Good day. And welcome to the GATX Third Quarter Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Jennifer Van Aken. Please go ahead.

Thank you, Jack, and good morning, everyone. Thanks for joining us for the third quarter conference call. With me today are Brian Kenney, President and CEO of GATX Corporation; and Bob Lyons, Executive Vice President and Chief Financial Officer. I’ll give a brief overview of the results provided in our press release earlier this morning and then we’ll take questions. As a reminder, any forward-looking statement made on this call represents our best judgment as to what may occur in the future. We have based these forward-looking statements on information currently available and disclaim any intention or obligation to update or revise these statements to reflect subsequent events or circumstances. The company’s actual results will depend on a number of competitive and economic factors, some of which maybe outside the control of the company. For more information, refer to our 2011 Form 10-K for a discussion of these factors. You can find these report, as well as other information about the company on our website www.gatx.com. Today we reported 2012 third quarter net income of $53.8 million or $1.13 per diluted share. This includes a benefit of $18.2 million or $0.38 per diluted share from tax adjustments and other items which are detailed on page 12 of the press release. This compares to 2011 third quarter net income of $32.9 million or $0.70 per diluted share, which includes a benefit from tax adjustments and other items of $1.3 million or $0.03 per diluted share. Year-to-date 2012, we reported net income of $107.6 million or $2.26 per diluted share, including a benefit of $0.7 million or $0.02 per diluted share from tax adjustments and other items. Again, these items are on page 12 of the press release. Year-to-date 2011, we reported net income of $79.2 million or $0.68 per diluted share,…

(Operator Instructions) And we’ll take our first question from Art Hatfield with Raymond James. Please go ahead.

Hey. Morning, everyone. Just a few questions here, just looking at ASC’s revenue and looking at it last year and I think this was unusual but fourth quarter last year was stronger than third quarter, was that a result of what went on with the strike and if so, can you comment how much revenue kind of shifted from what normally would have been in Q3 versus Q4?

Sure Art. This is Bob. That is one of the key drivers. If you recall the strike preparation really began in late second quarter and then the actual strike took place really during the first few weeks, first couple of days, but then first few weeks really to get back up to full operational of Q3. So we never really broke it down specifically about revenue. We did indicate that on a year-over-year basis, it was probably about call it $3 million to $4 million lost segment profit associated with the strike, with all elements of the strike including.

Is it correct, it was my original assumption about seasonally Q4 is a little but weaker than Q3 correct or is that just count on weather?

That is correct and it’s also pretty weather dependent.

Okay.

We’ve already seen here in the first couple weeks of October more challenging operating condition today we have seen than saw in the third quarter, high winds and other challenges on the water have, not just for ASC but others have resulted in a lot of -- number of lost operating days for the shippers on the Great Lake. So we’re watching that closely and keep in mind last year in the fourth quarter, ASC really had pristine operating conditions…

Right.

… pretty much throughout the whole quarter and that will be hard to replicate.

Right. Now and that’s fair. Just one last, one on ASC, outside of those kind of weather related issues is core demand still fairly healthy?

Hey, Art. It’s Brian. It’s -- there’s a little bit of a slowdown especially on the iron ore side that we’re seeing maybe for the fourth quarter. There’s several blast furnaces that we serve that are planning to curtail production due to little bit of a softening demand. But it’s not a big issue for us as far as earnings this year. If there is a slowdown we can take vessels out of service. We can do some slow steaming or we can shorten the season. But, yeah, we’re seeing a little bit of weakness on iron ore, at least that’s what they’re talking about for the fourth quarter. In coal, our shipments this year are pretty close, maybe down a little bit from last year, but we see stable demand there for the rest of the year and those are the two major commodity.

Okay. And thanks for your color on that. On the -- you had mentioned in Europe, you have seen some weakness in the chemical markets and I think, Jennifer had mentioned that you’re seeing that through tougher time or extended period of time as you place cars coming off lease with new customers. Can you kind of put some numbers around that, how that’s changed over the last couple quarters and kind of what magnitude you’re seeing that inability to place quickly with new customers?

Utilization is down I think from a little over 97% at the beginning of the year to 96.6% now. That’s actually a much smaller decrease than we expected. We had a planned return off-lease, a petroleum cars from a large customer in Eastern Europe that was scheduled for this year. That’s going slower than planned. So those cars are quite almost, all will be scrapped or redeployed, so it’s not really an issue economically. So we’re planning on utilization to drop. Really haven’t seen a big impact in idle cars, I mean they have increased as Jennifer said, because they are taking longer to place. If you look at our chemical customers in Europe, it has been choppier over the last two years on the petroleum side. Chemical production in Europe is down about 2.5% year-to-date and some of our customers are looking to reduce capacity due to the general economic weakness they are seeing. But others are still looking to modernize their fleet, both to gain efficiency and to deal with noise and age concerns. So the net effect of that is we are still placing cars. It’s just taking a little longer to do that.

Okay. And then finally, just some thoughts on your comments on guidance, as I kind of work through my numbers for Q4, I’m just kind of struggling to get a Q4 number that’s kind of close to, that would put you something around that high-end of your range. Can you give us some thoughts on how to think about that, maybe some things that you are seeing within expenses that maybe we wouldn’t see from the outside to kind of get us closer to that number…

Sure.

… that you’re talking about for the year?

Sure. Absolutely, Art. And, yeah, if you kind of work through the numbers on a normalized basis, Q4 would definitely be the lowest quarter for the year, which is not unusual for GATX, there’s a few things that I’ll comment on. First of all, remarketing this year, year-to-date is about $44 million. That’s equal to all of what we did in 2011. So we are not really barring any unforeseen events. We’re not seeing much at all in the way of remarketing activity in the fourth quarter. That’s consistent with what we said actually back in the second quarter. We had a really big first half of the year and it would be very light in the second half of the year and that will definitely continue in the fourth quarter. On the expense side, I would say SG&A likely will go up versus the run rate that we’ve seen year-to-date. That was a similar phenomenon that we had last year. As the number of projects come to completion, we have some year-end true-up events, capitation items, et cetera that typically you see that move up in the fourth quarter. And I think last year’s fourth quarter SG&A was up $4 million or $5 million versus the prior run rate. So that likely will happen again and then the other item, I’d comment on really is one of we just hit on. It’s a little bit of uncertainty. It’s really just related back to ASC. There are operations here in the fourth quarter are heavily weather dependent and maybe there is a bit of caution on our side there, but definitely October has gotten off to a tougher start than we saw in the third quarter. So we’re watching that one closely.

On ASC, is it just a revenue issue from the down days or do you get incremental expenses that occur in that type of environment?

It’s really the lost revenue, Art. We can move our vessels to the wall pretty efficiently as can others on the Great Lakes and they’ve been doing that. So it’s the lost contribution margin.

And they’ll try their hardest to make that up being tied up in October but that gets pushed into January, for instance, if they are able to still operate that.

Right. That’s correct.

We have to be off the water by January 15, typically as the drop dead date.

Okay. Perfect. That’s all I got today. Thanks for your time.

Thank you.

And we’ll go next to Steve Barger. Please go ahead. Your line is open.

Hey, good morning. This is actually Tejas filling in for Steve. Just have a few quick ones here. With having a large tank car exposure, have your thought on accumulating more exposure to the petroleum cars and more specifically to the Bakken? Has that changed and if so have you put in more orders for tank cars?

Well, we had the large supply agreement that we signed last year with Trinity for 12500 cars that’s delivering over the next five years. And part of that is going into crude service in the Bakken. We currently, -- Jennifer correct me if I’m wrong, have 1800 about cars in crude service in North America. To your point that will go up over the next couple of years, because that supply agreement you could see it go to as high as 3000 and a lot of that will go to servicing the shale and oil sands as well. Terms and pricing, petroleum car loadings are up 35%, 36% over last year for the railroads and that’s driving very strong pricing. So if you look at our cars that carry crude, the average renewal rate increase, the average renewal percentage are much higher than the LPI that we have in our press release. So don’t want to get into any specifics on pricing obviously other than to say we’re trying to incent our lessees to lock in as long as terms as possible at these higher rates. So yeah we have exposure there. We’re increasing exposure there, but in general we’re trying to deal with very good credits for very long-term and with the right car types, and that’s always the case for any of these markets.

Okay. And just a follow-up for that, with regards to the 12,500 that you put in with Trinity, are the lead times still looking about the same or have they extended, shortened?

Well the industry lead times for tank cars are about 15 months. For freight cars it’s four to six months. I think 15 months is pretty similar to what it was at the beginning of the year. The freight car market I believe was longer as far as the backlog at the beginning of the year. As far as our Trinity order, that’s different. Obviously that was placed last year, we’re not subject to those same lead times. And that order has gone very well. As I said, it’s over five years, 2500 cars a year. Most of those cars will be tank, although there’s a wide variety of car types. We’ve ordered in place obviously all the cars that delivered in 2011. The first year we ordered in place all the cars that will deliver in 2012, same for 2013. We’re actually taking orders for the second quarter of 2014. So it’s working very well so far.

Great. Great. Now, moving over to some of the commentary you had on the freight cars. You mentioned that the demand there is a little soft. Could you provide a little bit more color around that?

Sure. The primary area of softness in freight cars is in the coal market and that’s well publicized by the rail traffic. If you look at our -- lets take the coal market. If you look at our exposure there, we have about 8,000 owned cars that carry coal. We manage another 2,000 more, so 10,000 total owned and managed and that’s out of an industry fleet of 275,000 cars. So it’s a small exposure for GATX and a small market share, so let’s put that into perspective. If you look at the industry, there is about 175 to 200 trains that’s idle right now. That’s actually down from the end of the first quarter where there was over 300 idle, but if you look at back at the beginning of the year, there was only 20 idle. So it’s been a very volatile market. Carloads for the railroads for coal are down 8% to 9% from 2011. Probably, the only bright spot in coal has been the export market which has been up from 2011. Now, if we move to our fleet, we are still have utilization in the low to mid-90s in our coal fleet, but that’s down from 98% to 99% at the beginning of the year, but still much higher than the less ore fleet in general which we estimate more at about 75%. So our strategy in this market is that hold terms very short and keep cars utilized. And we do think there’s going to be a recovery. If you look at what -- you need to reverse in the factors that drove this weakness to begin with. So there’s a number of things that could turn around and some of them could turn around pretty quickly. For instance, attrition in the fleet will…

Got you. And last one, year-to-date the LPI index as well as the average lease terms have averaged 23% and 58 months respectively. Do you expect that to be similar in 4Q?

Yeah. I think the numbers, they may move around a little bit, but the expectation would be right in that ballpark for Q4.

Perfect. No. That’s all I had. Thank you for your time guys.

Thank you.

And we’ll go next to [James Elman]. Please go ahead.

Yeah. Could you just comment on the chemical industry slowdown? Was that specifically in Europe or is that across the United States as well?

Chemical industry in United States is fine. In Europe, that’s where that comment was in the press release. And as I said earlier in the call, chemical production in Europe was down about 2.5%. It’s been at choppy market over the last few years anyway, especially compared to the petroleum business we have in Europe. And we have customers on both sides, some are looking to reduce their fleet due to that economic weakness and others are looking to modernize their fleet. So we’re delivering new cars, they are getting placed. They are just taking a little longer because of that weakness.

And any other places in your business where the weakness in the economic output in Europe, it shows up in your businesses?

Well, we have a separate business that’s not owned. We have a joint venture called AAE that’s solely in the freight car business and heavily skewed towards intermodal. That business has been weak for a number of years. It’s very short-term leases in comparison to the tank car business in Europe and especially compared to the business in the U.S. So it turned very quickly when the economy turned down and container shipments went down back in 2009. It’s gotten a little bit better since then, but basically it’s been bouncing along the bottom and that’s been weak for a while. And that’s probably the one part of our business where we have joint venture that’s directly tied to economic activity with very little lag.

Okay. Just one other question, with the presidential election being so tight, could you just comment on how you are planning for or what would be the impact on the ethanol requirements for gasoline going away?

Well, that’s a very versatile car type. That’s a 30,000 gallon tank car and we were always extremely careful during the ethanol boom about placing those cars. So if you look back then about half our cars went into ethanol service and no more than that. Those 30,000 gallon tank cars that served that business, that is the same car type that serves the Bakken and that light crude coming out of Bakken. So it has a number of different uses and we try to keep those uses very well diversified. So try not to be tied to any one trend or any one market and that’s the way we run our business. So unclear what will happen to ethanol depending on who gets elected, but I think we’re in very good position with the diversity of our fleet and our customers to react to whatever happened.

Great. Thanks so much for the time.

We’ll go next to the site of Steve O’Hara. Please go ahead. Steve O’Hara - Sidoti & Company: Can you just talk about the -- it sounded like the chemical tank car demand was strong throughout the quarter. Was there any difference as the quarter progressed from within the three months?

Not really, Steve. To the extent, we are looking at the tank car fleet here in North America, the demand I think -- the quote Brian gave in the press release was unprecedented demand. So we’ve continued to try to capitalize on that, and we didn’t really see any significant change in that at all throughout the quarter. Steve O’Hara - Sidoti & Company: Okay. And then in terms of ASC, are you guys seeing any issues with low water or anything like that? And then in terms of what your guidance assumes. Are you assuming kind of a normal weather pattern or are you assuming kind of something that happened last year?

Well, water levels are down from 2011 and down from long-term averages for sure. I think superior is down about 4 inches from 2011, Michigan and Huron are down over a foot. And so, our outlook does assume a continuation of those water levels and the way to think about that is over $200,000 in lost margin for every inch on average that the lakes go down, that’s generally the effect on our business. Steve O’Hara - Sidoti & Company: Okay. And then just on the guidance, I mean so you are assuming kind of a normal weather pattern for the fourth quarter as opposed to kind of favorable weather…

Well, Steve, I’d say in terms of water levels, we are not assuming any change.

We are not assuming any increase, that’s for sure.

Yeah. It doesn’t change that quickly. And as I mentioned before, one of the uncertainties in Q4 and we have kind of factored that into our equation here a little bit is the weather and its impact on ASCs operation regardless of water level. Extremely cold temperatures, high winds in particular are really difficult to operating conditions not just for ASC, but everybody else on the lakes and we’re seeing some evidence of that already. Steve O’Hara - Sidoti & Company: All right. Thank you very much.

And we’ll go next to Matt Brooklier. Please go ahead. Your line is open.

Yeah. Thanks. Good morning. I think that previously during 2Q, we -- you had discussed on some incremental maintenance expense that was going to be driven by tank cars coming back. I was just curious, if you did incur any of those maintenance expenses during third quarter and what’s our expectation for fourth quarter?

Third quarter was pretty flat with last year’s third quarter in terms of maintenance. But still down dramatically year-to-date, I believe it’s up $15 million. Most of that is driven by fewer cars repaired in North America and that’s commercially driven at this point. So, when you -- we’re in market like today where there is 82% renewal percentage. There is just not a lot of cars coming back for into the maintenance network for service that places it with other customers and we’ve seen that all year. We expect more the same in the fourth quarter actually. And we expect more of the same next year this renewal rate percentage continues. Eventually, however we’re going to see higher compliance in maintenance especially HM-201 that’s structural tank inspection. It’s been relatively low level over the last couple years. It increases in 2013 and increases it rather dramatically in 2014. So, regardless of the commercial side of it, compliance maintenance will increase over the next two years.

Okay. Okay. I think if I remember correctly. You had anticipated maybe some incremental maintenance expense in the second half of 2012 and it sounds like now just given the fact that where renewal rates are currently on your cars and specifically on the tank car side that there is a potential for less maintenance expense going forward and baked into the guidance.

Let me -- let Bob talk about the guidance. But as far as the maintenance part what we try to do is even out those big bubbles with compliance maintenance that we’re trying to pull cars forward. That’s proving to be very difficult because customers don’t want to let their cars go early. So, you will see some increase in compliance events next year, but it’s difficult to get customers in a strong market to give up their cars. As far as what’s in the guidance, I’ll Give it to Bob.

Sure. Thank you. And yeah, we are going here into the fourth quarter assuming that that renewal -- that high renewal success rate that we’ve experience year-to-date and definitely saw on the third quarter will continue in the fourth. So, if you look on where we’re at year-to-date for maintenance expense and you annualize that we would be down in the ballpark of $15 million plus versus 2011. So, we’re not expecting anything unusual from the pattern we’ve seen here year-to-date.

Okay. And then turning to the renewal terms or lease duration at 59 -- 58, 59 months, I think that’s flat sequentially in third quarter versus second. Just curious as to what’s driving that, is that your decision or is that customer pushback. And if it is customer pushback, is it specific equipment where they’re looking to potentially get a little bit shorter in terms of how long they’re holding and utilizing equipment?

Well, first Matt, I’d just say, first of all 59 months is a very long renewal. And that is a -- but that’s what we’ve been driving towards. It’s certainly not a peak. We saw that probably back in 2007, 2008 at over 60 months or so. But 59 months is a very healthy renewal rate, renewal term. And I’d also add on new car deliveries, the average term is well north of that 59 months.

The other thing I’d add is and I’m sorry I don’t have the number for you. But if you absent coal renewals, which we are trying to keep very short that number would be even higher.

Okay.

And that would be right around, I think just a little bit north of 70 months, 72, 73 months.

Okay. And coal cars coming back in the quarter, did that -- did you see more coal cars returned and put into storage or during third quarter was that relatively similar to what you saw in second quarter?

Yeah. During the third quarter, we had a little under 500 coal cars that came up for renewal and about 60% of those renewed in the remainder went into storage.

Yeah. And as we’ve indicated, as Brian touched on before, those renewals generally would be much shorter term given where the rates are today, that’s our objective is to keep those short and we’ll get another shot at them in a better environment.

Okay. And then just with respect to the North American railcar fleet also I think about flattish sequentially is the anticipation that to keep the number around 109,000 cars moving forward or given the demand environment, is there a potential to add to that number, I mean what are your thoughts moving forward?

We are certainly adding to it from the perspective of the supply agreement to the 2,500 year. Scrapping really have been dependent on both scrap prices and what service we can put it into. So, it’s a little hard to predict. But as Jennifer said, I think in our opening, it’s getting very difficult at least from GATX’s investment philosophy perspective to invest in cars in the secondary market. Prices are pretty high.

Okay. So yeah that -- we’re kind of keep that anticipation is we keep the run rate of 109 or it all depends on market demand?

I would say, here in the near-term absent sizable portfolio acquisition or something like that. It’s going to be in that ballpark.

Okay.

Just based on the order for the delivery schedule of eternity order and normal scrapping.

Okay.

Now, we have placed some new car orders beyond the supply agreement order hasn’t been a huge amount of cars. But generally, we’re only going to do that at these prices if we can place them with excellent customers for extremely long-terms at these rates as Bob said, because that helps you amortize that higher cost in the market.

Okay. And when you those -- when did you place those new orders?

This was literally a couple hundred cars here and there.

Yeah.

That was earlier in the year. And they deliver over a long time.

Okay. So, that wasn’t during the third quarter. It was during the first half.

No. No. And in fact, that’s just as an example of why we would order new in this kind of environment.

Okay. That’s all I got. Thank you.

Thanks, Matt.

And we’ll go next to Zahid Siddique. Please go ahead. Your line is open. Zahid Siddique - Gabelli & Company: Hi. Good morning, everyone. I have a couple of questions. The first one on portfolio availability anything that might be becoming available either domestically or internationally from an acquisition perspective?

Nothing significant that we’re aware of in the marketplace, there is still a lot of secondary market activity, Zahid, but it’s in smaller lots. And as Brian alluded to a lot of those transactions are going off at pretty healthy valuation. So, we are adding some cars in the secondary market. I think year-to-date, we’ve probably purchased just under 1000 cars in the secondary market, somewhere around $50 million worth. But nothing major is out there at this point in time. Zahid Siddique - Gabelli & Company: So, I guess we can assume the average price is -- you’re paying is about 50,000 a car, is that a fair assumption?

Well, it’s always a little tough on the averages. But if you just did a quick math that would be in the ballpark. Zahid Siddique - Gabelli & Company: Right. And I guess I would think that the tanks probably a little bit higher than the freight within that. The other question I have is on the -- I guess more strategic level, what’s your plan in terms of use of cash or either share repurchases or dividend or I guess you did talk about buying portfolios, but if nothing is available what’s the second best use of cash?

Well, we continue -- we do pay, Zahid, as you know very solid dividend and we pay that every quarter or since 1919. It’s very important to our shareholders and we’ll continue to look at the dividend in the appropriate level. We increased it very slightly this past year. And we’ll look at it again in January or February when we meet with our Board, that’s typically when we look at any increase in the dividend. We have a share repurchase authorization outstanding that has some capacity under it. But as you can tell from the second quarter, we haven’t been active in that under the share repurchase program. But if you look over the last several years, we have repurchased quite a bit of stock. But we’re always looking to add hard assets to the portfolio and that’s -- that is our preference. We feel that gives us the greatest option to generate attractive shareholder return over the long haul. We continue to -- we need to be add -- to be in a position, where we can add assets to the portfolio and that’s I guess our preference is typically there. Zahid Siddique - Gabelli & Company: Okay. And the 1,000 cars that you mentioned that you bought in the secondary, that’s year-to-date or Q3?

That’s year-to-date. Zahid Siddique - Gabelli & Company: Okay. And my last question is on the activity in the shale and the Bakken regions. Could you comment on how is that activity?

Well, it’s what’s really driving the tank car market and not just for cars that go into that service, it’s also putting cars that go into other service in short supply. So, it’s having a positive effect on our entire tank car fleet, every customer, every lease. It’s tough to get your hands on a general service tank car right now with backlogs out 15 months. So, it’s definitely driving the tank car market and not just for cars that carry crude. Zahid Siddique - Gabelli & Company: Okay. And what’s happening with the cover the sand -- the covered hoppers for the sand for fracking?

It’s bouncing around, I’d say the rates are down a little bit this year, as I’ve said. That’s one of the markets where there is good demand, but overbuilding, people getting a little bit ahead of themselves. So I’d say rates are down definitely from the prior peak and probably down this year overall. Zahid Siddique - Gabelli & Company: Thank you so much.

And we’ll go next to the side of Kent Mortensen. Please go ahead.

Good morning. I was curious about, given the tremendous demand out there, why the remarketing income is lower for the second half. Historically, in kind of frothier stronger markets you guys have kind of cashed in those chips. And I’m just wondering is it because your feeling is that that you have this -- you have kind of the legs in the cycle and have this continuing demand that you don’t feel like it’s kind of time or appropriate to do that, or I’m just trying to understand why that remarketing income isn’t that actually stronger given that the markets have been improving in the second half?

Well, I think if you, Kent, let me take that one. If you look back in 2009 our remarketing income was $30 million, 2010, it was $31 million, last year we did about $45 million. This year we’re already at $45 million. We will do a little bit more in the fourth quarter. So it definitely has been moving up exactly as you said. As the markets have continued to strengthen and we’ve seen opportunities to optimize the portfolio, we’ve done that. But we also are, we’re always looking at the economics of the sale versus the hold, and that were driven by the economics and we’re just not out selling to hit a number.

Okay. The -- I guess I’m still having a hard time with the guidance. I mean these are the probably the strongest lease rates that we’ve seen in terms of increases in 10 years. The lease rate keeps, the LPI keeps going up sequentially. The terms are still extremely high level and so and I mean, just it’s amazing just anecdotally talking to people about shortages of tank cars, inability to get tank cars. And I understand ASC, but year-over-year reduction in earnings just doesn’t seem even possible to me and I guess, I’m really having a hard time getting my arms around that?

Well, keep in mind, Kent, we came into the year with an initial range of 240 to 260 and now we’re at the high end of 265 to 275.

No. I understand. I think you are extremely conservative with that guidance and that’s proven to be true. So, I’m just talking specifically about Q4 year-over-year?

Sure. So, I mean, let just, if you took simple math, right and we said, we didn’t have any remarketing in the fourth quarter.

Which you said you will, right?

We’ll have a little bit. If SG&A is up $5 million or $6 million and ASC runs into some operating challenges, those numbers are all going to drop very quickly to the bottom line.

So what’s driving a $5 million to $6 million increase in SG&A year-over-year again? You talked about compensation…

Yeah. It’s similar…

… were there some other issues?

Yeah. It’s similar to what we had last year as well. I mean, we have a number of projects, IT projects and some other international consulting expenses that are going to come rolling through here in the fourth quarter. The compensation true-ups at year-end can be material. And so on a year-to-date basis, we expected SG&A to be up in 2012 versus 2011 and it hasn’t been materially. We’ll see some of that catch up here in the fourth quarter.

It’s just, I guess, I understand ASC is material, but I just didn’t view it as a big driver of your story. I didn’t think weather was that critical. And then just with regard to the tax rate, just backing up the tax rate adjustments, it looked like your tax rate kind of ticked up for what you were kind of originally talking about for the year. What are you kind of think tax rate will look like for Q4?

It should be lower in Q4, probably back somewhere in that 31% range.

Okay. Great. Thank you.

We’ll go next to Brian Hogan. Please go ahead.

Thank you. Most of the questions have been asked and answered. But you were talking about investments earlier and you were taking about investments in other. I mean in assets that must be your priority. What about other asset classes? Are you interested in other assets classes and then with that have other geographies?

Yeah. Let me take that. As far as other asset classes beyond what we are already in, the answer is no. It’s not a strategic priority at all. As far as other geographies, the answer is yeah, and India is probably the best example. We are and towards the end of the second quarter there, we get the first railcar leasing license in India and we actually completed a transaction for 450 cars or 10 rigs as call them in India. And so we are very excited about that market over the next 10 years due to high growth. And we are very interested in taking what we’ve done well for 115 years here in North American and applying that to higher growth markets, and I think you’ll see increased investment in those areas. We’ve also invested more on European tank cars in 2012, that’s another example. I believe by the end of 2012, we’ll have close to 1,600 new cars in Europe which is a lot on a 21,000 car fleet. So, yeah, we are interested in other geographies especially with prices as they are in North America.

And then, we talked about a little bit of the economy as whole just in bits and pieces, but overall, what is your feeling on the economy?

It’s bumping along and it’s good for our business thus far. I mean, yeah, there are some weaknesses in certain car types especially freight that are not necessarily economic related as much as weather related and natural gas price related and rail velocity related, so it’s not. Some of the freight car weakness that we see have peculiar factors that can turn a little quicker than you might expect. So I’m happy with the overall growth in the economy. I’d rather actually have it bump along like this with slow growth. But I’ve seen in the past as when it grows lot faster, you see some irrational behavior in this market whereas new competitors coming in over ordering lot of new production capacity coming in and then rates going down. So, I’m happy with the way it’s growing right now if you put that freight car noise aside.

And then the competitive environment, obviously you’re getting some pretty nice terms and you talked about the bumping along the economy has been pretty nice, but your overall thoughts on the competitive environment?

The competitive environment, it is very competitive out there and I don’t think there is anything really to comment on in terms of. I don’t see any abnormal behavior out there in the railcar market right now.

And then, one last question on leverage. What is your target leverage ratio?

While we are -- we’ve never really specifically zeroed in on the target leverage. We’re comfortable where we’re at, Brian. I think, as we’ve talked in the past a very solid investment grade rating like we have today is critical to GATX, important to what we do in so many different ways. So we’re comfortable with where our leverage is at today. It wouldn’t work for any material change in that number right now.

Sure. Thank you.

And we’ll go next to Kristine Kubacki. Please go ahead.

Good morning. Good morning. Little bit, you mentioned your answer about being -- it still being a pretty rational market out there, so I kind of wanted to ask maybe in a little different way. A larger picture question, we saw some really big orders on tanks in Q2 and I guess, we have to have something to worry about, so we see short-term stagnating rig counts and there’s always be this threat of pipelines. And can you talk about maybe it’s not in the next year but maybe two or three years out, do you think that there could be a tank car bubble in the making?

That’s an excellent question, because that’s especially applicable to tank cars that would serve the Bakken and it’s something we think about all the time. And that’s obviously what everybody would like to know with more certainty is what’s the outlook for tank cars serving the Bakken. And you know it’s a difficult question, there’s a lot of variables that affect our outlook and a lot of these variables are interrelated. So what we look at, we look at projections of crude in the Bakken over the next 10 years. We look at existing and planned rail loading capacity and as you said, where pipeline capacity changes might go. I mentioned railroad velocity trends which has gotten a little quicker this year and look at that for the Bakken. We look at our existing industry fleet of large service -- large general service tank cars and that attrition of that fleet over time over the next couple of years. And of course, industry production as you mentioned of general service tank cars, and if you look at all that from what we can tell, it’s just a strong market for crude carrying tank cars well into 2014 even with all these variables. And that makes sense, that essentially if you look at how far out we are placed, we are placed out well into 2014. The backlog is just starting to touch 2014. Beyond that, it does get murkier out there. So how do we react and what’s our strategy. What we do is try to focus on good credits long-term because rates are so high and the right car types. So we look at very versatile car types. In that way, we are able to react to whatever happens out beyond 2014. But, yeah, I could see scenarios where it could become oversupplied into 2014 to 2016 timeframe depending what happens with all those factors.

Okay. Great.

I don’t know if that helps.

That does. Very good. Thank you so much.

And we’ll go next to Matt Brooklier. Please go ahead.

Yeah. Just a quick follow-up. I heard a little bit of chatter through our channel checks, barged covered hopper market, getting a little bit tighter in third quarter. I’m just curious if you could add any commentary on that specific equipment type?

Not really, Matt. I think, the specific car types are outliers that we’ve identified. I think we’ve pretty much hit on here throughout the call.

Okay. Thank you.

And we’ll go next to Art Hatfield. Please go ahead.

Hey. Just a follow-up and I can, I know you probably commented on this before and you may have today and I may have missed it. But can you recall what quarter absolute just overall lease rates kind of bottomed out in the past trough?

If you look at the way we report on the LPI, that reached its low point in the fourth quarter of 2009 and that was a negative 18.7%.

And that correlates pretty good to what absolute rates are doing as well?

Not exactly. I’d say, we probably saw, continued to see a little bit of degradation in rates after that point.

I’m sorry, Jennifer. Did you say Q4 2010 or 2009?

2009.

I’m sorry. I wrote it down wrong. Perfect. Okay. Thank you.

And we have no further questions in queue at this time. I would like to turn the conference back over to you presenters for any closing remarks.

I would just like to thank everyone for their participation this morning and I will be available all afternoon, if there is any follow-ups. Thank you.

And this does conclude today’s teleconference. You may now disconnect. And have a wonderful day.