85.0 million from the prior year period. The decrease was primarily
due to a decline in loan payments received, lower proceeds from sale of
securities and cash distributions from joint venture investments. This was
partially offset by an increase in proceeds from disposal of leased equipment.
2005 portfolio proceeds included $46.9 million from the sale of a 50% interest
in three aircraft related to the formation of a new joint venture at Air.

Proceeds from other asset sales for the first three months of 2005 were
$206.3 million, an increase of $194.3 million from prior year period. This was
primarily due to a $201.3 million sale/leaseback transaction of approximately
2,900 railcars. The

22



resulting operating lease is for a term of 21 years.

GATX's operating subsidiaries fund investment and meet debt, lease and
dividend obligations through cash flow from operations, portfolio proceeds
(including proceeds from asset sales), uncommitted money market lines,
commercial paper, committed revolving credit facilities, the issuance of
unsecured debt, and a variety of secured borrowings. GATX utilizes both the
domestic and international bank and capital markets.

In the first three months of 2005, GATX, primarily through its principal
subsidiary, GFC, repaid $142.4 million of long-term debt. Repayment of debt
included $135.0 million of medium term notes with scheduled maturity dates in
first quarter 2005.

Subsequent to quarter end, GFC completed a bond tender for an aggregate
principal amount of $188.4 million, consisting of $67.7 million of 6-7/8% notes
and $120.7 million of 7-3/4% notes, each issue maturing in December 2006. In
addition, GFC issued a total of $330.0 million of senior unsecured debt
including $230.0 million of five-year notes with a 5-1/8% coupon, and $100.0
million with ten-year notes with a 5.7% coupon.

GFC has a $445.0 million three-year senior unsecured revolving credit
facility maturing in May 2007 and a $100.0 million five-year senior unsecured
term loan with a delayed draw feature effective until May 2005 and maturing in
May 2009. At March 31, 2005, availability of the credit facility was $417.9
million with $27.1 million of letters of credit issued and backed by the
facility. All $100.0 million of the unsecured term loan was available, however
GFC does not expect to use the term loan and will allow the ability to draw on
it to expire in May. The revolving credit facility and term loan contain various
restrictive covenants, including requirements to maintain a defined net worth,
an asset coverage test, and a fixed charge coverage ratio. At March 31, 2005,
GFC was in compliance with all covenants and conditions of the credit facility
and term loan.

The indentures for GFC's public debt also contain restrictive covenants,
including limitations on loans, advances or investments in related parties
(including GATX) and dividends it may distribute to GATX. Certain of the
indentures contain limitation on liens provisions that limit the amount of
secured indebtedness that GFC may incur. At March 31, 2005, GFC was in
compliance with the covenants and all conditions of the indentures.

In addition to the credit facility and indentures, GFC and its
subsidiaries are subject to financial covenants related to certain bank
financings. Some bank financings include coverage and net worth financial
covenants as well as negative pledges. One financing contains a leverage
covenant. Another financing contains leverage and cash flow covenants that are
specific to a subsidiary. GATX does not anticipate any covenant violation in the
credit facility, bank financings, or indenture, nor does GATX anticipate that
any of these covenants will restrict its operations or its ability to procure
additional financing.

As of March 31, 2005, GFC had a shelf registration for $1.0 billion of
debt securities and pass through certificates of which $166.5 million of senior
unsecured notes had been issued. On April 14, 2005, GFC issued $330.0 million of
senior unsecured notes off the shelf registration, bringing the total issuance
off the shelf registration to $496.5 million.

The availability of these funding options may be adversely affected by
certain factors including the global capital market environment and outlook as
well as GFC's financial performance and outlook. Access to capital markets at
competitive rates is dependent on GFC's credit rating as determined by rating
agencies such as Standard & Poor's (S&P) and Moody's Investors Service
(Moody's). GFC's current long-term unsecured debt credit rating from S&P is
BBB-, with a positive outlook, unchanged from December 31, 2004. Moody's current
credit rating on GFC's long-term unsecured debt remains unchanged from year end
at Baa3, with a stable rating outlook. GFC's existing commercial paper credit
ratings of A-3 (S&P) and P-3 (Moody's) restrict GFC's access to the commercial
paper market. However, at various times during the first quarter 2005, GFC had
in excess of $100 million of commercial paper outstanding.

Unconditional purchase obligations of GATX's subsidiaries consist
primarily of committed aircraft deliveries and railcar orders. Unconditional
purchase obligations at March 31, 2005 were $526.6 million, comprised as follows
(in millions):



TOTAL REMAINDER 2005 2006 -2007 2008 -2009
-------- -------------- ---------- ----------

Rail......................................... $ 432.5 $ 188.2 $ 229.7 $ 14.6
Air.......................................... 74.0 5.8 68.2 --
Specialty.................................... 20.1 17.4 2.7 --
-------- -------------- ---------- ----------
Total unconditional purchase obligations $ 526.6 $ 211.4 $ 300.6 $ 14.6
======== ============== ========== ==========


23



NEW ACCOUNTING PRONOUNCEMENTS

See Note 3 to the consolidated financial statements for a summary of
new accounting pronouncements that may impact GATX's businesses.

CRITICAL ACCOUNTING POLICIES

There have been no changes to GATX's critical accounting policies during
the three month period ending March 31, 2005; refer to GATX's Annual Report on
Form 10-K for the fiscal year ended December 31, 2004 for a summary of GATX's
policies.

NON-GAAP FINANCIAL MEASURES

This report includes certain financial performance measures some of which
are computed using non-GAAP (Generally Accepted Accounting Principles)
components. These measures are return on equity from continuing operations;
return on assets including off balance sheet assets; and SG&A efficiency before
IDC on owned and managed assets. As required under SEC rules, GATX has provided
a reconciliation of these non-GAAP components to the most directly comparable
GAAP amounts. Financial performance measures disclosed in this report are meant
to provide additional information and insight into historical operating results
and the financial position of the business. Management uses these performance
measures to assist in analyzing GATX's underlying financial performance from
period to period and to establish criteria for compensation decisions. GATX
presented return on assets, including off balance sheet assets, because it
believes that incorporating off balance sheet assets, primarily railcars
financed with operating leases, results in a more accurate measure of the return
GATX receives on assets in which it has an ownership-like interest. The SG&A
efficiency ratio as presented is a more accurate measurement of actual SG&A
incurred for the year as it relates to the underlying owned and managed assets,
an asset base which is more reflective of the support services and
administrative activities performed for both GATX and its customers. These
measures are not in accordance with, or a substitute for, GAAP and may be
different from or inconsistent with non-GAAP financial measures used by other
companies.

GLOSSARY OF KEY TERMS

- Initial Direct Costs - SG&A expenses incurred by GATX to originate new
loans and leases. Identified initial direct costs are deferred and
amortized over the term of the lease or loan.

- Managed Assets - Assets that GATX manages, but that are not included in
assets on balance sheet or off-balance sheet assets. An asset is
considered managed if GATX performs the same activities relative to the
asset as performed for similar owned assets. The managed assets include
the assets wholly-owned by third-parties and assets owned by joint
ventures in which GATX is both an investor and manager. In these cases,
managed assets are shown net of GATX's investment in the joint venture, to
the extent the investment is already included in on balance sheet or
off-balance sheet assets.

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

- Off-Balance Sheet Assets - Assets, primarily railcars, which are financed
with operating leases and therefore not recorded on the balance sheet.
GATX estimates the off-balance sheet asset amount by calculating the
present value of committed future operating lease payments using a 10%
discount rate.

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

- Return on Assets - Income from continuing operations before cumulative
effect of accounting change divided by average total on and off-balance
sheet assets.

- Return on Equity - Income from continuing operations before cumulative
effect of accounting change divided by average total shareholders' equity.

24



- SG&A - Selling, general and administrative expenses.

- SG&A Efficiency Ratio - SG&A before capitalized initial direct costs
divided by average total owned and managed assets.

- Total Owned and Managed Assets - The sum of on and off-balance sheet
assets and managed assets.

RECONCILIATION OF NON-GAAP COMPONENTS USED IN COMPUTATION OF FINANCIAL
PERFORMANCE MEASURES (IN MILLIONS):



MARCH 31
------------------------------------
2005 2004 2003
--------- --------- ----------

BALANCE SHEET ASSETS AS REPORTED.............. $ 5,372.2 $ 5,983.2 $ 6,291.6
LESS: DISCONTINUED OPERATIONS................. -- 554.6 567.7
--------- --------- ----------
CONSOLIDATED ON BALANCE SHEET ASSETS.......... $ 5,372.2 $ 5,428.6 $ 5,723.9

ON BALANCE SHEET ASSETS BY SEGMENT
Rail.......................................... $ 2,555.5 $ 2,470.4 $ 2,394.9
Air........................................... 2,031.8 1,964.8 1,881.1
Specialty..................................... 480.1 575.9 889.3
Other......................................... 304.8 417.5 558.6
--------- --------- ----------
Consolidated............................. $ 5,372.2 $ 5,428.6 $ 5,723.9

OFF-BALANCE SHEET ASSETS
Rail.......................................... $ 1,258.9 $ 1,170.6 $ 1,209.5
Air........................................... 27.7 27.7 27.5
Specialty..................................... 12.4 13.8 16.7
Other......................................... 29.4 34.1 34.0
--------- --------- ----------
Consolidated............................. $ 1,328.4 $ 1,246.2 $ 1,287.7

TOTAL OFF AND ON BALANCE SHEET ASSETS (1)
Rail.......................................... $ 3,814.4 $ 3,641.0 $ 3,604.4
Air........................................... 2,059.5 1,992.5 1,908.6
Specialty..................................... 492.5 589.7 906.0
Other......................................... 334.2 451.6 592.6
--------- --------- ----------
Consolidated............................. $ 6,700.6 $ 6,674.8 $ 7,011.6

MANAGED ASSETS
Rail.......................................... $ 36.3 $ 102.7 $ 109.4
Air........................................... 1,985.0 2,042.0 2,250.1
Specialty..................................... 684.1 800.6 938.3
--------- --------- ----------
Consolidated............................. $ 2,705.4 $ 2,945.3 $ 3,297.8

TOTAL OWNED AND MANAGED ASSETS(2)
Rail.......................................... $ 3,850.7 $ 3,743.7 $ 3,713.8
Air........................................... 4,044.5 4,034.5 4,158.7
Specialty..................................... 1,176.6 1,390.3 1,844.3
Other......................................... 334.2 451.6 592.6
--------- --------- ----------
Consolidated............................. $ 9,406.0 $ 9,620.1 $ 10,309.4


25



The following information is based on continuing operations for the
trailing 12-months ended March 31 (in millions):



2005 2004
-------- --------

INCOME FROM CONTINUING OPERATIONS AS REPORTED
Rail................................................. $ 67.7 $ 56.3
Air.................................................. 12.6 14.3
Specialty............................................ 34.7 45.0
Other................................................ 52.2 (34.5)
-------- --------
Consolidated.................................... $ 167.2 $ 81.1

SG&A NET OF CAPITALIZED INITIAL DIRECT COSTS
AS REPORTED
Rail................................................. $ 72.2 $ 69.9
Air.................................................. 22.8 19.9
Specialty............................................ 7.7 14.8
Other................................................ 61.1 61.8
-------- --------
Consolidated.................................... $ 163.8 $ 166.4

INITIAL DIRECT COSTS
Air.................................................. $ 2.3 $ 2.0
Specialty............................................ .1 .2
-------- --------
Consolidated.................................... $ 2.4 $ 2.2

SG&A BEFORE CAPITALIZED INITIAL DIRECT COSTS(3)
Rail................................................. $ 72.2 $ 69.9
Air.................................................. 25.1 21.9
Specialty............................................ 7.8 15.0
Other................................................ 61.1 61.8
-------- --------
Consolidated.................................... $ 166.2 $ 168.6
======== ========


(1) Total on and off-balance sheet assets are used in the calculation of
return on assets which is income from continuing operations before
cumulative effect of accounting change divided by average total on and
off-balance sheet assets.

(2) Total owned and managed assets are used in the calculation of the SG&A
efficiency ratio which is SG&A before capitalized initial direct costs
divided by average total owned and managed assets.

(3) SG&A before capitalized initial direct costs is used in the calculation of
the SG&A efficiency ratio which is SG&A before capitalized initial direct
costs divided by average total owned and managed assets.

FORWARD LOOKING STATEMENTS

The following discussion and analysis should be read in conjunction with
the audited financial statements included herein. Certain statements in
Management's Discussion and Analysis may constitute forward-looking statements
made pursuant to the safe harbor provision of the Private Securities Litigation
Reform Act of 1995. These statements are identified by words such as
"anticipate," "believe," "estimate," "expect," "intend," "predict," or "project"
and similar expressions. This information may involve risks and uncertainties
that could cause actual results to differ materially from the forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are based on reasonable assumptions, such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. Risks and uncertainties
include, but are not limited to, general economic conditions; aircraft and
railcar lease rate and utilization levels; conditions in the capital markets and
the potential for a downgrade in GATX's or GFC's credit rating, either of which
could have an effect on the Company's borrowing costs or the ability to access
the markets for commercial paper or secured and unsecured debt; dynamics
affecting customers within the chemical, petroleum and food industries;
regulatory rulings that may impact the economic value of assets; competitors in
the rail and air markets who may have access to capital at lower costs than
GATX; additional potential write-downs and/or provisions within GATX's
portfolio; impaired asset charges; and general market conditions in the rail,
air, and other large-ticket industries.

26



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Since December 31, 2004, there have been no material changes in GATX's
interest rate and foreign currency exposures or types of derivative instruments
used to hedge these exposures, and no significant changes in underlying market
conditions. For a discussion of the Company's exposure to market risk refer to
Item 7A Quantitative and Qualitative Disclosure about Market Risk contained in
the Company's Annual Report on Form 10-K for the year ended December 31, 2004.

ITEM 4. CONTROLS AND PROCEDURES

The Company's management, with the participation of its principal
executive and principal financial officers, have conducted an evaluation of the
Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act")). Based on
such evaluation, the Company's Chief Executive Officer and Chief Financial
Officer have concluded that as of the end of the period covered by this
quarterly report, the Company's disclosure controls and procedures were
effective.

No change in the Company's internal control over financial reporting (as
defined in Exchange Act Rules (13a-15(f) and 15d-15(f)) such term is defined
above) occurred during the quarter ended March 31, 2005 that materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.

27



PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On March 2, 2005, GFC (erroneously identified as GATX Technology Services)
was joined with others as a defendant in the matter of John Adkins and Cynthia
Adkins v. Techsol Chemical Company, et al, filed in the Circuit Court of Wayne
County, West Virginia. The suit was filed by thirty-two plaintiffs who live
close to the Techsol facility near Huntington, West Virginia and arises from an
October 28, 2004 incident involving the release of approximately 22,000 gallons
of coal tar light oil from a tank car owned by GFC and leased to Marathon
Ashland Petroleum LLC (Marathon Ashland). The commodity was released during an
unloading operation at the Techsol facility and had been shipped from Sloss
Industries Corporation to the facility by Marathon Ashland. Immediately
following the release, residents of approximately 500 nearby homes, at least one
school and several businesses were evacuated. The plaintiffs' allege to have
suffered physical and mental harm, diminished property values and increased risk
of disease for which the defendants are responsible under various theories. The
complaint seeks compensatory and punitive damages and injunctive relief. On
April 8, 2005, Marathon Ashland filed its answer to the complaint and asserted
cross claims against all other defendants seeking contribution for losses,
including damages awarded to plaintiffs and any costs that it incurs in
remediating environmental damage caused by the release. The cross claim against
GFC alleges that GFC failed to provide a suitable tank car and failed to
adequately maintain the tank car. GFC believes that it has meritorious defenses
against the all of the above claims and that there is no basis for its liability
to the plaintiffs or Marathon Ashland.

GATX and its subsidiaries have been named as defendants in a number of
other legal actions and claims, various governmental proceedings and private
civil suits arising in the ordinary course of business, including those related
to environmental matters, workers' compensation claims by GATX employees and
other personal injury claims. Some of the legal proceedings include claims for
punitive as well as compensatory damages. Several of the Company's subsidiaries
have also been named as defendants or co-defendants in cases alleging injury
relating to asbestos. In these cases, the plaintiffs seek an unspecified amount
of damages based on common law, statutory or premises liability or, in the case
of ASC, the Jones Act, which makes limited remedies available to certain
maritime employees. In addition, demand has been made against the Company under
a limited indemnity given in connection with the sale of a subsidiary with
respect to asbestos-related claims filed against the former subsidiary. The
number of these claims and the corresponding demands for indemnity against the
Company have increased over the past several years. It is possible that the
number of these claims could continue to grow and that the cost of these claims
could correspondingly increase in the future.

The amounts claimed in some of the above described proceedings are
substantial and the ultimate liability cannot be reasonably determined at this
time. However, 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. Adverse court rulings or changes in applicable law could affect
claims made against GATX and its subsidiaries, increase the number, and change
the nature, of such claims.

28



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a) GATX's Annual Meeting of Stockholders was held on April 22, 2005.

(b) Matters voted upon at the meeting were:



Number of Shares Voted
----------------------------
For Withheld
---------- -----------

1. Election of Directors.
Rod F. Dammeyer 45,323,501 989,111
James M. Denny 45,452,683 859,929
Richard Fairbanks 44,369,184 1,943,428
Deborah M. Fretz 44,976,487 1,336,125
Brian A. Kenney 44,971,153 1,341,459
Miles L. Marsh 45,490,181 822,431
Mark G. McGrath 45,105,892 1,206,720
Michael E. Murphy 44,961,756 1,350,856
Casey J. Sylla 45,103,626 1,208,986
Ronald H. Zech 44,913,085 1,399,527

2. Ratification of appointment of Ernst & 44,829,748 For
Young LLP as independent auditors 988,935 Against
for fiscal 2005. 493,929 Abstentions


There were no broker non-votes with respect to the election of the directors or
the ratification of the appointment of independent auditors.

ITEM 6. EXHIBITS

Exhibits:

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

29



SIGNATURE

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

GATX CORPORATION
(Registrant)

/s/ Robert C. Lyons
-----------------------------------
Robert C. Lyons
Vice President and
Chief Financial Officer
(Duly Authorized Officer)

Date: May 6, 2005

30



EXHIBIT INDEX

The following exhibits are furnished as part of this quarterly report:



EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------

10A. Performance Stock Agreements for the 2004 Equity Incentive Compensation
Plan between GATX Corporation and certain executive officers entered
into as of January 1, 2005 which provide for vesting based upon
achievement of performance goals.

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

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

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


31