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
        September 30, 1997                                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 November 7, 1997, 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    Nine Months Ended
                                           September 30,       September 30,
                                          1997       1996      1997      1996
                                        -------   -------   --------  ---------
                                            (Unaudited)          (Unaudited)
REVENUES:

Investment and asset management      $  107,350  $ 93,655  $ 312,993  $ 235,444
Technology equipment sales and service   43,885      -       137,688        -
                                       --------   -------   --------  ---------
                                        151,235    93,655    450,681    235,444
                                       --------   -------   --------  ---------
EXPENSES:

Interest                                 23,335    22,716     67,820     62,541
Operating leases                         29,790    19,785     85,757     52,404
Cost of technology equipment
  sales & service                        37,200       -      113,734       - 
Selling, general & administrative        33,554    15,030     86,234     41,808 
Provision for losses on investments       3,506     3,000      9,531      9,501
Other                                     4,074       997      7,368      3,285 
                                       --------  --------   --------  ---------
                                        131,459    61,528    370,444    169,539
                                       --------  --------   --------  ---------

Income before income taxes               19,776    32,127     80,237     65,905
                                       --------  --------   --------  ---------

INCOME TAXES:

Current income taxes                     13,859    10,203     35,943     22,809
Deferred income taxes                    (5,846)    2,863     (3,443)     4,008
                                       --------  --------   --------  ---------
                                          8,013    13,066     32,500     26,817
                                       --------  --------   --------  ---------

NET INCOME                               11,763    19,061     47,737     39,088

Reinvested earnings at 
  beginning of period                   209,551   172,497    185,686    162,400
Dividends paid to stockholder            (7,929)   (6,305)   (20,038)   (16,235)
                                       --------  --------   --------  ---------
                               
REINVESTED EARNINGS AT END OF PERIOD  $ 213,385 $ 185,253  $ 213,385  $ 185,253
                                      ========= ========= ==========  =========




                                       1
<PAGE>






GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)

                                                   September 30,  December 31,
                                                       1997          1996
                                                   -----------    -----------
                                                   (Unaudited)
ASSETS:
Cash and cash equivalents                         $    55,134     $   18,482
Investments:
   Direct financing leases                            669,552        461,757
   Leveraged leases                                   173,449        257,039
   Operating lease equipment-
        net of depreciation                           479,681        429,880
   Secured loans                                      200,880        222,602
   Investment in joint ventures                       379,022        308,934
   Assets held for sale or lease                        7,973         12,393
   Other investments                                   60,357         65,506
   Investment in future residuals                      20,490         21,457
   Allowance for losses on investments               (124,931)      (114,096)
                                                   -----------   ------------
          Total investments                         1,866,473      1,665,472
                                                   -----------   ------------

Due from GATX Corporation                              15,376         45,147
Other assets                                          133,266        119,528

                                                   -----------   -----------
TOTAL ASSETS                                      $ 2,070,249    $ 1,848,629
                                                   ===========   ============


LIABILITIES AND STOCKHOLDER'S EQUITY:
Accrued interest                                  $    22,249    $    15,821
Accounts payable and other liabilities                140,300        138,660
Debt financing:
   Commercial paper and bankers' acceptances          218,900         13,772    
   Notes payable                                      131,603         63,114
   Obligations under capital leases                    10,157         12,429
   Senior term notes                                  805,600        935,600
                                                  ------------    ----------
          Total debt financing                      1,166,260      1,024,915
                                                  ------------    ----------

Nonrecourse obligations                               316,300        268,044
Deferred income                                         6,542          5,786
Deferred income taxes                                  48,775         51,726
   
Stockholder's equity:
   Convertible preferred stock, par value $1,         
       and additional paid-in capital                 125,000        125,000
   Common stock, par value $1, and
       and additional paid-in capital                  28,960         28,960
   Reinvested earnings                                213,385        185,686
   Foreign currency translation adjustment             (3,613)        (1,543)
   Unrealized gain on equity securities                 6,091          5,574
 
                                                 -------------    ----------
             Total stockholder's equity               369,823        343,677
                                                 -------------    ----------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY        $ 2,070,249    $ 1,848,629
                                                 =============   =========== 
                                                  



                                       2
<PAGE>



GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

                                                            Nine Months Ended
                                                              September 30,
                                                          1997           1996
                                                        ----------    ---------
                                                              (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income                                               $ 47,737     $ 39,088
Reconciliation to net cash provided by operating activities:
   Provision for losses on investments                      9,531        9,501
   Depreciation expense                                    56,448       29,781
   Provision for deferred income taxes (benefits)          (3,443)       4,008
   Gain on sale of assets                                 (63,792)     (25,747)
   Changes in assets and liabilities:
      Due from GATX Corporation                            29,771        7,378
      Accrued interest, accounts payable
       and other liabilities                                8,068       39,348
      Deferred income                                         756          756
   Other - net                                            (18,881)      (2,357)

                                                        ----------     --------
Net cash flows provided by operating activities            66,195      101,756
                                                        ----------     --------

CASH FLOWS FROM INVESTING ACTIVITIES:

Investments in leased equipment, net of
       nonrecourse borrowings for leveraged leases       (438,825)    (268,512)
Loans extended to borrowers                               (28,628)    (108,738)
Other investments                                        (110,536)     (81,742)
                                                        ----------    ---------
   Total investments                                     (577,989)    (458,992)
                                                        ----------    ---------
Lease rents received, net of earned income and
        leveraged lease nonrecourse debt service           82,463       81,693
Loan principal received                                    51,424      115,978
Proceeds from sale of assets                              201,931      129,982
Joint venture investment recovery, net of earned income    30,531        3,671
                                                       ----------    ---------
                                       
   Recovery of investments                                366,349      331,324
                                                       -----------    ---------
Net cash flows used in investing activities              (211,640)    (127,668)
                                                       -----------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:

Net increase in short-term borrowings                     285,617       22,776
Proceeds from issuance of long-term debt                      -        168,000
Proceeds from nonrecourse obligations                     130,095       68,413
Repayment of long-term debt                              (130,000)    (112,000)
Repayment of nonrecourse obligations                      (81,304)     (47,679)
Dividends paid to stockholder                             (20,038)     (16,235) 
Other financing activities                                 (2,273)      (3,792)

                                                       -----------    ---------
Net cash flows provided by financing activities           182,097       79,483
                                   
                                                       -----------    ---------
Net increase in cash and cash equivalents                  36,652       53,571
Cash and cash equivalents at beginning of period           18,482       19,905

                                                       -----------   ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD              $  55,134    $  73,476
                                                        ==========   ========== 



                                       3
<PAGE>


PART I.  FINANCIAL INFORMATION
Item 1.   Financial Statements, continued
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AND 1996


1.   The  consolidated  balance  sheet  of  GATX  Capital  Corporation  and  its
     subsidiaries  ("the  Company")  at December  31, 1996 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
     nine-month  period ended September 30, 1997 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.  While the amounts claimed 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
<PAGE>


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

RESULTS OF OPERATIONS

Net income earned  during the nine months ended  September 30, 1997 exceeded net
income earned during the corresponding period in the prior year by $8.6 million,
primarily due to an increase in revenue related to the remarketing of assets.

Net income  earned  during the three  months ended  September  30, 1997 was $7.3
million less than in the same period in 1996 mainly due to  historically  strong
results  in the third  quarter of 1996 and  one-time  expenses  incurred  by the
Company  during the third  quarter of 1997 in  connection  with two  significant
events:  the  acquisition  of the 20% of Sun Financial  Group,  Inc. not already
owned by the Company and the purchase of a portfolio  of leased  assets owned by
Pitney Bowes Credit  Corporation.  The Pitney Bowes  transaction is described in
more detail in Item 5. below.

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); from the remarketing of assets; from
managing  the  equipment  related  investment  portfolios  of  others;  and from
brokering or arranging asset financing transactions,  and (2) it provides a wide
range of technology  services  enabling its customers to acquire,  construct and
finance information  networks.  The Company's  technology solutions business was
significantly  expanded with the October 1996  acquisition of the 50% of Centron
which it did not already own.  Sales and service  revenue  related to technology
solutions 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.  Centron's
financial  results  were  consolidated  in the  Company's  financial  statements
subsequent to the October 1996 acquisition.

Revenues
---------

Investment  and asset  management  revenue  increased  $13.7  million  and $77.5
million  during the three and  nine-month  periods  ended  September  30,  1997,
respectively,  compared  to the same  periods in 1996.  Revenue  generated  from
higher average  investment  balances  during 1997,  including  those funded with
off-balance  sheet  financing,  was the  most  significant  contributor  to this
increase. Increases in asset remarketing income also contributed to the increase
in investment and asset management  revenue.  Asset remarketing  income was $2.5
million (11%) and $34.9 million (83%) greater  during the three and  nine-months
ended September 30, 1997 than in 1996's comparable periods, respectively.

Although  asset  remarketing  income,  which  includes gains on the sales of the
Company's  owned  assets and fee income  generated  from  providing  remarketing
services for 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  were  primarily  generated by
Centron and were not  consolidated in the Company's  financial  statements until
October 1996.


Expenses
---------

Higher average  borrowings (to fund new  investments and from the acquisition of
Centron)  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
from off-balance sheet financing.

The increase in selling,  general and  administrative  costs is primarily due to
the impact of the  acquisition of Centron and one-time  expenses  related to the
acquisition  of the 20% of Sun  Financial  Group,  Inc. not already owned by the
Company and the Pitney Bowes transaction.

The  allowance  for losses  increased  during the first nine months of 1997 as a
result of a $9.5 million  provision for losses and $1.8 million in recoveries of
previously written off investments. There were no significant write-downs during
this  period.  At  September  30,  1997,  the  allowance  for  losses is 6.5% of
investments, including off-balance sheet assets and after deducting nonleveraged
lease nonrecourse debt.



                                       5
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

The Company  generates  cash from  operations  and  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 nine months ended September 30, 1997, the
Company used cash generated from operations,  from investing activities and from
short-term  borrowings to repay $130 million of  medium-term  notes.  During the
third quarter of 1997, the Company filed a $532 million shelf  registration  for
debt securities, of which the entire amount was available on September 30, 1997.
Amounts  remaining  under the Company's  Series D medium term note  registration
statement were incorporated into this new registration  statement and the Series
D  registration  statement  was retired.  At September  30, 1997 the Company had
unused  capacity  under its  commercial  paper and bankers'  acceptances  credit
agreements of $41.1 million. Two of the Company's  subsidiaries maintain various
stand-alone bank facilities which had unused capacity  aggregating $48.8 million
as of September 30, 1997.

On  September  30, 1997 the Company  funded  approximately  $193  million of the
Pitney Bowes acquisition (see Item 5. below) with proceeds from commercial paper
and other short term  borrowings.  In October  1997,  the Company  borrowed $350
million under its $532 million  shelf  registration  and used the  proceeds,  in
part, to repay the commercial  paper and other  short-term  borrowings that were
used to fund this  purchase.  The  remainder of the  proceeds  were used to fund
additional portions of the Pitney Bowes acquisition in early November 1997.

During the third quarter of 1997 the Company sold certain assets and  has placed
the  proceeds  from such  sales  (approximately  $33  million)  in trust  with a
qualified  intermediary  pending the identification and acquisition of qualified
replacement  assets in order to effect a like-kind  exchange for federal  income
tax purposes.  The amounts in trust are classified as cash and cash  equivalents
in the accompanying balance sheet.


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 September 30, 1997, the Company had approved unfunded  transactions  totaling
approximately  $390 million,  including  approximately  $325 million expected to
fund during the fourth  quarter.  Of the expected fourth quarter funding amount,
approximately  $260  million  relates to the  acquisition  of the  Pitney  Bowes
portfolio (of which  approximately  $174 million  funded in early  November,  as
discussed above).  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.



PART II.  OTHER INFORMATION
Item 5.   Other Information

On August 21, 1997, the Company announced that it had entered into agreements to
invest in a $1.2 billion portfolio of leased assets owned by Pitney Bowes Credit
Corporation  ("PBCC"),  a  wholly-owned  subsidiary  of Pitney  Bowes  Inc.  The
Company's investment will total approximately $460 million in cash, for which it
will receive  assets valued by the Company at  approximately  $280 million and a
fifty percent  interest in a joint venture with PBCC that will own assets valued
by the Company at approximately $895 million.

The Company's  investment will be effected through a series of closings,  all of
which are expected to occur prior to December 31, 1997.  The first  closing took
place on September  30,  1997,  when the Company  paid PBCC  approximately  $193
million for assets  acquired.  The second  closing took place in early  November
1997, at which time the Company purchased  approximately  $174 million of assets
from PBCC.


                                       

                                       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 a current report on Form 8-K on August 27, 1997,
        under Item 5., Other Events.


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
                                      Vice President and Chief Financial Officer


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



November 13, 1997

                                  

                                       7
<PAGE>
[{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 24635}]
{"company-data": {"conformed-name": "GATX CAPITAL CORP", "cik": "0000357019", "assigned-sic": "6172", "irs-number": "941661392", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-08319", "film-number": "97715270"}, "business-address": {"street1": "FOUR EMBARCADERO CTR SUITE 2200", "city": "SAN FRANCISCO", "state": "CA", "zip": "94111", "phone": "4159553200"}, "former-company": {"former-conformed-name": "GATX LEASING CORP", "date-changed": "19900405"}}
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
        September 30, 1997                                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 November 7, 1997, 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    Nine Months Ended
                                           September 30,       September 30,
                                          1997       1996      1997      1996
                                        -------   -------   --------  ---------
                                            (Unaudited)          (Unaudited)
REVENUES:

Investment and asset management      $  107,350  $ 93,655  $ 312,993  $ 235,444
Technology equipment sales and service   43,885      -       137,688        -
                                       --------   -------   --------  ---------
                                        151,235    93,655    450,681    235,444
                                       --------   -------   --------  ---------
EXPENSES:

Interest                                 23,335    22,716     67,820     62,541
Operating leases                         29,790    19,785     85,757     52,404
Cost of technology equipment
  sales & service                        37,200       -      113,734       - 
Selling, general & administrative        33,554    15,030     86,234     41,808 
Provision for losses on investments       3,506     3,000      9,531      9,501
Other                                     4,074       997      7,368      3,285 
                                       --------  --------   --------  ---------
                                        131,459    61,528    370,444    169,539
                                       --------  --------   --------  ---------

Income before income taxes               19,776    32,127     80,237     65,905
                                       --------  --------   --------  ---------

INCOME TAXES:

Current income taxes                     13,859    10,203     35,943     22,809
Deferred income taxes                    (5,846)    2,863     (3,443)     4,008
                                       --------  --------   --------  ---------
                                          8,013    13,066     32,500     26,817
                                       --------  --------   --------  ---------

NET INCOME                               11,763    19,061     47,737     39,088

Reinvested earnings at 
  beginning of period                   209,551   172,497    185,686    162,400
Dividends paid to stockholder            (7,929)   (6,305)   (20,038)   (16,235)
                                       --------  --------   --------  ---------
                               
REINVESTED EARNINGS AT END OF PERIOD  $ 213,385 $ 185,253  $ 213,385  $ 185,253
                                      ========= ========= ==========  =========

                                       1
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)

                                                   September 30,  December 31,
                                                       1997          1996
                                                   -----------    -----------
                                                   (Unaudited)
ASSETS:
Cash and cash equivalents                         $    55,134     $   18,482
Investments:
   Direct financing leases                            669,552        461,757
   Leveraged leases                                   173,449        257,039
   Operating lease equipment-
        net of depreciation                           479,681        429,880
   Secured loans                                      200,880        222,602
   Investment in joint ventures                       379,022        308,934
   Assets held for sale or lease                        7,973         12,393
   Other investments                                   60,357         65,506
   Investment in future residuals                      20,490         21,457
   Allowance for losses on investments               (124,931)      (114,096)
                                                   -----------   ------------
          Total investments                         1,866,473      1,665,472
                                                   -----------   ------------

Due from GATX Corporation                              15,376         45,147
Other assets                                          133,266        119,528

                                                   -----------   -----------
TOTAL ASSETS                                      $ 2,070,249    $ 1,848,629
                                                   ===========   ============

LIABILITIES AND STOCKHOLDER'S EQUITY:
Accrued interest                                  $    22,249    $    15,821
Accounts payable and other liabilities                140,300        138,660
Debt financing:
   Commercial paper and bankers' acceptances          218,900         13,772    
   Notes payable                                      131,603         63,114
   Obligations under capital leases                    10,157         12,429
   Senior term notes                                  805,600        935,600
                                                  ------------    ----------
          Total debt financing                      1,166,260      1,024,915
                                                  ------------    ----------

Nonrecourse obligations                               316,300        268,044
Deferred income                                         6,542          5,786
Deferred income taxes                                  48,775         51,726
   
Stockholder's equity:
   Convertible preferred stock, par value $1,         
       and additional paid-in capital                 125,000        125,000
   Common stock, par value $1, and
       and additional paid-in capital                  28,960         28,960
   Reinvested earnings                                213,385        185,686
   Foreign currency translation adjustment             (3,613)        (1,543)
   Unrealized gain on equity securities                 6,091          5,574
 
                                                 -------------    ----------
             Total stockholder's equity               369,823        343,677
                                                 -------------    ----------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY        $ 2,070,249    $ 1,848,629
                                                 =============   =========== 
                                                  

                                       2
GATX CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

                                                            Nine Months Ended
                                                              September 30,
                                                          1997           1996
                                                        ----------    ---------
                                                              (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income                                               $ 47,737     $ 39,088
Reconciliation to net cash provided by operating activities:
   Provision for losses on investments                      9,531        9,501
   Depreciation expense                                    56,448       29,781
   Provision for deferred income taxes (benefits)          (3,443)       4,008
   Gain on sale of assets                                 (63,792)     (25,747)
   Changes in assets and liabilities:
      Due from GATX Corporation                            29,771        7,378
      Accrued interest, accounts payable
       and other liabilities                                8,068       39,348
      Deferred income                                         756          756
   Other - net                                            (18,881)      (2,357)

                                                        ----------     --------
Net cash flows provided by operating activities            66,195      101,756
                                                        ----------     --------

CASH FLOWS FROM INVESTING ACTIVITIES:

Investments in leased equipment, net of
       nonrecourse borrowings for leveraged leases       (438,825)    (268,512)
Loans extended to borrowers                               (28,628)    (108,738)
Other investments                                        (110,536)     (81,742)
                                                        ----------    ---------
   Total investments                                     (577,989)    (458,992)
                                                        ----------    ---------
Lease rents received, net of earned income and
        leveraged lease nonrecourse debt service           82,463       81,693
Loan principal received                                    51,424      115,978
Proceeds from sale of assets                              201,931      129,982
Joint venture investment recovery, net of earned income    30,531        3,671
                                                       ----------    ---------
                                       
   Recovery of investments                                366,349      331,324
                                                       -----------    ---------
Net cash flows used in investing activities              (211,640)    (127,668)
                                                       -----------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:

Net increase in short-term borrowings                     285,617       22,776
Proceeds from issuance of long-term debt                      -        168,000
Proceeds from nonrecourse obligations                     130,095       68,413
Repayment of long-term debt                              (130,000)    (112,000)
Repayment of nonrecourse obligations                      (81,304)     (47,679)
Dividends paid to stockholder                             (20,038)     (16,235) 
Other financing activities                                 (2,273)      (3,792)

                                                       -----------    ---------
Net cash flows provided by financing activities           182,097       79,483
                                   
                                                       -----------    ---------
Net increase in cash and cash equivalents                  36,652       53,571
Cash and cash equivalents at beginning of period           18,482       19,905

                                                       -----------   ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD              $  55,134    $  73,476
                                                        ==========   ========== 

                                       3
PART I.  FINANCIAL INFORMATION
Item 1.   Financial Statements, continued
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AND 1996

1.   The  consolidated  balance  sheet  of  GATX  Capital  Corporation  and  its
     subsidiaries  ("the  Company")  at December  31, 1996 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
     nine-month  period ended September 30, 1997 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.  While the amounts claimed 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
PART I.  FINANCIAL INFORMATION, continued
Item 2.  Management's Discussion and Analysis

RESULTS OF OPERATIONS

Net income earned  during the nine months ended  September 30, 1997 exceeded net
income earned during the corresponding period in the prior year by $8.6 million,
primarily due to an increase in revenue related to the remarketing of assets.

Net income  earned  during the three  months ended  September  30, 1997 was $7.3
million less than in the same period in 1996 mainly due to  historically  strong
results  in the third  quarter of 1996 and  one-time  expenses  incurred  by the
Company  during the third  quarter of 1997 in  connection  with two  significant
events:  the  acquisition  of the 20% of Sun Financial  Group,  Inc. not already
owned by the Company and the purchase of a portfolio  of leased  assets owned by
Pitney Bowes Credit  Corporation.  The Pitney Bowes  transaction is described in
more detail in Item 5. below.

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); from the remarketing of assets; from
managing  the  equipment  related  investment  portfolios  of  others;  and from
brokering or arranging asset financing transactions,  and (2) it provides a wide
range of technology  services  enabling its customers to acquire,  construct and
finance information  networks.  The Company's  technology solutions business was
significantly  expanded with the October 1996  acquisition of the 50% of Centron
which it did not already own.  Sales and service  revenue  related to technology
solutions 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.  Centron's
financial  results  were  consolidated  in the  Company's  financial  statements
subsequent to the October 1996 acquisition.

Revenues
---------

Investment  and asset  management  revenue  increased  $13.7  million  and $77.5
million  during the three and  nine-month  periods  ended  September  30,  1997,
respectively,  compared  to the same  periods in 1996.  Revenue  generated  from
higher average  investment  balances  during 1997,  including  those funded with
off-balance  sheet  financing,  was the  most  significant  contributor  to this
increase. Increases in asset remarketing income also contributed to the increase
in investment and asset management  revenue.  Asset remarketing  income was $2.5
million (11%) and $34.9 million (83%) greater  during the three and  nine-months
ended September 30, 1997 than in 1996's comparable periods, respectively.

Although  asset  remarketing  income,  which  includes gains on the sales of the
Company's  owned  assets and fee income  generated  from  providing  remarketing
services for 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  were  primarily  generated by
Centron and were not  consolidated in the Company's  financial  statements until
October 1996.

Expenses
---------

Higher average  borrowings (to fund new  investments and from the acquisition of
Centron)  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
from off-balance sheet financing.

The increase in selling,  general and  administrative  costs is primarily due to
the impact of the  acquisition of Centron and one-time  expenses  related to the
acquisition  of the 20% of Sun  Financial  Group,  Inc. not already owned by the
Company and the Pitney Bowes transaction.

The  allowance  for losses  increased  during the first nine months of 1997 as a
result of a $9.5 million  provision for losses and $1.8 million in recoveries of
previously written off investments. There were no significant write-downs during
this  period.  At  September  30,  1997,  the  allowance  for  losses is 6.5% of
investments, including off-balance sheet assets and after deducting nonleveraged
lease nonrecourse debt.

                                       5
LIQUIDITY AND CAPITAL RESOURCES

The Company  generates  cash from  operations  and  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 nine months ended September 30, 1997, the
Company used cash generated from operations,  from investing activities and from
short-term  borrowings to repay $130 million of  medium-term  notes.  During the
third quarter of 1997, the Company filed a $532 million shelf  registration  for
debt securities, of which the entire amount was available on September 30, 1997.
Amounts  remaining  under the Company's  Series D medium term note  registration
statement were incorporated into this new registration  statement and the Series
D  registration  statement  was retired.  At September  30, 1997 the Company had
unused  capacity  under its  commercial  paper and bankers'  acceptances  credit
agreements of $41.1 million. Two of the Company's  subsidiaries maintain various
stand-alone bank facilities which had unused capacity  aggregating $48.8 million
as of September 30, 1997.

On  September  30, 1997 the Company  funded  approximately  $193  million of the
Pitney Bowes acquisition (see Item 5. below) with proceeds from commercial paper
and other short term  borrowings.  In October  1997,  the Company  borrowed $350
million under its $532 million  shelf  registration  and used the  proceeds,  in
part, to repay the commercial  paper and other  short-term  borrowings that were
used to fund this  purchase.  The  remainder of the  proceeds  were used to fund
additional portions of the Pitney Bowes acquisition in early November 1997.

During the third quarter of 1997 the Company sold certain assets and  has placed
the  proceeds  from such  sales  (approximately  $33  million)  in trust  with a
qualified  intermediary  pending the identification and acquisition of qualified
replacement  assets in order to effect a like-kind  exchange for federal  income
tax purposes.  The amounts in trust are classified as cash and cash  equivalents
in the accompanying balance sheet.

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 September 30, 1997, the Company had approved unfunded  transactions  totaling
approximately  $390 million,  including  approximately  $325 million expected to
fund during the fourth  quarter.  Of the expected fourth quarter funding amount,
approximately  $260  million  relates to the  acquisition  of the  Pitney  Bowes
portfolio (of which  approximately  $174 million  funded in early  November,  as
discussed above).  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.

PART II.  OTHER INFORMATION
Item 5.   Other Information

On August 21, 1997, the Company announced that it had entered into agreements to
invest in a $1.2 billion portfolio of leased assets owned by Pitney Bowes Credit
Corporation  ("PBCC"),  a  wholly-owned  subsidiary  of Pitney  Bowes  Inc.  The
Company's investment will total approximately $460 million in cash, for which it
will receive  assets valued by the Company at  approximately  $280 million and a
fifty percent  interest in a joint venture with PBCC that will own assets valued
by the Company at approximately $895 million.

The Company's  investment will be effected through a series of closings,  all of
which are expected to occur prior to December 31, 1997.  The first  closing took
place on September  30,  1997,  when the Company  paid PBCC  approximately  $193
million for assets  acquired.  The second  closing took place in early  November
1997, at which time the Company purchased  approximately  $174 million of assets
from PBCC.

                                       

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

(a)     Exhibits:

         27.   Financial Data Schedule

(b)     The Company filed a current report on Form 8-K on August 27, 1997,
        under Item 5., Other Events.

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
                                      Vice President and Chief Financial Officer

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

November 13, 1997

                                  

                                       7