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 Quarter Ended                    Commission File Number
        March 31, 1998                                1-8319





                            GATX CAPITAL CORPORATION


      Incorporated in the                 IRS Employer Identification Number
       State of Delaware                               94-1661392

                             Four Embarcadero Center
                             San Francisco, CA 94111
                                 (415) 955-3200



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  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                  Yes X  No __
                                               


All Common Stock of Registrant is held by GATX Financial Services, Inc.
   (a wholly-owned subsidiary of GATX Corporation).

As of May 12, 1998, Registrant has outstanding 1,031,250 shares of $1 par value
Common Stock.

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND
(b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.




                                      
<PAGE>
                                   
PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND REINVESTED EARNINGS
(in thousands)


                                                    Three Months Ended
                                                         March 31,
                                                     1998         1997
                                                 ---------    ---------
                                                        (Unaudited)
REVENUES:

Investment and asset management                   $ 123,462    $ 111,135
Technology equipment sales and service               34,374       39,252
                                               ------------  -----------
                                                    157,836      150,387
                                               ------------  -----------

EXPENSES:

Interest                                             29,869       22,041
Operating leases                                     32,999       27,445
Cost of technology equipment sales and service       27,274       31,963
Selling, general & administrative                    27,716       26,148
Provision for losses on investments                   2,250        2,250
Other                                                   726        1,987
                                               ------------  -----------
                                                    120,834      111,834
                                               ------------  -----------

Income before income taxes                           37,002       38,553
                                               
Provision for income taxes                           15,437       15,613
                                               ------------  -----------

NET INCOME                                           21,565       22,940

Reinvested earnings at beginning of period          212,750      185,686
Dividends paid to stockholder                        (6,650)      (5,914)

                                               ------------  -----------
REINVESTED EARNINGS AT END OF PERIOD              $ 227,665    $ 202,712
                                               ============  ===========





                                       1
<PAGE>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
                                                  March 31,   December 31,
                                                      1998          1997
                                                  ----------    ----------
                                                  (Unaudited)
ASSETS:
Cash and cash equivalents                        $   86,718    $  61,990 
Investments:
   Direct financing leases                          474,147      666,524 
   Leveraged leases                                 161,082      170,555 
   Operating lease equipment-
        net of depreciation                         501,765      524,523 
   Secured loans                                    372,414      180,331 
   Investment in joint ventures                     548,084      549,596 
   Assets held for sale or lease                     13,178       15,398
   Other investments                                 56,131       52,690
   Investment in future residuals                    19,338       19,693
   Allowance for losses on investments             (123,789)    (121,576)  
                                                ------------  -----------
          Total investments                       2,022,350    2,057,734
                                                ------------  -----------

Due from GATX Corporation                            30,225       35,904
Other assets                                        135,003      161,515 

                                               ------------   -----------
TOTAL ASSETS                                    $ 2,274,296  $ 2,317,143
                                               ============   ===========

LIABILITIES AND STOCKHOLDER'S EQUITY:
Accrued interest                                $    29,265  $    16,070
Accounts payable and other liabilities              116,701      167,825
Debt financing:
   Commercial paper and bankers' acceptances        115,900      127,832 
   Notes payable                                     69,082       74,161
   Obligations under capital leases                  10,239        9,754
   Senior term notes                              1,109,600    1,155,600
                                               ------------  -----------
          Total debt financing                    1,304,821    1,367,347  
                                               ------------  -----------
Nonrecourse obligations                             368,567      329,820
Deferred income                                       8,663       13,556
Deferred income taxes                                63,994       55,600

Stockholder's equity:
   Convertible preferred stock, par value $1,       125,000      125,000
      and additional paid-in capital
   Common stock, par value $1, and
     additional paid-in capital                      28,960       28,960
   Reinvested earnings                              227,665      212,750
   Accumulated other comprehensive income:
    Foreign currency translation adjustment          (4,393)      (4,404)
    Unrealized gain on available-for-sale
     securities                                       5,053        4,619 
                                               ------------  -----------
     Total accumulated other comprehensive income       660          215     
                                               ------------  -----------
             Total stockholder's equity             382,285      366,925  
                                               ------------  -----------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY     $  2,274,296  $ 2,317,143
                                               ============  ===========

                                       2
<PAGE>
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                    Three Months Ended
                                                        March 31,
                                                    1998         1997
                                                  ----------  --------- 
                                                      (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income                                        $  21,565    $ 22,940
Reconciliation to net cash provided by operating
  activities:
   Provision for losses on investments                2,250       2,250
   Depreciation expense                              23,409      17,528
   Provision for deferred income taxes                8,129       1,529
   Gain on sale of assets                           (25,040)    (25,489)
   Changes in assets and liabilities:
      Other assets                                   25,827     (11,278) 
      Due from GATX Corporation                       5,679      19,786
      Accrued interest, accounts payable and        (37,929)    (15,471)
          other liabilities
      Deferred income                                (4,893)        752
   Other - net                                       (2,527)      3,828
                                                ------------ ----------
Net cash flows provided by operating activities      16,470      16,375
                                                ------------ ----------

CASH FLOWS FROM INVESTING ACTIVITIES:

Investments in leased equipment, net of
 nonrecourse borrowings for leveraged leases        (71,009)    (51,045)
Loans extended to borrowers                         (28,741)     (2,529)
Other investments                                   (18,588)    (32,326)
                                                ------------ -----------
   Total investments                               (118,338)    (85,900)
                                                ------------ -----------
Lease rents received, net of earned income and
        leveraged lease nonrecourse debt service     36,477      31,483
Loan principal received                              10,275      33,246
Proceeds from sale of assets                        100,384      88,731
Joint venture investment recovery, net of earned
  income                                              9,889       1,750
                                               ------------ -----------
   Recovery of investments                          157,025     155,210
                                               ------------ -----------
Net cash flows provided by investing activities      38,687      69,310
                                               ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:

Net (decrease) increase in short-term borrowings    (17,011)     17,015
Proceeds from nonrecourse obligations                68,279      39,658
Repayment of long-term debt                         (46,000)   (100,000)
Repayment of nonrecourse obligations                (29,532)    (25,742)
Dividends paid to stockholder                        (6,650)     (5,914)
Other financing activities                              485        (806)
                                                ------------ -----------
Net cash flows used in financing activities         (30,429)    (75,789)
                                                ------------ -----------

Net increase in cash and cash equivalents            24,728       9,896
Cash and cash equivalents at beginning of period     61,990      18,482
                                                ------------  -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD         $ 86,718    $ 28,378
                                                ============  ===========
                                       3
<PAGE>

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements, continued
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998 AND 1997


1.   The  consolidated  balance  sheet  of  GATX  Capital  Corporation  and  its
     subsidiaries  ("the  Company")  at December  31, 1997 was derived  from the
     audited financial statements at that date. All other consolidated financial
     statements are unaudited and include all  adjustments,  consisting  only of
     normal recurring items,  which  management  considers  necessary for a fair
     statement of the consolidated  results of operations and financial position
     for and as of the end of the indicated  periods.  Operating results for the
     three-month  period ended March 31, 1998 are not necessarily  indicative of
     the results that may be achieved for the entire year.

2.   Certain  prior year amounts  have been  reclassified  to conform to current
     presentation.

3.   The Company is engaged in various  matters of litigation and has unresolved
     claims pending.  In one matter, the Company,  through an affiliate,  is the
     subject of both litigation and unasserted  claims related to the conversion
     of certain  aircraft from passenger to freighter  configuration.  While the
     amounts  claimed in this matter and other matters are  substantial  and the
     ultimate liability with respect to such claims cannot be determined at this
     time, it is the opinion of management that damages,  if any, required to be
     paid by the Company in the discharge of such liability are not likely to be
     material to the Company's financial position or results of operations.


4.   As of  January  1, 1998,  the  Company  adopted  Statement  130,  Reporting
     Comprehensive Income. Statement 130 establishes new rules for the reporting
     and  display of  comprehensive  income  and its  components;  however,  the
     adoption of this  Statement  had no impact on the  Company's  net income or
     stockholder's equity.  Statement 130 requires unrealized gains or losses on
     the   Company's   available-for-sale   securities   and  foreign   currency
     translation  adjustments,  which prior to adoption were reported separately
     in  stockholder's  equity,  to be included in other  comprehensive  income.
     Prior year financial  statements  have been  reclassified to conform to the
     requirements of Statement 130.

     During   the  first   quarter  of  1998  and  1997,   respectively,   total
     comprehensive income amounted to $22,010,000 and $18,710,000.











                                       4
<PAGE>

PART I.   FINANCIAL INFORMATION, continued
Item 2.   Management's Discussion and Analysis

RESULTS OF OPERATIONS

Net  income  earned  during  the three  months  ended  March 31,  1998 was $21.6
million,  approaching  GATX Capital's record first quarter 1997 results of $22.9
million.  Asset  remarketing  income  was  a  significant  contributor  to  both
quarters' strong results,  but was approximately $6.0 million (16%) lower in the
first quarter of 1998. An increase in income from investments  (other than gains
on sales) partially offset the decrease in asset  remarketing  income during the
quarter.

Overview 
---------
The  Company  engages in two main  activities:  (1) it is  actively  involved in
asset-based  investment  and generates  income by financing  equipment  (through
lease, loan and joint venture  investments);  by remarketing assets; by managing
the  equipment  related  investment  portfolios  of others;  and by brokering or
arranging asset financing transactions,  all of which are intertwined and (2) it
provides a wide range of technology  services enabling its customers to acquire,
construct and finance information networks. Sales and service revenue related to
the  Company's  technology  solutions  business is  included  in the  technology
equipment  sales  and  service  revenue  line.  Revenue  earned  from  financing
alternatives  related to technology  solutions is included in the investment and
asset management revenue line.

Revenues
--------
Investment  and asset  management  revenue  increased  $12.3 million  during the
three-month  period ended March 31,  1998,  compared to the same period in 1997.
Revenue  generated from higher average  investment  balances during 1998 was the
most significant  contributor to this increase.  Average  investments during the
quarter were almost 25% higher than during the same period in 1997. The increase
in revenue  from  investments  (other  than from  gains on sales) was  partially
offset by a decrease in asset  remarketing  income.  As mentioned  above,  asset
remarketing  income was $6.0  million  (16%) lower during the three months ended
March 31, 1998 than during the same period in 1997.

Although  asset  remarketing  income,  which  includes gains on sales of Company
owned assets and fee income  generated  from providing  remarketing  services to
third parties, has historically been a significant  contributor to income, asset
remarketing  opportunities  are realized at lease end or in response to specific
market  conditions  and the income they  generate  can  fluctuate  significantly
depending on market conditions.

Technology equipment sales and service revenue was $4.9 million lower during the
quarter  than  during  the  first  quarter  of  1997,  primarily  due to  market
conditions  for  certain   products.   The  information   technology   business,
particularly the market for communications  network technology,  is experiencing
and will  continue  to  experience  a rapid  pace of  change  which  will have a
significant  effect  on the  demand  for  products.  1998's  first  quarter  was
primarily  affected  by the demand for IBM legacy  network  protocol  equipment.
While the Company's  strategy  includes  adding  products for a broader range of
network  protocols,  much of its historical  sales base was in these IBM related
products.  This decrease in revenue is almost entirely offset by a corresponding
decrease in the cost of technology equipment sales and services.


                                       5
<PAGE>
Expenses
--------
Higher average borrowings (to fund new investments) resulted in interest expense
being higher than last year.  Continued growth in the Company's  operating lease
portfolio  resulted in an increase in operating  lease  expense,  which includes
depreciation expense and rent expense related to off-balance sheet financing.

The allowance for losses increased $2.2 million during the first three months of
1998 primarily as a result of a $2.3 million provision for losses. There were no
significant  recoveries or write-downs during the period. At March 31, 1998, the
allowance for losses is 6.2% of investments,  including off-balance sheet assets
and after deducting nonleveraged lease nonrecourse debt.

LIQUIDITY AND CAPITAL RESOURCES

The Company  generates cash from operations and from portfolio  proceeds and has
certain  facilities for borrowing.  In addition,  certain lease transactions are
financed by obtaining  nonrecourse  loans equal to the present  value of some or
all of the rental  streams.  During the three months  ended March 31, 1998,  the
Company used cash generated from operations and from portfolio proceeds to repay
$46.0  million  of senior  term  notes  and  invest  in  $118.3  million  of new
investments.

At March 31,  1998 the  Company  had  borrowing  capacity  consisting  of $182.0
million  remaining  under its  Series E shelf  registration,  $154.1  million of
unused  capacity  under its  commercial  paper and bankers'  acceptances  credit
agreements,  and $31.0  million  remaining  under  stand-alone  bank  facilities
maintained by two of the Company's subsidiaries.

During the quarter the Company  placed the  proceeds  from  certain  asset sales
(approximately $55.1 million) in trust with qualified intermediaries pending the
identification  and  acquisition  of  qualified  replacement  assets in order to
affect  like-kind  exchanges for federal  income tax  purposes.  Also during the
quarter, the Company withdrew  approximately $33.8 million of proceeds from 1997
sales  previously  deposited  with a qualified  intermediary  because  qualified
replacement assets were not identified.  At March 31, 1998  approximately  $57.9
million is held in trust and is classified as cash and cash  equivalents  in the
accompanying balance sheet.

During the quarter the Company financed the sale of approximately $173.3 million
of direct financing leases  resulting in a  recharacterization  of the Company's
investment as secured loans.  The loans are due in 1998. No gain or loss will be
recognized on the sale until the loans are repaid.

The Company's capital structure  includes both fixed and floating rate debt. The
Company ensures a stable margin over its cost of funds by approximately matching
its  fixed  and  floating  rate  investments  to its  fixed  and  floating  rate
borrowings.

At March 31,  1998,  the Company had  approved  unfunded  transactions  totaling
approximately $253.7 million, including approximately $146.1 million expected to
fund during the remainder of 1998. Once approved for funding,  a transaction may
not be  completed  for various  reasons,  or the  investment  may be shared with
partners or sold.

FORWARD LOOKING STATEMENTS

Certain  statements  in the  Management's  Discussion  and  Analysis  constitute
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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,  and could cause actual  results to differ  materially
from those projected.

                                       6
<PAGE>
                                 
PART II.  OTHER INFORMATION
Item 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits:

     27. Financial Data Schedule

(b)  The Company filed no reports on Form 8-K during the three months ended 
     March 31, 1998.



Signatures
----------
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 CAPITAL CORPORATION


                                  /s/ Michael E. Cromar
                                  --------------------- 
                                  Michael E. Cromar
                                  Senior Vice President and 
                                  Chief Financial Officer



                                  /s/ A. Douglas Shattuck
                                  -----------------------      
                                  A. Douglas Shattuck
                                  Principal Accounting Officer and 
                                  Corporate Controller









May 14, 1998






                                       7
<PAGE>
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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 Quarter Ended                    Commission File Number
        March 31, 1998                                1-8319

                            GATX CAPITAL CORPORATION

      Incorporated in the                 IRS Employer Identification Number
       State of Delaware                               94-1661392

                             Four Embarcadero Center
                             San Francisco, CA 94111
                                 (415) 955-3200

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  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                  Yes X  No __
                                               

All Common Stock of Registrant is held by GATX Financial Services, Inc.
   (a wholly-owned subsidiary of GATX Corporation).

As of May 12, 1998, Registrant has outstanding 1,031,250 shares of $1 par value
Common Stock.

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND
(b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.
PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND REINVESTED EARNINGS
(in thousands)

                                                    Three Months Ended
                                                         March 31,
                                                     1998         1997
                                                 ---------    ---------
                                                        (Unaudited)
REVENUES:

Investment and asset management                   $ 123,462    $ 111,135
Technology equipment sales and service               34,374       39,252
                                               ------------  -----------
                                                    157,836      150,387
                                               ------------  -----------

EXPENSES:

Interest                                             29,869       22,041
Operating leases                                     32,999       27,445
Cost of technology equipment sales and service       27,274       31,963
Selling, general & administrative                    27,716       26,148
Provision for losses on investments                   2,250        2,250
Other                                                   726        1,987
                                               ------------  -----------
                                                    120,834      111,834
                                               ------------  -----------

Income before income taxes                           37,002       38,553
                                               
Provision for income taxes                           15,437       15,613
                                               ------------  -----------

NET INCOME                                           21,565       22,940

Reinvested earnings at beginning of period          212,750      185,686
Dividends paid to stockholder                        (6,650)      (5,914)

                                               ------------  -----------
REINVESTED EARNINGS AT END OF PERIOD              $ 227,665    $ 202,712
                                               ============  ===========

                                       1
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
                                                  March 31,   December 31,
                                                      1998          1997
                                                  ----------    ----------
                                                  (Unaudited)
ASSETS:
Cash and cash equivalents                        $   86,718    $  61,990 
Investments:
   Direct financing leases                          474,147      666,524 
   Leveraged leases                                 161,082      170,555 
   Operating lease equipment-
        net of depreciation                         501,765      524,523 
   Secured loans                                    372,414      180,331 
   Investment in joint ventures                     548,084      549,596 
   Assets held for sale or lease                     13,178       15,398
   Other investments                                 56,131       52,690
   Investment in future residuals                    19,338       19,693
   Allowance for losses on investments             (123,789)    (121,576)  
                                                ------------  -----------
          Total investments                       2,022,350    2,057,734
                                                ------------  -----------

Due from GATX Corporation                            30,225       35,904
Other assets                                        135,003      161,515 

                                               ------------   -----------
TOTAL ASSETS                                    $ 2,274,296  $ 2,317,143
                                               ============   ===========

LIABILITIES AND STOCKHOLDER'S EQUITY:
Accrued interest                                $    29,265  $    16,070
Accounts payable and other liabilities              116,701      167,825
Debt financing:
   Commercial paper and bankers' acceptances        115,900      127,832 
   Notes payable                                     69,082       74,161
   Obligations under capital leases                  10,239        9,754
   Senior term notes                              1,109,600    1,155,600
                                               ------------  -----------
          Total debt financing                    1,304,821    1,367,347  
                                               ------------  -----------
Nonrecourse obligations                             368,567      329,820
Deferred income                                       8,663       13,556
Deferred income taxes                                63,994       55,600

Stockholder's equity:
   Convertible preferred stock, par value $1,       125,000      125,000
      and additional paid-in capital
   Common stock, par value $1, and
     additional paid-in capital                      28,960       28,960
   Reinvested earnings                              227,665      212,750
   Accumulated other comprehensive income:
    Foreign currency translation adjustment          (4,393)      (4,404)
    Unrealized gain on available-for-sale
     securities                                       5,053        4,619 
                                               ------------  -----------
     Total accumulated other comprehensive income       660          215     
                                               ------------  -----------
             Total stockholder's equity             382,285      366,925  
                                               ------------  -----------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY     $  2,274,296  $ 2,317,143
                                               ============  ===========

                                       2
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                    Three Months Ended
                                                        March 31,
                                                    1998         1997
                                                  ----------  --------- 
                                                      (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income                                        $  21,565    $ 22,940
Reconciliation to net cash provided by operating
  activities:
   Provision for losses on investments                2,250       2,250
   Depreciation expense                              23,409      17,528
   Provision for deferred income taxes                8,129       1,529
   Gain on sale of assets                           (25,040)    (25,489)
   Changes in assets and liabilities:
      Other assets                                   25,827     (11,278) 
      Due from GATX Corporation                       5,679      19,786
      Accrued interest, accounts payable and        (37,929)    (15,471)
          other liabilities
      Deferred income                                (4,893)        752
   Other - net                                       (2,527)      3,828
                                                ------------ ----------
Net cash flows provided by operating activities      16,470      16,375
                                                ------------ ----------

CASH FLOWS FROM INVESTING ACTIVITIES:

Investments in leased equipment, net of
 nonrecourse borrowings for leveraged leases        (71,009)    (51,045)
Loans extended to borrowers                         (28,741)     (2,529)
Other investments                                   (18,588)    (32,326)
                                                ------------ -----------
   Total investments                               (118,338)    (85,900)
                                                ------------ -----------
Lease rents received, net of earned income and
        leveraged lease nonrecourse debt service     36,477      31,483
Loan principal received                              10,275      33,246
Proceeds from sale of assets                        100,384      88,731
Joint venture investment recovery, net of earned
  income                                              9,889       1,750
                                               ------------ -----------
   Recovery of investments                          157,025     155,210
                                               ------------ -----------
Net cash flows provided by investing activities      38,687      69,310
                                               ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:

Net (decrease) increase in short-term borrowings    (17,011)     17,015
Proceeds from nonrecourse obligations                68,279      39,658
Repayment of long-term debt                         (46,000)   (100,000)
Repayment of nonrecourse obligations                (29,532)    (25,742)
Dividends paid to stockholder                        (6,650)     (5,914)
Other financing activities                              485        (806)
                                                ------------ -----------
Net cash flows used in financing activities         (30,429)    (75,789)
                                                ------------ -----------

Net increase in cash and cash equivalents            24,728       9,896
Cash and cash equivalents at beginning of period     61,990      18,482
                                                ------------  -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD         $ 86,718    $ 28,378
                                                ============  ===========
                                       3
PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements, continued
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998 AND 1997

1.   The  consolidated  balance  sheet  of  GATX  Capital  Corporation  and  its
     subsidiaries  ("the  Company")  at December  31, 1997 was derived  from the
     audited financial statements at that date. All other consolidated financial
     statements are unaudited and include all  adjustments,  consisting  only of
     normal recurring items,  which  management  considers  necessary for a fair
     statement of the consolidated  results of operations and financial position
     for and as of the end of the indicated  periods.  Operating results for the
     three-month  period ended March 31, 1998 are not necessarily  indicative of
     the results that may be achieved for the entire year.

2.   Certain  prior year amounts  have been  reclassified  to conform to current
     presentation.

3.   The Company is engaged in various  matters of litigation and has unresolved
     claims pending.  In one matter, the Company,  through an affiliate,  is the
     subject of both litigation and unasserted  claims related to the conversion
     of certain  aircraft from passenger to freighter  configuration.  While the
     amounts  claimed in this matter and other matters are  substantial  and the
     ultimate liability with respect to such claims cannot be determined at this
     time, it is the opinion of management that damages,  if any, required to be
     paid by the Company in the discharge of such liability are not likely to be
     material to the Company's financial position or results of operations.

4.   As of  January  1, 1998,  the  Company  adopted  Statement  130,  Reporting
     Comprehensive Income. Statement 130 establishes new rules for the reporting
     and  display of  comprehensive  income  and its  components;  however,  the
     adoption of this  Statement  had no impact on the  Company's  net income or
     stockholder's equity.  Statement 130 requires unrealized gains or losses on
     the   Company's   available-for-sale   securities   and  foreign   currency
     translation  adjustments,  which prior to adoption were reported separately
     in  stockholder's  equity,  to be included in other  comprehensive  income.
     Prior year financial  statements  have been  reclassified to conform to the
     requirements of Statement 130.

     During   the  first   quarter  of  1998  and  1997,   respectively,   total
     comprehensive income amounted to $22,010,000 and $18,710,000.

                                       4
PART I.   FINANCIAL INFORMATION, continued
Item 2.   Management's Discussion and Analysis

RESULTS OF OPERATIONS

Net  income  earned  during  the three  months  ended  March 31,  1998 was $21.6
million,  approaching  GATX Capital's record first quarter 1997 results of $22.9
million.  Asset  remarketing  income  was  a  significant  contributor  to  both
quarters' strong results,  but was approximately $6.0 million (16%) lower in the
first quarter of 1998. An increase in income from investments  (other than gains
on sales) partially offset the decrease in asset  remarketing  income during the
quarter.

Overview 
---------
The  Company  engages in two main  activities:  (1) it is  actively  involved in
asset-based  investment  and generates  income by financing  equipment  (through
lease, loan and joint venture  investments);  by remarketing assets; by managing
the  equipment  related  investment  portfolios  of others;  and by brokering or
arranging asset financing transactions,  all of which are intertwined and (2) it
provides a wide range of technology  services enabling its customers to acquire,
construct and finance information networks. Sales and service revenue related to
the  Company's  technology  solutions  business is  included  in the  technology
equipment  sales  and  service  revenue  line.  Revenue  earned  from  financing
alternatives  related to technology  solutions is included in the investment and
asset management revenue line.

Revenues
--------
Investment  and asset  management  revenue  increased  $12.3 million  during the
three-month  period ended March 31,  1998,  compared to the same period in 1997.
Revenue  generated from higher average  investment  balances during 1998 was the
most significant  contributor to this increase.  Average  investments during the
quarter were almost 25% higher than during the same period in 1997. The increase
in revenue  from  investments  (other  than from  gains on sales) was  partially
offset by a decrease in asset  remarketing  income.  As mentioned  above,  asset
remarketing  income was $6.0  million  (16%) lower during the three months ended
March 31, 1998 than during the same period in 1997.

Although  asset  remarketing  income,  which  includes gains on sales of Company
owned assets and fee income  generated  from providing  remarketing  services to
third parties, has historically been a significant  contributor to income, asset
remarketing  opportunities  are realized at lease end or in response to specific
market  conditions  and the income they  generate  can  fluctuate  significantly
depending on market conditions.

Technology equipment sales and service revenue was $4.9 million lower during the
quarter  than  during  the  first  quarter  of  1997,  primarily  due to  market
conditions  for  certain   products.   The  information   technology   business,
particularly the market for communications  network technology,  is experiencing
and will  continue  to  experience  a rapid  pace of  change  which  will have a
significant  effect  on the  demand  for  products.  1998's  first  quarter  was
primarily  affected  by the demand for IBM legacy  network  protocol  equipment.
While the Company's  strategy  includes  adding  products for a broader range of
network  protocols,  much of its historical  sales base was in these IBM related
products.  This decrease in revenue is almost entirely offset by a corresponding
decrease in the cost of technology equipment sales and services.

                                       5
Expenses
--------
Higher average borrowings (to fund new investments) resulted in interest expense
being higher than last year.  Continued growth in the Company's  operating lease
portfolio  resulted in an increase in operating  lease  expense,  which includes
depreciation expense and rent expense related to off-balance sheet financing.

The allowance for losses increased $2.2 million during the first three months of
1998 primarily as a result of a $2.3 million provision for losses. There were no
significant  recoveries or write-downs during the period. At March 31, 1998, the
allowance for losses is 6.2% of investments,  including off-balance sheet assets
and after deducting nonleveraged lease nonrecourse debt.

LIQUIDITY AND CAPITAL RESOURCES

The Company  generates cash from operations and from portfolio  proceeds and has
certain  facilities for borrowing.  In addition,  certain lease transactions are
financed by obtaining  nonrecourse  loans equal to the present  value of some or
all of the rental  streams.  During the three months  ended March 31, 1998,  the
Company used cash generated from operations and from portfolio proceeds to repay
$46.0  million  of senior  term  notes  and  invest  in  $118.3  million  of new
investments.

At March 31,  1998 the  Company  had  borrowing  capacity  consisting  of $182.0
million  remaining  under its  Series E shelf  registration,  $154.1  million of
unused  capacity  under its  commercial  paper and bankers'  acceptances  credit
agreements,  and $31.0  million  remaining  under  stand-alone  bank  facilities
maintained by two of the Company's subsidiaries.

During the quarter the Company  placed the  proceeds  from  certain  asset sales
(approximately $55.1 million) in trust with qualified intermediaries pending the
identification  and  acquisition  of  qualified  replacement  assets in order to
affect  like-kind  exchanges for federal  income tax  purposes.  Also during the
quarter, the Company withdrew  approximately $33.8 million of proceeds from 1997
sales  previously  deposited  with a qualified  intermediary  because  qualified
replacement assets were not identified.  At March 31, 1998  approximately  $57.9
million is held in trust and is classified as cash and cash  equivalents  in the
accompanying balance sheet.

During the quarter the Company financed the sale of approximately $173.3 million
of direct financing leases  resulting in a  recharacterization  of the Company's
investment as secured loans.  The loans are due in 1998. No gain or loss will be
recognized on the sale until the loans are repaid.

The Company's capital structure  includes both fixed and floating rate debt. The
Company ensures a stable margin over its cost of funds by approximately matching
its  fixed  and  floating  rate  investments  to its  fixed  and  floating  rate
borrowings.

At March 31,  1998,  the Company had  approved  unfunded  transactions  totaling
approximately $253.7 million, including approximately $146.1 million expected to
fund during the remainder of 1998. Once approved for funding,  a transaction may
not be  completed  for various  reasons,  or the  investment  may be shared with
partners or sold.

FORWARD LOOKING STATEMENTS

Certain  statements  in the  Management's  Discussion  and  Analysis  constitute
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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,  and could cause actual  results to differ  materially
from those projected.

                                       6
PART II.  OTHER INFORMATION
Item 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits:

     27. Financial Data Schedule

(b)  The Company filed no reports on Form 8-K during the three months ended 
     March 31, 1998.

Signatures
----------
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 CAPITAL CORPORATION

                                  /s/ Michael E. Cromar
                                  --------------------- 
                                  Michael E. Cromar
                                  Senior Vice President and 
                                  Chief Financial Officer

                                  /s/ A. Douglas Shattuck
                                  -----------------------      
                                  A. Douglas Shattuck
                                  Principal Accounting Officer and 
                                  Corporate Controller

May 14, 1998

                                       7